AGREEMENT AND PLAN OF REORGANIZATION
OF
FORMTEK ACQUISITION, INC.
(A Corporation of the State of Delaware),
FORMTEK, INC.
(A Corporation of the State of Delaware),
AND
MET-COIL SYSTEMS CORPORATION
(A Corporation of the State of Delaware)
DATED March 13, 2000
Xxxxx & XxXxxxxx
000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as
of March 13, 2000, by and among Formtek Acquisition, Inc., a corporation
organized under the laws of the State of Delaware ("Merger Sub" or "Surviving
Corporation"); Formtek, Inc., a corporation organized under the laws of the
State of Delaware ("Parent"); and Met-Coil Systems Corporation, a corporation
organized under the laws of the State of Delaware (the "Company"). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned
thereto in Article XI.
WITNESSETH:
WHEREAS, Merger Sub is the wholly-owned Subsidiary of Parent;
WHEREAS, the Board of Directors of the Company, Parent and Merger Sub
have each approved the merger of the Company with and into Merger Sub (the
"Merger"), pursuant to the terms and conditions of this Agreement;
WHEREAS, the Board of Directors of the Company has (x) determined that
the terms of the Merger are advisable and in the best interests of the holders
of capital stock of the Company, (y) approved the Merger, and (z) recommended
the approval of the Merger and the approval and adoption of this Agreement by
the stockholders of the Company;
WHEREAS, the Board of Directors of Merger Sub has deemed it advisable
to merge with the Company and has recommended to its sole stockholder, Parent,
that it approve the Merger on the terms and conditions of this Agreement;
WHEREAS, Parent, as the sole stockholder of Merger Sub, has approved
and consented to the Merger of the Company with and into Merger Sub on the terms
and conditions of this Agreement;
WHEREAS, Parent and Merger Sub are unwilling to enter into this
Agreement unless certain holders of Shares, immediately following the execution
and delivery of this Agreement, enter into stockholder agreements (the
"Stockholder Agreements") among Parent, Merger Sub and each of certain holders
of Shares providing for, among other things, the agreement of such holders to
vote all of their Shares in favor of the Merger and granting to Parent and
Merger Sub an option to purchase such Shares;
WHEREAS, the Board of Directors of the Company has approved the
transactions contemplated by the terms of the Stockholder Agreements to the
extent such transactions result in Parent or Merger Sub being interested
stockholders for purposes of Section 203 of the DGCL; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger;
NOW, THEREFORE, it is agreed as follows by all of the parties,
acknowledging the receipt and sufficiency of the consideration exchanged herein
and intending to be legally bound hereby:
ARTICLE I
THE MERGER
1.1 Surviving Corporation. At the Effective Time, the Company shall
merge with and into Merger Sub, with Merger Sub as the surviving corporation,
pursuant to the terms and conditions contained herein. The Surviving Corporation
shall continue to be governed by the laws of the State of Delaware, but the
separate corporate existence of the Company shall cease forthwith upon the
Effective Time. Following the Merger, the existence of the Surviving Corporation
shall continue unaffected and unimpaired by the Merger, with all the rights,
privileges, immunities, and powers, and subject to all the duties and
liabilities, of a corporation organized under the laws of the State of Delaware.
1.2 Effective Time. The closing of the Merger (the "Closing") shall
take place (i) at the offices of Xxxxx & XxXxxxxx at 000 Xxxxxxxxxxx Xxxxxx,
X.X., Xxxxxxxxxx, X.X., as soon as practicable, but in any event within three
business days after the day on which the last to be fulfilled or waived of the
conditions set forth in Articles VII and VIII (other than those conditions that
by their nature are to be fulfilled at the Closing, but subject to the
fulfillment or waiver of such conditions) shall be fulfilled or waived in
accordance with this Agreement or (ii) at such other place and time or on such
other date as the Company and Parent may agree in writing. The date on which the
Closing takes place shall be referred to hereinafter as the "Closing Date," at
which time the Company and Merger Sub will file a certificate of merger with the
Delaware Secretary of State and make all other filings and recordings required
by Delaware law in connection with the Merger. The Merger shall become effective
at such time (the "Effective Time") as the certificate of merger is duly filed
with the Delaware Secretary of State or at such later time as is specified in
the certificate of merger.
1.3 Name. The name of Surviving Corporation shall be changed as of the
Effective Time to Met-Coil Systems Corporation.
1.4 Certificate of Incorporation. The Certificate of Incorporation of
the Surviving Corporation as in effect immediately prior to the Effective Time,
shall continue in full force and effect and, except as provided in Section 1.3
above, shall not be changed in any manner by the Merger and shall be the
Certificate of Incorporation of the Surviving Corporation following the
Effective Time unless and until the same be amended or repealed in accordance
with the provisions thereof, which power to amend or repeal is hereby expressly
reserved, and all rights or powers of whatsoever nature conferred in such
Certificate of Incorporation or herein upon any shareholder or director or
officer of the Surviving Corporation or upon any other persons whomsoever are
subject to the reserve power. Such Certificate of Incorporation shall constitute
the Certificate of Incorporation of the Surviving Corporation separate and apart
from this Agreement and may be separately certified as the Certificate of
Incorporation of the Surviving Corporation.
1.5 Bylaws. The Bylaws of the Surviving Corporation as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation following the Effective Time unless and until the same shall be
amended or repealed in accordance with the provisions thereof.
1.6 Directors and Officers. The members of the Board of Directors of
the Surviving Corporation immediately after the Effective Time shall be Xxxx X.
Xxxx, R. Xxxxx Xxxxx, Xxxxxx Xxxx, Xxxxx Xxxxx and Xxxxxxx Xxxxxxxx. The
officers of the Surviving Corporation immediately after the Effective Time of
the Merger shall include Xxxx X. Xxxx as Chairman, Xxxxx Xxxxx as President,
Xxxxxxx X. Xxxx as Senior Vice President - Finance and Treasurer, and Xxxxxxx
Xxxxxxx as Secretary. All such directors and officers shall serve in such
offices until their respective successors are elected and qualified, subject to
the provisions of the Bylaws and of the DGCL.
1.7 Additional Acts. If at any time the Surviving Corporation shall
consider or be advised that any acknowledgments or assurances in law or other
similar actions are necessary or desirable in order to acknowledge or confirm in
and to the Surviving Corporation any right, title, or interest of the Company
held immediately prior to the Effective Time, the Company and its proper
officers, directors and representatives shall and will, without further
consideration, on behalf of the Company, execute and deliver all such
acknowledgments or assurances in law and do all things necessary or proper to
acknowledge or confirm such right, title, or interest in the Surviving
Corporation as shall be necessary to carry out the purposes of this Agreement,
and the Surviving Corporation and the proper officers and directors thereof are
fully authorized to take any and all such action in the name of the Company or
otherwise.
1.8 Transfer of Property and Liabilities. At and after the Effective Time:
The Surviving Corporation shall succeed to and possess, without further
act or deed, all of the estate, rights, privileges, powers, and franchises, both
public and private, all of the property, real, personal, and mixed, of the
Company and Surviving Corporation; all debts due to the Company shall be vested
in the Surviving Corporation; all claims, demands, property, rights, privileges,
powers and franchises and every other interest of either of the parties to the
Merger shall be as effectively the property of the Surviving Corporation as they
were of the respective parties to the Merger; the title to any real estate
vested by deed or otherwise in the Company shall not revert or be in any way
impaired by reason of the Merger, but shall be vested in the Surviving
Corporation; all rights of creditors and all liens upon any property of either
of the parties to the Merger shall be preserved unimpaired, limited in lien to
the property affected by such lien at the Effective Time of the Merger; and all
debts, liabilities, and duties of the respective parties to the Merger shall
thenceforth attach to the Surviving Corporation and may be enforced against it
to the same extent as if such debts, liabilities, and duties had been incurred
or contracted by it.
ARTICLE II
CONVERSION OF SHARES OF CAPITAL STOCK
2.1 Merger Consideration. Subject to the provisions of this Article, at
the Effective Time, by virtue of the Merger and without any action on the part
of Parent, Merger Sub or the Company or the shareholders thereof, each share of
capital stock of Merger Sub and the Company issued and outstanding immediately
prior to the Effective Time shall be converted or cancelled as follows:
(a) Each share of Merger Sub that is issued and outstanding immediately
prior to the Effective Time shall become one fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving Corporation.
(b) Each Share that is issued and outstanding immediately prior to the
Effective Time (other than (i) any Shares which are held by any Subsidiary or in
the treasury of the Company, or which are held, directly or indirectly, by
Parent or any direct or indirect Subsidiary of Parent (including Merger Sub),
all of which shall be cancelled and none of which shall receive any payment with
respect thereto and (ii) Shares held by Dissenting Stockholders) shall be
cancelled and converted into and represent the right to receive an amount in
cash, without interest, equal to Seven Dollars and Ten Cents ($7.10) per Share
(the "Merger Consideration").
2.2 Stock Options and Warrants.
(a) Each Option and Warrant which is outstanding at the Effective Time
shall be canceled by virtue of the Merger and without any action on the part of
Parent, Merger Sub or the Company or the shareholders thereof, without
consideration except as provided in this Section 2.2(a), and shall cease to
exist. Each holder of an Option or Warrant, whether or not such Option or
Warrant is then exercisable, shall be entitled to receive, subject to applicable
withholding requirements, a cash payment (the "Cash Payment"), without interest,
at the Effective Time, equal to the product of (i) the total number of Shares as
to which such Option or Warrant could have been exercisable or convertible ("the
Option Shares") and (ii) the excess of the Merger Consideration over the
exercise price per Share subject to such Option or Warrant. Each such Cash
Payment shall be paid to each holder of an outstanding Option or Warrant
promptly after the Effective Time.
(b) The Company will ensure that any then-outstanding stock
appreciation rights or limited stock appreciation rights shall be cancelled as
of immediately prior to the Effective Time without any payment therefor. The
Company will ensure that the Met-Coil Systems Corporation 1997 Non-Employee
Directors Stock Option Plan, the Met-Coil Systems Corporation 1999 Non-Employee
Directors Stock Purchase Plan, the Met-Coil Systems Corporation 1993 Employees
Stock Option Plan and any other plan, program or arrangement (other than the
Met-Coil Systems Corporation Retirement Plan and the Met-Coil Systems Employee
Stock Ownership Plan) providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any of its subsidiaries
(collectively referred to as the "Stock Incentive Plans") shall terminate as of
the Effective Time.
2.3 Exchange of Certificates. The manner of making payment for Shares in
the Merger shall be as follows:
(a) (i) Prior to the Effective Time, Parent shall designate a bank or
trust company located in the United States reasonably satisfactory to the
Company to act as Paying Agent (the "Paying Agent") for the holders of Shares in
connection with the Merger and to receive the funds which holders of Shares will
be entitled to receive pursuant to Sections 2.1 and 2.2. Promptly after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Company Certificates") (other than those
which are held by any Subsidiary of the Company or in the treasury of the
Company or which are held directly or indirectly by Parent or any direct or
indirect Subsidiary of Parent (including Merger Sub)) (1) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Company Certificates shall pass, only upon proper delivery
of the Company Certificates to the Paying Agent) and (2) instructions for use in
effecting the surrender of the Company Certificates for payment therefor. Upon
surrender of Company Certificates for cancellation to the Paying Agent, together
with such letter of transmittal duly executed and any other required documents,
the holder of such Company Certificates shall be entitled to receive the Merger
Consideration deliverable in respect thereof and the Company Certificates shall
forthwith be cancelled. Until so surrendered, Company Certificates shall
represent solely the right to receive the Merger Consideration payable in
respect of the Shares represented thereby.
(ii) If the Merger Consideration is to be paid to or issued in a name
other than that in which the Company Certificate surrendered in exchange
therefor is registered, it shall be a condition of such exchange that the
Company Certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the Person requesting such exchange shall pay
to the Paying Agent any transfer or other taxes required by reason of the
foregoing or shall establish to the reasonable satisfaction of the Paying Agent
that such tax has been paid or is not applicable.
(b) In the event that any Company Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Company Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Company Certificate, the Paying
Agent will deliver to the Person delivering such affidavit the Merger
Consideration payable in respect of the Shares represented by such lost, stolen
or destroyed Company Certificates.
(c) Concurrently with or immediately prior to the Effective Time,
Parent shall, or shall cause Merger Sub to, deposit in trust with the Paying
Agent cash in United States dollars in an aggregate amount equal to (i) the
product of (x) the number of Shares outstanding immediately prior to the
Effective Time (other than Shares which are held by any Subsidiary of the
Company or in the treasury of the Company or which are held directly or
indirectly by Parent or any direct or indirect Subsidiary of Parent (including
Merger Sub) or a Person known at the time of such deposit to be a Dissenting
Stockholder) and (y) the Merger Consideration and (ii) the product of (x) the
Option Shares and (y) the excess of the Merger Consideration over the exercise
price per Share in respect of such Options or Warrants (such aggregate amount
being hereinafter referred to as the "Payment Fund"). The Payment Fund shall be
invested by the Paying Agent as directed by Parent in direct obligations of the
United States, obligations for which the full faith and credit of the United
States is pledged to provide for the payment of principal and interest,
commercial paper rated of the highest quality by Xxxxx'x Investors Services,
Inc. or Standard & Poor's Ratings Group or certificates of deposit, bank
repurchase agreements or bankers' acceptances of a commercial bank having at
least $100,000,000 in assets (collectively "Permitted Investments") or in money
market funds which are invested in Permitted Investments, and any net earnings
with respect thereto shall be paid to Parent as and when requested by Parent.
The Paying Agent shall, pursuant to irrevocable instructions, make the payments
referred to in Sections 2.1 and 2.2 hereof out of the Payment Fund. The Payment
Fund shall not be used for any other purpose except as otherwise agreed to by
Parent. Promptly following the date which is six months after the Effective
Time, the Paying Agent shall return to the Surviving Corporation all cash,
certificates and other instruments in its possession that constitute any portion
of the Payment Fund (other than net earnings on the Payment Fund which shall be
paid to Parent), and the Paying Agent's duties shall terminate. Thereafter, each
holder of a Company Certificate may surrender such Company Certificate to the
Surviving Corporation and (subject to applicable abandoned property, escheat and
similar laws) receive in exchange therefor the Merger Consideration, without
interest, but shall have no greater rights against the Surviving Corporation or
Parent than may be accorded to general creditors of the Surviving Corporation or
Parent under applicable law. Notwithstanding the foregoing, neither the Paying
Agent nor any party hereto shall be liable to a holder of Shares for any Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
2.4 Transfer of Shares Immediately Prior to and After the Effective
Time. No transfers of Shares shall be made on the stock transfer books of the
Company after the close of business on the day prior to the date of the
Effective Time. No transfer of Shares shall be made on the stock transfer books
of the Surviving Corporation. Company Certificates presented to the Surviving
Corporation after the Effective Time shall be canceled and exchanged for cash as
provided in this Article. At and after the Effective Time, each holder of a
Company Certificate shall cease to have any rights as a stockholder of the
Company, except for, in the case of a holder of a Company Certificate (other
than Shares to be canceled pursuant to Section 2.1 hereof, and other than Shares
held by Dissenting Stockholders), the right to surrender his or her Company
Certificate in exchange for payment of the Merger Consideration or, in the case
of a Dissenting Stockholder, the right to perfect his or her right to receive
payment for his or her Shares pursuant to Delaware law if such holder has
validly perfected and not withdrawn his or her right to receive payment for his
or her Shares.
2.5 Dissenting Shares. Notwithstanding anything contained in this
Agreement to the contrary but only to the extent required by the DGCL, Shares
that are issued and outstanding immediately prior to the Effective Time and are
held by holders of Shares who comply with all the provisions of the law of the
State of Delaware concerning the right of holders of Shares to dissent from the
Merger and require appraisal of their Shares (such holders being referred to
hereinafter as "Dissenting Stockholders", and such Shares being referred to
hereinafter as "Dissenting Shares") shall not be converted into the right to
receive the Merger Consideration but shall become the right to receive such
consideration as may be determined to be due such Dissenting Stockholder
pursuant to the law of the State of Delaware; provided, however, that (i) if any
Dissenting Stockholder shall subsequently deliver a written withdrawal of his or
her demand for appraisal (with the written approval of the Surviving
Corporation, if such withdrawal is not tendered within 60 days after the
Effective Time), or (ii) if any Dissenting Stockholder fails to establish and
perfect his or her entitlement to appraisal rights as provided by applicable
law, or (iii) if within 120 days of the Effective Time neither any Dissenting
Stockholder nor the Surviving Corporation has filed a petition demanding a
determination of the value of all Shares outstanding at the Effective Time and
held by Dissenting Stockholders in accordance with applicable law, then such
Dissenting Stockholder or Dissenting Stockholders, as the case may be, shall
forfeit the right to appraisal of such Shares and such Shares shall thereupon be
deemed to have been converted into the right to receive, as of the Effective
Time, the applicable Merger Consideration, without interest, as provided in
Section 2.3, and such Shares shall no longer be Dissenting Shares. The Company
shall give Parent and Merger Sub (x) prompt notice of any written demands for
appraisal, withdrawals of demands for appraisal and any other related
instruments received by the Company, and (y) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal. The Company
shall not voluntarily make any payment with respect to any demands for appraisal
and shall not, except with the prior written consent of Parent, settle or offer
to settle any such demand.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
All representations and warranties contained herein shall terminate at
the Effective Time. The Company represents and warrants to Parent and the Merger
Sub the following as of the date hereof.
3.1 Corporate Standing.
(a) The Company is organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation. The Company has full
corporate authority to own, lease and operate its properties and businesses.
Schedule 3.1 to the Company Disclosure Statement sets forth a list of the
jurisdictions in which the Company is qualified to conduct business as a foreign
corporation. The Company is in good standing as a foreign corporation under the
laws of the states listed in Schedule 3.1.
(b) The Company has made available to Parent and Merger Sub complete
and correct copies of the Company Charter and Bylaws and the certificates of
incorporation, bylaws and other similar organizational documents of each of its
Subsidiaries, in each case as amended to the date of this Agreement.
3.2 Subsidiaries. Schedule 3.2 to the Company Disclosure Statement
contains a complete and accurate list of all of the Subsidiaries of the Company
as of the date hereof. Each Subsidiary of the Company is a corporation or other
legal entity duly organized, validly existing and (if applicable) in good
standing under the laws of the jurisdiction of its organization and has all
requisite corporate, partnership or similar power and authority to own its
properties and conduct its business and operations as currently conducted.
Schedule 3.2 to the Company Disclosure Statement sets forth a list of the
jurisdictions in which each Subsidiary of the Company is qualified to conduct
business as a foreign corporation. Each Subsidiary is in good standing under the
laws of the states listed under their names in Schedule 3.2.
3.3 Authority.
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(a) The Company has the full corporate power and authority to enter
into, execute, deliver and perform this Agreement and all Exhibits to which it
is a party. The execution, delivery and performance of this Agreement and such
Exhibits, and the consummation of all transactions contemplated herein and
therein, have been duly authorized by all necessary corporate and other action
of the Company and no other corporate action on the part of the Company is
necessary to authorize the execution, delivery and performance of this Agreement
and such Exhibits by the Company and the consummation of the transactions
contemplated hereby except for the approval of the Company's stockholders
contemplated by Section 6.4. This Agreement has been duly executed and delivered
by a duly authorized officer of the Company and (assuming the due execution and
delivery of this Agreement by the other parties hereto) constitutes a valid and
binding agreement of the Company, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency and other similar laws affecting the
rights of creditors generally and except that the remedies of specific
performance, injunction and other forms of equitable relief may not be
available. The Exhibits to which the Company is a party, when duly executed and
delivered by the Company (assuming the due execution and delivery of such
Exhibits by the other parties hereto) constitute valid and binding agreements of
the Company enforceable against it in accordance with their terms, subject to
bankruptcy, insolvency and other similar laws affecting the rights of creditors
generally and except that the remedies of specific performance, injunction and
other forms of mandatory equitable relief may not be available.
(b) The Board of Directors of the Company has approved the transactions
contemplated by this Agreement and the Exhibits to which the Company is a party,
including the Merger and, solely for purposes of Section 203 of the DGCL, the
provisions contained in the Stockholder Agreements which could result in Parent
or Merger Sub becoming an interested stockholder under Section 203 of the DGCL.
(c) The Board of Directors of the Company has directed that this
Agreement be submitted to the stockholders of the Company for their approval.
The affirmative approval, by vote or written consent, of the holders of Shares
representing a majority of the outstanding Shares is the only vote of the
holders of any class or series of capital stock of the Company necessary to
approve and adopt this Agreement and approve the Merger.
(d) Except as set forth in Schedule 3.3(d) to the Company Disclosure
Statement, neither the execution and delivery of this Agreement nor the
execution and delivery of the certificates and documents set forth as Exhibits
hereto nor the consummation of the transactions contemplated hereby or thereby
will (i) conflict with or violate any provision of the Company Charter or Bylaws
of the Company or the certificates of incorporation, bylaws or other similar
organizational documents of any Subsidiary of the Company, (ii) conflict with or
violate any law, rule, regulation, ordinance, order, writ, injunction, judgment
or decree applicable to the Company or any Subsidiary of the Company or their
businesses or by which any of their assets is affected, except to the extent any
such conflict or violation would not, individually or in the aggregate, have a
Material Adverse Effect, or (iii) conflict with or result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination or
cancellation of, or accelerate the performance required by or maturity of, or
result in the creation of any security interest, lien, charge or encumbrance on
the assets of the Company or any Subsidiary of the Company pursuant to any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
permit, license, franchise, lease, contract, or other instrument or obligation
to which either the Company or any Subsidiary of the Company is a party or by
which any of the assets of the Company or any Subsidiary of the Company are
affected, except to the extent any such conflict, breach, default, right of
termination or cancellation, acceleration or creation of any such security
interest, lien, charge or encumbrance would not, individually or in the
aggregate, have a Material Adverse Effect.
(e) Except as set forth in Schedule 3.3(e) to the Company Disclosure
Statement, none of the Company or any Subsidiary of the Company are required to
submit any notice, declaration, report or other filing or registration with any
governmental or regulatory authority or instrumentality, and no approvals or
non-objections are required to be obtained or made by the Company or any
Subsidiary of the Company in connection with the execution, delivery or
performance by the Company or any Subsidiary of the Company of this Agreement or
any Exhibit or the consummation of the transactions contemplated hereby or
thereby, except for approvals that may be required under the DGCL, the HSR Act
and the Exchange Act.
3.4 Capitalization.
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(a) Schedule 3.4(a) to the Company Disclosure Statement sets forth the
aggregate number of the authorized, issued and outstanding shares of capital
stock of the Company as of the date hereof. The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable. None of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company. Except as disclosed in Schedule
3.4(a) of the Company Disclosure Statement, (i) there are no shares of capital
stock of the Company authorized, issued or outstanding and (ii) there are not as
of the date hereof, and at the Closing Date there will not be, any outstanding
or authorized options, warrants, rights, subscriptions, claims of any character,
agreements, obligations, convertible or exchangeable securities, or other
commitments, contingent or otherwise, relating to Shares or any other shares of
capital stock of the Company, pursuant to which the Company is or may become
obligated to issue Shares or any other shares of its capital stock or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of the capital stock of the Company. The Company has
no authorized or outstanding bonds, debentures, notes or other indebtedness the
holders of which have the right to vote (or convertible or exchangeable into or
exercisable for securities having the right to vote) with the stockholders of
the Company or any of its Subsidiaries on any matter ("Voting Debt"). After the
Closing Date, the Surviving Corporation will have no obligation, as a result of
the Company's actions, to issue, transfer or sell any Shares or any shares of
capital stock of the Surviving Corporation.
(b) No class of capital stock of the Company is entitled to pre-emptive
rights.
(c) There are no Warrants or Options held in the treasury of the Company.
(d) Except as disclosed in Schedule 3.4(d) to the Company Disclosure
Statement, all of the issued and outstanding capital stock of each Subsidiary of
the Company has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through its wholly-owned
Subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity and none of the outstanding shares of capital stock
of such Subsidiaries was issued in violation of any preemptive or similar rights
arising by operation of law, or under the charter or bylaws (or other similar
organizational documents) of any Subsidiary of the Company or under any
agreement to which the Company or any of its Subsidiaries is a party. No shares
of capital stock of any of the Subsidiaries are reserved for issuance and there
are no outstanding or authorized options, warrants, rights, subscriptions,
claims of any character, agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to the
capital stock of any Subsidiary of the Company, pursuant to which such
Subsidiary is or may become obligated to issue any shares of capital stock of
such Subsidiary or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of such Subsidiary. Except as
disclosed in Schedule 3.4(d) to the Company Disclosure Statement and except as
required by applicable Law, there are no restrictions of any kind which prevent
the payment of dividends by any of the Subsidiaries of the Company. Except as
disclosed in Schedule 3.4(d) to the Company Disclosure Statement, the Company
does not own, directly or indirectly, any capital stock or other equity interest
in any Person or have any direct or indirect equity or ownership interest in any
Person and neither the Company nor any of its Subsidiaries is subject to any
obligation or requirement to provide funds for or to make any investment (in the
form of a loan, capital contribution or otherwise) to or in any Person. The
Company's Subsidiaries have no Voting Debt.
3.5 Opinion of the Company's Financial Advisor. The Board of Directors
of the Company has received (i) the opinion, as of the date hereof, of Lincoln
Partners L.L.C. to the effect that the Merger Consideration is fair to the
stockholders of the Company from a financial point of view, subject to the
assumptions and qualifications contained in such opinion, and (ii) a commitment
from Lincoln Partners L.L.C. to deliver such opinion in written format to the
Board of Directors of the Company as promptly as reasonably practicable after
the date hereof.
3.6 Operation of the Company's Business. The Company and its
Subsidiaries own and retain all such assets, tangible or intangible,
contractual, license and leasehold rights necessary for the Surviving
Corporation (i) to operate the business of the Company and its Subsidiaries as
they operate them on the date hereof, and (ii) to utilize the assets and
contractual, license and leasehold rights in the same manner as they are used on
the date hereof, except to the extent such lack of ownership or failure to
retain would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. With the exception of those assets used in the
business of the Company and its Subsidiaries pursuant to license and leasehold
rights in favor of the Company and its Subsidiaries, all of the assets used in
the business of the Company and its Subsidiaries are owned by the Company and
its Subsidiaries, and none are owned by any other party.
3.7 Litigation. Except as set forth in Schedule 3.7 to the Company
Disclosure Statement, there are no actions, proceedings, suits, inquiries or
investigations before or by any Governmental Authority or any arbitrator or any
other alternative dispute resolution forum, now pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries which
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, and none of the Company, any of its Subsidiaries or any
of their assets is subject to any judgment, order or decree entered in any
lawsuit, action or proceeding.
3.8 Employee Benefit Plans.
----------------------
(a) Schedule 3.8(a) to the Company Disclosure Statement contains a
complete and accurate list of all Company Plans, Company Multiemployer Plans and
Company Other Benefit Obligations (other than those Company Other Benefit
Obligations that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect).
(b) Schedule 3.8(b) to the Company Disclosure Statement sets forth the
financial cost of all obligations owed under any Company Plan or Company Other
Benefit Obligation (other than those Company Other Benefit Obligations that
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect) that is not subject to the disclosure and reporting
requirements of ERISA.
(c) Schedule 3.8(c) to the Company Disclosure Statement sets forth, for
each Company Multiemployer Plan, as of its last valuation date, the amount of
potential withdrawal liability of the Company and any ERISA Affiliates of the
Company, calculated according to information made available pursuant to ERISA
Section 4221(e).
(d) the Company has delivered to Parent and the Merger Sub:
(i) all documents that set forth the terms of each Company
Plan, Company Multiemployer Plan or Company Other Benefit Obligation
(other than those Company Other Benefit Obligations that would not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect), and of any related trust, including all
summary plan descriptions, summaries and descriptions furnished to
participants and beneficiaries;
(ii) all personnel, payroll, and employment manuals and policies;
(iii) a written description of any Company Plan or Company
Other Benefit Obligation (other than those Company Other Benefit
Obligations that would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect) that is not otherwise
in writing;
(iv) all registration statements filed with respect to any
Company Plan;
(v) all insurance policies purchased by or to provide benefits
under any Company Plan;
(vi) all reports submitted to the Company or any Subsidiary
within the three years preceding the date of this Agreement by third
party administrators, actuaries, investment managers, trustees,
consultants, or other independent contractors with respect to any
Company Plan or Company Other Benefit Obligation (other than those
Company Other Benefit Obligations that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect);
(vii) the Form 5500 filed in each of the most recent three
plan years with respect to each Company Plan and Company Other Benefit
Obligation, including all schedules thereto and the opinions of
independent accountants;
(viii) all notices that were given by the Company or any ERISA
Affiliate of the Company or any Company Plan to the IRS, the PBGC, or
any participant or beneficiary, pursuant to ERISA or the Code, within
the three years preceding the date of this Agreement, including notices
that are expressly mentioned elsewhere in this Section 3.8;
(ix) all notices that were given by the IRS, the PBGC, or the
Department of Labor to the Company, any ERISA Affiliate of the Company,
or any Company Plan within the three years preceding the date of this
Agreement;
(x) with respect to Qualified Plans, the most recent
determination letter for each Plan of the Company that is a Qualified
Plan;
(xi) with respect to Title IV Plans, the Form PBGC-1 filed for
each of the three most recent plan years for each Plan of the Company
that is a Title IV Plan; and
(xii) with respect to Company Multiemployer Plans, the most
recent estimate of potential withdrawal liability prepared by each
Company Multiemployer Plan for the Company and each ERISA Affiliate of
the Company.
(e) Except as set forth in Schedule 3.8(e) to the Company Disclosure
Statement:
(i) The Company and its Subsidiaries have performed all of
their respective obligations under all Company Plans, Company
Multiemployer Plans and Company Other Benefit Obligations other than
any such obligations that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
The Company and its Subsidiaries have made appropriate entries in their
financial records and statements for all obligations and liabilities
under such Plans, Company Multiemployer Plans and Company Other Benefit
Obligations that have accrued but are not due other than any such
obligations and liabilities that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(ii) The Company and its Subsidiaries, with respect to all
Company Plans and Company Other Benefit Obligations, are, and each
Company Plan and Company Other Benefit Obligation is, in compliance
with ERISA, the Code, and other applicable Laws including the
provisions of such Laws expressly mentioned in this Section 3.8, and
with any applicable collective bargaining agreement other than any
noncompliance that would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect. Except to the extent
that any of the following would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect:
(A) No transaction prohibited by ERISA Section 406
and no "prohibited transaction" under Code Section 4975(c) has
occurred with respect to any Company Plan.
(B) Neither the Company nor any of its Subsidiaries
has any liability to the IRS with respect to any Plan,
including any liability imposed by Chapter 43 of the Code.
(C) Neither the Company nor any of its Subsidiaries
has any liability to the PBGC with respect to any Plan or has
any liability under ERISA Section 502 or Section 4071.
(D) All contributions and payments made or accrued
with respect to all Company Plans, Company Multiemployer Plans
and Company Other Benefit Obligations are deductible under
Code Section 162 or Section 404.
(iii) No event has occurred or, to Company's knowledge,
circumstance exists that could result in an increase in premium costs
of Company Plans and Company Other Benefit Obligations that are insured
or an increase in benefit costs of such Plans and Company Other Benefit
Obligations that are self-insured other than any such increases that
would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
(iv) Other than routine claims for benefits submitted by
participants or beneficiaries, no claim against, or legal proceeding or
investigation involving, any Company Plan or Company Other Benefit
Obligation is pending or is threatened.
(v) Each Qualified Plan of the Company and each of its
Subsidiaries has received a favorable determination letter from the
Internal Revenue Service that it is qualified under Code Section 401(a)
and that its related trust is exempt from federal income tax under Code
Section 501(a), and each such Plan complies in form and in operation
with the requirements of the Code and meets the requirements of a
"qualified plan" under Section 401(a) of the Code except to the extent
that any noncompliance or failure to meet such requirements would not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. No event has occurred or circumstance exists
that will or could give rise to disqualification or loss of tax-exempt
status of any such Plan or trust other than any such events or
circumstances that would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect .
(vi) The Company and each ERISA Affiliate of the Company has
met the minimum funding standard, and has made all contributions
required under each Company Plan and Company Multiemployer Plan, under
ERISA Section 302 and Code Section 412, and there is no unfunded
liability under any Company Plan.
(vii) The Company and each of its Subsidiaries has paid all
amounts due to the PBGC pursuant to ERISA Section 4007.
(viii) Neither the Company nor any ERISA Affiliate of the
Company has ceased operations at any facility or has withdrawn from any
Title IV Plan in a manner that would subject the Company to liability
under ERISA Sections 4062(e), 4063, or 4064.
(ix) Neither the Company nor any ERISA Affiliate of the
Company has filed a notice of intent to terminate any Plan or has
adopted any amendment to treat a Plan as terminated. The PBGC has not
instituted proceedings to treat any Company Plan as terminated. No
event has occurred or circumstance exists that may constitute grounds
under ERISA Section 4042 for the termination of, or the appointment of
a trustee to administer, any Company Plan other than any such events or
circumstances that would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(x) No amendment has been made, or is reasonably expected to
be made, to any Company Plan that has required or could require the
provision of security under ERISA Section 307 or Code Section
401(a)(29).
(xi) No accumulated funding deficiency, whether or not waived,
exists with respect to any Company Plan; no event has occurred or
circumstance exists that may result in an accumulated funding
deficiency as of the last day of the current plan year of any such Plan
other than any such events or circumstances that would not reasonably
be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(xii) The actuarial report for each Company Plan that is a
Pension Plan fairly presents the financial condition and the results of
operations of each such Plan in accordance with GAAP.
(xiii) The actuarially determined present value of all accrued
benefits under each Title IV Plan of the Company (determined on a
projected benefits basis) does not exceed, as of the Closing Date, the
fair market value of the assets of each such Title IV Plan.
(xiv) No reportable event (as defined in ERISA Section 4043
and in regulations issued thereunder) has occurred.
(xv) Neither the Company nor any of its Subsidiaries has ever
established or contributed to, or had an obligation to contribute to,
any VEBA, any organization or trust described in Code Section
501(c)(17) or Code Section 501(c)(20), or any welfare benefit fund as
defined in Code Section 419(e).
(xvi) Neither the Company nor any ERISA Affiliate of the
Company has withdrawn from any Multiemployer Plan with respect to which
there is any outstanding liability as of the date of this Agreement. No
event has occurred or circumstance exists that presents a risk of the
occurrence of any withdrawal from, or the participation, termination,
reorganization, or insolvency of, any Multiemployer Plan that could
result in any liability of either the Company or Parent to a
Multiemployer Plan other than any such events that would not reasonably
be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(xvii) Except to the extent required under ERISA Section 601
et seq. and Code Section 4980B, neither the Company nor any of its
ERISA Affiliates provides health or welfare benefits for any retired or
former employee or is obligated to provide health or welfare benefits
to any active employee following such employee's retirement or other
termination of service.
(xviii) The Company and each of its Subsidiaries have the
right to modify and terminate benefits to retirees (other than
pensions) with respect to both retired and active employees.
(xix) The Company and each of its Subsidiaries have complied
with the provisions of ERISA Section 601 et seq. and
Code Section 4980B and with the provisions of ERISA Section 701 et seq
and Subtitle K of the Code.
(xx) No payment that is owed or may become due to any
director, officer, employee, or agent of the Company will be
non-deductible to the Company or any of its Subsidiaries under Code
Section 280G or subject to tax under Code Section 4999; nor will the
Company or any of its Subsidiaries be required to "gross up" or
otherwise compensate any such person because of the imposition of any
excise tax on a payment to such person.
(xxi) Each Company Plan that is or is purported to be an
"employee stock ownership plan", as such term is defined in Code
Section 4975(e)(7) (the "ESOP"), complies with all of the requirements
set forth in Code Section 4975(e)(7), Treas. Reg. Section 54.4975-11
and ERISA Section 407(d)(6) except to the extent that any noncompliance
would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. To the extent that there is or has been
a loan or other extension of credit made to the ESOP, that loan or
other extension of credit meets or has met the requirements of Treas.
Reg. Section 54.4975-7 and ERISA Reg. Section 2550.408b-3 except to the
extent that any failure to meet such requirements would not reasonably
be expected, individually or in the aggregate, to have a Material
Adverse Effect. The execution, delivery and performance of this
Agreement by the parties hereto and the consummation of the
transactions contemplated hereby will not: (A) constitute a violation
of, or give rise to any liability under, Title I of ERISA or Code
Section 4975; (B) result in a disqualification of the ESOP under Code
Section 401(a); (C) cause the ESOP to fail to comply with all of the
requirements set forth in Code Section 4975(e)(7), Treas. Reg. Section
54.4975-11 and ERISA Section 407(d)(6); or (D) result in the imposition
of a tax under Chapter 43 of the Code or Code Section 4978A (as in
effect prior to the Revenue Reconciliation Act of 1989).
(f) Since May 31, 1999, except as set forth on Schedule 3.8 (f) to the
Company Disclosure Statement attached hereto or as required by applicable law,
neither the Company nor an ERISA Affiliate has (i) instituted or agreed to
institute any new employee benefit plan or practice for any employee, (ii) made
or agreed to make any change in any Company Plan, (iii) made or agreed to make
any increase in the compensation payable or to become payable by the Company or
an ERISA Affiliate to any employee, other than regularly scheduled increases, or
(iv) except pursuant to this Agreement and except for contributions required to
provide benefits pursuant to the provisions of the Company Plans, paid or
accrued or agreed to pay or accrue any bonus, percentage of compensation, or
other like benefit to, or for the credit of, any employee.
(g) Any contribution, insurance premium, excise tax, interest charge or
other liability or charge imposed or required with respect to any Company Plan
which is attributable to any period or any portion of any period prior to the
Closing shall, to the extent required by GAAP, be reflected as a liability on
the Company's balance sheet at Closing, including, without limitation, any
portion of the matching contribution required with respect to each Company Plan
for its respective plan year ending after the Closing which is attributable to
elective contributions made by employees in such plan prior to the Closing.
3.9 Taxes. Except as set forth on Schedule 3.9 to the Company
Disclosure Statement:
(a) The Company and its Subsidiaries have timely filed or caused to be
timely filed all federal income Tax Returns. The Company and its Subsidiaries
have timely filed all other United States federal, state county, local and
foreign Tax Returns required to be filed by or with respect to them, except to
the extent that a failure to file such Tax Returns would not, in the aggregate
with all other undisclosed items covered by this Section 3.9, have a Material
Adverse Effect. Such Tax Returns have accurately reflected the liability for
Taxes of the Company and its Subsidiaries for the periods covered thereby,
except to the extent that any inaccuracies would not, in the aggregate with all
other undisclosed items covered by this Section 3.9, have a Material Adverse
Effect. All Taxes shown to be payable on such Tax Returns or on subsequent
assessments with respect thereto have been paid in full on a timely basis other
than assessments which are being contested in good faith, except to the extent
that any failures to pay any such Taxes would not, in the aggregate with all
other undisclosed items covered by this Section 3.9, have a Material Adverse
Effect. The amount of the liability of the Company and its Subsidiaries for
unassessed and/or unpaid Taxes for all periods ending on or before the Closing
Date, would not exceed the amount of the current liability accrual for Taxes
(including reserves for deferred Taxes) reflected on the Company's November 30,
1999 balance sheet, by an amount that would, when aggregated with all other
undisclosed items covered by this Section 3.9, have a Material Adverse Effect.
(b) There are no Tax assessments or adjustments that have been asserted
against the Company or its Subsidiaries for any period that would, in the
aggregate with all other undisclosed items covered by this Section 3.9, have a
Material Adverse Effect.
(c) There are no audits, examinations, actions, suits, proceedings,
investigations, claims or assessments pending or threatened, in writing or
otherwise to the knowledge of the Company, against the Company or any of its
Subsidiaries for any alleged deficiency in any Tax (a "Tax Controversy") and the
Company has not been notified in writing of any proposed Tax Controversy against
the Company or any of its Subsidiaries (other than a Tax Controversy set forth
in Schedule 3.9 to the Company Disclosure Statement which is being contested in
good faith). There are no "deferred intercompany transactions" or "intercompany
transactions" the gain or loss on which has not yet been taken into account
under the appropriate consolidated return Treasury Regulations that would, in
the aggregate with all other undisclosed items covered by this Section 3.9, have
a Material Adverse Effect. Except for the consolidated return of the Company and
its Subsidiaries, neither the Company nor any of its Subsidiaries have been
included in any "consolidated," "unitary" or "combined" Tax Return with respect
to Taxes for any taxable period for which the statute of limitations has not
expired. The Company has delivered to Parent correct and complete copies of all
United States federal, state, and foreign income Tax Returns (to the extent
filed as of the date hereof or, if due but not filed, correct and complete
copies of extensions thereof), examination reports, statements of deficiencies
assessed against or agreed to by the Company and any of its Subsidiaries, or any
other similar correspondence from a taxing authority, relating to taxable years
1996, 1997, 1998 and 1999. Schedule 3.9 (c)(i) of the Company Disclosure
Statement lists all of the jurisdictions in which the Company has filed or is
filing returns on sales and use tax. Schedule 3.9 (c) (ii) of the Company
Disclosure Statement lists all of the jurisdictions in which the Company has
filed or is filing returns on income tax.
(d) There are no liens on the assets of the Company or any of its
Subsidiaries for Taxes that would, in the aggregate with all other undisclosed
items in this Section 3.9, have a Material Adverse Effect.
(e) (i) Neither the Company nor any of its Subsidiaries has entered
into an agreement or waiver or been requested to enter into an
agreement or waiver extending any statute of limitations relating
to the payment or collection of Taxes of the Company or any of its
Subsidiaries.
(ii) All Taxes which the Company or any of its Subsidiaries is (or
was) required by law to withhold or collect (other than immaterial
amounts) have been duly withheld or collected, and have been
timely paid over to the proper authorities to the extent due and
payable.
(iii) No claim has ever been made by any taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not
file a Tax Return that the Company or any of its Subsidiaries is
or may be subject to taxation by that jurisdiction, except to the
extent that a failure to file such Tax Returns would not, in the
aggregate with all other undisclosed items covered by this Section
3.9, have a Material Adverse Effect.
(iv) There are no tax sharing, allocation, indemnification or
similar agreements in effect as between the Company or its
Subsidiaries or any predecessor or affiliate thereof or any other
party under which the Company, Parent or Merger Sub could be
liable for Taxes.
(v) Neither the Company nor any of its Subsidiaries has applied
for, been granted, or agreed to any accounting method change for
which it will be required to take into account any adjustment
under Section 481 of the Code or any similar provision of the Code
or the corresponding tax laws of any nation, state or locality.
(vi) No election under Section 341(f) of the Code has been made or
shall be made prior to the Closing Date to treat the Company or
any of its Subsidiaries as a consenting corporation, as defined in
Section 341 of the Code.
(vii) Neither the Company nor any of its Subsidiaries is a party
to any agreement that would require the Company or any of its
Subsidiaries or any affiliate thereof to make any payment that
would constitute an "excess parachute payment" for purposes of
Sections 280G and 4999 of the Code.
(viii) Neither the Company nor any of its Subsidiaries is a
"United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Code.
(f) For purposes of this Agreement, the term "Tax" means any United
States federal, state, county or local, or foreign or provincial income, gross
receipts, profits, capital gains, capital stock, occupation, severance, stamp,
withholding, property, sales, use, license, excise, franchise, employment,
payroll, value added, alternative or added minimum, ad valorem or transfer tax,
or any other tax, levy, custom, duty or governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Authority, and shall include any liability
for such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group or of a contractual obligation to
indemnify any person or other entity. The term "Tax Return" means a report,
return or other information (including any attached schedules or any amendments
to such report, return or other information) required to be supplied to or filed
with any Governmental Authority with respect to any Tax, including an
information return, claim for refund, amended return or declaration or estimated
Tax.
3.10 Intellectual Property. Except as disclosed in Schedule 3.10 to the
Company Disclosure Statement, the Company and its Subsidiaries own or have a
valid and enforceable license to use the rights to all patents, trademarks,
tradenames, service marks and copyrights, together with any registrations and
applications therefor, licenses, inventions, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) or other intellectual property
(collectively, "Intellectual Property") used in and necessary to carry on the
business now operated by them; provided, however, that the enforceability of
such license may be subject to bankruptcy, insolvency and other similar laws
affecting debtors' rights or creditors' rights generally and except that the
remedies of specific performance, injunction and other forms of equitable relief
may not be available. Except as disclosed in Schedule 3.10 to the Company
Disclosure Statement, neither the Company nor any of its Subsidiaries has
received any written notice or otherwise has knowledge of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
its Subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in a Material Adverse Effect. There are no
amounts owing or to be owed by the Company to any other Person, as a result of
the consummation of the Merger or otherwise, with respect to any claims relating
to any Intellectual Property (or any intellectual property rights of any other
Person) or any settlement thereof.
3.11 Reports and Financial Statements.
--------------------------------
(a) The Company has filed all forms, reports and documents with the SEC
required to be filed by it since January 1, 1997 pursuant to the federal
securities laws and the SEC rules and regulations thereunder (collectively, the
"Company SEC Reports"). None of the Company SEC Reports, as of their respective
dates, contained any untrue statement of material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets (including the related
notes) included in the Company SEC Reports presents fairly, in all material
respects, the consolidated financial position of the Company and its
Subsidiaries as of the respective dates thereof, and the other related
statements (including the related notes) included in the Company SEC Reports
present fairly, in all material respects, the results of operations and the
changes in financial position of the Company and its Subsidiaries for the
respective periods or as of the respective dates set forth therein, all in
conformity with generally accepted accounting principles consistently applied
during the periods involved, except as otherwise noted therein and subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments. All of the Company SEC Reports, as of their respective dates,
complied as to form in all material respects with the requirements of the
Exchange Act or the Securities Act, as applicable, and the applicable rules and
regulations thereunder.
(b) Except (i) as and to the extent disclosed or reserved against on
the balance sheet of the Company as of November 30, 1999 included in the Company
SEC Reports or (ii) as incurred after the date thereof in the ordinary course of
business consistent with prior practice and not prohibited by this Agreement and
not involving borrowing by the Company or its Subsidiaries, the Company does not
have any liabilities or obligations of any nature, absolute, accrued, contingent
or otherwise and whether due or to become due, that, individually or in the
aggregate, have or would reasonably be expected to have a Material Adverse
Effect on the Company.
3.12 Absence of Certain Changes or Events. During the period since
May 31, 1999, except as disclosed in the Company SEC
Reports filed prior to the date hereof:
(a) The business of the Company and its Subsidiaries has been conducted
only in the ordinary course, consistent with past practice, except for
activities related to possible strategic alternatives for the Company, including
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and except as otherwise expressly permitted or
required by this Agreement;
(b) Neither the Company nor any of its Subsidiaries has taken any
action or omitted to take any action, or entered into any contract, agreement,
commitment or arrangement to take any action or omit to take any action, which,
if taken or omitted after the date hereof, would violate Section 6.1.; and
(c) There has not been, and, to the best knowledge of the Company,
nothing has occurred that would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
3.13 Registration Rights and Certain Other Agreements. Set forth in
Schedule 3.13 to the Company Disclosure Statement is an accurate and complete
listing, as of the date hereof, of (a) all contracts, leases, agreements or
understandings, whether written or (to the knowledge of the Company) oral, to
which the Company or any of its Subsidiaries is a party or is otherwise bound
which contain any restriction or limitation on the ability of the Company or any
of its Affiliates to engage in any business anywhere in the world, and (b) all
contracts, leases, agreements or understandings, whether written or (to the
knowledge of the Company) oral, giving any Person the right to require the
Company to register securities of any type or to participate in any registration
of securities of any type. The Company has previously provided or made available
to Parent true and complete copies of each of the foregoing agreements.
3.14 Brokers and Finders. Except for the fees and expenses payable to
Lincoln Partners L.L.C. (whose fees and expenses will be paid by the Company),
which fees and expenses are reflected in its agreements with the Company, copies
of which have been furnished to Parent by the Company, no agent, broker, Person
or firm acting on behalf of the Company is, or will be, entitled to any fee,
commission or broker's or finder's fees from any of the parties hereto, or from
any Person controlling, controlled by, or under common control with any of the
parties hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
3.15 Proxy Statement. The definitive proxy statement and related
materials to be furnished to the holders of Common Stock in connection with the
Merger (the "Proxy Statement") will comply in all material respects with the
Exchange Act and the rules and regulations thereunder and any other applicable
laws. If at any time prior to the Company Stockholders' Meeting any event occurs
which should be described in an amendment or supplement to the Proxy Statement,
the Company will file and disseminate, as required, an amendment or supplement
which complies in all material respects with the Exchange Act and the rules and
regulations thereunder and any other applicable laws. Prior to its filing with
the SEC, the amendment or supplement shall be delivered to Parent and Merger Sub
and their counsel. None of the information supplied by the Company for inclusion
or incorporation by reference in the Proxy Statement, will, at the date such
information is supplied and at the Closing Date, contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made, in light of the circumstance under which they are made, not
misleading. Notwithstanding the foregoing, no representation or warranty is made
by the Company with respect to any information with respect to Parent, Merger
Sub or their officers, directors or affiliates provided to the Company by Parent
or Merger Sub for inclusion or incorporation by reference in the Proxy
Statement.
3.16 Title To Assets. Except as reflected in the Company's financial
statements as of November 30, 1999 or disclosed in Schedule 3.16 to the Company
Disclosure Statement, the Company and each of its Subsidiaries has good and
marketable title to (or in the case of leases or other contracts, the full and
unencumbered right to exercise its rights under such leases or other agreements)
the properties and assets used by it, free and clear of all mortgages, deeds of
trust, liens, security interests, pledges, encumbrances, encroachments,
easements, leases, agreements, covenants, charges, restrictions, option, joint
ownership or adverse claims or rights whatsoever (collectively, "Liens"), except
for Permitted Liens, and except for properties and assets disposed of in the
ordinary course of business since November 30, 1999. "Permitted Liens" means:
(i) rights of lessors or lessee under the terms of leases (x) which have been
disclosed to Parent in this Agreement or Schedule 3.16 to the Company Disclosure
Statement or (y) for office equipment entered into in the ordinary course of
business; (ii) Liens for Taxes not yet due or payable; (iii) Liens imposed by
applicable law and incurred in the ordinary course of business for obligations
not yet due and payable to laborers, materialmen and the like; (iv) liens in
favor of the lender listed on Schedule 3.16 in connection with the Company's
secured credit facilities; (v) zoning and other restrictions, variances,
covenants, rights-of-way, encumbrances, easements and or other minor
irregularities of title, none of which, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on the value of any of
the real property of the Company or of any Subsidiary of the Company, or would
impair in any material respect the ability of the Company or the relevant
Subsidiary of the Company to utilize such property for its current use; and (vi)
rights which would not, singly or in the aggregate, have a Material Adverse
Effect.
3.17 Contracts. Schedule 3.17 to the Company Disclosure Statement sets
forth the following oral or written contracts and other agreements to which the
Company or any of its Subsidiaries is a party:
(a) Any agreement (or group of related agreements, with the same third
party or any of its Affiliates) for the lease of personal property providing for
lease payments in excess of $50,000 per annum;
(b) Any agreement (or group of related agreements) for the purchase or
sale of supplies, products or other personal property, or for the furnishing or
receipt of services, the performance of which involve consideration in excess of
$50,000 per annum, except for agreements for the sale of inventory in the
ordinary course of business, for the purchase of raw materials, for the purchase
of machine component parts and for the receipt of legal services; provided,
however, that this clause (b) shall not include any employment agreement
included pursuant to clause (e) below;
(c) Any agreement concerning a partnership or joint venture;
(d) Any agreement (or group of related agreements, with the same third
party or any of its Affiliates) under which the Company or any of its
Subsidiaries has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation the performance of which
involves consideration in excess of $50,000 per annum, or under which it has
imposed a Lien (excluding Permitted Liens as that term is defined in Section
3.16 of this Agreement) on any of its material assets, tangible or intangible;
(e) Any individual agreement with an employee of the Company or any of
its Subsidiaries;
(f) Any other agreement (or group of related agreements with the same
third party) the performance of which involves consideration in excess of
$25,000 per annum.
The foregoing are referred to hereafter as the "Material Contracts".
With respect to each of the Material Contracts, except as set forth in Schedule
3.17 to the Company Disclosure Statement: (i) they are in full force and effect
and enforceable against the counterparties in accordance with their terms,
except that such enforceability may be subject to bankruptcy, insolvency and
other similar laws affecting debtors' rights or creditors' rights generally and
except that the remedies of specific performance, injunction and other forms of
equitable relief may not be available; (ii) neither the Company nor any of its
Subsidiaries and to the Company's knowledge no other party thereto is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration under the agreement; (iii) neither the Company nor any of its
Subsidiaries has assigned any of its rights or obligations under any of the
Material Contracts; (iv) neither the Company nor any of its Subsidiaries has
received any outstanding notice of cancellation or termination in connection
with any of them; and (v) neither the Company nor any of its Subsidiaries is,
and to the Company's knowledge no party thereto is, the subject of bankruptcy
proceedings, nor has had a trustee appointed on its behalf or is insolvent. The
Company has delivered to the Parent and Merger Sub a correct and complete copy
of each written Material Contract (as amended to the date of this Agreement) and
a written summary setting forth the terms and conditions of each oral agreement
constituting a Material Contract referred to in Schedule 3.17 to the Company
Disclosure Statement. With respect to agreements for the purchase or receipt of
legal services, there are no such agreements in which the Company or any of its
Subsidiaries are obligated to pay any type of success fee, contingency fee or
fee determined with reference to the size or consummation of the transactions
contemplated by this Agreement.
3.18 Compliance. Except as set forth in Schedule 3.18 to the Company
Disclosure Statement, neither the Company nor any of its Subsidiaries is in
conflict with, or in default or violation of any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, except for such conflicts, defaults or violations that would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.
3.19 Insurance. The Company and its Subsidiaries have obtained and
maintained in full force and effect insurance (including director's and
officer's insurance) with insurance companies or associations in such amounts as
disclosed in Schedule 3.19 to the Company Disclosure Statement.
3.20 Company Preference Shares. Except as set forth in Schedule 3.20 to
the Company Disclosure Statement, the former holders of the Preferred Shares are
not entitled to receive any accrued dividends or redemption payments which have
not been paid when due.
3.21 Year 2000. Except to the extent that it would not reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect,
all internal computer systems, computer software or technology that are material
to the business, finances or operations of the Company and its Subsidiaries or
were sold or licensed to customers of the Company and its Subsidiaries
(collectively, "Material Systems") are (i) able to receive, record, store,
process, calculate, manipulate and output dates from and after September 9,
1999, time periods that include any Relevant Date and information that is
dependent on or relates to such dates or time periods, in the same manner and
with the same accuracy, functionality, data integrity and performance as when
dates or time periods prior to September 9, 1999 are involved and (ii) able to
store and output date information in a manner that is unambiguous as to century
(the circumstances set forth in clauses (i) and (ii), collectively, "Year 2000
Compliant"). The Company's costing system for inventory properly reflects the
actual costs of any inventory with a maximum deviation of plus or minus five
percent (5%) of such actual costs in the aggregate at any given date of
determination. The term "Relevant Date" means each of the following dates:
September 9, 1999, December 31, 1999, January 1, 2000, February 28, 2000,
February 29, 2000, March 1, 2000, December 31, 2000, and January 1, 2001.
3.22 Disposition of Assets. Other than inventory sold in the ordinary
course of business, no tangible asset of the Company having a fair value in
excess of $20,000 per item, or $50,000 in the aggregate, and no intangible asset
which is part of the assets of the Company, has been disposed of since November
30, 1999, except as set forth on Schedule 3.22 to the Company Disclosure
Statement.
3.23 Environmental and Health and Safety Matters.
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(a) Set forth on Schedule 3.23(a) to the Company Disclosure Statement attached
hereto is a true, accurate and complete list of all real property, currently
owned, leased and/or otherwise used or occupied by the Company (the "Property").
(b) Except as set forth in Schedule 3.23(b) to the Company Disclosure Statement,
the Company, and the Property, have been at all times and are in compliance with
(and the formerly owned real property located at Rockford, Illinois (the
"Rockford Property") was, subsequent to April 12, 1988, and prior to December 7,
1993, in compliance with) the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation, and Liability Act, the
Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act, the Clean Water Act, the Clean Air Act, the Occupational Safety and
Health Act, and all other federal, state and local laws, regulations and
ordinances relating to pollution, health and safety, or protection of the
environment, including, without limitation, those relating to containment,
emissions, discharges, releases or threatened releases of industrial, toxic or
hazardous substances, materials or wastes or other pollutants, contaminants,
petroleum products, asbestos, polychlorinated biphenyls ("PCBs"), or chemicals
(collectively, "Hazardous Substances") into the environment (including without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) or otherwise relating to the manufacturing, processing, recycling,
distribution, use, treatment, labeling, storage, disposal, release, abatement,
transport or handling of Hazardous Substances (the "Environmental Laws"), except
for such failures to comply which would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
(c) The Company has obtained and is in compliance (except for such failures to
comply which would not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect) with all permits, licenses and other
consents or authorizations which are required with respect to the operation of
its business at the Property under the Environmental Laws ("Environmental
Permits"), including without limitation those that are required to (a) operate
or install any equipment or facilities and (b) generate, manufacture, formulate,
store, treat, handle, transport, discharge, emit or dispose of Hazardous
Substances generated by its business, a true and complete list of which
Environmental Permits is included in Schedule 3.23(c) to the Company Disclosure
Schedule.
(d) Except as listed in Schedules 3.23(b) and (d) to the Company Disclosure
Statement, there are and have been no Hazardous Substances generated, used,
treated, stored, maintained, disposed of, or otherwise deposited in, located on,
released from, under or on, the Property or the Rockford Property (or released
onto, from or on any geologically or hydrologically adjoining property), the
business of the Company, or any premises at which the business of the Company is
being conducted, or is located, except in compliance with Environmental Laws.
Additionally, except as described in Schedule 3.23(d) to the Company Disclosure
Statement, there are and were no underground storage tanks maintained or located
on the Property or the Rockford Property, the business of the Company, or any
premises at which the business of the Company is located.
(e) Except as set forth in Schedules 3.23(b), (d) and (e) of the Company
Disclosure Statement, neither the Company nor its predecessors have any basis to
expect, nor have they, or any other Person for whose conduct they are or may be
held responsible received, any actual or threatened notice, document,
information, report or other communication (written or oral) from any Person,
Governmental Authority or person acting in the public interest, of any actual or
threatened failure to comply with any Environmental Law, or that any of them
have any potential liability with respect to Environmental Health and Safety
Liabilities.
(f) The Company has made available to Parent and Merger Sub true and complete
copies and results of any reports, correspondence, information or studies
possessed or initiated by the Company since January 1, 1990, pertaining to
Hazardous Substances in, on, under, or adjacent to the Property or the Rockford
Property, or concerning compliance by the Company or any other Person for whose
conduct they are or may be held responsible, with Environmental Laws.
3.24 Related Party Transactions. No officer or director of the Company
or any affiliate thereof has, directly or indirectly, entered into any
transaction with the Company, except for any arrangements which are either (i)
expressly disclosed on or incorporated by reference in the Company's Annual
Report on Form 10-K or (ii) listed on Schedule 3.24 to the Company Disclosure
Statement. For purposes of this Section 3.24 only, the term "affiliate" of the
Company shall mean and include any officer or director of the Company or any
shareholder owning or controlling more than 5% of the outstanding Common Stock
or any person related to any such officer, director or shareholder of the
Company by blood or by marriage, or any corporation, partnership,
proprietorship, trust or other entity in which such officer or director or
shareholder of the Company (or any spouse, ancestor or descendant of the same)
has more than a 5% legal or beneficial interest, or any corporation,
partnership, proprietorship, trust or other entity which controls, is controlled
by or is under common control with the Company.
3.25 Increases in Salaries and Wages. Except in the ordinary course of
business or as listed in Schedule 3.25 to the Company Disclosure Statement, the
Company has not, since November 30, 1999, paid any salary, wage, bonus payments
or any other benefits to its employees at rates exceeding the respective rates
paid to such employees which were in effect at November 30, 1999.
3.26 Employee Salaries and Benefits. The Company has provided Parent
with an accurate list of all salaried employees of the Company and its
Subsidiaries, and the current rate of compensation for each such employee
(including a separate statement of bonuses and fringe benefits). Except in the
ordinary course of business or as listed on Schedule 3.26 to the Company
Disclosure Statement, there is no liability for unpaid salary or wages, bonuses,
vacation time, or other employee benefits due or accrued, nor liability for
withheld or deducted amounts from employees' earnings, for the period ending on
or immediately prior to the Closing Date, including without limitation
commission payments to agents, representatives or employees. There are no labor
disputes, strikes, work stoppages or other interruptions in service or
performance that would reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect, and, to the Company's knowledge, all
relationships between the Company and each of its Subsidiaries and their
employees are generally stable and satisfactory.
3.27 Customer and Supplier Relationships; Warranty Claims. Neither the
Company nor any of its Subsidiaries has received any written notice or otherwise
has knowledge that any of the ten largest customers or suppliers of The
Lockformer Company or any of the ten largest customers or suppliers of Iowa
Precision Industries, Inc. intends to discontinue or alter the prices or terms
of, or substantially diminish, its relationship with the Company or any of its
Subsidiaries. Outstanding warranty claims against the Company or any of its
Subsidiaries by any customers with respect to products sold or services rendered
do not, in the aggregate, exceed two percent (2%) of the Company's and its
Subsidiaries' aggregate gross sales in the 12 months prior to the date hereof
and in the 12 months prior to the date of any subsequent determination. There
are no defects in any of the product lines designed or manufactured by the
Company or any of its Subsidiaries, except for defects which would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.
3.28 Accounts Receivable and Notes Receivable. The accounts receivable
and notes receivable of the Company and its Subsidiaries, other than those
listed on Schedule 3.28 to the Company Disclosure Schedule, represent bona fide
claims which the Company or its Subsidiaries have against debtors for sales or
services arising on or before the Closing Date are not subject to counterclaims,
setoffs or deductions of any kind except to the extent such counterclaims,
setoffs or deductions would not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect, and are not subject to additional
requirements of performance by the Company or any Subsidiary of the Company. The
aggregate amount of customer advance payments (i.e., payments in excess of
actual work performed or materials supplied as of the date of such payment)
received by the Company or any Subsidiary of the Company at or prior to the
Closing Date with respect to such accounts receivable does not exceed $750,000.
All of the accounts receivable and notes receivable have been created since the
date of incorporation of the Company or any Subsidiary of the Company, pursuant
to shipments of goods or services conforming to the terms of purchase orders
executed by and received from unrelated third parties in the normal course of
business. Such receivables have been recorded in accordance with the Company's
historical revenue recognition policy. To the Company's knowledge, there are no
pending insolvency, bankruptcy or similar proceedings involving any of the
Company's or its Subsidiaries' customers, distributors, dealers or
representatives.
3.29 Bonds; Guarantees. Other than as listed on Schedule 3.29 to the
Company Disclosure Schedule, there are no bonds, guarantees, notes, sureties,
letters of credit, or other similar credit agreements or debt obligations that
exist with respect to the Company or any of its Subsidiaries, their businesses
or any of their assets. Neither the Company nor any Subsidiary of the Company is
in default on the payment of any principal or interest on any indebtedness for
borrowed money, nor is the Company or any Subsidiary of the Company otherwise in
default under any indemnity, fidelity or contract bond or letter of credit,
note, guarantee or other credit agreement or debt obligation or instrument.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
As of the date of this Agreement, Parent represents and warrants to the
Company as follows:
4.1 Corporate Standing. Parent is a corporation duly organized, validly
existing, and in good standing under the laws of its state of incorporation.
Parent has full corporate authority to own, lease and operate its properties and
businesses. Schedule 4.1 to the Parent Disclosure Statement sets forth a list of
the jurisdictions in which Parent is qualified to conduct business as a foreign
corporation. Parent is in good standing as a foreign corporation under the laws
of the states listed in Schedule 4.1.
4.2 Authority.
---------
(a) Parent has full corporate power and authority to enter into,
execute, deliver, and perform this Agreement and all Exhibits to which it is a
party. The execution, delivery and performance of this Agreement and such
Exhibits, and the consummation of all transactions contemplated herein and
therein, have been duly authorized by all necessary corporate action of Parent.
This Agreement has been duly executed and delivered by a duly authorized officer
of the Parent and (assuming the due execution and delivery of this Agreement by
the other parties hereto other than Merger Sub and Ultimate Parent) constitutes
a valid and binding agreement of the Parent, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency and other similar
laws affecting the rights of creditors generally and except that the remedies of
specific performance, injunction and other forms of equitable relief may not be
available. Such Exhibits, when duly executed and delivered by Parent (assuming
the due execution and delivery of such Exhibits by the other parties hereto
other than Merger Sub and Ultimate Parent) shall be valid and binding agreements
of Parent enforceable against it in accordance with the terms hereof and
thereof, subject to bankruptcy, insolvency and other similar laws affecting the
rights of creditors generally and except that the remedies of specific
performance, injunction and other forms of equitable relief may not be
available.
(b) The Board of Directors of Parent has approved the transactions
contemplated by this Agreement and the Exhibits to which Parent is a party.
(c) Neither the execution and delivery of this Agreement nor the
execution and delivery of the certificates and documents set forth as Exhibits
hereto nor the consummation of the transactions contemplated hereby or thereby
will (i) conflict with or violate any provision of the Articles of Incorporation
or Bylaws of Parent, (ii) conflict with or violate any law, rule, regulation,
ordinance, order, writ, injunction, judgment or decree applicable to Parent or
its business or by which any of its assets are affected, except to the extent
any such conflict or violation would not have a Material Adverse Effect, or
(iii) conflict with or result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination or cancellation of or accelerate the
performance required by or maturity of, or result in the creation of any
security interest, lien, charge or encumbrance on the assets of Parent pursuant
to any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, permit, license, franchise, lease, contract, or other instrument or
obligation to which Parent is a party or by which any of its assets are
affected, except to the extent any such conflict, breach, default, right of
termination or cancellation, acceleration or creation of any such security
interest, lien, charge, or encumbrance would not have a Material Adverse Effect.
(d) Parent is not required to submit any notice, declaration, report or
other filing or registration with any governmental or regulatory authority or
instrumentality, and no approvals or non-objections are required to be obtained
or made by Parent in connection with the execution, delivery or performance by
Parent of this Agreement or any Exhibit or the consummation of the transactions
contemplated hereby or thereby, except for approvals that may be required under
the DGCL, the HSR Act and the Exchange Act.
4.3 Information Supplied. None of the information supplied by Ultimate
Parent, Parent or Merger Sub for inclusion or incorporation by reference in the
Proxy Statement (and provided to Ultimate Parent, Parent and Merger for review
and comment prior to printing of the Proxy Statement) will, on the date it is
first mailed to the Company's stockholders or at the time of the Company's
stockholders meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
4.4 Adequate Financing. Parent has adequate funds to consummate
the Merger and perform its other obligations under this
Agreement, including payment of the Merger Consideration and the Cash Payment.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MERGER SUB
As of the date of this Agreement, Merger Sub represents and warrants to
the Company as follows:
5.1 Corporate Standing. Merger Sub is a corporation duly organized,
validly existing, and in good standing under the laws of its state of
incorporation. Merger Sub has full corporate authority to own, lease and operate
its properties and businesses. Schedule 5.1 to the Merger Sub Disclosure
Statement sets forth a list of the jurisdictions in which Merger Sub is
qualified to conduct business as a foreign corporation. Merger Sub is in good
standing as a foreign corporation under the laws of the states listed in
Schedule 5.1.
5.2 Authority.
---------
(a) Merger Sub has full corporate power and authority to enter into,
execute, deliver, and perform this Agreement and all Exhibits to which it is a
party. The execution, delivery and performance of this Agreement and such
Exhibits, and the consummation of all transactions contemplated herein and
therein, have been duly authorized by all necessary corporate action of Merger
Sub. This Agreement has been duly executed and delivered by a duly authorized
officer of Merger Sub and (assuming the due execution and delivery of this
Agreement by the other parties hereto other than Parent and Ultimate Parent)
constitutes a valid and binding agreement of Merger Sub, enforceable against it
in accordance with its terms, subject to bankruptcy, insolvency and other
similar laws affecting the rights of creditors generally and except that the
remedies of specific performance, injunction and other forms of equitable relief
may not be available. Such Exhibits, when duly executed and delivered by Merger
Sub (assuming the due execution and delivery of such Exhibits by the other
parties hereto other than Parent and Ultimate Parent) shall be valid and binding
agreement of Merger Sub enforceable against it in accordance with the terms
hereof and thereof, subject to bankruptcy, insolvency and other similar laws
affecting the rights of creditors generally and except that the remedies of
specific performance, injunction and other forms of equitable relief may not be
available.
(b) The Board of Directors and stockholders of Merger Sub have approved
the transactions contemplated by this Agreement and the Exhibits to which Merger
Sub is a party.
(c) Neither the execution and delivery of this Agreement nor the
execution and delivery of the certificates and documents set forth as Exhibits
hereto nor the consummation of the transactions contemplated hereby or thereby
will (i) conflict with or violate any provision of the Articles of Incorporation
or Bylaws of Merger Sub, (ii) conflict with or violate any law, rule,
regulation, ordinance, order, writ, injunction, judgment or decree applicable to
Merger Sub or its business or by which any of its assets are affected, except to
the extent any such conflict or violation would not have a Material Adverse
Effect, or (iii) conflict with or result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination or cancellation of
or accelerate the performance required by or maturity of, or result in the
creation of any security interest, lien, charge or encumbrance on the assets of
Merger Sub pursuant to any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, permit, license, franchise, lease, contract, or other
instrument or obligation to which Merger Sub is a party or by which any of its
assets are affected, except to the extent any such conflict, breach, default,
right of termination or cancellation, acceleration or creation of any such
security interest, lien, change or encumbrance would not have a Material Adverse
Effect.
(d) Merger Sub is not required to submit any notice, declaration,
report or other filing or registration with any governmental or regulatory
authority or instrumentality, and no approvals or non-objections are required to
be obtained or made by Merger Sub in connection with the execution, delivery or
performance by Merger Sub of this Agreement or any Exhibit or the consummation
of the transactions contemplated hereby or thereby, except for approvals that
may be required under the DGCL, the HSR Act and the Exchange Act.
5.3 No Business Activities. Merger Sub is not a party to any
material agreements and has not conducted any activities other than in
connection with the organization of Merger Sub, the negotiation and execution of
this Agreement and the consummation of the transactions contemplated hereby.
Merger Sub has no Subsidiaries.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 Conduct of Business of the Company. Except as set forth in Schedule
6.1 to the Company Disclosure Statement, as expressly permitted by this
Agreement (including any transaction permitted by Schedule 6.1 to the Company
Disclosure Statement), as required by any change in applicable Law, or as
otherwise agreed by Parent in writing, during the period from the date of this
Agreement to the Closing Date, (i) the Company will, and will cause each of its
Subsidiaries to, conduct their businesses in the ordinary course of business
consistent with past practice, and (ii) to the extent consistent with the
foregoing, the Company will, and will cause each of its Subsidiaries to, use
their reasonable best efforts to preserve intact their current business
organizations, keep available the service of their current officers and
employees, and preserve their relationships with customers, suppliers and others
having business dealings with them (but without the obligation to pay any
additional compensation to any such officers, employees, customers, suppliers
and other persons), in each case with respect to the Company's and its
Subsidiaries' current businesses. Without limiting the generality of the
foregoing, from and including the date hereof to the Closing Date, the Company
will not, and will not permit any of its Subsidiaries to, without the prior
written consent of Parent (except to the extent set forth in Schedule 6.1 to the
Company Disclosure Statement):
(a) Except for Shares issued upon exercise of Options or other rights
outstanding as of the date hereof under Stock Incentive Plans or Company Plans
in accordance with the terms thereof, issue, deliver, sell, dispose of, pledge
or otherwise encumber, or authorize or propose the issuance, sale, disposition
or pledge or other encumbrance (in each instance, whether through the issuance
or granting of options, warrants, commitments, subscriptions, rights to purchase
or otherwise) of (A) any additional shares of its capital stock of any class, or
any Voting Debt or any securities or rights convertible into, exchangeable for,
or evidencing the right to subscribe for any shares of its capital stock or
Voting Debt or any rights, warrants, options, calls, commitments or any other
agreements of any character to purchase or acquire any shares of its capital
stock or Voting Debt or any securities or rights convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of its capital stock,
or (B) any other securities in respect of, in lieu of, or in substitution for,
Shares outstanding on the date hereof;
(b) Redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding securities, other than
pursuant to existing agreements requiring the Company to repurchase or acquire
any shares of its capital stock (provided that such repurchase or acquisition is
in accordance with the terms of such agreement as in effect on the date hereof);
(c) Split, combine, subdivide or reclassify any shares of its capital
stock or declare, set aside for payment or pay any dividend, or make any other
actual, constructive or deemed distribution in respect of any shares of its
capital stock or otherwise make any payments to stockholders in their capacity
as such (other than dividends or distributions paid by any Wholly Owned
Subsidiary of the Company to the Company or another Wholly Owned Subsidiary of
the Company);
(d) (i) grant any increases in the compensation of any of its
directors, officers or employees, except for increases granted to employees
other than officers in the ordinary course of business consistent with past
practice, (ii) pay or award or agree to pay or award any pension, retirement
allowance, or other non-equity incentive awards, or other employee benefit, not
required by any of the Company Plans to any current or former director, officer
or employees, whether past or present, or to any other Person, except for
payments or awards to current employees other than officers that are in the
ordinary course of business, consistent with past practice, (iii) pay or award
or agree to pay or award any stock option or equity incentive awards, (iv) enter
into any new or amend any existing employment agreement with any director,
officer or employee, (v) enter into any new or amend any existing severance
agreement with any current or former director, officer or employee, or (vi)
become obligated under any new Company Plan which was not in existence on the
date hereof, or amend any such Company Plan in existence on the date hereof,
except as may be contemplated by this Agreement;
(e) Adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any Subsidiary of the Company (other than the Merger);
(f) Make any acquisition, by means of stock or asset purchase,
recapitalization, merger, consolidation or otherwise, of (i) any direct or
indirect ownership interest in or assets comprising any business enterprise or
operation or (ii) except in the ordinary course and consistent with past
practice, any other assets; provided that such acquisitions do not and would not
prevent or materially delay the consummation of the Merger;
(g) (i) dispose of any interest in any material business enterprise or
operation of the Company or any of its Subsidiaries; (ii) make any other
disposition of any other direct or indirect ownership interest in any material
assets of the Company or any of its Subsidiaries; or (iii) except in the
ordinary course and consistent with past practice, dispose of any other assets
of the Company or any of its Subsidiaries;
(h) Adopt any amendments to the Company Charter or its Bylaws or alter
through merger, liquidation, reorganization, restructuring or in any other
fashion the corporate structure or ownership of any Subsidiary of the Company,
except as required by this Agreement or as required by applicable laws, rules or
regulations, including any NASDAQ rule or regulation;
(i) Incur any indebtedness (other than pursuant to and not exceeding
its existing secured credit facilities listed on Schedule 6.1(i) in the ordinary
course) for borrowed money or guarantee any indebtedness of any other Person or
make any loans, advances or capital contributions to, or investments in, any
other Person (other than to any Wholly Owned Subsidiary of the Company);
(j) Engage in the conduct of any business other than the Company's
existing businesses;
(k) Enter into any agreement or exercise any discretion providing for
acceleration of payment or performance as a result of a change of control of the
Company or its Subsidiaries, except in connection with the Merger;
(l) enter into any contracts, arrangements or understandings requiring
in the aggregate the purchase of equipment, materials, supplies or services in
excess of the Company's budget attached hereto as Schedule 6.1(l) plus $250,000
in the aggregate;
(m) enter into or amend, modify, terminate or waive any right under any
agreement with any Affiliates of the Company (other than its Subsidiaries);
(n) settle or compromise any litigation or Tax Controversy with respect
to the Company or its Subsidiaries or waive, release or assign any rights or
claims with respect to any litigation or Tax Controversy involving the Company
or its Subsidiaries;
(o) effect any change in any of its methods of accounting, except as
may be required by law or generally accepted accounting principles;
(p) Take any action, including without limitation, the adoption of any
shareholder rights plan or amendments to the Company Charter, which would,
directly or indirectly, restrict or impair the ability of Parent to vote, or
otherwise to exercise the rights and receive the benefits of a stockholder with
respect to, securities of the Company that may be acquired or controlled by
Parent or Merger Sub or permit any stockholder to acquire securities of the
Company on a basis not available to Parent in the event that Parent were to
acquire securities of the Company; or
(q) Authorize, recommend or propose (other than to Parent), or announce
an intention to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
The Company shall also continue to undertake all usual corporate,
stockholder, accounting and regulatory matters on a routine and regular basis.
The Company shall notify Parent in advance in writing of any material
developments or activities that would be outside of the ordinary course of
business in manufacturing carried on at the Company's facilities in Cedar
Rapids, Iowa and Lisle, Illinois, including, without limitation, the proposed
acquisition and/or disposition of assets material to the efficient operation of
the business, the pending or threatened loss of an important customer of the
Company, the receipt of a pending or threatened claim that would be material to
the business or the assets of the Company and its Subsidiaries taken as a whole,
or the existence of labor unrest at the Company or any of its Subsidiaries.
6.2 No Solicitation of Other Offers.
-------------------------------
(a) The Company and its Affiliates and each of their respective
officers, directors, employees, representatives, consultants, investment
bankers, attorneys, accountants and other agents shall immediately cease any
discussions or negotiations with any other parties that may be ongoing with
respect to any Acquisition Proposal. Neither the Company nor any of its
Affiliates shall, directly or indirectly, take (and the Company shall not
authorize or permit its or its Affiliates' officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants or
other agents or Affiliates, to so take) any action to (i) encourage, solicit,
initiate or facilitate the making of any Acquisition Proposal (including,
without limitation, by taking any action that would make Section 203 of the DGCL
inapplicable to an Acquisition Proposal) or (ii) participate in any way in
discussions or negotiations with, or, furnish or disclose any information to,
any Person (other than Parent or Merger Sub) in connection with, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal;
provided, however, that the Company, in response to an unsolicited Acquisition
Proposal and in compliance with its obligations under Section 6.2(b) hereof, may
participate in discussions or negotiations with or furnish information (pursuant
to a confidentiality agreement with terms not more favorable to such third party
than the terms of the Confidentiality Agreement) to any third party which makes
an Acquisition Proposal if (i) the Board of Directors reasonably determines (in
consultation with the Company's independent financial advisor) that such
Acquisition Proposal is likely to lead to a Superior Proposal and (ii) the Board
of Directors reasonably believes (in consultation with the Company's independent
legal counsel) that failing to take such action would constitute a breach of its
fiduciary duties. In addition, neither the Board of Directors of the Company nor
any committee thereof shall (A) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Merger Sub the approval and
recommendation of the Merger and this Agreement, (B) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, or (C) enter into any
agreement with respect to any Acquisition Proposal or enter into any
arrangement, understanding or agreement requiring it to abandon, terminate or
fail to consummate the Merger or any other transactions contemplated by this
Agreement; provided that the Company may recommend to its stockholders an
Acquisition Proposal and in connection therewith withdraw or modify its approval
or recommendation of the Merger and enter into an agreement with respect to such
Acquisition Proposal if (1) a third party makes a Superior Proposal, and (2) (a)
three (3) business days have elapsed following delivery to Parent of a written
notice of the determination by the Board of Directors of the Company to take
such action and during such (3) business day period the Company has informed
Parent of the terms and conditions of such Superior Proposal, and the identity
of the Person making such Superior Proposal, and (b) at the end of such three
(3) business day period the Acquisition Proposal continues to constitute a
Superior Proposal.
"Acquisition Proposal" shall mean (i) any inquiry, proposal or offer
from any Person relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Company or any of its material Subsidiaries
or of 50% or more of any class of equity securities of the Company or any of its
material Subsidiaries, (ii) any tender offer or exchange offer that, if
consummated, would result in any Person beneficially owning 50% or more of any
class of equity securities of the Company or any of its Subsidiaries, or (iii)
any merger, consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries.
"Superior Proposal" shall mean a bona fide proposal made by a third
party to acquire all of the Shares pursuant to a tender offer, a merger or a
sale of all of the assets of the Company (w) on terms which a majority of the
members of the Board of Directors of the Company determines in its good faith
reasonable judgment (in consultation with the Company's independent financial
advisor) to be more favorable to the Company and its stockholders than the
transactions contemplated hereby, (x) for which financing is then available (it
being understood that financing evidenced by highly confident letters and
similar letters shall be considered "available" for purposes of this Section),
and (y) which is not subject to any financing condition.
(b) From and after the date hereof, in addition to the obligations of
the Company set forth in paragraph (a), on the date of receipt thereof, the
Company shall advise Parent of any request for information or of any Acquisition
Proposal, or any inquiry, proposal, discussions or negotiation with respect to
any Acquisition Proposal. The Company shall promptly provide to Parent any
non-public information concerning the Company provided to any other Person in
connection with any Acquisition Proposal which was not previously provided to
Parent.
(c) Immediately following the execution of this Agreement, the Company
shall request each Person which has heretofore executed a confidentiality
agreement in connection with its consideration of acquiring the Company or any
portion thereof to return all confidential information heretofore furnished to
such Person by or on behalf of the Company.
6.3 Proxy Statement. As promptly as practicable, the Company will
prepare and file a preliminary Proxy Statement with the SEC and will use its
reasonable best efforts to respond to the comments of the SEC, if any, in
connection therewith and to furnish all information regarding the Company
required in the definitive Proxy Statement (including, without limitation,
financial statements and supporting schedules and certificates and reports of
independent public accountants). Parent, Merger Sub and Company will cooperate
with each other in the preparation of the Proxy Statement. Without limiting the
generality of the foregoing, each of Parent and Merger Sub will furnish to the
Company the information relating to it required by the Exchange Act to be set
forth in the Proxy Statement. As promptly as is reasonably practicable, the
Company will cause the definitive Proxy Statement to be mailed to the
stockholders of the Company and, if necessary, after the definitive Proxy
Statement shall have been so mailed, promptly circulate amended, supplemental or
supplemented proxy material and, if required in connection therewith, re-solicit
proxies. The Company will provide Ultimate Parent, Parent and Merger Sub the
opportunity to review and comment on the Proxy Statement (and any amended,
supplemental or supplemented proxy material) before it is printed and mailed to
the stockholders of the Company. The Company's obligations under this Section
6.3 are subject to its right to withdraw or modify its approval or
recommendation of the Merger in accordance with Section 6.2.
6.4 Stockholder Approval. As promptly as is reasonably practicable, the
Company, acting through its Board of Directors, shall, in accordance with
applicable Law, duly call, give notice of, convene and hold a meeting of the
holders of Shares (the "Company Stockholders' Meeting") for the purpose of
voting upon this Agreement and the Merger, and the Company agrees that this
Agreement and the Merger shall be submitted at such meeting. The Company shall
use its reasonable best efforts to solicit from its stockholders proxies, and
shall take all other action necessary and advisable, to obtain the approval of
stockholders required by applicable law and the Company Charter or its Bylaws
for this Agreement and the Merger. The Company agrees that it will include in
the Proxy Statement the recommendation of its Board of Directors that holders of
Shares approve and adopt this Agreement and approve the Merger. The Company's
obligations under this Section 6.4 are subject to its right to withdraw or
modify its approval or recommendation of the Merger in accordance with Section
6.2.
6.5 Commercially Reasonable Efforts. The Company and Parent shall, and
shall use their commercially reasonable efforts to cause their respective
Subsidiaries, as applicable, to: (i) promptly make all filings and seek to
obtain all Authorizations (including, without limitation, all filings required
under the HSR Act) required under all applicable Laws with respect to the Merger
and the other transactions contemplated hereby and will reasonably consult and
cooperate with each other with respect thereto; (ii) not take any action
(including effecting or agreeing to effect or announcing an intention or
proposal to effect, any acquisition, business combination or other transaction
except as set forth in the Company Disclosure Statement) which would impair the
ability of the parties to consummate the Merger; and (iii) use their
commercially reasonable efforts to promptly (x) take, or cause to be taken, all
other actions and (y) do, or cause to be done, all other things reasonably
necessary, proper or appropriate to satisfy the conditions set forth in Articles
VII and VIII (unless waived) and to consummate and make effective the
transactions contemplated by this Agreement on the terms and conditions set
forth herein (including seeking to remove promptly any injunction or other legal
barrier that may prevent such consummation); provided, however, that no loan
agreement or contract for borrowed money shall be repaid except as currently
required by its terms, in whole or in part, and, subject to Section 6.1, no
contract shall be amended to increase the amount payable thereunder or otherwise
to be more burdensome to the Company or any of its Subsidiaries in order to
obtain any such consent, approval or authorization without first obtaining the
written approval of Parent and Merger Sub. Each party shall promptly notify the
other party of any communication to that party from any Governmental Authority
in connection with any required filing with, or approval or review by, such
Governmental Authority in connection with the Merger and the other transactions
contemplated hereby and permit the other party to review in advance any proposed
communication to any Governmental Authority in such connection to the extent
permitted by applicable law.
6.6 Access to Information. Subject to currently existing contractual
and legal restrictions applicable to the Company, the Company shall (and shall
cause each of its Subsidiaries to) afford to officers, employees, counsel,
accountants and other authorized representatives of Parent ("Parent
Representatives") reasonable access, during normal business hours throughout the
period prior to the Closing Date, to its properties, books and records
(including, subject to execution of customary access letters, the work papers of
independent accountants), such access not to unreasonably interfere with the
Company's business or operations, and, during such period, shall (and shall
cause each of its Subsidiaries to) furnish promptly to such Parent
Representatives all information concerning its business, properties and
personnel as may reasonably be requested, including but not limited to all
purchase order and customer order logs. In addition, Parent Representatives may
conduct, within the two-week period prior to the Closing Date expected by
Parent, a complete investigation of the Company's financial and other records
and accounts (including but not limited to the work papers of the Company's
independent accountants), and Company will permit and cooperate fully with such
investigation. Parent may further conduct, and the Company will permit and
cooperate fully with, environmental audits of the Company's Cedar Rapids and
Lisle facilities. The Company shall, at its discretion which shall not be
unreasonably withheld, introduce Parent Representatives to the Company's
principal suppliers, customers, dealers and employees to facilitate discussions
between such persons and Parent in regard to Parent's conduct of the business
following the Closing Date. The officers and management of the Company agree to
cooperate with the Parent Representatives and agents and to make themselves
available to the extent necessary to complete the Parent Representatives'
investigation process and the closing of the Merger. All information obtained
pursuant to this Section 6.6 shall be subject to the Confidentiality Agreement,
which shall remain in full force and effect until consummation of the Merger or,
if the Merger is not consummated, for the period specified therein; provided,
however, that neither Parent nor the Company shall be precluded from making any
disclosure which it deems required by law or applicable rule or regulation of
any Governmental Authority or self-regulatory organization in connection with
the Merger. Parent acknowledges the Company's interest that the Parent
Representatives' investigations be as discreet as possible and not unduly
disrupt the operations of the Company, and Parent will work diligently to
complete the Parent Representatives' investigations in a timely manner so long
as the Company cooperates in making the records and personnel available to
Parent in a timely fashion.
6.7 Employee Matters.
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(a) Starting on the day after the Closing Date and ending on the
earlier of (i) one year from the Closing Date and (ii) May 31, 2001 (the
"Initial Period"), Parent will cause Surviving Corporation to provide employee
benefit plans for eligible employees of the Company (i.e., employees who satisfy
the eligibility requirements of the Company Plans as in effect immediately prior
to the date of this Agreement, and who continue to satisfy such eligibility
requirements through the end of the Initial Period) that are not materially less
favorable in the aggregate than the employee benefit plans provided to them as
set forth on Schedule 3.8(a) of the Company Disclosure Statement on the date of
this Agreement. With respect to any employee benefit plans established by Parent
and made available by Parent to employees of the Company or any of its
Subsidiaries, to the extent an employee of the Company or any of its
Subsidiaries becomes eligible to participate in any such plans, Parent shall
grant to such employee from and after the Closing Date, credit for all service
with the Company and its Subsidiaries (and any other service credited by the
Company under similar Company Plans) prior to the Closing Date for eligibility
to participate and vesting purposes. Notwithstanding the preceding sentence, no
employee of the Company or any of its Subsidiaries shall receive credit for
service with the Company and its Subsidiaries prior to the Closing Date for
purposes of eligibility for, or vesting of, profit sharing contributions under
the Mestek, Inc. Savings & Retirement Plan. To the extent Parent employee
benefit plans provide medical or dental welfare benefits and an employee of the
Company or any of its Subsidiaries becomes eligible to participate in any such
plans, such plans shall waive any preexisting conditions and actively at-work
exclusions with respect to employees of the Company and any of its Subsidiaries
(but only to the extent such employees were covered under corresponding Company
Plans immediately prior to the date they became eligible for coverage under such
Parent employee benefit plans) and shall provide that any expenses incurred on
or before the Closing Date in the applicable plan year by or on behalf of such
employees shall be taken into account under such Parent employee benefit plans
for the purposes of satisfying applicable deductible, co-insurance and maximum
out-of- pocket provisions for such employees.
(b) The Company may amend and/or take action with respect to its Stock
Incentive Plans prior to the Closing Date to provide that upon the Merger, all
options, stock appreciation rights or other awards granted under such plans and
outstanding as of the Closing Date shall be fully vested, and in the case of
stock options or stock appreciation rights, be immediately exercisable.
(c) Xxxxx Xxxxxxx (the "Agent") shall be appointed and constituted
agent by the Company for and on behalf of the employees of the Company, to take
all actions necessary or appropriate for the accomplishment and enforcement of
Section 6.7 (a), for the time period stated therein, including but not limited
to (i) giving and receiving notices and communications, (ii) negotiating and
entering into agreements and settlements with the parties of this Agreement, and
(iii) filing lawsuits to enforce Section 6.7(a), and enforcing and complying
with any orders of courts. The Agent, as far as required to perform her duties
hereunder, shall have reasonable access to information about the employee
benefit plans provided to the employees of the Company, and the reasonable
assistance of the parties to this Agreement with respect thereto; provided,
however, that the Agent shall treat such information as confidential and not
disclose any nonpublic information from or about the Company, Ultimate Parent,
any of their Subsidiaries, any employee of the Company or any of its
Subsidiaries, any employee benefit plan of the Company, Ultimate Parent or any
of their Subsidiaries, any fiduciary of such employee benefit plans, or any
insurance company under contract with the Company, Ultimate Parent or any of
their Subsidiaries, to anyone (except on a need to know basis to his legal
counsel and other individuals who agree in writing with the Company to treat
such information as confidential). The Agent shall receive no compensation for
her services, and shall not be personally liable to the parties of this
Agreement or to any employee of the Company for any act done or omitted
hereunder as Agent while acting in good faith, and any act performed or omitted
pursuant to the advice of counsel shall be conclusive evidence of good faith.
6.8 Preparation of Tax Returns and Payment of Taxes. The Company and
its Subsidiaries shall prepare and timely file all Tax Returns and amendments
thereto required to be filed by or with respect to them on or before the Closing
Date. Parent shall have a reasonable opportunity to review all such Tax Returns
and amendments thereto prior to filing. The Company and its Subsidiaries shall
timely pay all Taxes shown to be payable on such Tax Returns.
6.9 Indemnification.
---------------
(a) From the Effective Time and for a period of six years
after the Effective Time, Parent and Merger Sub shall jointly and severally (i)
indemnify, defend and hold harmless the present and former officers, directors,
employees and agents of the Company and its Subsidiaries and of Merger Sub
(collectively, the "Indemnified Parties"), from and against, and pay or
reimburse the Indemnified Parties for, all losses, obligations, expenses,
claims, damages or liabilities resulting from third party claims (and involving
claims by or in the right of the Company) and including interest, penalties,
out-of-pockets expenses and attorneys' fees incurred in the investigation or
defense of any of the same or in asserting any of their rights hereunder
resulting from or arising out of actions or omissions of such Indemnified
Parties occurring on or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement) to the fullest
extent permitted or required under (A) applicable law, (B) the certificate of
incorporation or Bylaws of the Company or its applicable Subsidiary in effect on
the date of this Agreement, including, without limitation, provisions relating
to advances of expenses incurred in the defense of any action or suit, or (C)
any indemnification agreement between the Indemnified Party and the Company or
its Subsidiaries; and (ii) advance to any Indemnified Parties expenses incurred
in defending any action or suit with respect to such matters, in each case to
the extent such Indemnified Parties are entitled to indemnification or
advancement of expenses under the Company's or its applicable Subsidiary's
certificate of incorporation and Bylaws in effect on the date hereof and subject
to the terms of such certificate of incorporation and Bylaws; provided, however,
that in the event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of each such claim shall
continue until final disposition of such claim.
(b) Any Indemnified Party wishing to claim indemnification
under Section 6.9(a) shall provide notice to Parent promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and the Indemnified Party shall permit the Parent (at its expense) to
assume the defense of any claim or any litigation resulting therefrom; provided,
however, that (i) counsel for Parent who shall conduct the defense of such claim
or litigation shall be reasonably satisfactory to the Indemnified Party and the
Indemnified Party may participate in such defense at such Indemnified party's
expense, and (ii) the omission by any Indemnified Party to give notice as
provided herein shall not relieve Parent of its indemnification obligation under
this Agreement, except to the extent that such omission results in a failure of
actual notice to Parent, and Parent is actually prejudiced as a result of such
failure to give notice. In the event that Parent does not accept the defense of
any matter as above provided, or counsel for the Indemnified Parties advises the
Indemnified Parties in writing that there are issues that raise conflicts of
interest between Parent and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and Parent shall pay all reasonable fees
and expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that Parent shall not be liable for
any settlement effected without its prior written consent (which consent shall
not be unreasonably withheld); provided, further, however, that Parent shall not
be responsible for the fees and expenses of more than one counsel for all of the
Indemnified Parties. In any event, Parent and the Indemnified Parties shall
cooperate in the defense of any action or claim. Parent shall not, in the
defense of any such claim or litigation, except with the consent of the
Indemnified Party, consent to entry of any judgment or enter into any settlement
that provides for injunctive or other nonmonetary relief affecting the
Indemnified Party or that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability with respect to such claim or litigation.
(c) This Section 6.9 is intended for the benefit of, and to
grant third party rights to, persons entitled to indemnification under this
Section 6.9, whether or not parties to this Agreement, and each of such persons
shall be entitled to enforce the covenants contained in this Section 6.9.
(d) If Parent or Merger Sub, as the case may be, or any of
their respective successors or assigns (i) reorganizes or consolidates with or
merges into any other person and is not the resulting, continuing or surviving
corporation or entity of such reorganization, consolidation or merger, or (ii)
liquidates, dissolves or transfers all or substantially all of its properties
and assets to any person or persons, then, and in such case, proper provision
will be made so that the successors and assigns of Parent or Merger Sub assume
all of the obligations of Parent or Merger Sub, as the case may be, as set forth
in this Section 6.9.
6.10 Employment Agreements. During the period from the date of this
Agreement to the Closing Date, the Company shall use its best efforts to
assist Merger Sub to obtain employment agreements with Xxxxx Xxxxx, to be
effective as of the Effective Time and containing terms which are reasonably
satisfactory to Merger Sub.
ARTICLE VII
CONDITIONS PRECEDENT TO PARENT'S AND MERGER SUB'S OBLIGATIONS
Parent and Merger Sub shall not be required to proceed on the Closing
Date with the transactions contemplated by this Agreement unless the following
conditions precedent shall have been fulfilled and satisfied, or shall have been
waived in writing by Parent or Merger Sub:
7.1 Representations and Warranties. Each of the warranties and
representations of the Company contained herein shall be true and correct as of
the date of this Agreement, and shall also be true and correct as of the Closing
Date as if then originally made (other than representations and warranties which
address matters only as of a certain date which shall be true and correct as of
such certain date ), except as affected by the transactions contemplated hereby
and except where such failures would not, individually or in the aggregate have
a Material Adverse Effect.
7.2 Covenants. The Company shall have complied with each of the
covenants required of it on or prior to the Closing Date, except where such
failures would not, individually or in the aggregate, have a Material Adverse
Effect.
7.3 Board and Shareholder Approval. This Agreement and the Merger
shall have been approved and adopted by the Board of Directors of the Company
and by the necessary vote of holders of the capital stock of the Company.
7.4 Certificate. The Company shall have delivered to Parent and Merger
Sub a certificate of its President and Chief Financial Officer, dated the date
of the Closing Date, certifying, to the best of the knowledge and belief of such
persons, that each of the warranties and representations of the Company
contained herein are true and correct as of the Closing Date (other than
representations and warranties which address matters only as of a certain date
which shall be true and correct as of such certain date) except as affected by
the transactions contemplated hereby and except where such failures would not,
individually or in the aggregate, have a Material Adverse Effect, and that the
Company shall have complied with each of the covenants required of it on or
prior to the Closing Date, except where such failures would not, individually or
in the aggregate, have a Material Adverse Effect.
7.5 Legal Opinion. The Company shall have delivered to Parent and
Merger Sub a legal opinion, in substantially the form attached hereto as Exhibit
A, from Xxxxxxxxxxxx & Ingersoll, P.L.C., Cedar Rapids, Iowa, counsel to the
Company.
7.6 Material Adverse Change. There shall have been no change
resulting in a Material Adverse Effect (or changes which in the aggregate result
in a Material Adverse Effect) since the date hereof.
7.7 Bankruptcy. The Company shall not be the subject of a petition for
reorganization or liquidation under the Federal bankruptcy laws, or under state
or foreign insolvency laws, nor shall an assignment for the benefit of creditors
or any similar protective proceeding or act or event of bankruptcy have
occurred.
7.8 Employment Agreements. Merger Sub shall have obtained an
employment agreement with Xxxxx Xxxxx which has been duly executed by the
employee and by Merger Sub and is effective as of the Closing Date.
7.9 Lawsuits. No action, suit or proceeding shall have been instituted
before a court, arbitration panel or Governmental Authority, and no regulatory
enforcement proceeding shall be pending before any governmental agency or
Governmental Authority, with respect to the business or operations of the
Company or its Subsidiaries or any products manufactured or services rendered by
the Company or its Subsidiaries, except where such actions, suits or proceedings
would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.
7.10 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by a court or other
Governmental Authority of competent jurisdiction shall be in effect and have the
effect of making the Merger illegal or otherwise prohibiting consummation of the
Merger.
7.11 HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated.
7.12 Dissenters' Rights. Holders of more than 25% of the outstanding
Shares shall not have perfected or otherwise provided written notice of their
intention to perfect their dissenters' rights.
7.13 Market Condition. There shall not have occurred (i) any general
suspension of trading in or limitation on prices for, securities on the Nasdaq
Stock Market's National Market or Small Cap Market, the New York Stock Exchange
or the American Stock Exchange (excluding any coordinated trading halt triggered
solely as a result of a specified decrease in a market index), (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States or any state, or (iii) any material limitation
(whether or not mandatory) by any United States or state Governmental Authority
which would prohibit Parent's bank or other financial institution from lending
funds to Parent for the purpose of consummating the Merger.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING BY THE COMPANY
The Company shall not be required to proceed at the Closing Date with
the transactions contemplated by this Agreement unless the following conditions
precedent shall have been fulfilled and satisfied, or shall have been waived in
writing by the Company:
8.1 Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub contained herein shall be true and correct
as of the date of this Agreement and shall be true and correct as of the Closing
Date as if then originally made (other than representations and warranties which
address matters only as of a certain date which shall be true and correct as of
such certain date ), except as affected by the transactions contemplated hereby
and except where such failure would not, individually or in the aggregate, have
a Material Adverse Effect.
8.2 Covenants. Parent and Merger Sub shall have complied with each of
the covenants required of them on or prior to the Closing Date, except where
such failure would not, individually or in the aggregate, have a Material
Adverse Effect.
8.3 Officers' Certificate. Parent and Merger Sub shall each have
delivered to the Company a certificate of the Chief Executive Officer and Chief
Financial Officer of Parent and Merger Sub, dated the date of the Closing Date,
certifying, to the best of the knowledge and belief of such officers, that each
of the warranties and representations of Parent and Merger Sub contained herein
are true and correct as of the Closing Date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct as of such certain date), except as affected by the transactions
contemplated hereby, and except where such failures would not, individually or
in the aggregate, have a Material Adverse Effect and that Parent and Merger
shall have complied with each of the covenants required of them on or prior to
the Closing Date, except where such failures would not, individually or in the
aggregate, have a Material Adverse Effect.
8.4 Legal Opinion. Parent and Merger Sub shall have delivered to the
Company, a legal opinion as of the Closing Date, in substantially the form
attached hereto as Exhibit B, from Xxxxx & XxXxxxxx, counsel to Parent and
Merger Sub.
8.5 HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated.
8.6 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by a court or other
Governmental Authority of competent jurisdiction shall be in effect and have the
effect of making the Merger illegal or otherwise prohibiting consummation of the
Merger.
ARTICLE IX
TERMINATION
9.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Closing Date, before or
after the approval by stockholders, by the mutual written consent of Parent,
Merger Sub and the Company.
9.2 Termination by Either Parent or the Company. This Agreement may be
terminated (upon notice from the terminating party to the other parties) and the
Merger may be abandoned by either Parent or the Company if:
(a) The Closing Date shall not have occurred by June 15, 2000 (the
"Termination Date"); provided that the right to terminate this Agreement under
this clause shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the failure
of the Closing Date to occur on or before the Termination Date; and provided
further that the Termination Date shall be June 29, 2000 if (i) any waiting
period (and any extension thereof) under the HSR Act applicable to the Merger
shall not have expired or been terminated by June 15, 2000, or (ii) the SEC
shall have refused to allow the Company to file a definitive proxy statement
with respect to the Merger by June 1, 2000.
(b) Any court of competent jurisdiction or Governmental Authority shall
have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the payment of the Merger
Consideration for the Shares or the making of any Cash Payment pursuant to the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable.
9.3 Termination by the Company. This Agreement may be terminated
(upon notice to Parent) by the Company and the Merger may be abandoned by the
Company if:
(a) Parent or Merger Sub breaches or fails to perform or comply with
its covenants and agreements contained herein or breaches its representations
and warranties in any material respect and such breach cannot or has not been
cured within 15 days after the giving of written notice of such breach to Parent
and Merger Sub, other than any breach which is not reasonably likely to result
in a Material Adverse Effect; or
(b) the Board of Directors of the Company, after complying with all of
the provisions of Section 6.2, accepts and enters into a definitive agreement
with respect to a Superior Proposal.
9.4 Termination by Parent and Merger Sub. This Agreement may be
terminated (upon notice to the Company) by Parent or Merger Sub, and the Merger
may be abandoned by Parent or Merger Sub if:
(a) The Board of Directors of the Company shall have withdrawn or
modified its approval or recommendation of this Agreement or the Merger;
(b) In the event of a breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement which cannot or has
not been cured prior to 15 days after the giving of written notice of such
breach to the Company and has not been waived by Parent or Merger Sub pursuant
to the provisions hereof, other than any breach which is not reasonably likely
to result in a Material Adverse Effect; or
(c) Any parties (other than Parent or the Merger Sub) to any
Stockholder Agreements whose signatories own of record or beneficially more than
ten percent (10%) of the Common Stock of the Company issued and outstanding on
the date of this Agreement shall have materially breached or repudiated any such
agreements.
9.5 Effect of Termination and Abandonment. In the event of termination
of this Agreement and abandonment of the Merger pursuant to this Article IX, no
party hereto (or any of its directors or officers) shall have any liability or
further obligation to any other party to this Agreement, except as provided in
Section 9.6 and 10.1, except that nothing herein will relieve any party from
liability for any breach of this Agreement.
9.6 Payment of Certain Fees upon Termination.
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(a) (i) If either (A)(i) the Company receives a bona fide Acquisition
Proposal at any time after the date of this Agreement and prior to the
termination of this Agreement, (ii) this Agreement terminates prior to the
consummation of the Merger for any reason (other than a breach of this Agreement
by Parent or Merger Sub), and (iii) by the date which is twelve (12) months
after the date of termination of this Agreement, either (1) an Acquisition
Proposal with a third party is consummated, or (2) the Company enters into an
agreement for an Acquisition Proposal with a third party which is thereafter
consummated, or (B) the Company terminates this Agreement pursuant to Section
9.3(b), then, in either event, the Company shall pay to Parent, by wire transfer
of immediately available funds, within two days after the consummation of the
Acquisition Proposal or Superior Proposal, as the case may be, a fee in the
amount of One Million Two Hundred Seventy-Seven Thousand Dollars ($1,277,000).
(b) In the event of termination of this Agreement by Parent or Merger
Sub pursuant to Section 9.4(b) or Section 9.4(c), then the Company shall
reimburse Parent for its reasonable out-of-pocket expenses (including but not
limited to expenses referenced in Section 10.1(i) and 10.1(ii)) actually
incurred in connection with this Agreement and the transactions contemplated
hereby, up to an aggregate amount of One Million Dollars ($1,000,000), which
amount shall be payable by wire transfer of immediately available funds within
three business days of written demand therefor, accompanied by a reasonable
detailed statement of such expenses and appropriate supporting documentation
therefor.
(c) In the event of termination of this Agreement by the Company
pursuant to Section 9.3(a), then Parent shall reimburse the Company for its
reasonable out-of-pocket expenses (including but not limited to expenses
referenced in Section 10.1(i)) actually incurred in connection with this
Agreement and the transactions contemplated hereby, up to an aggregate amount of
One Million Dollars ($1,000,000), which amount shall be payable by wire transfer
of immediately available funds within three business days of written demand
therefor, accompanied by a reasonably detailed statement of such expenses and
appropriate supporting documentation therefor.
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1 Expenses. Each party shall bear its own expenses, including the
fees and expenses of any attorneys, accountants, investment bankers, brokers,
finders or other intermediaries or other Persons engaged by it, incurred in
connection with this Agreement and the transactions contemplated hereby, except
(i) the expenses incurred in connection with the printing, filing and mailing to
stockholders of the Proxy Statement and the solicitation of stockholder
approvals shall be shared equally by the Company and Parent, (ii) all filing
fees incurred, or to be incurred, in connection with filings under the HSR Act
and any other applicable antitrust laws and regulations shall be the sole
responsibility of Parent, and (iii) as otherwise provided in Section 9.6.
10.2 Notices, Etc. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered personally, when scheduled for delivery when sent by courier service
guaranteeing delivery by a specific date, when sent by telecopy and confirmed by
return telecopy, or upon receipt after being mailed by first-class mail (or
other class of mail), postage prepaid and return receipt requested in each case
to the applicable addresses set forth below:
If to the Company:
Met-Coil Systems Corporation
0000 Xxxxx Xxxxxx, XX
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
President and Chief Operating Officer
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxxx, Esq.
Xxxxxxxxxxxx & Ingersoll
000 Xxxxx Xxxxxx XX, Xxxxx 000
Xxxxx Xxxxxx, XX 00000-0000
Facsimile: (000)-000-0000
If to Parent or Merger Sub:
Formtek, Inc.
000 Xxxxx Xxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxx
Senior Vice President and Chief Financial Officer
Facsimile: (000) 000-0000
With a copy to:
Xxxxx & XxXxxxxx
000 Xxxxxxxxxxx Xxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as such party shall have designated by notice so given
to each other party.
10.3 Amendments, Waivers, Etc. This Agreement may be amended, changed,
supplemented, waived or otherwise modified only by an instrument in writing
signed by the party against whom enforcement is sought; provided that, after the
adoption of this Agreement by the stockholders of the Company, no such
amendment, change, supplement or waiver shall be made without the further
requisite approval of such stockholders if such amendment, change, supplement or
waiver by law requires the further approval by such stockholders.
10.4 No Assignment. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns; provided that, except as otherwise expressly set forth
in this Agreement, neither the rights nor the obligations of any party may be
assigned or delegated without the prior written consent of the other parties.
10.5 Entire Agreement. Except as otherwise provided herein, this
Agreement (together with the Company Disclosure Statement, the Parent/Merger Sub
Disclosure Statement, Exhibits, and the Confidentiality Agreement and the other
agreements expressly contemplated hereby) embodies the entire agreement and
understanding between the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter. There are no representations, warranties or covenants by the parties
hereto relating to such subject matter other than those expressly set forth in
this Agreement (including the Company Disclosure Statement, the Parent/Merger
Sub Disclosure Statement, Exhibits and the Confidentiality Agreement) and any
writings expressly required hereby.
10.6 Specific Performance. The parties acknowledge that money damages
are not an adequate remedy for violations of this Agreement and that any party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable Law, each party waives any
objection to the imposition of such relief.
10.7 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
10.8 No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
10.9 No Third Party Beneficiaries. Except as otherwise provided in
Section 6.7 (with respect to the Agent only) and Section 6.9, this Agreement is
not intended to be for the benefit of and shall not be enforceable by any Person
or entity who or which is not a party hereto.
10.10 Public Announcements. Parent and the Company will agree upon the
timing and content of the initial press release to be issued describing the
transactions contemplated by this Agreement, and will not make any public
announcement thereof prior to reaching such agreement unless required to do so
by applicable Law or regulation or NASDAQ or stock exchange requirement. To the
extent reasonably requested by any other party, each party will thereafter
consult with and provide reasonable cooperation to the others in connection with
the issuance of further press releases or other public documents describing the
transactions contemplated by this Agreement.
10.11 Governing Law. This Agreement and all disputes hereunder shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Delaware, without regard to principles of conflict of laws.
10.12 Name, Captions, Etc. The names assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof. Unless otherwise specified,
(a) the terms "hereof", "herein" and similar terms refer to this Agreement as a
whole and (b) references herein to Articles or Sections refer to articles or
sections of this Agreement. Wherever appearing herein, the word "including"
shall be deemed to be followed by the words "without limitation."
10.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
10.14 Survival of Representations, Warranties, Covenants and
Agreements. The respective representations and warranties of the Company
contained herein or in any certificates or other documents delivered prior to or
at the Closing Date shall terminate at the Effective Time. The respective
representations and warranties of the Parent and Merger Sub contained herein or
in any certificates or other documents delivered prior to or at the Closing Date
shall terminate at the Effective Time. The respective covenants and agreements
of the parties contained herein or in any other documents delivered prior to or
at the Closing Date shall survive the execution and delivery of this Agreement
and shall only terminate in accordance with their respective terms.
10.15 Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable in a jurisdiction, such provision shall
be modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other jurisdiction.
10.16 Disclosure Statements. The parties acknowledge that the
disclosures contained in the Company Disclosure Statement and Parent/Merger Sub
Disclosure Statement to this Agreement (i) relate to certain matters concerning
the disclosures required and transactions contemplated by this Agreement, (ii)
are qualified in their entirety by reference to specific provisions of this
Agreement, and (iii) are not intended to constitute and shall not be construed
as indicating that such matter is required to be disclosed, nor shall such
disclosure be construed as an admission that such information is material with
respect to the Company, Parent or Merger Sub, as the case may be, except to the
extent required by this Agreement.
10.17 Waiver.
------
(a) Any of the parties may:
(i) Extend in writing the time for the performance of any of the
obligations herein contained to be performed for the benefit of
such party;
(ii) Waive in writing any inaccuracies in the representations and
warranties made to it contained in this Agreement or any Exhibit
or Company Disclosure Statement or Parent/Merger Sub Disclosure
Statement or any certificate or certificates delivered by another
party to this Agreement;
(iii) Waive in writing the failure in performance of any of the
conditions herein expressed for its benefit; and
(iv) Waive in writing compliance with any of the covenants herein
contained for its benefit.
(b) No such waiver or extension shall be valid unless in writing and
signed by the party granting the waiver or extension, and no such waiver or
extension shall be construed to excuse or mitigate any subsequent breach or
violation of this Agreement not specifically covered by such waiver.
ARTICLE XI
DEFINITIONS
As used in this Agreement, the following terms shall have the respective
meanings set forth below:
"Acquisition Proposal": As defined in Section 6.2(a).
"Affiliate": As defined in Rule 12b-2 under the Exchange Act.
"Agent": As defined in Section 6.7(c).
"Agreement": As defined in the preamble hereto.
"Authorization": Any consent, approval or authorization of, expiration
or termination of any waiting period requirement (including pursuant to the HSR
Act) by, or filing, registration, qualification, declaration or designation
with, any Governmental Authority.
"Bylaws": In respect of any Person, the bylaws of such Person.
"Cash Payment": As defined in Section 2.2(a).
"Certificate of Merger": The certificate of merger with respect to the
merger of the Company with and into Merger Sub, containing the provisions
required by, and executed in accordance with, Section 251 of the DGCL.
"Closing": As specified in Section 1.2.
"Closing Date": As defined in Section 1.2.
"Code": The Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder, as in effect from time to time.
"Common Stock": The Company's common stock, par value $0.01 per share.
"Company": Met-Coil Systems Corporation, a Delaware corporation.
"Company Certificates": As defined in Section 2.3.
"Company Charter": The Certificate of Incorporation of the Company, as
amended to the date hereof and as it may be further amended prior to the Closing
Date with the consent of Parent pursuant to Section 6.1.
"Company Disclosure Statement": The disclosure statement, dated the
date of this Agreement, delivered by the Company to Parent.
"Company Multiemployer Plan" means all Multiemployer Plans to which the
Company or an ERISA Affiliate of the Company contributes or has contributed, or
in which the Company or an ERISA Affiliate of the Company otherwise participates
or has participated.
"Company Other Benefit Obligation" means an Other Benefit Obligation
owed, adopted, or followed by the Company or an ERISA Affiliate of the Company.
"Company Plan" means all Plans, other than Multiemployer Plans, of
which the Company or an ERISA Affiliate of the Company is or was a Plan Sponsor,
or to which the Company or an ERISA Affiliate of the Company otherwise
contributes or has contributed, or in which the Company or an ERISA Affiliate of
the Company otherwise participates or has participated. All references to Plans
are to Company Plans unless the context requires otherwise.
"Company SEC Reports": As defined in Section 3.11.
"Company Stockholders' Meeting": As defined in Section 6.4.
"Confidentiality Agreement": That certain Confidentiality Agreement
dated July 21, 1999 between the Company and Ultimate Parent.
"Control": With respect to any Person, the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract, or otherwise.
"DGCL": The Delaware General Corporation Law.
"Dissenting Shares": As defined in Section 2.5.
"Dissenting Stockholder": As defined in Section 2.5.
"Effective Time": As defined in Section 1.2.
"Environmental, Health, and Safety Liabilities": Any cost, damages,
attorneys' fees, expense, liability, obligation, or
other responsibility arising from or under Environmental Laws and consisting of
or relating to:
(a) any environmental, health, or safety matters or conditions including
on-site or off-site contamination, occupational safety
and health, and regulation of Hazardous Substances;
(b) any events, facts, conditions or circumstances which may give rise to common
law or other legal liability, or otherwise form the basis of any fines,
penalties, judgments, awards, settlements, suits, notices of violation, legal
or administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses;
(c) financial responsibility under Environmental Laws for cleanup costs or
corrective action, including any investigation, cleanup, removal, containment,
or other remediation or response actions ("Cleanup") required by applicable
Environmental Laws (whether or not such Cleanup has been required or requested
by any Governmental Authority or any other Person) and for any natural resource
damages; or
(d) any other compliance, corrective, investigative, response, removal or
remedial measures required under Environmental Laws.
The terms "removal," "remedial," and "response action," include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as
amended ("CERCLA"), or equivalent state "Superfund" laws, and include removal,
remedial and investigatory activities under federal, state, or local voluntary
site remediation programs.
"Environmental Laws": As defined in Section 3.23.
"ERISA Affiliate" means, with respect to the Company, any other person
that, together with the Company, would be treated as a single employer under
Code Section 414.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended, and all regulations promulgated thereunder, as in
effect from time to time.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Executive Agreements": As defined in Section 6.7.
"Governmental Authority": Any
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.
"Hazardous Substances": As defined in Section 3.23.
"HSR Act": The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
"Initial Period": As defined in Section 6.7(a).
"Intellectual Property": As defined in Section 3.10.
"Knowledge of the Company", "to the Company's knowledge" and words of
similar import shall mean the actual knowledge of Xxxxxxx Xxxxxxxx, Xxxxx Xxxxx,
Xxxx Xxxxxxxxx, Xxxx Xxxxx, Xxxxxxx Xxxxxxx, X.X. Xxxxxx, Xxxx Xxxxx or Xxxx
Xxxxx.
"Law": Any foreign or domestic law, statute, code, ordinance, rule,
regulation promulgated, or order, judgment, writ, stipulation, award, injunction
or decree entered by any Governmental Authority.
"Lien": As defined in Section 3.16.
"Material Adverse Effect": In respect of any Person, a material adverse
effect on the business, properties, assets, liabilities, operations, results of
operations or condition (financial or otherwise) of such Person and its
Subsidiaries taken as a whole, or which would prevent the consummation of the
transactions contemplated by this Agreement on the terms and conditions
contained herein.
"Material Contracts": As defined in Section 3.17.
"Material Systems": As defined in Section 3.21.
"Merger": As defined in the recitals hereto.
"Merger Consideration": As defined in Section 2.1.
"Merger Sub": Formtek Acquisition, Inc., a Delaware corporation.
"Merger Sub Common Stock": Merger Sub's common stock, par value $0.01
per share.
"Multiemployer Plan" has the meaning given in ERISA Section 3(37)(A).
"NASDAQ": The Nasdaq Stock Market, National Market System.
"Options": Options to purchase Shares.
"Other Benefit Obligation" means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, or agents, other than obligations, arrangements, and
practices that are Plans or Multiemployer Plans. Other Benefit Obligations
include consulting agreements under which the compensation paid does not depend
upon the amount of service rendered, sabbatical policies, severance payment
policies, and fringe benefits within the meaning of Code Section 132.
"Parent": Formtek, Inc., a Delaware corporation.
"Parent/Merger Sub Disclosure Statement": The disclosure statement,
dated the date hereof, delivered by Parent and Merger Sub to the
Company.
"Parent Representatives": As defined in Section 6.6.
"Paying Agent": As defined in Section 2.3.
"Payment Fund": As defined in Section 2.3.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Pension Plan" has the meaning given in ERISA Section 3(2)(A).
"Permitted Investments": As defined in Section 2.3.
"Permitted Liens": As defined in Section 3.16.
"Person": Any individual or corporation, company, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture or other entity of any kind.
"Plan" has the meaning given in ERISA Section 3(3).
"Plan Sponsor" has the meaning given in ERISA Section 3(16)(B).
"Preferred Shares": The Company's Cumulative Preferred Shares, par
value $1.00 per share.
"Property": As defined in Section 3.23.
"PCBs": As defined in Section 3.23.
"Proxy Statement": As defined in Section 3.15.
"Qualified Plan" means any Plan that meets or purports to meet the
requirements of Code Section 401(a).
"Relevant Date": As defined in Section 3.21.
"SEC": The Securities and Exchange Commission.
"Securities Act": The Securities Act of 1933, as amended.
"Shares": Shares of common stock of the Company, par value $0.01 per
share.
"Stockholder Agreements": As defined in the recitals hereof.
"Stock Incentive Plans": As defined in Section 2.2(b).
"Subsidiary": As to any Person, any other Person of which more than (i)
50% of the equity and (ii) 50% of the voting interests are owned, directly or
indirectly, by such first Person. For the avoidance of doubt, the term
"Subsidiary", when applied to the Company, includes any Person listed as a
Subsidiary on Schedule 3.2 to the Company Disclosure Statement.
"Superior Proposal": As defined in Section 6.2.
"Surviving Corporation": Shall mean the Merger Sub in its capacity as
the surviving corporation in the Merger pursuant to Section 1.1 of
this Agreement.
"Tax": As defined in Section 3.9.
"Tax Controversy": As defined in Section 3.9.
"Tax Return": As defined in Section 3.9.
"Termination Date": As defined in Section 9.2.
"Title IV Plans" means all Pension Plans that are subject to Title IV
of ERISA other than Multiemployer Plans.
"Ultimate Parent": Mestek, Inc., a Pennsylvania corporation.
"VEBA" means a voluntary employees' beneficiary association under Code
Section 501(c)(9).
"Voting Debt": As defined in Section 3.4(a).
"Warrants": Warrants to purchase Shares.
"Welfare Plan" has the meaning given in ERISA Section 3(1).
"Wholly Owned Subsidiary": As to any Person, a Subsidiary of such
Person 100% of the equity and voting interest in which (other than directors'
qualifying shares) is owned, directly or indirectly, by such Person.
"Year 2000 Compliant": As defined in Section 3.21.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties set forth below.
FORMTEK, INC.
By: _/S/Xxxxxxx X. Shea________
Name:Xxxxxxx X. Xxxx
Title:Sr. Vice President-Finance
FORMTEK ACQUISITION, INC.
By: _/S/ Xxxxxxx X.Shea__________
Name:Xxxxxxx X. Xxxx
Title: Sr. Vice President-Finance
MET-COIL SYSTEMS CORPORATION
By: /S/ Xxxxxxx Blakeman_________
Name: Xxxxxxx Xxxxxxxx
Title: Chairman
In order to induce the Company to execute this Agreement,
Ultimate Parent hereby jointly and severally unconditionally guarantees to the
Company the full and timely performance of all of the obligations and agreements
of Parent and Merger Sub in accordance with the terms hereof. The Company may,
at its option, proceed against Ultimate Parent for the performance of any such
obligation or agreement, or for damages for default in the performance thereof,
without first proceeding against Parent or Merger Sub or against any of their
properties. Ultimate Parent further agrees that its guarantee shall be an
irrevocable guarantee and shall continue in effect notwithstanding any extension
or modification of any guaranteed obligation, any assumption of any such
guaranteed obligation by any other party, or any other act or thing which might
otherwise operate as a legal or equitable discharge of a guarantor and Ultimate
Parent hereby waives all special suretyship defenses and notice requirements.
Ultimate Parent represents and warrants to the Company that (i) Ultimate Parent
is a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation; (ii) Ultimate Parent has full corporate
power and authority to enter into, execute, deliver and perform its obligations
under this Agreement, (iii) this Agreement has been duly executed and delivered
by a duly authorized officer of Ultimate Parent and (assuming the due execution
and delivery of this Agreement by the other parties hereto other than Merger Sub
and Parent) constitutes a valid and binding agreement of the Ultimate Parent,
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency and other similar laws affecting the rights of creditors generally
and except that the remedies of specific performance, injunction and other forms
of equitable relief may not be available, and (iv) neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will conflict with or violate any provision of the Articles of
Incorporation or Bylaws of Ultimate Parent or conflict with or violate any law,
rule, regulation, ordinance, order, writ, injunction, judgment or decree
applicable to Ultimate Parent or its business or by which any of its assets are
affected, except to the extent any such conflict or violation would not have a
Material Adverse Effect.
MESTEK, INC.
By: _/s/ Xxxxxxx X. Shea________
Name: Xxxxxxx X. Xxxx
Title: Sr. Vice President-Finance
