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EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
among
UNITED DOMINION INDUSTRIES LIMITED,
UD NEVADA CORP.
and
CORE INDUSTRIES INC
Dated as of June 25, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I.
THE OFFER
SECTION 1.01 The Offer........................................................1
SECTION 1.02 Company Action...................................................2
ARTICLE II.
THE MERGER
SECTION 2.01 The Merger.......................................................3
SECTION 2.02 Effective Time, Closing..........................................4
SECTION 2.03 Effect of the Merger.............................................4
SECTION 2.04 Articles of Incorporation; Bylaws................................4
SECTION 2.05 Directors and Officers...........................................4
SECTION 2.06 Conversion of Securities.........................................5
SECTION 2.07 Employee and Director Stock Options; Deferred Director Fees......5
SECTION 2.08 Surrender of Shares: Stock Transfer Books........................5
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization and Qualification; Subsidiaries.....................7
SECTION 3.02 Articles of Incorporation and Bylaws.............................7
SECTION 3.03 Capitalization...................................................7
SECTION 3.04 Authority Relative to this Agreement.............................8
SECTION 3.05 No Conflict, Required Filings and Consents.......................8
SECTION 3.06 Compliance.......................................................9
SECTION 3.07 SEC Filings; Financial Statements................................9
SECTION 3.08 Absence of Certain Changes or Events............................10
SECTION 3.09 Absence of Litigation...........................................11
SECTION 3.10 Employee Benefit Plans..........................................11
SECTION 3.11 Labor Matters...................................................12
SECTION 3.12 Offer Documents; Schedule 14D-9; Proxy Statement................13
SECTION 3.13 Tangible Property; Real Property and Leases.....................13
SECTION 3.14 Trademarks, Patents and Copyrights..............................14
SECTION 3.15 Taxes...........................................................14
SECTION 3.16 Environmental Matters...........................................15
SECTION 3.17 Material Contracts..............................................16
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SECTION 3.18 Insurance; Workers' Compensation................................16
SECTION 3.19 Certain Payments; Absence of Certain Business Practices.........16
SECTION 3.20 Licenses and Permits............................................16
SECTION 3.21 Letters of Credit, Surety Bonds, Guarantees.....................16
SECTION 3.22 Brokers.........................................................17
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 4.01 Corporate Organization..........................................17
SECTION 4.02 Authority Relative to This Agreement............................17
SECTION 4.03 No Conflict; Required Filings and Consents......................17
SECTION 4.04 Financing.......................................................18
SECTION 4.05 Offer Documents; Proxy Statement................................18
SECTION 4.06 Due Diligence...................................................19
SECTION 4.07 Brokers.........................................................19
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger...........19
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.01 Special Stockholders' Meeting...................................21
SECTION 6.02 Proxy Statement.................................................21
SECTION 6.03 Company Board Representation; Section 14(f).....................22
SECTION 6.04 Access to Information; Confidentiality..........................23
SECTION 6.05 No Solicitation of Transactions.................................23
SECTION 6.06 Employee Benefits Matters; Employment Agreements................24
SECTION 6.07 Directors' and Officers' Indemnification and Insurance..........24
SECTION 6.08 Notification of Certain Matters.................................25
SECTION 6.09 Further Action; Reasonable Best Efforts.........................25
SECTION 6.10 Public Announcements............................................26
SECTION 6.11 Confidentiality Agreement.......................................26
ARTICLE VII.
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Merger........................................26
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ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination.....................................................27
SECTION 8.02 Effect of Termination...........................................28
SECTION 8.03 Fees and Expenses...............................................28
SECTION 8.04 Amendment.......................................................30
SECTION 8.05 Waiver..........................................................30
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements......30
SECTION 9.02 Notices.........................................................30
SECTION 9.03 Certain Definitions.............................................31
SECTION 9.04 Severability....................................................32
SECTION 9.05 Entire Agreement, Assignment....................................32
SECTION 9.06 Parties in Interest.............................................32
SECTION 9.07 Specific Performance............................................33
SECTION 9.08 Governing Law...................................................33
SECTION 9.09 Headings........................................................33
SECTION 9.10 Counterparts....................................................33
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GLOSSARY OF DEFINED TERMS
Location of
Definitions
-----------
affiliate....................................................... Section 9.03(a)
Agreement....................................................... Preamble
Articles of Merger.............................................. Section 2.02
beneficial owner................................................ Section 9.03(b)
Blue Sky Laws................................................... Section 3.05(b)
Board........................................................... Recitals
business day.................................................... Section 9.03(c)
Certificates.................................................... Section 2.08(b)
Code............................................................ Section 3.10(a)
Company......................................................... Preamble
Competing Proposal.............................................. Section 8.03(a)(ii)
Confidentiality Agreement....................................... Section 6.04(c)
control......................................................... Section 9.03(d)
control by...................................................... Section 9.03(d)
Disclosure Schedule............................................. Section 3.01
Effective Time.................................................. Section 2.02
Environmental Law............................................... Section 3.16(a)
ERISA........................................................... Section 3.10(a)
ERISA Affiliate................................................. Section 3.10(a)
Exchange Act.................................................... Section 1.02(b)
Expenses........................................................ Section 8.03(c)
Fee............................................................. Section 8.03(a)
GAAP............................................................ Section 3.07(b)
Goldman, Sachs.................................................. Section 1.02(a)
Hazardous Substances............................................ Section 3.16(a)
HSR Act......................................................... Section 3.05(b)
Indemnified Parties............................................. Section 6.07(b)
Information Statement........................................... Section 3.12
IRS............................................................. Section 3.10(a)
Material Adverse Effect......................................... Section 3.01
Material Contracts.............................................. Section 3.17
Material Subsidiaries........................................... Section 3.01
Merger.......................................................... Recitals
Merger Consideration............................................ Section 2.06(a)
Minimum Condition............................................... Section 1.01(a)
Multiemployer Plan.............................................. Section 3.10(a)
Nevada Law...................................................... Recitals
1996 Balance Sheet.............................................. Section 3.07(c)
1997 Balance Sheet.............................................. Section 3.15
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Offer........................................................... Recitals
Offer Documents................................................. Section 1.01(b)
Offer to Purchase............................................... Section 1.01(b)
Parent.......................................................... Preamble
Paying Agent.................................................... Section 2.08(a)
Per Share Amount................................................ Recitals
person.......................................................... Section 9.03(e)
Proxy Statement................................................. Section 3.12
Purchaser....................................................... Preamble
Purchaser's Election Date....................................... Section 5.01
Qualified Plan.................................................. Section 3.10(a)
Schedule 14D-1.................................................. Section 1.01(b)
Schedule 14D-9.................................................. Section 1.02(b)
SEC............................................................. Section 1.01(b)
SEC Reports..................................................... Section 3.07(a)
Securities...................................................... Section 3.07(a)
Shares.......................................................... Recitals
Special Stockholders' Meeting................................... Section 6.01
Stock Option Plans.............................................. Section 2.07
Subsidiary...................................................... Section 3.01
subsidiary...................................................... Section 9.03(f)
Surviving Corporation........................................... Section 2.01
Tax or Taxes.................................................... Section 3.15(j)
Third Party..................................................... Section 8.03(e)
Third Party Acquisition......................................... Section 8.03(f)
Transactions.................................................... Section 3.04
Under Common Control with....................................... Section 9.03(d)
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AGREEMENT AND PLAN OF MERGER, dated as of June 25, 1997 (this
"Agreement"), among UNITED DOMINION INDUSTRIES LIMITED, a corporation organized
under the laws of Canada ("Parent"), UD NEVADA CORP., a Nevada corporation and
an indirect wholly owned subsidiary of Parent ("Purchaser"), and CORE INDUSTRIES
INC, a Nevada corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "Offer") to acquire all the issued
and outstanding shares of common stock, par value U.S. $1.00 per share, of the
Company (the "Shares") for U.S. $25.00 per Share (such amount, or any greater
amount per Share paid pursuant to the Offer, being hereinafter referred to as
the "Per Share Amount") net to the seller in cash, subject to withholding of
taxes, if applicable, upon the terms and subject to the conditions of this
Agreement and the Offer;
WHEREAS, the Board of Directors of the Company (the "Board"), including
all the disinterested directors on the Board, has unanimously approved the
making of the Offer and resolved and agreed to recommend that holders of Shares
tender their Shares pursuant to the Offer;
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved the merger
(the "Merger") of Purchaser with and into the Company in accordance with the
General Corporation Law of the State of Nevada ("Nevada Law") following the
consummation of the Offer and upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I.
THE OFFER
SECTION 1.01 The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.01 and none of the events or
circumstances set forth in Annex A hereto shall have occurred or be existing,
Purchaser shall commence the Offer as promptly as reasonably practicable after
the date hereof, but in no event later than five business days after the first
public announcement of the execution hereof by all of the parties hereto. The
obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject to the condition (the "Minimum
Condition") that at least the number of Shares that combined with the Shares
already owned by Parent, Purchaser or any of their affiliates shall constitute a
majority of the then outstanding
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Shares on a fully diluted basis (including, without limitation, all Shares
issuable upon the conversion of any convertible securities or upon the exercise
of any options, warrants or rights) shall have been validly tendered and not
withdrawn prior to the expiration of the Offer and also shall be subject to the
satisfaction of the other conditions set forth in Annex A hereto. Purchaser
expressly reserves the right to waive any such condition (other than the Minimum
Condition), to increase the price per Share payable in the Offer, and to make
any other changes in the terms and conditions of the Offer; provided, however,
that no change may be made which decreases the price per Share payable in the
Offer or which changes the form of consideration to be paid in the Offer or
which reduces the maximum number of Shares to be purchased in the Offer or which
imposes conditions to the Offer in addition to those set forth in Annex A hereto
or which changes the Minimum Condition. The Per Share Amount shall, subject to
applicable withholding of taxes, be net to the seller in cash, upon the terms
and subject to the conditions of the Offer. Subject to the terms and conditions
of the Offer (including, without limitation, the Minimum Condition), Purchaser
shall pay, as promptly as practicable after expiration of the Offer, for all
Shares validly tendered and not withdrawn.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Purchaser shall file with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments
and supplements thereto, the "Schedule 14D-1") with respect to the Offer and the
other Transactions (as hereinafter defined), which shall have been provided to
the Company and to which the Company shall not have reasonably objected. The
Schedule 14D-1 shall contain or shall incorporate by reference an offer to
purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and any related summary advertisement (the Schedule 14D-1, the Offer
to Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
Documents"). Parent, Purchaser and the Company agree to correct promptly any
information provided by any of them for use in the Offer Documents which shall
have become false or misleading, and Parent and Purchaser further agree to take
all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with
the SEC and the other Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws.
SECTION 1.02 Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that (i) the Board, at a meeting duly
called and held on June 20, 1997, has unanimously (A) determined that this
Agreement and the transactions contemplated hereby, including each of the Offer
and the Merger, are fair to and in the best interests of the stockholders of the
Company, (B) approved and adopted this Agreement and the transactions,
including, without limitation, the Offer, the purchase of Shares pursuant to the
Offer and the Merger, contemplated hereby, (C) taken all action to redeem the
rights issued to stockholders pursuant to the Rights Agreement dated September
16, 1987 between the Company and Harris Trust and Savings Bank, (D) amended the
Company's Bylaws to provide that the provisions of Sections 78.378 to 78.3793 of
the Nevada Law shall not apply to the Company, and (E) recommended that the
stockholders of the Company accept the Offer and approve and adopt this
Agreement and the transactions, including, without limitation, the Merger,
contemplated hereby, (ii) approval of this Agreement by the Board constitutes
approval of a "memorandum of understanding" setting forth the principal terms of
a transaction governed by, and within the meaning of, Article Eleventh of the
Company's Articles of Incorporation, and (iii) Goldman, Sachs & Co. ("Goldman,
Sachs") has delivered to the Board an
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opinion to the effect that the consideration to be received by the holders of
Shares (other than Parent, Purchaser and their affiliates) pursuant to each of
the Offer and the Merger is fair to such holders of Shares. Subject only to the
fiduciary duties of the Board under applicable law as advised by the Company's
counsel, the Company hereby consents to the inclusion in the Offer Documents of
the recommendation of the Board described in the immediately preceding sentence.
The Company has been advised by each of its directors and executive officers
that they intend either to tender or cause to be tendered all Shares
beneficially owned by them to Purchaser pursuant to the Offer or to vote such
Shares in favor of the approval and adoption by the stockholders of the Company
of this Agreement and the transactions contemplated hereby.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing, subject only to the fiduciary duties
of the Board under applicable law as advised by the Company's counsel, the
recommendation of the Board described in Section 1.02(a) and shall disseminate
the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any other
applicable federal securities laws. The Company, Parent and Purchaser agree to
correct promptly any information provided by any of them for use in the Schedule
14D-9 which shall have become false or misleading, 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 disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws.
(c) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall furnish Purchaser with such
additional information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security position listings,
and such other assistance as Parent, Purchaser or their agents may reasonably
request. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and Purchaser
shall hold in confidence the information contained in such labels, listings and
files, shall use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated in accordance with Section
8.01, shall deliver to the Company all copies of such information then in their
possession.
ARTICLE II.
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions
set forth in Article VII, and in accordance with Nevada Law, at the Effective
Time (as hereinafter defined), Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate
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existence of Purchaser shall cease and the Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation"), and shall
continue to be governed by the laws of the State of Nevada. Notwithstanding
anything to the contrary contained herein, Parent may elect instead, at any time
prior to the fifth business day immediately preceding the date on which the
Proxy Statement (as defined in Section 3.12) is mailed initially to the
Company's stockholders, to merge the Company into Purchaser or another direct or
indirect wholly owned subsidiary of Parent. In such event, the parties agree to
execute an appropriate amendment to this Agreement in order to reflect the
foregoing and to provide, as the case may be, that Purchaser or such other
wholly owned subsidiary of Parent shall be the Surviving Corporation.
SECTION 2.02 Effective Time; Closing. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or articles of merger (in either case, the "Articles of
Merger") with the Secretary of State of the State of Nevada, in such form as is
required by, and executed in accordance with the relevant provisions of, Nevada
Law (the date and time of such filing being, collectively, the "Effective
Time"). Prior to such filing, a closing shall be held at the offices of
Robinson, Bradshaw & Hinson, P.A., 1900 Independence Center, Charlotte, North
Carolina 28246, or such other place as the parties shall agree, for the purpose
of confirming the satisfaction or waiver, as the case may be, of the conditions
set forth in Article VII.
SECTION 2.03 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Nevada Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.04 Articles of Incorporation; Bylaws. (a) Unless otherwise
determined by Parent prior to the Effective Time, and subject to the
requirements of Section 6.07, at the Effective Time the Articles of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation and
shall be amended and restated to conform to the Articles of Incorporation of
Purchaser as in effect immediately prior to the Effective Time; provided,
however, that, at the Effective Time, Article I of the Articles of Incorporation
of the Surviving Corporation shall be amended to read as follows: "The name of
the corporation is CORE Industries Inc" and the Articles of Incorporation of the
Surviving Corporation shall be amended if required to comply with Section 6.07.
(b) The Bylaws of Purchaser, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, the Articles of Incorporation of the
Surviving Corporation and such Bylaws.
SECTION 2.05 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the
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Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
SECTION 2.06 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the Shares:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to
Section 2.06(b)) shall be canceled and shall be converted automatically
into the right to receive an amount equal to the Per Share Amount in
cash (the "Merger Consideration"), payable, without interest, to the
holder of such Share, upon surrender, in the manner provided in Section
2.08, of the certificate that formerly evidenced such Share;
(b) Each Share owned by Purchaser, Parent or any direct or
indirect wholly owned subsidiary of Parent or of the Company
immediately prior to the Effective Time shall be canceled and retired
without any conversion thereof and no payment or distribution shall be
made with respect thereto; and
(c) Each share of common stock, par value U.S. $.01 per share,
of Purchaser issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, par value U.S.
$1.00 per share, of the Surviving Corporation.
SECTION 2.07 Employee and Director Stock Options; Deferred Director
Fees. (a) Each outstanding option to purchase Shares granted under the Company's
1978 Stock Option Plan, 1988 Stock Option Plan, 1988 Director Discounted Stock
Option Plan, 1991 Director Discounted Stock Option Plan and 1993 Performance
Incentive Plan (the "Stock Option Plans"), shall, immediately prior to the
Effective Time, become exercisable regardless of the vesting schedule contained
in any stock option agreement or in any of the Stock Option Plans and shall be
canceled at the Effective Time. In the event that any unexercised option is
canceled by the Company, each holder of a canceled option shall be entitled to
receive, at the Effective Time or as soon as practicable thereafter, from the
Company, in consideration for the cancellation of such option, an amount
(subject to any applicable withholding tax) in cash equal to the product of (i)
the number of Shares previously subject to such option and (ii) the excess, if
any, of the Merger Consideration over the exercise price per Share previously
subject to such option.
(b) At the Effective Time, the Company shall pay to each individual who
served as a Director of the Company prior to the Effective Time any and all
deferred director fees owed to such individual.
SECTION 2.08 Surrender of Shares: Stock Transfer Books. (a) Prior to
the Effective Time, Purchaser shall designate a bank or trust company to act as
agent (the "Paying Agent") for the holders of Shares in connection with the
Merger to receive the funds to which holders of Shares shall become entitled
pursuant to Section 2.06(a), and shall deposit with such Paying Agent an amount
sufficient to pay the aggregate Merger Consideration. Such funds shall be
invested by the Paying Agent as directed
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by the Surviving Corporation, provided that such investments shall be in
obligations of or guaranteed by the United States of America or of any agency
thereof and backed by the full faith and credit of the United States of America
or in commercial paper obligations rated A-1 or P-1 or better by Moody's
Investors Service, Inc. or Standard & Poor's Corporation, respectively.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder of
record of Shares entitled to receive the Merger Consideration pursuant to
Section 2.06(a) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each Share formerly
evidenced by such Certificate, and such Certificate shall then be canceled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such Certificate.
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 on the stock
transfer books of the Company, it shall be a condition of payment that the
Certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such payment shall have paid
all 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 taxes either have been paid or are not applicable.
(c) At any time following the sixth month after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds which had been made available to the Paying Agent and not
disbursed to holders of Shares (including, without limitation, all interest and
other income received by the Paying Agent in respect of all funds made available
to it) and, thereafter, such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws) only
as general creditors thereof with respect to any Merger Consideration that may
be payable upon due surrender of the Certificates held by them. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Share for any Merger Consideration delivered in
respect of such Share to a public official pursuant to any abandoned property,
escheat or other similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and, thereafter, there shall
be no further registration of transfers of Shares on the records of the Company.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that:
SECTION 3.01 Organization and Qualification; Subsidiaries. Each of the
Company and each subsidiary of the Company (a "Subsidiary") is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below). The Company and
each Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect. When used in connection with the
Company or any Subsidiary, the term "Material Adverse Effect" means any change
or effect that is or is reasonably likely to be materially adverse to the
business, operations, condition (financial or otherwise), assets or liabilities
(including, without limitation, contingent liabilities) of the Company and the
Subsidiaries taken as a whole. A true and complete list of all the Subsidiaries,
together with the jurisdiction of incorporation of each Subsidiary and the
percentage of the outstanding capital stock of each Subsidiary owned by the
Company and each other Subsidiary, is set forth in Section 3.01 of the
Disclosure Schedule, which has been delivered prior to the date of this
Agreement by the Company to Parent (the "Disclosure Schedule"). Except as
disclosed in such Section 3.01, the Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or other
business association or entity. The term "Material Subsidiaries" means the
Subsidiaries identified as Material Subsidiaries in Section 3.01 of the
Disclosure Schedule. The Subsidiaries that are not Material Subsidiaries are
not, individually and in the aggregate, material to the business, operations or
condition (financial or otherwise) of the Company and do not, individually and
in the aggregate, have any material assets or liabilities (including contingent
liabilities).
SECTION 3.02 Articles of Incorporation and Bylaws. The Company has
heretofore furnished to Parent a complete and correct copy of the Articles of
Incorporation and the Bylaws or equivalent organizational documents, each as
amended to date, of the Company and each Material Subsidiary. Such Articles of
Incorporation, Bylaws and equivalent organization documents are in full force
and effect. Neither the Company nor any Material Subsidiary is in violation of
any provision of its Articles of Incorporation, Bylaws or equivalent
organizational documents.
SECTION 3.03 Capitalization. The authorized capital stock of the
Company consists of 100,000 shares of preferred stock (none of which is issued
and outstanding) and 20,000,000 Shares. As of June 19, 1997, (i) 10,722,931
Shares are issued and outstanding, all of which are validly issued, fully paid
and nonassessable, (ii) no Shares are held by the Subsidiaries, and (iii)
696,049 Shares are
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reserved for issuance pursuant to stock options granted pursuant to the
Company's Stock Option Plans. Except as set forth in this Section 3.03 or
Section 3.03 of the Disclosure Schedule, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or any Material Subsidiary or
obligating the Company or any Material Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, the Company or any Material
Subsidiary. Section 3.03 of the Disclosure Schedule sets forth a list, as of the
date hereof, of the names of each person holding options under the Stock Option
Plans, and the number of shares purchasable under, the exercise price of such
options and date such options were granted. All Shares subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in Section
3.03 of the Disclosure Schedule, there are no outstanding contractual
obligations of the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any Shares or any capital stock of any Subsidiary or to provide funds
to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Subsidiary or any other person. Each outstanding share of
capital stock of each Material Subsidiary is duly authorized, validly issued,
fully paid and nonassessable, and each such share owned by the Company or
another Subsidiary is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on the
Company's or such other Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever.
SECTION 3.04 Authority Relative to this Agreement. The Company has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions, including, without
limitation, the Merger, contemplated hereby (the "Transactions"). The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the Transactions have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval and adoption
of this Agreement by the affirmative vote of the stockholders of the Company to
the extent required by Nevada Law and the Company's Articles of Incorporation,
and the filing and recordation of appropriate merger documents as required by
Nevada Law). This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Parent and Purchaser, constitutes a legal, valid and binding obligation of the
Company.
SECTION 3.05 No Conflict; Required Filings and Consents. Except as set
forth in Section 3.05 of the Disclosure Schedule, (a) the execution and delivery
of this Agreement by the Company do not, and the performance of this Agreement
by the Company will not, (i) conflict with or violate the Articles of
Incorporation or Bylaws or equivalent organizational documents of the Company or
any Subsidiary, (ii) assuming that required filings under the HSR Act (as
hereinafter defined) are made by the appropriate parties, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to the
Company or any Subsidiary or by which any property or asset of the Company or
any Subsidiary is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance of any nature on any property or asset of the Company or
any Material Subsidiary
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pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any Material Subsidiary is a party or by which the Company or any
Material Subsidiary or any property or asset of the Company or any Material
Subsidiary is bound or affected, except, in cases of (ii) and (iii), for any
such conflicts, violations, breaches, defaults or other occurrences which would
not, individually or in the aggregate, have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with, or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Exchange Act, state securities or
"blue sky" laws ("Blue Sky Laws") and state takeover laws, the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
Act"), and filing and recordation of appropriate merger documents as required by
Nevada Law, and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Offer or the Merger, or otherwise prevent
the Company from performing its obligations under this Agreement, and would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.06 Compliance. Except as set forth in Section 3.06 of the
Disclosure Schedule and with respect to matters addressed in Section 3.16,
neither the Company nor any Subsidiary is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or decree
applicable to the Company or any Subsidiary or by which any property or asset of
the Company or any Subsidiary is bound or subject or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any Subsidiary is a party
or by which the Company or any Subsidiary or any property or asset of the
Company or any Subsidiary is bound or affected, except for any such conflicts,
defaults or violations that would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 3.07 SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since August 31, 1994, and has heretofore delivered to Parent, in the form filed
with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years ended
August 31, 1994, 1995 and 1996, respectively, (ii) its Quarterly Reports on Form
10-Q for the periods ended November 30, 1996 and February 28, 1997, (iii) all
proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since August 31, 1994 and (iv) all other forms, reports
and other registration statements (other than Quarterly Reports on Form 10-Q not
referred to in clause (ii) above) filed by the Company with the SEC since August
31, 1994 (the forms, reports and other documents referred to in clauses (i),
(ii), (iii) and (iv) above being referred to herein, collectively, as the "SEC
Reports"). The SEC Reports (i) were prepared in accordance with the requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder and (ii) did not, at the time they were filed (or at the effective
date thereof with respect to registration statements under the Securities Act),
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 made
therein, in
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the light of the circumstances under which they were made, not misleading. No
Subsidiary is required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the SEC Reports was prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis ("GAAP") throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presents the consolidated
financial position, results of operations and changes in stockholders equity and
cash flows of the Company and the consolidated Subsidiaries as at the respective
dates thereof and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments which
were not and are not expected, individually or in the aggregate, to have a
Material Adverse Effect).
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as at August 31, 1996
including the notes thereto (the "1996 Balance Sheet"), in Section 3.07 of the
Disclosure Schedule, or in any SEC Report filed by the Company after August 31,
1996 neither the Company nor any Subsidiary has any liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with GAAP, except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since August 31, 1996,
which would not, individually or in the aggregate, be material in amount.
(d) The Company has heretofore furnished to Parent complete and correct
copies of all amendments and modifications (if any) that have not been filed by
the Company with the SEC to all agreements, documents and other instruments that
previously had been filed by the Company with the SEC and are currently in
effect.
SECTION 3.08 Absence of Certain Changes or Events. (a) Since February
28, 1997, except as set forth in Section 3.08(a) of the Disclosure Schedule or
as contemplated by this Agreement or disclosed in any SEC Report filed since
February 28, 1997 and prior to the date of this Agreement, the Company and the
Subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and there has not been (i) any change in
the business, operations, properties, condition, assets or liabilities
(including, without limitation, contingent liabilities) of the Company or any
Subsidiary having, individually or in the aggregate, a Material Adverse Effect,
(ii) any damage, destruction or loss (whether or not covered by insurance) with
respect to any property or asset of the Company or any Subsidiary and having,
individually or in the aggregate, a Material Adverse Effect, (iii) any entry by
the Company or any Subsidiary into any commitment or transaction material to the
Company and the Subsidiaries taken as a whole, (iv) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any officers or key employees of the Company or any Subsidiary,
except in the ordinary course of business consistent with past practice, or (v)
any entering into, renewal, modification or extension of, any contract,
arrangement or agreement with any other party having, individually or in the
aggregate, a Material Adverse Effect.
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(b) Since August 31, 1996, except as set forth in Section 3.08(b) of
the Disclosure Schedule or as contemplated by this Agreement or disclosed in any
SEC Report filed since August 31, 1996 and prior to the date of this Agreement,
there has not been (i) any material change by the Company in its accounting
methods, principles or practices, (ii) any material revaluation by the Company
of any asset (including, without limitation, any writing down of the value of
inventory or writing off of notes or accounts receivable), (iii) any failure by
the Company to revalue any asset in accordance with GAAP, or (iv) any
declaration, setting aside or payment of any dividend or distribution in respect
of any capital stock of the Company (except for quarterly cash dividends of $.06
per Share) or any redemption, purchase or other acquisition of any of its
securities.
SECTION 3.09 Absence of Litigation. Except as set forth in Section 3.09
of the Disclosure Schedule or as disclosed in the SEC Reports filed prior to the
date of this Agreement, there is no claim, action, proceeding or investigation
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary, or any property or asset of the Company or any Subsidiary,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, which (i) individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect or (ii) seeks
to, or is reasonably likely to, delay or prevent the consummation of any
Transaction. As of the date hereof, neither the Company nor any Subsidiary nor
any property or asset of the Company or any Subsidiary is subject to any order,
writ, judgment, injunction, decree, determination or award having, individually
or in the aggregate, a Material Adverse Effect.
SECTION 3.10 Employee Benefit Plans. (a) Section 3.10 of the Disclosure
Schedule contains a true and complete list of all "Qualified Plans" (as defined
below). Except as set forth in Section 3.10 of the Disclosure Schedule, no
Qualified Plan is a "defined benefit plan" within the meaning of Section 3(35)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and no Qualified Plan is subject to Part IV of ERISA. Each Qualified Plan is in
writing, and the Company has made available to Parent with respect to each
Qualified Plan (i) a copy of the trust or other funding arrangement, (ii) each
summary plan description and summary of material modifications, (iii) the most
recently filed Internal Revenue Service ("IRS") Form 5500, (iv) the most
recently received IRS determination letter and (v) the most recently prepared
financial statement. For purposes of this Agreement, "Qualified Plan" means each
"employee benefit plan" (within the meaning of Section 3(3) of ERISA) that is
sponsored by the Company or any entity which is considered one employer with the
Company (an "ERISA Affiliate") under Section 4001 of ERISA or Section 414 of the
Internal Revenue Code of 1986, as amended (the "Code") and that is intended to
be qualified under Section 401(a) of the Code, including without limitation any
"multiemployer plan" within the meaning of Section 3(37) of ERISA
("Multiemployer Plans").
(b) Other than the Qualified Plans, there is no other "employee benefit
plan" within the meaning of Section 3(3) of ERISA sponsored by the Company or
any ERISA Affiliate that covers a majority of the total employees of the Company
and its ERISA Affiliates.
(c) All Qualified Plans are in substantial compliance with ERISA.
Except as set forth in Section 3.10 of the Disclosure Schedule, each Qualified
Plan has received a favorable determination letter from the IRS, and there are
no circumstances likely to result in revocation of any such favorable
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determination letter. There is no material pending or, to the knowledge of the
Company, threatened litigation relating to the Qualified Plans. Neither the
Company nor any of the Subsidiaries has engaged in a transaction with respect to
any Qualified Plan that, assuming the taxable period of such transaction expired
as of the date thereof, insofar as may be reasonably foreseen, is likely to
subject the Company or any of the Subsidiaries to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA in an amount that
would be material.
(d) No liability under Subtitle C or D of Title IV of ERISA has been or
is expected to be incurred by the Company or any of the Subsidiaries with
respect to any ongoing, frozen or terminated Qualified Plan that is a
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them or any ERISA Affiliate. Except
as with respect to any plan listed in Section 3.10 of the Disclosure Schedule,
neither the Company nor any of the Subsidiaries presently contribute to a
Multiemployer Plan, nor have they contributed to a Multiemployer Plan within the
past five calendar years. Neither the Company nor any Subsidiary has received
any written notice setting forth the amount of any material liability of the
Company or any Subsidiary under any Multiemployer Plan if it were to engage in a
complete withdrawal (as defined in Section 4203 of ERISA) or partial withdrawal
(as defined in Section 4203 of ERISA) from such Multiemployer Plan. No notice of
a "reportable event", within the meaning of Section 4043 of ERISA for which the
30 day reporting requirement has not been waived, has been required to be filed
for any Qualified Plan or by any ERISA Affiliate within the 12-month period
ending on the date hereof.
(e) All contributions required to be made under the terms of any
Qualified Plan have been timely made. No Qualified Plan has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA. Neither the Company nor any of the
Subsidiaries has provided, or is required to provide, security to any Qualified
Plan pursuant to Section 401(a)(29) of the Code.
(f) Under each Qualified Plan which is a single-employer plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Qualified Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such
Qualified Plan, and there has been no material change in the financial condition
of such Plan since the last day of the most recent plan year.
(g) The Company and the Subsidiaries do not have any unfunded
liabilities under pension, retirement or other employee benefit plans, programs
or arrangements maintained outside the United States by the Company or any of
the Subsidiaries for the employees thereof, the payment of which by the Company
or such Subsidiary, individually or in the aggregate, would have a Material
Adverse Effect.
SECTION 3.11 Labor Matters. Except as set forth in Section 3.11 of the
Disclosure Schedule, (i) there are no controversies pending or, to the knowledge
of the Company, threatened between the Company or any Subsidiary and any of
their respective employees, which controversies have or could have a Material
Adverse Effect; (ii) neither the Company nor any Subsidiary is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by
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the Company or any Subsidiary, nor, to the knowledge of the Company, are there
any activities or proceedings of any labor union to organize any such employees;
(iii) neither the Company nor any Subsidiary has breached or otherwise failed to
comply with any provision of any such agreement or contract and there are no
grievances outstanding against the Company or any Subsidiary under any such
agreement or contract; (iv) there are no unfair labor practice complaints
pending against the Company or any Subsidiary before the National Labor
Relations Board or any current union representation questions involving
employees of the Company or any Subsidiary; and (v) there is no strike,
slowdown, work stoppage or lockout, or, to the knowledge of the Company, threat
thereof, by or with respect to any employees of the Company or any Subsidiary.
SECTION 3.12 Offer Documents; Schedule 14D-9; Proxy Statement. Neither
the Schedule 14D-9, any information supplied by the Company for inclusion in the
Offer Documents nor the information to be filed by the Company in connection
with the Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the
"Information Statement"), other than information provided by Parent or Purchaser
for inclusion therein, shall, at the respective times the Schedule 14D-9, the
Offer Documents, the Information Statement or any amendments or supplements
thereto are filed with the SEC or are first published, sent or given to
stockholders of the Company, as the case may be, 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 made therein, in the light of the
circumstances under which they are made, not misleading. The proxy statement to
be sent to the stockholders of the Company in connection with the Special
Stockholders' Meeting (as defined in Section 6.01 hereof) (such proxy statement,
as amended or supplemented, being referred to herein as the "Proxy Statement")
and the Information Statement shall not, at the date such document (or any
amendment or supplement thereto) is first mailed to stockholders of the Company,
with respect to the Information Statement at the time Shares are accepted for
payment in the offer, and with respect to the Proxy Statement at the time of the
Special Stockholders' Meeting and at the Effective Time, be false or misleading
with respect to any material fact, or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Special Stockholders' Meeting which shall
have become false or misleading. The Schedule 14D-9, the Information Statement
and the Proxy Statement shall comply in all material respects as to form with
the requirements of the Exchange Act and the rules and regulations thereunder.
SECTION 3.13 Tangible Property; Real Property and Leases. (a) The
Company and the Subsidiaries have sufficient title to all their tangible
properties and assets to conduct their respective businesses as currently
conducted or as contemplated to be conducted, with only such exceptions as,
individually or in the aggregate, would not have a Material Adverse Effect.
(b) No parcel of real property owned or leased by the Company is
subject to any governmental decree or order to be sold nor is being condemned,
expropriated or otherwise taken by any public authority with or without payment
of compensation therefor, nor, to the knowledge of the Company, has any such
condemnation, expropriation or taking been proposed.
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(c) All leases of real property leased for the use or benefit of the
Company or any Subsidiary to which the Company or any Subsidiary is a party
requiring rental payments in excess of U.S. $100,000 during the period of the
lease and all amendments and modifications thereto are in full force and effect
and have not been modified or amended, and there exists no default under any
such lease by the Company or any Subsidiary, nor any event which with notice or
lapse of time or both would constitute a default thereunder by the Company or
any Subsidiary, except as, individually or in the aggregate, would not have a
Material Adverse Effect.
SECTION 3.14 Trademarks, Patents and Copyrights. Except as set forth in
Section 3.14 of the Disclosure Schedule, the Company and the Subsidiaries own or
possess adequate licenses or other valid rights to use all patents, patent
rights, trademarks, trademark rights, trade names, trade dress, trade name
rights, copyrights, servicemarks, trade secrets, applications for trademarks and
for servicemarks, mask works, know-how and other proprietary rights and
information used or held for use in connection with the business of the Company
and the Subsidiaries as conducted since August 31, 1996, as currently conducted
or as contemplated to be conducted, and the Company is unaware of any assertion
or claim challenging the validity of any of the foregoing which, individually or
in the aggregate, could have a Material Adverse Effect. The conduct of the
business of the Company and the Subsidiaries as conducted since August 31, 1996,
as currently conducted and as contemplated to be conducted did not, does not and
will not conflict in any way with any patent, patent right, license, trademark,
trademark right, trade dress, trade name, trade name right, service mark, mask
work or copyright of any third party that, individually or in the aggregate,
could have a Material Adverse Effect. There are no infringements of any property
rights owned by or licensed by or to the Company or any Subsidiary which,
individually or in the aggregate, could have a Material Adverse Effect. Neither
the Company nor any Subsidiary has licensed or otherwise permitted the use by
any third party of any proprietary information on terms or in a manner which,
individually or in the aggregate, could have a Material Adverse Effect.
SECTION 3.15 Taxes. (a) The Company and the Subsidiaries have filed all
federal, state, local and foreign Tax returns and reports required to be filed
by them and have paid and discharged all Taxes shown as due thereon and have
paid all applicable ad valorem taxes as are due, other than (i) such payments as
are being contested in good faith by appropriate proceedings and (ii) such
filings, payments or other occurrences that, individually or in the aggregate,
could not result in the Company or any Subsidiary incurring liabilities in
excess of U.S. $100,000. The Company's federal consolidated income tax returns
for all periods ending on or after August 31, 1990 have been audited by the IRS.
Except as disclosed in Section 3.15 of the Disclosure Schedule, neither the IRS
nor any other taxing authority or agency, domestic or foreign, is now formally
proposing, or to the Company's knowledge informally proposing, any adjustment
relating to such returns or is now asserting or, to the knowledge of the
Company, threatening to assert against the Company or any Subsidiary any
deficiency or claim for additional taxes or interest thereon or penalties in
connection therewith. Neither the Company nor any Subsidiary has granted any
waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any federal, state, county, municipal or foreign
income Tax which is currently in effect. The accruals and reserves for taxes
reflected in the Company's consolidated balance sheet (the "1997 Balance Sheet")
included in its Quarterly Report on Form 10-Q for the period ended February 28,
1997, as filed with the SEC, are adequate to cover all Taxes accruable through
such date (including interest and penalties, if any, thereon and any payments of
Taxes are being contested by the
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Company or any Subsidiary) in accordance with GAAP. Neither the Company nor any
Subsidiary has made an election under Section 341(f) of the Code.
(b) "Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and custom duties, tariffs, and
similar charges.
SECTION 3.16 Environmental Matters. (a) For purposes of this Agreement,
the following terms shall have the following meanings: (i) "Hazardous
Substances" means (A) those substances defined as hazardous in or regulated as
hazardous under the following federal statutes and their state counterparts, as
each may be amended from time to time, and all regulations thereunder: the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation, and Liability Act,
the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (B)
any asbestos or asbestos-containing material, petroleum and petroleum products,
including crude oil and any fractions thereof, natural gas, natural gas liquids,
synthetic gas, polychlorinated biphenyls or radon; (C) any pollutant or
contaminant; or (D) any substance with respect to which a federal, state or
local agency requires environmental investigation, monitoring, reporting or
remediation; and (ii) "Environmental Law" means any federal, state or local law
relating to (A) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (C) otherwise relating to
pollution of the environment or the protection of human health.
(b) Except as described in Section 3.16 of the Disclosure Schedule or
with respect to matters described in oral or written reports provided to Parent
or Purchaser at any time prior to the time of execution of this Agreement by
Parent or Purchaser by environmental consultants retained by Parent or Purchaser
or in environmental due diligence reports prepared by Parent or Purchaser at any
time prior to the time of execution of this Agreement: (i) the Company and each
Subsidiary is in compliance with all applicable Environmental Laws, except for
noncompliance that individually or in the aggregate would not have a Material
Adverse Effect; (ii) the Company and each Subsidiary have obtained all permits,
licenses and other material governmental authorizations required under
applicable Environmental Laws, and are in compliance with the terms and
conditions thereof, except for failures to obtain or noncompliance that
individually or in the aggregate would not have a Material Adverse Effect; (iii)
neither the Company nor any of its Subsidiaries has received written notice of,
or, to the knowledge of the Company, is the subject of, any action, cause of
action, claim, investigation, demand or notice by any person or entity alleging
liability under or noncompliance with any Environmental Law that individually or
in the aggregate would have a Material Adverse Effect; and (iv) there is no
environmental condition on
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any of the properties currently or formerly owned or leased by the Company or
any Subsidiary that individually or in the aggregate would be reasonably likely
to have a Material Adverse Effect.
SECTION 3.17 Material Contracts. Section 3.17 of the Disclosure
Schedule lists each contract or agreement to which the Company or any of the
Material Subsidiaries is a party that involves payment of more than $100,000 and
that does not expire within one year of this Agreement or cannot be terminated
by the Company or the Material Subsidiary within one year of the date of this
Agreement without any liability to the Company or the Material Subsidiary (other
than any blanket purchase or sales order entered into in the ordinary course of
business or any equipment leases) (a "Material Contract"). Each Material
Contract is in full force and effect and is enforceable against the parties
thereto (other than the Company and the Material Subsidiaries) in accordance
with its terms and no condition or state of facts exists that, with notice or
the passage of time, or both, would constitute a material default by the Company
or any Material Subsidiary or to the knowledge of the Company, any third party
under such Material Contracts. The Company or the applicable Material Subsidiary
has duly complied in all material respects with the provision of each Material
Contract to which it is a party.
SECTION 3.18 Insurance; Workers' Compensation. Neither the Company nor
any Material Subsidiary has received any notice of cancellation with respect to
any of its insurance policies within the three years, where such cancellation,
individually or in the aggregate, would have a Material Adverse Effect.
SECTION 3.19 Certain Payments; Absence of Certain Business Practices.
To the knowledge of the Company, no employee or agent of the Company or any
Subsidiary, nor any other person acting on behalf of Company or any Subsidiary,
has within the past five (5) years violated the Foreign Corrupt Practices Act or
made or caused to be made any payments to government officials in violation of
the laws of the United States or any other jurisdiction. As of the date hereof,
neither the IRS nor any other federal, state, local or foreign government agency
or entity has notified the Company or any Company Subsidiary of any pending or
threatened investigation of any payment made by or on behalf of the Company or
any Company Subsidiary of, or alleged to be of, the type described in the
previous sentence.
SECTION 3.20 Licenses and Permits. The Company and each Material
Subsidiary have obtained all governmental licenses and permits (other than
governmental licenses and permits required under applicable Environmental Laws
or otherwise addressed in Section 3.16) necessary to conduct their respective
businesses in accordance with past practices except to the extent that the
failure to obtain and/or maintain such license or permit would not have a
Material Adverse Effect. Such licenses and permits are valid and in full force
and effect; no such licenses or permits will be terminated or materially
impaired or become terminable as a result of the Transactions contemplated by
this Agreement, except to the extent that the failure to obtain and/or maintain
such license or permit would not have a Material Adverse Effect.
SECTION 3.21 Letters of Credit, Surety Bonds, Guarantees. Section 3.21
of the Disclosure Schedule lists all letters of credit, performance or payment
bonds, guaranty arrangements and surety
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bonds of any nature involving amounts in excess of $100,000 relating to the
Company or any Subsidiary.
SECTION 3.22 Brokers. No broker, finder or investment banker (other
than Goldman, Sachs) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and Goldman,
Sachs pursuant to which such firm would be entitled to any payment relating to
the Transactions.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.01 Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a material adverse effect on the business or operations of
Parent and Purchaser and their respective subsidiaries, taken as a whole.
SECTION 4.02 Authority Relative to This Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the Transactions (other than with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by Nevada Law). This Agreement has been duly and validly
executed and delivered by Parent and Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of Parent and Purchaser enforceable against each
of Parent and Purchaser in accordance with its terms.
SECTION 4.03 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) assuming
that required filings under the HSR Act are made by appropriate parties,
conflict with or violate the Articles of Incorporation or Bylaws (or equivalent
documents) of either Parent or Purchaser, (ii) assuming that required filings
under the HSR Act are made by appropriate parties conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Parent or
Purchaser or by which any property or asset of either of them is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of
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time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or Purchaser is a party or by which Parent or Purchaser or any property
or asset of either of them is bound or affected, except, in cases of (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, have a material
adverse effect on the business or operations of Parent or Purchaser and their
respective subsidiaries, taken as a whole.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange Act,
Blue Sky Laws and state takeover laws, the HSR Act, and filing and recordation
of appropriate merger documents as required by Nevada Law and (ii) where failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the Offer
or the Merger, or otherwise prevent Parent or Purchaser from performing their
respective obligations under this Agreement.
SECTION 4.04 Financing. Parent has, or has commitments to obtain,
sufficient funds to permit Purchaser to acquire all the outstanding Shares in
the Offer and the Merger, evidence of which has been provided to the Company.
SECTION 4.05 Offer Documents; Proxy Statement. The Offer Documents will
not, at the time the Offer Documents are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
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
made therein, in the light of the circumstances under which they are made, not
misleading. The information supplied by Parent for inclusion in the Information
Statement or the Proxy Statement will not, on the date such document (or any
amendment or supplement thereto) is first mailed to stockholders of the Company,
with respect to the Information Statement, at the time Shares are accepted for
payment in the Offer, and with respect to the Proxy Statement at the time of the
Special Stockholders' Meeting and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Special Stockholders' Meeting which shall have become false or misleading.
Notwithstanding the foregoing, Parent and Purchaser make no representation or
warranty with respect to any information supplied by the Company or any of its
representatives which is contained in any of the foregoing documents or the
Offer Documents. The Offer Documents shall comply in all material respects as to
form with the requirements of the Exchange Act and the rules and regulations
thereunder.
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SECTION 4.06 Due Diligence. Parent and Purchaser agree to conduct or
cause to be conducted no further environmental testing of facilities owned,
leased or operated by the Company or any of its Subsidiaries prior to the
Effective Time.
SECTION 4.07 Brokers. Parent and Purchaser agree to indemnify the
Company, and hold it harmless from, any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of Parent or Purchaser.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, between the date of this Agreement and the
election or appointment of Purchaser's designees to the Board pursuant to
Section 6.03 upon the purchase by Purchaser of any Shares pursuant to the Offer
(the "Purchaser's Election Date"), unless Parent shall otherwise agree in
writing, the businesses of the Company and the Subsidiaries shall be conducted
only in, and the Company and the Subsidiaries shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice; and the Company shall use its best efforts to preserve substantially
intact the business organization of the Company and the Subsidiaries, to keep
available the services of the current officers, employees and consultants of the
Company and the Subsidiaries and to preserve the current relationships of the
Company and the Subsidiaries with customers, suppliers and other persons with
which the Company or any Subsidiary has significant business relations. By way
of amplification and not limitation, except as contemplated by this Agreement or
by Section 5.01 of the Disclosure Schedule, neither the Company nor any
Subsidiary shall, between the date of this Agreement and the Purchaser's
Election Date, directly or indirectly do, or propose to do, any of the following
without the prior written consent of Parent:
(a) amend or otherwise change its Articles of Incorporation or
Bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of (i) any shares of capital stock of any class of the Company or any
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Subsidiary (except for the issuance of
a maximum of 696,049 Shares issuable pursuant to employee and director
stock options outstanding on the date hereof) or (ii) any assets of the
Company or any Subsidiary, except for sales in the ordinary course of
business and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except for cash such
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declarations, set asides dividends declared at times and in amounts
consistent with the Company's current dividend policy ($.06 per Share
per quarter);
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization
or any division thereof or any material amount of assets other than in
the ordinary course of business; (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, pledge in respect of or otherwise as an accommodation become
responsible for the obligations of any person, or make any loans or
advances, except in the ordinary course of business and consistent with
past practice; (iii) enter into any contract or agreement other than
contracts or agreements entered into in the ordinary course of
business, consistent with past practice and which require payments by
the Company or the Subsidiaries in an aggregate amount of less than
U.S. $250,000; (iv) terminate, cancel or request any material change
in, or agree to any material change in, any Material Contract set forth
in Section 3.17(a) of the Disclosure Schedule and with respect to all
other Material Contracts, except in the ordinary course of business
consistent with past practice; (v) authorize any single capital
expenditure (excluding software development activity) which is in
excess of U.S. $250,000 or capital expenditures which are, in the
aggregate, in excess of U.S. $1,000,000 for the Company and the
Subsidiaries taken as a whole; or (vi) enter into or amend any
contract, agreement, commitment or arrangement with respect to any
matter set forth in this Section 5.01(e);
(f) increase the compensation payable or to become payable to
its officers or employees, except for increases in accordance with past
practices in salaries or wages of employees of the Company or any
Subsidiary who are not officers of the Company, or grant any severance
or termination pay to, or enter into any employment or severance
agreement with, any director, officer or other employee of the Company
or any Subsidiary, or establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee or circulate to any employee any details
of any proposal to adopt or amend any such plan;
(g) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice,
with respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable
and collection of accounts receivable);
(h) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
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(i) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the 1997 Balance Sheet or
subsequently incurred in the ordinary course of business and consistent
with past practice; or
(j) settle or comprise any pending or threatened suit, action
or claim that is material or which relates to any of the Transactions;
or
(k) announce an intention, enter into any formal or informal
agreement, or otherwise make a commitment, to do any of the foregoing
or any action that would result in any of the conditions to the Offer
not being satisfied (other than as contemplated by this Agreement).
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.01 Special Stockholders' Meeting. The Company, acting through
the Board, shall, in accordance with applicable law and the Company's Articles
of Incorporation and Bylaws, unless not required under applicable "short-form"
merger provisions of Nevada Law, (i) duly call, give notice of, convene and hold
a special meeting of its stockholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
this Agreement and the transactions contemplated hereby (the "Special
Stockholders' Meeting") and (ii) subject to its fiduciary duties under
applicable law as advised in writing by independent counsel, (A) include in the
Proxy Statement the unanimous recommendation of the Board that the stockholders
of the Company approve and adopt this Agreement and the Transactions, including,
without limitation, the Merger and (B) use its best reasonable efforts to obtain
such approval and adoption. At the Special Stockholders' Meeting (or by consent
if a stockholders meeting is not required), Parent and Purchaser shall cause all
Shares then owned by them and their subsidiaries to be voted in favor of the
approval and adoption of this Agreement and the Transactions, including, without
limitation, the Merger.
SECTION 6.02 Proxy Statement. As soon as practicable following
consummation of the Offer, the Company shall file the Proxy Statement with the
SEC under the Exchange Act, unless not required under applicable "short-form"
merger provisions of Nevada Law, and shall use its best reasonable efforts to
have the Proxy Statement cleared by the SEC. Parent, Purchaser and the Company
shall cooperate with each other in the preparation of the Proxy Statement, and
the Company shall notify Parent of the receipt of any comments of the SEC with
respect to the Proxy Statement and of any requests by the SEC for any amendment
or supplement thereto or for additional information and shall provide to Parent
promptly copies of all correspondence between the Company or any representative
of the Company and the SEC. The Company shall give Parent and its counsel the
opportunity to review the Proxy Statement prior to its being filed with the SEC
and shall give Parent and its counsel the opportunity to review all amendments
and supplements to the Proxy Statement and all responses to requests for
additional information and replies to comments prior to their being filed
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with, or sent to, the SEC. Each of the Company, Parent and Purchaser agrees to
use its best reasonable efforts, after consultation with the other parties
hereto, to respond promptly to all such comments of and requests by the SEC and
to cause the Proxy Statement and all required amendments and supplements thereto
to be mailed to the holders of Shares entitled to vote at the Special
Stockholders' Meeting at the earliest practicable time.
SECTION 6.03 Company Board Representation; Section 14(f). (a) Promptly
upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to
time thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as shall give
Purchaser representation on the Board equal to the product of the total number
of directors on the Board (giving effect to the directors elected pursuant to
this sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser at such time bears
to the total number of Shares then outstanding, and the Company shall, at such
time, promptly take all actions necessary to cause Purchaser's designees to be
elected as directors of the Company, including increasing the size of the Board
or securing the resignations of incumbent directors or both. At such times, the
Company shall use its best efforts to cause persons designated by Purchaser to
constitute the same percentage as persons designated by Purchaser shall
constitute of the Board of (i) each committee of the Board (some of whom may be
required to be independent as required by applicable law or requirements of the
New York Stock Exchange), (ii) each board of directors of each Subsidiary and
(iii) each committee of each such board, in each case only to the extent
permitted by applicable law. Notwithstanding the foregoing, until the time
Purchaser acquires a majority of the then outstanding Shares on a fully diluted
basis, the Company shall use its best efforts to ensure that all the members of
the Board and each committee of the Board and such boards and committees of the
Subsidiaries as of the date hereof who are not employees of the Company shall
remain members of the Board and of such boards and committees.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.03 and shall include the
Information Statement containing such information with respect to the Company
and its officers and directors as is required under Section 14(f) and Rule 14f-1
as an annex to the Schedule 14D-9 to fulfill such obligations. Parent or
Purchaser shall supply to 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.
(c) Following the election or appointment of designees of Purchaser
pursuant to this Section 6.03, prior to the Effective Time, any amendment of
this Agreement or the Articles of Incorporation or Bylaws of the Company, any
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or Purchaser or waiver of any of the Company's rights hereunder shall require
the concurrence of a majority of the directors of the Company then in office who
neither were designated by Purchaser nor are employees of the Company or if no
such directors are then in office, no such amendment, termination, extension or
waiver shall be effected which is materially adverse to the holders of Shares
(other than Parent and its subsidiaries).
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SECTION 6.04 Access to Information; Confidentiality. (a) From the date
hereof to the consummation of the Offer, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and the Subsidiaries to, afford the officers, employees and agents of
Parent and Purchaser complete access at all reasonable times to the officers,
employees, agents, properties, offices, plants and other facilities, books and
records of the Company and each Subsidiary, and shall furnish Parent and
Purchaser with all financial, operating and other data and information as Parent
or Purchaser, through its officers, employees or agents, may reasonably request.
(b) To the extent permitted by applicable law, in order to facilitate
the continuing operation of the Company by Parent and Purchaser from and after
the completion of the Offer without disruption and to assist in an achievement
of an orderly transition in the ownership and management of the Company, from
the date of this Agreement and until completion of the Offer, the Company,
Parent and Purchaser shall cooperate reasonably with each other to effect an
orderly transition including, without limitation, with respect to communications
with the Company's customers and employees.
(c) All information obtained by Parent or Purchaser pursuant to this
Section 6.04 shall be kept confidential, by Purchaser, by Parent and by any
other party which is to be afforded access pursuant to Section 6.04(a), in
accordance with the confidentiality agreement, dated October 2, 1996 (the
"Confidentiality Agreement"), between Parent and the Company.
SECTION 6.05 No Solicitation of Transactions. Neither the Company nor
any Subsidiary shall, directly or indirectly, through any officer, director,
agent or otherwise, solicit, initiate or encourage the submission of any
proposal or offer from any person relating to any acquisition or purchase of all
or any material portion of the assets of, or any equity interest in, the Company
or any Material Subsidiary or any business combination with the Company or any
Material Subsidiary or participate in any negotiations regarding, or furnish to
any other person any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing; provided,
however, that nothing contained in this Section 6.05 shall prohibit the Board
from furnishing information to, or entering into discussions or negotiations
with, any person in connection with an unsolicited (from the date of this
Agreement) proposal in writing by such person to acquire the Company pursuant to
a merger, consolidation, share exchange, business combination or other similar
transaction or to acquire all or substantially all of the assets of the Company
or any of its Subsidiaries, if, and only to the extent that, (i) the Board,
after consultation with independent legal counsel (which may include its
regularly engaged independent legal counsel), determines in good faith that such
action is required for the Board to comply with its fiduciary duties to
stockholders imposed by Nevada Law and (ii) prior to furnishing such information
to, or entering into discussions or negotiations with, such person the Company
uses its reasonable best efforts to obtain from such person an executed
confidentiality agreement on terms no less favorable to the Company than those
contained in the Confidentiality Agreement (or obtained a confidentiality
agreement prior to the date hereof). The Company immediately shall cease and
cause to be terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. The Company shall
notify Parent
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promptly if any such proposal or offer, or any inquiry or contact with any
person with respect thereto, is made. The Company agrees not to release any
third party from, or waive any provision of, any confidentiality or, subject to
the fiduciary duties of the Board, standstill agreement to which the Company is
or may become a party.
SECTION 6.06 Employee Benefits Matters; Employment Agreements. Annex B
hereto sets forth certain agreements among the parties hereto with respect to
the Plans and other employee benefits matters.
SECTION 6.07 Directors' and Officers' Indemnification and Insurance.
(a) The Articles of Incorporation and Bylaws of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification than are
set forth in Article VI of the Bylaws of the Company, which provisions shall not
be amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who at any time to and including the Effective Time were
directors, officers, employees, fiduciaries or agents of the Company in respect
of acts or omissions occurring at or prior to the Effective Time (including,
without limitation, the matters contemplated by this Agreement), unless such
modification shall be required by law. From and after the Purchaser's Election
Date, the Company shall not amend, repeal or otherwise modify the
indemnification and advancement of expenses provisions of Article VI of the
Bylaws of the Company or the indemnification or advancement of expenses
provisions in the Articles of Incorporation or Bylaws of any of the Subsidiaries
in any manner that would adversely affect the rights thereunder of individuals
who at any time to and including the Effective Time were directors, officers,
employees, fiduciaries or agents of the Company or any of the Subsidiaries in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the matters contemplated by this Agreement),
unless such modification is required by law. Any determinations made pursuant to
Section VI of the Bylaws of the Company, or analogous provisions of the Articles
of Incorporation or Bylaws of any of the Subsidiaries, with respect to the
appropriateness of indemnification shall be made in good faith.
(b) The Company shall, to the fullest extent permitted under applicable
law, indemnify and hold harmless, and, after the Effective Time, the Surviving
Corporation shall, to the fullest extent permitted under applicable law,
indemnify and hold harmless, each present and former director, officer,
employee, fiduciary and agent of the Company and each Subsidiary (collectively,
the "Indemnified Parties") against all costs and expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission in their capacity as an officer, director, employee,
fiduciary or agent, whether occurring before or after the Effective Time, for a
period of six years after the date hereof (and shall pay any expenses in advance
of the final disposition of any such action or proceeding to each Indemnified
Party to the fullest extent permitted under Nevada Law, and, with respect to
Indemnified Parties who are or were directors or officers of the Company, upon
receipt from the Indemnified Party to whom expenses are advanced of any
undertaking to repay such advances required under Nevada Law). In the event of
any such claim, action, suit, proceeding or investigation, (i) the Company or
the Surviving Corporation, as the case may be, shall pay the reasonable fees and
expenses of counsel selected by the Indemnified
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Parties, which counsel shall be reasonably satisfactory to the Company or the
Surviving Corporation, promptly after statements therefor are received (subject
to the provision of an undertaking as set forth in the prior sentence, if
applicable) and (ii) the Company and the Surviving Corporation shall cooperate
in the defense of any such matter; provided, however, that neither the Company
nor the Surviving Corporation shall be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld);
provided further that neither the Company nor the Surviving Corporation shall be
obligated pursuant to this Section 6.07(b) to pay the fees and expenses of more
than one counsel for all Indemnified Parties in any single action except to the
extent that two or more of such Indemnified Parties shall have conflicting
interests in the outcome of such action; and provided further that, in the event
that any claim for indemnification is asserted or made within such six-year
period, all rights to indemnification in respect of such claim shall continue
until the disposition of such claim.
(c) Each of the Company, from and after the date of this Agreement and
to and including the Effective Time, and the Surviving Corporation, from the
Effective Time until six years thereafter, shall use its best efforts to
maintain in effect, if available, the current directors' and officers' liability
insurance policies maintained by the Company (provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions which are not materially less favorable) with
respect to matters occurring on or prior to the Effective Time; provided,
however, that in no event shall the Surviving Corporation be required to expend
pursuant to this Section 6.07(d) more than an amount per year equal to 250% of
current annual premiums paid by the Company for such insurance (which annual
premiums the Company represents to be approximately $110,000).
(d) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Parent's option, Parent, shall
assume the obligations set forth in this Section 6.07.
SECTION 6.08 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 causes any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect and (ii) any
failure of the Company, Parent or 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 6.08 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice..
SECTION 6.09 Further Action; Reasonable Best Efforts. Upon the terms
and subject to the conditions hereof, each of the parties hereto shall (i) make
promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act with respect to the Transactions and (ii) use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate
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and make effective the Transactions, including, without limitation, using its
reasonable best efforts to obtain all licenses, permits (including, without
limitation, environmental permits), consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts
with the Company and the Subsidiaries as are necessary for the consummation of
the Transactions and to fulfill the conditions to the Offer and the Merger and
(iii) except as contemplated by this Agreement, use its reasonable best efforts
not to take any action, or enter into any transaction, which would cause any of
its representations or warranties contained in this Agreement to be untrue or
result in a breach of any covenant made by it in 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 proper officers and directors of
each party to this Agreement shall use their reasonable best efforts to take all
such action.
SECTION 6.10 Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or any Transaction and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with a
national securities exchange or foreign securities exchange to which Parent or
the Company is a party.
SECTION 6.11 Confidentiality Agreement. The Company hereby waives the
provisions of the Confidentiality Agreement as and to the extent necessary to
permit the consummation of each Transaction. Upon the acceptance for payment of
Shares pursuant to the Offer, the Confidentiality Agreement shall be deemed to
have terminated without further action by the parties thereto.
ARTICLE VII.
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Merger. The respective obligations of
each party to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the Transactions,
including, without limitation, the Merger, shall have been approved and
adopted by the affirmative vote of the stockholders of the Company
(unless the vote of the stockholders is not required by Nevada Law);
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated;
(c) No Order. No foreign, United States or state governmental
authority or other agency or commission or foreign, United States or
state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, executive
order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of
making the acquisition of Shares by Parent or Purchaser or
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any affiliate of either of them or the consummation of the Merger
illegal or otherwise restricting, preventing or prohibiting
consummation of the Transactions; and
(d) Offer. Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer; provided, however, that neither Parent nor Purchaser shall be
entitled to assert the failure of this condition if, in breach of this
Agreement or the terms of the Offer, Purchaser fails to purchase any
Shares validly tendered and not withdrawn pursuant to the Offer.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent, Purchaser and the Company prior to Purchaser's
Election Date; or
(b) By Parent, Purchaser or the Company if (i) the Effective
Time shall not have occurred on or before December 31, 1997; provided,
however, that the right to terminate this Agreement under this Section
8.01(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before such date
or (ii) any court of competent jurisdiction in the United States or
other governmental authority shall have issued an order, decree, ruling
or taken any other action restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable; or
(c) By Parent, upon approval of its Board of Directors, if (i)
due to an occurrence or circumstance that would result in a failure to
satisfy any condition set forth in Annex A hereto, Purchaser shall have
(A) failed to commence the Offer within 30 days following the date of
this Agreement, (B) terminated the Offer without having accepted any
Shares for payment thereunder or (C) failed to pay for Shares pursuant
to the Offer within 90 days following the commencement of the Offer;
unless such action or inaction under (A), (B) or (C) shall have been
caused by or resulted from the failure of Parent or Purchaser to
perform in any material respect any material covenant or agreement of
either of them contained in this Agreement or the material breach by
Parent or Purchaser of any material representation or warranty of
either of them contained in this Agreement or (ii) prior to the
purchase of Shares pursuant to the Offer, the Board or any committee
thereof shall have withdrawn or modified in a manner adverse to
Purchaser or Parent its approval or recommendation of the Offer, this
Agreement, the Merger or any other Transaction or shall have
recommended another merger, consolidation, business combination with,
or acquisition of, the Company or its assets or
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another tender offer or exchange offer for Shares, or shall have
resolved to do any of the foregoing; or
(d) By the Company, upon approval of the Board, if (i) due to
an occurrence or circumstance that would result in a failure to satisfy
any of the conditions set forth in Annex A hereto, Purchaser shall have
(A) failed to commence the Offer within 30 days following the date of
this Agreement, (B) terminated the Offer without having accepted any
Shares for payment thereunder or (C) failed to pay for Shares pursuant
to the Offer within 90 days following the commencement of the Offer,
unless such action or inaction under (A), (B), and (C) shall have been
caused by or resulted from the failure of the Company to perform in any
material respect any material covenant or agreement of it contained in
this Agreement or the material breach by the Company of any material
representation or warranty of it contained in this Agreement or (ii)
prior to the purchase of Shares pursuant to the Offer, the Board shall
have withdrawn or modified in a manner adverse to Purchaser or Parent
its approval or recommendation of the Offer, this Agreement, the Merger
or any other Transaction in order to approve the execution by the
Company of a definitive agreement providing for the acquisition of the
Company or any of its assets by a sale, merger or other business
combination or in order to approve a tender offer or exchange offer for
Shares by a third party, in either case, as the Board determines in
good faith that such action is required for the Board to comply with
its fiduciary duties to stockholders, after consultation with its
independent legal counsel and financial advisers, and is on terms more
favorable to the Company's stockholders than the Offer and the Merger
taken together; provided, however, that such termination under this
clause (ii) shall not be effective until the Company has made payment
to Parent of the Fee (as hereinafter defined) required to be paid
pursuant to Section 8.03(a) and has deposited with a mutually
acceptable escrow agent U.S. $3.0 million for reimbursement to Parent
and Purchaser of Expenses (as hereinafter defined).
SECTION 8.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void, and there shall be no liability on the part of any party hereto, except as
set forth in Sections 8.03 and 9.01, and nothing herein shall relieve any party
from liability for any breach hereof.
SECTION 8.03 Fees and Expenses. (a) In the event that
(i) any person (including, without limitation,
the Company or any affiliate thereof), other than Parent or any
affiliate of Parent, shall have become the beneficial owner of more
than 25% of the then outstanding Shares and this Agreement shall have
been terminated pursuant to Section 8.01 and within 12 months of such
termination a Third Party Acquisition (as defined hereinafter) shall
occur; or
(ii) any person shall have commenced, publicly
proposed or communicated to the Company a proposal that is publicly
disclosed for a tender or exchange offer for 25% or more (or which,
assuming the maximum amount of securities that could be purchased,
would result in any person beneficially owning 25% or more of the then
outstanding Shares or otherwise for the direct or indirect acquisition
of the
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Company or all or substantially all of its assets for per Share
consideration having a value greater than the Per Share Amount and (x)
the Offer shall have remained open for at least 20 business days, (y)
the Minimum Condition shall not have been satisfied and (z) this
Agreement shall have been terminated pursuant to Section 8.01; or
(iii) this Agreement is terminated pursuant to
Section 8.01(c)(ii) or 8.01(d)(ii);
then, in any such event, the Company shall pay Parent promptly (but in no event
later than one business day after the first of such events shall have occurred)
a fee of U.S. $10.0 million (the "Fee"), which amount shall be payable in
immediately available funds, plus all Expenses (as hereinafter defined).
(b) Provided that neither Parent nor Purchaser is in material breach of
its obligations under this Agreement, if (i) this Agreement is terminated
pursuant to Section 8.01(c) due to the occurrence of the condition set forth in
paragraph (g) of Annex A or (ii) this Agreement is terminated pursuant to
Section 8.01(c) because of the occurrence of the condition set forth in
paragraph (f) of Annex A, then, in either case (i) or (ii), the Company shall
promptly reimburse Parent and Purchaser for all Expenses.
(c) "Expenses" means all out-of-pocket expenses and fees up to U.S.
$3.0 million in the aggregate (including, without limitation, fees and expenses
payable to all banks, investment banking firms, other financial institutions and
other persons and their respective agents and counsel for arranging, committing
to provide or providing any financing for the Transactions or structuring the
Transactions and all fees of counsel, accountants, experts and consultants to
Parent and Purchaser, and all printing and advertising expenses) actually
incurred or accrued by either of them or on their behalf in connection with the
Transactions, including, without limitation, the financing thereof, and actually
incurred or accrued by banks, investment banking firms, other financial
institutions and other persons and assumed by Parent and Purchaser in connection
with the negotiation, preparation, execution and performance of this Agreement,
the structuring and financing of the Transactions and any financing commitments
or agreements relating thereto.
(d) Except as set forth in this Section 8.03, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not any Transaction is
consummated.
(e) In the event that the Company shall fail to pay the Fee or any
Expenses when due, the term "Expenses" shall be deemed to include the costs and
expenses actually incurred or accrued by Parent and Purchaser (including,
without limitation, fees and expenses of counsel) in connection with the
collection under and enforcement of this Section 8.03, together with interest on
such unpaid Fee and Expenses, commencing on the date that the Fee or such
Expenses became due, at a per annum rate equal to the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York, from time to time, in
the City of New York, as such bank's prime rate plus 1.00 percentage point. In
addition, in connection with any other action or proceeding by any party hereto
against any other party hereto alleging a breach of a representation, warranty,
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covenant or agreement set forth herein, the prevailing party in such action or
proceeding shall be entitled to recover costs and expenses actually incurred or
accrued (including, with limitation, fees and expenses of counsel) in connection
with the prosecution or defense (as the case may be) of such action or
proceeding.
(f) "Third Party Acquisition" means the occurrence of any of the
following events: (i) the acquisition of the Company by merger, consolidation or
other business combination transaction by any person other than Parent,
Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition by
any Third Party of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole; (iii) the acquisition by a Third Party of 50% or
more of the outstanding Shares whether by tender offer, exchange offer or
otherwise; (iv) the adoption by the Company of a plan of liquidation or the
declaration or payment of an extraordinary dividend; or (v) the repurchase by
the Company or any of its Subsidiaries of 50% or more of the outstanding Shares.
SECTION 8.04 Amendment. Subject to the limitations set forth in Section
6.03(c), this Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that, after the approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each Share shall be converted upon consummation
of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 8.05 Waiver. Subject to the limitations set forth in Section
6.03(c), at any time prior to the Effective Time, any party hereto may (i)
extend the time for the performance of any obligation or other act of any other
party hereto, (ii) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any agreement or condition contained herein. Any such extension
or waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Articles II and IX and Section 6.07 shall survive the Effective Time
indefinitely and those set forth in Sections 6.04(c), 8.03 and Article IX shall
survive termination indefinitely.
SECTION 9.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at
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such other address for a party as shall be specified in a notice given in
accordance with this Section 9.02):
if to Parent or Purchaser:
United Dominion Industries Limited
2300 One First Union Center
301 South College Street
Charlotte, North Carolina 28202-6039
Attention: Mr. Richard L. Magee
with a copy to:
Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street
Suite 1900
Charlotte, North Carolina 28246
Attention: Mr. Stephen M. Lynch
if to the Company:
CORE Industries Inc
500 North Woodward Avenue
Bloomfield Hills, Michigan 48304
Attention: Mr. Lawrence J. Murphy
with a copy to:
Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, Michigan 48226
Attention: Mr. Donald J. Kunz
SECTION 9.03 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified person;
(b) "beneficial owner" with respect to any Shares means a person who
shall be deemed to be the beneficial owner of such Shares (i) that such person
or any of its affiliates or associates (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) beneficially owns, directly or indirectly,
(ii) that such person or any of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights,
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exchange rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or (iii) that are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or person with whom such person or
any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
Shares;
(c) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government;
and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled by such
person, directly or indirectly, through one or more intermediaries.
SECTION 9.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05 Entire Agreement, Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes, except as set forth in Sections 6.04(c) and 6.11, all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. This Agreement shall not be
assigned by operation of law or otherwise, except that Parent and Purchaser may
assign all or any of their rights and obligations hereunder to any affiliate of
Parent provided that no such assignment shall relieve the assigning party of its
obligations hereunder if such assignee does not perform such obligations.
SECTION 9.06 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by
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reason of this Agreement, other than Section 6.07 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.07 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 9.08 Governing Law. Except to the extent that Nevada Law is
mandatorily applicable to the Offer, the Merger and the rights of the
stockholders of the Company, this Agreement shall be governed by, and construed
in accordance with, the laws of the State of North Carolina regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws.
SECTION 9.09 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.10 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
UNITED DOMINION INDUSTRIES LIMITED
Attest:
By: /s/ William R. Holland
--------------------------------------------
/s/ Richard L. Magee Name: William R. Holland
- --------------------------- Title: Chairman and Chief Executive Officer
Name: Richard L. Magee
Secretary
By: /s/ Richard A. Bearse
--------------------------------------------
Name: Richard A. Bearse
Title: Senior Vice President
UD NEVADA CORP.
Attest:
By: /s/ William R. Holland
--------------------------------------------
/s/ Richard L. Magee Name: William R. Holland
- --------------------------- Title: Chairman and Chief Executive Officer
Name: Richard L. Magee
Secretary
By: /s/ Richard A. Bearse
--------------------------------------------
Name: Richard A. Bearse
Title: Senior Vice President
CORE INDUSTRIES INC
Attest:
By: /s/ David R. Zimmer
--------------------------------------------
/s/ Lawrence J. Murphy Name: David R. Zimmer
- --------------------------- Title: President and Chief Executive Officer
Name: Lawrence J. Murphy
Secretary
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ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
not have been satisfied, (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer
or (iii) at any time on or after the date of this Agreement, and prior to the
acceptance for payment of Shares, any of the following conditions shall exist:
(a) there shall have been instituted or be pending any action
or proceeding brought by any governmental, administrative or regulatory
authority or agency, domestic or foreign, before any court or
governmental, administrative or regulatory authority or agency,
domestic or foreign, (i) challenging or seeking to make illegal,
materially delay or otherwise directly or indirectly restrain or
prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Parent,
Purchaser or any other affiliate of Parent pursuant to the Offer, or
the consummation of any other Transaction, or seeking to obtain
material damages in connection with any Transaction; (ii) seeking to
prohibit or limit materially the ownership or operation by the Company,
Parent or any of their subsidiaries of all or any material portion of
the business or assets of the Company, Parent or any of their
subsidiaries, or to compel the Company, Parent or any of their
subsidiaries to dispose of or hold separate all or any material portion
of the business or assets of the Company, Parent or any of their
subsidiaries, as a result of the Transactions; (iii) seeking to impose
or confirm limitations on the ability of Parent, Purchaser or any other
affiliate of Parent to exercise effectively full rights of ownership of
any Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer, or otherwise on all
matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of this Agreement and the
transactions contemplated hereby; or (iv) seeking to require
divestiture by Parent, Purchaser or any other affiliate of Parent of
any Shares;
(b) there shall have been issued any injunction, order or
decree by any court or governmental, administrative or regulatory
authority or agency, domestic or foreign, resulting from any action or
proceeding brought by any person other than any governmental,
administrative or regulatory authority or agency, domestic or foreign,
that (i) restrains or prohibits the making of the Offer or the
consummation of any other Transaction; (ii) prohibits or limits
ownership or operation by the Company, Parent or Purchaser of all or
any material portion of the business or assets of the Company, taken as
a whole, Parent or any of their subsidiaries, or compels the Company,
Parent or any of their subsidiaries to dispose of or hold separate all
or any material portion of the business or assets of the Company,
Parent or any of their subsidiaries, in each case as a result of the
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Transactions; (iii) imposes limitations on the ability of Parent or
Purchaser to exercise effectively full rights of ownership of any
Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer, or otherwise on all
matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of this Agreement and the
Transactions; (iv) requires divestiture by Parent or Purchaser of any
Shares;
(c) there shall have been any action taken, or any statute,
rule, regulation, order or injunction enacted, entered, enforced,
promulgated, amended, issued or deemed applicable to (i) Parent, the
Company or any subsidiary or affiliate of Parent or the Company or (ii)
any Transaction, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency,
domestic or foreign, in the case of both (i) and (ii) other than the
routine application of the waiting period provisions of the HSR Act to
the Offer or the Merger, in each case that results in any of the
consequences referred to in clauses (i) through (iv) of paragraph (b)
above;
(d) there shall have occurred any change, condition, event or
development that has a Material Adverse Effect with respect to the
Company;
(e) (i) the Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Parent or Purchaser the
approval or recommendation of the Offer, the Merger or the Agreement or
approved or recommended any takeover proposal or any other acquisition
of Shares other than the Offer and the Merger or (ii) the Board or any
committee thereof shall have resolved to do any of the foregoing;
(f) any representation or warranty of the Company in the
Agreement shall not be true and correct with the effect that such
failure of any such representation or warranty to be true and correct,
when taken together with all other such failures of such
representations and warranties to be true and correct, in the aggregate
has, or is reasonably likely to have, a Material Adverse Effect;
provided, however that, for the purpose of the foregoing condition, in
determining whether any such representation or warranty is true or
correct, any qualification as to materiality or Material Adverse Effect
contained in any such representation and warranty shall be deemed not
to apply;
(g) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or material covenant of the Company to be
performed or complied with by it under the Agreement;
(h) the Agreement shall have been terminated in accordance
with its terms; or
(i) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of or
payment for Shares thereunder; which, in the sole judgment of
Purchaser, in any such case, and regardless of the circumstances
(including any action or inaction by Parent or any of its affiliates)
giving rise to any such condition, makes it inadvisable to proceed with
such acceptance for payment or payment
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The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
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ANNEX B
For a period of one year from the Effective Time, Parent shall, or shall cause
the Company or the Surviving Corporation to, maintain the Plans (other than the
Stock Option Plans) which the Company maintains for the benefit of, or which are
open to, a majority of the employees of the Company on the terms in effect on
the date hereof, or such other plans, arrangements or programs as will provide
employees with benefits that in the aggregate are substantially equivalent to,
and no less favorable than, those provided under the Plans (other than the Stock
Option Plans) as in effect on the date hereof. In addition, Parent shall, or
shall cause the Surviving Corporation to, assume and agree to perform those
Change of Control Agreements listed in Schedule 6.06 of the Disclosure Schedule
in the same manner and to the same extent that the Company is required to
perform such agreements.
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