SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
THE YORK GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
Common stock, $0.01 par value
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(2) Aggregate number of securities to which transaction applies:
8,940,950 outstanding shares
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
$11.00 per share. The proposed maximum aggregate value of the
transaction of $98,350,450 equals the product of $11.00 (the
maximum cash consideration) and 8,940,950 (the number of outstanding
shares of Common Stock of the Registrant). The filing fee equals
1/50 of 1% of the aggregate value.
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(4) Proposed maximum aggregate value of transaction:
$98,350,450
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(5) Total fee paid:
$19,671
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/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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THE YORK GROUP, INC.
8554 KATY FREEWAY, SUITE 200
HOUSTON, TEXAS 77024
(800) 223-4964
PROXY STATEMENT
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
Dear Stockholders:
On behalf of the board of directors of The York Group, Inc. ("York"), I
invite you to attend a special meeting of stockholders to be held on Thursday,
August 9, 2001, at 9:00 a.m., local time, at the West Memorial Business Park
Conference Center, 8584 Katy Freeway, 1st Floor, Houston, Texas 77024. At the
special meeting, the York board of directors will ask you to consider and vote
upon a proposal to adopt a merger agreement dated as of May 24, 2001 providing
for the merger of Empire Merger Corp., a wholly-owned subsidiary of Matthews
International Corporation ("Matthews") into York. Following the merger, York
will continue as a subsidiary of Matthews. If the merger agreement is adopted by
the stockholders of York, each share of common stock of York, except shares held
by stockholders who exercise their appraisal rights under Delaware law, will be
converted into the right to receive between $10.00 and $11.00 per share in cash,
without interest. The actual price per share will be determined by a formula
that is described in the attached Proxy Statement.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend, please
complete and mail the enclosed proxy card to us in the enclosed return addressed
postage-paid envelope. If your shares are held of record in "street name" by a
broker, bank or other nominee ("broker nominee"), follow the voting instructions
that you receive from your broker nominee.
IF YOU DO NOT RETURN YOUR PROXY CARD OR INSTRUCT YOUR BROKER NOMINEE
HOW TO VOTE YOUR SHARES HELD OF RECORD IN THE BROKER NOMINEE'S NAME, YOU WILL IN
EFFECT BE VOTING AGAINST ADOPTION OF THE MERGER AGREEMENT.
This Proxy Statement gives you detailed information about the merger
and includes the merger agreement attached as Annex A. You should read all of
this information carefully. You can obtain more information about York and
Matthews from publicly available documents that they have filed with the
Securities and Exchange Commission.
I ENTHUSIASTICALLY SUPPORT THIS MERGER AND JOIN WITH THE OTHER
DIRECTORS OF YORK IN RECOMMENDING THAT YOU VOTE "FOR" THE ADOPTION OF THE MERGER
AGREEMENT.
Very truly yours,
Thomas J. Crawford
Chairman of the Board of Directors
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS (1) APPROVED OR DISAPPROVED THE MERGER, (2) PASSED UPON THE
MERITS OR FAIRNESS OF THE MERGER, OR (3) PASSED UPON THE ADEQUACY OR ACCURACY OF
THE DISCLOSURE IN THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This document is dated July 9, 2001 and is first being distributed to
the stockholders of York on or about July 9, 2001.
THE YORK GROUP, INC.
8554 KATY FREEWAY, SUITE 200
HOUSTON, TEXAS 77024
(800) 223-4964
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To our Stockholders:
Notice is hereby given that a special meeting of the stockholders of
The York Group, Inc., a Delaware corporation ("York"), will be held at the West
Memorial Business Park Conference Center, 8584 Katy Freeway, 1st Floor, Houston,
Texas 77024, at 9:00 a.m., local time, on Thursday, August 9, 2001, for the
following purposes, which are more fully described in the attached Proxy
Statement:
1. To adopt an Agreement and Plan of Merger dated as of May 24, 2001
by and among Matthews International Corporation, a Pennsylvania
corporation ("Matthews"), Empire Merger Corp., a Delaware
corporation and a wholly-owned subsidiary of Matthews ("Empire"),
and York, pursuant to which Empire will merge with and into York,
with York, the surviving corporation, continuing as a subsidiary
of Matthews. If the Agreement and Plan of Merger is adopted by
the stockholders of York, each share of common stock of York,
except shares held by stockholders who exercise their appraisal
rights under Delaware law, will be converted into the right to
receive between $10.00 and $11.00 per share in cash, without
interest. The actual price per share will be determined by a
formula that is described in the attached Proxy Statement.
2. To transact such other business as may properly come before the
special meeting or any adjournment thereof.
Only stockholders of record at the close of business on June 20, 2001,
are entitled to receive notice of and to vote at the special meeting or any
adjournment thereof.
YOUR VOTE IS VERY IMPORTANT. THE PROPOSED MERGER CANNOT OCCUR UNLESS
THE MERGER AGREEMENT IS ADOPTED BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF A
MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK OF YORK. FAILURE TO VOTE WILL
HAVE THE SAME EFFECT AS A VOTE AGAINST ADOPTION OF THE MERGER AGREEMENT. WHETHER
OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE SIGN, DATE, AND RETURN THE
ACCOMPANYING PROXY CARD PROMPTLY. FOR YOUR CONVENIENCE, A RETURN ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE
ENCLOSED PROXY CARD. IF YOUR SHARES ARE HELD IN "STREET NAME" BY A BROKER OR
OTHER NOMINEE, YOU MAY BE ABLE TO VOTE BY TELEPHONE OR THROUGH THE INTERNET IN
ACCORDANCE WITH THE INSTRUCTIONS YOU SHOULD RECEIVE FROM YOUR BROKER OR OTHER
NOMINEE.
If you do not vote in favor of adopting the merger agreement and
otherwise comply with the requirements of the Delaware General Corporation Law
concerning appraisal rights, you will be entitled to appraisal rights. The
accompanying Proxy Statement summarizes these requirements under the heading
"The Merger -- Appraisal Rights under Delaware Law."
YORK'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
ADOPTION OF THE MERGER AGREEMENT.
By Order of the Board of Directors
Cristen L. Cline
Corporate Secretary
July 9, 2001
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE MERGER.............................................1
WHO CAN HELP ANSWER YOUR QUESTIONS?................................................3
SUMMARY TERM SHEET.................................................................4
The Companies..................................................................4
The Special Meeting............................................................4
Reasons for the Merger.........................................................4
Recommendation of the Board of Directors.......................................4
Effects of the Merger; Merger Consideration....................................4
Opinion of York's Financial Advisor............................................5
Record Date and Voting.........................................................5
Stockholder Vote Required......................................................5
Appraisal Rights...............................................................5
Interests of Certain Persons in the Merger.....................................5
Conditions to the Merger.......................................................6
Regulatory Matters.............................................................6
Termination of the Merger Agreement............................................6
Expenses and Termination Fee...................................................7
Federal Income Tax Consequences................................................7
FORWARD-LOOKING STATEMENTS.........................................................8
SELECTED CONSOLIDATED FINANCIAL DATA...............................................9
YORK SPECIAL MEETING..............................................................10
Purpose of the York Special Meeting...........................................10
Record Date and Voting........................................................10
Proxies and Revocation of Proxies.............................................10
Quorum........................................................................11
Solicitation of Proxies.......................................................11
Appraisal Rights..............................................................11
Stock Certificates............................................................11
Required Vote.................................................................12
THE MERGER........................................................................13
Background of the Merger......................................................13
Purpose and Reasons for the Merger............................................16
Recommendation of the Board of Directors......................................16
Effects of the Merger; Merger Consideration...................................18
Opinion of York's Financial Advisor...........................................19
Certain Transactions and Relations Between York and Matthews..................23
Interests of Certain Persons in the Merger....................................24
Accounting Treatment..........................................................24
Regulatory Matters............................................................24
Federal Income Tax Consequences...............................................24
Appraisal Rights Under Delaware Law...........................................25
THE MERGER AGREEMENT..............................................................29
General.......................................................................29
Merger Consideration..........................................................29
Treatment of Stock Options....................................................29
Representations and Warranties................................................29
Covenants.....................................................................30
No Solicitation...............................................................31
Additional Agreements.........................................................31
Fees and Expenses.............................................................32
Conditions to the Merger......................................................32
Termination, Termination Fees, Amendment and Waiver...........................33
THE COMPANIES.....................................................................36
York..........................................................................36
Matthews and Empire...........................................................36
MARKET PRICES OF COMMON STOCK.....................................................37
PRINCIPAL STOCKHOLDERS............................................................38
WHERE YOU CAN FIND MORE INFORMATION...............................................40
STOCKHOLDER PROPOSALS FOR FISCAL 2001 ANNUAL MEETING..............................41
PROXY SOLICITATION EXPENSES.......................................................41
OTHER MATTERS.....................................................................41
Annex A Merger Agreement...........................................................A-1
Annex B Fairness Opinion...........................................................B-1
Annex C Appraisal Rights...........................................................C-1
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT AM I BEING ASKED TO VOTE ON AT THE SPECIAL MEETING?
A: The York board of directors is asking you to vote to adopt a merger
agreement that provides for the merger of Empire, a recently formed,
wholly-owned subsidiary of Matthews, into York, with York surviving the
merger and continuing as a subsidiary of Matthews. If the merger
agreement is adopted, at the effective time of the merger York will no
longer be a publicly held company.
Q. WHAT WILL I RECEIVE IF THE MERGER IS COMPLETED?
A: York stockholders will receive between $10.00 and $11.00 in cash,
without interest, for each share of York common stock owned. The actual
merger consideration will be based on a formula that is described in
this Proxy Statement under "The Merger -- Effects of the Merger; Merger
Consideration." The formula will be calculated after October 31, 2001,
and the actual merger consideration will be determined and then
announced publicly. No further stockholder action will be taken after
the formula is calculated and the actual merger consideration is
determined.
Q: WHY IS YORK PROPOSING THE MERGER?
A: York believes the merger presents the best opportunity to maximize
stockholder value. The merger will enable York's stockholders to
realize a premium over recent market prices for shares of York common
stock. Based upon a cash merger consideration of $10.00 per share, the
consideration to York stockholders represents a premium of 28.5%,
73.6%, 77.8%, 150.0% and 185.0% over the average York closing prices
for the 10-day period, 30-day period, 60-day period, 90-day period and
180-day period, respectively, preceding May 24, 2001. In addition, the
York board of directors evaluated other alternatives and concluded that
none of these alternatives would likely result in stockholders
receiving greater value for their York shares.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: It is anticipated that the merger will be completed no sooner than
November 27, 2001 and no later than December 31, 2001. This period may
be extended by York until five (5) days after the earlier of the
expiration or termination of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act").
Q: WHO CAN VOTE AT THE SPECIAL MEETING?
A: Holders of common stock of York at the close of business on June 20,
2001, may vote at the Special Meeting.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on
how to vote. Your broker will contact you regarding the procedures
necessary to vote your shares. Please follow these procedures carefully
and instruct your broker as to how you would like your shares voted at
the Special Meeting. If you do not instruct your broker how to vote,
your broker will not be able to vote your shares. Your broker's failure
to vote your shares will have the same effect as a vote against
adoption of the merger agreement.
Q: WHAT VOTE IS REQUIRED TO ADOPT THE MERGER AGREEMENT?
A: The merger agreement must be adopted by the holders of a majority of
the outstanding shares of common stock of York.
Q: IF I FAIL TO VOTE, WILL MY FAILURE TO VOTE HAVE ANY EFFECT ON THE
OUTCOME?
A: Yes. If you do not vote (i.e., if you do not send in a proxy card,
instruct your broker on how to vote your shares, or vote in person at
the Special Meeting), or if you abstain from voting, this action will
have the same effect as a vote against adoption of the merger
agreement.
Q: WILL MATTHEWS BE CONSIDERED AN "ACQUIRING PERSON" UNDER THE SHAREHOLDER
RIGHTS AGREEMENT DATED SEPTEMBER 28, 2000 BETWEEN YORK AND
COMPUTERSHARE INVESTOR SERVICES, LLC (THE "YORK RIGHTS AGREEMENT")?
A: No. York has taken and will continue to take all necessary action to
ensure that none of the transactions contemplated in the merger
agreement will cause Matthews, Empire or any of Matthews' affiliates or
associates to become an Acquiring Person under the York Rights
Agreement or otherwise affect in any way the rights under the York
Rights Agreement, including causing the rights described in the York
Rights Agreement to separate from the underlying shares or by giving
such holders the rights to acquire securities of York. All York
preferred stock purchase rights remain outstanding and when this
document refers to York common stock, that term includes any associated
York preferred stock purchase rights described in the York Rights
Agreement.
Q: WHAT WILL HAPPEN TO THE MEMBERS OF YORK'S MANAGEMENT?
A: It is anticipated that all of the present members of York's executive
management team will continue as officers and employees of York in
their present capacities.
Q: HAVE ANY PARTIES INVOLVED IN THE MERGER MADE A DETERMINATION AS TO THE
FAIRNESS OF THE TRANSACTION TO STOCKHOLDERS?
A. Yes. The York board of directors has reviewed various factors
pertaining to the transaction and, based on its review, believes that
the merger is fair to stockholders of York. In addition, York's
financial advisor considered York's alternatives and the fairness of
the transaction and determined that the merger consideration was fair
to York stockholders from a financial point of view.
Q: WHAT DO I NEED TO DO NOW?
A: If you are a record owner of common stock of York, you need only
complete, sign and mail your proxy card in the enclosed return
addressed, postage-paid envelope as soon as possible so that your
shares may be represented at the Special Meeting. If your shares are
held in street name, you need only complete the instructions that your
broker will send to you.
Q: WHAT DO I DO IF I WANT TO CHANGE MY VOTE AFTER I MAIL MY PROXY CARD?
A: You may change your vote by revoking your proxy at any time before the
shares represented by your proxy are voted at the Special Meeting. You
may do so in one of three ways:
o by completing and delivering a new, subsequently dated proxy
card to York;
o by sending York (to the attention of Cristen L. Cline,
Corporate Secretary) a written notice stating that you would
like to revoke your proxy; or
o by attending the Special Meeting and asking to vote in person
(your presence at the Special Meeting will not by itself
revoke your proxy).
Q: WILL STOCKHOLDERS HAVE APPRAISAL RIGHTS?
A: Yes. Under Delaware law, stockholders of York may be entitled to
appraisal rights. If a stockholder does not vote in favor of the merger
and meets all of the other requirements under Delaware law regarding
appraisal rights (these requirements are summarized in this Proxy
Statement under "The Merger -- Appraisal Rights under Delaware Law" and
a copy of the relevant statutory provisions is set forth in Annex C),
he or she will receive the "fair value" of his or her York common stock
as determined by a court. The court may determine that the fair value
is greater than, equal to, or less than the amount stockholders will
receive if the merger is completed.
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Q: HOW WILL I GET PAID FOR MY COMMON STOCK OF YORK?
A: If the merger agreement is approved and adopted by stockholders and the
merger is completed, you will receive instructions in the mail
explaining how to exchange your stock certificates for cash.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, you will receive written
instructions explaining how to exchange your stock certificates for
cash.
Q: WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO YORK
STOCKHOLDERS?
A: If the merger is completed, the payment of cash for shares of stock
will be taxable to York stockholders. Stockholders will recognize a
gain or loss in an amount equal to the difference between the adjusted
tax basis of their shares and the amount of cash they receive in the
merger. All stockholders should consult their tax advisor for a full
understanding of the tax consequences of the merger.
WHO CAN HELP ANSWER YOUR QUESTIONS?
If you have additional questions about the merger or would like
additional copies of this Proxy Statement or proxy card, please contact:
Cristen L. Cline, Corporate Secretary
8554 Katy Freeway, Suite 200
Houston, Texas 77024
(800) 223-4964
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SUMMARY TERM SHEET
This summary term sheet highlights selected information from this Proxy
Statement and does not contain all of the information that is important to you.
To understand the proposal fully and for a more complete description of the
terms of the merger, you should read this entire document carefully, including
the documents to which you have been referred and the Annexes. We have included
page references to the Proxy Statement parenthetically to direct you to a more
complete description of each topic presented in this summary. The merger
agreement is attached as Annex A to this Proxy Statement. We encourage you to
read the entire agreement carefully because it is the legal document that
governs the transaction. In addition, you may obtain information about Matthews
and York from documents that Matthews and York have filed with the Securities
and Exchange Commission.
o THE COMPANIES (PAGE 36)
York, a Delaware corporation, is one of the leading casket and
casket component manufacturers in the United States. Since December 31, 2000,
York has sold its metal vault manufacturing operations, its commemorative
products business and most of its casket distribution operations.
Matthews, a Pennsylvania corporation, is a designer, manufacturer and
marketer of custom-made products which are used to identify people, places,
products and events. Matthews' products and operations are comprised of three
business segments: Bronze, Graphics Imaging and Marking Products.
Empire is a Delaware corporation organized solely for the purpose of
effecting Matthews's acquisition of York through the merger. It is a
wholly-owned subsidiary of Matthews.
o THE SPECIAL MEETING (PAGE 10)
The Special Meeting will be held at West Memorial Business Park
Conference Center, 8584 Katy Freeway, 1st Floor, Houston, Texas 77024, at 9:00
a.m., local time, on Thursday, August 9, 2001. At the Special Meeting,
stockholders will be asked to consider and vote upon a proposal to adopt the
merger agreement.
o REASONS FOR THE MERGER (PAGE 16)
The merger presents the best opportunity to maximize York's stockholder
value. The merger will enable York stockholders to realize a premium over recent
market prices for shares of York common stock. In addition, the York board of
directors evaluated other alternatives to the merger and concluded that none of
these alternatives would likely result in stockholders receiving greater value
for their York shares.
o RECOMMENDATION OF THE BOARD OF DIRECTORS (PAGE 16)
The York board of directors believes the merger is in the best interest
of stockholders and believes the merger is fair to stockholders of York. The
York board of directors has unanimously approved the merger agreement and
unanimously recommends that stockholders vote "FOR" adoption of the merger
agreement.
o EFFECTS OF THE MERGER; MERGER CONSIDERATION (PAGE 18)
Upon consummation of the merger:
o Empire will be merged into York, with York, the surviving
corporation, continuing as a subsidiary of Matthews.
o each share of York common stock issued and outstanding at the
effective time of the merger, except shares held by
stockholders who properly exercise their appraisal rights
under Delaware law and shares held by Matthews or any
wholly-owned subsidiary or affiliate of Matthews (which shares
will be cancelled), will be converted into the right to
receive between $10.00 and $11.00 in cash, without interest.
The actual merger consideration will be determined by a
formula described in this Proxy Statement under "The
Merger--Effects of the Merger; Merger Consideration." The
formula will be applied after October 31, 2001, and the
actual merger consideration will be
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determined by the parties and then announced publicly. No
further stockholder action will be taken after the formula is
calculated and the actual merger consideration is determined.
o each share of common stock of Empire issued and outstanding at
the effective time of the merger will be converted into and
exchanged for one share of common stock of York.
o OPINION OF YORK'S FINANCIAL ADVISOR (PAGE 19)
York's financial advisor, Houlihan Lokey Howard & Zukin Financial
Advisors, Inc. ("Houlihan Lokey"), delivered its opinion as of May 23, 2001
(the date that the merger agreement was approved by the York board of
directors) that the per share consideration (between $10.00 and $11.00 per
share) is fair to York stockholders from a financial point of view. The full
text of Houlihan Lokey's written opinion, which sets forth assumptions made,
matters considered and limitations on the review undertaken in connection
with the opinion, is attached as Annex B to this Proxy Statement. You should
read this opinion in its entirety. The York board of directors does not plan
to obtain an update to this opinion.
o RECORD DATE AND VOTING (PAGE 10)
Holders of York shares are entitled to receive notice and to vote at
the Special Meeting if they owned the shares as of the close of business on the
record date of June 20, 2001. On the record date, 8,940,950 shares of common
stock were outstanding and entitled to vote at the Special Meeting. Stockholders
will have one vote for each share of common stock of York they owned on the
record date.
The presence in person or by proxy of the holders of shares
representing a majority of the outstanding shares of York common stock is
necessary for a quorum to be present at the Special Meeting. Abstentions and
broker non-votes will be counted as shares present for the purpose of
determining the presence of a quorum at the Special Meeting.
o STOCKHOLDER VOTE REQUIRED (PAGE 12)
The affirmative vote of the holders of a majority of the outstanding
shares of York common stock as of the record date is required to adopt the
merger agreement.
o APPRAISAL RIGHTS (PAGE 25)
Holders of York shares are entitled to appraisal rights under Delaware
law. If a stockholder properly exercises his or her appraisal rights, the
stockholder will be entitled to a judicial determination of the fair value of
his or her shares of York common stock. The stockholder will then receive from
the surviving corporation payment of the fair value in cash, together with a
fair rate of interest, if any, as determined by the court. The court may
determine that the fair value is greater than, equal to or less than the amount
stockholders will receive if the merger is completed. In that case, the
stockholder will not receive payment for his or her shares as described in this
Proxy Statement. In order to exercise appraisal rights, the stockholder must (1)
not vote in favor of the adoption of the merger agreement, (2) make a written
demand for appraisal to York prior to the taking of the vote on the adoption of
the merger agreement, (3) hold shares of York common stock on the date of making
the written demand for appraisal, and (4) otherwise comply fully with Section
262 of the Delaware General Corporation Law. If you wish to exercise your
appraisal rights, you must mail or deliver the written demand for appraisal to
The York Group, Inc. at 8554 Katy Freeway, Suite 200, Houston, Texas 77024,
Attention: Cristen L. Cline, Corporate Secretary.
o INTERESTS OF CERTAIN PERSONS IN THE MERGER (PAGE 24)
The executive officers and directors of York have interests that are
different from, or in addition to, the interests of the stockholders of York.
York maintains change of control agreements with certain of its
executive officers. The agreements provide that in the event of a change of
control of York, if the executive is terminated without good cause (as defined
in the agreements) or he or she voluntarily terminates employment for good
reason (as defined in the agreements) within one year of the change of control,
he or she will be entitled to (1) a lump-sum payment equal to a multiple of his
or her base salary in the year immediately preceding the termination, and (2)
continuation of health
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care and life insurance benefits for one year following the termination. The
merger will constitute a change of control of York for purposes of the
agreements.
o CONDITIONS TO THE MERGER (PAGE 32)
The merger will be completed only if a number of conditions are either
met or (where permitted) waived by the parties, including the following:
o stockholders holding a majority of the outstanding common
stock of York have voted in favor of adopting the merger
agreement;
o the waiting period applicable to the completion of the merger
under the HSR Act has expired or been terminated and any other
regulatory approvals have been received; and
o no temporary restraining order, injunction, or other order or
restraint prohibits the merger.
In addition, either York or Matthews has the right to withdraw from the
merger unless the following conditions are met or (where permitted) waived by
it:
o the other party's representations and warranties are true and
correct in all material respects as of the date of the merger
agreement and as of the closing date of the merger; and
o the other party has performed in all material respects each
obligation and agreement set forth in the merger agreement and
has complied in all material respects with each covenant
required to be performed or complied with by it under the
merger agreement.
o REGULATORY MATTERS (PAGE 24)
York and Matthews have each committed to use its reasonable best
efforts to take whatever actions are required to obtain necessary regulatory
approvals.
The HSR Act prohibits York and Matthews from completing the merger
until they have furnished certain information and materials to the Antitrust
Division of the U.S. Department of Justice and the Federal Trade Commission and
all required waiting periods have expired.
A notice is expected to be filed under the HSR Act with the Federal
Trade Commission and the Department of Justice in the first week of
September. In addition, York expects to make all other filings required under
other antitrust or competition laws or by other antitrust authorities. The
Department of Justice and the Federal Trade Commission have the authority to
challenge the merger on antitrust grounds before or after the merger is
completed. Each state and country where either York or Matthews has
operations may also review the merger under such jurisdiction's antitrust
laws.
o TERMINATION OF THE MERGER AGREEMENT (PAGE 33)
York and Matthews may mutually agree in writing to terminate the merger
agreement at any time before or after stockholder approval. In addition, either
York or Matthews may terminate the merger agreement if:
o the merger has not been consummated by December 31, 2001;
provided, however, this date may be extended by York until
five (5) days after the earlier of the expiration or
termination of any applicable waiting period under the HSR
Act;
o a court of competent jurisdiction or other governmental entity
has taken action to permanently restrain, enjoin or otherwise
prohibit the merger;
o the stockholders of York do not adopt the merger agreement at
the Special Meeting; or
o the York board of directors has determined to recommend a
proposal for a merger, consolidation, share exchange, business
combination or other similar transaction other than the
transactions contemplated by the merger agreement ("takeover
proposal") to its stockholders and to enter into a
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binding written agreement concerning such takeover proposal
after determining that such proposal is superior to the
merger.
In addition, York may terminate the merger agreement if:
o a material breach of or failure to perform any representation,
warranty, covenant or agreement on the part of Matthews set
forth in the merger agreement has occurred which remains
uncured for a period of ten (10) business days after the
notice of such breach or failure; or
o York's earnings before interest, taxes, depreciation and
amortization, which is commonly called "EBITDA," (subject to
certain adjustments set forth in the merger agreement) for the
nine months ended September 30, 2001 equals at least $9.0
million (the "Threshold EBITDA") and the York Equity Value (as
defined in the merger agreement) is greater than $11.00 per
share.
In addition, Matthews may terminate the merger agreement if:
o the York board of directors has not recommended or has
withdrawn its recommendation of the merger agreement and the
merger (other than due to its recommendation of a superior
takeover proposal);
o a material breach of or failure to perform any representation,
warranty, covenant or agreement on the part of York set forth
in the merger agreement has occurred which remains uncured for
a period of ten (10) business days after the notice of such
breach or failure; or
o the Threshold EBITDA is not achieved.
o EXPENSES AND TERMINATION FEE (PAGE 33)
York and Matthews will share equally all fees and expenses, other than
attorneys' and accounting fees and expenses, incurred in relation to the
printing and filing of this Proxy Statement. Those fees and expenses incurred in
connection with the merger, the merger agreement and the transactions
contemplated by the merger agreement will be paid by the party incurring those
fees or expenses whether or not the merger is completed.
Matthews is required to pay a termination fee of $6 million to York if
the merger agreement is terminated by either Matthews or York under certain
circumstances. York is required to pay a termination fee of $6 million to
Matthews if the merger agreement is terminated by either York or Matthews under
certain circumstances. See "The Merger Agreement -- Termination, Termination
Fees, Amendment and Waiver."
o FEDERAL INCOME TAX CONSEQUENCES (PAGE 24)
The receipt of cash by a stockholder of York pursuant to the merger
will be a taxable transaction for federal income tax purposes and may also be
taxable under applicable state, local and foreign income and other tax laws. A
stockholder will recognize a gain or loss in an amount equal to the difference
between the adjusted tax basis of his or her York common stock and the amount of
cash received in the merger. Such gain or loss will be a capital gain or loss if
the York common stock is a capital asset in the hands of the stockholder and
will be a long-term capital gain or loss if the holding period exceeds one year.
This tax treatment may not apply to every stockholder. Determining the actual
tax consequences may be complicated, and will depend on the specific situation
and variables not within York's control. All stockholders should consult their
own tax advisor for a full understanding of the tax consequences of the merger
to them. See "The Merger -- Federal Income Tax Consequences."
-7-
FORWARD-LOOKING STATEMENTS
The statements contained in this Proxy Statement include
forward-looking statements about York. These forward-looking statements are
subject to risks and uncertainties and should be read with the cautionary
statements included in this document. Forward-looking statements include, by way
of example and without limitation, statements concerning plans, objectives,
goals, strategies, future events of performance and underlying assumptions and
other statements which are other than statements of historical facts, and
information concerning future results of the operations of York and the
surviving company after the effective time of the merger. Forward-looking
statements are set forth, among other places, under "Questions and Answers About
the Merger," "Summary Term Sheet," "Background of the Merger," "Purpose and
Reasons for the Merger," "Recommendation of the Board of Directors," and
"Opinion of York's Financial Advisor." Forward-looking statements may be
identified, preceded by, followed by or otherwise include, without limitation,
words such as "believes," "expects," "anticipates," "intends," "estimates" or
similar expressions. York's expectations, beliefs and projections are expressed
in good faith and are believed by York to have a reasonable basis including,
without limitation, management's examination of historical operating trends,
data contained in York's records and other data available from third parties.
There can be no assurance that management's expectations, beliefs or projections
will result or be achieved or accomplished.
In addition to the factors discussed elsewhere in this Proxy
Statement, factors that could cause actual results to differ materially from
those discussed in the forward-looking statements are discussed in York's
filings with the Securities and Exchange Commission. See "Where You Can Find
More Information."
-8-
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for
York and its subsidiaries as of the dates indicated, reflecting the
commemorative products segment which was sold in May 2001 as discontinued
operations for the three months ended March 31, 2001 and 2000 and for the years
ended December 31, 2000, 1999 and 1998. The selected consolidated financial data
presented below for the years ended December 31, 1997 and 1996 are York's
historical financial data since York acquired the commemorative products
business in 1998. The selected consolidated income statement data for the three
months ended March 31, 2001, are not necessarily indicative of the results to be
expected for any other interim period or for the full year. The data set forth
below is qualified in its entirety by, and should be read in conjunction with,
York's consolidated financial statements and related notes thereto included in
its annual report on Form 10-K for the year ended December 31, 2000, quarterly
report on Form 10-Q for the three months ended March 31, 2001, and current
report on Form 8-K filed June 8, 2001, as amended by Form 8-K/A filed on June
29, 2001.
Three Months
Ended March 31 Year Ended December 31
------------------ ------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
-------- --------- ---------- ---------- ---------- ---------- ----------
INCOME STATEMENT DATA:
Net sales $42,379 $43,998 $150,783 $153,768 $192,399 $178,690 $149,178
Cost of goods sold 29,807 30,800 112,026 111,118 143,076 130,144 116,408
------- ------- --------- -------- -------- -------- --------
Gross profit 12,572 13,198 38,757 42,650 49,323 48,546 32,770
------- ------- --------- -------- -------- -------- --------
Other operating expenses 7,955 9,080 37,107 33,030 33,254 28,439 13,359
Plant closure and restructuring charges -- -- 14,726 -- -- -- --
------- ------- --------- -------- -------- -------- --------
Operating income (loss) 4,617 4,118 (13,076) 9,620 16,069 20,107 19,411
Other income -- -- 2,510 610 402 -- --
Interest expense, net (1,939) (1,786) (7,457) (6,523) (4,717) (650) (983)
------- ------- --------- -------- -------- -------- --------
Income (loss) from continuing operations
before income taxes 2,678 2,332 (18,023) 3,707 11,754 19,457 18,428
Income tax (benefit) provision 1,059 911 (4,878) 1,512 4,725 7,394 6,907
------- ------- --------- -------- -------- -------- --------
Income (loss) from continuing operations 1,619 1,421 (13,145) 2,195 7,029 12,063 11,521
Income from discontinued operations 1,024 286 1,495 5,118 3,761 -- --
Extraordinary item, net of tax -- -- -- -- -- -- (736)
------- ------- --------- -------- -------- -------- --------
Net income (loss) $ 2,643 $ 1,707 ($11,650) $7,313 $10,790 $12,063 $10,785
======= ======= ========= ======= ======== ======== ========
EARNINGS PER SHARE:
- ------------------
BASIC:
Income (loss) from continuing operations $ 0.18 $ 0.16 ($1.47) $0.25 $0.79 $1.38 $1.53
Discontinued operations, net of tax $ 0.12 $ 0.03 $0.17 $0.57 $0.42 -- --
Extraordinary item, net of tax -- -- -- -- -- -- ($0.10)
Net income (loss) $ 0.30 $.0.19 ($1.30) $0.82 $1.21 $1.38 $1.43
DILUTED:
Income (loss) from continuing operations $ 0.18 $ 0.16 ($1.47) $0.24 $0.77 $1.34 $1.46
Discontinued operations, net of tax $ 0.12 $ 0.03 $0.17 $0.57 $0.42 -- --
Extraordinary item, net of tax -- -- -- -- -- -- ($0.09)
Net income (loss) $ 0.30 $ 0.19 ($1.30) $0.81 $1.19 $1.34 $1.37
SHARES USED IN COMPUTING EARNINGS PER SHARE:
- -------------------------------------------
BASIC 8,940 8,937 8,941 8,937 8,922 8,712 7,518
DILUTED 8,947 9,028 8,941 9,028 9,085 8,979 7,874
-9-
YORK SPECIAL MEETING
PURPOSE OF THE YORK SPECIAL MEETING
At the Special Meeting, stockholders of York will be asked to consider
and vote upon a proposal to adopt the merger agreement.
THE YORK BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ADOPTION OF THE MERGER
AGREEMENT. For additional information, see "The Merger -- Background of the
Merger," "-- Purpose and Reasons for the Merger" and "-- Recommendation of the
Board of Directors."
RECORD DATE AND VOTING
The York board of directors has fixed the close of business on June 20,
2001 as the record date ("Record Date") for determining holders entitled to
notice of and to vote at the Special Meeting and any adjournment of the Special
Meeting.
On the Record Date, 8,940,950 shares of common stock, held by
approximately 179 record owners, were outstanding and entitled to vote. Each
share of York common stock is entitled to one vote, exercisable in person or by
properly executed proxy.
Only stockholders of record at the close of business on the Record Date
are entitled to notice of the Special Meeting and to vote at the Special
Meeting. If your shares are held in "street name," meaning that your shares are
held not in your name but in the name of a broker (or other nominee), you will
receive instructions from your broker explaining what you must do in order for
your broker to be able to vote your shares. Please follow these instructions
carefully to ensure that your shares will be voted at the Special Meeting. If
you do not provide instructions to your broker, your broker will not be able to
vote your shares (your broker's inability to vote is referred to as a "broker
non-vote").
PROXIES AND REVOCATION OF PROXIES
Because many stockholders will not be able to attend the Special
Meeting, the York board of directors is soliciting proxies to give each
stockholder an opportunity to vote on the proposal to adopt the merger
agreement. The York board of directors urges you to:
o read the material in this Proxy Statement carefully;
o vote on the proposal to adopt the merger agreement by marking
the appropriate box on the accompanying proxy card or
completing the instructions sent to you by your broker (or
other nominee); and
o sign, date and return the proxy card in the enclosed
postage-paid envelope.
The proxy card has separate boxes allowing you to vote for or against
adoption of the merger agreement, as well as abstaining from such vote. The
proxy card should be completed. All properly executed proxy cards received and
not properly and timely revoked will be voted in accordance with the
instructions. IF NO INSTRUCTIONS ARE INDICATED, SUCH SHARES WILL BE VOTED "FOR"
THE PROPOSAL TO ADOPT THE MERGER AGREEMENT. The York board of directors is not
aware of any other matters that may come before the Special Meeting. If any
other matters properly come before the Special Meeting, the persons named in the
accompanying proxy card intend to vote the proxy in accordance with their
judgment on such matters.
You may revoke your proxy at any time before the shares represented by
the proxy are voted at the Special Meeting. You may do so in one of three ways:
o by completing and delivering a new, subsequently dated proxy
card to York;
o by sending York a written notice stating that you would like
to revoke your proxy (all such notices should be sent to The
York Group, Inc., 8554 Katy Freeway, Suite 200, Houston, Texas
77024, Attention: Cristen L. Cline, Corporate Secretary); or
-10-
o by attending the Special Meeting and asking to vote in person
(your presence at the Special Meeting will not by itself
revoke your proxy).
If a quorum is not present at the Special Meeting, or if it appears
that the merger agreement will not be adopted by stockholders at the Special
Meeting, then a majority of the shares of common stock present in person or by
proxy at the Special Meeting may adjourn the Special Meeting in order to give
the York board of directors time to solicit additional proxies or votes for the
adoption of the merger agreement. In such case, the proxy holders intend to vote
in favor of adjourning the Special Meeting. At any reconvening of the Special
Meeting, all proxies, except those that have been revoked or withdrawn, will be
voted in the same manner in which they would have been voted at the original
convening of the Special Meeting.
Votes represented in person or by proxy at the Special Meeting will be
tabulated by the election inspectors appointed for the meeting and will
determine whether or not a quorum is present. The election inspectors will treat
abstentions and broker non-votes as shares that are present and entitled to vote
for purposes of determining the presence of a quorum but as unvoted for purposes
of determining approval of any matter submitted to the stockholders for a vote.
If a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, these shares will not be
considered as present and entitled to vote with regard to that matter.
QUORUM
The presence in person or by proxy of holders representing a majority
of the issued and outstanding shares of York common stock is necessary to
constitute a quorum at the Special Meeting. Abstentions and broker non-votes
will be counted as shares present for the purpose of determining the presence of
a quorum at the Special Meeting.
SOLICITATION OF PROXIES
York and Matthews will share equally all fees and expenses, other than
attorneys' and accounting fees and expenses, incurred in relation to the
printing and filing of this document (including any related preliminary
materials.) York will bear all other costs of soliciting proxies. In addition to
the use of the mails, proxies may be solicited by officers, directors, and
regular employees, personally or by telephone. York will reimburse banks,
brokers, and other nominees for any out-of-pocket expenses incurred by them in
sending proxy materials to the beneficial owners of York's common stock. If
follow-up requests for proxies are necessary, York may employ other persons to
make these requests.
APPRAISAL RIGHTS
Stockholders who do not vote in favor of adoption of the merger
agreement and who otherwise comply with the requirements of the Delaware General
Corporation Law concerning appraisal rights will be entitled to appraisal
rights. Stockholders who vote in favor of adoption of the merger agreement will
have waived their appraisal rights. For more information, see "The Merger --
Appraisal Rights Under Delaware Law."
STOCK CERTIFICATES
Please do not include your stock certificates with your proxy card. If
the merger agreement is adopted by stockholders and the merger is completed, you
will receive instructions explaining how to surrender your stock certificates.
Prior to the effective time of the merger, Matthews will deposit with a company
responsible for exchanging stock certificates for cash, called the "exchange
agent," an amount of cash equal to the aggregate merger consideration. The
exchange agent will act as paying agent for the benefit of the holders of
certificates of York common stock in exchange for the merger consideration. Each
holder of York common stock who surrenders his or her York shares to the
exchange agent will be entitled to receive a cash payment upon acceptance of the
shares by the exchange agent.
As soon as practicable after the effective time of the merger, a letter
of transmittal will be mailed by the exchange agent to York stockholders. The
letter of transmittal will contain instructions for surrendering the
certificates of York common stock. York stockholders should not send stock
certificates to York or the exchange agent until the letter of transmittal is
received. If a certificate for York common stock has been lost, stolen or
destroyed, the person claiming the loss, theft or destruction of his or her
certificate, will have to execute an affidavit and may have to post a bond, if
required by Matthews and the exchange agent, prior to the payment of cash
representing the merger consideration.
-11-
Twelve months following the effective time of the merger, the exchange
agent will deliver to Matthews any funds, certificates, and other documents, not
claimed by former York stockholders. Thereafter, the payment obligation for any
certificate representing York common stock which has not been satisfied will
become the responsibility of Matthews. If certificates for York common stock are
not surrendered prior to the date on which such payments would otherwise escheat
to or become the property of any governmental agency, the unclaimed amounts will
become the property of Matthews to the extent permitted by applicable law, free
and clear of all claims or interest of any person previously entitled to such
property. None of Matthews, the exchange agent nor the surviving corporation
will be liable to any former holder of York common stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of
common stock that are outstanding as of the close of business on June 20, 2001
(the Record Date) is required to adopt the merger agreement. BECAUSE A FIXED
NUMBER OF AFFIRMATIVE VOTES IS REQUIRED TO ADOPT THE MERGER AGREEMENT (EQUAL TO
A MAJORITY OF SHARES OF COMMON STOCK OUTSTANDING ON THE RECORD DATE), THE
FAILURE TO RETURN A PROXY CARD OR TO VOTE IN PERSON AT THE SPECIAL MEETING, AS
WELL AS ABSTENTIONS AND BROKER NON-VOTES, WILL HAVE THE SAME EFFECT AS VOTES
CAST AGAINST THE ADOPTION OF THE MERGER AGREEMENT.
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT
IMPORTANCE TO THE STOCKHOLDERS OF YORK. ACCORDINGLY, YORK STOCKHOLDERS ARE URGED
TO READ AND CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY
STATEMENT, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN
THE ENCLOSED RETURN ADDRESSED, POSTAGE-PAID ENVELOPE.
-12-
THE MERGER
BACKGROUND OF THE MERGER
In September 1999 in Kansas City, executives of York and Wilbert, Inc.
met to discuss possible business opportunities and strategic alliances. Wilbert
is a privately-held Illinois corporation that has an established network of
independently owned licensees which are granted the right to manufacture and
sell Wilbert burial vaults and to whom Wilbert supplies burial vault forms,
liners and other related products. Wilbert also manufactures a variety of
vacuum-molded plastic products, adhesives, coatings and other similar products.
In October 1999, York representatives received from Curtis J. Zamec, president
and chief executive officer of Wilbert, financial and other information
regarding Wilbert.
Discussions between Wilbert and York representatives continued through
October and November 1999 in Chicago and Kansas City concerning potential joint
business opportunities between the companies. These discussions included a
review of York's financial forecasts and other financial information. In January
2000, Wilbert representatives (board of directors members Mr. Zamec, Terry G.
Christenberry, and Joseph U. Suhor III) met with York representatives (board of
directors members Robert T. Rakich, Roger W. Sevedge, Kirk P. Pendleton, Alan H.
Elder, H. Joe Trulove and Bill W. Wilcock, then president and chief executive
officer) to discuss operational issues and a possible business combination.
In February 2000, a mutual confidentiality agreement was executed
between York and Wilbert and non-public financial information was exchanged. On
March 24, 2000, representatives of York and Wilbert discussed the financial
information and the potential weighting of shares in any proposed business
combination. Mr. Christenberry then sent Mr. Rakich correspondence concerning
hypothetical weightings for a business combination. These weightings made it
clear that Wilbert and its stockholders required a larger interest than York and
its stockholders in any combined business. On March 27, 2000, Mr. Rakich
reported this information to the York board of directors and proposed to discuss
these matters in full at York's regularly scheduled board of directors meeting
on May 17, 2000. On May 28, 2000, York informed Wilbert that York wished to
postpone any further discussions due to York's ongoing efforts to refinance its
existing debt.
In May 2000, York and its lenders entered into a waiver and forbearance
agreement, and York received certain financial covenant waivers pursuant to its
amended and restated credit agreement. York's total debt at the time was $72.0
million. York's management then undertook a comprehensive review of alternatives
to reduce and refinance its debt.
From the end of May 2000 through June 2000, Mr. Zamec telephoned Mr.
Elder several times seeking a private meeting regarding Mr. Elder's support of a
business combination and a potential purchase of Mr. Elder's shares of York
common stock by Wilbert. On June 20, 2000, Mr. Elder met with Mr. Zamec in
Philadelphia, at which time Mr. Elder informed Mr. Zamec that he would not
discuss the matter further with Mr. Zamec.
On September 18, 2000, Wilbert filed a Schedule 13D reporting ownership
of 9.9% of York's outstanding common stock. On September 20, 2000, Thomas J.
Crawford, York's new chief executive officer, spoke by telephone with Mr. Zamec
concerning Wilbert's acquisition of York shares. Mr. Crawford and Mr. Zamec
agreed to meet in person at the annual National Funeral Directors Association
convention in early October. On September 21, 2000, Wilbert amended its Schedule
13D reporting ownership of 11.3% of York's outstanding common stock.
On September 27, 2000, the York board of directors approved and adopted
the York Rights Agreement pursuant to which rights to acquire York common stock
would be triggered when a person or entity acquired 15% or more of York's
outstanding common stock. On October 2, 2000, Wilbert formally requested that
the York board of directors reverse its action in adopting the York Rights
Agreement, approve Wilbert under Section 203 of the Delaware General Corporation
Law and permit Wilbert to continue to make purchases of shares of York common
stock. Wilbert also amended its Schedule 13D reporting an increased ownership of
11.8% of York's outstanding common stock. Mr. Crawford informed Mr. Zamec by
telephone that York would not reverse its actions in adopting the York Rights
Agreement or approve Wilbert under Section 203 of the Delaware General
Corporation Law.
In September 2000, York again entered into a waiver and forbearance
agreement with its lenders and received certain covenant waivers under its
amended and restated credit agreement through December 2000. York's total debt
at the time was $67.6 million. York management continued its focus on reducing
and refinancing its debt.
On October 8, 2000, Mr. Zamec and Mr. Crawford met at the National
Funeral Directors Association convention. On October 24, 2000, Wilbert amended
its Schedule 13D reporting ownership of 13.2% of York's
-13-
outstanding common stock. On November 10, 2000, Messrs. Zamec, Christenberry,
Crawford and Pendleton met in Philadelphia to discuss the general state of
the death care industry, recent industry trends and challenges, various
structures under which Wilbert's and York's stockholders might benefit from a
full or partial business combination and its potential benefits, the various
product lines, sales methods and distribution channels of each respective
company, and of Wilbert potentially making a loan to York. The
representatives agreed to discuss these matters with their respective
companies.
On November 16, 2000, Mr. Crawford called Mr. Zamec requesting a
meeting between representatives of York and Wilbert. On November 21, 2000,
Messrs. Zamec, Christenberry, Suhor, Pendleton, Elder and Sevedge met in
Philadelphia. During that meeting, Wilbert's representatives expressed again
their interest in a combination between the two companies or a transaction in
which Wilbert would make a loan to York enabling York to refinance its debt.
York representatives requested the companies each designate representatives to
study a potential combination and to develop a joint plan of operation which
would then be followed by further discussions.
Previously, on November 8, 2000, Wilbert requested York to produce or
make available its stock ledger and any related records or documents for
Wilbert's inspection. York denied that request for failure to state a proper
purpose as required by applicable law. Mr. Crawford, however, in a subsequent
telephone conversation with Mr. Zamec, invited Wilbert to send a second request
stating a proper purpose with his indication that York would honor Wilbert's
proper request. Wilbert sent a second letter, dated November 30, 2000,
requesting to inspect York's stock ledger with an amended purpose to solicit
proxies or consents to call a special meeting at which Wilbert would seek to
replace the York board of directors, or to solicit proxies to replace the York
board of directors at the next annual meeting.
On December 1, 2000, Wilbert sent a letter to York proposing a business
combination between the two companies. Such proposal contained no financial
terms, but did include a proposal that the majority of the new company's board
of directors would be Wilbert nominees. On December 1, 2000, Wilbert also
amended its Schedule 13D reporting ownership of 14.1% of York's outstanding
common stock.
On December 8, 2000, Messrs. Pendleton and Crawford contacted David M.
Kelly, chief executive officer of Matthews, by telephone regarding possible
business combinations between York and Matthews. They agreed to have further
discussions.
On December 19, 2000, Mr. Crawford sent a letter to Mr. Zamec stating
that the continuation of discussions with Wilbert was not in the best interests
of York's stockholders, and that the York board of directors had concluded that
it could best maximize stockholder value by executing its refinancing plan. Mr.
Crawford noted that while Wilbert had released its proposal publicly, there
still was no specific proposal that would provide value to all York
stockholders.
In late December 2000 and early January 2001, Mr. Kelly made telephone
calls to Messrs. Crawford and Pendleton regarding a possible transaction between
York and Matthews. On January 4, 2001, Messrs. Kelly, Crawford, Pendleton,
Elder, and Edward J. Boyle, vice president, accounting and finance, treasurer
and secretary of Matthews, met in Atlanta, Georgia to discuss the benefits of an
acquisition of York by Matthews.
On January 8, 2001, Wilbert and Mr. Marvin Barbee transmitted a letter
to York requesting that York present certain persons as nominees for director at
York's 2001 annual meeting, who, if elected, would constitute the entire York
board of directors. The letter also invited York to propose certain persons in
the board of director's slate of nominees.
On January 15, 2001, York executed a waiver and forbearance agreement
and consent with its lenders and received certain covenant waivers until June
2001 relating to its amended and restated credit agreement. Among other things,
the forbearance agreement also established interim debt reduction targets. To
achieve these targets and meet York's current management plans, York began to
divest certain assets, including its casket distribution operations and metal
vault manufacturing operations.
On January 24, 2001, Messrs. Kelly, Crawford and Boyle met in
Pittsburgh to further discuss a potential transaction between York and Matthews,
including the process for determining the valuation of York, and a potential
price for York.
On February 7, 2001, Mr. Zamec sent a letter to Mr. Crawford proposing
that Wilbert lend York $15 million in the form of a seven year debenture that
would be convertible in whole or in part, at Wilbert's option, into common stock
of York at a conversion price of $4.75. Repayment of the principal under the
loan would not begin
-14-
until the third year of the loan. Among other conditions to the proposed
loan, Wilbert requested that Wilbert nominees constitute the majority of the
York board of directors at the closing of the loan, as well as the majority
of the directors proposed at its next annual meeting. Wilbert also asked the
York board of directors to take action exempting the transaction from York's
Shareholder Rights Plan and provisions of Section 203 of the Delaware General
Corporation Law.
At its February 19, 2001 meeting, the York board of directors discussed
Wilbert's proposal and potential responses. At that time, they also reviewed the
status of York's ongoing debt reduction activities. The York board of directors
unanimously agreed that the convertible loan proposal made by Wilbert and the
$4.75 per share conversion price was insufficient. At this meeting, the York
board of directors also discussed a potential transaction with Matthews and a
scheduled meeting between representatives from York and Matthews on February 20,
2001 in Atlanta. At this meeting, Messrs. Kelly, Crawford, Boyle and Dan Malone,
vice president finance and chief financial officer of York, discussed the terms
and valuation of a potential transaction between Matthews and York.
On February 21, 2001, Mr. Crawford sent a letter to Mr. Zamec rejecting
Wilbert's proposal to lend York $15 million pursuant to a convertible note and
appoint a majority of the York board of directors.
At a February 27, 2001 meeting, the York board of directors discussed a
possible proxy contest by Wilbert and the potential transaction with Matthews.
On March 2, 2001, Mr. Zamec sent a letter of intent to Mr. Crawford
proposing to acquire all of the assets related to York's metal vault
manufacturing operations at a purchase price of $2.2 million in cash. At a March
5, 2001 meeting, the York board of directors compared Wilbert's offer to other
offers York received, which were far in excess of Wilbert's offer. This letter
of intent expired on March 15, 2001 without an acceptance by York.
On March 16, 2001, Mr. Zamec sent a letter to the York board of
directors proposing a business combination transaction in which Wilbert would
acquire the outstanding common stock of those York stockholders desiring to sell
their stock for $6.50 per share. Wilbert also expressed its willingness to
provide stock in the combined entity in exchange for York shares for those
stockholders wishing to continue their ownership interest. Wilbert's proposal
was conditioned upon, among other things, a due diligence investigation, the
absence of a material adverse change in York's situation, and the approval of
the transaction by the York board of directors.
In Houston on March 19 and March 20, 2001, Messrs. Kelly, Crawford,
Boyle and Malone met to discuss the terms of the potential acquisition of York
by Matthews.
At a March 22, 2001 special meeting, the York board of directors
discussed Wilbert's March 16, 2001 correspondence and most recent Schedule 13D
filing. The York board of directors agreed to retain Houlihan Lokey as its
financial advisor to review York's alternatives, and discussed the ongoing
merger discussions with Matthews and the possible sale of York's commemorative
products segment to Matthews.
At an April 2, 2001 special meeting of the York board of directors, Mr.
Crawford updated the board on the status of the merger discussions with Matthews
and the proposed sale of York's commemorative products segment to Matthews. Mr.
Crawford also reviewed the March 16, 2001 correspondence from Wilbert.
From April 9 through April 12, 2001, York's representatives met with
the representatives of Matthews in Pittsburgh to discuss further the terms and
conditions of a possible sale of the commemorative products segment and a
potential merger of the companies.
On April 18, 2001, the York board of directors met by telephone to
discuss Wilbert's March 16, 2001 correspondence proposing the purchase of York
stock from willing stockholders for $6.50 per share. At this meeting the York
board of directors also discussed the status of the proposed transactions with
Matthews. Later that day, the York board of directors met again by telephone and
discussed the terms of the proposed merger with Matthews and the proposed sale
of York's commemorative products segment to Matthews. Representatives from
Houlihan Lokey attended and participated in discussions concerning transaction
alternatives with Matthews and Wilbert, as well as refinancing options.
On April 27, 2001, the York board of directors held a special meeting
at which Mr. Crawford reviewed the status of merger discussions with Matthews
and the proposed sale of York's commemorative products segment to Matthews. York
also publicly announced on that date that it had achieved the debt reduction
targets in its forbearance agreement by reducing its net debt to approximately
$40 million.
-15-
On May 1, 2001, Mr. Crawford sent a letter to Mr. Zamec rejecting
Wilbert's March 16 proposal.
On May 3, 2001, York announced the sale of its metal vault
manufacturing operations, which sale was closed on May 21, 2001. York received
consideration substantially in excess of the amount Wilbert had offered for the
metal vault manufacturing operations, and used the sales price to further reduce
its debt.
On May 10, 2001, Mr. Zamec sent a letter to the York board of directors
proposing a business combination transaction in which Wilbert would acquire all
outstanding common stock of York for $7.75 per share.
From April 27, 2001 to May 23, 2001, representatives of York and
Matthews and their respective counsel continued to negotiate the terms of the
sale of York's commemorative products segment to Matthews and the terms of a
merger with Matthews, including the merger agreement and related agreements.
On May 14, 2001, Mr. Zamec, Mr. Christenberry and Wilbert's legal
counsel met in Houston with Mr. Crawford, Mr. Malone and York's legal counsel,
to discuss Wilbert's May 10, 2001 offer to acquire the outstanding stock of York
and the maximum price Wilbert would be willing to offer.
The York board of directors held a special meeting by telephone on May
18, 2001 to review the proposed sale of the commemorative products segment to
Matthews and the terms of the proposed merger with Matthews, and the results of
the meeting with Wilbert representatives on May 14, 2001. On May 23, 2001, the
York board of directors held a special meeting by telephone to (i) approve the
sale of the commemorative products segment to Matthews, (ii) approve the terms
of a merger with Matthews and (iii) receive the fairness opinion from Houlihan
Lokey with respect to the merger.
During the evening of May 23, 2001 the merger agreement was executed by
York and Matthews and announced in a joint press release. The sale to Matthews
of the commemorative products segment was completed on May 24, 2001.
PURPOSE AND REASONS FOR THE MERGER
The transaction was initiated by the York board of directors as a
result of its determination that a sale to a strategic buyer or financial
investor represented the most viable alternative to maximize stockholder value,
and the York board of directors believes that the merger presents the best
opportunity to maximize stockholder value.
The primary benefit of the merger to York stockholders is the ability
of York stockholders to realize the value of their investment in York in cash at
a price which represents a substantial premium to the market price for the
common stock prior to the public announcement of the transaction. As a result of
the merger, York stockholders will cease to have any ownership interest in York
and will cease to participate in future earnings growth, if any, of York or to
benefit from the increase, if any, in the value of York. In addition, each
stockholder of York will recognize a taxable gain upon the completion of the
merger if and to the extent the amount of cash such stockholder receives in the
merger exceeds his or her tax basis in the York common stock.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE YORK BOARD OF DIRECTORS BELIEVES THE TERMS OF THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, YORK AND ITS STOCKHOLDERS, HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT, AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" ADOPTION OF THE MERGER AGREEMENT.
In reaching its decision to approve the merger and the merger
agreement, the York board of directors consulted with its financial and legal
advisors and considered a variety of factors, including the following:
o a review of the possible alternatives to a sale of York,
including the offers by Wilbert and the prospects of
continuing to operate York as an independent company, the
value to stockholders of such alternatives, and the timing and
likelihood of achieving additional value from those
alternatives, as well as the possibility that York's future
performance might not lead to a stock price having a higher
present value than the merger consideration;
o a review of York's strategic goals, the capital necessary to
implement those goals, the timing and likelihood of obtaining
the capital necessary to implement those goals, and the
possibility that the
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accomplishment of such goals might not lead to a stock price
having a higher present value than the merger consideration;
o a review of the offers made by Wilbert to acquire York common
stock and assessing Wilbert's ability to raise capital to
complete such a transaction;
o the sale of the commemorative products segment to Matthews,
which allowed York to pay down its outstanding principal
balance on its amended and restated credit agreement;
o the opinion of Houlihan Lokey, York's financial advisor, that
the cash merger consideration to be received by York
stockholders was fair to stockholders from a financial point
of view, and the financial analyses conducted by Houlihan
Lokey in reaching its opinion, as described under "-- Opinion
of York's Financial Advisor";
o the determination of the York board of directors that the
merger consideration to be paid for each share of common stock
of York is fair to the stockholders and that it would be in
the best interests of York and its stockholders to enter into
the merger agreement and related agreements; and
o the amount of consideration offered to York stockholders,
which, based upon the cash merger consideration of $10.00 per
share, represents a premium of 28.5%, 73.6%, 77.8%, 150.0%,
and 185.0% over the average York closing prices for the 10-day
period, the 30-day period, the 60-day period, the 90-day
period and the 180-day period, respectively, preceding May 24,
2001.
The York board of directors also considered certain countervailing
factors in its deliberations concerning the merger and the merger agreement,
including:
o the potential disruption to York's business that might result
from undertaking the merger process;
o the uncertainty regarding stockholders', customers' and
employees' perception of the merger;
o the contractual obligations of York, such as a no solicitation
covenant, and the transaction expenses to be incurred by York
prior to the completion of the merger;
o the payments required to terminate York's contract obligations
to certain officers and directors. See "--Interests of Certain
Persons in the Merger";
o the possibility that the merger may not be consummated because
York is unable to meet the Threshold EBITDA financial test, or
other conditions to the merger are not met by York; and
o the required payment by York in certain circumstances of a
termination fee and expenses under the merger agreement. See
"The Merger Agreement--Termination, Termination Fees,
Amendment and Waiver."
The York board of directors determined that the countervailing factors
did not outweigh the positive attributes of the merger.
-17-
The foregoing discussion of the information and factors discussed by
the York board of directors is not meant to be exhaustive but includes all
material factors considered by the York board of directors. The York board of
directors did not quantify or attach any particular weight to the various
factors that it considered in reaching its determination that the merger
agreement and the merger are fair to and in the best interests of York
stockholders, including its belief that the merger is fair to stockholders.
Rather, the York board of directors viewed its position and recommendation as
being based on the totality of the information presented to and considered by
it. As a result of its consideration of the foregoing and other relevant
considerations, the York board of directors unanimously determined that the
merger agreement and the merger are advisable to and in the best interests of
York stockholders and approved the merger agreement.
THE YORK BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" ADOPTION OF THE MERGER AGREEMENT.
EFFECTS OF THE MERGER; MERGER CONSIDERATION
The merger agreement provides for the merger of Empire into York, with
York surviving the merger as a subsidiary of Matthews. Each share of common
stock of York issued and outstanding at the effective time of the merger, except
shares held by stockholders who properly exercise their appraisal rights under
Delaware law and shares held by Matthews or by any wholly-owned subsidiary or
affiliate of Matthews (which will be cancelled), will be converted into the
right to receive (1) $10.00 in cash, without interest, plus (2) the Excess Cash
Increment (as defined below). The merger agreement provides that the per share
merger consideration will not be less than $10.00 nor more than $11.00. The
calculation of the Excess Cash Increment will be made after October 31, 2001,
and the amount per share above $10.00, if any, to be received by York
stockholders will then be announced by press release and included in a current
report on Form 8-K to be filed by York. No further stockholder vote will be
taken at that time and the parties will proceed under the merger agreement to
attempt to close the merger.
The capitalized terms that are set forth in the definitions below but
are not defined therein are defined in the merger agreement. Please refer to the
merger agreement for the complete definitions.
Excess Cash Increment = A - ($6.9 MILLION + B + C + D + E + F + G) + (H + I)
----------------------------------------------------
Outstanding Shares
The merger agreement provides that the Excess Cash Increment shall not
be less than zero.
"A" is "York Cash." "York Cash" means the total cash and Cash
Equivalents of York and its Subsidiaries at October 31, 2001, plus the Selected
Property Value. In general, "Selected Property Value" is a percentage of the
appraised value of specified properties that York currently has for sale.
"B" is "Present Value Environmental Remediation Costs." "Present Value
Environmental Remediation Costs" means the present value cost (discounted at
7.5%) of the Environmental Remediation Costs that are not paid on or before
October 31, 2001. In general, "Environmental Remediation Costs" are the costs to
clean up certain environmental conditions at specified properties.
"C" is the premium not otherwise paid by York on or before October 31,
2001 for cost cap coverage from AIG or a similarly rated insurance company for
each facility having an environmental remediation 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.
"D" is the legal, accounting, environmental consulting and investment
banking fees and expenses incurred or accrued and not paid by York and its
subsidiaries on or before October 31, 2001 in connection with the merger
agreement and completing the merger, or are reasonably anticipated by York to be
incurred by York prior to the completion of the merger.
"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 less, in the case of York Stock Options, any exercise price to be paid to
York by the optionee.
"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
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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.
"G" is all funded indebtedness, and any capitalized lease obligations
first incurred after the date of the merger agreement, of York and its
subsidiaries 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
writing.
"I" is any indemnity to which York would be entitled under the Asset
Purchase Agreement among Matthews, Empire Stock Corp., York, York Bronze Company
and OMC Industries, Inc., the Stock Purchase Agreement by and between Matthews,
Empire Stock Corp. and York dated concurrently with the merger agreement and any
other document related thereto, but which has not been paid due to the
deductible basket amounts provided for in those agreements or for any other
reason.
"Outstanding Shares" shall mean the total number of shares of York
common stock outstanding on October 31, 2001.
Immediately prior to the completion of the merger, York will settle,
cash out or cause to be cancelled all options to purchase shares of York common
stock ("York Stock Options") and any shares of common stock that 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
completion of the merger. Matthews will not be required to pay for, as part of
the merger consideration, any Deferred Stock, and any York Stock Options that
are not vested and exercised prior to October 31, 2001.
Each share of common stock of Empire issued and outstanding at the
effective time of the merger will be converted into and exchanged for one share
of stock of York. As a result of the merger, Matthews will own all of the issued
and outstanding capital stock of York.
The merger will be effective upon the filing of a Certificate of Merger
with the Delaware Secretary of State. The filing of the Certificate of Merger is
expected to occur promptly after all of the conditions to the merger set forth
in the merger agreement have been satisfied or waived. See "The Merger
Agreement--Conditions to the Merger." The merger will have the effect set forth
under Delaware law. More specifically, at the effective time of the merger, all
of the property, rights, privileges, powers and franchises of York and Empire
will be vested in the surviving corporation, and all of the debts, liabilities
and duties of York and Empire will become the debts, liabilities and duties of
the surviving corporation.
The directors of Empire immediately prior to the effective time of the
merger will be the directors of the surviving corporation and will serve until
their respective successors are duly elected. The officers of Empire immediately
prior to the effective time of the merger will be the officers of the surviving
corporation and will serve until their respective successors are duly elected.
The certificate of incorporation and bylaws of Empire will be the certificate of
incorporation and bylaws of the surviving corporation until duly amended in
accordance with applicable law. However, the certificate of incorporation will
be amended so that the name of the surviving corporation will be "The York
Group, Inc."
If the merger is consummated, York will no longer be required to file
periodic reports under the Securities Exchange Act of 1934, including annual
reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements and other
non-periodic reports such as Forms 8-K.
OPINION OF YORK'S FINANCIAL ADVISOR
Houlihan Lokey Howard & Zukin Financial Advisors, Inc. has delivered
its opinion dated May 23, 2001 to the York board of directors to the effect
that, as of such date and based upon and subject to certain matters stated in
such opinion, the consideration to be paid by Matthews in connection with the
merger is fair to the stockholders of York from a financial point of view. The
full text of Houlihan Lokey's written opinion, which sets forth the assumptions
made, matters considered and limitations on the review undertaken by Houlihan
Lokey, has been attached as Annex B to this document. Houlihan Lokey's opinion
is directed only to the fairness, from a financial point of view, of the
consideration to be paid by Matthews in connection with the merger, and is not
intended to constitute, and does not constitute, a recommendation as to how a
stockholder should vote with respect to the approval of the adoption of the
merger agreement. You are urged to read this opinion carefully in its entirety.
-19-
The York board of directors retained Houlihan Lokey pursuant to an
engagement letter dated April 5, 2001 to render an opinion as to the fairness to
the stockholders of York, from a financial point of view, of the consideration
to be received by them in connection with the merger. Houlihan Lokey is a
nationally recognized investment banking firm, and was selected by the York
board of directors based on Houlihan Lokey's reputation and experience in
investment banking in general and its recognized expertise in the valuation of
assets and businesses entities. On May 23, 2001, at a meeting of the York board
of directors, Houlihan Lokey delivered to the York board of directors its
written opinion, attached hereto as Annex B, that the consideration to be paid
for the transaction is fair to the stockholders of York from a financial point
of view.
The opinion of Houlihan Lokey does not address York's underlying
business decision to effect the merger. Houlihan Lokey has not been requested
to, and did not, solicit third party indications of interest in acquiring all or
any part of York. Furthermore, at the request of the York board of directors,
Houlihan Lokey has not negotiated the terms of the merger on York's behalf.
Houlihan Lokey considered the following background factors in preparing
the fairness opinion. Houlihan Lokey did not specifically weigh each factor
considered, and some factors did not impact its determination of the fairness of
the merger.
Although Houlihan Lokey ultimately based its opinion on the economic
analysis of the merger, it did, however, consider the following general
background factors:
o there are few other logical strategic buyers of the assets;
o the industry in general is not subject to high growth rates or
extreme cyclicality; and
o largely unsuccessful consolidation, roll-up, and expansion
schemes reshaped the industry during the 1990s.
In connection with its fairness opinion, Houlihan Lokey made such
reviews, analyses and inquiries as it deemed necessary and appropriate under the
circumstances. Among other things, Houlihan Lokey:
o reviewed York's annual reports to stockholders and on Form
10-K for the fiscal years ended December 31, 1995 through
2000, quarterly reports on Form 10-Q for the years 1999 and
2000, and Company-prepared interim financial statements for
the four-month period ended April 30, 2001, which York's
management had identified as being the most current financial
statements available;
o reviewed draft copies of the merger agreement;
o met with certain members of the senior management of York to
discuss the operations, financial condition, future prospects
and projected operations and performance of York, and met with
representatives of York's counsel to discuss certain matters;
o visited certain facilities and business offices of York;
o reviewed forecasts and projections prepared by York's
management for the year ending December 31, 2001; o reviewed
the historical market prices and trading volume for York's
publicly traded securities;
o reviewed certain other publicly available financial data for
certain companies that were deemed comparable to York and
publicly available prices and premiums paid in other
transactions that were considered similar to the merger;
o reviewed drafts of certain documents to be delivered at the
closing of the merger; and
o conducted such other studies, analyses and inquiries as were
deemed appropriate under the circumstances for rendering its
opinion.
Houlihan Lokey did not independently verify the accuracy and
completeness of the information supplied to it with respect to York's business
and its assets and did not assume any responsibility with respect to such
information. Houlihan Lokey did not make any independent appraisal of any of the
properties or assets involved in the merger. Houlihan Lokey recognizes that, as
with any potential merger or acquisition, there are inherent risks that could
prevent the transaction from being consummated. Houlihan Lokey also recognizes
that because the merger is conditioned upon York's ability to achieve a
negotiated EBITDA target level, there is increased risk that the merger may not
close.
The Houlihan Lokey opinion is necessarily based on business, economic,
market and other conditions as they existed and could be evaluated by Houlihan
Lokey at the date of the opinion. Furthermore, Houlihan Lokey has relied upon
and assumed, without independent verification, that (a) York-prepared financial
forecasts and projections used in its analysis have been reasonably prepared and
reflect the best currently available estimates of
-20-
the future financial results and condition of York and (b) there has been no
material change in the assets, financial condition, business or prospects of
York since the date of the most recent financial statements made available to
it.
The Houlihan Lokey opinion was prepared for the information of the York
board of directors in connection with its evaluation of the merger and did not
constitute a recommendation to York, the York board of directors, or any holder
of shares of the common stock of York as to whether to enter into the merger or
to take any other action.
York has paid Houlihan Lokey fees of $240,000 for its services in
connection with the engagement letter and has agreed to reimburse Houlihan Lokey
for reasonable out-of-pocket expenses incurred in connection therewith,
including reasonable fees and expenses of its legal counsel. No portion of the
fee is contingent upon the consummation of the merger or the conclusions reached
in the opinion.
COMPANY-SPECIFIC VALUATION CONSIDERATIONS
According to Houlihan Lokey, an analysis of company-specific factors
serves as a basis for comparing the subject company to other industry
participants. Some of the factors examined were demographics, product demand,
quality of management, diversity of operations, and access to capital.
Generally, the best-positioned firms should exceed industry norms in both good
times and bad, while the worst-positioned firms should experience sub-par
performance. Houlihan Lokey determined that York is not in as favorable a
position as most of its peers in the deathcare industry, both public and
private.
VALUATION METHODOLOGY
The fundamental premise on which all investment decisions are based is
that value to a potential investor is equal to the present worth of future
benefits. This basic concept can be applied to the valuation of an entire
company or to particular securities that comprise the capital structure of that
company. In each instance, it is a matter of identifying the future returns to
the investor that the company can be reasonably expected to generate, and
determining their present value in the context of the uncertainty associated
with realizing such returns.
There are two bases on which to determine the value of a company:
going-concern and liquidation. In the case of a company that is expected to
continue operating well into the future, the prospective investor will evaluate
the risks and expected returns of the investment on a going-concern basis. The
primary concern is not with the individual values of enterprise assets, but with
their ability to generate the returns expected in the future. Only secondarily
is the investor interested in individual asset values, and this from the
standpoint of security or collateral for the investment if for any reason the
company should choose to liquidate. In such a case, liquidation values for the
assets, as well as all costs associated with liquidation, would prevail.
When determining the value of an on-going business enterprise, there
are three general approaches available to the valuation professional: the market
approach, the income approach, and the asset approach. The choice of which
approach to use in a particular situation will depend upon the specific facts
and circumstances associated with the company, as well as the purpose for which
the valuation analysis is being conducted.
Houlihan Lokey utilized several valuation methodologies in its analysis
of the fairness of the consideration to be paid by Matthews for York's business.
These approaches are summarized below.
MARKET APPROACH. The Market Approach is one of determining a level of
earnings which is considered to be representative of the future performance of
the company, and capitalizing this figure by an appropriate risk-adjusted rate.
This approach provides an indication of value for the security which corresponds
with the particular earnings figure being capitalized (for example, capitalizing
net earnings available to common stock holders would yield an indication of
value for the common stock). There are several different forms of "earnings"
used in the market approach, because each form isolates particular nuances of
the company's operating performance.
The various "earnings" figures used in Houlihan Lokey's analysis,
earnings before interest, taxes, depreciation and amortization ("EBITDA") and
earnings before interest and taxes ("EBIT"), are debt-free variations of the
conventional net income figure determined according to generally accepted
accounting principles. Debt-free market multiples relate the company's
Enterprise Value ("EV"), or debt (net of cash) and equity, to earnings figures
from which no interest expense has been deducted. The more common debt-free
multiples are total invested capital/earnings before interest, taxes,
depreciation and amortization ("EV/EBITDA"), and total invested capital/earnings
before interest and taxes ("EV/EBIT"). The use of these multiples may be
appropriate when comparing companies that have substantially different amounts
of financial leverage, because the multiples are based on total company value,
which is generally independent of the amount of leverage in the company's
capital
-21-
structure. Their use effectively separates the issue of company valuation
from the specific financing decisions that are made to operate the business.
Furthermore, EV/EBITDA and EV/EBIT multiples, which are developed from
pre-tax earnings figures, may be appropriate when comparing companies that
have substantially different income tax situations, as well as different
amounts of financial leverage. In general, these debt-free methods reduce
distortions in price/cash flow and price/earnings multiples that might be
present due to differences in financial leverage or income taxes among firms.
The capitalization rate is an expression of what investors believe to
be a fair and reasonable rate of return for the particular security, given the
inherent risks of ownership. It incorporates expectations of growth and rests on
the implicit assumption that some level of earnings will be generated by the
enterprise into perpetuity. The most common means of obtaining capitalization
rates is through the market comparison method, whereby companies having their
stock traded in the public market are selected for comparison purposes and used
as a basis for choosing reasonable capitalization rates for the subject company.
Capitalization rates obtained in this manner are generally expressed as ratios
of the various earnings figures, and are referred to as "market multiples."
Another common method of obtaining such multiples is to examine companies that
have recently been sold in the public marketplace. For this method, the total
price paid for the company is related to earnings figures which yield implied
transaction multiples. The acquired company is then compared with the subject
company on the basis of risk and expected return, and its transaction multiples
are used as a basis for selecting appropriate multiples for the subject company.
In using the Market Approach, Houlihan Lokey applied market based
multiples of comparable public companies to representative projected earnings
levels of York, adjusted the enterprise value downward for any net debt, and
applied a 30% control premium to arrive at its control market value of equity
range.
Also under the Market Approach, comparable market transactions are
considered and applied to the selected earnings levels. However, there were no
recorded transactions that involved companies similar to York or Matthews in a
time period reasonable to consider comparable multiples.
INCOME APPROACH. The Income Approach, or Discounted Cash Flow ("DCF")
approach, is another popular method of determining the fair market value of a
company. The approach is one of estimating the present value of the projected
future cash flows to be generated from the business and theoretically available
(though not necessarily paid) to the capital providers of the company. In the
DCF approach, the counterpart to the market multiple described above is the
discount rate applied to the projected future cash flows to arrive at the
present value. The discount rate is intended to reflect all risks of ownership
and the associated risks of realizing the stream of projected future cash flows.
It can also be interpreted as the rate of return that would be required by
providers of capital to the company to compensate them for the time value of
their money, as well as the risk inherent in the particular investment. Unlike
the market multiple, however, the discount rate employed in the DCF approach
contains no implicit expectations of growth for the cash flows. Instead, the
projected cash flows themselves reveal growth expectations, while allowing for a
great deal more flexibility in projecting such growth rates.
In contrast to the "cash flow" figures used in the Market Approach, the
figure used in the DCF approach more accurately represents the true cash flow
being generated by the operations of the business. In short, it incorporates
cash expenditures on working capital and fixed assets, while also recognizing
the non-cash expenses contained in earnings figures. The cash flows are
typically projected over a limited number of years, which will depend on the
planning horizon of the specific firm and other factors related to the
particular industry and the general economy. As a result, it is necessary to
compute a terminal value as of the end of the last period for which cash flow is
projected. This terminal value is essentially an estimate of the value of the
enterprise as of that future point in time, and it incorporates the assumptions
of perpetual operations and implicit growth found in the market approach.
Discounting each of the projected future cash flows and the terminal value back
to the present, and summing the results, yields an indication of value for the
enterprise as a whole.
When used in combination, the various forms of the Market Approach and
the DCF approach can lead to a reasonable indication of value for the subject
company and its securities. However, these approaches do not generally capture
the value of assets and liabilities that are not required for the operation of
the business. Examples of such "non-operating" assets and liabilities include
excess cash, investments not related to the business, unnecessary land and
equipment, and contingent liabilities. If such items exist, they must be valued
separately and used to adjust the going-concern value indications obtained by
the market and DCF approaches.
In applying the DCF approach, Houlihan Lokey discounted the projected
earnings of York using the Gordon Growth Model ("GGM"). Houlihan Lokey selected
the GGM because only one year of projections were available from management.
Considering the risk of obtaining these projections, York's inherent operating
risks,
-22-
and the time value of money, the projected debt-free earnings were discounted
at rates ranging from 10.5% to 14.0%; and growth rates ranging from 1% to 3%
in perpetuity. In arriving at its control market value of equity under this
approach, Houlihan Lokey adjusted the enterprise value downward for any net
debt.
ASSET APPROACH. The Asset Approach, also called the adjusted book value
approach, differs from the Market and DCF approaches in two important ways.
First, it focuses on individual asset and liability values from the company's
balance sheet, which are adjusted to fair market value. In contrast, the Market
and DCF approaches focus on the aggregate returns generated by all the company's
assets. Second, it can be applied in situations where liquidation is imminent.
The Market and DCF approaches have very limited to no applicability in a
liquidation scenario.
The Asset Approach can also be used in going-concern situations to
provide an additional indication of value. The approach may be appropriate in
instances where the subject company has a heavy investment in tangible assets or
where operating earnings are insignificant relative to the value of the
underlying assets, such as in real estate holding companies and start-up
businesses. Furthermore, it may not be the best approach in instances where the
company has substantial operating earnings relative to the value of the
underlying assets. In such cases, the residual equity value resulting from the
adjusted book value approach may not reflect the value inherent in the company's
superior cash-generating capability. For the reasons listed above, Houlihan
Lokey did not apply the Asset Approach.
However, consideration was given to certain assets, namely distribution
centers and real property, that are held for sale by York. In the event that
certain of those assets are not sold before closing the merger, Matthews will
give credit in the Excess Cash Increment calculation equal to fifty percent of
the appraised value for each asset. As of the date Houlihan Lokey issued its
fairness opinion, York held for sale assets with an appraised value of $5.7
million. Houlihan Lokey assumed, for purposes of its analysis, that all of the
assets held for sale by York would be sold by the closing of the merger.
YORK VALUATION SUMMARY ($ IN MILLIONS)
INCOME APPROACH
Equity Value Range $ 53.14 -- $ 65.65
Plus: Net Debt $ -- -- $ --
------- -------
Control Equity Value Range $ 53.14 -- $ 65.65
======= =======
MARKET APPROACH
Equity Value Range $ 52.00 -- $ 74.00
Plus: Control Premium 30% $ 15.60 -- $ 22.20
------- -------
Control Equity Value Range $ 67.60 -- $ 96.20
======= =======
CONCLUDED CONTROL MARKET VALUE OF EQUITY
Mean $ 60.37 -- $ 80.92
Median $ 60.37 -- $ 80.92
CONCLUDED VALUE $ 65.00 -- $ 75.00
======= =======
Houlihan Lokey concluded that the "Control Market Value of Equity" for
York was approximately $65,000,000 to $75,000,000. On this basis, Houlihan Lokey
concluded that the value of consideration of approximately $90,610,000 for the
acquisition of York, discounted from the anticipated closing date, together with
the assumption of all of the liabilities, is fair from a financial point of
view.
CERTAIN TRANSACTIONS AND RELATIONS BETWEEN YORK AND MATTHEWS
On May 24, 2001, York sold the businesses which comprise its
commemorative products segment to Matthews for net cash proceeds of $45 million.
In connection with the transaction, Matthews acquired York's manufacturing
facilities in Kingwood, West Virginia and Bryan, Texas.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the York board of directors with
respect to the merger, stockholders of York should be aware that the directors
and executive officers of York have certain interests in the merger that may be
different from, or in addition to, the interests of the stockholders of York.
The York board of directors was aware of these interests and considered them,
among other factors, in approving the merger agreement. These interests are
summarized below.
CHANGE OF CONTROL AGREEMENTS: York executed change of control
agreements in December 2000 with certain of its executive officers, including
Thomas J. Crawford, David F. Beck, Cristen L. Cline, Mark W. Hornibrook, Dennis
C. Laphan, Dan E. Malone, Sandra A. Matson, Robert T. Monteleone, Gerard K.
Nichols, Angela Sizemore, and Ken Smith, which agreements have a term of two (2)
years. The agreements provide that in the event of a change of control of York,
if the executive is terminated without good cause (as defined in the agreements)
or he or she voluntarily terminates employment for good reason (as defined in
the agreements) within one year of the change of control, he or she will be
entitled to (1) a lump-sum payment equal to a multiple (Mr. Crawford: three
times (3x); all others: one times (1x)) of his or her base salary in the year
immediately preceding the termination, and (2) continuation of health care and
life insurance benefits for one year following the termination. The agreements
also provide that the executive will be paid an additional amount, which when
added to the lump sum payment, will place the executive in the same after-tax
position as if any excise tax imposed by the Internal Revenue Code did not apply
to any of the amounts payable under the agreement. The merger will constitute a
change of control of York for purposes of the agreements.
INDEMNIFICATION AND INSURANCE. After the effective time of the merger,
Matthews and the surviving corporation have agreed to indemnify, hold harmless,
and defend each and every present and former director, officer, employee,
fiduciary, and agent of York and each subsidiary of York from and against all
attorneys' fees, judgments, fines, losses, claims, damages, liabilities,
settlement amounts, costs and expenses in connection with any claim, action,
suit, proceeding or investigation 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 the merger agreement).
In addition, for a period of six years from the effective time of the
merger, the surviving corporation and Matthews will provide to the indemnified
parties liability insurance protection substantially equivalent to that provided
by York's current directors' and officers' liability insurance policies.
ACCOUNTING TREATMENT
The merger will be accounted for by Empire as a "purchase" in
accordance with generally accepted accounting principles. Consequently, the
aggregate consideration paid by Empire in connection with the merger will be
allocated to York's assets and liabilities based upon their fair values, with
any excess being treated as goodwill.
REGULATORY MATTERS
Under the HSR Act, certain mergers and acquisitions may not be
consummated unless notice has been given and certain information has been
furnished to the Antitrust Division of the U. S. Department of Justice and the
Federal Trade Commission and all required waiting periods have expired. A notice
is expected to be filed in the first week of September 2001 with the Federal
Trade Commission and the Department of Justice. In addition, York and Matthews
expect to make all other filings required under other antitrust or competition
laws or by other antitrust authorities.
The obligations of York, Matthews, and Empire to consummate the merger
are subject to the condition that there be no temporary restraining order,
preliminary or permanent injunction or other order issued by any court or other
legal or regulatory restraint prohibiting consummation of the merger. Neither
York, Empire, nor Matthews are aware of any foreign governmental approvals or
actions that may be required for consummation of the merger.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material federal income tax
consequences of the merger. The discussion is based on the Internal Revenue Code
of 1986, as amended, existing and proposed United States Treasury regulations
promulgated under the Internal Revenue Code, rulings, administrative
pronouncements and
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judicial decisions. Changes in any of these areas could materially affect the
tax consequences described in this Proxy Statement and could be made on a
retroactive basis.
The receipt of cash by stockholders in exchange for their common stock
of York will be a taxable transaction for federal income tax purposes and may
also be a taxable transaction under applicable state, local and foreign income
and other tax laws. The tax consequences of the receipt of cash may vary
depending upon, among other things, a stockholder's particular circumstances. In
general, however, a stockholder will recognize a gain or a loss for federal
income tax purposes equal to the difference between the adjusted tax basis of
the stockholder's shares of common stock and the amount of cash received by the
stockholder in exchange for those shares. This gain or loss generally will be:
o calculated separately for each block of shares (i.e., shares
acquired at the same cost in a single transaction) exchanged
pursuant to the merger;
o a capital gain or loss if the shares of common stock are a
capital asset in the hands of the stockholder; and
o a long-term gain or loss if the stockholder has held his or
her shares of common stock for more than one year at the
effective time of the merger.
The receipt of cash by a stockholder pursuant to the merger may be
subject to backup withholding. Backup withholding will not take place if the
stockholder provides a certified taxpayer identification number on Form W-9 and
otherwise complies with the backup withholding rules or demonstrates that the
stockholder is exempt from backup withholding. Backup withholding is not an
additional tax; any amounts withheld may be credited against the stockholder's
federal income tax liability.
The foregoing discussion does not address all aspects of federal income
taxation that may be relevant to a stockholder. The foregoing discussion may
also not apply to:
o stockholders who acquired their common stock pursuant to the
exercise of employee stock options or other compensation
arrangements with York;
o stockholders who are not citizens or residents of the United
States;
o stockholders who perfect their appraisal rights; or
o stockholders who are subject to special tax treatment under
the Internal Revenue Code (such as dealers in securities,
insurance companies, other financial institutions, regulated
investment companies, stockholders who hold their shares as
part of a hedge, straddle, or conversion transaction, and
tax-exempt entities).
Because of the individual nature of tax consequences, stockholders are
urged to consult their personal tax advisors to determine precisely the tax
consequences of the merger to them, including the effects of state, local or
foreign income or other tax laws or federal tax laws other than those pertaining
to income tax.
APPRAISAL RIGHTS UNDER DELAWARE LAW
If the merger is consummated, York stockholders who do not vote in
favor of the adoption of the merger agreement, who hold shares of common stock
of York on the date of making a written demand for appraisal as described below,
and who otherwise comply fully with Section 262 of the Delaware General
Corporation Law ("Section 262") will be entitled to a judicial determination of
the fair value of their shares of common stock of York in accordance with
Section 262 and to receive from the surviving corporation payment of such fair
value in cash, together with a fair rate of interest, if any, as determined by
such court. York stockholders who properly perfect their appraisal rights will
not be entitled to surrender their shares of common stock of York for payment in
the manner provided in the merger agreement and described in this Proxy
Statement.
Under Section 262, when a merger agreement is to be submitted for
approval and adoption at a meeting of stockholders, as in the case of the
Special Meeting, not less than 20 calendar days prior to the meeting, a
constituent corporation in the merger must notify each of the holders of its
stock who was a holder on the record date for the
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meeting that such appraisal rights are available and include in each such
notice a copy of Section 262. This Proxy Statement constitutes such notice to
the holders of record of the common stock of York.
The following is a summary of the procedures to be followed under
Section 262, the full text of which is attached as Annex C to this Proxy
Statement. The summary does not purport to be a complete statement of, and is
qualified in its entirety by reference to, Section 262 and to any applicable
amendments to such section after the date of this Proxy Statement. Failure to
follow any Section 262 procedures may result in the loss of appraisal rights
under Section 262. Stockholders should assume that the surviving corporation
will take no action to perfect any appraisal rights of any stockholder. Any
stockholder who desires to exercise his or her appraisal rights should review
carefully Section 262 and is urged to consult his or her legal advisor before
electing or attempting to exercise such rights.
Holders of record of shares of common stock of York who desire to
exercise their appraisal rights must deliver a separate written demand for
appraisal of such shares to York prior to the taking of the vote on the adoption
of the merger agreement and must not vote in favor of the adoption of the merger
agreement at the time the vote is taken. In addition, a holder of shares of
common stock of York wishing to exercise appraisal rights must hold of record
such shares on the date the written demand for appraisal is made and must
continue to hold such shares through the effective time of the merger. The
demand for appraisal will be sufficient if it reasonably informs York of the
identity of the York stockholder and that the York stockholder intends to demand
an appraisal of the fair value of his, her or its shares of common stock of
York.
If the shares of common stock of York are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian, the demand must
be executed by or for the record owner, and if the shares of common stock of
York are owned of record by more than one person, as in a joint tenancy or
tenancy in common, the demand must be made by or for all owners of record. An
authorized agent, including an agent for one or more joint owners, may execute
the demand for appraisal for a holder of record; however, such agent must
identify the record owner or owners and expressly disclose in such demand that
the agent is acting as agent for the record owner or owners of such shares.
A record holder, such as a broker, who holds shares of common stock of
York as a nominee for beneficial owners, some or all of whom desire to demand
appraisal, must exercise appraisal rights on behalf of such beneficial owners
with respect to the shares held for such beneficial owners. In such case, the
written demand for appraisal should set forth the number of shares covered by
such demand. Unless a demand for appraisal specifies a number of shares, the
demand will be presumed to cover all shares outstanding in the name of such
record owner. If a York stockholder holds shares of common stock of York through
a broker who in turn holds the shares through a central securities depository
nominee, a demand for appraisal of such shares must be made by or on behalf of
the depository nominee and must identify the depository nominee as record
holder.
BENEFICIAL OWNERS WHO ARE NOT RECORD OWNERS AND WHO INTEND TO EXERCISE
APPRAISAL RIGHTS SHOULD INSTRUCT THE RECORD OWNER TO COMPLY STRICTLY WITH THE
STATUTORY REQUIREMENTS WITH RESPECT TO THE DELIVERY OF WRITTEN DEMAND FOR
APPRAISAL. A DEMAND FOR APPRAISAL SUBMITTED BY A BENEFICIAL OWNER WHO IS NOT THE
RECORD OWNER WILL NOT BE HONORED.
Failure to vote against the merger agreement will not constitute a
waiver of a stockholder's appraisal rights. A proxy or vote against the merger
agreement will not constitute a demand for appraisal. Stockholders should not
expect to receive any additional notice with respect to the deadline for
demanding appraisal rights.
Any York stockholder who elects to exercise appraisal rights must mail
or deliver the written demand for appraisal to The York Group, Inc., 8554 Katy
Freeway, Suite 200, Houston, Texas 77024, Attention: Cristen L. Cline, Corporate
Secretary.
If the merger agreement is approved by York stockholders, then within
ten days after the effective time of the merger, the surviving corporation will
provide notice of the effective time of the merger to all York stockholders who
have complied with Section 262.
A York stockholder may withdraw his or her demand for appraisal within
60 days after the effective time of the merger and accept the terms of the
merger. Thereafter, the written approval of the surviving corporation will be
needed for such a withdrawal.
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Within 120 days after the effective time of the merger (the "120-Day
Period"), in compliance with Section 262, any York stockholder who has properly
demanded an appraisal and who has not withdrawn his or her demand as provided
above (such York stockholders being referred to collectively as the "Dissenting
Stockholders") and the surviving corporation each has the right to file in the
Delaware Court of Chancery (the "Delaware Court") a petition (the "Petition"),
with a copy served on the surviving corporation in the case of a Petition filed
by a Dissenting Stockholder, demanding a determination of the fair value of the
shares held by all of the Dissenting Stockholders. If, within the 120-Day
Period, no Petition has been filed as provided above, all rights to appraisal
cease and all Dissenting Stockholders who owned shares of common stock of York
become entitled to receive, for each share of common stock of York the merger
consideration, as if such Dissenting Stockholders had initially voted to approve
and adopt the merger. The surviving corporation is not obligated and does not
currently intend to file such a Petition.
Any Dissenting Stockholder is entitled, within the 120-Day Period and
upon written request to the surviving corporation, to receive from the surviving
corporation a statement setting forth (1) the aggregate number of shares of
common stock of York which have not voted to adopt and approve the merger and
with respect to which demands for appraisal have been received and (2) the
aggregate number of Dissenting Stockholders. Such statement must be mailed (1)
within ten days after a written request therefor has been received by the
surviving corporation, or (2) within ten days after the expiration of the period
for the delivery of demands, as described above, whichever is later.
Upon the filing of a Petition, the Delaware Court may order a hearing
and that notice of the time and place fixed for the hearing on the Petition be
sent by registered or certified mail to the surviving corporation and all
Dissenting Stockholders. Notice will also be published at least one week before
the day of the hearing in a newspaper of general circulation published in the
City of Wilmington, Delaware, or in another publication deemed advisable by the
Delaware Court. The costs relating to these notices will be borne by the
surviving corporation.
If a hearing on the Petition is held, the Delaware Court is empowered
to determine which Dissenting Stockholders have complied with the provisions of
Section 262 and are entitled to an appraisal of their shares. The Delaware Court
may require that Dissenting Stockholders submit their share certificates for
notation thereon of the pendency of the appraisal proceedings and the Delaware
Court may dismiss the proceedings as to any Dissenting Stockholder who does not
comply with such requirement.
The Delaware Court will appraise shares of common stock of York owned
by the Dissenting Stockholders, determining the fair value of such shares
exclusive of any element of value arising from the accomplishment or expectation
of the merger. In determining the fair value, the Delaware Court is to take into
account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme
Court discussed the factors that could be considered in determining fair value
in an appraisal proceeding, stating that "proof of value by any techniques or
methods which are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered and that "[f]air" price
obviously requires consideration of all relevant factors involving the value of
a company. The Delaware Supreme Court has stated that, in making this
determination of fair value, the court must consider market value, asset value,
dividends, earnings prospects, the nature of the enterprise and any other
factors which could be ascertained as of the date of the merger and which "throw
any light on future prospects of the merged corporation." The Delaware Supreme
Court noted that Section 262 provides that fair value is to be determined
"exclusive of any element of value arising from the accomplishment or
expectation of the merger." In Cede & Co. v. Technicolor, Inc., the Delaware
Supreme Court stated that such exclusion is a "narrow exclusion [that] does not
encompass known elements of value" but which rather applies only to the
speculative elements of value arising from such accomplishment or expectation.
In Weinberger, the Delaware Supreme Court held that "elements of future value,
including the nature of the enterprises, which are known or susceptible of proof
as of the date of the merger and not the product of speculation, may be
considered."
York stockholders considering seeking appraisal should have in mind
that the fair value of their shares determined by the Delaware Court under
Section 262 could be more than, the same as, or less than the consideration
payable pursuant to the merger agreement. Moreover, the surviving corporation
does not anticipate offering more than the consideration payable pursuant to the
merger agreement to any Dissenting Stockholder and reserves the right to assert
in any appraisal proceedings, that, for purposes of Section 262, the "fair
value" of a share of common stock of York is less than the consideration payable
pursuant to the merger agreement.
The Delaware Court may also (1) determine a fair rate of interest, if
any, to be paid to Dissenting Stockholders in addition to the fair value of the
shares, (2) determine the costs of the proceeding and tax such costs against the
parties as the Delaware Court deems equitable (however, costs do not include
attorneys' and expert
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witnesses' fees) and (3) upon application of a Dissenting Stockholder, order
all or a portion of the expenses incurred by any Dissenting Stockholder in
connection with the appraisal proceeding, including without limitation
reasonable attorneys' fees and fees and expenses of experts, to be charged
pro rata against the value of all shares entitled to appraisal.
No appraisal proceedings in the Delaware court will be dismissed as to
any Dissenting Stockholder without the approval of the Delaware court, and this
approval may be conditioned upon terms which the Delaware Court deems just.
From and after the effective time of the merger, Dissenting
Stockholders will not be entitled to vote any shares of common stock of York
subject to demand for appraisal for any purpose (or consent by written action)
and will not be entitled to receive payment of dividends or other distributions
in respect of such shares, except for dividends or other distributions payable
to York stockholders of record at a date prior to the effective time of the
merger.
Failure to take any required step in connection with appraisal rights
may result in the loss of such rights. Any York stockholder who loses such
rights will only be entitled to receive the merger consideration.
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THE MERGER AGREEMENT
The following description of the material provisions of the merger
agreement is qualified in its entirety by reference to the complete text of the
merger agreement, a copy of which is attached as Annex A to this Proxy
Statement, and is incorporated herein by this reference. You are urged to review
the merger agreement in its entirety carefully.
GENERAL
At the effective time of the merger, Empire will merge into York,
Empire will cease to exist, and York will survive the merger as a subsidiary of
Matthews. The surviving corporation will continue to be governed by Delaware
law. The certificate of incorporation and bylaws of Empire will be the initial
certificate of incorporation and bylaws of the surviving corporation. The
certificate of incorporation of the surviving corporation will be amended so
that the name of the surviving corporation will be "The York Group, Inc." The
directors and officers of Empire immediately prior to the effective time of the
merger will be the initial directors and officers of the surviving corporation.
MERGER CONSIDERATION
At the effective time of the merger, each share of common stock of York
and all other shares of capital stock of York that are owned by York or any
subsidiary of York or by Matthews or any wholly-owned subsidiary or affiliate of
Matthews will be canceled and retired and will cease to exist, and no
consideration will be paid for any such shares. All other issued and outstanding
shares of common stock of York, except for shares held by stockholders who
properly perfect their appraisal rights under Delaware law, will be converted
into the right to receive (1) $10.00 in cash, without interest, plus (2) the
Excess Cash Increment (as defined above under "The Merger -- Effects of the
Merger; Merger Consideration"). The merger agreement provides that the merger
consideration will not be less than $10.00 nor more than $11.00.
At the effective time of the merger, all stockholders of York, except
for stockholders who properly perfect their appraisal rights under Delaware law,
will cease to have any rights with respect to their shares of common stock other
than the right to receive the merger consideration in accordance with the terms
of the merger agreement. York stockholders who properly perfect their appraisal
rights will be entitled to a judicial determination of the fair value of their
shares of common stock of York and will receive from the surviving corporation
payment of such fair value in cash, together with a fair rate of interest, if
any, as determined by the court. York stockholders who properly perfect their
appraisal rights will not be entitled to any portion of the merger
consideration. However, shares held by stockholders who fail to perfect, or who
otherwise effectively withdraw or lose, their appraisal rights under Delaware
law will be treated as though they had been converted as of the effective date
of the merger into the right to receive the merger consideration. See "The
Merger -- Appraisal Rights under Delaware Law."
At the effective time of the merger, each share of common stock of
Empire issued and outstanding immediately prior to the effective time of the
merger will be converted into one share of common stock of the surviving
corporation.
TREATMENT OF STOCK OPTIONS
Immediately prior to the completion of the merger, York will settle,
cash out or cause to be cancelled all York Stock Options and any shares of
Deferred Stock pursuant to the Director Deferral Plan, such that all York Stock
Options and rights to Deferred Stock are terminated prior to the completion of
the merger. Option holders will be given written notice that York will cash out
all options that are "in the money" as of closing. The value of the stock
options will be based on a predetermined formula that will equate the options,
on a per share basis, to the calculated value of an outstanding share at the
time of closing.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains customary representations and warranties
by York, Matthews, and Empire relating to, among other things, capital
structure, business, as well as to the amendment by York of the York Rights
Agreement to make the rights thereunder inapplicable to the merger agreement and
the merger, and the immediate availability of funds to Matthews for payment of
the merger consideration.
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COVENANTS
Pursuant to the merger agreement, York has agreed that during the
period from the date of the merger agreement to the effective time of the
merger, York will carry on its business in the ordinary course consistent with
its past practice, except for other matters or transactions that are approved by
Matthews. During that time York will also use reasonable efforts to preserve
intact its business organizations and relations with third parties and keep
available the services of its present officers and employees. The merger
agreement provides that, prior to the effective time of the merger, neither York
nor any of its subsidiaries will, among other things (with limited exceptions):
o adopt or propose any change in its charter, bylaws or
equivalent documents;
o amend any material term of any outstanding security;
o merge or consolidate with any entity or organization;
o issue, sell, pledge, dispose of, lease, license, guarantee, or
encumber any shares of capital stock, or any options, warrants
or other rights of any kind to acquire any shares of such
capital stock or, except in the ordinary course of business
and in a manner consistent with past practice, any property or
assets;
o create or incur any lien on any asset other than in the
ordinary course of business and consistent with past practice;
o make any loan, advance or capital contributions to or
investments in any person;
o declare, set aside, make or pay any dividend with respect to
any of its capital stock or enter into any agreement with
respect to the voting of its capital stock;
o reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital
stock;
o acquire any interest in any person 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, in the aggregate, in excess of
$200,000;
o 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;
o terminate, cancel, waive any rights under or request any
material change in, or agree to any material change in, any
material contract or agreement or enter into any contract or
agreement material to the business, results of operations or
financial condition, in either case other than in the ordinary
course of business and consistent with past practice;
o enter into or amend certain contracts, agreements, commitments
or arrangements;
o 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;
o make any material election with respect to taxes or take any
position on any tax return filed on or after the date of the
merger 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;
o increase the compensation payable or to become payable to its
officers or employees, establish 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
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director, officer or employee, or increase the benefits
payable under any existing severance or termination pay
policies or employment or other agreements;
o take any action that, individually or in the aggregate, makes
any representation and warranty of York under the merger
agreement untrue in any material respect at, or as of any time
prior to, the effective time of the merger; or
o agree or commit to do any of the foregoing.
NO SOLICITATION
The merger agreement provides that York will not, through any of its
subsidiaries, officers, directors or employees or investment bankers, attorneys,
accountants, agents or other advisors or representatives:
o solicit, initiate or knowingly encourage the submission of any
proposals that would constitute a takeover proposal;
o enter into any agreement with respect to a takeover proposal;
or
o 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 York board of directors, York may, in response to unsolicited requests
therefor, participate in discussions or negotiations with, and furnish
information pursuant to a confidentiality agreement to, any person who indicates
a willingness to make a takeover proposal that would constitute a "superior
proposal."
A proposal will constitute a "takeover proposal" if it is a proposal
for a merger, consolidation, share exchange, business combination or other
similar transaction involving York or any of its significant subsidiaries, 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 the merger agreement. A takeover proposal will constitute a
"superior proposal" if it is 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 on terms which a
majority of the members of the York board of directors 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.
The merger agreement also provides that neither the York board of
directors nor any committee thereof may withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Matthews, the approval or
recommendation by the York board of directors or any such committee of the
merger agreement or the merger, or approve or recommend, or propose to approve
or recommend, any takeover proposal. However, the York board of directors, to
the extent required by its fiduciary obligations, may approve or recommend a
superior proposal or withdraw or modify its approval or recommendation of the
merger agreement or the merger and nothing contained in the merger agreement
will prevent the York board of directors from complying with certain rules
applicable to a takeover proposal.
The merger agreement requires York to notify Matthews promptly after
receipt by York 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.
ADDITIONAL AGREEMENTS
STOCKHOLDERS MEETING AND PROXY STATEMENT. York has agreed to duly call,
give notice of, convene and hold a special meeting of its stockholders to vote
on the adoption of the merger agreement and to use its commercially reasonable
efforts to solicit proxies from its stockholders in favor of the adoption of the
merger agreement.
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ACCESS TO INFORMATION. York has agreed to afford to the officers,
employees, accountants, counsel and other representatives of Matthews access,
during the period prior to the effective time of the merger, to all its
properties, books, contracts, commitments and records. The parties will hold any
such information in confidence in accordance with a confidentiality agreement
dated as of January 16, 2001 between York and Matthews.
APPROPRIATE ACTION; CONSENTS; FILINGS. York and Matthews have agreed to
use their reasonable best efforts to 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 complete the merger and the other transactions contemplated
by the merger agreement as promptly as practicable; 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,
in connection with the authorization, execution and delivery of the merger
agreement and the consummation of the merger; and make all necessary filings and
other required submissions with respect to the merger agreement and the merger
required under the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, and any other applicable law. Matthews and York have
also agreed to 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 the merger agreement under the HSR Act, 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 or
regulate actions having the purpose or effect of monopolization or restraint of
trade.
PUBLIC DISCLOSURE. York and Matthews have agreed to consult with each
other before issuing any press release or otherwise making any public statement
about the merger or the merger agreement and will not issue any press release or
make any public statement without the prior consent of the other party, which
consent shall not be unreasonably withheld or delayed.
INDEMNIFICATION OF DIRECTORS AND OFFICERS; INSURANCE. After the
effective time of the merger, Matthews and the surviving corporation have agreed
to indemnify, hold harmless, and defend each and every present and former
director, officer, employee, fiduciary, and agent of York and each subsidiary of
York from and against all attorneys' fees, judgments, fines, losses, claims,
damages, liabilities, settlement amounts, costs and expenses in connection with
any claim, action, suit, proceeding or investigation 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 the
merger agreement).
In addition, for a period of six years from the effective time of the
merger, the surviving corporation and Matthews will 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
YORK RIGHTS AGREEMENT. York has agreed that it has taken and will
continue to take all necessary action to ensure that none of the transactions
contemplated in the merger agreement will cause Matthews, Empire or any of
Matthews' affiliates or associates to become an Acquiring Person under the York
Rights Agreement or 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.
EMPLOYEES. For at least two (2) years following the completion of the
merger, 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 effective
date of the merger.
FEES AND EXPENSES
Except as described below and under "The Merger -- Termination,
Termination Fees, Amendment and Waiver," whether or not the merger is completed,
all fees and expenses incurred in connection with the merger, the merger
agreement and the transactions contemplated by the merger agreement will be paid
by the party incurring the fees or expenses.
York and Matthews will share equally all fees and expenses, other than
attorneys' and accounting fees and expenses, incurred in relation to the
printing and filing of this Proxy Statement.
CONDITIONS TO THE MERGER
The respective obligations of York, Matthews and Empire to complete the
merger are subject to the satisfaction or waiver on or prior to the effective
date of the merger of the following closing conditions:
-32-
o stockholders holding a majority of the outstanding common
stock of York have voted in favor of adopting the merger
agreement;
o the waiting period applicable to the completion of the merger
under the HSR Act has expired or been terminated; and
o no temporary restraining order, injunction, or other order or
restraint prohibits the merger.
In addition, Matthews's and Empire's respective obligations to complete
the merger are subject to the satisfaction or waiver by them of the following
conditions:
o York's representations and warranties are true and correct as
of the date of the merger agreement and as of the closing date
of the merger; and
o York has performed in all material respects each obligation
and agreement and having complied in all material respects
with each covenant required to be performed or complied with
by it under the merger agreement.
In addition, York's obligation to complete the merger is subject to the
satisfaction or waiver by it of the following conditions:
o Matthews's representations and warranties are true and correct
as of the date of the merger agreement and as of the closing
date of the merger; and
o Matthews has performed in all material respects each
obligation and agreement and having complied in all material
respects with each covenant required to be performed or
complied with by it under the merger agreement.
TERMINATION, TERMINATION FEES, AMENDMENT AND WAIVER
TERMINATION OF MERGER AGREEMENT. York and Matthews may mutually agree
in writing to terminate the merger agreement at any time before or after
stockholder approval. In addition, either York or Matthews may terminate the
merger agreement if:
o the merger has not been consummated by December 31, 2001,
however, this 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;
o a court of competent jurisdiction or other governmental entity
has 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;
o the stockholders of York do not vote in favor of adoption of
the merger agreement at the Special Meeting; or
o the York board of directors has determined to recommend an
alternative takeover proposal to its stockholders and to enter
into a binding written agreement concerning such takeover
proposal after determining that such proposal is superior to
the terms of the merger agreement;
In addition, York may terminate the merger agreement if:
o a material breach of or failure to perform any representation,
warranty, covenant or agreement on the part of Matthews set
forth in the merger agreement has occurred which remains
uncured for a period of ten business days after the notice of
such breach or failure; or
o the Threshold EBITDA is achieved and the per share merger
consideration is greater than $11.00 per share.
-33-
In addition, Matthews may terminate the merger agreement if:
o the York board of directors has not recommended or has
withdrawn its recommendation of the merger agreement and the
merger (other than due to its recommendation of a superior
takeover proposal);
o a material breach of or failure to perform any representation,
warranty, covenant or agreement on the part of York set forth
in the merger agreement has occurred which remains uncured for
a period of ten business days after the notice of such breach
or failure; or
o the Threshold EBITDA is not achieved.
TERMINATION FEE AND EXPENSES. York shall pay to Matthews a termination
fee of $6,000,000 if the merger agreement is terminated:
(1) by Matthews if the York board of directors has not recommended
or has withdrawn its recommendation of the merger agreement
and the merger (other than due to its recommendation of a
superior takeover proposal) and the Threshold EBITDA is
achieved and the per share merger consideration is greater
than $11.00 per share; or
(2) by York if the Threshold EBITDA is achieved and the per share
merger consideration is greater than $11.00 per share.
York shall also pay to Matthews a $6,000,000 termination fee if:
(1) the merger agreement is terminated by York because its
stockholders did not approve the merger agreement and either a
takeover proposal with respect to York has been made after the
date of the merger agreement and prior to the Special Meeting
or the York board of directors has not recommended or has
withdrawn its recommendation of the merger agreement and the
merger; or
(2) the merger agreement is terminated by York or Matthews because
the York board of directors has recommended a superior
takeover proposal;
and, in the case of either (1) or (2) of this sentence, 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 person within
nine months of the date of termination of the merger agreement.
Matthews shall pay to York a termination fee of $6,000,000 if the
merger agreement is terminated by Matthews or York under certain other
circumstances, including the following:
(1) the merger agreement is terminated by York or Matthews because
the Merger is not consummated by December 31, 2001;
(2) the merger agreement is terminated by York or Matthews because
a court of competent jurisdiction or other governmental entity
shall have issued a final, non-appealable order, decree or
ruling, or take any other action, having the effect of
permanently restraining, enjoining or otherwise prohibiting
the merger;
(3) the merger agreement is terminated by Matthews because the
York stockholders did not approve the adoption of the merger
agreement;
(4) the merger agreement is terminated by Matthews due to a
material breach of the merger agreement by York (except in the
case of an intentional misrepresentation by York);
(5) the merger agreement is terminated by Matthews if the
Threshold EBITDA is not achieved; or
(6) the merger agreement is terminated by York due to a material
breach of the merger agreement by Matthews.
-34-
AMENDMENT. The merger agreement may be amended by the parties at any
time before or after the adoption of the merger agreement by the York
stockholders. After such approval, however, the parties may not make any
amendment that by law requires further approval by the York stockholders without
further stockholder approval.
EXTENSION; WAIVER. At any time prior to the effective time of the
merger, a party may (1) extend the time for the performance of any of the
obligations or other acts of the other parties, (2) waive any inaccuracies in
the representations and warranties of the other parties contained in the merger
agreement or in any document delivered pursuant to the merger agreement, or (3)
waive compliance by the other parties with any of the agreements or conditions
of the other parties contained in the merger agreement. Any agreement on the
part of a party to any extension or waiver will be valid only if it is in
writing and signed on behalf of the party extending or waiving the condition or
agreement.
-35-
THE COMPANIES
YORK
York is one of the leading casket and casket component manufacturers in
the United States. Since December 31, 2000, York has sold its metal vault
manufacturing operations, its commemorative products business and most of its
casket distribution operations.
York produces a wide variety of caskets (metal, wood and other) and
casket components. Metal caskets are made from various gauges of cold rolled
steel, stainless steel, copper and bronze. Wood caskets are made from nine
different wood species ranging from poplar to mahogany, as well as from veneer
and fiber board. York also produces caskets made from cloth and paper covered
particle board and corrugated materials. York manufactures metal casket
components, functional and decorative casket hardware and interior components
for its own use and for sale to other casket assemblers. York and its
subsidiaries have approximately 1,030 employees.
York's principal executive offices are located at 8554 Katy Freeway,
Suite 200, Houston, Texas 77024, and its telephone number is (800) 223-4964.
York files annual and quarterly reports, proxy statements and other
documents with the Securities and Exchange Commission, including its annual
report on Form 10-K for the year ended December 31, 2000, the quarterly
report on Form 10-Q for the quarter ended March 31, 2001, and the current
reports on Form 8-K filed on January 25, 2001 and June 8, 2001, as amended on
Form 8-K/A filed on June 29, 2001. These documents are available to the
public. See "Where You Can Find More Information."
MATTHEWS AND EMPIRE
Matthews, which was founded in 1850 and incorporated in Pennsylvania in
1902, is a designer, manufacturer and marketer principally of custom-made
products which are used to identify people, places, products and events.
Matthew's products and operations are comprised of three business segments:
Bronze, Graphics Imaging and Marking Products. The Bronze segment is a leading
manufacturer of cast bronze memorials and other memorialization products,
crematories and cremation-related products and a leading builder of mausoleums
in the United States. The Graphics Imaging segment manufactures and provides
printing plates, pre-press services and imaging systems for the corrugated and
flexible packaging industries. The Marking Products segment designs,
manufactures and distributes a wide range of marking equipment and consumables
for identifying various consumer and industrial products, components and
packaging containers. Matthews and its majority-owned subsidiaries have
approximately 1,800 employees.
Empire is a wholly-owned subsidiary that was formed for the sole
purpose of completing the merger. Empire does not have any independent
operations.
Like York, Matthews files annual and quarterly reports, proxy
statements and other documents with the Securities and Exchange Commission, and
these documents are available to the public from the same sources described
below with respect to York. See "Where You Can Find More Information."
Matthews and Empire each has its principal executive offices at Two
NorthShore Center, Pittsburgh, Pennsylvania 15212. The telephone number of both
companies is (412) 442-8200.
-36-
MARKET PRICES OF COMMON STOCK
The common stock of York is traded on the Nasdaq National Market
under the symbol "YRKG." The closing sales price of the common stock on July
6, 2001, the last trading day before the printing of this Proxy Statement,
was $9.80. The closing sales price of the common stock on May 23, 2001, the
last trading day before the public announcement of the merger agreement, was
$7.92. As of June 20, 2001, there were 8,940,950 shares of common stock
outstanding.
The following table sets forth, for the calendar quarters indicated,
the highest and lowest closing prices of the common stock as reported on the
Nasdaq National Market:
HIGH LOW
FOR THE QUARTER ENDED 2001
September 30 (thru July 6) $9.900 $9.800
June 30 $10.000 $5.320
March 31 $5.844 $3.063
FOR THE QUARTER ENDED 2000
December 31 $6.375 $1.938
September 30 $6.625 $3.125
June 30 $5.250 $3.188
March 31 $5.938 $4.188
FOR THE QUARTER ENDED 1999
December 31 $4.813 $3.500
September 30 $8.750 $3.750
June 30 $8.938 $7.063
March 31 $11.000 $6.063
York has paid dividends during the past two fiscal years as set forth
below. Under the merger agreement, York has agreed not to declare or pay any
dividends on its common stock from the date of the merger agreement until
completion of the merger.
DIVIDEND PAID RECORD DATE DATE PAID
$.04 March 16, 2000 April 6, 2000
$.04 November 17, 1999 December 2, 1999
$.04 August 18, 1999 August 26, 1999
$.04 May 21, 1999 May 28, 1999
$.04 March 11, 1999 March 18, 1999
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
COMMON STOCK OF YORK.
-37-
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of shares of common stock of York by: (1) each person known
to York to be the beneficial owner of more than 5% of its outstanding common
stock; (2) the directors of York; (3) the chief executive officer of York and
the four most highly compensated executive officers of York (other than the
chief executive officer) for the fiscal year ended December 31, 2000; and (4)
all directors and executive officers of York, as a group. Except as otherwise
indicated in the notes to this table, beneficial ownership was determined as of
June 20, 2001. On that date, there were 8,940,950 shares of common stock
outstanding. Except as otherwise indicated in the notes to this table, the
persons named in this table and their spouses have sole voting and investment
power with respect to all shares of common stock of York owned by them.
NAME NUMBER PERCENT
Elder Group, Inc.............................. 639,600(1) 7.2%
394 Olivewood Court
Rochester, Michigan 48306
Dalton, Greiner, Hartman, Maher & Co.......... 709,400(2) 7.9%
565 Fifth Ave., Suite 2101
New York, NY 10017
Dimensional Fund Advisors, Inc................ 676,550(2) 7.6%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
FleetBoston Financial Corporation............. 451,300(2)(3) 5.0%
100 Federal Street
Boston, MA 02110
Wilbert, Inc.................................. 1,262,000(2) 14.1%
2913 Gardner Road
Broadview, IL 60153
Alan H. Elder (4)............................. 879,659 9.8%
Eldon P. Nuss(5).............................. 37,500 *
Kirk P. Pendleton(6).......................... 42,000 *
Roger W. Sevedge(7)........................... 329,124 3.7%
Thomas J. Crawford(8)......................... 30,000 *
Alfred M. Turner III(9)....................... 0 *
Sandra A. Matson(10).......................... 13,200 *
Robert T. Monteleone(11)...................... 7,320 *
H. Joe Trulove(12)............................ 286,262 3.2%
All directors and executive officers as a
group (13 Persons)(13)........................ 1,691,745 18.7%
-------------
* Less than 1%
(1) Mr. Alan Elder serves as Chairman of Elder Group, Inc., and
has the right to vote all shares.
(2) Based solely on a Schedule 13G or 13D filed with the SEC.
(3) According to the Schedule 13G, FleetBoston Financial
Corporation filed the schedule pursuant to Rule
13d-1(b)(ii)(G). The relevant subsidiaries are Fleet National
Bank and Fleet Investment Advisors, Inc.
(4) Includes 639,600 shares owned directly by Elder Group, Inc.,
of which Mr. Alan Elder serves as Chairman and has the right
to vote all shares; 107,192 shares owned directly by EFI LLC
of which Mr. Alan Elder serves as managing member; and 10,000
shares owned by a trust in the name of Mr. Elder's children to
which Mr. Elder disclaims beneficial ownership.
-38-
(5) Includes 7,500 shares that may be acquired within the next 60
days upon the exercise of outstanding stock options.
(6) Includes 40,000 shares that may be acquired within the next 60
days upon the exercise of outstanding stock options.
(7) Includes 164,552 shares owned by a revocable living trust of
which Mr. Sevedge is sole trustee; 164,552 shares owned by a
revocable living trust in the name of Mr. Sevedge's spouse of
which Mr. Sevedge's spouse is sole trustee, as to which Mr.
Sevedge disclaims beneficial ownership.
(8) Includes 30,000 shares that may be acquired within the next 60
days upon the exercise of outstanding stock options.
(9) Mr. Turner's options expired in February 2001 upon the
termination of his employment with York.
(10) Includes 13,200 shares that may be acquired within the next 60
days upon the exercise of outstanding stock options.
(11) Includes 7,320 shares that may be acquired within the next 60
days upon the exercise of outstanding stock options.
(12) Includes 2,000 shares that may be acquired within the next 60
days upon the exercise of outstanding stock options.
(13) Includes an aggregate of 122,020 shares that may be acquired
within the next 60 days upon the exercise of outstanding stock
options.
-39-
WHERE YOU CAN FIND MORE INFORMATION
York files annual and quarterly reports, proxy statements, and other
documents with the Securities and Exchange Commission. These documents are
available to the public. Stockholders may read and obtain copies of any document
York files from the following sources:
o the public reference facilities at the principal office of the
Securities and Exchange Commission located at Judiciary Plaza,
450 Fifth Street, N.W., Room 1024, Washington DC 20549
(telephone 1-800-SEC-0330);
o the public reference facilities at the regional offices of the
Securities and Exchange Commission, CitiCorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and 7
World Trade Center, Suite 1300, New York, New York 10048
(telephone 1-800-SEC-0330);
o the website of the Securities and Exchange Commission:
http://www.sec.gov; or
o commercial document retrieval services, including commercial
websites.
Stockholders should rely only on the information contained in this
Proxy Statement in determining how to vote their shares at the Special
Meeting. York has not authorized anyone to provide you with any information
that is different from the information contained in this Proxy Statement.
This Proxy Statement is dated July 9, 2001. Stockholders should not
assume that the information contained in the Proxy Statement is accurate as of
any date other than the date of this Proxy Statement regardless of the date on
which this Proxy Statement is mailed.
-40-
STOCKHOLDER PROPOSALS FOR FISCAL 2001 ANNUAL MEETING
Due to the date of the Special Meeting, York does not intend to hold an
annual meeting of stockholders in 2001. York's 2001 annual meeting of
stockholders has not been scheduled, and if the merger is consummated, the 2001
annual meeting will not be held. If the merger is not consummated, York
anticipates holding the 2001 annual meeting in November 2001. Stockholder
proposals for the 2001 annual meeting must be received by York on or prior to
July 27, 2001, in order to be included in the proxy statement and form of proxy
for that meeting. Stockholder proposals should be sent to The York Group, Inc.,
Attn: Corporate Secretary, 8554 Katy Freeway, Suite 200, Houston, Texas 77024. A
stockholder who would like to submit a proposal to York should refer to the
applicable rules and regulations of the Securities and Exchange Commission.
PROXY SOLICITATION EXPENSES
York will bear the cost of soliciting proxies for the Special Meeting.
In addition to the use of the mails, proxies may be solicited by officers,
directors, and regular employees, personally or by telephone. York will
reimburse banks, brokers, and other nominees for any out-of-pocket expenses
incurred by them in sending proxy materials to the beneficial owners of York's
common stock. If follow-up requests for proxies are necessary, York may employ
other persons to make these requests.
OTHER MATTERS
The York board of directors does not know of any other matters to come
before the Special Meeting. However, if any other matters properly come before
the Special Meeting, the persons named in the accompanying proxy card intend to
vote the proxy in accordance with their judgment on such matters.
-41-
ANNEX A
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
A-1
TABLE OF CONTENTS
PAGE
----
AGREEMENT AND PLAN OF MERGER......................................................................................1
ARTICLE I THE MERGER.............................................................................................1
Section 1.1 The Merger.........................................................................................1
Section 1.2 Effective Time.....................................................................................1
Section 1.3. Effects of the Merger..............................................................................1
Section 1.4. Charter and By-Laws; Board of Directors; Management Succession.....................................1
Section 1.5. Conversion of Securities...........................................................................2
Section 1.6. Matthews to Make Certificates Available............................................................8
Section 1.7. Transfer Taxes; Withholding........................................................................8
Section 1.8. Return of Exchange Fund............................................................................9
Section 1.9. No Further Ownership Rights in York Common Stock...................................................9
Section 1.10. Closing of York Transfer Books.....................................................................9
Section 1.11. Lost Certificates..................................................................................9
Section 1.12. Further Assurances.................................................................................9
Section 1.13. Closing............................................................................................9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF YORK...............................................................10
Section 2.1. Corporate Organization............................................................................10
Section 2.2. Capitalization....................................................................................11
Section 2.3. Authority; No Violation...........................................................................12
Section 2.4. Consents and Approvals............................................................................12
Section 2.5. SEC Documents and Other Reports...................................................................13
Section 2.6. Proxy Statement...................................................................................13
Section 2.7. Absence of Certain Changes or Events..............................................................13
Section 2.8. Permits and Compliance............................................................................14
Section 2.9. Tax Matters.......................................................................................14
Section 2.10. Actions and Proceedings...........................................................................15
Section 2.11. Certain Agreements................................................................................15
Section 2.12. ERISA.............................................................................................15
Section 2.13. Labor Matters.....................................................................................17
Section 2.14. Intellectual Property.............................................................................17
Section 2.15. Environmental and Safety Matters..................................................................18
Section 2.16. Insurance.........................................................................................19
Section 2.17. Required Vote of York Stockholders................................................................19
Section 2.18. State Take Over Laws..............................................................................19
Section 2.19. Opinion of Financial Advisor......................................................................20
Section 2.20. Broker's Fees.....................................................................................20
Section 2.21. Disclosure........................................................................................20
Section 2.22. Unlawful Payments and Contributions...............................................................20
Section 2.23. Material Contracts................................................................................20
Section 2.24. Warranties........................................................................................20
Section 2.25. Restrictions on Business Activities...............................................................21
Section 2.26. Real Property.....................................................................................21
Section 2.27. Rights Plan.......................................................................................21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MATTHEWS..........................................................21
Section 3.1. Corporate Organization............................................................................22
Section 3.2. Capitalization....................................................................................22
Section 3.3. Authority; No Violation...........................................................................22
Section 3.4. Consents and Approvals............................................................................22
Section 3.5. SEC Documents and Other Reports...................................................................23
Section 3.6. Proxy Statement...................................................................................23
Section 3.7. Absence of Certain Changes or Events..............................................................23
Section 3.8. Litigation........................................................................................23
Section 3.9. Brokers, Finders, etc.............................................................................23
Section 3.10. Vote of Stockholders..............................................................................24
Section 3.11. Financing.........................................................................................24
ARTICLE IV CONDUCT OF BUSINESS..................................................................................24
Section 4.1. Conduct of York...................................................................................24
ARTICLE V ADDITIONAL AGREEMENTS.................................................................................26
Section 5.1. No Solicitation...................................................................................26
Section 5.2. Proxy Statement...................................................................................27
Section 5.3. Stockholders Meeting..............................................................................27
Section 5.4. Access to Information.............................................................................28
Section 5.5. Notices of Certain Events.........................................................................28
Section 5.6. Appropriate Action; Consents; Filings.............................................................28
Section 5.7. Public Disclosure.................................................................................30
Section 5.8. Indemnification of Directors and Officers.........................................................30
Section 5.9. State Takeover Laws...............................................................................32
Section 5.10. Rights Agreement..................................................................................32
Section 5.11. Employees.........................................................................................32
ARTICLE VI CONDITIONS TO MERGER.................................................................................33
Section 6.1. Conditions to Each Party's Obligations............................................................33
Section 6.2. Additional Conditions to Obligations of York......................................................33
Section 6.3. Additional Conditions to Obligations of Matthews..................................................33
ARTICLE VII TERMINATION.........................................................................................34
Section 7.1. Termination.......................................................................................34
Section 7.2. Effect of Termination.............................................................................35
Section 7.3. Fees and Expenses.................................................................................35
Section 7.4. Post-Termination Obligations......................................................................36
ARTICLE VIII MISCELLANEOUS......................................................................................36
Section 8.1. Nonsurvival of Representations, Warranties and Agreements.........................................36
Section 8.2. Notices...........................................................................................36
Section 8.3. Interpretation and Construction; Severability; Interpretation of Obligations......................37
Section 8.4. Counterparts......................................................................................38
Section 8.5. Entire Agreement; No Third Party Beneficiaries....................................................38
Section 8.6. Governing Law.....................................................................................38
Section 8.7. Assignment........................................................................................38
Section 8.8 Amendment.........................................................................................38
-ii-
Section 8.9 Extension; Waiver..................................................................................38
Section 8.10 Consent to Jurisdiction: Appointment of Agent for Service of Process..............................38
EXHIBITS
- --------
Exhibit 1.5(x) Stock Option Valuation
Exhibit 1.5(y) Agreed Upon Procedures
-iii-
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)
-iv-
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)
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)
-v-
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)
-vi-
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 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)
----------------------------------------------------
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.
(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
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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, 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.
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"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 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.
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"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 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.
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(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.
(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.
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(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.
(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.
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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.
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
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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 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
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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.
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.
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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) 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.
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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.
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,
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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.
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
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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 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.
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(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 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
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any current or former officer, director or employee of York or any of its
Subsidiary with severance pay, unemployment compensation or similar payment.
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,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on York.
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(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
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
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(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.
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.
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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 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
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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
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:
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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
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
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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 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.
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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.
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-
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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;
(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 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
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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.
(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
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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 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
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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;
(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),
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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 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
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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
(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.
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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
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,
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such change shall, to the fullest extent permitted by applicable law, leave
this Agreement and the parties' rights and obligations hereunder unaffected.
(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 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.
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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 "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.
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(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
(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
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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 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.
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(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):
(a) if to York, to:
The York Group, Inc.
8554 Katy Freeway, Suite 200
Houston, Texas 77024
Attn: Legal Department
Telecopy: 713/984-5569
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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 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.
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(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.
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
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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]
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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: /s/ David M. Kelly
---------------------------------------
Name: David M. Kelly
-----------------------------------
Title: President
-----------------------------------
EMPIRE MERGER CORP.
By: /s/ David M. Kelly
-------------------------------------
Name: David M. Kelly
-----------------------------------
Title: President
-----------------------------------
THE YORK GROUP, INC.
By: /s/ Thomas J. Crawford
-------------------------------------
Name: Thomas J. Crawford
-----------------------------------
Title: President
-----------------------------------
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.
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
o 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)
o 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.
o 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.
o 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.
o 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
o Confirm accounts receivable balances greater than
$50,000
o For all non-replies, review subsequent receipts
greater than $5,000 through October 31, 2001
o 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.
o 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.
2) Perform a test of subsequent disbursements
o 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.
o 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.
ANNEX B
HOULIHAN LOKEY HOWARD & ZUKIN
FINANCIAL ADVISORS
May 23, 2001
Board of Directors
The York Group, Inc.
Houston, Texas
Dear Gentlemen:
We understand that The York Group, Inc. ("York" or the "Company") is
considering entering into an Agreement and Plan of Merger (the "Agreement") with
Matthews International Corporation ("Matthews") and Empire Merger Corp., a
wholly-owned subsidiary of Matthews ("Empire"), pursuant to which Empire will,
upon the realization of certain events, merge with and into York (the "Merger").
The amount of cash to be paid to the shareholders of York shall be (a) $10 per
share of York common stock, plus (b) the Excess Cash Increment (as defined in
the Agreement) of up to $1.00 per share. As a condition to the merger, York's
EBITDA for the nine-months ending September 30, 2001, must equal or exceed
$9,000,000, otherwise Matthews shall be permitted to terminate the Agreement.
The merger contemplated by the Agreement and all related transactions
are referred to collectively herein as the "Transaction."
You have requested our opinion (the "Opinion") as to the matters set
forth below. The Opinion does not address the Company's underlying business
decision to effect the Transaction. We have not been requested to, and did not,
solicit third party indications of interest in acquiring all or any part of the
Company. Furthermore, at your request, we did not participate in the structuring
of the Transaction or in the negotiation of the Agreement.
In connection with this Opinion, we have made such reviews, analyses
and inquiries as we have deemed necessary and appropriate under the
circumstances. Among other things, we have:
1. reviewed the Company's annual reports to shareholders and on Form
10-K for the five fiscal years ended December 31, 2000 and quarterly
reports on Form 10-Q for the years 1999 and 2000, and
Company-prepared interim financial statements for the period ended
April 30, 2001, which the Company's management has identified as
being the most current financial statements available;
2. reviewed copies of the Agreement;
3. met with certain members of the senior management of the Company to
discuss the operations, financial condition, future prospects and
projected operations and performance of the Company, and met with
representatives of the Company's counsel to discuss certain matters;
4. visited certain facilities and business offices of the Company;
5. reviewed forecasts and projections prepared by the Company's
management with respect to the Company for the year ended December
31, 2001;
6. reviewed the historical market prices and trading volume for the
Company's publicly traded securities;
B-1
7. reviewed certain other publicly available financial data for certain
companies that we deem comparable to the Company, and publicly
available prices and premiums paid in other transactions that we
considered similar to the Transaction;
8. reviewed drafts of certain documents to be delivered at the closing
of the Transaction; and
9. conducted such other studies, analyses and inquiries as we have
deemed appropriate.
In giving our Opinion, we have relied upon and assumed, without
independent verification, the accuracy and completeness of all information that
was publicly available or was furnished to us by the Company or otherwise
reviewed by us, and we have not assumed any responsibility or liability
therefore. We have not conducted any valuation or appraisal of any assets or
liabilities, nor have any such valuations or appraisals been provided to us. In
relying on financial forecasts and projections provided to us, we have assumed,
without independent verification, that they have been reasonably prepared based
on assumptions reflecting the best currently available estimates and judgments
by management as to the expected future results of operations and financial
condition of the Company, and that there has been no material change in the
assets, financial condition, business or prospects of the Company since the date
of the most recent financial statements made available to us.
We have also assumed that the Transaction will be consummated as
described in the Agreement. We have further assumed that the definitive
Agreement will not differ in any material respects from the draft thereof
furnished to us. We have relied as to all legal matters relevant to rendering
our Opinion upon the advice of counsel.
Our Opinion is necessarily based on economic, market and other
conditions as in effect on, and information made available to us as of, the date
hereof. It should be understood that subsequent developments may affect this
Opinion and that we do not have any obligation to update, revise, or reaffirm
this Opinion. We are expressing no Opinion herein as to the price at which the
shares of Company common stock will trade at any future time.
This Opinion is provided to the Board of Directors of the Company in
connection with and for the purposes of its evaluation of the Transaction in
accordance with the terms of our engagement letter dated April 5, 2001, and is
not on behalf of, and is not intended to confer rights or remedies upon any
stockholder of the Company or any person other than the Company's Board of
Directors. As you are aware, we will receive a fee in connection with rendering
this Opinion. This Opinion does not constitute a recommendation to any
stockholder of the Company as to how such stockholder should vote with respect
to the Transaction. This Opinion may not be disclosed, referred to, or
communicated (in whole or in part) to any party for any purpose whatsoever
except with our prior written consent in each instance, provided that this
Opinion may be reproduced in full in any proxy or information statement mailed
to stockholders of the Company.
Based upon the foregoing, and in reliance thereon, it is our Opinion
that the consideration to be received by the stockholders of the Company in
connection with the Transaction is fair to them from a financial point of view.
HOULIHAN LOKEY HOWARD & ZUKIN FINANCIAL ADVISORS, INC.
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/s/ HOULIHAN LOKEY HOWARD & ZUKIN FINANCIAL ADVISORS, INC.
B-2
ANNEX C
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
(a) Any stockholder of a corporation of this State who holds shares
of stock on the date of the making of a demand pursuant to subsection (d) of
this section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing
pursuant to Section 228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of the stockholder's shares of stock
under the circumstances described in subsections (b) and (c) of this section.
As used in this section, the word "stockholder" means a holder of record of
stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is
ordinarily meant by those words and also membership or membership interest of
a member of a nonstock corporation; and the words "depository receipt" mean a
receipt or other instrument issued by a depository representing an interest
in one or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class
or series of stock of a constituent corporation in a merger or consolidation
to be effected pursuant to Section 251 (other than a merger effected pursuant
to Section 251(g) of this title), Section 252, Section 254, Section 257,
Section 258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series of
stock, which stock, or depository receipts in respect thereof, at the
record date fixed to determine the stockholders entitled to receive
notice of and to vote at the meeting of stockholders to act upon the
agreement of merger or consolidation, were either (i) listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000
holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation
surviving a merger if the merger did not require for its approval the
vote of the stockholders of the surviving corporation as provided in
subsection (f) of (S)251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the shares
of any class or series of stock of a constituent corporation if the
holders thereof are required by the terms of an agreement of merger or
consolidation pursuant to Sections 251, 252, 254, 257, 258, 263 and 264
of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in
respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated
as a national market system security on an interdealer
quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of
this paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and
c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under Section 253 of this title
is not owned by the parent corporation immediately prior to the merger,
appraisal rights shall be available for the shares of the subsidiary
Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the
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procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days
prior to the meeting, shall notify each of its stockholders who was
such on the record date for such meeting with respect to shares for
which appraisal rights are available pursuant to subsection (b) or (c)
hereof that appraisal rights are available for any or all of the shares
of the constituent corporations, and shall include in such notice a
copy of this section. Each stockholder electing to demand the appraisal
of such stockholder's shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written demand
for appraisal of such stockholder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of
the stockholder and that the stockholder intends thereby to demand the
appraisal of such stockholder's shares. A proxy or vote against the
merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate
written demand as herein provided. Within 10 days after the effective
date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to
Section 228 or Section 253 of this title, each constituent corporation,
either before the effective date of the merger or consolidation or
within ten days thereafter, shall notify each of the holders of any
class or series of stock of such constituent corporation who are
entitled to appraisal rights of the approval of the merger or
consolidation and that appraisal rights are available for any or all
shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section;
provided that, if the notice is given on or after the effective date of
the merger or consolidation, such notice shall be given by the
surviving or resulting corporation to all such holders of any class or
series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the
date of mailing of such notice, demand in writing from the surviving or
resulting corporation the appraisal of such holder's shares. Such
demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the merger
or consolidation, either (i) each such constituent corporation shall
send a second notice before the effective date of the merger or
consolidation notifying each of the holders of any class or series of
stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice to
all such holders on or within 10 days after such effective date;
provided, however, that if such second notice is sent more than 20
days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal
rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that
is required to give either notice that such notice has been given
shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. For purposes of determining the stockholders entitled
to receive either notice, each constituent corporation may fix, in
advance, a record date that shall be not more than 10 days prior to
the date the notice is given, provided, that if the notice is given
on or after the effective date of the merger or consolidation, the
record date shall be such effective date. If no record date is fixed
and the notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or
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consolidation and with respect to which demands for appraisal have been
received and the aggregate number of holders of such shares. Such written
statement shall be mailed to the stockholder within 10 days after such
stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written
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withdrawal of such stockholder's demand for an appraisal and an acceptance of
the merger or consolidation, either within 60 days after the effective date
of the merger or consolidation as provided in subsection (e) of this section
or thereafter with the written approval of the corporation, then the right of
such stockholder to an appraisal shall cease. Notwithstanding the foregoing,
no appraisal proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
C-4
PROXY THE YORK GROUP, INC. PROXY
SPECIAL MEETING OF STOCKHOLDERS
THURSDAY, AUGUST 9, 2001
9:00 A.M., HOUSTON TIME
WEST MEMORIAL BUSINESS PARK CONFERENCE CENTER
8584 KATY FREEWAY
1ST FLOOR
HOUSTON, TEXAS 77024
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of THE YORK GROUP, INC. (the "Company")
hereby constitutes and appoints Thomas J. Crawford and Cristen L. Cline, or
either of them, as proxy of the undersigned, with full power of substitution and
revocation, to vote all shares of the common stock of the Company standing in
the undersigned's name on the books of the Company, at the special meeting of
stockholders to be held at 9:00 a.m., Houston time, at West Memorial Business
Park, Conference Center, 8584 Katy Freeway, 1st Floor, Houston, Texas 77024, on
Thursday, August 9, 2001, or at any adjournment thereof, with all the powers
which the undersigned would possess if personally present at the meeting.
The undersigned hereby instructs the said proxies (i) to vote in
accordance with the instruction marked on the reverse side on the proposal to
adopt an Agreement and Plan of Merger by and among Matthews International
Corporation, Empire Merger Corp., and the Company, BUT, IF NO INSTRUCTION IS
MARKED ON THE REVERSE SIDE, TO VOTE FOR ADOPTION OF THE AGREEMENT AND PLAN OF
MERGER, and (ii) to vote in the said proxies' discretion with respect to such
other matters (including matters incident to the conduct of the meeting) as may
properly come before the meeting).
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting and the Proxy Statement dated July 9, 2001, relating to the special
meeting of stockholders. The Agreement and Plan of Merger being voted on at the
special meeting is attached to the Proxy Statement as Annex A.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED RETURN
ADDRESSED POSTAGE-PAID ENVELOPE.
(CONTINUED - TO BE SIGNED ON REVERSE SIDE)
==============================================================================================================
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
PROPOSAL 1:
To adopt the Agreement and Plan of Merger / / FOR / / AGAINST / / ABSTAIN
dated as of May 24, 2001, by and among
Matthews International Corporation,
Empire Merger Corp and the Company in
the form attached as Annex A to the
Proxy Statement dated July 9, 2001,
pursuant to which each share of common
stock of York, except shares held by
stockholders who exercise their appraisal
rights under Delaware law, will be
converted into the right to receive between
$10.00 and $11.00 per share in cash, without
interest. The actual price per share will
be determined by a formula that is described
in the Proxy Statement dated July 9, 2001.
2. In their discretion, to take action on / / FOR / / AGAINST / / ABSTAIN
such other matters as may properly
come before the Special Meeting of
Stockholders or any adjournment(s)
thereof.
==============================================================================================================
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned
stockholder(s). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1 AND WILL GRANT THE
PROXIES' THE RIGHT TO VOTE IN THEIR DISCRETION WITH RESPECT TO SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING. All prior proxies are hereby revoked.
--------------------------------------------
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Signature(s)
Dated , 2001
--------------------------------
Please sign exactly as your name(s)
appear(s) on this Proxy. If held by more
than one owner, each owner must sign.
Trustees, administrators, etc. should
include full title. A corporation should
provide its full name and the title of the
authorized officer signing this Proxy.
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PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY THE PROXY CARD
USING THE ENCLOSED ENVELOPE.
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