EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of the 21/st/ day of October, 1997 by and among Kevco, Inc., a Delaware
corporation ("Parent"), SCC Acquisition Corp., an Indiana corporation and
wholly-owned Subsidiary of Parent ("Newco"), and Shelter Components Corporation,
an Indiana corporation (the "Company"). Certain initially capitalized terms used
in this Agreement which are not defined herein have the meaning set forth in
Exhibit "A" attached hereto.
-----------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, upon the terms and subject to the conditions set forth herein, the
respective boards of directors of Parent, Newco and the Company have unanimously
approved this Agreement and the transactions contemplated hereby including the
acquisition of the Company by Parent pursuant to a tender offer (as it may be
amended from time to time as permitted under this Agreement, the "Offer") by
Newco for all of the issued and outstanding shares of common stock of the
Company, $.01 par value per share (the "Company Common Stock"), at a price of
$17.50 per share (as it may be modified as provided herein, from time to time,
the "Offer Price"), net to the selling shareholders in cash, without interest
thereon, followed by a Merger (the "Merger") of Newco with and into the Company
upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of the premises, and the representations,
warranties, covenants and agreements contained herein, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows, intending to be legally bound thereby:
ARTICLE I
The Offer
---------
1.1 The Offer.
---------
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 10.1 and subject to the provisions of this Agreement, as
promptly as practicable but
in no event later than five (5) Business Days after the date of the public
announcement by Parent and the Company of this Agreement, Newco shall, and
Parent shall cause Newco to, commence the Offer. The obligation of Newco to,
and of Parent to cause Newco to, commence the Offer and accept for payment, and
pay for, any shares (the "Shares") of Company Common Stock properly tendered
pursuant to the Offer shall be subject only to the conditions (the "Offer
Conditions") set forth in Exhibit "B" any of which may be waived in whole or in
-----------
part by Newco in its sole discretion, provided that, without the prior written
consent of the Company, Newco shall not waive the Minimum Condition (as defined
in Exhibit "B"). Newco expressly reserves the right to modify the terms of the
-----------
Offer in a manner not inconsistent with this Agreement, except that, without the
prior written consent of the Company, Newco shall not (i) reduce the number of
Shares to be purchased in the Offer, (ii) reduce the Offer Price, (iii) impose
any conditions to the Offer in addition to the Offer Conditions or modify the
Offer Conditions (other than to waive any Offer Conditions to the extent
permitted by this Agreement), (iv) except as provided in the next sentence,
extend the Offer, (v) change the form of consideration payable in the Offer, or
(vi) make any other change or modification in any of the terms of the Offer in
any manner that could reasonably be expected to be adverse to the holders of
Shares. Notwithstanding the foregoing, Newco may, without the consent of the
Company, (i) extend the Offer, if at the scheduled or extended expiration date
of the Offer, any of the Offer Conditions shall not be satisfied or waived,
until such time as such conditions are satisfied or waived but in any event,
Newco shall not, without the prior written consent of the Company, extend the
Offer beyond the Cut-Off Date (as defined in Section 10.1(b) hereof), (ii)
extend the Offer for any period required by any rule, regulation, interpretation
or position of the SEC or the staff thereof applicable to the Offer, or (iii)
extend the Offer for a period of up to five Business Days if, on any scheduled
expiration date on which the Offer Conditions shall have been satisfied or
waived, the number of Shares which have been validly tendered and not withdrawn
represent more than 50% of the aggregate outstanding Shares (assuming the
exercise of all options to purchase, and the conversion or exchange of all
securities convertible or exchangeable into Shares which are outstanding as of
the consummation of the Offer), but less than 90% of the then issued and
outstanding Shares. Parent and Newco each agree that Newco will not terminate
the Offer between scheduled expiration dates (except in the event that this
Agreement is terminated) and that, in the event that Newco will otherwise be
entitled to terminate the Offer at any scheduled expiration date thereof due to
the failure of one or more of the Offer Conditions, unless this Agreement shall
have been, terminated, Newco shall, and Parent shall cause Newco to, extend the
Offer until such date as the Offer Conditions have been satisfied or such later
date as required by Applicable Law; provided however, that nothing herein shall
require Newco to extend the Offer beyond the Cut-Off Date (as defined in Section
10.1(b) hereof). Subject to the terms and conditions of the Offer in this
Agreement, Newco shall, and Parent shall cause Newco to accept for payment, all
Shares validly tendered and not withdrawn pursuant to the Offer as soon as Newco
is permitted to accept such Shares for payment pursuant to the Offer, and then
pay for such Shares promptly as required by SEC Rule 14(e) - 1(c). If this
Agreement is terminated by either Parent or Newco or by the Company, Newco
shall, and Parent shall cause Newco to, terminate promptly the Offer.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Parent and Newco shall file with the SEC a Tender Offer Statement on
Schedule 14D-1 (the "Schedule 14D-1") with respect to the Offer, which shall
contain an Offer to Purchase and a related letter of transmittal and summary
advertisement (such Schedule 14D-1 and the documents included therein pursuant
to which the Offer would be made, together with any supplements or amendments
thereto, the "Offer Documents"), and Parent and Newco shall cause the Offer
Documents to be disseminated to holders of Shares as and to the extent required
by SEC Rule 14d-5 and other applicable federal and state securities laws and the
rules of any stock exchange or stock market in which the Shares are then traded.
Parent, Newco and the Company each agree promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect, and
Parent and Newco further agree to take all steps necessary to cause the Schedule
14D-1 as so corrected to be promptly filed with the SEC and the other Offer
Documents as so corrected to be promptly disseminated to holders of Shares, in
each case as and to the extent required by applicable federal and state
securities laws and the rules of any stock exchange or stock market in which the
Shares are then traded. The Company and its counsel shall be given reasonable
opportunity to review and comment upon the Offer Documents prior to their filing
with the SEC or dissemination to the shareholders of the Company. Parent and
Newco agree to provide the Company and its counsel any comments Parent, Newco or
their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Newco on a timely
basis all forms necessary to accept for payment, and pay for, any Shares that
Newco is permitted to accept for payment under Applicable Law and pay for,
pursuant to the Offer.
1.2 Company Actions.
---------------
(a) Subject to the terms and conditions set forth herein, the Company
hereby approves of and consents to the Offer and represents and warrants that
the board of directors of the Company, at a meeting duly called and held, in
which a quorum of directors were present, duly and adopted by the affirmative
vote of all directors present, the resolutions set forth as Exhibit "C" attached
-----------
hereto, which in the manner set forth therein, approve this Agreement, the Offer
and the Merger, determine that, in the opinion of the board of directors, the
Offer, the Merger and the related transactions contemplated herein are in the
best interests of, the Company and its shareholders and are fair to the
shareholders and recommend that holders of Shares accept the Offer and, if
required by Applicable Law, approve the Merger (it being understood that,
notwithstanding anything in this Agreement to the contrary, if the Company's
board of directors modifies or withdraws its recommendation in accordance with
the terms of Section 7.3(b), such modification or withdrawal shall not
constitute a breach of this Agreement). The Company represents and warrants
that its board of directors has received the written opinion of SBC Warburg
Dillon Read Inc., the form of which is attached as Exhibit "D" attached hereto.
-----------
The Company has been authorized by SBC Warburg Dillon Read Inc. to permit,
subject to prior
review and consent by SBC Warburg Dillon Read Inc., the inclusion of such
fairness opinion (or a reference thereto) in the Offer Documents and in the
Schedule 14D-9 referred to below. The Company hereby consents to the inclusion
in the Offer Documents of the recommendation of the Company's board of directors
described in this Section 1.2 subject to the right of the board of directors to
modify or withdraw such recommendation in accordance with Section 7.3(b).
(b) As soon as reasonably practicable after the Offer Documents are
filed with the SEC and as otherwise required by Applicable Law, the Company
shall pursuant to SEC Rule 14d-9 file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as
amended from time to time, the "Schedule 14D-9") containing the recommendation
described in Section 1.2(a) (subject to a right of the board of directors to
modify or withdraw such recommendation in accordance with Section 7.3(b)) and
shall mail a copy of Schedule 14D-9 to the shareholders of the Company. The
Company shall cooperate with Parent in mailing or otherwise disseminating the
Schedule 14D-9 with the appropriate Offer Documents to the Company's
shareholders. Each of the Company, Parent and Newco agrees promptly to correct
any information provided by it for use in the Schedule 14D-9 if and to the
extent that such information shall become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented to be promptly filed with the SEC and promptly disseminated to the
Company's shareholders, in each case as and to the extent required by applicable
federal and state securities laws and the rules of any stock exchange or stock
market in which the Shares are then traded. Parent and its counsel shall be
given reasonable opportunity to review and comment upon the Schedule 14D-9 prior
to its filing with the SEC or dissemination to the Company's shareholders. The
Company agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Newco promptly with mailing labels containing the
names and addresses of the recordholders of Shares as of a recent date and of
those persons becoming recordholders subsequent to such date, together with
copies of all lists indicating current shareholders, security position listings
and related computer files, if available, and all information in the Company's
possession or control regarding the names, addresses and holdings of beneficial
owners of Shares, and shall furnish to Newco such information and assistance
(including updated lists of shareholders, security position listings and
computer files) as Parent or Newco may reasonably request in communicating the
Offer to the Company's shareholders. Subject to the requirements of Applicable
Law and subject to the terms of the August Confidentiality Agreement, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Newco and their
Affiliates, associates and agents shall hold in confidence the information
contained in any such labels, listings and files, will use such information only
in connection with the Offer and the Merger and, if this Agreement shall
be terminated, will promptly, upon request, deliver to the Company or destroy,
and will use their commercially reasonable efforts to cause their Affiliates,
associates and agents to deliver or destroy, all copies of such information then
in their possession or control.
ARTICLE II
The Merger
----------
2.1 The Merger. Upon the terms and subject to the conditions hereof, and
----------
in accordance with Indiana Law, Newco shall be merged with and into the Company
at the Effective Time as defined in Section 2.2. Following the Merger, the
separate corporate existence of Newco shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation") and shall succeed to
and assume all the rights and obligations of Newco and the Company in accordance
with Indiana Law. Company and Newco are herein sometimes referred to
collectively as the "Constituent Corporations."
2.2 Effective Time. The Merger shall become effective, pursuant to the
--------------
provisions of Indiana Law, at the Effective Time. When used in this Agreement,
the term "Effective Time" shall mean the later of the date and time at which the
Articles of Merger are duly filed with the Secretary of State of the State of
Indiana. The filing of the Articles of Merger shall be made as soon as
practicable after the satisfaction or waiver of the conditions to the Merger set
forth in this Agreement.
2.3 Effects of the Merger. The Merger shall have the effects set forth in
---------------------
the Indiana Law.
2.4 Name and Continued Existence of Surviving Corporation. The corporate
-----------------------------------------------------
name of the Company, as the Surviving Corporation in the Merger, shall continue
as the corporate name of the Surviving Corporation, the Constituent Corporation
whose corporate existence is to survive the Merger provided for herein and
continue thereafter as the Surviving Corporation. The identity, existence,
purposes, powers, objects, franchises, rights, privileges and immunities of the
Surviving Corporation shall continue unaffected and unimpaired by the Merger and
the corporate identity, existence, purposes, powers, objects, franchises,
rights, privileges and immunities of Newco shall be merged with and into the
Company, and the Company shall be fully vested therewith. At and after the
Effective Time, the separate existence of Newco, except insofar as continued by
statute, shall cease.
2.5 Governing Laws; Articles of Incorporation.
-----------------------------------------
(a) The laws of the State of Indiana shall govern the Surviving
Corporation.
(b) The Restated Articles of Incorporation of the Company, as amended, and
in effect at the Effective Time shall be the Articles of Incorporation of the
Surviving Corporation.
(c) In addition to the powers conferred upon it by law, the Surviving
Corporation shall have the powers set forth in the Restated Articles of
Incorporation of the Company and be governed by the provisions thereof. From
and after the Effective Time, and until further amended, as provided by law, the
Restated Articles of Incorporation of the Company may be certified, separate and
apart from this Agreement, as the Articles of Incorporation of the Surviving
Corporation.
2.6 Bylaws of Surviving Corporation. From and after the Effective Time,
-------------------------------
the Bylaws of the Company in effect at the Effective Time shall be the Bylaws of
the Surviving Corporation until the same shall be altered, amended or repealed,
or until new Bylaws shall be adopted in accordance with the provisions of law.
2.7 Directors and Officers. The directors and officers of Newco shall
----------------------
continue in office after the Effective Time as the directors and officers of the
Surviving Corporation. The directors and officers of the Surviving Corporation
shall serve in such capacities until their successors are duly elected and
qualified in accordance with law and the Bylaws of the Surviving Corporation.
2.8 Capital Stock of Surviving Corporation. The authorized capital stock
--------------------------------------
of the Company from and after the Effective Time shall be the authorized capital
stock of the Surviving Corporation.
2.9 Conversion of Shares. As of the Effective Time, by virtue of the
--------------------
Merger and without any action on the part of any holder of Shares or any shares
of common stock of Newco:
(a) Each issued and outstanding share of common stock of Newco and
owned by Parent shall be converted into and become one validly issued, fully
paid and non-assessable share of Common Stock of the Surviving Corporation.
(b) Subject to Sections 2.9(d) and 2.10, each Share issued and
outstanding (other than Shares to be canceled in accordance with Section 2.9(c))
shall be canceled and become the right to receive in cash, without interest, the
Offer Price set forth in the Offer (the "Merger Consideration"). As of the
Effective Time, all such Shares shall be canceled in accordance with this
paragraph, and when so canceled, shall no longer be outstanding and shall
automatically be retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration, without
interest.
(c) Each share of Company Common Stock (including without limitation the
Shares purchased pursuant to the Offer) owned by the Company, any Company
Subsidiary, Parent, or Newco shall automatically be canceled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(d) Options to purchase Company Common Stock will be treated as provided
in Section 7.4.
2.10 Shares of Dissenting Shareholders. Notwithstanding anything in this
---------------------------------
Agreement to the contrary, to the extent required by Indiana Law, any issued and
outstanding Shares held by a Person (a "Dissenting Shareholder") who has not
voted in favor of or consented to the Merger and complies with all the
provisions of Indiana Law concerning the right of holders of Shares to require
appraisal of their shares ("Dissenting Shares") shall not be converted as
described in Section 2.9(b), but shall become the right to receive such
consideration as may be determined to be due to such Dissenting Shareholder
pursuant to Indiana Law. If, after the Effective Time, such Dissenting
Shareholder withdraws his demand for appraisal or fails to perfect or otherwise
loses his right of appraisal, in any case pursuant to Indiana Law, his Shares
shall be deemed to be canceled as of the Effective Time and become the right to
receive the Merger Consideration determined as provided in Section 2.9(b). The
Company shall give Parent (i) prompt notice of any demands for appraisal of
Shares received by the Company and (ii) the opportunity to participate in and
direct all negotiations and proceedings with respect to any such demands. The
Company shall not, without the prior written consent of Parent, make any payment
with respect to, or settle, offer to settle or otherwise negotiate, any such
demands.
2.11 Surrender of Certificates.
-------------------------
(a) Prior to the Effective Time, Parent shall designate a bank or
trust company who shall be reasonably satisfactory to the Company to act as
paying agent in the Merger (the "Paying Agent"), and on or prior to the
Effective Time, Parent shall make available, or cause the Surviving Corporation
to make available, to the Paying Agent, cash in an amount necessary for the
payment of the Merger Consideration as provided in Section 2.9(b) upon surrender
of certificates representing Shares as part of the Merger. Funds made available
to the Paying Agent shall be invested by the Paying Agent as directed by Newco
or, after the Effective Time, the Surviving Corporation, provided that such
investments shall only be in obligations of or guaranteed by the United States
of America, in commercial paper obligations rated A-1 or P-1 or better by
Xxxxx'x Investors Service, Inc. or Standard & Poor's Corporation, respectively,
or in certificates of deposit, bank repurchase agreements or banker's
acceptances of commercial banks with capital exceeding $1 billion (it being
understood that any and all interest or income earned on funds made available to
the Paying Agent pursuant to this Agreement shall be turned over to Parent).
(b) As soon as reasonably practicable after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each holder of
record of a certificate or certificates that immediately prior to the Effective
Time represented Shares (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify), and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration as provided in Section
2.9(b). Upon surrender of a Certificate for cancellation to the Paying Agent or
to such other agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly executed, and such other documents as may reasonably
be required by the Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash into which the
Shares theretofore represented by such Certificate shall have been canceled and
become the right to receive pursuant to Section 2.9(b), and the Certificate so
surrendered shall forthwith be canceled. The Company will act in a commercially
reasonable manner in regard to payment of cash upon receipt of Shares. In the
event of a transfer of ownership of Shares that is not registered on the
transfer records of the Company, payment may be made to a person other than the
Person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.11, each Certificate (other than Certificates
representing Dissenting Shares) shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the shares of stock theretofore represented
by such Certificate shall have been converted pursuant to Section 2.9(b). No
interest will be paid or will accrue on the cash payable upon the surrender of
any Certificate. Parent or the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Shares such amounts as Parent or the Paying Agent is required to
deduct and withhold with respect to the making of such payment under the Code or
under any provision of Applicable Law. To the extent that amounts are so
withheld by Parent or the Paying Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Shares in respect of which such deduction and withholding was made by the Parent
or the Paying Agent.
(c) All cash paid upon the surrender of Certificates in accordance
with the terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Shares theretofore represented by
such Certificates. At the Effective Time, the stock transfer books of the
Company shall be closed, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the Shares that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Paying
Agent for any reason, they shall be canceled and exchanged as provided in this
Article II.
(d) Any portion of the funds made available to Paying Agent to pay the
Merger Consideration which remains undistributed to the holders of Shares for
one year after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any holders of Shares who have not theretofore
complied with this Article II and the instructions set forth in the letter of
transmittal mailed to such holders after the Effective Time shall thereafter
look only to the Surviving Corporation (subject to abandoned property, escheat
or other similar Laws) for payment of the Merger Consideration to which they are
entitled, without interest.
(e) None of Parent, Newco, the Company or the Paying Agent shall be
liable to any Person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar Law.
ARTICLE III
Closing and Closing Date
------------------------
If the Offer is consummated, the Closing of the Merger (the "Closing")
shall take place (i) at the offices of Xxxxxxx Xxxxxx L.L.P., 000 Xxxx Xx.,
Xxxxx 0000, Xxxx Xxxxx, Xxxxx 00000, (ii) on the date not later than five
Business Days after each of the conditions precedent set forth in ARTICLES VIII
and IX have been satisfied or waived.
ARTICLE IV
Representations and Warranties of Parent and Newco
--------------------------------------------------
Except as set forth in the disclosure letter delivered by Parent and Newco
to the Company (the "Parent Disclosure Letter"), Parent and Newco hereby
represent and warrant to the Company, that:
4.1 Organization; Authority. Parent is a corporation duly organized,
-----------------------
validly existing and in good standing under the laws of the state of Texas and
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Newco is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Indiana and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted by it.
4.2 Constituent Documents. Parent has delivered to the Company accurate
---------------------
and complete copies of the Articles of Incorporation and Bylaws of each of
Parent and Newco as currently in effect.
4.3 Authority Relative to This Agreement.
------------------------------------
(a) Parent and Newco each have all requisite corporate power and
authority to execute, deliver, and perform their respective obligations under
this Agreement. The execution and delivery by Parent and Newco of this
Agreement to which they are parties, and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Parent and Newco.
(b) This Agreement constitutes the legal, valid and binding obligation
of Parent and Newco, enforceable in accordance with its terms, except to the
extent such enforcement may be limited by: (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting creditors'
rights generally and (ii) equitable principles which may limit the availability
of certain equitable remedies (such as specific performance) in certain
instances. Except as described on Schedule 4.3(b) of the Parent Disclosure
Letter, the execution, delivery and performance by Parent and Newco of this
Agreement, and the consummation of the transactions contemplated hereby, do not
require the consent, waiver, approval, license or authorization of any Person
(except as already obtained).
4.4 Non-Contravention. Except as set forth on Schedule 4.4 of the Parent
-----------------
Disclosure Letter, the execution, delivery, and performance by Parent and Newco
of this Agreement and the consummation by each of them of the transactions
contemplated hereby do not and will not (i) conflict with, or result in a
violation of any provision of, the charter or bylaws of Parent or Newco, (ii)
conflict with, or result in a violation of any provision of, or constitute (with
or without the giving of notice or the passage of time or both) a default under,
or give rise (with or without the giving of notice or the passage of time or
both) to any right of termination, cancellation, or acceleration under, any
bond, debenture, note, mortgage, indenture, lease or other Contract to which
Parent or Newco is a party or by which Parent or Newco or their respective
business or any of their respective owned or leased assets may be bound, (iii)
conflict with or result in a violation of any provision of any shareholders
agreement, voting agreement, voting trust agreement, stock pledge agreement,
loan agreement or other Contract by which Parent or Newco may be bound, (iv)
result in the creation or imposition of any Lien upon any of the assets of
Parent or Newco, or (v) assuming compliance with the matters referred to in
Section 4.5 of the Parent Disclosure Letter, violate any Applicable Law binding
upon Parent and Newco.
4.5 Governmental Approvals. No consent, approval, order, or authorization
----------------------
of, or declaration, filing, or registration with, any Governmental Entity is
required to be obtained or made by Parent or Newco in connection with the
execution, delivery, or performance by Parent or Newco of this Agreement or the
consummation by either Parent or Newco of any of the transactions contemplated
hereby, other than (i) as set forth on Schedule 4.5 of the Parent Disclosure
Letter; and (ii) such consents, approvals, orders, or authorizations which, if
not obtained, and such declarations, filings, or registrations which, if not
made, would not,
individually or in the aggregate, have a Material Adverse Effect on the
business, assets, results of operations, or financial condition of Parent and
Newco considered as a whole or on the ability of Parent or Newco to consummate
the transactions contemplated hereby.
4.6 Legal Proceedings. There are no Proceedings pending or, to the best
-----------------
Knowledge of Parent and Newco, threatened, seeking to restrain, prohibit, or
obtain damages or other relief in connection with this Agreement or the
transactions contemplated hereby.
4.7 Brokerage Fees. Except as set forth on Schedule 4.7 of the Parent
--------------
Disclosure Letter, neither Parent, Newco nor any of their Affiliates has
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this Agreement
or of the transactions contemplated hereby.
4.8 Representations and Warranties. The representations and warranties
------------------------------
made in this Article IV that are qualified as to materiality shall be true and
correct and the representations and warranties that are not so qualified shall
be true and correct in all material respects, in each case, as if such
representations and warranties had been made as of the date of the consummation
of the Offer; provided such representations and warranties which expressly
relate only to an earlier date, shall only be true and correct as of such
earlier date.
ARTICLE V
Representations and Warranties of the Company
---------------------------------------------
Except as set forth in the disclosure letter delivered by the Company to
Parent at or prior to the execution hereof (the "Company Disclosure Letter") the
Company represents and warrants to Parent and Newco, that:
5.1 Organization; Authority. The Company is a corporation duly organized,
-----------------------
validly existing and in good standing under the laws of the State of Indiana and
has all requisite corporate power and authority to carry on its Business. Each
Company Subsidiary is duly organized, validly existing and in good standing
under the laws of the jurisdiction of organization indicated on Schedule 5.1 to
the Company Disclosure Letter. Each of the Company Subsidiaries has all
requisite corporate power and authority to carry on its business as now being
conducted by it.
5.2 Qualification. The Company and each Company Subsidiary is duly
-------------
qualified and licensed to do business and each is in good standing in each
jurisdiction except where the failure to be so qualified or licensed would not
have a Material Adverse Effect on the Company.
5.3 Constituent Documents. The Company has delivered to Parent accurate
---------------------
and complete copies of the Articles of Incorporation and Bylaws of the Company
and each Company Subsidiary as currently in effect.
5.4 Authority Relative to This Agreement.
------------------------------------
(a) The Company has all requisite corporate power and authority to
execute, deliver, and perform its obligations under this Agreement. The
execution and delivery by the Company of this Agreement, and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of the Company.
(b) This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, except to
the extent such enforcement may be limited by (i) fiduciary obligations of the
board of directors of the Company, (ii) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors' rights
generally and (iii) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances.
5.5 Non-Contravention. Except as set forth on Schedule 5.5 to the Company
-----------------
Disclosure Letter, the execution, delivery, and performance by the Company of
this Agreement and the consummation by it of the transactions contemplated
hereby do not and will not (i) conflict with, or result in a violation of any
provision of, the charter or bylaws of the Company or any Company Subsidiary,
(ii) conflict with, or result in a violation of any provision of, or constitute
(with or without the giving of notice or the passage of time or both) a default
under, or give rise (with or without the giving of notice or the passage of time
or both) to any right of termination, cancellation, or acceleration under, any
bond, debenture, note, mortgage, indenture, lease or other Contract to which the
Company or any Company Subsidiary is a party or by which the Company or any
Company Subsidiary or their respective owned or leased assets may be bound which
would have a Material Adverse Effect on the Company or require the consent,
waiver, approval, license or authorization of any Person (except as already
obtained) except where the failure to obtain such consent, waiver, approval,
license or authorization would not have a Material Adverse Effect on the
Company, (iii) conflict with or result in a violation of any provision of any
shareholders agreement, voting agreement, voting trust agreement, stock pledge
agreement, loan agreement or other Contract by which the Company or any Company
Subsidiary may be bound which would have a Material Adverse Effect on the
Company, (iv) result in the creation or imposition of any Lien upon any of the
assets of the Company or any Company Subsidiary which would have a Material
Adverse Effect on the Company, or (v) assuming compliance with the matters
referred to in Section 5.6, violate any Applicable Law binding upon the Company
or any Company Subsidiary which would have a Material Adverse Effect on the
Company.
5.6 Governmental Approvals. No consent, approval, order, or authorization
----------------------
of, or declaration, filing, or registration with, any Governmental Entity is
required to be obtained or made by the Company in connection with the execution,
delivery, or performance by the Company of this Agreement or the consummation by
the Company of any of the transactions contemplated hereby, other than (i) as
set forth on Schedule 5.6 to the Company Disclosure Letter; and (ii) such
consents, approvals, orders, or authorizations which, if not obtained, and
such declarations, filings, or registrations which, if not made, would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or on the ability of the Company to consummate the transactions contemplated
hereby.
5.7 [Intentionally Omitted].
-----------------------
5.8 Brokerage Fees. Except as set forth on Schedule 5.8 to the Company
--------------
Disclosure Letter to the Company Disclosure Letter, neither the Company nor, to
the Knowledge of the Company, any of its Affiliates has retained any financial
advisor, broker, agent, or finder or paid or agreed to pay any financial
advisor, broker, agent, or finder on account of this Agreement or any
transaction contemplated hereby.
5.9 SEC Filings. The Company has delivered or made available to Parent
-----------
each effective registration statement, report, filing, proxy statement or
information statement prepared by it and filed with the SEC within the past
three years (the "Public Reports"). The Company has timely made all required
filings with the SEC and with any exchange on which Shares of Company Common
Stock are listed within the past three years pursuant to the provisions of the
1933 Act, the 1934 Act and the rules and regulations of any such exchange except
where the failure to make such timely filings has not had or would not have a
Material Adverse Effect on the Company. Each of the Public Reports was, at the
time filed with the SEC, prepared in accordance with and was in compliance in
all material respects with the 1933 Act, the 1934 Act and the rules and
regulations of such exchange. None of the Public Reports, as of their
respective dates, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
5.10 Capital Stock.
-------------
(a) The authorized capital stock of the Company consists of
26,000,000 shares, 1,000,000 of which are shares of Company Special Stock, $.01
par value per share ("Company Special Stock"), none of which shares are issued
or outstanding, and 25,000,000 shares of Company Common Stock, of which
7,755,854 Shares are issued, outstanding and entitled to vote as of October 15,
1997. Each of the outstanding Shares has been duly authorized, is validly
issued, fully paid and non-assessable. None of such shares was issued in
violation of any preemptive or other preferential rights of any shareholder of
the Company or any other Person.
(b) The authorized capital stock of each Company Subsidiary is set
forth on Schedule 5.10(b) to the Company Disclosure Letter. Each of the
outstanding shares of each Company Subsidiary has been duly authorized, is
validly issued, fully paid and non-assessable. None of such shares of a Company
Subsidiary was issued in violation of any preemptive or other
preferential rights of any Person. The Company is not a party to any voting
trust, proxy, other agreement, understanding or Contract with respect to the
voting of any shares of the equity securities of any Company Subsidiary.
(c) (i) Except as set forth on Schedule 5.10(c)(i) to the Company
Disclosure Letter, there are no outstanding subscriptions, options, warrants,
calls, demands or other Contracts of any kind or nature whatsoever, under which
the Company is or may be obligated to sell or issue to any Person any shares of
Company Stock or any other securities which are convertible into, or otherwise
have a right to subscribe for, any shares of Company Stock.
(ii) Except as set forth on Schedule 5.10(c)(ii) to the Company
Disclosure Letter, there are no outstanding subscriptions, options, warrants,
calls, or other Contracts of any kind, under which the Company or any Company
Subsidiary is or may be obligated to sell or issue to any Person any shares of
common stock of a Company Subsidiary or any other securities which are
convertible into, or otherwise have a right to subscribe for, any shares of
common stock or other equity securities of any Company Subsidiary.
(d) Except as set forth on Schedule 5.10(d) to the Company Disclosure
Letter, the Company has no outstanding bonds, debentures, notes or other
obligations, the holders of which are convertible into or exercisable for
Shares.
(e) Except for those matters expressly covered by Section 5.9 the
Company has not violated, any applicable federal or state securities laws or
regulations in connection with the offer, sale or issuance of any of its
securities except where such violation would not have a Material Adverse Effect
on the Company.
5.11 Subsidiaries. Schedule 5.11 to the Company Disclosure Letter sets
------------
forth each Company Subsidiary or other Person controlled, directly or
indirectly, by the Company or in which the Company has any direct or indirect
equity interest.
5.12 Financial Statements. The Company has delivered to Parent true,
--------------------
correct and complete copies of (i) the Company's audited financial statements
set forth on Schedule 5.12(a) to the Company Disclosure Letter (the "Audited
Financial Statements"), and (ii) the Company's unaudited financial statements
set forth on Schedule 5.12(a) to the Company Disclosure Letter (the "Company's
Unaudited Financial Statements"), certified, on behalf of the Company, by the
Company's chief financial officer (the financial statements referred to in (i)
and (ii) being collectively referred to as the "Financial Statements"). As used
herein, the term "Financial Statements" shall mean the Financial Statements and
the Supplementary Unaudited Financial Statements. The Financial Statements have
been prepared from the books and records of the Company in conformity with GAAP,
applied on a basis consistent with preceding years throughout the periods
involved and fairly present the Company's financial position as of the
respective dates thereof and its results of operations, retained earnings and
cash flows for the
periods then ended in conformity with GAAP; provided, however, the unaudited
Financial Statements lack the footnote disclosure otherwise required by GAAP and
lack normal and recurring year-end adjustments, none of which would reasonably
be expected to have a Material Adverse Effect on the Company.
5.13 Business Information; Disclosure. The Company has delivered to Parent
--------------------------------
accurate and complete copies of the information with respect to the Company and
the Company Subsidiaries set forth on Schedule 5.13 to the Company Disclosure
Letter (collectively the "Business Information"). As of the date actually
prepared, the most recent versions of the information delivered to the Parent,
taken as a whole, contained in the Business Information is true and correct in
all material respects and does not omit any material fact necessary to be stated
therein or required to be stated therein in order to make any statement
contained therein not misleading. No representation or warranty made by the
Company in this Agreement, contains or will contain, at the time of delivery,
any untrue statement of a material fact.
5.14 Absence of Certain Changes. Except as disclosed on Schedule 5.14 to
--------------------------
the Company Disclosure Letter, since the date of the Company's Audited Financial
Statements (i) other than changes, events or conditions generally affecting the
industry in which the Company and Parent operate, there has not been any change
in, or an event or condition that would reasonably be expected to result in any
change in, the Business, or the ownership or operation of the Company's assets
that would have a Material Adverse Effect on the Company; (ii) the Company's
Business has been conducted in all material respects in the ordinary course of
business consistent with past practice; and (iv) as of the date of this
Agreement neither the Company nor any Company Subsidiary has, in respect of its
Business, taken any of the actions expressly prohibited by Section 6.1. Without
limiting the generality of the foregoing and except as disclosed in the Public
Reports or Schedule 5.14 to the Company Disclosure Letter, since December 31,
1996: (i) no Person, including the Company, has accelerated, terminated,
modified or canceled any material Contract, (or material series of related
Contracts) to which the Company is a party or by which it may be bound; (ii) the
Company has not permitted or allowed to be imposed upon any of its material
assets, tangible or intangible, any Lien except for Permitted Liens; (iii) the
Company has not made any capital expenditures (or series of related capital
expenditures) involving more than $500,000.00 as to any one item; (iv) the
Company has not made any capital investment in, any loan to, or any acquisition
of, the securities or assets of any other Person (or series of related capital
investments, loans (excluding trade payables), or acquisitions) exceeding
$500,000 in the aggregate or outside the ordinary course of business; (v) the
Company has not created, incurred, assumed or guaranteed any Indebtedness
(including capitalized lease obligations); (vi) the Company has not delayed or
postponed (beyond its normal practice) in any material respect, the payment of
accounts payable and other liabilities or obligations; (vii) the Company has
not, as of the date of this Agreement, canceled, compromised, waived, or
released any right or claim (or series of related rights or claims) involving
more than $250,000.00; (viii) the Company has not declared, set aside or paid
any dividend or distribution with respect to any of its equity securities or
redeemed, purchased or otherwise acquired any of its equity securities;
(ix) the Company has not, as of the date of this Agreement, experienced any
damage, destruction or loss (whether or not covered by insurance) to any of its
property exceeding $250,000.00 in the aggregate; (x) the Company has not granted
any increase in the base compensation of any of its directors, or executive
officers except in the ordinary course of business consistent with past
practice; (xi) the Company has not adopted any bonus, profit-sharing, incentive
compensation, pension, retirement, medical, hospitalization, life or other
insurance, severance or other plan, Contract or commitment for any of its
shareholders, directors, officers, or employees or modified or terminated any
existing such plan, Contract or commitment except in the ordinary course of
business consistent with past practice; (xii) the Company has not made any other
change in employment terms for any of its directors, or executive officers
except in the ordinary course of business consistent with past practice; and
(xiii) the Company has not committed to any of the foregoing.
5.15 Compliance With Laws. Except as set forth on Schedule 5.15 to the
--------------------
Company Disclosure Letter, the Company is in compliance with all Applicable Laws
relating to the ownership or operation of its assets and properties or the
operation of its Business, except for noncompliance with such Applicable Laws
which, individually or in the aggregate, would not have a Material Adverse
Effect on the Company. The Company is not charged with or, to the Knowledge of
the Company, threatened with, or, under investigation with respect to, any
violation of any Applicable Law relating to any aspect of the ownership or
operation of its assets or the operation of its Business except for any
violation which would not have a Material Adverse Effect on the Company. To the
Company's Knowledge, the Company has not made any illegal payment to officers or
employees of any Governmental Entity or to customers or suppliers, engaged in
any other illegal or reciprocal practices or illegally given any consideration
to purchasing agents or other representatives of customers with respect to sales
made or to be made by the Company, and no written notification has been received
by the Company alleging any violation of any of the foregoing.
5.16 Affiliate Agreements. Except as set forth on Schedule 5.16 to the
--------------------
Company Disclosure Letter, there are no material written or oral Contracts
between the Company and/or the Company's Affiliates in connection with its
Business, including, without limitation, any such Contracts relating to the
provision of any services by the Company to any such Affiliate, or by any such
Affiliate to the Company.
5.17 Liabilities. Except for liabilities or obligations reflected or
-----------
reserved against in the latest of the Financial Statements delivered to Parent
and current liabilities incurred in the ordinary course of the Company's
Business since the date of such Financial Statements and as expressly set forth
on Schedule 5.17 to the Company Disclosure Letter, the Company has no
liabilities except for those liabilities which would not have a Material Adverse
Effect on the Company.
5.18 Labor Relations.
---------------
(a) Except as set forth on Schedule 5.18 to the Company Disclosure
Letter, the Company is not a party to any collective bargaining agreement.
Except as set forth on Schedule 5.18 to the Company Disclosure Letter, there are
no controversies or unfair labor practice proceedings pending or, to the
Knowledge of the Company, threatened between the Company and any of its current
or former employees or any labor or other collective bargaining unit
representing any current or former employee of the Company that would likely
result in a labor strike or work stoppage or otherwise have a Material Adverse
Effect on the Company. Except as set forth on Schedule 5.18 to the Company
Disclosure Letter, no organizational effort is presently being made or, to the
Knowledge of the Company, threatened by or on behalf of any labor union with
respect to employees of the Company (a) which, with respect to efforts commenced
on or prior to the date hereof, if successful, would have a Material Adverse
Effect on the Company or (b) with respect to efforts commenced after the date
hereof would have a Material Adverse Effect on the Company. As of the date of
this Agreement, to the Knowledge of the Company, no officer of the Company has
any announced plan to terminate employment with the Company.
(b) The Company is in compliance with all Applicable Laws pertaining
to employment and employment practices and wages, hours, and other terms and
conditions of employment in respect of the employees of its Business except for
noncompliance with such Applicable Laws which, individually or in the aggregate,
would not have a Material Adverse Effect on the Company and is not, in respect
of its business or the employees thereof, engaged in any unfair labor practices
or unlawful employment practices which would have a Material Adverse Effect on
the Company. Except as set forth on Schedule 5.18 to the Company Disclosure
Letter, there is no pending or, to the Knowledge of the Company, threatened
Proceeding by or before, and the Company is not subject to any judgment, order,
writ, injunction, or decree of or inquiry from, the National Labor Relations
Board, the Equal Employment Opportunity Commission, the Department of Labor, or
any other Governmental Entity in connection with any current, former, or
prospective employee of the Company's Business, which would have a Material
Adverse Effect on the Company.
5.19 Employee Benefits.
-----------------
(a) Employee Benefit Plans. Schedule 5.19 to the Company Disclosure
----------------------
Letter lists all material Employee Benefit Plans whether or not covered by
ERISA, and, to the extent covering any employee, any executive compensation
arrangement, change in control agreement or severance plan or arrangement that
the Company or any Company Subsidiary maintains or to which the Company or any
Company Subsidiary contributes for the benefit of any current or former employee
of the Company or any Company Subsidiary.
(b) Multi-Employer Plans. Neither the Company nor any Company
--------------------
Subsidiary has any current obligation, fixed or contingent, to contribute to any
Multi-Employer Plan for the benefit of any current or former employee of the
Company.
(c) Documents. The Company has delivered to Parent true, correct and
---------
complete copies of all current plans or summary plan descriptions for each
Employee Benefit Plan listed on Schedule 5.19 to the Company Disclosure Letter.
(d) Post-Employment Benefits Other Than Pensions. Neither the Company
--------------------------------------------
nor any Affiliate has any obligation to provide post-employment benefits to
former employees other than as provided under Code Section 4980B or as a pension
pursuant to the terms of an Employee Pension Benefit Plan.
(e) Liabilities. Neither the Company nor any of its Affiliates
-----------
maintains or contributes to, or has maintained or contributed to, an Employee
Benefit Plan subject to Title IV of ERISA during the last five years. Nothing
done or omitted to be done and no transaction or holding of any asset under or
in connection with any Employee Benefit Plan has or will make the Company or any
director or officer of the Company subject to any liability under ERISA or any
liability for any Tax pursuant to Section 4975 of the Code that would have a
Material Adverse Effect on the Company. There are no pending, or to the
Knowledge of the Company, threatened claims by, or on behalf of the Employee
Benefit Plans, or by any participant therein, alleging a breach or breaches of
fiduciary duties or violations of Applicable Laws which would result in any
liability on the part of the Company, its officers or directors, or such
Employee Benefit Plans, under ERISA or any other Applicable Law which would
result in a Material Adverse Effect on the Company and, to the Knowledge of the
Company, there is no reasonable Basis for any such claim.
5.20 Litigation. Except as set forth on Schedule 5.20 to the Company
----------
Disclosure Letter, there are no actions, causes of action, claims, suits, or
Proceedings pending or, to the Knowledge of the Company, threatened, against the
Company or affecting the operation by the Company of its Business at law, in
equity, or before or by any Governmental Entity, which (i) seeks to restrain or
enjoin the consummation of the transactions contemplated hereby or (ii) (a) with
respect to matters pending or threatened on or prior to the date hereof, if
adversely determined, would have a Material Adverse Effect on the Company or (b)
with respect to matters arising after the date hereof, would have a Material
Adverse Effect on the Company. Except as set forth in Schedule 5.20 to the
Company Disclosure Letter, the Company is not subject to, or in default with
respect to, any order, writ, injunction, or decree of any Governmental Agency
which would have a Material Adverse Effect on the Company.
5.21 Environmental Matters. Except as set forth on Schedule 5.21 to the
---------------------
Company Disclosure Letter: (i) the Company is in compliance in all respects
with all Environmental Laws in connection with the ownership, use, maintenance
and operation of its assets, pertaining to
health, safety, the environment, Hazardous Materials, and otherwise in
connection with the conduct of its Business except where the failure to be in
compliance would not have a Material Adverse Effect on the Company; (ii) the
Company has no liability, whether contingent or otherwise, under any
Environmental Law with respect to its operations, properties or assets
(including those properties or assets acquired from another Person) which would
have a Material Adverse Effect on the Company; (iii) no written notices or
written notification of violation or alleged violation of, non-compliance or
alleged non-compliance with or any liability under, any Environmental Law
relating to the operations or properties of the Company have been received by
the Company since January 1, 1992 which would have a Material Adverse Effect on
the Company; (iv) there are no administrative, civil or criminal writs,
injunctions, decrees, orders, or judgments outstanding, or any Proceedings
pending or, to the Knowledge of the Company threatened, relating to compliance
with or liability under any Environmental Law affecting the Company (a) as to
such matters pending as of the date hereof, if decided adversely to the Company,
would have a Material Adverse Effect on the Company and (b) as to such matters
arising after the date hereof would have a Material Adverse Effect on the
Company; (v) there are no (a) underground storage tanks on any Owned Real
Property (as hereinafter defined) and the Company has not, to the Knowledge of
the Company, operated any underground storage tanks on any Leased Property (as
hereinafter defined), or (b) to the Knowledge of the Company, asbestos
containing materials on or in the improvements or fixtures located thereon
requiring removal or remediation under Applicable Laws which removal or
remediation would cost in excess of $250,000; (vi) the Company has obtained or
applied for all Permits required under any Environmental Law for the conduct of
its Business or necessary or required in respect of its owned or leased real
property, or improvements or equipment located thereon except where the failure
to have such Permit would not have a Material Adverse Effect on the Company;
(vii) the Company has no Knowledge of any other Person who has caused any
Release or threatened Release of any Hazardous Material on or from any Owned
Real Property or Leased Property at or to which the Company disposed,
transported, treated or arranged to dispose of Hazardous Materials which would
have a Material Adverse Effect on the Company; and (viii) except as set forth
on Schedule 5.21 to the Company Disclosure Letter, as of the date hereof the
Company is not required to give notice of or record or deliver to any
Governmental Entity an environmental disclosure document or statement by virtue
of the transactions set forth herein and contemplated hereby except where the
failure to give notice, record or delivery would have a Material Adverse Effect
on the Company.
5.22 Tax Matters. For purposes of this Section 5.22, references to the
-----------
"Company" includes the Company, each Company Subsidiary, and each other member
of any affiliated, consolidated or combined group of corporations of which the
Company or any Company Subsidiary is or ever has been a member.
(a) Tax Returns. All Tax Returns (including information returns)
-----------
including all schedules or attachments thereto, required by the United States or
any state or any political subdivision thereof or any foreign jurisdiction to
have been filed by the Company with respect to
Taxes owned by the company in excess of $100,000, have been timely filed. All
information provided in such Tax Returns is true, complete and accurate in all
material respects. All Taxes owed by the Company by law or pursuant to any Tax
sharing agreement (whether or not shown on any Tax Return and whether or not
assessed) have been paid or a full reserve has been made for such Taxes on the
books and records of the Company, including the Financial Statements except
where the failure to pay would not have a Material Adverse Effect. Except as
set forth on Schedule 5.22(a) to the Company Disclosure Letter, the Company is
not currently the beneficiary of any extension of time within which to file any
Tax Return.
(b) Additional Taxes. There is no dispute or claim concerning any Tax
----------------
liability of the Company either claimed or raised by any authority in writing or
as to which the Company has Knowledge based upon direct inquiry by any agent of
such authority which would have a Material Adverse Effect. Except as described
in Schedule 5.22(c) to the Company Disclosure Letter, no Tax deficiency or
delinquency is being asserted as of the date of this Agreement against the
Company; there is no unpaid assessment, proposal for additional Taxes,
deficiency or delinquency in the payment of any of the Taxes of the Company
that, to the Knowledge of the Company, could be asserted by any authority.
Schedule 5.22(c) to the Company Disclosure Letter lists as of the date of this
Agreement all federal and state income Tax Returns of the Company with respect
to Taxes owed by the Company in excess of $100,000 for taxable periods ended on
or after_December 31, 1994, indicates those Tax Returns that have been audited
and indicates those Tax Returns that currently are the subject of audit, if any.
The Company has made available to Parent correct and complete copies of all Tax
Returns, examination reports and statements of deficiencies assessed against or
agreed to by the Company, for any taxable period ended on or after December 31,
1994.
(c) Other Tax Matters. Except as set forth on Schedule 5.22(c) to the
-----------------
Company Disclosure Letter, as of the date of this Agreement no Person has waived
any statute of limitations in respect of Taxes of the Company to any extension
of time with respect to a Tax assessment or deficiency affecting the liability
of the Company for Taxes. There are no outstanding requests by the Company for
rulings with any Tax authority that would effect in any material respect the
operations of the Company.
5.23 Product Liability. Except as disclosed in Schedule 5.23 to the
-----------------
Company Disclosure Letter, (i) there is no written notice, demand, claim,
action, suit, inquiry, hearing, Proceeding, written notice of violation or
investigation of a civil, criminal or administrative nature by or before any
Governmental Entity against or involving any product, substance or material
(collectively, a "Product"), or claims or lawsuits by any Person involving the
same or similar Product manufactured, produced, distributed or sold by or on
behalf of the Company which is pending or, to the Knowledge of the Company,
threatened, resulting from a defect or alleged defect in design, manufacture,
materials or workmanship of any Product manufactured, produced, distributed or
sold by or on behalf of the Company, or any failure or alleged failure to warn,
or from any breach or alleged breach of implied warranties or representations
including, without
limitation, polybutelene products, and (ii) there has not been, nor is there
under consideration or investigation by the Company, any Product recall, rework,
retrofit or post-sale warning (collectively, recalls, reworks, retrofits and
post-sale warnings are referred to in this Agreement as "Recalls") conducted by
or on behalf of the Company or any Recall conducted by or on behalf of any
entity as a result of any defect or alleged defect in any Product supplied by
the Company, which would have a Material Adverse Effect on the Company.
5.24 Product Warranty. Each Product manufactured by the Company during the
----------------
last five years has been manufactured in conformity with all Applicable Laws,
and all express and implied warranties except where the failure to do so would
not have a Material Adverse Effect on the Company, and the Company has no
liability for any present or future charge, complaint, action, suit, Proceeding,
hearing, investigation, claim or demand giving rise to any liability for
replacement or repair thereof or other damages in connection therewith, (i)
subject only to any reserve for product warranty claims set forth on the
Financial Statements as adjusted for the passage of time through the
consummation of the Offer in accordance with past customs and practices of the
Company and (ii) except for any liability which would not have a Material
Adverse Effect on the Company.
5.25 Real Property.
-------------
(a) Section 5.25(a) to the Company Disclosure Letter lists all real
property owned by the Company (the "Owned Real Property"). Other than
condemnation rights of Governmental Entities and Permitted Liens none of the
Owned Real Property is subject to any right or option of any other Person to
purchase or otherwise obtain title to all or any portion of such property.
(b) Schedule 5.25(b) to the Company Disclosure Letter contains a list
of all leases, licenses, Permits, subleases, and occupancy agreements, together
with any amendments thereto (the "Leases") with respect to (i) all real property
leased by the Company (as lessee and including those in the names of nominees or
other entities) in connection with the Company's Business (the "Leased
Property"), and (ii) all real property leased or subleased by the Company, as
lessor or sublessor, to third parties. Except as identified on Schedule 5.25(b)
to the Company Disclosure Letter, true, complete and accurate copies of the
Leases have been made available to Parent, and each of such Leases is in full
force and effect without modification or amendment from the form delivered
except for leases which expire by their terms prior to the Cut-off Date. No
option has been exercised under any of such Leases, except options whose
exercise has been evidenced by a written document, a true, complete and accurate
copy of which has been delivered to Parent with the corresponding Lease.
Neither the Company nor, to the Knowledge of the Company, any of the other
parties to the Leases is in default under any of the Leases, which would have a
Material Adverse Effect on the Company, and no amount due under the Leases
remains past due, no controversy, claim, dispute or agreement exists between the
parties to the Leases, and
no default has occurred which with the giving of notice or with the passage of
time, or both, would constitute a default thereunder, which would have a
Material Adverse Effect on the Company.
(c) Except as set forth on Schedule 5.25(c) to the Company Disclosure
Letter:
(i) The Company has not received any written notice of any
violation of any Applicable Laws (including, without limitation, the Americans
with Disabilities Act) in respect of the Owned Real Property or Leased Property,
which has not been heretofore remedied, other than notices of violations which
would not have a Material Adverse Effect on the Company, and, to the Knowledge
of the Company, there does not exist any such violations which, individually or
in combination with any others, which would have a Material Adverse Effect on
the Company;
(ii) The Company has not received any written notice that any
operations on or uses of the Owned Real Property or Leased Property constitute
non-conforming uses under any Applicable Laws except for those which would not
have a Material Adverse Effect on the Company; and
(iii) The Company does not have any Knowledge, nor has it
received any written notice of, any pending, threatened or contemplated rezoning
proceeding affecting the Owned Real Property or Leased Property except for those
which would not have a Material Adverse Effect on the Company.
(d) Except as set forth in Schedule 5.25(d) to the Company Disclosure
Letter, the Company has not received any written notice from any insurance
carrier regarding defects or inadequacies in the Owned Real Property or Leased
Property, which, if not corrected, would result in termination of the Company's
insurance coverage therefor or an increase in the cost thereof or which would
result in a Material Adverse Effect on the Company.
(e) Except as set forth on Schedule 5.25(e) to the Company Disclosure
Letter, there is no pending or, to the Knowledge of the Company, threatened:
(i) Condemnation of any part of the Owned Real Property or the
Leased Property by any Governmental Entity which would have a Material Adverse
Effect on the Company;
(ii) Assessment against any part of the Owned Real Property or
the Leased Property which would have a Material Adverse Effect on the Company;
or
(iii) Litigation against the Company for breach of any
restrictive covenant affecting any part of the Owned Real Property or Leased
Property which would have a Material Adverse Effect on the Company.
(f) The Company's Owned Real Property and Leased Property has been
maintained in accordance with any leases or other Contracts with respect thereto
and is in operating condition and repair sufficient for their intended use
except where the failure to be maintained or the sufficiency of the condition
would not have a Material Adverse Effect.
5.26 Contracts. Schedule 5.26 to the Company Disclosure Letter lists all
---------
material Contracts of the Company as of the date of this Agreement and
identifies those material contracts entered into since the date of the Company's
Audited Financial Statements.
5.27 [Intentionally omitted.]
---------------------
5.28 Intellectual Property. Schedule 5.28 to the Company Disclosure Letter
---------------------
contains a list of all material Intellectual Property (excluding trade secrets,
know-how, customer lists and brand names) in which the Company has any right,
title or interest or which has been used in connection with, or which relates
to, its Business. Except as set forth in Schedule 5.28 to the Company
Disclosure Letter, the Company or a Company Subsidiary either owns or has the
right to use (in the manner presently being used by the Company or a Company
Subsidiary) by license, sublicense, agreement, or permission all of the
Intellectual Property set forth on Schedule 5.28 to the Company Disclosure
Letter. Except as otherwise set forth in Schedule 5.28 to the Company
Disclosure Letter, the Company has not granted a license, nor reached an
understanding with any third party, nor entered into a written agreement,
relating in whole or in part, to any of the material Intellectual Property of
the Company used in connection with the conduct of its Business, and there has
been no assertion thereof by any Person. To the Knowledge of the Company, there
is no infringement or other adverse claim against the rights of the Company with
respect to any of the Intellectual Property used or owned by the Company in
connection with the conduct of its Business which would have a Material Adverse
Effect on the Company. Schedule 5.28 to the Company Disclosure Letter lists
separately the Company's trademarks and trade names which are material to the
conduct of its Business (the "Material Trademarks and Trade Names"). The Company
has not been charged with, nor, to the Knowledge of the Company, is it
threatened to be charged with respect to its Material Trademarks and Trade
Names, the infringement or other violation of the intellectual property rights
of any other Person. In connection with the conduct of its Business, the
Company, with respect to its Material Trademarks and Trade Names, has hot
infringed, nor is it infringing, any intellectual property right of any other
Person which would have a Material Adverse Effect on the Company.
ARTICLE VI
Conduct of Business
-------------------
The Company covenants and agrees to and with Parent and Newco, as follows:
6.1 Conduct of the Company and Company Subsidiaries.
-----------------------------------------------
(a) Except as contemplated by this Agreement or as set forth on
Schedule 6.1 attached hereto, during the period from the date hereof until such
time as Parent's designees shall constitute a majority of the Board of Directors
of the Company, the Company shall, and the Company shall cause each Company
Subsidiary to: (i) conduct its business only in the ordinary course consistent
with past practice in all material respects; (ii) use commercially reasonable
efforts to preserve, maintain, and protect its assets and the Business of the
Company and each Company Subsidiary; (iii) use commercially reasonable efforts
to preserve intact the business organization of the Business of the Company and
each Company Subsidiary, to keep available the services of the employees of its
business, and to maintain existing relationships with licensors, licensees,
suppliers, contractors, distributors, customers, and others having business
relationships with its business; and (iv) comply in all material respects with
all Applicable Laws, including all applicable federal and state securities laws,
rules and regulations and including, without limitation, the timely filing of
all periodic reports with the SEC required to be filed pursuant to the 1934 Act.
(b) Without limiting the generality of the foregoing, and except as
set forth in Schedule 6.1 or otherwise expressly provided in this Agreement,
until such time as Parent's designees shall constitute a majority of the Board
of Directors of the Company, the Company shall not, and the Company shall cause
each Company Subsidiary not to, without the prior written consent of Parent
(which consent will not be unreasonably withheld):
(i) except in the ordinary course of business consistent with
past practice with respect to the purchase of inventory (including raw
materials) create, incur, guarantee, or assume any Indebtedness for borrowed
money in respect of the Business of the Company or any Company Subsidiary in
excess of $500,000;
(ii) mortgage or pledge any material portion or portions of its
properties or assets or create any Lien (other than Permitted Liens) thereupon;
(iii) (a) enter into, adopt, or (except as may be required by
Applicable Law) amend in any material respect any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, stock purchase, pension, retirement, deferred compensation,
employment, severance, or other Employee Benefit Plan, trust, fund, or other
arrangement for the benefit or welfare of any director or executive officer of
the Business of the Company or a Company Subsidiary; (b) except for normal
increases in the
ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company or Company Subsidiary, increase in any manner the
compensation or fringe benefits of any director or executive officer of the
Company or a Company Subsidiary; (c) pay to any employee of the Company or a
Company Subsidiary any benefit not required by any Employee Benefit Plan, trust,
fund, or other arrangement as in effect on the date hereof except for those paid
in the ordinary course of business and consistent with past practice; (d) pay
any bonus to any employee of the Company or a Company Subsidiary except for
bonuses paid in the ordinary course of business and consistent with past
practice; (e) other than pursuant to the contracts or agreements set forth on
Schedule 6.1 attached hereto declare, set aside or pay any dividend or
distribution with respect to Company Stock, or redeem, repurchase, or otherwise
acquire any of its Company Stock or other equity securities; or (f) offer, sell,
issue or commit to issue any shares of Company Stock, options to acquire Company
Stock or securities convertible into or having a right to acquire Company Stock;
except for the issuance of Common Stock upon the exercise of existing options,
warrants and convertible securities;
(iv) sell, lease, transfer, or otherwise dispose of, directly
or indirectly, any of its assets, other than (a) inventory and equipment sold in
the ordinary course of business consistent with past practice, (b) assets which
in the aggregate are not in excess of $2,000,000, and (c) assets presently
subject to a purchase agreement and set forth on Schedule 6.1 attached hereto;
(v) make any capital expenditures relating to the Business of
the Company or a Company Subsidiary which is in excess of $500,000.00 as to any
one item other than pursuant to existing commitments set forth on Schedule 6.1;
(vi) pay, discharge, or satisfy any material claims,
liabilities, or obligations relating to the Business of the Company or a Company
Subsidiary (whether accrued, absolute, contingent, unliquidated, or otherwise,
and whether asserted or unasserted), other than the payment, discharge, or
satisfaction in the ordinary course of business consistent with past practice,
or in accordance with their terms, of liabilities reflected or reserved against
in the Financial Statements or incurred since the latest of the Financial
Statements in the ordinary course of business consistent with past practice;
(vii) enter into any material Contract, or material transaction
relating to the Business of the Company or a Company Subsidiary, except in the
ordinary course of business consistent with past practice or except as set forth
on Schedule 6.1 attached hereto;
(viii) amend, modify, or change in any material respect any
existing material Contract relating to the Business of the Company or a Company
Subsidiary, other than in the ordinary course of business consistent with past
practice;
(ix) waive, release, grant, or transfer any rights of material value
relating to the Business of the Company or a Company Subsidiary, other than in
the ordinary course of business consistent with past practice;
(x) permit any current insurance or reinsurance policy to be
canceled or terminated or any of the coverages thereunder to lapse if such
policy covers material assets or insures risks, contingencies, or liabilities of
the Business of the Company or a Company Subsidiary, unless simultaneously with
such cancellation, termination, or lapse, replacement policies providing
coverage equal to or greater than the coverage canceled, terminated, or lapsed
have been obtained;
(xi) change any of the accounting principles or policies used by it
relating to the preparation of its Financial Statements, except for any change
required by reason of a concurrent change in GAAP and notice of which is given
in writing by the Company to Parent;
(xii) enter into any Contract to acquire all or substantially all of
the assets or properties of any other Person or merge or consolidate with or
acquire all or substantially all of the securities of any other Person other
than transactions that are (i) in the ordinary course of business consistent
with past practice (ii) which would involve a purchase price not in excess of
$1,000,000 in the aggregate or (iii) set forth on Schedule 6.1;
(xiii) effect any change in the Restated Articles of Incorporation or
Bylaws of the Company or Company Subsidiary except as may be required to effect
the transactions contemplated by this Agreement;
(xiv) except with respect to transactions contemplated by subsections
(iv) and (xii) above,
(A) enter into a material line of business or discontinue a
material line of business, or
(B) open or close any material office, distribution or
manufacturing facilities other than pursuant to the expiration of an existing
lease; or
(xv) agree to take, any of the actions which would require the
Company to violate this Section unless the Company's obligation to take such
action arises only if the Offer is not consummated.
(c) Until Parent's designees constitute a majority of the board of
directors of the Company, the Company will deliver to Parent accurate and
complete copies of all documents filed with the SEC or any exchange on which the
Shares is listed for trading.
(d) Until such time as Parent's designees shall constitute a
majority of the Board of Directors, or termination of this Agreement, the
Company will deliver to Parent as of the end of each calendar month preceding
such time as Parent's designees shall constitute a majority of the Board of
Directors, true and correct copies of the Company's Unaudited Financial
Statements of the type described on Schedule 5.12(a) to the Company Disclosure
Letter (the "Supplementary Unaudited Financial Statements").
ARTICLE VII
Additional Agreements
---------------------
7.1 Shareholder Approval; Preparation of Proxy Statement.
----------------------------------------------------
(a) If approval of the Merger by Shareholders of the Company (the
"Company Shareholder Approval") is required by Law, the Company shall as soon as
practicable following the consummation of the Offer in accordance with the terms
of Section 1.1 of this Agreement, so long as permitted by Law, duly call, give
notice of, convene and hold a meeting of its shareholders (the "Shareholders
Meeting") for the purpose of obtaining the Company Shareholder Approval. The
Company shall, through its board of directors (but subject to the right of the
board of directors to withdraw or modify its approval or recommendation of the
Offer, the Merger and this Agreement as set forth in Section 7.3(b)), recommend
to its shareholders that the Company Shareholder Approval be given.
Notwithstanding the foregoing, if Newco shall acquire Shares entitled to cast
90% or more of all the votes entitled to be cast on the Merger, the parties
shall take all necessary and appropriate action to cause the Merger to become
effective as soon as reasonably practicable after the consummation of the Offer
without a Shareholders Meeting in accordance with Section 23-1-40-4 of Indiana
Law. Without limiting the generality of the foregoing, so long as permitted by
law, the Company agrees that its obligations pursuant to the first sentence of
this Section 7.1 shall not be affected by (i) the commencement, public proposal,
public disclosure or communication to the Company of any Acquisition Proposal or
(ii) the withdrawal or modification by the board of directors of the Company of
its approval or recommendation of the Offer, this Agreement or the Merger.
(b) If Company Shareholder Approval is required by Law, the Company
shall as soon as practicable following the consummation of the Offer in
accordance with the terms of Section 1.1, and to the extent permitted by Law,
prepare and file a preliminary Proxy Statement with the SEC and shall use its
reasonable best efforts to respond to any comments of the SEC or its staff, and,
to the extent permitted by Law, to cause the Proxy Statement to be mailed to the
Company's Shareholders as promptly as practicable after responding to all such
comments to the satisfaction of the staff. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand,
and the SEC or its staff, on the other hand, with respect to the Proxy Statement
or the Merger. If at any time prior to the Shareholders Meeting there shall
occur any event that should be set forth in an amendment or supplement to the
Proxy Statement, the Company shall promptly prepare and mail to its Shareholders
such an amendment or supplement. The Company shall not mail any Proxy
Statement, or any amendment or supplement thereto, to which Parent reasonably
objects. Parent shall cooperate with the Company in the preparation of the Proxy
Statement or any amendment or supplement thereto.
(c) Parent agrees to cause all Shares purchased pursuant to the
Offer and all other Shares of the Company entitled to vote on the Merger owned
by Parent or any Subsidiary of Parent to be voted in favor of the Merger.
7.2 Access to Information; Confidentiality.
--------------------------------------
(a) (i) Between the date hereof and until such time as Parent's
designees shall constitute a majority of the Board of Directors of the Company,
the Company (i) shall give Parent and its authorized representatives reasonable
access to all employees, all offices, warehouses, and other facilities, and all
books and records relating to the Business, (ii) shall permit Parent and its
authorized representatives to make such inspections as they may reasonably
require, and (iii) shall cause its officers to furnish Parent and its authorized
representatives with such financial and operating data and other information
with respect to its Business as Parent may from time to time reasonably request;
provided, however, that no investigation pursuant to this Section shall affect
any representation or warranty of any party contained in this Agreement or in
any agreement, instrument, or document delivered pursuant hereto or in
connection herewith; and provided further that the Company shall have the right
to have a representative present at all times. Each party shall hold in
confidence all such information on the terms and subject to the conditions
contained in any Confidentiality Agreements or similar agreements heretofore
entered into between the parties (collectively the "Confidentiality
Agreements"), including the Confidentiality Agreement (the "August
Confidentiality Agreement") dated August 25, 1997 between the Company and
Parent.
(ii) Between the date hereof and until such time as Parent's
designees shall constitute a majority of the Board of Directors of the Company,
the Parent (i) shall give the Company and its authorized representatives
reasonable access to all employees, all offices, warehouses, and other
facilities, and all books and records relating to the business of the Parent to
the same extent requested by Parent of the Company, (ii) shall permit the
Company and its authorized representatives to make such inspections as they may
reasonably require but consistent with those conducted by Parent, and (iii)
shall cause its officers to furnish the Company and its authorized
representatives with such financial and operating data and other information
with respect to its business as the Company may from time to time reasonably
request to the extent that similar information has been provided by the Company
to Parent; provided, however, that no investigation pursuant to this Section
shall affect any representation or warranty of any party
contained in this Agreement or in any agreement, instrument, or document
delivered pursuant hereto or in connection herewith; and provided further that
the Parent shall have the right to have a representative present at all times.
Each party shall hold in confidence all such information on the terms and
subject to the conditions contained in any Confidentiality Agreements or similar
agreements heretofore entered into between the parties (collectively the
"Confidentiality Agreements").
(b) Each party acknowledges and agrees that irreparable damage
would occur in the event any confidential information regarding the Intellectual
Property, the Company, the Business, the Parent or the Parent's business (the
"Confidential Information") were disclosed to or utilized on behalf of any
Person which is in competition with Company or Parent. Accordingly, each party
covenants and agrees with the other that it will not, directly or indirectly,
without the prior written consent of the other, disclose any of such
Confidential Information from and after the date hereof to any Person, except to
its authorized representatives; provided, however, that Confidential Information
shall not be deemed to include information which (i) was or becomes generally
available to the public other than as a result of an unauthorized disclosure, or
(ii) was or becomes available on a non-confidential basis from a source other
than the recipient of such information, provided that such source is not known
to the provider of such information to be bound by a confidentiality agreement
with respect to such Confidential Information. Notwithstanding the foregoing
provisions of this Section 7.2(b), each party and its Affiliates may disclose
any Confidential Information to the extent that, in the written opinion of its
counsel, such person is legally compelled to do so, provided that, prior to
making such disclosure, such person advises and consults with the other party
regarding such disclosure and provided further that such person discloses only
that portion of such Confidential Information as is legally required. To the
extent that the provisions of this Section 7.2(b) conflict with the provisions
of the August Confidentiality Agreement, the provision of the August
Confidentiality Agreement shall be controlling.
(c) If Parent requests, the Company will cooperate, and will cause
its accountants to cooperate, in all material respects with any financing
efforts of Parent or its Affiliates (including providing assistance in the
preparation of one or more registration statements or other offering documents
relating to debt and/or equity financing) and any other filings that may be made
by Parent or its Affiliates with the SEC, all at the sole expense of Parent. The
Company (a) shall furnish to its independent accountants (or, if requested by
Parent to Parent's independent accountants), such customary management
representation letters as its accountants may reasonably require of the Company
as a condition to its execution of any required accountants' consents necessary
in connection with the delivery of any customary "comfort" letters reasonably
requested by financing sources of Parent or its Affiliates, and (b) shall
furnish to Parent all financial statements (audited and unaudited) and other
information in the possession of the Company of its representatives or agents as
Parent shall reasonably determine as necessary or appropriate in connection with
such financing. Without limiting the generality of the foregoing, the Company
agrees to cooperate with Parent's and Newco's efforts to secure any
financing, such cooperation to include providing such information to Parent's
and Newco's financing sources as Parent or Newco may reasonably request and
making available to such financing sources, senior officers and such other
employees of the Company as Parent and Newco may reasonably request to assist in
the preparation of one or more offering documents and other appropriate
marketing materials and otherwise participate in such marketing and sales
efforts relating to obtaining any financing as Parent and Newco may reasonably
request upon reasonable notice and consistent with such officers' and employees'
other business responsibilities to the Company.
7.3 Acquisition Proposals.
---------------------
(a) The Company shall, and shall direct and use its commercially
reasonable efforts to cause its officers, directors, employees, agents and other
representatives to, immediately cease any discussions or negotiations with any
Persons that may be ongoing with respect to an Acquisition Proposal (as
hereinafter defined). Further, the Company shall not, nor shall it permit any
of its Company Subsidiaries to, nor shall it authorize or permit any of its
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any Company
Subsidiary to, directly or indirectly, (i) solicit, initiate or knowingly
encourage (including by way of furnishing information) any inquiries or the
making of any proposal which constitutes or may reasonably be expected to lead
to any Acquisition Proposal, or (ii) engage in discussions or negotiations with
any Person regarding any Acquisition Proposal; provided, however, that if, at
any time prior to the acceptance for payment of Shares pursuant to the Offer,
the board of directors of the Company determines in good faith, after
consultation with and advice from outside counsel, that it would be consistent
with the fiduciary responsibilities of the board of directors to the Company's
shareholders under Applicable Law, the Company may, in response to an
Acquisition Proposal, and subject to compliance with Section 7.3(c), (A) furnish
information with respect to the Company or any Company Subsidiary to any Person
pursuant to a confidentiality agreement in substantially the same form as the
August Confidentiality Agreement with respect to protecting the Confidential
Information of the Company, and (B) participate in discussions, investigations
and/or negotiations regarding such Acquisition Proposal; provided, however, that
prior to furnishing information to, or entering into discussions or negotiations
with, such Person, (x) the Company shall provide written notice to Parent to the
effect that the Company is furnishing information to, or entering into
discussions or negotiations with, such Person, and (y) the Company keeps Parent
informed, on a current basis, as to the status and, subject to the fiduciary
responsibilities of the board of directors, the substance of such discussions or
negotiations. With respect to any Person or Persons with whom the Company has
been discussing any Acquisition Proposal prior to the date hereof, the Company
shall promptly following the execution of this Agreement, request each such
Person who has heretofore entered into a confidentiality agreement with the
Company regarding an Acquisition Proposal to return to the Company all
Confidential Information heretofore furnished to such Person or Persons by or on
behalf of the Company. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in this Section 7.3(a) by any
officer,
director, employee or other representative heretofore described in this Section
7.3(a), whether or not such Person is purporting to act on behalf of the Company
or any Company Subsidiary or otherwise, shall be deemed to be a breach of this
Section 7.3(a) by the Company. For purposes of this Agreement, an "Acquisition
Proposal" means any offer or proposal, inquiry or indication of interest, from
any Person relating to any direct or indirect acquisition or purchase of 5% or
more of the aggregate assets of the Company and the Company Subsidiaries, taken
as a whole, or 5% or more of the voting power of the Shares or securities of any
Company Subsidiary then outstanding or any tender offer or exchange offer that
if consummated would result in any Person beneficially owning 5% or more of the
voting power of the Shares or securities of any Company Subsidiary then
outstanding or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any Company Subsidiary, other than the transactions contemplated by
this Agreement.
(b) Except as set forth in this Section 7.3, neither the board of
directors of the Company nor any committee thereof shall (i) withdraw or modify,
or propose publicly to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such board of directors or such committee of the
Offer, the Merger or this Agreement; provided, however, that the board of
directors may (A) in respect to any takeover or Acquisition Proposal, suspend
such recommendation for a period of up to three days pending its analysis of
such Acquisition Proposal, or (B) at any time prior to consummation of the
Offer, modify or withdraw such recommendation if the board of directors of the
Company determines in good faith, after consultation with and the advice of
outside counsel, that it would be consistent with its fiduciary responsibilities
to so modify or withdraw such recommendation; provided, further that, unless
this Agreement shall have been terminated, any such suspension, modification or
withdrawal shall not prevent Parent and Newco, in its or their discretion, from
consummating the Offer and shall not affect any of the actions taken by the
Company pursuant to this Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal, or (iii) cause the
Company to enter into any letter of intent, agreement in principle, acquisition
or other similar agreement (each, an "Acquisition Agreement") related to any
Acquisition Proposal. Notwithstanding the foregoing, in the event that prior to
the acceptance for payment of Shares pursuant to the Offer, the board of
directors of the Company determines in good faith, after consultation with and
the advice of outside counsel, that it would be consistent with its fiduciary
responsibilities to the Company's shareholders under Applicable Law, the board
of directors of the Company may (subject to this and the following provisions of
this Section 7.3) (i) withdraw or modify its approval or recommendation of the
Offer, the Merger and this Agreement, (ii) approve or recommend a Superior
Proposal (as defined below) (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition or other similar agreement related
to any Superior Proposal or (iv) terminate this Agreement, but in each case,
only at a time that is after the second Business Day following Parent's receipt
of written notice (or such earlier time as is necessary for the board of
directors of the Company to comply with its fiduciary duties) (a "Notice of
Superior Proposal"), which obligation shall be satisfied by delivery by
facsimile transmission and by overnight delivery by Federal Express or other
nationally recognized
overnight carrier as well as by delivery of the notice required by Section
7.3(c) advising Parent that the board of directors of the Company has received
an Acquisition Proposal that may constitute a Superior Proposal, subject to the
fiduciary duties of the board of directors of the Company, specifying the
material terms and conditions of such Superior Proposal and identifying the
Person making such Superior Proposal. For purposes of this Agreement, a
"Superior Proposal" means any Acquisition Proposal determined by the board of
directors of the Company in good faith, after consultation with and advice from
outside counsel, to be a bona fide proposal and made by a third party for
consideration consisting of cash, property and/or securities, for more than a
majority of the combined voting power of the shares of Company Common Stock then
outstanding or all or substantially all of the assets of the Company or a
Company Subsidiary and otherwise on terms which the board of directors of the
Company determines in its good faith judgment, after consultation with outside
counsel and with a financial advisor of nationally recognized reputation (such
as SBC Warburg Dillon Read Inc.), to be more favorable to the Company's
shareholders than the Offer and the Merger.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 7.3, the Company shall promptly advise
Parent orally and in writing of any request for information or of any
Acquisition Proposal, subject to the fiduciary duties of the board of directors
of the Company, the material terms and conditions of such request or Acquisition
Proposal, and, the identity of the person making such request or Acquisition
Proposal. The Company will endeavor to keep Parent reasonably informed of the
overall status and, subject to the fiduciary duties of the board of directors of
the Company, substance of any such request or Acquisition Proposal.
(d) Nothing contained in this Section 7.3 shall prohibit the Company
from taking and disclosing to its shareholders a position contemplated by Rules
14D-9 and 14E-2 promulgated under the 1934 Act or from making any disclosure to
the Company's shareholders if, in the good faith judgment of the board of
directors of the Company, in reliance upon advice from its outside counsel, such
disclosure is necessary in order to comply with its fiduciary duties to the
Company's shareholders under Applicable Law or is otherwise required under
Applicable Law.
(e) During the period from the date of this Agreement until such time
as Parent's designees shall constitute a majority of the Board of Directors, the
Company shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which the Company or any Company
Subsidiary is a party (other than any involving Parent) unless the Company's
board of directors shall have determined in good faith, in reliance upon advice
from its outside counsel, that failing to release any third party or to amend,
modify or waive such provisions would not be consistent with the Company's board
of directors' fiduciary responsibilities under Applicable Law.
7.4 Stock Options. Prior to the consummation of the Offer, the Company
-------------
shall use its commercially reasonable efforts to obtain any consents from
holders of Options as are necessary to give effect to the provisions of
paragraphs (a) and (b) of this Section 7.4.
(a) Each option granted to a Company employee, consultant or director
to acquire Shares ("Option") that is outstanding immediately prior to the
consummation of the Offer, and whether or not then vested or exercisable, with
respect to which, as of the consummation of the Offer, the exercise price per
share is less than the Offer Price shall, effective as of immediately prior to
the consummation of the Offer, be canceled in exchange for a single lump sum
cash payment equal to the product of (1) the number of Shares subject to such
Option and (2) the excess of the Offer Price over the exercise price per share
of such Option.
(b) Each Option that is outstanding immediately prior to the
consummation of the Offer, and whether or not then vested or exercisable, with
respect to which, as of the exercise price per Share is equal to or greater than
the Offer Price shall, effective as of the consummation of the Offer, be
canceled and no payments shall be made with respect thereto.
7.5 Shareholder Agreements. Each of the Persons identified on Schedule
----------------------
7.5 shall enter into a Shareholders Agreement (the "Shareholders Agreement")
with Parent and the Company substantially in the form of Exhibit "E" attached
-----------
hereto within two (2) Business Days of the date hereof.
7.6 Public Announcements. Parent and Company will consult with each other
--------------------
before issuing any press releases or otherwise making any public statements with
respect to this Agreement, the Offer and the Merger, and shall not issue any
such press release or make any such public statement without the prior written
consent of the other party (which consent shall not be unreasonably withheld or
delayed) except as may be required by law or by obligations pursuant to any
listing agreement with any national securities exchange or as may be advised by
counsel, in writing, to be necessary. Parent and Company anticipate issuing a
joint press release within two (2) Business Days of the date hereof.
7.7 Notification of Certain Matters. Company shall give prompt notice to
-------------------------------
Parent of (i) the occurrence or nonoccurrence of any event, the occurrence or
nonoccurrence of which would be likely to cause (a) any representation or
warranty of the Company that is not qualified by materiality contained in
Article V of this Agreement to be untrue or inaccurate in any material respect
at or prior to the consummation of the Offer or (b) any representation or
warranty of the Company that is qualified by materiality contained in Article V
of this Agreement to be untrue or inaccurate in any respect at or prior to the
consummation of the Offer, and (ii) any failure of the Company to comply with or
satisfy in any material respect any covenant, condition, or agreement to be
complied with or satisfied by the Company hereunder. Company shall give prompt
notice to Parent if there occurs any event which has resulted in or is
reasonably likely to result in a Material Adverse Effect on the Company or,
subject to the fiduciary duties of the board
of directors of the Company, will prevent or result in a third party materially
delaying the consummation of the Offer or the Merger. The Company shall provide
to Parent copies of all filings made by the Company with any Governmental Entity
in connection with this Agreement and the transactions contemplated hereby.
Parent shall give prompt notice to Company of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause (a) any representation or warranty of Parent or Newco that is
not qualified by materiality contained in Article IV of this Agreement to be
untrue or inaccurate in any material respect at or prior to the consummation of
the Offer or (b) any representation or warranty of the Parent or Newco that is
qualified by materiality contained in Article IV of this Agreement to be untrue
or inaccurate in any respect at or prior to the consummation of the Offer and
(ii) any failure of Parent to comply with or satisfy any covenant, condition, or
agreement to be complied with or satisfied by Parent hereunder. Parent shall
give prompt notice to the Company if there occurs any event which has resulted
in or is reasonably likely to result in a Material Adverse Effect on Parent or
will prevent or result in a third party materially delaying the consummation of
the Offer or the Merger. The Company shall provide to Parent copies of all
filings made by the Company with any Governmental Entity in connection with this
Agreement and the transactions contemplated hereby. Parent shall provide to the
Company copies of all filings made by Parent with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby. The
delivery of any notice pursuant to this Section shall not be deemed to (i)
modify the representations or warranties hereunder of the party delivering such
notice, (ii) modify the conditions set forth in Articles VIII and IX, or (iii)
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
7.8 Fees and Expenses.
-----------------
(a) Except as otherwise provided in this Agreement, Parent, Newco and
Company shall each be responsible for their own fees and expenses incurred in
connection with the transactions contemplated by this Agreement, whether the
Offer or Merger is consummated.
(b) The Company shall pay, or cause to be paid to Parent, in
immediately available funds, $6,000,000.00 (the "Company Termination Fee") under
the circumstances and at the times set forth as follows:
(i) Upon demand, if Parent or Newco terminates this Agreement
under Section 10.1(f); or
(ii) Upon demand, if the Company terminates this Agreement under
Section 10.1(g); or
(iii) If (A) Parent or the Company terminates this Agreement under
Section 10.1(d)(ii) or (B) Parent terminates this Agreement under Section
10.1(e) as a result of a breach of a representation, warranty or covenant, and
in each case, prior to such termination,
an Acquisition Proposal shall have been made and publicly disclosed and
concurrently therewith or within 12 months thereafter, the Company enters into a
merger agreement, acquisition agreement or similar agreement (including without
limitation a letter of intent) with respect to a Superior Proposal or a Superior
Proposal is consummated, then the Company shall pay the Termination Fee upon the
earlier of the execution of such agreement or upon consummation of such Superior
Proposal; provided, however, for purposes of this Section 7.8, if a dispute
exists between the Company and Parent concerning whether such transaction
constitutes a Superior Proposal, The Principal Financial Group (or its
successor) shall determine whether the proposal is more favorable to the
Company's shareholders than the Offer and the Merger.
(c) If through no fault of Parent or Newco, Parent cannot consummate
the Offer because any of the conditions set forth in paragraphs (d), (e) or (g)
(insofar as it relates to the Company) of the Offer Conditions exists, then and
in any of such events, the Company shall pay, or cause to be paid, to Parent, on
demand, in immediately available funds, an amount equal to the actual out-of-
pocket expenses actually incurred by Parent and Newco in an amount not to exceed
$1,000,000; provided, if Parent incurs a commitment or similar fee with respect
to financing the Offer, the Company shall pay Parent, upon demand, an amount
equal to such commitment or similar fee not to exceed an additional $2,000,000
(the "Parent Expense Reimbursement"). Upon receipt of the Parent Expense
Reimbursement, Parent and Newco shall terminate the Agreement. Notwithstanding
the foregoing, Parent and Newco shall not be required to terminate the Agreement
or accept the Parent Expense Reimbursement if any of the foregoing conditions
exist as a result of the following with respect to the Company: (i) an
intentional or willful breach of a representation or warranty, (ii) intentional
or willful failure to perform a covenant or (iii) fraud.
7.9 Xxxx-Xxxxx-Xxxxxx. As promptly as practicable, and in any event
-----------------
within five (5) Business Days following the execution and delivery of this
Agreement by the parties, to the extent required by the HSR Act, Company and the
Parent shall each prepare and file, or shall cause its "ultimate parent" (as
defined in the HSR Act) to prepare and file, any required notification and
report form under the HSR Act, in connection with the transactions contemplated
hereby, the filing fees for which shall be borne by the Parent; Company and
Parent shall, or shall cause their ultimate parents to, request early
termination of the waiting period thereunder; and Company and Parent shall, or
shall cause their ultimate parents to, respond with reasonable diligence to any
request for additional information made in response to such filings. As promptly
as practicable, and in any event within five (5) Business Days, following the
execution and delivery of this Agreement by the parties, Company and Parent
shall prepare and file any other application, report, or other filing required
to be submitted to any other governmental authority in connection with the
transactions contemplated hereby.
7.10 Indemnification and Insurance. On and after the consummation of the
-----------------------------
Offer, the Company shall at all times fully perform all of its obligations to
the present and past officers and directors of the Company (the "Indemnified
Parties") under the provisions existing on the date hereof of the Restated
Articles of Incorporation, Bylaws and any indemnification agreements
(collectively the "Company Indemnification Obligations") for a period of at
least six years from the consummation of the Offer; provided, if pursuant to any
indemnification agreement the Company Indemnification Obligations extend for a
period longer than six years, the Company shall perform its obligations under
such agreement for the time period set forth therein. Parent hereby confirms
that neither amendment of the Company's Restated Articles of Incorporation or
Bylaws nor any merger, liquidation or dissolution of the Company shall impair or
eliminate the Company Indemnification Obligations. The Parent hereby irrevocably
guarantees the performance of the Company Indemnification Obligations if, at the
time any claim, action, suit, proceeding or investigation is brought against the
Indemnified Parties the tangible net book value of the Surviving Corporation is
less than $54,000,000; provided, however, the obligations of the Surviving
Corporation and Parent shall not, in the aggregate, exceed $54,000,000; and,
provided further that none of Parent's obligations under this sentence shall be
binding upon Parent until and unless the Offer shall be consummated. For the
period beginning at the consummation of the Offer and ending December 31, 2003,
the Company shall obtain and maintain directors' and officers' liability
insurance coverage as currently maintained by the Company in an amount equal to
$10,000,000; provided that the Surviving Corporation may substitute therefor
policies containing coverage, terms and conditions which are no less
advantageous to the beneficiaries of such insurance coverage.
7.11 Board of Directors. Promptly after such time as Newco purchases
------------------
Shares pursuant to the Offer (but subject to the satisfaction of the Minimum
Condition), Newco shall be entitled, to the fullest extent permitted by Law, to
designate at its option up to that number of directors, rounded to the nearest
whole number, of the Company's board of directors, subject to compliance with
Section 14(f) of the 1934 Act, as will make the percentage of the Company's
directors designated by Newco equal to the aggregate voting power of the Shares
held by Parent; provided, however, that in the event that Newco's designees are
elected to the board of directors of the Company, until the Effective Time, such
board of directors shall, if requested by Parent have two directors who are
directors on the date of this Agreement and who are not officers or Affiliates
of the Company or any Company Subsidiaries or officers or Affiliates of Parent
or any of its Subsidiaries (the "Independent Directors"); and provided, further
that, in such event, if the number of Independent Directors shall be reduced
below two for any reason whatsoever, the remaining Independent Directors shall,
to the fullest extent permitted by Law, designate a person to fill such vacancy
who shall be deemed to be an Independent Director for purposes of this Agreement
or, if no Independent Directors then remain, the other directors shall designate
two persons to fill such vacancies who shall not be officers or Affiliates of
the Company or any Company Subsidiaries, or officers or Affiliates of Parent or
any of its Subsidiaries, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement. Following the election or appointment
of Newco's designees pursuant to this Section 7.11 and prior to the Effective
Time, any amendment, or waiver of any term or condition, of this Agreement or
the Restated Articles of Incorporation or Bylaws of the Company, any termination
of this Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Newco or waiver or
assertion of any of the Company's rights hereunder, and any
other consent or action by the board of directors with respect to this
Agreement, will require the concurrence of a majority of the Independent
Directors and no other action by the Company, including any action by any other
director of the Company, shall be required for purposes of this Agreement. To
the fullest extent permitted by Applicable Law, the Company shall take all
actions requested by Parent which are reasonably necessary to effect the
election or appointment of any such designee, including mailing to its
shareholders the Information Statement containing the information required by
Section 14(f) of the 1934 Exchange Act and Rule 14f-1 promulgated thereunder,
and the Company agrees to make such mailing with the mailing of the Schedule
14D-9 (provided that Newco shall have provided to the Company on a timely basis
all information required to be included in the Information Statement with
respect to Newco's designees). Parent and Newco will be solely responsible for
any information with respect to either of them and their nominees, officers,
directors and Affiliates required by Section 14(f) of the 1934 Act and Rule 14f-
1 promulgated thereunder. In connection with the foregoing, the Company will
promptly, at the option of Parent, to the fullest extent permitted by Law,
either increase the size of the Company's board of directors and/or request the
resignation of such number of its current directors as is necessary to enable
Newco's designees to be elected or appointed to the Company's board of directors
as provided above.
7.12 Commercially Reasonable Efforts. Upon the terms and conditions set
-------------------------------
forth herein, subject to fiduciary responsibilities, each of the Company, Parent
and Newco agrees to use its commercially reasonable efforts to cause the
purchase of Shares pursuant to the Offer and the consummation of the Merger to
occur as soon as reasonably possible. Without limiting the foregoing, (i) each
of the Company, Parent and Newco agree to use its commercially reasonable
efforts to take, or cause to be taken, all actions necessary to comply promptly
with all legal requirements that may be imposed on itself with respect to the
Offer and the Merger (which actions shall include furnishing all information
required under the HSR Act and in connection with approvals of or filings with
any other Governmental Entity) and shall promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with the Offer and the
Merger, and (ii) each of the Company, Parent and Newco shall, and shall cause
its Subsidiaries to, use its commercially reasonable efforts to obtain (and
shall reasonably cooperate with each other in obtaining) (a) any material
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, Newco, the Company or any of their Subsidiaries in
connection with the Offer and the Merger or the taking of any action
contemplated by this Agreement and (b) the financing necessary to consummate the
Offer and the Merger on terms and conditions satisfactorily to Parent.
Notwithstanding anything to the contrary contained in this Agreement, in
connection with any filing or submission required or action to be taken by
Parent, the Company or any of Company Subsidiaries to consummate the Offer, the
Merger or the other transactions contemplated in this Agreement, the Company
shall not, without Parent's prior written consent, commit to any divestiture of
assets or businesses of the Company and Company Subsidiaries if such divested
assets and/or businesses are Material to the assets or profitability of the
Company and Company
Subsidiaries taken as a whole; and neither Parent nor any of its Subsidiaries
shall be required to divest or hold separate or otherwise take or commit to take
any action that limits ability to retain, the Company or any of the businesses,
product lines or assets of Parent or any of its Subsidiaries or that would have
a Material Adverse Effect on Parent.
7.13 Litigation Settlement. The Company agrees that it shall not settle
---------------------
any litigation commenced after the date hereof against the Company or any of its
directors by any shareholder of the Company relating to the Offer, the Merger or
this Agreement without the prior written consent of Parent, which consent shall
not be unreasonably withheld or delayed.
7.14 Parent Guarantee. The Parent hereby unconditionally and irrevocably
----------------
guarantees performance of all obligations of Newco arising under or by reason of
this Agreement.
7.15 Compliance with Indiana Corporation Law and other State Takeover
----------------------------------------------------------------
Statutes. Parent, Newco and the Company shall take such actions as are necessary
--------
to comply with the provisions of IC 23-2-3.1-0.5 et. seq. (the "Indiana Takeover
Offers Statute") and the Company shall take such actions as are necessary,
including amending its Bylaws, to render inapplicable the provisions of IC 23-1-
42-1 et. seq. (the "Indiana Control Share Acquisitions Statute") to the
transactions contemplated by this Agreement, so that the Offer, the Merger and
the transaction contemplated by this Agreement may be consummated as promptly as
reasonably practical by the terms contemplated hereby. If any other "fair price"
or "control share acquisition" statute or similar statute or regulation, shall
be or become applicable to the Offer, the Merger or the transactions
contemplated by the Agreement, the Company, through the board of directors, will
approve the Agreement, the Offer and the Merger, will amend the Bylaws of the
Company, and will take such other actions as are necessary so that the Offer,
the Merger and the transactions contemplated by this Agreement may be
consummated as promptly as reasonably practical on the terms contemplated hereby
and otherwise act to minimize the effects of any such statute or regulation on
the transactions contemplated hereby.
7.16 Compensation Arrangements.
-------------------------
(a) The Parent and Newco hereby acknowledge that they are aware of
the agreements (the "Severance Agreements") and the Separation Plan listed on
Exhibit "F" attached hereto which were approved by the Company's Compensation
-----------
Committee on October 21, 1997 and by the Company's board of directors on October
21, 1997.
(b) The Parent and Newco agree to use commercially reasonable
efforts, consistent with the provisions of Applicable Law, to cause the Company
to perform its obligations under the Severance Agreements and the Severance
Plan, and neither Parent nor Newco shall challenge or contest the enforceability
of, cause the Company to challenge or contest the enforceability of the
Severance Agreements or the Severance Plan.
ARTICLE VIII
Conditions to Obligations of the Company to Close the Merger
------------------------------------------------------------
The obligations of the Company to consummate the Merger shall be subject to
the fulfillment on or prior to the Closing Date of each of the following
conditions:
8.1 Shareholder Approval; Purchase of Shares.
----------------------------------------
(a) If required by Applicable Law, Company Shareholder Approval shall
have been obtained; provided, however, that Parent and Newco shall vote all of
their shares of Company Common Stock entitled to vote thereon in favor of the
Merger.
(b) Newco shall have previously accepted for payment and paid for
Shares pursuant to the Offer.
8.2 Legal Proceedings. There shall not be any statute, rule or regulation
-----------------
that makes consummation of the transactions contemplated hereby illegal or
otherwise prohibited and no Governmental Entity shall have issued an order,
decree, or ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the consummation of the transactions contemplated
hereby, and such order, decree, ruling, or other action shall have become final
and nonappealable.
8.3 Xxxx-Xxxxx-Xxxxxx. All applicable waiting periods (and any extensions
-----------------
thereof) under the HSR Act shall have expired or otherwise been terminated
without objection from any of the relevant federal authorities.
ARTICLE IX
Conditions to Obligation of Parent and Newco to Close
-----------------------------------------------------
The obligations of Parent and Newco to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
9.1 Shareholder Approval; Purchase of Shares.
----------------------------------------
(a) If required by Applicable Law, Company Shareholder Approval shall
have been obtained; provided, however, that Parent and Newco shall vote all of
their shares of Company Common Stock entitled to vote thereon in favor of the
Merger.
(b) Newco shall have previously accepted for payment and paid for
Shares pursuant to the Offer.
9.2 Legal Proceedings. There shall not be any statute, rule or regulation
-----------------
that makes consummation of the transactions contemplated hereby illegal or
otherwise prohibited and no Governmental Entity shall have issued an order,
decree, or ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the consummation of the transactions contemplated
hereby, and such order, decree, ruling, or other action shall have become final
and nonappealable.
9.3 Xxxx-Xxxxx-Xxxxxx. All applicable waiting periods (and any extensions
-----------------
thereof) under the HSR Act shall have expired or otherwise been terminated
without objection of any of the relevant federal authorities.
9.4 No Material Adverse Change. Except as disclosed in this Agreement or
--------------------------
the Schedules hereto, since the latest of the Financial Statements or, if
applicable, the Supplementary Unaudited Financial Statements, there shall not
have been any material adverse change in the Company or the Business, assets,
results of operations or financial condition of the Company's Business or any
material portion thereof.
ARTICLE X
Termination, Amendment and Waiver
---------------------------------
10.1 Termination. This Agreement may be terminated and the transactions
-----------
contemplated hereby abandoned at any time prior to the consummation of the Offer
in the following manner:
(a) by mutual written consent of the Company, Parent and Newco; or
(b) either by the Company or Parent, if the Offer shall not have been
consummated on or before December 31, 1997 (the "Cut-Off Date") unless such
failure to consummate the Offer shall (i) be due to a breach of this Agreement
by the party or parties seeking to terminate this Agreement pursuant to this
clause (b), or (ii) through no fault of the parties hereto, be due to the
failure to obtain the governmental approvals contemplated by Section 7.9 of this
Agreement on or before April 30, 1998; or
(c) either by the Company or by Parent, if there shall be any
statute, rule, or regulation that makes consummation of the transactions
contemplated hereby illegal or otherwise prohibited or a Governmental Entity
shall have issued an order, decree, or ruling or taken any
other action permanently restraining, enjoining, or otherwise prohibiting the
consummation of the transactions contemplated hereby, and such order, decree,
ruling, or other action shall have become final and nonappealable; or
(d) by either Parent or the Company if (i) as a result of the failure
of any of the Offer Conditions set forth in Exhibit "B" (other than the Minimum
-----------
Condition), the Offer shall have been terminated or expired in accordance with
its terms without Newco having accepted for payment of any Shares pursuant to
the Offer consistent with Newco's obligations under Section 1.1 of this
Agreement, or (ii) as a result of the failure of the Minimum Condition, the
Offer shall have terminated or expired in accordance with its terms without
Newco having accepted for payment any Shares pursuant to the Offer consistent
with Newco's obligations under Section 1.1 of this Agreement, or (iii) Newco
shall have, consistent with its obligations hereunder, failed to pay for the
Shares prior to the Cut-Off Date; provided, however, that the right to terminate
this Agreement pursuant to this Section 10.1(d) shall not be available to any
party whose failure to perform any of its obligations under this Agreement
results in the failure of any such Offer Condition; provided, however, neither
Parent or the Company may terminate for failure to obtain the governmental
approvals contemplated by Section 7.9 of this Agreement on or before April 30,
1998;
(e) by Parent or Newco prior to the purchase of Shares pursuant to
the Offer in the event of a breach by the Company of any representation,
warranty, covenant or other agreement contained in this Agreement which (i)
would give rise to the failure of the condition set forth in paragraph (d) or
(e) of Exhibit "B" and (ii) cannot be or has not been cured within ten (10)
-----------
Business Days after the giving of written notice to the Company; or
(f) by Parent or Newco if either Parent or Newco is entitled to
terminate the Offer as a result of the occurrence of any event set forth in
paragraph (c) of Exhibit "B" to this Agreement; provided that the temporary
-----------
suspension of the recommendation of the Company's board of directors referred to
herein in accordance with Section 7.3(b) shall not give rise to a right of
termination pursuant to this Section 10.1(f); or
(g) by the Company in accordance with Section 7.3(b); provided,
however, that it has complied with all provisions thereof, including the notice
provisions therein, and that it complies with the requirements of Section 7.8
relating to the payment (including the timing of any payment) of the Company
Termination Fee; or
(h) by the Company, if (i) any of the representations or warranties
of Parent or Newco set forth in this Agreement that are qualified as to
materiality shall not be true and correct in any respect or any such
representations or warranties that are not so qualified shall not be true and
correct in any material respect, or (ii) Parent or Newco shall have failed to
perform in any material respect any material obligation or to comply in any
material respect with any material agreement or covenant of Parent or Newco to
be performed or complied with by it under this Agreement and, in the case of
(i), such untruth or incorrectness cannot be or has not been
cured within ten (10) Business Days after the giving of written notice to Parent
or Newco, and, in the case of (ii), such failure cannot be or has not been cured
within ten (10) Business Days after the giving of written notice to Parent or
Newco; or
(i) by the Company, prior to the commencement of the Offer if Newco
for any reason shall have failed to commence the Offer in accordance with
Section 1.1 within five (5) Business Days after the date of this Agreement.
10.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement pursuant to Section 10.1 by the Company or by Parent, written notice
thereof shall forthwith be given to the other party specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
become null and void and have no effect except that (i) the agreements contained
in this Section 10.2, Article XII, Article XIII and the last sentences each of
Section 1.1(a) and 1.2(a) shall survive the termination hereof and remain in
full force and effect and (ii) subject to the provisions of Sections 7.8 and
10.5, nothing herein shall relieve any party for liability for any breach
hereof.
10.3 Amendment. This Agreement may not be amended except by an instrument
---------
in writing approved by the parties to this Agreement and signed by or on behalf
of each of the parties hereto; provided, however, that:
(a) After the consummation of the Offer, no change shall be made to
the provisions in Article II, Article VIII, Article IX or Section 7.1 without
the consent of the holders of a majority of the Shares not owned by Parent,
Newco or any of their respective Affiliates. The holders of the Shares not
acquired in the Offer shall be third party beneficiaries of the provisions in
Article II, Article VIII, Article IX, and Section 7.1 and shall be entitled to
enforce the obligations of the Parent, Newco and Company under Article II,
Article VIII, Article IX, and Section 7.1 and this clause (a) to the same extent
as if such Persons were a party to this Agreement.
(b) After the consummation of the Offer, no change shall be made in
the provisions in Sections 7.4, 7.10, 7.12, 7.14, 7.16 or 10.3 which would
diminish the rights or benefits a person would have if the requirements of those
Sections as constituted as of the consummation of the Offer were honored without
the consent of that person. Each individual who has rights under the
arrangements cited in Sections 7.4, 7.10, 7.12, 7.14, 7.16 or 10.3 shall be a
third party beneficiary of those Sections and shall be entitled to enforce the
obligations of the Parent, Newco and Company under those Sections and this
clause (b) to the same extent as if such individual were a party to this
Agreement.
The prohibitions against change in preceding subparagraphs (a) and (b) include
prohibitions against accomplishing the prohibited changes indirectly by
extending time for performance, termination of this Agreement, waiver or other
indirect means.
10.4 Waiver. The Company, on the one hand, and Parent, on the other hand,
------
may (i) waive any inaccuracies in the representations and warranties of the
other party or parties contained herein or in any document, certificate, or
writing delivered pursuant hereto or (ii) waive compliance by the other party or
parties with any of the other party's or parties' agreements or fulfillment of
any conditions to its or their own obligations contained herein. Any agreement
on the part of a party hereto to any such waiver shall be valid only if set
forth in an instrument in writing signed by or on behalf of such party. No
failure or delay by a party hereto in exercising any right, power, or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege.
10.5 Remedies Not Exclusive. The rights and remedies herein provided shall
----------------------
be cumulative and not exclusive of any rights or remedies provided by Law except
that if this Agreement is terminated pursuant to any of the provisions of
Sections 7.3(b) or 7.8(b) hereof, the payment of the Company Termination Fee
provided for in Section 7.8(b) or the payment of the Parent Expense
Reimbursement provided in Section 7.8(c) hereof shall be the sole and exclusive
right, remedy and obligation of the parties hereto.
ARTICLE XI
Non-Survival of Representations and Warranties
----------------------------------------------
None of the representations and warranties contained in this Agreement or
in any instrument delivered pursuant to this Agreement shall survive the
consummation of the Offer.
ARTICLE XII
Financing Condition
-------------------
12.1 Financing Condition. The Company acknowledges and agrees that the
-------------------
obligation of Parent and Newco to consummate the Offer is subject to, among
other conditions set forth in Exhibit "B," Parent obtaining, prior to the
------------
expiration of the Offer, sufficient financing, on terms and conditions
satisfactory to Parent to enable consummation of the Offer and the Merger (the
"Financing Condition").
12.2 Failure to Obtain Financing. In the event that the Offer is not
---------------------------
consummated by the Cut-Off Date only because Parent was unable to satisfy the
Financing Condition the Parent shall pay, or cause to be paid, to the Company,
upon demand, an amount equal to $6,000,000 (the "Parent Termination Fee");
provided that if any of the Offer Conditions exist, (excluding the Financing
Condition and condition (g) as it applies to the Parent), Parent shall have no
obligation to pay the Parent Termination Fee.
ARTICLE XIII
Miscellaneous
-------------
13.1 Notices. All notices, requests, demands, and other communications
-------
required or permitted to be given or made hereunder by any party hereto shall be
in writing and shall be deemed to have been duly given or made if delivered
personally, or three (3) Business Days after deposit in the United States Mail
and transmitted by first class registered or certified mail, postage prepaid,
return receipt requested, or when sent by prepaid overnight delivery service, to
the parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
If to Parent: Kevco, Inc.
ATTN: Xxxxx X. Xxxxxx
0000 X. Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Or if to Newco: SSC Acquisition Corp.
ATTN: Xxxxx X. Xxxxxx
0000 X. Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
With a copy to: Xxxxxxx X. Xxxxxx
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
If to Company: Shelter Components Corporation
ATTN: Xxxxx X. Xxxxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
With a copy to: Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
00/xx/ Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
13.2 Governing Law. This Agreement shall be construed in accordance with
-------------
and governed by the internal substantive Laws, not the Law of conflicts, of the
State of Indiana.
13.3 Captions. The captions used herein are for administrative and
--------
convenience purposes only and shall not be construed in interpreting this
Agreement.
13.4 Gender. Whenever the context so requires, the masculine shall include
------
the feminine and neuter, and the singular shall include the plural, and
conversely.
13.5 Invalidity. If any portion of this Agreement shall be held invalid or
----------
inoperative, then so far as reasonable and possible:
(1) The remainder of this Agreement shall be considered valid and
operative; and
(2) Effect shall be given to the intent manifested by the portion
held invalid or inoperative.
13.6 Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed an original but all of which shall constitute one
instrument.
13.7 Specific Performance. Each party hereto acknowledges that a remedy at
--------------------
law for any breach or attempted breach of this Agreement may be inadequate,
agrees that such other party hereto shall be entitled to specific performance
and injunctive and other equitable relief in case of any such breach of
attempted breach and further agrees to waive any requirement for securing or
posting of any bond in connection with the obtaining of such injunctive or other
equitable relief. Such remedies shall be cumulative and not exclusive and shall
be in addition to any other rights or remedies any party may have against the
other.
13.8 Attorneys' Fees. If any action at law or in equity, including any
---------------
action for injunctive or declaratory relief, is brought to enforce or interpret
any of the provisions of this Agreement, the prevailing party shall be entitled
to recover reasonable attorneys' fees and expenses from the other party, which
fees and expenses may be set by the court in the trial of such action or may be
enforced in a separate action brought for that purpose and which fees and
expenses shall be in addition to any other relief which may be awarded.
13.9 Binding Effect. This Agreement and schedules attached hereto, the
--------------
Shareholder's Agreement as well as all covenants, agreements, representatives,
warranties or obligations contained in any of same shall be binding upon and
inure to the benefit of the parties hereto, their respective successors, assigns
(if permitted), receivers, trustees or other legal representatives. Neither
Parent nor Newco shall have the right to assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of the other
parties thereto.
13.10 Entire Agreement. The August Confidentiality Agreement and this
----------------
Agreement (and the exhibits, schedules and Disclosure Letters attached hereto)
contains the entire agreement between the parties hereto with respect to the
within subject matter and supersedes any and all prior agreements, whether
written or oral, with respect thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
PARENT:
KEVCO, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Its: President and Chairman
------------------------------------
NEWCO:
SCC ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Its: President
------------------------------------
COMPANY:
SHELTER COMPONENTS CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Its: Chief Executive Officer
------------------------------------
EXHIBIT "A"
DEFINITIONS
-----------
CERTAIN DEFINED TERMS. As used in the Agreement, each of the following
initially capitalized terms still have the respective meaning set forth below:
"AFFILIATE" means, with respect to any Person, any other person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. "Control" or
"controls" for purposes hereof means that a Person has the power, direct or
indirect, to conduct or govern the policies of another Person.
"APPLICABLE LAW" means any Law of any Governmental Entity to which a
specified Person or property is subject.
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act or transaction that primarily forms or is likely to be the
primary cause for any specified consequence.
"BUSINESS" means the Business conducted by the Company as of the date of
the Agreement and including, without limitation, the manufacture, distribution
and sale of products to the manufactured housing, modular housing and
recreational vehicle industries, the distribution and sale of products to other
industries within its geographic territories and the supply and rendering of
other services ancillary and incidental thereto.
"BUSINESS DAY" refers to a day other than a Saturday, Sunday or a holiday
on which commercial banks are required or authorized to close in Elkhart,
Indiana.
"CODE" means Internal Revenue Code of 1986, as amended.
"COMPANY SUBSIDIARY" means each Subsidiary of the Company.
"COMPANY STOCK" means Company Common Stock and Company Special Stock.
"CONTRACTS" refers to, collectively, all oral or written contracts,
agreements, leases, subleases, licenses, sublicenses, commitments, instruments,
guaranties, bids and proposals to which Parent, Newco or Company is a party as
of the date specified, all unfilled orders
outstanding as of the Closing Date for the purchase of raw materials, goods or
services, and all unfilled orders outstanding as of the Closing Date for the
sale of raw materials, goods or services.
"COSTS OF REMEDIATION" refers to all Damages arising out of or related to
(i) those items listed or referred to on Schedule 5.21 to the Company Disclosure
Letter or the Financial Statements; (ii) the presence of any Hazardous Materials
existing at any Owned Real Property or Leased Property at or to which the
Company disposed, transported, stored, treated or arranged to dispose Hazardous
Materials (including, without limitation, off-site liability under any
Environmental Law arising from or in connection with transportation, treatment,
storage disposal, or arranging for disposal of Hazardous Materials; and (iii)
the Release of any Hazardous Materials) from any of such property, including,
without limitation, fees for services of attorneys, consultants, contractors,
experts and laboratories, and all other out-of-pocket costs, incurred in
connection with investigation, characterization, remediation or mitigation
thereof.
"DAMAGES" refers to, in respect of any obligation to indemnify any Person,
pursuant to the terms of the Agreement, any losses, amounts paid in settlement,
Taxes, claims, damages, liabilities, obligations, judgments, settlements and
costs and expenses (including costs of investigation or enforcement and
attorneys' fees and expenses), including all special or punitive damages which
are assessed or incurred.
"EMPLOYEE BENEFIT PLANS" refers to an Employee Pension Benefit Plan or an
Employee Welfare Benefit Plan where no distinction is required by the context in
which the term is used.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in Section 3(2)
of ERISA.
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in Section 3(1)
of ERISA.
"ENVIRONMENTAL LAWS" refers to any existing federal, state, or local
statute, regulation or ordinance, or any existing judicial or administrative
decree or decision with respect to any Hazardous Materials, drinking water,
ground water, landfills, open dumps, storage tanks, underground storage tanks,
solid waste, waste water, storm water run-off, waste emissions or xxxxx.
Without limiting the generality of the foregoing, the term will encompass each
of the following statutes, and the regulations promulgated thereunder, in each
case as in effect as of Closing: (a) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (b) Occupational Safety and
Health Act of 1970, as amended, (c) the Resource Conservation and Recovery Act
of 1976, as amended, (d) the Hazardous Material Transportation Act, as amended,
(e) the Toxic Substances Control Act, as amended, (f) the Clean Water Act, as
amended, (g) comparable state and local Laws, and (h) other health, safety and
environmental protection Laws in effect on the date of the Agreement.
"ERISA" refers to the Employee Retirement Income Security Act of 1974 as
amended.
"GAAP" refers to generally accepted accounting principles in the United
States of America as in effect as of the date hereof.
"GOVERNMENTAL ENTITY" means any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental or regulatory body, agency,
department, commission, board, bureau or other authority or instrumentality
(domestic or foreign).
"HAZARDOUS MATERIALS" means any substance, material or waste which is
regulated by any applicable local, state or federal Governmental Entity,
including without limitation, any material, substance or waste which is defined
as "hazardous", "hazardous waste", "hazardous material", "hazardous substance",
"extremely hazardous waste", "restricted hazardous waste", "pollutant",
"contaminant", "toxic substance" or "toxic waste" under any provision of any
applicable Environmental Law, and includes, but is not limited to, petroleum,
petroleum products, asbestos, urea formaldehyde and polychlorinated biphenyls.
"HSR ACT" refers to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"INDEBTEDNESS" means any liability, whether or not contingent, (i) in
respect of borrowed money or evidenced by bonds, notes, debentures, or similar
instruments, (ii) representing the balance deferred and unpaid of the purchase
price of any property (including pursuant to capital leases) but excluding trade
payables, if and to the extent any of the foregoing indebtedness would appear as
a liability upon a balance sheet prepared on a consolidated basis in accordance
with GAAP, (iii) guaranties, direct or indirect, in any manner, of all or any
part of any Indebtedness of any Person.
"INDIANA LAW" means the Indiana Business Corporation Law.
"INTELLECTUAL PROPERTY" means patents, trademarks, service marks, trade
names, copyrights, trade secrets, know-how, inventions, brand names, labels,
customer lists, logos, rights in computer software, rights granted or retained
in licenses under any of the foregoing, and similar rights utilized by Company
or Parent, as the case may be, in its business and all registrations,
applications, licenses and rights with respect to any of the foregoing.
"KNOWLEDGE" as applied to either the Company, a Company Subsidiary, Parent
or Newco, refers to the actual knowledge, of its respective executive officers,
its risk management officer, its human resources officer or directors.
"LAW" means all applicable federal, state, local, foreign or other laws
(including common law), statutes, ordinances, regulations, rules, codes, writs,
judgments, orders or decrees.
"LIEN" refers to any mortgage, pledge, security agreement, charge,
restriction, easement or other encumbrance of any type or character.
"MATERIAL ADVERSE EFFECT" refers to a material adverse effect with respect
to the, business, results of operations, properties, operations, or financial
condition of any specified Person and its Subsidiaries, taken as a whole.
"MULTI-EMPLOYER PLAN" has the meaning set forth in Section 3(37) of ERISA.
"PERMITS" refers to any licenses, permits, franchises, consents, approvals,
variances and other authorizations of, from or required by any Governmental
Entity under any applicable law.
"PERMITTED LIEN" means Liens imposed by law, such as carriers'
warehousemen's and mechanic's Liens or other Liens arising out of judgments or
awards against such person with respect to which such person shall be then
prosecuting appeal or other proceedings for review, and which do not in the
aggregate materially adversely affect the value of said properties or materially
impair their use in the operation of the Business of the Company; Liens for ad
valorem taxes not yet due and payable or not yet subject to penalties for
nonpayment or which are being contested in good faith and by appropriate
proceedings; Liens in favor of issuers of surety bonds issued pursuant to the
request of and for the account of the Company in the ordinary course of its
business, and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
Business of the Company; survey exceptions, easements or reservations of, or
rights of others for, rights of way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of Owned Real Property, and which do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the business of the Company; Liens or other interests in favor
of others incidental to the conduct of the Company's Business or to the
ownership of its properties which were not incurred in connection with
Indebtedness or other extensions of credit, including, without limitation,
properties in the Company's possession under conditional sales, consignment or
purchase money lease agreements and which do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the Business of the Company; and other Liens in existence as of
the date of the Agreement which will not have a Material Adverse Effect on the
Company or on the ability of Parent to consummate the Offer or the financing of
the Offer.
"PERSON" refers to any individual, partnership, corporation, trust,
association, limited liability company, Government Entity or any department or
agency thereof, or any other entity.
"PROCEEDING" means any proceeding, action, claim, suit, audit,
investigation or inquiry by or before any Governmental Entity.
"RELEASE" refers to any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, storing, escaping, leaching, dumping, burying,
abandoning or disposing into the environment.
"SEC" means the Securities and Exchange Commission.
"SUBSIDIARY" means, with respect to any Person, any corporation, limited
liability company, partnership, association, trust, or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association, trust, or other business entity a
majority of the partnership or other similar ownership or beneficial interest
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more Subsidiaries of that Person or a combination thereof. For
purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association,
trust or other business entity if such Person or Persons shall be allocated a
majority of limited liability company, partnership, association, trust or other
business entity gains or losses, distributions or other economic interests or
shall be or control any managing director, manager, general partner or trustee
of such limited liability company, partnership, association trust or other
business entity.
"TAX" refers to all federal, state, local and foreign taxes, charges, fees,
levies, penalties, duties or other assessments, including, without limitation,
income, gross receipts, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, withholding, social security, disability, real property, personal
property, ad valorem or other tax or governmental fee of any kind whatsoever
imposed or required to be withheld by any Governmental Entity, whether disputed
or not.
"TAX RETURN" means any tax return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"1933 ACT" means the Securities Act of 1933, as amended.
"1934 ACT" means the Securities Exchange Act of 1934, as amended.
EXHIBIT "B"
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer, but subject, in all cases to
Parent's and Newco's obligations set forth under the Agreement, including,
without limitation, under Sections 1.1, 7.12 and 12.2 Newco shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the 1934 Act (relating to
Newco's obligation to promptly pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that would when
combined with any Shares held by the Parent, Newco or any of their Affiliates,
would constitute a majority of the aggregate outstanding Shares (assuming the
exercise of all options to purchase, and the conversion or exchange of all
securities convertible or exchangeable into, Shares outstanding as of the
consummation Offer) (the "Minimum Condition"), (ii) any waiting period under the
HSR Act applicable to the Offer shall have expired or been terminated prior to
the expiration of the Offer, and (iii) the Financing Condition shall have been
satisfied. Furthermore, notwithstanding any other term of the Offer, but
subject, in all cases, to Parent's and Newco's obligations set forth in the
Agreement, including, without limitation, under Sections 1.1, 7.12 and 12.2
Newco shall not be required to accept for payment or, to pay for any Shares not
theretofore accepted for payment or paid for, and may terminate the Offer at any
time if, at any time on or after the date of the Agreement and before the
acceptance of such Shares for payment or the payment therefor, any of the
following conditions exists (other than as a result of any action or inaction of
Parent or any of its Subsidiaries that constitutes a breach of this Agreement):
(a) there shall be instituted or pending by any governmental agency or
similar authority in any United States federal or state court or administrative
agency any suit, action, Proceeding, application or counterclaim which would
reasonably be expected to (i) restrain or prohibit the acquisition by Parent or
Newco of the Shares pursuant to the Offer, the consummation of the Offer or the
Merger, or require the Company, Parent or Newco to pay any damages that are
material in relation to the Company and Company Subsidiaries, or Parent and its
Subsidiaries, taken as a whole, (ii) prohibit or limit in any material respect
the ownership or operation of any business or assets of the Company or Company
Subsidiaries or Parent or its Subsidiaries, as they are presently being
operated, or to compel the Company or Parent to dispose of or hold separate any
material business or assets of the Company and Company Subsidiaries or Parent
and its Subsidiaries, as a result of the Offer, or the Merger, (iii) impose
material limitations on the ability of Parent or Newco to acquire or hold, to
exercise full rights of ownership of, any Shares to be accepted for payment
pursuant to the Offer, including, without limitation, the right to vote such
Shares on all matters properly presented to the shareholders of the Company,
(iv) prohibit Parent
or any of its Subsidiaries from effectively controlling any material business or
operations of the Company or Company Subsidiaries, or (v) which otherwise is
reasonably likely to have a Material Adverse Effect on the Business, properties,
assets, financial condition or results of operations of the Company and Company
Subsidiaries taken as a whole;
(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any United States federal or state
governmental agency, court or similar authority, any statute, rule, regulation,
judgment, order of injunction, other than the application to the Offer or the
Merger of applicable waiting periods under the HSR Act, that would reasonably be
expected to result in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above (other than any state law, statue, rule or regulation
whose applicability can be avoided by not extending the Offer to residents of
such state provided that in the aggregate not more than 5% of the outstanding
Shares as of the consummation of the Offer shall be owned of record by residents
of all such states);
(c) the board of directors of the Company or any committee thereof
shall have and be continuing to have suspended (in excess of three days),
withdrawn or modified in a manner adverse to Parent or Newco its approval or
recommendation of the Offer, the Merger or this Agreement, or approved or
recommended any Acquisition Proposal, or shall have resolved to take any of the
foregoing actions;
(d) any of the representations and warranties of the Company set forth
in the Agreement that are qualified as to materiality shall not be true and
correct in any respect or any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each
case, at the date of this Agreement and as if such representations and
warranties were made as of such time of determination (except that
representations and warranties that speak as of a specified date shall only be
true and correct to such extent as of such date);
(e) the Company shall have and be continuing to have failed to perform
in any material respect any material obligation or to comply in any material
respect with any material agreement or material covenant of the Company to be
performed or complied with by it under the Agreement prior to the consummation
of the Offer;
(f) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on a national
securities exchange in the United States (excluding any coordinated trading halt
triggered solely as a result of a specified increase or decrease in a market
index or similar "circuit breaker" process), (ii) a declaration of a banking
moratorium or any general suspension of payments in respect of banks in the
United States, (iii) any material limitation (whether or not mandatory) by any
Governmental Entity on, or other similar event that materially adversely
affects, the extension of credit in the United States by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the United
States which materially
adversely affects the extension of credit in the United States by banks or other
leading institutions, or (v) from the date of this Agreement through the date of
termination or expiration, a decline of at least 25% in either the Dow Xxxxx
Industrial Average or the Standard & Poor's 500 Index; or
(g) there shall have occurred and be continuing any material adverse
change with respect to the Company or Parent (other than changes in general
economic conditions or in economic conditions generally affecting the industry
in which the Company and Parent operates).
which, in the judgment of Newco with respect to each and every matter referred
to above and regardless of the circumstances (including any action or inaction
by Newco or any of its Affiliates not inconsistent with the terms hereof) giving
rise to any such condition, makes it inadvisable to proceed with the Offer or
with such acceptance for payment of or payment for Shares.
If the Agreement is terminated by Parent or Newco or by the Company in
accordance with its terms, Newco shall, and Parent shall cause Newco to,
terminate promptly the Offer.
The foregoing conditions are for the benefit of Parent and Newco and may,
subject to the terms and conditions of the Agreement, be waived by Parent and
Newco in whole or in part at any time and from time to time in their sole
discretion; provided, however, that the Minimum Condition must be satisfied
prior to acceptance of any Shares for purchase pursuant to the Offer. The
failure by Parent or Newco at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
Notwithstanding the fact that Newco reserves the right to assert the occurrence
of a condition following acceptance for payment but prior to payment in order to
delay or cancel its obligation to pay for properly tendered Shares, Newco shall
either promptly pay for such Shares or promptly return such Shares.
Each term which is defined in the Agreement has the same meaning wherever
it is used in this Exhibit "B" as the meaning given in the Agreement.
EXHIBIT "C"
RESOLUTIONS OF THE BOARD OF DIRECTORS OF
SHELTER COMPONENTS CORPORATION
(Approved and Adopted at Meeting of the Directors on October 21, 1997)
WHEREAS, there has been presented to the Board of Directors of the
Corporation a proposed Agreement and Plan of Merger (the "Merger Agreement"), by
and among the Corporation, Kevco, Inc., a Texas corporation ("Kevco"), and a
wholly owned subsidiary of Kevco, a true and correct copy thereof is attached as
Exhibit A hereto;
NOW THEREFORE BE IT RESOLVED, that the acquisition of the Corporation by
Kevco pursuant to the Offer (as defined in the Merger Agreement) and the Merger
(as defined in the Merger Agreement), be, and hereby is, in all respects,
approved substantially according to the terms, provisions, and conditions of the
Merger Agreement.
FURTHER RESOLVED, that the Merger Agreement, together with any exhibits,
schedules and annexes thereto, substantially in the form presented to and
reviewed by the Board of Directors, and the Corporation's performance of its
obligations under the Merger Agreement and related documents and agreements
contemplated by the Merger Agreement and necessary or appropriate to effect the
transactions contemplated by the Merger Agreement, be, and hereby are, in all
respects, approved.
FURTHER RESOLVED, that the Board of Directors of the Corporation hereby
determines and declares, upon the terms and subject to the conditions set forth
in the Merger Agreement, that, in the opinion of the Board of Directors, the
Offer and the Merger are in the best interests of the Corporation and the
shareholders of the Corporation and are fair to the shareholders of the
Corporation; and that the Board of Directors does hereby recommend that the
shareholders of the Corporation accept the Offer and tender their shares of
common stock of the Corporation pursuant to the Offer and, if required by
applicable law, approve, adopt and accept the Merger Agreement and the Merger.
FURTHER RESOLVED, that, any of the Chairman of the Board, the Chief
Executive Officer or the President of the Corporation be, and hereby is
authorized, empowered and directed for and on behalf of and in the name of the
Corporation to execute, acknowledge, deliver and otherwise approve and authorize
the Merger Agreement in substantially the form presented to the Board of
Directors, with such changes and modifications or amendments thereto as a such
officer of the Corporation shall deem necessary or appropriate, the approval of
which shall be conclusively evidenced by his or their execution and delivery
thereof.
FURTHER RESOLVED, that, the Board of Directors acting pursuant to Indiana
Code (S) 23-1-43-19, and intending to render inapplicable the provisions of
Indiana Code (S) 23-1-43, et seq, The Business Combinations Chapter, to the
Offer, the Merger, the Merger Agreement and the Shareholders Agreements (as
defined in the Merger Agreement) approves the Offer, the Merger, the Merger
Agreement and the Shareholders Agreements, approves the purchase of shares of
the common stock of the Corporation to be made by Kevco pursuant to the Offer
and the transactions contemplated by Shareholders Agreements; and approves such
share purchase before the share acquisition date (as defined in Indiana Code (S)
23-1-43-15 of such purchaser.
FURTHER RESOLVED, that, subsequent to the execution and delivery of the
Merger Agreement, any one or more of the officers of the Corporation be, and
hereby are, authorized, empowered and directed to take all further actions and
to execute and deliver all instruments, certificates, documents, deeds,
assignment, and withdrawal documents including, without limitation, to make any
and all filings with the Secretary of State of Indiana, foreign jurisdictions
where the Corporation is qualified to transact business, and other local, state
and federal authorities, in the name and on behalf of the Corporation, which
shall in his or her judgment be necessary, proper or advisable in order to
perform the Corporation's obligations under or in connection with the Offer, the
Merger, the Merger Agreement and the other transactions contemplated thereby.
FURTHER RESOLVED, that the Secretary or any Assistant Secretary be, and
hereby are, authorized and empowered for and on behalf of and in the name of the
Corporation to execute, acknowledge and deliver any and all attestations and
certifications that may be required from time to time in connection with the
Offer, the Merger, the Merger Agreement and the other transactions contemplated
thereby.
FURTHER RESOLVED, that the foregoing resolutions are adopted subject to and
in acknowledgment of the right of the parties to the Merger Agreement to
terminate and abandon the transactions in accordance with the terms of the
Merger Agreement.
EXHIBIT "D"
FAIRNESS OPINION
[LETTERHEAD OF SBC WARBURG APPEARS HERE] SBC Warburg Dillon Read Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel. 000-000-0000
October 21, 1997
The Board of Directors
Shelter Components Corporation
0000 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, of the per share consideration to be offered to the holders (the
"Shareholders") of shares of common stock, $.01 par value per share (the
"Common Stock"), of Shelter Components Corporation (the "Company"), in
connection with the proposed acquisition (the "Acquisition") of the Company by
Kevco, Inc., ("Acquiror").
We have assumed that the terms of the Acquisition are as set forth in the
Agreement and Plan of Merger dated as of October 21, 1997 (the "Agreement")
among Acquiror, the Acquiror's acquisition subsidiary (the "Acquisition
Subsidiary") and the Company. We understand that the Acquisition is to be
effected in a two-step transaction, the first step of which will be a cash
tender offer (the "Tender Offer") by the Acquisition Subsidiary for all
outstanding shares of Common Stock at a per share price of $17.50 net to the
seller in cash upon the terms and conditions set forth in the Agreement. We
further understand that each share of Common Stock not acquired in the Tender
Offer will be converted in a subsequent merger of the Acquisition Subsidiary
with and into the Company into the right to receive $17.50 in cash.
In arriving at our opinion, we have, among other things: (i) reviewed
certain publicly available business and financial information relating to the
Company; (ii) reviewed the historical price and trading activity for the
shares of Commons Stock; (iii) reviewed certain internal financial information
and other data provided to us by the Company relating to the business and
prospects of the Company, including financial projections prepared by the
management of the Company; (iv) conducted discussions with members of the
senior management of the Company; (v) reviewed the financial terms, to the
extent publicly available, of certain acquisition transactions which we
considered relevant; (vi) reviewed publicly available financial and securities
market data pertaining to certain publicly held companies in lines of business
which we believed to be generally comparable to those of the Company; and
(vii) conducted such other financial studies, analyses and investigations, and
considered such other information as we deemed necessary or appropriate. We
were not requested to, and did not, solicit third party indications of
interest in acquiring the Company.
In connection with our review, with your consent, we have not assumed any
responsibility for independent verification of any of the foregoing
information and have relied upon its being complete and accurate in all
material respects. We have not been requested to and have not made an
independent evaluation or appraisal of any assets or liabilities (contingent
or otherwise) of the Company or any of its subsidiaries, nor have we been
furnished with any such evaluation or appraisal. Further, we have assumed,
with your consent, that all of the information, including the projections
provided to us by the Company's management, was prepared in good faith and was
reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the Company's management as to the future financial
performance of the Company, and was based upon the historical performance and
certain estimates and assumptions which were reasonable at the time made. In
addition, our opinion is based on economic, monetary and market conditions
existing on the date hereof.
SBC Warburg Dillon Read Inc. is a subsidiary of Swiss Bank Corporation and a
member of the New York Stock Exchange.
[LETTERHEAD OF SBC WARBURG APPEARS HERE]
We are acting as financial advisor to the Company and its Board of Directors
in connection with the Acquisition and will receive a fee from the Company for
our services. In the ordinary course of its business, SBC Warburg Dillon Read
Inc. ("SBCWDR") may trade the securities of the Company and Acquiror for its
own account or for the accounts of customers, and it may at any time hold a
long or short position in such securities.
It is understood that our advisory services and the opinion expressed herein
are provided for the information of the Board of Directors in their evaluation
of the Acquisition, and our opinion is not intended to be and does not
constitute a recommendation as to whether or not any Shareholder should tender
shares of Common Stock pursuant to the Tender Offer.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the per share consideration to be offered to the Shareholders
in connection with the Acquisition is fair, from a financial point of view, to
such Shareholders.
Very truly yours,
SBC WARBURG DILLON READ INC.
2
EXHIBIT "E"
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (the "Agreement"), dated as of October 21,
1997, among Kevco, Inc., a Texas corporation (the "Parent"), SCC Acquisition
Corp., an Indiana corporation and a direct wholly owned subsidiary of Parent
("Newco"), and the other parties signatory hereto (each a "Shareholder," and
collectively, the "Shareholders").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, concurrently herewith, Parent, Newco and Shelter Components
Corporation, an Indiana corporation (the "Company"), are entering into an
Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "Merger Agreement"; capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger Agreement),
pursuant to which, among other things, Newco will be merged with and into the
Company (the "Merger"); and
WHEREAS, in furtherance of the Merger, Parent and the Company have agreed
that as soon as practicable (and not later than five Business Days) after the
first public announcement of the execution and delivery of the Merger Agreement,
Newco will commence a cash tender offer to purchase all outstanding shares of
Company Common Stock (as defined in Section 1), including all of the Shares (as
defined in Section 2) Beneficially Owned (as defined in Section 1) by the
Shareholders; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholders agree, and the Shareholders
have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Owned" or "Ownership" with respect to any securities shall mean
having the sole power to dispose of such securities and the sole power to vote
such securities.
(b) "Company Common Stock" shall mean at any time the common stock,
$.01 par value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
1
2. TENDER OF SHARES.
(a) TENDER. Subject to Section 6, each Shareholder hereby agrees to
validly tender (and not to withdraw except in the case of termination of the
Merger Agreement as a result of a Superior Proposal) pursuant to and in
accordance with the terms of the Offer, not later than the fifth Business Day
prior to the expiration of the Offer (as such expiration date may be delayed
from time to time), the number of shares of Company Common Stock set forth
opposite such Shareholder's name on Schedule I hereto (the "Existing Shares"
and, together with any shares of Company Common Stock acquired by such
Shareholder after the date hereof and prior to the termination of this
Agreement, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution or otherwise, the "Shares"). Each Shareholder
hereby acknowledges and agrees that Newco's obligation to accept for payment and
pay for Shares in the Offer is subject to the terms and conditions of the Offer.
(b) DISCLOSURE. Subject to Section 6, each Shareholder hereby agrees
to permit Parent and Newco to publish and disclose in the Offer Documents and,
if approval of the Merger by the Company's shareholders (other than Parent or
any of its wholly-owned subsidiaries) is required under Applicable Law, in the
Proxy Statement (including all documents and schedules filed with the SEC) his
or its identity and ownership of Company Common Stock and the nature of his or
its commitments under this Agreement.
3. PROVISIONS CONCERNING COMPANY COMMON STOCK.
(a) VOTING AGREEMENT. Each Shareholder hereby agrees that during the
period commencing on the date hereof and continuing until the termination of
this Agreement, at any meeting of the holders of Company Common Stock, however
called, or in connection with any written consent of the holders of Company
Common Stock, such Shareholder shall vote (or cause to be voted) the Shares held
of record or Beneficially Owned by such Shareholder, whether issued, heretofore
owned or hereafter acquired, (i) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Merger Agreement and
this Agreement and any actions required in furtherance thereof and hereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or this Agreement (after giving effect to
any materiality or similar qualifications contained therein); and (iii) except
as otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or Company
Subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or Company Subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or Company Subsidiaries; (C) (1) any
change in a majority of the persons who constitute the Board of Directors of the
Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's Articles of
2
Incorporation or Bylaws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action involving the Company
or Company Subsidiaries which is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by this Agreement and the Merger
Agreement. Such Shareholder shall not enter into any agreement or understanding
with any Person or entity the effect of which would be inconsistent with or
violative of the provisions and agreements contained in this Section 3.
(b) GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY.
(i) Subject to Section 6, each Shareholder hereby irrevocably grants
to and appoints Parent and Xxxxx X. Xxxxxx (as President and Chief Executive
Officer) and Xxxxx XxXxxxxx (as Chief Financial Officer) or either of them, in
their respective capacities of officers of Parent, and any individual who shall
hereafter succeed to any of such office of Parent, and each of them
individually, such Shareholder's Proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Shareholder, to vote
such Shareholder's Shares, or grant a consent or approval in respect of the
Shares in favor of the various transactions contemplated by the Merger Agreement
and against any Acquisition Proposal.
(ii) Subject to Section 6, each Shareholder represents that any
proxies heretofore given in respect of such Shareholder's Shares are not
irrevocable, and that any such proxies are hereby revoked.
(iii) Each Shareholder understands and acknowledges that Parent is
entering into the Merger Agreement in reliance that such Shareholder's execution
and delivery of this Agreement. Each Shareholder hereby affirms that the
irrevocable proxy set forth in this Section 3(c) is given in connection with the
execution of the Merger Agreement and that such irrevocable proxy is given to
secure the performance of the duties of such Shareholder under this Agreement.
Each Shareholder hereby further affirms that the irrevocable proxy is coupled
with an interest and, except as provided under Section 6, may under no
circumstances be revoked. Each Shareholder hereby ratifies and confirms all
that such irrevocable proxy may lawfully do and caused to be done in accordance
with the terms of this Agreement prior to termination of this Agreement.
(c) OPTIONS. Each of the Shareholders that holds Options to acquire
shares of Company Common Stock, as identified on the signature pages hereof,
shall, if requested by the Company, consent to the cancellation of such
Shareholder's Options in exchange for a lump sum cash payment in accordance with
the terms of the Merger Agreement and shall execute all appropriate
documentation in connection with such cancellation. The foregoing shall not
apply if as a result thereof such Shareholder shall be required to disgorge any
profits on such Options pursuant to Section 16(b) of the 1934 Act or the rules
promulgated thereunder.
3
4. OTHER COVENANTS, REPRESENTATIONS AND WARRANTIES. Each Shareholder
hereby individually as to itself represents, warrants, covenants and agrees to
and with Parent as follows:
(a) OWNERSHIP OF SHARES. Such Shareholder is the record Owner of the
number of Existing Shares, other shares, and derivative securities set forth
opposite such Shareholder's name on Schedule I hereto. On the date hereof, the
Existing Shares set forth opposite such Shareholder's name on Schedule I hereto
constitute all of the shares or securities issued by the Company Owned of record
by such Shareholder. Such Shareholder has sole voting power and sole power to
issue instructions with respect to the matters set forth in Sections 2 and 3
hereof, sole power of disposition, sole power of conversion, sole power to
demand appraisal rights and sole power to agree to all of the matters set forth
in this Agreement, in each case with respect to all of the Existing Shares set
forth opposite such Shareholder's name on Schedule I hereto, with no
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) POWER; BINDING AGREEMENT. Such Shareholder has the legal
capacity, power and authority, as applicable, to enter into and perform all of
such Shareholder's obligations under this Agreement. The execution, delivery
and performance of this Agreement by such Shareholder will not violate any other
agreement to which such Shareholder is a party including, without limitation,
any voting agreement, shareholders agreement or voting trust. This Agreement
has been duly and validly executed and delivered by such Shareholder and
constitutes a valid and binding agreement of such Shareholder, enforceable
against such Shareholder in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws affecting creditors'
rights generally. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which such Shareholder is trustee
whose consent is required for the execution and delivery of this Agreement or
the consummation by such Shareholder of the transactions contemplated hereby.
(c) NO CONFLICTS. Except for filings under the HSR Act, if
applicable, (A) no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority or any other Person
is necessary for the execution of this Agreement by such Shareholder and the
consummation by such Shareholder of the transactions contemplated hereby and (B)
none of the execution and delivery of this Agreement by such Shareholder, the
consummation by such Shareholder of the transactions contemplated hereby or
compliance by such Shareholder with any of the provisions hereof shall (1)
conflict with or result in any breach of any applicable organizational documents
applicable to such Shareholder, (2) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which such Shareholder is a party or by which such Shareholder or any of
such Shareholder's properties or assets may be
4
bound, or (3) violate any order, writ, injunction, decree, judgment, order,
statute, rule or regulation applicable to such Shareholder or any of such
Shareholder's properties or assets.
(d) NO ENCUMBRANCES. Except as applicable in connection with the
transactions contemplated by Section 2 hereof and except as noted on Schedule I
hereto, the certificates representing such Shareholder's Existing Shares will
be, when tendered pursuant to Section 2(a) of this Agreement, held by such
Shareholder, or by a nominee or custodian for the benefit of such Shareholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, or any other encumbrances whatsoever, except for any such
encumbrances arising hereunder. The transfer by each Shareholder of his or its
Shares to Newco in the Offer shall pass to Newco good and valid title to the
number of Shares set forth opposite such Shareholder's name on Schedule I
hereto, free and clear of all claims, liens, restrictions, security interests,
pledges, limitations and encumbrances whatsoever.
(e) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. Except as
applicable in connection with the transactions contemplated by Section 2 hereof,
subject to Section 6, no Shareholder shall (i) directly or indirectly, offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Shareholder's Shares or Options or any interest therein; (ii) except as
contemplated by this Agreement, grant any proxies or powers of attorney, deposit
any Shares or Options into a voting trust or enter into a voting agreement with
respect to any Shares or Options; or (iii) take any action that would make any
representation or warranty of such Shareholder contained herein untrue or
incorrect or have the effect of preventing or disabling such Shareholder from
performing such Shareholder's obligations under this Agreement.
(f) WAIVER OF APPRAISAL RIGHTS. Each Shareholder hereby waives any
rights of appraisal or rights to dissent from the Merger that such Shareholder
may have.
(g) RELIANCE BY PARENT. Such Shareholder understands and acknowledges
that Parent is entering into, and causing Newco to enter into, the Merger
Agreement in reliance upon such Shareholder's execution and delivery of this
Agreement.
(h) FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, the transactions
contemplated by this Agreement.
5. STOP TRANSFER; CHANGES IN SHARES. Each Shareholder agrees with, and
covenants to, Parent that such Shareholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Shareholder's Shares, unless
such transfer is made in compliance with this Agreement (including the
provisions of Section 2 hereof). In the event of a stock dividend or
distribution, or any change in the
5
Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall be deemed to refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.
6. TERMINATION. Except as otherwise provided herein, the covenants and
agreements contained herein with respect to the Shares including but not limited
to the grant of the irrevocable proxy set forth in Section 3(b)(i) hereof, shall
terminate upon the earliest of (w) the acquisition of the Shares by Parent or
Newco pursuant to the Offer, (x) the Effective Time, (y) the termination of the
Merger Agreement or the withdrawal or modification by the Company Board of its
recommendation of the Offer or the Merger as permitted by Section 7.3(b) of the
Merger Agreement and (z) the six month anniversary of the date hereof.
7. SHAREHOLDER CAPACITY. No person executing this Agreement who is or
becomes during the term hereof a director of the Company makes any agreement or
understanding herein in his or her capacity as such director.
8. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) CERTAIN EVENTS. Each Shareholder agrees that this Agreement and
the obligations hereunder shall attach to such Shareholder's Shares and shall be
binding upon any Person to which legal or beneficial ownership of such Shares
shall pass, whether by operation of law or otherwise, including, without
limitation, such Shareholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, provided
that Parent may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly owned subsidiary of Parent, but no
such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Shareholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; provided that
Schedule I hereto may be supplemented by Parent by adding the name and other
relevant information concerning any shareholder of the Company who agrees to be
bound
6
by the terms of this Agreement without the agreement of any other party hereto,
and thereafter such added shareholder shall be treated as a "Shareholder" for
all purposes of this Agreement.
(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Shareholders: At the addresses set forth on Schedule I hereto
If to Parent: Kevco, Inc.
0000 X. Xxxxxxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy: 817/332-2765
copy to: Xxxxxxx X. Xxxxxx
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxx 00000
Telecopy: 817/334-7290
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement may cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
7
(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Indiana, without giving effect to the
principles of conflicts of law thereof.
(l) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(m) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
IN WITNESS WHEREOF, Parent, Newco and each Shareholder have caused this
Agreement to be duly executed as of the day and year first above written.
PARENT:
KEVCO, INC.
By:
------------------------------------------
Name: Xxxxx Xxxxxx
Title: Chairman of the Board and President
NEWCO:
SCC ACQUISITION CORP.
By:
------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
8
SHAREHOLDERS:
9
AGREED TO AND ACKNOWLEDGED
(with respect to Section 5):
COMPANY:
SHELTER COMPONENTS CORPORATION
By:
------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
10
Schedule I to Shareholders Agreement
Number of Shares of
Name and Address Number of Shares Common Stock Issuable
of Shareholders of Common Stock Owned Upon Exercise of Options
---------------- --------------------- ------------------------
Xxxxxxx X. Xxxxxx 3,983 5,000
00000 Xxxxxx Xxxxx Xxx
Xxxxxxxxx, Xxxxxxx 00000-0000
Xxxxx X. Xxxxxxxxx 353,575 40,625
00000 Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Xxxxxx X. Xxxxxx 383,422 40,625
00000 Xxxxxxxxx Xx.
Xxxxxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxxxx 93,594 5,000
0 Xxxxxx Xxxx
Xxxxx Xxxx, Xxx Xxxx 00000
Xxxxxx X. Xxxxxx 15,091 5,000
000 Xxxxxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxxxx X. Xxxxxx 91,170 5,000
0000 Xxxxxxxxx Xxxx-XX0X
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxxxx 125,377 5,000
c/o Janney Xxxxxxxxxx Xxxxx, Inc.
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxx X. Xxxxxxx 24,906 35,000
00000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Xxxxxx X. Xxxxxx --- 10,000
00000 Xxxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
11
EXHIBIT "F"
SEVERANCE AGREEMENTS
AND SEVERANCE PLAN
Shelter Components
Separation Allowance Plan
for Salaried Employees
10/14/97
Separation Allowance Plan for Salaried Employees
------------------------------------------------
INTRODUCTION
------------
This document serves as both the master plan document and the Summary Plan
Description (SPD) for the Shelter Components Separation Plan for Salaried
Employees ("Plan"). All decisions about eligibility and benefits will be
determined by the provisions of the Plan.
POLICY STATEMENT
----------------
It is the policy of the Company to provide a formal means of compensating
salaried employees who are terminated from employment.
Accordingly, a schedule of separation allowance, together with the conditions
governing their payment, are set forth below.
It is understood that the payment of separation allowance under this Plan does
not constitute a contractual agreement with the employee for the period covered
by the separation allowance nor for the employee to be retained in the employ of
the Company.
Part-time and temporary employees are not eligible for any separation allowance.
SCOPE
-----
This policy and related procedures apply to all facilities and subsidiaries of
the Company employing salaried personnel unless specifically excluded.
ADMINISTRATION
--------------
It is the responsibility of all management personnel to administer the Plan
within its objectives and the provisions set forth. The President shall make
final determination regarding eligibility for benefits and interpretation of
all terms of the Plan.
10/14/97 1
DEFINITIONS
-----------
For purposes of this Plan, the following definitions apply:
1. The Company- Shelter Components Corporation and all subsidiaries.
2. Salaried Employee- those employees whose compensation is based on a fixed
rate per pay period or annual amount.
3. Temporary Employees- those employees hired for full-time work (40 hours per
week) but for a limited period of time not to exceed twelve (12) months.
4. Part-time Employees- those employees hired for an indefinite period who are
normally scheduled to work less than forty (40) hours per week.
5. Years of Service- means total number of full and fractional years of
service with the Company unless otherwise excluded under a provision of
this Plan or by virtue of employment practices or policies of the Company.
For purposes of this Plan, such service will be from the last date of hire.
Service prior to a break in service, which was re-established for purposes
of calculating vacation time, shall be counted as service under this Plan.
Only full months of service will be counted towards Years of Service.
6. Base Salary- means the basic rate of pay for a forty (40) hour work week.
Base Salary excludes overtime, bonus, commissions, profit sharing, shift
premiums, or any other compensation not normally included in a salaried
employee's base compensation.
ELIGIBILITY
-----------
A salaried employee terminated for the following reasons, and only under the
conditions stated, shall be eligible to receive separation allowance.
Individuals involuntarily separated for work-related misconduct or for poor
performance will not be eligible for the separation allowance. Otherwise,
salaried employees are eligible under the following conditions:
A. SEPARATION FROM ACTIVE EMPLOYMENT- termination by the Company due to a
reduction in the work force for business reasons such as declining volume,
inefficient or discontinued operations, etc., provided:
1. The separation is for an indefinite period of time.
2. The employee has not declined an offer to be retained in a position at
a base salary at least 80% of base salary in effect at the time of
layoff.
3. The employee has not been retained on the Company's payroll.
10/14/97 2
B. SALARIED EMPLOYEE OFFERED ANOTHER POSITION- a salaried employee whose
performance has been considered satisfactory but cannot continue in his/her
present position because of a reduction in force or due to circumstances
deemed acceptable by the Company may be offered, if available, other
employment opportunities within the Company. In such cases, such employee
will be eligible for separation pay if such employee:
1. Is offered and declines any position in another Company facility which
requires relocation to a facility at least 50 miles from his or her
current place of employment and which the pay offered is less than
120% of the affected employee's current pay; or
2. Is offered and declines a salaried position which does not require
relocation to a facility at least 50 miles from his or her current
place of employment and for which the pay offered is less than 80% of
his/her current pay; or
3. Is offered and declines an hourly-rated position in a Company
facility; or
4. Accepts an hourly-rated position in a Company facility and during the
succeeding six (6) months quits or is separated for reasons other than
discharge or death. Such separation allowance shall be the amount to
which the employee was entitled at the time of the separation from the
last salaried position to which assigned.
C. SALE OR TRANSFER OF ALL OR A PORTION OF A COMPANY BUSINESS TO ANOTHER
EMPLOYER- a salaried employee employed in a Company business or portion
thereof which is sold or transferred to another employer shall be eligible
for separation pay only if:
1. He/she is not offered employment with the new employer or maintains
existing employment; or
2. He/she is offered and declines a position with the new employer which
requires relocation to a facility at least 50 miles from his or her
current place of employment and which the pay offered is less than
120% of the affected employee's current pay; or
3. He/she is offered and declines a salaried position which does not
require a relocation to a facility at least 50 miles from his or her
current place of employment and for which the pay offered is less than
80% of their current pay, or
4. He/she is offered and declines an hourly-rated position, or
5. Special arrangements are made at or prior to the time of sale or
transfer to pay separation pay.
10/14/97 3
If in the sole discretion of the Company, there appears to be a sound basis for
an employee to believe his/her position with the new employer is not comparable
to the one held with the Company, such employee will be given the alternative of
being released under Mutually Satisfactory Conditions, as defined in this Plan.
Such employee shall be eligible for separation allowance.
D. RELEASE UNDER MUTUALLY SATISFACTORY CONDITIONS-An employee released due to
inability to satisfactorily perform assigned duties is normally not eligible
for separation allowance. However, there may be situations involving an
employee where special circumstances, such as medical reasons (except for
those whom workers' compensation payments are currently being paid, or where
such a claim is pending), warrant a release which is mutual satisfactory to
both the Company and the employee. Separation allowance up to and including
the amount described in the Plan may be granted in such cases only if
approved in advance by the President.
AMOUNT OF SEPARATION ALLOWANCE
------------------------------
Separation allowance shall be based upon an eligible employee's length of
service and the employee's Base Salary as in effect at the time of termination
unless otherwise provided under the Plan.
The amount of separation pay will equal one (1) week base salary times the
employee's years of service. The minimum amount of separation pay will be two
(2) weeks base salary. The maximum amount of separation allowance will not
exceed thirteen (13) weeks base salary.
For example, an employee entitled to separation pay whose base salary per week
is $500.00 and whose years of service is five (5) years will have a separation
pay amount calculated as:
$500.00 x 5 years = $2,500.00 Separation Pay
PAYMENT OF SEPARATION ALLOWANCE
--------------------------------
Any separation allowance due an employee will be made as soon as practicable
after termination. In no case will payment be delayed more than sixty (60) days
after termination. Any separation allowance due will be paid in a single lump
sum payment processed through the Company's Payroll Department.
Any applicable deductions and/or required taxes will be deducted from any
separation allowance payment.
Amounts owed to the Company by an employee entitled to separation allowance will
be deducted (up to the full amount of the separation allowance) from the
separation allowance payment.
10/14/97 4
OTHER
-----
A. Separation allowance shall be in addition to any payments for unused
vacation time to which the employee may be entitled under the Company's
vacation policy.
B. Separation may be paid to the estate of a deceased employee if the
employee's death occurs after the act giving rise to such claim and before
actual payment is made.
C. The Company reserves the right to modify or amend the Plan from time to
time and to terminate the Plan at any time without notice. Any modification
or amendment to the Plan, including terminating the Plan, must be approved
by the President of the Company.
D. This document shall be the only legally governing document for the Plan,
subject to all applicable laws and regulations. All statements, whether
verbal or written, made by the Company, the Plan Administrator, or any
employee of the Company shall not be deemed representations and warranties.
No such statements shall void, reduce or increase any benefits under this
Plan.
E. The sole and exclusive remedy for any person who has been denied benefits
under this Plan and who believes that he/she is entitled to benefits under
this Plan shall present such claim in writing to the Designated Agent for
Service of Legal Process within sixty (60) days following the act giving
rise to such claim. Failure to provide written notice within sixty (60)
days following the act giving rise to such claim will result in waiver of
any claim under this Plan. The Designated Agent for Service of Legal
Process shall within a reasonable time provide adequate notice in writing
to any claimant as to the decision of such claim. If such claim has been
denied in whole or in part, such notice shall set forth; (1) the specific
reason for the denial; (2) specific reference to any pertinent provisions
of the Plan; (3) a description of any additional material or information
necessary for the claimant to perfect such claim; and (4) an explanation of
the Plan's review procedure.
Within sixty (60) days after receipt by the claimant of notification of
denial from the Designated Agent for Service of Legal Process, the claimant
shall have the right to present written appeal to the Plan Administrator.
If no such written appeal is received within said sixty (60) days, the
Designated Agent for Service of Legal Process' decision shall be final and
binding. The Plan Administrator will review such appeal and within a
reasonable time uphold, modify, or reverse such decision and notify the
claimant of the same. The decision of the Plan Administrator will be final.
F. Release. In order to obtain separation benefits, the employee must sign a
release, such as that attached as Appendix A hereto, that releases the
Company, its agents, and employees from any liability arising from
employment.
10/14/97 5
GENERAL INFORMATION
-------------------
Name and address of the Plan Sponsor
------------------------------------
Shelter Components Corporation
XX Xxx 0000
Xxxxxxx, XX 00000
(000) 000-0000
Name and address of the Plan Administrator
------------------------------------------
President
Shelter Components Corporation
XX Xxx 0000
Xxxxxxx, XX 00000
(000) 000-0000
Name and address of Designated Agent for Service of Legal Process
-----------------------------------------------------------------
Corporate Attorney
Shelter Components Corporation
XX Xxx 0000
Xxxxxxx, XX 00000
(000) 000-0000
Internal Revenue Service and Plan Identification Number
--------------------------------------------------------
The corporate tax identification number assigned by the Internal
Revenue Service is 00-0000000. The Plan number is 503.
Plan Type
---------
The Plan is a Welfare Benefits Plan as defined by Employee Retirement Income
Security Act of 1974 (ERISA).
Type of Administration
----------------------
The administation of this Plan is performed by Shelter Components Corporation.
Plan Year
---------
The Plan year is from November 1st to October 31st.
Funding
-------
The Plan is funding from the general assets of the Company.
Plan Effective Date
-------------------
The Plan is effective November 1, 1997.
6
RIGHTS OF PARTICIPANTS
----------------------
As a participant in the Plan, you are entitled to certain rights under federal
law.
According to the law, you have the right to examine, without charge at the Plan
Administrator's office or other specified locations, all documents and contracts
of the Plan that are filed with the U.S. Department of Labor, such as detailed
annual reports and plan descriptions. You may obtain copies of all documents
upon written request to the Plan Administrator. The Plan Administrator may make
a reasonable charge for copies. You are also entitled to receive a summary of
the Plan's annual financial report.
Federal law imposes duties on the individuals responsible for the operation of
the Plan to do so carefully and in the interest of all participants. No one,
including your employer, a union, or any other person, may fire you or
discriminate against you to prevent you from obtaining any benefit under the
Plan or exercising your rights under federal law.
Under federal law, there are steps you may take to enforce your rights. For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file a suit in federal court. The court may require the Plan
Administrator to provide you the materials and pay up to $100 a day until you
receive the materials unless the delay is beyond the control of the Plan
Administrator. If the people who operate the Plan misuse the Plan's money, or if
you are discriminated against for enforcing your rights, you may seek assistance
from the U.S. Department of Labor or file suit in federal court. If you do file
suit, the court will decide who should pay court fees and legal fees. If your
case is upheld by the court, the court may order the person or organization you
have sued to pay related expenses. If you lose or the court finds your case
frivolous, you may be ordered to pay the court costs and legal fees.
If you have any questions about the Plan, contact the Plan Administrator. If you
have any questions about your rights, contact the office of the U.S. Department
of Labor-Management Services Administration, Department of Labor.
7
Appendix A
----------
SEPARATION AND RELEASE AGREEMENT
--------------------------------
The purpose of this document is to set forth the agreement between SHELTER
COMPONENTS, INC., ("COMPANY") and EMPLOYEE ("EMPLOYEE") regarding his/her
employment by COMPANY and the termination of that employment.
1. COMPANY agrees as to pay EMPLOYEE the total sum of ________________________
__________________________________________ and 00/100 Dollars
($___________) as a severance payment. Payment shall be made by check
payable to EMPLOYEE eight (8) days after execution of this Agreement.
2. EMPLOYEE agrees as follows:
(a) To resign his/her employment with COMPANY effective ___________.
(b) To RELEASE and DISCHARGE COMPANY, its officer, directors, and
employees from any and all claims, actions or causes of action, known
and unknown, relating to, arising out of EMPLOYEE's employment with
COMPANY and the termination of that employment. By way of
specification and not by way of limitation, EMPLOYEE specifically
waives, releases, and agrees to forgo any rights or claims that he/she
may now have, may have heretofore had, or may at any time hereafter
have against COMPANY on matters arising prior to and up to the date of
this Agreement, under tort, contract, or other law of the State of
Indiana, including, but not limited to claims arising out of
allegation of wrongful or retaliatory discharge, breach of contract,
breach of implied covenant of good faith and fair dealing,
misrepresentation, slander, libel, defamation, emotional pain and
suffering, and intentional affliction of emotional distress and those
claims alleging discrimination on the basis of race, age, color, sex,
religion, national origin, and disability under the Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans
with Disabilities Act of 1990, the Age Discrimination in Employment
Act, Older Worker Benefit Protection Act, or under any other laws,
ordinances, executive orders, rules, regulations, or administrative or
judicial case law arising under the statutory or common laws of the
United States, State of Indiana, or any political subdivision of the
State of Indiana.
(c) NOT TO XXX COMPANY, its officers, directors, and employees alleging
any claim, action or cause of action for breach of contract or
wrongful discharge under any statute or common law of the State of
Indiana, or alleging any claim, action, or cause of action for
discrimination under Title VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act of 1990, the Age Discrimination in
Employment Act, or any other federal statute, state statute, or local
ordinance.
(d) Not to reapply for employment with COMPANY within five (5) years of
the date of separation.
3. In executing this Agreement, EMPLOYEE represents that he/she has entered
into this Agreement KNOWINGLY AND VOLUNTARILY and with full knowledge and
understanding of the provisions of this Agreement, including the rights
he/she is waiving under Title VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act of 1990, the Age Discrimination in
Employment Act, any other federal statute, state statute or local
ordinance, and any common law of the State of Indiana. EMPLOYEE further
represents that by entering into this Agreement, he/she is not relying on
any statements or representations made by COMPANY, its officers, directors,
employees, or agents which are not incorporated in this Agreement; rather,
EMPLOYEE is relying upon his/her own judgment and the advice of his/her
counsel.
4. It is understood and agreed to by EMPLOYEE that by entering into this
Agreement, making the payments provided herein and providing the benefits
set out herein, COMPANY does not admit having committed any violation of
Civil Rights Act of 1964, the Americans with Disabilities Xxx 0000, the Age
Discrimination in Employment Act, or any other rights EMPLOYEE has or may
have under any other federal statute, state statute or local ordinance, or
common law claim of the State of Indiana.
5. EMPLOYEE acknowledges that he/she understands that he/she has the right to
review the terms of this Agreement for a period of twenty-one (21) days
prior to signing this Agreement.
6. EMPLOYEE represents and acknowledges that he/she has been advised by
COMPANY, in writing, that he/she has seven (7) calendar days from the date
of execution of this Agreement within which to revoke this Agreement and
that all waivers, covenants not to xxx and releases would not be effective
until after seven (7) calendar days from the date of this Agreement.
7. This Agreement constitutes the entire agreement between COMPANY and
EMPLOYEE and shall not be modified or amended unless in writing and
executed by both COMPANY and EMPLOYEE.
8. This Agreement shall be construed in accordance with the laws of the State
of Indiana. If any portion of this Agreement is deemed to be null, void, or
inoperative for any reason, that portion of the Agreement is severable and
the remaining portions will remain in full force and effect.
9. Each of the covenants contained herein shall be binding upon the parties
hereto, their heirs, executors, administrators, and successors in interest.
This Agreement is executed as of __________ day of _________________, 1997.
EMPLOYEE __________________________________________________________________
EMPLOYEE
Date: ________________________________________________________
Shelter Components, Inc.
---------------------------------------------------
By:
------------------------------------------------
Its:
-----------------------------------------------
Date:
----------------------------------------------
