EXHIBIT 2.1
AGREEMENT AND PLAN OF CONVERSION
AGREEMENT AND PLAN OF CONVERSION, dated as of March __, 1997, by and
among SunSource Inc., a Delaware corporation (the "Corporation"); SunSource
L.P., a Delaware limited partnership (the "Partnership"); LPSub Inc., a
Delaware corporation ("LPSub"); ▇▇▇▇▇▇/SDI, Inc. a Delaware corporation
("▇▇▇▇▇▇/SDI"); and the limited partners of SDI Partners I, L.P. ("GP Limited
Partners").
B A C K G R O U N D
The Partnership is a master limited partnership whose general partner
is SDI Partners I, L.P. ("the General Partner") and whose Class A and Class B
limited partnership interests ("A Interests" and "B Interests") are publicly
held. ▇▇▇▇▇▇/SDI is the general partner of the General Partner. The parties
desire to convert the Partnership to corporate form (the "Conversion") and to
that end have newly formed the Corporation and LPSub, a wholly-owned subsidiary
of the Partnership. The Partnership owns the limited partnership interest in SDI
Operating Partners, L.P. (the "Operating Partnership") with the general
partnership interest of the Operating Partnership being owned by the General
Partner.
The parties have also newly formed SunSource Capital Trust, a Delaware
statutory business trust (the "Trust"). The Corporation will contribute Junior
Subordinated Debentures to the Trust in exchange for 11.6% Trust Preferred
Securities (the "Trust Preferred Securities") and Trust Common Securities (the
"Trust Common Securities").
The parties desire to accomplish the Conversion through (i) the
contribution by the Partnership of the limited partnership interest in the
Operating Partnership to LPSub in exchange for shares of Class A Common Stock
of LPSub; (ii) the contribution by ▇▇▇▇▇▇/SDI of its general partnership
interest in the General Partner to LPub in exchange for shares of Class B
Common Stock of LPSub; (iii) the contribution by the GP Limited Partners of
their limited partnership interests in the General Partner to the Corporation in
exchange for shares of Common Stock of the Corporation; and (iv) the merger
provided for herein (the "Merger") by which the Partnership and LPSub will be
merged into the Corporation and the A Interests will receive Trust Preferred
Securities of the Trust and cash and the B Interests and ▇▇▇▇▇▇/SDI will receive
Common Stock of the Corporation.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying the
same into effect, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
THE CONVERSION
SECTION 1.1 The Contributions. Immediately prior to the Effective Time
( as hereinafter defined) (i) the Partnership shall contribute the limited
partnership interest in the Operating Partnership to LPSub in exchange for 1,000
shares of Class A Common Stock of LPSub; (ii) ▇▇▇▇▇▇/SDI shall contribute its
general partnership interest in the General Partner to LPSub in exchange for
1,000 shares of Class B Common Stock of LPSub; (iii) the GP Limited Partners
shall contribute their limited partnership interests in the General Partner to
the Corporation in exchange for an aggregate of 468,000 shares of Common Stock
of the Corporation, provided that 75,000 of such shares shall be held in escrow
until the second anniversary of the Effective Time and shall only be distributed
to the GP Limited Partners if the Corporation is then current on distributions
on the Trust Preferred Securities; and (iv) the Corporation shall contribute the
limited partnership interests in the General Partner to a newly formed wholly
owned subsidiary.
SECTION 1.2 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Partnership and LPSub shall be merged
with and into the Corporation (such parties to the Merger being sometimes
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hereinafter collectively referred to as the "Constituent Entities") pursuant to
the Agreement of Merger attached hereto as Annex 1 (the "Merger Agreement") and
the separate existence of the Partnership and LPSub shall cease. The
Corporation shall be the surviving entity in the Merger (sometimes hereinafter
referred to as the "Surviving Entity") and shall continue to be governed by the
laws of the State of Delaware, and all rights, privileges, immunities and
franchises of the Constituent Entities shall vest in the Surviving Entity and
continue unaffected by the Merger.
SECTION 1.3 Terms and Conditions of The Merger. The manner of
converting the securities of the Constituent Entities shall be as set forth in
Section 5 of the Merger Agreement.
SECTION 1.4 Timing
(a) Limited Partner Approval. The Partnership shall submit the
proposal to convert to corporate form (the "Conversion Proposal") to its limited
partners for approval and adoption at a meeting to be held as soon as
practicable. In connection with such meeting, the Partnership shall take such
reasonable steps as shall be necessary for the prompt preparation and filing by
the Partnership of a proxy statement (the "Proxy Statement") under the
Securities Exchange Act of 1934 (the "Exchange Act") and by the Corporation of a
registration statement (the "Registration Statement") and prospectus (the
"Prospectus") under the Securities Act of 1933 (the "Securities Act"), with the
Securities and Exchange Commission ("SEC") and shall cause the Proxy
Statement/Prospectus to be mailed to the limited partners of the Partnership as
soon as practicable. Adoption of the Conversion Proposal requires (i) the
approval of limited partners holding a majority of the outstanding A Interests
and B Interests, each voting separately as a class, and (ii) the approval of
unaffiliated limited partners (limited partners other than affiliates of the
General Partner) holding a majority of the outstanding A Interests and B
Interests held by unaffiliated limited partners, each voting separately as a
class (the "Class Votes").
(b) Approval of Other Parties. The Partnership and ▇▇▇▇▇▇/SDI,
as stockholders of LPSub at the time of the Closing (as hereinafter defined)
approve and adopt the Merger Agreement. The Partnership and the GP Limited
Partners, as stockholders of the Corporation at the time of the Closing approve
and adopt the Merger Agreement. LPSub, as general partner of the General Partner
at the time of the Closing approves and adopts the Merger Agreement on behalf
of the General Partner.
(c) Closing and Effective Time. Subject to the Conversion
Proposal receiving the requisite approval by the limited partners and subject to
the provisions of this Agreement, the parties shall hold a closing (the
"Closing") on (i) the later of (A) the business day following the meeting of the
limited partners of the Partnership to consider and vote upon the Conversion
Proposal or (B) the business day on which the last of the conditions set forth
in Article IV is fulfilled or waived or (ii) such other date as the parties
hereto may agree (the "Closing Date"), at 10:00 A.M. (local time) at the offices
of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, Philadelphia, Pennsylvania, or at such other
place or time as the parties hereto may agree. The Merger shall become effective
as set forth in Section 3 of the Merger Agreement (the "Effective Time"). At the
Closing, the contributions provided in Section 1.1 hereof shall be made and
immediately thereafter a certificate of merger shall be filed in the Office the
Secretary of State of Delaware.
(d) Certificate of Incorporation and Bylaws. From and after
the Effective Time, and pursuant to the Merger, the Certificate of Incorporation
and Bylaws of the Corporation as attached as Annexes 2 and 3, respectively,
shall continue to be the Certificate of Incorporation and Bylaws of the
Corporation as the surviving entity without change or amendment until further
amended in accordance with the provisions thereof and applicable law.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 Representations and Warranties by the Partnership. The
Partnership represents and warrants to the other parties that:
(a) Organization and Good Standing of the Partnership, the
Operating Partnership and LPSub. Each of the Partnership and the Operating
Partnership is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware. LPSub is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
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(b) Capitalization. The sole general partner of the
Partnership is the General Partner and there are issued and outstanding
11,099,573 A Interests and 21,675,746 B Interests of the Partnership. The sole
general partner of the Operating Partnership is the General Partner and the sole
limited partner of the Operating Partnership is the Partnership. The authorized
capital stock of LPSub consists of 1,001 shares of Class A Common Stock, par
value $.01 per share, of which one share is outstanding and owned by the
Partnership, and 1,000 shares of Class B Common Stock, of which no shares are
outstanding.
There is no outstanding option, warrant or other agreement or
commitment to which either the Partnership, the Operating Partnership or LPSub
is a party or by which it is bound providing for the issuance of any additional
securities of the Partnership, the Operating Partnership or LPSub.
(c) Authorization. The execution, delivery and performance of
this Agreement have been duly and validly authorized by all necessary
partnership action on the part of the Partnership other than the approval of the
Conversion Proposal by the limited partners of the Partnership and by all
necessary corporate action on the part of LPSub. This Agreement has been duly
executed and delivered by the Partnership and by LPSub and is enforceable
against each of LPSub and the Partnership in accordance with its terms.
(d) Proxy Statement; Other Information. The Partnership
represents that the Registration Statement, the Proxy Statement, the Schedule
13E-3 and all other filings with the SEC in connection with the Conversion
comply in all material respects with the Securities Act and the Exchange Act, as
the case may be, and that these materials do not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading.
(e) Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by the Partnership and LPSub nor the
consummation of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the Agreement of Limited Partnership of
the Partnership (the "Partnership Agreement"); (ii) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority or body, except (A) pursuant to the
Securities Act and the Exchange Act or the rules and requirements of any
national securities exchange or the National Association of Securities Dealers,
Inc., (B) the filing of a certificate of merger pursuant to the Revised Uniform
Limited Partnership Act (the "Delaware RULPA") and the General Corporation Law
of the State of Delaware (the "DGCL"), (C) filings under state securities laws
or in connection with maintaining the good standing and qualification of the
Corporation following the Effective Time, (D) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Premerger
Notification Act filings, if any or (E) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a material adverse effect on the
Partnership or the Operating Partnership; (iii) result in a default (or give
rise to any right of termination, unilateral modification or amendment,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, license, agreement or other instrument or obligation to which the
Partnership or the Operating Partnership is a party or by which the Partnership
or the Operating Partnership or any of their respective assets may be bound,
except for such defaults (or rights of termination, unilateral modification or
amendment, cancellation or acceleration) which in the aggregate would not have a
material adverse effect on the Partnership or the Operating Partnership; or (iv)
violate any order, writ, injunction, decree, judgment, ordinance, statute, rule
or regulation applicable to the Partnership or the Operating Partnership or any
of their respective properties or businesses, except for violations (other than
of orders, writs, injunctions or decrees) which would not in the aggregate have
a material adverse effect on the Partnership or the Operating Partnership.
SECTION 2.2 Representations and Warranties by the Corporation.
The Corporation represents and warrants to the other parties that:
(a) Organization and Good Standing of the Corporation and the
Trust. The Corporation is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Trust is a statutory
business trust duly organized, validly existing and in good standing under the
laws of the State of Delaware.
(b) Capitalization. The authorized capital stock of the Corporation
consists of 1,000,000 shares of Preferred Stock, par value $.01 per share, of
which none are outstanding, and 20,000,000 shares of Common Stock,
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par value $.01 per share, of which 1,000 shares are outstanding and owned by the
Partnership. The authorized securities of the Trust consist of 4,217,837 shares
of Trust Preferred Securities, of which none are outstanding, and 130,449 shares
of Trust Common Securities, of which 1,000 shares are outstanding and owned by
the Corporation.
There is no outstanding option, warrant or other agreement or
commitment to which either the Corporation or the Trust is a party or by which
it is bound providing for the issuance of any additional securities of the
Corporation or the Trust except for the issuance by the Trust to the Corporation
of 4,217,837 Trust Preferred Securities in exchange for Junior Subordinated
Debentures and 130,449 Trust Common Securities for cash and except pursuant to
this Agreement.
(c) Authorization. The execution, delivery and performance of
this Agreement has been duly and validly authorized by all necessary corporate
action on the part of the Corporation. This Agreement has been duly executed and
delivered by the Corporation and is enforceable against it in accordance with
its terms.
(d) Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by the Corporation nor the consummation
of the transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the Corporation's Certificate of Incorporation or
Bylaws; (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority or
body, except (A) pursuant to the Securities Act and the Exchange Act or the
rules and requirements of any national securities exchange or the National
Association of Securities Dealers, Inc., (B) the filing of a certificate of
merger pursuant to the Delaware RULPA and the DGCL, (C) filings under state
securities laws or in connection with maintaining the good standing and
qualification of the Corporation following the Effective Time, (D)
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Premerger Notification Act filings, if any or (E) where the
failure to obtain such consent, approval, authorization or permit, or to make
such filing or notification, would not in the aggregate have a material adverse
effect on the Corporation; (iii) result in a default (or give rise to any right
of termination, unilateral modification or amendment, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
license, agreement or other instrument or obligation to which the Corporation is
a party or by which it or any of its assets may be bound, except for such
defaults (or rights of termination, unilateral modification or amendment,
cancellation or acceleration) which in the aggregate would not have a material
adverse effect on the Corporation; or (iv) violate any order, writ, injunction,
decree, judgment, ordinance, statute, rule or regulation applicable to the
Corporation or any of its properties or businesses, except for violations (other
than of orders, writs, injunctions or decrees) which would not in the aggregate
have a material adverse effect on the Corporation.
SECTION 2.3 Representations and Warranties by ▇▇▇▇▇▇/SDI and the GP
Limited Partners. Each of ▇▇▇▇▇▇/SDI and the GP Limited Partners severally
represents and warrants to the other parties that:
(a) Organization and Good Standing. It is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
(b) Authorization. The execution, delivery and performance of
this Agreement have been duly and validly authorized by all necessary corporate
action on its part. This Agreement has been duly executed and delivered by it.
(c) Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by it nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the Agreement of Limited Partnership of the General Partner,
the Partnership Agreement or its certificate of incorporation or bylaws, as the
case may be; (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority or
body, except (A) pursuant to the Securities Act and the Exchange Act or the
rules and requirements of any national securities exchange or the National
Association of Securities Dealers, Inc., (B) the filing of a certificate of
merger pursuant to the Delaware RULPA and DGCL, (C) filings under state
securities laws
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or in connection with maintaining the good standing and qualification of the
Corporation following the Effective Time, (D) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Premerger
Notification Act filings, if any or (E) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a material adverse effect on the
General Partner or on it; (iii) result in a default (or give rise to any right
of termination, unilateral modification or amendment, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
license, agreement or other instrument or obligation to which it or the General
Partner is a party or by which they or any of their assets may be bound, except
for such defaults (or rights of termination, unilateral modification or
amendment, cancellation or acceleration) which in the aggregate would not have a
material adverse effect on it or on the General Partner; or (iv) violate any
order, writ, injunction, decree, judgment, ordinance, statute, rule or
regulation applicable to it or to the General Partner or any of its properties
or businesses, except for violations (other than of orders, writs, injunctions
or decrees) which would not in the aggregate have a material adverse effect on
it or on the General Partner.
(d) Certain Agreements. Except as disclosed in the
Registration Statement, (i) there are no agreements in effect between the
General Partner or any of its affiliates, on the one hand, and the Partnership
and the Operating Partnership, on the other; and (ii) there are no material
written agreements in effect between ▇▇▇▇▇▇ Brothers or any of its affiliates,
on the one hand, and any member of management, on the other.
(e) Ownership of Partnership Interests; Title. It is the owner
of record and beneficially of the general or limited partnership interest in the
General Partner. It has not received any notice of any adverse claim to the
ownership of any such interest and does not have any reason to know of any such
adverse claim that may be justified. On the Closing Date, it shall have good and
transferable title to such interest, free and clear of all liens.
ARTICLE III
ADDITIONAL COVENANTS AND AGREEMENTS
SECTION 3.1 Legal Conditions to Conversion. Each of the parties hereto
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself with respect to the Conversion.
SECTION 3.2 Affiliates. Prior to the Closing Date the Partnership shall
deliver to the Corporation a letter identifying all persons who are, at the time
the Conversion Proposal is submitted for approval to the limited partners of the
Partnership, "affiliates" of the Partnership for purposes of Rule 145 under the
Securities Act. The Partnership shall use its best efforts to cause each such
person to deliver to the Corporation on or prior to the Closing Date executed
affiliates' letters in customary form.
SECTION 3.3 Fees and Expenses. Whether or not the Conversion is
consummated, all costs and expenses incurred by the Partnership in connection
with this Agreement and the transactions contemplated hereunder shall be paid by
the Partnership.
SECTION 3.4 Stock Exchange Listing. The Corporation shall use its best
efforts to cause the Trust Preferred Securities and Common Stock to be issued in
the Conversion to be approved for listing on the New York Stock Exchange (the
"NYSE"), subject to official notice of issuance, prior to the Closing Date. The
A Interests and the B Interests will be delisted at or immediately after the
Effective Time.
SECTION 3.5 Indemnification.
(a) The Partnership shall, and from and after the Effective
Time, the Corporation shall, indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date of this Agreement or who
becomes prior to the Effective Time, an officer, director, partner, shareholder,
agent or fiduciary of the Partnership, the Operating Partnership, the General
Partner, ▇▇▇▇▇▇/SDI or the Corporation (the "Companies") or
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an affiliate of such person (collectively, the "Indemnified Parties") against
all losses, claims, damages, costs, expenses, liabilities or judgments, or
amounts that are paid in settlement with the approval of the indemnifying party
(which approval shall not be unreasonably withheld) of, or in connection with,
any claim, action, suit, proceeding or investigation ("Proceeding") based in
whole or in part out of the fact that such person is or was an officer,
director, partner or shareholder of one or more of the Companies or an affiliate
of such person, whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to, or at or
after, the Effective Time ("Indemnified Liabilities") in each case to the full
extent a partnership or a corporation is permitted under Delaware law to
indemnify such persons or entities; and the Partnership (and after the Effective
Time, the Corporation) will pay or reimburse expenses in advance of the final
disposition of any such Proceeding to each Indemnified Party to the full extent
permitted by law upon receipt of an undertaking to repay such expenses if and
when requested to do so under applicable law. Without limiting the foregoing, in
the event any such Proceeding is brought against any Indemnified Party (whether
arising before or after the Effective Time), (i) the Indemnified Parties may
retain counsel satisfactory to them, (ii) the Partnership (and after the
Effective Time, the Corporation) shall pay all reasonable fees and expenses of
such counsel for the Indemnified Parties promptly as statements therefor are
received, and (iii) the Partnership (and after the Effective Time, the
Corporation) will use all reasonable efforts to assist in the vigorous defense
of any such matter, provided that neither the Partnership nor the Corporation
shall be liable for any settlement of any claim effected without its written
consent, which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 3.5, upon
learning of any Proceeding, shall notify the Partnership (and after the
Effective Time, the Corporation) (but the failure so to notify the Partnership
or the Corporation, as the case may be, shall not relieve the Partnership or the
Corporation from any liability which it may have under this Section 3.5 except
to the extent such failure prejudices the indemnifying party) and shall deliver
to the Partnership (and after the Effective Time, the Corporation) the
undertaking referred to above. The Indemnified Parties as a group may retain
only one law firm to represent them with respect to each such matter unless
there is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
(b) The provisions of this Section 3.5 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and the
Indemnified Party's heirs, representatives, successors and assigns.
ARTICLE IV
CONDITIONS TO THE CONVERSION
SECTION 4.1 Conditions to Each Party's Obligation to Effect the
Conversion. The respective obligations of the parties to effect the Conversion
shall be subject to the satisfaction, on or before the Closing Date, of each of
the following conditions:
(a) Representations and Warranties and Performance. The
representations and warranties of each of the other parties herein contained
shall be true and correct on the Closing Date with the same effect as though
made at such time. Each of the other parties shall have performed in all
material respects all obligations and complied in all material respects with all
agreements, undertakings, covenants and conditions required by this Agreement to
be performed or complied with by it at or prior to the Closing Date.
(b) Pending Litigation. There shall not be any litigation or
other proceeding pending or threatened to restrain or invalidate the
transactions contemplated by this Agreement.
(c) Limited Partner Approval. The Conversion Proposal shall
have been approved and adopted by the requisite vote of the holders of the A
Interests and B Interests pursuant to the Class Votes.
(d) Regulatory Approval. All authorizations, consents and
permits required to perform this Agreement and the Merger Agreement shall have
been obtained and the required statutory waiting period under the
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▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, if applicable, shall have
expired or been terminated.
(e) Registration Statement. The Registration Statement filed
pursuant to Section 1.4 (a) shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceeding seeking a stop
order.
(f) NYSE Listing. The Trust Preferred Securities and the
Common Stock to be issued in the Conversion shall have been approved for listing
on the NYSE upon official notice of issuance.
(g) Blue Sky Compliance. The Corporation shall have complied
with all requirements of state securities or "blue sky" laws with respect to the
issuance of the securities in the Conversion.
(h) Special Committee Determination. The Special Committee
shall not have withdrawn its determination that the Conversion is fair to the
holders of A Interests and B Interests.
(i) Fairness Opinion. The fairness opinion delivered to the
Partnership by ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and included as an exhibit to the Proxy
Statement/Prospectus shall not have been rescinded prior to the Closing Date.
(j) Tax Opinion. The tax opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius
LLP delivered to the Partnership and filed as an exhibit to the Registration
Statement shall not have been rescinded prior to the Closing Date.
(k) Validity Opinion. The securities law opinion of ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & Finger regarding the validity of the Trust Preferred Securities
delivered to the Trust and filed as an exhibit to the Registration Statement
shall not have been rescinded prior to the Closing Date.
(l) Available Financing. The Corporation shall have available
financing to refinance existing senior debt on terms acceptable to the
Corporation and the General Partner or shall have received approval of the
Conversion by the existing senior lenders.
(m) Deferred Compensation Plan. The Corporation shall have
received from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("Management") undertakings to defer into the Deferred Compensation Plan for Key
Employees of the Operating Partnership all payments due under the previous
Deferred Compensation Plans and Long Term Performance Share Plan of the
Operating Partnership.
(n) Changes in Applicable Law. There shall have been no
material change, in effect or pending, in applicable law , including with
respect to the taxation of the Conversion, the Corporation or the Trust
Preferred Securities.
(o) Contribution Agreement. The Corporation shall have entered
into a Contribution Agreement with ▇▇▇▇▇▇ Brothers Inc. on terms satisfactory to
the parties hereto.
(p) Stockholders Agreement. The Corporation, ▇▇▇▇▇▇ Brothers
Inc. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have entered into a
Stockholders Agreement on terms satisfactory to the parties hereto.
(q) Registration Rights Agreement. The Corporation, certain
affiliates of ▇▇▇▇▇▇ Brothers Inc. and Management shall have entered into a
Registration Rights Agreement on terms satisfactory to the parties hereto.
(r) Escrow Agreement. The Corporation and the Escrow Agent
shall have entered into an Escrow Agreement on terms satisfactory to the parties
hereto.
(s) Resale Agreement. The Corporation, certain affiliates of
▇▇▇▇▇▇ Brothers Inc. and Management shall have entered into an greement
regarding resale of the Corporation's Common Stock.
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(t) Other Documentation. The parties hereto shall have entered
into such other agreements as are contemplated by the Conversion, including,
without limitation, the Indenture and Declaration of Trust in respect of the
Junior Subordinated Debentures and Trust Preferred Securities, on terms
satisfactory to the parties hereto.
ARTICLE V
TERMINATION AND ABANDONMENT
SECTION 5.1 Termination and Abandonment. This Agreement may be
terminated and the Conversion may be abandoned at any time prior to the
Effective Time, whether before or after approval by the limited partners of the
Partnership, by action of the Board of Directors of ▇▇▇▇▇▇/SDI.
SECTION 5.2 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto; provided,
however, that after approval of the Conversion Proposal by the limited partners
of the Partnership, no amendment may be made which decreases the amount or
changes the type of consideration to which the limited partners of the
Partnership are entitled under this Agreement or otherwise materially adversely
affects the rights of the limited partners of the Partnership without the
further approval of the limited partners.
SECTION 5.3 Waiver. Any time prior to the Effective Time, whether
before or after the meeting referred to in Section 1.4(a), any party hereto may
waive compliance with any of the agreements of any other party or with any
conditions to the obligations of such party; provided, however, that after
approval of the Conversion Proposal by the limited partners of the Partnership,
no waiver may be given which materially adversely affects the rights of the
limited partners of the Partnership without the further approval of the limited
partners . Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on behalf
of such party by a duly authorized officer.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if sent by telecopy or facsimile
transmission (with hard copy to follow), registered or certified mail, postage
prepaid, or Federal Express or similar overnight delivery services addressed, in
the case of all parties at
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▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with required copies to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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Dechert Price & ▇▇▇▇▇▇
4000 ▇▇▇▇ Atlantic Tower
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▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or such other address as shall be furnished in writing by any party to the
others prior to the giving of the applicable notice or communication.
SECTION 6.2 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 6.3 Headings. The headings herein are for convenience of
reference only, do not constitute a part of this Agreement, and shall not be
deemed to limit or affect any of the provisions hereof.
SECTION 6.4 Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties, with respect to the subject matter hereof.
SECTION 6.5 Cooperation. Subject to the terms and conditions of this
Agreement, each of the parties hereto shall use its reasonable efforts to take,
or cause to be taken, such action, to execute and deliver, or cause to be
executed and delivered, such governmental notifications and additional documents
and instruments and to do, or cause to be done, all things necessary, proper or
advisable under the provisions of this Agreement and under applicable law to
consummate and make effective the transactions contemplated by this Agreement.
SECTION 6.6 No Rights, Etc.. Nothing in this Agreement express or
implied is intended to confer upon any other person any rights or remedies under
or by reason of this Agreement.
SECTION 6.7 Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware applicable to contracts made and to be performed in that
State.
SECTION 6.8 Special Committee. Any determination by the Corporation or
the General Partner that any of the conditions in Article IV hereof have been
satisfied or waived, or any amendment of this Agreement, shall require the
affirmative vote of the Special Committee (as defined in the Registration
Statement).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Conversion to be duly executed as of the date first above written.
SUNSOURCE INC.
By
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Chairman
SUNSOURCE L.P.
By SDI Partners I, L.P.
Its General Partner
By ▇▇▇▇▇▇/SDI, Inc.
Its General Partner
By
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Chairman
PARTSUB INC.
By
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President
▇▇▇▇▇▇/SDI, INC.
By
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President
DOTMAR CORP.
By
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President
JPM CORP.
By
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President
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NORVED CORP.
By
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President
DIACOR CORP.
By
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President
HJC CORP.
By
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President
MWH CORP.
By
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President
LJC CORP.
By
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President
CELAR CORP.
By
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President
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ANNEX 1
AGREEMENT OF MERGER
OF
SUNSOURCE L.P.
(a Delaware limited partnership)
AND
PARTSUB INC.
(a Delaware corporation)
WITH AND INTO
SUNSOURCE INC.
(a Delaware corporation)
AGREEMENT OF MERGER, dated as of ___________, 1997, by and among
SunSource L.P., a Delaware limited partnership (the "Partnership"), LPSub
Inc., a Delaware corporation ("LPSub"; and together with the Partnership, the
"Disappearing Entities"), and SunSource Inc., a Delaware corporation (the
"Corporation"), with reference to the following RECITALS:
A. The Partnership is a Delaware limited partnership whose general
partner is LPSub. Its limited partnership interests are publicly held,
consisting of 11,099,573 Class A limited partnership interests ("A Interests")
and 21,675,746 Class B limited partnership interests ("B Interests).
B. LPSub is a Delaware corporation whose authorized and outstanding
stock consists of 1,001 shares of Class A Common Stock, par value $.01 per
share, all of which are owned of record and beneficially by the Partnership, and
1,000 shares of Class B Common Stock, par value $.01 per share, all of which are
owned of record and beneficially by ▇▇▇▇▇▇/SDI, Inc., a Delaware corporation.
C. The Corporation is a Delaware corporation whose authorized capital
stock consists of 1,000,000 shares of Preferred Stock, par value $.01 per share,
of which none are outstanding, and 20,000,000 shares of Common Stock, par value
$.01 per share, of which 1,000 shares are outstanding and owned by the
Partnership.
D. The Corporation has organized SunSource Capital Trust, a Delaware
statutory business trust (the "Trust"), which has authorized and issued
4,217,837 11.6% Trust Preferred Securities (the "Trust Preferred Securities")
and 130,449 Trust Common Securities, all of which are owned by the Corporation.
E. The partners of the Partnership and the Boards of Directors and
stockholder of LPSub and the Corporation have approved and adopted resolutions
approving and adopting this Agreement of Merger in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") and the Delaware Revised
Uniform Limited Partnership Act (the "DRULPA").
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants herein contained and intending to be legally bound, agree as follows:
1. Parties to Merger. The Disappearing Entities and the Corporation
(such parties to the merger being hereinafter sometimes collectively referred to
as the "Constituent Entities") shall effect a merger (the "Merger") in
accordance with and subject to the terms and conditions of this Agreement of
Merger (the "Agreement").
2. Merger. At the Effective Time (as defined in Section 3 hereof), each
of the Disappearing Entities shall be merged with and into the Corporation
(which latter entity shall be, and is hereinafter sometimes referred to as, the
"Surviving Entity").
3. Filing and Effective Time. A certificate of merger and such other
documents and instruments as are required by, and complying in all respects
with, the DGCL and DRULPA shall be filed in the Office of the Secretary of State
of Delaware. The Merger shall become effective, following the filing of all such
documents and instruments, at 11:59 p.m. on __________, 1997 (the "Effective
Time").
4. Effect of Merger. At the Effective Time, the separate existence of
each of the Disappearing Entities shall cease, the Surviving Entity shall
continue to be a corporation organized and governed by the laws of the State of
Delaware and the Merger shall have the effects provided therefor by the DGCL and
DRULPA.
5. Partnership Interests and Capital Stock. At the Effective Time:
(a) Each A Interest of the Partnership issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holders thereof, be converted into 0.38
share of Trust Preferred Securities and $1.30 in cash;
(b) Each B Interest of the Partnership issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holders thereof, be converted into 0.25
share of Common Stock of the Corporation;
(c) The shares of Class B Common Stock of LPSub issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into 538,000 shares of Common Stock;
(d) The shares of Class A Common Stock of LPSub issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be canceled;
and
(e) No fractional interests shall be issued in the Merger but
in lieu thereof each holder of A Interests shall be entitled to receive cash in
an amount equal to the fraction of a share of Trust Preferred Securities to
which the holder is otherwise entitled multiplied by the average closing price
of the Trust Preferred Securities for the five trading days following the
Effective Time and each holder of B Interests shall be entitled to receive cash
in an amount equal to the fraction of a share of Common Stock to which the
holder is otherwise entitled multiplied by the average closing price of the
Common Stock for the five trading days following the Effective Time.
6. Exchange of Certificates. Promptly after the Effective Time, the
Corporation will mail to all limited partners of record a letter of transmittal
containing instructions with respect to the surrender of depositary receipts for
A Interests in exchange for certificates representing shares of Trust Preferred
Securities and cash and the surrender of depositary receipts for B Interests in
exchange for certificates representing shares of Common Stock. Upon surrender to
the Corporation of one or more depositary receipts, together with a properly
completed letter of transmittal, there will be issued and mailed to former
limited partners of record at the Effective Time a certificate or certificates
representing the number of shares of Trust Preferred Securities and cash or a
certificate or certificates for shares of Common Stock to which such holder is
entitled. From and after the Effective Time, each depositary receipt will
evidence only the right to receive shares of Trust Preferred Securities and cash
or shares of Common Stock. No distributions or dividends with respect to the
Trust Preferred Securities or Common Stock payable to the holders of record
thereof after the Effective Time will be paid to the holder of any unsurrendered
depositary receipts until such depositary receipts are surrendered for exchange,
at which time accumulated distributions or dividends will be paid, without
interest, subject to any applicable escheat laws.
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7. Further Assurances. Each of the Disappearing Entities shall at any
time, or from time to time, as and when requested by the Surviving Entity, or by
its successors and assigns, execute and deliver, or cause to be executed and
delivered in its name by its last acting officers, or by the corresponding
officers of the Surviving Entity, all such conveyances, assignments, transfers,
deeds, or other instruments, and shall take, or cause to be taken, such further
or other action as the Surviving Entity, or its successors and assigns, may deem
required or convenient in order to evidence the transfer, vesting or devolution
of any property, right, privilege, immunity, power or purpose, or to vest or
perfect in or confirm to the Surviving Entity, or its successors and assigns,
title to and possession of all the properties, rights, privileges, immunities,
powers and purposes of the Disappearing Entities and otherwise to carry out the
intent and purposes hereof.
8. Termination. Notwithstanding approval by the partners and
shareholders of the Constituent Entities of this Agreement, this Agreement may
be terminated at any time prior to the Effective Time by action of the General
Partner.
9. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Delaware, without giving effect to
principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto, pursuant to the approval and
authority duly given by resolutions approved and adopted by their respective
partners and Boards of Directors and shareholder, have duly executed this
Agreement of Merger as of the day and year first written above.
SUNSOURCE L.P.
By LPSub Inc.
Its General Partner
By
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President
LPSUB INC.
By
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President
SUNSOURCE INC.
By
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Chairman
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