AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 11, 1998
BY AND BETWEEN
MHD ACQUISITION CORP.
AND
PORTEC, INC.
TABLE OF CONTENTS
ARTICLE 1 THE MERGER . . . . . . . . . . . . . . . . . 1
SECTION 1.1 The Merger . . . . . . . . . . . . 1
SECTION 1.2 Closing . . . . . . . . . . . . . . 1
SECTION 1.3 Effective Time . . . . . . . . . . 1
SECTION 1.4 Certificate of Incorporation . . . 2
SECTION 1.5 By-Laws . . . . . . . . . . . . . . 2
SECTION 1.6 Directors . . . . . . . . . . . . . 2
SECTION 1.7 Officers . . . . . . . . . . . . . 2
SECTION 1.8 Effect of Merger on Acquiror
Capital Stock . . . . . . . . . . . 2
SECTION 1.9 Conversion of Common Shares . . . . 2
1.9.1 Outstanding Common Shares . . . . . 2
1.9.2 Treasury Shares . . . . . . . . . . 2
SECTION 1.10 Exchange of Certificates and
Related Matters . . . . . . . . . . 3
1.10.1 Paying Agent . . . . . . . . . . . 3
1.10.2 Exchange Procedures . . . . . . . . 3
1.10.3 Letter of Transmittal . . . . . . . 3
1.10.4 No Further Ownership Rights
in Shares . . . . . . . . . . . . . 4
1.10.5 Termination of Payment Fund . . . . 4
1.10.6 No Liability . . . . . . . . . . . 4
SECTION 1.11 Stock Options. . . . . . . . . . . 4
SECTION 1.12 Dissenting Shares . . . . . . . . . 5
SECTION 1.13 Further Assurances . . . . . . . . 5
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 6
SECTION 2.1 Organization, Standing and
Corporate Power . . . . . . . . . . 6
SECTION 2.2 Capital Structure . . . . . . . . . 6
SECTION 2.3 Subsidiaries . . . . . . . . . . . 6
SECTION 2.4 Authority; Noncontravention . . . . 7
SECTION 2.5 SEC Documents . . . . . . . . . . . 8
SECTION 2.6 Absence of Certain Changes or
Events . . . . . . . . . . . . . . 9
SECTION 2.7 Absence of Undisclosed
Liabilities . . . . . . . . . . . 10
SECTION 2.8 Benefit Plans . . . . . . . . . . 10
SECTION 2.9 Taxes . . . . . . . . . . . . . . 12
SECTION 2.10 Compliance with Applicable Laws . 13
SECTION 2.11 Opinion of Financial Advisor . . 13
SECTION 2.12 Brokers . . . . . . . . . . . . . 13
SECTION 2.13 Environmental . . . . . . . . . . 13
SECTION 2.14 Litigation . . . . . . . . . . . 15
SECTION 2.15 Labor Relations . . . . . . . . . 15
SECTION 2.16 Contracts . . . . . . . . . . . . 16
SECTION 2.17 Intellectual Property. . . . . . 16
SECTION 2.18 Real Estate . . . . . . . . . . . 16
SECTION 2.19 Voting Requirements . . . . . . . 17
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF ACQUIROR 17
SECTION 3.1 Organization, Standing and
Corporate Power . . . . . . . . . 17
SECTION 3.2 Authority; Noncontravention . . . 17
SECTION 3.3 Financing . . . . . . . . . . . . 18
SECTION 3.4 Brokers . . . . . . . . . . . . . 18
ARTICLE 4 ADDITIONAL AGREEMENTS . . . . . . . . . . . 18
SECTION 4.1 Preparation of Proxy Statement . 18
4.1.1 Proxy Statement . . . . . . . . . 18
4.1.2 Company Information . . . . . . . 19
4.1.3 Acquiror Information . . . . . . 19
SECTION 4.2 Meeting of Stockholders . . . . . 19
SECTION 4.3 Access to Information;
Confidentiality . . . . . . . . . 19
SECTION 4.4 Reasonable Efforts . . . . . . . 20
SECTION 4.5 Public Announcements . . . . . . 20
SECTION 4.6 Acquisition Proposals . . . . . . 20
SECTION 4.7 Fiduciary Duties . . . . . . . . 21
SECTION 4.8 Filings; Other Action . . . . . . 22
SECTION 4.9 Indemnification . . . . . . . . . 22
SECTION 4.10 Failure to Close . . . . . . . . 23
SECTION 4.11 Financing Commitments . . . . . . 23
ARTICLE 5 COVENANTS RELATING TO CONDUCT OF BUSINESS
PRIOR TO MERGER . . . . . . . . . . . . . . . . 23
SECTION 5.1 Conduct of Business by
the Company . . . . . . . . . . . 23
SECTION 5.2 Management of the Company
and Subsidiaries . . . . . . . . 25
SECTION 5.3 Conduct of Business by Acquiror . 26
SECTION 5.4 Other Actions . . . . . . . . . . 26
SECTION 5.5 Notification . . . . . . . . . . 26
ARTICLE 6 CONDITIONS PRECEDENT . . . . . . . . . . . 26
SECTION 6.1 Conditions to Each Party's
Obligation To Effect the Merger . 26
6.1.1 Stockholder Approval . . . . . . 26
6.1.2 Governmental and Regulatory
Consents . . . . . . . . . . . . 26
6.1.3 HSR Act . . . . . . . . . . . . . 27
6.1.4 No Proceedings . . . . . . . . . 27
6.1.5 Financing . . . . . . . . . . . . 27
SECTION 6.2 Conditions to Obligations
of Acquiror . . . . . . . . . . . 27
6.2.1 Representations and Warranties . 27
6.2.2 Performance of Obligations of
the Company . . . . . . . . . . . 27
6.2.3 Third Party Approvals . . . . . . 27
6.2.4 No Material Adverse Effect . . . 27
SECTION 6.3 Conditions to Obligation of
the Company . . . . . . . . . . . 27
6.3.1 Representations and Warranties . 27
6.3.2 Performance of Obligations
of Acquiror . . . . . . . . . . . 28
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER . . . . . 28
SECTION 7.1 Termination . . . . . . . . . . . 28
SECTION 7.2 Effect of Termination . . . . . . 30
SECTION 7.3 Amendment . . . . . . . . . . . . 31
SECTION 7.4 Extension; Waiver . . . . . . . . 31
SECTION 7.5 Procedure for Termination,
Amendment, Extension or Waiver . 31
ARTICLE 8 SURVIVAL OF PROVISIONS . . . . . . . . . . 32
SECTION 8.1 Survival . . . . . . . . . . . . 32
ARTICLE 9 NOTICES . . . . . . . . . . . . . . . . . . 32
SECTION 9.1 Notices . . . . . . . . . . . . . 32
ARTICLE 10 MISCELLANEOUS . . . . . . . . . . . . . . 33
SECTION 10.1 Entire Agreement . . . . . . . . 33
SECTION 10.2 Expenses . . . . . . . . . . . . 34
SECTION 10.3 Counterparts . . . . . . . . . . 34
SECTION 10.4 No Third Party Beneficiary . . . 34
SECTION 10.5 Governing Law . . . . . . . . . . 34
SECTION 10.6 Assignment; Binding Effect . . . 34
SECTION 10.7 Disclosure Schedule . . . . . . . 34
SECTION 10.8 Enforcement of this Agreement . . 35
SECTION 10.9 Headings, Gender, etc . . . . . . 35
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement")
is made and entered into as of March 11, 1998 by and
between MHD Acquisition Corp., a Delaware corporation
("Acquiror"), and Portec, Inc., a Delaware corporation
(the "Company").
PREAMBLE
WHEREAS, the respective Boards of Directors of
Acquiror and the Company have determined that the Merger
(as defined in Section 1.1) is in the best interests of
their respective stockholders and have approved the
Merger, upon the terms and subject to the conditions set
forth herein;
WHEREAS, Acquiror and the Company desire to make
certain representations, warranties, covenants and
agreements in connection with such Merger; and
NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth in this Agreement, and
for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1 The Merger. Subject to the terms and
conditions of this Agreement, at the Effective Time (as
defined in Section 1.3), Acquiror shall be merged with
and into the Company (the "Merger"), in accordance with
the Delaware General Corporation Law (the "Delaware
Code"), and the separate corporate existence of Acquiror
shall cease and the Company shall continue as the
surviving corporation under the laws of the State of
Delaware (as such, the "Surviving Corporation") with all
the rights, privileges, immunities and powers, and
subject to all the duties and liabilities, of a
corporation organized under the Delaware Code. The Merger
shall have the effects set forth in the Delaware Code.
SECTION 1.2 Closing. Unless this Agreement shall
have been terminated and the transactions herein
contemplated shall have been abandoned pursuant to
Section 7.1, and subject to the satisfaction or waiver of
the conditions set forth in Article 6, the closing of the
Merger (the "Closing") will take place at 9:00 a.m. on
the first business day following the date on which the
last of the conditions set forth in Section 6.1 shall be
fulfilled or waived in accordance with this Agreement
(the "Closing Date"), at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇, 7200 Sears Tower, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another date, time or place is
agreed to in writing by the parties hereto.
SECTION 1.3 Effective Time. The parties hereto will
file with the Secretary of State of the State of Delaware
(the "Delaware Secretary of State") on the date of the
Closing (or on such other date as Acquiror and the
Company may agree) a certificate of merger or other
appropriate documents, mutually satisfactory in form and
substance to Acquiror and the Company and executed in
accordance with the relevant provisions of the Delaware
Code, and make all other filings or recordings required
under the Delaware Code in connection with the Merger.
The Merger shall become effective upon the filing of the
certificate of merger with the Delaware Secretary of
State, or at such later time as is specified in the
certificate of merger (the "Effective Time").
SECTION 1.4 Certificate of Incorporation. At the
Effective Time, the Certificate of Incorporation of the
Company shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended in
accordance with its terms and as provided by applicable
law.
SECTION 1.5 By-Laws. The By-Laws of Acquiror, as in
effect immediately prior to the Effective Time, shall be
the By-Laws of the Surviving Corporation until thereafter
amended as provided by law, the By-Laws or the
Certificate of Incorporation of the Surviving
Corporation.
SECTION 1.6 Directors. The directors of Acquiror at
the Effective Time shall be the directors of the
Surviving Corporation and will hold office from the
Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided
in the Certificate of Incorporation or By-Laws of the
Surviving Corporation, or as otherwise provided by law.
SECTION 1.7 Officers. The officers of Acquiror at
the Effective Time shall be the officers of the Surviving
Corporation and will hold office from the Effective Time
until their respective successors are duly elected or
appointed and qualify in the manner provided in the
Certificate of Incorporation or By-Laws of the Surviving
Corporation, or as otherwise provided by law.
SECTION 1.8 Effect of Merger on Acquiror Capital
Stock. Each share of capital stock of Acquiror issued and
outstanding immediately prior to the Effective Time shall
be converted into one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
SECTION 1.9 Conversion of Common Shares.
1.9.1 Outstanding Common Shares. Subject to
the other provisions of this Section 1.9, each share
of common stock, $1.00 par value, of the Company
(the "Common Shares") issued and outstanding
immediately prior to the Effective Time (other than
shares held as treasury shares by the Company and
Dissenting Shares (as defined in Section 1.12))
shall, by virtue of the Merger and without any
action on the part of the holder thereof, be
converted into the right to receive $16.00 in cash,
without interest (the "Merger Consideration").
1.9.2 Treasury Shares. Each Common Share
issued and outstanding immediately prior to the
Effective Time which is then held as a treasury
share by the Company immediately prior to the
Effective Time shall, by virtue of the Merger and
without any action on the part of the Company, be
cancelled and retired and cease to exist, without
any conversion thereof.
SECTION 1.10 Exchange of Certificates and Related
Matters.
1.10.1 Paying Agent. At the Effective Time,
Acquiror shall cause the Surviving Corporation to
deposit with a paying agent appointed by the Company
and reasonably acceptable to Acquiror (the "Paying
Agent"), for the benefit of the holders of Common
Shares, cash in an aggregate amount equal to the
aggregate Merger Consideration (such amount being
sometimes hereinafter referred to as the "Payment
Fund").
1.10.2 Exchange Procedures. Upon surrender to
the Paying Agent for cancellation of a certificate
which immediately prior to the Effective Time
represented Common Shares, together with a letter of
transmittal and such other customary documents as
may be required by the instructions to the letter of
transmittal (collectively, the "Certificate") and
acceptance thereof by the Paying Agent, the holder
of such Certificate shall be entitled to receive in
exchange therefor the amount of cash into which the
number of Common Shares previously represented by
such Certificate shall have been converted pursuant
to Section 1.9.1. The Paying Agent shall accept such
Certificate upon compliance with such reasonable
terms and conditions as the Paying Agent may impose
to effect an orderly exchange thereof in accordance
with normal exchange practices. If the Merger
Consideration (or any portion thereof) is to be
delivered to any person other than the person in
whose name the Certificate representing Common
Shares surrendered in exchange therefor is
registered on the record books of the Company, it
shall be a condition to such exchange that the
Certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer
and that the person requesting such exchange shall
pay to the Paying Agent any transfer or other taxes
required by reason of the payment of such
consideration to a person other than the registered
holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent
that such tax has been paid or is not applicable.
After the Effective Time, there shall be no further
transfer on the records of the Company or its
transfer agent of any Certificate representing
Common Shares and if any such Certificate is
presented to the Company for transfer, it shall be
cancelled against delivery of the Merger
Consideration as hereinabove provided. Until
surrendered as contemplated by this Section 1.10.2,
each Certificate representing Common Shares (other
than a Certificate representing Common Shares to be
cancelled in accordance with Section 1.9.2), shall
be deemed at any time after the Effective Time to
represent only the right to receive upon such
surrender the Merger Consideration, without any
interest thereon.
1.10.3 Letter of Transmittal. Promptly after
the Effective Time (but in no event more than five
business days thereafter), the Surviving Corporation
shall require the Paying Agent to mail to each
record holder of Certificates that immediately prior
to the Effective Time represented Common Shares
which have been converted pursuant to Section 1.9, a
letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and
title shall pass, only upon proper delivery of
Certificates representing Common Shares to the
Paying Agent and shall be in such form and have such
provisions as the Surviving Corporation reasonably
may specify) and instructions for use in
surrendering such Certificates and receiving the
Merger Consideration to which such holder shall be
entitled therefor pursuant to Section 1.9. The
Surviving Corporation also shall require the Paying
Agent to have such letter of transmittal and
instructions available at its offices immediately
after the Effective Date in order to accommodate
record holders of Certificates desiring to receive
the Merger Consideration at the earliest possible
date.
1.10.4 No Further Ownership Rights in Shares.
The Merger Consideration paid upon the surrender for
exchange of Certificates representing Common Shares
in accordance with the terms of this Article I shall
be deemed to have been issued and paid in full
satisfaction of all rights pertaining to the Common
Shares theretofore represented by such Certificates,
subject, however, to the Surviving Corporation's
obligation (if any) to pay any dividends or make any
other distributions with a record date prior to the
Effective Time which may have been declared by the
Company on such Common Shares in accordance with the
terms of this Agreement or prior to the date of this
Agreement and which remain unpaid at the Effective
Time.
1.10.5 Termination of Payment Fund. Any
portion of the Payment Fund which remains
undistributed to the holders of the Certificates
representing Common Shares for 120 days after the
Effective Time shall be delivered to Acquiror, upon
demand, and any holders of Common Shares who have
not theretofore complied with this Article I shall
thereafter look only to Acquiror and only as general
creditors thereof for payment, without interest, of
their claim for any Merger Consideration with
respect to their Common Shares.
1.10.6 No Liability. None of Acquiror, the
Surviving Corporation or the Paying Agent shall be
liable to any person in respect of any cash, shares,
dividends or distributions payable from the Payment
Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar
law. If any Certificates representing Common Shares
shall not have been surrendered prior to seven years
after the Effective Time (or immediately prior to
such earlier date on which any Merger Consideration
in respect of such Certificate would otherwise
escheat to or become the property of any
Governmental Entity (as defined in Section 2.4)),
any such cash, shares, dividends or distributions
payable in respect of such Certificate shall, to the
extent permitted by applicable law, become the
property of the Surviving Corporation free and clear
of all claims or interest of any person previously
entitled thereto.
SECTION 1.11 Stock Options. Immediately prior to
the Effective Time, each outstanding option to purchase
Common Shares (each, a "Stock Option") granted under the
1988 Portec, Inc. Employees' Stock Benefit Plan (the
"Plan") or pursuant to any other stock option plan or
agreement entered into by the Company with any employee
or director of the Company or any Subsidiary (as defined
in Section 2.3) thereof, whether or not then vested or
exercisable, shall become vested, exercisable and
cancelled, and each holder of a Stock Option shall be
entitled to receive as soon as practicable thereafter
from the Company in consideration for the cancellation of
such Stock Option an amount in cash (less applicable
withholding taxes) equal to the product of (i) the number
of Common Shares previously subject to such Stock Option
multiplied by (ii) the excess, if any, of the Merger
Consideration over the exercise price per Common Share
previously subject to such Stock Option.
SECTION 1.12 Dissenting Shares. Notwithstanding
anything in this Agreement to the contrary, the Common
Shares outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of
the Merger or consented thereto in writing and who has
demanded properly in writing appraisal for such Common
Shares in accordance with Section 262 of the Delaware
Code and who shall not have withdrawn such demand or
otherwise have forfeited appraisal rights shall not be
converted into or represent the right to receive the
Merger Consideration ("Dissenting Shares"). Such
stockholders shall be entitled to receive payment of the
appraised value of such Common Shares held by them in
accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders
who shall have failed to perfect or who effectively shall
have withdrawn or lost their rights to appraisal of such
Common Shares held by them under such Section 262 shall
thereupon be deemed to have been converted into and to
have become exchangeable, as of the Effective Time, for
the right to receive, without any interest thereon, the
Merger Consideration, upon surrender, in the manner
provided in Section 1.10.2, of the Certificate or
Certificates that formerly evidenced such Common Shares.
The Company shall give Acquiror prompt notice of any
demands for appraisal received by the Company,
withdrawals of such demands, and any other instruments
served pursuant to Delaware law and received by the
Company, and Acquiror shall have the right to participate
in all negotiations and proceedings with respect to such
demands. Prior to the Effective Time, the Company shall
not, except with the prior written consent of Acquiror,
make any payment with respect to any demands for
appraisal, or settle or offer to settle, any such
demands.
SECTION 1.13 Further Assurances. If, at any time
after the Effective Time, the Surviving Corporation shall
consider or be advised that any deeds, bills of sale,
assignments or assurances or any other acts or things are
necessary, desirable or proper (i) to vest, perfect or
confirm, of record or otherwise, in the Surviving
Corporation its right, title and interest in, to or under
any of the rights, privileges, powers, franchises,
properties or assets of either of the Company or
Acquiror, or (ii) otherwise to carry out the purposes of
this Agreement, the Surviving Corporation and its proper
officers and directors or their designees shall be
authorized to execute and deliver, in the name and on
behalf of either the Company or Acquiror, all such deeds,
bills of sale, assignments and assurances and do, in the
name and on behalf of such corporations, all such other
acts and things as may be necessary, desirable or proper
to vest, perfect or confirm the Surviving Corporation's
right, title and interest in, to and under any of the
rights, privileges, powers, franchises, properties or
assets of such corporations and otherwise to carry out
the purposes of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to
Acquiror, except as set forth in the written disclosure
schedule delivered on or prior to the date hereof by the
Company (the "Disclosure Schedule") as follows:
SECTION 2.1 Organization, Standing and Corporate
Power. The Company is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Delaware and has the requisite corporate
power and authority to carry on its business as now being
conducted. The Company is duly qualified to do business
and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such
qualification necessary, except where the failure to be
so qualified would not, individually or in the aggregate,
have a Material Adverse Effect. As used in this
Agreement, the term "Material Adverse Effect" means with
respect to the Company a material adverse effect on the
business, assets, properties, liabilities, results of
operations or financial condition of the Company and its
Subsidiaries (as defined in Section 2.3) taken as a
whole. The Company has delivered to Acquiror complete and
correct copies of its Certificate of Incorporation and
By-Laws, as amended to the date of this Agreement.
SECTION 2.2 Capital Structure. The authorized
capital stock of the Company consists of 10,000,000
Common Shares and 1,000,000 shares of preferred stock,
without par value. At the close of business on March 10,
1998, (i) 4,449,601 Common Shares were issued and
outstanding; (ii) no Common Shares were held as treasury
stock; (iii) 719,657 Common Shares were reserved for
issuance upon the exercise of Stock Options; and (iv) no
shares of preferred stock were issued or outstanding.
All outstanding shares of capital stock of the Company
are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. No
bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on
any matters on which the stockholders of the Company may
vote are issued or outstanding. Section 2.2 of the
Disclosure Schedule sets forth the following information
with respect to each Stock Option outstanding on the date
hereof, (a) the name of the recipient, (b) the number of
Common Shares subject to such Stock Option, and (c) the
applicable exercise price for each Stock Option. Except
as set forth above or in Section 2.2 of the Disclosure
Schedule, the Company does not have any outstanding
option, warrant, subscription or other right, agreement
or commitment which either obligates the Company to
issue, sell or transfer, repurchase, redeem or otherwise
acquire or vote any shares of capital stock of the
Company, or which restricts the transfer of Common
Shares.
SECTION 2.3 Subsidiaries. (i) Section 2.3(i) of the
Disclosure Schedule sets forth the name of each
Subsidiary (as defined below) of the Company and the
state or jurisdiction of its incorporation. Each
Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate
power and authority and all necessary government
approvals to own, lease and operate its properties and to
carry on its business as now being conducted, except
where the failure to be so organized, existing and in
good standing or to have such power and authority or
necessary governmental approvals would not, individually
or in the aggregate, have a Material Adverse Effect. Each
Subsidiary is duly qualified or licensed and in good
standing to do business 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 has not had and would not, individually or
in the aggregate, have a Material Adverse Effect. As
used herein, "Subsidiary" means any corporation,
partnership, joint venture or other legal entity and of
which the Company (either alone or through or together
with any other Subsidiary), owns, directly or indirectly,
50% or more of the capital stock or other equity
interests the holders of which are generally entitled to
vote with respect to matters to be voted on in such
corporation, partnership, joint venture or other legal
entity. Except as disclosed in the Filed SEC Documents
(as herein defined), the Company and its Subsidiaries are
not subject to any material joint venture, joint
operating or similar arrangement or any material
shareholders agreement relating thereto.
(ii) Section 2.3(ii) of the Disclosure Schedule sets
forth, as to each Subsidiary, its authorized capital
stock and the number of its issued and outstanding shares
of capital stock. The Company is, directly or indirectly,
the record and beneficial owner of all of the outstanding
shares of capital stock of each of the Subsidiaries, and
no capital stock of any Subsidiary is or may become
required to be issued by reason of any options, warrants,
rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights
convertible into or exchangeable or exercisable for,
shares of any capital stock of any Subsidiary, and there
are no contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or
may be bound to issue, redeem, purchase or sell
additional shares of capital stock of any Subsidiary or
securities convertible into or exchangeable or
exercisable for any such shares. All of such shares so
owned by the Company are validly issued, fully paid and
nonassessable and are owned by it or by another wholly-
owned Subsidiary thereof free and clear of all liens,
claims, encumbrances, restraints on alienation, or any
other restrictions with respect to the transferability or
assignability thereof (other than restrictions on
transfer imposed by federal or state securities laws).
SECTION 2.4 Authority; Noncontravention. The
Company has the requisite corporate power and authority
to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this
Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the
part of the Company, subject, in the case of the Merger,
to the approval of its stockholders as set forth in
Section 4.2. The Board of Directors of the Company has
determined that the Merger is advisable and fair to and
in the best interests of the stockholders of the Company
and has approved (and has resolved to recommend to
stockholders for approval) the Merger and this Agreement.
This Agreement has been duly executed and delivered by
the Company and, assuming this Agreement has been duly
executed and delivered by Acquiror, constitutes a valid
and binding obligation of the Company, enforceable
against the Company in accordance with its terms except
that the enforcement thereof may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to
creditor's rights generally and (b) general principles of
equity (regardless of whether enforceability is
considered in a proceeding at law or in equity). Except
as disclosed in Section 2.4 of the Disclosure Schedule,
the execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated by this
Agreement and compliance with the provisions hereof will
not, (i) conflict with or violate any of the provisions
of the Certificate of Incorporation or By-Laws of the
Company, (ii) subject to the governmental filings and
other matters referred to in the following sentence,
conflict with, result in a breach of or default (with or
without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material
benefit under, or require the consent of any person
under, any loan agreement, note, indenture or other
agreement, permit, concession, franchise, lease,
contract, license or similar instrument, obligation or
undertaking to which the Company or any of its
Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any of their assets is bound or
affected, or (iii) subject to the governmental filings
and other matters referred to in the following sentence,
contravene any law, rule or regulation of any state or of
the United States or any political subdivision thereof or
therein, or any order, writ, judgment, injunction,
decree, determination or award currently in effect,
subject, in the case of clauses (ii) and (iii), to those
conflicts, breaches, defaults and similar matters, which,
individually or in the aggregate, have not had and would
not reasonably be expected to have a Material Adverse
Effect, nor materially and adversely affect the Company's
ability to consummate the transactions contemplated
hereby. No consent, approval or authorization of, or
declaration or filing with, or notice to, any
governmental agency or regulatory body, court, agency,
commission, division, department, public body or other
authority (a "Governmental Entity") which has not been
received or made, is required by or with respect to the
Company or any Subsidiary in connection with the
execution and delivery of this Agreement by the Company
or the consummation by the Company of the transactions
contemplated hereby, except for (i) the filing of
premerger notification and report forms under the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act") with respect to the Merger, (ii)
the filing with the SEC of (x) a proxy statement relating
to the approval by the stockholders of the Company of the
Merger (the "Proxy Statement"), and (y) such reports
under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as may be required in connection
with this Agreement and the transactions contemplated by
this Agreement, (iii) the filing of the certificate of
merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of
other states in which the Company is qualified to do
business, and (iv) such other consents, approvals,
authorizations, filings or notices as are set forth in
Section 2.4 of the Disclosure Schedule.
SECTION 2.5 SEC Documents. The Company has timely
filed all required reports, schedules, forms, statements
and other documents with the SEC since January 1, 1996
(such reports, schedules, forms, statements and other
documents are hereinafter referred to as the "SEC
Documents"). As of their respective dates, the SEC
Documents complied with the requirements of the
Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC
Documents as of such dates contained any untrue statement
of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they were made, not misleading.
The consolidated financial statements of the Company
included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements
and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied
on a consistent basis during the periods involved (except
as may be indicated in the notes thereto or, in the case
of unaudited interim financial statements, as permitted
by Rule 10-01 of Regulation S-X) and fairly present, in
all material respects, the consolidated financial
position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then
ended (subject, in the case of unaudited interim
financial statements, to normal recurring adjustments).
SECTION 2.6 Absence of Certain Changes or Events.
Except as disclosed in the SEC Documents filed prior to
the date hereof (the "Filed SEC Documents") or in Section
2.6 of the Disclosure Schedule or as otherwise
contemplated or permitted by this Agreement, since the
date of the most recent audited financial statements
included in the Filed SEC Documents, the Company and its
Subsidiaries have conducted their business only in the
ordinary course (which conduct has not had a Material
Adverse Effect), and except as otherwise expressly
permitted by this Agreement, there has not been (i) any
event, effect or change which has had or which would
reasonably be expected to have a Material Adverse
Effect, (ii) any declaration, setting aside or payment of
any dividend or other distribution (whether in cash,
stock or property) with respect to any of the Company's
outstanding capital stock (other than regular quarterly
cash dividends of $.08 per Common Share in accordance
with usual record and payment dates and in accordance
with the Company's present dividend policy), (iii) any
split, combination or reclassification of any of its
outstanding capital stock or any issuance or the
authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of
its outstanding capital stock, (iv) (a) any granting by
the Company or any of its Subsidiaries to any director,
officer or other employee of the Company or any of its
Subsidiaries of any increase in compensation, except in
the case of employees in the ordinary course of business
consistent with prior practice, or as was required under
employment agreements in effect as of the date of the
most recent audited financial statements included in the
Filed SEC Documents, (b) any granting by the Company or
any of its Subsidiaries to any such director, officer or
other employee of any increase in severance or
termination pay, except as was required under any
employment, severance or termination agreements in effect
as of the date of the most recent audited financial
statements included in the Filed SEC Documents, (c) any
entry by the Company or any of its Subsidiaries into any
employment, severance, change of control, termination or
similar agreement with any officer, director or other
employee, (v) any change in the method of accounting or
policy used by the Company or any of its Subsidiaries,
except as disclosed in the financial statements included
in the Filed SEC Documents, (vi) any loss or material
interference with the Company's business or assets from
fire, accident, flood or other casualty (whether or not
covered by insurance) that has had or would reasonably be
expected to have a Material Adverse Effect; or (viii) any
material increase in indebtedness.
SECTION 2.7 Absence of Undisclosed Liabilities.
Except as disclosed in the Filed SEC Documents or in
Section 2.7 of the Disclosure Schedule or which were
incurred after December 31, 1997 in the ordinary course
of business (which has not had a Material Adverse
Effect), or in connection with the transactions
contemplated by this Agreement, the Company and its
Subsidiaries (i) do not have any material liabilities or
obligations (whether direct or indirect, contingent or
otherwise) and (ii) have not entered into any material
oral or written agreement or other transaction which has
had or would reasonably be expected to have a Material
Adverse Effect.
SECTION 2.8 Benefit Plans. Schedule 2.8 sets forth
a complete and correct list of all Benefit Plans (as
defined below). Except as disclosed in Section 2.8 of the
Disclosure Schedule:
(i) Each "employee pension benefit plan" (as
defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"))
(hereinafter a "Pension Plan"), "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA)
(hereinafter a "Welfare Plan"), and each other plan,
arrangement or policy (written or oral) relating to
stock options, stock purchases, stock incentives,
compensation, deferred compensation, severance,
employment, consulting, vacation, bonus, fringe
benefits or other employee benefits, in each case
maintained or contributed to, or required to be
maintained or contributed to, by the Company or any
person or entity that together with the Company is
treated as a single employer under Section 414(b),
(c), (m) or (o) of the Code (each a "Commonly
Controlled Entity") for the benefit of any present
or former officers, employees, agents, directors or
independent contractors (or their beneficiaries) of
the Company or its Commonly Controlled Entities or
with respect to which the Company or its Commonly
Controlled Entities may have any liability (all the
foregoing being herein called "Benefit Plans") has
been administered in accordance with its terms. The
Company, its Subsidiaries and all the Benefit Plans
are in compliance with the applicable provisions of
ERISA, the Internal Revenue Code of 1986, as amended
(the "Code"), all other applicable laws and all
applicable collective bargaining agreements.
Complete and correct copies of all current and prior
documents, including all amendments thereto, with
respect to each Benefit Plan have been delivered to
Acquiror.
(ii) None of the Company or any Commonly
Controlled Entity has incurred any liability to a
Pension Plan covered by Title IV of ERISA (other
than for contributions not yet due) or to the
Pension Benefit Guaranty Corporation (other than for
the payment of premiums not yet due) which liability
has not been fully paid as of the date hereof. The
aggregate present value of all benefits, including
the maximum value of all subsidized benefits
pursuant to each Benefit Plan covered by Title IV or
ERISA, determined on an ongoing basis and on the
basis of projected compensation for active
participants, and earnings, mortality and other
actuarial assumptions set forth in the most recent
actuarial report for the Benefit Plan does not
exceed the current fair market value of the Benefit
Plan's assets. All contributions and other amounts
payable as of the Effective Time by the Company or
its Subsidiaries with respect to each Benefit Plan
in respect of current or prior plan years have been
either paid or accrued on the balance sheet of the
Company or its Subsidiaries.
(iii) No Commonly Controlled Entity is required
to contribute to, or has or could have any liability
with respect to, any "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA) or has
withdrawn from any multiemployer plan where such
withdrawal has resulted or could result in any
"withdrawal liability" (within the meaning of
Section 4201 of ERISA) that has not been fully paid.
(iv) No matter is pending or, to the knowledge
of the Company threatened, relating to any Benefit
Plan before any court or governmental agency.
(v) Neither the Company nor a Commonly
Controlled Entity, nor any of their respective
employees or directors, nor any fiduciary, has
engaged in any transaction, including the execution
and delivery of this Agreement and other agreements,
instruments and documents for which execution and
delivery by the Company is contemplated herein, in
violation of Section 406(a) or (b) of ERISA or which
is a "prohibited transaction" (as defined in Section
4975(c)(i) of the Code) for which no exemption
exists under Section 408(b) of ERISA or Section
4975(d) of the Code or for which no administrative
exemption has been granted under Section 408(a) of
ERISA.
(vi) The Benefit Plans and their related trusts
intended to qualify under Sections 401 and 501(a) of
the Code, respectively, received favorable
determination letters from the Internal Revenue
Service and the Company believes such Plans and
their related trusts continue to qualify and operate
as designed. Any voluntary employee benefit
association which provides benefits to current or
former employees of the Company and its
Subsidiaries, or their beneficiaries received a
favorable determination letter from the Internal
Revenue Service and the Company believes such
associations continue to qualify and operate as
designed. Each Benefit Plan which is intended to
meet the requirements of Section 125 of the Code
meets those requirements and each program of
benefits for which employee contributions are
provided pursuant to elections under any such
Benefit Plan meets the requirements of the Code
applicable thereto.
(vii) Neither the Company nor any of its
Subsidiaries has any liability (contingent or
otherwise) under Section 4069, Section 4212(c) or
Section 4062(c) of ERISA.
(viii) Neither the execution and delivery of
this Agreement nor the consummation of the
transactions contemplated hereby will, as a result
of such transactions or any event occurring
thereafter (i) result in any payment becoming due to
any employee (current, former or retired) director
or consultant of the Company or its Subsidiaries, or
to a trustee under any "rabbi trust" or similar
arrangement, (ii) increase any benefits under any
Benefit Plan or (iii) result in the acceleration of
the time of payment of, vesting of or other rights
with respect to any such benefits. Neither the
Company nor any Subsidiary has made any payments or
provided any compensation or benefits nor are they
or any successor under any agreement, arrangement or
Benefit Plan obligated to make any payments or
provide any compensation or benefits, the
deductibility of which may be limited by Section
280G or 162(m) of the Code. Neither the Company nor
any Commonly Controlled Entity or any officer or
employee thereof has made any promises, commitments
or representations, whether legally binding or not,
to create any additional benefit plan, agreement or
arrangement, or modify or change any existing
Benefit Plan. No event, condition or circumstance
exists that would prevent the amendment or
termination of any Benefit Plan.
SECTION 2.9 Taxes. Except as disclosed in Section
2.9 of the Disclosure Schedule:
(i) Each of the Company and its Subsidiaries
has filed all tax returns and reports required to be
filed by it or requests for extensions to file such
returns or reports have been timely filed, granted
and have not expired. All tax returns filed by the
Company and each of its Subsidiaries are complete
and accurate except to the extent that such failure
to be complete and accurate would not have a
Material Adverse Effect. The Company and each of its
Subsidiaries has paid (or the Company has paid on
the Subsidiaries' behalf) all taxes shown as due on
such returns and all taxed required to be paid. The
most recent financial statements contained in the
SEC Documents reflect an adequate reserve for all
taxes payable by the Company and the Subsidiaries
for all taxable periods and portions thereof accrued
through the date of such financial statements.
(ii) No deficiencies for any taxes have been
proposed, asserted or assessed against the Company
or any of its Subsidiaries that are not adequately
reserved for, and, except as set forth on Section
2.9 of the Disclosure Schedule, no requests for
waivers of the time to assess any such taxes have
been granted or are pending. The Federal income tax
returns of the Company and each of its Subsidiaries
consolidated in such returns have been examined by
and settled with the United States Internal Revenue
Service, or the statute of limitations on assessment
or collection of any Federal income taxes due from
the Company or the any of its Subsidiaries has
expired, through such taxable years as are set forth
in Section 2.9 of the Disclosure Schedule.
(iii) As used in this Agreement, "taxes" shall
include all Federal, state, local and foreign
income, property, premium, franchise, sales, excise,
employment, payroll, withholding and other taxes,
tariffs or governmental charges of any nature
whatsoever and any interest, penalties, additional
amounts and additions to taxes relating thereto.
(iv) Neither the Company nor any of its
Subsidiaries has made any election, filed any
consent or entered into any agreement with respect
to taxes that is not reflected on the federal income
tax returns of the Company and its Subsidiaries for
the three years ended December 31, 1996 (copies of
which returns have been made available to Acquiror
for review prior to the date of this Agreement) and
that would reasonably be expected to be material to
the Company and the Subsidiaries taken as a whole.
SECTION 2.10 Compliance with Applicable Laws.
Except as disclosed in Section 2.10 of the Disclosure
Schedule:
(i) The business of the Company and each of the
Subsidiaries is being, and has been since December
31, 1995, conducted in compliance in all material
respects with all applicable federal, state, local
and foreign laws, statutes, ordinances, rules and
regulations, decrees, judgments and orders of any
Governmental Entity, and all material notices,
reports, documents and other information required to
be filed thereunder within the last three years were
properly filed and were in compliance in all
material respects with such laws. The assets,
properties, facilities and operations of the Company
and each of the Subsidiaries are in compliance in
all material respects with all applicable laws
relating to public and worker health and safety.
(ii) The Company, and each of the Subsidiaries,
has all licenses, permits, authorizations,
franchises, and rights ("Licenses") which are
necessary for it to own, lease or operate its
properties and assets and to conduct its business as
now conducted. The business of the Company and each
of the Subsidiaries has been and is being conducted
in compliance in all material respects with all such
Licenses. All such Licenses are in full force and
effect, and there is no proceeding or investigation
pending or, to the knowledge of the Company,
threatened which would reasonably be expected to
lead to the revocation, amendment, failure to renew,
limitation, suspension or restriction of any such
License.
SECTION 2.11 Opinion of Financial Advisor. The
Company has received the written opinion of ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co., dated the date of the Board's approval of
this Agreement, to the effect that, as of such date, the
Merger Consideration to be received in the Merger is fair
to the Company's stockholders from a financial point of
view.
SECTION 2.12 Brokers. Except for ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co., whose fees will be paid by the Company
pursuant to its amended agreement with the Company (a
copy of which has been or will be furnished to Acquiror),
all negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by
the Company directly with Acquiror, and no person or
entity is entitled to a finder's fee, brokerage
commission, or similar payment in connection with the
Merger.
SECTION 2.13 Environmental. Except as set forth in
Section 2.13 of the Disclosure Schedule:
(i) The operations and properties of the
Company and the Subsidiaries (a) are in compliance
in all material respects with all applicable
Environmental Laws (as defined) and (b) have not
generated, used, stored, transported, manufactured,
released or disposed of any Hazardous Materials (as
defined) on or off the Company's premises in
material violation of Environmental Laws. No
material expenditure will be required to comply with
Environmental Laws in connection with the operation
or continued operation of the business of the
Company and the Subsidiaries after the Effective
Date in a manner consistent with the current
operation thereof by the Company and the
Subsidiaries. To the knowledge of the Company and
the Subsidiaries, no material expenditure will be
required to remediate, clean up, ▇▇▇▇▇ or remove any
Hazardous Materials on any of any real property
owned, operated or leased by the Company or the
Subsidiaries.
(ii) There are no actions, complaints,
citations, investigations or proceedings pending or,
to the knowledge of the Company, threatened against
the Company or the Subsidiaries alleging the
violation of or seeking to impose liability pursuant
to any Environmental Law or Environmental Permit (as
defined below);
(iii) The Company has provided or will provide
Acquiror with copies of all environmental audits,
assessments, studies, reports, analyses,
investigation results or similar environmentally-
related documents of any real property currently or
formerly owned, operated or leased by the Company or
any of its Subsidiaries that are in the possession,
custody or control of the Company or its
subsidiaries.
(iv) The Company has provided or will provide
Acquiror with copies of all requests for information
(and responses thereto), notices of violation,
complaints, claims or other documents or
correspondence related to or referring to any actual
or alleged violations of Environmental Laws,
including but not limited to the Federal
Comprehensive Environmental, Response, Cleanup and
Liability Act ("CERCLA") and similar state laws, at
(a) any real property currently or formerly owned,
operated or leased by the Company or any
Subsidiaries, including but not limited to
facilities located in Pittsburgh, Pennsylvania,
Novi, Michigan and Troy, New York, or (b) at CERCLA
or similar state sites at which the Company or any
Subsidiaries are named as potentially responsible
parties, or for which the Company or any
Subsidiaries have received a CERCLA Section 122(c),
Section 104(e) or similar notice or request for
information.
(v) The Company and Subsidiaries possess, and
have maintained in full force and effect, all
Environmental Permits required for the operation of
their respective businesses, and are in compliance
with the provisions of all such Environmental
Permits. No modification, revocation, reissuance,
alteration, transfer or amendment of any material
Environmental Permit, or any review by, or approval
of, any third party of any Environmental Permit is
required in connection with the execution or
delivery of this Agreement or the consummation of
the transactions contemplated hereby.
(vi) The Company and the Subsidiaries have not
contractually created or assumed any liabilities or
obligations or indemnifications under any
Environmental Laws at or related to any real
property currently or formerly owned, operated or
leased by the Company or any Subsidiaries.
(vii) As used in this Section 2.13, each of the
following terms shall have the following meanings:
(a) "Environmental Law" means any applicable
federal, state, local, or foreign law, statute,
code, ordinance, rule, regulation or other
requirement (including common law) relating to the
environment (including air, soil, surface water,
groundwater, drinking water, plant life and animal
life), or public or employee health and safety; (b)
"Environmental Permit" means any permit, consent,
approval, authorization, license, variance,
registration, identification number or permission
required under or issued pursuant to any applicable
Environmental Law or order, writ, injunction or
decree; and (c) "Hazardous Materials" means any
hazardous, toxic or dangerous substances, materials
and wastes, including but not limited to naturally
occurring or man-made petroleum or other
hydrocarbons, flammable explosives, asbestos
containing materials, urea formaldehyde insulation,
radioactive materials, radioactive wastes, by-
products and/or ores, polychlorinated biphenyls,
pesticides, herbicides and any other pollutants or
contaminants (including materials with hazardous
constituents), sewage, sludge, industrial and/or
mining slag, tailings, solvent and/or any other
similar substance, material, or waste and including
any other substances, materials or wastes regulated
under Environmental Law.
SECTION 2.14 Litigation. Except as set forth in
the Filed SEC Documents or in Section 2.14 of the
Disclosure Schedule: (i) there are no outstanding orders,
judgments, injunctions, awards or decrees of any
Governmental Entity against the Company or any of its
Subsidiaries, any of its or their properties, assets or
business, any Pension Plan or Welfare Plan ("Company
Plan") or, to the knowledge of the Company, any of its or
their current or former directors or officers, as such,
that have had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse
Effect; (ii) there are no actions, suits or claims or
legal, administrative or arbitration proceedings or
investigations pending or, to the knowledge of the
Company, threatened against the Company or any of its
Subsidiaries, any of its or their properties, assets or
business, any Company Plan or, to the knowledge of the
Company, any of its or their current or former directors
or officers, as such, that have had or would reasonably
be expected to have, individually or in the aggregate, a
Material Adverse Effect; and (iii) there are no actions,
suits or claims or legal, administrative or arbitration
proceedings or investigations pending or, to the
knowledge or the Company, threatened against the Company
or any of its Subsidiaries, any of its or their
properties, assets or business, any Company Plan or, to
the knowledge of the Company, any of its or their current
or former directors or officers, as such, relating to the
transactions contemplated by this Agreement.
SECTION 2.15 Labor Relations. Except as set forth
in Section 2.15 of the Disclosure Schedule:
(i) Neither the Company nor any Subsidiary is a
party to any collective bargaining agreement or
other labor union contract applicable to persons
employed by the Company or any Subsidiary and there
are no known organizational campaigns, petitions or
other unionization activities seeking recognition of
a collective bargaining unit.
(ii) There are no strikes, slowdowns, work
stoppages or material labor relations controversies
pending or, to the knowledge of the Company,
threatened between the Company or any Subsidiary and
any of their respective employees, and neither the
Company nor any Subsidiary has experienced any such
strike, slowdown, work stoppage or material
controversy within the past three years.
SECTION 2.16 Contracts. Except as set forth in the
Filed SEC Documents or as set forth in Section 2.16 of
the Disclosure Schedule, there are no agreements,
contracts or other instruments to which the Company is a
party or by which the Company or any of its Subsidiaries
or any of their assets is bound or affected that are
material to the business, financial condition or results
of operations of the Company or its Subsidiaries taken as
a whole ("Company Agreements"). 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 Company Agreements which are currently in effect,
except for such breaches and defaults which would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Except as set
forth in the Filed SEC Documents or as set forth in
Section 2.16 of the Disclosure Schedule, neither the
Company nor any of its Subsidiaries is a party to or
bound by any non-competition agreement or any other
agreement or obligation which purports to limit in any
material respect the manner in which, or the localities
in which, the Company or any such Subsidiary is entitled
to conduct all or any material portion of the business of
the Company or its Subsidiaries.
SECTION 2.17 Intellectual Property. Except as set
forth in Section 2.17 of the Disclosure Schedule:
(i) the Company and each Subsidiary has
exclusive ownership of and title to each issued
patent, pending patent application, registered
trademark, registered trade name, registered service
▇▇▇▇ and registered copyright owned or used in the
business of the Company and its Subsidiaries taken
as a whole (collectively, the "Registered
Intellectual Property"), and to the knowledge of the
Company, the Company and each Subsidiary has
ownership of and rights to use each material patent
application, unregistered trademark application,
unregistered trade name, unregistered service ▇▇▇▇,
unregistered copyright and other trade secret or
other proprietary intellectual property (the "Other
Intellectual Property" and collectively with the
Registered Intellectual Property, the "Intellectual
Property") owned or used in the business of the
Company and its Subsidiaries taken as a whole.
(ii) To the Company's knowledge, the use by the
Company and each Subsidiary of such Intellectual
Property does not infringe upon the rights of any
other person, and no other person is infringing upon
the rights of the Company or any Subsidiary in any
such Intellectual Property, except for any such
infringements, that would not reasonably be expected
to have, individually or in the aggregate, a
Material Adverse Effect.
SECTION 2.18 Real Estate. The Company and its
Subsidiaries do not own any real estate other than the
premises identified in the Filed SEC Documents or as set
forth in Section 2.18 of the Disclosure Schedule as being
so owned. The Company and its Subsidiaries do not lease
any real estate other than the premises identified in the
Filed SEC Documents or as set forth in Section 2.18 of
the Disclosure Schedule as being so leased.
SECTION 2.19 Voting Requirements. The affirmative
vote of the holders of a majority of the outstanding
Common Shares entitled to vote at the Stockholders
Meeting (as defined in Section 4.2) is the only vote of
the holders of any class of the Company's capital stock
necessary to approve this Agreement and the transactions
contemplated by this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to the Company as
follows:
SECTION 3.1 Organization, Standing and Corporate
Power. Acquiror is a corporation duly organized, validly
existing and in good standing under the laws of the State
of Delaware. Acquiror has not engaged in any business
since it was incorporated other than in connection with
its organization and the transactions contemplated by
this Agreement.
SECTION 3.2 Authority; Noncontravention. Acquiror
has all requisite corporate power and authority to enter
into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement
by Acquiror and the consummation by Acquiror of the
transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part
of Acquiror. This Agreement has been duly executed and
delivered by and, assuming this Agreement has been duly
executed and delivered by the Company, constitutes a
valid and binding obligation of Acquiror, enforceable
against it in accordance with its terms except that the
enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws
now or hereafter in effect relating to creditor's rights
generally and (b) general principles of equity
(regardless of whether enforceability is considered in a
proceeding at law or in equity). The execution and
delivery of this Agreement do not, and the consummation
of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not
(i) conflict with or violate any of the provisions of the
Certificate of Incorporation or By-Laws of Acquiror, (ii)
subject to the governmental filings and other matters
referred to in the following sentence, conflict with,
result in a breach of or default (with or without notice
or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any
obligation or loss of a material benefit under, or
require the consent of any person under, any indenture,
or other agreement, permit, concession, franchise,
license or similar instrument or undertaking to which
Acquiror or any of its subsidiaries is a party or by
which Acquiror or any of its subsidiaries or any of their
assets is bound or affected, or (iii) subject to the
governmental filings and other matters referred to in the
following sentence, contravene any law, rule or
regulation of any state or of the United States or any
political subdivision thereof or therein, or any order,
writ, judgment, injunction, decree, determination or
award currently in effect, subject, in the case of
clauses (ii) and (iii), to those conflicts, breaches,
defaults and similar matters, which, individually or in
the aggregate, would not materially and adversely affect
Acquiror's ability to consummate the transactions
contemplated hereby. No consent, approval or
authorization of, or declaration or filing with, or
notice to, any Governmental Entity which has not been
received or made is required by or with respect to
Acquiror in connection with the execution and delivery of
this Agreement by Acquiror or the consummation by
Acquiror of any of the transactions contemplated hereby,
except for (i) the filing of premerger notification and
report forms under the HSR Act with respect to the
Merger, (ii) the filing of the certificate of merger with
the Delaware Secretary of State, and appropriate
documents with the relevant authorities of the other
states in which the Company is qualified to do business,
and (iii) such other consents, approvals, authorizations,
filings or notices as are set forth in Section 2.4 of the
Disclosure Schedule.
SECTION 3.3 Financing. Acquiror has delivered to
the Company true and correct copies of letters from PNC
Bank and PNC Equity Management Corp (collectively, the
"Lenders"), stating Lenders' interest in providing the
debt financing ("Financing") which, together with equity
to be obtained by Acquiror will be in an amount necessary
to pay the Merger Consideration and consummate the
transactions contemplated hereby, subject to the
negotiation, preparation and execution of binding
financing commitments with respect to the Financing
("Financing Commitments"), and to the fulfillment of the
conditions precedent to be contained in the Financing
Commitments.
SECTION 3.4 Brokers. All negotiations relative to
this Agreement and the transactions contemplated hereby
have been carried out by Acquiror directly with the
Company, without the intervention of any person on behalf
of Acquiror in such manner as to give rise to any valid
claim by any person against Acquiror, the Company or any
Subsidiary for a finder's fee, brokerage commission, or
similar payment.
ARTICLE 4
ADDITIONAL AGREEMENTS
SECTION 4.1 Preparation of Proxy Statement.
4.1.1 Proxy Statement. As soon as practicable
following the date of this Agreement, the Company
shall prepare and file with the SEC the Proxy
Statement. The Company will use its reasonable
efforts to cause the Proxy Statement to be mailed to
the Company's stockholders as promptly as
practicable. Notwithstanding anything in this
Agreement to the contrary, the Company reserves the
right to use an Information Statement in lieu of the
Proxy Statement if it determines to obtain the
approval of this Agreement and the Merger by means
of a written consent procedure in lieu of a vote at
the Stockholders Meeting (as defined in Section
4.2).
4.1.2 Company Information. The Company agrees
that none of the information supplied or to be
supplied by the Company specifically for inclusion
in the Proxy Statement will, at the date it is first
mailed to the Company's stockholders or at the time
of the Stockholders 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 Proxy Statement will
comply as to form in all material respect with the
requirements of the Exchange Act and the rules and
regulations thereunder.
4.1.3 Acquiror Information. Acquiror agrees
that none of the information supplied or to be
supplied by Acquiror specifically for inclusion in
the Proxy Statement will, at the date it is first
mailed to the Company's stockholders or at the time
of the Stockholders 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.
SECTION 4.2 Meeting of Stockholders. The Company
will take all action necessary in accordance with
applicable law and its Certificate of Incorporation and
By-laws to convene a meeting of its stockholders (the
"Stockholders Meeting") to consider and vote upon the
approval of this Agreement and the Merger. Subject to
Section 4.7 hereof, the Company will, through its Board
of Directors, recommend to its stockholders approval of
this Agreement and the Merger. Without limiting the
generality of the foregoing, the Company agrees that,
subject to its right to terminate this Agreement pursuant
to Section 7.1(vi), its obligations pursuant to the
first sentence of this Section 4.2 shall not be affected
by (i) the commencement, public proposal, public
disclosure or communication to the Company of any
Acquisition Proposal (as defined in Section 4.6) or (ii)
the withdrawal or modification by the Board of Directors
of the Company of its approval or recommendation of this
Agreement or the Merger. The Company will use its
reasonable efforts to hold the Stockholders Meeting as
soon as practicable after the date hereof.
Notwithstanding anything in this Agreement to the
contrary, the Company reserves the right to obtain the
approval of this Agreement and the Merger by means of a
written consent procedure in lieu of a vote at the
Stockholders Meeting.
SECTION 4.3 Access to Information; Confidentiality.
Upon reasonable notice, the Company shall, and shall
cause its Subsidiaries to, afford to Acquiror and to the
officers, employees, accountants, counsel, financial
advisors, financing sources and other representatives of
Acquiror reasonable access during normal business hours
during the period prior to the Effective Time to all its
properties, books, contracts, commitments, personnel and
records. During such period, the Company shall furnish
promptly to, upon request, a copy of (i) each SEC
Document filed by it during such period, and (ii) all
correspondence or written communication with any
Governmental Entity which relates to the transactions
contemplated hereby or which is otherwise material to the
financial condition or operations of the Company and its
Subsidiaries taken as a whole. Except as required by
law, Acquiror will hold, and will cause its respective
directors, officers, partners, employees, accountants,
counsel, financial advisors and other representatives and
affiliates to hold, any nonpublic information obtained
from the Company in confidence to the extent required by,
and in accordance with, the provisions of the letter
dated August 18, 1997, between Acquiror and the Company
(the "Confidentiality Agreement").
SECTION 4.4 Reasonable Efforts. Upon the terms and
subject to the conditions and other agreements set forth
in this Agreement, each of the parties agrees to use its
reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable,
the Merger and the other transactions contemplated by
this Agreement.
Notwithstanding any provision in this Agreement to
the contrary, in connection with any filing or submission
or other action required to be made or taken by either
Acquiror or the Company to effect the Merger and to
consummate the transactions contemplated hereby, neither
Acquiror nor the Company shall, without the other's prior
written consent, commit to any divestiture transaction,
and neither Acquiror, the Company nor any of their
affiliates 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 and its Subsidiaries or
any material portions thereof.
SECTION 4.5 Public Announcements. Acquiror and the
Company will consult with each other before issuing, and
shall provide each other a reasonable opportunity to
review and comment upon, any press release or public
statement with respect to this Agreement or the
transactions contemplated hereby, except to the extent
disclosure prior to such consultation, review and comment
may be required by applicable law, court process or
obligations pursuant to any listing agreement with any
national securities exchange.
SECTION 4.6 Acquisition Proposals. The Company
shall not, nor shall it authorize or permit any officer,
director or employee of, or any investment banker,
attorney or other advisor or representative of, the
Company or any of its Subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the
submission of any Acquisition Proposal (as defined
below), (ii) participate in any discussions or
negotiations regarding, or furnish to any person any non-
public information with respect to, or take any other
action to facilitate any inquiries or the making of any
proposal that constitutes, an Acquisition Proposal or
(iii) enter into any agreement with respect to an
Acquisition Proposal; provided, however, that nothing
contained in this Section 4.6 shall prohibit the Company
or the Board of Directors of the Company from furnishing
non-public information to, or entering into discussions
or negotiations with, any person or entity with respect
to an unsolicited Acquisition Proposal if (but only if),
(a) the Board determines reasonably and in good faith,
after due investigation and after consultation with and
based upon the advice of its outside financial advisor,
that such Acquisition Proposal is or could reasonably be
expected to lead to a Superior Proposal (as defined
below); (b) the Board determines reasonably and in good
faith, after due investigation and after consultation
with and based upon the advice of outside counsel, that
the failure to take such action would cause the Board to
violate its fiduciary duties to stockholders under
applicable law and (c) the Company (x) provides at least
two business days' notice to Acquiror to the effect that
it is taking such action and (y) receives from such
person or entity an executed confidentiality agreement
substantially similar to the Confidentiality Agreement,
except that such confidentiality agreement need not
prohibit such person or entity from making an unsolicited
Acquisition Proposal directly and privately to the Board
of Directors of the Company. In the event that the
Company executes such a confidentiality agreement, the
Confidentiality Agreement shall automatically be amended
to provide Acquiror with the right to make an unsolicited
Acquisition Proposal directly and privately to the Board
of Directors of the Company. Notwithstanding anything in
this Agreement to the contrary, the Company shall
promptly advise Acquiror orally and in writing of the
receipt by it (or by any of the other entities or persons
referred to above) after the date hereof of any
Acquisition Proposal or any inquiry which could
reasonably lead to an Acquisition Proposal, the material
terms and conditions of such Acquisition Proposal or
inquiry, and the identity of the person or entity making
any such Acquisition Proposal, provided that the Company
shall have no obligation to disclose the identity of such
person or entity if such disclosure would violate the
terms of any agreement with such person or entity, or the
Board of Directors, after consultation with and based
upon the advice of outside counsel, concludes in good
faith that such disclosure would violate its fiduciary
duties. The Company agrees that it will fully enforce
(including by way of obtaining an injunction), and not
waive any provision of, any confidentiality agreement to
which it is a party. For purposes of this Agreement,
"Acquisition Proposal" means any bona fide proposal with
respect to a merger, consolidation, share exchange or
similar transaction involving the Company or any
significant Subsidiary or any purchase of all or any
significant portion of the assets or capital stock of the
Company or any significant Subsidiary or any other
business combination (including without limitation the
acquisition of an equity interest therein) involving the
Company other than the transactions contemplated hereby;
and "Superior Proposal" means an Acquisition Proposal
which the Board believes in good faith, after due
investigation (taking into account, among other things,
the financing terms and the likelihood of consummation)
and based upon the advice of its outside legal and
financial advisors, is more favorable to the Company's
stockholders from a financial point of view than the
Merger.
SECTION 4.7 Fiduciary Duties. The Board of
Directors of the Company shall not (i) withdraw or modify
the approval or recommendation by such Board of Directors
of this Agreement or the Merger, or (ii) approve or
recommend an Acquisition Proposal, unless the Company
receives an unsolicited Acquisition Proposal in
accordance with Section 4.6 and the Board of Directors of
the Company determines in good faith, after due
investigation and after consultation with and based upon
the advice of outside counsel, that the failure of the
Board of Directors to withdraw or modify its approval or
recommendation of this Agreement or the Merger, or
approve or recommend such Acquisition Proposal would
cause the Board to violate its fiduciary duties to
stockholders under applicable law. Nothing contained in
this Section 4.7 shall prohibit the Company from taking
and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the
Company's stockholders which, in the good faith judgment
of the Board of Directors of the Company based on advice
of outside counsel, is required under applicable law;
provided that the Company does not withdraw or modify its
position with respect to the Merger or approve or
recommend an Acquisition Proposal, except under the
circumstances described in the immediately preceding
sentence and on two business days' notice to Acquiror to
the effect that it is taking such action. Notwithstanding
anything contained in this Agreement to the contrary, any
action by the Board of Directors permitted by this
Section 4.7 shall not constitute a breach of this
Agreement by the Company.
SECTION 4.8 Filings; Other Action. As promptly as
practicable after the date of this Agreement, (i) the
Company and Acquiror shall make all filings and
submissions under the HSR Act, and (ii) the Company and
Acquiror shall cooperate in all reasonable respects with
each other in (a) determining if other filings are
required to be made prior to the Effective Time with, or
if other material consents, approvals, permits, notices
or authorizations are required to be obtained prior to
the Effective Time from any Governmental Entity in
connection with the execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby and (b) timely making all such
filings and timely seeking all such consents, approvals,
permits, notices or authorizations. In connection with
the foregoing, the Company will provide Acquiror, and
Acquiror will provide the Company, with copies of
correspondence, filings or communications (or memoranda
setting forth the substance thereof) between such party
or any of its representatives, on the one hand, and any
Governmental Entity or members of their respective
staffs, on the other hand, with respect to this Agreement
and the transactions contemplated hereby. Each of
Acquiror and the Company acknowledge that certain actions
may be necessary with respect to the foregoing in making
notifications and obtaining clearances, consents,
approvals, waivers or similar third party actions which
are material to the consummation of the transactions
contemplated hereby, and each of Acquiror and the Company
agree to take such action as is reasonably necessary to
complete such notifications and obtain such clearances,
approvals, waivers or third party actions.
SECTION 4.9 Indemnification. (i) From and after the
Effective Time, the Surviving Corporation will indemnify
and hold harmless each present and former director and
officer of the Company and its Subsidiaries, determined
as of the Effective Time (the "Indemnified Parties"),
against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred
in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the
Effective Time, to the fullest extent that the Company or
such Subsidiary would have been permitted under
applicable law and the Certificate of Incorporation or
By-Laws of the Company or such Subsidiary in effect on
the date hereof to indemnify such person (and the
Surviving Corporation shall also advance expenses as
incurred to the fullest extent permitted under applicable
law, provided the person to whom expenses are advanced
provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to
indemnification).
(ii) For a period of six (6) years after the
Effective Time, the Surviving Corporation shall cause to
be maintained in effect the current policies of
directors' and officers' liability insurance maintained
by the Company (provided that the Surviving Corporation
may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions
which are no less advantageous in all material respects
to the Indemnified Parties) with respect to claims
arising from facts or events which occurred before the
Effective Time; provided, however, that the Surviving
Corporation shall not be obligated to make annual premium
payments for such insurance to the extent such premiums
exceed 200% of the premiums paid as of the date hereof by
the Company for such insurance.
(iii) The provisions of this Section 4.9 are
intended to be for the benefit of, and shall be
enforceable by, each Indemnified Party, his heirs and his
personal representatives, and shall be binding on all
successors and assigns of the Surviving Corporation.
SECTION 4.10 Failure to Close. If this Agreement
is terminated for any reason pursuant to Article 7, the
parties agree that for a period of two (2) years from the
date of termination, Acquiror and its Subsidiaries will
not solicit for employment any officer or employee of the
Company or its Subsidiaries.
SECTION 4.11 Financing Commitments. Promptly
following the date of this Agreement, Acquiror will use
its reasonable efforts to (i) negotiate, execute and
deliver the Financing Commitments with the Lenders or
such other reputable financing sources reasonably
acceptable to the Company, (ii) satisfy the covenants and
the conditions included in the Financing Commitments and
(iii) obtain the proceeds of the Financing.
ARTICLE 5
COVENANTS RELATING TO CONDUCT
OF BUSINESS PRIOR TO MERGER
SECTION 5.1 Conduct of Business by the Company.
Except as contemplated by this Agreement or as set forth
in Section 5.1 of the Disclosure Schedule, during the
period from the date of this Agreement to the Effective
Time, the Company shall, and shall cause its Subsidiaries
to, act and carry on their respective businesses in the
ordinary course of business and, to the extent consistent
therewith, use reasonable efforts to preserve intact
their current business organizations, keep in full force
and effect their Licenses, keep available the services of
their current key officers, employees and agents, and
preserve the goodwill of regulators or those engaged in
material business relationships with them. Without
limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective
Time, the Company shall not, and shall not permit any of
the Subsidiaries to, without the prior consent of
Acquiror:
(i) adopt or propose any change to its
Certificate of Incorporation or By-Laws;
(ii) (a) declare, set aside or pay any
dividends on, or make any other distributions with
respect to, any of the Company's outstanding capital
stock, other than regular quarterly cash dividends
not in excess of $.08 per Common Share so long as
the Common Shares remain outstanding, in accordance
with usual record and payment dates and in
accordance with the Company's present dividend
policy (except that no dividends shall be declared,
set aside or paid prior to July 31, 1998), (b)
split, combine or reclassify any of its outstanding
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 outstanding capital
stock or (c) purchase, redeem or otherwise acquire
any shares of capital stock or other securities of,
or other ownership interests of the Company other
than the Stock Options to be purchased as
contemplated by Section 1.11 above and as may be
necessary to fund matching contributions under the
Company's 401(k) plan;
(iii) issue, sell, grant, pledge or otherwise
encumber any shares of its capital stock, any other
voting securities or any securities convertible
into, or any rights, warrants or options to acquire,
any such shares, voting securities or convertible
securities other than upon the exercise of Stock
Options outstanding on the date of this Agreement;
(iv) acquire any business or any corporation,
partnership, joint venture, association or other
business organization or division or acquire any
material assets or make any investment in any person
or enter into any reorganization;
(v) take any action that, if taken prior to the
date of this Agreement, would have been required to
be disclosed in Section 2.6 of the Disclosure
Schedule or that would otherwise cause any of the
representations and warranties contained in Article
2 not to be true and correct in all material
respects at any time;
(vi) sell, mortgage or otherwise encumber or
subject to any lien or otherwise dispose of any of
its properties or assets that are material to the
Company and its Subsidiaries taken as a whole,
except in the ordinary course of business;
(vii) (a) except for the dollar amount required
to cancel and cash out the Stock Options as
contemplated by Section 1.11 above, incur any
indebtedness for borrowed money or guarantee or
otherwise become responsible for any such
indebtedness of another person, other than
indebtedness owing to or guarantees of indebtedness
owing to the Company or any direct or indirect
wholly-owned Subsidiary of the Company or enter into
any agreement for indebtedness or (b) make any loans
or advances to any other person, other than to the
Company, or to any direct or indirect wholly-owned
Subsidiary of the Company and other than routine
advances in the ordinary course of business to
employees or agents;
(viii) make any tax election or settle or
compromise any income tax liability that would
reasonably be expected to be material to the Company
and its Subsidiaries taken as a whole;
(ix) pay, discharge, settle or satisfy any
claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business
consistent with past practice or in accordance with
their terms of liabilities reflected or reserved
against in, or contemplated by, the most recent
consolidated financial statements (or the notes
thereto) of the Company included in the Filed SEC
Documents or incurred since the date of such
financial statements in the ordinary course of
business consistent with past practice;
(x) except in the ordinary course of business,
modify, amend or terminate, or waive, release or
assign any material rights or claims under any
material agreement, permit, concession, franchise,
license or similar instrument to which the Company
or any Subsidiary is a party;
(xi) authorize any of, or commit or agree to
take any of the foregoing actions;
(xii) make any capital expenditures other than
as contemplated by the Company's annual budget;
(xiii) (a) enter into, adopt or amend or
increase the amount or accelerate the payment or
vesting of any benefit or amount payable under, any
Benefit Plan, or increase in any manner, the
compensation or fringe benefits, or otherwise
extend, expand or enhance the engagement, employment
or any related rights, of any director, officer or
other employee of the Company or any of its
Subsidiaries, except for normal increases in the
ordinary course of business consistent with past
practice that, in the aggregate, do not result in a
material increase in benefits or compensation
expense to the Company or any of its Subsidiaries;
(b) enter into or amend any employment, severance or
special pay arrangement with respect to the
termination of employment with any director or
officer or other employee other than in the ordinary
course of business consistent with past practice; or
(c) deposit into any trust (including any "rabbi
trust") amounts in respect of any employee benefit
obligations or obligations to directors;
(xiv) make any changes in accounting methods,
except as required by law, rule, regulation, the SEC
or GAAP; or
(xv) enter into any agreement or arrangement
with any Affiliate (other than wholly owned
Subsidiaries). As used in this Agreement, the term
"Affiliate," shall mean, as to any person, any other
person which directly or indirectly controls, or in
under common control with, or is controlled by, such
person. As used in this definition, "control"
(including, with its correlative meanings,
"controlled by" and "under common control with")
shall mean possession, directly or indirectly, of
power to direct or cause the direction of management
or policies (whether through ownership of securities
or partnership or other ownership interests, by
contract or otherwise).
SECTION 5.2 Management of the Company and
Subsidiaries. The Company shall, from the date of this
Agreement through the Effective Time, cause its
management and that of the Subsidiaries to consult on a
regular basis and in good faith with the employees and
representatives of Acquiror concerning the management of
the Company and its Subsidiaries' businesses.
SECTION 5.3 Conduct of Business by Acquiror. Except
as contemplated by this Agreement, during the period from
the date of this Agreement to the Effective Time,
Acquiror shall, and shall cause its subsidiaries to, act
and carry on their respective businesses in the ordinary
course of business except where the failure to do so
would not adversely affect Acquiror's ability to pay the
Merger Consideration.
SECTION 5.4 Other Actions. The Company and Acquiror
shall not, and shall not permit any of their respective
subsidiaries to, take or omit to take any action that
would, or that would reasonably be expected to, result in
(i) any of the representations and warranties of such
party set forth in this Agreement becoming untrue in any
material respect at any time or (ii) any of the
conditions of the Merger set forth in Article 6 not being
satisfied.
SECTION 5.5 Notification. The Company shall give
prompt notice to Acquiror and Acquiror shall give prompt
notice to the Company of (i) the occurrence, or non-
occurrence of any event whose occurrence or non-
occurrence would reasonably be expected to cause (a) any
representation or warranty contained in this Agreement
which is qualified as to materiality or Material Adverse
Effect to be untrue or inaccurate at any time from the
date hereof to the Effective Time, (b) any other
representation or warranty made contained in this
Agreement to be untrue or inaccurate at any time from the
date hereof to the Effective Time, or (c) any condition
set forth in Article 6 to be unsatisfied at any time from
the date hereof to the Effective Time, and (ii) any
failure of the Company, or Acquiror, as the case may be,
to comply with or satisfy in any material respect 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
5.5 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice or
the right of such party to terminate this Agreement.
ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to Each Party's Obligation
To Effect the Merger. The respective obligation of each
party to effect the Merger is subject to the satisfaction
or waiver on or prior to the Closing Date of the
following conditions:
6.1.1 Stockholder Approval. This Agreement
and the Merger shall have been approved and adopted
by an affirmative vote of the holders of the
requisite number of shares present, in person or by
proxy, and entitled to vote on the Merger at the
Stockholders Meeting.
6.1.2 Governmental and Regulatory Consents.
The Company and Acquiror shall have made all such
filings, and obtained such authorizations, consents,
or approvals required by any Governmental Entity to
consummate the transactions contemplated hereby;
provided, however that such authorizations, consents
or approvals shall impose no conditions that could
reasonably be expected to have a Material Adverse
Effect.
6.1.3 HSR Act. The waiting period (and any
extension thereof) applicable to the Merger under
the HSR Act shall have been terminated or shall have
otherwise expired.
6.1.4 No Proceedings. No proceeding shall
have been commenced and be continuing, seeking to
restrain or enjoin the consummation of the Merger.
6.1.5 Financing. Acquiror shall have
obtained the proceeds of the Financing contemplated
by the Financing Commitments.
SECTION 6.2 Conditions to Obligations of Acquiror.
The obligations of Acquiror to effect the Merger are
further subject to the following conditions:
6.2.1 Representations and Warranties. The
representations and warranties of the Company
contained in this Agreement shall be true and
correct on the date hereof and (except to the extent
specifically given as of an earlier date) on and as
of the Closing Date as though made on the Closing
Date, and the Company shall have delivered to
Acquiror a certificate dated as of the Closing Date
signed by an executive officer to the effect set
forth in this Section 6.2.1.
6.2.2 Performance of Obligations of the
Company. The Company shall have performed in all
material respects all obligations required to be
performed by it under this Agreement at or prior to
the Closing Date, and the Company shall have
delivered to Acquiror a certificate dated as of the
Closing Date signed by an executive officer to the
effect set forth in this Section 6.2.2.
6.2.3. Third Party Approvals. All
authorizations, consents and approvals of any third
party required to be obtained by the Company which,
if not obtained, would have a Material Adverse
Effect, shall have been obtained and shall be in
full force and effect.
6.2.4 No Material Adverse Effect. Since the
date of this Agreement, no event, effect or change
shall have occurred which has had or which would
reasonably be expected to have a Material Adverse
Effect, and the Acquiror shall have received a
certificate signed by the Chief Executive Officer or
Chief Financial Officer of the Company to such
effect.
SECTION 6.3 Conditions to Obligation of the
Company. The obligation of the Company to effect the
Merger is further subject to the following conditions:
6.3.1 Representations and Warranties. The
representations and warranties of Acquiror contained
in this Agreement shall be true and correct on the
date hereof and (except to the extent specifically
given as of an earlier date) on and as of the
Closing Date as though made on the Closing Date, and
Acquiror shall have delivered to the Company a
certificate dated as of the Closing Date, signed by
an executive officer and to the effect set forth in
this Section 6.3.1.
6.3.2 Performance of Obligations of Acquiror.
Acquiror shall have performed in all material
respects all obligations required to be performed by
it under this Agreement at or prior to the Closing
Date, and Acquiror shall have delivered to the
Company a certificate dated as of the Closing Date,
signed by an executive officer and to the effect set
forth in this Section 6.3.2.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination. This Agreement may be
terminated and abandoned at any time prior to the
Effective Time, whether before or after approval of
matters presented in connection with the Merger by the
stockholders of the Company:
(i) by mutual written consent of Acquiror and
the Company;
(ii) by either Acquiror or the Company:
(a) if, upon a vote at a duly held
Stockholders Meeting, this Agreement and the
Merger shall fail to receive the requisite vote
for approval and adoption by the stockholders
of the Company at the Stockholders Meeting;
(b) if the Merger shall not have been
consummated on or before July 31, 1998;
provided, that either party may terminate this
Agreement on or after such earlier date on
which it can be reasonably determined that it
will be impossible to consummate the Merger by
July 31, 1998; and provided, further, that the
party seeking to terminate this Agreement
pursuant to this Section 7.1(ii)(b) shall not
have breached in any material respect its
obligations under this Agreement in any manner
that shall have caused or contributed to the
failure to consummate the Merger by July 31,
1998;
(c) if any Governmental Entity shall have
issued an order, decree or ruling or taken any
other action, or there shall be enacted any law
having the effect of, permanently enjoining,
restraining or otherwise prohibiting, or making
illegal the Merger and such order, decree,
ruling or other action shall have become final
and nonappealable, provided the party seeking
to terminate this Agreement under this clause
(c) shall have used reasonable efforts to
remove or overturn such order, decree, ruling
or other action; or
(d) if, on or before April 10, 1998,
Acquiror has not delivered to the Company
executed Financing Commitments providing that
the Financing is subject only to conditions
substantially similar to the conditions set
forth in Sections 6.1 and 6.2, and such other
commercially reasonable conditions as may be
required by the Lenders or such other reputable
financing sources reasonably acceptable to the
Company (which conditions shall be reasonably
acceptable to the Company), and to definitive
documentation;
(iii) by the Company, upon a material breach of
any representation or warranty of Acquiror or
Acquiror fails to comply in any material respect
with any of its covenants or agreements, or if any
representation or warranty of Acquiror shall be or
become untrue in any material respect, which breach
or non-compliance is not curable or, if curable, is
not cured by Acquiror within 30 days after written
notice of such breach or non-compliance from the
Company;
(iv) by Acquiror, upon a material breach of any
representation, or warranty of the Company or the
Company fails to comply in any material respect with
any of its covenants or agreements, or if any
representation or warranty of the Company shall be
or become untrue in any material respect, which
breach or non-compliance is not curable or, if
curable, is not cured by the Company within 30 days
after written notice of such breach or non-
compliance from Acquiror;
(v) by Acquiror, at any time before 5:00 p.m.
Chicago time on April 10, 1998 if Acquiror shall
determine in good faith that it is not satisfied
with the results of its due diligence investigation
of the Company; provided, however, that Acquiror
must advise the Company orally and in writing of any
such determination prior to terminating this
Agreement pursuant to this Section 7.1(v);
(vi) by the Company, if the Board determines to
enter into and enters into a definitive agreement
providing for a Superior Proposal which was obtained
consistent with Section 4.6; provided, however, that
the Company shall have no right to terminate this
Agreement under this Section 7.1(vi) unless (a) the
Company has provided Acquiror with written notice of
the material terms of the Superior Proposal at least
two business days prior to such termination, and (b)
the Company simultaneously pays to Acquiror the
Termination Penalty (as defined herein) required
under Section 7.2(ii); or
(vii) by Acquiror, if: (a) the Board shall have
taken any action contemplated by Section 4.7, (b) a
tender offer or exchange offer for 30% or more of
the Common Shares of the Company is commenced, and
the Board fails to recommend against acceptance of
such tender offer or exchange offer by its
stockholder within the time period required by
Section 14e-2 of the Exchange Act (the taking of no
position by the expiration of such period with
respect to the acceptance of such tender offer or
exchange offer by its stockholders constituting such
a failure), (c) the Company shall have intentionally
breached any of its covenants or agreements in
Section 4.6, or (d) after April 10, 1998 there shall
be pending any proceeding seeking material damages
on account of the consummation of the Merger which
Acquiror determines in good faith, after due
investigation and consultation with counsel
representing the Company in such proceeding, could
reasonably be expected to result in the Company
incurring a material amount of damages or expenses,
after taking into account applicable insurance
coverage; provided, however, Acquiror shall not then
be in material breach of its obligations under this
Agreement.
SECTION 7.2 Effect of Termination. (i) In the event
of termination of this Agreement by either the Company or
Acquiror as provided in Section 7.1, except as provided
below in Section 7.2(ii), (iii) or (iv), this Agreement
shall forthwith become void and have no effect, without
any liability or obligation on the part of Acquiror or
the Company, other than the last sentence of Section 4.3
and Sections 7.2 and 10.2. Nothing contained in this
Section shall relieve any party from any liability
resulting from any material breach of the
representations, warranties, covenants or agreements set
forth in this Agreement.
(ii) In the event of termination of this Agreement
by the Company pursuant to Section 7.1(vi) or by Acquiror
pursuant to Section 7.1(vii)(a) or (b), the Company shall
(a) pay Acquiror $2,500,000 in cash as liquidated damages
and not as a penalty, immediately upon such termination,
in same-day funds (the "Termination Payment"), by wire
transfer to an account designated by Acquiror; provided
however, that the Termination Payment shall be $2,000,000
if such termination occurs on or before April 10,1998;
and (b) reimburse Acquiror for its out-of-pocket costs
and expenses reasonably incurred and due to third parties
in connection with this Agreement and the transactions
contemplated thereby (including fees and disbursements of
counsel, accountants, financial advisors and consultants,
commitment fees, due diligence expenses, travel costs,
filing fees and similar fees, all of which shall be
conclusively established by vouchers or other statements
therefor) (collectively, "Covered Expenses"), up to a
maximum of $500,000, by wire transfer of same-day funds
to an account designated by Acquiror, immediately
following receipt and verification of the Covered
Expenses set forth in such vouchers or other statements.
(iii) The Company shall pay Acquiror the
Termination Payment (less the amount, if any, of Covered
Expenses paid under Section 7.2(iv) in excess of
$500,000) if: (x) this Agreement is terminated pursuant
to Section 7.1(ii)(a), and (y) the Company, within twelve
(12) months from the date of this Agreement, enters into
a written agreement to effect an Acquisition Proposal
with, or an Acquisition Proposal is made by, a party
other than Acquiror or any of its subsidiaries, and (z)
in each such case the Acquisition Proposal is thereafter
consummated within such twelve-month period. The
Termination Payment contemplated by the prior sentence
shall be paid in same-day funds by wire transfer to an
account designated by Acquiror on the earlier of the
consummation of such Acquisition Proposal or within sixty
(60) days after a meeting at which the stockholders of
the Company approve such Acquisition Proposal.
Notwithstanding anything in this Agreement to the
contrary, the Termination Payment, if payable, shall be
paid only once and shall be Acquiror's sole and exclusive
remedy hereunder for the termination of the Agreement
under the circumstances in which the Termination Payment
is paid (regardless of any breach of this Agreement),
except for the reimbursement of Acquiror's Covered
Expenses, and upon such delivery of the Termination
Payment to Acquiror, no person shall have any further
claim or rights against the Company under this Agreement
with respect thereto; provided, however that this
sentence shall not apply to and shall in no way restrict
the right of Acquiror to assert a counterclaim in
response to any action brought by the Company against
Acquiror with respect to such events. The Company shall
reimburse Acquiror for all costs incurred in connection
with the collection of the Termination Payment and the
Covered Expenses under this Agreement.
(iv) In the event of (x) termination of this
Agreement pursuant to Section 7.1(ii)(a), or (y)
termination of this Agreement pursuant to Section 7.1(iv)
based solely on the Company's intentional breach of a
representation or warranty or intentional non-compliance
of a covenant, the Company shall reimburse Acquiror for
its Covered Expenses up to a maximum of $1,100,000, by
wire transfer of same-day funds to an account designated
by Acquiror, immediately following receipt and
verification of the Covered Expenses set forth in
Acquiror's vouchers or other statements. In the event of
termination of this Agreement by Acquiror pursuant to
Section 7.1 (vii)(d), the Company shall reimburse
Acquiror for one-half of its Covered Expenses up to a
maximum obligation of the Company of $350,000, by wire
transfer of same-day funds to an account designated by
Acquiror, immediately following receipt and verification
of the Covered Expenses set forth in Acquiror's vouchers
or other statements.
SECTION 7.3 Amendment. Subject to the applicable
provisions of the Delaware Code, at any time prior to the
Effective Time, the parties hereto may modify or amend
this Agreement, by written agreement executed and
delivered by duly authorized officers of the respective
parties; provided, however, that after approval of the
Merger by the stockholders of the Company, no amendment
shall be made which reduces the amount of the Merger
Consideration payable in the Merger or adversely affects
the rights of the Company's stockholders hereunder
without the approval of such stockholders. This Agreement
may not be amended except by an instrument in writing
signed on behalf of each of the parties.
SECTION 7.4 Extension; Waiver. At any time prior to
the Effective Time, the parties may (a) extend the time
for the performance of any of the obligations or other
acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties
contained in this Agreement or in any document delivered
pursuant to this Agreement or (c) subject to Section 7.3,
waive compliance with any of the agreements or conditions
of the other parties contained in this Agreement. Any
agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a
waiver of such rights.
SECTION 7.5 Procedure for Termination, Amendment,
Extension or Waiver. A termination of this Agreement
pursuant to Section 7.1, an amendment of this Agreement
pursuant to Section 7.3 or an extension or waiver
pursuant to Section 7.4 shall, in order to be effective,
require in the case of Acquiror or the Company, action by
its Board of Directors or the duly authorized designee of
its Board of Directors.
ARTICLE 8
SURVIVAL OF PROVISIONS
SECTION 8.1 Survival. The representations and
warranties respectively made by the Company, Acquiror in
this Agreement, or in any certificate, respectively,
delivered by the Company, Acquiror pursuant to Section
6.2 or Section 6.3 hereof, will terminate upon the
Closing and be of no further force or effect.
ARTICLE 9
NOTICES
SECTION 9.1 Notices. Any notice or communication
given pursuant to this Agreement must be in writing and
will be deemed to have been duly given if mailed (by
registered or certified mail, postage prepaid, return
receipt requested), or, if transmitted by facsimile, or
if delivered by courier, as follows:
If to the Company, to:
Portec, Inc.
M. T. ▇▇▇▇▇▇
Chief Executive Officer and President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Acquiror, to:
c/o Code ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLC
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Altheimer & ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and other communications required or
permitted under this agreement that are addressed as
provided in this Section 9.1 will, whether sent by mail,
facsimile, or courier, be deemed given upon the first
Business Day after actual delivery to the addressed
destination to which such notice or other communication
is sent (as evidenced by the return receipt or shipping
invoice signed by a representative of such party or by
facsimile confirmation). Any party from time to time may
change its address for the purpose of notices to that
party by giving a similar notice specifying a new
address, but no such notice will be deemed to have been
given until it is actually received by the party sought
to be charged with the contents thereof. For purposes of
this Section 9.1, "Business Day" shall mean a day other
than Saturday, Sunday or any day on which the principal
commercial banks located in Chicago, Illinois are
authorized or obligated to close under the laws of
Illinois.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 Entire Agreement. This Agreement and
the Confidentiality Agreement constitute the entire
agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior
communications, agreements, understandings,
representations, and warranties whether oral or written
between the parties hereto. There are no oral or written
agreements, understandings, representations, or
warranties between the parties hereto with respect to the
subject hereof other than those set forth in this
Agreement and the Confidentiality Agreement. In the
event of any conflict between the terms of this Agreement
and the terms of the Confidentiality Agreement, the terms
of this Agreement shall control.
SECTION 10.2 Expenses. Except as otherwise
provided in this Agreement, the Company and Acquiror each
will pay its own costs and expenses incident to preparing
for, entering into and carrying out this Agreement and
the consummation of the transactions contemplated hereby
except that the expenses incurred in connection with the
printing, mailing and distribution of the Proxy Statement
(or an Information Statement in lieu thereof) shall be
borne equally by the Company and Acquiror.
Notwithstanding anything in this Agreement to the
contrary, the Company covenants and agrees that, assuming
the Closing Date occurs on or before July 31, 1998, the
fees and expenses of the Company incurred in connection
with this Agreement and the Merger shall not exceed
$1,100,000 in the aggregate, and all such fees and
expenses shall have been accrued or paid as of the
Effective Time.
SECTION 10.3 Counterparts. This Agreement may be
executed in one or more counterparts, each of which will
be deemed an original, but all of which will constitute
one and the same instrument and shall become effective
when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 10.4 No Third Party Beneficiary. Except as
otherwise specifically provided in Section 4.9, this
Agreement is not intended and may not be construed to
create any rights in any parties other than the Company
and Acquiror and their respective successors or assigns,
and it is not the intention of the parties to confer
third-party beneficiary rights upon any other person.
SECTION 10.5 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the State of Delaware (without regard to the principles
of conflicts of law) applicable to a contract executed
and to be performed in such State.
SECTION 10.6 Assignment; Binding Effect. Neither
this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any
of the parties without the prior written consent of the
other parties, such consent not to be unreasonably
withheld and any such assignment that is not consented to
shall be null and void, except that Acquiror shall have
the right to assign this Agreement to affiliate of ▇.
▇▇▇▇▇▇▇ Industries, L.P. Subject to the preceding
sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by, the parties and
their respective successors and assigns.
SECTION 10.7 Disclosure Schedule. The Company shall
have the right to amend or supplement the Disclosure
Schedule at any time prior to April 10, 1998, provided no
such amendment or supplement shall be deemed to cure or
otherwise alter or change any representation or warranty
of the Company made as of the date hereof. If the
amended or supplemented disclosure (if originally made at
the closing in the certificate required by Section 6.2.1)
would excuse Acquiror from performing its obligations
under this Agreement or otherwise permit Acquiror to
terminate this Agreement, Acquiror may then elect to
terminate this Agreement. If Acquiror does not terminate
this Agreement within five (5) days after receipt of such
amended or supplemented disclosure, Acquiror will be
deemed to have waived the right to terminate this
Agreement on the basis of such amended or supplemented
disclosure.
SECTION 10.8 Enforcement of this Agreement. The
parties hereto agree that irreparable damage would occur
in the event that any of the terms or provisions of this
Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is
accordingly agreed that each of the parties hereto 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 of America or any state having
jurisdiction, such remedy being in addition to any other
remedy to which any party may be entitled at law or in
equity.
SECTION 10.9 Headings, Gender, etc. The headings
used in this Agreement have been inserted for convenience
and do not constitute matter to be construed or
interpreted in connection with this Agreement. Unless the
context of this Agreement otherwise requires, (a) words
of any gender are deemed to include each other gender;
(b) words using the singular or plural number also
include the plural or singular number, respectively; (c)
the terms "hereof," "herein," "hereby," "hereto," and
derivative or similar words refer to this entire
Agreement; (d) the terms "Article" or "Section" refer to
the specified Article or Section of this Agreement; (e)
all references to "dollars" or "$" refer to currency of
the United States of America; (f) the term "person" shall
include any natural person, corporation, limited
liability company, general partnership, limited
partnership, or other entity, enterprise, authority or
business organization; and (g) the term "or" is
disjunctive but not necessarily exclusive.
IN WITNESS WHEREOF, this Agreement has been duly
executed and delivered by the duly authorized officers of
the Company and Acquiror effective as of the date first
written above.
MHD ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Vice President
PORTEC, INC.
By: /s/ M. T. ▇▇▇▇▇▇
--------------------------
Name: M. T. ▇▇▇▇▇▇
Its: Chief Executive Officer
and President