EXHIBIT 99.4
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "AGREEMENT"), dated as of November ___,
2003, is made by and among each of the persons listed under the heading
"Stockholders" on the signature page hereto (collectively, the "STOCKHOLDERS"
and each, individually, a STOCKHOLDER"), and ▇▇▇▇▇▇ Associated Companies, Inc.,
a Pennsylvania corporation (the "PURCHASER").
WHEREAS, Sylvan Inc., a Nevada corporation (the "COMPANY"), the
Purchaser, and SAC Holding Co., a Pennsylvania corporation and a partially or
wholly owned subsidiary of the Purchaser (the "MERGER SUBSIDIARY"), are entering
into an Agreement and Plan of Merger (the "MERGER AGREEMENT"), dated the date
hereof, pursuant to which the Merger Subsidiary has agreed to merge with and
into the Company (the "MERGER").
WHEREAS, the consummation of the transactions contemplated by the
Merger Agreement is subject to certain conditions, including the approval of the
Merger by the holders of a majority of the outstanding shares of common stock of
the Company.
WHEREAS, the Stockholders are the collective record and beneficial
owners of 1,056,886 shares of common stock of the Company (the "ORIGINAL
SHARES"), representing approximately 20.5% of the shares of common stock of the
Company outstanding as of the date hereof (such shares, together with any shares
of capital stock of the Company acquired by any Stockholder or as to which any
Stockholder may acquire direct or indirect voting or investment power after the
date hereof and during the term of this Agreement, being collectively referred
to herein as the "STOCKHOLDER SHARES").
WHEREAS, as a condition to the willingness of the Purchaser to enter
into the Merger Agreement, and as an inducement to the Purchaser to do so, the
Stockholders have agreed as set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
1. DEFINITIONS. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Merger Agreement.
2. CERTAIN COVENANTS OF STOCKHOLDERS.
(a) Agreement to Vote. At any meeting of the stockholders
of the Company held prior to the Termination Date (as defined in Section 5(d)
below), however called, and at every adjournment thereof prior to the
Termination Date, or in connection with any written consent of the stockholders
of the Company, each Stockholder shall vote the Stockholder Shares (i) in favor
of the approval of the Merger and each of the other transactions contemplated by
the Merger Agreement to be performed by the Company and any actions required in
furtherance thereof; and (ii) against any Acquisition Proposal. Prior to the
Termination Date, no Stockholder shall enter into any agreement or understanding
with any Person, to vote, grant any proxy or give instructions with respect to
the voting of the Stockholder Shares in any manner inconsistent with
the preceding sentence, other than proxies for the election of directors at any
meeting of stockholders.
(b) Proxies.
(i) Each Stockholder hereby revokes any
and all previous proxies granted with respect to matters set forth in
Section 2(a) above for the Stockholder Shares.
(ii) Each Stockholder covenants and
agrees in favor of the Purchaser, that if the Purchaser so requests (x)
not later than five days prior to the date of the Company Stockholder
Meeting, it shall deliver or cause to be delivered to the Company duly
executed proxies in favor of the Purchaser, in form reasonably
acceptable to the Purchaser, voting in favor of the Merger together
with a copy of the board resolutions authorizing such proxies and (y)
such proxies will not be revoked; provided, however, that if a waiting
period under the HSR Act or the pre-merger filing requirements of any
other jurisdiction applies to the grant of the proxies so requested, no
Stockholder shall deliver or grant such proxies until any applicable
waiting periods shall have expired or terminated.
(iii) Except as provided herein, prior to
the Termination Date, no Stockholder shall grant any proxies or powers
of attorney with respect to matters set forth in Section 2(a) above,
deposit any of the Stockholder Shares into a voting trust or enter into
a voting agreement with respect to any of the Stockholder Shares, in
each case with respect to the matters set forth in Section 2(a).
(c) Transfer of Stockholder Shares by Stockholder. Prior
to the Termination Date, no Stockholder shall (A) pledge or place any Lien on
any Stockholder Shares, other than pursuant to this Agreement, or (B) transfer,
sell, exchange or otherwise dispose of (including by gift) any Stockholder
Shares, other than pursuant to this Agreement or the Merger Agreement.
(d) Acquisition Proposal. No Stockholder shall, and no
Stockholder shall authorize any Affiliate, director, officer, employee,
investment banker, attorney or other advisor or representative of any
Stockholder to, (i) directly or indirectly solicit, initiate or knowingly
encourage the submission of, any Acquisition Proposal or (ii) directly or
indirectly participate in any discussions or negotiations regarding, or furnish
to any Person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal, except that nothing
herein shall prohibit ▇▇▇▇▇▇ ▇▇▇▇ from the exercise of his fiduciary duties as a
director of the Company in accordance with the Merger Agreement and Section 5(o)
hereof.
(e) Inquiry. Except as prohibited by any Confidentiality
Agreement to which the Company or the Stockholders are a party, each Stockholder
shall promptly notify the Purchaser in writing of any contact, inquiry,
submission, proposal or offer of which any Stockholder becomes aware for an
Acquisition Proposal and of any request in connection with such a proposal for
non-public information relating to the Company or any of its Subsidiaries or
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any of the relevant details relating to such a proposal (including the identity
of the prospective party and the proposed terms and conditions) known at such
time.
2A. PROFIT SHARING.
(a) If the Merger Agreement is terminated pursuant to
Section 10.01(c)(i), Section 10.01(c)(iv) or Section 10.01(d)(ii) thereof (in
any such case, a "TRIGGERING TERMINATION"), and within twelve (12) months
following such Triggering Termination, the Company merges with or into, or is
acquired, directly or indirectly, by merger or otherwise, by a Third Party in a
transaction in which all holders of shares of Company common stock (other than
Company management and their Affiliates) are entitled to receive consideration
for all of their shares of Company common stock (such event, an "ALTERNATIVE
TRANSACTION"), then, upon consummation of such Alternative Transaction, each
Stockholder shall pay to Purchaser an amount equal to fifty percent (50%) of the
"profit" (determined in accordance with Section 2A(b) below), if any, in respect
of (x) the Original Shares held by such Stockholder as of the date of this
Agreement, and (y) any additional shares of Company common stock owned of record
or beneficially by such Stockholder as of the date of consummation of such
Alternative Transaction (collectively, the "APPLICABLE SHARES").
(b) The "profit" associated with the consummation of such
Alternative Transaction shall be an amount (if positive) equal to (x) the
aggregate consideration paid in respect of the Applicable Shares as a result of
the consummation of such Alternative Transaction, valuing any noncash
consideration at its fair market value as set forth in subsection (c) below,
less (y) the product obtained by multiplying $12.25 by the number of Applicable
Shares (the amount by which "(x)" exceeds "(y)" being referred to herein as the
"OVERAGE"), less (z) the total amount of Taxes payable by such Stockholder on
the Overage.
(c) For purposes of this Section 2A, the fair market
value of any noncash consideration consisting of:
(i) securities listed on a national securities
exchange or traded on the NASDAQ shall be equal to the average closing price per
share of such security as reported on such exchange or NASDAQ for the 5 trading
days prior to the date of determination; and
(ii) consideration which is other than securities
of the form specified in foregoing clause "(i)" shall be determined, as of the
date of consummation of the Alternative Transaction, by a nationally recognized
independent investment banking firm (which may be the investment banking firm
retained by the Special Committee of the Board of Directors of the Company, or
by the Board of Directors of the Company, to evaluate the consideration payable
in the Alternative Transaction) mutually selected, within three business days
after the event requiring selection of such investment banking firm , by
Purchaser, on the one hand, and the Stockholders, on the other hand, which
determination shall be made by such investment banking firm within 15 business
days after the date of such event; provided, however, that if Purchaser and the
Stockholders do not agree within three business days after the date of such
event as to the selection of an investment banking firm, then, by the end of the
fifth business day after the date of such event, each of Purchaser, on the one
hand, and the Stockholders, on the other hand, shall select an investment
banking firm, which two investment banking firms shall jointly make such
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determination within 20 business days after the date of such event, or, if such
two investment banking firms are unable to agree on such determination, the two
investment banking firms shall, by the end of the 20th business day after the
date of such event, select a third investment banking firm and notify such third
investment banking firm in writing (with a copy to Purchaser and the
Stockholders) of their respective determinations of the fair market value of
such noncash consideration, following which such third investment banking firm
shall, within 15 business days after the date of its selection, notify Purchaser
and the Stockholders in writing of its selection of one or the other of the two
original determinations of the fair market value of such noncash consideration;
provided further, that the reasonable and customary fees and expenses of all
such investment banking firms shall be borne equally by Purchaser, on the one
hand, and the Stockholders, on the other hand. The determination of the
investment banking firm shall be binding upon the parties.
(d) Any payment to be made by any Stockholder pursuant to
this Section 2A shall be made as follows following consummation of the
Alternative Transaction: (x) if the consideration paid in the Alternative
Transaction is all cash, such payment shall be made in cash within three
business days following receipt by such Stockholder of such consideration by
wire transfer of same day funds to an account designated by Purchaser, (y) if
such consideration is all noncash consideration, such payment shall be made
through a transfer of such noncash consideration to Purchaser, suitably endorsed
for transfer (with the method and timing of such transfer to be reasonably
determined by Purchaser), or (z) if such consideration is part cash and part
noncash consideration, such payment shall be made in cash (in the manner set
forth in clause "(x)" above) and in such noncash consideration (in the manner
set forth in clause "(y)" above) in the same proportion as such consideration is
payable to such Stockholder in accordance with the terms of the Alternative
Transaction.
2B. PUT RIGHT.
(a) Purchaser hereby grants to each Stockholder an
irrevocable option (each such option, a "PUT OPTION") to sell to Purchaser at
any time during the Exercise Period all that Stockholder's Original Shares, in
each case at a total cash option exercise price equal to the product of (1) the
total number of that Stockholder's Original Shares multiplied by (2) $12.25
(each such price, a "PURCHASE PRICE").
(b) In this Agreement, "EXERCISE PERIOD" means the period
of 30 days beginning on and including the date of a Triggering Termination. If
there is no Triggering Termination, then there shall be no Exercise Period.
(c) Each Stockholder must exercise its Put Option in
whole only and the Stockholders must collectively exercise all Put Options at
the same time. To exercise the Put Options, the Stockholders must deliver to
Purchaser a written notice of the Stockholders' intention to effect that
exercise. The closing of the purchase of the Original Shares subject to the Put
Options will take place in the office of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C. in Pittsburgh,
Pennsylvania. Stockholders will designate in their written notice the date and
time of the closing, which date may be not less than two (2) business days nor
more than sixty (60) days after the Stockholders have delivered such notice. At
that closing, Purchaser will pay in respect of each Put Option the Purchase
Price payable under that Put Option, as applicable, by wire transfer of
immediately available funds to an account or accounts designated in writing by
the applicable Stockholder at
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least one business day prior to the closing date, against delivery of the
certificates representing the Original Shares subject to that Purchase Price,
duly endorsed for transfer to Purchaser and/or such additional or other evidence
of transfer as Purchaser may request.
3. REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS OF
STOCKHOLDERS. The Stockholders jointly and severally represent, warrant and
covenant to Purchaser that:
(a) Ownership. Each Stockholder is, as of the date
hereof, the beneficial owner of the Stockholder Shares set forth next to such
Stockholder's name on the signature page hereto, such Stockholder has the sole
right to vote such Stockholder Shares and there are no restrictions on rights of
disposition or other Liens pertaining to such Stockholder Shares. Except as
created hereby, none of the Stockholder Shares is subject to any voting trust or
other agreement, arrangement or restriction with respect to the voting of the
Stockholder Shares.
(b) Authority and Non-Contravention. Each Stockholder has
the right, power and authority to enter into this Agreement and to consummate
the transactions contemplated by this Agreement. The execution and delivery of
this Agreement by the Stockholders and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary action
on the part of the Stockholders. This Agreement has been duly executed and
delivered by the Stockholders and constitutes a valid and binding obligation of
each Stockholder, enforceable against each Stockholder in accordance with its
terms, subject to general principles of equity and as may be limited by
bankruptcy, insolvency, moratorium, or similar laws affecting creditors' rights
generally. Such actions by the Stockholders require no action by or in respect
of, or filing with, any Governmental Authority with respect to any Stockholder,
other than any required filings under Section 13 of the Exchange Act.
(c) Total Shares. The Stockholder Shares are the only
shares of capital stock of the Company owned beneficially or of record as of the
date hereof by any Stockholder or any of their Affiliates, and (except for
options held by ▇▇▇▇▇▇ ▇▇▇▇ to acquire up to 12,000 shares of Company common
stock) such Stockholder does not have any option to purchase or right to
subscribe for or otherwise acquire any securities of the Company and has no
other interest in or voting rights with respect to any other securities of the
Company.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PURCHASER. The Purchaser represents, warrants and covenants to the Stockholders
that:
(a) Power and Authority. The Purchaser has the right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement and the Merger Agreement. The
execution and delivery of this Agreement by the Purchaser and the consummation
of the transactions contemplated by this Agreement have been duly authorized by
all necessary action on the part of the Purchaser. This Agreement has been duly
executed and delivered by the Purchaser and constitutes a valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, subject to general principles of equity and as may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally.
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(b) Limitation on Voting Agreements. For so long as this
Agreement remains in effect, the Purchaser shall not obtain binding voting
agreements, proxies or other commitments to vote shares of Company common stock
from any other stockholder of the Company with respect to matters set forth in
Section 2(a) hereof, provided, however, the Purchaser may obtain voting
agreements, proxies or commitments from officers, directors and employees of the
Company, provided that the total number of shares of common stock of the Company
subject to such voting agreements, proxies or commitments, when aggregated with
the Stockholder Shares, does not exceed 40% of the issued and outstanding shares
of Company common stock eligible to vote at the Company Stockholder Meeting.
5. MISCELLANEOUS.
(a) Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense. The Purchaser will not object if the Company reimburses the
Stockholders' legal fees and expenses in connection with this Agreement and
related matters, provided the total amount to be reimbursed, together with the
total amount of legal fees and expenses of Steel Partners and its affiliates to
be reimbursed, does not exceed $60,000.
(b) Further Assurances. From time to time, at the request
of the Purchaser, in the case of Stockholders, or at the request of
Stockholders, in the case of the Purchaser, and without further consideration,
each party shall execute and deliver or cause to be executed and delivered such
additional documents and instruments and take all such further action as may be
reasonably necessary or desirable to consummate the transactions contemplated by
this Agreement.
(c) Specific Performance. The Stockholders, on the one
hand, and Purchaser, on the other, agree that the other party would be
irreparably damaged if for any reason either party fails to perform any of its
obligations under this Agreement, and that the other party would not have an
adequate remedy at law for money damages in such event. Accordingly, each party
shall be entitled to seek specific performance and injunctive and other
equitable relief to enforce the performance of this Agreement by the other
party. This provision is without prejudice to any other rights that such party
may have against the other party for any failure to perform their obligations
under this Agreement.
(d) Amendments, Termination. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
each party hereto. The representations, warranties, covenants and agreements set
forth in Sections 2, 3 and 4 above (but not Section 2A or Section 2B) shall
terminate, except with respect to liability for prior breaches thereof, upon the
earliest to occur of (i) the termination of the Merger Agreement in accordance
with its terms, (ii) the Effective Time, or (iii) April 15, 2004 (the earliest
of such dates, the "TERMINATION DATE"). The covenants and agreements set forth
in Section 2A above shall terminate, except with respect to liability for prior
breaches thereof, upon the earliest to occur of (i) the date that is twelve (12)
months and one day following the date of any Triggering Termination, (ii) the
Effective Time, or (iii) the date of any termination of the Merger Agreement
that does not constitute a Triggering Termination. The covenants and agreements
set forth in Section 2B above shall terminate, except with respect to liability
for prior breaches thereof, upon
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the earliest to occur of (i) the expiration of the Exercise Period (if the Put
Options have not been validly exercised during such Exercise Period), (ii) the
Effective Time, or (iii) the date of any termination of the Merger Agreement
that does not constitute a Triggering Termination.
(e) Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns.
(f) Certain Events. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to the Stockholder Shares
and the Applicable 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 any Stockholder's heirs, guardians, administrators or
successors, and each Stockholder further agrees to take such commercially
reasonable actions as may be necessary to effectuate the foregoing, provided
such actions do not require the expenditure of monies, other than immaterial
amounts. In the event of any stock split, stock dividend, reclassification,
merger, reorganization, recapitalization or other change in the capital
structure of the Company affecting the capital stock of the Company, the number
of Stockholder Shares and Applicable Shares shall be adjusted appropriately.
This Agreement and the representations, warranties, covenants, agreements and
obligations hereunder shall attach to any additional shares of capital stock of
the Company or other voting securities of the Company issued to or acquired by
any Stockholder directly or indirectly (including through the exercise of any
warrants, stock options or similar instruments). Each Stockholder shall cause
the certificated Stockholder Shares to have a legend placed conspicuously on
such certificate to the following effect:
"The shares of common stock evidenced by this
certificate are subject to a Voting Agreement dated
November ___, 2003, entered into by the record owner
of such shares and ▇▇▇▇▇▇ Associated Companies,
Inc.."
Each Stockholder shall cause a counterpart of this
Agreement to be deposited with the Company at its principal place of business or
registered office where it shall be subject to the same right of examination by
a stockholder of the Company, in Person or by agent or attorney, as are the
books and records of the Company.
(g) Entire Agreement. This Agreement (including the
documents referred to herein) (i) constitutes the entire agreement, and
supersedes all prior agreements and understanding, both oral and written,
between the parties with respect to the subject matter of this Agreement and
(ii) is not intended to confer upon any Person other than the parties any rights
or remedies.
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(h) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
sent by documented overnight delivery service or, to the extent receipt is
confined, appropriate telecopy address or telecopy number set forth below (or at
such other address or telecopy number for a party as shall be specified by like
notice):
If to the Purchaser to:
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▇▇▇▇▇▇ Associated Companies, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Stockholder, to:
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Wynnefield Capital Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(i) Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Nevada regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
(j) Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement, and, shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
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(k) Interpretation. The headings contained in this
Agreement are inserted for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
(l) Severability. Any provision hereof which is invalid
or unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
(m) Consent to Jurisdiction. Each party hereto
irrevocably submits to the nonexclusive jurisdiction of (a) the state courts of
the State of New York and (b) the United States federal district courts located
in the State of New York for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
(n) Attorney's Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements, in addition to any other relief to which such party may be
entitled.
(o) No Limitation on Actions of any Stockholder as
Director. In the event any Stockholder or any of Stockholder's Affiliates is a
director of the Company, notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement is intended or shall be construed to
require such Stockholder or such affiliate to take or in any way limit any
action that such Stockholder or such affiliate may take to discharge such
Stockholder's or such Affiliate's fiduciary duties as a director of the Company.
* * * * *
IN WITNESS WHEREOF, this Voting Agreement has been signed by or on
behalf of each of the parties as of the date first above written.
PURCHASER:
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▇▇▇▇▇▇ ASSOCIATED COMPANIES, INC.
By:
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STOCKHOLDERS: ORIGINAL SHARES
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WYNNEFIELD PARTNERS SMALL CAP VALUE, L.P. 382,897
By: Wynnefield Capital Management, LLC, its General Partner
By:
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▇▇▇▇▇▇ ▇▇▇▇,
Co-Managing Member
WYNNEFIELD PARTNERS SMALL CAP VALUE, L.P. I 507,303
By: Wynnefield Capital Management, LLC, its General Partner
By:
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▇▇▇▇▇▇ ▇▇▇▇,
Co-Managing Member
WYNNEFIELD SMALL CAP VALUE OFFSHORE FUND, LTD. 178,686
By: Wynnefield Capital, Inc.
By:
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▇▇▇▇▇▇ ▇▇▇▇,
President
▇▇▇▇▇▇ ▇▇▇▇ -0-
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