EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Dated as of December 16, 2002
by and among
TECHTRONIC INDUSTRIES CO. LTD.,
RAMC HOLDINGS, INC.,
TIC ACQUISITION CORP.,
and
ROYAL APPLIANCE MFG. CO.
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER............................................................................................. 2
SECTION 1.1 The Merger.................................................................................. 2
SECTION 1.2 Closing..................................................................................... 2
SECTION 1.3 Effective Time.............................................................................. 2
SECTION 1.4 Effects of the Merger....................................................................... 2
SECTION 1.5 Articles of Incorporation and Code of Regulations........................................... 3
SECTION 1.6 Directors and Officers of the Surviving Corporation......................................... 3
ARTICLE II CANCELLATION AND CONVERSION OF SHARES; CONSIDERATION.................................................. 3
SECTION 2.1 Effect on Capital Stock..................................................................... 3
SECTION 2.2 Company Stock Option Plans.................................................................. 3
SECTION 2.3 Exchange of Certificates;................................................................... 4
SECTION 2.4 Certain Adjustments......................................................................... 6
SECTION 2.5 Dissenters' Rights.......................................................................... 6
SECTION 2.6 Further Assurances.......................................................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES....................................................................... 7
SECTION 3.1 Representations and Warranties of the Company............................................... 7
SECTION 3.2 Representations and Warranties of Acquiror, Parent and Merger Sub........................... 24
ARTICLE IV PRE-CLOSING COVENANTS................................................................................. 25
SECTION 4.1 Conduct of Business......................................................................... 25
SECTION 4.2 Other Actions............................................................................... 28
SECTION 4.3 Advice of Changes........................................................................... 28
SECTION 4.4 No Solicitation by the Company.............................................................. 28
SECTION 4.5 Continued Availability of Funds; Evidence of Funds.......................................... 29
ARTICLE V ADDITIONAL AGREEMENTS.................................................................................. 30
SECTION 5.1 Preparation of the Proxy Statement; Shareholders Meeting.................................... 30
SECTION 5.2 Access to Information; Confidentiality...................................................... 31
SECTION 5.3 Commercially Reasonable Efforts; Cooperation................................................ 31
SECTION 5.4 Director, Officer and Employee Indemnification.............................................. 32
SECTION 5.5 Public Announcements........................................................................ 34
SECTION 5.6 2002 Year-End Benefits...................................................................... 34
SECTION 5.7 Delisting................................................................................... 34
ARTICLE VI CONDITIONS PRECEDENT.................................................................................. 34
SECTION 6.1 Conditions To Each Party's Obligation To Effect The Merger.................................. 34
SECTION 6.2 Conditions to Obligations of Acquiror, Parent and Merger Sub................................ 35
SECTION 6.3 Conditions to Obligations of the Company.................................................... 35
SECTION 6.4 Frustration of Closing Conditions........................................................... 36
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.................................................................... 36
SECTION 7.1 Termination................................................................................. 36
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SECTION 7.2 Effect of Termination....................................................................... 38
SECTION 7.3 Fees and Expenses........................................................................... 39
ARTICLE VIII GENERAL PROVISIONS.................................................................................. 39
SECTION 8.1 Survival of Representations and Warranties.................................................. 39
SECTION 8.2 Notices..................................................................................... 39
SECTION 8.3 Counterparts................................................................................ 40
SECTION 8.4 Specific Performance........................................................................ 40
SECTION 8.5 Entire Agreement; No Third-Party Beneficiaries.............................................. 40
SECTION 8.6 Governing Law............................................................................... 41
SECTION 8.7 Assignment.................................................................................. 41
SECTION 8.8 Consent to Jurisdiction..................................................................... 41
SECTION 8.9 Interpretation.............................................................................. 41
SECTION 8.10 Headings................................................................................... 41
SECTION 8.11 Severability............................................................................... 41
SECTION 8.12 Amendment.................................................................................. 42
SECTION 8.13 Extension; Waiver.......................................................................... 42
SECTION 8.14 Schedules.................................................................................. 42
Appendix A - Definitions
Exhibit 1 - Voting Agreement
Exhibit 2 - Form of Company Closing Certificate
Exhibit 3 - Form of Parent Closing Certificate
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of December 16,
2002, among ROYAL APPLIANCE MFG. CO., an Ohio corporation (the "Company"),
TechTronic Industries Co., Ltd., a corporation organized under the laws of Hong
Kong ("Parent"), RAMC HOLDINGS, INC., a Delaware corporation ("Acquiror"), and
TIC ACQUISITION CORP., an Ohio corporation and a wholly owned subsidiary of
Acquiror ("Merger Sub").
RECITALS
A. The respective Boards of Directors of the Company, Acquiror, Parent,
and Merger Sub have approved the merger of Merger Sub with and into the Company
(the "Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding common share, without par value,
of the Company ("Company Common Stock"), other than (i) Dissenting Shares, (ii)
any shares owned by any direct or indirect subsidiary of the Company and any
Company Common Stock held in the treasury of the Company, or (iii) owned by
Acquiror or an Affiliate of Acquiror will be converted into the right to receive
the Merger Consideration;
B. The respective Boards of Directors of the Company, Acquiror, Parent,
and Merger Sub have each determined that the Merger and the other transactions
contemplated hereby are consistent with, and in furtherance of, their respective
business strategies and goals;
C. The Company, Acquiror, Parent, and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
D. The Board of Directors of the Company has resolved to recommend the
Merger to the holders of the Company Common Stock, has determined that the
consideration to be paid for each share of Company Common Stock in the Merger is
fair to the holders of such Company Common Stock, and has resolved to recommend
that the holders of such Company Common Stock accept the Merger Consideration
and approve this Agreement and each of the transactions contemplated hereby upon
the terms and subject to the conditions set forth herein;
E. Concurrently with the execution and delivery of this Agreement, as a
condition and inducement to Acquiror's, Parent's and Merger Sub's willingness to
enter into this Agreement, certain shareholders of the Company (the "Major
Shareholders") have entered into Voting Agreements, dated as of the date of this
Agreement, in the form attached hereto as EXHIBIT 1 (the "Voting Agreements")
pursuant to which each such Major Shareholder has, among other things, agreed to
vote the Company Common Stock held by such Major Shareholder for the Merger;
F. The Board of Directors of Parent has resolved to recommend the Merger
to the holders of shares of Parent Common Stock and the executive members of the
Board of Directors of Parent have expressed their respective intentions to vote
their shares of Parent Common Stock in favor of the Merger; and
G. Currently with the execution and delivery of this Agreement, as a
condition and inducement to Acquiror's, Merger Sub's and Parent's willingness to
enter into this Agreement, the Company has entered into new employment
agreements with each of the individuals listed on Section 6.3(d) of the Company
Disclosure Schedule, which agreements are effective as of the Effective Time and
which terminate each of those individuals' current employment and severance
agreements. In exchange for the individuals' agreement to terminate their
existing agreements and enter into the new agreements, such individuals will
receive at the Effective Time, in the aggregate, $2.4 million.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows. Capitalized terms used herein shall have
the meanings referred to or set forth in Appendix A hereto.
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Ohio Statutes, Merger Sub
shall be merged with and into the Company at the Effective Time and the separate
corporate existence of Merger Sub shall thereupon cease. Following the Effective
Time, the Company shall be the surviving corporation (the "Surviving
Corporation").
SECTION 1.2 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver (subject to
applicable law) of the conditions (excluding conditions that, by their terms,
cannot be satisfied until the Closing Date) set forth in ARTICLE VI, unless
another time or date is agreed to by the parties hereto. The Closing will be
held at the offices of ▇▇▇▇ ▇▇▇▇▇▇▇▇, a legal professional association, 2600
Erieview Tower, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or such other
location as the parties hereto shall agree to in writing. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date."
SECTION 1.3 Effective Time. Subject to the provisions of this Agreement,
as soon as practicable or prior to the Closing Date, the parties shall (i) file
a Certificate of Merger (the "Certificate of Merger") in such form as is
required by and executed in accordance with the relevant provisions of the Ohio
Statutes and (ii) make all other filings or recordings required under the Ohio
Statutes. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Secretary of State of the State of Ohio, or at
such later date or time as the Company and Acquiror shall agree and specify in
the Certificate of Merger (the date and time the Merger becomes effective being
the "Effective Time").
SECTION 1.4 Effects of the Merger. The Merger shall have the effects set
forth in the Ohio Statutes. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of the Company and Merger Sub shall be vested in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
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SECTION 1.5 Articles of Incorporation and Code of Regulations. Subject to
Section 5.4, the articles of incorporation and code of regulations of Merger Sub
shall be the articles of incorporation and code of regulations, respectively, of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law; provided, however, that the name of the Surviving
Corporation shall be "Royal Appliance Mfg. Co."
SECTION 1.6 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation and the officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, in each case, until the earlier of their death, resignation or
removal or until their respective successors are duly elected and qualified, as
the case may be.
ARTICLE II
CANCELLATION AND CONVERSION OF SHARES; CONSIDERATION
SECTION 2.1 Effect on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
capital stock of the Company or Merger Sub:
(a) Cancellation of Treasury Stock and Company-Owned Stock. Each share of
Company Common Stock that is (i) owned by any direct or indirect subsidiary of
the Company, (ii) owned by Acquiror or an Affiliate of Acquiror, or (iii) held
in the treasury of the Company shall automatically be canceled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(b) Conversion of Company Common Stock. Subject to SECTION 2.5
(Dissenters' Rights), each issued and outstanding share of Company Common Stock
shall be converted into the right to receive $7.37 in cash (the "Merger
Consideration").
(c) Capital Stock of Merger Sub. At the Effective Time, each share of
common stock, no par value, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into one share of common stock of
the Surviving Corporation.
(d) Cancellation and Retirement of Company Common Stock. As of the
Effective Time, all shares of Company Common Stock (other than shares to be
canceled in accordance with SECTION 2.1(A) and Dissenting Shares) shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares of
Company Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration, without interest, upon surrender
of such certificate in accordance with SECTION 2.3.
SECTION 2.2 Company Stock Option Plans. For purposes of this Agreement,
the term "Option" means each unexercised option, warrant, phantom stock award or
other security (including, without limitation, any "Company Stock Option," as
hereafter defined). The Company shall take all actions necessary to ensure that,
as of the Effective Time, each outstanding Company Stock Option, vested or
unvested, exercisable or non-exercisable, shall be extinguished and converted
into the right to receive a cash amount equal to the product of (x) the excess,
if any, of the Merger Consideration minus the exercise price, if any, of each
such
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Company Stock Option (the "Option Shares Merger Consideration"), multiplied by
(y) the aggregate number of shares of the Company Common Stock issuable upon the
exercise in full of such Option at the Effective Time. The Company Stock Option
Plans shall terminate as of the Effective Time and the provisions in any other
plan, program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any Subsidiary shall
be terminated as of the Effective Time. In addition, the Company shall take all
action necessary to ensure that following the Effective Time no participant in
the Company Stock Option Plans or other plans, programs or arrangements shall
have any right thereunder to acquire or participate in changes in value of
equity securities of the Company, the Surviving Corporation, Merger Sub or any
of their respective subsidiaries and to terminate all such plans effective as of
the Effective Time.
SECTION 2.3 Exchange of Certificates; (a) Exchange Agent.
(a) The Parties agree that National City Bank, or such other bank or trust
company which the Parties may designate, shall act as agent (the "Exchange
Agent") of Acquiror for purposes of, among other things, mailing and receiving
transmittal letters and distributing to the Company shareholders (or holders of
Company Stock Options) the proceeds payable to such holders under SECTION 2.1(B)
(Conversion of Company Common Stock) or SECTION 2.2 (Company Stock Option Plans)
above. Immediately prior to the Effective Time, Merger Sub (or the Company, as
the Surviving Corporation) shall deposit, or shall cause to be deposited, with
or for the account of the Exchange Agent, for the benefit of the holders of
Certificates (as defined herein) cash in an aggregate amount (the "Exchange
Fund") equal to the sum of (x) the product of (A) the Merger Consideration
multiplied by (B) the number of shares of Company Common Stock issued and
outstanding at the Effective Time plus (y) the Option Shares Merger
Consideration for all outstanding Options as of the Effective Time.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail or deliver to each holder of
record of a certificate or certificates or Options grant which immediately prior
to the Effective Time represented outstanding shares of Company Common Stock or
Options (the "Certificates") whose shares or options were converted into the
right to receive the Merger Consideration or Option Shares Merger Consideration
pursuant to SECTION 2.1(B) (Conversion of Company Common Stock) or SECTION 2.2
(Company Stock Option Plans), as applicable, (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 Exchange
Agent and shall be in such form and have such other provisions as the Company
and Acquiror may reasonably specify) and (ii) instructions for use in
surrendering the Certificates in exchange for the Merger Consideration or Option
Shares Merger Consideration, as applicable. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor a check representing the amount of cash such holder has the
right to receive pursuant to the provisions of this ARTICLE II, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock which is not registered in the
transfer records of the Company, a certificate representing the proper number of
shares of Company Common Stock may be issued to a Person other than the Person
in whose name the Certificate so surrendered is registered if such
4
Certificate is properly endorsed or otherwise in proper form for transfer and
the Person requesting such issuance pays any transfer or other taxes required by
reason of the payment of the Merger Consideration or Option Shares Merger
Consideration, as applicable, to a Person other than the registered holder of
such Certificate or establishes to the satisfaction of Acquiror that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
SECTION 2.3, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the Merger
Consideration or Option Shares Merger Consideration, as applicable, that the
holder thereof has the right to receive in respect of such Certificate pursuant
to the provisions of this ARTICLE II. No interest shall be paid or will accrue
on any cash payable to holders of Certificates pursuant to the provisions of
this ARTICLE II.
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration or Option Shares Merger Consideration, as applicable, shall be
deemed to have been paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock, theretofore represented by such Certificates,
and there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or the
Exchange Agent for any reason, they shall be canceled and exchanged as provided
in this ARTICLE II, except as otherwise provided by law.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed (including interest thereon) to the holders of the
Certificates for six months after the Effective Time shall to the extent
permitted by law, become the property of the Surviving Corporation. Any holders
of the Certificates who have not theretofore complied with this ARTICLE II shall
thereafter look only to the Surviving Corporation, and only as a general
creditor, for payment of their claim for Merger Consideration or Option Shares
Merger Consideration, as applicable, and without interest. If any certificates
representing any Company Common Stock shall not have been surrendered prior to
five years after the Effective Time (or immediately prior to such earlier date
on which any payment in respect thereof would otherwise escheat to or become the
property of any Governmental Entity), the payment in respect of such
certificates shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(e) No Liability. None of the Parties shall be liable to any Person in
respect of any Merger Consideration from the Exchange Fund, delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) Investment of Exchange Fund. The Exchange Agent shall invest the
Exchange Fund, as directed by the Surviving Corporation, in (i) direct
obligations of the United States of America, (ii) obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of principal and interest, (iii) commercial paper rated the highest
quality by either ▇▇▇▇▇'▇ Investors Services, Inc. or Standard & Poor's
Corporation, or (iv) certificates of deposit, bank repurchase agreements or
bankers acceptances, of commercial banks with capital exceeding $500 million,
and any net earnings with respect thereto shall be paid to the Surviving
Corporation as and when requested by the Surviving Corporation; provided, that
any such investment or any such payment of earnings shall not delay the receipt
5
by holders of Certificates of the Merger Consideration or Option Shares Merger
Consideration, as the case may be, or otherwise impair such holders' respective
rights hereunder.
(g) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon (i) the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed, (ii) evidence that
such Person is the beneficial owner of the Certificate claimed by such Person to
be lost, stolen or destroyed, and (iii) if required by the Surviving
Corporation, the posting by such Person of a bond in such reasonable amount as
the Surviving Corporation may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent shall issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration or Option Shares Merger Consideration, as applicable.
(h) Withholding Rights. The Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Company Common Stock or Company Stock Options such amounts (each a
"Withholding Amount") as the Exchange Agent, Surviving Corporation, or Acquiror
is required to deduct and withhold with respect to the making of such payment
under the Code (as hereinafter defined), or any provision of state, local or
foreign tax law, including, without limitation, withholdings required in
connection with payments with respect to Company Stock Options held by employees
of the Company. To the extent that amounts are so withheld by the Exchange
Agent, Surviving Corporation, or Acquiror, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder in
respect of which such deduction and withholding was made.
SECTION 2.4 Certain Adjustments. If after the date hereof and on or prior
to the Effective Time, the outstanding shares of Company Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, or any similar event shall occur (any such action, an
"Adjustment Event"), the Merger Consideration shall be adjusted accordingly to
provide to the holders of Company Common Stock the same economic effect as
contemplated by this Agreement prior to such reclassification, recapitalization,
split-up, combination, exchange or dividend or similar event.
SECTION 2.5 Dissenters' Rights.(a)
(a) Notwithstanding any provision of this Agreement to the contrary, any
shares of Company Common Stock outstanding immediately prior to the Effective
Time and held by persons who shall have properly demanded payment of the fair
cash value of such shares of Company Common Stock in accordance with Section
1701.85 of the Ohio Statutes (collectively, the "Dissenting Shares") shall not
be converted into or represent the right to receive the Merger Consideration as
provided in SECTION 2.1(B). Such persons shall be entitled only to such rights
as are granted under Section 1701.85 of the Ohio Statutes, except that all
Dissenting Shares held by persons who fail to perfect or who effectively
withdraw or lose their rights as dissenting shareholders in respect of such
shares under 1701.85 of the Ohio Statutes shall thereupon be deemed to have been
converted into, as of the Effective Time, the right to receive the applicable
6
portion of the Merger Consideration, without interest thereon, upon surrender of
the certificate therefor in the manner provided in SECTION 2.3.
(b) The Surviving Corporation or the Company shall give Acquiror (i)
prompt notice of any demands by dissenting shareholders received by the Company
or the Surviving Corporation, withdrawals of such demands and any other
instruments served on the Company or the Surviving Corporation and any material
correspondence received by the Surviving Corporation or the Company in
connection with such demands and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands. The Surviving
Corporation shall not, except with the prior written consent of Acquiror, make
any payment with respect to any demands for appraisal or offer to settle or
settle any such demands. Any funds paid to dissenting shareholders shall be paid
out of the Exchange Fund to the extent such payment is equal to or less than the
Merger Consideration and, if greater, the excess shall be paid out of the assets
of the Surviving Corporation.
SECTION 2.6 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized, to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and (ii) to take and do, in the
name and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record in the Surviving Corporation any and all
right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Company. Except as set
forth in the disclosure schedule delivered by the Company to Acquiror
simultaneously with the execution of this Agreement (the "Company Disclosure
Schedule"), the Company hereby represents and warrants to Acquiror, Parent, and
Merger Sub as follows:
(a) Organization, Standing and Corporate Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio and it has the requisite corporate power and authority to
carry on its business as now being conducted. The Company is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed or to be in good
standing individually or in the aggregate would not have a Material Adverse
Effect. The Company has made available to Acquiror prior to the execution of
this Agreement complete and correct copies of its charter documents, each as
amended to date.
(b) Subsidiaries. SECTION 3.1(B) of the Company Disclosure Schedule
contains a list of all the Subsidiaries of the Company. Except as set forth on
SCHEDULE 3.1(B) of the Company Disclosure Schedule, the Company does not own any
stock of, or equity participation in, any Person. Each of the Company's
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and it has
the requisite corporate power and authority to carry on its business as now
being conducted. Each such Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction
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in which the nature of its business or the ownership, leasing or operation of
its properties makes such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed or to be in good
standing individually or in the aggregate would not have a Material Adverse
Effect. The Company has made available to Acquiror prior to the execution of
this Agreement complete and correct copies of its Subsidiaries' charter
documents, each as amended to date. All the outstanding shares of capital stock
of, or other equity interests in, each Subsidiary (i) have been validly issued
and are fully paid and nonassessable, (ii) are owned directly or indirectly by
the Company, free and clear of all pledges, claims, liens, taxes, charges,
community property interests, conditions, equitable interests, liens, options,
rights of first refusal, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens") and (iii) are free of any other
restriction (including any restriction on the right to vote, sell, transfer or
otherwise dispose of such capital stock or other ownership interests), except in
the case of clauses (ii) and (iii) for any Liens or restrictions that arise
under federal or state securities laws or would not, individually or in the
aggregate, have a Material Adverse Effect. There are no outstanding or
authorized options, warrants, calls, subscriptions, rights or other agreements
evidencing the right to purchase or subscribe for any shares of capital stock of
a Subsidiary or obligating such Subsidiary to issue additional shares.
(c) Capital Structure. The authorized capital stock of the Company
consists of (i) 101,000,000 shares of Company Common Stock and (ii) 1,000,000
shares of preferred stock ("Company Preferred Stock"). At the close of business
on December 13, 2002 (the "Stock Reference Date"): (i) 12,816,452 shares of
Company Common Stock were issued and outstanding; (ii) 13,102,800 shares of
Company Common Stock were held by the Company in its treasury; and (iii)
2,758,540 shares of Company Common Stock were subject to outstanding employee,
consultants and directors stock options to purchase Company Common Stock or
rights to receive Company Common Stock upon exercise of phantom stock awards
(collectively, the "Company Stock Options") granted pursuant to the Company's
incentive plans (collectively, the "Company Stock Plans"). On the Stock
Reference Date, no shares of the Company Preferred Stock were issued or
outstanding. All outstanding shares of capital stock of the Company are, and all
shares which may be issued will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Except (i) for changes since the Stock Reference Date resulting from the
issuance of shares of Company Common Stock pursuant to the Company Stock Options
and (ii) for outstanding rights issued pursuant to the Company Rights Agreement
as defined herein, there are not issued, reserved for issuance or outstanding
(A) shares of capital stock or other voting securities of the Company, (B)
securities of the Company convertible into or exchangeable or exercisable for
shares of capital stock or voting securities of the Company or (C) warrants,
calls, options or other rights to acquire from the Company or any Subsidiary any
capital stock or voting securities of the Company or any Subsidiary. There are
no outstanding obligations of the Company or any Subsidiary to repurchase,
redeem or otherwise acquire any such securities. Neither the Company nor any
Subsidiary is a party to any voting agreement with respect to the voting of any
such securities. Except as shown in SECTION 3.1(C) of the Company Disclosure
Schedule, there are no outstanding (A) securities of the Company or any
Subsidiary convertible into or exchangeable or exercisable for shares of capital
stock or other voting securities or ownership interests in any Subsidiary, (B)
warrants, calls, options or other rights to acquire from the Company or any
Subsidiary, and no obligation of the Company or any Subsidiary to issue, any
capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable or exercisable for
8
any capital stock, voting securities or ownership interests in, any Subsidiary
or (C) obligations of the Company or any Subsidiary to repurchase, redeem or
otherwise acquire any such outstanding securities of Subsidiaries or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such securities.
(d) Authority; No Conflict. The Company has all requisite corporate power
and authority to enter into this Agreement and, subject to the Company
Shareholder Approval (as defined in SECTION 3.1(S)), to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to the Company Shareholder Approval. This
Agreement has been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by Acquiror, Parent, and Merger Sub,
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting the rights of creditors and to
general principles of equity. Except as shown on SECTION 3.1(D) of the Company
Disclosure Schedule, the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or passage of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its subsidiaries under (i) the articles of incorporation or code of
regulations of the Company or the comparable organizational documents of any of
its Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
license or similar authorization applicable to the Company or any of its
Subsidiaries or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in SECTION 3.1(E) applicable
to the Company or any of its Subsidiaries or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate would not have a Material Adverse Effect.
(e) Consents. No Consent or approval of any Third Party is required in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby, except
the Company Shareholder Approval. No consent, approval, order or authorization
of, action by or in respect of, or registration, declaration or filing with, any
federal, state, local, municipal or foreign government, any court,
administrative, regulatory or other governmental agency, commission or authority
or any non-governmental U.S. or foreign self-regulatory agency, commission or
authority or any arbitral tribunal (each, a "Governmental Entity") or other
Legal Requirement is required by the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby, except
for: (1) the filing with the SEC of (A) a proxy statement relating to the
Company Shareholders Meeting (the "Proxy Statement"), and (B) such reports under
Sections 13(a), 13(d), 13(e), 15(d) or 16(a) of the Exchange Act, as may be
required in connection with this Agreement and the transactions contemplated
hereby; (2) the filing of the
9
Certificate of Merger with the Secretary of State of the State of Ohio; (3) the
filing of a pre-merger notification and report form by the Company under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended ("HSR Act");
(4) such filings, consents, approvals, orders or authorizations, if any,
required to be made or obtained pursuant to the laws of any non-U.S.
jurisdiction relating to antitrust matters or competition ("Foreign Antitrust
Laws"); and (5) such consents, approvals, orders or authorizations the failure
of which to be made or obtained individually or in the aggregate would not (x)
have a Material Adverse Effect or (y) reasonably be expected to materially
impair or delay the ability of Company to perform its obligations under this
Agreement.
(f) Reports; Undisclosed Liabilities.
(i) The Company has filed all required reports, schedules, forms,
statements and other documents (including exhibits and all other
information incorporated therein) with the SEC since January 1, 2001 (the
"Company SEC Documents"). As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to such
Company SEC Documents, and none of the Company SEC Documents when filed,
declared effective or mailed (as the case may be) contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company (including the
related schedules and notes thereto) included in the Company SEC
Documents (or incorporated therein by reference) comply as to form, as of
their respective dates of filing with the SEC, in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated statement of operations, cash flows and
shareholders' equity for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(ii) As of September 30, 2002, the Company has no Indebtedness or
other liabilities, except for liabilities, including Indebtedness: (a)
reflected or reserved for on the Balance Sheet as of such date or
disclosed in the notes thereto (or in the notes of the Company's audited
financial statements as of December 31, 2001 if GAAP does not require
such notes in interim financial statements), (b) relating to performance
obligations, under Contracts in accordance with the terms and conditions
thereof which are not required by GAAP to be reflected on such Balance
Sheet, (c) arising since September 30, 2002, which are both: (x)
consistent with the past practices of the Company and is taken in the
ordinary course of the normal day-to-day operations of the Company; and
(y) similar in nature and magnitude to liabilities customarily incurred,
without specific authorization of the Board of Directors, in the ordinary
course of the normal day-to-day operations of other Persons that are in
the same line of business as the
10
Company (in the "Ordinary Course of Business"), or (d) which, individually
or in the aggregate, would not have a Material Adverse Effect.
(g) Company Proxy Materials. All of the information supplied by the
Company for inclusion in the Definitive Proxy Statement referred to in SECTION
5.1(A) will not, on the date when the Definitive Proxy Statement is first mailed
to the Company's shareholders and the Definitive Proxy Statement, as then
amended or supplemented, will not, on the date of the Company Shareholders
Meeting referred to in SECTION 5.1(B) hereof or on the Closing Date, contain any
statement which is false or misleading with respect to any material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Company makes no representation or warranty
regarding information furnished by Acquiror, Parent, or Merger Sub for inclusion
in the Definitive Proxy Statement (or any amendment or supplement thereto). The
Definitive Proxy Statement will comply as to form and, with respect to
information supplied or to be supplied in writing by or on behalf of the Company
for inclusion in the Definitive Proxy Statement, substance, in all material
respects, with the requirements of the Exchange Act and the applicable rules and
regulations of the SEC thereunder.
(h) Absence of Certain Changes or Events. Except for liabilities incurred
in connection with this Agreement or the transactions contemplated hereby or
disclosed in the Company Disclosure Schedule, the Company and its Subsidiaries
have since December 31, 2001 conducted their business only in the ordinary
course, and there has not been (1) any declaration, setting aside or payment of
any dividend or other distribution (whether in cash, stock or property) with
respect to any of the Company's capital stock; (2) any split, combination or
reclassification of any of the Company's capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of the Company's capital stock, except for
issuances of Company Common Stock upon the exercise of Company Stock Options in
accordance with their present terms or Company Stock Options issued in
accordance with the terms of the Company Stock Plans; (3) (A) any granting by
the Company or any of its Subsidiaries after December 31, 2001 to any current or
former director, executive officer or other key employee of the Company or its
Subsidiaries of any increase in compensation, bonus or other benefits, except
for normal increases in the Ordinary Course of Business or as was required under
any employment agreements in effect as of December 31, 2001, (B) any granting by
the Company or any of its Subsidiaries after December 31, 2001 to any such
current or former director, executive officer or key employee of any increase in
severance or termination pay, or (C) any entry by the Company or any of its
Subsidiaries after December 31, 2001 into, or any amendment of, any employment,
deferred compensation, consulting, severance, termination or indemnification
agreement with any such current or former director, executive officer or key
employee; (4) except insofar as may have been disclosed in the Company
Disclosure Schedule or required by a change in GAAP, any change in accounting
methods, principles or practices by the Company materially affecting its assets,
liabilities, prospects or business; (5) any tax election that individually or in
the aggregate would reasonably be expected to have a Material Adverse Effect or
any settlement or compromise of any material income tax liability; (6) any
change in the business, assets, financial condition or results of operations of
the Company or its Subsidiaries or any other event which in any such case has
had or could reasonably be expected to have a Material Adverse Effect; (7) any
damage, destruction or loss, whether covered by insurance or not, with respect
to any of the assets of the Company or
11
any of its Subsidiaries having a Material Adverse Effect; (8) an entry into any
agreement, commitment or transaction by the Company or any Subsidiary which is
material to the Company and its Subsidiaries taken as a whole; (9) any change in
the terms and conditions of the Company Stock Option Plans; (10) any redemption
or other acquisition of Company Common Stock by the Company or any of the
Subsidiaries or any declaration or payment of any dividend or other distribution
in cash, stock or property with respect to Common Stock, except for purchases
heretofore made pursuant to the terms of the Company's employee benefit plans;
(11) any revaluation by the Company of any asset (including, without limitation,
any writing down of the value of inventory or writing off of notes or accounts
receivable), other than in the Ordinary Course of Business; (12) (A) any
settlement or compromise by the Company or any Subsidiary of any claim,
litigation or other legal proceeding, other than in the Ordinary Course of
Business and in an amount less than $100,000 or (B) any payment, discharge or
satisfaction by the Company or any Subsidiary of any other claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the Ordinary Course of Business and consistent with
past practice or with respect to any other such claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company; or (13)
any agreement or commitment, whether in writing or otherwise, to take any action
of the type described in this SECTION 3.1(H). Since December 31, 2001, the
Company and the Subsidiaries have conducted their respective businesses in all
material respects only in the Ordinary Course of Business, consistent with past
custom and practice.
(i) Compliance With Applicable Laws; Litigation. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders,
registrations and approvals of all Governmental Entities which are required for
the ownership or lease of the Real Property or the operation of the businesses
of the Company and its Subsidiaries (collectively, the "Company Permits"),
except where the failure to have any such Company Permits individually or in the
aggregate would not have or reasonably be expected to have a Material Adverse
Effect. The Company and its Subsidiaries are and since January 1, 2002 have been
in compliance with the terms of the Company Permits and all Legal Requirements,
except where the failure so to comply individually or in the aggregate would not
have a Material Adverse Effect. The Company has not received any notice or other
communication (whether oral or written) from any Governmental Entity or any
other Person regarding (1) any actual, alleged, possible, or potential violation
of, or failure to comply with, any Legal Requirement or Company Permit, or (2)
any actual, alleged, possible, or potential obligation on the part of the
Company to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature, nor to the Company's Knowledge is there any basis for any
such notice or other communication, other than, in each case, those the outcome
of which individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect.
(j) Labor Matters.
(i) Neither the Company nor any of its Subsidiaries is a party to
any collective bargaining or other labor union contract applicable to
Persons employed by the Company or any of its Subsidiaries and no
collective bargaining agreement is being negotiated by the Company or any
of its Subsidiaries. As of the date of this Agreement, there is no labor
dispute, strike or work stoppage against the Company or any of its
12
Subsidiaries pending or, to the Knowledge of the Company, threatened
which may interfere with the respective business activities of the
Company or any of its Subsidiaries. As of the date of this Agreement, (x)
neither the Company or any of its Subsidiaries, nor any of their
respective representatives or employees, has committed any unfair labor
practice in connection with the operation of the respective businesses of
the Company or any of its Subsidiaries, and (y) there is no charge or
complaint against the Company or any of its Subsidiaries by the National
Labor Relations Board or any comparable governmental agency pending or,
to the Knowledge of the Company, threatened in writing.
(ii) SECTION 3.1(J) of the Company Disclosure Schedule sets forth
all employee benefit plans ("Company Benefit Plans") as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA") and all other employee benefit arrangements or payroll
practices, including, without limitation, any such arrangements or
payroll practices providing severance pay, sick leave, vacation pay,
salary continuation for disability, retirement benefits, deferred
compensation, bonus pay, incentive pay, stock options or other
stock-based compensation, hospitalization insurance, medical insurance,
life insurance, scholarships or tuition reimbursements, maintained by the
Company or to which the Company is obligated to contribute for employees,
individuals other than Employees, or former employees. Each of the
employee benefit plans, practices and arrangements set forth on SECTION
3.1(J) of the Company Disclosure Schedule shall hereafter be referred to
as a "Plan" or "Plans" as the context may require.
(iii) Copies of the following documents, with respect to each of
the Plans, as applicable, have been delivered to Acquiror by the Company:
(i) all plan and related trust documents, and amendments thereto; (ii)
the most recent IRS Form 5500; (iii) the last IRS determination letter;
(iv) summary plan descriptions; and (v) the most recent actuarial report.
(iv) Neither the Company nor any trade or business (whether or not
incorporated) which has been under common control or treated as a single
employer with the Company under Section 414(b), (c) or (m) of the Code
(an "ERISA Affiliate") has incurred, or is reasonably likely to incur,
any liability under Title IV of ERISA or Section 412 of the Code and none
of the Plans is a Multiemployer Plan, as defined in Section 3(37) of
ERISA. Neither the Company nor any ERISA Affiliate has incurred any
Liability resulting from a complete or partial withdrawal from any
Multiemployer Plan, and none of them has incurred, or is reasonably
likely to incur, any liability due to the termination or reorganization
of a Multiemployer Plan which has not been satisfied in full, and to the
Company's Knowledge, no event has occurred that would subject the Company
or any ERISA Affiliate to any such liability.
(v) Each Plan complies with, and has been established, operated
and administered in accordance with its terms and the requirements of,
ERISA, the Code and other Legal Requirements and, there are no material
pending or, to Company's Knowledge, threatened claims by, on behalf of or
involving any plan administrator or any plan trustee (other than routine
claims for benefits).
13
(vi) Neither the Company nor any ERISA Affiliate has incurred any
liability for any tax or penalty imposed by Section 4975 of the Code or
Section 502(i) of ERISA with respect to any Plan.
(vii) Each Plan which is intended to qualify under Section 401(a)
of the Code has received an IRS determination letter concluding that such
Plan so qualifies in form, and no event has occurred and no condition
exists that, to the Company's Knowledge, would cause such Plan to lose
its qualified status.
(viii) Except as set forth on SECTION 3.1(J) of the Company
Disclosure Schedule or as may be required under Section 4980B of the
Code, or Section 601 of ERISA, the Company does not have any liability
for post-retirement medical or life insurance benefits or coverage for
any employee or former employee or any dependent of any such employee or
former employee.
(ix) Except as set forth on SECTION 3.1 of the Company Disclosure
Schedule, the consummation of the Merger will not result in any increase
in the amount of compensation or benefits or accelerate the vesting or
timing of payment of any compensation or benefits payable by the Company
to or in respect of any employee or former employee or the beneficiary or
dependent of any such employee or former employee under any Plan or
Contract.
(x) Except as set forth in SECTION 3.1(J) of the Company
Disclosure Schedule, and assuming, with the permission of the Parent,
Acquiror and Merger Sub, for the purposes of Section 162(m) of the Code
only, that none of Acquiror, Parent or Merger Sub, prior to January 1,
2004, will issue any class of common equity securities required to be
registered under Section 12 of the Securities Exchange Act of 1934, as
amended, no amount payable to any Employee or former Employee will fail
to be deductible for Federal income tax purposes by reason of Section
162(m) or Section 280G of the Code.
(xi) The Company has no separate Plans for the benefit of the
Company's non-United States employees or United States employees located
in a foreign jurisdiction.
(k) Taxes.
(i) Except as otherwise disclosed on Section 3.1(k) of the Company
Disclosure: (1) the Company has filed (or joined in the filing of) when
due all reports, returns, information returns, forms, declarations,
claims for refund, statements or other information (including any
amendments thereto and including any schedule or statement thereto) filed
or maintained, or required to be filed or maintained, in connection with
the calculation, determination, assessment or collection of any Tax and
shall include any amended returns required as a result of examination
adjustments made by the Internal Revenue Service or other Governmental
Entity (each, "Tax Return") required by applicable Legal Requirements to
be filed with respect to the Company and all Taxes shown to be due on
such Tax Returns have been paid; (2) all such Tax Returns were true,
correct and complete as of the time of each such filing; (3) all Taxes
relating to periods ending on or before the date hereof owed by the
Company (whether or not shown on any
14
Tax Return) and required to have been paid, have been paid (except for
Taxes which are being contested in good faith in appropriate proceedings
diligently conducted); (4) any liability of the Company for Taxes not yet
due and payable, or which are being contested in good faith in
appropriate proceedings diligently conducted, has been provided for on
the financial statements of the Company in accordance with GAAP; (5)
there is no action, suit, proceeding, investigation, audit or claim now
pending against, or with respect to, the Company in respect of any Tax or
assessment, nor is any claim for additional Tax or assessment asserted by
any Governmental Entity; (6) since January 1, 1999, no claim has been
made by any Governmental Entity in a jurisdiction where the Company does
not currently file a Tax Return that it is or may be subject to Tax by
such jurisdiction, nor to the Company's Knowledge is any such assertion
threatened; (7) there is no outstanding request for any extension of time
within which to pay any Taxes or file any Tax Returns; (8) there has been
no waiver or extension of any applicable statutes of limitation for the
assessment or collection of any Taxes of the Company; (9) the Company is
not a party to any agreement, whether written or unwritten, providing for
the payment of Taxes, payment for Tax losses, entitlements to refunds or
similar Tax matters; (10) no ruling with respect to Taxes (other than a
request for determination of the status of a qualified pension plan) has
been requested by or on behalf of the Company; (11) the Company has
withheld and paid all material Taxes required to be withheld in
connection with any amounts paid or owing to any employee, creditor,
independent contractor or other third party; (12) no property of the
Company is "tax-exempt use property" within the meaning of Section 168(h)
of the Code; (13) the Company is not a party to any lease made pursuant
to former Section 168(f)(8) of the Internal Revenue Code of 1954; (14)
the Company has not filed any agreement or consent under Section 341(f)
of the Code; and (15) the Company has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(ii) Except as disclosed in 3.1(k) of the Company Disclosure
Schedule and assuming, with the permission of the Parent, Acquiror and
Merger Sub, for the purposes of Section 162(m) of the Code only, that
none of Acquiror, Parent or Merger Sub, prior to January 1, 2004, will
issue any class of common equity securities required to be registered
under Section 12 of the Securities Exchange Act of 1934, as amended: (1)
any amount that could be received (whether in cash or property or the
vesting of property) as a result of the Transactions by any employee,
officer or director of the Company who is a "disqualified individual" (as
such term is defined in proposed Treasury Regulation Section 1.280G-1)
under any employment, severance or termination agreement, other
compensation arrangement or benefit plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined
in Section 280(G)(b)(1) of the Code); and (2) the disallowance of a
deduction under Section 162(m) of the Code for employee remuneration will
not apply to any amount paid or payable by the Company under any
Contract, benefit plan, program, arrangement or understanding currently
in effect.
(l) Environmental Matters. Except as disclosed in SECTION 3.1(L) of the
Company Disclosure Schedule, (i) the Company and its Subsidiaries and, to the
Knowledge of the Company, all real property owned, leased or operated by the
Company and its Subsidiaries are in
15
compliance with Environmental Laws, except as would not have or would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect; (ii) the Company and its Subsidiaries have obtained and
currently possess and maintain all permits required by Environmental Laws
(collectively, "Company Environmental Permits") for each of their respective
operations, all such Company Environmental Permits are in good standing, and the
Company and its Subsidiaries are in compliance with the terms and conditions of
such Company Environmental Permits, except in each such case as would not have
or would not reasonably be likely to have, individually or in the aggregate, a
Material Adverse Effect; (iii) neither the Company and its Subsidiaries nor any
real property currently or, to the Knowledge of the Company, formerly owned,
leased or operated by the Company or its Subsidiaries is subject to any pending
or, to the Knowledge of the Company, threatened Environmental Claim; (iv)
neither the Company nor any of its Subsidiaries has generated, arranged for the
disposal of or otherwise caused to be disposed of any Hazardous Material at any
off-site location at which the Company and its Subsidiaries would reasonably be
expected to be liable for undertaking or paying for any investigation or any
other action to respond to the release or, to the Knowledge of the Company,
threatened release of any Hazardous Material or would reasonably be expected to
be required to pay natural resource damages, except in any such case as would
not have or would not reasonably be likely to have, individually or in the
aggregate, a Material Adverse Effect; (v) no Company property or any property
currently or, to the Knowledge of the Company, formerly owned, leased or
operated by the Company and its Subsidiaries has been the subject of any
treatment, storage, disposal, accumulation, generation, or release of Hazardous
Materials in any manner which would reasonably be expected to give rise to
liability under Environmental Laws or need to undertake any action to respond to
such Hazardous Materials, except as would not have or would not reasonably be
likely to have, individually or in the aggregate, a Material Adverse Effect;
(vi) there are no wetlands at any of the Company properties nor is any Company
property subject to any current or, to the Knowledge of the Company, threatened
environmental deed restriction, use restriction, institutional or engineering
control, except as would not have or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect; (vii) the Company
has neither expressly, nor by operation of law, assumed or undertaken any
liability arising under or related to any Environmental Claim; (viii) the
Company is not required to give notice of or record or deliver to any
Governmental Agency an environmental disclosure document or statement by virtue
of the transactions set forth herein and contemplated hereby; (ix) the Company
and its Subsidiaries have made available to Parent all environmental audits,
reports and other material environmental documents in their possession relating
to their current and, to the extent the Company or its Subsidiaries have
Knowledge that they are potentially liable, their formerly owned or operated
properties, facilities or operations; (viii) no capital expenditures are
presently required to maintain or achieve compliance with Environmental Laws,
except as would not have or would not reasonably be likely to have, individually
or in the aggregate, a Material Adverse Effect on the Company; and (ix) to the
Knowledge of the Company, there are no underground storage tanks,
polychlorinated biphenyls ("PCB") or PCB-containing equipment, except for PCB or
PCB-containing equipment owned by utility companies, or asbestos or
asbestos-containing materials at any Company property, except as would not have
or would not reasonably be likely to have, individually or in the aggregate, a
Material Adverse Effect.
16
As used in this Agreement:
"Environmental Claims" means any and all administrative, regulatory,
judicial or third-party claims, demands, notices of violation or non-compliance,
directives, proceedings, investigations, orders, decrees, judgments or other
allegations of noncompliance with or liability or potential liability relating
in any way to any Environmental Law or any Company Environmental Permit.
"Environmental Laws" means all applicable federal, state, and local Laws,
rules and regulations, orders, judgments, decrees and other legal requirements
including, without limitation, common law relating to pollution or the
regulation and protection of human health, safety, the environment or natural
resources, including, but not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sec.
9601 et seq.); the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sec. 180 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as
amended (7 U.S.C. Sec. 136 et seq.); the Resource Conservation and Recovery Act,
as amended (42 U.S.C. Sec. 6901 et seq.); the Toxic Substances Control Act, as
amended (42 U.S.C. Sec. 7401 et seq.); the Clean Air Act, as amended (42 U.S.C.
Sec. 740 et seq.); the Federal Water Pollution Control Act, as amended (33
U.S.C. Sec. 1251 et seq.); the Occupational Safety and Health Act, as amended
(29 U.S.C. Sec. 651 et seq.); the Safe Drinking Water Act, as amended (42 U.S.C.
Sec. 300f et seq.); and their state and local counterparts or equivalents and
any transfer of ownership notification or approval statute.
"Hazardous Material" means all substances, pollutants, chemicals,
compounds, wastes, including, without limitation, petroleum and any fraction
thereof, and bacteria, mold, fungi or other toxic growth, either regulated under
Environmental Laws or otherwise potentially injurious to human health and the
environment.
(m) Opinion of Financial Advisor. The Company has received the opinion of
its Financial Advisor, to the effect that, as of the date of its opinion, the
Merger Consideration is fair from a financial point of view to the holders of
shares of Company Common Stock.
(n) Takeover Statutes. The Company's Board of Directors, at a meeting
duly called and held, has approved, for purposes of Chapter 1704 of the Ohio
Revised Code, the Merger and the acquisition by Acquiror of the shares of common
stock of the Surviving Corporation pursuant to the Merger. As of the date of
this Agreement, except for Chapter 1704 of the Ohio Revised Code and Section
1701.831 of the Ohio Law, no "fair price," "business combination," "moratorium,"
"control share acquisition" or other anti-takeover statute or similar statute or
regulation enacted by any state apply to the Merger or the other transactions
contemplated by this Agreement.
(o) Finders' or Advisors' Fees. Except for its Financial Advisor, there
is no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the Company or any of its
Subsidiaries who might be entitled to any fee or commission in connection with
the transactions contemplated by this Agreement.
17
(p) Intellectual Property; Software.
(i) Except in each case where the failure would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect, (1) the Company and its Subsidiaries own all right, title and
interest in or have valid and enforceable rights to use, by license or
other agreements, all of the Intellectual Property that is currently used
in the conduct of the Company's or any of its Subsidiary's business, free
of all liens, pledges, charges, options, rights of first refusal,
security interests or other encumbrances of any kind, (2) no action,
claim, arbitration, proceeding, audit, hearing, investigation, litigation
or suit (whether civil, criminal, administrative, investigative or
informal) has commenced, been brought or heard by or before any
Governmental Entity or arbitrator or is pending or is threatened in
writing by any third Person with respect to any Intellectual Property
owned by such third Person or the Company or any of its Subsidiaries in
connection with the business as currently conducted, including any claim
or suit that alleges that any such Intellectual Property owned by the
Company or any of its Subsidiaries infringes, impairs, dilutes or
otherwise violates the rights of others, and the Company and its
Subsidiaries are not subject to any outstanding injunction, judgment,
order, decree, ruling, charge, settlement, or other dispute involving any
third Person's Intellectual Property, (3) neither the Company nor any of
its Subsidiaries has threatened or initiated any claim or action against
any third party with respect to any Intellectual Property, and (4) the
Company has no Knowledge of any material conflicts with or infringements
of any Intellectual Property of any third Person.
(ii) For purposes of this Agreement, "Intellectual Property" means
all (1) inventions, discoveries, processes, designs, techniques,
developments, technology, and related improvements, whether or not
patentable; (2) United States and foreign issued patents and applications
therefor and all divisionals, reissues, renewals, registrations,
confirmations, re-examinations, certificates of inventorship, extensions,
continuations and continuations-in-part thereof and all rights of
priority therein; (3) United States, state and foreign trademarks, trade
dress, service marks, service names, trade names, brand names, logo or
business symbols, whether registered or unregistered, and pending
applications (including intent to use applications) to register the
foregoing, including all extensions and renewals thereof and all goodwill
associated therewith; (4) United States and foreign copyrights and moral
rights in writings, designs, software, mask works or other works, whether
registered or unregistered, and pending applications to register the
same, (5) technical, scientific, and other know-how, trade secrets,
methods, processes, practices, formulas and techniques, computer software
programs and software systems, including all databases, compilations,
tool sets, compilers, higher level or "proprietary" languages, related
documentation and materials, whether in interpretive code, source code,
object code or human readable form; (6) rights of publicity and privacy,
"name and likeness" rights and other similar rights; (7) books and
records kept in the ordinary course of the business describing or used in
connection with any of the foregoing; and (8) claims or causes of action
arising out of or related to past, present or future infringement or
misappropriation of any of the foregoing. Without limiting the foregoing,
the Intellectual Property shall include the United States and foreign
issued patents, patent applications, trademark registrations, trademark
applications, copyright registrations and copyright
18
applications, and the right to register the domain names as set forth in
the Company Disclosure Schedule
(q) Problems with Customers and Suppliers.
(i) Section 3.1(q) of the Company Disclosure Schedule lists each
of the Company's customers whose purchases from the Company constituted
greater than 10% of the Company's revenue for the year ended December 31,
2001 and the nine months ended September 30, 2002 (each a "Major
Customer") and the dollar amount of business done with each Major
Customer in each such period. Section 3.1(q) of the Company Disclosure
Schedule further lists each of the Company's vendors and suppliers, the
dollar value of purchases constituted greater than 10% of the Company's
revenue for the year ended December 31, 2001 and the nine months ended
September 30, 2002 (each a "Major Supplier"), and the dollar amount of
business done with each Major Supplier in each such period. The Company
has furnished Acquiror, Parent and Merger Sub with complete and accurate
copies or descriptions of all current agreements (written or unwritten)
with such Major Customers and Major Suppliers. Except as set forth on
Section 3.1(q) or the Company Disclosure Schedule, (1) the Company is not
engaged in a material dispute with any Major Customer or Major Supplier,
(2) there has been no material adverse change in the business
relationship of the Company with any Major Customer or Major Supplier
since September 30, 2002, and (3) no Major Customer or Major Supplier has
indicated in writing or otherwise any material modification or change in
the business relationship with the Company, including but not limited to,
a reduction in the volume of business transacted by such Major Customer
or Major Supplier, as the case may be, below historical levels.
(ii) Since January 1, 2002: (1) no supplier or customer of the
Company or any of its Subsidiaries has canceled or otherwise terminated
its relationship with the Company or any of its Subsidiaries, except for
such cancellations and terminations that, individually or in the
aggregate, have not had, or more likely than not are not expected to
have, a Material Adverse Effect; (2) to the Knowledge of the Company, no
supplier or customer of the Company or any of its Subsidiaries has
provided written notice to the Company or any of its Subsidiaries of its
intent either to terminate its relationship with the Company or any of
its Subsidiaries or to cancel any material agreement with the Company or
any of its Subsidiaries, except for such terminations and cancellations
that would not, individually or in the aggregate, have, or will have, a
Material Adverse Effect; (3) to the Knowledge of the Company, none of the
suppliers of the Company or any of its Subsidiaries is unable to continue
to supply the products or services supplied to the Company or any of its
Subsidiaries by such supplier, except for such inabilities that,
individually or in the aggregate, have not had, or will have, a Material
Adverse Effect; and (4) the Company and its Subsidiaries have no direct
or indirect ownership interest in any supplier or customer of the Company
or any of its Subsidiaries that is material to the Company and its
Subsidiaries taken as a whole.
(r) Certain Business Practices. To the Knowledge of the Company, within
the past five years, none of the Company, any of its Subsidiaries or any
directors, officers, agents or employees of the Company or any of its
Subsidiaries has, directly or indirectly, (i) used any
19
funds for unlawful contributions, gifts, kickbacks entertainment or other
unlawful expenses related to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (iii) made any unlawful contribution,
gift, bribe, rebate, payoff, influence payment, kickback, or other unlawful
payment to any Person, private or public, regardless of form, whether in money,
property, or services (1) to obtain favorable treatment in securing business,
(2) to pay for favorable treatment for business secured, (3) to obtain special
concessions or for special concessions already obtained, for or in respect of
the Company, or (4) in violation of any Legal Requirement, (iv) established or
maintained any fund or asset that has not been recorded in the books and records
of the Company, or (v) made any other unlawful payment.
(s) Real Estate.
(i) Section 3.1(s) of the Company Disclosure Schedule contains a
true correct and complete description of all owned and leased real estate
and all leases, subleases, licenses and other occupancy agreements
together with any amendments thereto, any option agreements and any
subordination, nondisturbance and attornment agreements (the "Leases"),
with respect to all real property leased or subleased by the Company or
its Subsidiaries (the "Leased Real Estate" and, together with the owned
real estate, the "Real Property"). Each Lease is in full force and
effect, the Company and/or the Subsidiaries, as applicable and any other
party thereto has performed all material obligations required to be
performed by it to date under each of the Leases and neither the Company,
the Subsidiary nor, to the Company's or Subsidiary's Knowledge, any other
party thereto is in material default under any of the Leases (and no
event has occurred which, with due notice or lapse of time or both, would
constitute such a lapse or default). No amount due under the Leases
remains unpaid, no material controversy, claim, dispute or disagreement
exists between the parties to any of the Leases. The Company has
delivered to Parent true correct and complete copies of each Lease, and
all amendments thereto, listed on Section 3.1(s) of the Company
Disclosure Schedule, except to the extent otherwise noted therein.
(ii) The covenants, conditions, restrictions, encroachments,
encumbrances, easements, rights of way, licenses, grants, building or use
restrictions, exceptions, reservations, limitations or other impediments
affecting the Real Property do not and will not, with respect to each
Real Property, materially impair the Company's ability to use any such
Real Property in the operation of the Company's business as presently
conducted. There are no pending or, to the Company's Knowledge,
threatened condemnation or similar proceedings affecting the Real
Property
(iii) All brokerage commissions and other compensation and fees
payable by reason of the Leases have been paid in full except for such
commissions and other compensation related to options or extensions in
the Leases which are not yet exercised.
(iv) To the Company's Knowledge, all improvements on the Real
Property and the operations therein conducted conform in all material
respects to all applicable Legal Requirements, including without
limitation, health, fire, environmental, safety, zoning
20
and building laws, ordinances and administrative regulations, except for
possible nonconforming uses or violations which do not and will not
expose any person or property to injury or damage, materially and
adversely affect any insurance coverage, give rise to strict liability,
penalties or fines jeopardize any Permit or materially interfere with the
present use, operation or maintenance thereof by the Company and its
Subsidiaries as now used, operated or maintained, and which do not and
will not materially and adversely affect the value thereof. To the
Company's Knowledge, all buildings, structures, improvements and fixtures
owned, leased or used by the Company or its Subsidiaries in the conduct
of its business at the Real Property conform in all material respects to
all applicable codes and rules adopted by national and local associations
and boards of insurance underwriters; and all such buildings, structures,
improvements and fixtures are in good operating condition and repair,
free of leaks and other material defects and have not suffered any
casualty or other material damage that has not been repaired in all
material respects except to the extent that the same does not materially
affect the Company's use and enjoyment of the Real Property.
(v) There are no outstanding requirements or recommendations by
any insurance company which has issued to the Company a policy covering
the Real Property, or by any board of fire underwriters or other body
exercising similar functions, requiring or recommending any repairs or
work to be done on such property.
(vi) Except as set forth in Section 3.1(s) of the Company
Disclosure Schedule, the Company has not assigned any of its interests
under any Lease, nor is any Real Property subject to any lease, sublease,
license or other agreement granting to any other Person any right to the
use, occupancy or enjoyment of such property or any portion thereof. No
option (to extend or reduce the term of any Lease, or reduce or expand
the space conveyed under any sublease or to purchase the property leased
under any such lease) has been exercised or has expired under any of the
Leases, except options whose exercise or expiration have been evidenced
by a written document, a true, complete and accurate copy of which has
been delivered to the Parent with the corresponding Lease.
(vii) The Real Property is all of the real property used by the
Company or necessary for the conduct of its business as currently
conducted.
(t) Voting Requirements. The affirmative vote of the holders of
two-thirds of the outstanding shares of Company Common Stock at the Company
Shareholders Meeting to adopt this Agreement (the "Company Shareholder
Approval") is the only vote of the holders of any class or series of the
Company's capital stock necessary to adopt and approve this Agreement and the
Merger and the transactions contemplated hereby.
(u) Condition and Compliance of Property; Accounts.
(i) The assets of the Company: (1) in the aggregate are adequate
to conduct the operations of the Company in substantially the manner
currently conducted, (2) are suitable for the purposes for which they are
currently used, (3) have been maintained in accordance with the Company's
historical practices since December 31, 2001, and (4) are in good
condition, ordinary wear and tear excepted.
21
(ii) Section 3.1(u) of the Company Disclosure Schedule correctly
identifies each bank account, brokerage account and safety deposit box
maintained by or on behalf or for the benefit of the Company.
(v) Company Rights Agreement. The Rights Agreement dated as of October
23, 1993 between the Company and National City Bank, Cleveland, Ohio (the
"Company Rights Agreement") has been amended to (i) render the Company Rights
Agreement inapplicable to the Merger and the other transactions contemplated by
this Agreement, (ii) ensure that (x) none of Acquiror or its wholly owned
Subsidiaries is an Acquiring Person (as defined in the Company Rights Agreement)
pursuant to the Company Rights Agreement, (y) a Distribution Date, a Triggering
Event or a Share Acquisition Date (as such terms are defined in the Company
Rights Agreement) does not occur solely by reason of the execution of this
Agreement, the consummation of the Merger, or the consummation of the other
transactions contemplated by this Agreement and (z) ensure that the Company
Rights Agreement will expire or otherwise terminate immediately prior to the
Effective Time.
(w) Board Recommendation. As of the date hereof, the Board of Directors
of the Company has recommended that the shareholders of the Company vote for
adoption of this Agreement.
(x) Contracts. Except as disclosed in the Company SEC Documents, neither
the Company nor any Subsidiary is a party to or bound by (i) any "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC) or any agreement, contract or commitment that would be such a "material
contract" but for the exception for contracts entered into in the ordinary
course of business, (ii) any non-competition agreement or any other agreement or
obligation which materially limits or will materially limit the Company from
engaging in any line of business, (iii) any Lease, or (iv) any material
agreement, contract or commitment to which the Company is a party that is not in
the Ordinary Course of Business (collectively, "the Contracts"). With such
exceptions as, individually or in the aggregate, have not had, and would not be
reasonably expected to have, a Material Adverse Effect, (x) each of the
contracts, agreements and commitments of the Company is valid and in full force
and effect and (y) neither the Company nor a Subsidiary has violated any
provision of, or committed or failed to perform any act which, with or without
notice, lapse of time, or both, would constitute a default under the provisions
of any such contract, agreement or commitment. To the Knowledge of the Company,
no counterparty to any such contract, agreement or commitment has violated any
provision of, or committed or failed to perform any act which, with or without
notice, lapse of time, or both would constitute a default or other breach under
the provisions of, such contract, agreement or commitment, except for defaults
or breaches which, individually or in the aggregate, have not had, or would not
reasonably be expected to have, a Material Adverse Effect. Neither Company nor
any Subsidiary is a party to, or otherwise a guarantor of or liable with respect
to, any interest rate, currency or other swap or derivative transaction. The
Company has provided or made available to Parent a copy of each agreement
described in item (i), (ii), (iii) or (iv) above.
(y) Insurance. SECTION 3.1(Y) of the Company Disclosure Schedule sets
forth a list of all insurance policies and all material fidelity bonds or other
insurance service contracts (the "Insurance Policies") providing coverage for
the properties or operations of the Company, the
22
type and amount of coverage, and the expiration dates of the Insurance Policies.
There is no claim by the Company pending under any of the Insurance Policies as
to which coverage has been questioned, denied or disputed by the underwriters of
such policies. All premiums payable under all Insurance Policies have been paid,
and the Company has otherwise complied in all material respects with the terms
and conditions of all the Insurance Policies. The Insurance Policies are valid
and enforceable in accordance with their terms, are issued by an insurer that is
financially sound and reputable, are in full force and effect and insure against
risk and liabilities customary in the industry and as required by Legal
Requirements and the Contracts. The Company has not received notice from any
insurance carrier: (i) threatening a suspension, revocation, modification or
cancellation of any Insurance Policy or a material increase in any premium in
connection therewith, or (ii) informing Company that any coverage listed on
SECTION 3.1(W) of the Company Disclosure Schedule will or may not be available
in the future on substantially the same terms as now in effect.
(z) Product Liability; Warranty. Except as disclosed in SECTION 3.1(Z) of
the Company Disclosure Schedule:
(i) there has not been during the past six (6) years from the date
of this Agreement and there is no notice, demand, claim, action, suit,
inquiry, hearing, proceeding, notice of violation or investigation of a
civil, criminal or administrative nature by any Governmental Entity
against or involving any product, substance or material (collectively, a
"Product"), or class of claims or lawsuits involving a Product
manufactured, produced, distributed or sold by or on behalf of the
Company which is pending or, to Company's Knowledge, threatened,
resulting from an 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 alleged failure to warn, or from any
breach of express or implied specifications or warranties or
representations (a "Product Claim");
(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 concerning any Products
manufactured, produced, distributed or sold by or on behalf of the
Company or, to the Company's Knowledge, any Recall conducted by or on
behalf of any entity as a result of any alleged defect in any Product
supplied by the Company, other than rework, refurbishments, or refits
arising in the Ordinary Course of Business; and
(iii) there is no Product Claim pending or, to the Company's
Knowledge threatened, on behalf of a customer of the Company or a
consumer that, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.
(aa) No Additional Representations or Warranties. Neither the Company nor
any other Person makes any other express or implied representation on behalf of
the Company other than as expressly set forth in this ARTICLE III.
23
SECTION 3.2 Representations and Warranties of Acquiror, Parent and Merger
Sub. Acquiror, Parent and Merger Sub each hereby represents and warrants to the
Company as follows:
(a) No Prior Activities of Merger Sub. Merger Sub has not conducted any
business prior to the date hereof and has no, and prior to the Effective Time
will have no, assets, liabilities or obligations of any nature other than those
incident to its formation and pursuant to this Agreement and the Merger and the
other transactions contemplated by this Agreement.
(b) Organization, Standing and Corporate Power. Each of Acquiror, Parent
and Merger Sub is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate or other power, as the case may be,
and authority to carry on its business as now being conducted.
(c) Authority; No Conflict. Each of Acquiror, Parent, and Merger Sub has
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, subject to approval
by shareholders of Parent ("Parent Shareholder Approval"). The execution and
delivery of this Agreement by Acquiror, Parent, and Merger Sub and the
consummation by Acquiror, Parent, and Merger Sub of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Acquiror, Parent, and Merger Sub, subject to Parent Shareholder
Approval. This Agreement has been duly executed and delivered by Acquiror,
Parent, and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Acquiror, Parent, and Merger Sub, enforceable against Acquiror, Parent and
Merger Sub in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting the rights of creditors and to general
principles of equity. Except as set forth in SECTION 3.2(C) to the Acquiror
disclosure schedule attached hereto (the "Acquiror Disclosure Schedule"), the
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of a benefit under, (i) the certificate incorporation, articles of
organization or other charter documents of Acquiror or Parent or the articles of
incorporation or code of regulation of Merger Sub, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license or similar authorization
applicable to Acquiror or Parent or their respective properties or assets or
(iii) subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Acquiror or Parent or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate would not reasonably be expected to materially impair or delay the
ability of Acquiror, Parent, or Merger Sub to perform their obligations under
this Agreement. No consent, approval, order or authorization of, action by, or
in respect of, or registration, declaration or filing with, any Governmental
Entity is required by Acquiror, Parent or Merger Sub in connection with the
execution and delivery of this Agreement by Acquiror or the consummation by
Acquiror of the
24
transactions contemplated hereby, except: (1) the filing of the Certificate of
Merger with the Secretary of State of the State of Ohio; (2) the filing of a
pre-merger notification and report form by Acquiror and Parent under the HSR
Act; (3) such filings, consents, approvals, orders or authorizations as may be
required to be made or obtained pursuant to Foreign Antitrust Laws; (4) such
filings, consents, approvals, orders or authorizations as may be required to be
made or obtained pursuant to rules and regulations of the Stock Exchange of Hong
Kong; and, (5) such consents, approvals, orders or authorizations the failure of
which to be made or obtained individually or in the aggregate would not
reasonably be expected to materially impair or delay the ability of Acquiror,
Parent or Merger Sub to perform its respective obligations under this Agreement.
(d) Proxy Materials. All of the information to be furnished by Acquiror,
Parent or Merger Sub for inclusion in the Definitive Proxy Statement (or any
amendment or supplement thereto) will not, on the date it is first mailed to the
Company's shareholders, and the Definitive Proxy Statement, as then amended or
supplemented, on the date of the Company Shareholders Meeting referred to in
SECTION 5.1(A) (Proxy Statement) or on the Closing Date, contain any statement
which is false or misleading with respect to any material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing, Acquiror, Parent and Merger
Sub make no representation or warranty regarding information furnished by the
Company for inclusion in the Definitive Proxy Statement (or any amendment or
supplement thereto). The information supplied or to be supplied in writing by or
on behalf of Acquiror or Merger Sub for inclusion in the Definitive Proxy
Statement will comply as to form and substance in all material respects with the
requirements of the Exchange Act and the applicable rules and regulations of the
SEC thereunder.
(e) Brokers. Except as set forth in SECTION 3.2(E) of the Acquiror
Disclosure Statement, no broker, investment banker, financial advisor or other
Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Acquiror or
Merger Sub.
ARTICLE IV
PRE-CLOSING COVENANTS
SECTION 4.1 Conduct of Business. Except as (i) set forth in SECTION 4.1
of the Company Disclosure Schedule, (ii) as otherwise expressly contemplated by
this Agreement or (iii) consented to by Acquiror, such consent not to be
unreasonably withheld or delayed, during the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause its
Subsidiaries to, carry on their respective businesses in the Ordinary Course of
Business consistent with past practice and in compliance in all material
respects with all applicable Legal Requirements and, to the extent consistent
therewith, use all reasonable efforts to preserve intact their current business
organizations (other than internal organizational realignments), use all
reasonable efforts to keep available the services of their current officers and
other key employees and preserve their relationships with those Persons having
business dealings with them to the end that their goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing and except as subject to the above exceptions,
during the
25
period from the date of this Agreement to the Effective Time or earlier
termination of this Agreement, the Company shall not, and shall not permit any
of its Subsidiaries to:
(a) (x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock other than dividends and
distributions by a direct or indirect wholly owned Subsidiary of the Company to
its parent, (y) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, except for issuances of the
Company Common Stock upon the exercise of the Company Stock Options under the
Company Stock Plans or in connection with other awards under the Company Stock
Plans, in each case, outstanding as of the Stock Reference Date, and in
accordance with their present terms or issued pursuant to SECTION 4.1(B) or (z)
except pursuant to agreements entered into with respect to the Company Stock
Plans that are in effect as of the close of business on the Stock Reference Date
or issued pursuant to SECTION 4.1(B), purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its Subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such shares
or other securities;
(b) issue, deliver, sell, pledge or otherwise encumber or subject to any
Lien any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities, other than the
issuance of Company Common Stock upon the exercise of the Company Stock Options
or in connection with other awards under the Company Stock Plans (x) outstanding
as the Stock Reference Date and in accordance with their present terms or
granted after the date thereof in the Ordinary Course of Business consistent
with past practice or (y) after consulting with Acquiror, otherwise granted
after the date hereof;
(c) amend its articles of incorporation, code of regulations or other
comparable organizational documents, or, in the case of the Company, merge or
consolidate with any Person;
(d) acquire or agree to acquire, or dispose of or agree to dispose of,
any material assets, either by purchase, merger, consolidation, sale of shares
in any of its Subsidiaries or otherwise, except for (w) purchases of capital
equipment in accordance with the previously approved capital expenditure budget,
a complete and correct copy of which has been furnished to Acquiror, (x)
purchase of inventory components and subsequent sale of inventory in the
Ordinary Course of Business, consistent with past practice, (y) sale of obsolete
equipment for fair market value, and (z) the sale of excess equipment in an
amount in any single transaction or series of related transactions, not to
exceed $3 million;
(e) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien, abandon or otherwise dispose of any of its properties or assets other
than in the Ordinary Course of Business consistent with past practice;
(f) take any action that would cause the representations and warranties
set forth in this Agreement to no longer be true and correct;
26
(g) amend, modify or waive any provision of the Company Rights Agreement,
and shall not take any action to redeem the rights issued thereunder or render
the rights issued thereunder inapplicable to a transaction, other than to permit
another transaction that the Board of Directors of the Company has determined in
good faith, after consultation with outside counsel, is a Superior Proposal;
(h) make any change in accounting methods or cash management;
(i) (i) grant any increase in the compensation payable or to become
payable by the Company or any of its Subsidiaries to any of its officers,
directors or key employees, except in the case of key employees (who are not
officers or directors) increases in the Ordinary Course of Business, or pursuant
to Contracts in effect as of the date of this Agreement; or (ii) (A) adopt any
new, (B) grant any award under, or (C) except as required by applicable Legal
Requirements, amend or otherwise increase, or accelerate the payment or vesting
of the amounts payable or to become payable under, any existing Company Benefit
Plan; or (iii) enter into or modify or amend any employment or severance
agreement with or, except as required by applicable Legal Requirements, grant
any severance or termination rights to any officer, director or employee of the
Company or any of its Subsidiaries; (iv) enter into any collective bargaining
agreement or (v) make any loan to, or enter into any material transaction of any
other nature with, any director, executive officer or key employee of the
Company;
(j) modify, amend or terminate in any material respect, any of its
material Contracts or waive, release or assign any material rights or claims;
(k) (i) incur or assume any Indebtedness other than Indebtedness with
respect to working capital in amounts consistent with past practice; (ii)
materially modify any Indebtedness or other Liability; (iii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person (other than a
Subsidiary), other than immaterial amounts in the Ordinary Course of Business,
and other than the endorsement of negotiable instruments for collection in the
Ordinary Course of Business; (iv) make any loans, advances or capital
contributions to, or investments in, any other person (other than to wholly
owned Subsidiaries of the Company or customary advances to employees in
accordance with past practice); or (v) enter into any material commitment or
transaction;
(l) make any material tax election (unless required by law) or settle or
compromise any material income tax liability;
(m) (i) waive the benefits of, or agree to modify in any material manner,
any confidentiality, standstill or similar agreement to which the Company or any
of its Subsidiaries is a party, or (ii) pay, discharge or satisfy any
proceeding, other than a payment, discharge or satisfaction (A) involving
payments by the Company or its Subsidiaries of less than $1 million, or (B) for
which liabilities are reflected on or are reserved against in the Company's most
recent consolidated financial statements (or the notes thereto) included in the
Company SEC Reports, but not to exceed the reserve therefor, in each case in
complete satisfaction, and with a complete release, of such matter with respect
to all parties to such matter, of actions, suits, proceedings or claims;
27
(n) make any payment or incur any liability or obligation for the purpose
of obtaining any consent from any third party to the transactions contemplated
hereby;
(o) fail to keep in full force and effect insurance comparable in amount
and scope to coverage maintained by it (or on behalf of it) on the date hereof;
(p) accelerate the collection of receivables or defer the payment of
payables or modify the payment terms of any receivables or payables, other than
immaterial changes in a manner consistent with past practice, or sell,
securitize, factor or otherwise transfer any accounts receivable other than
consistent with past practice;
(q) permit any purchase of Common Stock by the Company or any of its
Subsidiaries at a price higher than the Merger Consideration;
(r) fail to inform Parent of the occurrence of any event which to the
Knowledge of the Company could reasonably be expected to result in a breach of
any representation or warranty contained in Section 3.1; and
(s) shall enter into an agreement, contract, commitment or arrangement to
do any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing;
provided that the limitations set forth in this SECTION 4.1 (other than clause
(c)) shall not apply to any transaction to which the only parties are the
Company and any wholly owned Subsidiary or Subsidiaries of the Company.
SECTION 4.2 Other Actions. Except as required by law, the Company, Parent
and Acquiror shall not, and neither shall permit any of their respective
Subsidiaries to, voluntarily take any action that would reasonably be expected
to result in any of the conditions to the Merger set forth in ARTICLE VI
(Conditions Precedent) not being satisfied.
SECTION 4.3 Advice of Changes. The Company and Acquiror shall give prompt
oral and written notice to the other party of (i) the occurrence, or
non-occurrence of any event whose occurrence, or non-occurrence would be likely
to cause either (A) a Material Adverse Change, (B) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any respect
at any time from the date hereof to the Effective Time or (C) any failure of the
Company, Acquiror or Parent, or any of their respective officers, directors,
employees, agents or subsidiaries, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this SECTION 4.3
shall not limit or otherwise affect the representations, warranties or remedies
available hereunder to any party hereto.
SECTION 4.4 No Solicitation by the Company.
(a) The Company shall not, nor shall it permit any of its Subsidiaries
to, nor shall it authorize or permit any of its directors, officers or employees
or any investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its Subsidiaries to, directly or
indirectly, through another Person, (i) solicit, initiate or encourage
(including by way
28
of furnishing information), or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes any Company Takeover
Proposal or (ii) participate in any discussions or negotiations regarding any
Company Takeover Proposal; provided, however, that if, at any time, the Board of
Directors of the Company determines in good faith, after consultation with such
legal, financial and other advisors as it deems appropriate, that it is
necessary to do so in order to act in a manner consistent with its fiduciary
duties under applicable law, the Company may, prior to the date of the
Shareholders Meeting and in response to a Superior Proposal that was not
solicited by it or that did not otherwise result from a breach of this SECTION
4.4(A), (x) furnish non-public information with respect to the Company and its
Subsidiaries to any Person making or proposing to make a Superior Proposal
pursuant to a confidentiality agreement and (y) participate in discussions or
negotiations regarding such Superior Proposal.
(b) In addition to the obligations of the Company set forth in paragraph
(a) of this SECTION 4.4, the Company shall immediately advise Acquiror orally
and in writing of any request for information or of any Company Takeover
Proposal and the material terms and conditions of such request or Company
Takeover Proposal. The Company will keep Acquiror reasonably informed of the
status and details (including amendments and proposed amendments) of any such
request or Company Takeover Proposal.
(c) Nothing contained in this SECTION 4.4 shall prohibit the Company from
taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange 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, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable law.
(d) Notwithstanding the preceding provisions of this SECTION 4.4, the
Company (i) may file this Agreement and any press release announcing this
Agreement as exhibits to a Current Report on Form 8-K, and (ii) may, in private
communications with third parties and in other public disclosures, make a
statement to the effect that, consistent with its fiduciary obligations and
subject to the terms of this Agreement, the Board of Directors of the Company
has preserved its ability to respond to third parties, where appropriate.
SECTION 4.5 Continued Availability of Funds; Evidence of Funds.
(a) The Parent, directly or indirectly through the Acquiror or Merger
Sub, shall at all times prior to the Closing Date, maintain on hand sufficient
funds to pay the Merger Consideration (the "Financing").
(b) The Parent shall provide to the Company upon execution of this
Agreement and thereafter, as the Company may reasonably request, continuing
financial and accounting evidence of their financial capacity to make the
investments contemplated by this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Preparation of the Proxy Statement; Shareholders Meeting.
(a) Proxy Statement. In connection with the Company Shareholders
Meeting contemplated by SECTION 5.1(B) below, the Company will prepare and file
(after consultations with Acquiror) a preliminary proxy statement relating to
the transactions contemplated by this Agreement (the "Preliminary Proxy
Statement") and will use its commercially reasonable efforts to respond to the
comments of the SEC thereon, and to cause a final proxy statement (such proxy
statement the "Definitive Proxy Statement") to be mailed to the Company's
shareholders, in each case as soon as reasonably practicable after providing
Acquiror with reasonable opportunity to comment thereon. Each party to this
Agreement will notify the other parties promptly of the receipt of the comments
of the SEC, if any, and of any request by the SEC for amendments or supplements
to the Preliminary Proxy Statement or the Definitive Proxy Statement or for
additional information, and will supply the others with copies of all
correspondence between such party or its representatives, on the one hand, and
the SEC or members of its staff, on the other hand, with respect to the
Preliminary Proxy Statement, the Definitive Proxy Statement or the Merger. If at
any time prior to the Company Shareholders Meeting, (i) any event should occur
relating to the Company or any of the Subsidiaries which should be set forth in
an amendment of, or a supplement to, the Definitive Proxy Statement, or (ii) any
event should occur relating to Acquiror, Parent, or Merger Sub or any of their
respective Affiliates, or relating to the plans of any such Persons for the
Surviving Corporation after the Effective Time of the Merger, or relating to the
Financing of the transaction, in either case that should be set forth in an
amendment of, or a supplement to, the Definitive Proxy Statement, then the
Company or Acquiror (as applicable), will, upon learning of such event, promptly
inform the other of such event and the Company shall prepare, file and, if
required, mail such amendment or supplement to the Company's shareholders;
provided that, prior to such filing or mailing the Company shall consult with
Acquiror with respect to such amendment or supplement and shall afford Acquiror
reasonable opportunity to comment thereon. Acquiror will furnish to the Company
the information relating to Acquiror, Parent, and Merger Sub, their respective
Affiliates and the plans of such Persons for the Surviving Corporation after the
Effective Time of the Merger, and relating to the Financing, which is required
to be set forth in the Preliminary Proxy Statement or the Definitive Proxy
Statement under the Exchange Act and the rules and regulations of the SEC
thereunder.
(b) The Company will take all action necessary in accordance with
applicable law and its governing documents to duly call, give notice of, and,
after SEC clearance of the Definitive Proxy Statement, convene a meeting of its
shareholders (the "Company Shareholders Meeting") to consider and vote upon the
adoption of this Agreement. The Board of Directors of the Company shall
recommend such adoption and approval, and subject to fiduciary obligations under
applicable law, shall not withdraw or modify such recommendation other than in
compliance with SECTION 4.4(A) and SECTION 7.1(E) , or if the Fairness Opinion
is withdrawn by Financial Advisor and the Company terminates this Agreement
under SECTION 7.1(F), and shall take all lawful action necessary to obtain such
shareholder approval.
30
(c) Parent will take all action necessary in accordance with applicable
law, including the rules and regulations of the Stock Exchange of Hong Kong, to
obtain approval of the Merger by the shareholders of Parent. The disclosure
statement or other communication sent by Parent to its shareholders shall
contain (i) the recommendation of the Board of Directors of Parent that such
shareholders vote in favor of the Merger and (ii) a statement that the executive
members of the Board of Directors of Parent intend to vote their shares of
Parent Common Stock in favor of the Merger.
SECTION 5.2 Access to Information; Confidentiality. To the extent
permitted by applicable law and subject to the Agreement dated October 2, 2002
between Acquiror and the Company (the "Confidentiality Agreement"), the Company
shall, and shall cause each of its Subsidiaries to afford to Acquiror and to the
officers, employees, accountants, counsel, financial advisors and other
representatives of Acquiror, reasonable access during normal business hours
during the period prior to the Effective Time to all their respective properties
(including access to perform environmental studies, if deemed necessary or
appropriate by the Acquiror), books, contracts, commitments, personnel and
records and, during such period, the Company shall, and shall cause each of its
subsidiaries to furnish promptly to Acquiror (a) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities laws and (b)
all other information concerning its business, properties and Personnel as such
other party may reasonably request. Any review pursuant to this SECTION 5.2
shall be for the purposes of confirming the accuracy of any representation or
warranty contained in this Agreement given by the Company to Acquiror, Parent
and Merger Sub. The Acquiror will hold, and will cause its respective officers,
employees, accountants, counsel, financial advisors and other representatives
and affiliates, any non-public information in accordance with the terms of the
Confidentiality Agreement.
SECTION 5.3 Commercially Reasonable Efforts; Cooperation.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including (i) obtaining of all necessary actions or non-actions,
waivers, consents and approvals from Governmental Entities and the making of all
necessary registrations and filings and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) obtaining of all necessary
consents, approvals or waivers from third parties, (iii) defending any lawsuits
or other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (iv) executing and delivering
of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. Nothing
set forth in this SECTION 5.3(A) will limit or affect actions permitted to be
taken pursuant to SECTION 4.2.
(b) Each of Acquiror and the Company shall use their best efforts to
file as soon as practicable notifications under the HSR Act with respect to the
Merger and the other transactions
31
contemplated by this Agreement and to respond at the earliest practicable date
with any request under the HSR Act for additional information, documents or
other materials received by such party from the Federal Trade Commission or the
Department of Justice or any other Governmental Entity in respect of such
filings or the Merger and the other transactions contemplated by this Agreement.
The parties to this Agreement will cooperate with the other party in connection
with making any filing under the HSR Act and in connection with any filings,
conferences or other submissions related to resolving any investigation or other
inquiry by any Governmental Authority with respect to the Merger and the other
transactions contemplated by this Agreement.
SECTION 5.4 Director, Officer and Employee Indemnification.
(a) Acquiror shall, and shall cause the Surviving Corporation to, and
the Surviving Corporation shall, indemnify and hold harmless, to the fullest
extent permitted under applicable law, the individuals who on or prior to the
Effective Time were officers, directors or employees of the Company or its
Subsidiaries (collectively, the "Indemnitees") with respect to all acts or
omissions by them in their capacities as such or taken at the request of the
Company or its Subsidiaries at any time prior to the Effective Time. With
respect to all acts or omissions by them in their capacities as such or taken at
the request of the Company or its Subsidiaries at any time prior to the
Effective Time. Acquiror agrees that, and Acquiror agrees to cause the Surviving
Corporation to agree that, all rights of the Indemnitees to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time as provided in the respective articles of incorporation or
regulations (or comparable organizational and governing documents) of the
Company and its Subsidiaries as now in effect and any indemnification agreements
or arrangements of the Company or its Subsidiaries shall survive the Merger and
shall continue in full force and effect in accordance with their terms. Such
rights shall not be amended, or otherwise modified in any manner that would
adversely affect the rights of the Indemnitees, unless such modification is
required by law. In addition, the Surviving Corporation shall pay any expenses
of any Indemnitee under this SECTION 5.4 as incurred to the fullest extent
permitted under applicable law, provided that the Person to whom expenses are
advanced provides an undertaking to repay such advances to the extent required
by applicable law.
(b) In the event any action is asserted or made, any determination
required to be made with respect to whether an Indemnitee's conduct complies
with the standards set forth under the Ohio Statutes, the applicable
organizational documents of the Company or its Subsidiaries or any
indemnification agreements or arrangements of the Company or its Subsidiaries,
as the case may be, shall be made by independent legal counsel selected by the
Acquiror and reasonably acceptable to the Indemnitee; provided, however, that
nothing in this SECTION 5.4 shall impair any rights of any current or former
director or officer of the Company or its Subsidiaries, including pursuant to
the respective articles of incorporation or bylaws of Surviving Corporation or
the Company, or their respective subsidiaries, under Ohio law or otherwise.
(c) Each of Acquiror, the Surviving Corporation and the Indemnitee
shall cooperate, and cause their respective affiliates to cooperate, in the
defense of any action and shall provide access to properties and individuals as
reasonably requested and furnish or cause to be furnished
32
records, information and testimony, and attend such conferences, discovery
proceedings, hearings, trials or appeals, as may be reasonably requested in
connection therewith.
(d) For the six-year period commencing immediately after the Effective
Time, Surviving Corporation shall either (i) maintain in effect the Company's
current directors' and officers' liability insurance policies providing coverage
as respects acts or omissions occurring prior to the Effective Time with respect
to those persons who are currently covered by the Company's directors' and
officers' liability insurance policy ("D&O Insurance") on terms and at limits no
less favorable to the Company's directors and officers currently covered by
policies in effect on the date hereof or (ii) a directors' and officers'
insurance policy for the exclusive benefit of those persons who are currently
covered by the Company's directors' and officers' liability insurance policy
from a financially sound and nationally reputable carrier which (1) is at least
as favorable to the Persons currently covered by the Company's directors' and
officers' liability insurance in effect as of the date hereof and (2) will at a
minimum have the same terms and limits as the Company's directors' and officers'
liability insurance policies in effect as of the date hereof; provided, however,
that, if the Company's current directors' and officers' liability insurance
expires, is terminated or is canceled during such six-year period, Acquiror
shall, or shall cause the Surviving Corporation to, obtain directors' and
officers' liability insurance covering such acts or omissions with respect to
each such Person on terms and at limits no less favorable to the Company's
directors and officers currently covered by policies in effect immediately prior
to the date of such expiration, termination or cancellation, provided, however,
that the Surviving Corporation shall not be required to pay an annual premium
for the D&O Insurance in excess of 200% of the estimated premium for 2003. The
Company and Acquiror shall cooperate to make any arrangements necessary to
obtain or continue such directors' and officers' liability insurance for such
six-year period, including the prepayment any fees or premiums to the applicable
insurance providers of such amounts as necessary to provide the coverage
contemplated by this SECTION 5.4.
(e) The provisions of this SECTION 5.4 are intended to be for the
benefit of, and shall be enforceable by, each Indemnitee, such Indemnitee's
heirs and representatives and (ii) are in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such Person
may have by contract or otherwise.
(f) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation shall assume all of the obligations thereof set forth in this
SECTION 5.4.
(g) The obligations of Acquiror and the Surviving Corporation under
this SECTION 5.4 shall not be terminated or modified in such a manner as to
adversely affect any Indemnitee to whom this SECTION 5.4 applies without the
consent of the affected Indemnitee (it being expressly agreed that the
Indemnitees to whom this SECTION 5.4 applies shall be third party beneficiaries
of this SECTION 5.4).
33
SECTION 5.5 Public Announcements. Acquiror and the Company will consult
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger, and, subject to SECTION 4.4(D), shall not issue any such
press release or make any such public statement prior to such consultation,
except as either party may determine is required by applicable law, court
process or by obligations pursuant to any listing rules or listing agreement
with any national securities or stock exchange. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Agreement shall be in the form heretofore agreed to by the parties.
SECTION 5.6 2002 Year-End Benefits. The Surviving Corporation agrees to
make, if not previously paid prior to the Effective Time, payments under the
Company's current incentive bonus and profit sharing plans with respect to the
year ended December 31, 2002.
SECTION 5.7 Delisting. Each of the parties hereto shall cooperate with
each other in taking, or causing to be taken, all actions necessary to delist
all of the Company Common Stock from the New York Stock Exchange and to
terminate registration under the Exchange Act; provided, that such delisting and
termination shall not be effective until after the Effective Time.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions To Each Party's Obligation To Effect The Merger.
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Shareholders' Approval. The Company Shareholder Approval and the
Parent Shareholder Approval shall each have been obtained.
(b) Governmental And Regulatory Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental Entity required of the
Company, Acquiror, Merger Sub, or any of their Subsidiaries to consummate the
Merger and the other transactions contemplated hereby, the failure of which to
be obtained or taken is reasonably expected to have a Material Adverse Effect on
the Surviving Corporation and its Subsidiaries, taken as a whole, shall have
been obtained in form and substance reasonably satisfactory to Acquiror.
(c) No Injunctions Or Restraints. No judgment, order, decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity of competent jurisdiction or
other legal restraint or prohibition (collectively, "Restraints") affecting the
Closing or seeking to prohibit the transactions contemplated under this
Agreement shall be in effect; provided, however, that the parties asserting this
condition shall have used its commercially reasonable efforts to prevent the
entry of any such Restraints and to appeal as promptly as possible any such
Restraints that may be entered.
(d) HSR Act. The waiting or similar period (including any extension
thereof) applicable to the consummation of the Merger under the HSR Act and any
applicable Foreign Antitrust Law shall have expired or been terminated.
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SECTION 6.2 Conditions to Obligations of Acquiror, Parent and Merger
Sub. The obligations of Acquiror, Parent and Merger Sub to effect the Merger are
further subject to satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth herein shall be true and correct both when made and at
and as of the Closing Date, as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such date),
except where the failure of such representations and warranties to be so true
and correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) would not have, individually or in
the aggregate, a Material Adverse Effect.
(b) Performance of Obligations of the Company. The Company shall have
performed or complied in all material respects to all obligations required to be
performed or complied by it under this Agreement at or prior to the Closing
Date.
(c) No Material Adverse Change. At any time after the date of this
Agreement there shall not have occurred any Material Adverse Change.
(d) Dissenting Shares. Acquiror shall have received evidence, in form
and substance reasonably satisfactory to it, that the number of Dissenting
Shares shall constitute no greater than 10% of the total number of shares of
Company Common Stock outstanding immediately prior to the Effective Time.
(e) Closing Certificate. The Acquiror shall have received on the
Closing Date a closing certificate in the form of Exhibit 4 hereto dated the
Closing Date and executed by the chief executive officer of the Company
certifying to the fulfillment of the conditions specified in SECTIONS 6.1 and
6.2.
(f) Resolutions, etc. The Acquiror shall have received from the Company
a certificate, dated as of the Closing Date, of its secretary or assistant
secretary as to (i) any resolutions of the Company authorizing the execution,
delivery or performance of this Agreement, the Merger or any other related
document; and (ii) the articles of incorporation and code of regulations of the
Company, with any amendments thereto, in effect as of the date hereof, upon
which the Acquiror may conclusively rely until it shall have received a further
certificate of secretary of the Company canceling or amending such prior
articles of incorporation.
(g) Good Standing Certificate. The Company shall provide to the
Acquiror a certificate of the Secretary of State of Ohio as to the Company's
good standing.
(h) Director Resignations. The Company shall deliver or cause to be
delivered to the Acquiror letters of resignation executed by the directors of
the Company effective as of the Effective Time.
SECTION 6.3 Conditions to Obligations of the Company. The obligations
of the Company to effect the Merger are further subject to satisfaction or
waiver of the following conditions:
35
(a) Representations and Warranties. The representations and warranties
of Acquiror set forth herein shall be true and correct both when made and at and
as of the Closing Date, as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) would not have, individually or in
the aggregate, a Material Adverse Effect on Acquiror.
(b) Performance of Obligations of Acquiror, Parent and Merger Sub.
Acquiror, Parent and Merger Sub shall have performed or complied in all material
respects to all obligations required to be performed or complied by them under
this Agreement at or prior to the Closing Date.
(c) Exchange Fund Funding. On or prior to the Closing Date, but prior
to the Effective Time, Parent, Acquiror or Merger Sub shall have deposited with
the Exchange Agent the Exchange Fund.
(d) Payment for Termination of Employment Agreement. Immediately prior
to the Effective Time, Parent, Acquiror or Merger Sub shall have furnished
cashiers' checks or wire transfers of funds to each of the employees listed on
Section 6.3(d) of the Company Disclosure Schedule in the aggregate amount of
$2.4 million.
(e) Closing Certificate. The Company shall have received on the Closing
Date a closing certificate in the form of Exhibit 5 dated the Closing Date and
executed by the chief executive officer of Parent certifying to the fulfillment
of the conditions specified in SECTIONS 6.1 and 6.3.
SECTION 6.4 Frustration of Closing Conditions. None of Acquiror, Parent
or the Company may rely on the failure of any condition set forth in SECTION 6.1
(Conditions to Each Party's Obligation to Effect the Merger), SECTION 6.2
(Conditions to Obligations of the Acquiror),or SECTION 6.3 (Conditions to
Obligations of the Company), as the case may be, to be satisfied if such failure
was caused by such party's failure to use commercially reasonable efforts to
consummate the Merger and the other transactions contemplated by this Agreement,
as required by and subject to SECTION 5.3 (Commercially Reasonable Efforts;
Cooperation).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Shareholder
Approval:
(a) By mutual written consent of Acquiror and the Company;
(b) By either Acquiror or the Company:
(i) if the Merger shall not have been consummated by April 15,
2003; provided, however, that the right to terminate this Agreement
pursuant to this Section 7.1(b)(i) shall not be available to any party
whose failure to perform any of its
36
obligations under this Agreement solely is the basis for the failure of
the Merger to be consummated by such time;
(ii) if the Company Shareholder Approval shall not have been
obtained at a Company Shareholders Meeting duly convened therefor or at
any adjournment or postponement thereof; or
(iii) if any Restraint having any of the effects set forth in
SECTION 6.1(C) shall be in effect and shall have become final and
nonappealable; provided, however, that the party seeking to terminate
this Agreement pursuant to this SECTION 7.1(B)(III) shall have used
commercially reasonable efforts to prevent the entry of and to remove
such Restraint;
(c) By Acquiror, if the Company shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform would give rise to a Material Adverse Effect relating to the
Company and (A) is not cured within 30 days after written notice thereof or (B)
is incapable of being cured by the Company;
(d) By the Company, if Acquiror, Parent or Merger Sub shall have
breached or failed to perform in any material respect any of their respective
representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform includes failure to fully fund the
Exchange Fund and (A) is not cured within 30 days after written notice thereof
or (B) is incapable of being cured by Acquiror;
(e) By the Company upon the Company's execution of a binding agreement
with a third party with respect to a Superior Proposal, provided that for any
termination by the Company under this SECTION 7.1(E) to be effective, the
Company must have complied with all provisions of this Agreement, including the
notice provisions contained in SECTION 4.4(B) and paid the Termination Fee and
expense reimbursement to Acquiror in accordance with SECTION 7.3;
(f) by the Company if any event, circumstance, condition, fact, effect
or other matter has occurred or exists which (i) would, or would be reasonably
likely to give rise to the failure of any of the conditions to the obligations
of the Parent, Merger Sub or Acquiror set forth in SECTION 6.1 OR 6.3; and (ii)
cannot be or has not been cured within 30 days after the giving of written
notice to the Acquiror;
(g) by Acquiror if any event, circumstance, condition, fact, effect or
other matter has occurred or exists which (i) would, or would be reasonably
likely to give rise to the failure of any of the conditions of the Company set
forth in SECTION 6.1 OR 6.2; and (ii) cannot be or has not been cured within 30
days after the giving of written notice to the Company;
(h) by Acquiror if any of the following shall have occurred:
(i) any Person (other than Acquiror or any Subsidiary of
Acquiror) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), a tender offer or exchange offer to purchase
any Company Common Stock or securities
37
convertible into such shares such that, upon consummation of such
offer, such person would own or control 50% or more of the then
outstanding Company Common Stock, and the Board of Directors of the
Company, within ten Business Days after such tender or exchange offer
shall have been so commenced, fails to recommend against acceptance of
such tender or exchange offer by its shareholders;
(ii) the Company or any Subsidiary of the Company shall have
authorized, recommended, proposed or publicly announced an intention to
authorize, recommend or propose, or entered into, an agreement with any
Person (other than Acquiror or any Subsidiary of Acquiror) to (A)
effect a merger, consolidation or similar transaction involving the
Company or any of its material Subsidiaries, (B) sell, lease or
otherwise dispose of assets of the Company or its Subsidiaries
representing 20% or more of the consolidated assets of the Company and
its Subsidiaries or (C) issue, sell or otherwise dispose of (including
by way of merger, consolidation, tender offer, share exchange or any
similar transaction) securities (or options, rights or warrants to
purchase, or securities convertible into, such securities) representing
10% or more of the voting power of the Company;
(iii) any Person (other than Acquiror or any Subsidiary of
Acquiror) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act) or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
the Exchange Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, 15% or more of the then
outstanding Company Common Stock, except for any Person that
beneficially owns more than 15% of the outstanding Company Common Stock
as of the date of this Agreement, unless such Person's beneficial
ownership increases by more than 1% of the outstanding Company Common
Stock; or
(iv) the Company's Board of Directors shall have withdrawn or
modified in a manner adverse to Acquiror the recommendation of the
Company's Board of Directors that the shareholders approve this
Agreement and the Merger (an "Adverse Recommendation") (it being
understood and agreed that any communication by the Company or the
Company's Board of Directors to the shareholders that indicates that
the Company's Board of Directors had determined not to withdraw or
modify such recommendation, in whole or in part, because such action
would or might give rise to a right on the part of Acquiror to
terminate this Agreement and/or obligate the Company to pay the fee set
forth in SECTION 7.3(B) shall nevertheless be deemed to be an Adverse
Recommendation).
SECTION 7.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Acquiror as provided in SECTION 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Acquiror or the Company, other than pursuant to the
provisions of this SECTION 7.2, SECTION 7.3 and ARTICLE VIII, which provisions
survive such termination; provided, however, that nothing herein shall relieve
any party to this Agreement from any liability for any willful and material
breach by such party of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
38
SECTION 7.3 Fees and Expenses.
(a) Expenses. If this Agreement is terminated in connection with any of
the circumstances described in SECTION 7.3(B), the Company shall reimburse
Acquiror and Merger Sub for all reasonable out-of-pocket expenses and fees
payable by Acquiror or Merger Sub in connection with the proposed financing of
the Merger; provided, however, that the Company shall not be obligated to
reimburse Acquiror and Merger Sub for expenses in excess of Seven Hundred
Thousand Dollars ($700,000) in the aggregate. Any such required reimbursement
shall take place on the later of the termination of this Agreement or submission
of evidence of such incurred expenses to the Company.
(b) Termination Fee. If this Agreement is terminated (i) pursuant to
SECTION 7.1(H) within two (2) Business Days after such termination, or (ii)
pursuant to SECTION 7.1(E) on the date of such termination, the Company shall
pay Acquiror a fee of Five Million Three Hundred Thousand Dollars ($5,300,000),
by wire transfer to an account specified by Parent (the "Termination Fee").
(c) Other Expenses. Except as provided otherwise in paragraph (a)
above, all costs and expenses incurred in connection with this Agreement, and
the transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Survival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
SECTION 8.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.2 Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to the Company, to: Royal Appliance Mfg. Co.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chief Executive Officer
39
with a copy to: ▇▇▇▇ ▇▇▇▇▇▇▇▇, A Legal Professional
Association
2600 Erieview Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq. or
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Esq.
(b) if to Acquiror, Parent or Merger Sub, to:
TechTronic Industries Co, Ltd.
▇▇/▇., ▇▇▇ ▇▇▇▇.,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇.
Tsuen Wan, N.T., Hong Kong
Facsimile No.: 011-852-2413-0620
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇,
Chief Executive Officer
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
SECTION 8.3 Counterparts. This Agreement may be executed in one 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.
SECTION 8.4 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction without the necessity of posting a bond,
this being in addition to any other remedy to which they are entitled at law or
in equity.
SECTION 8.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein), and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement and (b) except for the
provisions of SECTION 5.4 and SECTION 5.6, are not intended to confer upon any
Person other than the parties any rights or remedies.
40
SECTION 8.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio, without regard to
principles of conflict of laws thereof.
SECTION 8.7 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 hereto without the
prior written consent of the other party; provided, however, that RAMC Holdings,
Inc. may assign its rights and obligations hereunder to Parent, or to any direct
or indirect wholly-owned subsidiary of Parent. Any assignment in violation of
the preceding sentence shall be void. Subject to the preceding two sentences,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
SECTION 8.8 Consent to Jurisdiction. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any federal court
located in the State of Delaware or any Delaware state court, in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of Delaware or a Delaware state court.
SECTION 8.9 Interpretation. When a reference is made in this Agreement
to an Article, Section or Exhibit, such reference shall be to an Article or
Section of, or an Exhibit to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. The language used in this Agreement
shall be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Any references to any federal, state, local or foreign statute or law shall also
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise.
SECTION 8.10 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.11 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the
41
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner so that the transactions
contemplated hereby are fulfilled to the extent possible.
SECTION 8.12 Amendment. This Agreement may be amended by the parties at
any time before or after the Company Shareholder Approval; provided, however,
that after any such Company Shareholder Approval, there shall not be made any
amendment affecting the Merger Consideration or that by law requires further
approval by the shareholders of the Company without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
SECTION 8.13 Extension; Waiver. At any time prior to the Effective
Time, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of another party contained in this Agreement or
in any document delivered pursuant to this Agreement or (c) subject to the
proviso of SECTION 8.11, waive compliance by any party with any of the
agreements or conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
SECTION 8.14 Schedules. The Company has set forth information in the
Company Disclosure Schedule in a section thereof that corresponds to the section
of this Agreement to which it relates. Such information will qualify other
sections hereof, and be deemed included in the Company Disclosure Schedule for
such other section, only to the extent that such applicability is manifestly
evident on the face of such disclosures. The fact that any item of information
is disclosed in the Company Disclosure Schedule to this Agreement shall not be
construed to mean that such information is required to be disclosed by this
Agreement or is necessarily material.
[THIS SPACE LEFT BLANK INTENTIONALLY]
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
ROYAL APPLIANCE MFG. CO.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
& President
RAMC HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
TIC ACQUISITION CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
TECHTRONIC INDUSTRIES CO., LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
43
APPENDIX A
DEFINITIONS
For purposes of this Agreement:
"Acquiror" has the meaning set forth in the Recitals.
"Acquiror Disclosure Schedule" has the meaning set forth in Section
3.2(c).
"Adjustment Event" has the meaning set forth in Section 2.4.
"Affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or
is under common Control with, such first Person.
"Agreement" has the meaning set forth in the Recitals.
"Balance Sheet" means the consolidated balance sheet of the Company as
of September 30, 2002.
"Certificates" has the meaning set forth in Section 2.3(b).
"Certificate of Merger" has the meaning set forth in Section 1.3.
"Closing" has the meaning set forth in Section 1.2.
"Closing Date" has the meaning set forth in Section 1.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the Recitals.
"Company Benefit Plans" has the meaning set forth in Section 3.1(j).
"Company Common Stock" has the meaning set forth in the Recitals.
"Company Disclosure Schedule" has the meaning set forth in Section 3.1.
"Company Permits" has the meaning set forth in Section 3.1(i).
"Company Preferred Stock" has the meaning set forth in Section 3.1(c).
"Company Rights Agreement" has the meaning set forth in Section 3.1(t).
"Company SEC Documents" has the meaning set forth in Section 3.1(f).
"Company Stock Options" has the meaning set forth in Section 3.1(c).
"Company Shareholder Approval" has the meaning set forth in Section
3.1(t).
"Company Shareholders Meeting" has the meaning set forth in Section
5.1(b).
"Company Stock Plans" has the meaning set forth in Section 3.1(c).
"Company Takeover Proposal" means any inquiry, proposal or offer from
any person relating to any (a) direct or indirect acquisition or purchase of a
business that constitutes 20% or more of the net revenues, net income or the
assets of the Company and its Subsidiaries, taken as a whole, (b) direct or
indirect acquisition or purchase of 20% or more of any class of equity
securities of the Company or any of its Subsidiaries whose business constitutes
20% or more of the net revenues, net income or assets of the Company and its
Subsidiaries, taken as a whole, (c) tender offer or exchange offer that if
consummated would result in any person beneficially owning 20% or more of any
class of equity securities of the Company or any of its Subsidiaries whose
business constitutes 20% or more of the net revenues, net income or assets of
the Company and its Subsidiaries, taken as a whole, or (d) merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its Subsidiaries whose
business constitutes 50% or more of the net revenues, net income or assets of
the Company and its Subsidiaries, taken as a whole, other than the transactions
contemplated by this Agreement.
"Confidentiality Agreement" has the meaning set forth in Section 5.2.
"Consent" shall mean any approval consent, ratification, permission,
waiver or authorization (including any License or Governmental authorization).
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Dissenting Shares" has the meaning set forth in Section 2.5.
"Effective Time" has the meaning set forth in Section 1.3.
"ERISA" has the meaning set forth in Section 3.1(j).
"ERISA Affiliate" means any trade or business, whether or not
incorporated, that together with the Company would be deemed to be a "single
employer" within the meaning of Section 4001(b) of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Agent" has the meaning set forth in Section 2.3(a).
"Exchange Fund" has the meaning set forth in Section 2.3(a).
"Fairness Opinion" shall mean the opinion referenced in Section 3.1(m).
ii
"Financial Advisor" means NatCity Investments, Inc.
"Foreign Antitrust Laws" has the meaning set forth in Section 3.1(e).
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" has the meaning set forth in Section 3.1(e).
"HSR Act" has the meaning set forth in Section 3.1(e).
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person, (i) the
principal of and premium, if any, in respect of any indebtedness of such Person
for money borrowed, (ii) the principal, premium, if any, and interest of such
Person with respect to obligations evidenced by bonds, debentures, notes or,
except for accrued liabilities arising in the Ordinary Course of Business, other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses (other than trade payables which
are not overdue or in default), (iii) all obligations of such Person in respect
of letters of credit or other similar instruments (including reimbursement
obligations with respect thereto) but only to the extent of drawings thereunder,
(iv) every obligation of such Person issued or assumed as the deferred purchase
price of property or services (excluding trade accounts payable or accrued
liabilities arising in the Ordinary Course of Business which are not overdue or
in default), (v) every capital lease obligation (determined in accordance with
GAAP) of such Person, (vi) all Indebtedness of other Persons secured by a Lien
on any asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the amount of such Indebtedness shall be the
lesser of (A) the fair market value of such asset at such date of determination
and (B) the amount of such Indebtedness of such other Persons, (vii) every
obligation to pay rent or other payment amounts of such Person with respect to
any sale-leaseback transaction to which such Person is a party, payable through
the stated maturity of such sale-leaseback transaction, (viii) factoring
arrangements of such Person, whether or not such arrangements appear on the
balance sheet of such Person; and (ix) every obligation of the type referred to
in clauses (i) through (viii) of another Person the payment of which, in any
case, such Person has guaranteed or is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise.
"Indemnitees" have the meaning set forth in Section 5.4(a).
"Insurance Policies" has the meaning set forth in Section 3.1(w).
"Knowledge" means the actual knowledge of those individuals listed on
Section 6.3(d) of the Company Disclosure Schedule.
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational or other Order, constitution law, rule
ordinance, permit, principle of common law, regulation, statute or treaty.
"Liens" has the meaning set forth in Section 3.1(b).
iii
"Material Adverse Change" or "Material Adverse Effect" means any
change, effect, event, occurrence or state of facts that is, has had or is
reasonably likely to have a material and adverse effect to the business,
financial condition, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, other than any change, effect, event or
occurrence (i) relating to the economy or capital or securities markets of the
United States or any other region in general, including changes in interest or
exchange rates, (ii) resulting from entering into this Agreement or the
consummation of the transactions contemplated hereby or the announcement
thereof, or (iii) relating to its business, financial condition or results of
operations that has been disclosed in writing to the other party prior to the
date of this Agreement. The parties agree that termination of the employment of
the Chief Executive Officer of the Company under circumstances that trigger the
severance payment under Section 7A of his employment agreement, dated of even
date herewith, shall constitute a Material Adverse Change.
"Merger" has the meaning set forth in the Recitals.
"Merger Consideration" has the meaning set forth in Section 2.1(b).
"Merger Sub" has the meaning set forth in the Recitals.
"Ohio Statutes" means the Ohio General Corporation Law.
"Order" means any administrative award, decision, injunction, judgment,
order, ruling, subpoena, or verdict entered, issued, made, or rendered by any
court, administrative agency, or other Governmental Entity.
"Ordinary Course of Business" has the meaning set forth in Section
3.1(f)(ii).
"Parent" has the meaning set forth in the recitals.
"Parent Shareholder Approval" has the meaning set forth in Section
3.2(c).
"Permitted Liens" means, with respect to any asset, (i) covenants,
conditions, restrictions, encroachments, encumbrances, easements, rights of way,
licenses, grants, building or use restrictions, exceptions, reservations,
limitations or other imperfections of title (other than a Lien securing any
Indebtedness) with respect to such asset which, individually or in the
aggregate, does not materially detract from the value of, or materially
interfere with the present occupancy or use of, such asset and the continuation
of the present occupancy or use of such asset; (ii) the matters set forth on
Section 3.1(v) of the Company Disclosure Schedule; (iii) unfiled mechanic's,
materialmen's and similar liens with respect to amounts not yet due and payable
or which are being contested in good faith through appropriate proceedings and,
for those existing on the date of the Balance Sheet, for which adequate reserves
in accordance with GAAP are reflected on the Balance Sheet, or arose subsequent
to September 30, 2002 in the Ordinary Course of Business; (iv) liens for Taxes
not yet delinquent or which are being contested in good faith through
appropriate proceedings and, for those existing on the date of the Balance
Sheet, for which adequate reserves in accordance with GAAP are reflected on the
Balance Sheet, or arose subsequent to September 30, 2002 in the Ordinary Course
of Business; and (v) liens securing rental payments under capital lease
arrangements, which capital lease arrangements if existing on
iv
the date of the Balance Sheet were reflected on the Balance Sheet, or arose
subsequent to the date of the Balance Sheet in the Ordinary Course of Business.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
"Preliminary Proxy Statement" has the meaning set forth in Section
5.1(a).
"Product" has the meaning set forth in Section 3.1(z).
"Product Claim" has the meaning set forth in Section 3.1(z).
"Proxy Statement" has the meaning set forth in Section 3.1(e).
"Restraints" has the meaning set forth in Section 6.1(c).
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Stock Reference Date" has the meaning set forth in Section 3.1(c).
"Subsidiary" of any Person means another Person of which sufficient
voting securities, other voting ownership, or voting partnership interests (or,
if there are no such voting interests, 50% or more of the equity interests) of
such Person to elect at least a majority of its Board of Directors or other
governing body are owned, directly or indirectly, by such first Person.
"Superior Proposal" means any bona fide written offer for a Company
Takeover Proposal by a Third Party that, the Board of Directors of the Company
determines in good faith, has the good faith intent to proceed with negotiations
and the financial and other capabilities to consummate the Company Takeover
Proposal, taking into account, among other things, the legal, financial,
regulatory and other aspects of such Company Takeover Proposal, (i) on terms
which the Board of Directors of the Company determines in its good faith
judgment (based on the advice of its legal and financial advisors) is more
favorable to the constituencies of the Company that may be considered by the
directors of the Company under Section 1701.59(E) of the Ohio Statutes, and (ii)
that is reasonably capable of being completed.
"Surviving Corporation" has the meaning set forth in Section 1.1.
"Taxes" means all (x) federal, state, local or foreign net and gross
income, alternative or add-on minimum, environmental, gross receipts, ad
valorem, value added, goods and services, capital stock, profits, license,
single business, employment, severance, stamp, unemployment, customs, property,
sales, excise, use, occupation, service, transfer, payroll, social security,
franchise, withholding and other taxes or similar governmental duties, charges,
fees, levies or other assessments including any interest, penalties or additions
with respect thereto, (y) liability for the payment of any amounts of the type
described in clause (x) as a result of being a member of an affiliated,
consolidated, combined or unitary group, and (z) liability for the payment of
any amounts as a result of being party to any tax sharing agreement or as a
result of any express or
v
implied obligation to indemnify any other person with respect to the payment of
any amounts of the type described in clause (x) or (y).
"Termination Fee" has the meaning set forth in Section 7.3(b).
"Third Party" means any Person or group other than the Company, the
Acquiror, Parent, Merger Sub or any of their respective Affiliates.
"Withholding Amount" has the meaning set forth in Section 2.3(h).
vi
EXHIBIT 1
VOTING AGREEMENT
THIS VOTING AGREEMENT, dated as of December 16, 2002 (this
"Agreement"), is made by and among TechTronic Industries, Inc., a Hong Kong
corporation ("Parent"), Richmont Capital Partners I, L.P., a Delaware limited
partnership ("Richmont"), and E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, individually and as Trustee of
the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ D/T/D January 18, 1993 ("▇▇▇▇▇▇" and, together with
Richmont, each a "Shareholder" and collectively, the "Shareholders").
W I T N E S S E T H:
WHEREAS, as of the date hereof, each of the Shareholders owns
beneficially the number of common shares without par value (the "Company Common
Shares") of Royal Appliance Mfg. Co., an Ohio corporation (the "Company"), in
each case as set forth opposite such Shareholder's name on the signature page
hereof (such shares, together with any Company Common Shares acquired by any
Shareholder prior to the termination of this Agreement, are collectively
referred to herein as the "Shares");
WHEREAS, concurrently with the execution of this Agreement, Parent,
RAMC Holdings, Inc., a Delaware corporation ("Acquiror"), TIC Acquisition Corp.,
an Ohio corporation and wholly owned subsidiary of Acquiror ("Merger Sub"), and
the Company are entering into an Agreement and Plan of Merger, dated as of the
date hereof (the "Merger Agreement"; capitalized terms used and not otherwise
defined herein shall have the respective meanings assigned to them in the Merger
Agreement), pursuant to which, upon the terms and subject to the conditions
thereof, Merger Sub will be merged with and into the Company (the "Merger"); and
WHEREAS, as a condition to the willingness of the Company, Parent,
Acquiror, and Merger Sub to enter into the Merger Agreement, Parent has
requested each of the Shareholders to agree, and in order to induce Parent to
enter into the Merger Agreement, such Shareholders are willing to agree, to vote
in favor of adopting the Merger Agreement and approving the Merger and the other
transactions contemplated by the Merger Agreement, upon the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereby agree, severally and not jointly, as follows:
Section 1. VOTING OF SHARES.
(a) Until the termination of this Agreement in accordance with
the terms hereof, each Shareholder hereby agrees that, at the Shareholders'
Meeting of the Company or any other meeting of the shareholders of the Company,
however called, each Shareholder will (i) appear at such meeting or otherwise
cause its Shares to be counted as present thereat for purposes of establishing a
quorum, and (ii) vote all of such Shareholder's Shares (A) in favor of the
adoption of the Merger Agreement and the approval of the Merger and the other
transactions contemplated by the Merger Agreement, and (B) against any action or
agreement that is
inconsistent with the Merger or would reasonably be expected to result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or which would reasonably be
expected to result in any of the conditions to the Merger Agreement not being
fulfilled. In addition, each Shareholder agrees that it will, upon request by
the Parent, furnish written confirmation, in form and substance reasonably
acceptable to Parent, of such Shareholder's vote in favor of the Merger
Agreement and the Merger.
(b) In the event that any Shareholder fails to satisfy its
obligations under clauses (a)(i) or (a)(ii) above, each Shareholder hereby
grants Parent a power of attorney up to and through the termination of this
Agreement to execute and deliver a proxy in the form attached hereto as Annex A
for and on behalf of such Shareholder.
(c) Notwithstanding the foregoing, nothing in this Agreement
shall (i) limit or restrict any Shareholder, or any affiliate thereof, from
acting in his capacity as director or officer of the Company, to the extent
applicable, it being understood that this Agreement shall apply to any such
Shareholder solely in his capacity as a Shareholder of the Company and (ii)
nothing in this Agreement shall be interpreted as obligating the Shareholders to
exercise any options to acquire Shares.
Section 2. TRANSFER OF SHARES. Each Shareholder represents and warrants
that it has no present intention of taking action to, prior to the termination
of this Agreement, and shall not, directly or indirectly, (a) sell, assign,
transfer (including by operation of law), tender or otherwise dispose of any of
the Shares, (b) deposit any of the Shares into a voting trust or enter into a
voting agreement or arrangement with respect to the Shares or grant any proxy or
power of attorney with respect thereto which is inconsistent with this
Agreement, or (c) enter into any contract, option or other arrangement or
undertaking with respect to the direct or indirect sale, transfer (including by
operation of law) or other disposition of any Shares. Notwithstanding anything
to the contrary in clauses (a) and (c) above, any Shareholder may transfer any
or all of its Shares; provided, however, that in any such case, prior to and as
a condition to the effectiveness of such transfer, each person as to which any
of such Shares or any interest in any of such Shares is or may be transferred
shall have executed and delivered to each of the Company and Parent a
counterpart to this Agreement pursuant to which such person shall be bound by
all of the terms and provisions of this Agreement.
Section 3. PURCHASE OF SHARES. Each Shareholder agrees that it shall
not directly or indirectly acquire additional Shares except pursuant to the
exercise of any option to purchase Shares in which such Shareholder has an
interest as of the date hereof.
Section 4. AGREEMENT OF PARENT. Parent hereby covenants and agrees with
the Shareholders that it shall take all reasonably necessary actions to ensure
that immediately following the Effective Time, each Shareholder or its designee
shall receive the Merger Consideration in immediately available funds with
respect to the number of Shares for which such Shareholder is entitled to
receive Merger Consideration pursuant to the terms of the Merger Agreement,
provided that such Shareholder or its designee shall have surrendered to Parent
a Certificate or Certificates evidencing such number of Shares together with a
letter or letters of
2
transmittal in accordance with Section 2.3 of the Merger Agreement, duly
executed and completed in accordance with the instructions thereto.
Section 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDER.
Each Shareholder hereby represents, warrants and covenants to Parent with
respect to itself and its ownership of its Shares as follows:
(a) Shareholder has all legal capacity to execute and deliver
this Agreement and to consummate the transactions contemplated hereby.
(b) Shareholder is the beneficial owner of its Shares and will
continue to be the beneficial owner of its Shares until the termination of this
Agreement, except as permitted by Section 2 of this Agreement.
(c) This Agreement has been duly executed and delivered by
such Shareholder.
(d) This Agreement constitutes the valid and binding agreement
of such Shareholder, enforceable against Shareholder in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting creditors'
rights generally, by general equity principles, (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(e) The execution and delivery of this Agreement by
Shareholder does not, and the performance of this Agreement by Shareholder will
not, (i) conflict with or violate any trust agreement or other similar documents
relating to any trust of which Shareholder is trustee, (ii) conflict with or
violate any law applicable to Shareholder or by which Shareholder or any of
Shareholder's properties is bound or affected or (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any assets of Shareholder, including, without limitation,
Shareholder's Shares, pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Shareholder is a party or by which Shareholder or any of
Shareholder's assets is bound or affected, except for any such breaches,
defaults, conflicts, violations or other occurrences that would not prevent or
delay the performance by Shareholder of Shareholder's obligations under this
Agreement.
(f) Until the termination of this Agreement, Shareholder will
not (and will use Shareholder's reasonable best efforts to cause the Company,
its respective officers, directors and employees, and any investment banker,
attorney, accountant or other advisor or representative of Shareholder or the
Company or any of the same not to) (i) solicit, initiate or knowingly encourage
(including by furnishing nonpublic information) any inquiries or the making of
any proposal or offer that constitutes, or may reasonably be expected to lead to
a Company takeover, (ii) participate in any discussions or negotiations in
furtherance of such inquiries or to obtain a Company Takeover Proposal, or the
making of any proposal that constitutes any Company Takeover Proposal, or (iii)
or knowingly facilitate any effort or attempt to make or implement a
3
Company Takeover Proposal. Notwithstanding any provision of this Section 3(f) to
the contrary, any Shareholder that is a member of the Company's Board of
Directors may take actions in such capacity to the extent permitted by the
Merger Agreement.
(g) Shareholder hereby waives any rights of appraisal or
rights to dissent from the Merger.
(h) Shareholder agrees to execute and deliver any additional
documents necessary, in the reasonable opinion of Parent, to carry out the
purpose and intent of this Agreement.
(i) Shareholder understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon the execution and delivery
of this Agreement by Shareholder.
Section 6. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby
represents and warrants to the Shareholders as follows:
(a) Parent is a company duly organized and validly existing
under the laws of the jurisdiction of its incorporation. Parent has all
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby by Parent have been duly authorized by all necessary action on the part
of Parent.
(b) (i) No filing with any governmental authority and no
authorization, consent or approval of any other Person is necessary for the
execution of this Agreement by Parent and the consummation by Parent of the
transactions contemplated hereby and (ii) none of the execution and delivery of
this Agreement by Parent, the consummation by Parent of the transactions
contemplated hereby shall (A) conflict with or result in any breach of the
organizational documents of Parent, (B) result in, or give rise to, a violation
or breach of or a default under any of the terms of any material contract,
understanding, agreement or other instrument or obligation to which Parent is a
party or by which Parent or any of its assets may be bound, or (C) violate any
applicable order, writ, injunction, decree, judgment, statute, rule or
regulation, except for any of the foregoing as could not reasonably be expected
to impair Parent's ability to perform its obligations under this Agreement.
(c) Parent understands and acknowledges that the Shareholders
are entering into this Agreement in reliance upon the execution and delivery of
the Merger Agreement by Parent.
Section 7. TERMINATION. This Agreement shall terminate upon the
earliest to occur of (i) the Effective Time, (ii) the termination of the Merger
Agreement in accordance with the terms thereof, (iii) the mutual consent of the
parties hereto, or (iv) the date set forth in Section 7.1(b)(i) of the Merger
Agreement; provided that no such termination shall relieve any party of
liability for a breach hereof prior to termination.
Section 8. EXPENSES. Each party hereto shall be responsible for its own
fees and expenses (including, without limitation, the fees and expenses of
financial consultants,
4
investment bankers, accountants and counsel) in connection with the entering
into of this Agreement.
Section 9. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof. This Agreement is not intended to
confer upon any other person any rights or remedies hereunder. This Agreement
may not be amended, modified or rescinded except by an instrument in writing
signed by each of the parties hereto.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by operation of Law (including by merger
or consolidation) or otherwise without the prior written consent of the other
parties hereto. Any assignment in violation of the preceding sentence shall be
void. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by the parties hereto and their
respective successors and assigns.
(c) 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. Each of the parties hereto agrees that it will use its
reasonable best efforts to do all things necessary to effectuate this Agreement.
(d) All notices, requests, claims, demands and other
communications to be given under this Agreement shall be in writing and shall be
deemed given (i) three (3) business days following sending by registered or
certified mail, postage prepaid, (ii) when sent if sent by facsimile; provided,
however, that the fax is promptly confirmed by telephone confirmation thereof,
(iii) when delivered, if delivered personally to the intended recipient, and
(iv) one business day following sending by overnight delivery via a national
courier service, and in each case, addressed to a party at the following address
for such party:
if to the Shareholders: c/o Royal Appliance Mfg. Co.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇ ▇▇▇▇▇▇▇▇, a Legal Professional
Association
2600 Erieview Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
5
If to Parent: Techtronic Industries Co. Ltd.
24/F, CDW ▇▇▇▇.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief
Executive Officer
Facsimile: ▇▇▇▇-▇▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
(e) This Agreement shall be governed by, and construed in
accordance with the laws of the State of Ohio, without giving effect to the
choice of law provisions thereof.
(f) The descriptive headings 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.
(g) The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement, or the application thereof to any person or any circumstance, is
invalid or unenforceable, (a) if necessary, a suitable and equitable provision
shall be substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision
and (b) the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
(h) The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that, in addition to any other members at law or in equity,
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement.
(i) This Agreement may be executed in one 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.
6
(j) The words "hereof," "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
section and paragraph references are to the sections and paragraphs of this
Agreement unless otherwise specified. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation." All terms defined in this Agreement shall
have the defined meanings contained herein when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such, instrument or
statute as from time to time, amended, qualified or supplemented, including (in
the case of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and all attachments
thereto and instruments incorporated therein. References to a person are also to
its permitted successors and assigns.
(k) The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above.
Shares held of Royal Appliance Mfg. Co.
TECHTRONIC INDUSTRIES, INC.
0 By:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chief Executive Officer
RICHMONT CAPITAL PARTNERS I, L.P.
2,969,900 By: J.R. Investment Corp.
Its: General Partner
By:_____________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Its: President
1,020,000
E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Individually and
as Trustee of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ D/T/D
January 18, 1993
7
EXHIBIT 2
ROYAL APPLIANCE MFG. CO.
OFFICER'S CERTIFICATE
I, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President and Chief Executive Officer of Royal
Appliance Mfg. Co., an Ohio corporation ("Royal"), pursuant to Section 6.2(c) of
the Agreement and Plan of Merger dated as of December ___, 2002 (the
"Agreement), among Royal, TechTronic Industries Co., Ltd., RAMC Holdings, Inc.
and TIC Acquisition Corp., do hereby certify, on behalf of Royal and solely in
my capacity as Chief Executive Officer of Royal, that (i) the representations
and warranties of Royal set forth in Section 3.1 of the Agreement are true and
correct both when made (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of such
representation and warranties to be so true and correct (without giving effect
to any limitation as to materiality or "Material Adverse Effect" set forth
therein) would not have, individually or in the aggregate, a Material Adverse
Effect; and (ii) Royal has performed and has complied in all material respects
with all covenants and agreements required by the Agreement to be performed or
complied with by Royal on or prior to the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand on this ___ day of
_______________, 2003.
_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
President and Chief Executive Officer
Royal Appliance Mfg. Co.
EXHIBIT 3
TECHTRONIC INDUSTRIES CO. LTD
OFFICER'S CERTIFICATE
I, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman and Chief Executive Officer of TechTronic
Industries Co., Ltd., a Hong Kong corporation ("Parent"), pursuant to Section
6.3(b) of the Agreement and Plan of Merger dated as of December ___, 2002 (the
"Agreement), among Royal Appliance Mfg. Co., RAMC Holdings, Inc. and TIC
Acquisition Corp., do hereby certify, on behalf of Parent and solely in my
capacity as Chairman and Chief Executive Officer of Parent, that (i) the
representations and warranties of Parent, Acquiror, and Merger Sub set forth in
Section 3.2 of the Agreement are true and correct both when made (except to the
extent expressly made as of an earlier date, in which case as of such date),
except where the failure of such representation and warranties to be so true and
correct (without giving effect to any limitation as to materiality or "Material
Adverse Effect" set forth therein) would not have, individually or in the
aggregate, a Material Adverse Effect; and (ii) Parent, Acquiror, and Merger Sub
have performed and have complied in all material respects with all covenants and
agreements required by the Agreement to be performed or complied with by Parent,
Acquiror, and Merger Sub on or prior to the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand on this ___ day of
_______________, 2003.
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chairman and Chief Executive Officer
TechTronic Industries Co., Ltd.
