Exhibit 1
AGREEMENT AND PLAN OF MERGER
AMONG
SCOTSMAN INDUSTRIES, INC.,
K ACQUISITION CORP.
AND
▇▇▇▇▇ INDUSTRIAL CORPORATION
DATED AS OF FEBRUARY 2, 1997
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
THE OFFER................................ 2
SECTION 1.1 The Offer..................................................... 2
SECTION 1.2 Company Actions............................................... 4
ARTICLE II
THE MERGER................................ 6
SECTION 2.1 The Merger.................................................... 6
SECTION 2.2 Closing....................................................... 6
SECTION 2.3 Effective Time................................................ 6
SECTION 2.4 Effects of the Merger......................................... 7
SECTION 2.5 Articles of Incorporation and By-laws; Officers and Directors. 7
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES........... 7
SECTION 3.1 Effect on Capital Stock....................................... 7
SECTION 3.2 Surrender of Certificates..................................... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............. 10
SECTION 4.1 Organization.................................................. 10
SECTION 4.2 Subsidiaries.................................................. 11
SECTION 4.3 Capital Structure............................................. 11
SECTION 4.4 Authority..................................................... 12
SECTION 4.5 Consent and Approvals; No Violations.......................... 13
SECTION 4.6 SEC Documents and Other Reports............................... 14
SECTION 4.7 Absence of Certain Changes or Events.......................... 15
SECTION 4.8 Information Supplied.......................................... 15
SECTION 4.9 No Existing Violation, Default, Etc........................... 16
SECTION 4.10 Licenses and Permits.......................................... 17
SECTION 4.11 Termination, Severance and Employment Agreements.............. 18
SECTION 4.12 Environmental Matters......................................... 19
SECTION 4.13 Tax Matters................................................... 19
SECTION 4.14 Actions and Proceedings....................................... 20
SECTION 4.15 Contracts..................................................... 20
SECTION 4.16 ERISA......................................................... 21
SECTION 4.17 Liabilities................................................... 22
SECTION 4.18 Intellectual Properties....................................... 22
SECTION 4.19 Propriety of Past Payments.................................... 23
SECTION 4.20 Opinion of Financial Advisor.................................. 23
i
Page
----
SECTION 4.21 State Takeover Statutes; Rights Agreement; Charter Provisions. 23
SECTION 4.22 Asset Purchase Agreement...................................... 24
SECTION 4.23 Brokers....................................................... 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB............ 26
SECTION 5.1 Organization.................................................. 26
SECTION 5.2 Authority..................................................... 26
SECTION 5.3 Consents and Approvals; No Violations......................... 26
SECTION 5.4 Information Supplied.......................................... 27
SECTION 5.5 Interim Operations of Sub..................................... 28
SECTION 5.6 Brokers....................................................... 28
SECTION 5.7 Financing..................................................... 28
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS................ 28
SECTION 6.1 Conduct of Business by the Company Pending the Merger......... 28
SECTION 6.2 No Solicitation............................................... 31
SECTION 6.3 Third Party Standstill Agreements............................. 32
SECTION 6.4 Other Actions................................................. 33
ARTICLE VII
ADDITIONAL AGREEMENTS.......................... 33
SECTION 7.1 Shareholder Approval; Preparation of Proxy Statement.......... 33
SECTION 7.2 Access to Information......................................... 34
SECTION 7.3 Fees and Expenses............................................. 35
SECTION 7.4 Options....................................................... 36
SECTION 7.5 Public Announcements.......................................... 37
SECTION 7.6 Real Estate Transfer Tax...................................... 37
SECTION 7.7 State Takeover Laws........................................... 38
SECTION 7.8 Indemnification; Directors and Officers Insurance............. 38
SECTION 7.9 Notification of Certain Matters............................... 39
SECTION 7.10 Board of Directors............................................ 39
SECTION 7.11 Reasonable Best Efforts....................................... 40
SECTION 7.12 Certain Litigation............................................ 41
SECTION 7.13 Employee Benefits............................................. 42
SECTION 7.14 Employee Stock Ownership Plan and Trust....................... 42
SECTION 7.15 Severance..................................................... 42
ii
Page
----
ARTICLE VIII
CONDITIONS PRECEDENT........................... 42
SECTION 8.1 Conditions to Each Party's Obligation to Effect the Merger.... 42
ARTICLE IX
TERMINATION AND AMENDMENT......................... 43
SECTION 9.1 Termination................................................... 43
SECTION 9.2 Effect of Termination......................................... 45
SECTION 9.3 Amendment and Certain Other Actions........................... 45
SECTION 9.4 Extension; Waiver............................................. 46
ARTICLE X
GENERAL PROVISIONS............................ 46
SECTION 10.1 Non-Survival of Representations and Warranties................ 46
SECTION 10.2 Notices....................................................... 47
SECTION 10.3 Interpretation................................................ 47
SECTION 10.4 Counterparts.................................................. 48
SECTION 10.5 Entire Agreement; No Third-Party Beneficiaries................ 48
SECTION 10.6 Governing Law................................................. 48
SECTION 10.7 Assignment.................................................... 49
SECTION 10.8 Severability.................................................. 49
SECTION 10.9 Enforcement of this Agreement................................. 49
iii
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of February 2, 1997 (this
"Agreement"), among SCOTSMAN INDUSTRIES, INC., a Delaware corporation
("Parent"), K ACQUISITION CORP., a Michigan corporation and a wholly owned
subsidiary of Parent ("Sub"), and ▇▇▇▇▇ INDUSTRIAL CORPORATION, a Michigan
corporation (the "Company") (Sub and the Company being hereinafter collectively
referred to as the "Constituent Corporations").
W I T N E S S E T H:
--------------------
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have unanimously approved the acquisition of the Company by Parent
pursuant to a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") by Sub for (i) all of the outstanding shares
of Common Stock, $1.00 par value (the "Common Stock"), together with the related
Rights (as defined in Section 4.3), and (ii) all of the outstanding shares of
Series A Convertible Voting Preferred Stock, $24.375 stated value per share (the
"ESOP Preferred Stock"), of the Company, each at a price of $43.00 per share
(the "Offer Price"), net to the seller in cash, without interest thereon,
followed by a merger (the "Merger") of Sub with and into the Company upon the
terms and subject to the conditions set forth herein (the shares of Common
Stock, together with all associated Rights (except as the context otherwise
requires), and ESOP Preferred Stock subject to the Offer are hereinafter
referred to collectively as the "Shares");
WHEREAS, the Company has advised the Parent and Sub that, simultaneous
with the execution and delivery of this Agreement, the Company and certain of
its Subsidiaries are entering into an Asset Purchase Agreement dated as of the
date hereof (the "Asset Purchase Agreement") with ▇▇▇▇▇▇▇ Corporation, a
Delaware corporation ("▇▇▇▇▇▇▇"), and Transpro Group, Inc., a Delaware
corporation (together with ▇▇▇▇▇▇▇, the "Private Buyer"), pursuant to which the
Company has agreed to sell to the Private Buyer, and the Private Buyer has
agreed to purchase from the Company, on a going concern basis, substantially all
of the assets and properties of the transportation products business conducted
by the Company (the "TPG Assets"), all on the terms and subject to the
conditions set forth in the Asset Purchase Agreement;
WHEREAS, the Board of Directors of the Company has (i) determined that
the consideration to be paid for each Share in the Offer and for the TPG Assets
by the Private Buyer under the Asset Purchase Agreement are fair to and in the
best interests of the shareholders of the Company, (ii) approved and adopted
this Agreement and the Asset Purchase Agreement and the transactions
contemplated hereby and thereby and (iii) adopted resolutions unanimously
determining that, subject to the terms and provisions of this Agreement, the
Offer, the Merger, this Agreement and the Asset Purchase Agreement, and the
transactions contemplated thereby, are advisable, approving such transactions
and recommending that the Company's shareholders accept the Offer and, if
required by applicable law, approve this Agreement and the Merger; and
WHEREAS, pursuant to the Merger, each issued and outstanding share of
Company Capital Stock (as defined in Section 3.1) not owned directly or
indirectly by Parent or the Company will be converted into the right to receive
the consideration paid per Share pursuant to the Offer.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE OFFER
---------
SECTION 1.1 The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of this
Agreement, Sub shall, and Parent shall cause Sub to, commence the Offer. The
obligation of Sub to, and of Parent to cause Sub to, commence the Offer and
accept for payment, and pay for, any Shares tendered pursuant to the Offer shall
be subject only to the conditions set forth in Exhibit A (the "Offer
Conditions") (any of which may be waived in whole or in part by Sub in its sole
discretion, provided that, without the consent of the Company, Sub shall not
waive the Minimum Condition (as defined in Exhibit A)). Sub expressly reserves
the right to modify the terms of the Offer, except that, without the consent of
the Company, Sub shall not (i) reduce the number of Shares subject to the Offer,
(ii) reduce the Offer Price, (iii) modify or add to the Offer Conditions (other
than to waive any Offer Conditions to the extent permitted by this Agreement),
(iv) except as provided in the next sentence, extend the Offer, (v) change the
form of consideration payable in
2
the Offer or (vi) amend, waive or add any other term of the Offer in any manner
adverse to the Company or the holders of Shares. Notwithstanding the foregoing,
Sub may, without the consent of the Company, (i) extend the Offer if at the
scheduled or extended expiration date of the Offer any of the Offer Conditions
shall not be satisfied or waived until such time as such conditions are
satisfied or waived, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer, (iii) extend the Offer
on one or more occasions for an aggregate period of not more than five business
days beyond the scheduled or extended expiration date if as of such expiration
date sufficient Shares have not been tendered in order for the Merger to be
effected without a vote of the Company's shareholders pursuant to Section
450.1711 of the MBCA and (iv) extend the Offer for any reason on one or more
occasions for an aggregate period of not more than five business days beyond the
latest expiration date that would otherwise be permitted under clause (i), (ii)
or (iii) of this sentence. So long as this Agreement is in effect and the Offer
Conditions have not been satisfied or waived, Sub shall, and Parent shall cause
Sub to, cause the Offer not to expire. In the event that the Company delivers to
Parent a Section 9.1(e) Notice (as defined in Section 9.1(e)), Sub shall extend
the Offer to the earlier of (i) a date that is not earlier than seven business
days following the date of such delivery, unless the Offer would otherwise not
expire prior thereto, or (ii) the termination of this Agreement by the Company
pursuant to Section 9.1(e). In the event that Parent delivers to the Company the
notice contemplated in paragraph (d) or (e) of Exhibit A, Sub shall extend the
Offer to a date not earlier than two business days following the end of the 20-
day cure period contemplated in such paragraph (d) or (e) or, if earlier, the
date on which the breach or failure to perform or comply, as the case may be, is
cured, unless the Offer would otherwise not expire prior thereto. Subject to the
terms and conditions of the Offer and this Agreement, Sub shall, and Parent
shall cause Sub to, accept for and pay for, all Shares validly tendered and not
withdrawn pursuant to the Offer that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer as soon as practicable after the
expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-
1") with respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal and summary advertisement (such Schedule 14D-1 and
the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents").
Parent, Sub and the Company each agrees
3
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and Parent and Sub further agree to take all
steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the
SEC and the other Offer Documents as so corrected to be disseminated to holders
of Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given reasonable
opportunity to review and comment upon the Offer Documents prior to their filing
with the SEC or dissemination to the shareholders of the Company. Parent and Sub
agree to provide the Company and its counsel any comments Parent, Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
(c) Prior to the expiration of the Offer, Parent shall provide or
cause to be provided to Sub all funds necessary to accept for payment, and pay
for, any Shares that Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer.
SECTION 1.2 Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents that the Board of Directors of the Company,
at a meeting duly called and held, at which all directors were present, has,
subject to the terms and provisions of this Agreement, duly and unanimously
adopted resolutions approving this Agreement, the Offer, the Merger and the
Asset Purchase Agreement and the transactions contemplated hereby and thereby,
determining that the Offer, the Merger and the transactions contemplated by this
Agreement and the Asset Purchase Agreement are advisable and that the terms of
the Offer, the Merger and the Asset Purchase Agreement are fair to, and in the
best interests of, the Company's shareholders and recommending that holders of
Shares accept the Offer and, if required by applicable law, that the Company's
shareholders approve this Agreement and the Merger; provided, however, that such
approval, determination, recommendation or other action may be withdrawn,
modified or amended at any time or from time to time if the Board of Directors
of the Company concludes in good faith based on the advice of its outside
counsel that it is necessary to do so in order to comply with its fiduciary
duties under applicable law. The Company represents that its Board of Directors
has received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, LLC (the "Financial
Advisor") that the proposed consideration to be received by Company's common
shareholders pursuant to the Offer and the Merger is fair to the Company's
common shareholders (other than Parent or any of its affiliates) from a
financial point of view. The Company has been authorized by Financial Advisor to
permit, subject to prior review and consent by
4
Financial Advisor (such consent not to be unreasonably withheld), the inclusion
of such fairness opinion (or a reference thereto) in the Offer Documents and in
the Schedule 14D-9 referred to below. The Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Company's Board of
Directors described in this Section 1.2(a), subject to the immediately preceding
proviso. The Company has been advised by each of its directors and executive
officers that each such person intends, as of the date of this Agreement, to
tender, or cause the tender of, all Shares owned by such person pursuant to the
Offer, including any shares of ESOP Preferred Stock over which such person has
the power to direct the tender, regardless of whether such shares are allocated
to such person's account.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendation described in
paragraph (a) above (subject to the proviso in Section 1.2(a)) and shall mail a
copy of the Schedule 14D-9 to the shareholders of the Company. Each of the
Company, Parent and Sub agrees promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that such information
shall have become false or misleading in any material respect, and the Company
further agrees to take all steps necessary to amend or supplement the Schedule
14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed
with the SEC and disseminated to the Company's shareholders, in each case as and
to the extent required by applicable federal securities laws. Parent and its
counsel shall be given reasonable opportunity to review and comment upon the
Schedule 14D-9 prior to its filing with the SEC or dissemination to shareholders
of the Company. The Company agrees to provide Parent and its counsel any
comments the Company or counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Sub promptly with mailing labels containing
the names and addresses of the record holders of shares of Common Stock as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of shareholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Shares, and shall
furnish to Sub such information and assistance (including updated lists of
shareholders, security position listings and computer files) as Parent or Sub
may reasonably request in communicating the Offer to the Company's
5
shareholders. Subject to the requirements of applicable law, and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Sub and their agents
shall hold in confidence the information contained in any such labels, listings
and files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will, upon request, deliver,
and will use their reasonable best efforts to cause their agents to deliver, to
the Company all copies of such information then in their possession or control.
(d) The Company shall use its reasonable best efforts to assist the
trustee (the "ESOP Trustee") under the Employee Stock Ownership Trust between
the Company and Old Kent Bank and Trust Company dated January 1, 1989, as
amended (the "ESOP Trust"), in the solicitation of directions from the
participants in the Company's Employee Stock Ownership Plan (the "Employee Stock
Plan") with respect to the tender of the shares of the ESOP Preferred Stock held
thereunder in accordance with the terms of the ESOP Trust and the Employee Stock
Plan.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the Business Corporation Act of the State of
Michigan (the "MBCA"), Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 2.3). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the "rights and obligations of Sub in accordance with the MBCA." The
name of the Surviving Corporation shall be "▇▇▇▇▇ Industrial Corporation".
SECTION 2.2 Closing. The closing of the Merger will take place at
10:00 a.m. on a date to be specified by Parent or Sub, which shall be no later
than the second business day after satisfaction or waiver of the conditions set
forth in Article VIII (the "Closing Date"), at the offices of Sidley & Austin,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another date, time or
place is agreed to in writing by the parties hereto.
SECTION 2.3 Effective Time. The Merger shall become effective when a
Certificate of Merger (the "Certificate of Merger"), executed in accordance with
the relevant provisions of the MBCA, is accepted by the administrator (as
defined in the
6
MBCA, the "Administrator"); provided, however, that, upon mutual consent of the
Constituent Corporations, the Certificate of Merger may provide for a later date
of effectiveness of the Merger not more than 10 days after the date the
Certificate of Merger is delivered to the Administrator. When used in this
Agreement, the term "Effective Time" shall mean the later of the date and time
at which the Certificate of Merger is accepted by the Administrator or such
later time established by the Certificate of Merger. The filing of the
Certificate of Merger shall be made as soon as practicable after the
satisfaction or waiver of the conditions to the Merger set forth herein.
SECTION 2.4 Effects of the Merger. The Merger shall have the effects
set forth in Section 450.1724 of the MBCA.
SECTION 2.5 Articles of Incorporation and By-laws; Officers and
Directors. (a) Subject to Section 2.1, the Articles of Incorporation of Sub, as
in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The By-Laws of the Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by the Articles of
Incorporation of the Surviving Corporation or by applicable law.
(c) The directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, until the next annual
meeting of shareholders (or the earlier of their death, resignation or removal)
and until their respective successors are duly elected and qualified, as the
case may be.
(d) The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, for a term of one year
(or until the earlier of their death, resignation or removal) and until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES
---------------------------------------------------
SECTION 3.1 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on
7
the part of Sub, the Company or the holders of any securities of the Constituent
Corporations:
(a) Capital Stock of Sub. Each issued and outstanding share of stock
of Sub shall be converted into and become one fully paid and nonassessable
shares of Common Stock, $1.00 par value, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each
share of capital stock of the Company (including, without limitation, the
Shares purchased pursuant to the Offer) owned by the Company or any
Subsidiary of the Company, Parent, Sub or any other Subsidiary (as defined
in Section 10.3) of Parent (other than the shares into which the
outstanding shares of capital stock of Sub were converted pursuant to
Section 3.1(a)) automatically shall be canceled and retired and shall cease
to exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Each share of (i) the Common Stock, together
with the related Right, or (ii) the ESOP Preferred Stock (the Common Stock
and the ESOP Preferred Stock are hereinafter collectively referred to as
the "Company Capital Stock"), in each case, that is issued and outstanding
(other than shares to be canceled in accordance with Section 3.1(b)), shall
be converted into the right to receive from the Surviving Corporation in
cash, without interest, the price paid per share of Common Stock in the
Offer (the "Merger Consideration"). As of the Effective Time, all such
Shares, when so converted, 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 shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration, without interest.
(e) Company Stock Options. Each Company Stock Option (as defined in
Section 4.3) that is outstanding shall be canceled and converted into the
right to receive the amount of cash specified in Section 7.4.
SECTION 3.2 Surrender of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall designate a bank or trust company reasonably
acceptable to the Company to act as paying agent in the Merger (the "Paying
Agent"), and prior to the Effective Time, Parent shall deposit in trust with, or
cause the Surviving Corporation to deposit in trust with, the Paying Agent cash
in amounts necessary for the payment of the Merger
8
Consideration upon surrender of certificates representing Shares as part of the
Merger (it being understood that any and all interest earned on funds made
available to the Paying Agent pursuant to this Agreement shall be turned over to
Parent). If the amount of cash deposited with the Paying Agent pursuant to this
Section 3.2 is insufficient to pay all of the amounts required to be paid
pursuant to Section 3.1, Parent from time to time after the Effective Time shall
take all steps necessary to enable or cause the Surviving Corporation to deposit
with the Paying Agent additional cash in an amount sufficient to make all such
payments.
As soon as reasonably practicable after the Effective Time, the Paying
Agent shall mail to each holder of record of a certificate or certificates that
immediately prior to the Effective Time represented Shares (the "Certificates"),
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and shall be in a form and have
such other provisions as Parent may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the Paying Agent
shall, and Parent shall cause the Paying Agent to, pay the holder of such
Certificate in exchange therefor the amount of cash into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.1, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 3.2, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares of capital
stock theretofore represented by such Certificate shall have been converted
pursuant to Section 3.1. No interest will be paid or will accrue on the cash
payable upon the surrender of any Certificate.
9
(c) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article III shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
shares of capital stock theretofore represented by such Certificates. At the
Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of capital stock that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Paying
Agent for any reason, they shall be canceled and exchanged as provided in this
Article III.
(d) No Liability. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Any funds deposited with the Paying Agent that remain unclaimed by the
shareholders of the Company on the first anniversary of the Effective Time shall
be repaid to the Surviving Corporation (including, without limitation, all
interest and other income received by the Paying Agent in respect of all such
funds), and thereafter shareholders of the Company shall look only to Parent or
the Surviving Corporation (subject to the terms of this Agreement, abandoned
property, escheat and other similar laws) as general creditors thereof with
respect to any Merger Consideration that may be payable upon due surrender of
the Certificates held by them.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows,
except that the following representations and warranties (other than those
contained in Section 4.22) do not pertain to, and the Company Letter (as defined
in Section 4.2) need not include, matters included among the Purchased Assets or
Assumed Liabilities (as defined in the Asset Purchase Agreement) (it being
understood that the inclusion of such matters shall not be interpreted to mean
that by implication such matters are not included among such Purchased Assets or
Assumed Liabilities):
SECTION 4.1 Organization. The Company and each of its Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now being conducted, except
where the failure to be so organized, validly existing or in good standing would
not have a Material Adverse Effect (as defined in Section
10
10.3) on the Company or prevent or materially delay the consummation of the
Offer or the Merger. The Company and each of its Subsidiaries is duly qualified
or licensed to do business and in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the Offer or the Merger. The Company has,
or will prior to consummation of the Offer, deliver to Parent complete and
correct copies of its Articles of Incorporation and By-laws and the Articles of
Incorporation and By-laws (or similar organizational documents) of its
Subsidiaries.
SECTION 4.2 Subsidiaries. Item 4.2 of the letter from the Company to
Parent dated the date hereof, which letter relates to this Agreement and is
designated therein as the Company Disclosure Letter (the "Company Letter"),
lists each Subsidiary of the Company existing as of the date hereof. Except as
set forth in Section 4.2 of the Company Letter, all the outstanding shares of
capital stock of each Subsidiary of the Company are owned by the Company, by
another wholly owned Subsidiary of the Company or by the Company and another
wholly owned Subsidiary of the Company, free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens"), and are duly authorized, validly issued,
fully paid and nonassessable. Except as set forth in Item 4.2 of the Company
Letter and except for the capital stock of its Subsidiaries, the Company does
not own, directly or indirectly, any capital stock or other ownership interest
in any corporation, partnership, joint venture or other entity.
SECTION 4.3 Capital Structure. The authorized capital stock of the
Company consists of 30,000,000 shares of Common Stock and 5,000,000 shares of
preferred stock (the "Preferred Stock"), of which 820,513 shares of Preferred
Stock have been designated as the ESOP Preferred Stock. At the close of business
on January 31, 1997, (i) 5,961,665 shares of Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
free of preemptive rights, and (ii) 786,869.1221 shares of ESOP Preferred Stock
were issued and outstanding, all of which were validly issued, fully paid and
nonassessable and free of preemptive rights. As of the date of this Agreement,
except for (i) the rights to purchase shares of Common Stock (the "Rights")
issued pursuant to the Rights Agreement dated as of April 26, 1996 (the "Rights
Agreement"), between the Company and State Street Bank, as Rights Agent; (ii)
11
the rights of holders of shares of ESOP Preferred Stock to convert such shares
into shares of Common Stock; and (iii) stock options covering not in excess of
1,550,670 shares of Common Stock, including shares offered under the Company's
1980 Nonqualified Stock Option Plan, Stock Option and Stock Appreciation Rights
Plan of 1980, 1983 Incentive Stock Option Plan, 1984 Stock Option Plan, 1987
Stock Option and Restricted Stock Plan and 1993 Long-Term Incentive Plan
(collectively, the "Company Stock Options"), there are no options, warrants,
calls, rights or agreements to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of the Company or any Subsidiary or
obligating the Company or any of its Subsidiaries to grant, extend or enter into
any such option, warrant, call, right or agreement.
Except as set forth in the Company Letter and except in respect of the
ESOP Preferred Stock, as of the date of this Agreement, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries (i) to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or (ii) to vote or to dispose of any shares of the capital stock of any
of the Company's Subsidiaries.
SECTION 4.4 Authority. The Board of Directors of the Company has
approved and adopted this Agreement and the Asset Purchase Agreement and the
transactions contemplated hereby and thereby and adopted resolutions unanimously
determining that, subject to the terms and provisions of this Agreement, the
Offer, the Merger, this Agreement and the Asset Purchase Agreement, and the
transactions contemplated thereby, are advisable, approving such transactions
and recommending that the Company's shareholders accept the Offer and, if
required by applicable law, approve this Agreement and the Merger; and the
Company has all requisite corporate power and authority to enter into this
Agreement and the Asset Purchase Agreement and, subject to approval by the
shareholders of the Company of this Agreement and the Merger (if required), to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Asset Purchase Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to approval by the shareholders of the
Merger (if required). This Agreement and the Asset Purchase Agreement have been
duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub and of
the Asset Purchase Agreement
12
by the Private Buyer) constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms. The only shareholder action required in order to effect the Merger is
approval of the Merger by the holders of a majority of the shares of the Company
Capital Stock outstanding as of the record date for the Shareholders Meeting (as
defined in Section 7.1), all holders of each of the Common Stock and the ESOP
Preferred Stock voting separately as a class to the extent any ESOP Preferred
Stock is outstanding as of such record date; provided, however, that if Sub
purchases an amount of Shares pursuant to the Offer sufficient to permit the
Merger to be effected in accordance with Section 450.1711 of the MBCA (which
would include all of the outstanding shares of ESOP Preferred Stock, unless the
same were converted into Common Stock pursuant to the terms thereof or
redeemed), no shareholder approval will be required. No action by the
shareholders of the Company is required under the MBCA or the Company's Articles
of Incorporation or By-laws in order to effect the transactions contemplated by
the Asset Purchase Agreement.
SECTION 4.5 Consent and Approvals; No Violations. Except as set forth
in Item 4.5 of the Company Letter, the execution and delivery of this Agreement
do not, and the consummation by the Company and its shareholders of the
transactions contemplated hereby and compliance with the provisions hereof will
not, 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 the 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, any provision of (i) the Articles of Incorporation or
By-laws of the Company, (ii) any provision of the Articles of Incorporation, By-
laws or other organizational documents of any of its Subsidiaries, (iii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
the Company or any of its Subsidiaries or (iv) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries or any of their respective properties or assets, other than, in
the case of clauses (ii), (iii) or (iv), any such violations, defaults, rights,
losses or Liens that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Offer or the Merger. No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state), foreign
or supranational court, commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is required by or with respect
13
to the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or is necessary for the consummation
of the Offer, the Merger and the other transactions contemplated by this
Agreement, except for (i) in connection, or in compliance, with the provisions
of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the Securities Exchange Act of 1934, as amended (together with
the rules and regulations promulgated thereunder, the "Exchange Act"), (ii) the
filing of a Certificate of Merger with the Administrator and appropriate
documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business, (iii) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Offer, the Merger or the other transactions contemplated by
this Agreement, (iv) such filings, authorizations, orders and approvals as may
be required by state takeover laws (the "State Takeover Approvals"), (v) such
filings as may be required in connection with the taxes described in Section
7.6, (vi) filings with and approvals of the New York Stock Exchange, Inc. and
the SEC with respect to the delisting and deregistration of the Common Stock,
(vii) such other consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the laws of any foreign
country in which the Company or any of its Subsidiaries conducts any business or
owns any property or assets and (viii) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Offer or the Merger.
SECTION 4.6 SEC Documents and Other Reports. The Company has filed
all required documents with the SEC since January 1, 1993 (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 of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and as
of their respective dates none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply as of
their respective dates as to form in all material respects with their applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of
14
the 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 therein
or in the notes thereto) and fairly present the consolidated financial position
of the Company and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to the
lack of footnotes thereto, to normal year-end audit adjustments and to any other
adjustments described therein). The Company has not, since December 31, 1995,
made any change in the accounting practices or policies applied in the
preparation of its financial statements.
SECTION 4.7 Absence of Certain Changes or Events. Except as disclosed
in Item 4.7 of the Company Letter or in the Company SEC Documents filed and
publicly available prior to the date of this Agreement (the "Company Filed SEC
Documents") and except for the transactions contemplated by the Asset Purchase
Agreement, since December 31, 1995, (A) the Company and its Subsidiaries have
not incurred any material liability or obligation (indirect, direct or
contingent), or entered into any material oral or written agreement or other
material transaction, that is not in the ordinary course of business or that
could reasonably be expected to result in a Material Adverse Effect on the
Company; (B) the Company and its Subsidiaries have not sustained any loss or
interference with their business or properties from fire, flood, windstorm,
accident or other calamity (whether or not covered by insurance) that has had or
that could reasonably be expected to have a Material Adverse Effect on the
Company; (C) there has been no material change in the indebtedness of the
Company and its Subsidiaries, no change in the capital stock of the Company,
except for the issuance of shares of Common Stock pursuant to Company Stock
Options or pursuant to conversion rights in existence at the date of this
Agreement, and no dividend or distribution of any kind declared, paid or made by
the Company on any class of its stock, except for regular semi-annual dividends
of not more than $0.975 per share on the ESOP Preferred Stock, regular quarterly
dividends of not more than $0.165 per share on the Common Stock and the
distribution of the Rights; and (D) there has been no event causing a Material
Adverse Effect on the Company, nor any development that could, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect
on the Company.
SECTION 4.8 Information Supplied. None of the information supplied or
to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with the
15
Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the
"Information Statement") or (iv) the proxy statement (together with any
amendments or supplements thereto, the "Proxy Statement") relating to the
Shareholders Meeting will, in the case of the Offer Documents, the Schedule 14D-
9 and the Information Statement, at the respective times the Offer Documents,
the Schedule 14D-9 and the Information Statement are filed with the SEC or first
published, sent or given to the Company's shareholders, or, in the case of the
Proxy Statement, at the time the Proxy Statement is first mailed to the
Company's shareholders or at the time of the Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Schedule 14D-9, the Information Statement and the Proxy Statement will comply as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder, except that no representation or warranty
is made by the Company with respect to statements made or incorporated by
reference therein based on information supplied by Parent or Sub specifically
for inclusion or incorporation by reference therein.
SECTION 4.9 No Existing Violation, Default, Etc. Except as disclosed
in Item 4.9 of the Company Letter or the Company Filed SEC Documents, neither
the Company nor any of its Subsidiaries is in violation of (A) its Articles of
Incorporation, By-Laws or other organizational documents, (B) any applicable
law, ordinance, administrative or governmental rule or regulation or (C) any
order, decree or judgment of any Governmental Entity having jurisdiction over
the Company or any of its Subsidiaries, except, in each case, for any violations
that, individually or in the aggregate, would not have a Material Adverse Effect
on the Company or prevent or materially delay the consummation of the Offer or
the Merger. Except as disclosed in Item 4.9 of the Company Letter or the Company
Filed SEC Documents, the properties, assets and operations of the Company and
its Subsidiaries are in compliance in all material respects with all applicable
federal, state, local and foreign laws, rules and regulations, orders, decrees,
judgments, permits and licenses relating to public and worker health and safety
(collectively, "Worker Safety Laws") and the protection and clean-up of the
environment and activities or conditions related thereto, including, without
limitation, those relating to the generation, handling, disposal, transportation
or release of hazardous materials (collectively, "Environmental Laws"), except
for any violations that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Offer or the Merger. Except as disclosed in Item 4.9 of the
Company Letter or the Company Filed
16
SEC Documents, with respect to such properties, assets and operations, including
any previously owned, leased or operated properties, assets or operations, to
the Company's knowledge, there are no past, present or reasonably anticipated
future events, conditions, circumstances, activities, practices, incidents,
actions or plans of the Company or any of its Subsidiaries that may interfere
with or prevent compliance or continued compliance in all material respects with
applicable Worker Safety Laws or Environmental Laws, other than any such
interference or prevention as would not, individually or in the aggregate with
any such other interference or prevention, have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Offer or the
Merger.
Except as set forth in the Company Letter or the Company Filed SEC
Documents, no event of default or event that, but for the giving of notice or
the lapse of time or both, would constitute an event of default exists or, upon
the consummation by the Company of the transactions contemplated by this
Agreement, will exist under (i) any indenture, mortgage, loan agreement, note or
other agreement or instrument for borrowed money, or any guarantee of any
agreement or instrument for borrowed money or (ii) any lease, permit, license or
other agreement or instrument, in each case, to which the Company or any of its
Subsidiaries is a party or by which the Company or any such Subsidiary is bound
or to which any of the properties, assets or operations of the Company or any
such Subsidiary is subject, other than, in the case of clause (ii), any events
of default that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Offer or the Merger.
SECTION 4.10 Licenses and Permits. Except as set forth in Item 4.10 of
the Company Letter or the Company Filed SEC Documents, the Company and its
Subsidiaries have such certificates, permits, licenses, franchises, consents,
approvals, orders, authorizations and clearances from appropriate Governmental
Entities (the "Company Licenses") as are necessary to own, lease or operate
their properties and to conduct their businesses in the manner described in the
Company SEC Documents and as currently owned or leased and conducted, and all
such Company Licenses are valid and in full force and effect, except such
licenses which the failure to have or to be in full force and effect,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company or prevent or materially delay the consummation of the Offer or the
Merger. Except as set forth in Item 4.10 of the Company Letter or the Company
Filed SEC Documents, the Company and its Subsidiaries are in compliance in all
material respects with their respective obligations under the Company Licenses,
with such exceptions as, individually or in the
17
aggregate, would not have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the Offer or the Merger, and, to the
Company's knowledge, no event has occurred that allows, or after notice or lapse
of time would allow, revocation or termination of the Company Licenses, other
than such revocations or terminations that, individually or in the aggregate,
would not have a Material Adverse Effect on the Company or prevent or materially
delay the consummation of the Offer and the Merger.
SECTION 4.11 Termination, Severance and Employment Agreements. The
Company has provided to Parent a complete and accurate list and a copy of each
of the following as it relates to the businesses conducted by the Company and
its Subsidiaries: (a) employment or severance agreement or arrangement (whether
written or oral) with any director, executive officer or other key employee that
is not terminable without material liability or obligation (either individually
or collectively) on 60 days' or less notice; (b) agreement of employment with
any director, executive officer or other key employee that provides any term of
employment or other compensation guarantee or extending severance benefits or
other benefits after termination of employment not comparable to benefits
generally available to employees of the Company and its Subsidiaries; (c)
agreement, plan or arrangement (whether written or oral) of employment with any
director, executive officer or other key employee under which that person may
receive payments that may be subject to tax imposed by (Section) 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or included in the
determination of that person's "parachute payment" under (Section) 280G of the
Code; and (d) agreement or arrangement (whether written or oral) or plan,
including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan, with or affecting any director, executive
officer or other key employee any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the Asset Purchase
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement or the Asset
Purchase Agreement. Except as set forth in Item 4.11 of the Company Letter or
the Company Filed SEC Documents, since December 31, 1995, neither the Company or
any of its Subsidiaries has entered into or amended in any material respect, any
employment or severance agreement or arrangement (whether written or oral) with,
or granted any severance or termination pay to, any director, executive officer
or other key employee of the Company or any of its Subsidiaries. As used in this
Agreement, "key employee" means an employee whose aggregate annual compensation
in 1996 or 1997 exceeded, or is scheduled to exceed, $100,000.
18
SECTION 4.12 Environmental Matters. Except as set forth in the
Company Filed SEC Documents or Item 4.12 of the Company Letter, and except, in
each case, for matters that would not have a Material Adverse Effect on the
Company, neither the Company nor any of its Subsidiaries is the subject of any
federal, state, local or foreign investigation, and neither the Company nor any
of its Subsidiaries has received any notice or claim (or is aware of any facts
that would form a reasonable basis for any claim), or entered into any
negotiations or agreements with any third party, and there are not facts or
conditions associated with the properties or operations of the businesses of the
Company and its Subsidiaries, giving rise or relating to any material liability
or remedial action or potential material liability or remedial action under any
Environmental Laws, nor are there any pending, reasonably anticipated or, to the
knowledge of the Company, threatened actions, suits or proceedings against or
affecting the Company, any of its Subsidiaries or any of their properties,
assets or operations seeking any such liability or remedial action in connection
with any Environmental Laws.
SECTION 4.13 Tax Matters. Except as may be disclosed in Item 4.13 of
the Company Letter or in the Company Filed SEC Documents and except for matters
that individually or in the aggregate would not have a Material Adverse Effect
on the Company, (i) the Company and each Subsidiary have filed all Tax Returns
required to have been filed and have paid all Taxes shown to be due on such Tax
Returns; (ii) all Tax Returns filed by the Company and each Subsidiary are
complete and accurate and disclose all Taxes required to be paid by the Company
and each Subsidiary for the periods covered thereby; (iii) neither the Company
nor any Subsidiary has waived any statute of limitations in respect of Taxes of
the Company or such Subsidiary; (iv) the Tax Returns referred to in clause (i)
relating to federal income Taxes have been examined by the Internal Revenue
Service or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired; (v) no issues that have been
raised by the relevant taxing authority in connection with the examination of
the Tax Returns referred to in clause (i) are currently pending; (vi) no taxing
authority has proposed any adjustments to tax against the Company or any
Subsidiary; (vii) all deficiencies asserted or assessments made as a result of
any examination of the Tax Returns referred to in clause (i) by a taxing
authority have been paid in full; (viii) there are no Liens for Taxes upon the
assets of the Company or any Subsidiary except Liens relating to current Taxes
not yet due; and (ix) all Taxes which the Company or any Subsidiary are required
by law to withhold or to collect for payment have been duly withheld and
collected, and have been paid or accrued, reserved against and
19
entered on the books of the Company. For purposes of this Agreement (a) "Tax"
(and, with correlative meaning, "Taxes" and "Taxable") means, any federal,
state, local or foreign income, gross receipts, property, sales, use, goods and
services, license, excise, franchise, employment, payroll, withholding,
alternative or added minimum, ad valorem, value added, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed by
any governmental authority, and (b) "Tax Return" means any return, report or
similar statement required to be filed with respect to any Tax (including any
attached schedules), including, without limitation, any information return,
claim for refund, amended return or declaration of estimated Tax.
SECTION 4.14 Actions and Proceedings. Except as set forth in the
Company Filed SEC Documents or Item 4.14 of the Company Letter, there are no
outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving the Company or any of its Subsidiaries,
any of its or their present or former directors, officers, employees,
consultants, agents or shareholders, as such, or any of its or their properties,
assets or business or any Company Plan (as defined in Section 4.17) that,
individually or in the aggregate, would have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Offer or the
Merger. Except as set forth in the Company Filed SEC Documents or Item 4.14 of
the Company Letter, as of the date of this Agreement, there are no actions,
suits or claims or legal, administrative or arbitrative proceedings or
investigations pending or, to the knowledge of the Company, threatened against
or involving the Company or any of its Subsidiaries or any of its or their
present or former directors, officers, employees, consultants, agents or
shareholders, as such, or any of its or their properties, assets or business or
any Company Plan that, individually or in the aggregate, would have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Offer or the Merger.
SECTION 4.15 Contracts. Except as disclosed in Item 4.15 of the
Company Letter, all of the material contracts of the Company and its
Subsidiaries that are required to be described in the Company SEC Documents or
to be filed as exhibits thereto have been described in the Company SEC Documents
or filed as exhibits thereto. Neither the Company or any of its Subsidiaries
nor, to the knowledge of the Company, any other party is in breach of or default
under any material contracts which are currently in effect, except for such
breaches and defaults as in the aggregate have not had or would not have a
Material Adverse Effect on the
20
Company or prevent or materially delay the consummation of the Offer or the
Merger.
SECTION 4.16 ERISA. Prior to the consummation of the Offer, the
Company will deliver to Parent a complete and accurate list of each Company Plan
and each Company Multiemployer Plan. Except as to matters which would not have a
Material Adverse Effect on the Company, each Company Plan complies with the
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code and all other applicable statutes and
governmental rules and regulations, and (i) no "reportable event" (within the
meaning of Section 4043 of ERISA) has occurred with respect to any Company Plan,
(ii) neither the Company nor any of its ERISA Affiliates has withdrawn,
completely or partially, from any Company Multiemployer Plan (as hereinafter
defined in this Section 4.16) or instituted, or is currently considering taking,
any action to do so, and (iii) no action has been taken, or is currently being
considered other than as contemplated by this Agreement, to terminate any
Company Plan subject to Title IV of ERISA. Except as provided in the Company
Filed SEC Documents, no Company Plan, nor any trust created thereunder, has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, which would have a Material Adverse Effect on the
Company. There are no actions, suits or claims pending or, to the knowledge of
the Company, threatened (other than routine claims for benefits) with respect to
any Company Plan which would have a Material Adverse Effect on the Company.
Neither the Company nor any of its ERISA Affiliates has incurred or reasonably
expects to incur any liability under or pursuant to Title IV of ERISA which
would have a Material Adverse Effect on the Company. No prohibited transactions
described in Section 406 of ERISA or Section 4975 of the Code have occurred
which would have a Material Adverse Effect on the Company. All Company Plans
that are intended to be qualified under Section 401(a) of the Code have been
determined by the Internal Revenue Service to be so qualified, and the Company
is not aware of any reason why any Company Plan is not so qualified in
operation. Neither the Company nor any of its ERISA Affiliates has been notified
by any Company Multiemployer Plan that such Company Multiemployer Plan is
currently in reorganization or insolvency under and within the meaning of
Section 4241 or 4245 of ERISA or that such Company Multiemployer Plan intends to
terminate or has been terminated under Section 4041A of ERISA. As used herein,
(i) "Company Plan" means a "pension plan" (as defined in Section 3(2) of ERISA
(other than a Company Multiemployer Plan)) or a "welfare plan" (as defined in
Section 3(1) of ERISA) established or maintained by the Company or any of its
ERISA Affiliates or as to which the Company or any of its ERISA Affiliates has
contributed or otherwise may have any liability; (ii) "Company Multiemployer
21
Plan" means a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
to which the Company or any of its ERISA Affiliates is or has been obligated to
contribute or otherwise may have any liability; and (iii) "ERISA Affiliate"
means (A) any corporation which at any time on or before the Effective Time is
or was a member of the same controlled group of corporations (within the meaning
of Section 414(b) of the Code) as the Company, (B) any partnership, trade or
business (whether or not incorporated) which at any time on or before the
Effective Time is or was under common control (within meaning of Section 414(c)
of the Code) with the Company and (C) any entity which at any time on or before
the Effective Time is or was a member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as either the Company, any
corporation described in clause (A) of this clause (iii) or any partnership,
trade or business described in clause (B) of this clause (iii). Except as set
forth in Item 4.16 of the Company Letter or the Company Filed SEC Documents, no
Company Plan (i) provides health, life insurance, or other welfare benefits to
former employees (or their dependents or beneficiaries) after retirement or
termination of employment except as required by section 601 et seq. of ERISA,
and (ii) no Company Plan provides additional benefits or contains other
provisions that would become effective upon or as a result of the consummation
of any of the transactions contemplated by this Agreement.
SECTION 4.17 Liabilities. Except as fully reflected or reserved
against in the financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, or disclosed in the footnotes
thereto, the Company and its Subsidiaries had no liabilities (including, without
limitation, tax liabilities) at the date of such financial statements, absolute
or contingent, that are of a nature required under generally accepted accounting
principles to be recorded or reflected on such financial statements that have
had or would reasonably be expected to have a Material Adverse Effect on the
Company. Except as so reflected, reserved or disclosed or as disclosed in Item
4.17 of the Company Letter or the Company Filed SEC Documents, the Company and
its Subsidiaries have no commitments which have had or would reasonably be
expected to have a Material Adverse Effect on the Company.
SECTION 4.18 Intellectual Properties. Except as disclosed in Item
4.18 of the Company Letter and matters which would not have a Material Adverse
Effect on the Company, the Company and its Subsidiaries own or have a valid
license to use all inventions, patents, trademarks, service marks, trade names,
copyrights, trade secrets, software, mailing lists and other intellectual
property rights (collectively, the "Company Intellectual Property") necessary to
carry on their respective
22
businesses as currently conducted; and, to the knowledge of the Company, neither
the Company nor any such Subsidiary has received any notice of infringement of
or conflict with, and there are no infringements of or conflicts with, the
rights of others with respect to the use of any of the Company Intellectual
Property that, in either such case, has had or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
SECTION 4.19 Propriety of Past Payments. Since January 1, 1991, (i) no
funds or assets of the Company or any of its Subsidiaries have been used for
illegal purposes, (ii) no unrecorded fund or assets of the Company or any of its
Subsidiaries has been established for any purpose, (iii) no accumulation or use
of the corporate funds of the Company or any of its Subsidiaries has been made
without being properly accounted for in the respective books and records of the
Company or such Subsidiary, (iv) all payments by or on behalf of the Company or
any of its Subsidiaries have been duly and properly recorded and accounted for
in the books and records of the Company and its Subsidiaries, (v) no false or
artificial entry has been made in the books and records of the Company or any of
its Subsidiaries for any reason, (vi) no payment has been made by or on behalf
of the Company or any of its Subsidiaries with the understanding that any part
of such payment is to be used for any purpose other than that described in the
documents supporting such payment and (vii) neither the Company nor any of its
Subsidiaries has made any illegal contributions to any political party or
candidate, either domestic or foreign, except for such uses, payments,
contributions or actions described in clauses (i) through (vii) which, or the
cessation of which, would not have a Material Adverse Effect on the Company or
result in material adverse publicity for the Company.
SECTION 4.20 Opinion of Financial Advisor. The Company has received
the opinion of Financial Advisor, dated the date hereof, to the effect that, as
of the date hereof, the consideration to be received in the Offer and the Merger
by the Company's common shareholders is fair to the Company's common
shareholders (other than Parent or any of its affiliates) from a financial point
of view, a copy of which opinion has been delivered to Parent.
SECTION 4.21 State Takeover Statutes; Rights Agreement; Charter
Provisions. The Company has taken all actions necessary to provide that the
provisions of the Stacey, Bennett, and ▇▇▇▇▇▇▇ Shareholder Equity Act, Sections
450.1790 et seq. of the MBCA, do not apply to the Company and the transactions
contemplated by this Agreement and the Asset Purchase Agreement. Chapter 7A of
the MBCA does not apply to this Agreement and the
23
transactions contemplated hereby by reason of the prior approval requirements of
Section 450.1782(1)(b) of the MBCA. The Company has heretofore provided Parent
with a complete and correct copy of the Rights Agreement, including all
amendments and exhibits thereto. The Board of Directors of the Company has
approved an amendment to the Rights Agreement (which amendment will be presented
to the Rights Agent with directions to execute promptly following the execution
of this Agreement) to provide that a Shares Acquisition Date, a Distribution
Date, any of the events set forth in Section 11(a)(ii) of the Rights Agreement
or a Section 13 Event (as such terms are defined in the Rights Agreement) shall
not occur or be deemed to occur, the Rights shall not separate from the shares
of the Common Stock, the Rights shall not be become exercisable, and neither
Parent nor Sub shall become an Acquiring Person (as defined in the Rights
Agreement) as a result of the execution, delivery or performance of this
Agreement, the announcement, making or consummation of the Offer, the
acquisition of shares of capital stock of the Company pursuant to the Offer or
the Merger, the consummation of the Merger or any other transactions
contemplated by this Agreement. The Board of Directors has taken all actions
necessary to exempt this Agreement and the Asset Purchase Agreement, and the
transactions contemplated hereby and thereby, from the provisions of Articles X
and XII of the Company's Articles of Incorporation.
SECTION 4.22 Asset Purchase Agreement. The Asset Purchase Agreement
has been duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of the Asset Purchase Agreement by the
Private Buyer) constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. Except as set
forth in Item 4.22 of the Company Letter, the execution and delivery by the
Company of the Asset Purchase Agreement do not, and the consummation by the
Company of the transactions contemplated thereby and compliance with the
provisions thereof will not, 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 the 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, any provision of (i)
the Articles of Incorporation or By-laws of the Company, (ii) any provision of
the Articles of Incorporation, By-laws or other organizational documents of any
of its Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its Subsidiaries or (iv) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to
24
the Company or any of its Subsidiaries or any of their respective properties or
assets, other than, in the case of clauses (ii), (iii) or (iv), any such
violations, defaults, rights, losses or Liens that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the transactions contemplated by the Asset
Purchase Agreement. No filing or registration with, or authorization, consent or
approval of, any Governmental Entity is required by or with respect to the
Company or any of its Subsidiaries in connection with the execution and delivery
of the Asset Purchase Agreement by the Company or is necessary for the
consummation of the transactions contemplated thereby, except for (i) in
connection, or in compliance, with the provisions of the HSR Act, (ii) such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the transactions contemplated by the Asset Purchase
Agreement, (iii) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the laws of any
foreign country in which the Company or any of its Subsidiaries conducts any
business or owns any property or assets and (iv) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the transactions contemplated by the Asset Purchase Agreement. The
representations and warranties of the Company set forth in the Asset Purchase
Agreement are true and correct in all material respects, and, immediately prior
to the consummation of the Offer, the Company will have complied in all material
respects with all material agreements or covenants of the Company to be
performed or complied with by it under the Asset Purchase Agreement by such
time. The Company has delivered to Parent a complete and correct copy of the
Asset Purchase Agreement.
SECTION 4.23 Brokers. No broker, investment banker, financial advisor
or other person, other than Financial Advisor, the fees and expenses of which
will be paid by the Company (and are reflected in an agreement between Financial
Advisor and the Company, a copy of which has been furnished to Parent), 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 the Company.
25
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
-----------------
Parent and Sub represent and warrant to the Company as follows:
SECTION 5.1 Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, validly existing or in good standing would not have
a Material Adverse Effect on Parent or Sub or prevent or materially delay the
consummation of the Offer or the Merger.
SECTION 5.2 Authority. Parent and Sub have all requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Sub and the consummation by Parent and Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and (assuming the valid authorization,
execution and delivery of this Agreement by the Company) constitutes a valid and
binding obligation of each of Parent and Sub enforceable against each
respectively in accordance with its terms.
SECTION 5.3 Consents and Approvals; No Violations. The execution and
delivery by Parent and Sub of this Agreement do not, and the consummation by
Parent and Sub of the transactions contemplated hereby and compliance with the
provisions hereof will not, 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 the loss of a
benefit under, or result in the creation of any Lien upon any of the properties
or assets of Parent or any of its Subsidiaries under, any provision of (i) the
Certificate of Incorporation, By-laws or comparable organizational documents of
Parent, Sub or any other Subsidiaries of Parent, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Parent or any
of its Subsidiaries (other than any agreement or note that will be paid or
discharged in full at or prior to the consummation of the Offer) or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation
26
applicable to Parent or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clause (ii) or (iii), any such
violations, defaults, rights, losses or Liens that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent or Sub or prevent
or materially delay the consummation of the Offer or the Merger. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Parent or Sub or
is necessary for the consummation of the Offer, the Merger and the other
transactions contemplated by this Agreement, except for (i) in connection, or in
compliance, with the provisions of the HSR Act and the Exchange Act, (ii) the
filing of Certificate of Merger with the Administrator and appropriate documents
with the relevant authorities of other states in which Parent or any of its
Subsidiaries is qualified to do business, (iii) such filings and consents as may
be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by the
Offer, the Merger or the other transactions contemplated by this Agreement, (iv)
such filings, authorizations, orders and approvals as may be required to obtain
the State Takeover Approvals, (v) such filings as may be required in connection
with the taxes described in Section 7.6, (vi) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
the laws of any foreign country in which Parent or any of its Subsidiaries
conducts any business or owns any property or assets and (vii) such other
consents, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Parent or Sub or prevent or
materially delay the consummation of the Offer or the Merger.
SECTION 5.4 Information Supplied. None of the information supplied or
to be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
shareholders, or, in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's shareholders or at the time of the
Shareholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
27
under which they are made, not misleading. The Offer Documents will comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no representation or warranty is
made by Parent or Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company specifically for
inclusion or incorporation by reference therein.
SECTION 5.5 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
SECTION 5.6 Brokers. No broker, investment banker, financial advisor
or other person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, the fees and
expenses of which will be paid by Parent, 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 Parent or Sub.
SECTION 5.7 Financing. Scotsman Group Inc. has entered into, and
furnished to the Company a copy of, the Financing Commitment Letter with First
Chicago Capital Markets, Inc. (the "Lender"). Subject to the terms and condition
specified therein, the Financing Commitment Letter will provide Sub funds
sufficient in amount to consummate the Offer and Merger pursuant to this
Agreement. The Financing Commitment Letter is in full force and effect as of the
date of the Agreement.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
SECTION 6.1 Conduct of Business by the Company Pending the Merger.
Except for actions reasonably necessary to effect the consummation of the
transactions contemplated by, and in accordance with the terms of, the Asset
Purchase Agreement, during the period from the date of this Agreement until such
time as Parent's designees shall constitute a majority of the Board of Directors
of the Company, the Company shall, and shall cause each of its Subsidiaries to,
in all material respects carry on its business in, and not enter into any
material transaction other than in accordance with, the ordinary course of its
business as currently conducted and, to the extent consistent therewith, use
reasonable best efforts to preserve intact its current business organizations,
keep available the services of its current officers and key employees and
preserve its relationships with customers, suppliers and others having business
dealings with it
28
to the end that its goodwill and ongoing business shall not be impaired. Without
limiting the generality of the foregoing, and except as referred to in Item 6.1
of the Company Letter or as otherwise expressly contemplated by this Agreement
or the Asset Purchase Agreement or required by law, during such period, the
Company shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of Parent (which consent shall not be unreasonably
withheld):
(a) (w) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to its shareholders in their capacity as
such (other than regular quarterly dividends of not more than $0.165 per share
on the Common Stock and regular semi-annual dividends of not more than $0.975
per share on the ESOP Preferred Stock, in each case declared and paid on dates
consistent with past practice), (x) 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 the issuance of shares of Common Stock upon conversion of any share of
ESOP Preferred Stock in accordance with the terms thereof, or (y) except as
required under existing employee benefit plans, agreements, policies, awards or
arrangements in effect on the date of this Agreement, purchase, redeem or
otherwise acquire any shares of its capital stock or those of any Subsidiary or
any other securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(b) except as required under existing employee benefit plans,
agreements, policies, awards or arrangements in effect on the date of this
Agreement, issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock, any other voting securities or equity equivalent or
any securities convertible into, or any rights, warrants or options to acquire
any such shares, voting securities, equity equivalent or convertible securities
(other than pursuant to the Rights Agreement or the issuance of shares of Common
Stock upon the exercise of Company Stock Options outstanding on the date of this
Agreement in accordance with their current terms and the issuance of shares of
Common Stock upon the conversion of any shares of ESOP Preferred Stock into
shares of Common Stock in accordance with the terms thereof);
(c) amend its Articles of Incorporation or By-laws or other similar
organizational documents;
(d) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the
29
assets of or equity in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets, other than the purchase of raw
materials and goods and services used in the manufacture of the products of the
businesses of the Company and its Subsidiaries, in each case in the ordinary
course of business consistent with past practice, and other transactions that
are in the ordinary course of business consistent with past practice and which
in the aggregate involve assets having a purchase price not in excess of
$1,000,000;
(e) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than the sale of products of the
businesses of the Company and its Subsidiaries, in each case in the ordinary
course of business consistent with past practice, and other transactions that
are in the ordinary course of business consistent with past practice and which
in the aggregate involve assets having a fair market value or book value not in
excess of $500,000;
(f) incur any new indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or guarantee any debt
securities of others or make any loans, advances or capital contributions to, or
other investments in, any other person, other than to or in the Company or any
wholly owned Subsidiary of the Company and other than customary travel and
similar advances to employees in the ordinary course of business consistent with
past practices;
(g) alter (through merger, liquidation, reorganization, restructuring
or in any other fashion) the corporate structure or ownership of the Company or
any Subsidiary;
(h) enter into or adopt, or amend any existing, severance plan,
agreement or arrangement or enter into or amend any Company Plan or employment
or consulting agreement, other than as required by law;
(i) except as required under existing plans, agreements, policies,
awards or arrangements in effect on the date of this Agreement or as described
in Item 6.1 of the Company Letter, increase the compensation payable or to
become payable to its officers or employees, except, in the case of employees
who are not officers, for increases in the ordinary course of business
consistent with past practice, pay or commit to pay any bonus, or grant any
severance or termination pay to, or enter into any employment or severance
agreement, or establish, adopt, enter into, or amend in any material respect or
take action to
30
enhance in any material respect or accelerate any rights or benefits under, any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, stock ownership, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer or
employee, except, in each case, as may be required to comply with applicable law
or regulation;
(j) violate or fail to perform any material obligation or duty imposed
upon it by any applicable federal, state or local law, rule, regulation,
guideline or ordinance;
(k) redeem the Rights or amend the Rights Agreement;
(l) breach in any material respect any of its material
representations, warranties, covenants or agreements contained in the Asset
Purchase Agreement (regardless of any provisions regarding notice or lapse of
time, or both) or waive any of its material rights under, amend or terminate the
Asset Purchase Agreement, other than a waiver of the condition regarding the
consummation of the Offer contained in Section 5.3(d) of the Asset Purchase
Agreement;
(m) make any material change in its accounting methods, policies or
procedures, except as a result of any change in law or generally accepted
accounting principles;
(n) prepare or file any Tax Return inconsistent with past practice or,
on any such Tax Return, take any position, make any election or adopt any method
that is inconsistent with positions taken, elections made or methods used in
preparing or filing similar Tax Returns in prior periods, or give any approval
or consent under Section 4.13, or agree to any allocation under Section 1.2(c),
of the Asset Purchase Agreement without the prior written consent of Parent; or
(o) authorize, recommend, propose or announce an intention to do any
of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
The Company shall promptly advise Parent orally and in writing of any
change or event having, or which could reasonably be expected to have, a
Material Adverse Effect on the Company or which could prevent or materially
delay the consummation of the Offer or the Merger.
SECTION 6.2 No Solicitation. From and after the date hereof, the
Company shall not, and shall not permit any of its or its Subsidiaries'
officers, directors or employees to, and the
31
Company shall use its reasonable best efforts to cause all of its and its
Subsidiaries' attorneys, financial advisors, agents and other representatives
not to, directly or indirectly, solicit, initiate or knowingly encourage
(including by way of furnishing information) any Takeover Proposal (as
hereinafter defined in this Section 6.2), or engage in or continue discussions
or negotiations relating thereto; provided, however, that the Company may engage
in discussions or negotiations with, or furnish information concerning the
Company and its business, properties or assets to, any third party with respect
to a Takeover Proposal if the Board of Directors of the Company concludes in
good faith based on the advice of its outside counsel that it is necessary to do
so in order to comply with its fiduciary duties under applicable law. The
Company promptly will notify Parent of any Takeover Proposal, including the
material terms and conditions thereof and the identity of the person or group
making such Takeover Proposal, and will promptly notify Parent of any
determination by the Company's Board of Directors that a Superior Proposal (as
hereinafter defined in this Section 6.2) has been made. As used in this
Agreement, (i) "Takeover Proposal" shall mean any proposal or offer, other than
a proposal or offer by Parent or any of its Subsidiaries, for a tender or
exchange offer, a merger, consolidation or other business combination involving
the Company or any of its Subsidiaries or any proposal to acquire in any manner
a substantial equity interest in, or a substantial portion of the assets of, the
Company or any of its Subsidiaries and (ii) "Superior Proposal" shall mean a
bona fide proposal or offer made by a third party to acquire the Company
pursuant to a tender or exchange offer, a merger, consolidation or other
business combination or a sale of all or substantially all of the assets of the
Company and its Subsidiaries on terms which a majority of the members of the
Board of Directors of the Company concludes in their good faith reasonable
judgment to be more favorable to the Company's shareholders than the
transactions contemplated hereby and for which any required financing is
committed or which a majority of such members reasonably concludes is reasonably
capable of being obtained by such third party. Notwithstanding anything else in
this Agreement, including this Section 6.2, to the contrary, the Company and its
Board of Directors shall not be prohibited from taking or disclosing to its
shareholders any position pursuant to Rules 14d-9 and 14e-2 under the Exchange
Act or from making any disclosure to the Company's shareholders if the Company's
Board of Directors concludes in good faith based on the advice of its outside
counsel that it is necessary to do so in order to comply with its fiduciary
duties under applicable law.
SECTION 6.3 Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any
32
provision of any confidentiality or standstill agreement to which the Company or
any of its Subsidiaries is a party (other than any involving Parent, including
the standstill agreement included in the Confidentiality Agreement dated June
18, 1996, between Parent and the Company, which standstill agreement the parties
hereto acknowledge the Company has waived only in respect of the Offer
(including any Offer involving any increase in the Offer Price), the Merger and
the other transactions contemplated hereby), unless the Board of Directors of
the Company concludes in good faith based on the advice of its outside counsel
that it is necessary to do so in order to comply with its fiduciary duties under
applicable law. During such period, the Company agrees to enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreements, including, without limitation, obtaining injunctions to prevent any
breaches of such agreements and to enforce specifically the terms and provisions
thereof in any court of the United States of America or any state thereof having
jurisdiction, unless the Board of Directors of the Company concludes in good
faith based on the advice of its outside counsel that failure to take such
action is necessary in order to comply with its fiduciary duties under
applicable law.
SECTION 6.4 Other Actions. Except as expressly contemplated or
permitted by this Agreement or except as set forth in the Company Letter, the
Company shall not, and shall not permit any of its Subsidiaries to, take any
action that would, or that could reasonably be expected to, result in (i) any of
the representations and warranties of the Company set forth in this Agreement
that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect, or (iii) any of the Offer Conditions not being satisfied
(subject to the Company's right to take actions specifically permitted by
Section 6.2).
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
SECTION 7.1 Shareholder Approval; Preparation of Proxy Statement. (a)
If approval of this Agreement and the Merger by shareholders of the Company (the
"Company Shareholder Approval") is required by law, the Company shall, as soon
as practicable following the consummation of the Offer, duly call, give notice
of, convene and hold a meeting of its shareholders (the "Shareholders Meeting")
for the purpose of obtaining the Company Shareholder Approval. The Shareholders
Meeting shall be held as soon as practicable following the purchase of Shares
pursuant to the Offer. The Company shall, through its Board of Directors,
33
but subject to the fiduciary duties of its Board of Directors under applicable
law as determined by the Board of Directors in good faith based on the advice of
the Company's outside counsel, recommend to its shareholders that the Company
Shareholder Approval be given. Notwithstanding the foregoing, if Sub or any
other Subsidiary of Parent shall acquire ownership of not less than 90% of the
outstanding shares of each class of the Company, the parties shall, at the
request of Parent, take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after the expiration of the Offer
without a Shareholders Meeting in accordance with Section 450.1711 of the MBCA.
(b) If the Company Shareholder Approval is required by law, the
Company shall, as soon as practicable following the consummation of the Offer,
prepare and file a preliminary Proxy Statement with the SEC and shall use its
reasonable best efforts to respond to any comments of the SEC or its staff and
to cause the Proxy Statement to be mailed to the Company's shareholders as
promptly as practicable after responding to all such comments to the
satisfaction of the staff. The Company shall notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Shareholders Meeting there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company promptly shall prepare and mail to its shareholders such
an amendment or supplement. Except as required by law, the Company shall not
mail any Proxy Statement, or any amendment or supplement thereto, to which
Parent reasonably objects without first attempting in good faith to resolve such
objections. Parent shall cooperate with the Company in the preparation of the
Proxy Statement or any amendment or supplement thereto.
(c) Parent agrees to cause all shares of the Company Capital Stock
purchased pursuant to the Offer entitled to vote on the Merger owned by Parent
or any Subsidiary of Parent to be voted in favor of the Company Shareholder
Approval. Parent also agrees that if the transactions contemplated by the Asset
Purchase Agreement have not been consummated prior to consummation of the Offer,
Parent shall take all actions as are reasonably required to consummate such
transactions.
SECTION 7.2 Access to Information. Subject to currently existing
contractual and legal restrictions applicable to the Company, the Company shall,
and shall cause each of its
34
Subsidiaries to, afford to Parent and to the officers, employees, accountants,
counsel, actuaries, financial advisors and other representatives of Parent
reasonable access to, and permit them to make such inspections as they may
reasonably require of, during normal business hours during the period from the
date of this Agreement through the Effective Time, all their respective
properties, books, contracts, commitments and records (including, without
limitation, the work papers of independent accountants and actuaries) and,
during such period, the Company shall, and shall cause each of its Subsidiaries
to, promptly furnish to Parent (i) 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 (ii) all other information
concerning its business, properties and personnel as Parent may reasonably
request; provided, however, that no invasive soil or groundwater tests may be
performed without the prior written consent of the Company, which shall not be
unreasonably withheld. No investigation pursuant to this Section 7.2 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto. All information obtained
by Parent pursuant to this Section 7.2 shall be kept confidential in accordance
with the Confidentiality Agreement dated June 18, 1996, between Parent and the
Company.
SECTION 7.3 Fees and Expenses. (a) Except as provided in this Section
7.3 and Section 7.6, regardless of whether the Merger is consummated, all costs
and expenses incurred by a party hereto in connection with this Agreement and
the transactions contemplated hereby, including, without limitation, the fees
and disbursements of counsel, financial advisors and accountants, shall be paid
by the party incurring such costs and expenses.
(b) The Company shall pay, or cause to be paid, in same day funds by
wire transfer to an account specified by Parent up to $1,750,000 of Expenses (as
hereinafter defined in this Section 7.3) if: (i) Parent or Sub terminates this
Agreement under Section 9.1(d) or (ii) the Company terminates this Agreement
pursuant to Section 9.1(e). If Expenses are payable, or have been paid, under
the preceding sentence and within 365 days after a termination described in such
sentence a Takeover Proposal with a third party is consummated (other than a
Takeover Proposal relating to the sale of all or substantially all of the
Company's transportation products group), the Company shall pay to Parent,
simultaneously with the consummation of such Takeover Proposal, by wire transfer
of same day funds, the additional sum of $9,000,000.
35
"Expenses" shall mean documented out-of-pocket fees and expenses
reasonably incurred or paid by or on behalf of Parent or its Subsidiaries in
connection with the Offer, the Merger or the consummation of any of the
transactions contemplated by this Agreement, including all reasonable fees and
expenses of law firms, commercial banks, investment banking firms, accountants,
experts and consultants to Parent or any of its Subsidiaries.
SECTION 7.4 Options. (a) Prior to the commencement of the Offer, the Board
of Directors of the Company or the Compensation Committee of the Board of
Directors of the Company (the "Committee") shall adopt procedures pursuant to
which each outstanding Company Stock Option, stock appreciation right and other
stock based award (an "Option") which is exercisable immediately prior to the
consummation of the Offer in accordance with the terms of the applicable plan
(collectively, the "Stock Option Plans"), may be exercised or settled by the
holder thereof by the delivery to the Company of a notice of exercise or
acceptance of cash settlement prior to the consummation of the Offer. Upon the
consummation of the Offer, each Option so exercised or settled shall be canceled
and promptly thereafter the Company shall deliver to the holder thereof cash in
an amount equal to (i) the product of (x) the number of shares of Common Stock
subject or related to such Option and (y) the excess, if any, of the Merger
Consideration over the exercise or purchase price per share of Common Stock
subject or related to such Option, minus (ii) all applicable federal, state,
local and other Taxes required to be withheld by the Company.
(b) Prior to the commencement of the Offer, the Board of Directors of
the Company or the Committee shall take action in accordance with the terms of
the Stock Option Plans to cause each Option outstanding immediately following
the consummation of the Offer, whether or not then exercisable, to become fully
exercisable. The Board of Directors of the Company or the Committee shall also
adopt procedures pursuant to which each such Option may be exercised or settled
by the holder thereof by the delivery to the Company of a notice of exercise or
acceptance of cash settlement prior to the Effective Time. At or prior to the
Effective Time, each such Option so exercised or settled shall be canceled and
promptly thereafter the Company shall deliver to the holder thereof cash in an
amount equal to (i) the product of (x) the number of shares of Common Stock
subject or related to such Option and (y) the excess, if any, of the Merger
Consideration over the exercise or purchase price per share of Common Stock
subject or related to such Option minus (ii) all applicable federal, state,
local and other Taxes required to be withheld by the Company.
36
(c) Following the Effective Time, each outstanding Option which has
not theretofore been exercised or settled by the holder thereof shall be
canceled (whether or not such holder has delivered the acknowledgment referred
to in the proviso to this sentence), and promptly thereafter Parent shall
deliver to the holder thereof cash in an amount equal to (i) the product of (x)
the number of shares of Common Stock subject or related to such Option and (y)
the excess, if any, of the Merger Consideration over the exercise or purchase
price per share of Common Stock subject or related to such Option, minus (ii)
all applicable federal, state, local and other Taxes required to be withheld by
the Company; provided, however, that any such payment to a holder of an Option
so canceled shall be conditioned upon the delivery to Parent by such holder of a
receipt in writing acknowledging the receipt by such holder of such payment in
exchange for the cancellation of all Options held by such holder. No further
options shall be granted under any Stock Option Plan after the date of this
Agreement. The Company shall take such actions as may be reasonably requested by
Parent in connection with the cancellation of the Options pursuant to the Merger
and this Agreement.
(d) Prior to the commencement of the Offer, the Board of Directors of
the Company or the Committee shall take action in accordance with the terms of
the Stock Option Plans and pursuant to all other plans and agreements providing
for the award of restricted Common Stock to cause the restrictions on the shares
of restricted Common Stock granted under such plans and agreements to lapse
effective upon the consummation of the Offer and to adopt procedures to enable
all holders thereof to tender such shares of Common Stock pursuant to the terms
of the Offer.
(e) Parent shall provide the Company sufficient funds for the Company
to meet its payment obligations set forth in Sections 7.4(a) and 7.4(b) and,
notwithstanding any provisions of this Agreement to the contrary, the Company
may borrow such funds to the extent they are not provided by Parent pursuant to
this Section 7.4(e).
SECTION 7.5 Public Announcements. Parent and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange.
SECTION 7.6 Real Estate Transfer Tax. Parent and the Company agree
that the Company (or, following the Merger, the
37
Surviving Corporation) shall pay any state or local tax which is attributable to
the transfer of the beneficial ownership of the Company's or its Subsidiaries'
real property, if any (collectively, the "Transfer Taxes"), to Parent and any
penalties or interest with respect to the Transfer Taxes, payable in connection
with the consummation of the Offer and the Merger. The Company agrees to
cooperate with Parent in the filing of any returns with respect to the Transfer
Taxes, including supplying in a timely manner a complete list of all real
property interests held by the Company and its Subsidiaries and any information
with respect to such property that is reasonably necessary to complete such
returns. The portion of the consideration allocable to the real property of the
Company and its Subsidiaries shall be determined by Parent in its reasonable
discretion. The shareholders of the Company shall be deemed to have agreed to
be bound by the allocation established pursuant to this Section 7.6 in the
preparation of any return with respect to the Transfer Taxes.
SECTION 7.7 State Takeover Laws. If any "fair price" or "control
share acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated hereby, Parent and the Company and
their respective Boards of Directors shall use their reasonable best efforts to
grant such approvals and take such actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to minimize the effects of
any such statute or regulation on the transactions contemplated hereby.
SECTION 7.8 Indemnification; Directors and Officers Insurance. From
and after the consummation of the Offer, Parent shall, and agrees to cause the
Company or the Surviving Corporation to, exculpate, indemnify and hold harmless
all past and present officers, directors, employees and agents of the Company
and its Subsidiaries (the "Indemnified Parties") to the same extent such persons
are currently exculpated and indemnified by the Company or any of its
Subsidiaries pursuant to the Company's or any such Subsidiary's Articles of
Incorporation or By-Laws (or similar organizational documents), agreements in
effect as of the date hereof or applicable law for acts or omissions, or alleged
acts or omissions, occurring at or prior to the Effective Time, and Parent
shall, and shall cause the Company or the Surviving Corporation to, honor all
such obligations of the Company (including, if necessary, providing the Company
or the Surviving Corporation sufficient funds), including, without limitation,
obligations to advance expenses to such Indemnified Parties arising pursuant to
the Company's or any such Subsidiary's Articles of Incorporation or By-laws (or
similar organizational documents), agreements in effect as of the date
38
hereof or applicable law; provided, however, that Parent shall not be obligated
to exculpate, indemnify or hold harmless any Indemnified Party who shall become
an employee of the Private Buyer or any of its Subsidiaries in connection with
the Asset Purchase Agreement, or the transactions contemplated thereby, for any
acts or omissions occurring at or prior to the Effective Time in respect of the
business previously conducted by the Company using the TPG Assets (the "Excluded
Matters"); and, provided, further, that this Section 7.8 shall not be deemed to
limit, modify or affect any rights of indemnification, including the advancement
of expenses, under any provisions of the Company's or any of its Subsidiaries'
Articles of Incorporation or By-laws (or similar organizational documents), any
agreements in effect on the date hereof or applicable law with respect to the
Excluded Matters. Parent shall cause the Surviving Corporation to provide, for
an aggregate period of not less than six years from the Effective Time, the
Company's current directors and officers an insurance and indemnification policy
that provides coverage for events occurring prior to the Effective Time (the
"D&O Insurance"), that is no less favorable than the Company's existing policy
or, if substantially equivalent insurance coverage is unavailable, the best
available coverage; provided, however, that the Surviving Corporation shall not
be required to pay an annual premium for the D&O Insurance in excess of 200
percent of the last annual premium paid prior to the date hereof, but in such
case shall purchase as much coverage as possible for such amount.
SECTION 7.9 Notification of Certain Matters. Parent shall give prompt
notice to the Company, and the Company shall give prompt notice to Parent, of:
(i) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would be likely to cause (x) any material representation or
warranty contained in this Agreement that is not qualified as to materiality to
be untrue or inaccurate in any material respect, (y) any material representation
or warranty contained in this Agreement that is qualified as to materiality to
be untrue or inaccurate in any respect or (z) any material covenant, condition
or agreement contained in this Agreement not to be complied with or satisfied;
and (ii) any failure of Parent, Sub or the Company, as the case may be, to
comply with or satisfy any material 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 7.9 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
SECTION 7.10 Board of Directors. Promptly after such time as Sub
acquires Shares pursuant to the Offer, Sub shall be entitled to designate at its
option up to that number of
39
directors, rounded to the nearest whole number, of the Company's Board of
Directors, subject to compliance with Section 14(f) of the Exchange Act, as
shall make the percentage of the Company's directors designated by Sub equal to
the aggregate voting power of the Shares held by Parent or any of its
Subsidiaries (assuming the exercise of all outstanding options to purchase, and
the conversion or exchange of all securities convertible or exchangeable into
shares of the Company Capital Stock); provided, however, that the size of the
Company's Board of Directors shall not be larger than 10 persons; provided,
further, that in the event that Sub's designees are elected to the Board of
Directors of the Company, until the Effective Time, such Board of Directors
shall have, and Parent shall cause the Board to have, at least three directors
who are directors on the date of this Agreement (of which at least two directors
are not officers of the Company) (collectively, the "Independent Directors");
and provided, further that, in such event, if the number of Independent
Directors shall be reduced below three for any reason whatsoever, the remaining
Independent Directors shall designate a person to fill such vacancy who shall be
deemed to be an Independent Director for purposes of this Agreement or, if no
Independent Directors then remain, the other directors of the Company as of the
date of this Agreement shall designate three persons to fill such vacancies who
shall not be officers or affiliates of the Company or any of its Subsidiaries,
or officers or affiliates of Parent or any of its Subsidiaries, and such persons
shall be deemed to be Independent Directors for purposes of this Agreement.
Subject to applicable law, the Company shall take all action requested by Parent
that is reasonably necessary to effect any such election, including mailing to
its shareholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company agrees to make such mailing with the mailing of the Schedule 14D-9
(provided that Sub shall have provided to the Company on a timely basis all
information required to be included in the Information Statement with respect to
Sub's designees). In connection with the foregoing, the Company promptly shall,
at the option of Parent, either increase the size of the Company's Board of
Directors and/or obtain the resignation of such number of its current directors
as is necessary to enable Sub's designees to be elected or appointed to the
Company's Board of Directors as provided above.
SECTION 7.11 Reasonable Best Efforts. Subject to the terms and
provisions of this Agreement and applicable law, each of the Company, Parent and
Sub agrees to use its reasonable best efforts to cause the purchase of Shares
pursuant to the Offer and the consummation of the Merger to occur as soon as
practicable. Without limiting the foregoing, (a) each of the Company, Parent and
Sub agree to use its reasonable best efforts to take, or
40
cause to be taken, all actions necessary to comply promptly with all legal
requirements that may be imposed on itself with respect to the Offer, the Merger
and the transactions contemplated by the Asset Purchase Agreement (which actions
shall include furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
shall promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with the Offer, the Merger and the transactions
contemplated by the Asset Purchase Agreement and (b) each of the Company, Parent
and Sub shall, and shall cause its Subsidiaries to, use its reasonable best
efforts to obtain (and shall cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, Sub, the Company or any of their Subsidiaries in
connection with the Offer, the Merger and the transactions contemplated by the
Asset Purchase Agreement or the taking of any action contemplated thereby or by
this Agreement. Notwithstanding anything to the contrary contained in this
Agreement, (i) the Company shall not be obligated to use its reasonable best
efforts or to take any action pursuant to this Section 7.11 if the Board of
Directors of the Company shall conclude in good faith based on the advice of its
outside counsel that such action is necessary in order to comply with its
fiduciary duties under applicable law, and (ii) in connection with any filing or
submission required or action to be taken by Parent, the Company or any of their
respective Subsidiaries to consummate the Offer, the Merger or the other
transactions contemplated in this Agreement or the Asset Purchase Agreement, the
Company shall not, without Parent's prior written consent, commit to any
divestiture transaction and neither Parent nor any of its Subsidiaries shall be
required to divest or hold separate or otherwise take or commit to take any
action that limits its freedom of action with respect to, or its ability to
retain, the Company or any of the businesses, product lines or assets of Parent
or any of its Subsidiaries or that would have a Material Adverse Effect on
Parent.
SECTION 7.12 Certain Litigation. The Company agrees that it shall not
settle any litigation commenced after the date hereof against the Company or any
of its directors by any shareholder of the Company relating to the Offer, the
Merger, this Agreement or the Asset Purchase Agreement without the prior written
consent of Parent, which shall not be unreasonably withheld.
41
SECTION 7.13 Employee Benefits. Parent shall provide or shall cause
the Surviving Corporation to provide benefits for the employees of the Company
from and after the Effective Time either under the Company Plans or under other
employee benefit plans established by Parent or the Surviving Corporation;
provided, however, that this Section 7.13 shall not be deemed to affect in any
way any rights of the employees of the Company under the Company Plans that are
vested as of the Effective Time.
SECTION 7.14 Employee Stock Ownership Plan and Trust. As soon as
reasonably practicable after the Effective Time, employer contirbutions to the
Employee Stock Plan shall be discontinued and the Employee Stock Plan shall be
merged into another qualified defined contribution plan maintained by Parent or
the Surviving Corporation.
SECTION 7.15 Severance, Employment and Benefit Agreements. Parent
shall timely honor, and following the consummation of the Offer and the Merger
(respectively) shall cause the Company or the Surviving Corporation, as the case
may be, to timely honor (including by providing sufficient funds therefor), in
accordance with their terms, all severance, employment and benefit agreements,
plans and arrangements, including, without limitation, those arrangements
referred to in Item 7.15 of the Company Letter (other than any Company Plans or
other employee benefit plans, which are addressed in Section 7.13), with the
Company's directors, officers and employees that are disclosed in the Company
Letter or the Company Filed SEC Documents.
ARTICLE VIII
CONDITIONS PRECEDENT
--------------------
SECTION 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Company Shareholder Approval. If required by applicable law, the
Company Shareholder Approval shall have been obtained; provided, however,
that Parent and Sub shall vote all of their shares of capital stock of the
Company entitled to vote thereon in favor of the Merger.
(b) No Injunction or Restraint. No statute, rule, regulation,
executive order, decree, temporary
42
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other Governmental Entity
preventing the consummation of the Merger shall be in effect; provided,
however, that each of the parties shall have used its reasonable best
efforts to prevent the entry of any such temporary restraining order,
injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for payment
and paid for Shares pursuant to the Offer; provided, however, that this
condition will be deemed satisfied with respect to the obligations of
Parent or Sub if Sub fails to accept for payment and pay for any Shares
pursuant to the Offer in violation of the terms of this Agreement.
(d) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated.
ARTICLE IX
TERMINATION AND AMENDMENT
-------------------------
SECTION 9.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Shareholder Approval (if required by applicable law):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions set forth in Exhibit A the Offer shall have terminated or
expired in accordance with its terms without Sub having accepted for
payment any Shares pursuant to the Offer or (y) all of the Offer
Conditions have not been satisfied prior to June 30, 1997 or such
later date as the parties may agree to; provided, however, that the
right to terminate this Agreement pursuant to this Section 9.1(b)(i)
shall not be available to any party whose failure to perform any of
its obligations under this Agreement results in the failure of any
such Offer
43
Condition or if the failure of such Offer Condition results from facts
or circumstances that constitute a breach of representation or
warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree or ruling or other action shall
have become final and nonappealable, provided that the party seeking
to terminate this Agreement shall have used its reasonable best
efforts, subject to Section 7.11, to lift or vacate such order, decree
or ruling;
(c) by Parent or Sub prior to the purchase of Shares pursuant to the
Offer in the event of a breach by the Company of any representation,
warranty, covenant or other agreement contained in this Agreement which (i)
would give rise to the failure of a condition set forth in paragraph (d) or
(e) of Exhibit A and (ii) cannot be or has not been cured within 20 days
after the giving of written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph
(c) of Exhibit A to this Agreement;
(e) by the Company if the Board of Directors of the Company
reasonably determines that a Takeover Proposal constitutes a Superior
Proposal and the Board of Directors of the Company concludes in good faith
based on the advice of its outside counsel that termination of this
Agreement is necessary in order to comply with its fiduciary duties under
applicable law; provided, however, that the Company may not terminate this
Agreement pursuant to this Section 9.1(e) unless and until five business
days have elapsed following delivery to Parent of a written notice (a
"Section 9.1(e) Notice") of such conclusion by the Board of Directors of
the Company and during such five business day period the Company has
cooperated fully with Parent, including, without limitation, informing
Parent of the terms and conditions of the Takeover Proposal and the
identity of the Person making the Takeover Proposal, with the intent of
enabling Parent to agree to a modification of the terms and conditions of
this
44
Agreement so that the transactions contemplated hereby may be effected; and
provided, further, that the Company may not terminate this Agreement
pursuant to this Section 9.1(e) unless at the end of such five business day
period the Board of Directors of the Company continues reasonably to
believe its prior conclusion that the Takeover Proposal constitutes a
Superior Proposal and simultaneously with such termination the Company pays
to Parent the Expenses specified under Section 7.3(b);
(f) by the Company, if (i) any of the representations or warranties of
Parent or Sub set forth in this Agreement that are qualified as to
materiality shall not be true and correct in any respect or any such
representations or warranties that are not so qualified shall not be true
and correct in any material respect, or (ii) Parent or Sub shall have
failed to perform in any material respect any obligation or to comply in
any material respect with any agreement or covenant of Parent or Sub to be
performed or complied with by it under this Agreement and, in the case of
(i) or (ii), such untruth or incorrectness or failure cannot be or has not
been cured within 20 days after the giving of written notice to Parent or
Sub, as applicable; or
(g) by the Company, if the Offer has not been timely commenced in
accordance with Section 1.1.
SECTION 9.2 Effect of Termination. In the event of a termination of
this Agreement by either the Company or Parent as provided in Section 9.1, this
Agreement shall forthwith become void and the Offer and the Merger terminated
and abandoned and there shall be no liability or obligation on the part of
Parent, Sub or the Company or their respective officers, directors, employees or
agents, except with respect to the last sentence of Section 1.2(c), Section
4.23, Section 5.6, the last sentence of Section 7.2, Section 7.3, this Section
9.2 and Section 10.7 (which designated Section or sentence shall survive any
termination), and each of the parties hereto hereby releases and waives any
claim that may otherwise exist upon such termination; provided, however, that
nothing herein shall relieve any party for liability for any willful or bad
faith breach hereof.
SECTION 9.3 Amendment and Certain Other Actions. Subject to applicable
law, this Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors at any time before or after
obtaining the Company Shareholder Approval (if required by law), but, after the
45
purchase of Shares pursuant to the Offer no amendment shall be made which
decreases the Merger Consideration and after the Company Shareholder Approval no
amendment shall be made which by law requires further approval by the
shareholders of the Company without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto. Following the election or appointment of the
Sub's designees pursuant to Section 7.10 and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors then in office shall
be required by the Company to (i) amend or terminate this Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
this Agreement, (iii) extend the time for performance of Parent and Sub's
respective obligations under this Agreement or (iv) give or authorize any
consent, approval, authorization or recommendation of the Company or its Board
of Directors required hereunder.
SECTION 9.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed, (i) subject to the
provisions of Section 9.3, extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) subject to the
provisions of Section 9.3, waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii) subject to the provisions of Section 9.3, waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument 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 those rights.
ARTICLE X
GENERAL PROVISIONS
------------------
SECTION 10.1 Non-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, or, in
the case of the Company, shall survive the consummation of the Offer. The
covenants and agreements of the parties hereto and the Surviving Corporation
shall survive the Effective Time without limitation (except for those that, by
their terms, contemplate a shorter survival period).
46
SECTION 10.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, one day
after being delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) 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 Parent or Sub, to
Scotsman Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chairman, President and
Chief Executive Officer
with a copy to:
Sidley & Austin
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq. and
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(b) if to the Company, to
▇▇▇▇▇ Industrial Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chairman and
Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. and
R. ▇▇▇▇ ▇▇▇▇▇▇, Esq.
SECTION 10.3 Interpretation. When a reference is made in this
Agreement to a Section or Exhibit, such reference shall be to a Section or
Exhibit of this Agreement unless otherwise
47
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." As used in this Agreement, the term "subsidiary"
or "Subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person.
As used in this Agreement, "Material Adverse Change" or "Material Adverse
Effect" means, when used in connection with the Company or Parent, as the case
may be, any change or effect (or any development that, insofar as can reasonably
be foreseen, is likely to result in any change or effect) that is materially
adverse to the business, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole or Parent and
its Subsidiaries taken as a whole, as the case may be. As used in this
Agreement, "consummation of the Offer" means the purchase of Shares pursuant to
the Offer. As used in this Agreement, "to the Company's knowledge" (or words of
similar import) and references to the Company's awareness of certain facts mean
or refer to the actual knowledge of a director or executive officer of the
Company.
SECTION 10.4 Counterparts. This Agreement may be executed in
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 10.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, and the Confidentiality Agreement referred to in the last sentence of
Section 7.2, constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof. This Agreement, except for the provisions of
Sections 7.8 and 7.15 (which shall be for the benefit of, and shall be
enforceable by, the described beneficiaries thereto and their heirs, legal
representations, successors and assigns), is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
SECTION 10.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the
48
State of Michigan, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
SECTION 10.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties, except that Sub
may assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect wholly
owned Subsidiary of Parent, but no such assignment shall relieve Sub of any of
its obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
SECTION 10.8 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 so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible.
SECTION 10.9 Enforcement of this Agreement. 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, such remedy being in addition to
any other remedy to which any party is entitled at law or in equity.
49
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
SCOTSMAN INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
Attest:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President-Finance
and Secretary
K ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
Attest:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President-Finance
and Secretary
▇▇▇▇▇ INDUSTRIAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman & Chief
Executive Officer
Attest:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President, General
Counsel and Secretary
50
EXHIBIT A
---------
CONDITIONS OF THE OFFER
-----------------------
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that would constitute
a majority of the outstanding shares of Company Capital Stock at the date of the
expiration of the Offer (assuming the exercise of all options to purchase, and
the conversion or exchange of all securities convertible or exchangeable into,
shares of the Company Capital Stock outstanding at the expiration date of the
Offer) (the "Minimum Condition"), (ii) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated, (iii) the Company and the Private Buyer shall have consummated
the transactions contemplated by the Asset Purchase Agreement or the Private
Buyer shall have waived any conditions to consummate the Asset Purchase
Agreement, agreeing to consummate the transactions contemplated thereby
contemporaneously with or immediately following the consummation of the Offer
and (iv) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer all outstanding shares of ESOP Preferred Stock, unless
the Company shall have called all outstanding shares of ESOP Preferred Stock for
redemption on a date that is not later than one business day after the
consummation of the Offer. Furthermore, notwithstanding any other term of the
Offer or this Agreement, Sub shall not be required to accept for payment or,
subject as aforesaid, to pay for any Shares not theretofore accepted for payment
or paid for, and may terminate the Offer if, at any time on or after the date of
this Agreement and before the acceptance of such Shares for payment or the
payment therefor, any of the following conditions exists (other than as a result
of any action or inaction of Parent or any of its Subsidiaries that constitutes
a breach of this Agreement):
(a) there shall be instituted by any Governmental Entity and pending
as of the expiration date of the Offer any suit, action or proceeding (i)
seeking to prohibit or limit the acquisition by Parent or Sub of
any Shares pursuant to the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of any
of the other transactions contemplated by this Agreement or the Asset
Purchase Agreement, or seeking to obtain from the Company, Parent or Sub
any damages that are material in relation to the Company and its
Subsidiaries taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent or any of their respective
Subsidiaries of any material portion of the business or assets of the
Company and its Subsidiaries, or Parent and its Subsidiaries, or to compel
the Company or Parent to dispose of or hold separate any material portion
of the business or assets of the Company and its Subsidiaries or Parent and
its Subsidiaries, as a result of the Offer, the Merger or any of the other
transactions contemplated by this Agreement, (iii) seeking to impose
limitations on the ability of Parent or Sub to acquire or hold, or exercise
full rights of ownership of, any Shares to be accepted for payment pursuant
to the Offer, including, without limitation, the right to vote such Shares
on all matters properly presented to the shareholders of the Company, or
(iv) prohibiting Parent or any of its Subsidiaries from effectively
controlling any material portion of the business or operations of the
Company or its Subsidiaries provided, however, that, in the case of clauses
(i) through (iv) above, Parent shall have used its reasonable best efforts,
subject to Section 7.11, to resolve or eliminate the same;
(b) as of the expiration date of the Offer, there shall be enacted,
entered, enforced, promulgated or deemed applicable to the Offer or the
Merger by any Governmental Entity any statute, rule, regulation, judgment,
order or injunction, other than the application to the Offer, the Merger or
the transactions contemplated by the Asset Purchase Agreement of applicable
waiting periods under the HSR Act, that would reasonably be expected to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (iv) of paragraph (a) above;
(c) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or Sub its
approval or recommendation of the Offer, the Merger or this
A-2
Agreement, or approved or recommended any Takeover Proposal;
(d) any of the representations and warranties of the Company set forth
in this Agreement shall not be true and correct in any respect, in each
case as if such representations and warranties were made as of such time,
except for (i) failures to be true and correct that would not reasonably be
expected to result in a Material Adverse Effect on the Company and (ii)
failures to comply that are capable of being and are cured within 20 days
after written notice from Parent to the Company of such failure (in which
case Parent shall, and shall cause Sub to, extend the expiration date of
the Offer to two business days following the end of such cure period or, if
earlier, the date of cure, unless the Offer would otherwise not expire
prior thereto);
(e) the Company shall have failed to perform any obligation or to
comply with any agreement or covenant of the Company to be performed or
complied with by it under this Agreement, except for (i) failures to so
perform or comply that would not reasonably be expected to result in a
Material Adverse Effect on the Company and (ii) failures to perform or
comply that are capable of being and are cured within 20 days after written
notice from Parent to the Company of such failure (in which case Parent
shall, and shall cause Sub to, extend the expiration date of the Offer to
two business days following the end of such cure period or, if earlier, the
date of cure, unless the Offer would otherwise not expire prior thereto);
(f) there shall have occurred and be continuing as of the expiration
date of the offer (i) any general suspension of trading in, or limitation
on prices for, securities on a national securities exchange in the United
States of America (excluding any coordinated trading halt triggered solely
as a result of a specified decrease in a market index), (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks
in the United States of America, (iii) any limitation (whether or not
mandatory) by any Governmental Entity on, or other event that materially
adversely affects, the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or
A-3
indirectly involving the United States of America which in any case is
reasonably expected to have a Material Adverse Effect on the Company or to
materially adversely affect Parent's or Sub's ability to complete the Offer
or the Merger or (v) in case of any of the foregoing existing on the date
of this Agreement, material acceleration or worsening thereof which in any
case is reasonably expected to have a Material Adverse Effect on the
Company or to materially adversely affect Parent's or Sub's ability to
complete the Offer or the Merger; or
(g) this Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions, other than the Minimum Conditions, are for
the sole benefit of Parent and Sub and may, subject to the terms of this
Agreement, be waived by Parent and Sub in whole or in part at any time and from
time to time in their sole discretion. The failure by Parent or Sub at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
A-4
