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EXHIBIT 10.3
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MATTHEWS INTERNATIONAL CORPORATION,
EMPIRE MERGER CORP.
AND
THE YORK GROUP, INC.
Dated as of May 24, 2001
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TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
ARTICLE I THE MERGER
Section 1.3. Effects of the Merger
Section 1.4. Charter and By-Laws; Board of Directors; Management Succession
Section 1.5. Conversion of Securities
Section 1.6. Matthews to Make Certificates Available
Section 1.7. Transfer Taxes; Withholding
Section 1.8. Return of Exchange Fund
Section 1.9. No Further Ownership Rights in York Common Stock
Section 1.10. Closing of York Transfer Books
Section 1.11. Lost Certificates
Section 1.12. Further Assurances
Section 1.13. Closing
ARTICLE II REPRESENTATIONS AND WARRANTIES OF YORK
Section 2.1. Corporate Organization
Section 2.2. Capitalization
Section 2.3. Authority; No Violation
Section 2.4. Consents and Approvals
Section 2.5. SEC Documents and Other Reports
Section 2.6. Proxy Statement
Section 2.7. Absence of Certain Changes or Events
Section 2.8. Permits and Compliance
Section 2.9. Tax Matters.
Section 2.10. Actions and Proceedings.
Section 2.11. Certain Agreements
Section 2.12. ERISA
Section 2.13. Labor Matters
Section 2.14. Intellectual Property
Section 2.15. Environmental and Safety Matters
Section 2.16. Insurance
Section 2.17. Required Vote of York Stockholders
Section 2.18. State Take Over Laws
Section 2.19. Opinion of Financial Advisor
Section 2.20. Broker's Fees
Section 2.21. Disclosure
Section 2.22. Unlawful Payments and Contributions
Section 2.23. Material Contracts
Section 2.24. Warranties
Section 2.25. Restrictions on Business Activities
Section 2.26. Real Property
Section 2.27. Rights Plan
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MATTHEWS
Section 3.1. Corporate Organization
Section 3.2. Capitalization
Section 3.3. Authority; No Violation
Section 3.4. Consents and Approvals
Section 3.5. SEC Documents and Other Reports
Section 3.6. Proxy Statement
Section 3.7. Absence of Certain Changes or Events
Section 3.8. Litigation
Section 3.9. Brokers, Finders, etc.
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Section 3.10. Vote of Stockholders
Section 3.11. Financing.
ARTICLE IV CONDUCT OF BUSINESS
Section 4.1. Conduct of York
ARTICLE V ADDITIONAL AGREEMENTS
Section 5.1. No Solicitation
Section 5.2. Proxy Statement
Section 5.3. Stockholders Meeting
Section 5.4. Access to Information
Section 5.5. Notices of Certain Events
Section 5.6. Appropriate Action; Consents; Filings
Section 5.7. Public Disclosure
Section 5.8. Indemnification of Directors and Officers
Section 5.9. State Takeover Laws
Section 5.10. Rights Agreement
ARTICLE VI CONDITIONS TO MERGER
Section 6.1. Conditions to Each Party's Obligations
Section 6.2. Additional Conditions to Obligations of York
Section 6.3. Additional Conditions to Obligations of Matthews
ARTICLE VII TERMINATION
Section 7.1. Termination
Section 7.2. Effect of Termination
Section 7.3. Fees and Expenses
Section 7.4. Post-Termination Obligations
ARTICLE VIII MISCELLANEOUS
Section 8.1. Nonsurvival of Representations, Warranties and Agreements
Section 8.2. Notices
Section 8.3. Interpretation and Construction; Severability; Interpretation of
Obligations
Section 8.4. Counterparts
Section 8.5. Entire Agreement; No Third Party Beneficiaries
Section 8.6. Governing Law
Section 8.7. Assignment
Section 8.8 Amendment
Section 8.9 Extension; Waiver
Section 8.10 Consent to Jurisdiction: Appointment of Agent for Service of
Process
Exhibits
Exhibit 1.5(x) Stock Option Valuation
Exhibit 1.5(y) Agreed Upon Procedures
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TABLE OF DEFINED TERMS
Term Section
1990 Plan 2.2(a)
1991 Plan 2.2(a)
1996 Director Plan 2.2(a)
1996 Plan 2.2(a)
Adjusted Working Capital 1.5(c)(ii)
Adjusted Working Capital Statement 1.5(c)(ii)
Agent 8.10
Agreed-Upon Procedures 1.5(c)(iii)
Agreement Preamble
Antitrust Laws 5.6(b)
Appraisal Shares 1.5(e)
Appraised Value 1.5(c)(ii)
Bronze Business 1.5(c)(ii)
Certificate of Merger 1.2
Certificates 1.6(b)
Closing 1.13
Code 1.7
Confidentiality Agreement 5.4
Constituent Corporations Preamble
Deferred Stock 1.5(d)
Domain Names 2.14(a)
DGCL 1.1
EBITDA 1.5(c)(ii)
EBITDA Statement 1.5(c)(ii)
ERISA 2.12(a)
ERISA Affiliate 2.12(d)
Effective Time 1.2
End Date 7.1(b)
Environmental Laws 2.15(a)
Excess Cash Increment 1.5(c)(ii)
Exchange Act 2.5
Exchange Agent 1.6(a)
Exchange Fund 1.6(a)
Excess Cash Increment 1.5(c)(ii)
Financial Statements 1.5(c)(ii)
GAAP 1.5(c)(ii)
Governmental Entity 2.4
HSR Act 2.4
Indemnified Parties 5.8(a)
Independent Auditor 1.5(c)(iv)
Intellectual Property 2.14(a)
IRS 2.9
Knowledge of York 2.8
Liens 2.2(b)
Material Adverse Effect 2.1(a)
Material Agreement 2.3(b)
Matthews Preamble
Matthews Disclosure Letter Article III
Matthews SEC Documents 3.5
Merger Recitals
Merger Sub Preamble
Order 5.6(b)
Outstanding Shares 1.5(c)(ii)
Patents 2.14(a)
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Person 4.1(c)
Proxy Statement 2.4
Registered Intellectual Property 2.14(a)
SEC 2.4
Securities Act 2.1(a)
Selected Property Value 1.5(c)(ii)
Significant Subsidiary 5.1(a)
State and Foreign Approvals 2.4
Stockholders Meeting 5.3
Subsidiary 2.1(a)
Superior Proposal 5.1(a)
Surviving Corporation 1.1
Takeover Proposal 5.1(a)
Taxes 2.9
Tax Return 2.9
Threshold EBITDA 1.5(c)(iii)
Trademarks 2.14(a)
Unusual Charges 1.5(c)(ii)
URLs 2.14(a)
Vault Business 1.5(c)(ii)
wholly-owned Subsidiary 2.1(a)
Worker Safety Laws 2.15(a)
York Preamble
York By-Laws 2.1(a)
York Cash 1.5(c)(ii)
York Certificate of Incorporation 2.1(a)
York Common Stock Recitals
York Disclosure Letter Article II
York Equity Value 1.5(c)(ii)
York Intellectual Property 2.14(a)
York Leased Property 2.27(b)
York Leases 2.27(b)
York Non Plan Options 2.2(a)
York Material Contracts 2.24
York Multiemployer Plan 2.12(d)
York Owned Property 2.27(a)
York Permits 2.8
York Plan 2.12(d)
York Preferred Stock 2.2(a)
York Products 2.14(a)
York Real Property 2.27(b)
York Registered Intellectual Property 2.14(a)
York Rights Recitals
York Rights Agreement 2.28
York SEC Documents 2.5
York Stock Options 2.2(a)
York Stock Plans 2.2(a)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is entered into as of May 24, 2001 (this
"Agreement") by and among MATTHEWS INTERNATIONAL CORPORATION, a Pennsylvania
corporation ("Matthews"), EMPIRE MERGER CORP., a Delaware corporation and a
wholly-owned subsidiary of Matthews ("Merger Sub"), and THE YORK GROUP, INC.,
a Delaware corporation ("York") (Matthews, Merger Sub and York being
hereinafter collectively referred to as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Matthews, Merger Sub and York
have approved and declared advisable the merger of Merger Sub with and into
York (the "Merger"), upon the terms and conditions set forth herein, whereby
each issued and outstanding share of Common Stock of York, par value $.01 per
share (the "York Common Stock"), together with any associated York preferred
stock purchase rights ("York Rights"), not owned directly or indirectly by
Matthews will be converted into an amount in cash; and
WHEREAS, the respective Boards of Directors of Matthews and York have
determined that the Merger is in furtherance of and consistent with their
respective long-term business strategies and is in the best interests of their
respective stockholders;
NOW, THEREFORE, in consideration of the premises, representations, warranties
and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Merger Sub shall be merged with and into York at the
Effective Time (as defined in Section 1.2). Following the Merger, the
separate corporate existence of Merger Sub shall cease and York shall continue
as the surviving corporation (the "Surviving Corporation") and shall succeed
to and assume all the rights and obligations of Merger Sub in accordance with
the DGCL and shall continue under the name The York Group, Inc.
Section 1.2. Effective Time. Concurrently with the Closing (as defined in
Section 1.13), Matthews, Merger Sub and York will cause a Certificate of
Merger (the "Certificate of Merger"), executed in accordance with the relevant
provisions of the DGCL, to be filed with the Secretary of State of Delaware.
The Merger shall become effective on the date and at the time when the
Certificate of Merger has been duly filed with the Secretary of State of
Delaware (the "Effective Time").
Section 1.3. Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
Section 1.4. Charter and By-Laws; Board of Directors; Management Succession.
(a) At the Effective Time, the Certificate of Incorporation of Merger Sub as
in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until changed or amended as
provided therein or by applicable law; provided, however, that at the
Effective Time, the Certificate of Incorporation shall be amended so that the
name of the Surviving Corporation shall be "The York Group, Inc." At the
Effective Time, the By-Laws of Merger Sub, as in effect immediately prior to
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the Effective Time shall be the By-Laws of the Surviving Corporation until
changed or amended as provided therein or by applicable law.
(b) From and after the Effective Time, until duly changed in compliance with
applicable law and the certificate of incorporation and by-laws of the
Surviving Corporation, the board of directors of the Surviving Corporation
shall consist of the board of directors of Merger Sub immediately prior to the
Effective Time.
(c) From and after the Effective Time, the officers of the Surviving
Corporation shall be the officers of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or
appointed and qualified in accordance with applicable law.
Section 1.5. Conversion of Securities. As of the Effective Time, by virtue
of the Merger and without any action on the part of Matthews, Merger Sub, York
or the holders of any securities of the Constituent Corporations:
(a) All shares of York Common Stock, together with any associated York Rights,
that are held in the treasury of York or by any wholly-owned Subsidiary of
York and any shares of York Common Stock, together with any associated York
Rights, owned by Matthews or by any wholly-owned Subsidiary or Affiliate of
Matthews shall be cancelled and no capital stock of Matthews or other
consideration shall be delivered in exchange therefor.
(b) Each share of common stock, par value $.01 per share, of Merger Sub issued
and outstanding immediately prior to the Effective Time shall be converted
into one share of common stock, par value $.01 per share, of the Surviving
Corporation with the same rights, powers and privileges as the shares so
converted and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation.
(c) (i) Each share of York Common Stock, together with any associated York
Rights, issued and outstanding immediately prior to the Effective Time (other
than shares of York Common Stock referred to in Section 1.5(a) hereof and
Appraisal Shares as defined in Section 1.5(e)), shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into an
amount in cash, per share of York Common Stock held, together with any
associated York Rights, as determined in Section 1.5(c)(ii) below.
(ii) The calculation of the amount of cash to be paid to the holders of York
Common Stock for each share of York Common Stock together with any associated
York Rights shall be (x) $10 per share of York Common Stock together with any
associated York Rights, plus (y) the Excess Cash Increment (such per share
calculation being herein referred to as the "York Equity Value"); provided,
however, (i) for the avoidance of doubt, the York Equity Value shall not be
less than $10 per share of York Common Stock together with any associated York
Rights and (ii) that if York's EBITDA (as defined below) for the nine months
ended September 30, 2001 does not at least equal $9.0 million (the "Threshold
EBITDA"), then Matthews shall be permitted to terminate this Agreement in
accordance with Section 7.1(j) hereof. Notwithstanding the foregoing,
Matthews shall not be required to pay more than $11 per share of York Common
Stock.
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(iii) (A) As used herein,
Excess Cash Increment = A - ($6.9 million + B + C + D + E + F + G) + (H + I)
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Outstanding Shares
Excess Cash Increment shall not be less than zero.
"A" is "York Cash." "York Cash" shall mean the total cash and Cash Equivalents
of York and its Subsidiaries at October 31, 2001, plus the Selected Property
Value. "Cash Equivalents" shall mean all highly liquid investments of York
purchased with original maturities of three months or less. "Selected
Property Value" shall mean (i) 50% of the aggregate Appraised Value on the
following properties of York not sold nor subject to a Pending Contract to
sell by York on or before October 31, 2001: Aiken, South Carolina; Portland,
Oregon; Lawrenceville, Georgia; Richmond, Indiana (at 111 N. W. "T" Street)
and New Orleans, Louisiana (the "Selected Properties"), plus (ii) the agreed
upon purchase price for any or all of the Selected Properties that are subject
to a Pending Contract for sale. "Appraised Value" shall mean the fair market
value of such properties held for sale, determined as soon as practicable
after the date hereof, but in no event determined later than October 31, 2001,
by a certified real estate appraisal firm selected by Matthews, using
appraisal criteria determined by the appraisal firm and reasonably acceptable
to Matthews and York, including consideration of environmental issues with
respect to such properties, and "Pending Contract" shall mean a standard
contract for sale of real estate in the applicable jurisdiction with respect
to which the contingency period has expired or which does not contain a
contingency period of more than 60 days.
"B" is "Present Value Environmental Remediation Costs." "Present Value
Environmental Remediation Costs" shall mean the present value cost (discounted
at 7.5%) of the Environmental Remediation Costs which are not paid on or
before October 31, 2001. "Environmental Remediation Costs" shall mean the
estimated remediation costs to meet applicable environmental clean-up
requirements and to conduct any ongoing environmental monitoring and
maintenance activities for the following locations: Anniston, Alabama, West
Point, Mississippi and Lynn, Indiana, with such costs to be determined as
follows:
(1) York shall, at York's expense, engage an environmental consulting company
to perform a limited Phase II subsurface environmental investigation of the
three sites consistent with a scope of work, which was proposed by Matthews
and approved by York before the date of this Agreement ("Limited Phase II
Investigation"). York and Matthews have preapproved RMT, Inc. ("RMT") to
perform the Limited Phase II Investigation. RMT or, if both York and Matthews
approve, another environmental consulting company ("Contractor"), shall be
instructed to perform its work so as to reach a probable-cost estimate or a
range of estimates in accordance with (i) the provisions herein and (ii) the
scope of work, including specifically to produce a range of estimates (if
necessary) with a confidence range of plus or minus $1 million as provided for
in subsection (4) below. York will allow Matthews or its representatives to
observe the Limited Phase II Investigation at all three sites and shall
provide Matthews with copies of all field notes, boring logs and analytical
data within a reasonable time after receipt and prior to the preparation of
the Phase II Report. York shall authorize Contractor to discuss its work with
Matthews or its representatives if York's representatives participate in such
discussions.
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(2) York shall use commercially reasonable efforts to cause the Limited Phase
II Investigation to be completed, and a report regarding the same to be
issued, on or before July 15, 2001 ("Phase II Report"). The Phase II Report
will contain recommendations for additional investigation and/or remediation,
if appropriate. York will consider, in good faith, reasonable comments by
Matthews or its representatives on the draft Phase II Report before
finalizing.
(3) Based upon the Limited Phase II Investigation, the Phase II Report shall
include a probable-cost estimate (on a facility specific basis) of costs to
conduct remediation activities necessary (if any) to address the presence of
contaminants in soil and/or groundwater at each of the facilities in
concentrations greater than permitted for commercial/industrial property under
applicable Environmental Laws, as revealed by the Limited Phase II
Investigation. The probable-cost estimate shall be based upon the lowest cost
methods for investigation, remediation, removal, corrective action,
containment and/or monitoring permitted by applicable Environmental Laws and
to minimize liability under Environmental Laws. It is understood that any
required corrective action may include the use of risk-based remedies
(including without limitation natural attenuation remedies), institutional
and/or engineering controls or deed restrictions, if such remedies or controls
have been approved or accepted by the relevant state agency in similar
situations and provided that such remedies or controls do not unreasonably
restrict or interfere with the current use of the facility. It is further
understood that the probable-cost estimate shall include all investigation,
remediation, removal, corrective action, containment and/or monitoring
requirements of applicable state or federal environmental agencies.
(4) If Contractor's probable-cost estimate for any of the three facilities
cannot be refined to an estimate with a confidence range of plus or minus $1
million (e.g. $1-3 million) after the Limited Phase II Investigation, then
York and Matthews will cooperate with Contractor to approve such additional
investigation by Contractor at any of the three facilities as will facilitate
the refinement of the probable-cost estimate to an estimate with a confidence
range of plus or minus $1 million. Such additional investigation shall be at
York's expense and shall be completed on or before August 31, 2001 or such
later date as the parties may agree upon; provided that a final
characterization report and probable-cost estimate with a confidence range of
plus or minus $1 million must be delivered by Contractor to York and Matthews
no later than September 30, 2001. York will allow Matthews or its
representatives to observe any additional investigation and shall provide
Matthews with copies of all field notes, boring logs and analytical data
within a reasonable time after receipt and prior to the preparation of the
final characterization report. York shall authorize contractor to discuss its
work with Matthews or its representatives if York's representatives
participate in such discussions. Subject to Subsection (5), Environmental
Remediation Costs for any given facility shall be the midpoint of any probable
cost estimate range for such facility that meets the requirements of this
Subsection (4) (e.g. with a $1-3 million range, midpoint would be $2 million).
Environmental Remediation Costs for all three facilities shall be the
aggregate midpoints of such ranges, which meet the requirements of this
subsection (4).
(5) If the midpoint of the probable-cost estimate for any one facility is
equal to or less than $100,000, then the Environmental Remediation Cost for
such facility shall be deemed to be zero. Without giving effect to the
preceding sentence, if the aggregate midpoints of the probable-cost estimates
for all three facilities, in the aggregate, is less than or equal to $300,000,
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then the Environmental Remediation Cost for all three facilities shall be
deemed to be zero.
If as a result of the Limited Phase II Investigation, York must commence
remediation activities before the Closing Date to comply with applicable
Environmental Laws, York and Matthews agree to reasonably cooperate with
respect to such activities, and Matthews will identify the name and contact
information for a person representing Matthews who will coordinate with York,
and if desired, provide comment regarding the scope, timing, and performance
of such activities.
"C" is the premium not paid on or before October 31, 2001 for cost cap
coverage from AIG or a similarly rated insurance company for each facility
having a probable-cost estimate exceeding $100,000 so that the parties may
protect against actual costs of remediation at such facility exceeding the
amount of the Environmental Remediation Costs applicable to such facility. In
determining the Insurance Premium, the policy shall have (a) a self-insured
retention/deductible equal to the Environmental Remediation Costs for each
facility having a probable-cost estimate exceeding $100,000, (b) limits of
liability equal to 100% of the Environmental Remediation Costs for each
facility having a probable-cost estimate exceeding $100,000, and (c) a policy
term of 10 years, unless a shorter or longer remediation period is applicable,
in which case the term shall not be shorter than the projected remediation
period. If cost cap coverage meeting the specifications set forth herein
cannot be bound by York despite York's commercially reasonable efforts to do
so on or before October 31, 2001 (it being understood that York shall have no
obligation to purchase such insurance if the premium exceeds 25% of the
Environmental Remediation Costs), then cost cap coverage need not be procured
and for purposes of the Excess Cash Increment calculation, the premium shall
be deemed to be 25% of the Environmental Remediation Costs with respect to
such facilities for which such cost cap coverage has not been obtained.
"D" is the legal, accounting, environmental consulting and investment banking
fees and expenses incurred or accrued by York and its Subsidiaries on or
before October 31, 2001 in connection with this Agreement and closing the
Merger (and not yet paid), or are reasonably anticipated by York to be
incurred by York prior to the Closing.
"E" is the costs of settling, cashing out or causing to be cancelled all York
Stock Options not exercised on or before October 31, 2001 and Deferred Stock
(as defined in Section 1.5(d)), as determined in accordance with the formula
set forth in Exhibit 1.5(x) less, in the case of York Stock Options, any
exercise price to be paid to York by the optionee (but for avoidance of doubt
not decreased by any unpaid cash accruals under the Director Deferral Plan (as
defined in Section 1.5(d)) or York's Non-Qualified Deferred Compensation
Plan).
"F" is the amount by which Adjusted Working Capital is greater that $13.2
million or less than $10.2 million on October 31, 2001. If Adjusted Working
Capital as of October 31, 2001 is greater than $13.2 million, the excess
amount shall be a negative number and have the effect of increasing the Excess
Cash Increment, but if the Adjusted Working Capital as of October 31, 2001 is
less than $10.2 million, the deficiency shall be a positive number and have
the effect of decreasing the Excess Cash Increment. "Adjusted Working Capital"
shall mean the difference between (a) the sum of (1) trade accounts and notes
receivable (net of allowance for doubtful accounts), (2) inventory, (3) pre-
paid expenses, (4) deferred tax amount, (5) income tax receivable, (6) assets
held for sale, (7) other current assets, (8) any amounts which are reflected
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in Adjusted Working Capital and are being deducted from the Excess Cash
Increment calculation pursuant to letters "D" and "E" above and (9) any
indemnity to which York would be entitled under the Purchase Agreements (as
defined herein), but which has not been paid due to the Basket Amount provided
for in Section 5.03(b)(ii) of the Stock Purchase Agreement or the Asset
Purchase Agreement (as such agreements are defined herein) or for any other
reason and (b) the sum of (1) accounts payable, (2) accrued expenses and (3)
other current liabilities, and specifically excluding any calculation of cash,
Cash Equivalents or Funded Indebtedness, all determined in accordance with
generally accepted accounting principles ("GAAP") applied consistently with
the audited financial statements (the "Financial Statements") of York as of
December 31, 2000. The foregoing notwithstanding, Adjusted Working Capital
shall not be reduced by any decreases in York's assets, liabilities or
financial position resultant from or arising out of claims for indemnification
under the Purchase Agreements.
"G" is all funded indebtedness, and any capitalized lease obligations first
incurred after the date of this Agreement, of York and its Subsidiaries
("Funded Indebtedness") on October 31, 2001.
"H" is any cash paid for severance, retention, transition or integration costs
to the extent that York and Matthews agree to the same in a writing referring
to this Section 1.5(c)(ii) and/or the Excess Cash Increment.
"I" is any indemnity to which York would be entitled under the Asset Purchase
Agreement dated concurrently herewith among Matthews, Empire Stock Corp.,
York, York Bronze Company and OMC Industries, Inc. (the "Asset Purchase
Agreement"), the Stock Purchase Agreement by and between Matthews, Empire
Stock Corp. and York dated concurrently herewith (the "Stock Purchase
Agreement") and any other document related thereto (together with the Stock
Purchase Agreement and the Asset Purchase Agreement, the "Purchase
Agreements"), but which has not been paid due to the Basket Amount provided
for in Section 5.03(b)(ii) of the Stock Purchase Agreement or the Asset
Purchase Agreement or for any other reason.
"Outstanding Shares" shall mean the total number of shares of York Common
Stock outstanding on October 31, 2001.
Neither York Cash nor Excess Cash Increment will be reduced by any decreases
in York's Cash or Cash Equivalents resulting from or arising out of claims for
indemnification under the Purchase Agreements. For the avoidance of doubt,
York has not agreed at this time and is not obligated under this Agreement or
any of the Purchase Agreements to pay any transition or integration costs.
(B) As used herein, "EBITDA" shall mean the York net income for the nine
months ended September 30, 2001 as shown in the Financial Statements of York
filed with York's September 30, 2001 Form 10-Q Report, (i) plus interest,
taxes, depreciation and amortization for such nine month period as shown in
such Financial Statements of York, (ii) plus any Unusual Charges for such nine
month period (as defined below), (iii) less any Non-recurring Gains during
such nine month period (as defined below), (iv) and including a pro forma
adjustment to remove the EBITDA effect for such nine month period of the
Bronze Business, the Selected Properties, the Vault Business, and all other
businesses, assets and properties disposed of or discontinued by York on or
after January 1, 2001. As used herein, "Unusual Charges" shall mean (w) any
legal, accounting, investment banking, proxy solicitation and printing fees,
costs and expenses, incurred in conjunction with this Agreement and the
Purchase Agreements and closing the Merger and the transactions contemplated
by the Purchase Agreements, (x) legal, accounting, investment banking, proxy
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solicitation, printing and other fees, costs, expenses and charges incurred in
evaluating and responding to the proposals, offers and communications of
stockholders and other potential strategic or financial partners, acquirors or
investors plus those incurred in conjunction with York's credit facilities and
refinancing efforts, (y) any transition, integration, consolidation, severance
and retention fees, costs and expenses incurred in conjunction with this
Agreement and closing the Merger and determined in accordance with GAAP, and
(z) any other items of a non-recurring nature (whether or not related to this
Agreement or closing the Merger, such as plant closing expenses or
environmental costs of a non recurring nature) accruing during 2001 (and
determined in accordance with GAAP). For avoidance of doubt with respect to
subsection (y) of the immediately preceding sentence, York has not agreed at
this time and is not obligated under this Agreement or any of the Purchase
Agreements to pay any transition, integration and consolidation fees, costs
and expenses. As used herein, "Non-recurring Gains" shall mean any gain (or
loss) on the sale or other disposition, except for any sales or dispositions
in the ordinary course of the business of York and its Subsidiaries at the
time of such disposition, of any fixed assets or business units (determined in
accordance with GAAP). The foregoing notwithstanding, EBITDA shall not be
reduced by any decreases in York's assets, liabilities or financial position
resultant from or arising out of claims for indemnification under the Purchase
Agreements.
(C) As used herein, "Bronze Business" shall mean the bronze business
discontinued by York prior to the date hereof and the business conducted by
York's York Bronze, Inc. and OMC Industries, Inc. subsidiaries sold to
Matthews pursuant to the Stock Purchase Agreement.
(D) As used herein, "Vault Business" shall mean the business being sold by
York pursuant to the Asset Purchase Agreement dated May 2, 2001 between Doric
Products, Inc. and York.
(iv) As promptly as practicable after September 30, 2001 (but in no event
later than November 12, 2001), York will deliver to Matthews a statement of
EBITDA as of September 30, 2001 (the "EBITDA Statement"). As promptly as
practicable after September 30, 2001 (but in no event later than October 31,
2001), York will deliver to Matthews a Statement of Adjusted Working Capital
as of September 30, 2001 (the "September Adjusted Working Capital Statement").
The Adjusted Working Capital Statements (as defined below) and the EBITDA
Statement will be prepared in accordance with GAAP, applied consistently with
the Financial Statements of York as of December 31, 2000, and subjected to the
Agreed-Upon Procedures to be performed by Arthur Andersen LLP.
As promptly as practicable after October 31, 2001 (but in no event later than
November 19, 2001), York will deliver to Matthews a Statement of Adjusted
Working Capital as of October 31, 2001 (the "October Adjusted Working Capital
Statement and together with the September Adjusted Working Capital Statement,
the "Adjusted Working Capital Statements"). Such October Adjusted Working
Capital Statement will be prepared on a basis consistent in all material
respects with the September Adjusted Working Capital Statement. Matthews
shall cause such October Adjusted Working Capital Statement to be reviewed by
PricewaterhouseCoopers LLP prior to November 27, 2001.
As used herein, "Agreed-Upon Procedures" shall mean the assumptions and
determinations used to calculate EBITDA and Adjusted Working Capital which are
described as Exhibit 1.5(y) hereto to be used by York and York's auditors in
preparing the Adjusted Working Capital Statements and the EBITDA Statement.
13
(v) If Matthews objects to the Adjusted Working Capital Statements or the
EBITDA Statement by November 27, 2001, and Matthews and York are unable to
resolve such objections by November 30, 2001, then all disagreements will be
submitted for resolution to Arthur Andersen LLP (the "Independent Auditor").
The Independent Auditor will have up to 10 days after its appointment to
resolve the disputes submitted to it. The Adjusted Working Capital Statements
and the EBITDA Statement, either as agreed to by Matthews and York or as
adjusted by the Independent Auditor pursuant to the preceding sentence, will
be final and binding. The fees and expenses of the Independent Auditor will
be shared equally by Matthews and York.
(d) Immediately prior to the Effective Time, York shall settle, cash out or
cause to be cancelled all York Stock Options (as defined in Section 2.2(a))
and any shares of Common Stock which have been deferred ("Deferred Stock")
pursuant to the York Non-Employee Director Cash and Equity Compensation Plan
(the "Director Deferral Plan"), such that all York Stock Options and rights to
Deferred Stock are terminated prior to the Effective Time. For the avoidance
of doubt, Matthews shall not be required to pay for, as part of the Merger
Consideration, any Deferred Stock, and any York Stock Options which are not
vested and exercised prior to October 31, 2001.
(e) Notwithstanding any portion of this Agreement to the contrary, any shares
of York Common Stock, together with any associated York Rights, held by a
holder who has demanded and perfected appraisal rights for such shares
permitted by and in accordance with the DGCL and who, as of the Effective
Time, has not effectively withdrawn or lost such appraisal rights ("Appraisal
Shares") shall not be converted into or represent a right to receive, pursuant
to Section 1.5(c), cash, but the holder thereof shall only be entitled to
receive such rights as granted by the DGCL.
(i) Notwithstanding the foregoing, if any holder of shares of York Common
Stock, together with any associated York Rights, shall effectively withdraw or
lose (through failure to perfect or otherwise) such holder's appraisal rights,
then as of the later of (A) the Effective Time or (B) the occurrence of such
event, such holder's shares, together with any associated York Rights, shall
automatically be converted into and represent only the right to receive, as
provided in Section 1.5(c), cash with no interest thereon upon surrender of
the certificate formally representing such shares.
(ii) York will give Matthews prompt notice of its receipt of any written
demands for purchase of any shares of York Common Stock, together with any
associated York Rights, together with copies of such demands. York shall
permit Matthews to participate in all negotiations and proceedings with
respect to demands for purchase of any shares of York Common Stock, together
with any associated York Rights, as may be demanded under the DGCL.
Section 1.6. Matthews to Make Consideration Available. (a) Exchange of
Certificates. Matthews shall authorize First Chicago Trust Company of New
York (or such other person or persons as shall be reasonably acceptable to
Matthews and York) to act as the depository and exchange agent hereunder (the
"Exchange Agent"). Prior to the Effective Time, Matthews shall deposit with
the Exchange Agent, and in trust for the holders of shares of York Common
Stock, together with any associated York Rights, converted in the Merger, via
wire transfer in immediately available funds cash sufficient to make all
payments as required pursuant to Section 1.5(c) (the "Exchange Fund"). The
Exchange Agent shall deliver the cash contemplated to be issued pursuant to
Section 1.5(c) out of the Exchange Fund.
14
(b) Exchange Procedures. As soon as practicable after the Effective Time,
the Exchange Agent shall mail to each record holder of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of York Common Stock converted in the Merger (the
"Certificates") a letter of transmittal, which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon actual delivery of the Certificates to the Exchange Agent, and shall
contain instructions for use in effecting the surrender of the Certificates in
exchange for cash, pursuant to Section 1.5(c). Upon surrender for
cancellation to the Exchange Agent of all Certificates held by any record
holder of a Certificate, together with such letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor cash, pursuant to Section 1.5(c), and any Certificate so
surrendered shall forthwith be cancelled.
Section 1.7. Transfer Taxes; Withholding. If any cash is to be paid to a
name other than that in which the Certificate surrendered in exchange therefor
is registered, it shall be a condition of such exchange that the Certificate
so surrendered shall be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange shall pay to the
Exchange Agent any transfers or other taxes required, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Matthews or the Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement
such amounts as Matthews or the Exchange Agent is required to deduct and
withhold with respect to the making of any such payment under the Internal
Revenue Code of 1986, as amended (the "Code") or under any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by
Matthews or the Exchange Agent and paid to the appropriate authority, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the person in respect of which such deduction and withholding was
made by Matthews or the Exchange Agent.
Section 1.8. Return of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the former stockholders of York for one (1)
year after the Effective Time shall be delivered to the Surviving Corporation,
upon demand of the Surviving Corporation, and any such former stockholders who
have not theretofore complied with this Article I shall thereafter look only
to Matthews and the Surviving Corporation for payment of their claim for cash
pursuant to Section 1.5(c). Neither Matthews, the Exchange Agent nor the
Surviving Corporation shall (absent manifest error) be liable to any former
holder of York Common Stock for any cash held in the Exchange Fund which is
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
Section 1.9. No Further Ownership Rights in York Common Stock. All cash
paid upon the surrender for exchange of Certificates in accordance with the
terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to the shares of York Common Stock, together with any
associated York Rights, represented by such Certificates.
Section 1.10. Closing of York Transfer Books. At the Effective Time, the
stock transfer books of York shall be closed and no transfer of shares of York
Common Stock, together with any associated York Rights, shall thereafter be
made on the records of York. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, the Exchange Agent or Matthews, such
Certificates shall be cancelled and exchanged as provided in this Article I.
15
Section 1.11. Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
reasonably required by Matthews or the Exchange Agent, the posting by such
person of a bond, in such reasonable amount as Matthews or the Exchange Agent
may direct as indemnity against any claim that may be made against them with
respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the cash pursuant to Section
1.5(c).
Section 1.12. 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 (a) to vest, perfect or confirm, of record or otherwise,
in the Surviving Corporation its right, title or interest in, to or under any
of the rights, privileges, powers, franchises, properties, permits, licenses
or assets of either of the Constituent Corporations, or (b) 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 of the Constituent Corporations,
all such deeds, bills of sale, assignments and assurances and to do, in the
name and on behalf of either Constituent Corporation, all such other acts and
things as may be necessary, desirable or proper to vest, perfect or confirm
the Surviving Corporation's right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of such
Constituent Corporation and otherwise to carry out the purposes of this
Agreement.
Section 1.13. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") and all actions specified in this Agreement to occur
at the Closing shall take place at the offices of Reed Smith LLP, 435 Sixth
Avenue, Pittsburgh, Pennsylvania, at 10:00 a.m., local time, no later than the
second business day following the day on which the last of the conditions set
forth in Article VI shall have been fulfilled or waived (if permissible),
which is expected to be on or about November 30, 2001, or at such other time
and place as Matthews and York shall agree; provided, however, that in no
event shall the Closing take place prior to November 27, 2001 or later than
the End Date (as defined in Section 7.1(b)).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF YORK
Except as disclosed in York's filings with the Securities and Exchange
Commission, the letter delivered to Matthews concurrently herewith and
designated therein as the York Disclosure Letter (the "York Disclosure
Letter") or the Disclosure Schedules to the Purchase Agreements, York hereby
represents and warrants to Matthews and Merger Sub as follows:
Section 2.1. Corporate Organization. (a) York is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. York has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not reasonably be expected to have a Material
Adverse Effect on York. As used in this Agreement, the term "Material Adverse
16
Effect" means, with respect to York or Matthews, as the case may be, a
material adverse effect on (i) the business, operations, results of operations
or financial condition of such party and its Subsidiaries taken as a whole, or
(ii) the ability of such party to consummate the transactions contemplated
hereby, except to the extent resulting from, related to or otherwise arising
by virtue of (u) noncompliance with Environmental Laws by York, its
Subsidiaries or their Affiliates, agents or predecessors, with the exception
of an intentional misrepresentation of Section 2.15 which to York's knowledge
would reasonably be expected to have a Material Adverse Effect, (v) with
respect to each party, the effect of any event, occurrence, fact, condition,
change, development or effect that is set forth in this Agreement or in the
York Disclosure Letter, (w) with respect to each party, the effect of any
other transaction or transactions with respect to which such party or its
Affiliates, prior to the date hereof, has announced (generally or
specifically) its intention to investigate, evaluate or consummate, (x) with
respect to York, the effect of the public announcement or pendency of the
transactions contemplated hereby on current customers or revenues of York or
the effect of the announcement or pendency of any other agreement, agreements,
transaction or transactions among any of the parties hereto, among any of
their Affiliates, or among any party hereto and any Affiliate of a party
hereto (each a "Constituent Agreement", (y) with respect to each party, any
changes in general, local, regional, state, United States or global economic
or political conditions or (z) with respect to each party, any changes
affecting the industry or industries generally in which such party operates.
As used in this Agreement, the word "Subsidiary" means any corporation,
partnership, limited liability company, joint venture or other legal entity of
which York or Matthews, as the case may be (either alone or through or
together with any other Subsidiary) (i) owns, directly or indirectly, 50% or
more of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation, partnership, limited liability company, joint
venture or other legal entity, (ii) is a general partner, trustee or other
entity or person performing similar functions, or (iii) has control (as
defined in Rule 405 under the Securities Act of 1933, as amended (together
with the rules and regulations promulgated thereunder, the "Securities Act")).
True and complete copies of the Certificate of Incorporation (the "York
Certificate of Incorporation") and by-laws of York (the "York By-Laws"), as in
effect as of the date of this Agreement, have previously been made available
by York to Matthews.
(b) Each York Subsidiary (i) is duly organized and validly existing under the
laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would reasonably be expected to have a Material Adverse Effect on
York and (iii) has all requisite corporate power and authority to own or lease
its properties and assets and to carry on its business as now conducted except
as would not reasonably be expected to have a Material Adverse Effect on York.
(c) The minute books of each of York and the York Subsidiaries accurately
reflect in all material respects all material corporate actions held or taken
since January 1, 1998 of its respective stockholders and respective boards of
directors (including committees of the board of directors of York) except as
would not reasonably be expected to have a Material Adverse Effect on York.
17
Section 2.2. Capitalization. (a) As of December 31, 2000, the authorized
capital stock of York consists of (i) 25,000,000 shares of York Common Stock,
of which 8,940,950 shares were issued and outstanding and 0 shares were held
in treasury, and (ii) 1,000,000 shares of Preferred Stock, par value $.01 per
share, of York (the "York Preferred Stock"), 100,000 of which shares have been
designated as the Series A Junior Participating Preferred Stock, par value
$.01 per share, in connection with the York Rights Agreement and none of
which, as of the date hereof, are issued and outstanding. All of the issued
and outstanding shares of York Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and were not issued in
violation of any preemptive right. As of the date of this Agreement, except
(i) pursuant to the terms of options issued pursuant to the 1990 Stock
Incentive Plan (the "1990 Plan"), the 1991 Stock Incentive Plan (the "1991
Plan"), the 1996 Employee Stock Option Plan (the "1996 Plan"), and the 1996
Independent Director Stock Option Plan (the "1996 Director Plan"; together
with the 1990 Plan, the 1991 Plan and the 1996 Plan, the "York Stock Plans"),
(ii) York Rights under the York Rights Agreement, (iii) as contemplated in any
Constituent Agreement, and (iv) as contemplated hereby, York does not have and
is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of York Common Stock or any other equity securities of
York or any securities representing the right to purchase or otherwise receive
any shares of York Common Stock or York Preferred Stock. As of the date of
this Agreement, no shares of York Common Stock or York Preferred Stock are
reserved for issuance, except for (A) 822,608 shares of York Common Stock
reserved for issuance upon exercise of stock options granted pursuant to the
York Stock Plans (the "York Stock Options") and (B) 100,000 shares of York
Preferred Stock reserved for issuance in connection with the York Rights
Agreement. Since March 31, 2001, York has not issued any shares of its
capital stock or any securities convertible into or exercisable for any shares
of its capital stock, other than pursuant to the exercise of York Stock
Options granted prior to such date. York has previously provided Matthews
with a list of the option holders, the date of each option to purchase York
Common Stock granted, the number of shares subject to each such option, the
expiration date of each such option and the price at which each such option
may be exercised under an applicable York Stock Plan. In no event will the
aggregate number of shares of York Common Stock outstanding at the Effective
Time exceed the number specified in Section 2.2(a) of the York Disclosure
Letter.
(d) York owns, directly or indirectly, all of the issued and outstanding
shares of capital stock or other equity ownership interests of each of the
York Subsidiaries as set forth in Section 2.2(b) of the York Disclosure
Letter, free and clear of any liens, pledges, charges, encumbrances and
security interests whatsoever ("Liens") other than as set forth in Section
2.2(b) of the York Disclosure Letter, and all of such shares or equity
ownership interests are duly authorized and validly issued and are fully paid,
nonassessable and were not issued in violation of any preemptive right. No
York Subsidiary has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other equity
security of such Subsidiary.
18
Section 2.3. Authority; No Violation. (a) Subject to obtaining stockholder
approval, York has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
approved and declared advisable by the board of directors of York. The board
of directors of York has directed that this Agreement and the transactions
contemplated hereby be submitted to York's stockholders for adoption at the
Stockholders Meeting (as defined in Section 5.3) and, except for the adoption
of this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of York Common Stock, no other corporate proceeding on the
part of York is necessary to approve and adopt this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by York and (assuming due authorization,
execution and delivery by Matthews and Merger Sub of this Agreement)
constitutes a valid and binding obligation of York, enforceable against York
in accordance with its terms.
(b) Subject to obtaining stockholder approval, neither the execution and
delivery of this Agreement by York nor the consummation by York of the
transactions contemplated hereby, nor compliance by York with any of the terms
or provisions hereof, will (i) violate any provision of the York Certificate
of Incorporation or the York By-Laws or (ii) assuming that the consents and
approvals referred to in Section 2.4 are duly obtained, (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to York or any of its Subsidiaries or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of York or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture or other agreement,
instrument for borrowed money, any guarantee of any agreement or instrument
for borrowed money or any license, lease or any other agreement or instrument
("Material Agreement") to which York or any of its Subsidiaries is a party, or
by which they or any of their respective properties or assets may be bound or
affected, except (in the case of clause (ii) above) for such violations,
conflicts, breaches or defaults which, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect
on York.
Section 2.4. Consents and Approvals. Except (i) in connection, or in
compliance, with the provisions of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") and any filings required under foreign
laws regulating competition, investment or exchange controls, (ii) for the
filing of any required applications or notices with any state or foreign
agencies and approval of such applications and notices as listed in Section
2.4 of the York Disclosure Letter (the "State and Foreign Approvals"), (iii)
for the filing with the Securities and Exchange Commission (the "SEC") of a
proxy statement in definitive form relating to the Stockholders Meeting to be
held in connection with this Agreement and the transactions contemplated
hereby (the "Proxy Statement"), (iv) for the filing of the Certificate of
Merger with the Secretary of State of Delaware, (v) for the approval of this
Agreement by the requisite vote of the stockholders of York, (vi) those
consents listed in Section 2.4 of the York Disclosure Letter and (vii)
19
consents, approvals, filings and registrations which if not made or obtained
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on York, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") or
with any third party are necessary in connection with (A) the execution and
delivery by York of this Agreement, and (B) the consummation by York of the
Merger and the other transactions contemplated by this Agreement.
Section 2.5. SEC Documents and Other Reports. Except as would not have a
Material Adverse Effect on York, York has filed all required documents with
the SEC since January 1, 1998 (the "York SEC Documents"). As of their
respective dates, the York SEC Documents complied in all material respects
with the requirements of the Securities Act or the Securities Exchange Act of
1934, as amended (together with the rules and regulations promulgated
thereunder, the "Exchange Act"), as the case may be, and, at the respective
times they were filed, none of the York SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except as would not
have a Material Adverse Effect on York, the consolidated financial statements
(including, in each case, any notes thereto) of York included in the York SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto as of their respective dates of filing, were prepared in
accordance with GAAP (except, in the case of the unaudited statements, as
permitted by Regulation S-X of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated therein or in the notes
thereto) and fairly presented in all material respects the consolidated
financial position of York and its consolidated Subsidiaries as of the
respective dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the York SEC Documents
or as required by GAAP, York has not, since December 1, 2000, made any
material change in the accounting practices or policies applied in the
preparation of its financial statements.
Section 2.6. Proxy Statement. None of the information to be supplied by
York for inclusion or incorporation by reference in the Proxy Statement will
at the time of the mailing of the Proxy Statement and 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.
If at any time prior to the Effective Time any event with respect to York, its
officers and directors or any of its Subsidiaries shall occur that is required
to be described in the Proxy Statement, such event shall be so described, and
an appropriate supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of York. The Proxy
Statement will comply (with respect to York) as to form in all material
respects with the provisions of the Exchange Act.
20
Section 2.7. Absence of Certain Changes or Events. Except as disclosed in
the York SEC Documents filed prior to the date of this Agreement, except as
set forth in Section 2.7 of the York Disclosure Letter or except as
contemplated in any Constituent Agreement, since December 31, 2000, (A) York
and its Subsidiaries have not incurred any material liability or obligation
(indirect, direct or contingent), or entered into any material oral or written
agreement or other transaction, that is not in the ordinary course of business
or that would have a Material Adverse Effect on York, (B) York and its
Subsidiaries have not sustained any loss or interference with their business
or properties from fire, flood, windstorm, accident or other calamity (whether
or not covered by insurance) that has had or that would have a Material
Adverse Effect on York, (C) there has been no change in the capital stock of
York and no dividend or distribution of any kind declared, paid or made by
York on any class of its stock, (D) there has not been (y) any granting by
York or any of its Subsidiaries to any executive officer or material
modification of any severance or termination benefits or (z) any entry by York
or any of its Subsidiaries into or material modification of any employment,
severance or termination agreement with any such executive officer and (E)
York and its Subsidiaries have not prepared or filed any Tax Return (as
defined in Section 2.9) inconsistent with past practice or, on any such Tax
Return, taken any position, made any election, or adopted any method that is
inconsistent with positions taken, elections made or methods used in preparing
or filing similar Tax Returns in prior periods. Set forth in Section 2.7 of
the York Disclosure Letter is a description of any changes between December
31, 2000 and the date of this Agreement (excluding any intervening
fluctuations between such dates) to the amount and terms of the indebtedness
of York and its Subsidiaries as described in York's Annual Report on Form 10-K
for the year ended December 31, 2000, as filed with the SEC (other than any
changes in, or the incurrence of, indebtedness of York or any of its
Subsidiaries with a principal amount not in excess of $100,000).
Section 2.8. Permits and Compliance. Each of York and its Subsidiaries is
in possession of all franchises, grants, authorizations, licenses, permits,
charters, easements, variances, exceptions, consents, certificates, approvals
and orders of any Governmental Entity necessary for York or any of its
Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "York Permits"), except where the
failure to have any of the York Permits would not, individually or in the
aggregate, have a Material Adverse Effect on York, and, as of the date of this
Agreement, no suspension or cancellation of any of the York Permits is pending
or, to the Knowledge of York, threatened, except where the suspension or
cancellation of any of the York Permits, individually or in the aggregate,
would not have a Material Adverse Effect on York. Except as set forth in
Section 2.8 of the York Disclosure Letter and assuming the filings, notices,
approvals and consents referred to in Section 2.4 are duly obtained, neither
York nor any of its Subsidiaries is in violation of (i) its charter, by-laws
or equivalent documents, (ii) any applicable law, ordinance, administrative or
governmental rule or regulation or (iii) any order, decree or judgment of any
Governmental Entity having jurisdiction over York or any of its Subsidiaries,
except, in the case of clauses (i), (ii) and (iii), for any violations that,
individually or in the aggregate, would not have a Material Adverse Effect on
York. "Knowledge of York" means the actual knowledge, after reasonable
inquiry, of the individuals identified in Section 2.8 of the York Disclosure
Letter.
21
Section 2.9. Tax Matters. Except as otherwise set forth in Section 2.9 of
the York Disclosure Letter, (i) York and each of its Subsidiaries have filed
all federal, and all material state, local, foreign and provincial, Tax
Returns required to have been filed or appropriate extensions therefor have
been properly obtained, and such Tax Returns are correct and complete, except
to the extent that any failure to so file or any failure to be correct and
complete, individually or in the aggregate, would not have a Material Adverse
Effect on York; (ii) all Taxes shown to be due on such Tax Returns have been
timely paid or extensions for payment have been properly obtained, or such
Taxes are being timely and properly contested, (iii) York and each of its
Subsidiaries have complied in all material respects with all rules and
regulations relating to the withholding of Taxes except to the extent that any
failure to comply with such rules and regulations, individually or in the
aggregate, would not have a Material Adverse Effect on York; (iv) neither York
nor any of its Subsidiaries has waived any statute of limitations in respect
of its Taxes which waiver is currently in effect; (v) any Tax Returns referred
to in clause (i) for tax years prior to 1998 relating to federal and state
income Taxes have been examined by the Internal Revenue Service (the "IRS") or
the appropriate state taxing authority or the period for assessment of the
Taxes in respect of which such Tax Returns were required to be filed has
expired; (vi) no issues that have been raised in writing by the relevant
taxing authority in connection with the examination of the Tax Returns
referred to in clause (i) are currently pending; (vii) all deficiencies
asserted or assessments made as a result of any examination of such Tax
Returns by any taxing authority have been paid in full; and (viii) neither
York nor any of its Subsidiaries has made any payments, is obligated to make
any payments or is a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under
Section 280G of the Code. For purposes of this Agreement: (i) "Taxes" means
(A) any federal, state, local, foreign or provincial income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, value-added, transfer
or excise tax, or other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Entity, and (B) any liability for the
payment of amounts with respect to payments of a type described in clause (A)
as a result of being a member of an affiliated, consolidated, combined or
unitary group, and (ii) "Tax Return" means any return, report or similar
statement (including the attached schedules) required to be filed with respect
to any Tax, including any information return, claim for refund, amended return
or declaration of estimated Tax.
Section 2.10. Actions and Proceedings. Except as set forth in the York
Disclosure Letter or in the York SEC Documents filed prior to the date of this
Agreement, there are no outstanding orders, judgments, injunctions, awards or
decrees of any Governmental Entity against or involving York or any of its
Subsidiaries, or against or involving any of the directors, officers or
employees of York or any of its Subsidiaries, as such, any of its or their
properties, assets or business or any York Plan that, individually or in the
aggregate, would have a Material Adverse Effect on York. Except as set forth
in Section 2.10 of the York Disclosure Letter, as of the date of this
Agreement, there are no actions, suits or claims or legal, administrative or
arbitrative proceedings or investigations pending or, to the Knowledge of
York, threatened against or involving York or any of its Subsidiaries or any
of its or their directors, officers or employees as such, or any of its or
their properties, assets or business or any York Plan that, individually or in
the aggregate, would have a Material Adverse Effect on York. There are no
actions, suits, labor disputes or other litigation, legal or administrative
22
proceedings or governmental investigations pending or, to the Knowledge or
York, threatened against or affecting York or any of its Subsidiaries or any
of its or their officers, directors or employees, as such, or any of its or
their properties, assets or business relating to the transactions contemplated
by this Agreement.
Section 2.11. Certain Agreements. Except as set forth in Section 2.11 of
the York Disclosure Letter, neither York nor any of its Subsidiaries is a
party to any oral or written agreement or plan, including any employment
agreement, severance agreement, retention agreement, stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, the vesting of the benefits of which
will be accelerated, or which will become payable or which at the
participant's or holder's option may become payable, due to or by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will, or may at the option of the holder
or participant, be calculated on the basis of any of the transactions
contemplated by this Agreement.
Section 2.12. ERISA. (a) Section 2.12(a)(X) of the York Disclosure Letter
contains a list of each York Plan. With respect to each York Plan, York has
made available to Matthews a true and correct copy of (i) the most recent
annual report (Form 5500) filed with the IRS, (ii) such York Plan and all
amendments thereto, (iii) each trust agreement, insurance contract or
administration agreement relating to such York Plan, (iv) the most recent
summary plan description for each York Plan for which a summary plan
description is required, (v) the most recent actuarial report or valuation
relating to a York Plan subject to Title IV of the Employee Retirement Income
Security Act of 1974 and the regulations promulgated thereunder ("ERISA"),
(vi) the most recent determination letter, if any, issued by the IRS with
respect to any York Plan intended to be qualified under Section 401(a) of the
Code, (vii) any request for a determination currently pending before the IRS
and (viii) all correspondence with the IRS, the Department of Labor or the
Pension Benefit Guaranty Corporation relating to any outstanding controversy.
Each York Plan complies with ERISA, the Code and all other applicable statutes
and governmental rules and regulations, except any failure to comply as would
not have, individually or in the aggregate, a Material Adverse Effect on York.
Except as set forth in Section 2.12(a)(Y) of the York Disclosure Letter, (i)
no "reportable event" (within the meaning of Section 4043 of ERISA) has
occurred within the past three years with respect to any York Plan which could
result in liability to York, (ii) neither York nor any of its ERISA Affiliates
(as hereinafter defined) has withdrawn from any York Multiemployer Plan (as
hereinafter defined) at any time or instituted, or is currently considering
taking, any action to do so, and (iii) no action has been taken, or is
currently being considered, to terminate any York Plan subject to Title IV of
ERISA.
(b) There has been no failure to make any contribution or pay any amount due
to any York Plan as required by Section 412 of the Code, Section 302 of ERISA,
or the terms of any such Plan, and no York Plan, nor any trust created
thereunder, has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived.
(c) With respect to York Plans, no event has occurred and, to the Knowledge of
York, there exists no condition or set of circumstances in connection with
which York or any of its ERISA Affiliates would be subject to any liability
under the terms of such York Plans, ERISA, the Code or any other applicable
law which has had, or would have, individually or in the aggregate, a Material
23
Adverse Effect on York. Except as listed on Section 2.12(c) of the York
Disclosure Letter, all York Plans that are intended to be qualified under
Section 401(a) of the Code have been determined by the IRS to be so qualified,
or a timely application for such determination is now pending or will be filed
on a timely basis and, except as listed on Section 2.12(c) of the York
Disclosure Letter, there is no reason why any York Plan is not so qualified in
operation. Neither York nor any of its ERISA Affiliates has been notified by
any York Multiemployer Plan that such York Multiemployer Plan is currently in
reorganization or insolvency under and within the meaning of Section 4241 or
4245 of ERISA or that such York Multiemployer Plan intends to terminate or has
been terminated under Section 4041A of ERISA. Neither the termination of any
York Multiemployer Plan nor the complete or partial withdrawal by YORK or any
of its ERISA Affiliates from any York Multiemployer Plan would result in any
liability of York or any of its ERISA Affiliates that would have, individually
or in the aggregate, a Material Adverse Effect on York. Except as set forth
in Section 2.12(c) of the York Disclosure Letter, neither York nor any of its
ERISA Affiliates has any liability or obligation under any welfare plan to
provide life insurance or medical benefits after termination of employment to
any employee or dependent other than as required by Part 6 of Title 1 of
ERISA.
(d) As used in this Agreement, (i) "York Plan" means a "pension plan" (as
defined in Section 3(2) of ERISA (other than a York Multiemployer Plan (as
hereinafter defined)), a "welfare plan" (as defined in Section 3(1) of ERISA),
or any material bonus, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
vacation, severance, death benefit, insurance or other plan, arrangement or
understanding, in each case established or maintained or contributed to by
York or any of its ERISA Affiliates or as to which York or any of its ERISA
Affiliates or otherwise may have any liability, whether or not covered by
ERISA), (ii) "York Multiemployer Plan" means a "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA) to which York or any of its ERISA
Affiliates is or has been obligated to contribute or otherwise may have any
liability, and (iii) with respect to any person, "ERISA Affiliate" means any
corporation or trade or business (whether or not incorporated) which is under
common control, or otherwise would be considered a single employer with such
person pursuant to Section 414(b), (c), (m) or (o) of the Code and the
regulations promulgated thereunder or pursuant to Section 4001(b) of ERISA and
the regulations promulgated thereunder.
(e) Section 2.12(e) of the York Disclosure Letter contains a list, as of the
date of this Agreement, of all (i) severance and employment agreements with
officers of York and each ERISA Affiliate, (ii) severance programs and
policies of York with or relating to its employees and (iii) plans, programs,
agreements and other arrangements of York with or relating to its employees
which contain change of control or similar provisions, in each case involving
a severance or employment agreement or arrangement with an individual officer
or employee, only to the extent such agreement or arrangement provides for
minimum annual payments in excess of $50,000. York has provided to Matthews a
true and complete copy of each of the foregoing.
(f) Except as otherwise provided in Section 2.12(f) of the York Disclosure
Letter, the consummation of the transactions contemplated by this Agreement
will not accelerate the time of payment or vesting under any York Plan nor
obligate any of York, the Surviving Corporation or Matthews to provide any
current or former officer, director or employee of York or any of its
Subsidiary with severance pay, unemployment compensation or similar payment.
24
Section 2.13. Labor Matters. Except as disclosed in Section 2.13 of the
York Disclosure Letter, (i) neither York nor any of its Subsidiaries is party
to any collective bargaining agreement or other labor agreement with any union
or labor organization and no union or labor organization has been recognized
by York or any of its Subsidiaries as an exclusive bargaining representative
for employees of York or any of its Subsidiaries, (ii) neither York nor any of
its Subsidiaries is the subject of any material proceeding asserting that it
or any of its Subsidiaries has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or labor organization,
and (iii) to the Knowledge of York there is no pending, threatened, nor has
there been for the past three years, any labor strike, dispute, walkout, work
stoppage, slow-down or lockout involving it or any of its Subsidiaries: except
in each case as would not, individually or in the aggregate, have a Material
Adverse Effect on York.
Section 2.14. Intellectual Property. (a) For the purposes of this
Agreement, the following terms have the following definitions:
"Intellectual Property" shall mean any or all of the following and all
worldwide common law and statutory rights in, arising out of, or associated
therewith: (i) patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof ("Patents"); (ii) inventions (whether patentable
or not), invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (iii) copyrights, copyrights
registrations and applications therefor, and all other rights corresponding
thereto throughout the world; (iv) domain names, uniform resource locators
("URLs") and other names and locators associated with the Internet
(collectively, "Domain Names"); (v) industrial designs and any registrations
and applications therefor; (vi) trade names, logos, common law trademarks and
service marks, trademark and service mark registrations and applications
therefor (collectively, "Trademarks"); (vii) all databases and data
collections and all rights therein; (viii) all moral and economic rights of
authors and inventors, however denominated, and (ix) any similar or equivalent
rights to any of the foregoing (as applicable). The foregoing
notwithstanding, generally available commercial software shall be excluded
from the meaning of Intellectual Property. "York Intellectual Property" shall
mean any Intellectual Property that is owned by, or exclusively licensed to,
York or any of its Subsidiaries, excluding any Intellectual Property that is
the subject of any Constituent Agreement.
"Registered Intellectual Property" means all Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued, filed with, or recorded by any private, state, government or other
legal authority. "York Registered Intellectual Property" means all of the
Registered Intellectual Property owned by, or filed in the name of, York or
any of its Subsidiaries.
"York Products" means all current versions of products or service offerings of
York or any of its Subsidiaries.
(b) Except as disclosed in Section 2.14 of the York Disclosure Letter, no York
Intellectual Property or York Product is subject to any proceeding or
outstanding decree, order, judgment, contract, license, agreement or
stipulation restricting in any manner the use, transfer or licensing thereof
by York or any of its Subsidiaries, or which may affect the validity, use or
enforceability of such York Intellectual Property or York Product, which,
25
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on York.
(c) Each item of York Registered Intellectual Property is valid and
subsisting, all necessary registration, maintenance and renewal fees currently
due in connection with such York Registered Intellectual Property have been
made an all necessary documents, recordations and certificates in connection
with such York Registered Intellectual Property have been filed with the
relevant patent, copyright, trademark or other authorities in the United
States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such York Registered Intellectual Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on York.
(d) Except as disclosed in Section 2.14 of the York Disclosure Letter or as
would not have a Material Adverse Effect on York, York owns and has good and
exclusive title to, each material item of York Intellectual Property, free and
clear of any lien or encumbrance (excluding non-exclusive licenses and related
restrictions granted in the ordinary course); and York is the exclusive owner
of all Trademarks used in connection with the operation or conduct of the
business of York including the sale of any products or the provision of any
services by York. Without limiting the foregoing, (i) York owns exclusively,
and has good title to, all copyrighted works that are York Products or which
York or any of its Subsidiaries otherwise purports to own and (ii) except as,
individually or in the aggregate, could not reasonable be expected to have a
Material Adverse Effect on York, to the extent that any Patents would be
infringed by any York Products, York or any of its Subsidiaries is the
exclusive owner of such Patents.
(e) Except as would not have a Material Adverse Effect on York, neither York
nor any of its Subsidiaries has transferred ownership of, or granted any
exclusive license with respect to, any Intellectual Property that is York
Intellectual Property, to any third party, or knowingly permitted York's or
such Subsidiary's rights in such York Intellectual Property to lapse or enter
the public domain.
(f) Section 2.14 of the York Disclosure Letter lists all contracts, licenses
and agreements to which York and each of its Subsidiaries is a party and that
remain in effect: (i) with respect to York Intellectual Property licenses or
transferred to any third party resulting in, or which may result in, annual
payments of $50,000 or more to York; or (ii) pursuant to which a third party
has licensed or transferred any Intellectual Property to York.
(g) The operation of the business of York as such business currently is
conducted, including (i) York's design, development, manufacture,
distribution, reproduction, marketing or sale of the products or services of
York (including York Products) and (ii) York's use of any product device or
process, to its Knowledge and except as could not reasonably be expected to
have a Material Adverse Effect, has not and does not and will not infringe or
misappropriate the Intellectual Property of any third party or constitute
unfair competition or trade practices under the laws of any jurisdiction.
(h) York has not received written notice from any third party that the
operation of the business of York or any act, product or service of York,
infringes or misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction, except (i) as disclosed in Section 2.14 of the York Disclosure
26
Letter and (ii) as could not reasonably be expected to have a Material Adverse
Effect on York.
(i) No person has infringed or is infringing or misappropriating any York
Intellectual Property, except as could not reasonably be expected to have a
Material Adverse Effect on York.
Section 2.15. Environmental and Safety Matters. (a) Except as set forth in
Section 2.15 of the York Disclosure Letter, the properties, assets and
operations of York and its Subsidiaries (i) are in compliance with all
applicable federal, state, local, regional and foreign laws, rules and
regulations, orders, decrees, common law, judgments, permits and licenses
relating to public and worker health and safety (collectively, "Worker Safety
Laws") and relating to the protection, regulation and clean-up of the indoor
and outdoor environment , including, without limitation, those relating to the
generation, handling, disposal, transportation or release of hazardous or
toxic materials, substances, wastes, pollutants and contaminants including,
without limitation, asbestos, petroleum, radon and polychlorinated biphenyls
(collectively, "Environmental Laws"), except for any violations that,
individually or in the aggregate, would not have a Material Adverse Effect on
York; and (ii) to the Knowledge of York, with respect to such properties,
assets and operations, including any previously owned, leased or operated
properties, assets or operations, there are no past or present conditions,
circumstances, activities, practices or incidents of York or its Subsidiaries,
that would interfere with or prevent compliance or continued compliance with
or give rise to any liabilities or investigatory, corrective or remedial
obligations under applicable Worker Safety Laws and Environmental Laws, other
than any such interference, prevention, liability or obligation that,
individually or in the aggregate, has not had, or would not have, a Material
Adverse Effect on York.
(b) To the Knowledge of York, except as disclosed in Section 2.15 of the York
Disclosure Letter, York and its Subsidiaries, and their respective
predecessors, have not caused or permitted any property, asset, operation,
including any previously owned property, asset or operation, to use, generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer or
process hazardous or toxic materials, substances, wastes, pollutants or
contaminants, except in material compliance with all Environmental Laws and
Worker Safety Laws, other than any such activity that, individually or in the
aggregate, would not have a Material Adverse Effect on York. Except as
disclosed in Section 2.15 of the York Disclosure Letter, York and its
Subsidiaries have not reported to any Governmental Entity, or been notified by
any Governmental Entity of the existence of, any material violation of an
Environmental Law or any release, discharge or emission of any hazardous or
toxic materials, substances, wastes, pollutants or contaminants that was in
violation of Environmental Laws, other than any such violation, release,
discharge or emission that, individually or in the aggregate, would not have a
Material Adverse Effect on York.
(c) With respect to York and its Subsidiaries, neither this Agreement nor the
consummation of the transactions that are the subject of this Agreement will
result in any obligations for site investigation or cleanup, or notification
to or consent of any Governmental Entity or third party, pursuant to any of
the so-called "transaction-triggered" or "responsible property transfer"
Environmental Laws, other than any such obligations that are disclosed in
Section 2.15 of the York Disclosure Letter or that, individually or in the
aggregate, would not have a Material Adverse Effect on York.
27
Section 2.16. Insurance. York and its Subsidiaries have in effect insurance
coverage with reputable insurers, which in respect of amounts, premiums, types
and risks insured, constitutes reasonably adequate coverage against all risks
customarily insured against by companies of comparable size and with similar
operations.
Section 2.17. Required Vote of York Stockholders. The affirmative vote of
the holders of a majority of the outstanding shares of York Common Stock is
required to adopt this Agreement. No other vote of the stockholders of York
is required by law, the York Certificate of Incorporation or the York By-Laws
or otherwise in order for York to consummate the Merger and the transactions
contemplated by this Agreement.
Section 2.18. State Takeover Laws. The board of directors of York has, to
the extent such statute is applicable, taken all action (including appropriate
approvals of the Board of directors of York) necessary to exempt York, its
Subsidiaries and affiliates, the Merger, this Agreement, and the transactions
contemplated hereby from Section 203 of the DGCL. To the knowledge of York,
no other state takeover statutes are applicable to the Merger, this Agreement,
or the transactions contemplated hereby.
Section 2.19. Opinion of Financial Advisor. York has received the written
opinion of Houlihan Lokey Howard & Zukin, dated the date hereof, to the effect
that, as of the date hereof the consideration to be received by the York
stockholders is fair from a financial point of view, a copy of which opinion
has been delivered to Matthews.
Section 2.20. Broker's Fees. Neither York nor any York Subsidiary nor any
of their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement other than the fixed fee paid Houlihan Lokey Howard & Zukin with
respect to its engagement by York and the fairness opinion delivered by it.
Section 2.21. Disclosure. To the Knowledge of York, York has made available
to Matthews true and complete copies of all agreements, instruments and other
documents requested by Matthews, its counsel and its financial advisor in
connection with their legal and financial review of York and its Subsidiaries.
Section 2.22. Unlawful Payments and Contributions. To the Knowledge of
York, neither York, any Subsidiary nor any of their respective directors,
officers or any of their respective employees or agents has (i) used any York
funds for any unlawful contribution, endorsement, gift, entertainment or other
unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic governmental official or
employee; (iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any person.
Section 2.23. Material Contracts. There have been made available to
Matthews, its affiliates and their representatives true and complete copies of
all of the following contracts to which York or any of its Subsidiaries is a
party or by which any of them is bound (collectively, the "York Material
Contracts"): (i) contracts with any current officer or director of York or
any of its Subsidiaries; (ii) contracts for the sale of any of the material
assets of York or any of its Subsidiaries other than in the ordinary course of
business or for the grant to any person of any preferential rights to purchase
any of its material assets other than inventory in the ordinary course of
28
business; (iii) contracts containing covenants of York or any of its
Subsidiaries not to compete in any line of business or with any person in any
geographical area or covenants of any other person not to compete with York or
any of its Subsidiaries in any line of business or in any geographical area;
(iv) material indentures, credit agreements, mortgages, promissory notes, and
other contracts relating to the borrowing of money; and (v) all other
agreements, contracts or instruments which, in the reasonable opinion of York,
are material to York or any of its Subsidiaries. Except as set forth in
Section 2.23 of the York Disclosure Letter or, individually or in the
aggregate as could not reasonably be expected to have a Material Adverse
Effect on York, all of the York Material Contracts are in full force and
effect and are the legal, valid and binding obligation of York or its
Subsidiaries, enforceable against them in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity). Except
as set forth in Section 2.23 of the York Disclosure Letter, neither York nor
any Subsidiary is in default under any York Material Contract no is any other
party to any York Material Contract in default thereunder except, in each
case, for those defaults that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on York.
Section 2.24. Warranties. The accrual for warranty related expenses as of
December 31, 2000 reported in York's audited financial statement contained in
York's Form 10-K for the year ended December 31, 2000, adequately reflects an
amount required for satisfaction of warranty claims due in respect of goods
sold or services provided by York or any of its Subsidiaries prior to such
date. Such provision has been established in accordance with GAAP. Neither
York nor its Subsidiaries have agreed to provide any express product or
service warranties other than standard warranties, the terms of which have
been provided to Matthews and identified as York's standard warranties.
Section 2.25. Restrictions on Business Activities. Excepting the
Constituent Agreements and the Vault Agreement, there is no agreement,
commitment, judgment, injunction, order or decree binding upon York or to
which York is a party which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of York,
any acquisition of property by York or the conduct of business by York as
currently conducted other than such effects, individually or in the aggregate,
which have not had and would not reasonably be expected to have, a Material
Adverse Effect on York.
Section 2.26. Real Property. (a) Section 2.26 of the York Disclosure
Letter lists each parcel of real property owned in fee by York or any of its
Subsidiaries (the "York Owned Property"). York or its applicable Subsidiary
has good and indefeasible title in and to all of the York Owned Property,
subject to no Liens that would have a Material Adverse Effect on York or
materially impair York's rights to or ability to use any such property, except
as described on Section 2.26(a) of the York Disclosure Letter.
(b) Section 2.26(b) of the York Disclosure Letter sets forth a list of all
leases, subleases and other occupancy agreements, including all amendments,
extensions and other modifications (the "York Leases") for real property (the
"York Leased Property"; the York Owned Property and the York Leased Property
collectively the "York Real Property") to which York or any of its
subsidiaries is a party. York or its applicable Subsidiary has a valid
leasehold interest in and to all of the York Leased Property, subject to no
29
Liens except as described in Section 2.26(b) of the York Disclosure Letter.
Each York Lease is in full force and effect and is enforceable in accordance
with its terms. There exists no default or condition on the part of York
which, with the giving of notice, the passage of time or both, could become a
default under any York Lease in any case, that would have a Material Adverse
Effect on York or impair York's rights to or ability to use any such property.
York has previously delivered to Matthews true and complete copies of all of
the York Leases. Except as described on Section 2.26(b) of the York
Disclosure Letter, no consent, waiver, approval or authorization is required
from the landlord under any York Lease as a result of the execution of this
Agreement or the consummation of the transactions contemplated hereby the
failure to obtain would have a Material Adverse Effect on York or materially
impair York's right to or ability to use any such property.
Section 2.27. Rights Plan. York has amended its Rights Agreement dated as of
September 28, 2000 between York and Computershare Investor Services, LLC, as
Rights Agent (the "York Rights Agreement") to make the rights thereunder
inapplicable to this Agreement, and all of the transactions contemplated
hereby. After such amendment, and subject to York's rights under Section 5.1,
York will not thereafter amend the York Rights Agreement to make the rights
thereunder applicable to the Merger or so as to make the rights thereunder
inapplicable to any acquisition of York capital stock other than pursuant to
this Agreement or any of the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MATTHEWS
Except as disclosed in the letter delivered to York concurrently herewith and
designated therein as the Matthews Disclosure Letter (the "Matthews Disclosure
Letter"), in each case with specific reference to the Section to which
exception is taken, Matthews and Merger Sub represent and warrant to York as
follows:
Section 3.1. Corporate Organization. Matthews is a company duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania. Merger Sub is a company duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Matthews and
Merger Sub has the corporate power and authority to own or lease all of its
respective properties and assets and to carry on its respective business as
now being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified could not reasonably be expected to have a Material
Adverse Effect on Matthews.
Section 3.2. Capitalization. As of the date hereof, the authorized capital
stock of Merger Sub consists of 1,000 shares of Common Stock, par value $.01
per share, of which 100 are issued and outstanding. Matthews owns, directly
or indirectly, all of the issued and outstanding shares of capital stock of
Merger Sub.
Section 3.3. Authority; No Violation. (a) Each of Matthews and Merger Sub has
full corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
requisite action of Matthews and Merger Sub. This Agreement has been duly and
30
validly executed and delivered by Matthews and Merger Sub and (assuming due
authorization, execution and delivery by York of this Agreement) constitutes a
valid and binding obligation of each of Matthews and Merger Sub, enforceable
against each in accordance with its terms, subject to bankruptcy, insolvency
or other similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.
(b) Neither the execution and delivery of this Agreement by Matthews or the
Merger Sub nor the consummation by Matthews or the Merger Sub of the
transactions contemplated hereby, nor compliance by Matthews or the Merger Sub
with any of the terms or provisions hereof or thereof, will (i) violate any
provision of the Matthews or Merger Sub charter documents or (ii) assuming
that the consents and approvals referred to in Section 3.4 are duly obtained,
(x) violate any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to Matthews or any of its Subsidiaries
or any of their respective properties or assets, or (y) violate, conflict
with, result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a
right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any Lien upon any of the respective
properties or assets of Matthews or any of its Subsidiaries under, any of the
terms, conditions or provisions of any Material Agreement to which Matthews or
any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected, except (in the case
of clause (ii) above) for such violations, conflicts, breaches or defaults
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Matthews.
Section 3.4. Consents and Approvals. Except (i) in connection, or in
compliance, with the provisions of the HSR Act and any filings required under
foreign laws regulating competition, investment or exchange controls, (ii) for
the filing of any required State and Foreign Approvals, (iii) for the filing
with the SEC and The Nasdaq National Market of the Proxy Statement, (iv) for
the filing of the Certificate of Merger with the Secretary of State of
Delaware, (v) those consents listed in Section 3.4 of the Matthews Disclosure
Letter and (vi) consents, approvals, filings and registrations which if not
made or obtained would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Matthews or the Merger Sub, no
consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary in connection with (A) the
execution and delivery by Matthews and the Merger Sub of this Agreement, and
(B) the consummation by Matthews and the Merger Sub of the Merger and the
other transactions contemplated by this Agreement.
Section 3.5. SEC Documents and Other Reports. Matthews has filed all
required documents with the SEC since January 1, 1998 (the "Matthews SEC
Documents"). As of their respective dates, the Matthews SEC Documents
complied in all material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and, at the respective times they
were filed, none of the Matthews SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements (including, in each case, any notes thereto) of Matthews
included in the Matthews SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto as of their respective dates of
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filing, were prepared in accordance with the published rules and regulations
of the SEC and fairly presented in all material respects the consolidated
financial position of Matthews and its consolidated Subsidiaries as at the
respective dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the Matthews SEC
Documents, Matthews has not, since December 31, 2000, made any change in the
accounting practices or policies applied in the preparation of its financial
statements.
Section 3.6. Proxy Statement. None of the information to be supplied by
Matthews for inclusion or incorporation by reference in the Proxy Statement
will, at the time of the mailing of the Proxy Statement and 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 3.7. Absence of Certain Changes or Events. Except as disclosed in
the Matthews SEC Documents filed prior to the date of this Agreement, since
December 31, 2000, (a) Matthews and its Subsidiaries, taken as a whole, have
conducted their business in the ordinary course of business and have not
incurred any material liability or obligation (indirect, direct or
contingent), or entered into any material oral or written agreement or other
transaction, that is not in the ordinary course of business or that could
reasonably be expected to have a Material Adverse Effect on Matthews, and (b)
there has been no other event causing a Material Adverse Effect on Matthews,
nor any development that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect on Matthews.
Section 3.8. Litigation. There is no litigation pending or, to the knowledge
of Matthews or Merger Sub, threatened, against Matthews or Merger Sub that
could reasonably be expected to have or result in a material adverse effect on
the ability of Matthews or Merger Sub to consummate the transactions
contemplated by this Agreement. There are no actions, suits, labor disputes
or other litigation, legal or administrative proceedings or governmental
investigations pending or, to the knowledge of Matthews, threatened against or
affecting Matthews or any of its Subsidiaries or any of its or their officers,
directors or employees, as such, or any of its or their properties, assets or
business relating to the transactions contemplated by this Agreement.
Section 3.9. Brokers, Finders, etc. Neither Matthews nor Merger Sub has
employed any broker or finder in connection with the transactions contemplated
herein so as to give rise to any claim for any brokerage or finder's
commission, fee or similar compensation.
Section 3.10. Vote of Stockholders. No vote or approval of any class of
Matthews stockholders is required for Matthews to execute this Agreement or to
consummate the transactions contemplated herein. Merger Sub has obtained the
unanimous written consent of its sole stockholder approving Merger Sub's
execution of this Agreement and consummation of the transactions contemplated
herein.
Section 3.11. Financing. As of the Closing Date, Matthews will have
immediately available funds for payment in full of the purchase price per
share for each share of York Common Stock outstanding, in immediately
available funds.
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ARTICLE IV
CONDUCT OF BUSINESS
Section 4.1. Conduct of York. York agrees that from the date hereof until
the Effective Time, except as set forth in Section 4.1 of the York Disclosure
Letter, as otherwise contemplated by this Agreement or with the prior written
consent of Matthews, York and its Subsidiaries shall conduct their business in
the ordinary course consistent with past practice and shall use their
reasonable efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time, except as set forth
in Section 4.1 of the York Disclosure Letter or as expressly contemplated by
this Agreement, without the prior written consent of Matthews, York will not,
and will not permit any of its Subsidiaries to:
(a) adopt or propose any change in its charter, bylaws or equivalent
documents;
(b) amend any material term of any outstanding security of York or any of its
Subsidiaries, except for outstanding stock option plans or agreements in order
to effectuate Section 1.5(d) herein, and subject to York's rights under
Section 5.1, the York Rights Agreement and the Rights to make them
inapplicable to this Agreement and the Merger;
(c) merge or consolidate with any corporation, limited liability company,
partnership, trust, association, individual or any other entity or
organization ("Person");
(d) issue, sell, pledge, dispose of, grant, transfer, lease, license,
guarantee, encumber, or authorize the issuance, sale, pledge, disposition,
grant, transfer, lease, license, guarantee or encumbrance of, (i) any shares
of capital stock of York or any of its Subsidiaries (other than the issuance
of shares by a wholly-owned Subsidiary of York to York or another wholly-owned
Subsidiary of York), or securities convertible or exchangeable or exercisable
for any shares of such capital stock, or any options, warrants or other rights
of any kind to acquire any shares of such capital stock or such convertible or
exchangeable securities, or any stock appreciation rights or limited stock
appreciation rights, or any other ownership interest of York or any of its
Subsidiaries or (ii) except in the ordinary course of business and in a manner
consistent with past practice (such as the sale of inventory to customers),
any property or assets (tangible or intangible) (including, without
limitation, by merger, consolidation, spinoff or other dispositions of stock
or assets) of York or any of its Subsidiaries (it is understood and agreed
that sales by York of its operating and non-operating assets are not deemed to
be in the ordinary course of business under this subsection (ii)), except in
the case of either clause (i) or (ii) (A) the issuance of York Common Stock
upon the exercise of stock options issued pursuant to the York Stock Plans
prior to the date hereof, (B) pursuant to existing obligations under contracts
or agreements in force at the date of this Agreement and (C) sales or other
dispositions of non-operating property and assets of York and its
Subsidiaries; provided, however, that York shall provide at least ten (10)
days prior written notice to Matthews of any such proposed sale or other
disposition of non-operating property or assets; and provided, further, that
York shall not sell or otherwise dispose of non-operating property and assets
of York and its Subsidiaries in a manner which includes continuing indemnity
obligations by York without the written consent of Matthews, which will not be
unreasonably withheld;
33
(e) create or incur any Lien on any asset (tangible or intangible) other than
in the ordinary course of business and consistent with past practice;
(f) make any loan, advance or capital contributions to or investments in any
Person other than loans, advances or capital contributions to or investments
in wholly-owned Subsidiaries of York made in the ordinary course and
consistent with past practices;
(g) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock (except for dividends paid by any direct or indirect wholly-
owned Subsidiary of York to York or to any other direct or indirect wholly-
owned Subsidiary of York) or enter into any agreement with respect to the
voting of its capital stock;
(h) reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock;
(i) (i) acquire (including, without limitation, by merger, consolidation or
acquisition of stock or assets) any interest in any Person or any division
thereof (other than a wholly-owned Subsidiary) or any assets, other than
acquisitions of assets in the ordinary course of business and consistent with
past practice and any other acquisitions for consideration that is not, in the
aggregate, in excess of $200,000, (ii) incur any indebtedness for borrowed
money or guarantee such indebtedness of another Person, or issue or sell any
debt securities or warrants or other rights to acquire any debt security of
York or any of its Subsidiaries, except for (A) indebtedness for borrowed
money incurred in the ordinary course of business and consistent with past
practice or in connection with transactions otherwise permitted under this
Section 4.1, and (B) other indebtedness for borrowed money incurred under York
's credit agreement (or any replacement thereof) for working capital purposes
only not to exceed $15,000,000 at any time outstanding, (iii) terminate,
cancel, waive any rights under or request any material change in, or agree to
any material change in, any material contract or agreement of York or, except
in connection with transactions permitted under this Section 4.1(i), enter
into any contract or agreement material to the business, results of operations
or financial condition of York and its Subsidiaries, taken as a whole, in
either case other than in the ordinary course of business and consistent with
past practice, or (v) enter into or amend any contract, agreement, commitment
or arrangement that, if fully performed, would not be permitted under this
Section 4.1(i);
(j) take any action with respect to accounting policies or procedures, other
than actions in the ordinary course of business and consistent with past
practice or except as required by changes in GAAP;
(k) make any material election with respect to Taxes or take any position on
any Tax Return filed on or after the date of this Agreement or adopt any
method therefor that is inconsistent with elections made, positions taken or
methods used in preparing or filing similar Tax Returns in prior periods;
(l) except as may be required by changes in law, contractual commitments or
corporate policies with respect to severance pay, termination pay or bonus
programs in existence on the date hereof, and additional commitments for
retention bonuses of up to $300,000 in the aggregate, (i) increase the
compensation payable or to become payable to its officers or employees (except
for increases in the ordinary course of business and consistent with past
practice in salaries or wages of employees of York or any of its
34
Subsidiaries), (ii) establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee, except as
contemplated by this Agreement or to the extent required by applicable law or
the terms of a collective bargaining agreement, or (iii) increase the benefits
payable under any existing severance or termination pay policies or employment
or other agreements;
(m) take any action that, individually or in the aggregate, makes any
representation and warranty of York hereunder untrue in any material respect
at, or as of any time prior to, the Effective Time; or
(n) agree or commit to do any of the foregoing.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1. No Solicitation. (a) York agrees that it shall not, nor shall
it permit any of its Subsidiaries to, nor shall it authorize any officer,
director or employee or any investment banker, attorney, accountant, agent or
other advisor or representative of York, or any of its respective Subsidiaries
to, (i) solicit, initiate or knowingly encourage the submission of any
Takeover Proposal, (ii) enter into any agreement with respect to a Takeover
Proposal or (iii) participate in any discussions or negotiations regarding, or
furnish to any Person any information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal;
provided, however, that to the extent required by the fiduciary obligations of
the board of directors of York as determined in good faith by a majority of
the members thereof (after consultation with outside legal counsel), York may,
in response to unsolicited requests therefor, participate in discussions or
negotiations with, and furnish information pursuant to a confidentiality
agreement no less favorable to such party than the Confidentiality Agreement
(as defined in Section 5.4) to, any Person who indicates a willingness to make
a Superior Proposal. York immediately shall cease all existing discussions or
negotiations with any Persons conducted heretofore with respect to, or that
could reasonably be expected to lead to, any Takeover Proposal. For all
purposes of this Agreement, (i) "Takeover Proposal" means any proposal for a
merger, consolidation, share exchange, business combination or other similar
transaction involving York, or any of its Significant Subsidiaries (as
hereinafter defined) or any proposal or offer to acquire, directly or
indirectly, an equity interest in, at least 15% of the voting securities of,
or a substantial portion of the assets of, York or any of its Significant
Subsidiaries, other than the transactions contemplated by this Agreement, (ii)
"Superior Proposal" means a bona fide written proposal made by a third party
to acquire all of the outstanding equity interests in or substantially all of
the assets of York pursuant to a tender or exchange offer, a merger, a share
exchange, a sale of all or substantially all its assets or otherwise on terms
which a majority of the members of the board of directors of York determines
in good faith (taking into account the advice of independent financial
advisors) to be more favorable to York and its stockholders than the Merger ,
and (iii) a "Significant Subsidiary" means any Subsidiary that would
constitute a "significant subsidiary" within the meaning of Rule 1-02 of
Regulation S-X of the SEC.
35
(b) Except as otherwise provided in this Section 5.1(b), neither the board of
directors of York nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Matthews, the approval
or recommendation by the board of directors of York or any such committee of
this Agreement or the Merger or (ii) approve or recommend, or propose to
approve or recommend, any Takeover Proposal. Notwithstanding the foregoing,
(i) the board of directors of York, to the extent required by its fiduciary
obligations, as determined in good faith by a majority of the members thereof
(after consultation with outside legal counsel), may approve or recommend a
Superior Proposal or withdraw or modify its approval or recommendation of this
Agreement or the Merger and (ii) nothing contained in this Agreement shall
prevent the board of directors of York from complying with Rule 14d-9 and Rule
14e-2 promulgated under the Exchange Act with regard to a Takeover Proposal.
(c) York shall notify Matthews promptly (but in no event later than one
business day) after receipt by York (or its advisors) of any Takeover Proposal
or any request for nonpublic information in connection with a Takeover
Proposal or for access to the properties, books or records of York by any
Person or entity that informs York that it is considering making, or has made,
a Takeover Proposal. Such notice shall be made orally and in writing. York
shall keep Matthews informed, on a current basis, of the status of any such
Takeover Proposal or request.
Section 5.2. Proxy Statement. (a) York shall prepare and file with the SEC
the Proxy Statement at a time which is appropriate in view of the anticipated
Closing Date. The Proxy Statement shall include the recommendation of the
board of directors of York in favor of approval and adoption of this Agreement
and the Merger, except to the extent the board of directors of York, in
accordance with the terms of Section 5.1(b), shall have withdrawn or modified
its approval or recommendation of this Agreement and the Merger. Matthews
shall assist and cooperate with York in preparing the Proxy Statement and
shall provide York with information required to be disclosed in the Proxy
Statement relating to Matthews. York shall use its commercially reasonable
efforts to cause the Proxy Statement to be mailed to its stockholders as
promptly as practicable after SEC approval. If at any time prior to the
Effective Time any event with respect to any party or its officers and
directors or any of its Subsidiaries shall occur that is required to be
described in the Proxy Statement, the parties will work together in good faith
to ensure that such event shall be so described, and an appropriate amendment
or supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of York. Each party agrees that the Proxy
Statement will comply (with respect to such party) as to form in all material
respects with the provisions of the Exchange Act.
(b) York and Matthews shall make all necessary filings with respect to the
Merger and the transactions contemplated thereby under the Securities Act and
the Exchange Act and applicable "Blue Sky" laws and the rules and regulations
thereunder. No filing of, or supplement to, the Proxy Statement will be made
by York without providing Matthews the opportunity to review and comment
thereon. If at any time prior to the Effective Time any information relating
to York or Matthews, or any of their respective affiliates, officers or
directors, should be discovered by York or Matthews which should be set forth
in a supplement to the Proxy Statement, so that such Proxy Statement would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the party which discovers such
information shall promptly notify the other parties hereto and an appropriate
amendment or supplement describing such information shall be promptly filed
36
with the SEC and, to the extent required by law, disseminated to York
stockholders.
Section 5.3. Stockholders Meeting. York shall duly call, give notice of,
convene and hold a meeting of its stockholders (the "Stockholders Meeting")
for the purpose of voting on the adoption of this Agreement and, through its
board of directors, will recommend to its stockholders adoption of this
Agreement, except to the extent that the board of directors of York shall have
withdrawn or modified its approval or recommendation of this Agreement and the
Merger as permitted by Section 5.1(b). In a manner consistent with its
fiduciary duties to its stockholders and as it may reasonably determine to be
consistent with the objective of consummating the Merger, York shall use
commercially reasonable efforts to convene the Stockholders Meeting within 45
days of the Proxy Statement being approved by the SEC. So long as the York
board continues to recommend the Merger, York shall use its commercially
reasonable efforts to solicit from its stockholders proxies in favor of the
Merger and to take all other action necessary or advisable to secure the vote
or consent of the stockholders required to effect the Merger. In the Proxy,
York will take all actions required under the DGCL to notify its stockholders
that appraisal rights are available for York Common Stock pursuant to Section
262 of the DGCL including sending a copy of Section 262 of the DGCL to its
stockholders.
Section 5.4. Access to Information. Upon reasonable notice and subject to
applicable law and other legal obligations, York shall, and shall cause each
of its Subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of Matthews, access, during the period prior
to the Effective Time, to all its properties, books, contracts, commitments
and records and, during such period, York shall, and shall cause each of its
Subsidiaries to, furnish promptly to Matthews (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws and
(b) all other information concerning its business, properties and personnel as
Matthews may reasonably request. Unless otherwise required by law, the
parties will hold any such information which is nonpublic in confidence in
accordance with Confidentiality Agreement dated as of January 16, 2001 between
York and Matthews (the "Confidentiality Agreement"). No information or
knowledge obtained in any investigation pursuant to this Section 5.4 shall
affect or be deemed to modify any representation or warranty contained in this
Agreement or the conditions to the obligations of the parties to consummate
the Merger.
Section 5.5. Notices of Certain Events. (a) York and Matthews shall promptly
notify each other of:
(i) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement; and
(ii) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement.
(iii) any actions, suits, claims, investigations or proceedings commenced or,
to the knowledge of either party, threatened against, relating to or involving
or otherwise affecting either party or any of their Subsidiaries which, if
pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 2.10 or which relate to the consummation of the
transactions contemplated by this Agreement;
37
(iv) any fact or event which would be reasonably likely to demonstrate that
any representation or warranty of any party hereto contained in this Agreement
was or is untrue or inaccurate in any material respect as of the date of this
Agreement;
(v) the occurrence or non-occurrence of any fact or event which would be
reasonably likely to cause any material covenant, condition or agreement of
any party hereto under this Agreement not to be complied with or satisfied in
all material respects;
(vi) any failure of any party hereto to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder in any
material respect;
provided, however, that no such notification shall affect the representations
or warranties of any party or the conditions to the obligations of any party
hereunder.
Section 5.6. Appropriate Action; Consents; Filings. (a) Subject to the
terms and conditions of this Agreement and except to the extent that the board
of directors of York shall have withdrawn or modified its approval or
recommendation of this Agreement or the Merger, as permitted by Section
5.1(b), York and Matthews shall use their reasonable best efforts to (A) take,
or cause to be taken, all actions, and do, or cause to be done, all things,
necessary, proper or advisable under applicable laws to consummate the Merger
and the other transactions contemplated by this Agreement as promptly as
practicable, (B) obtain from any Governmental Entity any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained
or made by York and Matthews or any of their Subsidiaries, or to avoid any
action or proceeding by any Governmental Entity (including, without
limitation, those in connection with the HSR Act or other foreign laws or
regulations), in connection with the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated herein,
and (C) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under the
Securities Act, the Exchange Act and any other applicable law; provided,
however, that York and Matthews shall cooperate with each other in connection
with the making of all such filings, including providing copies of all such
documents to the non-filing party and its advisors prior to filing and, if
requested, accepting all reasonable additions, deletions or changes suggested
in connection therewith. York and Matthews shall furnish to each other all
information required for any application or other filing to be made pursuant
to the rules and regulations of any applicable law in connection with the
transactions contemplated by this Agreement. Subject to the terms and
conditions of this Agreement and except to the extent that the board of
directors of York shall have withdrawn or modified its approval or
recommendation of this Agreement or the Merger, as permitted by Section
5.1(b), York and Matthews shall not take any action, or refrain from taking
any action, the effect of which would be to delay or impede the ability of
York and Matthews to consummate the transactions contemplated by this
Agreement.
(b) Each of Matthews and York shall use their reasonable best efforts to
resolve such objections, if any, as may be asserted by any Governmental Entity
with respect to the transactions contemplated by this Agreement under HSR, the
Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade
Commission Act, as amended, and any other Federal, state or foreign statutes,
rules, regulations, orders or decrees that are designed to prohibit, restrict
38
or regulate actions having the purpose or effect of monopolization or
restraint of trade (collectively, "Antitrust Laws"). In connection therewith,
if any administrative or judicial action or proceeding is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any Antitrust Law, each of Matthews and York shall
cooperate and use their reasonable best efforts to contest and resist any such
action or proceeding and to have vacated, lifted, reversed, or overturned any
decree, judgment, injunction or other order, whether temporary, preliminary or
permanent (each, an "Order"), that is in effect and that prohibits, prevents,
or restricts consummation of the Merger or any such other transactions, unless
by mutual agreement Matthews and York decide that litigation is not in their
respective best interests. Each of Matthews and York shall use their
reasonable best efforts to take such action as may be required to cause the
expiration of the notice periods under the HSR or other Antitrust Laws with
respect to the Merger and the other transactions contemplated by this
Agreement as promptly as possible after the execution of this Agreement.
Matthews and York also agree to take any and all of the following actions to
the extent necessary to obtain the approval of any Governmental Entity with
jurisdiction over the enforcement of any applicable laws regarding the
transactions contemplated hereby: entering into negotiations; providing
information required by law or governmental regulation; and complying with any
additional requests for information pursuant to the Antitrust Laws.
(c) (i) York and Matthews shall give, or shall cause their respective
Subsidiaries to give, any notices to third parties, and use, and cause their
respective Subsidiaries to use, commercially reasonable efforts to obtain any
third party consents necessary, proper or advisable in order to consummate the
transactions contemplated by this Agreement.
(ii) In the event that either party shall fail to obtain any third party
consent described in Section 5.6(c)(i) above, such party shall use
commercially reasonable efforts, and shall take any such actions reasonably
requested by the other party hereto, to minimize any adverse effect upon York
and Matthews, their respective Subsidiaries, and their respective businesses
resulting, or which could reasonably be expected to result after the Effective
Time, from the failure to obtain such consent.
Section 5.7. Public Disclosure. York and Matthews will consult with each
other before issuing any press release or otherwise making any public
statement with respect to the Merger, this Agreement or the transactions
contemplated hereby and shall not issue any such press release or make any
such public statement without the prior consent of the other party, which
shall not be unreasonably withheld or delayed. York will consult with
Matthews before issuing any press releases or making any other public
statements containing forward looking information and shall not issue any such
press release or make any such statement without the prior consent of
Matthews, which shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, any such press release or public statement as
may be required by applicable law or any listing agreement with any national
securities exchange may be issued prior to consultation, if the party making
such release or statement has used its reasonable efforts to consult with the
other party.
Section 5.8. Indemnification of Directors and Officers. (a) After the
Effective Time, Matthews and the Surviving Corporation shall jointly and
severally, to the fullest extent permitted by applicable law, indemnify, hold
harmless, and defend each and every present and former director, officer,
employee, fiduciary, and agent of York and each Subsidiary of York
39
(collectively, the "Indemnified Parties") from and against all attorneys'
fees, judgments, fines, losses, claims, damages, liabilities, settlement
amounts, costs and expenses ("Adverse Consequences") in connection with any
claim, action, suit, proceeding or investigation (whether arising or relating
to facts occurring before, at or after the Effective Time), whether civil,
administrative or investigative ("Proceeding"), arising out of or pertaining
to any action or omission in their capacity as an officer, director, employee,
fiduciary or agent (including the transactions contemplated by this Agreement)
provided that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under
Delaware law or the provisions hereunder, as the case may be, shall be made by
independent counsel selected by the Indemnified Party and reasonably
acceptable to Matthews; and that nothing herein shall impair any rights or
obligations of any Indemnified Party. In the event that any claim or claims
are brought against any Indemnified Party (whether arising before or after the
Effective Time), such Indemnified Party may select counsel for the defense of
such claim, which counsel shall be reasonably acceptable to York (if selected
prior to the Effective Time) and Matthews (if selected after the Effective
Time).
(b) For a period of six years from the Effective Time, the Surviving
Corporation and Matthews shall provide to the Indemnified Parties liability
insurance protection substantially equivalent in kind and scope as that
provided by York's current directors' and officers' liability insurance
policies (copies of which have been made available to Matthews); provided,
however, that in no event shall the Surviving Corporation and Matthews be
required to expend in any one year an amount in excess of 150% of the annual
premiums currently paid by York for such insurance; provided, further, that if
during such period the annual premiums for such comparable insurance coverage
exceed such amount, the Surviving Corporation and Matthews shall be obligated
to provide a policy which, in the reasonable judgment of the Surviving
Corporation and Matthews, provides the best coverage available for a cost not
exceeding such amount.
(c) To the extent there is any Proceeding (whether arising before or after the
Effective Time) against an Indemnified Party that arises out of or pertains to
any action or omission in his or her capacity as director, officer, employee,
fiduciary or agent of York occurring prior to the Effective Time, or arises
out of or pertains to the transactions contemplated by this Agreement for a
period of six years after the Effective Time (whether arising before or after
the Effective Time), in each case for which such Indemnified Party is
indemnified under this Section 5.11, such Indemnified Party shall be entitled
to be represented by counsel, reasonable costs and fees of which shall be paid
when due by Matthews following the Effective Time. Neither the Surviving
Corporation nor Matthews shall be bound by any settlement effected unless one
or the other gives written consent (which consent shall not be unreasonably
withheld by either). In the event that any claim or claims for
indemnification are asserted or made prior to the date that is six years after
the Effective Time, all rights to indemnification and defense in respect to
any such claim or claims shall continue until the disposition of any and all
such claims.
(d) If any Indemnified Party is entitled under any provision of this Agreement
to indemnification by Matthews or the Surviving Corporation for only a portion
(but not, however, for the total amount) of any Adverse Consequences actually
incurred by Indemnitee in connection with any Proceeding, Matthews and the
Surviving Corporation shall nevertheless indemnify such Indemnified Party for
the portion of such Adverse Consequences to which such Indemnified Party is
40
entitled. If the indemnification provided for herein in respect of any
Adverse Consequences actually incurred by such Indemnified Party in connection
with any Proceeding is finally determined by a court of competent jurisdiction
to be prohibited by applicable law, then Matthews and the Surviving
Corporation, in lieu of indemnifying such Indemnified Party, shall contribute
to the amount paid or payable as a result of such Adverse Consequences in such
proportion as is appropriate to reflect (i) the relative benefits received by
Matthews, the Surviving Corporation, York and/or any Subsidiary on the one
hand and the Indemnified Party on the other hand from the events,
circumstances, conditions, happenings, actions or transactions from which such
Adverse Consequences arose, (ii) the relative fault of Matthews, the Surviving
Corporation, York and/or any Subsidiary (including its representatives) on the
one hand and of the Indemnified Party on the other hand in connection with the
events, circumstances and happenings which resulted in such Adverse
Consequences, such relative fault to be determined by reference to, among
other things, the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent the events, circumstances and/or
happenings resulting in such Adverse Consequences, and (iii) any other
relevant equitable considerations, it being agreed that it would not be just
and equitable if such contribution were determined by pro rata or other method
of allocation which does not take into account the foregoing equitable
considerations.
(e) The indemnification provided herein shall be applicable whether or not
negligence of the Indemnified Party is alleged or proved, and regardless of
whether such negligence be contributory or sole.
(f) If requested to do so by the Indemnified Party with respect to any
Proceeding, Matthews shall advance to or for the benefit of the Indemnified
Party, prior to the final disposition of such Proceeding, the expenses
actually incurred by such Indemnified Party in investigating, defending or
appealing such Proceeding. Any judgments, fines or amounts to be paid in
settlement of any Proceeding shall also be advanced by Matthews upon request
by the Indemnified Party. Advances made by Matthews are subject to refund as
provided in the following paragraph.
(g) If Matthews advances or pays any amount to the Indemnified Party under
this Section and if it shall thereafter be finally adjudicated that the
Indemnified Party was not entitled to be indemnified hereunder for all or any
portion of such amount, then the Indemnified Party shall promptly repay such
amount or such portion thereof, as the case may be, to Matthews. If Matthews
advances or pays any amount to an Indemnified Party under this Section and if
the Indemnified Party shall thereafter receive all or a portion of such amount
under one or more policies of directors and officers liability insurance, such
Indemnified Party shall promptly repay such amount or such portion thereof, as
the case may be, to Matthews.
(h) If any change after the date of this Agreement in any applicable law,
statute or rule expands the power of Matthews or the Surviving Corporation to
indemnify any Indemnified Party, such change shall be within the purview of
such Indemnified Party's rights and Matthew's and the Surviving Corporation's
obligations under this Agreement. If any change after the date of this
Agreement in any applicable law, statute or rule narrows the right of Matthews
or the Surviving Corporation to indemnify an Indemnified Party, such change
shall, to the fullest extent permitted by applicable law, leave this Agreement
and the parties' rights and obligations hereunder unaffected.
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(i) The indemnification and other rights provided by any provisions of this
Agreement shall not be deemed exclusive of any other rights to which any
Indemnified Party may be entitled under (i) any statutory or common law, (ii)
Matthew's, the Surviving Corporation's, York's or any Subsidiary's articles or
certificate of incorporation, (iii) Matthews, the Surviving Corporation's,
York's, or any Subsidiary's bylaws, (iv) any other agreement or (v) any vote
of stockholders or disinterested directors or otherwise, both as to action in
the Indemnified Party's official capacity and as to action in another capacity
while occupying any of the positions or having any of the relationships
referred to in this Agreement. Nothing in this Agreement shall in any manner
affect, impair or compromise any indemnification, any Indemnified Party has or
may have by virtue of any agreement previously entered into between such
Indemnified Party and Matthews, the Surviving Corporation, York or any
Subsidiary.
(j) The indemnification provisions of this Section 5.8 of this Agreement shall
inure to the benefit of and be enforceable by (i) each Indemnified Party and
any Indemnified Party's personal or legal representatives, executors,
administrators, heirs, devisees and legatees and (ii) Matthews, the Surviving
Corporation, York, the Subsidiaries and their respective successors and
assigns. This Section 5.8 shall not inure to the benefit of any other Person.
Matthews and the Surviving Corporation agree to require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Matthews or the Surviving
Corporation, as applicable, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that Matthews and/or the
Surviving Corporation, as applicable, would be required to perform it if no
such succession had taken place. As used in this Section, the term "Matthews"
and the term "Surviving Corporation" shall include any successor to their
respective businesses and/or assets as aforesaid which executes and delivers
the assumption and agreement provided for in this Section or which otherwise
becomes bound by all terms and provisions of this Agreement by operation of
law.
Section 5.9. State Takeover Laws. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute
or regulation shall become applicable to the transactions contemplated hereby,
York shall use its reasonable best efforts to grant such approvals and take
such actions as are necessary so that the transactions contemplated hereby and
thereby may be consummated as promptly as practicable on the terms
contemplated hereby and thereby and otherwise act to minimize the effects of
any such statute or regulation on the transactions contemplated hereby and
thereby.
Section 5.10. Rights Agreement. York hereby agrees that it has taken and
will continue to take all necessary action to ensure that none of the
transactions contemplated in this Agreement will cause Matthews, the Merger
Sub or any of Matthews' affiliates or associates to become an Acquiring Person
under the York Rights Agreement or subject to York's rights under Section 5.1,
otherwise affect in any way the rights under the York Rights Agreement,
including causing such rights to separate from the underlying shares or by
giving such holders the rights to acquire securities of any party hereto.
Section 5.11. Employees. For at least two (2) years following the Closing,
Matthews agrees to provide employee benefits to the employees of York and its
Subsidiaries which are in the aggregate no less favorable than such benefits
that were provided by York and the Subsidiaries as of the Closing. For these
purposes, the employees of York and their Subsidiaries will be given credit
42
for years of service with York, its subsidiaries and their predecessors for
all employee benefit purposes, with the exception of the defined benefit
pension plans of Matthews.
ARTICLE VI
CONDITIONS TO MERGER
Section 6.1. Conditions to Each Party's Obligations. The respective
obligations of each party to this Agreement to consummate the Merger and the
transactions contemplated hereby shall be subject to the satisfaction of the
following conditions:
(a) Stockholder Approvals. This Agreement and the Merger shall have been
approved and adopted by the stockholders of York.
(b) Waiting Periods; Approvals. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(c) No Injunctions or Restraints. No temporary restraining order, preliminary
or permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint shall prohibit the
consummation of the Merger.
Section 6.2. Additional Conditions to Obligations of York. The obligations
of York to consummate the Merger and the transactions contemplated hereby
shall be subject to the satisfaction of the following additional conditions,
any of which may be waived in writing exclusively by York:
(a) Representations and Warranties. The representations and warranties of
Matthews set forth in Article III shall be true and correct as of the date of
the Agreement and as of the Closing Date, in each case as though made on and
as of such date (except to the extent any such representation or warranty
expressly speaks as of an earlier date), except for such breaches or
inaccuracies that do not (without giving effect as to any limitation as to
"materiality" or "Material Adverse Effect" set forth therein), individually or
in the aggregate, materially affect the ability of Matthews to consummate the
Merger; and York shall have received a certificate signed on behalf of
Matthews by an executive officer of Matthews to such effect.
(b) Performance of Obligations. Matthews shall have performed in all material
respects each obligation and agreement and shall have complied in all material
respects with each covenant required to be performed and complied with by it
under this Agreement at or prior to the Effective Time; and York shall have
received a certificate signed on behalf of Matthews by an executive officer of
Matthews to such effect.
Section 6.3. Additional Conditions to Obligations of Matthews. The
obligation of Matthews to effect the Merger is subject to the satisfaction of
each of the following additional conditions, any of which may be waived in
writing exclusively by Matthews:
(a) Representations and Warranties. The representations and warranties of York
set forth in Article II shall be true and correct as of the date of this
Agreement and as of the Closing Date, in each case as though made on and as of
such date (except to the extent any such representation or warranty expressly
speaks as of an earlier date), except for such breaches or inaccuracies that
do not (without giving effect as to any limitation as to "materiality" or
43
"Material Adverse Effect" set forth therein except for any materiality
limitations relating to the disclosure of documents by York), individually or
in the aggregate, have a Material Adverse Effect on York; and Matthews shall
have received a certificate signed on behalf of York by an executive officer
of York to such effect. For purposes of determining whether a Material
Adverse Effect on York has occurred, due consideration shall be given to
whether York achieved the Threshold EBITDA.
(b) Performance of Obligations. York shall have performed in all material
respects each obligation and agreement and shall have complied in all material
respects with each covenant required to be performed or complied with by it
under this Agreement at or prior to the Effective Time; and Matthews shall
have received a certificate signed on behalf of York by an executive officer
of York to such effect.
ARTICLE VII
TERMINATION
Section 7.1. Termination. This Agreement may be terminated at any time prior
to the Effective Time (with respect to Sections 7.1(b) through 7.1(j), by
written notice by the terminating party to the other party), whether before or
after approval of the matters presented in connection with the Merger by the
stockholders of York:
(a) by mutual written consent of York and Matthews; or
(b) by York or Matthews, if the Merger shall not have been consummated by
December 31, 2001 (the "End Date"); provided, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has
been the cause of or resulted in the failure of the Merger to occur on or
before the End Date; and provided, further, that the End Date may be extended
by York until five days after the earlier of the expiration or termination of
any applicable waiting period under the HSR Act; or
(c) by York or Matthews, if a court of competent jurisdiction or other
Governmental Entity shall have issued a final, non-appealable order, decree or
ruling, or taken any other action, having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger; or
(d) by York or Matthews if, at the Stockholders Meeting (including any
adjournment or postponement thereof), the requisite vote of the stockholders
of York in favor of adoption of this Agreement shall not have been obtained;
or
(e) by Matthews if the Board of Directors of York shall not have recommended
or shall have withdrawn its recommendation of this Agreement and the Merger,
except in the case of 7.1(f) below; or
(f) by Matthews or York, if the Board of Directors of York shall have
determined to recommend a Takeover Proposal to its shareholders and to enter
into a binding written agreement concerning such Takeover Proposal after
determining, pursuant to Section 5.1, that such Takeover Proposal constitutes
a Superior Proposal; provided, however, that York may not terminate this
Agreement pursuant to this Section 7.1(f) unless (i) York has delivered to
Matthews a written notice of York's intent to enter into such an agreement to
effect the Superior Proposal and (ii) five business days have elapsed
following delivery to Matthews of such written notice by York; or
44
(g) by Matthews, if a material breach of or failure to perform any
representation, warranty, covenant or agreement on the part of York set forth
in this Agreement shall have occurred which remains uncured for a period of
ten (10) business days after the notice of such breach or failure and such
breach or failure would cause the conditions set forth in Sections 6.3(a) or
6.3(b) not to be satisfied, and such conditions are incapable of being
satisfied by the End Date; or
(h) by York, if a material breach of or failure to perform any
representation, warranty, covenant or agreement on the part of Matthews set
forth in this Agreement shall have occurred which remains uncured for a period
of ten (10) business days after the notice of such breach or failure and such
breach or failure would cause the conditions set forth in Sections 6.2(a) or
6.2(b) not to be satisfied, and such conditions are incapable of being
satisfied by the End Date; or
(i) by York, if the Threshold EBITDA is achieved and the York Equity Value is
greater than $11 per share; or
(j) by Matthews if the Threshold EBITDA is not achieved.
Section 7.2. Effect of Termination. In the event of termination of this
Agreement pursuant to Section 7.1, there shall be no liability or obligation
on the part of York, Matthews or their respective officers, directors,
stockholders or Affiliates, except as set forth in Section 7.3, or except to
the extent that such termination results from willful breach by a party of any
of its representations, warranties, covenants or agreements contained in this
Agreement; provided, however, that the provisions of Sections 7.3 and 7.4, of
this Agreement and the Confidentiality Agreement shall remain in full force
and effect and survive any termination of this Agreement.
Section 7.3. Fees and Expenses. (a) Except as set forth in this Section 7.3
or elsewhere in this Agreement, all fees and expenses incurred in connection
with this Agreement and closing the Merger contemplated hereby shall be paid
by the party incurring such expenses, whether or not the Merger is
consummated; provided, however, that York and Matthews shall share equally all
fees and expenses, other than attorneys' and accounting fees and expenses,
incurred in relation to the printing and filing of the Proxy Statement
(including any related preliminary materials).
(b) If this Agreement is terminated (i) by Matthews pursuant to Section 7.1(e)
and the Threshold EBITDA is achieved and the York Equity Value is greater than
$11 per share, or (ii) by York pursuant to Section 7.1(i), York shall pay to
Matthews a termination fee of $6,000,000 by wire transfer within one business
day after such termination. If the Threshold EBITDA is achieved and the York
Equity Value is greater than $11 per share, any termination by York under
Section 7.1(d) shall be presumed to be under Section 7.1(i) rather than
Section 7.1(d).
(c) If (i) this Agreement is terminated by York pursuant to Section 7.1(d) and
either (x) a Takeover Proposal with respect to York shall have been made after
the date of this Agreement and prior to the Stockholders Meeting or (y) York's
Board of Directors shall not have recommended or shall have withdrawn its
recommendation of this Agreement and the Merger or (ii) this Agreement is
terminated by York or Matthews pursuant to Section 7.1(f), and, in the case of
either (i) or (ii) above, York or its stockholders consummate the sale or
transfer, by way of merger, consolidation or otherwise, of a majority interest
in the equity of York or substantially all of York's assets to any other
45
Person within nine months of the date of termination of this Agreement, then
York shall pay the $6,000,000 termination fee within one day after the closing
of such transaction.
(d) If this Agreement is terminated by Matthews pursuant to Section 7.1(b),
7.1(c), 7.1(d), 7.1(g) (except in the case of an intentional misrepresentation
by York), or 7.1(j), Matthews shall pay to York a termination fee of
$6,000,000 by wire transfer within one business day after such termination.
(e) If this Agreement is terminated by York pursuant to Section 7.1(b), 7.1(c)
or 7.1(h), Matthews shall pay York a termination fee of $6,000,000 by wire
transfer within one business day after such termination.
(f) If any party is obligated to pay a termination fee under any of the
subsections of Section 7.3 described above, in any such case it shall only be
obligated to pay such fee once. If one party fails to promptly pay to the
other any fee or expense due hereunder, the defaulting party shall pay the
costs and expenses (including reasonable legal fees and expenses) in
connection with any action, including the filing of any lawsuit or other legal
action, taken to collect payment, together with interest on the amount of any
unpaid fee at the publicly announced prime rate of Mellon Bank, N.A. from the
date such fee was required to be paid.
Section 7.4. Post-Termination Obligations. In the event of termination of
this Agreement, Matthews and Merger Sub shall and shall cause their Affiliates
to return all documents and copies and other materials received from or on
behalf of York, its Affiliates, its Subsidiaries and its agents relating to
the transactions contemplated hereby, whether so obtained before or after the
execution hereof, to York, and York shall and shall cause its Affiliates to
return all documents and copies and other materials received from or on behalf
of Matthews and Merger Sub relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to Matthews; and all
information received or accumulated by the parties hereto shall be treated as
"Confidential Information" in accordance with the Confidentiality Agreement
(as modified or supplemented by this Agreement) which shall remain in full
force and effect, as modified or supplemented by this Agreement,
notwithstanding the termination of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Nonsurvival of Representations, Warranties and Agreements. None
of the representations, warranties, covenants and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Effective Time, except for covenants and agreements which, by their terms, are
to be performed after the Effective Time. The Confidentiality Agreement shall
survive the execution and delivery of this Agreement but shall terminate and
be of no further force and effect as of the Effective Time.
Section 8.2. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered personally, one day
after being delivered to a nationally recognized overnight courier or when
telecopied (with a confirmatory copy sent by such overnight courier) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
46
(a) if to York, to:
The York Group, Inc.
8554 Katy Freeway, Suite 200
Houston, Texas 77024
Attn: Legal Department
Telecopy: 713/984-5569
with copies (which shall not constitute notice) to:
Locke Liddell & Sapp LLP
Attn: David F. Taylor
3400 Chase Tower
600 Travis Street
Houston, Texas 77002
Telecopy: 713/223-3717
and
(b) if to Matthews, to:
Matthews International Corporation
Two NorthShore Center
Pittsburgh, PA 15212
Attention: Edward Boyle, CFO
Facsimile No.: 412/442-8290
with copies (which shall not constitute notice) to:
Reed Smith LLP
435 Sixth Avenue
Pittsburgh, PA 15219
Attention: Pasquale D. Gentile, Jr.
Facsimile No.: 412/288-3063
Section 8.3. Interpretation and Construction, Severability; Interpretation of
Obligations.
(a) Interpretation and Construction. Matthews and York have participated
jointly in the negotiation and drafting of this Agreement. If an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by Matthews and York and no presumption or burden of
proof shall arise favoring or disfavoring either Matthews or York because of
the authorship of any of the provisions of this Agreement. Any reference to
any United States Federal, state, local or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. 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) the term "party" means, on the one hand, Matthews, on the
other hand, York, (f) the word "including" means "including without
limitation"; and (g) all references to "dollars" or "$" refer to currency of
the United States of America. The exhibits and schedules specified in this
Agreement are incorporated herein by reference and made a part hereof. The
47
article and section headings hereof are for convenience only and shall not
affect the meaning or interpretation of this Agreement.
(b) Severability. The invalidity or unenforceability of one or more of the
provisions of this Agreement in any situation in any jurisdiction shall not
affect the validity or enforceability of any other provision hereof or the
validity or enforceability of the offending provision in any other situation
or jurisdiction.
(c) Interpretation of Obligations. Notwithstanding anything in this Agreement
to the contrary, Matthews shall not be permitted to terminate this Agreement
solely because of an Order to divest any business, product line or assets,
regardless of whether such action could result in a Material Adverse Effect on
York, Matthews or the benefits to Matthews of the consummation of the Merger.
Matthews agrees to divest such business, product line or assets, as the case
may be, pursuant to such Order, or as may be required to cause the expiration
of the notice periods under the HSR or other Antitrust Laws, after an
opportunity to negotiate, contest or appeal any such Order or requirement;
provided, however, that such right of Matthews to negotiate, contest or appeal
shall not extend beyond December 20, 2001.
Section 8.4. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 8.5. Entire Agreement; No Third Party Beneficiaries. This Agreement
(including the documents and the instruments referred to herein), (a)
constitute the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 5.8 and Section
5.11 of this Agreement and this Section 8.5, are not intended to confer upon
any Person other than the parties hereto any rights or remedies hereunder or
thereunder.
Section 8.6. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under the applicable principles of
conflicts of laws thereof.
Section 8.7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, and any attempted assignment thereof without
such consent shall be null and void. 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 8.8 Amendment. This Agreement may be amended by the parties hereto,
by action taken or authorized by their respective boards of directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of York, but, after any such approval, no amendment
shall be made which by law requires further approval by such stockholders
without such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
48
Section 8.9 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto contained herein, (ii) waive any inaccuracies in the representations
and warranties of the other parties hereto contained herein or in any document
delivered hereto and (iii) waive compliance with any of the agreements or
conditions of the other parties hereto contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
Section 8.10 Consent to Jurisdiction: Appointment of Agent for Service of
Process. Each party hereto hereby (a) submits to the jurisdiction of any
court of the State of Delaware and the Federal courts sitting in the State of
Delaware with respect to such matters arising out of or relating to, this
Agreement and the transactions contemplated hereby, (b) agrees that all claims
with respect to such action or proceeding may be heard and determined in such
Delaware state or Federal court, (c) waives the defense of an inconvenient
forum in connection therewith, (d) consents to service of process upon it by
mailing or delivering such service to CT Corporation System, 1209 Orange
Street, Wilmington, Delaware (the "Agent") and authorizes and directs its
Agent to accept such service, (e) agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law,
and (f) to the extent that it or its properties have or hereafter may acquire
immunity from jurisdiction of any such court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment
in aid of execution, execution or otherwise), waives such immunity in respect
of its obligations under this Agreement.
[Signature page to follow]
49
IN WITNESS WHEREOF, Matthews, Merger Sub and York have caused this Merger
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.
MATTHEWS INTERNATIONAL CORPORATION
By: David M. Kelly
Name: David M. Kelly
Title: President
EMPIRE MERGER CORP.
By: David M. Kelly
Name: David M. Kelly
Title: President
THE YORK GROUP, INC.
By: Thomas J. Crawford
Name: Thomas J. Crawford
Title: CEO & President
50
Exhibit 1.5(x)
Cost of York Stock Options and Deferred Stock Calculation
C= Q ($10 + Y - P) Given that C cannot be less than zero, nor can it
--------------- exceed Q($11 - P).
1 + Q/S
This amount is the cost of settling the York Stock Options and Deferred Stock
(Item "E" in Excess Cash Increment Calculation).
Y = Excess Cash Increment, excluding the per share impact of the cost of
settling the York Stock Options and Deferred Stock.
Q = Shares corresponding to outstanding stock options as of October 31, 2001
which have exercise prices less than $11.00 per share and the total number of
shares of deferred stock.
P = Weighted Average Exercise Price for shares corresponding to outstanding
stock options which have exercise prices less than $11.00 per share, including
an exercise price of zero for any shares of deferred stock.
S = Outstanding Shares as of October 31, 2001.
51
Exhibit 1.5(y)
The York Group, Inc.
Agreed Upon Procedures
Perform the procedures outlined below, summarizing all adjustments greater
than $10,000.
I. Perform SAS 71 Review as of September 30, 2001
II. Inventory
1) Perform the following physical inventory procedures as of September 30,
2001
. Perform 50 test counts at all locations with inventory in excess of $500,000
(25 counts sheet to floor and 25 counts floor to sheet)
. Obtain a comparative analysis of inventory by location as of September 30,
2001 and October 31, 2001 and investigate variances greater than 10%.
2) Perform testing of inventory cut-off as of October 31, 2001 for each
location where test counts are performed.
. Review shipping documents, invoices and general ledger entries for last five
shipments of October 2001 and first five shipments of November 2001, noting
that cut-off is proper based on shipping document dates.
. Review receiving documents and general ledger entries for last five receipts
of October 2001 and first five receipts of November 2001, noting that general
ledger cut-off is proper based on receiving document dates.
3) Perform inventory price testing on a FIFO basis for 25 items at each
location where test counts are performed.
. Compare inventory pricing as of October 31, 2001 to the pricing used at
December 31, 2000 and investigate differences in excess of 10%.
III. Accounts Receivable
1) Obtain reconciliation of the accounts receivable sub-ledger and general
ledger as of August 31, 2001 and investigate all reconciling items in excess
of $25,000.
2) Perform the following procedures on accounts receivable as of August 31,
2001
. Confirm accounts receivable balances greater than $50,000
. For all non-replies, review subsequent receipts greater than $5,000 through
October 31, 2001
. For non-replies for which there are no subsequent receipts, review invoices
and shipping documents for two invoices (judgmentally selected)
3) Review rollforward of accounts receivable sub-ledger from August 31, 2001
to October 31, 2001.
. Obtain a detail of billings and cash receipts from August 31, 2001 to
October 31, 2001 and examine supporting documentation for 25 billings and 25
cash receipts.
IV. Accounts Payable and Accrued Liabilities
1) Obtain reconciliation between accounts payable sub-ledger and general
ledger as of August 31, 2001 and investigate all reconciling items in excess
of $25,000.
52
2) Perform a test of subsequent disbursements
. For disbursements greater than $25,000 made after August 31, 2001 through
October 31, 2001, (excluding rebate payments), review check copy, related
invoice and sub-ledger detail, noting that disbursements for goods or services
received prior to August 31, 2001 are accrued at August 31, 2001.
. Obtain a comparative analysis of payables and accruals as of August 31, 2001
and October 31, 2001 and investigate all variances in excess of 10%.
V. Current Assets
1) Review check copy and invoice support for current asset balances as of
August 31, 2001, for which the balance increased by more than $25,000 from
December 31, 2000, exclusive of operations sold during 2000.
2) Obtain rollforward of current asset balances from August 31, 2001 to
October 31, 2001 and review check copy and invoice support for individual
current asset additions in excess of $25,000.
3) Verify amortization for applicable current asset balances in excess of
$25,000 as of October 31, 2001.
VI. Perform the Following Additional Procedures as of October 31, 2001
1) Recompute the Company's calculations of "Working Capital," "Adjusted
EBITDA," and "York Cash," as defined in the Merger Agreement. Recomputations
will be based on the Company's reported financial results, as provided by
management, subject to adjustments resulting from the above procedures.
VII. Review the components of working capital as of September 30, 2001 and
investigate any changes in underlying general ledger account balances that
exceed 10% and $50,000 of the corresponding balance at December 31, 2000.