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EXHIBIT (c)(2)
May 6, 1999
To the Persons Identified
on the Signature Page Hereto
c/o Instron Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Reference is hereby made to the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of May 6, 1999, among Kirtland Capital Partners III L.P.,
an Ohio limited partnership ("KCP"), ISN Acquisition Corporation, a
Massachusetts corporation ("MergerCo"), and Instron Corporation, a Massachusetts
corporation (the "Company"). Capitalized terms used and not defined herein shall
have the respective meanings ascribed to them in the Merger Agreement.
1. CONCERNING ROLLOVER. This letter agreement (this "Agreement")
memorializes our mutual understanding and agreement relating to the willingness
of certain members of management of the Company identified on the signature page
hereto and certain of their affiliates (collectively, the "Management
Stockholders") to maintain an equity ownership position in the Company following
the completion of the Merger. To this end, the Management Stockholders hereby
(i) agree that, from and after the date hereof and upon the request of the
Company or KCP, they will take such actions as may be reasonably necessary to
exchange the shares of Common Stock owned by them as reflected on Exhibit A
attached hereto for shares of Series B Stock as reflected on Exhibit A attached
hereto pursuant to customary documentation reasonably acceptable to KCP, the
Company and the Management Stockholders, (ii) consent to the conversion at the
Effective Time of all such shares of Series B Stock into a like number of shares
of Surviving Corporation Common Stock pursuant to customary documentation
reasonably acceptable to KCP, the Company and the Management Stockholders, and
(iii) consent to the conversion at the Effective Time of all Options identified
on Exhibit A attached hereto into the number of options identified on Exhibit A
attached hereto with the exercise price indicated thereon (such converted
options being hereinafter referred to as the "Rollover Options"). It is the
intention of the parties hereto that the rollover of stock and options described
above be structured on a tax-free basis, and the parties agree to use their
respective reasonable best efforts to attempt to give effect to such intentions.
Simultaneously with the execution and delivery hereof, KCP is entering into a
letter agreement with certain other stockholders (the "Other Stockholders") of
the Company providing for their continued participation in the equity ownership
of the Company as set forth therein (the "Other Stockholder Letter"). A fully
executed copy of the Other Stockholder Letter is being delivered to you
simultaneously herewith. KCP hereby agrees that, subject to the satisfaction of
the conditions set forth in the Merger Agreement and at the Effective Time: (i)
it will and will cause its affiliates to provide all of the equity capital
necessary to consummate the Transactions other than the equity capital (a) that
will be provided by the Management Stockholders as described above and (b) that
will be provided by the Other Stockholders pursuant to the Other Stockholder
Letter as in effect on the date hereof, (ii) it will and will cause its
affiliates to provide such equity capital by means of the issuance to KCP and
its affiliates of shares of Surviving Corporation Common Stock, and (iii) the
purchase price for each such share purchased by KCP and its affiliates shall be
$110 payable solely in cash.
2. CERTAIN AGREEMENTS. At the Effective Time, each of the Management
Stockholders and KCP will execute and deliver (and KCP will cause each of its
affiliates who are shareholders of the Company to execute and deliver) the
Stockholders Agreement in the form attached hereto as Exhibit B (the
"Stockholders Agreement"). At the Effective Time, each of the Management
Stockholders will execute and deliver a non-competition agreement in the form
attached hereto as Exhibit C. At the Effective Time, each of the Management
Stockholders (other than ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇) will execute and deliver and KCP
will cause the Company to execute and deliver an amendment to their respective
Executive Severance Agreements in the form attached hereto as Exhibit D. At the
Effective Time, ▇▇. ▇▇▇▇▇▇▇▇▇ will execute and deliver and KCP will cause the
Company to execute and deliver the Deferred Compensation Agreement in the form
attached hereto as Exhibit E.
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At the Effective Time, each of Messrs. McConnell, Andersen, Barrett, Burr,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ will execute and deliver and KCP will cause the Company
to execute and deliver an amendment to their respective Restricted Stock Award
Agreements in the form attached hereto as Exhibit F. At the Effective Time each
of the Management Stockholders, the Other Stockholders and KCP will execute and
deliver (and KCP will cause (i) each of its affiliates who are shareholders of
the Company to execute and deliver and (ii) the Company to execute and deliver)
a registration rights agreement, in customary form, providing "piggyback"
registration rights for the Management Stockholders, subject to the approval of
the underwriters participating in any particular underwritten equity offering.
Notwithstanding the foregoing provisions of this Section 2, the ▇▇▇▇▇▇▇▇ ▇▇▇▇
Trust -- 1965 and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Moulding will only enter into the Stockholders
Agreement.
3. CONCERNING OPTIONS AND RESTRICTED STOCK. At the Effective Time, KCP
shall cause the Company to (i) adopt the Instron Corporation 1999 Stock Option
Plan in the form attached hereto as Exhibit G (the "Plan"), (ii) authorize up to
10% of the aggregate number of shares of Surviving Corporation Common Stock
outstanding on a fully diluted basis immediately following the Effective Time
(excluding any and all warrants issued to any Lender at the Effective Time but
including the Rollover Options and all options issued or issuable under the Plan
at the Effective Time) to be available for issuance thereunder in accordance
with the terms thereof, and (iii) issue options to purchase shares of Surviving
Corporation Common Stock (collectively, the "New Options") equal to 40% of the
number determined pursuant to clause (ii) hereof to the persons and in the
amounts specified on Exhibit H attached hereto, with each such New Option to
have an exercise price of $110 per share and to vest at the rate of 20% per year
or upon a Change of Control (as defined in the Plan). All New Options issued
under the Plan shall be issued in accordance with the terms of the Plan and the
terms of the Incentive Stock Option Agreement or Nonqualified Stock Option
Agreement attached hereto as Exhibit I-1 and I-2 respectively. All New Options
will be "incentive stock options" to the extent permitted by law. All Rollover
Options shall be governed by the terms of the Instron Corporation 1992 Stock
Incentive Plan as amended at the Effective Time as set forth on Exhibit J
attached hereto (such plan as amended being hereinafter referred to as the "1992
Plan") and the agreements governing such options except that, at the Effective
Time, all such agreements shall be amended as set forth on Exhibits K-1 and K-2
attached hereto. Shares of Common Stock that are subject to restrictions on
transfer as reflected on Exhibit A attached hereto shall, from and after the
Effective Time, be governed by the 1992 Plan and the Restricted Stock Award
Agreements, as amended in the manner contemplated hereby.
4. CERTAIN REPRESENTATIONS BY THE MANAGEMENT STOCKHOLDERS. Each Management
Stockholder hereby represents and warrants as follows, severally as to such
Management Stockholder only:
(a) Such Management Stockholder has the legal capacity, power and
authority to enter into and perform all of its respective obligations under
this Agreement. The execution, delivery and performance of this Agreement
by such Management Stockholder will not violate any other agreement to
which such Management Stockholder is a party. This Agreement has been duly
and validly executed and delivered by such Management Stockholder and
constitutes a valid and binding agreement of such Management Stockholder,
enforceable against such Management Stockholder in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws and principles of
equity affecting creditors rights and remedies generally. There is no
beneficiary or holder of a voting trust certificate or other interest in
any trust of which such Management Stockholder is a trustee whose consent
is required for the execution and delivery of this Agreement or the
consummation by such Management Stockholder of the transactions
contemplated hereby, other than where any such consent has been obtained.
(b)(i) Except for any filings under federal and state securities laws
and the filings referred to in Article VII of the Merger Agreement, no
filing with, and no permit, authorization, consent or approval of, any
Governmental Entity is necessary for the execution of this Agreement by
such Management Stockholder and the consummation by such Management
Stockholder of the transactions contemplated hereby and (ii) none of the
execution and delivery of this Agreement by such Management Stockholder,
the consummation by such Management Stockholder of the transactions
contemplated hereby or compliance by such Management Stockholder with any
of the provisions hereof (A) results in a violation or breach of, or
constitutes (with or without notice or lapse of time or both) a default (or
gives rise to any third party right of termination, cancellation, material
modification or acceleration) under, any of the terms, conditions or
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provisions of any note, loan agreement, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which such Management Stockholder
is a party or by which such Management Stockholder or any of its respective
properties or assets may be bound, of (B) violates any order, writ,
injunction, decree, judgment, statute, rule or regulation applicable to
such Management Stockholder or any of its respective properties or assets.
(c) Such Management Stockholder understands and acknowledges that KCP
is entering into, and causing MergerCo to enter into, the Merger Agreement
in reliance upon the execution and delivery of this Agreement by such
Management Stockholder.
(d) Except for the ▇▇▇▇▇▇▇▇ ▇▇▇▇ Trust -- 1965, such Management
Stockholder is an "accredited investor" within the meaning of Regulation D
promulgated under the Securities Act of 1933. KCP acknowledges that the
obligations of the ▇▇▇▇▇▇▇▇ ▇▇▇▇ Trust -- 1965 under Section 1 hereof shall
be subject to such trust's receipt, review and satisfaction with a private
placement memorandum or other documentation necessary to satisfy Regulation
D promulgated under the Securities Act of 1933.
5. CERTAIN REPRESENTATIONS BY KCP. KCP hereby represents and warrants to
the Management Stockholders as follows:
(a) KCP has the power and authority to enter into and perform all of
its obligations under this Agreement. The execution, delivery and
performance of this Agreement by KCP will not violate any other agreement
to which it is a party. This Agreement has been duly and validly executed
and delivered by KCP and constitutes a valid and binding agreement of KCP,
enforceable against KCP in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
and other similar laws and principles of equity affecting creditors rights
and remedies generally.
(b) (i) Except for any filings under federal and state securities laws
and the filings referred to in Article VII of the Merger Agreement, no
filing with, and no permit, authorization, consent or approval of, any
Governmental Entity is necessary for the execution of this Agreement by KCP
and the consummation by KCP of the transactions contemplated hereby and
(ii) none of the execution and delivery of this Agreement by KCP, the
consummation by KCP of the transactions contemplated hereby or compliance
by KCP with any of the provisions hereof (A) conflicts with or results in
any breach of any organizational documents applicable to KCP, (B) results
in a violation or breach of, or constitutes (with or without notice of
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under,
any of the terms, conditions or provisions of any note, loan agreement,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to
which KCP is a party or by which KCP or any of its properties or assets may
be bound, or (C) violates any order, writ, injunction, decree, judgment,
statute, rule or regulation applicable to KCP or any of its properties or
assets.
(c) KCP understands and acknowledges that the Management Stockholders
are entering into this Agreement in reliance upon the execution and
delivery of the Merger Agreement by KCP.
6. FURTHER ASSURANCES. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful action as may be
reasonably necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement,
provided that the foregoing shall not require any party hereto to waive or amend
any of its rights under this Agreement or any of the exhibits hereto.
7. DEBT ARRANGEMENTS. KCP acknowledges that under the proposed terms of the
Stockholders Agreement the Company's ability to repurchase equity of the
Management Stockholders will depend on the terms of the Company's debt
arrangements. KCP agrees that it will negotiate in good faith to obtain
"baskets" under these debt arrangements in form and amounts customary for
leveraged acquisition financing agreements.
8. TERMINATION. This Agreement shall terminate upon the termination of the
Merger Agreement in accordance with its terms or upon the execution and delivery
of the Stockholders Agreement.
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9. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) BINDING AGREEMENT. This Agreement and the obligations hereunder shall
be binding upon the successors and, subject to Section 9(c) below, the assigns
of the parties hereto, including, without limitation, the heirs, guardians,
administrators or successors of the Management Stockholders.
(c) ASSIGNMENT. This Agreement shall not be assigned without the prior
written consent of the other parties.
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by the parties hereto.
(e) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(f) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore in the event
of any such breach the aggrieved party shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity.
(g) REMEDIES CUMULATIVE. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative or exclusive, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(h) NO WAIVER. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect hereof
at law or in equity, or to insist upon compliance by any other party hereto with
its obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver of such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
(i) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to be for
the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(j) CHOICE OF LAW/CONSENT TO JURISDICTION. All disputes, claims or
controversies arising out of this Agreement, or the negotiation, validity or
performance of this Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts without regard to its rules
of conflict of laws. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the sole and exclusive jurisdiction of the
courts of the Commonwealth of Massachusetts and of the United States District
Court for the District of Massachusetts (the "Massachusetts Courts") for any
litigation arising out of or relating to this Agreement, or the negotiation,
validity or performance of this Agreement (and agrees not to commence any
litigation relating thereto except in such courts), waives any objection to the
laying of venue of any such litigation in the Massachusetts Courts and agrees
not to plead or claim in any Massachusetts Court that such litigation brought
therein has been brought in any inconvenient forum. Each of the parties hereto
agrees, (a) to the extent such party is not otherwise subject to service of
process in the Commonwealth of Massachusetts, to appoint and maintain an agent
in the Commonwealth of Massachusetts as such party's agent for acceptance of
legal process,
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and (b) that service of process may also be made on such party by prepaid
certified mail with a proof of mailing receipt validated by the United States
Postal Service constituting evidence of valid service. Service made pursuant to
(a) or (b) above shall have the same legal force and effect as if served upon
such party personally within the Commonwealth of Massachusetts. For purposes of
implementing the parties' agreement to appoint and maintain an agent for service
of process in the Commonwealth of Massachusetts, KCP does hereby appoint CT
Corporation, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as such agent.
(k) DESCRIPTIVE HEADINGS. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(l) COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same Agreement.
(m) NO AGREEMENT UNTIL EXECUTED. Irrespective of negotiations among the
parties or the exchanging of drafts of this Agreement, this Agreement shall not
constitute or be deemed to evidence a contract, agreement, arrangement or
understanding among the parties hereto unless and until (i) the Board of
Directors of the Company has approved, for purposes of Chapter 110F of the
Massachusetts General Laws and any applicable provision of the Company's
articles of organization, the terms of this Agreement, and (ii) this Agreement
is executed by the parties hereto.
(n) ATTORNEY'S FEES. KCP acknowledges that the Company will be responsible
for the reasonable fees and expenses of the Management Stockholders' legal
counsel in connection with the preparation and negotiation of this Agreement and
the agreements contemplated hereby up to an aggregate of $85,000.
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If the foregoing accurately sets forth our mutual understanding and
agreement, kindly sign this Agreement in the space provided below.
Very truly yours,
KIRTLAND CAPITAL PARTNERS III L.P.
By: Kirtland Partners Ltd., its
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Accepted and Agreed this day of
May, 1999:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
THE ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ TRUST -- 1965
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Beneficiary
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. MOULDING
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▇▇▇▇▇▇ ▇. Moulding
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ MOULDING
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Moulding
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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SCHEDULE OF EXHIBITS
Name of Exhibit Exhibit to Schedule 13E-3
--------------- -------------------------
Exhibit A Rollover Amounts
Exhibit B Form of Stockholder Agreement Exhibit (c)(5)
Exhibit C Form of Noncompetition Agreement
Exhibit D Form of Amendment to Executive Severance Agreements
Exhibit E Form of Deferred Compensation Agreement
Exhibit F Form of Amendment to Restricted Stock Award Agreements Exhibit (c)(6)
Exhibit G Form of 1999 Stock Option Plan Exhibit (c)(7)
Exhibit H New Option Grants
Exhibit I-1 Form of Incentive Stock Option Agreement Exhibit (c)(8)
Exhibit I-2 Form of Nonqualified Stock Option Agreement Exhibit (c)(9)
Exhibit J Form of Amendment to Instron Corporation 1992 Stock Incentive Plan Exhibit (c)(10)
Exhibit K-1 Form of Amendment to Nonqualified Stock Option Agreement Exhibit (c)(11)
Exhibit K-2 Form of Amendment to Incentive Stock Option Agreement Exhibit (c)(12)
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EXHIBIT A
SURVIVING
COMMON STOCK CORPORATION OPTIONS
TO BE SERIES B COMMON TO BE ROLLOVER
MANAGEMENT STOCKHOLDER ROLLED OVER(1) STOCK STOCK ROLLED OVER OPTIONS(2)
---------------------- -------------- -------- ----------- ----------- ----------
▇. ▇▇▇▇▇▇▇▇▇............. 97,923 19,585 19,585 0 0
▇. ▇▇▇▇▇▇................ 0 0 0 15,000 3,000
▇. ▇▇▇▇▇▇▇▇.............. 1,335 267 267 16,500 3,300
▇. ▇▇▇▇▇▇▇............... 2,289 458 458 0 0
▇. ▇▇▇▇.................. 1,645 329 329 40,000 8,000
The ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Trust-1965............. 20,000 4,000 4,000 0 0
▇. ▇▇▇▇▇▇▇▇▇▇▇........... 5,310 1,062 1,062 0 0
▇. ▇▇▇▇▇▇▇............... 2,761 552 552 10,000 2,000
▇. ▇▇▇▇▇▇▇▇.............. 11,400 2,280 2,280 0 0
L. Moulding(3)........... 13,547 2,709 2,709 43,500 8,700
▇. ▇▇▇▇▇................. 9,000 1,800 1,800 0 0
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(1) Includes an aggregate of 25,340 restricted shares (▇. ▇▇▇▇▇▇▇▇▇, 12,000; ▇.
▇▇▇▇▇▇▇▇, 1,335; ▇. ▇▇▇▇▇▇▇, 2,289; ▇. ▇▇▇▇, 1,645; ▇. ▇▇▇▇▇▇▇▇▇▇▇, 5,310;
and ▇. ▇▇▇▇▇▇▇, 2,761.
(2) All Rollover Options will be exercisable at 5 times the exercise price under
the surrendered option.
(3) Common Stock held jointly with wife, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
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Exhibit C
CONFIDENTIALITY AND NONCOMPETITION AGREEMENT
THIS CONFIDENTIALITY AND NONCOMPETITION AGREEMENT (this "Agreement") is
made and entered into as of the _____ day of _____________ 1999 by and between
Instron Corporation, a Massachusetts corporation (the "Company"), and
____________________ (the "Executive").
WITNESSETH THAT:
WHEREAS, the respective general partner and Boards of Directors of
Kirtland Capital Partners III L.P., an Ohio limited partnership ("KCP"), ISN
Acquisition Corporation, a Massachusetts corporation ("MergerCo."), and the
Company have approved the merger of MergerCo. with and into the Company in
accordance with the Massachusetts Business Corporation Law (the "Merger"); and
WHEREAS, at the request of KCP, and in order to induce KCP and
MergerCo. to approve and enter into the Merger, the Executive has agreed to
enter into this Agreement.
NOW THEREFORE, in consideration of the premises and $1.00 and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Company and the Executive hereby agree as follows:
1. DEFINITIONS. When used herein, the following terms shall have the
meanings set forth below:
(a) "Subsidiary" means a corporation, company or other entity (i)
more than 50 percent of whose outstanding shares or securities
(representing the right to vote for the election of directors or other
managing authority) are, or (ii) which does not have outstanding shares
or securities (as may be the case in a partnership, joint venture or
unincorporated association), but more than 50 percent of whose
ownership interest representing the right generally to make decisions
for such other entity is, now or hereafter, owned or controlled,
directly or indirectly, by the Company.
(b) "Termination Date" shall be the last day worked by the
Executive for the Company.
2. OPERATION OF AGREEMENT. This Agreement will be effective and binding
immediately upon its execution.
3. CONFIDENTIALITY. The Executive agrees that all trade secrets, customer lists
and other confidential business information of the Company and its
Subsidiaries are the exclusive property of the Company and its Subsidiaries,
and the Executive shall not at any time directly or indirectly reveal or
cause to be revealed to any person or entity such trade secrets, customer
lists and other confidential business information obtained as a result of
the
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Executive's employment or relationship with the Company of any of its
Subsidiaries; provided that the foregoing shall not (i) prevent the
Executive from disclosing any of the foregoing during his employment with
the Company or any of its Subsidiaries as part of his work on behalf of the
Company or any of its Subsidiaries, (ii) apply to any of the foregoing once
it is publicly available through no fault of the Executive or (iii) prevent
the Executive from engaging in any legally required or compelled disclosure,
provided the Executive gives the Company prior notice and a reasonable
opportunity to minimize or contest the applicability of such required or
compelled disclosure.
4. COMPETITIVE ACTIVITY.
(a) The Executive agrees that he will not engage in Competition for so long
as he is employed by the Company or any Subsidiary of the Company and,
notwithstanding the Executive's termination of employment, until the
first anniversary of the Termination Date.
(b) The word "Competition" for the purposes of this Agreement shall mean,
without the written consent of the Board of Directors of the Company:
(i) becoming directly or indirectly involved, as an owner,
principal, employee, officer, director, independent
contractor, representative, stockholder, agent, advisor,
lender or in any other capacity, with any entity that as of
the Termination Date is or intends to become a Direct
Competitor; provided, that, in no event shall ownership of
less than 5% of the outstanding capital stock entitled to
vote for the election of directors of a publicly-traded
corporation, in and of itself, be deemed Competition; and,
provided, further, that if any entity is not a Direct
Competitor at the Termination Date, but during the one year
period after the Termination Date becomes or intends to
become a Direct Competitor, then during such one year period
the Executive shall not engage in those activities that make
or would make such entity a Direct Competitor, or
(ii) soliciting any person who is a customer of one of the
businesses conducted by the Company or one of its
Subsidiaries, or any business in which the Executive has
been engaged on behalf of the Company and its Subsidiaries,
on behalf of any Direct Competitor, or inducing or
attempting to persuade any employee or consultant of the
Company or any of its Subsidiaries to terminate his or her
employment or consulting relationship.
(c) For the purposes of this Agreement, an entity shall become a "Direct
Competitor" when it produces or intends to produce any product which is
or would be in direct competition with any product line (including any
product line then being planned or designed) of the Company or any of
its Subsidiaries at the Termination Date, including, but not limited to
MTS Systems, Inc.
2
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(d) The Executive acknowledges and agrees that the Company's remedy at law
for any breach of the Executive's obligations under Section 3 and 4 of
this Agreement would be inadequate and agrees and consents that
temporary and permanent injunctive relief may be granted in any
proceeding which may be brought to enforce any provision of such
Sections without the necessity of proof of actual damage. With respect
to any provision of this Section 4 finally determined by a court of
competent jurisdiction to be unenforceable, the Executive and the
Company hereby agree that such court shall have jurisdiction to reform
this Agreement or any provision hereof so that it is enforceable to
the maximum extent permitted by law, and the parties agree to abide by
such court's determination.
5. NOTICES. Any notices, requests, demands and other communications, provided
for in or pertinent to this Agreement shall be sufficient if delivered to
the other party hereto by means of a written notice, mailed by United States
registered or certified mail, return receipt requested, postage prepaid to
either the Executive's last known address, or to the Company's principal
executive offices, as the case may be.
6. GOVERNING LAW. The provisions of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of Massachusetts
without giving effect to the principles of conflict laws of such
Commonwealth.
7. AMENDMENT. This Agreement may be amended or canceled by mutual agreement of
the parties in writing without the consent of any other person and, no
person, other than the parties hereto shall have any rights under or
interest in this Agreement or the subject matter hereof.
8. SUCCESSORS AND BINDING AGREEMENT.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company and any successor to the Company, including without
limitation any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of the Company
whether by purchase, merger, consolidation, reorganization or
otherwise (and such successor shall thereafter be deemed the
"Company" for the purposes of this Agreement), but shall not
otherwise be assignable, transferable or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer
or delegate this Agreement or any rights or obligations hereunder
except as expressly provided in Section 8(a) hereof.
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9. VALIDITY. If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances shall not
be affected, and the provision so held to be invalid, unenforceable or
otherwise illegal shall be reformed to the extent (and only to the extent)
necessary to make it enforceable, valid and legal.
10. SURVIVAL. Notwithstanding any provision of this Agreement to the contrary,
the parties' respective rights and obligations under Sections 3 and 4 will
survive any termination or expiration of this Agreement or the termination
of the Executive's employment for any reason whatsoever.
11. TERM. The period during which this Agreement shall be in effect (the
"Term") shall commence as of the date hereof and shall expire as of the
first anniversary of the Executive's Termination Date.
12. PRIOR AGREEMENT. This Agreement supercedes each provision in any prior
agreement between the Company and/or any of its Subsidiaries and the
Executive covering confidentiality and/or noncompetition.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant
to the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, and its corporate seal to be
hereunto affixed and attested by its assistant secretary, all as of the day and
year first above written.
-----------------------------------
Executive
ATTEST: INSTRON CORPORATION
By:
----------------------------------- -----------------------------------
Secretary
[___________________________]
[___________________________]
(Seal)
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Exhibit D
AMENDMENT TO EXECUTIVE SEVERANCE AGREEMENT
WHEREAS, Instron Corporation (the "Company") and ________________ (the
"Executive") entered into an Executive Severance Agreement made as of May 14,
1998 (the "Agreement");
WHEREAS, the respective general partner and Boards of Directors of
Kirtland Capital Partners III L.P., an Ohio limited partnership, ISN Acquisition
Corporation, a Massachusetts corporation ("MergerCo."), and the Company have
approved the merger of MergerCo. into the Company in accordance with the
Massachusetts Business Corporation Law (the "Merger"); and
WHEREAS, the Company and the Executive wish to amend the Agreement
pursuant to Section 14 thereof;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt whereof is hereby acknowledged, the Company and
the Executive agree as follows:
1. Section 3(b)(i) of the Agreement is amended to read
as follows:
(i) failure to maintain the Executive in an
executive position with duties and
responsibilities in the aggregate normally
associated with an executive at the Company
at a vice president level or higher, the
Executive's title is reduced to below a vice
president or, except for the Treasurer of
the Company, the Executive is no longer a
member of the Executive Committee of the
Company;
2. The Company and the Executive agree that the
consummation of the merger of ISN Acquisition Company
into the Company shall constitute a Change in Control
for purposes of the Agreement.
3. A new Section 18 is added to the Agreement to read as
follows:
14
18. TERMINATION. The Executive and the Company agree that
this Agreement shall not apply to any Terminating
Event that occurs after the second anniversary of the
merger of ISN Acquisition Corporation into the
Company, or to any Change in Control that occurs
after such merger.
IN WITNESS WHEREOF, this Amendment has been executed as a sealed
instrument by the Company by its duly authorized officer, and by the Executive,
as of the _____ day of _______________, 1999.
INSTRON CORPORATION
By:
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
--------------------------------------------
Executive
15
Exhibit E
DEFERRED COMPENSATION AGREEMENT
THIS DEFERRED COMPENSATION AGREEMENT is made and entered into as of the
________ day of ________________1999 by and between Instron Corporation, a
Massachusetts corporation (the "Company") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the
"Executive").
WITNESSETH:
WHEREAS, the respective general partner and Boards of Directors of
Kirtland Capital Partners III L.P., an Ohio limited partnership, ISN Acquisition
Corporation, a Massachusetts corporation ("MergerCo.") and the Company, have
approved the merger of MergerCo. with and into the Company in accordance with
the Massachusetts Business Corporation Law (the "Merger"); and
WHEREAS, the Company and the Executive entered into an Executive
Severance Agreement effective as of May 14, 1998 (the "Severance Agreement");
and
WHEREAS, the Company and the Executive wish to provide for the deferral
of certain amounts that will become payable to the Executive following the
Merger, and for the cancellation of the Severance Agreement.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the Company and
the Executive hereby agree as follows:
1. EFFECTIVE DATE. This Agreement shall be effective on the date
hereof and will terminate when the assets in the Account have been distributed
as provided in this Agreement.
2. COMMENCEMENT DATE. The Company shall commence payments to the
Executive from the Account beginning on the earlier of (a) the fifth anniversary
of the date hereof, (b) the date of the Executive's disability, death, or
termination without Cause, or (c) a Change of Control of the Company (as defined
in the Instron Corporation 1999 Stock Option Plan) following the date hereof
(each a "Commencement Date"). For purposes of this Agreement, "Cause" shall
mean:
(i) the continued failure of the Executive to perform substantially
the Executive's duties with the Company or one of its Subsidiaries (other than
any such failure resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to the Executive
by the Board which specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the Executive's
duties,
(ii) the engaging by the Executive in illegal conduct or willful
misconduct, in each case which is materially injurious to the Company,
16
(iii) the Executive's intentional violation of his confidentiality
obligations owed to the Company, or
(iv) the Executive's conviction of, or plea of guilty or nolo
contendere to, a felony involving moral turpitude.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" or "intentional" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that the Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the Company. The
cessation of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than two-thirds of
the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Executive and the
Executive is given a reasonable opportunity, together with counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in subparagraph (i), (ii), (iii) or
(iv) above, and specifying the particulars thereof in detail.
For purposes of this Agreement, a termination for Cause shall only have
the effect of not constituting a Commencement Date and shall not otherwise
affect the right of the Executive to receive distributions from the Account in
accordance with this Agreement upon the occurrence of any other event that does
constitute a Commencement Date for purposes of this Agreement.
3. ACCOUNT. The Company shall establish a bookkeeping deferred
compensation account for the benefit of the Executive (the "Account"). The
balance in the Account shall reflect the amount credited by the Company and
quarterly adjustments thereto for interest earnings.
4. CREDIT TO ACCOUNT. Simultaneously with the execution and
delivery hereof, the Company shall credit to the Account one million two hundred
thousand dollars ($1,200,000).
5. CREDITING OF INTEREST. The Company shall credit interest on
the value of the Account in arrears on the last business day of each quarter at
a rate of interest equal to the so called composite "prime rate" as quoted in
the Eastern Edition of the Wall Street Journal for that day.
6. ADDITIONAL BENEFITS; LIMITATION ON PAYMENTS AND BENEFITS.
(a) The Contribution under Section 4 of this Agreement and the
crediting of interest under Section 5 of this Agreement shall be included in the
sum of payments made by the Company to or for the benefit of the Executive,
under Section 5 of the Severance Agreement and shall be considered a "Severance
Payment" as defined in the Severance Agreement. Sections 5A and 5B of the
Severance Agreement shall apply to the Severance Payment and to this Agreement.
(b) Notwithstanding any provision of this Agreement to the
contrary, if any amount to be paid under this Agreement would be an "Excess
Parachute Payment," within the meaning of the
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17
Internal Revenue Code of 1986, as amended, (the "Code"), or any successor
provision thereto, but for the application of this sentence, then the Company
may propose that the payments to be paid under this Agreement shall be reduced
to the minimum extent necessary so that no portion of any such payment, as so
reduced, constitutes an Excess Parachute Payment. The determination of whether
any such payment under this Agreement is an Excess Parachute Payment shall be
made at the expense of the Company, if requested by the Executive or the
Company, by the Company's independent accountants. If the Executive agrees to
any such reduction proposed by the Company, interest credited pursuant to
Section 5 shall be reduced to the minimum extent necessary so that no portion of
such interest to be paid, if so reduced, constitutes an Excess Parachute
Payment. If the Executive does not agree to such reduction, then the Company
may, at its sole option, accelerate payments due to the Executive under Section
7 to the extent required so that no payment to the Executive under this
Agreement will constitute an Excess Parachute Payment. The fact that the
Executive's right to payments may be reduced or accelerated by reason of the
provisions contained in this Section 6 shall not of itself limit or otherwise
affect any other rights of the Executive other than pursuant to this Agreement.
7. PAYMENTS TO EXECUTIVE. The Executive shall not be entitled to
receive from the Company any amounts credited to the Account until a
Commencement Date. If the Commencement Date results from a Change of Control,
the Company shall pay to the Executive the full balance of the Account within 7
days after such Change of Control. If the Commencement Date is the result of the
Executive's disability, death or termination without Cause, the Company shall
pay to the Executive or his beneficiary the amounts credited to the Account in
five annual installments beginning on the first day of the month following the
Commencement Date caused by such event, as set forth in the schedule below. If a
Commencement Date has not occurred prior to the fifth anniversary of the date
hereof, the Company shall pay to the Executive or his beneficiary the amounts
credited to the Account in five annual installments beginning on the first day
of the month following such Commencement Date, as set forth in the schedule
below.
Percentage of Account to
Installment Schedule Be Paid to The Executive
-------------------- ------------------------
First Annual Installment 20%
Second Annual Installment 25%
Third Annual Installment 33 1/3%
Fourth Annual Installment 50%
Fifth Annual Installment 100%
8. DEATH. If the Executive dies before the balance in the Account has
been paid to him, the balance of the Account shall be paid to the Executive's
beneficiary according to the schedule set forth in Section 7. The Executive's
beneficiary shall be the person or persons designated by the Executive to
receive his benefits under this Agreement on a form provided by the Company. If
the
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Executive fails to designate a beneficiary or designates a beneficiary who fails
to survive him, the Executive's beneficiary shall be his estate.
9. ACCOUNT PAYABLE FROM GENERAL ASSETS. All payments under this
Agreement shall be paid by the Company out of its general assets. The
Executive's right to receive payments under this Agreement shall be no greater
than that of an unsecured general creditor of the Company.
10. NONASSIGNMENT OF BENEFITS. No amount payable under this
Agreement may be assigned, transferred, encumbered or subject to any legal
process for the payment of any claim against the Executive or his beneficiary.
11. AMENDMENT AND TERMINATION. This Agreement may be amended from
time to time or terminated at any time by a writing signed by both parties
hereto which makes specific reference to this Agreement.
12. CANCELLATION AND TERMINATION OF SEVERANCE AGREEMENT. Except for
Section 5A and 5B of the Severance Agreement, the Severance Agreement shall be
canceled and terminated on the closing date of the Merger, and, from after the
date hereof, the Company shall have no obligation to the Executive or any other
person under the Severance Agreement, except that Section 5A and 5B thereof, as
modified by Section 6 of this Agreement, shall remain in full force and effect.
13. NOT A CONTRACT OF EMPLOYMENT. Nothing contained in this Agreement
shall be construed as a contract of employment between the Company and the
Executive, as a right of the Executive to be continued in the employment of the
Company, or as a limitation of the right of the Company to discharge the
Executive, with or without Cause.
14. WITHHOLDING OF TAXES. The Company will withhold to the extent
required by law all applicable income and other taxes from amounts accrued or
paid under this Agreement.
15. REFERENCES TO "CODE". References herein to the "Code" shall
mean the Internal Revenue Code of 1986, as amended from time to time.
16. GOVERNING LAW. Except to the extent preempted by federal law, and
without regard to conflict of laws principles, the laws of the Commonwealth of
Massachusetts shall govern this Agreement in all respects, whether as to its
validity, construction, capacity, performance or otherwise.
17. AGREEMENT BINDING ON SUCCESSORS. This Agreement shall be binding
upon the successors and assigns of the parties hereto.
18. NO FUNDING REQUIRED. The Executive acknowledges that the Company
shall have no obligation to set aside any assets to fund its obligations under
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
INSTRON CORPORATION
By: ________________________________________
[______________________________________]
[______________________________________]
EXECUTIVE:
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Exhibit H
NEW OPTIONS GRANTS(1)
▇. ▇▇▇▇▇▇▇▇▇ 9.99%
▇. ▇▇▇▇▇▇ 3.33%
▇. ▇▇▇▇▇▇▇▇ 3.33%
▇. ▇▇▇▇▇▇▇ 3.33%
▇. ▇▇▇▇ 3.33%
▇. ▇▇▇▇▇▇▇▇▇▇▇ 3.33%
▇. ▇▇▇▇▇▇▇ 3.33%
▇. ▇▇▇▇▇▇▇▇ 3.33%
L. Moulding 3.33%
▇. ▇▇▇▇▇ 3.33%
-----
Total 39.96%
=====
------------
(1) Expressed as percentages of the total 10% option pool. Amounts shown are
rounded.