EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
by and among
DOVER TECHNOLOGIES INTERNATIONAL, INC.,
DTI INTERMEDIATE, INC.
and
VITRONICS CORPORATION
dated as of
September 3, 1997
Table of Contents
Page
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ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.................................................... 1
Section 1.2 Company Actions.............................................. 5
Section 1.3 Directors.................................................... 7
Section 1.4 The Merger................................................... 9
Section 1.5 Effective Time............................................... 10
Section 1.6 Closing...................................................... 11
Section 1.7 Directors and Officers of the
Surviving Corporation................................... 11
Section 1.8 Shareholders' Meeting........................................ 11
Section 1.9 Merger Without Meeting of Shareholders....................... 13
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock.................................. 13
Section 2.2 Exchange of Certificates..................................... 14
Section 2.3 Dissenters' Rights........................................... 16
Section 2.4 Options ..................................................... 17
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Section 3.1 Organization................................................. 18
Section 3.2 Capitalization............................................... 19
Section 3.3 Authorization; Validity of Agreement;
Company Action.......................................... 21
Section 3.4 Consents and Approvals; No Violations........................ 21
Section 3.5 SEC Reports and Financial Statements......................... 22
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Section 3.6 Absence of Certain Changes................................... 23
Section 3.7 No Undisclosed Liabilities................................... 24
Section 3.8 Litigation................................................... 24
Section 3.9 Employee Benefit Plans....................................... 24
Section 3.10 Tax Matters; Government Benefits............................. 27
Section 3.11 Intellectual Property........................................ 31
Section 3.12 Employment Matters........................................... 32
Section 3.13 Compliance with Laws......................................... 32
Section 3.14 Vote Required................................................ 33
Section 3.15 Environmental Laws........................................... 33
Section 3.16 Information in Proxy Statement............................... 35
Section 3.17 Opinion of Financial Advisor................................. 36
Section 3.18 Brokers or Finders........................................... 36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Section 4.1 Organization................................................. 37
Section 4.2 Authorization; Validity of Agreement;
Necessary Action........................................ 37
Section 4.3 Consents and Approvals; No Violations........................ 38
Section 4.4 Information in Proxy Statement............................... 38
Section 4.5 Financing.................................................... 39
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company............................ 39
Section 5.2 Access; Confidentiality...................................... 41
Section 5.3 Consents and Approvals....................................... 42
Section 5.4 No Solicitation.............................................. 43
Section 5.5 Additional Agreements........................................ 46
Section 5.6 Publicity.................................................... 46
Section 5.7 Notification of Certain Matters.............................. 47
Section 5.8 Directors' and Officers'
Indemnification......................................... 47
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Section 5.9 Purchaser Compliance......................................... 48
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation
to Effect the Merger.................................... 48
Section 6.2 Condition to Parent's and the
Purchaser's Obligations to Effect
the Merger.............................................. 49
ARTICLE VII
TERMINATION
Section 7.1 Termination.................................................. 49
Section 7.2 Effect of Termination........................................ 51
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses............................................ 52
Section 8.2 Amendment and Modification................................... 53
Section 8.3 Non-survival of Representations and
Warranties.............................................. 54
Section 8.4 Notices...................................................... 54
Section 8.5 Interpretation............................................... 55
Section 8.6 Counterparts................................................. 55
Section 8.7 Entire Agreement; No Third Party
Beneficiaries........................................... 56
Section 8.8 Severability................................................. 56
Section 8.9 Governing Law................................................ 56
Section 8.10 Assignment................................................... 56
ANNEX A Conditions of the Offer.......................................... A-1
iii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated as of September 3, 1997, by and among Dover Technologies
International, Inc., a Delaware corporation ("Parent"), DTI Intermediate, Inc.,
a Delaware corporation and a wholly owned subsidiary of Parent (the
"Purchaser"), and Vitronics Corporation, a Massachusetts corporation (the
"Company").
WHEREAS, the Board of Directors of each of Parent, the
Purchaser and the Company has approved, and deems it advisable and in the best
interests of its respective shareholders to consummate, the acquisition of the
Company by Parent upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
(a) As promptly as practicable (but in no event later than
five business days after the public announcement of the execution hereof), the
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer (the
"Offer") for all of the outstanding shares (the "Shares") of common stock, $.01
par value per share (the "Common Stock"), of the Company at a price of $1.90 per
Share, net to the seller in cash (such price, or any such higher price per Share
as may be paid in the Offer, being referred to herein as the "Offer Price"),
subject to (i) there being validly
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tendered and not withdrawn prior to the expiration of the Offer, that number of
Shares which represents at least sixty-six and two-thirds percent (66 2/3%) of
the Shares outstanding on a fully diluted basis (the "Minimum Condition") and
(ii) the other conditions set forth in Annex A hereto, and shall consummate the
Offer in accordance with its terms. As used herein, "fully diluted basis" takes
into account issued and outstanding Shares and Shares subject to issuance under
outstanding stock options and warrants. The obligations of the Purchaser to
accept for payment and to pay for any Shares validly tendered on or prior to the
expiration of the Offer and not withdrawn shall be subject only to the Minimum
Condition and the other conditions set forth in Annex A hereto. The Offer shall
be made by means of an offer to purchase (the "Offer to Purchase") containing
the terms set forth in this Agreement, the Minimum Condition and the other
conditions set forth in Annex A hereto. The Purchaser shall not decrease the
Offer Price or decrease the number of Shares sought, or amend any other
condition of the Offer in any manner adverse to the holders of the Shares
without the written consent of the Company; provided, however, that if on the
initial scheduled expiration date of the Offer, which shall be twenty business
days after the date the Offer is commenced, all conditions to the Offer shall
not have been satisfied or waived, the Purchaser may, from time to time, in its
sole discretion, extend the expiration date for one or more periods totaling not
more than thirty business days. Notwithstanding the foregoing, the Purchaser may
extend the initial expiration date or any extension thereof, as the Purchaser
reasonably deems necessary to comply with any legal or regulatory requirements,
including but not limited to, the termination or expiration of any applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"). The Purchaser shall, on the terms and subject to the
prior satisfaction or waiver of the conditions of the
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Offer, accept for payment and pay for Shares tendered as soon as it is legally
permitted to do so under applicable law; provided, however, that if, immediately
prior to the initial expiration date of the Offer (as it may be extended), the
Shares tendered and not withdrawn pursuant to the Offer equal more than
seventy-five percent (75%) of the outstanding Shares, but less than 90% of the
outstanding Shares, the Purchaser may extend the Offer for a period not to
exceed twenty business days, notwithstanding that all conditions to the Offer
are satisfied as of such expiration date of the Offer. Notwithstanding the
foregoing, the Offer may not be extended beyond the date of termination of this
Agreement pursuant to Article VII hereof.
(b) As soon as practicable on the date the Offer is commenced,
Parent and the Purchaser shall file with the United States Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will
include, as exhibits, the Offer to Purchase and a form of letter of transmittal
and summary advertisement (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). Parent represents and warrants to
the Company that the Offer Documents will comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed with
the SEC and on the date first published, sent or given to the Company's
shareholders, shall not 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
were made, not misleading, except that no representation is made by Parent or
the Purchaser with respect to information furnished by the Company to Parent or
the Purchaser, in writing, expressly for inclusion in the
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Offer Documents. The Company represents and warrants to Parent and the Purchaser
that the information supplied by the Company to Parent or the Purchaser, in
writing, expressly for inclusion in the Offer Documents and Parent represents
and warrants to the Company that the information supplied by Parent or the
Purchaser to the Company, in writing, expressly for inclusion in the Schedule
14D-9 (as hereinafter defined) will not 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 were made, not misleading.
(c) Each of Parent and the Purchaser will take all steps
necessary to cause the Offer Documents to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Each of Parent and the
Purchaser, on the one hand, and the Company, on the other hand, will promptly
correct any information provided by it for use in the Offer Documents if and to
the extent that it shall have become false or misleading in any material respect
and Parent will take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given the opportunity to
review the Schedule 14D-1 before it is filed with the SEC. In addition, Parent
and the Purchaser will provide the Company and its counsel, in writing, with any
comments, whether written or oral, Parent, the Purchaser or their counsel may
receive from time to time from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
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Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that its Board of Directors, at a meeting duly
called and held, has (i) unanimously determined that each of this Agreement, the
Offer and the Merger (as defined in Section 1.4 hereof) are fair to and in the
best interests of the shareholders of the Company, (ii) approved this Agreement
and the transactions contemplated hereby, including the Offer and the Merger
(collectively, the "Transactions"), and such approval constitutes approval of
the Offer, this Agreement and the Transactions, including the Merger, for
purposes of Chapter 110F of the Massachusetts General Laws (the "MBCA"), such
that, if applicable to the Company the provisions of the MBCA will not apply to
the Transactions, and (iii) resolved to recommend that the shareholders of the
Company accept the Offer, tender their Shares thereunder to the Purchaser and
approve and adopt this Agreement and the Merger; provided, that such
recommendation may be withdrawn, modified or amended if, in the opinion of the
Board of Directors, only after receipt of advice from outside legal counsel,
failure to withdraw, modify or amend such recommendation would result in the
Board of Directors violating its fiduciary duties to the Company's shareholders
under applicable law. The Company represents and warrants that the actions set
forth in this Section 1.2(a) and all other actions it has taken in connection
herewith are sufficient to render the relevant provisions of the MBCA and
Chapter 110D of the Massachusetts General Laws inapplicable to the Offer and the
Merger.
(b) As soon as practicable on the date the Offer is commenced,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-9")
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which shall, subject to the provisions of Section 5.4(b) hereof, contain the
recommendation referred to in clause (iii) of Section 1.2(a) hereof. The Company
represents and warrants to Parent and the Purchaser that the Schedule 14D-9 will
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's shareholders, shall not 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 were made, not misleading, except
that no representation is made by the Company with respect to information
furnished by Parent or the Purchaser, in writing, expressly for inclusion in the
Schedule 14D-9. The Company further agrees to take all steps necessary to cause
the Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. Each of the Company, on the one hand, and Parent and the
Purchaser, on the other hand, agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false and misleading in any material respect and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and to be disseminated to holders of the Shares, in
each case as and to the extent required by applicable federal securities laws.
Parent and its counsel shall be given the opportunity to review the Schedule
14D-9 before it is filed with the SEC. In addition, the Company agrees to
provide Parent, the Purchaser and their counsel, in writing, with any comments,
whether written or oral, that the Company or its counsel may receive from time
to time from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments or other communications.
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(c) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to the Purchaser mailing labels, security
position listings and any available listing, or computer file containing the
names and addresses of all record holders of the Shares as of a recent date, and
shall furnish the Purchaser with such additional information (including, but not
limited to, updated lists of holders of the Shares and their addresses, mailing
labels and lists of security positions) and assistance as the Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares. Except for such steps as are necessary to
disseminate the Offer Documents, Parent and the Purchaser shall hold in
confidence the information contained in any of such labels and lists and the
additional information referred to in the preceding sentence, will use such
information only in connection with the Offer, and, if this Agreement is
terminated, will upon request of the Company deliver or cause to be delivered to
the Company all copies of such information then in its possession or the
possession of its agents or representatives.
Section 1.3 Directors.
(a) Promptly upon the purchase of and payment for Shares by
the Purchaser which represent at least a majority of the outstanding Shares,
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as is equal to
the product of the total number of directors on such Board (giving effect to the
directors designated by Parent pursuant to this sentence) multiplied by the
percentage that the number of Shares so accepted for payment bears to the total
number of Shares then outstanding. In furtherance thereof, the Company shall,
upon the request of Parent, use its best reasonable efforts promptly either to
increase the size of its Board of Directors, including amending the Bylaws
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of the Company if necessary to so increase the size of the Company's Board of
Directors, or secure the resignations of such number of its incumbent directors,
or both, as is necessary to enable Parent's designees to be so elected to the
Company's Board of Directors, and shall take all actions available to the
Company to cause Parent's designees to be so elected. At such time, the Company
shall, if requested by Parent, also cause persons designated by Parent to
constitute at least the same percentage (rounded up to the next whole number) as
is on the Company's Board of Directors of (i) each committee of the Company's
Board of Directors, (ii) each board of directors (or similar body) of each
Subsidiary (as defined in Section 3.1 hereof) of the Company and (iii) each
committee (or similar body) of each such board.
(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-l promulgated
thereunder in order to fulfill its obligations under Section 1.3(a) hereof,
including mailing to shareholders the information required by such Section 14(f)
and Rule 14f-1 as is necessary to enable Parent's designees to be elected to the
Company's Board of Directors. Parent or the Purchaser shall supply the Company
and be solely responsible for any information with respect to either of them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1. The provisions of this Section 1.3(b) are in addition to
and shall not limit any rights which the Purchaser, Parent or any of their
affiliates may have as a holder or beneficial owner of Shares as a matter of law
with respect to the election of directors or otherwise.
(c) Following the election or appointment of the Purchaser's
designees pursuant to this Section and prior to the earlier to occur of (i) the
Effective Time or (ii) November 21, 1997, any amendment or termination of this
Agreement, grant by the Company of any extension
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for the performance or waiver of the obligations or other acts of the Purchaser
or Parent, waiver of the Company's rights hereunder, or action with respect to
the Company's employee benefit plans or option agreements, shall require the
concurrence of a majority of the Company's directors then in office who are
directors on the date hereof, or are directors (other than directors designated
by the Purchaser in accordance with this Section) designated by such directors
to fill any vacancy ("Current Directors"). In addition, following the election
or appointment of the Purchaser's designees pursuant to this Section and prior
to the earlier to occur of (i) the Effective Time or (ii) November 21, 1997,
none of Parent, the Purchaser or such designee shall cause the Company to take
any action or fail to take any action that would cause or result in any
obligation of the Company hereunder or any condition herein not being satisfied
without the concurrence of a majority of the Company's directors then in office
who are Current Directors. Prior to the earlier to occur of (i) the Effective
Time or (ii) November 21, 1997, neither the Purchaser nor its designees shall
remove any Current Director, except for cause, and the Purchaser agrees to cause
its designees to vote for the election of any designee of the Current Directors
to fill a vacancy created by any Current Director ceasing to be a director.
Section 1.4 The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time, the Company and the
Purchaser shall consummate a merger (the "Merger") as set forth below.
(a) At the election of Parent, pursuant to the Merger (i) the
Company shall be merged with and into the Purchaser and the separate corporate
existence of the Company shall thereupon cease, (ii) the Purchaser shall be the
successor or surviving corporation in the Merger (sometimes hereinafter referred
to as the "Purchaser Surviving Corporation" or the "Surviving Corporation")
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and shall continue to be governed by the laws of the State of Delaware, and
(iii) all the rights, privileges, immunities, powers and franchises of the
Company shall vest in the Purchaser Surviving Corporation and, except as
otherwise provided for in this Agreement, all obligations, duties, debts and
liabilities of the Company shall be the obligations, duties, debts and
liabilities of the Purchaser Surviving Corporation; or
(b) At the election of Parent, pursuant to the Merger (i) the
Purchaser shall be merged with and into the Company and the separate corporate
existence of the Purchaser shall cease, (ii) the Company shall be the successor
or surviving corporation in the Merger (sometimes hereinafter referred to as the
"Company Surviving Corporation" or the "Surviving Corporation") and shall
continue to be governed by the laws of the Commonwealth of Massachusetts, and
(iii) the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger, except as set forth in this Section 1.4(b).
(c) The Articles of Incorporation of the Surviving Corporation
shall be the Articles of Incorporation of the Surviving Corporation immediately
prior to the Effective Time, until thereafter amended as provided therein and
under the Delaware or Massachusetts corporation law, as applicable. The Bylaws
of the Surviving Corporation shall be the Bylaws of the Purchaser, as in effect
immediately prior to the Effective Time, until thereafter amended as provided
therein and under the Delaware or Massachusetts corporation law, as applicable.
Section 1.5 Effective Time. Parent, the Purchaser and the
Company will cause a Certificate of Merger to be executed and filed on the
Closing Date (as defined in Section 1.6 hereof) (or on such other date as
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Parent and the Company may agree) with the Secretary of State of Delaware and
the Secretary of the Commonwealth of Massachusetts as provided by applicable
law. The Merger shall become effective on the date on which the Certificate of
Merger is duly filed with the Secretary of State of the state of incorporation
of the Surviving Corporation or such time as is agreed upon by the parties and
specified in the Certificate of Merger, and such time is hereinafter referred to
as the "Effective Time."
Section 1.6 Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m. on the second business day after satisfaction or
waiver of all of the conditions set forth in Article VI hereof, or such other
date as may be agreed to by the parties in writing (the "Closing Date"), at the
offices of the Company at 1 Forbes Road, Newmarket Industrial Park, Newmarket,
New Hampshire 03857 unless another place is agreed to in writing by the parties
hereto.
Section 1.7 Directors and Officers of the Surviving
Corporation. The directors and officers of the Purchaser at the Effective Time
shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the Articles of Incorporation and the
Bylaws of the Surviving Corporation.
Section 1.8 Shareholders' Meeting.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in accordance
with applicable law and subject to the fiduciary duties of the Board of
Directors:
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(i) duly call, give notice of, convene and hold a
special meeting of its shareholders (the "Special Meeting") as promptly
as practicable following the acceptance for payment and purchase of
Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the approval of the Merger and the
adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy
or information statement relating to the Merger and this Agreement and
use its best efforts (x) to obtain and furnish the information required
to be included by the SEC in the Proxy Statement (as hereinafter
defined) and, after consultation with Parent, to respond promptly to
any comments made by the SEC with respect to the preliminary proxy or
information statement and cause a definitive proxy or information
statement, including any amendment or supplement thereto (the "Proxy
Statement") to be mailed to its shareholders, provided that no
amendment or supplement to the Proxy Statement will be made by the
Company without consultation with Parent and its counsel and (y) to
obtain the necessary approvals of the Merger and this Agreement by its
shareholders; and
(iii) include in the Proxy Statement the recommendation
of the Board of Directors that shareholders of the Company vote in
favor of the approval of the Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares
then owned by it, the Purchaser or any of its other Subsidiaries and affiliates
in favor of the approval of the Merger and the approval and adoption of this
Agreement.
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Section 1.9 Merger Without Meeting of Shareholders.
Notwithstanding Section 1.8 hereof, in the event that Parent, the Purchaser and
any other Subsidiaries of Parent shall acquire in the aggregate at least 90% of
the outstanding Shares of the Company, pursuant to the Offer or otherwise, the
parties hereto shall, at the request of Parent and subject to Article VI hereof,
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
shareholders of the Company, in accordance with Section 82 of the Massachusetts
Business Corporation Law ("MBCL").
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any Shares or holders of common stock, par value $.01 per share, of the
Purchaser (the "Purchaser Common Stock"):
(a) The Purchaser Common Stock. Each issued and outstanding
share of the Purchaser Common Stock shall be converted into and become one fully
paid and nonassessable share of common stock of the Company Surviving
Corporation or shall remain outstanding and constitute one fully paid and
non-assessable share of the Purchaser Surviving Corporation, as the case may be,
and shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. All
Shares that are owned by the Company as treasury stock and any Shares owned by
Parent, the Purchaser or any other wholly owned Subsidiary of Parent shall be
canceled and retired and shall cease to exist
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and no consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and outstanding Share
(other than Shares to be canceled in accordance with Section 2.1(b) above and
any Shares which are held by shareholders exercising appraisal rights pursuant
to Sections 85-98 of the MBCL ("Dissenting Shareholders")) shall be converted
into the right to receive the Offer Price, payable to the holder thereof,
without interest (the "Merger Consideration"), upon surrender of the certificate
formerly representing such Share in the manner provided in Section 2.2 hereof.
All such Shares, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section 2.2
hereof, without interest, or the right, if any, to receive payment from the
Surviving Corporation of the "fair value" of such Shares as determined in
accordance with the MBCL.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust
company reasonably acceptable to the Company to act as agent for the holders of
the Shares in connection with the Merger (the "Paying Agent") to receive in
trust the funds to which holders of the Shares shall become entitled pursuant to
Section 2.1(c) above. Such funds shall be invested by the Paying Agent as
directed by Parent or the Surviving Corporation.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a
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certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"), whose Shares were converted
pursuant to Section 2.1 hereof into the right to receive the Merger
Consideration (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent and the Company may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment of the Merger Consideration. Upon surrender
of a Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each Share formerly represented
by such Certificate and the Certificate so surrendered shall forthwith be
canceled. If payment of the Merger Consideration is to be made to a person other
than the person in whose name the surrendered Certificate is registered, it
shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that the
person requesting such payment shall have paid any transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the Certificate surrendered or shall have
established to the satisfaction of the Surviving Corporation that such tax
either has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger Consideration
in cash as contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in the Shares.
At the Effective Time, the stock
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transfer books of the Company shall be closed and thereafter there shall be no
further registration of transfers of the Shares on the records of the Company.
From and after the Effective Time, the holders of Certificates evidencing
ownership of the Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following
six months after the Effective Time, the Surviving Corporation shall be entitled
to require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying Agent
and which had not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Section 2.3 Dissenters' Rights. If any Dissenting Shareholder
shall demand to be paid the fair value of such holder's Shares, as provided in
Sections 85-98 of the MBCL, the Company shall give Parent notice thereof and
Parent shall have the right to participate in all negotiations and proceedings
with respect to any such demands to the extent permitted by the MBCL. Neither
the
16
Company nor the Surviving Corporation shall, except with the prior written
consent of Parent, voluntarily make any payment with respect to, or settle or
offer to settle, any such demand for payment. If any Dissenting Shareholder
shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent, the Shares held by such Dissenting Shareholder shall thereupon be
treated as though such Shares had been converted into the Merger Consideration
pursuant to Section 2.1 hereof.
Section 2.4 Options. At the Effective Time, each holder of a
then outstanding option (collectively, the "Options") to purchase Shares granted
by the Company, whether or not then exercisable, shall in settlement thereof,
receive for each Share subject to such Option an amount (subject to any
applicable withholding tax) in cash equal to the difference between the Offer
Price and the per Share exercise price of such Option to the extent such
difference is a positive number. Prior to the Effective Time, the Company shall
use all commercially reasonable efforts to obtain all necessary consents or
releases from holders of Options, to the extent required by the terms of the
plans or agreements governing such Options, as the case may be, or pursuant to
the terms of any Option granted thereunder, and take all such other lawful
action as may be necessary to give effect to the transactions contemplated by
this Section 2.4 (except for such action that may require the approval of the
Company's shareholders). The Company shall take all action necessary to ensure
that (i) the Company's 1995 Key Employees Stock Option Plan (the "Stock Option
Plan") shall have been terminated as of the Effective Time and the provisions in
any other plan, program or arrangement providing for the issuance or grant of
any other interest in respect of the capital stock of the Company or any
Subsidiary thereof, shall be canceled as of the Effective Time, and (ii)
following the Effective Time, (a) no participant in any Stock Option Plan or
other plans,
17
programs or arrangements shall have any right thereunder to acquire equity
securities of the Company, the Surviving Corporation or any Subsidiary thereof
(except options to acquire approximately 96,000 Shares of the Company where the
exercise price is higher than $1.90 per Share) and all such plans shall have
been terminated, and (b) the Company will not be bound by any convertible
security, option, warrant, right or agreement which would entitle any person to
own any capital stock of the Company, the Surviving Corporation or any
Subsidiary thereof.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as disclosed in the schedule attached to this Agreement
setting forth exceptions to the Company's representations and warranties set
forth herein (the "Company Disclosure Schedule"), the Company represents and
warrants to Parent and the Purchaser as set forth below (any matter disclosed in
any Section hereof or in the Company Disclosure Schedule being deemed disclosed
for purposes of all Sections hereof and all Sections of the Company Disclosure
Schedule). The Company Disclosure Schedule will be arranged in sections
corresponding to sections of this Agreement to be modified thereby.
Section 3.1 Organization. (a) Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority, and
governmental approvals would not, individually or in the aggregate, have a
Company Material Adverse Effect (as defined below). As used in this Agreement,
the term "Subsidiary" shall mean
18
all corporations or other entities in which the Company or the Parent, as the
case may be, owns a majority of the issued and outstanding capital stock or
similar interests. As used in this Agreement, "Company Material Adverse Effect"
with reference to any events, changes or effects, shall mean that such events,
changes or effects are materially adverse to the Company and its Subsidiaries,
taken as a whole.
(b) The Company and each of its Subsidiaries is duly qualified
or licensed to do business and in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
individually or in the aggregate have a Company Material Adverse Effect. The
Company does not own any equity interest in any corporation or other entity
other than its Subsidiaries.
Section 3.2 Capitalization. (a) The authorized capital stock
of the Company consists of 20,000,000 shares of Common Stock, par value $.01 per
share. As of the date hereof, (i) 9,856,572 Shares are issued and outstanding,
(ii) none of the Shares are issued and held in the treasury of the Company and
(iii) 543,400 Shares are reserved for issuance upon the exercise of outstanding
Options. Section 3.2(a) of the Company Disclosure Schedule discloses the number
of shares subject to each outstanding Option and the exercise price thereof. All
the outstanding shares of the Company's capital stock are, and all Shares which
may be issued pursuant to the exercise of outstanding Options will be, when
issued in accordance with the respective terms thereof, duly authorized, validly
issued, fully paid and non-assessable. There are no bonds, debentures, notes or
other indebtedness having general voting rights (or convertible into securities
having such rights)
19
("Voting Debt") of the Company or any of its Subsidiaries issued and
outstanding. Except as set forth above and except for the transactions
contemplated by this Agreement, as of the date hereof, (i) there are no shares
of capital stock of the Company authorized, issued or outstanding, (ii) there
are no existing options, warrants, calls, preemptive rights, subscriptions or
other rights, agreements, arrangements or commitments of any character, relating
to the issued or unissued capital stock of the Company or any of its
Subsidiaries, obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any of its Subsidiaries
to grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment and (iii) there are no
outstanding contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Shares, or the capital stock of the
Company or of any Subsidiary or affiliate of the Company or to provide funds to
make any investment (in the form of a loan, capital contribution or otherwise)
in any Subsidiary or any other entity.
(b) All of the outstanding shares of capital stock of each of
its Subsidiaries are owned beneficially and of record by the Company or one of
its Subsidiaries, directly or indirectly, and all such shares have been validly
issued and are fully paid and nonassessable and are owned by either the Company
or one of its Subsidiaries free and clear of all liens, charges, claims or
encumbrances ("Encumbrances").
(c) There are no voting trusts or other agreements or
understandings to which the Company or any
20
of its Subsidiaries is a party with respect to the voting of the capital stock
of the Company or any of the Subsidiaries.
Section 3.3 Authorization; Validity of Agreement; Company
Action. The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the Transactions. The execution,
delivery and performance by the Company of this Agreement, and the consummation
by it of the Transactions, have been unanimously approved and duly authorized by
its Board of Directors and no other corporate action on the part of the Company
is necessary to authorize (i) the execution and delivery by the Company of this
Agreement and (ii) the consummation by it of the Transactions, except that
consummation of the Merger may require approval of the Company's shareholders as
contemplated by Section 1.8 hereof. This Agreement has been duly executed and
delivered by the Company and, assuming due and valid authorization, execution
and delivery hereof by Parent and the Purchaser, is a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization, or other laws affecting creditors'
rights generally or by the availability of equitable remedies generally.
Section 3.4 Consents and Approvals; No Violations. Except for
the filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act and the HSR Act,
none of the execution, delivery or performance of this Agreement by the Company,
the consummation of the Transactions or compliance by the Company with any of
the provisions hereof will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation, the Bylaws or similar organizational
documents of the Company or any of its
21
Subsidiaries, (ii) require any filing with, or permit, authorization, consent or
approval of, any court, arbitral tribunal, administrative agency or commission
or other governmental or regulatory authority or agency (a "Governmental
Entity"), (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound (the "Company Agreements") or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its Subsidiaries or any of their properties or
assets, excluding from the foregoing clauses (ii), (iii) and (iv) such
violations, breaches or defaults which would not, individually or in the
aggregate, have a Company Material Adverse Effect or have a material adverse
effect on the ability of the Company to consummate the Transactions. Section 3.4
of the Company Disclosure Schedule sets forth a list of all third party consents
and approvals required to be obtained in connection with this Agreement under
the Company Agreements prior to the consummation of the Transactions.
Section 3.5 SEC Reports and Financial Statements. The Company
has filed with the SEC, and has heretofore made available to Parent, true and
complete copies of all forms, reports, schedules, statements and other documents
required to be filed by it since January 1, 1994 under the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act") (as such documents
have been amended since the time of their filing, collectively, the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents,
22
including, without limitation, any financial statements or schedules included
therein (a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. None of
the Company's Subsidiaries is required to file any forms, reports or other
documents with the SEC. The financial statements of the Company included in the
Company SEC Documents (the "Financial Statements") have been prepared from, and
are in accordance with, the books and records of the Company and its
consolidated Subsidiaries, comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position and the consolidated
results of operations and cash flows (and changes in financial position, if any)
of the Company and its consolidated Subsidiaries as of the times and for the
periods referred to therein.
Section 3.6 Absence of Certain Changes. Except as disclosed in
Section 3.6 of the Company Disclosure Schedule or in the Company SEC Documents
filed prior to the date hereof, since December 31, 1996, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary and
usual course consistent with past practices and (i) there have not occurred any
events or changes (including the incurrence of any liabilities of any nature,
whether or not accrued, contingent or otherwise) having,
23
individually or in the aggregate, a Company Material Adverse Effect and (ii) the
Company has not taken any action since December 31, 1996 which is prohibited
under Section 5.1 hereof.
Section 3.7 No Undisclosed Liabilities. Except (a) as
disclosed in the Financial Statements and (b) for liabilities and obligations
(i) incurred in the ordinary course of business and consistent with past
practice since December 31, 1996, (ii) pursuant to the terms of this Agreement,
(iii) as disclosed in Section 3.7 of the Company Disclosure Schedule, or (iv) as
disclosed in Section 3.8 of the Company Disclosure Schedule, neither the Company
nor any of its Subsidiaries has any material liabilities or material obligations
of any nature, whether or not accrued, contingent or otherwise.
Section 3.8 Litigation. Except as disclosed in Section 3.8 of
the Company Disclosure Schedule, as of the date hereof, there are no suits,
claims, actions, proceedings, including, without limitation, arbitration
proceedings or alternative dispute resolution proceedings, or investigations
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries before any Governmental Entity that, either individually
or in the aggregate, would be reasonably likely to have a Company Material
Adverse Effect.
Section 3.9 Employee Benefit Plans.
(a) Section 3.9(a) of the Company Disclosure Schedule contains
a true and complete list of each deferred compensation and each incentive
compensation, stock purchase, stock option and other equity compensation plan,
program, agreement or arrangement; each severance or termination pay, medical,
surgical, hospitalization, life insurance and other "welfare" plan,
24
fund or program (within the meaning of section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")); each profit-sharing, stock
bonus or other "pension" plan, fund or program (within the meaning of section
3(2) of ERISA); each employment, termination or severance agreement; and each
other employee benefit plan, fund, program, agreement or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to by the Company or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with the Company would be
deemed a "single employer" within the meaning of section 4001(b) of ERISA, or to
which the Company or an ERISA Affiliate is party, whether written or oral, for
the benefit of any employee or former employee of the Company or any Subsidiary
(the "Plans"). Each of the Plans that is subject to section 302 or Title IV of
ERISA or section 412 of the Internal Revenue Code of 1986, as amended (the
"Code") is hereinafter referred to in this Section 3.9 as a "Title IV Plan."
Neither the Company, any Subsidiary nor any ERISA Affiliate has any commitment
or formal plan, whether legally binding or not, to create any additional
employee benefit plan or modify or change any existing Plan that would affect
any employee or former employee of the Company or any Subsidiary.
(b) No liability under Title IV or section 302 of ERISA has
been incurred by the Company or any ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring any such liability, other than liability for
premiums due the Pension Benefit Guaranty Corporation ("PBGC") (which premiums
have been paid when due).
(c) [Reserved.]
(d) With respect to each Title IV Plan, the present value of
accrued benefits under such Plan, based
25
upon the actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such Plan's actuary with respect to such Plan did
not exceed, as of its latest valuation date, the then current value of the
assets of such Plan allocable to such accrued benefits.
(e) No Title IV Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA, nor is any Title IV Plan a plan described in
section 4063(a) of ERISA. Neither the Company nor any ERISA Affiliate has made
or suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in sections 4203 and 4205 of ERISA (or any liability
resulting therefrom has been satisfied in full).
(f) Each Plan has been operated and administered in accordance
with its terms and applicable law, including but not limited to ERISA and the
Code.
(g) Each Plan intended to be "qualified" within the meaning of
section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service with respect to the qualified status of such Plan
under the Code, including all amendments to the Code effected by the Tax Reform
Act of 1986 and subsequent legislation, and nothing has occurred since the
issuance of such letter which could reasonably be expected to cause the loss of
the tax-qualified status of such Plan and the related trust maintained
thereunder. Each Plan intended to satisfy the requirements of Section 501(c)(9)
has satisfied such requirements.
(h) No Plan provides medical, surgical, hospitalization, death
or similar benefits (whether or not insured) for employees or former employees
of the Company or any Subsidiary for periods extending beyond their retirement
or other termination of service, other
26
than (i) coverage mandated by applicable law, (ii) death benefits under any
"pension plan," or (iii) benefits the full cost of which is borne by the current
or former employee (or his or her beneficiary).
(i) Except as disclosed in Section 3.9(i) of the Company
Disclosure Schedule or as set forth in Section 5.10 of this Agreement, the
consummation of the transactions contemplated by this Agreement will not, either
alone or in combination with another event, except as expressly provided in
Section 2.4 of this Agreement, (a) entitle any current or former employee or
officer of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, or (b) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer.
(j) There are no pending, or to the knowledge of Company,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits) which could have a material adverse
effect upon the Plans or have a Company Material Adverse Effect.
Section 3.10 Tax Matters; Government Benefits.
(a) Except as disclosed in Section 3.10(a) of the Company
Disclosure Schedule, the Company and each of its Subsidiaries have duly filed
(or there has been filed on its behalf) all Tax Returns (as hereinafter defined)
that are required to be filed and have duly paid or caused to be duly paid in
full or made provision in accordance with GAAP (or there has been paid or
provision has been made on their behalf) for the payment of all Taxes (as
hereinafter defined) shown due on such Tax Returns. All such Tax Returns are
correct and complete in all material respects and accurately reflect all
27
liability for Taxes for the periods covered thereby. All Taxes owed and due by
the Company and each of its Subsidiaries for results of operations through
December 31, 1996 (whether or not shown on any Tax Return) have been paid or
have been adequately reflected on the Company's balance sheet as of December 31,
1996 included in the Financial Statements (the "Balance Sheet"). Since December
31, 1996, the Company has not incurred liability for any Taxes other than in the
ordinary course of business. Neither the Company nor any of its Subsidiaries has
received written notice of any claim made by an authority in a jurisdiction
where neither the Company nor any of its Subsidiaries file Tax Returns, that the
Company is or may be subject to taxation by that jurisdiction.
(b) Except as disclosed in Section 3.10(b) of the Company
Disclosure Schedule, there are no liens for Taxes upon any property or assets of
the Company or any of its Subsidiaries except for liens for Taxes not yet due.
(c) The federal income Tax Returns of the Company and its
Subsidiaries have been examined by the Internal Revenue Service (or the
applicable statutes of limitation for the assessment of federal income Taxes for
such periods have expired) for all periods through and including December 31,
1992, and, except as disclosed in Section 3.10(c) of the Company Disclosure
Schedule, no deficiencies were asserted as a result of such examinations that
have not been resolved or fully paid. Neither the Company nor any of its
Subsidiaries has waived any statute of limitations in any jurisdiction in
respect of Taxes or Tax Returns or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(d) The deductibility of compensation paid by the Company or
any of its Subsidiaries prior to the
28
Effective Time will not be limited by Section 162(m) of the Code.
(e) No federal, state, local or foreign audits, examinations
or other administrative proceedings have been commenced or, to the Company's
knowledge, are threatened with regard to any Taxes or Tax Returns of the Company
or of any of its Subsidiaries. No written notification has been received by the
Company or by any of its Subsidiaries that such an audit, examination or other
proceeding is pending or threatened with respect to any Taxes due from or with
respect to or attributable to the Company or any of its Subsidiaries or any Tax
Return filed by or with respect to the Company or any of its Subsidiaries. To
the Company's knowledge, there is no dispute or claim concerning any Tax
liability of the Company, or any of its Subsidiaries either claimed or raised by
any taxing authority in writing.
(f) Except as set forth in the Company Disclosure Schedule, no
power of attorney granted by either the Company or any of its Subsidiaries is
currently in force.
(g) Neither the Company nor any of its Subsidiaries is a party
to any agreement, plan, contract or arrangement that could result, separately or
in the aggregate, in a payment of any "excess parachute payments" within the
meaning of section 280G of the Code.
(h) Neither the Company nor any of its Subsidiaries has filed
a consent pursuant to section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in section 341(f)(4) of the Code) owned by the Company or any of its
Subsidiaries.
29
(i) Neither the Company nor any of its Subsidiaries is a party
to any tax sharing, tax indemnity or other agreement or arrangement with any
entity not included in the Company's consolidated financial statements most
recently filed by the Company with the SEC.
(j) None of the Company or any of its Subsidiaries has been a
member of any affiliated group within the meaning of section 1504(a) of the
Code, or any similar affiliated or consolidated group for tax purposes under
state, local or foreign law (other than a group the common parent of which is
the Company), or has any liability for Taxes of any person (other than the
Company and its Subsidiaries) under Treasury Regulation Section 1.15026 (or any
similar provision of state, local or foreign law), as a transferee or successor,
by contract or otherwise.
(k) As used in this Agreement, the following terms shall have
the following meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges,
fees, duties, levies, penalties or other assessments imposed by any
federal, state, local or foreign governmental authority, including, but
not limited to, income, gross receipts, excise, property, sales, gain,
use, license, custom duty, unemployment, capital stock, transfer,
franchise, payroll, withholding, social security, minimum estimated,
and other taxes, and shall include interest, penalties or additions
attributable thereto; and
(ii) "Tax Return" shall mean any return, declaration,
report, claim for refund, or information return or statement relating
to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
30
Section 3.11 Intellectual Property.
(a) The Company and its Subsidiaries own or have adequate
rights to use the items of Intellectual Property (as defined below and
specifically listed in Section 3.11(a) of the Company Disclosure Schedule)
necessary to conduct the business of the Company and its Subsidiaries as
presently conducted or as currently proposed to be conducted, free and clear of
all Encumbrances (other than Encumbrances which, individually or in the
aggregate, would not have a Company Material Adverse Effect).
(b) The conduct of the Company's and its Subsidiaries'
business and the Intellectual Property owned or used by the Company and its
Subsidiaries, do not infringe any Intellectual Property rights or any other
proprietary right of any person other than infringements which, individually or
in the aggregate, would not have a Company Material Adverse Effect. The Company
and its Subsidiaries have received no notice of any allegations or threats that
the Company's and its Subsidiaries' use of any of the Intellectual Property
infringes upon or is in conflict with any Intellectual Property or proprietary
rights of any third party other than infringements or conflicts which
individually or in the aggregate would not have a Company Material Adverse
Effect.
(c) As used in this Agreement, "Intellectual Property" means
all of the following: (i) U.S. and foreign registered and unregistered
trademarks, trade dress, service marks, logos, trade names, corporate names and
all registrations and applications to register the same (the "Trademarks"); (ii)
issued U.S. and foreign patents and pending patent applications, patent
disclosures, and any and all divisions, continuations, continuations-in-part,
re-issues, reexaminations, and extension thereof, any counterparts claiming
priority therefrom, utility models, patents of
31
importation/confirmation, certificates of invention and like statutory rights
(the "Patents"); (iii) U.S. and foreign registered and unregistered copyrights
(including, but not limited to, those in computer software and databases),
rights of publicity and all registrations and applications to register the same
(the "Copyrights"); (iv) all categories of trade secrets as defined in the
Uniform Trade Secrets Act including, but not limited to, business information;
and (v) all licenses and agreements pursuant to which the Company has acquired
rights in or to any Trademarks, Patents, or Copyrights, or licenses and
agreements pursuant to which the Company has licensed or transferred the right
to use any of the foregoing ("Licenses").
Section 3.12 Employment Matters. To the knowledge of the
Company, no key employee disclosed in Section 3.12 of the Company Disclosure
Schedule has any plans to terminate such employee's employment with the Company
or any of its Subsidiaries as a result of the Transactions or otherwise. Neither
the Company nor any of its Subsidiaries has experienced any strikes, collective
labor grievances, other collective bargaining disputes or claims of unfair labor
practices in the last five years. To the Company's knowledge, there is no
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company and its Subsidiaries.
Section 3.13 Compliance with Laws. The Company and its
Subsidiaries are in compliance with, and have not violated any applicable law,
rule or regulation of any United States federal, state, local, or foreign
government or agency thereof which affects the business, properties or assets of
the Company and its Subsidiaries, and no notice, charge, claim, action or
assertion has been received by the Company or any of its Subsidiaries or has
been filed, commenced or, to the Company's knowledge, threatened against the
Company or any of its
32
Subsidiaries alleging any such violation, except for any matter otherwise
covered by this sentence which would not have, individually or in the aggregate,
a Company Material Adverse Effect. All licenses, permits and approvals required
under such laws, rules and regulations are in full force and effect except where
the failure to be in full force and effect would not have a Company Material
Adverse Effect.
Section 3.14 Vote Required. The affirmative vote of the
holders of two-thirds of the outstanding Shares in favor of the Merger is the
only vote of the holders of any class or series of the Company's capital stock
which may be necessary to approve this Agreement and the Transactions.
Section 3.15 Environmental Laws.
(a) The Company and its Subsidiaries are in compliance with
all applicable Environmental Laws (as defined below) (which compliance includes,
without limitation, the possession by the Company and its Subsidiaries of all
permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof),
except where failure to be in compliance, either individually or in the
aggregate, would not have a Company Material Adverse Effect.
(b) There is no Environmental Claim (as defined below) pending
or, to the Company's knowledge, threatened against the Company or any of its
Subsidiaries or, to the Company's knowledge, against any person or entity whose
liability for any Environmental Claim the Company or any of its Subsidiaries has
or may have retained or assumed either contractually or by operation of law
which Environmental Claim would have, either individually or in the aggregate, a
Company Material Adverse Effect.
33
(c) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release or presence of any Hazardous Material (as defined below), which
could form the basis of any Environmental Claim against the Company or any of
its Subsidiaries, or to the Company's knowledge, against any person or entity
whose liability for any Environmental Claim the Company or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law, which Environmental Claim would have, either individually or
in the aggregate, a Company Material Adverse Effect.
(d) The Company and its Subsidiaries have not, and to the
Company's knowledge, no other person has, placed, stored, deposited, discharged,
buried, dumped or disposed of Hazardous Materials or any other wastes produced
by, or resulting from, any business, commercial or industrial activities,
operations or processes, on, beneath or adjacent to any property currently or
formerly owned, operated or leased by the Company or any of its Subsidiaries,
except (x) for inventories of such substances to be used, and wastes generated
therefrom, in the ordinary course of business of the Company and its
Subsidiaries, or (y) which would not, either individually or in the aggregate,
have a Company Material Adverse Effect.
(e) Without in any way limiting the generality of the
foregoing, except as disclosed in Section 3.15(e) of the Company Disclosure
Schedule, none of the properties owned, operated or leased by the Company or any
of its Subsidiaries contain any: underground storage tanks; asbestos;
polychlorinated biphenyls ("PCBs"); underground injection wells; radioactive
materials; or septic tanks or waste disposal pits in which process wastewater or
any Hazardous Materials have been discharged or disposed the existence of which,
34
individually or in the aggregate, could reasonably be expected to have a Company
Material Adverse Effect.
(f) The Company has made available to Parent for review copies
of all environmental reports or studies in its possession.
(g) For purposes of this Agreement, (i) "Environmental Laws"
means all federal, state, local and foreign laws and regulations relating to
pollution or protection of human health or the environment, including, without
limitation, laws relating to releases or threatened releases of Hazardous
Materials or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, release, disposal, transport or handling of Hazardous
Materials and all laws and regulations with regard to record keeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials; (ii) "Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, Cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, or Release, of any
Hazardous Materials at any location, whether or not owned, leased or operated by
the Company or any of its Subsidiaries, or (b) circumstances forming the basis
of any violation, or alleged violation, of any Environmental Law; (iii)
"Hazardous Materials" means all substances defined as Hazardous Substances,
Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. Section 300.5, or defined as such by, or
regulated as such under, any Environmental Law.
Section 3.16 Information in Proxy Statement. The Proxy
Statement, if any (or any amendment thereof or
35
supplement thereto), will not, at the date mailed to Company shareholders and at
the time of the meeting of Company shareholders to be held in connection with
the Merger, 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, except that no representation is made by the Company with respect to
statements made therein based on information supplied in writing by Parent or
the Purchaser for inclusion in the Proxy Statement. The Proxy Statement will
comply in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
Section 3.17 Opinion of Financial Advisor. The Company has
received the opinion of Scott-Macon Securities, Inc., dated the date hereof, to
the effect that, as of such date, the consideration to be received in the Offer
and the Merger by the Company's shareholders is fair to the Company's
shareholders from a financial point of view, a copy of which opinion has been
delivered to Parent and the Purchaser.
Section 3.18 Brokers or Finders. The Company represents, as to
itself and its Subsidiaries and affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee from the Company
or any of its Subsidiaries in connection with any of the transactions
contemplated by this Agreement except for Scott-Macon, Ltd., whose fees are set
forth in the engagement letter attached as Section 3.18 of the Company
Disclosure Schedule.
36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company
as set forth below.
Section 4.1 Organization. Parent is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
the Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of Delaware.
Section 4.2 Authorization; Validity of Agreement; Necessary
Action. Each of Parent and the Purchaser has full corporate power and authority
to execute and deliver this Agreement and to consummate the Transactions. The
execution, delivery and performance by Parent and the Purchaser of this
Agreement and the consummation of the Transactions have been duly authorized by
the Boards of Directors of Parent and the Purchaser and by Parent as the sole
shareholder of the Purchaser and no other corporate action on the part of Parent
and the Purchaser is necessary to authorize the execution and delivery by Parent
and the Purchaser of this Agreement and the consummation of the Transactions.
This Agreement has been duly executed and delivered by Parent and the Purchaser
and, assuming due and valid authorization, execution and delivery hereof by the
Company, is a valid and binding obligation of each of Parent and the Purchaser
enforceable against each of them in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization, or other laws affecting creditors' rights generally or by the
availability of equitable remedies generally.
37
Section 4.3 Consents and Approvals; No Violations. Except for
the filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act and the HSR Act,
none of the execution, delivery or performance of this Agreement by Parent or
the Purchaser, the consummation by Parent or the Purchaser of the Transactions
or compliance by Parent or the Purchaser with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the Articles of
Incorporation or Bylaws of Parent or the Articles of Incorporation or Bylaws of
the Purchaser, (ii) require any filing with, or permit, authorization, consent
or approval of, any Governmental Entity, (iii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Parent, or any of its Subsidiaries or the Purchaser is a party or by
which any of them or any of their respective properties or assets may be bound,
or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its Subsidiaries or any of their properties or
assets, excluding from the foregoing clauses (ii), (iii) and (iv) such
violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on the ability of Parent and the
Purchaser to consummate the Transactions.
Section 4.4 Information in Proxy Statement. None of the
information supplied by Parent or the Purchaser in writing specifically for
inclusion or incorporation by reference in the Proxy Statement, if any, will, at
the date mailed to shareholders and at the time of the meeting of shareholders
to be held in connection with the Merger, contain any untrue statement
38
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 4.5 Financing. Parent has the funds sufficient to
finance the transactions contemplated herein.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company
covenants and agrees that, except (i) as expressly contemplated by this
Agreement or (ii) as agreed in writing by Parent, after the date hereof, and
prior to the time the designees of Parent have been elected to, and shall
constitute a majority of, the Board of Directors of the Company pursuant to
Section 1.3 hereof (the "Appointment Date"):
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course (other than actions necessary to
consummate the transactions described herein) and, to the extent consistent
therewith, each of the Company and its Subsidiaries shall use its best efforts
to preserve its business organization intact and maintain its existing relations
with customers, suppliers, employees, creditors and business partners subject,
however, to any changes to such relationships necessitated or caused by the
announcement of the proposed transaction contemplated hereby;
(b) the Company will not, directly or indirectly, (i) except
upon exercise of Options or other rights to purchase shares of Common Stock
outstanding on the date hereof, issue, sell, transfer or pledge or agree
39
to sell, transfer or pledge any treasury stock of the Company or any capital
stock of any of its Subsidiaries beneficially owned by it, (ii) amend its
Articles of Incorporation or Bylaws or similar organizational documents; or
(iii) split, combine or reclassify the outstanding Shares or any outstanding
capital stock of any of the Subsidiaries of the Company;
(c) neither the Company nor any of its Subsidiaries shall: (i)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock; (ii) issue, sell, pledge,
dispose of or encumber any additional shares of, or securities convertible into
or exchangeable for, or options, warrants, calls, commitments or rights of any
kind to acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than Shares reserved for issuance on the date hereof
pursuant to the exercise of Options outstanding on the date hereof; (iii)
transfer, lease, license, sell or dispose of any assets, or incur any
indebtedness or other liability other than in the ordinary course of business,
or mortgage, pledge or encumber any assets or modify any indebtedness; or (iv)
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(d) neither the Company nor any of its Subsidiaries shall: (i)
grant any increase in the compensation payable or to become payable by the
Company or any of its Subsidiaries to any of its executive officers or (ii)(A)
adopt any new, or (B) amend or otherwise increase, or accelerate the payment or
vesting of the amounts payable or to become payable under any existing bonus,
incentive compensation, deferred compensation, severance, profit sharing, stock
option, stock purchase, insurance, pension, retirement or other employee benefit
plan, agreement or arrangement; or (iii) enter into any employment or severance
agreement with or,
40
except in accordance with the existing written policies of the Company, grant
any severance or termination pay to any officer, director or employee of the
Company or any of its Subsidiaries;
(e) neither the Company nor any of its Subsidiaries shall
permit any insurance policy naming it as a beneficiary or a loss payable payee
to be canceled or terminated without notice to Parent;
(f) neither the Company nor any of its Subsidiaries shall
enter into any contract or transaction relating to the purchase of assets other
than in the ordinary course of business;
(g) neither the Company nor any of its Subsidiaries shall
change any of the accounting methods used by it unless required by GAAP, neither
the Company nor any of its Subsidiaries shall make any material Tax election,
change any material Tax election already made, adopt any material Tax accounting
method, change any material Tax accounting method unless required by GAAP, enter
into any closing agreement, settle any Tax claim or assessment or consent to any
Tax claim or assessment or any waiver of the statute of limitations for any such
claim or assessment; and
(h) neither the Company nor any of its Subsidiaries will enter
into any agreement with respect to the foregoing or take any action with the
intent of causing any of the conditions to the Offer set forth in Annex A not to
be satisfied.
Section 5.2 Access; Confidentiality. (a) Upon reasonable
notice, the Company shall (and shall cause each of its Subsidiaries to) afford
to the officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours during the
period prior to
41
the Appointment Date, to all its properties, books, contracts, commitments and
records and, during such period, the Company shall (and shall cause each of its
Subsidiaries to) furnish promptly to Parent (x) 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 (y) all other
information concerning its business, properties and personnel as Parent may
reasonably request, including without limitation, true and complete copies of
each Plan of the Company or of any of its Subsidiaries and any amendments
thereto (or if any Plan is not a written Plan, a description thereof), any
related trust or other funding vehicle, any summary plan description under ERISA
or the Code and the most recent determination letter received from the Internal
Revenue Service with respect to each such Plan intended to qualify under Section
401 of the Code. Access shall include the right to conduct such environmental
studies and tests as Parent, in its reasonable discretion, shall deem
appropriate; provided, however, that such studies and tests must be performed in
such a way as not to disrupt materially the Company's business. After the
Appointment Date, the Company shall provide Parent and such persons as Parent
shall designate with all such information, at such time as Parent shall request.
Unless otherwise required by law and until the Appointment Date, Parent and the
Purchaser will hold any such information which is non-public in confidence.
(b) Following the execution of this Agreement, Parent and the
Company shall cooperate with each other and make all reasonable efforts to
minimize any disruption to the business which may result from the announcement
of the Transactions.
Section 5.3 Consents and Approvals. (a) Each of the Company,
Parent and the Purchaser shall take all reasonable actions necessary to comply
promptly with all
42
legal requirements which may be imposed on it with respect to this Agreement and
the Transactions (which actions shall include, without limitation, furnishing
all information required under the HSR Act and in connection with approvals of
or filings with any other Governmental Entity) and will promptly cooperate with
and furnish information to each other in connection with any such requirements
imposed upon any of them or any of their Subsidiaries in connection with this
Agreement and the Transactions. Each of the Company, Parent and the Purchaser
shall, and shall cause its Subsidiaries to, take all reasonable actions
necessary to obtain (and will cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, the Purchaser, the Company or any of their
Subsidiaries in connection with the Transactions or the taking of any action
contemplated thereby or by this Agreement.
(b) The Company and Parent shall take all reasonable actions
necessary to file as soon as practicable notifications under the HSR Act and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
Section 5.4 No Solicitation. (a) Neither the Company nor any
of its Subsidiaries shall (and the Company and its Subsidiaries shall cause
their respective officers, directors, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any
43
information to, any corporation, partnership, person or other entity or group
(other than Parent or any of its affiliates or representatives) concerning any
proposal or offer to acquire all or a substantial part of the business and
properties of the Company or any of its Subsidiaries or any capital stock of the
Company or any of its Subsidiaries, whether by merger, tender offer, exchange
offer, sale of assets or similar transactions involving the Company or any
Subsidiary, division or operating or principal business unit of the Company (an
"Acquisition Proposal"), except that nothing contained in this Section 5.4 or
any other provision hereof shall prohibit the Company or the Company's Board of
Directors from (i) taking and disclosing to the Company's shareholders a
position with respect to a tender or exchange offer by a third party pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such
disclosure to the Company's shareholders as, in the good faith judgment of the
Board of Directors, after receiving advice from outside counsel, is required
under applicable law; provided that, except as permitted by this Section 5.4,
neither the Board of Directors of the Company nor any committee thereof shall
(x) approve or recommend or propose to approve or recommend any Acquisition
Proposal, (y) enter into any agreement with respect to any Acquisition Proposal,
or (z) withdraw or modify, or propose to withdraw or modify, in a manner adverse
to Parent or the Purchaser, the approval or recommendation by such Board of
Directors or any such committee of the Offer, this Agreement or the Merger. The
Company will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing.
(b) Notwithstanding the foregoing, prior to the acceptance of
Shares pursuant to the Offer constituting the Minimum Condition, the Company may
furnish information concerning its business, properties
44
or assets to any corporation, partnership, person or other entity or group
pursuant to appropriate confidentiality agreements, and may negotiate and
participate in discussions and negotiations with such entity or group concerning
an Acquisition Proposal if (x) such entity or group has on an unsolicited basis
submitted a bona fide written proposal to the Company relating to any such
transaction which the Board of Directors determines in good faith, after
receiving advice from Scott-Macon Securities, Inc. or a nationally recognized
investment banking firm, represents a superior transaction to the Offer and the
Merger and which the Board of Directors determines in good faith can be fully
financed and (y) in the opinion of the Board of Directors of the Company, only
after receipt of advice from outside legal counsel to the Company, the failure
to provide such information or access or to engage in such discussions or
negotiations could reasonably be expected to cause the Board of Directors to
violate its fiduciary duties to the Company's shareholders under applicable law
(an Acquisition Proposal which satisfies clauses (x) and (y) being referred to
herein as a "Superior Proposal"). The Company shall within one business day
following receipt of a Superior Proposal notify Parent of the receipt of the
same. The Company shall promptly provide to Parent any material non-public
information regarding the Company provided to any other party which was not
previously provided to Parent. At any time after two business days following
notification to Parent of the Company's intent to do so (which notification
shall include the identity of the bidder and a complete summary of the material
terms and conditions of the proposal) and if the Company has otherwise complied
with the terms of this Section 5.4(b), the Board of Directors may withdraw or
modify its approval or recommendation of the Offer.
(c) In the event of a Superior Proposal which (i) is to be
paid entirely in cash and (ii) is not subject to any financing condition or
contingency, the
45
Company may enter into an agreement with respect to such Superior Proposal no
sooner than four days after giving Parent written notice of its intention to
enter into such agreement; provided that the Purchaser or Parent has not, prior
to the expiration of such four-day period, advised the Company of its intention
to raise the Offer Price to match such Superior Proposal. Upon expiration of
such four-day period without such action by the Purchaser or Parent, the Company
may enter into an agreement with respect to such Superior Proposal (with the
bidder and on terms no less favorable than those specified in such
notification), provided it shall concurrently with entering into such agreement
pay or cause to be paid to Parent the amount specified in Section 8.1(b) hereof.
Section 5.5 Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to achieve the satisfaction of the Minimum Condition and all
conditions set forth in Annex A attached hereto and Article VI hereof, and to
consummate and make effective the Merger and the other transactions contemplated
by this Agreement. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the officers and directors of the Company, Parent and the Purchaser shall use
all reasonable efforts to take, or cause to be taken, all such necessary
actions.
Section 5.6 Publicity. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Parent nor any of their respective affiliates shall issue
or cause the
46
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions without the prior consultation
of the other party, except as such party believes, after receiving the advice of
outside counsel, may be required by law or by any listing agreement with a
national securities exchange or trading market.
Section 5.7 Notification of Certain Matters. The Company shall
give prompt notice to Parent and Parent shall give prompt notice to the Company,
of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time and (ii) any material failure of the Company, Parent or the
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 5.7 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 5.8 Directors' and Officers' Indemnification. For six
years after the Effective Time, the Surviving Corporation (or any successor to
the Surviving Corporation) and Parent shall jointly indemnify, defend and hold
harmless the present and former officers and directors of the Company and its
Subsidiaries, and persons who become any of the foregoing prior to the Effective
Time (each an "Indemnified Party") against all losses, claims, damages,
liabilities, costs, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the written consent of the Parent or the Surviving Corporation which consent
shall not unreasonably be withheld)) arising out of actions or
47
omissions occurring at or prior to the Effective Time to the full extent
permissible under applicable Massachusetts law, the terms of the Company's
Articles of Incorporation or the Bylaws, as in effect at the date hereof;
provided that, in the event any claim or claims are asserted or made within such
six-year period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims.
Section 5.9 Purchaser Compliance. Parent shall cause the
Purchaser to comply with all of its obligations under or related to this
Agreement.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part
jointly by the Company and Parent to the extent permitted by applicable law:
(a) Shareholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the holders of the Shares, if
required by applicable law in order to consummate the Merger;
(b) Statutes; Court Orders. No statute, rule or regulation
shall have been enacted or promulgated by any governmental authority which
prohibits the consummation of the Merger; and there shall be no order or
injunction of a court of competent jurisdiction in effect precluding
consummation of the Merger;
48
(c) Purchase of Shares in Offer. Parent, the Purchaser or
their affiliates shall have purchased Shares pursuant to the Offer, except that
this condition shall not apply if Parent, the Purchaser or their affiliates
shall have failed to purchase Shares pursuant to the Offer in breach of their
obligations under this Agreement; and
(d) HSR Approval. The applicable waiting period under the HSR
Act shall have expired or been terminated.
Section 6.2 Condition to Parent's and the Purchaser's
Obligations to Effect the Merger. The obligations of Parent and the Purchaser to
consummate the Merger are further subject to the fulfillment of the condition
that all actions contemplated by Section 2.4 hereof shall have been taken.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and
the Transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after shareholder approval thereof:
(a) By the mutual written consent of Parent and the Company;
or
(b) By either of the Company or Parent:
(i) if (x) the Offer shall have expired without any
Shares being purchased therein or (y) the Purchaser shall not have
accepted for payment all Shares tendered pursuant to the Offer by
November 17, 1997; provided, however, that the right to terminate this
Agreement under this Section
49
7.1(b)(i) 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 Parent or the Purchaser, as the case may be, to
purchase the Shares pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action (which order, decree,
ruling or other action the parties hereto shall use their reasonable
efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree, ruling or
other action shall have become final and non-appealable; or
(c) By the Company:
(i) if Parent, the Purchaser or any of their affiliates
shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the
Offer; provided, that the Company may not terminate this Agreement
pursuant to this Section 7.1(c)(i) if the Company is at such time in
breach of its obligations under this Agreement such as to cause a
Company Material Adverse Effect; or
(ii) if Parent or the Purchaser shall have breached in
any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement,
which breach cannot be or has not been cured, in all material respects,
within 30 days after the giving of written notice to Parent or the
Purchaser, as applicable; or
50
(iii) in connection with entering into a definitive
agreement in accordance with Section 5.4(c) hereof, provided it has
complied with all provisions thereof, including the notice provisions
therein, and that it makes simultaneous payment of the amount specified
in Section 8.1(b) hereof; or
(d) By Parent:
(i) if, due to an occurrence, not involving a breach by
Parent or the Purchaser of their obligations hereunder, which makes it
impossible to satisfy any of the conditions set forth in Annex A
hereto, Parent, the Purchaser, or any of their affiliates shall have
failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer;
(ii) if prior to the purchase of Shares pursuant to the
Offer, the Company shall have breached any representation, warranty,
covenant or other agreement contained in this Agreement which (A) would
give rise to the failure of a condition set forth in paragraph (f) or
(g) of Annex A hereto and (B) cannot be or has not been cured, in all
material respects, within 30 days after the giving of written notice to
the Company; or
(iii) upon the occurrence of any event set forth in
paragraph (e) of Annex A hereto.
Section 7.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to its terms, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void, and there shall be no liability on the part of
the
51
Purchaser, Parent or the Company except (A) for fraud or for breach of this
Agreement prior to such termination and (B) as set forth in the last sentence of
Section 5.2(a) and Section 8.1 hereof.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as contemplated by
this Agreement, including Sections 8.1(b) and (c) hereof, all costs and expenses
incurred in connection with this Agreement and the consummation of the
Transactions shall be paid by the party incurring such expenses. Parent
acknowledges and agrees that the Company has disclosed that it is obligated and
will become further obligated for fees and expenses (including fees and expenses
of Duffy & Sweeney and Roger Barzun, Esq., its counsel, Coopers & Lybrand,
L.L.P., its independent accountants, and Scott-Macon, Ltd., its financial
advisor) incurred by it in connection with the transactions contemplated hereby.
It is understood and agreed that certain of such fees and expenses may be paid
by the Company prior to the execution of this Agreement. Parent agrees to
refrain from taking any action which would prevent or delay the payment of
reasonable fees and expenses by the Company. Further, Parent agrees to take, and
cause the Purchaser to take, all action necessary to cause the Surviving
Corporation to pay promptly any of the foregoing reasonable fees and expenses
incurred, but not paid, by the Company prior to the Effective Time.
(b) If (i) Parent terminates this Agreement pursuant to
Section 7.1(d)(iii) hereof, (ii) the Company terminates this Agreement pursuant
to Section 7.1(c)(iii) hereof, or (iii) either the Company or Parent terminates
this Agreement pursuant to Section 7.1(b)(i) and prior thereto there shall have
been publicly announced another Acquisition Proposal or an event set forth in
paragraph
52
(h) of Annex A shall have occurred, the Company shall pay to Parent, an amount
equal to the greater of $750,000 (the "Termination Fee"), or an amount equal to
Parent's actual, reasonable and reasonably documented out-of-pocket fees and
expenses incurred by Parent and the Purchaser in connection with the Offer, the
Merger, this Agreement, the consummation of the Transactions and the financing
therefor, which shall be payable in same day funds, provided that in no event
shall the Company be obligated to pay any such fees and expenses in excess of
$1,000,000. The Termination Fee or Parent's good faith estimate of its expenses,
as the case may be, shall be paid concurrently with any such termination,
together with delivery of a written acknowledgment by the Company of its
obligation to reimburse Parent for its actual expenses in excess of such
estimated expenses payment.
(c) If the Company terminates this Agreement pursuant to (i)
Section 7.1(b), or (ii) Sections 7.1(c)(i) or 7.1(c)(ii) hereof, then Parent
shall pay to the Company an amount equal to the Company's reasonable legal fees
and expenses incurred, as of the date of such termination, with respect to this
Agreement and the Transactions.
Section 8.2 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the shareholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action taken
by their respective Boards of Directors (which in the case of the Company shall
include approvals as contemplated in Section 1.2(a)), at any time prior to the
Closing Date with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the shareholders of the
Company, no such amendment, modification or supplement (i) shall reduce the
amount or change the form of the Merger Consideration or (ii) which
53
under applicable law may not be made without shareholder approval may be made
without such approval.
Section 8.3 Non-survival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
Dover Technologies International, Inc.
One Marine Midland Plaza
East Tower, Sixth Floor
Binghamton, New York 13901
Attention: Robert A. Livingston
Telephone No.: (607) 773-2290
Telecopy No.: (607) 722-8612
with a copy to:
Coughlin & Gerhart, LLP
One Marine Midland Plaza
East Tower, Eighth Floor
Binghamton, New York 13901
Attention: Robert J. Smith, Esq.
Telephone No.: (607) 723-9511
Telecopy No.: (607) 772-6093
54
(b) and, if to the Company, to:
Vitronics Corporation
1 Forbes Road
Newmarket, New Hampshire 03857
Attention: President
Telephone No.: (603) 659-6550
Telecopy No.: (603) 659-6529
with a copy to:
Duffy & Sweeney
300 Turks Head Building
Providence, Rhode Island 02902
Attention: Michael F. Sweeney, Esq.
Telephone No.: (401) 455-0700
Telecopy No.: (401) 455-0701
Section 8.5 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." As used in this Agreement, the term "affiliates"
shall have the meaning set forth in Rule 12b-2 of the Exchange Act.
Section 8.6 Counterparts. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
This Agreement may be executed by the parties and transmitted by facsimile
transmission and if so executed and transmitted this Agreement will be for all
purposes as effective as if the parties had delivered an executed original
Agreement.
55
Section 8.7 Entire Agreement; No Third Party Beneficiaries.
This Agreement (including the documents and the instruments referred to herein
but excluding the Confidentiality Agreement dated August 18, 1997) constitute
the entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and thereof. This Agreement is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 8.8 Severability. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court asking such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 8.9 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
Section 8.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations
56
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,
except that the Purchaser may assign, in its sole discretion, any or all of its
rights, interests and obligations hereunder to Parent or to any direct or
indirect wholly owned Subsidiary of Parent. 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 8.11 Knowledge of Parent and the Purchaser. Any fact
or circumstance known to Parent or the Purchaser prior to the execution and
delivery of this Agreement shall not, of itself, constitute a breach of any
representation or warranty by the Company. For purposes of this Section, a fact
or circumstance shall be deemed known by Parent or the Purchaser only if it is
known by an executive officer of Parent, regardless of whether such fact or
circumstance is known by any other employee, representative or agent of Parent
or the Purchaser.
Section 8.12 Integration of Exhibits. All schedules and
exhibits (including the Company Disclosure Schedule) attached to this Plan of
Merger are integral parts of this Plan of Merger as if fully set forth herein
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
57
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
DOVER TECHNOLOGIES
INTERNATIONAL, INC.
By: /s/ John E. Pomeroy
--------------------------
Name: John E. Pomeroy
Title: President
DTI INTERMEDIATE, INC.
By: /s/ John E. Pomeroy
--------------------------
Name: John E. Pomeroy
Title: President
VITRONICS CORPORATION
By: /s/ James J. Manfield, Jr.
--------------------------
Name: James J. Manfield, Jr.
Title: President
58
ANNEX A
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other
provisions of the Offer, and in addition to (and not in limitation of) the
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Merger Agreement), the Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares, and may terminate or amend the Offer as to
any Shares not then paid for, if (i) any applicable waiting period under the HSR
Act has not expired or terminated, (ii) the Minimum Condition has not been
satisfied, or (iii) at any time on or after the date of the Merger Agreement and
before the time of acceptance for payment for any such Shares, any of the
following events shall occur or shall be determined by the Purchaser, in its
judgment reasonably exercised, to have occurred:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity against the Purchaser, Parent, the Company
or any Subsidiary of the Company (i) seeking to prohibit or impose any material
limitations on Parent's or the Purchaser's ownership or operation (or that of
any of their respective Subsidiaries or affiliates) of all or a material portion
of their or the Company's businesses or assets, or to compel Parent or the
Purchaser or their respective Subsidiaries and affiliates to dispose of or hold
separate any material portion of the business or assets of the Company or Parent
and their respective Subsidiaries, in each case taken as a whole, (ii)
A-1
challenging the acquisition by Parent or the Purchaser of any Shares under the
Offer, seeking to restrain or prohibit the making or consummation of the Offer
or the Merger or the performance of any of the other transactions contemplated
by the Merger Agreement, or seeking to obtain from the Company, Parent or the
Purchaser any damages that are material in relation to the Company and its
Subsidiaries taken as a whole, (iii) seeking to impose material limitations on
the ability of the Purchaser, or render the Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer and
the Merger, (iv) seeking to impose material limitations on the ability of the
Purchaser or Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
it on all matters properly presented to the Company's shareholders, or (v) which
otherwise is reasonably likely to have a Company Material Adverse Effect;
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated, or deemed
applicable, pursuant to an authoritative interpretation by or on behalf of a
Government Entity, to the Offer or the Merger, or any other action shall be
taken by any Governmental Entity, other than the application to the Offer or the
Merger of applicable waiting periods under HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange or the American Stock Exchange for a period in excess of 24 hours
(excluding suspensions or limitations resulting solely from physical damage or
interference with such exchanges not related to market conditions), (ii) any
decline in
A-2
either the Dow Jones Industrial Average or the Standard & Poor's Index of 400
Industrial Companies or in the New York Stock Exchange Composite Index in excess
of 15% measured from the close of business on the trading day next preceding the
date of the Merger Agreement, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or not
mandatory), (iv) a commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States, (v) any limitation (whether or not mandatory) by any United States
governmental authority on the extension of credit generally by banks or other
financial institutions, (vi) a change in general financial, bank or capital
market conditions which materially and adversely affects the ability of
financial institutions in the United States to extend credit or syndicate loans
or (vii) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(d) there shall have occurred any events after the date of the
Merger Agreement which, either individually or in the aggregate, would have a
Company Material Adverse Effect;
(e) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any Acquisition Proposal;
(f) the representations and warranties of the Company set
forth in the Merger Agreement shall not be true and correct, in each case (i) as
of the date referred to in any representation or warranty which addresses
matters as of a particular date, or (ii) as to all other representations and
warranties, as of the date
A-3
of the Merger Agreement and as of the scheduled expiration of the Offer, unless
the inaccuracies (without giving effect to any materiality or material adverse
effect qualifications or materiality exceptions contained therein) under such
representations and warranties, taking all the inaccuracies under all such
representations and warranties together in their entirety, would not,
individually or in the aggregate, result in a Company Material Adverse Effect;
(g) the Company shall have failed to perform any obligation or
to comply with any agreement or covenant to be performed or complied with by it
under the Merger Agreement other than any failure which would not have, either
individually or in the aggregate, a Company Material Adverse Effect;
(h) any person acquires beneficial ownership (as defined in
Rule 13d-3 promulgated under the Exchange Act), of at least 25% of the
outstanding Common Stock of the Company;
(i) the Merger Agreement shall have been terminated in
accordance with its terms; or
The foregoing conditions are for the sole benefit of Parent
and the Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such condition (including any action or inaction by
Parent or the Purchaser not in violation of the Merger Agreement) and may be
waived by Parent or the Purchaser in whole or in part at any time and from time
to time in the sole discretion of Parent or the Purchaser, subject in each case
to the terms of the Merger Agreement. The failure by Parent or the Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
A-4
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.1 (b)
Subsidiaries:
1. Vitronics Europe Limited - a United Kingdom company
2. Vitronics Foreign Sales Corporation - a Barbados company
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.2 (a)
STOCK OPTIONS OUTSTANDING
VESTING BALANCE AMOUNT
DATE NAME PRICE YEARS 8/26/97 PAID
- ---- ---- ----- ----- ------- ----
1987 PLAN
---------
Dec-92 CHANASYK, A 0.5625 5 13,000 17,387.50
Dec-92 CHANASYK, A 0.5625 5 10,000 13,375.00
Dec-92 CLAPP, R 0.5625 5 2,000 2,675.00
Dec-92 GIORDANO, L 0.5625 5 400 535.00
Dec-92 HALL, J 0.5625 5 2,000 2,675.00
Dec-92 KEOUGH, A* 0.5625 5 3,000 4,012.50
Dec-92 LABONVILLE, M 0.5625 5 1,000 1,337.50
Dec-92 MCKEEL, D 0.5625 5 1,000 1,337.50
Dec-92 MILLETTE, S 0.5625 5 2,000 2,675.00
Dec-92 PARADIS, F 0.5625 5 800 1,070.00
Dec-92 SULLIVAN, W 0.5625 5 2,000 2,675.00
Dec-92 WAITT, L 0.5625 5 200 267.50
Dec-93 CHANASYK, A 0.8400 5 10,000 10,600.00
Dec-93 GIORDANO, L 0.8400 5 400 424.00
Dec-93 WAITT, L 0.8400 5 800 848.00
Dec-93 DAROIS, J 0.8400 5 1,000 1,060.00
Dec-93 HALL, J 0.8400 5 2,000 2,120.00
Dec-93 SULLIVAN, W 0.8400 5 2,000 2,120.00
Dec-93 MCKEEL, D 0.8400 5 2,000 2,120.00
Dec-93 CLAPP, R 0.8400 5 3,000 3,180.00
Dec-93 LABONVILLE, M 0.8400 5 2,000 2,120.00
Dec-93 MILLETTE, S 0.8400 5 5,000 5,300.00
Dec-93 PARADIS, F 0.8400 5 1,800 1,908.00
Dec-93 HOWARD, S 0.8400 5 2,000 2,120.00
Dec-93 MARTIN, P 0.8400 5 2,500 2,650.00
Dec-94 KEOUGH, A* 1.3125 5 27,000 15,862.50
Dec-94 CHANASYK, A 1.3125 5 10,000 5,875.00
Dec-94 GIORDANO, L 1.3125 5 2,000 1,175.00
Dec-94 WAITT, L 1.3125 5 2,000 1,175.00
Dec-94 DAROIS, J 1.3125 5 1,000 587.50
Dec-94 HALL, J 1.3125 5 2,000 1,175.00
Dec-94 SULLIVAN, W 1.3125 5 1,000 587.50
Dec-94 MCKEEL, D 1.3125 5 2,000 1,175.00
Dec-94 CLAPP, R 1.3125 5 3,000 1,762.50
Dec-94 LABONVILLE, M 1.3125 5 2,000 1,175.00
Dec-94 MILLETTE, S 1.3125 5 2,500 1,468.75
Dec-94 PARADIS, F 1.3125 5 3,000 1,762.50
Dec-94 MARTIN, P 1.3125 5 2,500 1,468.75
Dec-94 BENNETT, D 1.3125 5 2,500 1,468.75
------- ----------
TOTAL 134,400 123,311.25
* Non-Qualified Option
VESTING BALANCE AMOUNT
DATE NAME PRICE YEARS 8/26/97 PAID
- ---- ---- ----- ----- ------- ----
1995 PLAN
---------
Dec-95 CHANASYK, A 2.3750 5 30,000 -
Dec-95 GIORDANO, L 2.3750 5 2,000 -
Dec-95 WAITT, L 2.3750 5 2,000 -
Dec-95 DAROIS, J 2.3750 5 1,000 -
Dec-95 HALL, J 2.3750 5 2,000 -
Dec-95 JEKA, D 2.3750 5 1,000 -
Dec-95 GAGNE, M 2.3750 5 2,000 -
Dec-95 SCHAEFFER, R 2.3750 5 1,000 -
Dec-95 SULLIVAN, W 2.3750 5 1,000 -
Dec-95 MCKEEL, D 2.3750 5 2,000 -
Dec-95 PIVARUNAS, J 2.3750 5 1,000 -
Dec-95 CLAPP, R 2.3750 5 2,500 -
Dec-95 LABONVILLE, M 2.3750 5 1,000 -
Dec-95 DAY, B 2.3750 5 5,000 -
Dec-95 MILLETTE, S 2.3750 5 7,500 -
Dec-95 WRIGHT, M 2.3750 5 1,000 -
Dec-95 JOHNSON, P 2.3750 5 1,000 -
Dec-95 RILEY, G 2.3750 5 1,000 -
Dec-95 GILBERT, R 2.3750 5 1,000 -
Dec-95 HENRY, J 2.3750 5 1,000 -
Dec-95 PARADIS, F 2.3750 5 3,000 -
Dec-95 MARTIN, P 2.3750 5 2,000 -
Dec-95 BENNETT, D 2.3750 5 5,000 -
Nov-96 NASH, T 1.0625 5 25,000 20,937.50
Dec-96 CHANASYK, A 1.0300 5 10,000 8,700.00
Dec-96 GIORDANO, L 1.0300 5 2,000 1,740.00
Dec-96 WAITT, L 1.0300 5 2,000 1,740.00
Dec-96 DAROIS, J 1.0300 5 1,000 870.00
Dec-96 HALL, J 1.0300 5 2,000 1,740.00
Dec-96 JEKA, D 1.0300 5 5,000 4,350.00
Dec-96 GAGNE, M 1.0300 5 2,000 1,740.00
Dec-96 SCHAEFFER, R 1.0300 5 1,000 870.00
Dec-96 SULLIVAN, W 1.0300 5 1,000 870.00
Dec-96 MCKEEL, D 1.0300 5 2,000 1,740.00
Dec-96 PIVARUNAS, J 1.0300 5 2,000 1,740.00
Dec-96 CLAPP, R 1.0300 5 2,000 1,740.00
Dec-96 LABONVILLE, M 1.0300 5 1,000 870.00
Dec-96 DAY, B 1.0300 5 5,000 4,350.00
Dec-96 MILLETTE, S 1.0300 5 5,000 4,350.00
Dec-96 WRIGHT, M 1.0300 5 1,000 870.00
Dec-96 JOHNSON, P 1.0300 5 1,000 870.00
Dec-96 RILEY, G 1.0300 5 1,000 870.00
Dec-96 GILBERT, R 1.0300 5 1,000 870.00
Dec-96 HENRY, J 1.0300 5 1,000 870.00
Dec-96 PARADIS, F 1.0300 5 3,000 2,610.00
Dec-96 MARTIN, P 1.0300 5 2,000 1,740.00
VESTING BALANCE AMOUNT
DATE NAME PRICE YEARS 8/26/97 PAID
- ---- ---- ----- ----- ------- ----
1995 PLAN
---------
Dec-96 BENNETT, D 1.0300 5 5,000 4,350.00
May-97 LOCKYER, M 0.8400 5 10,000 10,600.00
Aug-97 LOCKYER, M 1.2900 5 5,000 3,050.00
Aug-97 SULLIVAN, D 1.0900 5 25,000 20,250.00
-------- -----------
TOTAL 199,000 105,298.00
-------- -----------
TOTAL QUALIFIED OPTIONS 333,400 228,608.75
VITRONICS CORPORATION
NONQUALIFIED STOCK OPTION PLANS
VESTING BALANCE AMOUNT
DATE NAME PRICE YEARS 8/26/97 PAID
- ---- ---- ----- ----- ------- ----
May-92 STEADMAN, D 1.1250 5 10,000 7,750.00
Dec-92 MANFIELD, J 0.5625 5 28,000 37,450.00
Dec-92 MANFIELD, J 0.5625 5 22,000 29,425.00
Dec-92 STEADMAN, D 0.5625 5 20,000 26,750.00
Dec-92 STEADMAN, D 0.5625 5 15,000 20,062.50
Dec-93 MANFIELD, J 0.8400 5 25,000 26,500.00
Dec-94 MANFIELD, J 1.3125 5 50,000 29,375.00
Dec-94 STEADMAN, D 1.3125 5 20,000 11,750.00
Dec-95 KANELY, J 2.3438 5 20,000 -
-------
TOTAL 210,000 189,062.50
------- ----------
TOTAL OPTIONS 543,400 417,671.25
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.4
1. Loan Agreement with First National Bank of Portsmouth(Bank of New
Hampshire)
2. Miscellaneous office equipment leases and software licenses
3. The Company is reviewing its real estate leases in Newmarket, NH and
Plymouth, England
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.6
None
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.7
None
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.8
Vitronics v. Conceptronics (Docket Number C-91-696L)
Conceptronics v. Vitronics and Manfield et al (Docket Number 97-C-18)
Letters of counsel in response to auditors requests have previously been
provided to Parent during due diligence process.
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.9 (a)
Stock Option Plans:
1983 Stock Option Plan
1983 II Stock Option Plan
1987 Stock Option Plan
1995 Stock Option Plan
(Copies of the above Plans and a copy of the Qualified and Non-Qualified Stock
Option Agreements were previously provided to Parent during the due diligence
process) (See Section 3.2 (a) for a schedule of current stock options
outstanding under all option plans)
Employment Agreements:
James J. Manfield Jr.
Thomas Nash
Daniel J. Sullivan
Steven A. Millette
Michael Lockyer
(copies of the above Employment Agreements were previously provided to
Parent during the due diligence process)
Benefit Management of Maine Health Insurance Plan(Self insured)
Boston Mutual Officers Health Insurance Plan
Dental Plan
Life Insurance Plan
Additional Life Insurance for Officers
Short Term Disability Insurance
Long Term Disability Insurance
Additional Disability Insurance for Officers
Tuition Reimbursement
401K Plan, with 25% matching up to 6%
$70 per year towards purchase of safety shoes
Section 125 pre-tax medical reimbursement and dependent care
Employee Assistance Program
$100,000 Travel Accident Insurance
Employee Stock Purchase Plan
Employee Handbook
(copies of the above employee benefits were previously
provided to Parent during the due diligence process)
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.9 (i)
Employment Agreements:
James J. Manfield Jr.
Thomas Nash
Daniel J. Sullivan
Steven A. Millette
Michael Lockyer
Copies of the above employment agreement were provided to Parent as part of the
due diligence process.
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.10 (a)
The Company is current in its tax filings in those states in which it is
currently registered.
The Company is currently registered for Sales & Use tax in Massachusetts,
Illinois and California.
The Company presently is registered for VAT purposes in England.
The Company presently is registered for income tax purposes in California,
Massachusetts and New Hampshire and England.
The Company presently withholds income taxes for California, Massachusetts,
Connecticut, Maine, Illinois, federal and England.
There may be other locations in which the Company has nexus, and is presently
unaware of this fact.
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.10 (b)
None
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.10 (c)
None
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.10 (f)
The Company has granted Powers of attorney in the ordinary course of business to
various freight forwarders for the purpose of clearing freight through customs
and other freight forwarding functions.
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.11 (a)
Trademarks:
- -----------
VITRONICS
UNITHERM
ENVIROCLEAN
Trademark VITRONICS
Common Law Trademarks:
- ----------------------
IsoTherm
VITROSENSE
Natural Convection/Infrared
Controlled Convection/Infrared
VITRO-FOIL
VITRO-CLEAN
Acro-Therm
RadianTherm
MagnaTherm
Tops
Polar Cooling
SELECTSeries
AutoPurge
BGA Solutions
Patents:
- --------
4,833,301 Multi-Zone Thermal Process System Utilizing Nonfocused Infrared Panel
Emitters
5,103,846 Apparatus for Cleaning Mechanical Devices Using Terpene Compounds
5,573,688 Convection/Infrared Solder Reflow Apparatus
4,565,917 Multi-Zone Thermal Process System Utilizing Nonfocused Infrared Panel
Emitters
4,077,557 Dip Storage, Insertion and Ejection Tool
4,602,238 Infrared Panel Emitter and Method of Producing the Same
4,696,096 Reworking Methods and Apparatus for Surface Mounted Technology
Circuit Boards
4,654,502 Method for Reflow Soldering of Surface Mounted Devices to Printed
Circuit Boards
4,659,906 Infrared Panel Emitter and Method of Producing the Same
Foreign Patents continued on next page
Page 1
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.11 (a)
Canadian Patent 1,234,429 Infrared Panel Emitter and Method of Producing the
Same
Canadian Patent 1,235,529 Multi-Zone Thermal Process System Utilizing
Nonfocused Infrared Panel Emitters
European Patent 0,181,341,B1 Infrared Panel Emitter and Method of Producing the
Same
European Patent 0,169,885,B1 Multi-Zone Thermal Process System Utilizing
Nonfocused Infrared Panel Emitters
Danish Patent 157,589 Multi-Zone Thermal Process System Utilizing Nonfocused
Infrared Panel Emitters
Taiwan Patent 49,283 Apparatus for Cleaning Mechanical Devices Using Terpene
Compounds
Taiwan Patent Rights 22,987 Multi-Zone Thermal Process System Utilizing
Nonfocused Infrared Panel Emitters
Taiwan Patent Rights 22,988 Infrared Panel Emitter and Method of Producing
the Same
Copies of the above referenced Patents and Trademarks were previously provided
to Parent during the due diligence process.
The Company's patents are currently subject to litigation as disclosed in
Section 3.8
Page 2
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.12
Corporate Staff:
James Manfield
Thomas Nash
Steven Millette
Michael Lockyer
Daniel Sullivan
Albert Chanasyk
Lorraine Giordano
Brian Day
Given the absence of future written employment agreements for officers and
managers and the uncertainty generated during the due diligence process, the
Company has no ability to comment on the future plans of individuals.
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.15 (e)
None
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.18
Scott-Macon Agreement attached as Exhibit 3.18
SCOTT-MACON, LTD.
800 THIRD AVENUE
NEW YORK, N.Y. 10022-7604
212-755-8200
212-755-8255 (FAX)
July 30, 1997
Mr. James J. Manfield, Jr.
Chairman of the Board and
Chief Executive Officer
Vitronics Corporation
4 Forbes Road
Newmarket Industrial Park
Newmarket, New Hampshire 03857
Dear Jim:
This letter will confirm the understanding and agreement between Scott-Macon,
Ltd. ("Scott-Macon") and Vitronics Corporation ("Vitronics") with respect to the
investment banking services to be provided by Scott-Macon to Vitronics and the
fees to be paid to Scott-Macon by Vitronics.
Scott-Macon will provide investment banking services to Vitronics in connection
with a sale or merger of Vitronics with another entity or an acquisition by
Vitronics of another entity. To date, Scott-Macon has discussed with Vitronics
the potential acquisition by or merger with BTU International, Inc., Cookson
Group plc, Conceptronic, Inc. (a subsidiary of Arguss Holdings Inc.), and Soltec
Inc. (a subsidiary of Dover Technology which in turn is a subsidiary of Dover
Corporation). Additional companies that are actively involved in reviewing
Vitronics for a potential purchase or merger will also be included. The four
companies mentioned above, and these additional companies, will be referred to
as a target company ("Target Company").
In the event that prior to the date this letter agreement terminates or is
otherwise extended, Vitronics or any portion thereof is either sold or merged
with any Target Company or Vitronics acquires all or a portion of any Target
Company, Vitronics will pay to Scott-Macon a fee (the "Success Fee") equal to
the total of:
5% of the first $2,000,000 of Transaction Value,
4% of the second $2,000,000 of Transaction Value,
3% of the third $2,000,000 of Transaction Value,
2% of the fourth $2,000,000 of Transaction Value, and
1% of Transaction Value in excess of $8,000,000.
SCOTT-MACON, LTD.
Mr. James J. Manfield, Jr. July 30, 1997
Vitronics Corporation Page Two
As used herein, "Transaction Value" shall be the fair market value of the
consideration paid, namely the amount of cash and/or assets and the value of any
equity and/or debt issued, raised, assumed or forgiven in completing the
transaction, plus any contingent payment used in the transaction when the
contingent payment is paid. Transaction Value shall exclude the value of any
employment agreement entered into by James J. Manfield, Jr. and any other
employment agreements as a result of a transaction. The Success Fee shall be
paid to Scott-Macon by bank wire or certified check at the time of Closing.
Should the Success Fee referred to above be paid to Scott-Macon by Vitronics as
a result of the completion of a partial (at least 40%) merger with or
acquisition of a Target Company, and Vitronics subsequently merges with or
acquires the remaining portion of the Target Company within twenty four months
of the initial partial merger or acquisition, Scott-Macon will be paid an
additional fee calculated by applying the Success Fee outlined above to a new
Transaction Value inclusive of the original and newly acquired portion, but
giving credit for the initial Success Fee paid to Scott-Macon.
Vitronics will pay for all reasonable out-of-pocket expenses incurred by
Scott-Macon in connection with its retention by Vitronics. Normal out-of-pocket
expenses include, but are not limited to, travel, hotel, meals, telephone and
telefax charges, postage, express mail and messenger charges, and copying and
printing charges. Any professionals such as legal or accounting retained by
Vitronics will be paid directly by Vitronics to the firms involved. Scott-Macon
will obtain from Vitronics prior approval on individual expenses which exceed
one thousand dollars ($1,000). In addition, Scott-Macon will obtain from
Vitronics prior approval on all expenses when the cumulative expenses reach
$5,000. Scott-Macon shall submit periodic invoices for reimbursable expenses.
This agreement shall continue for a period of eight months from the signing of
this agreement. However, if an agreement covering a specific transaction is
being actively negotiated at the expiration of the eight-month period, this
agreement will be extended after the expiration of the eight month period until
that transaction is completed or the negotiations cease.
In connection with engagements such as this, it is our firm's policy to receive
indemnification and contribution. Therefore:
1. The Company agrees to indemnify and hold harmless Scott-Macon, its
affiliates and their respective directors, officers, employees,
owners, agents and controlling persons (each an "Indemnified Party")
from and against any and all losses, claims, damages and
liabilities, joint or several, to which any Indemnified Party may
become subject in connection with or arising out of or relating to
the engagement of Scott-Macon under this letter agreement, or any
actions taken or omitted, services performed or matters contemplated
by or in connection with this letter agreement, and to reimburse
each Indemnified Party promptly upon demand for expenses (including
fees and expenses of legal counsel) as they are incurred in
connection with the investigation of, preparation for or defense of
any pending or threatened claim, or any litigation proceeding or
other action in respect thereof, including any amount paid in
settlement of any litigation or other action (commenced or
SCOTT-MACON, LTD.
Mr. James J. Manfield, Jr. July 30, 1997
Vitronics Corporation Page Three
threatened) to which the Company shall have consented in writing
(such consent not to be unreasonably withheld, considering, among
other things, the best interest of the Company), whether or not any
Indemnified Party is a party and whether or not liability resulted;
provided, however, that the Company shall not be liable under the
foregoing indemnity agreement to an Indemnified Party in respect of
any loss, claim, damage or liability to the extent that a court
having competent jurisdiction shall have determined by a final
judgement (not subject to further appeal) that such loss, claim,
damage or liability resulted primarily from the willful misfeasance
or gross negligence of such Indemnified Party.
2. An Indemnified Party shall accept legal counsel of the Company,
provided that such counsel is reasonably satisfactory to the
Indemnified party, to conduct the defense and all related matters in
connection with any such litigation, proceeding or other action. The
Company shall pay the reasonable fees and expenses of such legal
counsel and such counsel shall to the fullest extent consistent with
its professional responsibilities cooperate with the Company and any
legal counsel designated by the Company.
3. In the event that the indemnity provided for in paragraphs 1 and 2
hereof is unavailable or insufficient to hold any Indemnified Party
harmless, then the Company shall contribute to amounts paid or
payable by an Indemnified Party in respect of such Indemnified
Party's losses, claims, damages and liabilities as to which the
indemnity provided for in paragraphs 1 and 2 hereof is unavailable
(i) in such proportion as appropriately reflects the relative
benefits received by the Company, on the one hand, and such
Indemnified Party, on the other hand, in connection with the matters
as to which such losses, claims, damages or liabilities relate, or
(ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as appropriately reflects not
only the relative benefits referred to in clause (i) but also the
relative fault of the Company, on the one hand, and such Indemnified
Party on the other hand as well as any other equitable
considerations. The amount paid or payable by the party in respect
of losses, claims, damages and liabilities referred to above shall
be deemed to include any reasonable legal or other fees and expenses
incurred in defending any litigation, proceeding or other action or
claim. Notwithstanding the provisions hereof, the Indemnified
Parties shall not be required to contribute any amount in excess of
the amount of fees actually received by Scott-Macon during the
previous twelve months under this letter agreement (excluding the
amounts received as reimbursement of expenses incurred by
Scott-Macon).
4. It is understood and agreed that, in connection with Scott-Macon's
engagement by the Company, Scott-Macon or its affiliates may also be
engaged to act for the Company or it's affiliates in one or more
additional capacities, and that the terms of any such additional
engagement may be embodied in one or more separate written
agreements. These Indemnification Provisions shall apply to the
engagement under this letter agreement and to any such additional
engagement and any modification of such additional engagement.
SCOTT-MACON, LTD.
Mr. James J. Manfield, Jr. July 30, 1997
Vitronics Corporation Page Four
5. These Indemnification Provisions shall remain in full force and
effect whether or not any of the transactions contemplated by the
Letter Agreement are consummated and shall survive the expiration of
the period of the Letter Agreement, and shall be in addition to any
liability that the Company might otherwise have to any Indemnified
Party under the Letter Agreement or otherwise.
This agreement may only be modified in writing.
If the foregoing correctly reflects our agreement, will you kindly indicate your
acceptance by signing, dating and returning the enclosed copy of this agreement,
retaining the original for your files.
Very truly yours,
SCOTT-MACON, LTD.
\s\ Robert B. Dimmitt
Managing Director
AGREED TO AND ACCEPTED:
VITRONICS CORPORATION
BY: \s\ James J. Manfield, Jr.
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TITLE: Chairman and CEO
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DATE: August 11, 1997
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