SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
Bryan Steam Corporation
(Name of Subject Company)
Bryan Steam Corporation
(Name of Person(s) Filing Statement)
Common Stock, par value $10.00 per share
(Title of Class of Securities)
117547 109
(CUSIP Number of Class of Securities)
H. Jesse McVay
Bryan Steam Corporation
P.O. Box 27
Peru, Indiana 46970
(765) 473-6651
With copy to:
Eric R. Moy, Esquire
Barnes & Thornburg
11 South Meridian Street
Indianapolis, Indiana 46204
(317) 236-1313
(Name, address and telephone number of
person authorized to receive notice
and communications on behalf of the
person(s) filing statement)
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Bryan Steam Corporation, a New
Mexico corporation ("Bryan" or the "Company"). The address of the principal
executive offices of the Company is State Road 19 North, P.O. Box 27, Peru,
Indiana 46970. The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9" or
the "Statement") relates is the Company's Common Stock, par value $10 per share
(the "Common Stock" or the "Shares").
ITEM 2. TENDER OFFER OF THE PURCHASER
This Statement relates to the tender offer by Burnham Acquisition
Corporation, a New Mexico corporation ("Purchaser"), and a wholly owned
subsidiary of Burnham Corporation, a New York corporation ("Parent"), disclosed
in a Tender Offer Statement on Schedule 14D-1, dated September 29, 1998 (the
"Schedule 14D-1"), to purchase all outstanding Shares for a purchase price of
$152.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
September 29, 1998 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), copies of which are filed herewith as
Exhibits A and B, respectively, and incorporated herein by reference.
The Offer is being made pursuant to the terms of an Agreement and Plan
of Merger, dated as of September 23, 1998 (the "Merger Agreement"), by and among
Parent, Purchaser and the Company, a copy of which is filed herewith as Exhibit
C and incorporated herein by reference. Pursuant to the Merger Agreement, after
completion of the purchase of Shares pursuant to the Offer and the satisfaction
of other provisions of the New Mexico Business Corporation Act (the "NMBCA"),
Purchaser will be merged with and into the Company (the "Merger"), with the
Company being the surviving corporation in the Merger and a wholly owned
subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), by virtue of the Merger and without any action on the part of the
Company, Parent or Purchaser, each Share then outstanding (other than Shares
owned by Parent, Purchaser or any subsidiary of Parent, Purchaser or the Company
or held in the treasury of the Company, all of which shall be canceled, and
Shares held by shareholders who perfect their appraisal rights under the NMBCA)
will be converted into and represent the right to receive $152.00 in cash per
Share, subject to applicable withholding or back-up withholding taxes, if any,
without interest thereon (the "Merger Consideration").
Based on information in the Offer to Purchase, the principal executive
offices of Purchaser and Parent are 1241 Harrisburg Pike, Lancaster,
Pennsylvania 17603. Copies of the press release issued by the Company and Parent
are filed herewith as Exhibit D, and incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND.
(a) Name and Address of The Company. The name and address of the
Company, which is the person filing this Statement, is set forth in Item 1
above.
(b) Material Contracts, etc. Except as set forth in this Item 3(b) or
incorporated herein by reference, to the knowledge of the Company, as of the
date hereof there exists no material contract, agreement, arrangement or
understanding and no actual or potential conflict of interest between the
Company or its affiliates and (1) the executive officers, directors or
affiliates of the Company or (2) Parent or Purchaser or their respective
executive officers, directors or affiliates.
(b)(1)
The Stockholders' Agreement.
General. In order to induce Parent to execute and deliver the Merger
Agreement, each of Robert Miller, Ina Mae Miller, Beverly Bryan, Georgeanna
Williams, as Trustee of the Georgeanna Williams Revocable Living Trust, Lisa
Lockhart, Charles Miller, Kenneth Starkey, Bryan Herd, Sharon Herd, Marilyn
Malott, Paul Malott, Victor Herd and Kristine Herd
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have entered into a Stockholders' Agreement, dated as of September 23, 1998,
with Parent. The stockholders who have signed the Stockholders' Agreement
together beneficially own 106,315 Shares, constituting approximately 55.6% of
the outstanding Shares.
The following is a summary of the material terms of the Stockholders'
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of which has
been filed with the Securities and Exchange Commission (the "Commission") as
Exhibit E to the Schedule 14D-9.
Voting of Shares. The stockholders of the Company who signed the
Stockholders' Agreement have agreed as set forth below to tender their Shares
and have irrevocably appointed Parent as the exclusive attorney-in-fact and
proxy of such stockholder, with full power of substitution. Parent, as proxy of
such holder has been granted the power:
I. to attend any and every meeting (whether annual or special or
both) of the stockholders of the Company, including any
adjournment or postponement thereof, on behalf of such
stockholder, and at each such meeting, with respect to all
shares of common stock of the Company owned by such
stockholder on the date of execution and delivery of the
Stockholders' Agreement or acquired thereafter that are
entitled to vote at each such meeting or over which such
stockholder has voting power (and any and all other shares of
common or preferred stock of the Company or other securities
issued on or after such date in respect of any such shares),
including, without limitation, the shares indicated opposite
such stockholder's signature at the end of the Stockholders'
Agreement:
A. to vote in favor of the Merger (as such term is
defined in the Merger Agreement) and to vote in favor
of the adjournment of any meeting, which Parent
believes may facilitate the obtaining the approval of
the Merger; and otherwise to act with respect to such
shares as said attorney-in-fact and proxy (or his
substitute) shall deem necessary or appropriate to
cause the approval of the Merger by the necessary
majority required under applicable law;
B. to vote and otherwise act with respect to such shares
in such a manner as said attorney-in-fact and proxy
(or his substitute) shall deem proper, with respect
to (x) proposals or offers (other than the Merger)
relating to (1) any proposed sale, lease or other
disposition of all or a substantial amount of the
assets of the Company or any of its subsidiaries, (2)
any proposed merger, consolidation or other
combination of the Company or any of its subsidiaries
with any other entity, (3) any sale, issuance,
disposition or granting of rights in respect of the
shares of the Company or of any subsidiary of the
Company or (4) any other proposed action of the
Company or any of its subsidiaries requiring
stockholder approval that would conflict with or
violate the Company's representations, covenants or
obligations under the Merger Agreement, adversely
affect the Company's ability to consummate the Merger
or the other transactions contemplated by the Merger
Agreement or otherwise impede, interfere with or
discourage the Merger (each of the actions described
in (1) - (4) above, an "Acquisition Proposal"), and
(y) any procedural matters presented at any such
meeting at which any action is scheduled to be taken
with respect to the Merger or any Acquisition
Proposal;
II. if no meeting of stockholders is scheduled in accordance with
the Merger Agreement or if any such meeting is canceled,
postponed or adjourned other than with Parent's approval, to
call a special stockholders meeting of the Company for the
purpose of (i) approving the Merger or any action with respect
thereto, or (ii) taking action with respect to any Acquisition
Proposal; and
III. to waive, for the duration of this Stockholders' Agreement,
any and all rights such stockholder may have to exercise any
rights as dissenting shareholder under Sections 53-15-3 and
53-15-4 of the NMBCA, subject to the right to receive the
consideration as specifically provided in the Merger
Agreement.
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Restrictions on Transfer. Each of the stockholders who is a party to
the Stockholders' Agreement have agreed (a) not to deposit any of such
stockholder's shares of common stock of the Company into a voting trust or enter
into a voting agreement with respect to such shares; (b) not to sell, transfer
or otherwise dispose of or pledge or otherwise encumber, any shares of common
stock of the Company, or options or warrants to purchase such shares, unless the
purchaser or transferee of such shares or rights agrees in writing (a copy of
which shall be delivered by such stockholder to Parent and Purchaser) prior to
such sale, transfer or disposition to be bound by and subject to the provisions
contained in the Stockholders' Agreement; and (c) not, in his or her capacity as
stockholder, to solicit, initiate, encourage, endorse, support (including, by
providing information) or participate in any discussions regarding, any
Acquisition Proposal other than the Merger.
Irrevocable Proxy. Each of the stockholders who is a party to the
Stockholders' Agreement has affirmed that the proxy contained in the
Stockholders' Agreement is issued in connection with the Merger Agreement to
facilitate the transactions contemplated thereunder and in consideration of
Parent and Purchaser entering into the Merger Agreement and as such is coupled
with an interest and is irrevocable. The proxy contained in the Stockholders'
Agreement will terminate upon the earlier to occur of (a) the Effective Time as
defined in the Merger Agreement and (b) the termination of the Merger Agreement
in accordance with its terms. By execution and delivery of the Stockholders'
Agreement, each of the stockholders who are a party to the Stockholders'
Agreement has confirmed that such stockholder has received a copy of a
substantially final form of the Merger Agreement, and that all other information
deemed necessary by such stockholder concerning the Merger, the Merger Agreement
and the transactions contemplated thereunder or any other matters considered by
such stockholder to be relevant to the stockholder's decision to execute this
Agreement has been made available to such stockholder. All authority conferred
or agreed to be conferred in the Stockholders' Agreement survives the death,
insolvency, or incapacity of each the stockholders who is a party to the
Stockholders' Agreement and any obligation of any of such stockholder thereunder
is binding upon the heirs, personal representatives, successors and assigns of
such stockholder. The proxy contained in the Stockholders' Agreement revokes any
and all other proxies theretofore granted by each and every stockholder who is
party to the Stockholders' Agreement. Each stockholder who is a party to the
Stockholders' Agreement has agreed to not give any subsequent proxy or grant any
option with respect to such shares (and such proxy or option if given will be
deemed not to be effective) that purports to grant authority within the scope of
the authority conferred in the Stockholders' Agreement.
Covenant to Tender Shares. In order further to induce Purchaser and
Parent to enter into the Merger Agreement, each stockholder who signed the
Stockholders' Agreement thereby further agreed validly to tender (or cause the
record owner of such shares validly to tender), and not to withdraw, pursuant to
and in accordance with the terms of the Offer, not later than the tenth business
day after commencement of the Offer pursuant to the Merger Agreement and Rule
14d-2 under the Exchange Act, the number of Shares set forth opposite such
stockholder's name on the signature pages to the Stockholders' Agreement (the
"Existing Securities" and, together with any Shares acquired by such stockholder
(whether beneficially or of record) after the date of the Stockholders'
Agreement and prior to the termination of the Stockholders' Agreement by means
of purchase, dividend, distribution, transfer, issuance, or exercise of options
or other rights to acquire the Shares (the "Securities")). If any stockholder
who signed the Stockholders' Agreement acquires Securities after the date of the
Stockholders' Agreement, such stockholder has agreed to tender (or cause the
record holder to tender) pursuant to the Offer such Securities on or before such
tenth business day or, if later, on or before the second business day after such
acquisition. Each stockholder who signed the Stockholders' Agreement
acknowledged and agreed that Purchaser's obligation to accept for payment,
purchase and pay for the Securities in the Offer, including the Securities
beneficially owned by such stockholder, is subject to the terms and conditions
of the Offer.
Specific Performance. Each stockholder who executed the Stockholders'
Agreement acknowledged that money damages would be both incalculable and an
insufficient remedy for any breach of the Stockholders' Agreement by it, and
that any such breach would cause Parent and Purchaser irreparable harm.
Accordingly, each such stockholder agreed that in the event of any breach or
threatened breach of this Agreement, Parent and Purchaser, in addition to any
other remedies at law or in equity they may have, is entitled, without the
requirement of posting a bond or other security, to equitable relief, including
injunctive relief and specific performance.
Representations. Each stockholder who executed the Stockholders'
Agreement represented and warranted that, as of the date of the Stockholders'
Agreement, such stockholder (a) owned personally and directly the number of
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shares of the Shares set forth in the signature page of the Stockholders'
Agreement, (b) owned such stock free and clear of all liens, security interests,
encumbrances, options and other adverse interests of every kind whatsoever, and
(c) had the power and right to execute and deliver the Stockholders' Agreement,
and perform such stockholder's obligations thereunder, without the consent or
agreement of any other person or entity.
Release of Claims. Each of the stockholders who executed the
Stockholders' Agreement irrevocably waived and released any and all claims such
stockholder may have as a holder of Shares against any employee, officer or
director of the Company or any of its subsidiaries in respect of the conduct of
such employee, officer or director in his or her capacity as such prior to
consummation of the Merger.
Governing Law. The Stockholders' Agreement is governed by the laws of
the State of Indiana except that the provisions hereof with respect to the
granting of proxies, the exercise of the rights granted in respect of such
proxies and the associated appointment of attorneys-in-fact is governed by the
laws of the jurisdiction of incorporation of the Company.
Employment Agreement with McVay.
The Company has an Employment Agreement, dated April 1, 1998, with H.
Jesse McVay. Such agreement provides for an initial term of three (3) years,
automatically extended for an additional year on each anniversary of the date of
such agreement unless either party gives written notice not to so extend within
ninety (90) days prior to an annual anniversary, in which case no further
extension shall occur and the term shall end two years subsequent to the annual
anniversary immediately following the anniversary prior to which the notice not
to extend for an additional year is given. Such agreement provides for an
initial annual salary of $77,200 which may be increased from time to time by the
Company. Pursuant to such agreement, if the Company terminates the employment of
Mr. McVay without cause, or if Mr. McVay terminates his employment by reason of
a material breach of any term, condition or covenant of the Company under the
Employment Agreement, the Company must pay to Mr. McVay a lump sum equal to one
hundred percent (100%) of his total salary and bonus (excluding the Transaction
Bonus described below) for the preceding calendar year, plus costs of engaging a
placement firm to find alternative employment, and the Company must maintain,
for a period of one year after the date of termination, each employee medical
and life benefit plan in which Mr. McVay was entitled to participate immediately
prior to the date of termination, unless an essentially equivalent benefit is
provided by another source. Such agreement also provides for the payment of a
transaction bonus (the "Transaction Bonus") in the amount of $30,000 in the
event of a change of control (as defined in the agreement), payable one half on
the date of the change of control and one half on the date six months after the
change in control. The Merger Agreement provides that such Transaction Bonus
will be triggered by the Offer.
The foregoing summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated by reference and a copy of which has been
filed with the Commission as Exhibit F to the Schedule 14D-9.
Employment Agreement with Bishop.
The Company has an Employment Agreement, dated April 1, 1998, with
Albert J. Bishop. Such agreement provides for an initial term of five years and
initial annual salary of $12,000 which may be increased from time to time by the
Company. Pursuant to such agreement, if the Company terminates the employment of
Mr. Bishop without cause, or if Mr. Bishop terminates his employment by reason
of a material breach of any term, condition or covenant of the Company under the
Employment Agreement, the Company must continue to pay to Mr. Bishop monthly
payments equal to his base compensation for the full remainder of the term of
the agreement, and the Company must maintain, for a period of one year after the
date of termination, each employee medical and life benefit plan in which Mr.
Bishop was entitled to participate prior to the date of termination, unless an
essentially equivalent benefit is provided by another source. Such agreement
also provides for the payment of a Transaction Bonus in the amount of $50,000 in
the event of a change of control (as defined in the agreement), payable one half
on the date of the change of control and one half on the date six months after
the change in control. The Merger Agreement provides that the Transaction Bonus
will be triggered by the Offer.
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The foregoing summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated by reference and a copy of which has been
filed with the Commission as Exhibit G to the Schedule 14D-9.
Other Employment Agreements.
The Company also has Employment Agreements, dated April 1, 1998, with
each of the following executive officers of the Company: Richard D. Holmquist,
Kurt J. Krauskopf, Terrence D. Kubly, P. Wayne McCune, Gregory A. Minard, Sandra
A. Mitting and Michael D. Sturch (each an "Employment Agreement" and,
collectively, the "Employment Agreements"). The Employment Agreements of Mr.
Holmquist, Mr. Krauskopf, Mr. Minard, Ms. Mitting and Mr. Sturch provide for an
initial term of two (2) years and the Employment Agreements of Mr. Kubly and Mr.
McCune provide for an initial term of three (3) years. Pursuant to the
Employment Agreements, if the Company terminates the employment of such
employees without cause, or if the respective employee terminates his or her
employment by reason of a material breach of any term, condition or covenant of
the Company under the applicable Employment Agreement, the Company must pay to
the respective employee a lump sum equal to fifty percent (50%) of his or her
total salary and bonus for the preceding calendar year (excluding any
Transaction Bonus), plus the costs of engaging a placement firm to find
alternative employment, and the Company must maintain, for a period of one year
after the date of termination, each employee medical and life benefit plan in
which the respective employee was entitled to participate immediately prior to
the date of termination, unless an essentially equivalent benefit is provided by
another source. Such agreement also provides for the payment of a Transaction
Bonus in the event of a change of control (as defined in the agreement), payable
one half on the date of the change of control and one half on the date six
months after the change in control. The Transaction Bonuses provided in the
Employment Agreements for Messrs. Holmquist, Krauskopf, Kubly, McCune, Minard,
Mitting and Sturch are $4,000, $8,000, $8,000, $8,000, $4,000, $2,000 and
$4,000, respectively. The Merger Agreement provides that the Transaction Bonuses
will be triggered by the Offer.
The foregoing summary is not a complete description of the terms and
conditions of the Employment Agreements and is qualified in its entirety by
reference to the full text of the Employment Agreements which are incorporated
by reference and copies of which has been filed with the Commission as Exhibits
H through N to the Schedule 14D-9.
Goelzer Agreement.
On March 18, 1998, the Company and a management group led by H. Jesse
McVay and consisting of several senior management employees of the Company
(excluding Albert J. Bishop) engaged Goelzer & Co., Inc. ("Goelzer & Co.") to
represent such management group (the "Management Group") in arranging a
management-supported offer for up to 100% of the common equity of the Company.
Pursuant to a Letter Agreement by and among the Company, Goelzer & Co. and the
Management Group, dated March 18, 1998 and amended August 26, 1998, the Company
has agreed to pay to Goelzer & Co. a fee of $200,000.
The foregoing summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated by reference and a copy of which has been
filed with the Commission as Exhibit O to the Schedule 14D-9.
(b)(2) In connection with the transactions contemplated by the Merger,
the following agreements were entered into: (i) the Merger Agreement and (ii) a
Confidentiality Agreement, dated as of June 18, 1998, by and between the Company
(acting through its agent, Goelzer) and Parent (the "Confidentiality
Agreement").
The Merger Agreement.
The following is a summary of the material terms of the Merger
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof, which is incorporated herein by reference and a copy of which has
been filed with the Commission as Exhibit C to this Schedule 14D-9.
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The Offer. The Merger Agreement provides for the commencement of the
Offer, in connection with which Parent or Purchaser has expressly reserved the
right to waive conditions of the Offer, in whole or in part, at any time and
from time to time in their sole discretion. Purchaser has agreed, however, that
it will not, without the prior written consent of the Company, (i) decrease or
change the amount or form of consideration payable in the Offer, (ii) decrease
the number of Shares sought pursuant to the Offer, (iii) impose additional
conditions to the Offer, (iv) change the conditions of the Offer (provided that
Parent or Purchaser in their sole discretion may waive any of the conditions to
the Offer) or (v) make any change to any other provision of the Offer that is
materially adverse to the holders of the Shares. Purchaser is entitled to extend
the Offer in accordance with applicable law as follows: (i) if any of the
conditions to the Offer are not satisfied or waived by Purchaser as of any
scheduled expiration date, then Purchaser may extend the Offer from time to time
until the earlier of (a) the consummation of the Offer or (b) twenty business
days following the original expiration date of the Offer specified herein, and
(ii) if all conditions to the Offer are satisfied or waived as of any scheduled
expiration date, then Purchaser may extend the Offer from time to time by not
more than ten business days in the aggregate. The obligation of Purchaser to
consummate the Offer and to accept for payment and to pay for any Shares
tendered pursuant to the Offer will be subject only to the conditions set forth
in "--Conditions to the Offer."
Board Representation. Upon the purchase of Shares by Purchaser pursuant
to the Offer, it is not contemplated that any changes in the present Board of
Directors of the Company or Management of the Company will occur.
The Merger. The Merger Agreement provides that, upon the terms and
subject to the conditions of the Merger Agreement, and in accordance with the
relevant provisions of the NMBCA, Purchaser shall be merged with and into the
Company as soon as practicable following the satisfaction or waiver of the
conditions to the Merger. The Company shall be the Surviving Corporation and
shall continue its existence under the laws of New Mexico, and the Certificate
of Incorporation and the Bylaws of Purchaser as in effect immediately prior to
the Effective Time shall be the Certificate of Incorporation and Bylaws of the
Surviving Corporation (except the name of the Surviving Corporation shall be
Bryan Steam Corporation). H. Jesse McVay, Albert Morrison III and Ronald L.
Griffith will be the initial directors of the Surviving Corporation and H. Jesse
McVay (President), Ronald L. Griffith (Vice President), Kurt J. Krauskopf
(Treasurer, Comptroller and Secretary), Robert Berardi (Assistant Treasurer) and
Tammy McEwen (Assistant Secretary) will be the initial officers of the Surviving
Corporation. Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by Parent, Purchaser or any subsidiary
of Parent, Purchaser or the Company or held in the treasury of the Company, all
of which shall be canceled, and other than Dissenting Shares, as defined herein)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive in cash the Merger Price, upon
the surrender of the certificate representing such Shares. The parties to the
Merger Agreement shall cause the Merger to be consummated by filing with the
Corporation Commission of the State of New Mexico or its successor duly prepared
and executed Articles of Merger, as required by the NMBCA. The Merger will
become effective upon such filing or at such time thereafter as is provided
under applicable law.
Stockholder Meeting; Recommendation to Stockholders. Unless the Merger
is consummated in accordance with the "short-form" merger provisions under the
NMBCA, and subject to applicable law, the Company shall, through its Board of
Directors, duly call, give notice of, convene and hold a special meeting of its
stockholders (the "Shareholder Meeting") for the purpose of voting on the
adoption of the plan of merger set forth in the Merger Agreement as soon as
reasonably practicable following the consummation of the Offer but in any event
prior to the 90th day after the date of the Merger Agreement (subject to
unavoidable delays in receiving comments from the SEC Staff or in considering
and preparing responses to such comments). Except to the extent legally required
for the discharge of the Board of Directors' fiduciary duties as reflected in a
written opinion of independent legal counsel, Bryan shall, through its Board of
Directors, include in the Proxy Statement the recommendation of the Board of
Directors of Bryan that the shareholders of Bryan adopt the Merger Agreement and
approve the Merger, and the Company is required to use all reasonable efforts to
obtain the adoption and approval of its stockholders, and obtaining the opinion
of McDonald & Company Securities, Inc. ("McDonald & Co.") to the effect that the
Merger Price is fair to the Company's stockholders from a financial point of
view. Parent and Purchaser have agreed that, at the Shareholder Meeting, all of
the Shares acquired pursuant to the Offer or otherwise by Parent or Purchaser or
any of their affiliates will be voted in favor of the Merger.
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If Purchaser or any other direct or indirect subsidiary of Parent shall
acquire at least 90 percent of the outstanding Shares, each of Parent, Purchaser
and the Company may, if Purchaser so elects, take all necessary and appropriate
action to cause the Merger to become effective, as soon as practicable after the
consummation of the Offer, without a meeting of stockholders of the Company, in
accordance with Section 53-14-5 of the NMBCA.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to corporate
existence and good standing, capital structure, subsidiaries, corporate
authorization, absence of changes, Commission filings, consents and approvals,
no defaults under agreements, investment banking fees, employee benefits, labor
relations, litigation, taxes, compliance with applicable laws, environmental
matters, intellectual property, real property, insurance, material contracts,
and other matters.
Purchaser and Parent have also made certain representations and
warranties with respect to corporate existence and good standing, corporate
authorization, Commission filings, consents and approvals, no violations of
other agreements and other matters.
Conduct of Business and Other Covenants Pending the Merger. The Company
has agreed that, except as expressly contemplated or permitted by the Merger
Agreement (or to the extent that Parent may otherwise grant prior consent in
writing, which consent shall not be unreasonably withheld), during the period
from the date of the Merger Agreement to the Effective Date, the Company will
conduct its business only in, and the Company will cause each of its
subsidiaries not to take any action except in, the ordinary course consistent
with past practice (subject to the further limitations specified in the Merger
Agreement). In addition, the Company has agreed that it will, and it will cause
its subsidiaries to use, all commercially reasonable efforts to preserve intact
in all material respects its present business organization and reputation, to
keep available the services of its key officers and employees, to maintain its
assets and properties in good working order and condition (ordinary wear and
tear excepted), to preserve its relationships with customers and suppliers and
others having significant business dealings with them, to comply in all material
respects with all laws and orders of all governmental or regulatory authorities
applicable to them, and to maintain insurance (subject to consulting with Parent
prior to renewing any insurance policy), including, without limitation, product
liability insurance, in such amounts and against such risks and losses as was in
effect on June 30, 1998 (subject to the specific reinstatement of product
liability insurance for one of the Company's subsidiaries).
In addition, without limiting the generality of the foregoing and
except as expressly contemplated or permitted by the Merger Agreement, during
the period specified in the first sentence of the preceding paragraph, the
Company has agreed that, without the prior written consent of Parent, it will
not (and will cause its subsidiaries not to):
(i) amend or propose to amend its or their Articles of
Incorporation or By-laws;
(ii) (w) declare, set aside or pay any dividends on or
make other distributions in respect of any of its
capital stock other than the dividend of $2.00 per
share declared on the Shares on August 26, 1998 and
payable on September 15, 1998; (x) split, combine,
reclassify or take similar action with respect to any
of its capital stock or issue or authorize or propose
the issuance of any other securities or option in
respect of, in lieu of or in substitution for Shares,
(y) adopt a plan of complete or partial liquidation
or resolutions providing for or authorizing such
liquidation or a dissolution, merger, consolidation,
restructuring, recapitalization or other
reorganization or (z) directly or indirectly redeem,
repurchase or otherwise acquire any Shares or any
option with respect thereto;
(iii) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any Shares or any
option with respect thereto, or modify or amend any
right of any holder of outstanding Shares or options
with respect thereto;
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(iv) acquire (by merging or consolidating with, or by
purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other
manner) any business or any corporation, partnership,
association or other business organization or
division thereof or otherwise acquire or agree to
acquire any assets other than raw materials and
supplies acquired in the ordinary course of its
business consistent with past practice in amounts in
any one instance (or group of related instances) not
in excess of $250,000 and in each case pursuant to an
order or agreement requiring delivery of such raw
materials and supplies within 120 days after the
creation of such order or agreement;
(v) sell, lease, grant any security interest in or
otherwise dispose of or encumber any of its assets or
properties other than finished goods in the ordinary
course of business consistent with past practice
pursuant to orders as to which (x) no one order (or
group of related orders) involves an aggregate
selling price in excess of $150,000, and (y) (i) each
order is to be fully performed within 150 days after
its creation or (ii) in the case of orders for which
there is no definite date by which the orders must be
fully performed, the aggregate selling price for all
such orders that are more than 150 days old shall not
exceed $500,000;
(vi) except to the extent required by applicable law or
generally accepted accounting principals, (x) permit
any material change in (A) any pricing, marketing,
purchasing, investment, accounting, financial
reporting, inventory, receivable, credit, allowance
or tax practice or policy or (B) any method of
calculating any bad debt, contingency or other
reserve for accounting, financial reporting or tax
purposes or (y) make any material tax election or
settle or compromise any material income tax
liability with any governmental or regulatory
authority;
(vii) (x) other than working capital borrowings of up to
$300,000 under the Company's existing bank line of
credit, incur any indebtedness for borrowed money
(which shall be deemed for this purpose to include
entering into credit agreements, lines of credit or
similar arrangements, whether or not amounts are
borrowed thereunder) or guarantee any such
indebtedness, or (y) voluntarily purchase, cancel,
prepay or otherwise provide for a complete or partial
discharge in advance of a scheduled repayment date
with respect to, or waive any right under, any
indebtedness for borrowed money;
(viii) (x) enter into, adopt, amend in any material respect
(except as may be required by applicable law) or
terminate any Company benefit plan or other agreement
between the Company (or any of its subsidiaries) and
one or more of its directors, officers or employees,
or (y) increase in any manner the compensation or
fringe benefits of any director, officer or employee
or pay any benefit not required by any plan or
arrangement in effect as of the date hereof (except
that the Company shall comply with the union contract
and except for normal increases approved by Parent);
(ix) enter into any new contract or amend, modify or
terminate any existing contract, or engage in any new
transaction (x) not in the ordinary course of
business consistent with past practice, (y) not on an
arm's length basis, or (z) with any shareholder or
affiliate of the Company;
(x) make any capital expenditure or any commitment to
make a capital expenditure or any commitment for
additions to plant, property or equipment
constituting capital assets;
(xi) make any change in lines of business or any material
changes in prices, marketing plans or procedures;
(xii) make any changes to current levels of inventory,
receivables or payables, except as may occur in the
ordinary course of business consistent with past
practice;
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(xiii) grant any stock-related, performance or similar
awards or bonuses;
(xiv) forgive any loans to employees, officers or directors
or any of their respective affiliates or associates;
(xv) make any deposits or contributions of cash or other
property to, or take any other action to fund or in
any other way secure the payment of compensation or
benefits under, any Company benefit plan;
(xvi) enter into, amend, extend or waive any rights under
any collective bargaining or other labor agreement;
(xvii) commence, settle or agree to settle any litigation,
suit, action, claim, proceeding or investigation;
(xviii) pay, discharge or satisfy or agree to pay, discharge
or satisfy any claim, liability or obligation
(absolute accrued, asserted or unasserted, contingent
or otherwise) other than (A) the payment, discharge
or satisfaction of liabilities reflected or reserved
against in full in the financial statements as at
June 30, 1998 or incurred in the ordinary course of
business subsequent to June 30, 1998 or (B) the
Company's Transaction Costs, which for these purposes
shall mean all out- of-pocket costs reasonably
incurred by the Company or any of its subsidiaries on
or after July 1, 1998 in connection with the
potential and actual sale of the Company, including
without limitation (1) the fees and expenses of
McDonald & Co., (2) the fees and expenses of Goelzer
& Co., (3) legal fees and expenses, (4) expenses for
environmental reports, (5) expenses for title
reports, (6) expenses for proxy solicitation and fees
and expenses of the Exchange Agent, and (7) filing
fees in connection with compliance with securities
and antitrust laws; but the term Company's
Transaction Costs shall not include (I) any amounts
payable or paid to senior managers of the Company
under the Senior Management Agreements by virtue of
the consummation of the Merger (Parent having agreed
separately to cause the Company after the Effective
Time to pay such amounts in addition to all other
consideration for the Merger), or (II) any expenses
incurred by Parent or Purchaser with respect to the
Offer;
(xix) enter into, modify, amend or terminate any contract
material to the business of the Company or any of its
subsidiaries which it may enter, amend or terminate
without violating clause (ix) above, or waive any
rights under any such contract, unless in each
instance the Company first obtains the consent of
Parent, which consent shall not be unreasonably
withheld;
(xx) enter into or extend or renew any contract (including
without limitation any insurance policy), which
contract, extension or renewal has a term or is to be
performed over a period of more than 60 days (and
before renewing any insurance policy, the Company
shall reasonably consult with Parent); or
(xxi) enter into any contract, agreement, commitment or
arrangement to do or engage in any of the foregoing.
The Company has agreed that it will confer on a regular and frequent
basis with Parent with respect to the Company's businesses and operations and
other matters relevant to the Merger, and shall promptly advise Parent, in
writing, of any change or event, including, without limitation, any complaint,
investigation or hearing by any governmental or regulatory authority (or
communication indicating the same may be contemplated) or the institution or
threat of litigation, having, or which, insofar as can be reasonably foreseen,
could have, a material adverse effect on the Company or on the ability of the
Company to consummate the transactions contemplated by the Offer and the Merger
Agreement.
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<PAGE>
No Solicitation. The Company has agreed that it will not, and it will
not authorize or permit its subsidiaries or any of its or their officers,
directors, employees, investment bankers, financial advisors, attorneys,
accountants or other agents or representatives (each, a "Representative") to
directly or indirectly, solicit, initiate or participate in any negotiations
regarding, furnish any confidential information in connection with, endorse or
otherwise cooperate with, or assist, participate in or facilitate (collectively,
"Solicitation Activities") the making of any proposal or offer for, or which may
reasonably be expected to lead to, a Potential Transaction (as defined below),
by any person, corporation, partnership or other entity or group, including a
current holder of the Shares or a person acting on behalf of or who has been in
contact with such a holder (a "Potential Acquiror"); provided, however, that to
the extent the Board of Directors of the Company believes, on the basis of a
written opinion furnished by independent legal counsel, that the failure to take
any such actions would constitute a breach of applicable fiduciary duties of
such Board of Directors, then the Company and its Representatives may
participate in Solicitation Activities but only to the extent necessary to
comply with such duties; provided further, however, that the Company will
promptly inform Parent, in writing, of the material terms and conditions of any
proposal or offer for, or which may reasonably be expected to lead to, a
Potential Transaction that it receives and the identity of the Potential
Acquiror and the Company shall keep Parent fully apprised of all developments
regarding such Potential Transaction. Such full apprising of all developments
shall include providing Parent with copies of all correspondence from or to the
Company and the Potential Acquirer, including all attachments and enclosures.
(As used in the Merger Agreement, "Potential Transaction" means any potential
merger, consolidation or other business combination involving the Company, or
any acquisition in any manner of all or a substantial portion of the equity of,
or all or a substantial portion of the assets of the Company whether for cash,
securities or any other consideration or combination thereof other than pursuant
to the transactions contemplated by the Merger Agreement.)
The Company has also agreed, as of the date and time of the Merger
Agreement that the Company and its Representatives will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties other than Parent and Purchaser conducted theretofore with respect
to any Potential Transaction.
Filing of the Proxy Statement. The Company has agreed that it will
prepare and file with the SEC the Proxy Statement at the earliest practicable
date after the Offer has expired or terminated (unless 90% or more of Shares are
acquired by Purchaser pursuant to the Offer or the Shares cease to be registered
under the Exchange Act in accordance with applicable law); and shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC. Parent,
Purchaser and the Company have agreed to cooperate with each other in the
preparation of the Proxy Statement, and the Company has agreed to promptly
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 to promptly provide to Parent copies
of all correspondence between the Company or any representative of the Company
and the SEC with respect to the Proxy Statement. The Company has agreed to give
Parent and its counsel the opportunity to review the Proxy Statement and all
responses to requests for additional information by and replies to comments of
the SEC before their being filed with, or sent to, the SEC. If the Proxy
Statement is required to be filed with the SEC, each of the Company, Parent and
Purchaser has agreed to use all reasonable efforts, after consultation with the
other parties thereto, to respond promptly to all such comments of and requests
by the SEC and to cause the Proxy Statement to be mailed to the holders of
Shares entitled to vote at the Shareholder Meeting at the earliest practicable
time.
Shareholder Approval of the Merger. To the extent required by
applicable law, the Company has agreed to, through its Board of Directors, duly
call, give notice of, convene and hold the Shareholder Meeting for the purpose
of voting on the adoption of the Merger Agreement (the "Shareholders' Approval")
as soon as reasonably practicable after consummation of the Offer but in any
event prior to the 90th day after the date of the Merger Agreement (subject to
unavoidable delays in receiving comments from the SEC staff or in considering
and preparing responses to such comments).
Except to the extent legally required for the discharge of its fiduciary duties
as reflected in a written opinion of independent legal counsel, the Company has
agreed to include in the Proxy Statement the recommendation of the Board of
Directors of the Company that the shareholders of the Company adopt the Merger
Agreement and approve the Merger, and the Company has agreed to use all
reasonable efforts to obtain such adoption and approval, including utilizing a
proxy solicitation firm that is reasonably acceptable to Parent and obtaining
the opinion of McDonald & Co. to the effect that the Merger Price is fair to the
holders of the Shares from a financial point of view. At such meeting, Parent
shall, and has agreed to and has
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<PAGE>
agreed to cause its Subsidiaries to, vote all shares of the Shares, if any, then
owned by Parent or any such Subsidiary in favor of the adoption of the Merger
Agreement.
In the event that the approval and adoption of the Merger Agreement and
the Merger at the Shareholder Meeting or any adjournment thereof receives the
affirmative vote of less than 66-2/3% of all shares entitled to vote for such
approval, then Parent may in its sole discretion require the Company to, and the
Company has agreed to be obligated to, through its Board of Directors, duly
call, give notice of, convene and hold a second Shareholder Meeting for the
purpose of voting on the adoption of the Merger Agreement. Such second
Shareholder Meeting shall be held as soon as reasonably practicable after the
date of the notice from Parent to the Company in which Parent notifies the
Company that Parent desires the Company to call a second Shareholder Meeting.
If Parent directly or indirectly acquires at least 90 percent of the
outstanding Shares, each of Parent, Purchaser and the Company have agreed to
take all necessary and appropriate action as Parent may reasonably request to
cause the Merger to become effective as promptly as practicable after the
consummation of the Offer without a meeting of holders of the Shares in
accordance with the applicable provisions of the New Mexico Business Corporation
Act.
Consents and Approvals. Subject to certain conditions, each of the
Company and Parent have agreed to proceed diligently and in good faith and will
use all commercially reasonable efforts to do, or cause to be done, all things
necessary, proper or advisable to, as promptly as practicable, obtain all
consents, approvals or actions of, make all filings with and give all notices to
governmental or regulatory authorities or any other public or private third
parties that may be required of Parent, the Company or any of their subsidiaries
in order to consummate the Offer and the Merger. In addition to and not in
limitation of the foregoing, (i) each of the parties have agreed to (x) take
promptly all actions necessary to make the filings required of Parent and the
Company or their affiliates under the Hart Scott Rodino Antitrust Improvements
Act of 1974 (the "HSR Act"), (y) comply at the earliest practicable date with
any request for additional information received by such party or its affiliates
from the Federal Trade Commission (the "FTC") or the Antitrust Division of the
Department of Justice (the "Antitrust Division") pursuant to the HSR Act, and
(z) cooperate with the other party in connection with such party's filings under
the HSR Act and in connection with resolving any investigation or other inquiry
concerning the Merger or the other matters contemplated by the Merger Agreement
commenced by either the FTC or the Antitrust Division or state attorneys
general.
Company Employees. Parent has agreed the after the Effective Time the
Company will honor in accordance with their respective provisions the existing
agreements between the Company and each of Messrs. Bishop, McVay, Holmquist,
Krauskopf, Kubly, Minard, Mitting, McCune and Sturch (collectively, "Senior
Management Agreements"). Further, Parent has agreed to cause after the Effective
Time the Company to pay to each of such persons the transaction bonus
contemplated in each persons applicable Senior Management Agreement, in the
installments and at the times specified therein, irrespective of whether the
Merger is deemed to have been supported or sponsored by management or any
management group. In addition, Parent has agreed that it will cause the Company
after the Effective Time to honor all existing union contracts and all other
existing agreements between the Company and its employees that have been
disclosed by the Company to Parent prior to the date of the Merger Agreement.
Expenses. Subject to the applicability of the Termination Fee and
remedies in respect of a breach of the Merger Agreement, if the Merger is not
consummated, all costs and expenses incurred in connection with the Merger
Agreement and the transactions contemplated by the Merger Agreement will be paid
by the party incurring such cost or expense. However, if the Merger is
consummated, the Company's Transaction Costs (as defined below) will be paid by
the Company either before or after the Effective Time, or by Parent, without
reduction of the Offer Price or Merger Price payable to holders of Shares
pursuant to the terms of the Offer and the Merger Agreement. As used herein, the
"Company's Transaction Costs" means all out-of-pocket costs reasonably incurred
by the Company or any of its subsidiaries on or after July 1, 1998 in connection
with the potential and actual sale of the Company, including without limitation
(i) the fees and expenses of McDonald & Co., (ii) the fees and expenses of
Goelzer & Co., (iii) legal fees and expenses, (iv) expenses for environmental
reports, (v) expenses for title reports, (vi) expenses for proxy solicitation
and fees and expenses of the Exchange Agent, and (viii) filing fees in
connection with compliance with securities and antitrust laws. However, the
Company's Transaction Expenses do not include (a) any amounts payable or paid to
senior managers of the Company under the Senior Management
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<PAGE>
Agreements by virtue of the consummation of the Merger (Parent having agreed, as
described above, to cause the Company after the Effective Time to pay such
amounts in addition to all other consideration for the Merger), or (b) any
expenses incurred by Parent or Purchaser with respect to the Offer.
Brokers or Finders. Each of Parent and the Company has represented to
the other, as to itself and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by the Offer or the Merger Agreement,
except, in the case of the Company, for McDonald & Co. and Goelzer & Co.
Directors' and Officers' Indemnification.
(a) Until the fourth anniversary of the Effective Time (and until
resolution of any claims asserted prior to such fourth
anniversary), Parent has agreed to cause the Company after the
Effective Time to indemnify, defend and hold harmless, to the
extent allowed by law and to the extent currently provided in
the By-laws and Articles of Incorporation of the Company, each
person who is as of the date hereof, or has been at any time
prior to the date hereof, a director or officer of the Company
or any of its subsidiaries (the "Indemnified Parties") against
(i) (subject to certain restrictions specified in the Merger
Agreement) all losses, claims, damages, costs, expenses,
liabilities or judgments or amounts that are paid in
settlement of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person
is or was a director or officer of the Company or any
subsidiary of the Company, whether pertaining to any matter
existing or occurring at or prior to the Effective Time and
whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities") and (ii) all
Indemnified Liabilities based in whole or in part on, or
arising in whole or in part out of, or pertaining to the
Merger Agreement or the transactions contemplated thereby, in
each case to the full extent the Company would have been
permitted under New Mexico law to indemnify such person (and
subject to the foregoing, the Company after the Effective Time
will, in the event the Company determines in its reasonable
discretion that such person would be entitled to
indemnification hereunder, pay expenses in advance of the
final disposition of any such action or proceeding to each
Indemnified Party; provided, however, that the person to whom
the expenses are advanced must provide an undertaking (without
delivering a bond or other security) to repay such advance if
it is ultimately determined that such person is not entitled
to indemnification as provided in Section 53-11-4.1 of the
NMBCA). Without limiting the foregoing, in the event any such
claim, action, suit, proceeding or investigation is brought
against any Indemnified Parties (whether arising before or
after the Effective Time), (i) any counsel retained by the
Indemnified Parties for any period after the Effective Time
shall be reasonably satisfactory to the Company; (ii) after
the Effective Time, the Company will pay all reasonable fees
and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received as theretofore
provided; and (iii) after the Effective Time, the Company will
use all reasonable efforts to assist in the vigorous defense
of such matter, provided that the Company will not be liable
for any settlement of any claim effected without its written
consent, which consent, however, shall not be unreasonably
withheld. Any Indemnified Party wishing to claim
indemnification under the terms of the Merger Agreement, upon
learning of any such claim, action, suit, proceeding or
investigation, shall notify the Company (but the failure so to
notify the Company will not relieve the Company from its
obligation to indemnify such person except to the extent such
failure to notify prejudices the Company), and shall deliver
to the Company the undertaking, if any, required by the NMBCA
or the Merger Agreement. Notwithstanding anything to the
contrary contained in the Merger Agreement, after the
Effective Time the Company's obligation to indemnify the
officers and directors prior to the Effective time of the
Company as set forth above shall be limited to cover claims
only to the extent that those claims are not covered under the
Company's directors' and officers' insurance policies in
effect as of the date of the Merger Agreement and the
continuation, maintenance or substitution thereof as required
by the Merger Agreement.
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<PAGE>
Directors' and Officers' Insurance. For a period of four years after
the Effective Time, Parent has agreed to cause the Company after the Effective
Time to maintain in effect the policies of directors' and officers' liability
insurance that were maintained by the Company prior to the execution of the
Merger Agreement (provided that the Company may substitute therefor other
policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims arising from
facts or events which occurred before or at the Effective Time; provided,
however, that the Company is not obligated to make annual premium payments for
such insurance to the extent such premiums exceed 125% of the premiums paid as
of the date of the Merger Agreement by the Company for such insurance (the
"Company's Current Premium"), and if such premiums for such insurance would at
any time exceed 125% of the Company's Current Premium, then the Company shall
cause to be maintained policies of insurance which, in the Company's good faith
determination, provided the maximum coverage available at an annual premium
equal to 125% of the Company's Current Premium.
Retention of the Company Name. Parent has agreed that until the 10th
anniversary of the Effective Time of the Merger, Parent will cause the name of
the Company to continue to be "Bryan Steam Corporation", unless, due to a change
in circumstances after the Effective Time, such continuation will be, in the
opinion of the Board of Directors of the Company at that time, materially
adverse to Parent or the Company.
Takeover Laws. The Company has agreed to, upon the request of Parent,
take all reasonable steps to exclude the applicability of, or to assist in any
challenge by Parent or the Purchaser of the validity or applicability to the
Merger of, any Takeover Laws. As used herein, "Takeover Laws" means any
"moratorium", "control share acquisition", "business combination", "fair price"
or other form of antitakeover laws and regulations of any jurisdiction that may
purport to be applicable to the Merger Agreement or the Merger.
Termination Fee; Expenses.
(a) The Company has agreed that in the event that the Merger
Agreement is terminated as a result of the occurrence of any
Trigger Event (as defined below), then the Company will pay to
Parent a fee equal to 1.5% of the Purchase Price plus all
Reimbursable Expenses (as defined below); provided, however,
that if such termination is solely attributable to events
described in clause (iii) or (iv) of the definition of Trigger
Event, then the Company will pay to Parent all Reimbursable
Expenses (but not the 1.5% fee). Amounts due hereunder shall
be payable in immediately available funds at the time of such
termination.
(b) As used herein, "Trigger Event" means the occurrence of any of
the following:
(i) the Board of Directors of the Company (or any
committee thereof) shall approve, recommend,
authorize, propose or facilitate any potential
Acquisition Transaction (as defined below) other than
the Offer and the Merger pursuant to the Merger
Agreement, or such Board (or any such committee)
shall engage in discussions or negotiations with a
potential counterparty concerning any such potential
Acquisition Transaction, or such Board (or any such
committee) shall publicly announce its intention to
do any of the foregoing;
(ii) the Board of Directors of the Company (or any
committee thereof) shall fail to recommend the Offer
and the Merger to stockholders of the Company in the
Schedule 14D-9 or proxy statement required by the
Merger Agreement or within two business days
following Parent's request from time to time that the
Company so confirm its recommendation of the Offer
and the Merger, or such Board (or any such committee)
shall withdraw, modify or amend in any manner adverse
to Parent the authorization, approval or
recommendation given by such Board (or such
committee) to the Offer and the Merger, or shall
publicly announce that it does not favor the Offer or
the Merger;
(iii) the shareholders of the Company holding at least
66-2/3% of the outstanding shares of the Shares shall
fail to approve the Merger in accordance with
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<PAGE>
applicable law at the Shareholder Meeting, or if the
Shareholder Meeting shall not be held on or prior to
December 31, 1998; or
(iv) any person, entity or "group" (as that term is used
in Section 13(d)(e) of the Exchange Act), other than
those shareholders who have executed and delivered
Stockholder Agreements as described in the recitals
to the Merger Agreement, becomes the beneficial owner
(as defined in Rule 13d-3 promulgated under the
Exchange Act) of 15% or more of outstanding the
Shares.
(c) As used herein, "Acquisition Transaction" means any tender
offer or exchange offer, any merger, consolidation,
liquidation, dissolution, recapitalization, reorganization or
other business combination, any acquisition, sale or other
disposition of a material amount of assets or securities or
any other similar transaction involving the Company, its
securities or any of its subsidiaries or divisions.
(d) As used herein, "Parent Reimbursable Expenses" means all
out-of-pocket costs (including without limitation reasonable
legal and accounting costs) theretofore and hereafter incurred
by Parent in connection with the transactions contemplated by
the Merger Agreement including, without limitation, costs and
expenses incurred in connection with (i) Parent's due
diligence investigations concerning the Company and its
subsidiaries, (ii) Parent's preparation of preliminary and
final proposals relating to the acquisition of the Company,
(iii) Parent's negotiation of the Merger Agreement, (iv)
Parent's assistance in the preparation of the proxy statement
relating to the Merger, (v) fees and expenses of the Exchange
Agent, and (vi) fees and expenses reasonably incurred so as to
facilitate and promote consummation of the Merger.
Conditions to the Merger. Pursuant to the Merger Agreement, the
respective obligations of each party to effect the Merger are subject to the
fulfillment, or waiver where permissible, at or prior to the proposed Effective
Time, of each of the following conditions: (a) the Merger Agreement and the
transactions contemplated thereby shall have been approved by the Company's
shareholders in the manner and to the extent required by applicable law and the
Articles of Incorporation and By-laws of the Company; (b) 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 action or proceeding
before a court of competent jurisdiction or other competent governmental body by
any governmental or regulatory authority shall have been instituted or
threatened to make illegal or otherwise restrain or prohibit (whether
temporarily, preliminary or permanently) the Merger or the other transactions
contemplated by the Merger Agreement or to obtain an amount of damages or other
material relief in connection with the execution of the Merger Agreement or the
consummation of the Merger or other transactions contemplated by the Merger
Agreement; and no governmental agency shall have given notice to any party
thereto to the effect that consummation of the Merger or the other transactions
contemplated by the Merger Agreement would constitute a violation of any law or
that it intends to commence proceedings to restrain consummation of the Merger
(each party thereto, however, has agreed to use reasonable efforts promptly to
have such prohibition or notice lifted); and (d) each of Purchaser and the
Company shall have received from the other appropriately certified copies of all
resolutions adopted by their respective Boards of Directors and shareholders in
connection with the Merger Agreement and the transactions contemplated thereby.
Conditions to Obligation of Parent and Purchaser to Effect the Merger.
The obligation of Parent and Purchaser to effect the Merger is further subject
to the fulfillment at or prior to the proposed Effective Time, of each of the
following additional conditions (all or any of which may be waived in whole or
in part by Parent and Purchaser in their sole discretion): (a) the Company shall
have performed and complied with, in all material respects, each agreement,
covenant and obligation required by the Merger Agreement to be so performed or
complied with by the Company at or prior to the Closing, and the Company shall
have delivered to Parent a certificate, dated the Closing Date and executed on
behalf of the Company by its President, to such effect; (b) all proceedings to
be taken on the part of the Company in connection with the transactions
contemplated by the Merger Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to Parent, and Parent shall have
received copies of all such documents and other evidences as Parent may
reasonably request in order to establish the consummation of such transactions
and the taking of all proceedings in connection therewith, and such documents
shall include, but shall not be limited to (i) certain certificates as required
by certain provisions of the Merger Agreement, (ii) a certificate of existence
or good standing regarding each of the Company
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and its subsidiaries, certified in the case of the Company by the New Mexico
Corporation Commission and certified in the case of the Company's Subsidiaries
by the appropriate office of the jurisdiction of its respective incorporation,
each dated within ten (10) business days of the proposed Effective Time, (iii)
an incumbency certificate certifying the identity of the officers of the
Company, and (iv) the resignations, effective the Closing Date, of such
directors and officers of the Company and its subsidiaries as Parent shall
specify consistent with the Merger Agreement; (c) Parent shall have received a
complete list of the signatories of each account or safe deposit box of the
Company and its subsidiaries; (d) the Company shall not have received written
objections to the Merger from holders who in the aggregate hold more than 10% of
the outstanding shares of the Shares, and the Company shall not have knowledge
that holders of 10% or more of the outstanding shares of the Shares intend to
file with the Company written objections to the Merger; (e) the Company shall
have delivered to Parent a final accounting of the Company's Transaction
Expenses, in form reasonably satisfactory to Parent, including copies of
applicable final invoices; (f) other than specific filings provided for by the
Merger Agreement, all consents, approvals and actions of filings with and
notices to any governmental or regulatory authority or any other public or
private third party required of the Company or any of its subsidiaries to
consummate the Merger and the other transactions contemplated by the Merger
Agreement, the failure of which to be obtained or taken could, individually or
in the aggregate, be reasonably expected to have a material adverse effect on
the Company and its subsidiaries or on the ability of the Company to consummate
the transactions contemplated by the Merger Agreement shall have been obtained,
all in form and substance reasonably satisfactory to Parent and no such consent,
approval or action shall contain any term or condition which could be reasonably
expected to result in a material diminution of the benefits of the Merger to
Parent.
Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger is further subject to the
fulfillment, at or prior to the proposed Effective Time, of each of the
following additional conditions (all or any of which may be waived in whole or
in part by the Company in its sole discretion): (a) each of the representations
and warranties made by Parent and Purchaser in the Merger Agreement shall be
true and correct in all material respects as of the proposed Effective Time as
though made on and as of such time or, in the case of representations and
warranties made as of a specified date earlier than such time, on and as of such
earlier date, and Parent and Purchaser shall each have delivered to the Company
a certificate, dated the proposed Effective Time and executed on behalf of
Parent by its President and on behalf of Purchaser by its President, to such
effect; (b) Parent and Purchaser shall have performed and complied with, in all
material respects, each agreement, covenant and obligation required by the
Merger Agreement to be so performed or complied with by Parent or Purchaser at
or prior to the Closing, and Parent and Purchaser shall each have delivered to
the Company a certificate, dated the Closing Date and executed on behalf of
Parent by its President and on behalf of Purchaser by its President, to such
effect; (c) the Company shall have received a written opinion, dated as of the
Closing Date, from Krieg, Devault, Alexander & Capehart, Indiana counsel to
Parent and Purchaser, from Cleary, Gottlieb, Steen & Hamilton and/or from
Parent's New Mexico counsel, as appropriate, in form and substance reasonably
satisfactory to the Company, as to certain appropriate matters agreed upon by
legal counsel of Parent and Purchaser and of the Company; (d) all proceedings to
be taken on the part of Parent and Purchaser in connection with the transactions
contemplated by the Merger Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Company, and the Company
shall have received copies of all such documents and other evidences as the
Company may reasonably request in order to establish the consummation of such
transactions and the taking of all proceedings in connection therewith, and such
documents shall include, but shall not be limited to: (i) certain certificates
as required by certain provisions of the Merger Agreement, (ii) certificates of
existence or good standing regarding each of Parent and Purchaser, certified by
the New York Secretary of State and the New Mexico State Corporation Commission,
respectively, dated within ten (10) business days of the Closing Date, and (iii)
incumbency certificates certifying the identity of the officers of Parent and
Purchaser, respectively; and (e) the Exchange Fund shall have been funded with
the full amount of the Merger Price for all outstanding shares of the Shares.
Conditions to the Offer. Notwithstanding any other provision of the
Offer, the obligation of Purchaser to accept for payment, purchase or pay for
any Shares tendered prior to the scheduled expiration date of the Offer or any
extension thereof (the "Offer Date") is subject to the fulfillment, at or prior
to the Offer Date, of the following conditions (and upon the failure of any such
condition to be fulfilled, unless waived by Purchaser, Purchaser may terminate
the Offer as to any Shares not then accepted for payment, and Purchaser shall
not be required to accept for payment, purchase or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange
Act, pay for any Shares):
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(a) The number of Shares validly tendered and not withdrawn
shall constitute at least a two-thirds majority plus one of the
outstanding Shares on a fully diluted basis.
(b) Any waiting period (and any extension thereof) applicable
to the consummation of the Offer under the HSR Act shall have expired
or been terminated.
(c) No action or proceeding before a court of competent
jurisdiction or other competent governmental body by any governmental
or regulatory authority shall have been instituted or threatened to
make illegal or otherwise restrain or prohibit (whether temporarily,
preliminary or permanently) the Offer or the Merger or the other
transactions contemplated by the Merger Agreement or to obtain an
amount of damages or other material relief in connection with the
execution of the Merger Agreement or the consummation of the Offer or
other transactions contemplated by the Merger Agreement; and no
governmental agency shall have given notice to any party hereto to the
effect that consummation of the Offer or the Merger or the other
transactions contemplated by the Merger Agreement would constitute a
violation of any law or that it intends to commence proceedings to
restrain consummation of the Offer or the Merger.
(d) Purchaser shall have received from the Company
appropriately certified copies of all resolutions adopted by the
Company's Board of Directors in connection with the Offer, the Merger,
the Merger Agreement and the transactions contemplated thereby.
(e) Each of the representations and warranties made by the
Company in the Merger Agreement shall be true and correct in all
respects (subject to limitations as to materiality as may be contained
therein) as though made on and as of the Offer Date or, in the case of
representations and warranties made as of a specified date earlier than
the Offer Date, on and as of such earlier date, and the Company shall
have delivered to Parent a certificate, dated the Offer Date and
executed on behalf of the Company by its President to such effect.
(f) The Company shall have performed and complied with, in all
material respects, each agreement, covenant and obligation required by
the Merger Agreement to be so performed or complied with by the Company
at or prior to the Offer Date, and the Company shall have delivered to
Parent a certificate, dated the Offer Date and executed on behalf of
the Company by its President, to such effect.
(g) Parent and Purchaser shall have received a written
opinion, dated as of the Offer Date, from Barnes & Thornburg, counsel
to the Company, in form and substance reasonably satisfactory to Parent
and Purchaser, as to certain appropriate matters agreed upon by legal
counsel of Parent and Purchaser and of the Company.
(h) All proceedings to be taken on the part of the Company on
or before the consummation of the Offer in connection with the
transactions contemplated by the Merger Agreement and all documents
incident thereto shall be reasonably satisfactory in form and substance
to Parent, and Parent shall have received copies of all such documents
and other evidences as Parent may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith. Such documents shall include, but
shall not be limited to: (i) the certificates required by clauses (e)
and (f) of this Section 14; (ii) a certificate of existence or good
standing regarding each of the Company and its Subsidiaries, certified
in the case of the Company by the New Mexico Corporation Commission and
certified in the case of the Company's subsidiaries by the appropriate
office of the jurisdiction of its respective incorporation, each dated
within ten (10) business days of the Offer Date; and (iii) an
incumbency certificate certifying the identity of the officers of the
Company.
(i) The Company and each of its Subsidiaries shall have good,
marketable and insurable title to their respective real properties,
subject only to those encumbrances identified in a schedule to the
Merger Agreement, and the Company shall have obtained and delivered to
Parent reasonable assurances from the relevant municipalities to the
effect that such real properties and their current operations are in
compliance with local zoning ordinances without constituting
non-conforming uses.
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(j) The Company shall have delivered to Parent a current
survey of the real property and facilities of the Company located in
Peru, Indiana, which survey (i) shall have been prepared by a licensed
Indiana land surveyor, (ii) shall fulfill the Minimum Detail
Requirements for ALTA/ACSM Land Title Surveys (1992) for an Urban
Survey and Table A thereof, and (iii) shall have been certified to the
Surviving Corporation, Parent and Parent's title insurance company in a
manner reasonably satisfactory to Parent; and such survey shall not
show encroachments or other matters which, individually or in the
aggregate, materially adversely affect the value or use of such real
property and facilities.
(k) There shall not have occurred (A) any general suspension
of, or limitation on prices for, trading in the securities of a general
nature on any national securities exchange that lasts more than 24
hours, (B) the declaration of any banking moratorium or any suspension
of payments in respect of banks or any limitation (whether or not
mandatory) on the extension of credit by lending institutions in the
United States, (C) the commencement of a war, armed hostilities or any
other international or national calamity involving the United States or
a substantial terrorist attack or the threat thereof on a target in
United States that leads to the declaration of a national emergency,
(D) a material adverse change in the United States currency exchange
rates or a suspension of, or limitation on, the markets therefor, or
(E) the Dow Jones Index shall fall below 6448 (which was the value of
such Index on December 31, 1996).
(l) A Trigger Event shall not have occurred.
(m) Other than the filings required in connection with the
Merger, all consents, approvals and actions of, filings with and
notices to any governmental or regulatory authority or any other public
or private third party required of the Company or any of its
subsidiaries to consummate the Offer, the failure of which to be
obtained or taken could, individually or in the aggregate, be
reasonably expected to have a material adverse effect on the Company
and its subsidiaries or on the ability of Parent to consummate the
purchase of Shares pursuant to the Offer, shall have been obtained, all
in form and substance reasonably satisfactory to Parent and no such
consent, approval or action shall contain any term or condition which
could be reasonably expected to result in a material diminution of the
benefits of the Offer to Parent.
(n) The Merger Agreement shall not have been terminated
pursuant to its terms and shall not have been amended pursuant to its
terms to provide for its termination.
Termination. The Merger Agreement may be terminated, and the
transactions contemplated thereby may be abandoned, at any time prior to the
Effective Time, whether prior to or after Shareholders' Approval: (a) by mutual
written agreement of the parties thereto duly authorized by action taken by or
on behalf of their respective Boards of Directors; (b) by either the Company or
Parent upon notification to the non-terminating party by the terminating party:
(1) at any time after January 31, 1999 if the Merger shall not have been
consummated on or prior to such date and such failure to consummate the Merger
is not caused by a breach of the Merger Agreement by the terminating party;
provided, however, the date may be extended indefinitely by the mutual written
agreement of the parties, (2) if Shareholders' Approval shall not be obtained by
January 31, 1999, (3) if any governmental or regulatory authority, the taking of
action by which is a condition to the obligations of either the Company or
Parent to consummate the transactions contemplated thereby, shall have
determined not to take such action and all appeals of such determination shall
have been taken and have been unsuccessful, or (4) if any court of competent
jurisdiction or other competent governmental or regulatory authority shall have
issued an order making illegal or otherwise restricting, preventing or
prohibiting the Merger and such order shall have become final and nonappealable;
(c) by the Company, if (1) Purchaser fails to commence the Offer as provided in
the Merger Agreement or fails to purchase validly tendered Shares in violation
of the terms of the Offer or the Merger Agreement; (2) there has been a breach
by Parent or Purchaser of any representation or warranty contained in the Merger
Agreement, or (3) there has been a material breach of any of the covenants or
agreements set forth in the Merger Agreement on the part of Parent or Purchaser,
which breach is not curable or, if curable, is not cured within ten (10) days
after written notice of such breach is given by the Company to Parent or
Purchaser.; (d) by Parent, if (1) the Offer is terminated or withdrawn on
account of the failure to be fulfilled of a condition specified in Annex A to
the Merger Agreement (as specified in "--Conditions to the Offer"), (2) there
has been a breach by the Company of any representation or warranty contained in
the Merger Agreement or
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(3) there has been a material breach of any of the covenants or agreements set
forth in the Merger Agreement on the part of the Company, which breach is not
curable or, if curable, is not cured within ten (10) days after written notice
of such breach is given by Parent to the Company; or (e) by Parent if a Trigger
Event occurs.
Amendment. The Merger Agreement may be amended, supplemented or
modified by the parties thereto at any time prior to the Effective Time, whether
prior to or after adoption of the Merger Agreement at the Shareholder Meeting,
but after such adoption only to the extent permitted by applicable law. No such
amendment, supplement or modification shall be effective unless set forth in a
written instrument duly executed by or on behalf of each party thereto.
Governing Law. The Merger Agreement is governed by and construed in
accordance with the laws of the State of Indiana applicable to a contract
executed and performed in such State without giving effect to the conflicts of
laws principles thereof, except to the extent that the NMBCA, the Securities Act
and the Exchange Act shall apply to the transactions contemplated therein.
Enforcement of Agreement; Injunctive Relief. Parent, Purchaser and the
Company have irrevocably and unconditionally submitted to the exclusive
jurisdiction and venue of the United States District Court for the Southern
District of Indiana, Indianapolis Division for federal jurisdiction (unless such
court has no jurisdiction, in which case Parent, Purchaser and the Company
submitted to the exclusive jurisdiction of the courts of the State of Indiana
located in Marion County) for any actions, suits or proceedings arising out of
or relating to the Merger Agreement and the transactions contemplated thereby.
Parent, Purchaser and the Company have also waived, to the fullest extent
permitted by law, any rights they may have to a jury trial on any matter related
in any way to the Merger Agreement or the transactions contemplated thereby. In
addition, each of the Company on the one hand and Parent and Purchaser on the
other hand have recognized and acknowledged that a breach by it of any covenants
or agreements contained in the Merger Agreement will cause the other party to
sustain damages for which it would not have an adequate remedy at law for money
damages, and therefore each of the parties thereto has agreed that in the event
of any such breach, if the aggrieved party so desires, the aggrieved party shall
be entitled to the remedy of specific performance, injunctive and other
equitable relief (without the requirement or need for the posting of any bond)
in addition to any other remedy to which the aggrieved party may be entitled, at
law or in equity.
Joint and Several Obligations. The obligations of Parent and Purchaser
under the Merger Agreement are joint and several.
Timing. The exact timing and details of the Merger will depend upon
legal requirements and a variety of other factors, including the number of
Shares acquired by Purchaser pursuant to the Offer. Although Parent has agreed
to cause the Merger to be consummated on the terms and subject to the conditions
set forth above, there can be no assurance as to the timing of the Merger.
Confidentiality Agreement.
Pursuant to an agreement dated as of June 18, 1998 (the
"Confidentiality Agreement") between the Company (acting through its agent,
Goelzer & Co.) and Parent, the Company has supplied Parent with certain
non-public, confidential and proprietary information about the Company. Parent
has agreed in the Confidentiality Agreement among other provisions that it,
together with its, among others, representatives, employees, agents, advisors,
lenders or affiliates will treat confidentially all such information supplied by
the Company and that it will, until June 18, 2003, use the confidential
information solely for the purpose of evaluating a possible transaction with the
Company, and will keep the confidential information confidential, except for
disclosure as may be required by law.
The foregoing summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated by reference and a copy of which has been
filed with the Commission as Exhibit P to the Schedule 14D-9.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
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(a) Recommendation of the Board. At a meeting of the Company's Board of
Directors held on September 21, 1998, the board by unanimous vote (i) determined
that the Offer and the Merger were fair to, and in the best interests of, the
Company, its shareholders and its other constituencies, (ii) approved the Merger
Agreement, the Offer and the Merger and (iii) recommended that the shareholders
accept the Offer and approve the Merger Agreement. A letter to the Company's
shareholders from the Company's Chairman of the Board, dated September 29, 1998,
which includes the Board's recommendation to the shareholders, is attached
hereto as Exhibit Q and incorporated herein by reference.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS TENDER THEIR SHARES PURSUANT TO THE TERMS OF THE OFFER.
(b) Background; Reasons for Board's Recommendation.
Background of the Offer. On June 10, 1998, senior management of Parent
and the Company had initial discussions regarding the possible acquisition of
the Company by Parent. Parent was informed that the Company would be sold
through an "auction" which was to be conducted by McDonald & Co., the Company's
financial advisor. Parent executed a confidentiality agreement and thereafter
received certain financial, corporate and other information concerning the
Company from McDonald & Co. and from Goelzer & Co., a consultant specifically
engaged by the Company to arrange an offer for the Company supported by the
Company's management.
Senior management of Parent and the Company met on July 7, 1998
together with representatives of Goelzer & Co. further to explore Parent's
preliminary plans for the acquisition and to discuss the views of the Company's
management. Representatives of Parent and Goelzer & Co. had further
conversations concerning Parent's plans during the period July 8, 1998 through
July 20, 1998.
On July 21, 1998, based on the information received, Parent submitted
to McDonald & Co. a preliminary, non-binding proposal for the acquisition of the
Company at a cash price in the range of $135.00 to $148.00 per share. This
preliminary proposal was endorsed by Goelzer & Co., which indicated that the
proposal had the support of the Company's management.
The Company thereafter invited Parent and its representatives to
conduct a further business review of the Company, which the Company undertook
between July 23, 1998 and September 4, 1998.
On September 8, 1998, on the basis of its review and in accordance with
the auction procedures established by McDonald & Co., Purchaser submitted to
McDonald & Co. a final purchase proposal for the Company. Under this final
proposal, which was ultimately accepted in substantial part by the Company,
Purchaser offered to pay $152.00 per share net to holders of common stock of the
Company in the Merger. In addition, Purchaser agreed to pay the transaction
expenses incurred by the Company, and the amounts to which senior managers of
the Company would be entitled upon certain changes in control of the Company.
Purchaser's proposal was subject to the condition (among other conditions) that
ten shareholders of the Company holding in the aggregate in excess of 50% of the
outstanding common shares of the Company execute and deliver to Purchaser an
option entitling Purchaser to acquire their shares at $152.00 per share (as well
as a proxy to vote their shares in favor of the Merger).
On September 10, 1998, a meeting of the Board of the Company was held
at which the Company's outside legal counsel advised the Board regarding its
fiduciary duties under applicable law, and representatives of McDonald & Co.
made a presentation to the Board with respect to the financial terms of the
proposed Merger Agreement, as well as the terms and status of other proposals
which had been received from other entities during the auction process.
Representatives of McDonald & Co. also delivered its oral opinion to the Board
that the merger was fair to such holders from a financial point of view. After
discussion, the Board determined that further negotiations should take place
with Purchaser to finalize the Merger Agreement on a mutually acceptable basis.
Based on discussions with the Company, Purchaser understood that its proposal
was financially superior to all other proposals.
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In subsequent negotiations on September 10 and 11, 1998 between
Purchaser and the Company, in order to expedite the acquisition, Purchaser
requested that the transaction be restructured from a single-step merger to a
"two-step" transaction consisting of a tender offer followed by a merger.
Purchaser also requested that ten shareholders holding in excess of 50% of the
Company's common stock irrevocably agree to tender their shares in such tender
offer, and grant Purchaser a proxy to vote their shares in favor of the Merger,
pursuant to a Stockholders' Agreement.
From September 10, 1998 through September 21, 1998, Parent and the
Company engaged in continued negotiations and document preparation through their
representatives.
On September 21, 1998, the Board of the Company met again to discuss
the transaction, including the restructuring to a "two-step" transaction. At
this meeting, the Company's outside legal counsel again advised the Board
regarding its fiduciary duties under applicable law, and representatives of
McDonald & Co. made a presentation to the Board with respect to the financial
terms of the proposed Offer and Merger. Representatives of McDonald & Co. also
delivered its written opinion to the Board that the consideration to be received
by the stockholders of the Company in connection with the Offer and the Merger
was fair to such holders from a financial point of view. Based upon such advice,
such presentation and such opinion, the Board unanimously approved the Merger
Agreement, the Merger and the Offer.
Also on September 21, 1998, certain major stockholders of the Company
met with the Company's Chairman, its outside legal counsel and representatives
of McDonald & Co. to discuss the background of the proposed transaction and the
Stockholders' Agreement. Between September 21, 1998 and September 23, 1998, ten
stockholders holding in the aggregate approximately 55.6% of the outstanding
common stock of the Company executed the Stockholders' Agreement.
On September 23, 1998, Parent, Purchaser, and the Company executed and
delivered the Merger Agreement, and Parent, Purchaser executed and delivered the
Stockholders' Agreement. The transaction was publicly announced on September 23,
1998, and, on September 30, 1998, Purchaser commenced the Offer.
Reasons for the Board's Recommendation. In approving the Merger
Agreement and the transactions contemplated thereby, and recommending that all
shareholders tender their Shares pursuant to the Offer, the Company's Board of
Directors considered a number of factors, including:
(i) the financial and other terms of the Offer, the
Merger and the Merger Agreement;
(ii) the desire, as expressed to the Board of Directors,
of the Company's principal shareholders for an
opportunity to liquidate their Shares for fair value;
(iii) the presentations by McDonald & Co. at the September
10 and September 21, 1998 Board meetings and the
opinion of McDonald & Co. to the effect that, as of
the date of such opinion and based upon certain
matters considered relevant by McDonald & Co., the
consideration to be received by the shareholders of
the Company in the Offer and the Merger was fair from
a financial point of view (the full text of such
opinion, dated September 21, 1998, which sets forth
the procedures followed, assumptions and
qualifications made, matters considered and the
limitations thereof, is included as Exhibit R to the
Schedule 14D-9 filed with the Commission, and
shareholders are urged to read it in its entirety);
(iv) that the $152.00 per Share tender offer price
represents (A) a premium of 126% over the last
reported sales price of the Shares in the
over-the-counter market on June 23, 1998, the last
trading session before the Company announced its
intention to explore the strategic alternatives that
may be available to it with the objective of
maximizing shareholder value; and (B) a 90% premium
over the last reported sales price of the Shares on
September 22, 1998, the last trading day before the
announcement of the Merger Agreement;
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(v) the fact that the Company conducted an auction
process and no other bidder submitted a proposal
having terms more favorable than those ultimately
proposed by Parent and Purchaser;
(vi) advice to the Company's Board of Directors from
McDonald & Co. regarding any likelihood of a superior
offer arising;
(vii) the commitment by Parent in the Merger Agreement to
continue to manufacture the Company's products under
the Company name and to honor all commitments to the
Company employees, and Parent's stated intention, for
the foreseeable future, to continue the manufacture
of the Company's boiler products at the Company's
Peru, Indiana, facility;
(viii) Parent's stated intention for the Company to continue
to do business through its existing sales
representative network;
(ix) the familiarity of the Company's Board of Directors
with the business, results of operation, properties
and financial condition of the Company and the nature
of the industry in which it operates and the
familiarity of Parent with the business and industry
in which the Company operates;
(x) the fact that the obligations of Parent and Purchaser
under the Merger Agreement were not subject to any
financing conditions;
(xi) the financial resources of Parent and Purchaser and
their ability to meet their respective obligations
under the Merger Agreement; and
(xii) the limited number of conditions to Purchaser's
requirement to consummate the Offer and the Merger.
The foregoing discussion of the information and factors considered and
given weight by the Board is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation of the Merger
Agreement and the Offer, the Board did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specified factors
considered in reaching its determination.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Merger Agreement provides that unless 90% or more of the Shares are
acquired by Purchaser pursuant to the Offer, to the extent required by
applicable law, the Company shall use all reasonable efforts to obtain the
adoption and approval of the Merger Agreement by the shareholders, including
utilizing a proxy solicitation firm reasonably acceptable to Parent. No such
proxy solicitation firm has been engaged at the time of filing this Statement.
Except as disclosed herein, neither the Company nor any person acting
on its behalf currently intends to employ, retain or compensate any other person
to make solicitations or recommendations to security holders on its behalf
concerning the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Share Transactions in Last 60 Days. No transactions in Shares have
been effected by the Company or, to the Company's knowledge, by any of its
executive officers, directors, affiliates or subsidiaries during the past 60
days, except that Harold Koch, a director of the Company, transferred 30 Shares
to a church as a bona fide gift on September 21, 1998.
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(b) Intent to Tender. To the Company's knowledge, (i) all of the
Company's executive officers and directors presently intend to tender in the
Offer all Shares that they now own and (ii) none of such persons presently
intends to otherwise sell any Shares which are owned beneficially or held of
record by such persons prior to the consummation of the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Certain Negotiations. Except as described in this Schedule 14D-9,
including as set forth in the Offer to Purchase, to the knowledge of the
Company, no negotiation is being undertaken or is under way by the Company in
response to the Offer which relates to or would result in (i) any extraordinary
transaction, such as a merger or reorganization, involving the Company or any
affiliate or subsidiary of the Company, (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the Company, (iii)
a tender offer for or other acquisition of securities by or of the Company or
(vi) any material change in present capitalization or dividend policy of the
Company. Pursuant to the Merger Agreement, however, and as described under
"Merger Agreement" in Item 3(b)(2) above, the Company may, subject to certain
limitations, take certain actions in respect of proposed transactions necessary
for the directors of the Company to discharge their fiduciary duties to
shareholders under applicable law.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT DESCRIPTION
Exhibit A Offer to Purchase*
Exhibit B Letter of Transmittal*
Exhibit C Agreement and Plan of Merger by and among
Parent, Purchaser and the Company, dated as of
September 23, 1998
Exhibit D Press release issued on September 23, 1998
Exhibit E Stockholders' Agreement, dated as of September
23, 1998, by and among Robert Miller, Ina Mae
Miller, Georgeanna Williams, as Trustee of
the Georgeanna Williams Revocable Living Trust,
Lisa Lockhart, Charles Miller, Kenneth Starkey,
Bryan Herd, Sharon Herd, Marilyn Malott, Paul
Malott, Victor Herd and Kristine Herd, Parent and
Purchaser
Exhibit F Employment Agreement, dated as of April 1, 1998,
by and between the Company and H. Jesse McVay
Exhibit G Employment Agreement, dated as of April 1, 1998,
by and between the Company and Albert J. Bishop
Exhibit H Employment Agreement, dated as of April 1, 1998,
by and between the Company and Richard D.
Holmquist
Exhibit I Employment Agreement, dated as of April 1, 1998,
by and between the Company and Kurt J. Krauskopf
Exhibit J Employment Agreement, dated as of April 1, 1998,
by and between the Company and Terrence D.
Kubly
Exhibit K Employment Agreement, dated as of April 1, 1998,
by and between Wendland Manufacturing Company
and P. Wayne McCune
Exhibit L Employment Agreement, dated as of April 1, 1998,
by and between the Company and Gregory A.
Minard
Exhibit M Employment Agreement, dated as of April 1, 1998,
by and between the Company and Sandra A. Mitting
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Exhibit N Employment Agreement, dated as of April 1, 1998,
by and between the Company and Michael D. Sturch
Exhibit O Letter Agreement, dated as of March 18, 1998, by
and among Goelzer & Co., the Company and the
Management Group, and amendment thereto, dated
as of August 26, 1998
Exhibit P Confidentiality Agreement, dated as of
June 18, 1998, by and between Parent and the
Company (through its agent, Goelzer & Co.)
Exhibit Q Letter to the Company's shareholders from Albert J.
Bishop, Chairman of the Board of the Company *
Exhibit R Fairness Opinion, dated as of September 21, 1998,
from McDonald & Co.
* Included in the materials sent to stockholders of the Company.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Schedule 14D-9 is true, complete
and correct.
Dated: September 29, 1998 BRYAN STEAM CORPORATION
By: /s/ H. Jesse McVay
----------------------------
H. Jesse McVay, President
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
Exhibit 99(A) Offer to Purchase*
Exhibit 99(B) Letter of Transmittal*
Exhibit 99(C) Agreement and Plan of Merger by and among
Parent, Purchaser and the Company, dated as of
September 23, 1998
Exhibit 99(D) Press release issued on September 23, 1998
Exhibit 99(E) Stockholders' Agreement, dated as of September
23, 1998, by and among Robert Miller, Ina Mae
Miller, Georgeanna Williams, as Trustee of
the Georgeanna Williams Revocable Living Trust,
Lisa Lockhart, Charles Miller, Kenneth Starkey,
Bryan Herd, Sharon Herd, Marilyn Malott, Paul
Malott, Victor Herd and Kristine Herd, Parent and
Purchaser
Exhibit 99(F) Employment Agreement, dated as of April 1, 1998,
by and between the Company and H. Jesse McVay
Exhibit 99(G) Employment Agreement, dated as of April 1, 1998,
by and between the Company and Albert J. Bishop
Exhibit 99(H) Employment Agreement, dated as of April 1, 1998,
by and between the Company and Richard D. Holmquist
Exhibit 99(I) Employment Agreement, dated as of April 1, 1998,
by and between the Company and Kurt J. Krauskopf
Exhibit 99(J) Employment Agreement, dated as of April 1, 1998,
by and between the Company and Terrence D.
Kubly
Exhibit 99(K) Employment Agreement, dated as of April 1, 1998,
by and between Wendland Manufacturing Company
and P. Wayne McCune
Exhibit 99(L) Employment Agreement, dated as of April 1, 1998,
by and between the Company and Gregory A.
Minard
Exhibit 99(M) Employment Agreement, dated as of April 1, 1998,
by and between the Company and Sandra A. Mitting
-27-
<PAGE>
Exhibit 99(N) Employment Agreement, dated as of April 1, 1998,
by and between the Company and Michael D. Sturch
Exhibit 99(O) Letter Agreement, dated as of March 18, 1998, by
and among Goelzer & Co., the Company and the
Management Group, and amendment thereto, dated
as of August 26, 1998
Exhibit 99(P) Confidentiality Agreement, dated as of
June 18, 1998, by and between Parent and the
Company (through its agent, Goelzer & Co.)
Exhibit 99(Q) Letter to the Company's shareholders from Albert J.
Bishop, Chairman of the Board of the Company *
Exhibit 99(R) Fairness Opinion, dated as of September 21, 1998,
from McDonald & Co.
* Included in the materials sent to stockholders of the Company.
-28-
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Bryan Steam Corporation
at
$152.00 Net Per Share
by
Burnham Acquisition Corporation
a wholly-owned subsidiary of
Burnham Corporation
- -----------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, OCTOBER 28, 1998, UNLESS
THE OFFER IS EXTENDED.
- -----------------------------------------------------------------
THE OFFER IS BEING MADE PURSUANT TO THE TERMS OF AN
AGREEMENT AND PLAN OF MERGER, DATED AS OF SEPTEMBER 23, 1998 (THE
"MERGER AGREEMENT"), AMONG BURNHAM CORPORATION ("PARENT"),
BURNHAM ACQUISITION CORPORATION ("PURCHASER") AND BRYAN STEAM
CORPORATION ("BRYAN" OR THE "COMPANY"). THE BOARD OF DIRECTORS OF
THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND
ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
OF COMMON STOCK OF THE COMPANY ("SHARES") PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE
BEING VALIDLY TENDERED AND NOT WITHDRAWN AT THE EXPIRATION OF THE
OFFER AT LEAST SIXTY-SIX AND TWO-THIRDS PERCENT (66-2/3%) PLUS
ONE OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE
DATE OF PURCHASE (THE "MINIMUM CONDITION"). THE OFFER IS ALSO
SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS OFFER TO
PURCHASE. SEE INTRODUCTION AND SECTIONS 1 AND 14 HEREOF.
Purchaser has entered into a Stockholders' Agreement with
certain stockholders, who together own approximately 55.6% of the
outstanding Shares, pursuant to which, among other things, such
stockholders have irrevocably agreed validly to tender (and not
to withdraw) all such Shares pursuant to the Offer, and such
stockholders have granted Parent a proxy with respect to the
voting of such Shares in favor of the Merger.
---------
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC.]
<PAGE>
Any stockholder desiring to tender all or a portion of such
stockholder's Shares should either (1) complete and sign the
Letter of Transmittal (or a manually signed facsimile thereof) in
accordance with the instructions in the Letter of Transmittal,
have such stockholder's signature thereon guaranteed if required
by Instruction 1 or 5 of the Letter of Transmittal, mail or
deliver it and any other required documents to the Depositary,
and either deliver the certificates for such Shares to the
Depositary along with the Letter of Transmittal or tender such
Shares pursuant to the procedures for book-entry transfer set
forth in Section 3 hereof or (2) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such stockholder. Any stockholder
whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such
broker, dealer, commercial bank, trust company or other nominee
if such stockholder desires to tender such Shares.
Any stockholder who desires to tender Shares and whose
certificates representing such Shares are not immediately
available, who cannot comply with the procedure for book-entry
transfer on a timely basis or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer,
may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3.
Questions and requests for assistance may be directed to
the Information Agent at the address and telephone number set
forth on the back cover of this Offer to Purchase. Requests for
additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related
materials may be directed to the Information Agent or to brokers,
dealers, commercial banks and trust companies.
September 29, 1998
- ii -
<PAGE>
TABLE OF CONTENTS
INTRODUCTION....................................................1
1. TERMS OF THE OFFER..........................................2
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES...............4
3. PROCEDURE FOR TENDERING SHARES..............................5
4. WITHDRAWAL RIGHTS...........................................7
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES................8
6. PRICE RANGE OF THE SHARES; DIVIDENDS........................9
7. CERTAIN EFFECTS OF THE TRANSACTION..........................9
8. CERTAIN INFORMATION CONCERNING THE COMPANY.................10
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT........12
10. SOURCE AND AMOUNT OF FUNDS.................................13
11. BACKGROUND OF THE TRANSACTION..............................13
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE
STOCKHOLDERS' AGREEMENT....................................15
13. DIVIDENDS AND DISTRIBUTIONS................................29
14. CERTAIN CONDITIONS OF THE OFFER............................29
15. CERTAIN LEGAL MATTERS......................................31
16. CERTAIN FEES AND EXPENSES..................................32
17. MISCELLANEOUS..............................................32
Annex I - Directors and Executive Officers of Purchaser and Parent
- iii -
<PAGE>
To the Holders of Common Stock of
Bryan Steam Corporation:
INTRODUCTION
Burnham Acquisition Corporation, a New Mexico corporation
("Purchaser") and a wholly-owned subsidiary of Burnham
Corporation, a New York corporation ("Parent"), hereby offers to
purchase all outstanding shares of the Common Stock, par value
$10.00 per share (the "Shares"), of Bryan Steam Corporation, a
New Mexico corporation ("Bryan" or the "Company"), at a purchase
price of $152.00 per Share (the "Offer Price"), net to the seller
in cash, without interest thereon, upon the terms and subject to
the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with any
supplements or amendments thereto, collectively constitute the
"Offer"). Tendering stockholders will not be obligated to pay
brokerage fees or commissions or, except as set forth in
Instruction 6 to the Letter of Transmittal, transfer taxes on the
purchase of Shares pursuant to the Offer. Purchaser or Parent
will pay all charges and expenses of IBJ Schroder Bank & Trust
Company, as the depositary (the "Depositary"), and MacKenzie
Partners, Inc., as the information agent (the "Information
Agent"), incurred in connection with the Offer. See Section 16.
The Offer is conditioned upon, among other things, there
being validly tendered and not withdrawn at the expiration of the
Offer at least sixty-six and two-thirds percent (66-2/3%) plus
one of the outstanding Shares on a fully diluted basis on the
date of purchase (the "Minimum Condition"). The Offer is also
subject to certain other conditions. See Section 1 and Section 14
hereof.
The Offer is being made pursuant to an Agreement and Plan
of Merger, dated as of September 23, 1998 (the "Merger
Agreement"), among Parent, Purchaser and the Company. The Merger
Agreement provides, among other things, for the making of the
Offer by Purchaser and further provides that, following the
completion of the Offer and subject to the satisfaction or waiver
of certain conditions, Purchaser will be merged with and into the
Company (the "Merger"), with the Company surviving the Merger as
a wholly owned subsidiary of Parent with the name "Bryan Steam
Corporation" (the "Surviving Corporation"). As a result of the
Merger, each outstanding Share (other than Shares held by Parent,
Purchaser or any subsidiary of Parent, Purchaser or the Company,
Shares held in the treasury of the Company and Shares
("Dissenting Shares") held by stockholders who have properly
exercised their rights to fair value appraisal rights under the
New Mexico Business Corporation Act ("NMBCA")) will be converted
at the effective time of the Merger (the "Effective Time") into
the right to receive in cash the price per Share paid in the
Offer without interest (the "Merger Consideration"). For a
description of the Merger Agreement, see Section 12. Certain U.S.
federal income tax consequences of the sale of Shares pursuant to
the Offer and the exchange of Shares for cash pursuant to the
Merger (whether as Merger Consideration or cash amounts received
pursuant to the exercise of appraisal rights) are described in
Section 5.
Concurrently with the execution of the Merger Agreement,
and as a condition and inducement to Parent and Purchaser
entering into the Merger Agreement, Purchaser and Parent entered
into an agreement, dated September 23, 1998 (the "Stockholders'
Agreement"), with certain individuals named therein (each, a
"Proxy Grantor") who in the aggregate beneficially own 106,315
Shares (representing approximately 55.6% of the outstanding
Shares). Pursuant to the Stockholders' Agreement, the Proxy
Grantors have (i) agreed validly to tender (and not to withdraw)
all such Proxy Grantor's Shares in the Offer and (ii) granted
Parent a proxy with respect to the voting of such Shares in favor
of the Merger upon the terms and subject to the conditions set
forth therein. For a more detailed description of the
Stockholders' Agreement, see Section 12.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
MCDONALD & COMPANY SECURITIES, INC. ("MCDONALD & CO."), THE
COMPANY'S INDEPENDENT FINANCIAL ADVISOR, HAS ADVISED THE
COMPANY'S BOARD OF DIRECTORS THAT, IN ITS OPINION, THE
CONSIDERATION TO BE RECEIVED BY THE STOCKHOLDERS OF THE COMPANY
IN CONNECTION WITH THE OFFER AND THE MERGER IS FAIR TO SUCH
HOLDERS, FROM A FINANCIAL POINT OF VIEW. A COPY OF THE OPINION OF
MCDONALD & CO. IS AN EXHIBIT TO THE COMPANY'S
<PAGE>
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE
"SCHEDULE 14D-9") FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") IN CONNECTION WITH THE OFFER A COPY
OF WHICH (WITHOUT CERTAIN EXHIBITS) IS BEING FURNISHED TO
STOCKHOLDERS CONCURRENTLY HEREWITH.
The Company has represented pursuant to the Merger
Agreement that, as of September 23, 1998, 191,284 Shares were
issued and outstanding and that as of that date no options to
purchase any Shares were issued and outstanding. Parent,
Purchaser and their affiliates do not currently beneficially own
any Shares or rights to acquire Shares other than the rights to
acquire Shares pursuant to the Stockholders' Agreement. Based on
the foregoing, Purchaser believes the Minimum Condition would be
satisfied if 127,524 Shares are duly tendered and not withdrawn
pursuant to the Offer.
The consummation of the Merger is subject to the
satisfaction or waiver of a number of conditions, including, if
required, the approval of the Merger by the requisite vote of the
stockholders of the Company in accordance with applicable law.
The NMBCA is applicable to the Company and the Merger because the
Company is organized under the laws of New Mexico. Under the
NMBCA, approval of the Merger requires the affirmative vote of
holders of a two-thirds majority of the shares entitled to vote
thereon, provided, that a holder of at least 90% of the
outstanding shares of each class of stock of a corporation may
cause the merger of such corporation with such holder without the
vote of the stockholders of the corporation.
If the Minimum Condition is satisfied, Purchaser will own
at least 66-2/3% plus one of the then outstanding Shares. In such
event, Parent and Purchaser believe that the Merger will be
approved at a subsequent meeting of the stockholders of the
Company (if such a meeting is required). If at least 90% of the
outstanding Shares are tendered and acquired by Purchaser in the
Offer, then Parent and Purchaser believe that, under the NMBCA,
Purchaser will be able to approve the Merger Agreement and effect
the Merger pursuant to the "short-form" merger provisions of
Section 53-14-5 of the NMBCA without any action by any other
stockholder. If the Minimum Condition is satisfied but less than
90% of the then outstanding Shares are tendered, then a vote of
the Company's stockholders will be required under the NMBCA to
approve the Merger. In that event, a longer period of time may be
required to effect the Merger. In any event, Purchaser intends to
effect the Merger in accordance with the terms of the Merger
Agreement as promptly as possible following the purchase of
Shares pursuant to the Offer.
If sufficient shares are not validly tendered pursuant to
the Offer to satisfy the Minimum Condition, Purchaser has the
option (i) to extend the Offer in accordance with (and subject to
the limitations of) the Merger Agreement, (ii) subject to
compliance with applicable rules and regulations of the
Commission, to waive the Minimum Condition, or (iii) to take such
other action as may be allowed by the Merger Agreement including
the termination of the Merger Agreement. In such event, the
Company would solicit the approval of the Merger and the Merger
Agreement by a vote of the stockholders of the Company. However,
there is no guarantee that such approval would be forthcoming.
Whether the Merger is effected pursuant to the "short-form"
merger provisions of applicable law, or pursuant to the
provisions requiring a stockholder vote, holders of Shares who
have not sold their Shares pursuant to the Offer (or otherwise)
will have certain rights under the NMBCA to dissent and demand
payment in cash of the fair value (as agreed by the stockholder
and the Company or as judicially determined) of their Shares. The
fair value so agreed or determined could be more or less than the
Offer Price and the Merger Consideration. See Sections 12 and 14.
This Offer to Purchase, the Letter of Transmittal and the
Schedule 14D-9 contain important information that should be read
carefully by stockholders before they make any decision whether
to tender their Shares pursuant to the Offer.
1. Terms of the Offer
Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), Purchaser will
accept for payment and pay for all Shares validly tendered and
not withdrawn as provided in Section 4 prior to the Expiration
Date. As used herein, the term "Expiration Date" shall mean 12:00
midnight, New York City time, on Wednesday, October 28, 1998,
- 2 -
<PAGE>
unless and until Purchaser shall, in its sole discretion, have
extended the period of time during which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time
and date at which the Offer, as so extended by Purchaser, shall
expire. Subject to the terms of the Merger Agreement (as
described in Section 12), Purchaser may from time to time extend
the Expiration Date.
The Offer is subject to the conditions set forth in Section
14, including, among other things, expiration or termination of
all waiting periods imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and the
Minimum Condition being satisfied. See Sections 14 and 15.
Subject to the applicable rules and regulations of the
Commission and the Merger Agreement, Purchaser expressly reserves
the right (but will not be obligated) to, at any time and from
time to time in its sole discretion, waive any condition to the
Offer in whole or in part in its sole discretion. In addition,
subject to the applicable rules and regulations of the
Commission, Purchaser expressly reserves the right at any time
and from time to time to modify or amend the terms of the Offer;
provided that under the Merger Agreement, Purchaser has agreed
that it will not, without the prior written consent of the
Company, (1) decrease or change the amount or form of the
consideration payable in the Offer, (2) decrease the number of
Shares sought pursuant to the Offer, (3) impose additional
conditions to the Offer, (4) change the conditions to the Offer
(provided that Purchaser in its sole discretion may waive any
conditions to the Offer), or (5) make any change to any other
provision of the Offer that is materially adverse to the holders
of the Shares.
If the conditions set forth in Section 14 are not satisfied
or waived by Parent or Purchaser as of any scheduled expiration
date, Purchaser may extend the Offer from time to time as
described in Section 12; provided, that Purchaser is not
obligated to make any such extension.
Subject to the limitations set forth in the Merger
Agreement (as described in Section 12), Purchaser reserves the
right (but will not be obligated), at any time or from time to
time in its sole discretion, to extend the period during which
the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement
of such extension. There can be no assurance that Purchaser will
exercise its right to extend the Offer.
Subject to the Merger Agreement and applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
relating to Purchaser's obligation to pay for or return tendered
Shares promptly after the termination or withdrawal of the Offer,
and to the provisions of the Merger Agreement, Purchaser
expressly reserves the right to delay acceptance for payment of
or payment for any Shares, to extend the Offer, or to terminate
the Offer and not to accept for payment or pay for any Shares not
theretofore accepted for payment or paid for, upon the failure of
any of the conditions specified in paragraphs (a) through (n) of
Section 14 to be fulfilled, and at any time or from time to time,
to amend the Offer or to waive any conditions to the Offer in any
respect consistent with the provisions of the Merger Agreement,
as such provisions may be amended from time to time, in each case
by giving oral or written notice of such delay, extension,
termination, amendment or waiver to the Depositary.
Any such extension of the period during which the Offer is
open, delay in acceptance for payment or payment, termination or
amendment of the Offer or waiver of any conditions to the Offer
will be followed, as promptly as practicable, by public
announcement thereof, such announcement in the case of an
extension to be issued not later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Without
limiting the obligation of Purchaser under such rule or other
applicable law or the manner in which Purchaser may choose to
make any public announcement, Purchaser currently intends to make
announcements by issuing a press release to the PR Newswire and
making any appropriate filing with the Commission. As used in
this Offer, "business day" means any day other than a Saturday,
Sunday or a U.S. federal holiday, and consists of the time period
from 12:01 a.m. through 12:00 Midnight, New York City time.
If Purchaser makes a material change in the terms of the
Offer or the information concerning the Offer or if it waives a
material condition of the Offer (including a waiver of the
Minimum Condition), Purchaser will disseminate additional tender
offer materials and extend the Offer if and to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange
Act. The minimum period during which a tender offer must remain
open
- 3 -
<PAGE>
following a material change in the terms of the Offer or
information concerning the Offer, other than a change in the
price or in the number of Shares sought, will depend on the facts
and circumstances then existing, including the relative
materiality of the changes. With respect to a change in the price
or number of Shares sought, a minimum of ten business days from
the date of such change is generally required under applicable
Commission rules and regulations to permit adequate disclosure to
stockholders.
The Company has provided Purchaser with the Company's
stockholder lists and security position listings for the purpose
of disseminating the Offer to stockholders. This Offer to
Purchase, the related Letter of Transmittal and certain other
relevant materials will be mailed to record holders of Shares and
will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose
nominees, appear on the Company's stockholder lists or, if
applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. Acceptance for Payment and Payment for Shares
Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment) and the terms and
conditions of the Merger Agreement, Purchaser will accept for
payment, and pay for, all Shares validly tendered and not
properly withdrawn prior to the Expiration Date, promptly after
the latter of (i) the Expiration Date and (ii) subject to
compliance with Rule 14e-1(c) under the Exchange Act, the date of
satisfaction or waiver of all of the conditions of the Offer set
forth in Section 14 (including expiration or termination of the
waiting period under the HSR Act) applicable to the acquisition
of Shares pursuant to the Offer. Any determination concerning the
satisfaction of such terms and conditions is within the
reasonable discretion of Purchaser and such determination will be
final and binding on all tendering stockholders. See Section 14.
Subject to compliance with Rule 14e-1(c) under the Exchange Act
and the terms and conditions of the Merger Agreement, Purchaser
expressly reserves the right, in its discretion, to delay
acceptance for payment of or payment for Shares in order to
comply, in whole or in part, with any applicable law or
government regulation or any condition contained herein. See
Sections 14 and 15.
In all cases, payment for Shares purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of
(i) certificates evidencing such Shares (or a timely Book-Entry
Confirmation (as defined in Section 3) with respect to such
Shares), (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with all
required signature guarantees or an Agent's Message, as defined
below, in connection with a book-entry transfer, and (iii) all
other documents required by the Letter of Transmittal. See
Section 3. The term "Agent's Message" means a message,
transmitted by the Book-Entry Transfer Facility (as defined in
Section 3) to, and received by, the Depositary and forming a part
of a Book-Entry Confirmation, which states that the Book-Entry
Transfer Facility has received an express acknowledgment from the
participant in the Book-Entry Transfer Facility tendering the
Shares, which are the subject of such Book-Entry Confirmation,
that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce
such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have
accepted for payment, and thereby purchased, Shares validly
tendered and not withdrawn as, if and when Purchaser gives oral
or written notice to the Depositary of Purchaser's acceptance of
such Shares for payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving
payment from Purchaser and transmitting payment to tendering
stockholders whose Shares have theretofore been accepted for
payment. If, for any reason, acceptance for payment of any Shares
tendered pursuant to the Offer is delayed, or Purchaser is unable
to accept for payment Shares tendered pursuant to the Offer,
then, without prejudice to Purchaser's rights under Section 14,
the Depositary may, nevertheless, on behalf of Purchaser, retain
tendered Shares, and such Shares may not be withdrawn, except to
the extent that the tendering stockholders are entitled to
withdrawal rights as described in Section 4 and as otherwise
required by Rule 14e-1(c) under the Exchange Act. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE OFFER PRICE BE PAID BY
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
If any tendered Shares are not purchased for any reason or
if certificates are submitted for more Shares than are tendered,
certificates for such Shares not purchased or tendered will be
returned pursuant to the instructions of the tendering
stockholder without expense to the tendering stockholder (or, in
the case of Shares delivered by
- 4 -
<PAGE>
book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, such Shares will be credited to an account
maintained at the Book-Entry Transfer Facility) as promptly as
practicable following the expiration, termination or withdrawal
of the Offer.
If, prior to the Expiration Date, Purchaser (in its sole
discretion) increases the consideration to be paid per Share
pursuant to the Offer, Purchaser will pay such increased
consideration for all such Shares purchased pursuant to the
Offer, whether or not such Shares were tendered prior to such
increase in consideration.
Purchaser reserves the right, subject to the terms of the
Merger Agreement, at any time, to assign, in its sole discretion,
to one or more affiliates of Purchaser the right to purchase all
or any portion of the Shares tendered pursuant to the Offer, but
any such assignment will not relieve Purchaser of its obligations
under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
Notwithstanding anything to the contrary herein, Purchaser
cannot and will not assert any of the conditions set forth under
Section 14 (other than certain regulatory conditions as, and to
the extent, permitted by applicable rules and regulations of the
Commission) at any time after the Expiration Date.
3. Procedure for Tendering Shares
Valid Tenders. For Shares to be validly tendered pursuant
to the Offer, either (a) a Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in
connection with a book-entry delivery of Shares and any other
required documents, must be received by the Depositary at the
address set forth on the back cover of this Offer to Purchase
prior to the Expiration Date, and either (i) certificates
representing Shares must be received by the Depositary at any
such address on or prior to the Expiration Date or (ii) such
Shares must be delivered pursuant to the procedures for
book-entry transfer set forth below and a Book-Entry Confirmation
must be received by the Depositary, in each case prior to the
Expiration Date, or (b) the tendering stockholder must comply
with the guaranteed delivery procedures set forth below. No
alternative, conditional or contingent tenders will be accepted.
Book-Entry Transfer. The Depositary will establish an
account with respect to the Shares at The Depository Trust
Company (the "Book-Entry Transfer Facility") for purposes of the
Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the
Book-Entry Transfer Facility's system may make book-entry
delivery of Shares by causing the Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedure for such transfer. However,
although delivery of Shares may be effected through book-entry
transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or an Agent's Message in
connection with a book-entry transfer) and any other required
documents, must, in any case, be transmitted to, and received by,
the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase on or prior to the Expiration
Date, or the tendering stockholder must comply with the
guaranteed delivery procedures described below. The confirmation
of a book-entry transfer of Shares into the Depositary's account
at the Book-Entry Transfer Facility as described above is
referred to herein as the "Book-Entry Confirmation." DELIVERY OF
DOCUMENTS (INCLUDING AN EXECUTED LETTER OF TRANSMITTAL) TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY
TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of
Transmittal must be guaranteed by a member in good standing of
the Securities Transfer Agent's Medallion Program, or by any
other bank, broker, dealer, credit union, savings association or
other entity that is an "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Exchange Act, (each of
the foregoing constituting an "Eligible Institution") unless the
Shares tendered thereby are tendered (i) by a registered holder
(which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility systems
whose name appears on a security position listing as the owner of
the Shares) of Shares who has not completed either the box
labeled "Special Delivery Instructions" or the box labeled
"Special Payment Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. See Instruction
1 of the Letter of Transmittal. If a certificate representing
Shares is registered in the name of a
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<PAGE>
person or persons other than the signer of the Letter of
Transmittal, or if payment is to be made or certificates for
Shares not accepted for payment or not tendered are to be issued
or returned to a person other than the registered holder, then
such certificate must be endorsed or accompanied by appropriate
stock powers, in each case signed exactly as the name or names of
the registered holder or holders appear on the certificates, with
the signatures on the certificates or stock powers guaranteed by
an Eligible Institution as described above and as provided in the
Letter of Transmittal. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender
Shares pursuant to the Offer and such stockholder's certificates
are not immediately available or the procedures for book-entry
transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary on or prior
to the Expiration Date, such Shares may nevertheless be tendered
if all of the following guaranteed delivery procedures are
complied with:
(i) such tender is made by or through an Eligible
Institution;
(ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by
Purchaser herewith, is received by the Depositary, as provided
below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares in proper
form for transfer, or a Book-Entry Confirmation with respect to
all tendered Shares, in either case together with a properly
completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof), with any requested signature
guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and any other documents required by the Letter of
Transmittal, are received by the Depositary within three trading
days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day except Saturday, Sunday or a
federal holiday.
The Notice of Guaranteed Delivery may be delivered by hand
or transmitted by facsimile transmission or mail to the
Depositary and must include an endorsement by an Eligible
Institution in the form set forth in such Notice of Guaranteed
Delivery.
The method of delivery of certificates for Shares, the
Letter of Transmittal and all other required documents, including
delivery through the Book-Entry Transfer Facility, is at the
option and risk of the tendering stockholder. If delivery is made
by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be
allowed to ensure timely delivery.
Notwithstanding any other provision hereof, payment for
Shares accepted for payment pursuant to the Offer in all cases
will be made only after timely receipt by the Depositary of (i)
certificates for (or a Book-Entry Confirmation with respect to)
such Shares, (ii) a Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message, and
(iii) all other documents required by the Letter of Transmittal.
Backup Withholding. In order to avoid "backup withholding"
of U.S. federal income tax on payments of cash pursuant to the
Offer, a stockholder surrendering Shares in the Offer must,
unless an exemption applies, provide the Depositary with such
stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such stockholder is not subject to
backup withholding. If a stockholder does not provide such
stockholder's correct TIN or fails to provide the certifications
described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such
stockholder pursuant to the Offer may be subject to backup
withholding of 31%. All stockholders surrendering Shares pursuant
to the Offer should complete and sign the main signature form and
the Substitute Form W-9 included as part of the Letter of
Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to
Purchaser and the Depositary). Certain stockholders (including,
among others, all corporations and certain foreign individuals
and entities) are not subject to backup withholding. Noncorporate
foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of
which may be obtained from the Depositary, in order to avoid
backup withholding. See Instruction 8 to the Letter of
Transmittal.
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<PAGE>
Determination of Validity. All questions as to the form of
documents and the validity, eligibility (including time of
receipt) and acceptance for payment of any tender of Shares
pursuant to any of the procedures described above will be
determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties.
Purchaser reserves the absolute right to reject any or all
tenders of Shares that are determined by it not to be in proper
form or the acceptance of or payment for which, in the opinion of
Purchaser, may be unlawful. Purchaser also reserves the absolute
right to waive any defect or irregularity in any tender of
Shares. Purchaser's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding on all parties.
No tender of Shares will be deemed to have been validly made
until all defects and irregularities have been cured or waived.
None of Purchaser, Parent, the Depositary, the Information Agent
or any other person will be under any duty to give notification
of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
Appointment as Proxy. By executing a Letter of Transmittal,
a tendering stockholder irrevocably appoints designees of
Purchaser as such stockholder's attorney-in-fact and proxy, each
with full power of substitution, in the manner set forth in the
Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder
and accepted for payment by Purchaser (and with respect to any
and all other Shares or other securities issued or issuable in
respect of such Shares on or after the date of the Offer). All
such powers of attorney and proxies shall be considered coupled
with an interest in the tendered Shares. Such powers of attorney
and proxies shall be irrevocable and shall be effective when, and
only to the extent that, Purchaser accepts such Shares for
payment. Upon such acceptance for payment, all prior powers of
attorney or proxies given by such stockholder with respect to
such Shares (and any other Shares or other securities so issued
in respect of such purchased Shares) will be revoked, without
further action, and no subsequent powers of attorney or proxies
may be given (and, if given, will not be deemed effective) by
such stockholder. The designees of Purchaser will be empowered to
exercise all voting and other rights of such stockholder with
respect to such Shares (and any other Shares or securities so
issued in respect of such accepted Shares) as they in their sole
discretion may deem proper, including, without limitation, in
respect of any annual or special meeting of the Company's
stockholders, or any adjournment or postponement thereof, or in
connection with any action by written consent in lieu of any such
meeting or otherwise (including any such meeting or action by
written consent to approve the Merger). Purchaser reserves the
absolute right to require that, in order for Shares to be validly
tendered, immediately upon Purchaser's acceptance for payment of
such Shares, Purchaser must be able to exercise full voting and
other rights with respect to such Shares (and any other Shares or
securities so issued in respect of such accepted Shares),
including voting at any meeting of stockholders then scheduled or
giving or withdrawing written consents as to which the record
date has passed.
Binding Agreement. A valid tender of Shares will constitute
the tendering stockholder's acceptance of the terms and
conditions of the Offer. Purchaser's acceptance for payment of
Shares tendered pursuant to the Offer will constitute a binding
agreement between the tendering stockholder and Purchaser upon
the terms and subject to the conditions of the Offer.
4. Withdrawal Rights
Except as otherwise provided in this Section 4, tenders of
Shares made pursuant to the Offer are irrevocable. Shares
tendered pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date and, unless theretofore accepted for
payment by Purchaser as provided herein, may also be withdrawn at
any time after November 27, 1998 If Purchaser extends the Offer,
is delayed in its purchase of or payment for Shares or is unable
to purchase or pay for Shares for any reason, then, without
prejudice to the rights of Purchaser hereunder, tendered Shares
may be retained by the Depositary on behalf of Purchaser and may
not be withdrawn except to the extent that tendering stockholders
are entitled to withdrawal rights as set forth in this Section 4.
The reservation by Purchaser of the right to delay the acceptance
or purchase of or payment for Shares is subject to the provisions
of Rule 14e-1(c) under the Exchange Act, which requires Purchaser
to pay the consideration offered or return Shares deposited by or
on behalf of stockholders promptly after the termination or
withdrawal of the Offer.
For a withdrawal of tendered Shares to be effective, a
written or facsimile transmission notice of withdrawal must be
timely received by the Depositary at the address set forth on the
back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the
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<PAGE>
person who tendered such Shares. If certificates evidencing
Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then prior to the physical release
of such certificates, the tendering stockholder must also submit
the serial numbers shown on such certificates, and the
signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution (except in the case of Shares tendered for
the account of an Eligible Institution). If Shares have been
tendered pursuant to the procedure for book-entry transfer set
forth in Section 3, any notice of withdrawal with respect to such
Shares must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn
Shares.
All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by
Purchaser, in its sole discretion, whose determination shall be
final and binding on all parties. No withdrawal of Shares shall
be deemed to have been properly made until all defects and
irregularities have been cured or waived. None of Purchaser,
Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability
for failing to give such notification.
Withdrawals of Shares may not be rescinded. Any Shares
properly withdrawn will be deemed not to have been validly
tendered for purposes of the Offer, but may be retendered at any
subsequent time prior to the Expiration Date by following any of
the procedures described in Section 3.
5. Certain U.S. Federal Income Tax Consequences
The following is a summary of the principal U.S. federal
income tax consequences of the Offer and the Merger to holders
whose Shares are purchased pursuant to the Offer or whose Shares
are converted into the right to receive cash in the Merger
(whether upon receipt of the Merger Consideration or upon receipt
of any cash amounts by dissenting stockholders pursuant to the
exercise of rights to fair value appraisal under the NMBCA). The
discussion applies only to holders of Shares in whose hands
Shares are capital assets, and may not apply to Shares received
pursuant to the exercise of employee stock options or otherwise
as compensation, or to holders of Shares who are not citizens or
residents of the United States.
The U.S. federal income tax consequences set forth below
are included for general informational purposes only and are
based upon present law. Individual circumstances may differ;
accordingly, each holder of Shares should consult such holder's
own tax advisor to determine the applicability of the rules
discussed below to such stockholder and the particular tax
effects of the Offer and the Merger, including the application
and effect of state, local and other tax laws.
The receipt of the Offer Price or the receipt of cash
pursuant to the Merger (whether as Merger Consideration or cash
amounts received by dissenting stockholders pursuant to the
exercise of appraisal rights) will be a taxable transaction for
U.S. federal income tax purposes (and also may be a taxable
transaction under applicable state, local and other income tax
laws). In general, for U.S. federal income tax purposes, a holder
of Shares will recognize gain or loss equal to the difference
between such holder's adjusted tax basis in the Shares sold
pursuant to the Offer or converted to cash in the Merger and the
amount of cash received therefor. Gain or loss must be determined
separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) sold pursuant to the Offer or
converted to cash in the Merger. Such gain or loss will be
capital gain or loss and will be long-term gain or loss if, on
the date of sale (or, if applicable, the date of the Merger), the
Shares were held for more than one year.
Payments in connection with the Offer or the Merger may be
subject to backup withholding at a 31% rate. Backup withholding
generally applies if the stockholder (a) fails to furnish such
stockholder's social security number or TIN, (b) furnishes an
incorrect TIN, (c) fails to properly report interest or dividends
or (d) under certain circumstances, fails to provide a certified
statement, signed under penalties of perjury, that the TIN
provided is such stockholder's correct number and that such
stockholder is not subject to backup withholding. Backup
withholding is not an additional tax but merely an advance
payment, which may be refunded to the extent it results in an
overpayment of tax. Certain persons generally are exempt from
backup withholding, including corporations and financial
institutions. Certain penalties apply for failure to furnish
correct information and for failure to include the reportable
payments in income. Each stockholder should consult with such
stockholder's own tax advisor as to such stockholder's
qualification for exemption from withholding and the procedure
for obtaining such exemption.
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<PAGE>
6. Price Range of the Shares; Dividends
According to the Company's Annual Report on Form 10-KSB for
the year ended June 30, 1998 (the "Company 10-K"), there are
approximately 1,065 record holders of Shares. There is no
established trading market for the Shares and the Company is not
normally informed of the terms of transactions in its shares. The
Shares are traded sporadically over-the-counter. Set forth below
are the range of high and low bid quotations as reported on
Bloomberg L.P. for each quarter during the last two fiscal years.
The quotations listed below may reflect inter-dealer
transactions, without retail mark-up, mark-down, or commission.
They do not necessarily represent actual transactions and
management does not have knowledge of the volume of trading, if
any, at any of such bid prices.
Bryan Common Stock
Quarter Ended: High Ask Low Ask
-------- -------
September 30, 1996 40 1/2 37
December 31, 1996 38 37
March 31, 1997 39 1/2 38
June 30, 1997 50 39 1/2
September 30, 1997 50 50
December 31, 1997 63 1/2 53
March 31, 1998 65 7/16 63 1/2
June 30, 1998 67 1/4 65 7/16
September 30, 1998
(through September 28, 1998) 80 67 1/4
According to the Company 10-K and information supplied to
Purchaser by the Company, the Company paid dividends of $1.40 per
Share on September 15, 1995, $1.50 per Share on September 13,
1996, $2.00 per Share on September 15, 1997 and $2.00 per Share
on September 15, 1998.
On September 22, 1998, the last full trading day before the
execution of the Merger Agreement and the public announcement of
Purchaser's intention to make the Offer, the high and low bid
quotations, reported on Bloomberg L.P. were $80 and $67-1/4. On
July 20, 1998, the last date on which a bid in the Shares was
reported on Bloomberg L.P., the bid quotation was $80.
Stockholders are encouraged to obtain current market quotations
for the Shares.
7. Certain Effects of the Transaction
The purchase of Shares pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and the
number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the
public. According to the Company 10-K, as of June 30, 1998, there
were 1,065 recordholders of Bryan Common Stock and more than 300
beneficial holders whose shares are held of record by nominees.
The extent of the public market for the Shares and the
continued trading of the Shares over-the-counter after the
purchase of Shares pursuant to the Offer, will depend upon the
number of holders of Shares remaining at such time, the interest
in maintaining a market in such Shares on the part of securities
firms, the possible termination of registration of such Shares
under the Exchange Act, as described below, and other factors.
Depending on the number of Shares acquired pursuant to the Offer,
price quotations for the Shares may no longer meet the
requirements for continued trading over-the-counter. If, as a
result of the purchase of Shares pursuant to the Offer or
otherwise, trading of the Shares over-the-counter is
discontinued, the liquidity of and market for the Shares could be
adversely affected. Any reduction in the number of Shares that
might otherwise trade publicly may have an adverse effect on the
market price for or marketability of the Shares and may cause
future prices to be less than the Offer Price.
The Shares are currently registered under the Exchange Act.
Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if
the Shares are not listed on a national securities exchange and
there are fewer than 300 record holders of the Shares.
Termination of
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<PAGE>
registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by
the Company to its stockholders and to the Commission and would
make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b) of the
Exchange Act, the requirement of furnishing a proxy statement in
connection with stockholders' meetings pursuant to Section 14(a)
or 14(c) of the Exchange Act, and the requirements of Rule 13e-3
under the Exchange Act with respect to "going private"
transactions, no longer applicable to the Company. In addition,
"affiliates" of the Company and persons holding "restricted
securities" of the Company, if any, may be deprived of the
ability to dispose of such securities pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended.
It is the present intention of Purchaser to seek to cause
the Company to make an application for the termination of the
registration of the Shares under the Exchange Act as soon as
possible after the purchase of all validly tendered Shares in the
Offer if the requirements for termination of registration are
met. If registration of the Shares is not terminated prior to the
Merger, the registration of the Shares under the Exchange Act
will be terminated following consummation of the Merger. See
Section 12.
8. Certain Information Concerning the Company
Except as otherwise stated in this Offer to Purchase, the
information concerning the Company contained herein has been
taken from or based upon publicly available documents and records
on file with the Commission and other public sources including,
but not limited to, the Company 10-K. Although neither Parent nor
Purchaser has any knowledge that any statements contained herein
based on such documents and records are untrue, neither Parent
nor Purchaser takes any responsibility for the accuracy or
completeness of the information concerning the Company, furnished
by the Company or contained in such documents and records, or for
any failure by the Company to disclose events that may have
occurred and may affect the significance or accuracy of any such
information.
The Company was incorporated in New Mexico in 1916. Its
executive offices are located at P.O. Box 27, Peru, Indiana
46970. The Company manufactures boilers and boiler accessories
and operates a tank manufacturing facility.
Set forth below is a summary of certain selected financial
information with respect to the Company for the years ended June
30, 1998 and June 30, 1997. The June 30, 1998 and June 30, 1997
information were excerpted from the Company 10-K. More
comprehensive financial information is included in the Company
10-K and the following summary is qualified in its entirety by
reference to such report and the financial statements and other
financial information (including any related notes) contained
therein. The Company 10-K may be inspected and copies may be
obtained in the manner set forth below.
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<PAGE>
BRYAN STEAM CORPORATION
SELECTED CONSOLIDATED CONDENSED FINANCIAL DATA
(In Thousands, Except Share Data)
Audited
-------------------
1998 1997
--------- --------
Year Ended
June 30,
-------------------
Income Statement Data:
Gross sales less discounts,
returns and allowances $26,178 $26,233
Net income (loss) 988 1,609
Earnings (loss) Per Share* 5.17 8.41
Balance Sheet Data:
Total Assets 18,562 17,223
Total Liabilities 3,546 2,831
Stockholders' Equity 15,016 14,392
* Based on 191,284 Shares issued and outstanding throughout the
period.
The Company is subject to the information and reporting
requirements of the Exchange Act and, in accordance therewith, is
required to file periodic reports, proxy statements and other
information with the Commission relating to its business,
financial condition and other matters. Information as of
particular dates concerning the Company's directors and officers,
their remuneration, stock options and other matters, the
principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be
available for inspection at the Commission's public reference
facilities at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549 and also should be available for inspection and copying at
prescribed rates at the regional offices of the Commission
located at the Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, IL 60661. Copies of such material may also be
obtained by mail at prescribed rates, from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. Such material may be obtained electronically by visiting
the Commission's web site on the Internet at http://www.sec.gov.
Prior to entering into the Merger Agreement, Parent and
Purchaser conducted a due diligence review of the Company and in
connection with such review, received certain non-public
information from the Company. The non-public information
included, among other things, financial estimates (the
"Estimates"). One of the Estimates was provided by Goelzer & Co.,
prepared in March, 1998, respecting potential operating results
for the fiscal year ending June 30, 2000. The other of the
Estimates was provided by McDonald & Co., prepared in June, 1998,
respecting potential operating results for the fiscal year ending
June 30, 1999. The Estimate respecting the year ending June 30,
1999, indicated that sales would increase at the rate of 5%, and
margins would remain consistent with those of prior years. For
the year ended June 30, 2000, the Estimate indicated net sales of
approximately $30.8 million and income from operations (pre-tax)
of approximately $3 million. The Company has advised Parent and
Purchaser that the Estimates were prepared by the Company's
management and the respective financial advisors based on
numerous assumptions, including among others, projections of
revenue, gross profit, operating expenses, depreciation and
amortization, taxes, capital expenditures and working capital
requirements. No assurances can be given with respect to any such
assumptions. None of the assumptions in the Estimates gives
effect to the Offer, the Merger or financing thereof or the
operations of the Company after consummation of such
transactions.
The Company has advised Purchaser that it does not as a
matter of course disclose estimates or projections as to future
revenues or earnings, and the Estimates were not prepared with a
view to public disclosure or compliance with published guidelines
of the Commission or the American Institute of Certified Public
Accountants for projections. The Estimates have not been
examined, reviewed or compiled by the Company's independent
auditors, and accordingly they have not expressed an opinion or
any other assurance on them. The forecasted
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<PAGE>
information is included herein solely because such information
was furnished to Parent and Purchaser or its financial advisors.
Accordingly, the inclusion of the Estimates in this Offer should
not be regarded as an indication that Parent or Purchaser or
their financial advisors or their respective officers and
directors consider such information to be accurate or reliable,
and none of such persons assumes any responsibility for the
accuracy or reliability thereof. The Estimates were prepared for
internal use and are subjective in many respects and thus
susceptible to various interpretations and periodic revision
based upon actual experience and business development. In
addition, because the estimates and assumptions underlying the
Estimates are inherently subject to significant economic and
competitive uncertainties and contingencies, which are difficult
or impossible to predict accurately and are beyond the control of
the Company, Parent and Purchaser, there can be no assurance that
the Estimates will be realized or that the Company's future
results will not vary materially from the Estimates.
9. Certain Information Concerning Purchaser and Parent
Purchaser, a New Mexico corporation, was organized to
acquire the Company and has not conducted any unrelated
activities since its organization. All of Purchaser's outstanding
stock is owned by Parent, a New York corporation. The principal
executive offices of Purchaser and Parent are located at 1241
Harrisburg Avenue, Lancaster PA, 17603. Parent is, itself and
through its subsidiaries, a major manufacturer of boilers,
furnaces, radiators and related equipment.
The name, citizenship, business address, present principal
occupation or employment and five-year employment history of each
of the directors and executive officers of Purchaser and Parent
is set forth in Annex I hereto and incorporated herein by
reference.
Parent and Purchaser are not subject to the informational
reporting requirements of the Exchange Act, and, accordingly, do
not file reports or other information with the Commission
relating to their respective business, financial condition or
other matters.
Set forth below is a summary of certain selected financial
information with respect to Parent for the six months ended June
30, 1998 and June 30, 1997, and for the years ended December 31,
1997 and December 31, 1996.
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<PAGE>
BURNHAM CORPORATION AND ITS SUBSIDIARIES
SELECTED CONSOLIDATED CONDENSED FINANCIAL DATA
(In Thousands, Except Per Share Data)
Unaudited Audited
------------------ ----------------
1998 1997 1997 1996
-------- --------
Six months ended, Year Ended
June 30, December 31,
-------------------------------------
Income Statement Data:
Net sales $72,564 $66,769 $174,593 $159,936
Net income (loss) 602 1,794 9,419 8,844
Earnings (loss)
Per Share* .26 .80 4.20 3.95
Balance Sheet Data:
Total Assets 124,317 112,266 127,642 114,285
Total Liabilities 55,045 48,307 57,752 50,916
Stockholders' Equity 69,272 63,959 69,890 63,369
- ---------------
* Based on 2,264, 2,238, 2,238 and 2,235 Shares issued and
outstanding for each respective period.
A copy of Parent's 1997 Annual Report containing audited
consolidated Balance Sheets as of December 31, 1997 and 1996 and
the related consolidated statements of income, stockholders'
equity and cash flows for the years then ended, as well as recent
unaudited financial statements, may be obtained by requesting the
same from Parent at the following address: Burnham Corporation,
P. O. Box 3205, Lancaster, PA 17604-3205, Telephone:
717-293-5800, Fax: 717-293-5816, Attention: Ronald L. Griffith.
10. Source and Amount of Funds
The total amount of funds required by Purchaser to purchase
all outstanding Shares pursuant to the Offer and to pay related
fees and expenses in connection with the Offer and the Merger is
estimated to be approximately $30.5 million. Purchaser expects to
obtain the necessary funds from Parent. Parent has sufficient
existing cash reserves and existing credit facilities with
available balances to satisfy its and Purchaser's obligations
under the Offer and the Merger Agreement. The Offer is not
conditioned upon any financing arrangements.
11. Background of the Transaction
On June 10, 1998, senior management of Parent and the
Company had initial discussions regarding the possible
acquisition of the Company by Parent. Parent was informed that
the Company would be sold through an "auction", which was to be
conducted by McDonald & Co., the Company's financial advisor.
Parent executed a confidentiality agreement and thereafter
received certain financial, corporate and other information
concerning the Company from McDonald & Co. and from Goelzer & Co.
Inc. ("Goelzer & Co."), a consultant specifically engaged by the
Company to arrange an offer for the Company supported by the
Company's management.
Senior management of Parent and the Company met on July 7,
1998 together with representatives of Goelzer & Co. further to
explore Parent's preliminary plans for the acquisition and to
discuss the views of the Company's management. Representatives of
Parent and Goelzer & Co. had further conversations concerning
Parent's plans during the period July 8, 1998 through July 20,
1998.
On July 21, 1998, based on the information received, Parent
submitted to McDonald & Co. a preliminary, non-binding proposal
for the acquisition of the Company at a cash price in the range
of $135.00 to $148.00 per share. This preliminary proposal was
endorsed by Goelzer & Co., which indicated that the proposal had
the support of the Company's management.
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<PAGE>
The Company thereafter invited Parent and its
representatives to conduct a further business review of the
Company, which the Company undertook between July 23, 1998 and
September 4, 1998.
On September 8, 1998, on the basis of its review and in
accordance with the auction procedures established by McDonald &
Co. and the Company, Parent submitted to McDonald & Co. a final
purchase proposal for the Company. Under this final proposal,
which was ultimately accepted in substantial part by the Company,
Parent offered to pay $152.00 per share net to holders of common
stock of the Company in the Merger. In addition, Parent agreed to
pay the transaction expenses incurred by the Company, and the
amounts to which senior managers of the Company would be entitled
upon certain changes in control of the Company. Parent's proposal
was subject to the condition (among other conditions) that the
Company solicit not more than ten stockholders of the Company and
that ten stockholders of the Company holding in the aggregate in
excess of 50% of the outstanding common shares of the Company
execute and deliver to Parent an option entitling Purchaser to
acquire their shares at $152.00 per share (as well as a proxy to
vote their shares in favor of the Merger).
On September 10, 1998, a meeting of the Board of the
Company was held at which the Company's outside legal counsel
advised the Board regarding its fiduciary duties under applicable
law, and representatives of McDonald & Co. made a presentation to
the Board with respect to the financial terms of the proposed
Merger Agreement, as well as the terms and status of other
proposals, which had been received from other entities during the
auction process. Representatives of McDonald & Co. also delivered
its oral opinion to the Board that the Merger was fair to such
holders from a financial point of view. After discussion, the
Board determined that further negotiations should take place with
Parent to finalize the Merger Agreement on a mutually acceptable
basis.
In subsequent negotiations on September 10 and 11, 1998
between Parent and the Company, in order to expedite the
acquisition, Parent requested that the transaction be
restructured from a single-step merger to a "two-step"
transaction consisting of a tender offer followed by a merger.
Parent also requested that the ten stockholders holding in excess
of 50% of the Company's common stock irrevocably agree to tender
their shares in such tender offer, and grant Parent a proxy to
vote their shares in favor of the Merger, pursuant to a
Stockholders' Agreement.
From September 10, 1998 through September 21, 1998, Parent
and the Company engaged in continued negotiations and document
preparation through their representatives. Based on discussions
with the Company, Parent understood that its proposal was
financially superior to all other proposals.
On September 21, 1998, the Board of the Company met again
to discuss the transaction, including the restructuring to a
"two-step" transaction. At this meeting, the Company's outside
legal counsel again advised the Board regarding its fiduciary
duties under applicable law, and representatives of McDonald &
Co. made a presentation to the Board with respect to the
financial terms of the proposed Offer and Merger. Representatives
of McDonald & Co. also delivered its written opinion to the Board
that the consideration to be received by the stockholders of the
Company in connection with the Offer and the Merger was fair to
such holders from a financial point of view. Based upon such
advice, such presentation and such opinion, the Board, subject to
finalization of the Merger Agreement in subsequent negotiations,
unanimously approved the Merger and the Offer.
Also on September 21, 1998, certain major stockholders of
the Company met with the Company's Chairman, its outside legal
counsel and representatives of McDonald & Co. to discuss the
background of the proposed transaction and the Stockholders'
Agreement. Between September 21, 1998 and September 23, 1998, ten
stockholders holding in the aggregate approximately 55.6% of the
outstanding common stock of the Company executed the
Stockholders' Agreement, which was dated as of September 23, 1998
and was held in escrow subject to the execution of the final
Merger Agreement.
On September 23, 1998, Parent, Purchaser and the Company
executed and delivered the Merger Agreement, and Parent and
Purchaser executed and delivered the Stockholders' Agreement. The
transaction was publicly announced on September 23, 1998, and, on
September 29, 1998, Purchaser commenced the Offer.
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12. Purpose of the Offer; The Merger Agreement; The Stockholders'
Agreement.
General
The purpose of the Offer, the Merger and the Stockholders'
Agreement is to enable Parent to acquire, in one or more
transactions, control of, and the entire equity interest in, the
Company. An additional purpose of the Merger is for Parent to
acquire all Shares not tendered and purchased pursuant to the
Offer. The acquisition of the entire equity interest in the
Company is structured as a cash tender offer followed by a merger
in order to provide a prompt and orderly transfer of ownership of
the Company from the public stockholders to Parent.
If the Minimum Condition is satisfied, Purchaser will own
at least 66-2/3% plus one of the then outstanding Shares. In that
event, the Company will call a stockholders meeting, if required,
and Purchaser will vote such Shares to approve the Merger
Agreement and the Merger. A vote of a two-thirds majority of
outstanding Shares is required under the NMBCA to approve a
merger, and as such, Purchaser believes that if the Minimum
Condition is satisfied the resolution in favor of the Merger will
pass and the Merger will be approved. If at least 90% of the then
outstanding Shares are tendered pursuant to the Offer, Purchaser
will be able to approve the Merger Agreement and the Merger and
to effect the Merger pursuant to the "short-form" merger
provisions of Section 53- 14-5 of the NMBCA without prior notice
to, or any action by, any other stockholder of the Company. On
the other hand, if the Minimum Condition is not satisfied and
such condition is waived by Purchaser in its sole discretion, and
thereafter the Offer is concluded with Purchaser owning not more
than 66-2/3% of the Shares then outstanding, then the Company
will call a stockholders meeting and Purchaser will vote in favor
of the Merger whatever Shares it does acquire pursuant to the
Offer. In such event, however, no assurance can be given that the
affirmative vote of holders of a two-thirds majority of the
Shares would be obtained at a special stockholders' meeting
called for such purpose as required to approve the Merger. See
Introduction and Section 15.
Upon consummation of the Merger, the Company will become a
wholly-owned subsidiary of Parent. The Offer is being made
pursuant to the Merger Agreement.
The Merger Agreement. The following is a summary of the
material terms of the Merger Agreement. This summary is not a
complete description of the terms and conditions thereof and is
qualified in its entirety by reference to the full text thereof,
which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1") filed in
connection with the Offer. The Schedule 14D-1 (including the
Merger Agreement and other exhibits) may be examined, and copies
thereof may be obtained, in the manner set forth in Section 8
with respect to the Company 10-K (except that such Schedule will
not be available at the regional offices of the Commission).
The Offer. The Merger Agreement provides for the
commencement of the Offer, in connection with which Parent or
Purchaser has expressly reserved the right to waive conditions of
the Offer, in whole or in part, at any time and from time to time
in their sole discretion. Purchaser has agreed, however, that it
will not, without the prior written consent of the Company, (i)
decrease or change the amount or form of consideration payable in
the Offer, (ii) decrease the number of Shares sought pursuant to
the Offer, (iii) impose additional conditions to the Offer, (iv)
change the conditions of the Offer (provided that Parent or
Purchaser in their sole discretion may waive any of the
conditions to the Offer) or (v) make any change to any other
provision of the Offer that is materially adverse to the holders
of the Shares. Purchaser is entitled to extend the Offer in
accordance with applicable law as follows: (i) if any of the
conditions to the Offer are not satisfied or waived by Purchaser
as of any scheduled expiration date, then Purchaser may extend
the Offer from time to time until the earlier of (a) the
consummation of the Offer or (b) twenty business days following
the original expiration date of the Offer specified herein, and
(ii) if all conditions to the Offer are satisfied or waived as of
any scheduled expiration date, then Purchaser may extend the
Offer from time to time by not more than ten business days in the
aggregate. The obligation of Purchaser to consummate the Offer
and to accept for payment and to pay for any Shares tendered
pursuant to the Offer will be subject only to the conditions set
forth in Section 14.
For a description of the conditions to the Offer, see
Section 14.
The Merger. The Merger Agreement provides that, upon the
terms and subject to the conditions of the Merger Agreement, and
in accordance with the relevant provisions of the NMBCA,
Purchaser shall be merged with
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and into the Company as soon as practicable following the
satisfaction or waiver of the conditions to the Merger. The
Company shall be the Surviving Corporation and shall continue its
existence under the laws of New Mexico, and the Certificate of
Incorporation and the Bylaws of Purchaser as in effect
immediately prior to the Effective Time shall be the Certificate
of Incorporation and Bylaws of the Surviving Corporation (except
the name of the Surviving Corporation shall be Bryan Steam
Corporation). H. Jesse McVay, Albert Morrison III and Ronald L.
Griffith will be the initial directors of the Surviving
Corporation and H. Jesse McVay (President), Ronald L. Griffith
(Vice President), Kurt J. Krauskopf (Treasurer, Comptroller and
Secretary), Robert Berardi (Assistant Treasurer) and Tammy McEwen
(Assistant Secretary) will be the initial officers of the
Surviving Corporation. Each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned
by Parent, Purchaser or any subsidiary of Parent, Purchaser or
the Company or held in the treasury of the Company, all of which
shall be canceled, and other than Dissenting Shares, as defined
herein) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into the right to
receive in cash the Merger Consideration, upon the surrender of
the certificate representing such Shares. The parties to the
Merger Agreement shall cause the Merger to be consummated by
filing with the Corporation Commission of the State of New Mexico
or its successor duly prepared and executed Articles of Merger,
as required by the NMBCA. The Merger will become effective upon
such filing or at such time thereafter as is provided under
applicable law.
Stockholder Meeting; Recommendation to Stockholders. Unless
the Merger is consummated in accordance with the "short-form"
merger provisions under the NMBCA, and subject to applicable law,
the Company shall, through its Board of Directors, duly call,
give notice of, convene and hold a special meeting of its
stockholders (the "Stockholder Meeting") for the purpose of
voting on the adoption of the plan of merger set forth in the
Merger Agreement as soon as reasonably practicable following the
consummation of the Offer but in any event prior to the 90th day
after the date of the Merger Agreement (subject to certain
unavoidable delays outside the control of the parties). Except to
the extent legally required for the discharge of the Board of
Directors' fiduciary duties as reflected in a written opinion of
independent legal counsel, Bryan shall, through its Board of
Directors, include in the Proxy Statement the recommendation of
the Board of Directors of Bryan that the stockholders of Bryan
adopt the Merger Agreement and approve the Merger, and the
Company is required to use all reasonable efforts to obtain the
adoption and approval of its stockholders. Parent and Purchaser
have agreed that, at the Stockholder Meeting, all of the Shares
acquired pursuant to the Offer or otherwise by Parent or
Purchaser or any of their affiliates will be voted in favor of
the Merger.
If Purchaser or any other direct or indirect subsidiary of
Parent shall acquire at least 90 percent of the outstanding
Shares, each of Parent, Purchaser and the Company may, if
Purchaser so elects, take all necessary and appropriate action to
cause the Merger to become effective, as soon as practicable
after the consummation of the Offer, without a meeting of
stockholders of the Company, in accordance with Section 53-14-5
of the NMBCA.
Representations and Warranties. The Merger Agreement
contains various representations and warranties of the parties
thereto. These include representations and warranties by the
Company with respect to corporate existence and good standing,
capital structure, subsidiaries, corporate authorization, absence
of changes, Commission filings, consents and approvals, no
defaults under agreements, investment banking fees, employee
benefits, labor relations, litigation, taxes, compliance with
applicable laws, environmental matters, intellectual property,
real property, insurance, material contracts, and other matters.
Purchaser and Parent have also made certain representations
and warranties with respect to corporate existence and good
standing, corporate authorization, consents and approvals, no
violations of other agreements and other matters.
Conduct of Business and Other Covenants Pending the Merger.
The Company has agreed that, except as expressly contemplated or
permitted by the Merger Agreement (or to the extent that Parent
may otherwise grant prior consent in writing, which consent shall
not be unreasonably withheld), during the period from the date of
the Merger Agreement to the Effective Time, the Company will
conduct its business only in, and the Company will cause each of
its subsidiaries not to take any action except in, the ordinary
course consistent with past practice (subject to the further
limitations specified in the Merger Agreement). In addition, the
Company has agreed that it will, and it will cause its
subsidiaries to use, all commercially reasonable efforts to
preserve intact in all material respects its present business
organization and reputation, to keep available the services of
its key officers and employees, to maintain its assets and
properties in good working order and condition (ordinary wear and
tear
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<PAGE>
excepted), to preserve its relationships with customers and
suppliers and others having significant business dealings with
them, to comply in all material respects with all laws and orders
of all governmental or regulatory authorities applicable to them,
and to maintain insurance (subject to consulting with Parent
prior to renewing any insurance policy), including, without
limitation, product liability insurance, in such amounts and
against such risks and losses as was in effect on June 30, 1998
(subject to the specific reinstatement of product liability
insurance for one of the Company's subsidiaries).
In addition, without limiting the generality of the
foregoing and except as expressly contemplated or permitted by
the Merger Agreement, during the period specified in the first
sentence of the preceding paragraph, the Company has agreed that,
without the prior written consent of Parent, it will not (and
will cause its subsidiaries not to):
(i) amend or propose to amend its or their Articles
of Incorporation or By-laws;
(ii) (w) declare, set aside or pay any dividends on or
make other distributions in respect of any of its capital
stock other than the dividend of $2.00 per share declared
on the Shares on August 26, 1998 and payable on September
15, 1998; (x) split, combine, reclassify or take similar
action with respect to any of its capital stock or issue or
authorize or propose the issuance of any other securities
or option in respect of, in lieu of or in substitution for
Shares; (y) adopt a plan of complete or partial liquidation
or resolutions providing for or authorizing such
liquidation or a dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization; or
(z) directly or indirectly redeem, repurchase or otherwise
acquire any Shares or any option with respect thereto;
(iii) issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any Shares or any option
with respect thereto, or modify or amend any right of any
holder of outstanding Shares or options with respect
thereto;
(iv) acquire (by merging or consolidating with, or by
purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other
manner) any business or any corporation, partnership,
association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets
other than raw materials and supplies acquired in the
ordinary course of its business consistent with past
practice in amounts in any one instance (or group of
related instances) not in excess of $250,000 and in each
case pursuant to an order or agreement requiring delivery
of such raw materials and supplies within 120 days after
the creation of such order or agreement;
(v) sell, lease, grant any security interest in or
otherwise dispose of or encumber any of its assets or
properties other than finished goods in the ordinary course
of business consistent with past practice pursuant to
orders as to which (x) no one order (or group of related
orders) involves an aggregate selling price in excess of
$150,000, and (y) (i) each order is to be fully performed
within 150 days after its creation or (ii) in the case of
orders for which there is no definite date by which the
orders must be fully performed, the aggregate selling price
for all such orders that are more than 150 days old shall
not exceed $500,000;
(vi) except to the extent required by applicable law
or generally accepted accounting principals, (x) permit any
material change in (A) any pricing, marketing, purchasing,
investment, accounting, financial reporting, inventory,
receivable, credit, allowance or tax practice or policy or
(B) any method of calculating any bad debt, contingency or
other reserve for accounting, financial reporting or tax
purposes or (y) make any material tax election or settle or
compromise any material income tax liability with any
governmental or regulatory authority;
(vii) (x) other than working capital borrowings of up
to $300,000 under the Company's existing bank line of
credit, incur any indebtedness for borrowed money (which
shall be deemed for this purpose to include entering into
credit agreements, lines of credit or similar arrangements,
whether or not amounts are borrowed thereunder) or
guarantee any such indebtedness, or (y) voluntarily
purchase, cancel, prepay or otherwise provide for a
complete or partial discharge in advance of a scheduled
repayment date with respect to, or waive any right under,
any indebtedness for borrowed money;
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<PAGE>
(viii) (x) enter into, adopt, amend in any material
respect (except as may be required by applicable law) or
terminate any Company benefit plan or other agreement
between the Company (or any of its subsidiaries) and one or
more of its directors, officers or employees, or (y)
increase in any manner the compensation or fringe benefits
of any director, officer or employee or pay any benefit not
required by any plan or arrangement in effect as of the
date hereof (except that the Company shall comply with the
union contract and except for normal increases approved by
Parent);
(ix) enter into any new contract or amend, modify or
terminate any existing contract, or engage in any new
transaction (x) not in the ordinary course of business
consistent with past practice, (y) not on an arm's length
basis, or (z) with any stockholder or affiliate of the
Company;
(x) make any capital expenditure or any commitment to
make a capital expenditure or any commitment for additions
to plant, property or equipment constituting capital
assets;
(xi) make any change in lines of business or any
material changes in prices, marketing plans or procedures;
(xii) make any changes to current levels of inventory,
receivables or payables, except as may occur in the
ordinary course of business consistent with past practice;
(xiii) grant any stock-related, performance or similar
awards or bonuses;
(xiv) forgive any loans to employees, officers or
directors or any of their respective affiliates or
associates;
(xv) make any deposits or contributions of cash or
other property to, or take any other action to fund or in
any other way secure the payment of compensation or
benefits under, any Company benefit plan;
(xvi) enter into, amend, extend or waive any rights
under any collective bargaining or other labor agreement;
(xvii) commence, settle or agree to settle any
litigation, suit, action, claim, proceeding or
investigation;
(xviii) pay, discharge or satisfy or agree to pay,
discharge or satisfy any claim, liability or obligation
(absolute accrued, asserted or unasserted, contingent or
otherwise) other than (A) the payment, discharge or
satisfaction of liabilities reflected or reserved against
in full in the financial statements as at June 30, 1998 or
incurred in the ordinary course of business subsequent to
June 30, 1998 or (B) the Company's Transaction Costs, which
for these purposes shall mean all out-of-pocket costs
reasonably incurred by the Company or any of its
subsidiaries on or after July 1, 1998 in connection with
the potential and actual sale of the Company, including
without limitation (1) the fees and expenses of McDonald &
Co., (2) the fees and expenses of Goelzer & Co., (3) legal
fees and expenses, (4) expenses for environmental reports,
(5) expenses for title reports, (6) expenses for proxy
solicitation and fees and expenses of the Exchange Agent,
and (7) filing fees in connection with compliance with
securities and antitrust laws; but the term Company's
Transaction Costs shall not include (I) any amounts payable
or paid to senior managers of the Company under the Senior
Management Agreements by virtue of the consummation of the
Merger (Parent having agreed separately to cause the
Company after the Effective Time to pay such amounts in
addition to all other consideration for the Merger), or
(II) any expenses incurred by Parent or Purchaser with
respect to the Offer;
(xix) enter into, modify, amend or terminate any
contract material to the business of the Company or any of
its subsidiaries which it may enter, amend or terminate
without violating clause (ix) above, or waive any rights
under any such contract, unless in each instance the
Company first obtains the consent of Parent, which consent
shall not be unreasonably withheld;
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<PAGE>
(xx) enter into or extend or renew any contract
(including without limitation any insurance policy), which
contract, extension or renewal has a term or is to be
performed over a period of more than 60 days (and before
renewing any insurance policy, the Company shall reasonably
consult with Parent); or
(xxi) enter into any contract, agreement, commitment
or arrangement to do or engage in any of the foregoing.
The Company has agreed that it will confer on a regular and
frequent basis with Parent with respect to the Company's
businesses and operations and other matters relevant to the
Merger, and shall promptly advise Parent, in writing, of any
change or event, including, without limitation, any complaint,
investigation or hearing by any governmental or regulatory
authority (or communication indicating the same may be
contemplated) or the institution or threat of litigation, having,
or which, insofar as can be reasonably foreseen, could have, a
material adverse effect on the Company or on the ability of the
Company to consummate the transactions contemplated by the Offer
and the Merger Agreement.
No Solicitation.
The Company has agreed that it will not, and it will not
authorize or permit its subsidiaries or any of its or their
officers, directors, employees, investment bankers, financial
advisors, attorneys, accountants or other agents or
representatives (each, a "Representative") to directly or
indirectly, solicit, initiate or participate in any negotiations
regarding, furnish any confidential information in connection
with, endorse or otherwise cooperate with, or assist, participate
in or facilitate (collectively, "Solicitation Activities") the
making of any proposal or offer for, or which may reasonably be
expected to lead to, a Potential Transaction (as defined below),
by any person, corporation, partnership or other entity or group,
including a current holder of Shares or a person acting on behalf
of or who has been in contact with such a holder (a "Potential
Acquiror"); provided, however, that to the extent the Board of
Directors of the Company believes, on the basis of a written
opinion furnished by independent legal counsel, that the failure
to take any such actions would constitute a breach of applicable
fiduciary duties of such Board of Directors, then the Company and
its Representatives may participate in Solicitation Activities
but only to the extent necessary to comply with such duties;
provided further, however, that the Company will promptly inform
Parent, in writing, of the material terms and conditions of any
proposal or offer for, or which may reasonably be expected to
lead to, a Potential Transaction that it receives and the
identity of the Potential Acquiror and the Company shall keep
Parent fully apprised of all developments regarding such
Potential Transaction. Such full apprising of all developments
shall include providing Parent with copies of all correspondence
from or to the Company and the Potential Acquiror, including all
attachments and enclosures. (As used in the Merger Agreement,
"Potential Transaction" means any potential merger, consolidation
or other business combination involving the Company, or any
acquisition in any manner of all or a substantial portion of the
equity of, or all or a substantial portion of the assets of the
Company whether for cash, securities or any other consideration
or combination thereof other than pursuant to the transactions
contemplated by the Merger Agreement.)
The Company has also agreed, as of the date and time of the
Merger Agreement that the Company and its Representatives will
immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties other
than Parent and Purchaser conducted theretofore with respect to
any Potential Transaction.
Filing of the Proxy Statement. The Company has agreed that
it will prepare and file with the Commission the Proxy Statement
at the earliest practicable date after the Offer has expired or
terminated (unless 90% or more of Shares are acquired by
Purchaser pursuant to the Offer or the Shares cease to be
registered under the Exchange Act in accordance with applicable
law); and shall use all reasonable efforts to have the Proxy
Statement cleared by the Commission. Parent, Purchaser and the
Company have agreed to cooperate with each other in the
preparation of the Proxy Statement, and the Company has agreed to
promptly notify Parent of the receipt of any comments of the
Commission with respect to the Proxy Statement and of any
requests by the Commission for any amendment or supplement
thereto or for additional information, and to promptly provide to
Parent copies of all correspondence between the Company or any
representative of the Company and the Commission with respect to
the Proxy Statement. The Company has agreed to give Parent and
its counsel the opportunity to review the Proxy Statement and all
responses to requests for additional information by and replies
to comments of the Commission before their being filed with, or
sent to, the Commission. If the Proxy Statement is required to be
filed with the Commission,
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<PAGE>
each of the Company, Parent and Purchaser has agreed to use all
reasonable efforts, after consultation with the other parties
thereto, to respond promptly to all such comments of and requests
by the Commission and to cause the Proxy Statement to be mailed
to the holders of Shares entitled to vote at the Stockholder
Meeting at the earliest practicable time.
Stockholder Approval of the Merger. To the extent required
by applicable law, the Company has agreed to, through its Board
of Directors, duly call, give notice of, convene and hold the
Stockholder Meeting for the purpose of voting on the adoption of
the Merger Agreement (the "Stockholders' Approval") as soon as
reasonably practicable after consummation of the Offer but in any
event prior to the 90th day after the date of the Merger
Agreement (subject to certain unavoidable delays outside the
control of the parties). Except to the extent legally required
for the discharge of its fiduciary duties as reflected in a
written opinion of independent legal counsel, the Company has
agreed to include in the Proxy Statement the recommendation of
the Board of Directors of the Company that the stockholders of
the Company adopt the Merger Agreement and approve the Merger,
and the Company has agreed to use all reasonable efforts to
obtain such adoption and approval, including utilizing a proxy
solicitation firm that is reasonably acceptable to Parent. At
such meeting, Parent shall, and has agreed to and has agreed to
cause its Subsidiaries to, vote all shares of the Shares, if any,
then owned by Parent or any such Subsidiary in favor of the
adoption of the Merger Agreement.
In the event that the approval and adoption of the Merger
Agreement and the Merger at the Stockholder Meeting or any
adjournment thereof receives the affirmative vote of less than
66-2/3% of all shares entitled to vote for such approval, then
Parent may in its sole discretion require the Company to, and the
Company has agreed to be obligated to, through its Board of
Directors, duly call, give notice of, convene and hold a second
Stockholder Meeting for the purpose of voting on the adoption of
the Merger Agreement. Such second Stockholder Meeting shall be
held as soon as reasonably practicable after the date of the
notice from Parent to the Company in which Parent notifies the
Company that Parent desires the Company to call a second
Stockholder Meeting.
If Parent directly or indirectly acquires at least 90
percent of the outstanding Shares, each of Parent, Purchaser and
the Company have agreed, if Purchaser so requests, to take all
necessary and appropriate action as Parent may reasonably request
to cause the Merger to become effective as promptly as
practicable after the consummation of the Offer without a meeting
of holders of the Shares in accordance with the applicable
provisions of the NMBCA.
Consents and Approvals. Subject to certain conditions, each
of the Company and Parent have agreed to proceed diligently and
in good faith and will use all commercially reasonable efforts to
do, or cause to be done, all things necessary, proper or
advisable to, as promptly as practicable, obtain all consents,
approvals or actions of, make all filings with and give all
notices to governmental or regulatory authorities or any other
public or private third parties that may be required of Parent,
the Company or any of their subsidiaries in order to consummate
the Offer and the Merger. In addition to and not in limitation of
the foregoing, (i) each of the parties have agreed to (x) take
promptly all actions necessary to make the filings required of
Parent and the Company or their affiliates under the HSR Act, (y)
comply at the earliest practicable date with any request for
additional information received by such party or its affiliates
from the Federal Trade Commission (the "FTC") or the Antitrust
Division of the Department of Justice (the "Antitrust Division")
pursuant to the HSR Act, and (z) cooperate with the other party
in connection with such party's filings under the HSR Act and in
connection with resolving any investigation or other inquiry
concerning the Merger or the other matters contemplated by the
Merger Agreement commenced by either the FTC or the Antitrust
Division or state attorneys general.
Company Employees. Parent has agreed that after the
Effective Time the Company will honor in accordance with their
respective provisions the existing agreements between the Company
and each of Messrs. Bishop, McVay, Holmquist, Krauskopf, Kubly,
Minard, Mitting, McCune and Sturch (collectively, "Senior
Management Agreements"). Further, Parent has agreed to cause
after the Effective Time the Company to pay to each of such
persons the transaction bonus contemplated in each persons
applicable Senior Management Agreement, in the installments and
at the times specified therein, irrespective of whether the
Merger is deemed to have been supported or sponsored by
management or any management group. In addition, Parent has
agreed that it will cause the Company after the Effective Time to
honor all existing union contracts and all other existing
agreements between the Company and its employees that have been
disclosed by the Company to Parent prior to the date of the
Merger Agreement.
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Expenses. Subject to the applicability of the Termination
Fee and remedies in respect of a breach of the Merger Agreement,
if the Merger is not consummated, all costs and expenses incurred
in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement will be paid by the party
incurring such cost or expense. However, if the Merger is
consummated, the Company's Transaction Costs (as defined below)
will be paid by the Company either before or after the Effective
Time, or by Parent, without reduction of the Offer Price or
Merger Consideration payable to holders of Shares pursuant to the
terms of the Offer and the Merger Agreement. As used herein, the
"Company's Transaction Costs" means all out-of-pocket costs
reasonably incurred by the Company or any of its subsidiaries on
or after July 1, 1998 in connection with the potential and actual
sale of the Company, including without limitation (i) the fees
and expenses of McDonald & Co., (ii) the fees and expenses of
Goelzer & Co., (iii) legal fees and expenses, (iv) expenses for
environmental reports, (v) expenses for title reports, (vi)
expenses for proxy solicitation and fees and expenses of the
Exchange Agent, and (viii) filing fees in connection with
compliance with securities and antitrust laws. However, the
Company's Transaction Costs do not include (a) any amounts
payable or paid to senior managers of the Company under the
Senior Management Agreements by virtue of the consummation of the
Merger (Parent having agreed, as described above, to cause the
Company after the Effective Time to pay such amounts in addition
to all other consideration for the Merger), or (b) any expenses
incurred by Parent or Purchaser with respect to the Offer.
Brokers or Finders. Each of Parent and the Company has
represented to the other, as to itself and its affiliates, that
no agent, broker, investment banker, financial advisor or other
firm or person is or will be entitled to any broker's or finder's
fee or any other commission or similar fee in connection with any
of the transactions contemplated by the Offer or the Merger
Agreement, except, in the case of the Company, for McDonald & Co.
and Goelzer & Co.
Directors' and Officers' Indemnification.
(a) Until the fourth anniversary of the Effective Time (and
until resolution of any claims asserted prior to such fourth
anniversary), Parent has agreed to cause the Company after the
Effective Time to indemnify, defend and hold harmless, to the
extent allowed by law and to the extent currently provided in the
By-laws and Articles of Incorporation of the Company, each person
who is as of the date hereof, or has been at any time prior to
the date hereof, a director or officer of the Company or any of
its subsidiaries (the "Indemnified Parties") against (subject to
certain restrictions specified in the Merger Agreement) (i) all
losses, claims, damages, costs, expenses, liabilities or
judgments or amounts that are paid in settlement of or in
connection with any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director or
officer of the Company or any subsidiary of the Company, whether
pertaining to any matter existing or occurring at or prior to the
Effective Time and whether asserted or claimed prior to, or at or
after, the Effective Time ("Indemnified Liabilities") and (ii)
all Indemnified Liabilities based in whole or in part on, or
arising in whole or in part out of, or pertaining to the Merger
Agreement or the transactions contemplated thereby, in each case
to the full extent the Company would have been permitted under
New Mexico law to indemnify such person (and subject to the
foregoing, the Company after the Effective Time will, in the
event the Company determines in its reasonable discretion that
such person would be entitled to indemnification hereunder, pay
expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party; provided, however, that
the person to whom the expenses are advanced must provide an
undertaking (without delivering a bond or other security) to
repay such advance if it is ultimately determined that such
person is not entitled to indemnification as provided in Section
53-11-4.1 of the NMBCA). Without limiting the foregoing, in the
event any such claim, action, suit, proceeding or investigation
is brought against any Indemnified Parties (whether arising
before or after the Effective Time), (i) any counsel retained by
the Indemnified Parties for any period after the Effective Time
shall be reasonably satisfactory to the Company; (ii) after the
Effective Time, the Company will pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received as theretofore provided; and
(iii) after the Effective Time, the Company will use all
reasonable efforts to assist in the vigorous defense of such
matter, provided that the Company will not be liable for any
settlement of any claim effected without its written consent,
which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under the
terms of the Merger Agreement, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the
Company (but the failure so to notify the Company will not
relieve the Company from its obligation to indemnify such person
except to the extent such failure to notify prejudices the
Company), and shall deliver to the Company the undertaking, if
any, required by the NMBCA or the Merger Agreement.
Notwithstanding anything to the contrary contained in the Merger
Agreement, after the
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Effective Time the Company's obligation to indemnify the officers
and directors prior to the Effective time of the Company as set
forth above shall be limited to cover claims only to the extent
that those claims are not covered under the Company's directors'
and officers' insurance policies in effect as of the date of the
Merger Agreement and the continuation, maintenance or
substitution thereof as required by the Merger Agreement.
Directors' and Officers' Insurance. Parent has agreed to
cause the Company, for a period of four years after the Effective
Time, to maintain in effect the policies of directors' and
officers' liability insurance that were maintained by the Company
prior to the execution of the Merger Agreement (provided that the
Company may substitute therefor other policies of at least the
same coverage and amounts containing terms and conditions which
are no less advantageous) with respect to claims arising from
facts or events which occurred before or at the Effective Time;
provided, however, that the Company is not obligated to make
annual premium payments for such insurance to the extent such
premiums exceed 125% of the premiums paid as of the date of the
Merger Agreement by the Company for such insurance (the
"Company's Current Premium"), and if such premiums for such
insurance would at any time exceed 125% of the Company's Current
Premium, then the Company shall cause to be maintained policies
of insurance which, in the Company's good faith determination,
provide the maximum coverage available at an annual premium equal
to 125% of the Company's Current Premium.
Retention of the Company Name. Parent has agreed that until
the 10th anniversary of the Effective Time of the Merger, Parent
will cause the name of the Company to continue to be "Bryan Steam
Corporation", unless, due to a change in circumstances after the
Effective Time, such continuation will be, in the opinion of the
Board of Directors of the Company at that time, materially
adverse to Parent or the Company.
Takeover Laws. The Company has agreed to, upon the request
of Parent, take all reasonable steps to exclude the applicability
of, or to assist in any challenge by Parent or Purchaser of the
validity or applicability to the Merger of, any Takeover Laws. As
used herein, "Takeover Laws" means any "moratorium", "control
share acquisition", "business combination", "fair price" or other
form of antitakeover laws and regulations of any jurisdiction
that may purport to be applicable to the Merger Agreement or the
Merger.
Termination Fee; Expenses.
(a) The Company has agreed that in the event that the
Merger Agreement is terminated as a result of the occurrence of
any Trigger Event (as defined below), then the Company will pay
to Parent a fee equal to 1.5% of the purchase price as defined in
the Merger Agreement plus all Parent Reimbursable Expenses (as
defined below); provided, however, that if such termination is
solely attributable to events described in clause (iii) or (iv)
of the definition of Trigger Event, then the Company will pay to
Parent all Parent Reimbursable Expenses (but not the 1.5% fee).
Amounts due hereunder shall be payable in immediately available
funds at the time of such termination.
(b) As used herein, "Trigger Event" means the occurrence of
any of the following:
(i) the Board of Directors of the Company (or any
committee thereof) shall approve, recommend, authorize, propose
or facilitate any potential Acquisition Transaction (as defined
below) other than the Offer and the Merger pursuant to the Merger
Agreement, or such Board (or any such committee) shall engage in
discussions or negotiations with a potential counterparty
concerning any such potential Acquisition Transaction, or such
Board (or any such committee) shall publicly announce its
intention to do any of the foregoing;
(ii) the Board of Directors of the Company (or any
committee thereof) shall fail to recommend the Offer and the
Merger to stockholders of the Company in the Schedule 14D-9 or
proxy statement required by the Merger Agreement or within two
business days following Parent's request from time to time that
the Company so confirm its recommendation of the Offer and the
Merger, or such Board (or any such committee) shall withdraw,
modify or amend in any manner adverse to Parent the
authorization, approval or recommendation given by such Board (or
such committee) to the Offer and the Merger, or shall publicly
announce that it does not favor the Offer or the Merger;
(iii) the stockholders of the Company holding at least
66-2/3% of the outstanding Shares shall fail to approve the
Merger in accordance with applicable law at the Stockholder
Meeting, or if the Stockholder Meeting shall not be held on or
prior to December 31, 1998; or
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<PAGE>
(iv) any person, entity or "group" (as that term is
used in Section 13(d)(e) of the Exchange Act), other than those
stockholders who have executed and delivered the Stockholders'
Agreement as described in the recitals to the Merger Agreement,
becomes the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act) of 15% or more of the
outstanding Shares.
(c) As used herein, "Acquisition Transaction" means any
tender offer or exchange offer, any merger, consolidation,
liquidation, dissolution, recapitalization, reorganization or
other business combination, any acquisition, sale or other
disposition of a material amount of assets or securities or any
other similar transaction involving the Company, its securities
or any of its subsidiaries or divisions.
(d) As used herein, "Parent Reimbursable Expenses" means
all out-of-pocket costs (including without limitation reasonable
legal and accounting costs) theretofore and hereafter incurred by
Parent in connection with the transactions contemplated by the
Merger Agreement including, without limitation, costs and
expenses incurred in connection with (i) Parent's due diligence
investigations concerning the Company and its subsidiaries, (ii)
Parent's preparation of preliminary and final proposals relating
to the acquisition of the Company, (iii) Parent's negotiation of
the Merger Agreement, (iv) Parent's assistance in the preparation
of the proxy statement relating to the Merger, (v) fees and
expenses of the Exchange Agent, and (vi) fees and expenses
reasonably incurred so as to facilitate and promote consummation
of the Merger.
Conditions to the Merger. Pursuant to the Merger Agreement,
the respective obligations of each party to effect the Merger are
subject to the fulfillment, or waiver where permissible, at or
prior to the proposed Effective Time, of each of the following
conditions: (a) the Merger Agreement and the transactions
contemplated thereby shall have been approved by the Company's
stockholders in the manner and to the extent required by
applicable law and the Articles of Incorporation and By-laws of
the Company; (b) 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 action or
proceeding before a court of competent jurisdiction or other
competent governmental body by any governmental or regulatory
authority shall have been instituted or threatened to make
illegal or otherwise restrain or prohibit (whether temporarily,
preliminary or permanently) the Merger or the other transactions
contemplated by the Merger Agreement or to obtain an amount of
damages or other material relief in connection with the execution
of the Merger Agreement or the consummation of the Merger or
other transactions contemplated by the Merger Agreement; and no
governmental agency shall have given notice to any party thereto
to the effect that consummation of the Merger or the other
transactions contemplated by the Merger Agreement would
constitute a violation of any law or that it intends to commence
proceedings to restrain consummation of the Merger (each party
thereto, however, has agreed to use reasonable efforts promptly
to have such prohibition or notice lifted); and (d) each of
Purchaser and the Company shall have received from the other
appropriately certified copies of all resolutions adopted by
their respective Boards of Directors and stockholders in
connection with the Merger Agreement and the transactions
contemplated thereby.
Conditions to Obligation of Parent and Purchaser to Effect
the Merger. The obligation of Parent and Purchaser to effect the
Merger is further subject to the fulfillment at or prior to the
proposed Effective Time, of each of the following additional
conditions (all or any of which may be waived in whole or in part
by Parent and Purchaser in their sole discretion): (a) the
Company shall have performed and complied with, in all material
respects, each agreement, covenant and obligation required by the
Merger Agreement to be so performed or complied with by the
Company at or prior to the Closing, and the Company shall have
delivered to Parent a certificate, dated the Closing Date and
executed on behalf of the Company by its President, to such
effect; (b) all proceedings to be taken on the part of the
Company in connection with the transactions contemplated by the
Merger Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to Parent, and
Parent shall have received copies of all such documents and other
evidences as Parent may reasonably request in order to establish
the consummation of such transactions and the taking of all
proceedings in connection therewith, and such documents shall
include, but shall not be limited to (i) certain certificates as
required by certain provisions of the Merger Agreement, (ii) a
certificate of existence or good standing regarding each of the
Company and its subsidiaries, certified in the case of the
Company by the New Mexico Corporation Commission and certified in
the case of the Company's Subsidiaries by the appropriate office of
the jurisdiction of its respective incorporation, each dated
within ten (10) business days of the proposed Effective Time,
(iii) an incumbency certificate certifying the identity of the
officers of the Company, and (iv) the resignations, effective the
Closing Date, of such directors and officers of the Company and
its subsidiaries as Parent shall specify consistent with the
Merger Agreement;
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(c) Parent shall have received a complete list of the signatories
of each account or safe deposit box of the Company and its
subsidiaries; (d) the Company shall not have received written
objections to the Merger from holders who in the aggregate hold
more than 10% of the outstanding Shares, and the Company shall
not have knowledge that holders of 10% or more of the outstanding
Shares intend to file with the Company written objections to the
Merger; (e) the Company shall have delivered to Parent a final
accounting of the Company's Transaction Costs, in form reasonably
satisfactory to Parent, including copies of applicable final
invoices; (f) other than specific filings provided for by the
Merger Agreement, all consents, approvals and actions of filings
with and notices to any governmental or regulatory authority or
any other public or private third party required of the Company
or any of its subsidiaries to consummate the Merger and the other
transactions contemplated by the Merger Agreement, the failure of
which to be obtained or taken could, individually or in the
aggregate, be reasonably expected to have a material adverse
effect on the Company and its subsidiaries or on the ability of
the Company to consummate the transactions contemplated by the
Merger Agreement shall have been obtained, all in form and
substance reasonably satisfactory to Parent and no such consent,
approval or action shall contain any term or condition which
could be reasonably expected to result in a material diminution
of the benefits of the Merger to Parent.
Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger is
further subject to the fulfillment, at or prior to the proposed
Effective Time, of each of the following additional conditions
(all or any of which may be waived in whole or in part by the
Company in its sole discretion): (a) each of the representations
and warranties made by Parent and Purchaser in the Merger
Agreement shall be true and correct in all material respects as
of the proposed Effective Time as though made on and as of such
time or, in the case of representations and warranties made as of
a specified date earlier than such time, on and as of such
earlier date, and Parent and Purchaser shall each have delivered
to the Company a certificate, dated the proposed Effective Time
and executed on behalf of Parent by its President and on behalf
of Purchaser by its President, to such effect; (b) Parent and
Purchaser shall have performed and complied with, in all material
respects, each agreement, covenant and obligation required by the
Merger Agreement to be so performed or complied with by Parent or
Purchaser at or prior to the Closing, and Parent and Purchaser
shall each have delivered to the Company a certificate, dated the
Closing Date and executed on behalf of Parent by its President
and on behalf of Purchaser by its President, to such effect; (c)
the Company shall have received a written opinion, dated as of
the Closing Date, from Krieg, Devault, Alexander & Capehart,
Indiana counsel to Parent and Purchaser, from Cleary, Gottlieb,
Steen & Hamilton and/or from Parent's New Mexico counsel, as
appropriate, in form and substance reasonably satisfactory to the
Company, as to certain appropriate matters agreed upon by legal
counsel of Parent and Purchaser and of the Company; (d) all
proceedings to be taken on the part of Parent and Purchaser in
connection with the transactions contemplated by the Merger
Agreement and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Company, and the
Company shall have received copies of all such documents and
other evidences as the Company may reasonably request in order to
establish the consummation of such transactions and the taking of
all proceedings in connection therewith, and such documents shall
include, but shall not be limited to: (i) certain certificates as
required by certain provisions of the Merger Agreement, (ii)
certificates of existence or good standing regarding each of
Parent and Purchaser, certified by the New York Secretary of
State and the New Mexico State Corporation Commission,
respectively, dated within ten (10) business days of the Closing
Date, and (iii) incumbency certificates certifying the identity
of the officers of Parent and Purchaser, respectively; and (e)
the Exchange Fund shall have been funded with the full amount of
the Merger Consideration for all outstanding shares of the
Shares.
For a description of the conditions to the Offer, see
Section 14.
Termination. The Merger Agreement may be terminated, and
the transactions contemplated thereby may be abandoned, at any
time prior to the Effective Time, whether prior to or after
Stockholders' Approval: (a) by mutual written agreement of the
parties thereto duly authorized by action taken by or on behalf
of their respective Boards of Directors; (b) by either the
Company or Parent upon notification to the non-terminating party
by the terminating party: (1) if the Merger shall not have been
consummated on or prior to January 31, 1999 and such failure to
consummate the Merger is not caused by a breach of the Merger
Agreement by the terminating party; provided, however, such date
may be extended indefinitely by the mutual written agreement of
the parties, (2) if Stockholders' Approval shall not be obtained
by January 31, 1999, (3) if any governmental or regulatory
authority, the taking of action by which is a condition to the
obligations of either the Company or Parent to consummate the
transactions contemplated thereby, shall have determined not to
take such action and all appeals of such determination shall have
been taken and have been unsuccessful, or (4) if any court of
competent jurisdiction or
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<PAGE>
other competent governmental or regulatory authority shall have
issued an order making illegal or otherwise restricting,
preventing or prohibiting the Merger and such order shall have
become final and nonappealable; (c) by the Company, if (1)
Purchaser fails to commence the Offer as provided in the Merger
Agreement or fails to purchase validly tendered Shares in
violation of the terms of the Offer or the Merger Agreement; (2)
there has been a breach by Parent or Purchaser of any
representation or warranty contained in the Merger Agreement, or
(3) there has been a material breach of any of the covenants or
agreements set forth in the Merger Agreement on the part of
Parent or Purchaser, which breach is not curable or, if curable,
is not cured within ten (10) days after written notice of such
breach is given by the Company to Parent or Purchaser.; (d) by
Parent, if (1) the Offer is terminated or withdrawn on account of
the failure to be fulfilled of a condition specified in Annex A
to the Merger Agreement (as specified in Section 14 of this
Offer), (2) there has been a breach by the Company of any
representation or warranty contained in the Merger Agreement or
(3) there has been a material breach of any of the covenants or
agreements set forth in the Merger Agreement on the part of the
Company, which breach is not curable or, if curable, is not cured
within ten (10) days after written notice of such breach is given
by Parent to the Company; or (e) by Parent if a Trigger Event
occurs.
Amendment. The Merger Agreement may be amended,
supplemented or modified by the parties thereto at any time prior
to the Effective Time, whether prior to or after adoption of the
Merger Agreement at the Stockholder Meeting, but after such
adoption only to the extent permitted by applicable law. No such
amendment, supplement or modification shall be effective unless
set forth in a written instrument duly executed by or on behalf
of each party thereto.
Governing Law. The Merger Agreement is governed by and
construed in accordance with the laws of the State of Indiana
applicable to a contract executed and performed in such State
without giving effect to the conflicts of laws principles
thereof, except to the extent that the NMBCA, the Securities Act
and the Exchange Act shall apply to the transactions contemplated
therein.
Enforcement of Agreement; Injunctive Relief. Parent,
Purchaser and the Company have irrevocably and unconditionally
submitted to the exclusive jurisdiction and venue of the United
States District Court for the Southern District of Indiana,
Indianapolis Division for federal jurisdiction (unless such court
has no jurisdiction, in which case Parent, Purchaser and the
Company submitted to the exclusive jurisdiction of the courts of
the State of Indiana located in Marion County) for any actions,
suits or proceedings arising out of or relating to the Merger
Agreement and the transactions contemplated thereby. Parent,
Purchaser and the Company have also waived, to the fullest extent
permitted by law, any rights they may have to a jury trial on any
matter related in any way to the Merger Agreement or the
transactions contemplated thereby. In addition, each of the
Company on the one hand and Parent and Purchaser on the other
hand have recognized and acknowledged that a breach by it of any
covenants or agreements contained in the Merger Agreement will
cause the other party to sustain damages for which it would not
have an adequate remedy at law for money damages, and therefore
each of the parties thereto has agreed that in the event of any
such breach, if the aggrieved party so desires, the aggrieved
party shall be entitled to the remedy of specific performance,
injunctive and other equitable relief (without the requirement or
need for the posting of any bond) in addition to any other remedy
to which the aggrieved party may be entitled, at law or in
equity.
Joint and Several Obligations. The obligations of Parent
and Purchaser under the Merger Agreement are joint and several.
Timing. The exact timing and details of the Merger will
depend upon legal requirements and a variety of other factors,
including the number of Shares acquired by Purchaser pursuant to
the Offer. Although Parent has agreed to cause the Merger to be
consummated on the terms and subject to the conditions set forth
above, there can be no assurance as to the timing of the Merger.
Stockholders' Agreement
The following is a summary of the material terms of the
Stockholders' Agreement. This summary is not a complete
description of the terms and conditions thereof and is qualified
in its entirety by reference to the full text thereof which is
incorporated herein by reference and a copy of which has been
filed with the Commission as an exhibit to the Schedule 14D-1.
The Stockholders' Agreement may be examined, and copies thereof
may be
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obtained, as set forth in Section 8 (except that such
Agreement will not be available at the regional offices of the
Commission).
The stockholders who have signed the Stockholders'
Agreement together beneficially own 106,315 Shares, constituting
approximately 55.6% of the outstanding Shares.
Voting of Shares. In order to induce Parent to execute and
deliver the Merger Agreement each Proxy Grantor has agreed to
tender such stockholder's Shares and has irrevocably appointed
Parent as the exclusive attorney-in-fact and proxy of such
stockholder, with full power of substitution. Parent, as proxy of
such holder, has been granted the power:
I. to attend any and every meeting (whether annual or special
or both) of the stockholders of the Company, including any
adjournment or postponement thereof, on behalf of such
stockholder, and at each such meeting, with respect to all
shares of common stock of the Company owned by such
stockholder on the date of execution and delivery of the
Stockholders' Agreement or acquired thereafter that are
entitled to vote at each such meeting or over which such
stockholder has voting power (and any and all other shares
of common or preferred stock of the Company or other
securities issued on or after such date in respect of any
such shares):
A. to vote in favor of the Merger (as such term is
defined in the Merger Agreement) and to vote in favor
of the adjournment of any meeting, which Parent
believes may facilitate the obtaining the approval of
the Merger; and otherwise to act with respect to such
shares as said attorney-in-fact and proxy (or his
substitute) shall deem necessary or appropriate to
cause the approval of the Merger by the necessary
two-thirds majority required under applicable law;
B. to vote and otherwise act with respect to such shares
in such a manner as said attorney-in-fact and proxy
(or his substitute) shall deem proper, with respect to
(x) proposals or offers (other than the Merger)
relating to (1) any proposed sale, lease or other
disposition of all or a substantial amount of the
assets of the Company or any of its subsidiaries, (2)
any proposed merger, consolidation or other
combination of the Company or any of its subsidiaries
with any other entity, (3) any sale, issuance,
disposition or granting of rights in respect of the
shares of the Company or of any subsidiary of the
Company or (4) any other proposed action of the
Company or any of its subsidiaries requiring
stockholder approval that would conflict with or
violate the Company's representations, covenants or
obligations under the Merger Agreement, adversely
affect the Company's ability to consummate the Merger
or the other transactions contemplated by the Merger
Agreement or otherwise impede, interfere with or
discourage the Merger (each of the actions described
in (1) - (4) above, an "Acquisition Proposal"), and
(y) any procedural matters presented at any such
meeting at which any action is scheduled to be taken
with respect to the Merger or any Acquisition
Proposal;
II. if no meeting of stockholders is scheduled in accordance
with the Merger Agreement or if any such meeting is
canceled, postponed or adjourned other than with Parent's
approval, to call a special stockholders meeting of the
Company for the purpose of (i) approving the Merger or any
action with respect thereto, or (ii) taking action with
respect to any Acquisition Proposal; and
III. to waive, for the duration of this Stockholders' Agreement,
any and all rights such stockholder may have to exercise
any rights as dissenting stockholder under Sections 53-15-3
and 53-15-4 of the NMBCA, subject to the right to receive
the consideration as specifically provided in the Merger
Agreement.
Restrictions on Transfer. Each Proxy Grantor has agreed (a)
not to deposit any of such stockholder's shares of common stock
of the Company into a voting trust or enter into a voting
agreement with respect to such shares; (b) not to sell, transfer
or otherwise dispose of or pledge or otherwise encumber, any
shares of common stock of the Company, or options or warrants to
purchase such shares, unless the purchaser or transferee of such
shares or rights agrees in writing (a copy of which shall be
delivered by such stockholder to Parent and Purchaser) prior to
such sale, transfer or disposition to be bound by and subject to
the provisions contained in the Stockholders' Agreement; and (c)
not, in his or her capacity as stockholder, to solicit, initiate,
encourage, endorse, support
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(including, by providing information) or participate in any
discussions regarding, any Acquisition Proposal other than the
Merger.
Irrevocable Proxy. Each Proxy Grantor has affirmed that the
proxy contained in the Stockholders' Agreement is issued in
connection with the Merger Agreement to facilitate the
transactions contemplated thereunder and in consideration of
Parent and Purchaser entering into the Merger Agreement and as
such is coupled with an interest and is irrevocable. The proxy
contained in the Stockholders' Agreement will terminate upon the
earlier to occur of (a) the Effective Time as defined in the
Merger Agreement and (b) the termination of the Merger Agreement
in accordance with its terms. By execution and delivery of the
Stockholders' Agreement, each of the stockholders who are a party
to the Stockholders' Agreement has confirmed that such
stockholder has received a copy of a substantially final form of
the Merger Agreement, and that all other information deemed
necessary by such stockholder concerning the Merger, the Merger
Agreement and the transactions contemplated thereunder or any
other matters considered by such stockholder to be relevant to
the stockholder's decision to execute this Agreement has been
made available to such stockholder. All authority conferred or
agreed to be conferred in the Stockholders' Agreement survives
the death, insolvency, or incapacity of each the stockholders who
is a party to the Stockholders' Agreement and any obligation of
any of such stockholder thereunder is binding upon the heirs,
personal representatives, successors and assigns of such
stockholder. The proxy contained in the Stockholders' Agreement
revokes any and all other proxies theretofore granted by each and
every stockholder who is party to the Stockholders' Agreement.
Each stockholder who is a party to the Stockholders' Agreement
has agreed to not give any subsequent proxy or grant any option
with respect to such shares (and such proxy or option if given
will be deemed not to be effective) that purports to grant
authority within the scope of the authority conferred in the
Stockholders' Agreement.
Covenant to Tender Shares. In order further to induce
Purchaser and Parent to enter into the Merger Agreement, each
Proxy Grantor has further agreed validly to tender (or cause the
record owner of such shares validly to tender), and not to
withdraw, pursuant to and in accordance with the terms of the
Offer, not later than the tenth business day after commencement
of the Offer pursuant to the Merger Agreement and Rule 14d-2
under the Exchange Act, the number of Shares set forth opposite
such stockholder's name on the signature pages to the
Stockholders' Agreement (the "Existing Securities" and, together
with any Shares acquired by such stockholder (whether
beneficially or of record) after the date of the Stockholders'
Agreement and prior to the termination of the Stockholders'
Agreement by means of purchase, dividend, distribution, transfer,
issuance, or exercise of options or other rights to acquire the
Shares (the "Securities")). If any stockholder who signed the
Stockholders' Agreement acquires Securities after the date of the
Stockholders' Agreement, such stockholder has agreed to tender
(or cause the record holder to tender) pursuant to the Offer such
Securities on or before such tenth business day or, if later, on
or before the second business day after such acquisition. Each
stockholder who signed the Stockholders' Agreement acknowledged
and agreed that Purchaser's obligation to accept for payment,
purchase and pay for the Securities in the Offer, including the
Securities beneficially owned by such stockholder, is subject to
the terms and conditions of the Offer.
Specific Performance. Each stockholder who executed the
Stockholders' Agreement acknowledged that money damages would be
both incalculable and an insufficient remedy for any breach of
the Stockholders' Agreement by it, and that any such breach would
cause Parent and Purchaser irreparable harm. Accordingly, each
such stockholder agreed that in the event of any breach or
threatened breach of this Agreement, Parent and Purchaser, in
addition to any other remedies at law or in equity they may have,
is entitled, without the requirement of posting a bond or other
security, to equitable relief, including injunctive relief and
specific performance.
Representations. Each stockholder who executed the
Stockholders' Agreement represented and warranted that, as of the
date of the Stockholders' Agreement, such stockholder (a) owned
personally and directly the number of shares of the Shares set
forth on the signature page of the Stockholders' Agreement, (b)
owned such stock free and clear of all liens, security interests,
encumbrances, options and other adverse interests of every kind
whatsoever, and (c) had the power and right to execute and
deliver the Stockholders' Agreement, and perform such
stockholder's obligations thereunder, without the consent or
agreement of any other person or entity.
Release of Claims. Each of the stockholders who executed
the Stockholders' Agreement irrevocably waived and released any
and all claims such stockholder may have as a holder of Shares
against any employee,
- 27 -
<PAGE>
officer or director of the Company or any of its subsidiaries in
respect of the conduct of such employee, officer or director in
his or her capacity as such prior to consummation of the Merger.
Governing Law. The Stockholders' Agreement is governed by
the laws of the State of Indiana except that the provisions
thereof with respect to the granting of proxies, the exercise of
the rights granted in respect of such proxies and the associated
appointment of attorneys-in-fact is governed by the laws of the
jurisdiction of incorporation of the Company, which is New
Mexico.
Confidentiality Agreement
Pursuant to an agreement dated as of June 18, 1998 (the
"Confidentiality Agreement") between the Company (acting through
its agent, Goelzer & Co.) and Parent, the Company has supplied
Parent with certain non-public, confidential and proprietary
information about the Company. Parent has agreed in the
Confidentiality Agreement among other provisions that it,
together with its, among others, representatives, employees,
agents, advisors, lenders or affiliates will treat confidentially
all such information supplied by the Company and that it will,
until June 18, 2003, use the confidential information solely for
the purpose of evaluating a possible transaction with the
Company, and will keep the confidential information confidential,
except for disclosure as may be required by law.
Appraisal Rights
No appraisal rights are available to holders of Shares in
connection with the Offer. However, if the Merger is consummated,
holders of Shares will have certain rights under Section 53-15-3
of the NMBCA to dissent and demand payment in cash of the fair
value of their Shares. Such rights, if the statutory procedures
are complied with, could lead to a judicial determination of the
fair value required to be paid in cash to such dissenting holders
for their Shares. Any such judicial determination of the fair
value of Shares could be based upon considerations other than or
in addition to the Offer Price and the market value of the
Shares, including asset values and the investment value of the
Shares. The value so determined could be more or less than the
Offer Price and the Merger Consideration.
If any holder of Shares who demands payment of fair value
under Section 53-15-3 of the NMBCA fails to perfect, or
effectively withdraws or loses such stockholder's right to fair
value as provided in the NMBCA, the Shares of such holder will be
converted into the right to receive Merger Consideration in
accordance with the Merger Agreement. A stockholder may withdraw
such stockholder's demand by delivery to Company of a written
withdrawal of such stockholder's demand and acceptance of the
Merger.
Failure to follow the steps required by Sections 53-15-3
and 4 of the NMBCA for perfecting rights to payment of fair value
may result in the loss of such rights.
Plans for the Company
As soon as practicable following the consummation of the
Offer, Purchaser intends to effect the Merger. It is expected
that, initially following the Offer and the Merger, the business
and operations of the Company will, except as set forth in this
Offer to Purchase, be continued by the Company substantially as
they are currently being conducted, and that the Company's
current management, under the direction of the Board of Directors
of the Surviving Corporation, will continue to manage the
Company.
"Going Private" Transactions. The Commission has adopted
Rule 13e-3 under the Exchange Act which is applicable to certain
"going private" transactions and which may under certain
circumstances be applicable to the Merger. However, Rule 13e-3
would be inapplicable if (i) the Shares are deregistered under
the Exchange Act prior to the Merger or other business
combination or (ii) the Merger or other business combination is
consummated within one year after the purchase of the Shares
pursuant to the Offer and the amount paid per Share in the Merger
or other business combination is at least equal to the amount
paid per Share in the Offer. If applicable, Rule 13e-3 requires,
among other things, that certain financial information concerning
the fairness of the proposed transaction and the consideration
offered to minority stockholders in such transaction be filed
with the Commission and disclosed to stockholders prior to the
consummation of the transaction.
- 28 -
<PAGE>
Except as noted in this Offer to Purchase, Purchaser and
Parent have no present plans or proposals that would result in an
extraordinary corporate transaction, such as a merger,
reorganization, liquidation, or sale or transfer of a material
amount of assets, involving the Company or any of its
subsidiaries, or any material changes in the Company's
capitalization, dividend policy, corporate structure, business or
composition of its management.
13. Dividends and Distributions
Pursuant to the terms of the Merger Agreement, the Company
is prohibited from issuing, selling, pledging or granting any
options, rights to purchase, warrants or shares of capital stock
of the Company or any option in respect thereof and the Company
is further prohibited from declaring or paying any dividends or
distributions other than the dividend of $2.00 per Share declared
on August 26, 1998 and payable on September 15, 1998.
14. Certain Conditions of the Offer
Notwithstanding any other provision of the Offer, the
obligation of Purchaser to accept for payment, purchase or pay
for any Shares tendered prior to the Expiration Date is subject
to the fulfillment, at or prior to the Expiration Date, of the
following conditions (and upon the failure of any such condition
to be fulfilled, unless waived by Purchaser, Purchaser may
terminate the Offer as to any Shares not then accepted for
payment, and Purchaser shall not be required to accept for
payment, purchase or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the
Exchange Act, pay for any Shares):
(a) The number of Shares validly tendered and not
withdrawn shall constitute at least a two-thirds majority
plus one of the outstanding Shares on a fully diluted
basis.
(b) Any waiting period (and any extension thereof)
applicable to the consummation of the Offer under the HSR
Act shall have expired or been terminated.
(c) No action or proceeding before a court of
competent jurisdiction or other competent governmental body
by any governmental or regulatory authority shall have been
instituted or threatened to make illegal or otherwise
restrain or prohibit (whether temporarily, preliminary or
permanently) the Offer or the Merger or the other
transactions contemplated by the Merger Agreement or to
obtain an amount of damages or other material relief in
connection with the execution of the Merger Agreement or
the consummation of the Offer or other transactions
contemplated by the Merger Agreement; and no governmental
agency shall have given notice to any party hereto to the
effect that consummation of the Offer or the Merger or the
other transactions contemplated by the Merger Agreement
would constitute a violation of any law or that it intends
to commence proceedings to restrain consummation of the
Offer or the Merger.
(d) Purchaser shall have received from the Company
appropriately certified copies of all resolutions adopted
by the Company's Board of Directors in connection with the
Offer, the Merger, the Merger Agreement and the
transactions contemplated thereby.
(e) Each of the representations and warranties made by
the Company in the Merger Agreement shall be true and
correct in all respects (subject to limitations as to
materiality as may be contained therein) as though made on
and as of the Expiration Date or, in the case of
representations and warranties made as of a specified date
earlier than the Expiration Date, on and as of such earlier
date, and the Company shall have delivered to Parent a
certificate, dated the Expiration Date and executed on
behalf of the Company by its President to such effect.
(f) The Company shall have performed and complied
with, in all material respects, each agreement, covenant
and obligation required by the Merger Agreement to be so
performed or complied with by the Company at or prior to
the Expiration Date, and the Company shall have delivered
to Parent a certificate, dated the Expiration Date and
executed on behalf of the Company by its President, to such
effect.
- 29 -
<PAGE>
(g) Parent and Purchaser shall have received a written
opinion, dated as of the Expiration Date, from Barnes &
Thornburg, counsel to the Company, in form and substance
reasonably satisfactory to Parent and Purchaser, as to
certain appropriate matters agreed upon by legal counsel of
Parent and Purchaser and of the Company.
(h) All proceedings to be taken on the part of the
Company on or before the consummation of the Offer in
connection with the transactions contemplated by the Merger
Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to Parent,
and Parent shall have received copies of all such documents
and other evidences as Parent may reasonably request in
order to establish the consummation of such transactions
and the taking of all proceedings in connection therewith.
Such documents shall include, but shall not be limited to:
(i) the certificates required by clauses (e) and (f) of
this Section 14; (ii) a certificate of existence or good
standing regarding each of the Company and its
Subsidiaries, certified in the case of the Company by the
New Mexico Corporation Commission and certified in the case
of the Company's subsidiaries by the appropriate office of
the jurisdiction of its respective incorporation, each
dated within ten (10) business days of the Expiration Date;
and (iii) an incumbency certificate certifying the identity
of the officers of the Company.
(i) The Company and each of its Subsidiaries shall
have good, marketable and insurable title to their
respective real properties, subject only to those
encumbrances identified in a schedule to the Merger
Agreement, and the Company shall have obtained and
delivered to Parent reasonable assurances from the relevant
municipalities to the effect that such real properties and
their current operations are in compliance with local
zoning ordinances without constituting non-conforming uses.
(j) The Company shall have delivered to Parent a
current survey of the real property and facilities of the
Company located in Peru, Indiana, which survey (i) shall
have been prepared by a licensed Indiana land surveyor,
(ii) shall fulfill the Minimum Detail Requirements for
ALTA/ACSM Land Title Surveys (1992) for an Urban Survey and
Table A thereof, and (iii) shall have been certified to the
Surviving Corporation, Parent and Parent's title insurance
company in a manner reasonably satisfactory to Parent; and
such survey shall not show encroachments or other matters
which, individually or in the aggregate, materially
adversely affect the value or use of such real property and
facilities.
(k) There shall not have occurred (A) any general
suspension of, or limitation on prices for, trading in the
securities of a general nature on any national securities
exchange that lasts more than 24 hours, (B) the declaration
of any banking moratorium or any suspension of payments in
respect of banks or any limitation (whether or not
mandatory) on the extension of credit by lending
institutions in the United States, (C) the commencement of
a war, armed hostilities or any other international or
national calamity involving the United States or a
substantial terrorist attack or the threat thereof on a
target in United States that leads to the declaration of a
national emergency, (D) a material adverse change in the
United States currency exchange rates or a suspension of,
or limitation on, the markets therefor, or (E) any decline
in the Dow Jones Index below 6448 (which was the value of
such Index on December 31, 1996).
(l) A Trigger Event shall not have occurred.
(m) Other than the filings required in connection with
the Merger, all consents, approvals and actions of, filings
with and notices to any governmental or regulatory
authority or any other public or private third party
required of the Company or any of its subsidiaries to
consummate the Offer, the failure of which to be obtained
or taken could, individually or in the aggregate, be
reasonably expected to have a material adverse effect on
the Company and its subsidiaries or on the ability of
Parent to consummate the purchase of Shares pursuant to the
Offer, shall have been obtained, all in form and substance
reasonably satisfactory to Parent and no such consent,
approval or action shall contain any term or condition
which could be reasonably expected to result in a material
diminution of the benefits of the Offer to Parent.
(n) The Merger Agreement shall not have been
terminated pursuant to its terms and shall not have been
amended pursuant to its terms to provide for its
termination.
- 30 -
<PAGE>
Notwithstanding anything to the contrary herein, Purchaser cannot
and will not assert any of the conditions set forth under this
Section 14 (other than certain regulatory conditions as, and to
the extent, permitted by applicable rules and regulations of the
Commission) at any time after the Expiration Date.
15. Certain Legal Matters
Based on information supplied by the Company, and on the
advice of local counsel in Indiana, Purchaser does not believe
that any Indiana state takeover statutes apply (or purport to
apply) to the Offer or the Merger. Based on advice of local
counsel in New Mexico, Purchaser does not believe that any New
Mexico state takeover statutes apply (or purport to apply) to the
Offer or the Merger. Accordingly, Purchaser has not currently
complied with any state takeover statute or regulation. Purchaser
reserves the right to challenge the applicability or validity of
any state law purportedly applicable to the Offer, the
Stockholders' Agreement or the Merger and nothing in this Offer
or any action taken in connection with the Offer, the
Stockholders' Agreement or the Merger is intended as a waiver of
such right. If it is asserted that any state takeover statute is
applicable to the Offer, the Stockholders' Agreement or the
Merger and an appropriate court does not determine that such
statute is inapplicable or invalid as applied to the Offer, the
Stockholders' Agreement or the Merger, Purchaser may be required
to file certain information with, or to receive approvals from,
the relevant state authorities, and Purchaser might be unable to
accept for payment or pay for Shares tendered pursuant to the
Offer, or be delayed in consummating the Offer or the Merger. In
such case, Purchaser may not be obligated to accept for payment
or pay for any Shares tendered pursuant to the Offer.
Antitrust. Under the provisions of the HSR Act applicable
to the Offer, the purchase of Shares under the Offer may be
consummated following the expiration of a 15-calendar-day waiting
period following the filing by Parent as the "ultimate parent
entity" of Purchaser of a Notification and Report Form with
respect to the Offer, unless Parent receives a request for
additional information or documentary material from the Antitrust
Division of the Department of Justice (the "Antitrust Division")
or the Federal Trade Commission (the "FTC") or unless early
termination of the waiting period is granted. Parent's filing
under the HSR Act will also be made with respect to Purchaser's
acquisition of Shares under the Stockholders' Agreement. Parent
is expected to make its filing with the Antitrust Division and
the FTC on or about September 29, 1998. If, within the initial
15-day waiting period, either the Antitrust Division or the FTC
requests additional information or documentary material from
Parent, the waiting period will be extended and would expire at
11:59 P.M., New York City time, on the tenth calendar day after
the date of substantial compliance by Parent with such request.
Only one extension of the waiting period pursuant to a request
for additional information is authorized by the HSR Act.
Thereafter, such waiting period may be extended only by court
order or with the consent of Parent. If the acquisition of Shares
is delayed pursuant to a request by the FTC or the Antitrust
Division for additional information or documentary material
pursuant to the HSR Act, the Offer may, at the discretion of
Purchaser, be extended and, in any event, the purchase of or any
payment for Shares will be deferred until ten days following the
date the request is complied with by Parent, unless the waiting
period is sooner terminated by the FTC and the Antitrust
Division. Unless the Offer is extended, any extension of the
waiting period will not give rise to any additional withdrawal
rights. See Section 4. Although the Company is required to file
certain information and documentary material with the FTC and the
Antitrust Division in connection with the Offer, neither the
Company's failure to make such filings nor a request from the FTC
or the Antitrust Division for additional information or
documentary material made to the Company will extend the waiting
period.
In practice, complying with a request for additional
information or documentary material may require a significant
amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with
the relevant governmental agency concerning possible means of
addressing those issues and may agree to delay consummation of
the transaction while such negotiations continue.
The FTC and the Antitrust Division frequently scrutinize
the legality under the antitrust laws of transactions such as
Parent's proposed acquisition of the Company. At any time before
or after Purchaser's purchase of Shares pursuant to the Offer,
the Antitrust Division or the FTC could take such action under
the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or the consummation of the Merger or
seeking the divestiture of Shares acquired by Purchaser or the
divestiture of substantial assets of Purchaser or its
subsidiaries, or the Company or its subsidiaries. Private parties
may also bring legal action under the antitrust laws under
certain circumstances. There can be no
- 31 -
<PAGE>
assurance that a challenge to the Offer on antitrust grounds will
not be made or, if such a challenge is made, of the result
thereof. If any such action by the FTC, the Antitrust Division or
any other person should be threatened or commenced, Purchaser may
extend, terminate or amend the Offer. See Section 14 for certain
conditions of the Offer. Parent and Purchaser believe that
consummation of the Offer would not violate any antitrust laws;
there can be no assurance, however, that a challenge to the Offer
on antitrust grounds will not be made or, if a challenge is made,
what the result will be.
Although the parties to the Merger Agreement are required
to remove or satisfy, if reasonably practicable, any objections
to the validity or legality of the Merger, Parent is not required
to satisfy any legal requirement that it divest or hold separate
any assets or business operations of Parent or the Company.
16. Certain Fees and Expenses
Purchaser has retained MacKenzie Partners, Inc. to act as
the Information Agent and IBJ Schroder Bank & Trust Company to
act as the Depositary in connection with the Offer. The
Information Agent and the Depositary each will receive reasonable
and customary compensation for their services, will be reimbursed
for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in
connection therewith, including certain liabilities under the
U.S. federal securities laws.
Except as set forth above, neither Parent nor Purchaser
will pay any fees or commissions to any broker or dealer or other
person for soliciting tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies will be
reimbursed by Purchaser for customary mailing and handling
expenses incurred by them in forwarding the offering materials to
their customers.
17. Miscellaneous
Purchaser is not aware of any jurisdiction where the making
of the Offer is prohibited by any administrative or judicial
action pursuant to any valid state statute. If Purchaser becomes
aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser
will make a good faith effort to comply with such state statute.
If, after such good faith effort, Purchaser cannot comply with
such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares
in such state.
Purchaser and Parent have filed with the Commission the
Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3, under
the Exchange Act, containing certain additional information with
respect to the Offer and may file amendments thereto. The Company
has filed with the Commission the Schedule 14D-9 (including
exhibits) containing the Company's recommendation with respect to
the Offer and other information required to be disseminated to
stockholders of the Company pursuant to Rule 14d-9. Such
Statements and any amendments thereto, including exhibits, may be
examined and copies may be obtained from the principal office of
the Commission in the manner set forth in Section 8 (except that
they will not be available at the regional offices of the
Commission).
No person has been authorized to give any information or
make any representation on behalf of Purchaser not contained in
this Offer to Purchase or in the Letter of Transmittal and, if
given or made, such information or representations must not be
relied upon as having been authorized.
Burnham Acquisition Corporation
September 29, 1998
- 32 -
<PAGE>
ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT
A. Directors and Executive Officers of Purchaser
The following table sets forth the name, business address,
present principal occupation or employment and five-year
employment history of position with Purchaser and each director
and executive officer of Purchaser.
Position with Purchaser and Present
Name and Address Principal Occupation or Employment
- --------------------------- -----------------------------------
Ronald L. Griffith Sole Director & Secretary,
P.O. 3205 Burnham Acquisition Corporation
Lancaster, PA 17604 Senior Vice President-Finance &
Secretary-Treasurer, Burnham
Corporation*
Albert Morrison III President, Burnham Acquisition
P.O. Box 3205 Corporation
Lancaster, PA 17604 President & Chief Executive Officer,
Burnham Corporation*
B. Directors and Executive Officers of Parent
The following table sets forth the name, business address,
position with Parent and present principal occupation of each
director, executive officer and controlling person of Parent.
Each individual listed below is a citizen of the United States.
Position with Parent and Present
Name and Address Principal Occupation or Employment*
- --------------------------- ------------------------------------
John B. Dodge Chairman of the Board, Burnham Corporation
P.O. Box 3205 President, JVD Development Co., a real estate
Lancaster, PA 17604 development firm
Albert Morrison, III President & Chief Executive Officer, Burnham
P.O. Box 3205 Corporation
Lancaster, PA 17604
Ronald L. Griffith Senior Vice President-Finance &
P.O. Box 3205 Secretary-Treasurer, Burnham
Lancaster, PA 17604 Corporation
Donald E. Sweigart Senior Vice President, Burnham Corporation
P.O. Box 3205
Lancaster, PA 17604
Donald B. Titus Vice President, Burnham Corporation
P.O. Box 3205
Lancaster, PA 17604
Robert L. Coons Vice President, Burnham Corporation
P.O. Box 3205
Lancaster, PA 17604
Kenneth H. Sturtz Vice President, Burnham Corporation
P.O. Box 3205
Lancaster, PA 17604
- -------------------
* In each case, such occupation or employment has remained unchanged
during the previous five years.
- 33 -
<PAGE>
Robert B. Balfantz Vice President, Burnham Corporation
P.O. Box 3205
Lancaster, PA 17604
Shaun D. McMeans Controller, Burnham Corporation
P.O. Box 3205
Lancaster, PA 17604
Ben W. Drew, Jr. Director, Burnham Corporation
P.O. Box 3205 President, MKS Corp., a U.S.-Russian
Lancaster, PA 17604 economic development firm
Elizabeth B. Freimer Director, Burnham Corporation
P.O. Box 3205 Retired
Lancaster, PA 17604
Elizabeth Hughes Director, Burnham Corporation
P.O. Box 3205 Retired
Lancaster, PA 17604
Thomas C. Kile Director, Burnham Corporation
P.O. Box 3205 President, Centerville Development Corp., a
Lancaster, PA 17604 real estate development firm
Robert C. Simpson Director, Burnham Corporation
P.O. Box 3205
Lancaster, PA 17604
William N. Vitalis Director, Burnham Corporation
P.O. Box 3205 Investor
Lancaster, PA 17604
- 34 -
<PAGE>
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
By Mail: By Facsimile: By Hand/Overnight Delivery:
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station Confirm Facsimile by New York, NY 10004
New York, NY 10274-0084 Telephone: Attention: Securities
Attention: Reorganization (212) 858-2103 Processing Window, SC-1
Department
Delivery of this instrument to an address other than as set
forth above or transmission of instructions to a facsimile number
other than the ones listed above will not constitute a valid
delivery.
Questions and requests for assistance may be directed to
the Information Agent at the telephone numbers and address below.
Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer material may be obtained from
the Information Agent. You may also contact your broker, dealer,
commercial bank or trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC.]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
Call Toll-Free: (800) 322-2885
- 35 -
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
Bryan Steam Corporation
Pursuant to the Offer to Purchase
Dated September 29, 1998
by
Burnham Acquisition Corporation
a wholly-owned subsidiary of
Burnham Corporation
- -----------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON WEDNESDAY, OCTOBER 28, 1998,
UNLESS THE OFFER IS EXTENDED.
- -----------------------------------------------------------------
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
By Mail: By Facsimile:
P.O. Box 84 (212) 858-2611
Bowling Green Station Confirm Facsimile by Telephone:
New York, NY 10274-0084 (212) 858-2103
Attention: Reorganization
Department
By Hand/Overnight Delivery:
One State Street
New York, NY 10004
Attention: Securities Processing Window, SC-1
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER
THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA
FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE
FORM W-9 PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL
SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
-----------------------------------------------------------------------
| DESCRIPTION OF SHARES TENDERED |
| |
|-----------------------------------------------------------------------|
| Name(s) and Address(es) | Share(s) Tendered (Attach |
| of Registered Holder(s) | additional schedule, if necessary) |
| (please fill in, | |
| if blank) | |
|-----------------------------------------------------------------------|
| | Certificate | Total Number | Number of |
| | Number(s)* | of Shares | Shares |
| | | Represented | (Tendered** |
| | | by Certi- | |
| | | ficate(s)* | |
| |-------------|--------------|-------------|
| | | | |
| |-------------|--------------|-------------|
| | | | |
| |-------------|--------------|-------------|
| | | | |
| |-------------|--------------|-------------|
| | | | |
| |-------------|--------------|-------------|
| | | | |
| |-------------|--------------|-------------|
| | | | |
| |-------------|--------------|-------------|
| | | | |
| |-------------|--------------|-------------|
| |Total Shares | | |
- -----------------------------------------------------------------------
* Need not be completed by stockholders making delivery of
Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all
Shares evidenced by any certificate delivered to the
Depositary are being tendered. See Instruction 4.
<PAGE>
This Letter of Transmittal is to be completed by
stockholders of Bryan Steam Corporation (the "Company") either if
certificates ("Share Certificates") evidencing Shares (as defined
below) are to be forwarded herewith or if delivery of Shares is
to be made by book-entry transfer to the account of IBJ Schroder
Bank & Trust Company (the "Depositary") at The Depository Trust
Company (the "Book-Entry Transfer Facility") pursuant to the
book-entry transfer procedures described in Section 3 of the
Offer to Purchase (as defined below). DELIVERY OF DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
Stockholders whose Share Certificates are not
immediately available or who cannot deliver their Share
Certificates and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in the Offer
to Purchase) or who cannot complete the procedure for delivery by
book-entry transfer on a timely basis and who wish to tender
their Shares must do so pursuant to the guaranteed delivery
procedure described in Section 3 of the Offer to Purchase. See
Instruction 2.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
Call Toll Free: (800) 322-2885
<PAGE>
|_| CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:_______________________
Account Number:______________________________________
Transaction Code Number:_____________________________
|_| CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):_____________________
Date of Execution of Notice
of Guaranteed Delivery:______________________________
Name of Institution which
Guaranteed Delivery:_________________________________
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Burnham Acquisition
Corporation, a New Mexico corporation ("Purchaser"), the
above-described shares of Common Stock, par value $10.00 per
share (the "Shares"), of Bryan Steam Corporation, a New Mexico
corporation (the "Company"), pursuant to Purchaser's offer to
purchase all outstanding Shares, and all benefits that may inure
to holders thereof, for a purchase price of $152.00 per Share,
net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to
Purchase dated September 29, 1998 (the "Offer to Purchase"),
receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as they may be amended from time to time,
together constitute the "Offer"). The undersigned understands
that Purchaser reserves the right to transfer or assign, in whole
at any time or in part from time to time, to one or more of its
affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer. Capitalized terms not
defined herein shall have the meanings attributed to them in the
Offer to Purchase.
Subject to, and effective upon, acceptance for payment of,
the Shares tendered herewith, in accordance with the terms of the
Offer (including, if the Offer is extended or amended, the terms
and conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all
the Shares that are being tendered hereby (and any and all other
Shares or other securities or rights issued or issuable in
respect of such Shares on or after September 29, 1998
(collectively, "Distributions")), and irrevocably appoints the
Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares and all Distributions,
with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to
(a) deliver Share Certificates evidencing such Shares and all
Distributions, or transfer ownership of such Shares and all
Distributions on the account books maintained by the Book-Entry
Transfer Facility, together, in either case, with all
accompanying evidence of transfer and authenticity, to or upon
the order of Purchaser, (b) present such Shares and all
Distributions for transfer on the Company's books and (c) receive
all benefits and otherwise exercise all rights (except for the
specific rights granted herein or in the Stockholders' Agreement
(if applicable) to Burnham Corporation) of beneficial ownership
of such Shares and all Distributions, all in accordance with the
terms of the Offer.
By executing this Letter of Transmittal, the undersigned
irrevocably appoints Burnham Corporation as attorney-in-fact and
proxy of the undersigned, each with full power of substitution,
to the full extent of the undersigned's rights with respect to
the Shares tendered by the undersigned and accepted for payment
by Purchaser (and any and all Distributions). Such power of
attorney and proxy shall be considered coupled with an interest
in the tendered Shares (and Distributions). This appointment will
be effective if, when, and only to the extent that, Purchaser
accepts such Shares for payment pursuant to the Offer. Except for
the irrevocable power of attorney granted in the Stockholders'
Agreement (if applicable), upon such acceptance for payment, all
prior powers of attorney and proxies given by the undersigned
with respect to such Shares and Distributions will, without
further action, be revoked, and no subsequent powers of attorney
or proxies may be given (and if given will be deemed not to be
effective). The above named attorney-in-fact and proxy will, with
respect to the Shares and Distributions for which the appointment
is effective, be empowered to exercise all voting and other
rights of the undersigned as such attorney-in-fact and proxy may
deem proper at any annual, special, adjourned or postponed
meeting of the Company's stockholders, by written consent or
otherwise. The undersigned understands that Purchaser reserves
the right to require that, in order for Shares or Distributions
to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares, Purchaser must be able to
exercise full voting rights with respect to such Shares and
Distributions.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to tender, sell, assign
and transfer the Shares tendered hereby and all Distributions and
that when the same are accepted for payment by Purchaser,
Purchaser will acquire good, marketable and unencumbered title
thereto and to all Distributions,
<PAGE>
free and clear of all liens, restrictions, charges and
encumbrances, and that none of such Shares and Distributions will
be subject to any adverse claim. The undersigned, upon request,
shall execute and deliver all additional documents deemed by the
Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby
and all Distributions. In addition, the undersigned shall remit
and transfer promptly to the Depositary for the account of
Purchaser all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer,
and, pending such remittance and transfer or appropriate
assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold
the entire purchase price of the Shares tendered hereby or deduct
from such purchase price, the amount or value of such
Distribution as determined by Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred
shall be affected by, and all such authority shall survive, the
death or incapacity of the undersigned. All obligations of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns and trustees in
bankruptcy or other legal representatives of the undersigned.
Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant
to any one of the procedures described in Section 3 of the Offer
to Purchase and in the instructions hereto will constitute the
undersigned's acceptance of the terms and conditions of the
Offer. Purchaser's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between
the undersigned and Purchaser upon the terms and subject to the
conditions of the Offer, including, without limitation, the
undersigned's representation and warranty that the undersigned
owns the Shares being tendered. The undersigned recognizes that
under certain circumstances set forth in the Offer to Purchase,
Purchaser may not be required to accept for payment any of the
Shares tendered hereby.
Unless otherwise indicated herein in the box entitled
"Special Payment Instructions," please issue the check for the
purchase price of all Shares purchased, and return all Share
Certificates evidencing Shares not purchased or not tendered, in
the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise
indicated in the box entitled "Special Delivery Instructions,"
please mail the check for the purchase price of all Shares
purchased and all Share Certificates evidencing Shares not
tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s)
appearing above under "Description of Shares Tendered." In the
event that the boxes entitled "Special Payment Instructions" and
"Special Delivery Instructions" are both completed, please issue
the check for the purchase price of all Shares purchased and
return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of, and mail such check and Share
Certificates to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment
Instructions," please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased,
by crediting the account at the Book-Entry Transfer Facility
designated above. The undersigned recognizes that Purchaser has
no obligation, pursuant to the Special Payment Instructions, to
transfer any Shares from the name of the registered holder(s)
thereof if Purchaser does not accept for payment any of the
Shares tendered hereby.
<PAGE>
|_| CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING
SHARES THAT YOU OWN HAVE BEEN LOST OR DESTROYED AND SEE
INSTRUCTION 10.
Number of Shares represented by
the lost or destroyed certificates: __________________
- ----------------------------- -------------------------------
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, (See Instructions 1, 5,
6 and 7) 6 and 7)
To be completed ONLY if To be completed ONLY if
the check for the purchase the check for the purchase
price of Shares purchased or price of Shares purchased or
Share Certificates evidencing Share Certificates evidencing
Shares not tendered or not Shares not tendered or not
purchased are to be issued in purchased are to be mailed to
the name of someone other someone other than the under-
than the undersigned or if signed, or to the undersigned
Shares tendered by book-entry at an address other than that
transfer which are not shown under "Description of
purchased are to be returned Shares Tendered."
by credit to an account
maintained at the Book-Entry Deliver: |_| Check
Transfer Facility other than |_| Share
that designated above. Certificate(s)
to:
Issue: |_| Check
|_| Share Name:_______________________
Certificate(s) (Print)
to:
Address:____________________
Name:_______________________
(Print) ____________________________
(Include Zip Code)
Address:____________________
____________________________
(Include Zip Code)
____________________________
(Taxpayer Identification or
Social Security Number)
|_| Credit unpurchased Shares
tendered by book-entry
transfer to the
Book-Entry Transfer
Facility account set
forth below:
|_| The Depository Trust
Company
____________________________
(Account Number)
(See Substitute Form W-9)
- ----------------------------- -------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is
required on this Letter of Transmittal if (a) this Letter of
Transmittal is signed by the registered holder(s) (which term,
for purposes of these instructions, includes any participant in
the Book-Entry Transfer Facility's systems whose name appears on
a security position listing as the owner of Shares) of the Shares
tendered herewith and such registered holder(s) has not completed
either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" above or (b) such Shares
are tendered for the account of a financial institution
(including most commercial banks, savings and loan associations
and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program or by any other "Eligible
Guarantor Institution" as such term is defined in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (an
"Eligible Institution"). In all other cases, all signatures on
this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5. If Share Certificates are
registered in the name of a person other than the signer of this
Letter of Transmittal, or if payment is to be made or Share
Certificates not accepted for payment are to be returned to a
person other than the registered holder of the Share Certificates
surrendered, the tendered Share Certificate(s) must be endorsed
or accompanied by appropriate stock powers, in either case signed
exactly as the name or name(s) of the registered holders or
owners appear on the Share Certificate(s), with the signatures on
such Share Certificate(s) or stock powers guaranteed as
aforesaid. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE
CERTIFICATES. This Letter of Transmittal is to be used either if
Share Certificates are to be forwarded herewith or if Shares are
to be delivered by book-entry transfer pursuant to the procedure
set forth in the section entitled "Procedure for Tendering
Shares" of the Offer to Purchase. Share Certificates evidencing
all tendered Shares, or confirmation of a book-entry transfer of
such Shares (a "Book-Entry Confirmation"), if such procedure is
available, into the Depositary's account at the Book-Entry
Transfer Facility pursuant to the procedures set forth in Section
3 of the Offer to Purchase, together with a properly completed
and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantees (or, in
the case of a book-entry transfer, an Agent's Message, as defined
below) and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date (as
defined in the Offer to Purchase). If Share Certificates are
forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany
each such delivery. Stockholders whose Share Certificates are not
immediately available, who cannot deliver their Share
Certificates and all other required documents to the Depositary
prior to the Expiration Date or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis may tender
their Shares pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice
of Guaranteed Delivery, substantially in the form provided by
Purchaser herewith, must be received by the Depositary prior to
the Expiration Date; and (iii) the Share Certificates, in proper
form for transfer, or a confirmation of a book-entry transfer of
such Shares, if such procedure is available, into the
Depositary's account at the Book-Entry Transfer Facility,
together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any
required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message), and any other documents required
by this Letter of Transmittal, must be received by the Depositary
within three trading days after the date of execution of the
Notice of Guaranteed Delivery, all as described in Section 3 of
the Offer to Purchase. A "trading day" is any day except
Saturday, Sunday or a federal holiday. The term "Agent's Message"
means a message, transmitted by the Book-Entry Transfer Facility
to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states the Book-Entry Transfer
Facility has received an express acknowledgment from the
participant in the Book-Entry Transfer Facility tendering the
Shares that such participant has received and agrees to be bound
by the terms of this Letter of Transmittal and that Purchaser may
enforce such agreement against the participant.
The method of delivery of this Letter of Transmittal, Share
Certificates and all other required documents, including delivery
through the Book-Entry Transfer Facility, is at the option and
risk of the tendering stockholder, and the delivery will be
deemed made only when actually received by the Depositary. If
delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases,
sufficient time should be allowed to ensure timely delivery.
<PAGE>
No alternative, conditional or contingent tenders will be
accepted and no fractional Shares will be purchased. By execution
of this Letter of Transmittal (or a facsimile hereof), all
tendering stockholders waive any right to receive any notice of
the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under
"Description of Shares Tendered" is inadequate, the Share
Certificate numbers, the number of Shares evidenced by such Share
Certificates and the number of Shares tendered should be listed
on a separate schedule and attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who
tender by book-entry transfer.) If fewer than all the Shares
evidenced by any Share Certificate delivered to the Depositary
herewith are to be tendered hereby, fill in the number of Shares
which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificate(s) evidencing the
remainder of the Shares that were evidenced by the Share
Certificates delivered to the Depositary herewith will be sent to
the person(s) signing this Letter of Transmittal, unless
otherwise provided in the box entitled "Special Delivery
Instructions," as soon as practicable after the expiration or
termination of the Offer. All Shares evidenced by Share
Certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the
registered holder(s) of the Shares tendered hereby, the
signature(s) must correspond with the name(s) as written on the
face of the certificate(s) without any alteration, enlargement or
change whatsoever.
If any Share tendered hereby is owned of record by two or
more persons, all such persons must sign this Letter of
Transmittal. If any of the Shares tendered hereby are registered
in the names of different holders, it will be necessary to
complete, sign and submit as many separate Letters of Transmittal
as there are different registrations of such Shares.
If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, no endorsements of Share
Certificates or separate stock powers are required, unless
payment is to be made to, or Share Certificates evidencing Shares
not tendered or not purchased are to be issued in the name of a
person other than the registered holder(s), in which case the
Share Certificate(s) evidencing the Shares tendered hereby must
be endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name(s) of the registered holder(s)
appears(s) on such Share Certificate(s). Signatures on such Share
Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other
than the registered holder(s) of the Shares tendered hereby, the
Share Certificate(s) evidencing the Shares tendered hereby must
be endorsed or accompanied by appropriate stock powers, in either
case, signed exactly as the name(s) of the registered holder(s)
appear(s) on such Share Certificate(s). Signatures on such Share
Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or
stock power is signed by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such
person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act
must be submitted.
6. STOCK TRANSFER TAXES. Except as provided in this
Instruction 6, Purchaser will pay all stock transfer taxes with
respect to the transfer and sale of Shares to it or its order
pursuant to the Offer. If, however, payment of the purchase price
of any Shares purchased is to be made to, or if Share
Certificates evidencing Shares not tendered or not purchased are
to be issued in the name of, a person other than the registered
holder(s), the amount of any stock transfer taxes (whether
imposed on the registered owner(s), such other person or
otherwise) payable on account of the transfer to such other
person will be deducted from the purchase price of such Shares
purchased, unless satisfactory evidence to Purchaser of the
payment of such taxes or exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be
necessary for transfer tax stamps to be affixed to the Share
Certificates evidencing the shares tendered hereby.
<PAGE>
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check
for the purchase price of any Shares tendered hereby is to be
issued, or Share Certificate(s) evidencing Shares not tendered or
not purchased are to be issued, in the name of a person other
than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone
other than the person(s) signing this Letter of Transmittal or to
the person(s) signing this Letter of Transmittal but at an
address other than that shown in the box entitled "Description of
Shares Tendered," the appropriate boxes on this Letter of
Transmittal must be completed. Stockholders delivering Shares
tendered hereby by book-entry transfer may request that Shares
not purchased be credited to such account maintained at the
Book-Entry Transfer Facility as such stockholder may designate in
the box entitled "Special Payment Instructions." If no such
instructions are given, all such Shares not purchased will be
returned by crediting the account at the Book-Entry Transfer
Facility designated herein as the account from which such Shares
were delivered. See Instruction 1.
8. SUBSTITUTE FORM W-9. Each tendering stockholder (or
other payee) is required to provide the Depositary with a correct
Taxpayer Identification Number ("TIN") and certain other
information on the Substitute Form W-9, which is provided under
"Important Tax Information" below, and to certify whether such
stockholder (or other payee) is subject to backup withholding of
federal income tax. If a tendering stockholder has been notified
by the Internal Revenue Service that such stockholder is subject
to backup withholding, such stockholder must cross out item (2)
of the certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue
Service that such stockholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute
Form W-9 may subject the tendering stockholder (or other payee)
to 31% federal income tax withholding on the payment of the
purchase price of all Shares purchased from such stockholder. If
the tendering stockholder has not been issued a TIN and has
applied for one or intends to apply for one in the near future,
such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, sign and date
the Substitute Form W-9, and complete the additional Certificate
of Awaiting Taxpayer Identification Number. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN
by the time of payment, the Depositary will withhold 31% on all
payments thereafter to such stockholder (or other payee) until a
TIN is provided to the Depositary.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests
for assistance may be directed to the Information Agent the
addresses or telephone numbers set forth herein. Additional
copies of the Offer to Purchase, this Letter of Transmittal, the
Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute
Form W-9 may be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any
certificate(s) representing Shares has been lost, destroyed or
stolen, the stockholder should promptly notify the Depositary by
checking the box immediately preceding the special
payment/special delivery instructions and indicating the number
of Shares so lost, destroyed or stolen. The Depositary will, in
turn, notify the Company's transfer agent, who will initiate lost
stock proceedings. This Letter of Transmittal and related
documents cannot be processed until the procedures for replacing
lost, destroyed or stolen certificates have been followed.
11. WAIVER OF CONDITIONS. The Conditions of the Offer may
be waived by Purchaser, in whole or in part, at any time in its
sole discretion in the case of any Shares tendered.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED
FACSIMILE HEREOF), PROPERLY COMPLETED AND DULY EXECUTED, WITH ANY
REQUIRED SIGNATURE GUARANTEES, OR AN AGENT'S MESSAGE (TOGETHER
WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER
AND ALL OTHER REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND
DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY
THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE
OFFER TO PURCHASE).
<PAGE>
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose
tendered Shares are accepted for payment is required by law to
provide the Depositary (as payer) with such stockholder's correct
TIN on Substitute Form W-9 above. If such stockholder is an
individual, the TIN is such stockholder's social security number.
If the Depositary is not provided with the correct TIN, the
stockholder or other payee may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder or other payee with respect to
Shares purchased pursuant to the Offer may be subject to backup
withholding.
Certain stockholders (including, among others, all
corporations and certain foreign individuals) are not subject to
these backup withholding and reporting requirements. In order for
a foreign individual to qualify as an exempt recipient, such
individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of
such statements can be obtained from the Depositary. See the
enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required
to withhold 31% of any payments made to the stockholder or other
payee. Backup withholding is not an additional tax. Rather, the
tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in
an overpayment of taxes, a refund may be obtained from the
Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to
a stockholder or other payee with respect to Shares purchased
pursuant to the Offer, the stockholder is required to notify the
Depositary of such stockholder's correct TIN (or the TIN of any
other payee) by completing the form above certifying that the TIN
provided on Substitute Form W-9 is correct (or that such
stockholder is awaiting a TIN), and that (i) such stockholder is
exempt from backup withholding, (ii) such stockholder has not
been notified by the Internal Revenue Service that such
stockholder is subject to backup withholding as a result of a
failure to report all interest or dividends or (iii) the Internal
Revenue Service has notified such stockholder that such
stockholder is no longer subject to backup withholding.
What Number to Give the Depositary
The stockholder is required to give the Depositary the
social security number or employer identification number of the
record holder of the Shares tendered hereby. If the Shares are in
more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional
guidance on which number to report. If the tendering Stockholder
has not been issued a TIN and has applied for a number or intends
to apply for a number in the near future, the stockholder should
write "Applied For" in the space provided for the TIN in Part I,
sign and date the Substitute Form W-9, and complete the
additional Certificate of Awaiting Taxpayer Identification
Number. If "Applied For" is written in Part I and the Depositary
is not provided with a TIN by the time of payment, the Depositary
will withhold 31% of all payments to such stockholder until a
properly certified TIN is provided to the Depositary.
<PAGE>
- -----------------------------------------------------------------
IMPORTANT STOCKHOLDERS: SIGN HERE
(Also Please Complete Substitute Form W-9 Included Herein)
X:__________________________________________________
X:__________________________________________________
Signature(s) of Holder(s)
Dated: _____________, 199_
(Must be signed by the registered holder(s) exactly as
name(s) appear(s) on Share Certificates or, if tendered by
a participant in a Book-Entry Transfer Facility by the
participant exactly as such participant's name appears on a
security position listing as the owner of the Shares or by
a person(s) authorized to become the registered holder(s)
by certificates and documents transmitted herewith. If
signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative
capacity, please provide the following information. See
Instruction 5.)
Name(s):____________________________________________
____________________________________________
(Please Print)
Capacity (full title):______________________________
Address:____________________________________________
____________________________________________________
(Include Zip Code)
Area Code and Telephone No.:________________________
Taxpayer Identification
or Social Security No.:_____________________________
Guarantee of Signature(s)
(If required - See
Instructions 1 and 5)
Authorized Signature:_______________________________
Name (Please Print):________________________________
Name of Firm:_______________________________________
Address:____________________________________________
____________________________________________________
(Include Zip Code)
Area Code and Telephone Number:_____________________
Dated: _____________, 199_
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION
GUARANTEE IN SPACE BELOW.
- -----------------------------------------------------------------
<PAGE>
Payer's Name: IBJ SCHRODER BANK & TRUST COMPANY
---------------------------------------------------------------------
| SUBSTITUTE | Part I - Taxpayer | Social Security Number |
| | Identification Number - | OR Employee |
| Form W-9 | | Identification Number |
| Department of | | |
| the Treasury | For all accounts, enter | |
| Internal Revenue | taxpayer identification | |
| Service | number in the box at | ---------------------- |
| | right. (For most indi- | (If awaiting TIN write |
| Payer's Request | viduals, this is your | "Applied For") |
| for Taxpayer | social security number. | |
| Identification | If you do not have a | |
| Number (TIN) | number, see OBTAINING A | |
| | NUMBER in the enclosed | |
| | Guidelines). Certify by | |
| | signing and dating | |
| | below. | |
| | | |
| | Note: If the account is | |
| | in more than one name, | |
| | see chart in the | |
| | enclosed Guidelines to | |
| | determine which number | |
| | to give the Payer. | |
|------------------|-------------------------|------------------------|
| | Part II - For Payees exempt from backup with- |
| | holding, see the enclosed Guidelines and com- |
| | plete as instructed therein. |
|------------------|--------------------------------------------------|
| Part III - Certification - Under penalties of perjury, I certify |
| that: |
| |
| (1) The number shown on this form is my correct Taxpayer |
| Identification Number (or I am waiting for a number to be |
| issued to me); and |
| |
| (2) I am not subject to backup withholding either because (a) I am |
| exempt from backup withholding, (b) I have not been notified |
| by the Internal Revenue Service (IRS) that I am subject to |
| backup withholding as a result of a failure to report all |
| interest or dividends, or (c) the IRS has notified me that I |
| am no longer subject to backup withholding. |
| |
| Certification Instructions - You must cross out item (2) above |
| if you have been notified by the IRS that you are subject to |
| backup withholding because of underreporting interest or |
| dividends on your tax return. However, if after being notified |
| by the IRS that you were subject to backup withholding you |
| received another notification from the IRS that you were no |
| longer subject to backup withholding, do not cross out item |
| (2). (Also see instructions in the enclosed Guidelines). |
| |
| __________________________ ________________________ |
| Signature Date |
| |
---------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
WROTE "APPLIED FOR" IN PART I OF THIS SUBSTITUTE FROM W-9
---------------------------------------------------------------------
| CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER |
| |
| I certify under penalties of perjury that a taxpayer |
| identification number has not been issued to me, and either (a) I |
| have mailed or delivered an application to receive a taxpayer |
| identification number to the appropriate Internal Revenue Service |
| Center or Social Security Administration Office or (b) I intend |
| to mail or deliver an application in the near future. I |
| understand that, notwithstanding the information I provided in |
| Part III of the Substitute Form W-9 (and the fact that I have |
| completed this Certificate of Awaiting Taxpayer Identification |
| Number), all reportable payments made to me thereafter will be |
| subject to a 31% backup withholding tax until I provide a |
| properly certified taxpayer identification number. |
| |
| __________________________ ________________________ |
| Signature Date |
| |
---------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO
YOU PURSUANT TO THE OFFER TO PURCHASE. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
AGREEMENT AND PLAN OF MERGER
dated as of September 23, 1998
by and among
BURNHAM CORPORATION,
BURNHAM ACQUISITION CORPORATION
and
BRYAN STEAM CORPORATION
<PAGE>
TABLE OF CONTENTS
ARTICLE A
THE OFFER
A-1.01 The Offer......................................2
A-1.02 Bryan Actions..................................3
A-1.03 Stockholder Lists..............................3
ARTICLE I
PLAN OF MERGER
1.01 The Merger.......................................4
1.02 Effective Time...................................4
1.03 Closing..........................................4
1.04 Articles of Incorporation; By-laws of the
Surviving Corporation; Location of
Principal Office.................................4
1.05 Directors and Officers of the Surviving
Corporation......................................5
1.06 Effects of the Merger............................5
1.07 Further Assurances...............................5
1.08 Shareholders' Approval...........................5
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock......................6
2.02 Exchange of Certificates.........................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification...................9
3.02 Capital Stock...................................10
3.03 Authority Relative to this Agreement............11
3.04 Non-Contravention: Approvals and Consents.......12
3.05 SEC Reports and Financial Statements............13
3.06 Absence of Certain Changes or Events............13
3.07 Absence of Undisclosed Liabilities..............14
3.08 Legal Proceedings...............................14
3.09 Information Supplied; Schedule 14D-9; Offer
Documents and Proxy Statement...................14
3.10 Compliance with Laws and Orders.................15
3.11 Compliance with Agreements; Certain Agreements..15
3.12 Taxes...........................................16
3.13 Benefit Plans; ERISA............................17
3.14 Insurance.......................................19
i
<PAGE>
3.15 Labor Matters...................................20
3.16 Environmental Matters...........................21
3.17 Tangible Property and Assets....................23
3.18 Intellectual Property Rights....................23
3.19 Vote Required...................................25
3.20 Disclosure......................................25
3.21 Effect of Transactions on Manufacturer's
Representatives and Customers...................25
3.22 Bryan's Transaction Costs.......................25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER
SUB
4.01 Organization and Qualification..................25
4.02 Authority Relative to this Agreement............26
4.03 Non-Contravention; Approvals and Consents.......26
4.04 Legal Proceedings...............................27
4.05 Information Supplied............................27
4.06 Financing.......................................28
ARTICLE V
COVENANTS OF THE COMPANY
5.01 Conduct of Business.............................28
5.02 No Solicitations................................31
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality..........32
6.02 Preparation of Proxy Statement..................32
6.03 Approval of Shareholders........................33
6.04 Regulatory and Other Approvals..................34
6.05 Employees.......................................34
6.06 Expenses........................................35
6.07 Brokers or Finders..............................35
6.08 Notice and Cure.................................35
6.09 Fulfillment of Conditions.......................36
6.10 Indemnification; Directors' and Officers'
Insurance.......................................36
6.11 Retention of Bryan Name.........................37
6.12 Takeover Laws...................................38
6.13 Subsequent Financial Statements.................38
6.14 Termination Fee; Expenses.......................38
ii
<PAGE>
ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to
Effect the Merger...............................39
7.02 Conditions to Obligation of Buyer and Merger
Sub to Effect the Merger........................40
7.03 Conditions to Obligation of Bryan to Effect
the Merger......................................41
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination.....................................42
8.02 Effect of Termination...........................43
8.03 Amendment.......................................43
8.04 Waiver..........................................43
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations; Warranties;
Covenants and Agreements........................44
9.02 Knowledge.......................................44
9.03 Notices.........................................44
9.04 Entire Agreement................................45
9.05 Public Announcements............................45
9.06 No Third Party Beneficiaries....................46
9.07 No Assignment, Binding Effect...................46
9.08 Headings........................................46
9.09 Invalid Provisions..............................46
9.10 Governing Law...................................46
9.11 Counterparts....................................46
9.12 Interpretation..................................47
9.13 Incorporation of Exhibits.......................47
9.14 Enforcement of Agreement; Injunctive Relief.....47
9.15 Joint and Several Obligations...................48
ANNEXES:
Annex A -- Conditions of Offer and List of Encumbrances
EXHIBITS:
Exhibit A - Form of Stockholders Agreement
iii
<PAGE>
SCHEDULES:
Schedule 3.01 - Jurisdictions of Qualification
Schedule 3.04 - Bryan Consents and Approvals
Schedule 3.06 - Material Adverse Changes, etc.
Schedule 3.07 - Undisclosed Liabilities
Schedule 3.08 - Legal Proceedings
Schedule 3.10 - Permits; Legal Compliance
Schedule 3.11 - Contracts and Contract Compliance
Schedule 3.12 - Tax Matters
Schedule 3.13 - Benefit Plans
Schedule 3.14 - Insurance
Schedule 3.15 - Labor Matters
Schedule 3.16 - Environmental Matters
Schedule 3.17 - Exceptions to Title to Personal Property
Schedule 3.18 - Intellectual Property
Schedule 3.21 - Relationships with Representatives and Customers
Schedule 3.22 - Bryan's Transaction Costs
Schedule 7.02 - Encumbrances
iv
<PAGE>
This AGREEMENT AND PLAN OF MERGER dated as of September 23, 1998 (this
"Agreement"), is made and entered into by and among ("BURNHAM CORPORATION"), a
New York corporation ("Buyer" or "Burnham"), BURNHAM ACQUISITION CORPORATION, a
New Mexico corporation wholly owned by Buyer ("Merger Sub"), and BRYAN STEAM
CORPORATION, a New Mexico corporation (prior to the Merger referred to as
"Bryan", and after the Merger referred to as the "Surviving Corporation").
WHEREAS, the Boards of Directors of Buyer, Merger Sub and Bryan have each
determined that it is advisable and in the best interests of their respective
shareholders to consummate and have approved the transactions contemplated
hereby (in which Merger Sub will make a tender offer (the "Offer") for all
outstanding shares of Bryan, Merger Sub will subsequently merge with and into
Bryan, and Bryan will thereupon become a wholly-owned subsidiary of Buyer (the
"Merger"));
WHEREAS, the Board of Directors of Bryan has unanimously adopted a
resolution approving the Offer, the Merger, this Agreement and the transactions
contemplated hereby and recommending that the holders of Bryan Common Stock (as
defined below) tender their shares of Bryan Common Stock in the Offer and
approve the Merger;
WHEREAS, concurrently with the execution hereof and in order to induce
Buyer and Merger Sub to enter into this Agreement, Buyer and Merger Sub are
entering into a Stockholders' Agreement with ten holders of Bryan Common Stock
who collectively own beneficially and of record 55.6% of the issued and
outstanding shares of common stock of Bryan; and such holders have, in
accordance with Rule 14a-2(b)(2) of the rules promulgated under the Securities
Exchange Act of 1934, as amended, executed and delivered such Stockholders'
Agreement substantially in form of Exhibit A hereto wherein each such holder (i)
has agreed to tender his shares of Bryan Common Stock pursuant to the Offer and
(ii) has granted to Buyer the right to vote such holder's shares of common stock
of Bryan in favor of the adoption and approval of the Merger;
WHEREAS, Buyer, Merger Sub and Bryan desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements and representations and warranties set forth in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
ARTICLE A
THE OFFER
A-1.01 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.01 hereof and subject to the provisions hereof, Buyer
shall cause Merger Sub promptly (but in no event later than five business days
following the public announcement of the terms of this Agreement) to commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) an offer to purchase all outstanding shares of
common stock of Bryan, par value $10.00 per share (the "Bryan Common Stock" or
the "Shares"), at a price of $152.00 per Share, net to the seller in cash (the
"Offer"). Subject to the satisfaction of the Offer Conditions (as defined below)
and the terms and conditions of this Agreement, Merger Sub shall accept for
payment and pay for Shares validly tendered and not withdrawn pursuant to the
Offer as soon as practicable under applicable law. The obligation of Merger Sub
to consummate the Offer and to accept for payment and to pay for any Shares
tendered pursuant thereto shall be subject to only those conditions set forth in
Annex A hereto (the "Offer Conditions"), which are for the sole benefit of Buyer
and Merger Sub and may be asserted by Buyer or Merger Sub or waived by Buyer or
Merger Sub, in whole or in part, at any time and from time to time in their sole
discretion. Bryan agrees that no Shares held by Bryan or any of its subsidiaries
will be tendered to Merger Sub pursuant to the Offer. Merger Sub will not,
without the prior written consent of Bryan, (i) decrease or change the amount or
form of the consideration payable in the Offer, (ii) decrease the number of
Shares sought pursuant to the Offer, (iii) impose additional conditions to the
Offer, (iv) change the conditions to the Offer (provided, that Buyer or Merger
Sub in their sole discretion may waive any of the conditions to the Offer) or
(v) make any change to any other provision of the Offer that is materially
adverse to the holders of the Shares. Merger Sub shall be entitled to extend the
Offer in accordance with applicable law, but if the conditions set forth in
Annex A are satisfied as of any scheduled expiration date of the Offer, the
Offer may not be extended by more than ten business days in the aggregate,
except with the prior written consent of the Company or as required by law. If
the conditions set forth in Annex A are not satisfied or waived by Merger Sub as
of any scheduled expiration date, Merger Sub may extend the Offer from time to
time until the earlier of the consummation of the Offer or twenty business days
following the original expiration date of the Offer.
(b) On the date of commencement of the Offer, Buyer and Merger Sub
shall file or cause to be filed with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Offer
(together with all amendments and supplements thereto, the "Schedule 14D-1"),
which shall contain the offer to purchase and related letter of transmittal and
other ancillary Offer documents and instruments pursuant to which the Offer will
be made (collectively with any supplements or amendments thereto, the "Offer
Documents"). Bryan and its counsel shall be given a reasonable opportunity to
review and comment on the Offer Documents prior to their filing with the SEC.
Buyer and Merger Sub agree to provide Bryan with, and to consult with Bryan
regarding, any comments that may be received from the SEC or its staff with
respect to the Offer Documents promptly after receipt thereof.
2
<PAGE>
A-1.02 Bryan Actions. (a) Bryan hereby consents to the Offer and
represents and warrants that (i) the making of the Offer and the other
transactions contemplated by this Agreement have been approved and consented to
by the Board of Directors of Bryan in accordance with applicable law, (ii)
Bryan's Board of Directors (at meetings duly called and held) has unanimously
(x) determined that the Offer and the Merger are fair to and in the best
interests of the stockholders of Bryan, (y) resolved to recommend acceptance of
the Offer and approval of the plan of merger contained in this Agreement by such
stockholders of Bryan, and (z) resolved to elect, to the extent permitted by
law, not to be subject to any "moratorium", "control share acquisition",
"business combination", "fair price" or other form of antitakeover laws and
regulations (collectively, "Takeover Laws") of any jurisdiction that may purport
to be applicable to this Agreement, and (iii) McDonald & Company Securities,
Inc., Bryan's independent financial advisor, has advised Bryan's Board of
Directors that, in its opinion, the consideration to be paid in the Offer and
the Merger to Bryan's stockholders is fair, from a financial point of view, to
such stockholders.
(b) Upon commencement of the Offer, Bryan 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 the
recommendations of its Board of Directors described in Section A-1.02(a) and
hereby consents to the inclusion of such recommendations in the Offer Documents
and to the inclusion of a copy of the Schedule 14D-9 with the Offer Documents
mailed or furnished to Bryan's stockholders. Buyer, Merger Sub and their counsel
shall be given a reasonable opportunity to review and comment on the Schedule
14D-9 prior to its filing with the SEC. Bryan agrees to provide Buyer and Merger
Sub with, and to consult with Buyer and Merger Sub regarding, any comments that
may be received from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt thereof.
(c) Bryan hereby agrees that, subject to the terms and conditions of
this Agreement, in the event there shall occur a change in law or in a binding
judicial interpretation of existing law which would, in the absence of action by
Bryan or the Board of Directors of Bryan specified in such law or
interpretation, prevent Merger Sub, were it to acquire two-thirds of the Shares
then outstanding, from approving and adopting this Agreement without the
affirmative vote of any other holder of Shares, Bryan will use its best efforts
promptly to take such action or cause such action to be taken.
A-1.03 Stockholder Lists. In connection with the Offer, Bryan shall
promptly furnish Buyer and Merger Sub with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of the latest practicable date
and shall furnish Buyer and Merger Sub with such information and assistance
(including periodic updates of such information) as Buyer or Merger Sub or their
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares.
3
<PAGE>
ARTICLE I
PLAN OF MERGER
1.01 The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 1.02), Merger Sub shall
be merged with and into Bryan and the separate corporate existence of Merger Sub
shall thereupon cease. Bryan shall be the surviving corporation in the Merger
(the "Surviving Corporation"). Merger Sub and Bryan are sometimes referred to
herein as the "Constituent Corporations." As a result of the Merger, the
outstanding shares of capital stock of the Constituent Corporations shall be
converted or canceled in the manner provided in Article II.
1.02 Effective Time. At the Closing (as defined in Section 1.03), such
articles of merger or other appropriate documents (in each case, "Articles of
Merger") shall be duly prepared and executed by the Constituent Corporations and
thereafter delivered to the Corporation Commission of the State of New Mexico or
its successor (the "New Mexico Corporation Commission") for filing, as provided
in Section 53-14-4 of the New Mexico Business Corporation Act (the "NMBCA"), on,
or as soon as practicable after, the Closing Date (as defined in Section 1.03)
and shall make all other filings, recordings and publications as required by the
NMBCA. The Merger shall become effective on the date the Articles of Merger are
filed (such date being referred to herein as the "Effective Time").
1.03 Closing. The closing of the Merger (the "Closing") will take place at
the offices of Barnes & Thornburg, 11 South Meridian Street, Indianapolis,
Indiana 46204, or at such other place as the parties hereto mutually agree, on a
date and at a time to be specified by the parties, which shall in no event be
later than 10:00 a.m., local time, on the 5th business day following the day on
which the last to be satisfied or waived of the conditions set forth in Article
VII shall be satisfied or, if permissible, waived in accordance with this
Agreement, or on such other date and time as the parties hereto mutually agree.
The date on which the Closing occurs is hereinafter referred to as the "Closing
Date." At the Closing, Buyer, Merger Sub and Bryan shall deliver to each other
the certificates and other documents and instruments required to be delivered
under Article VII and take such other actions as may be necessary to consummate
the transactions contemplated by this Agreement.
1.04 Articles of Incorporation; By-laws of the Surviving
Corporation; Location of Principal Office.
(a) Articles of Incorporation. The Articles of
Incorporation of Merger Sub in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the
Surviving Corporation until thereafter amended as provided by law
and such Articles of Incorporation; provided, however, that
Article I of the Articles of Incorporation of the Surviving
Corporation shall be amended to read in its entirety as follows:
"The name of the Corporation is Bryan Steam Corporation."
(b) By-laws. The By-laws of Merger Sub in effect immediately prior to
the Effective Time shall be the By-laws of the Surviving Corporation until
thereafter amended as provided by law, the Articles of Incorporation of the
Surviving Corporation and such By-laws.
4
<PAGE>
(c) Location of Principal Office. The location of the principal
office of the Surviving Corporation shall be State Road 19 North, Post Office
Box 27, Peru, Indiana 46970.
1.05 Directors and Officers of the Surviving Corporation.
(a) Directors. The individuals listed below shall be the directors of
the Surviving Corporation until their successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Articles of Incorporation and By-laws of the Surviving
Corporation:
H. Jesse McVay
Albert Morrison, III
Ronald L. Griffith
(b) Officers. The individuals listed below shall be the officers of
the Surviving Corporation until their successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Articles of Incorporation and By-laws of the Surviving
Corporation, and the Board of Directors of Bryan will confirm by resolution the
appointment of such officers effective as of the Effective Time:
H. Jesse McVay, President
Ronald L. Griffith, Vice President
Kurt J. Krauskopf, Treasurer,
Comptroller and Secretary
Robert Berardi, Assistant Treasurer
Tammy McEwen, Assistant Secretary
1.06 Effects of the Merger. Subject to the foregoing, the Merger shall
have the effects specified in accordance with Section 53-14-6 of the NMBCA.
1.07 Further Assurances. Each party hereto will execute such further
documents and instruments and take such further actions as may reasonably be
requested by one or more of the others to consummate the Merger, to vest the
Surviving Corporation with full title to all assets, properties, rights,
approvals, immunities and franchises of either of the Constituent Corporations
or to effect the other purposes of this Agreement.
1.08 Shareholders' Approval. In order to consummate the Merger, Bryan,
acting through its Board of Directors, shall pursuant to Section 6.03 as soon as
practicable and in accordance with (but only if required under) applicable law,
promptly and duly call, give notice of, convene and hold a special shareholder
meeting or its 1998 Annual Meeting of shareholders for the purpose of
considering and taking action upon the Merger and adopting and approving this
Agreement (the "Shareholder Meeting").
5
<PAGE>
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock.
(a) Conversion of Capital Stock and Dissenting Shares.
At the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof:
(i) Capital Stock of Merger Sub. All of the issued and
outstanding shares of the common stock, with no par value, of Merger Sub
("Merger Sub Common Stock") issued and outstanding immediately prior to the
Effective Time shall remain outstanding and unchanged after the Merger and shall
thereafter constitute all of the issued and outstanding shares of the capital
stock of the Surviving Corporation ("Surviving Corporation Common Stock").
Immediately after the Merger, all of the issued and outstanding shares of common
stock of the Surviving Corporation shall be owned by Buyer.
(ii) Cancellation of Treasury Stock. All shares of common stock,
of Bryan, par value $10.00 per share ("Bryan Common Stock"), that are owned by
Bryan as treasury stock shall be canceled and retired and shall cease to exist
and no stock of Buyer or other consideration shall be delivered in exchange
therefor.
(iii) Exchange Price for Bryan Common Stock. Each share of Bryan
Common Stock (other than shares to be canceled in accordance with Section
2.01(a)(ii) and other than Dissenting Shares (as defined in Section 2.01(b)))
issued and outstanding immediately prior to the Effective Time shall be
converted into and represent the right to receive $152.00 in cash per share (the
"Merger Price"). The Merger Price shall be payable in cash without interest
thereon, upon surrender of the corresponding Certificate (as defined in Section
2.02(b)) in accordance with Section 2.02. As of the Effective Time, all shares
of Bryan Common Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a Certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Price per share as provided
herein.
(b) Dissenting Shares.
(i) To the extent applicable, each outstanding share of Bryan
Common Stock the holder of which has not voted in favor of the Merger, has
perfected such holder's right to fair value of such holder's shares in
accordance with the applicable provisions of the NMBCA and has not effectively
withdrawn or lost such right (a "Dissenting Share"), shall not be converted into
or represent a right to receive the Merger Price pursuant to Section 2.01
(a)(iii), but the holder thereof (sometimes referred to herein as a "Dissenting
Shareholder") shall be entitled only to such rights as are granted by the
applicable provisions of the NMBCA; provided, however, that any Dissenting Share
held by a person at the Effective Time who shall, after the Effective Time,
withdraw the demand for fair value or lose the right to fair value, in either
case pursuant to the NMBCA, shall be deemed to be converted into, as of the
Effective Time, the right to receive the Merger Price pursuant to Section
2.01(a)(iii).
6
<PAGE>
(ii) Bryan shall give Buyer (x) prompt notice of any written
objection to the proposed adoption and approval of this Agreement, any written
demand for payment of the fair value of shares, any withdrawals of such demands
and any other instruments received by Bryan served pursuant to the applicable
provisions of the NMBCA relating to dissenting shareholders and (y) the
opportunity to direct all negotiations and proceedings with respect to demands
by dissenting shareholders under the NMBCA. Bryan will not voluntarily make any
payment with respect to any demands by dissenting shareholders and will not,
except with the prior written consent of Buyer, settle or offer to settle any
such demands.
2.02 Exchange of Certificates.
(a) Exchange Agent.
(i) At the Closing or immediately prior to the Effective Time,
Buyer (x) shall appoint as exchange agent reasonably satisfactory to Bryan (the
"Exchange Agent") in accordance with an exchange agreement reasonably
satisfactory to Bryan, and (y) shall make available to the Surviving
Corporation, and shall cause to be deposited with the Exchange Agent, the
aggregate amount due to holders of shares of Bryan Common Stock under Section
2.01(a)(iii) (the "Purchase Price"), to be held for the benefit of and to be
distributed to, holders of shares of Bryan Common Stock in accordance with this
Section 2.02. The Exchange Agent shall agree to hold such funds (such funds,
together with earnings thereon, being referred to herein as the "Exchange Fund")
for delivery as contemplated by this Section 2.02 and upon such additional terms
as may be agreed upon by the Exchange Agent, Bryan and Buyer.
(ii) The deposit shall be made on the following terms: (a) the
Exchange Agent will be given irrevocable instructions that monies deposited in
the Exchange Fund pursuant to this Section 2.02 will be applied by the Exchange
Agent to making the cash payments to the former Bryan shareholders provided for
herein; (b) the Exchange Agent, upon the direction of Buyer or, after the
Effective Time, the Surviving Corporation, may invest in direct obligations of
the United States of America or obligations for which the full faith and credit
of the United States is pledged to provide for the payment of principal and
interest, certificates of deposit issued by commercial banks having capital and
surplus in excess of One Hundred Million Dollars ($100,000,000), or commercial
paper rated A-1 or better by Standard & Poor's corporation or P-1 by Moody's
Investors Service, Inc.; (c) any net profit resulting from, or interest or
income produced by, such investments will be payable as directed by the
Surviving Corporation (including, if so directed, to it); provided, that Buyer
shall replace any monies lost through any investments made as contemplated by
this Section 2.02, if required to make payments to former shareholders of Bryan
pursuant to this Agreement, and shall reimburse the Exchange Agent for all
expenses incurred in connection with the acquisition or liquidation of any such
investment; (d) all expenses of the Exchange Agent will be paid by Buyer or the
Surviving Corporation; and (e) any portion of the Exchange Fund deposited with
the Exchange Agent pursuant to this Section 2.02, which remains unclaimed by the
former shareholders of Bryan for six (6) months after the Effective Time, will
be repaid to the Surviving Corporation upon demand. If certain Bryan
shareholders, such as shareholders who cannot be located, have not received the
cash to which they are entitled under the terms of this Agreement within six (6)
months after the Effective Time, the Surviving Corporation will thereafter hold
the amount of
7
<PAGE>
cash to which such shareholders are entitled, subject to applicable law and to
the extent that the same has not yet been paid to a public official pursuant to
abandoned property laws, for their benefit and will act and serve as their agent
for the purpose of holding such funds. To the extent that any former
shareholders of Bryan exercise their rights as Dissenting Shareholders, payments
to them required or authorized by the NMBCA may be made from the Exchange Fund,
but not in excess of the Merger Price for each share of Bryan Common Stock
formerly owned.
(b) Exchange Procedures.
(i) The record date for the purposes of the transactions
contemplated hereby shall be the Closing Date. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the Exchange
Agent to mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of Bryan
Common Stock (the "Certificates") converted pursuant to Section 2.01(a)(iii)
into the right to receive the Merger Price (x) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as the Surviving
Corporation may reasonably specify) and (y) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Price. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal duly executed and completed in accordance with its
terms, the holder of such Certificate shall be entitled to receive in exchange
therefor an amount equal to the Merger Price per share of Bryan Common Stock
represented thereby, which such holder has the right to receive pursuant to the
provisions of this Article II (in accordance with applicable law), and the
Certificate so surrendered shall forthwith be canceled. In no event shall the
holder of any Certificate be entitled to receive interest on any funds to be
received in the Merger. In the event of a transfer of ownership of Bryan Common
Stock which is not registered in the transfer records of Bryan, the Merger Price
may be issued to a transferee if the Certificate representing such Bryan Common
Stock is presented to the Exchange Agent accompanied by all documents required
to evidence, to the satisfaction of the Surviving Corporation, that such
transfer had properly occurred and that any applicable stock transfer taxes had
been properly paid.
(ii) Until surrendered as contemplated by this Section 2.02(b),
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger Price per
share of Bryan Common Stock represented thereby as contemplated by this Article
II, and shall not entitle the holder thereof to any rights of shareholders of
the Surviving Corporation.
(iii) The Surviving Corporation shall pay all charges and
expenses incurred by the Surviving Corporation or the Exchange Agent in
connection with the exchange of Certificates for cash.
(iv) The parties acknowledge that the Exchange Agent may require
each holder of record of outstanding shares of Bryan Common Stock to execute and
deliver such documents and instruments as the Exchange Agent may reasonably
require to effectuate the surrender of such shares in exchange for the Merger
Price, including any appropriate affidavits and tax forms.
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(c) No Further Ownership Rights in Bryan Common Stock. All cash paid
upon the surrender of shares of Bryan Common Stock in accordance with the terms
hereof shall be deemed to have been paid in full satisfaction of all rights
pertaining to such shares of Bryan Common Stock. From and after the Effective
Time, Bryan's stock transfer books shall be closed and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Bryan Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article II. If any
Certificates shall not have been surrendered prior to two years after the
Effective Time, unclaimed funds payable with respect to such Certificates shall,
to the extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(d) No Further Ownership Rights in Merger Sub Common Stock. All
shares of common stock of the Surviving Corporation (the "Surviving Corporation
Common Stock") issued upon the surrender of shares of Merger Sub Common Stock in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Merger Sub Common Stock,
and there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Merger Sub Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing Merger Sub Common Stock are presented
to the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in Article II.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the shareholders of Bryan six (6) months after the
Effective Time shall be delivered to the Surviving Corporation, upon demand, and
any shareholders of Bryan who have not theretofore complied with this Article II
shall thereafter look only to the Surviving Corporation (subject to abandoned
property, escheat and other similar laws) as general creditors for payment of
their claims for the Merger Price per share. Neither Buyer nor the Surviving
Corporation shall be liable to any holder of shares of Bryan Common Stock for
cash representing the Merger Price delivered from the Exchange Fund or otherwise
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Bryan represents and warrants to Buyer and Merger Sub as follows:
3.01 Organization and Qualification. (a) Bryan is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has full corporate power and authority to
conduct its business as and to the extent now conducted and to own, use and
lease its assets and properties. Bryan is duly qualified, licensed or admitted
to do business and is in good standing in each jurisdiction listed on Schedule
3.01 hereto in which the ownership, use or leasing of its assets and properties,
or the conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for such failures to be so
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qualified, licensed or admitted and in good standing which, individually or in
the aggregate, (i) are not having and could not be reasonably expected to have a
material adverse effect on Bryan, and (ii) could not be reasonably expected to
have a material adverse effect on the validity or enforceability of this
Agreement or on the ability of Bryan to perform its obligations hereunder. As
used in this Agreement, any reference to any event, change or effect being
"material" or "materially adverse" or having a "material adverse effect" on or
with respect to an entity (or group of entities taken as a whole) means such
event, change or effect is material or materially adverse, as the case may be,
to the business, condition (financial or otherwise), properties, assets
(including intangible assets), liabilities (including contingent liabilities),
prospects or results of operations of such entity (or, if with respect thereto,
of such group of entities taken as a whole). Bryan has previously delivered to
Buyer accurate and complete copies of the Articles of Incorporation and the
By-laws of Bryan and each of its subsidiaries as currently in effect.
(b) Except for Monticello Exchanger and Manufacturing Co., Inc.
("Memco") and Wendland Manufacturing Co., Inc. ("Wendland"), Bryan 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, joint venture or other business
association or entity. All outstanding shares of capital stock of each of Memco
and Wendland are duly authorized, validly issued, fully paid, non-assessable and
owned, directly or indirectly, by Bryan free and clear of any liens, claims or
encumbrances. Each of Memco and Wendland is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has full corporate power and authority to conduct its business
as and to the extent now conducted and to own, use and lease its assets and
properties. Each of Memco and Wendland is duly qualified, licensed or admitted
to do business and is in good standing in each jurisdiction listed on Schedule
3.01 hereto in which the ownership, use or leasing of its assets and properties,
or the conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for such failures to be so qualified, licensed or
admitted and in good standing which, individually or in the aggregate, (i) are
not having and could not be reasonably expected to have a material adverse
effect on either Memco or Wendland as the case may be, and (ii) could not be
reasonably expected to have a material adverse effect on the validity or
enforceability of this Agreement or on the ability of Bryan to perform its
obligations hereunder.
3.02 Capital Stock, etc.. (a) The authorized capital stock of Bryan
consists solely of 200,000 shares of common stock, par value $10.00 per share
(previously defined as "Bryan Common Stock"), and 2,500 shares of preferred
stock (the "Preferred Stock"). As of the date hereof, 191,284 shares of Bryan
Common Stock are issued and outstanding, 8,716 shares of Bryan Common Stock are
held in the treasury of Bryan; and no shares of Preferred Stock are issued or
outstanding. All of the issued and outstanding shares of Bryan Common Stock are
duly authorized, validly issued, fully paid and nonassessable. Except pursuant
to this Agreement, there are no outstanding subscriptions, options, warrants,
rights (including "phantom" stock rights), preemptive rights or other contracts,
commitments, understandings or arrangements, including any right of conversion
or exchange under any outstanding security, instrument or agreement (together,
"Options"), obligating Bryan to issue or sell any shares of capital stock of
Bryan or to grant, extend or enter into any Option with respect thereto.
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(b) There are no outstanding contractual obligations of Bryan to
repurchase, redeem or otherwise acquire any shares of Bryan Common Stock or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in any other person.
(c) There are no obligations to issue or to make any payments in
respect of any shares of Preferred Stock; no person or entity has any right to
make any claim in any manner whatsoever as a holder or a prior holder of any
Preferred Stock or any rights related in any way to any shares of Preferred
Stock; and no person or entity has any right to claim to be a holder of any
rights related in any way to the Preferred Stock.
(d) Except as expressly provided herein or in the Schedules hereto,
no notice to obtain approval of the Merger is required to be sent to any person
or entity, whether or not entitled to vote, other than the holders of record of
Bryan Common Stock.
(e) There are no outstanding subscriptions, options, warrants, rights
(including "phantom" stock rights), preemptive rights or other contracts,
commitments, understandings or arrangements, including any right of conversion
or exchange under any outstanding security, instrument or agreement, obligating
either Wendland or Memco to issue or sell any shares of its capital stock (each,
a "Subsidiary Option") or to grant, extend or enter into any Subsidiary Option
with respect thereto. There are no outstanding contractual obligations of either
Wendland or Memco to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any other person or entity.
3.03 Authority Relative to this Agreement. Bryan has full corporate power
and authority to enter into this Agreement and, subject to obtaining
Shareholders' Approval (as defined in Section 6.03) with respect to the Merger,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by Bryan and the consummation by Bryan of the transactions contemplated hereby
have been duly and validly approved by the Board of Directors of Bryan, the
Board of Directors of Bryan has recommended adoption of this Agreement by the
shareholders of Bryan and directed that this Agreement be submitted to the
shareholders of Bryan for their consideration, and no other corporate
proceedings on the part of Bryan or its shareholders are necessary to authorize
the execution, delivery and performance of this Agreement by Bryan and the
consummation by Bryan of the transactions contemplated hereby other than
obtaining Shareholders' Approval (as defined in Section 6.03). This Agreement
has been duly and validly executed and delivered by Bryan and constitutes a
legal, valid and binding obligation of Bryan enforceable against Bryan in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3.04 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by Bryan does not,
and the performance by Bryan of its obligations hereunder and the consummation
of the transactions contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or lapse of time or
both) a default under, or result in the creation or imposition of
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any liens, mortgages, encumbrances, pledges or security interests of any kind
(each a "Lien') upon any of the assets or properties of Bryan under any of the
terms, conditions or provisions of (i) the Articles of Incorporation or By-laws
of Bryan, or (ii) subject to the obtaining of Shareholders' Approval and the
taking of the actions described in paragraph (b) of this Section, (x) any
statute, law, rule, regulation, requirement, code or ordinance (together,
"Laws"), or any judgment, decree, binding agreement or order (together,
"Orders"), of or with any court, tribunal, arbitrator, authority, agency,
commission, official or other instrumentality of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision (a "Governmental or Regulatory Authority"), applicable to Bryan or
any of its assets or properties, or (y) any note, bond, mortgage, security
agreement, indenture, license, franchise, permit, concession, contract, lease or
other instrument, obligation or agreement of any kind (each a "Contract", and
together, "Contracts") to which Bryan or any of its Subsidiaries is a party or
by which Bryan or any of its Subsidiaries or any of its assets or properties is
bound, excluding from the foregoing clauses (x) and (y) conflicts, violations,
breaches, defaults, terminations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on the business or a
material product line of Bryan and its Subsidiaries or on the ability of Bryan
to consummate the transactions contemplated by this Agreement. As used in this
Agreement, "Subsidiary" means, with respect to any party, any corporation or
other organization, whether incorporated or unincorporated, of which more than
fifty percent (50%) of either the equity interests in, or the voting control of,
such corporation or other organization is, directly or indirectly through
Subsidiaries or otherwise, beneficially owned by such party.
(b) Except (i) for the filing of a premerger notification report by
Bryan under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), (ii) for the
filing of the Proxy Statement (as defined in Section 3.09) with the Securities
and Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder (the "Exchange Act")
and clearance of any SEC comments thereon, (iii) for the filing of the Articles
of Merger required by the NMBCA with the New Mexico Corporate Commission and
appropriate documents with the relevant authorities of other states in which the
Constituent Corporations are qualified to do business, (iv) for the filing of
Schedule 14D-1 and Schedule 14D-9, and (v) as disclosed in Schedule 3.04 hereto,
no consent, approval or action of, filing with or notice to any Governmental or
Regulatory Authority or other public or private third party is necessary or
required under any of the terms, conditions or provisions of any Law or Order of
any Governmental or Regulatory Authority or any Contract to which Bryan is a
party or by which Bryan or any of its assets or properties is bound for the
execution and delivery of this Agreement by Bryan, the performance by Bryan of
its obligations hereunder or the consummation of the transactions contemplated
hereby, other than such consents, approvals, actions, filings and notices which
the failure to make or obtain, as the case may be, individually or in the
aggregate, could not be reasonably expected to have a material adverse effect on
Bryan or on the ability of Bryan to consummate the transactions contemplated by
this Agreement.
3.05 SEC Reports and Financial Statements. (a) Bryan delivered to Buyer
prior to the execution of this Agreement a true and complete copy of each form,
report, schedule, registration statement, definitive proxy statement and other
document, including any financial statements,
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exhibits or schedules included or incorporated by reference (together with all
amendments thereof and supplements thereto) filed by Bryan with the SEC since
July 1, 1995 whether or not the same was required to have been filed under
applicable law (as such documents have since the time of their filing been
amended or supplemented, the "Bryan SEC Reports"), which includes all the
documents (other than preliminary material) that Bryan was required to file with
the SEC since such date. As of their respective dates, each of the Bryan SEC
Reports (i) complied as to form in all material respects with the requirements
of the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Securities Act"), or the Exchange Act, as the case may be, (ii)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading and (iii) was timely filed pursuant
to the Securities Act and the Exchange Act.
(b) The audited consolidated financial statements and unaudited
interim financial statements (including, in each case, the notes, if any,
thereto) included in Bryan SEC Reports (the "Bryan Financial Statements") or
contained in filings subsequent to the date hereof complied or will comply as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, were or will be prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis (except as may be indicated therein or in the notes thereto and except
with respect to unaudited statements as permitted by Form 10-Q of the SEC) and
fairly present (subject, in the case of the unaudited interim financial
statements, to normal, recurring year-end audit adjustments which are not
expected to be, individually or in the aggregate, materially adverse to Bryan)
the consolidated financial position of Bryan and its Subsidiaries as at the
respective dates thereof and the results of their consolidated operations and
cash flows for the respective periods then ended.
3.06 Absence of Certain Changes or Events. Except as disclosed in Schedule
3.06 hereto, (a) since June 30, 1998 there has not been any change, event or
development having, or that could be reasonably expected to have (individually
or when aggregated with other such changes, events and developments) a material
adverse effect on Bryan, other than those occurring as a result of general
economic or financial conditions and other than developments which are not
unique to Bryan but also generally affect other persons who participate or are
engaged in the lines of business in which Bryan participates or is engaged, and
(b) except as disclosed in Schedule 3.06 hereto, between such date and the date
hereof (i) Bryan has conducted its business only in the ordinary course
consistent with past practice and (ii) Bryan has not taken any action which, if
taken after the date hereof, would constitute a breach of any provision of
clause (ii) of Section 5.01(b).
3.07 Absence of Undisclosed Liabilities. Except for matters reflected or
reserved against in the balance sheet dated June 30, 1998 included in Bryan
Financial Statements or as disclosed in Schedule 3.07 hereto, neither Bryan nor
any of its Subsidiaries has at such date, or has incurred since that date, any
liabilities or obligations of any nature, whether accrued, absolute, contingent
or otherwise, that would be required by GAAP to be reflected on a consolidated
balance sheet of Bryan and its Subsidiaries (including the notes thereto),
except liabilities or obligations (i) which were incurred in the ordinary course
of business consistent with past practice and (ii) which have not been, and
could not be reasonably expected to be, individually or in the aggregate,
materially adverse to Bryan and its Subsidiaries.
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3.08 Legal Proceedings. Except as disclosed in Schedule 3.08 hereto, (i)
there are no claims, actions, suits, arbitrations, proceedings or any
Governmental or Regulatory Authority investigations or audits pending, or to the
knowledge of Bryan threatened, against, relating to or affecting Bryan,
Wendland, Memco or any of their respective assets or properties, and there are
no facts or circumstances known to Bryan that could be reasonably expected to
give rise to any such claim, action, suit, arbitration, proceeding,
investigation or audit (other than threatened claims, actions and suits which,
individually or in the aggregate, cannot reasonably be expected to have an
adverse effect on Bryan or on the ability of Bryan to consummate the Merger);
provided, however, that Bryan has been named as a defendant in litigation
involving claims relating to exposure to asbestos disclosed on Schedule 3.08
("Asbestos Suits") and Bryan is likely to be named as defendant in additional
Asbestos Suits prior to the Closing Date, and (ii) neither Bryan, Wendland nor
Memco is subject to any Order of any Governmental or Regulatory Authority.
3.09 Information Supplied; Schedule 14D-9; Offer Documents
and Proxy Statement.
(a) None of the information supplied or to be supplied by or on
behalf of Bryan or any affiliate of Bryan for inclusion in the Offer Documents
and any other schedule or document required to be filed with the SEC in
connection with the Offer and the Merger will, at the times such documents are
filed with the SEC and are mailed to stockholders of Bryan, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, or to correct any
statement made in any communication with respect to the Offer previously filed
with the SEC or disseminated to the stockholders of Bryan. The Schedule 14D-9
will not, at the time the Schedule 14D-9 is filed with the SEC and at all times
prior to the purchase of Shares by Merger Sub pursuant to the Offer, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation or warranty is made by Bryan with respect to information supplied
in writing by Buyer, Merger Sub or an affiliate of Buyer or Merger Sub expressly
for inclusion therein. The Schedule 14D-9 will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
of the SEC thereunder.
(b) The proxy statement relating to the Shareholder Meeting, including
the letter to stockholders, notice of meeting, proxy statement and form of
proxy, the information statement and any other information that may be provided
in writing to holders of Bryan Common Stock in connection with the Merger, and
any schedules required to be filed with the SEC in connection therewith, each as
amended or supplemented from time to time (as so amended and supplemented, the
"Proxy Statement"), and any other documents to be filed by Bryan with any other
Governmental or Regulatory Authority in connection with the Merger and the other
transactions contemplated hereby will not, on the date of its filing or, in the
case of the Proxy Statement, at the date it is mailed to shareholders, at the
time of the Shareholder Meeting and at the Effective Time, contain any untrue
statement of a material fact, omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading or omit to state any
material fact
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required to correct any statement made in any earlier communication with respect
to the solicitation of any proxy or approval for the Merger, except that no
representation is made by Bryan with respect to information supplied in writing
by or on behalf of Buyer and Merger Sub expressly for inclusion therein and
information incorporated by reference therein from documents filed by Buyer or
any of its Subsidiaries with the SEC. The Proxy Statement and any such other
documents filed by Bryan with the SEC under the Exchange Act will comply as to
form in all material respects with the requirements of the Exchange Act, to the
extent applicable.
(c) Neither the information supplied or to be supplied in writing by
or on behalf of Bryan for inclusion in any document to be filed by Buyer or
Merger Sub with the SEC nor any other Governmental or Regulatory Authority in
connection with the Merger and the other transactions contemplated hereby will,
on the date of its filing, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
3.10 Compliance with Laws and Orders. Set forth on Schedule 3.10 are all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental and Regulatory Authorities that are currently held by Bryan,
Wendland or Memco or for which Bryan, Wendland or Memco has applied. Bryan and
its subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental and Regulatory Authorities necessary for the
lawful conduct of their respective businesses ("Permits"), except for failures
to hold such permits, licenses, variances, exemptions, orders and approvals
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on Bryan and its
subsidiaries taken as a whole. Bryan and its subsidiaries are in compliance with
the terms of the Permits, except failures so to comply which, individually or in
the aggregate, are not having and could not be reasonably expected to have a
material adverse effect on Bryan and its subsidiaries taken as a whole. Except
as set forth in detail on Schedule 3.10, Bryan and its subsidiaries are not in
violation of or default under any Law or Order of any Governmental or Regulatory
Authority, except for violations which, individually or in the aggregate, are
not having and could not be reasonably expected to have a material adverse
effect on Bryan and its subsidiaries taken as a whole.
3.11 Compliance with Agreements; Certain Agreements. Set forth on Schedule
3.11 are all Contracts under which either Bryan, Wendland or Memco have any
rights, entitlements, duties or obligations, other than (i) manufacturer's
representative contracts written on one of the two standard forms disclosed to
Buyer, (ii) contracts for the purchase of materials, supplies or services in the
ordinary course of business consistent with past practice, no one of which (and
no group of related contracts of which) involves an aggregate purchase price in
excess of $250,000 and each of which contracts is to be fully performed within
90 days after its commencement, and (iii) contracts for the sale of finished
goods in the ordinary course of business consistent with past practice, no one
of which contracts (and no group of related contracts of which) involves an
aggregate selling price in excess of $150,000 and no one of which (other than
contracts with aggregate selling prices of not more than $500,000) has been in
effect, without being fully performed, for more than 150 days. Except as
disclosed in Schedule 3.11 hereto, neither Bryan, its Subsidiaries nor, to the
knowledge of Bryan, any other party thereto, is in breach or violation of, or in
default in the performance or observance of any term or provision of, and no
event has occurred which, with notice or lapse of time or both, could be
reasonably expected to result in a
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default under, (i) the Articles of Incorporation or By-laws of Bryan or (ii) any
Contract to which Bryan is a party or by which Bryan or any of its assets or
properties is bound, except in the case of clause (ii) for breaches, violations
and defaults which, individually or in the aggregate, are not having and could
not be reasonably expected to have a material adverse effect on Bryan.
3.12 Taxes.
(a) Each of Bryan and its Subsidiaries has filed all federal and all
material foreign, state and local tax reports and returns required to be filed
and except as disclosed on Schedule 3.12, has duly paid all taxes shown as due
thereon, including, without limitation, income, capital stock, gross receipts,
net proceeds, ad valorem, value added, turnover, sales, use, real estate
transfer, property, personal property (tangible and intangible), stamp, leasing,
lease, user, excise, franchise, transfer, fuel, vehicle sales, excess profits,
occupational and interest equalization, unitary, severance, withholding, social
security, employment and other taxes, duties, assessments and charges
(including, without limitation, the recapture of any tax items such as
investment tax credits), together with all interest, penalties and additions
imposed with respect to such amounts, which are due on or before the date hereof
or claimed to be due by federal, state, or local taxing authorities or which are
payable on or before the date hereof with respect to the business and operations
of Bryan and its Subsidiaries (collectively, "Taxes"). All such returns are
accurate and complete in all material respects. There are no tax liens upon any
property or assets of Bryan and its Subsidiaries, except liens for Taxes not yet
due and payable. All Taxes (including interest and penalties) applicable for all
periods prior to the Closing or other governmental charges upon Bryan and its
Subsidiaries or their assets, income or revenues have been or will be paid (if
due) or, if not currently payable, reserved against in accordance with GAAP.
Bryan and its Subsidiaries have not executed any waivers of the statute of
limitations on the right of the Internal Revenue Service (the "IRS") or any
state or local taxing authority to assess additional Taxes or to contest the
income or loss with respect to any tax return. The basis of any depreciable
assets, and the methods used in determining allowable depreciation (including
cost recovery), held by Bryan and its Subsidiaries, are substantially correct
and in compliance with the Internal Revenue Code of 1986, as amended (the
"Code"), and all regulations thereunder.
(b) No issues have been raised that are currently pending by any
taxing authority in connection with any of the aforesaid tax returns or reports.
No issues have been raised in any examination by any taxing authority with
respect to Bryan and its Subsidiaries which, by application of similar
principles, reasonably could be expected to result in a material proposed
deficiency for any other period not so examined. The items of income and
deductions reflected on the federal income tax returns and comparable state and
local returns filed by or on behalf of Bryan and its Subsidiaries for all
taxable years (including the supporting schedules filed therewith), available
copies of which have been supplied (or will be promptly supplied upon request)
to Buyer, state accurately in all material respects the receipts and
expenditures of Bryan and its Subsidiaries, and the same were derived from the
books and records of Bryan.
(c) Bryan and its Subsidiaries have not entered into any joint
venture, partnership, or other arrangement or contract which is treated as a
partnership for federal income tax purposes.
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(d) None of Bryan or any of its Subsidiaries has ever been a
"consenting corporation," within the meaning of Section 341(f)(l) of the Code,
or comparable provisions of any state statutes, and none of the assets of Bryan
and its Subsidiaries is subject to an election under Section 341(f) of the Code
or comparable provisions of any state statutes.
(e) No property of Bryan and its Subsidiaries is property which Bryan
or Buyer is or will be required to treat as being owned by another person
pursuant to the provisions of Section 168(f)(8) of the Code, as in effect prior
to the Tax Reform Act of 1986.
(f) No property of Bryan and its Subsidiaries is "tax exempt use
property" as such term is defined in Section 168(h) of the Code.
(g) None of the properties or assets of Bryan and its Subsidiaries is
tax-exempt bond financed property within the meaning of Section 168(g)(5) of the
Code.
(h) None of Bryan nor any of its Subsidiaries nor any predecessor
thereof is or has been, or has filed a tax return claiming that it is or has
been, an Electing Small Business Corporation pursuant to the provisions of
Subchapter S of the Code.
(i) None of Bryan or its Subsidiaries (i) has been a
member of an affiliated group filing a consolidated federal
income tax return (other than a group the common parent of which
was Bryan) or (ii) has any liability for the Taxes of any person
(other than any of Bryan and its Subsidiaries) under Treas. Reg.
ss. 1.1502-6 (or any provision of state, local or foreign law),
as a transferor or successor, by contract or otherwise.
3.13 Benefit Plans; ERISA.
(a) All Benefit Plans (as defined below) are listed in Schedule 3.13,
and copies of all documentation relating to such Benefit Plans have been
delivered or made available to Buyer (including copies of written Benefit Plans,
written descriptions of oral Benefit Plans, summary plan descriptions, trust
agreements, the three most recent annual returns IRS Forms 5500 and IRS
determination letters). Except as disclosed in Schedule 3.13 hereto:
(i) each Benefit Plan has at all times been maintained and
administered in all material respects in accordance with its terms and with the
requirements of all applicable law, including ERISA (as defined below) and the
Code, and each Benefit Plan intended to qualify under Section 401(a) of the Code
has at all times since its adoption been so qualified, and each trust which
forms a part of any such plan has at all times since its adoption been
tax-exempt under Section 501(a) of the Code whether or not waived;
(ii) no Benefit Plan has incurred any "accumulated funding
deficiency" within the meaning of Section 302 of ERISA or Section 412 of the
Code;
(iii) no "reportable event" (within the meaning of Section 4043
of ERISA) has occurred with respect to any Benefit Plan or any Plan (as defined
below) maintained by an ERISA Affiliate (as defined below) since the effective
date of Section 4043;
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(iv) with respect to each Multiemployer Plan (as defined below)
(i) no withdrawal liability has been incurred by Bryan or any ERISA Affiliate,
and Bryan has no reason to believe that any such liability will be incurred,
prior to the Closing Date, (ii) no such plan is in "reorganization" (within the
meaning of Section 4241 of ERISA), (iii) no notice has been received that
increased contributions may be required to avoid a reduction in plan benefits or
the imposition of an excise tax, or that the plan is or may become "insolvent"
(within the meaning of Section 4241 of ERISA), and (iv) no proceedings have been
instituted by the Pension Benefit Guaranty Corporation against the plan;
(v) no direct, contingent or secondary liability has been
incurred or is expected to be incurred by Bryan under Title IV of ERISA to any
party with respect to any Benefit Plan or Multiemployer Plan presently or
heretofore maintained or contributed to by any ERISA Affiliate;
(vi) neither Bryan nor any ERISA Affiliate has incurred any
liability for any tax imposed under Section 4971 through 4980B of the Code or
civil liability under Section 502(i) or (1) of ERISA;
(vii) no benefit under any Benefit Plan (except as may be set
forth in the Senior Management Agreements as defined in Section 6.05(a)),
including, without limitation, any severance or parachute payment plan or
agreement, will increase the amount of compensation due any employee or will be
established or become accelerated, vested or payable by reason of any
transaction contemplated under this Agreement;
(viii) no tax has been incurred under Section 511 of the Code
with respect to any Benefit Plan (or trust or other funding vehicle pursuant
thereto);
(ix) no Benefit Plan provides health or death benefit coverage
beyond the termination of an employee's employment, except as required by Part 6
of Subtitle B of Title I of ERISA or Section 4980B of the Code or any State laws
requiring continuation of benefits coverage following termination of employment
and there has been no communication to any employee that would reasonably be
expected to promise or guarantee any such employee retiree health or life
insurance or other retiree death benefits on a permanent basis;
(x) no suit, actions or other litigation (excluding claims for
benefits incurred in the ordinary course of plan activities) have been brought
or, to the knowledge of Bryan, threatened against or with respect to any Benefit
Plan and there are no facts or circumstances known to Bryan that could
reasonably be expected to give rise to any such suit, action or other
litigation; and
(xi) all contributions to Benefit Plans and Multiemployer Plans
that were required to be made under such Benefit Plans as of the Closing Date
have been made, and all benefits accrued under any unfunded Benefit Plan have
been paid, accrued or otherwise adequately reserved in accordance with GAAP, all
of which accruals under unfunded Benefit Plans are as reflected in Bryan SEC
Reports or disclosed in Schedule 3.13, and Bryan has performed all material
obligations required to be performed under all Benefit Plans.
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(b) Except as set forth in Schedule 3.13 hereto or as provided in
Section 6.05, neither the execution and delivery of this Agreement nor the
consummation of the transaction contemplated hereby will entitle any former or
current employee of Bryan or any Affiliate or any group of such employees to any
payment, increase the amount of compensation due to any such employees or cause
acceleration of benefits under any Benefit Plan.
(c) As used herein:
(i) "Benefit Plan" means any Plan, existing at the Closing Date
or prior thereto, established or to which contributions have at any time been
made by Bryan or its Subsidiaries, or under which any employee, former employee
or director of Bryan or its Subsidiaries or any beneficiary thereof is covered,
is eligible for coverage or has benefit rights.
(ii) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated thereunder.
(iii) "ERISA Affiliate" means any business entity which is, or
at any time was, a member of a controlled group (within the meaning of Section
412(n)(6) of the Code) that includes, or at any time included, Bryan or its
Subsidiaries.
(iv) "Multiemployer Plan" means a multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA with respect to which Bryan or any ERISA
Affiliate has an obligation to contribute or has or could have withdrawal
liability under Section 4201 of ERISA.
(v) "Plan" means any employment, consulting, termination, bonus,
incentive compensation, deferred compensation, pension, profit sharing,
retirement stock purchase, stock option, stock ownership, stock appreciation
rights, phantom stock, savings, leave of absence, layoff, vacation, day or
dependent care, legal services, cafeteria, life, health, accident, disability,
workmen's compensation or other insurance, severance, separation or other
employee benefit plan, practice, policy, agreement or arrangement of any kind,
whether written or oral, or whether for the benefit of a single individual or
more than one individual including, but not limited to, any "employee benefit
plan" within the meaning of Section 3(3) of ERISA.
3.14 Insurance. Schedule 3.14 identifies all insurance policies of Bryan
and its Subsidiaries currently in force, inclusive of the name and address of
the insurer, the policy number and the year or years of coverage (the "Insurance
Policies"). To the best of Bryan's knowledge, Schedule 3.14 lists all claims
made against or under the Insurance Policies and under any prior insurance
policies in effect at any time during the past five years with respect to Bryan,
Wendland and Memco, including claims related to product liability, third-party
property damage, bodily injury and third-party environmental impairment. To the
best of the knowledge of Bryan, Schedule 3.14 also identifies all insurance
policies of Bryan under which asbestos-related claims against Bryan are or would
be covered. Wendland will promptly (and in any event within 10 days from the
date hereof) reinstate product liability insurance coverage with a scope
equivalent to that under the product liability insurance policy of Wendland most
recently expired, and Wendland will promptly deliver to Buyer reasonable
evidence of such reinstatement.
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3.15 Labor Matters.
(a) Except as set forth in Schedule 3.15, (i) no employees of Bryan
or any of its Subsidiaries are represented by a labor union or organization, no
labor union or organization has been certified or recognized as a representative
of any such employees, and neither Bryan nor any of its Subsidiaries is a party
to or has any obligation under any collective bargaining agreement or other
labor union contract with any labor union or organization, or has any obligation
to recognize or deal with any labor union or organization, and there are no such
contracts pertaining to or which determine the terms or conditions of employment
of any employee of Bryan or any of its Subsidiaries; (ii) there are no pending
or threatened representation campaigns, elections or proceedings or questions
concerning union representation involving any employees of Bryan or any of its
Subsidiaries; (iii) neither Bryan nor any of its Subsidiaries has any knowledge
of any activities or efforts of any labor union or organization (or
representatives thereof) to organize any employees of Bryan or any of its
Subsidiaries, nor of any demands for recognition or collective bargaining, nor
of any strikes, slowdowns, work stoppages or lock-outs of any kind, or threats
thereof, by or with respect to any employees of Bryan or any of its Subsidiaries
or any actual or claimed representatives thereof, and no such activities,
efforts, demands, strikes, slowdowns, work stoppages or lock-outs occurred
during the 48-month period preceding the date hereof; (iv) neither Bryan nor any
of its Subsidiaries has engaged in, admitted committing or been held in any
administrative or judicial proceeding to have committed any unfair labor
practice under the National Labor Relations Act, as amended; (v) neither Bryan
nor any of its Subsidiaries is involved in any industrial or trade dispute or
any dispute or negotiations regarding a claim of material importance with any
labor union or organization; and (vi) there are no controversies, claims,
demands or grievances of material importance pending or, so far as Bryan or any
of its Subsidiaries is aware, threatened, between Bryan or any of its
Subsidiaries and any of their respective employees or any actual or claimed
representative thereof.
(b) Schedule 3.15 (and the exhibits thereto) set forth all contracts
and agreements, including, without limitation, employment agreements, consulting
agreements, change in control agreements, independent contractor agreements,
retainers and severance agreements under which Bryan or any of its Subsidiaries
has any obligation to provide wages, salary, commissions or other compensation
or remuneration (other than obligations to make current wage or salary payments
terminable at will without notice) to or on behalf of any employee, former
employee, consultant or contractor (or any designee, assignee or beneficiary
thereof). A complete and correct copy of each written (and a complete and
correct written description of each such oral) contract or agreement, has been
delivered or made available to Buyer.
(c) A true and correct statement of the names, current rates of base
compensation and description of the formula for computing bonus compensation of
all officers, directors and salaried non-union employees of Bryan and its
Subsidiaries as of the date hereof, is set forth in Schedule 3.15. Except as set
forth in Schedule 3.15, (i) Bryan and its Subsidiaries have no obligation
(including an obligation for the payment of any fee, extraordinary bonus or
"golden parachute" based upon the successful completion of the transactions
contemplated hereunder) under any employment contract, severance agreement or
other change in control plan, agreement or arrangement, or any other similar
agreements, employment policies (including vacation and severance pay policies)
or retirement or employee benefit plans, arrangements or
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understandings, written or otherwise, with any officer, director, employee or
agent of Bryan or any Subsidiary and (ii) since January 1, 1998, Bryan and its
Subsidiaries have (A) not paid or agreed to pay any bonuses or made or agreed to
make any increase in the rate of wages, salaries or other compensation or
remuneration of any of its officers, directors, consultants or employees (except
for increases in accordance with written binding commitments, true, correct and
complete copies of which have been previously delivered to Buyer, or in
accordance with a past practice described in Schedule 3.15), or (B) become a
party to any employment contract or arrangement with any of its officers or
employees providing for any new or additional bonuses, profit sharing payments,
severance pay or retirement benefits or any other form of employee compensation
or benefits.
(d) Bryan and each of its Subsidiaries has at all times complied in
all material respects and is in material compliance with all applicable federal,
state and local laws, rules and regulations respecting employment, wages, hours,
occupational health and safety, and payment and withholding of taxes in
connection with employment. Except as set forth in Schedule 3.15, there are no
claims, complaints or legal or administrative proceedings pending or, so far as
Bryan is aware, threatened, against Bryan or any of its Subsidiaries before any
federal, state or municipal court or governmental agency, or any federal, state
or municipal taxing authority involving or relating to any past or present
employee(s) or applicant(s) for employment of Bryan or any of its Subsidiaries,
or relating to any acts, omissions or practices of Bryan or any of its
Subsidiaries relating to employment practices or occupational health and safety.
Neither Bryan nor any of its Subsidiaries are party to or bound by any court or
administrative order, judgment, decree or ruling of any kind respecting the
employment practices or occupational health and safety of any employees or
prospective employees of Bryan or any of its Subsidiaries.
3.16 Environmental Matters. Except as disclosed in
Schedule 3.16 hereto:
(a) To the best of Bryan's knowledge, Bryan and its Subsidiaries are
and have been consistently in compliance with applicable Environmental Law (as
defined below) and have obtained all licenses, permits, authorizations,
approvals and consents from Governmental and Regulatory Authorities that are
required in respect of the business, operations, assets or properties of each
under any applicable Environmental Law. Bryan and its Subsidiaries are in
material compliance with the terms and conditions of all such licenses, permits,
authorizations, approvals and consents.
(b) No Order or notice has been issued, no demand or claim (including
any for personal injury, property or natural resources damage) has been
asserted, no complaint has been filed, no penalty has been assessed and no
investigation or review is pending or, to the knowledge of Bryan and its
Subsidiaries, threatened by any third party (including any Governmental or
Regulatory Authority) with respect to any alleged failure by Bryan or any of its
Subsidiaries to comply with applicable Environmental Law or to have any license,
permit, authorization, approval or consent from Governmental or Regulatory
Authorities required under any applicable Environmental Law in connection with
the conduct of the business or operations of Bryan or any of its Subsidiaries or
with respect to any treatment, storage, recycling, transportation, disposal or
"release" as defined in 42 U.S.C. ss. 9601(22) ("Release"), of any Hazardous
Material (as defined below).
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(c) Bryan and its Subsidiaries have not handled any Hazardous
Material on any property owned or leased by Bryan or any of its Subsidiaries;
and, without limiting the foregoing, at any property owned or leased by Bryan or
any of its Subsidiaries, (i) there are no underground storage tanks, active or
abandoned; (ii) no Hazardous Material has been Released in a quantity reportable
under, or in violation of, any Environmental Law; (iii) no interim status or
hazardous waste permit is or has been required; and (iv) there has been no
disposal of any Hazardous Material.
(d) Bryan and its Subsidiaries have not transported or arranged for
the transportation of any Hazardous Material to any location that, to the
knowledge of Bryan and its Subsidiaries, is not consistently in compliance with
applicable Environmental Law or which is the subject of any investigation,
action, suit, arbitration or proceeding that could be reasonably expected to
lead to claims against Bryan or any of its Subsidiaries for clean-up costs,
remedial work, damages to natural resources or personal injury claims, which
could be reasonably expected to have a material adverse impact on Bryan or any
of its Subsidiaries including, but not limited to, claims under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, and the rules and regulations promulgated thereunder ("CERCLA").
(e) No oral or written notification of a Release of a Hazardous
Material has been or was required to be filed by or on behalf of Bryan or any of
its Subsidiaries and no property owned or leased by Bryan or any of its
Subsidiaries is listed or proposed for listing on the National Priorities List
promulgated pursuant to CERCLA or on any similar state list of sites requiring
investigation or clean-up.
(f) There are no Liens arising under or pursuant to any Environmental
Law with respect to any real property owned or leased by Bryan or any of its
Subsidiaries, and no action of any Governmental or Regulatory Authority has been
taken or is in process which could subject any of such properties to such Liens,
and Bryan or any of its Subsidiaries would not be required to place any notice
or restriction relating to the presence of Hazardous Material at any such
property owned by it in any deed to such property.
(g) Bryan has delivered, or made available, to Buyer all
environmental (including asbestos) investigations, studies, audits, tests,
reviews or other analyses conducted during the prior three years by, or which
are in the possession of, Bryan in relation to any property or facility owned or
leased by Bryan or any of its Subsidiaries, including Phase 1 environmental
reports for all properties owned, leased or controlled, indirectly or directly,
by Bryan or any of its Subsidiaries.
As used herein:
(x) "Environmental Law" means any Law or Order relating to human
health, safety or protection of the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants or Hazardous
Materials in the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), or otherwise
relating to the treatment, storage, disposal, transport, use or handling of any
Hazardous Material; and
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(y) "Hazardous Material" means (A) any chemicals, materials,
substances or wastes which are now or hereafter become defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "pollutants," "contaminants" or words of
similar import, under any Environmental Law; and (B) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, and polychlorinated biphenyls (PCBs).
3.17 Tangible Property and Assets. Except as disclosed in Schedule 3.17
hereto, Bryan has good and marketable title to, or has valid leasehold interests
in or valid rights under contract to use, all tangible property and assets used
in and, individually or in the aggregate, material to the conduct of the
businesses of Bryan free and clear of all Liens other than (i) any statutory
Lien arising in the ordinary course of business by operation of law with respect
to a liability that is not yet due or delinquent and (ii) any minor imperfection
of title or similar Lien which individually or in the aggregate with other such
Liens does not materially impair the value of the property or asset subject to
such Lien or the use of such property or asset in the conduct of the business of
Bryan. All such property and assets are, in all material respects, in good
working order and condition, ordinary wear and tear excepted, and adequate and
suitable for the purposes for which they are presently being used.
3.18 Intellectual Property Rights. Schedule 3.18 sets forth a true,
correct and complete list of all Intellectual Property (as defined below) owned
or held by Bryan or any of its Subsidiaries (or otherwise used in the business
of Bryan and its Subsidiaries) on the date hereof and all license agreements
(including all amendments or supplements thereto or continuing thereunder) in
effect on the date hereof pursuant to which any such Intellectual Property is
licensed to or by Bryan or its Subsidiaries, in each case, which have been, are,
or may reasonably be expected in the future to be, material to Bryan and its
Subsidiaries taken as a whole. Except as set forth in Schedule 3.18, Bryan and
its Subsidiaries own all right, title and interest in and to all Intellectual
Property used in their respective businesses (other than Intellectual Property
which, individually or in the aggregate, is not material to the conduct of the
businesses of Bryan and its Subsidiaries), free and clear of any royalty or
other payment obligation, lien or charge. Bryan and its Subsidiaries are not in
default (and with the giving of notice or lapse of time or both, would not be in
default) in any material respect under any license to use any Intellectual
Property. The Intellectual Property is not being infringed by any third party,
and Bryan is not infringing any intellectual property rights of any third party,
except for such defaults and infringements which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
material adverse effect on Bryan. Except as indicated in Schedule 3.18, all
maintenance taxes, annuities and renewal fees have been paid and all other
necessary actions to maintain the Intellectual Property have been taken through
the date hereof and will continue to be paid or taken by Bryan and its
Subsidiaries through the Effective Time. To the best of Bryan's knowledge, no
claims or controversies currently exist regarding any infringement of or by or
violation of or by any of the Intellectual Property. For purposes of this
Agreement, "Intellectual Property" includes
(i) all trademarks, service marks, trademark registrations, service
mark registrations, trade names and applications for registration of trademarks
and service marks;
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(ii) all licenses which create rights in or to the trademark, service
mark or trade name properties described in clause (i) above;
(iii) all copyrights, copyright registrations and applications for
registration of copyrights;
(iv) all renewals, modifications and extensions of any items referred
to in clauses (i) through (iii) above;
(v) all patents, design patents and utility patents, all applications
for grant of any such patents pending as of the date hereof or as of the
Effective Time or filed within five years prior to the date hereof, and all
reissues, divisions, continuations-in-part and extensions thereof;
(vi) all technical documentation, trade secrets, designs, inventions,
processes, formula, know-how, operating manuals and guides, plans, new product
development, technical and marketing surveys, material specifications, product
specifications, invention records, research records, labor routings, inspection
processes, equipment lists, engineering reports and drawing, architectural or
engineering plans, know-how agreements and other know- how;
(vii) all marketing and licensing records, sales literature, customer
lists, trade lists, sales forces and distributor networks lists, advertising and
promotional materials, service and parts records, warranty records, maintenance
records and similar records;
(viii) all rights arising under, and rights to develop, use and sell
under, any of the foregoing and all licenses with respect thereto; and
(ix) all rights and incidents of interest in and to all
non-competition or confidentiality agreements.
3.19 Vote Required. The affirmative vote of the holders of record of at
least two-thirds of the outstanding shares of Bryan Common Stock with respect to
the adoption of this Agreement is the only vote of the holders of any class or
series of the capital stock of Bryan required to adopt this Agreement and
approve the Merger and the other transactions contemplated hereby.
3.20 Disclosure. The information heretofore delivered or made available by
Bryan with respect to Bryan and its Subsidiaries, when such information is taken
as a whole, does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading.
3.21 Effect of Transactions on Manufacturer's
Representatives and Customers. Except as listed on Schedule 3.21,
to the best of the knowledge of Bryan, the execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby (a) will not
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adversely affect the relationship of Bryan with any of its manufacturer's
representatives or customers, (b) will not adversely affect the relationship of
Bryan with any of its suppliers, and (c) will not result in any breach or
default, or trigger any "change in control" provision, under any material
Contract.
3.22 Bryan's Transaction Costs. To the best of the knowledge of Bryan,
Schedule 3.22 sets forth an accurate estimate of Bryan's Transaction Costs (as
defined in Section 6.06) through consummation of the Merger, and Bryan has
furnished Buyer with true and complete copies of all currently-existing
agreements (and written summaries of all currently-existing oral agreements)
under which Bryan's Transaction Costs are likely to become payable. After the
date hereof, neither Bryan nor any of its subsidiaries will materially amend any
such agreement, or enter into any new such agreement, without the prior approval
of Buyer (such approval not to be unreasonably withheld).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB
Buyer and Merger Sub represent and warrant to Bryan as follows:
4.01 Organization and Qualification. Each of Buyer and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated hereby. Each of Buyer and Merger Sub is duly qualified, licensed or
admitted to do business and is in good standing in each jurisdiction in which
the ownership, use or leasing of its assets and properties, or the conduct or
nature of its business, makes such qualification, licensing or admission
necessary, except for such failures to be so qualified, licensed or admitted and
in good standing which, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on the validity or
enforceability of this Agreement or on the ability of Buyer or Merger Sub to
perform its obligations hereunder.
4.02 Authority Relative to this Agreement. Each of Buyer and Merger Sub
has full corporate power and authority to enter into this Agreement, and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by each of Buyer and Merger Sub and the consummation by each of Buyer and Merger
Sub of the transactions contemplated hereby have been duly and validly approved
by their respective Boards of Directors and by Buyer in its capacity as the sole
shareholder of Merger Sub and no other corporate proceedings on the part of
Buyer, Merger Sub or their shareholders are necessary to authorize the
execution, delivery and performance of this Agreement by Buyer or Merger Sub and
the consummation by Buyer or Merger Sub of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Buyer and
Merger Sub and constitutes a legal, valid and binding obligation of Buyer and
Merger Sub enforceable against Buyer and Merger Sub in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency,
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reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.03 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by Buyer and Merger
Sub does not and the performance by Buyer and Merger Sub of their obligations
hereunder and the consummation of the transactions contemplated hereby will not,
conflict with, result in a violation or breach of, constitute (with or without
notice or lapse of time or both) a default under, result in or give to any
person any right of termination, cancellation, modification or acceleration of,
or result in the creation or imposition of any Lien upon any of the assets or
properties of Buyer, or any of its Subsidiaries, under any of the terms,
conditions or provisions of (i) the certificates or articles of incorporation or
By-laws (or other comparable charter documents) of Buyer or any of its
Subsidiaries, or (ii) subject to the taking of the actions described in
paragraph (b) of this Section, (x) any Law or Order of any Governmental or
Regulatory Authority applicable to Buyer or any of its Subsidiaries or any of
their respective assets or properties, or (y) any Contract to which Buyer or any
of its Subsidiaries is a party or by which Buyer or any of its Subsidiaries or
any of their respective assets or properties is bound, excluding from the
foregoing clauses (x) and (y) conflicts, violations, breaches, defaults,
terminations, modifications, accelerations and creations and impositions of
Liens which, individually or in the aggregate, could not be reasonably expected
to have a material adverse effect on the ability of Buyer and Merger Sub to
consummate the transactions contemplated by this Agreement.
(b) Except (i) for the filing of a premerger notification report by
Buyer under the HSR Act, (ii) for the filing of the Articles of Merger required
by the NMBCA with the New Mexico Corporation Commission and appropriate
documents with the relevant authorities of other states in which the Constituent
Corporations are qualified to do business, and (iii) for the filing of Schedule
14D-1 and Schedule 14D-9, no consent approval or action of, filing with or
notice to any Governmental or Regulatory Authority or other public or private
third party is necessary or required under any of the terms, conditions or
provisions of any Law or Order of any Governmental or Regulatory Authority or
any Contract to which Buyer or any of its Subsidiaries is a party or by which
Buyer or any of its Subsidiaries or any of their respective assets or properties
is bound by the execution and delivery of this Agreement by Buyer and Merger
Sub, the performance by Buyer and Merger Sub of their obligations hereunder or
the consummation of the transactions contemplated hereby, other than such
consents, approvals, actions, filings and notices which the failure to make or
obtain, as the case may be, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on the ability of Buyer
and Merger Sub to consummate the transactions contemplated by this Agreement.
4.04 Legal Proceedings. There are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of Buyer and its Subsidiaries,
threatened against, relating to or affecting, nor to the knowledge of Buyer and
its Subsidiaries are there any Governmental or Regulatory Authority
investigations or audits pending or threatened against, relating to or
affecting, Buyer or any of its Subsidiaries or any of their respective assets
and properties which, if determined adversely to Buyer or any of its
Subsidiaries, individually or in the aggregate,
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could be reasonably expected to have a material adverse effect on the ability of
Buyer and Merger Sub to consummate the transactions contemplated by this
Agreement. Neither Buyer nor any of its Subsidiaries is subject to any Order of
any Governmental or Regulatory Authority which, individually or in the
aggregate, could be reasonably expected to have a material adverse effect on the
ability of Buyer and Merger Sub to consummate the transactions contemplated by
this Agreement.
4.05 Information Supplied.
(a) None of the Offer Documents will, at the times such documents are
filed with the SEC and are mailed to the stockholders of Bryan, 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
light of the circumstances under which they are made, not misleading, except
that no representation is made by Buyer or Merger Sub with respect to
information supplied in writing by Bryan or an affiliate of Bryan expressly for
inclusion therein. The Offer Documents will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
of the SEC thereunder.
(b) None of the information supplied by Buyer, Merger Sub or any
affiliate of Buyer or Merger Sub specifically for inclusion in the Proxy
Statement or the Schedule 14D-9 will, at the date of filing with the SEC, and,
in the case of the Proxy Statement, at the time the Proxy Statement is mailed
and at the time of the Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) Neither the information supplied or to be supplied in writing by
or on behalf of Buyer or Merger Sub for inclusion, nor the information
incorporated by reference from documents filed by Buyer or any of its
Subsidiaries with the SEC, in the Proxy Statement or any other documents to be
filed by Buyer, Merger Sub or Bryan with the SEC or any other Governmental or
Regulatory Authority in connection with the Merger and the other transactions
contemplated hereby will on the date of its filing or, in the case of the Proxy
Statement, at the date it is mailed to shareholders, and at the time of the
Shareholder Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. All such documents filed by Buyer or Merger Sub with the
SEC under the Exchange Act will comply as to form in all material respects with
the requirements of the Exchange Act.
4.06 Financing. Buyer has sufficient cash and/or credit facilities on hand
or immediately available to consummate the Offer and the Merger in accordance
with this Agreement and to make all other necessary payments of fees and
expenses in connection with the transactions contemplated by this Agreement.
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ARTICLE V
COVENANTS OF THE COMPANY
5.01 Conduct of Business. At all times from and after the date hereof
until the Effective Time, Bryan covenants and agrees that (except as expressly
contemplated or permitted by this Agreement, or to the extent that Buyer may
otherwise grant prior consent in writing, which consent shall not be
unreasonably withheld):
(a) Bryan shall conduct its business only in, and Bryan shall cause
its Subsidiaries not to take any action except in, the ordinary course
consistent with past practice (subject to the further limitations specified in
this Article).
(b) Without limiting the generality of paragraph (a) of this Section,
Bryan shall, and shall cause its Subsidiaries to, use all commercially
reasonable efforts to preserve intact in all material respects its present
business organization and reputation, to keep available the services of its key
officers and employees, to maintain its assets and properties in good working
order and condition (ordinary wear and tear excepted), to preserve its
relationships with customers and suppliers and others having significant
business dealings with them, to comply in all material respects with all Laws
and Orders of all Governmental or Regulatory Authorities applicable to them, and
to maintain (subject to Section 5.01(b)(xx)) insurance, including, without
limitation, product liability insurance, in such amounts and against such risks
and losses as was in effect on June 30, 1998 (subject to Section 3.14). Also
without limiting the generality of paragraph (a) of this Section, Bryan shall
not, and shall cause its Subsidiaries not to:
(i) amend or propose to amend its or their Articles of Incorporation
or By-laws;
(ii) (w) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock other than the dividend of
$2.00 per share declared on Bryan Common Stock on August 26, 1998 and payable on
September 15, 1998; (x) split, combine, reclassify or take similar action with
respect to any of its capital stock or issue or authorize or propose the
issuance of any other securities or Option in respect of, in lieu of or in
substitution for shares of its capital stock, (y) adopt a plan of complete or
partial liquidation or resolutions providing for or authorizing such liquidation
or a dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization or (z) directly or indirectly redeem, repurchase or
otherwise acquire any shares of its capital stock or any Option with respect
thereto;
(iii) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any Option with respect
thereto, or modify or amend any right of any holder of outstanding shares of
capital stock or Options with respect thereto;
(iv) acquire (by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, or by
any other manner) any business or any corporation, partnership, association or
other business
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organization or division thereof or otherwise acquire or agree to acquire
any assets other than raw materials and supplies acquired in the ordinary
course of its business consistent with past practice in amounts in any one
instance (or group of related instances) not in excess of $250,000 and in
each case pursuant to an order or agreement requiring delivery of such raw
materials and supplies within 120 days after the creation of such order or
agreement;
(v) sell, lease, grant any security interest in or otherwise dispose
of or encumber any of its assets or properties other than finished goods in the
ordinary course of business consistent with past practice pursuant to orders as
to which (x) no one order (or group of related orders) involves an aggregate
selling price in excess of $150,000, and (y)(i) each order is to be fully
performed within 150 days after its creation or (ii) in the case of orders for
which there is no definite date by which the orders must be fully performed, the
aggregate selling price for all such orders that are more than 150 days old
shall not exceed $500,000;
(vi) except to the extent required by applicable law or GAAP, (x)
permit any material change in (A) any pricing, marketing, purchasing,
investment, accounting, financial reporting, inventory, receivable, credit,
allowance or tax practice or policy or (B) any method of calculating any bad
debt, contingency or other reserve for accounting, financial reporting or tax
purposes or (y) make any material tax election or settle or compromise any
material income tax liability with any Governmental or Regulatory Authority;
(vii) (x) other than working capital borrowings of up to $300,000
under Bryan's existing bank line of credit, incur any indebtedness for borrowed
money (which shall be deemed for this purpose to include entering into credit
agreements, lines of credit or similar arrangements, whether or not amounts are
borrowed thereunder) or guarantee any such indebtedness, or (y) voluntarily
purchase, cancel, prepay or otherwise provide for a complete or partial
discharge in advance of a scheduled repayment date with respect to, or waive any
right under, any indebtedness for borrowed money;
(viii) (x) enter into, adopt, amend in any material respect (except as
may be required by applicable law) or terminate any Bryan Benefit Plan or other
agreement between Bryan (or any of its Subsidiaries) and one or more of its
directors, officers or employees, or (y) increase in any manner the compensation
or fringe benefits of any director, officer or employee or pay any benefit not
required by any plan or arrangement in effect as of the date hereof (except that
Bryan shall comply with the union contract and except for normal increases
approved by Buyer);
(ix) enter into any new Contract or amend, modify or terminate any
existing Contract, or engage in any new transaction (x) not in the ordinary
course of business consistent with past practice, (y) not on an arm's length
basis, or (z) with any shareholder or affiliate of Bryan;
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(x) make any capital expenditure or any commitment to make a capital
expenditure or any commitment for additions to plant, property or equipment
constituting capital assets;
(xi) make any change in lines of business or any material changes in
prices, marketing plans or procedures;
(xii) make any changes to current levels of inventory, receivables or
payables, except as may occur in the ordinary course of business consistent with
past practice;
(xiii) grant any stock-related, performance or similar awards or
bonuses;
(xiv) forgive any loans to employees, officers or directors or any of
their respective affiliates or associates;
(xv) make any deposits or contributions of cash or other property to,
or take any other action to fund or in any other way secure the payment of
compensation or benefits under, any Bryan Benefit Plan;
(xvi) enter into, amend, extend or waive any rights under any
collective bargaining or other labor agreement;
(xvii) commence, settle or agree to settle any litigation, suit,
action, claim, proceeding or investigation;
(xviii) pay, discharge or satisfy or agree to pay, discharge or
satisfy any claim, liability or obligation (absolute accrued, asserted or
unasserted, contingent or otherwise) other than the payment, discharge or
satisfaction of liabilities reflected or reserved against in full in the
financial statements as at June 30, 1998 or incurred in the ordinary course of
business subsequent to June 30, 1998 or Bryan's Transaction Costs;
(xix) enter into, modify, amend or terminate any Contract material to
the business of Bryan or any of its Subsidiaries which it may enter, amend or
terminate without violating clause (ix) above, or waive any rights under any
such Contract, unless in each instance Bryan first obtains the consent of Buyer,
which consent shall not be unreasonably withheld;
(xx) enter into or extend or renew any Contract (including without
limitation any insurance policy), which Contract, extension or renewal has a
term or is to be performed over a period of more than 60 days (and before
renewing any insurance policy, Bryan shall reasonably consult with Buyer); or
(xxi) enter into any contract, agreement, commitment or arrangement to
do or engage in any of the foregoing.
(c) Advice of Changes. Bryan shall confer on a regular and frequent
basis with Buyer with respect to its businesses and operations and other matters
relevant to the Merger,
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and shall promptly advise Buyer, in writing, of any change or event, including,
without limitation, any complaint, investigation or hearing by any Governmental
or Regulatory Authority (or communication indicating the same may be
contemplated) or the institution or threat of litigation, having, or which,
insofar as can be reasonably foreseen, could have, a material adverse effect on
Bryan or on the ability of Bryan to consummate the transactions contemplated
hereby.
5.02 No Solicitations. (a) Bryan shall not, and it shall not authorize or
permit either of its Subsidiaries or any of its or their officers, directors,
employees, investment bankers, financial advisors, attorneys, accountants or
other agents or representatives (each, a "Representative") to directly or
indirectly, solicit, initiate or participate in any negotiations regarding,
furnish any confidential information in connection with, endorse or otherwise
cooperate with, or assist, participate in or facilitate (collectively,
"Solicitation Activities") the making of any proposal or offer for, or which may
reasonably be expected to lead to, a Potential Transaction (as defined below),
by any person, corporation, partnership or other entity or group, including a
current shareholder of Bryan Common Stock or a person acting on behalf of or who
has been in contact with such a shareholder (a "Potential Acquiror"); provided,
however, that to the extent the Board of Directors of Bryan believes, on the
basis of a written opinion furnished by independent legal counsel, that the
failure to take any such actions would constitute a breach of applicable
fiduciary duties of such Board of Directors, then Bryan and its Representatives
may participate in Solicitation Activities but only to the extent necessary to
comply with such duties; provided further, however, that such participation
shall only be in compliance with Section 5.02(b); provided further, however,
that nothing herein shall in any event prevent Bryan's Board of Directors from
taking and disclosing to Bryan's shareholders a position contemplated by Rule
14D-9 and 14e-2 promulgated under the Exchange Act with respect to any tender
offer or from making such other disclosures to Bryan's shareholders, which, in
either case, based upon the advice of independent legal counsel, the Board in
its good faith judgment determines is required by the fiduciary duties of the
Board of Directors under applicable law.
(b) Bryan shall promptly inform Buyer, in writing, of the material
terms and conditions of any proposal or offer for, or which may reasonably be
expected to lead to, a Potential Transaction that it receives and the identity
of the Potential Acquiror and Bryan shall keep Buyer fully apprised of all
developments regarding such Potential Transaction. Such full apprising of all
developments shall include providing Buyer with copies of all correspondence
from or to Bryan and the Potential Acquirer, including all attachments and
enclosures.
(c) As of the date and time of this agreement Bryan and its
Representatives will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties other than Burnham and
Merger Sub conducted heretofore with respect to any Potential Transaction.
(d) As used in this Agreement, "Potential Transaction" means any
potential merger, consolidation or other business combination involving Bryan,
or any acquisition in any manner of all or a substantial portion of the equity
of, or all or a substantial portion of the assets of Bryan whether for cash,
securities or any other consideration or combination thereof other than pursuant
to the transactions contemplated by this Agreement.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality.
(a) Bryan shall, throughout the period from the date hereof to the
Effective Time, (i) provide Buyer and its Representatives with full access, upon
reasonable prior notice and during normal business hours, to all officers,
employees, agents and accountants of Bryan and its assets, properties, books and
records, and (ii) furnish promptly to such persons (x) a copy of each report,
statement, schedule and other document filed or received by Bryan pursuant to
the requirements of federal or state securities or tax laws or filed with any
other Governmental or Regulatory Authority, and (y) all other information and
data (including, without limitation, copies of Contracts, Bryan Benefit Plans
and other books and records) concerning the business and operations of Bryan or
its Subsidiaries as Buyer or its Representatives reasonably may request. No
investigation pursuant to this paragraph or otherwise shall affect any
representation or warranty contained in this Agreement or any condition to the
obligations of the parties hereto.
(b) Non-public information obtained by Buyer pursuant to Section
6.01(a) shall be subject to the provisions of the confidentiality agreement
between Buyer and Bryan, dated June 18, 1998 (the "Confidentiality Agreement"),
the terms of which are incorporated herein by reference.
6.02 Preparation of Proxy Statement. Bryan shall prepare and file with the
SEC the Proxy Statement at the earliest practicable date after the Offer has
expired or terminated (unless 90% or more of outstanding Bryan Common Stock is
acquired by Merger Sub pursuant to the Offer or Bryan Common Stock ceases to be
registered under the Exchange Act in accordance with applicable law); and shall
use all reasonable efforts to have the Proxy Statement cleared by the SEC. If at
any time prior to the Effective Time any event shall occur that is required to
be set forth in an amendment of or a supplement to the Proxy Statement, Bryan
shall prepare and file with the SEC such amendment or supplement as soon
thereafter as is reasonably practicable. Buyer, Merger Sub and Bryan shall
cooperate with each other in the preparation of the Proxy Statement, and Bryan
shall promptly notify Buyer 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 promptly provide
to Buyer copies of all correspondence between Bryan or any representative of
Bryan and the SEC with respect to the Proxy Statement. Bryan shall give Buyer
and its counsel the opportunity to review the Proxy Statement and all responses
to requests for additional information by and replies to comments of the SEC
before their being filed with, or sent to, the SEC. If the Proxy Statement is
required to be filed with the SEC, each of Bryan, Buyer and Merger Sub agrees to
use all 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 to be mailed to the holders of Bryan Common Stock entitled
to vote at the Shareholder Meeting at the earliest practicable time.
6.03 Approval of Shareholders. (a) To the extent required by applicable
law, Bryan shall, through its Board of Directors, duly call, give notice of,
convene and hold the Shareholder Meeting for the purpose of voting on the
adoption of this Agreement (the "Shareholders'
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Approval") as soon as reasonably practicable after consummation of the Offer but
in any event prior to the 90th day after the date hereof (subject to unavoidable
delays in receiving comments from the SEC staff or in considering and preparing
responses to such comments). Except to the extent legally required for the
discharge of its fiduciary duties as reflected in a written opinion of
independent legal counsel, Bryan shall, through its Board of Directors, include
in the Proxy Statement the recommendation of the Board of Directors of Bryan
that the shareholders of Bryan adopt this Agreement and approve the Merger, and
shall use all reasonable efforts to obtain such adoption and approval, including
utilizing a proxy solicitation firm that is reasonably acceptable to Buyer and
obtaining the opinion of McDonald & Company Securities, Inc. to the effect that
the Merger Price is fair to the holders of Bryan Common Stock from a financial
point of view. At such meeting, Buyer shall, and shall cause its Subsidiaries
to, cause all shares of Bryan Common Stock, if any, then owned by Buyer or any
such Subsidiary to be voted in favor of the adoption of this Agreement.
(b) Not earlier than five days, and not later than three days, prior
to the day of the Shareholder Meeting (if such Shareholder Meeting is required
under applicable law), Bryan shall provide a notice to Buyer stating the number
of Bryan Common Shares for which valid, executed proxies have been received with
directions to vote such shares in favor of the Merger. Bryan shall thereupon
promptly consult with Buyer and, if after such consultation Buyer so requests,
Bryan shall cause the Shareholder Meeting to be adjourned for such period as
Buyer shall request not to exceed thirty (30) days (or postponed to such date as
Buyer shall request, which date shall not be more than thirty (30) days after
the original date of the meeting) to allow the proxy solicitation firm to
continue to solicit proxies in favor of the Merger. In such event, Bryan shall
cooperate with Buyer and the proxy solicitation firm to attempt to obtain
proxies sufficient to result in approval of the Merger by the shareholders of
Bryan.
(c) In the event that the approval and adoption of this Agreement and
the Merger at the Shareholder Meeting or any adjournment thereof receives the
affirmative vote of less than 66- 2/3% of all shares entitled to vote for such
approval, then Buyer may in its sole discretion (but subject to Section
8.01(b)(ii)) require Bryan to, and Bryan shall be obligated to, through its
Board of Directors, duly call, give notice of, convene and hold a second
Shareholder Meeting for the purpose of voting on the adoption of this Agreement.
Such second Shareholder Meeting shall be held as soon as reasonably practicable
after the date of the notice from Buyer to Bryan in which Buyer notifies Bryan
that Buyer desires Bryan to call a second Shareholder Meeting. In the event
Buyer determines a second Shareholder Meeting is appropriate, then all other
provisions in this Agreement relating to the Shareholder Meeting shall be read
mutatis mutandis as applying to such second Shareholder Meeting.
(d) If Buyer shall directly or indirectly acquire at least 90 percent
of the outstanding shares of Bryan Common Stock, each of Buyer, Merger Sub and
Bryan shall take all necessary and appropriate action as Buyer may reasonably
request to cause the Merger to become effective as promptly as practicable after
the consummation of the Offer without a meeting of holders of Bryan Common Stock
in accordance with Section 53-14-5 of the NMBCA.
6.04 Regulatory and Other Approvals. Subject to the terms
and conditions of this Agreement and without limiting the
provisions of Sections 6.02 and 6.03, each of Bryan and Buyer
will proceed diligently and in good faith and will use all
commercially reasonable efforts
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to do, or cause to be done, all things necessary, proper or advisable to, as
promptly as practicable, (a) obtain all consents, approvals or actions of, make
all filings with and give all notices to Governmental or Regulatory Authorities
or any other public or private third parties required of Buyer, Bryan or any of
their Subsidiaries to consummate the Merger and the other matters contemplated
hereby, and (b) provide such other information and communications to such
Governmental or Regulatory Authorities or other public or private third parties
as the other party or such Governmental or Regulatory Authorities or other
public or private third parties may reasonably request. In addition to and not
in limitation of the foregoing, (i) each of the parties will (x) take promptly
all actions necessary to make the filings required of Buyer and Bryan or their
affiliates under the HSR Act, (y) comply at the earliest practicable date with
any request for additional information received by such party or its affiliates
from the Federal Trade Commission (the "FTC") or the Antitrust Division of the
Department of Justice (the "Antitrust Division") pursuant to the HSR Act, and
(z) cooperate with the other party in connection with such party's filings under
the HSR Act and in connection with resolving any investigation or other inquiry
concerning the Merger or the other matters contemplated by this Agreement
commenced by either the FTC or the Antitrust Division or state attorneys
general.
6.05 Employees.
(a) Buyer confirms that the Surviving Corporation will honor in
accordance with their respective provisions the existing agreements between
Bryan and each of Messrs. Bishop, McVay, Holmquist, Krauskopf, Kubly, Minard,
Mitting, McCune and Sturch (collectively, "Senior Management Agreements"),
copies of which Bryan has heretofore delivered to Buyer. Further, Buyer confirms
that it will cause the Surviving Corporation to pay to each of such persons the
Transaction Bonus contemplated in the applicable Senior Management Agreement, in
the installments and at the times specified therein, irrespective of whether the
Merger is deemed to have been supported or sponsored by management or any
management group.
(b) The Surviving Corporation will honor all existing union contracts
and all other existing agreements between Bryan and its employees which have
heretofore been disclosed to Buyer.
6.06 Expenses. Subject to Section 6.14 and to remedies in respect of
breach of the provisions hereof, if the Merger is not consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such cost or expense.
If the Merger is consummated, Bryan's Transaction Costs (as defined below) shall
be paid by Bryan, by the Surviving Corporation and/or by Buyer without reduction
of the per-share amount payable to Bryan shareholders under Section
2.01(a)(iii). As used herein, "Bryan's Transaction Costs" means all
out-of-pocket costs reasonably incurred by Bryan or any of its Subsidiaries on
or after July 1, 1998 in connection with the potential and actual sale of Bryan
and its Subsidiaries, including without limitation (i) the fees and expenses of
McDonald & Company Securities, Inc., (ii) the fees and expenses of Goelzer & Co.
Inc., (iii) legal fees and expenses, (iv) expenses for environmental reports,
(v) expenses for title reports, (vi) expenses for proxy solicitation and fees
and expenses of the Exchange Agent, and (viii) filing fees in connection with
compliance with securities and antitrust laws. Bryan's Transaction Expenses
shall not include (a) any amounts payable or paid to senior managers of Bryan
under the Senior Management Agreements by virtue of the consummation of the
Merger
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(Buyer having agreed separately to cause the Surviving Corporation to pay such
amounts in addition to all other consideration for the Merger), or (b) any
expenses incurred by Buyer or Merger Sub with respect to the Offer.
6.07 Brokers or Finders. Each of Buyer and Bryan represents, as to itself
and its Affiliates, that no agent, broker, investment banker, financial advisor
or other firm or person is or will be entitled to any broker's or finder's fee
or any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement, except, in the case of Bryan, for
McDonald & Company Securities, Inc. and Goelzer & Co., Inc. True and complete
copies of Bryan's agreements with such firms have been delivered by Bryan to
Buyer prior to the execution of this Agreement.
6.08 Notice and Cure. Each of Buyer and Bryan will notify the other
promptly in writing of, and contemporaneously will provide the other with true
and complete copies of any and all information or documents relating to, and
will use all commercially reasonable efforts to cure before the Closing, any
event, transaction or circumstance occurring or not occurring after the date of
this Agreement that causes or will cause or is likely to cause any covenant or
agreement of Buyer or Bryan, as the case may be, under this Agreement to be
breached or that renders or will render untrue (disregarding any limitations as
to materiality as may be contained therein) any representation or warranty of
Buyer or Bryan, as the case may be, contained in this Agreement as if the same
were made on or as of the date of such event, transaction or circumstance. Each
of Buyer and Bryan also will notify the other promptly in writing of, and will
use all commercially reasonable efforts to cure before the Closing, any
violation or breach of any representation, warranty, covenant or agreement made
by Buyer or Bryan, as the case may be, in this Agreement, whether occurring or
arising prior to, on or after the date of this Agreement. No notice given
pursuant to this Section shall have any effect on the representations,
warranties, covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein and such notice shall
not limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
6.09 Fulfillment of Conditions. Subject to the terms and conditions of
this Agreement, each of Buyer and Bryan will take or cause to be taken all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each condition to the other's obligations contained in
this Agreement and to consummate and make effective the transactions
contemplated by this Agreement, and neither Buyer nor Bryan will, nor will
either permit any of its Subsidiaries to, take or fail to take any action that
could be reasonably expected to result in the nonfulfillment of any such
condition.
6.10 Indemnification; Directors' and Officers' Insurance.
(a) Until the fourth anniversary of the Effective Time (and until
resolution of any claims asserted prior to such fourth anniversary), the
Surviving Corporation shall, to the extent allowed by law and to the extent
currently provided in the By-laws and Articles of Incorporation of Bryan,
indemnify, defend and hold harmless each person who is as of the date hereof, or
has been at any time prior to the date hereof, a director or officer of Bryan or
any of its Subsidiaries (the "Indemnified Parties") against (i) all losses,
claims, damages, costs, expenses, liabilities or judgments or amounts that are
paid in settlement of or in connection with any claim,
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action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director or officer of Bryan or any Subsidiary of Bryan, whether pertaining to
any matter existing or occurring at or prior to the Effective Time and whether
asserted or claimed prior to, or at or after, the Effective Time ("Indemnified
Liabilities") and (ii) all Indemnified Liabilities based in whole or in part on,
or arising in whole or in part out of, or pertaining to this Agreement or the
transactions contemplated hereby, in each case to the full extent Bryan would
have been permitted under New Mexico law to indemnify such person (and subject
to the foregoing, the Surviving Corporation shall, in the event the Surviving
Corporation determines in its reasonable discretion that such person would be
entitled to indemnification hereunder, pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party;
provided, however, that the person to whom the expenses are advanced must
provide an undertaking (without delivering a bond or other security) to repay
such advance if it is ultimately determined that such person is not entitled to
indemnification as provided in Section 53-11-4.1 of the NMBCA). Without limiting
the foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Parties (whether arising before
or after the Effective Time), (i) any counsel retained by the Indemnified
Parties for any period after the Effective Time shall be reasonably satisfactory
to the Surviving Corporation; (ii) after the Effective Time, the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received as heretofore
provided; and (iii) after the Effective Time, the Surviving Corporation will use
all reasonable efforts to assist in the vigorous defense of such matter,
provided that the Surviving Corporation shall not be liable for any settlement
of any claim effected without its written consent, which consent, however, shall
not be unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 6.10, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Surviving
Corporation (but the failure so to notify the Surviving Corporation shall not
relieve it from any liability which it may have under this Section 6.10 except
to the extent such failure prejudices the Surviving Corporation), and shall
deliver to the Surviving Corporation the undertaking, if any, required by the
NMBCA or this Agreement. The Surviving Corporation shall be liable for the fees
and expenses hereunder with respect to only one law firm, in addition to local
counsel in each applicable jurisdiction, to represent the Indemnified Parties as
a group with respect to each such matter unless there is, under applicable
standards of professional conduct, a conflict between the positions of any two
or more Indemnified Parties that would preclude or render inadvisable joint or
multiple representation of such parties.
(b) For a period of four years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by Bryan
(provided that the Surviving Corporation may substitute therefor other policies
of at least the same coverage and amounts containing terms and conditions which
are no less advantageous) with respect to claims arising from facts or events
which occurred before or at the Effective Time; provided, however, that the
Surviving Corporation shall not be obligated to make annual premium payments for
such insurance to the extent such premiums exceed 125% of the premiums paid as
of the date hereof by Bryan for such insurance ("Bryan's Current Premium"), and
if such premiums for such insurance would at any time exceed 125% of Bryan's
Current Premium, then the Surviving Corporation shall cause to be maintained
policies of insurance which, in the Surviving Corporation's good faith
determination,
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provided the maximum coverage available at an annual premium equal to 125% of
Bryan's Current Premium. Notwithstanding anything to the contrary contained
elsewhere herein, the Surviving Corporation's indemnity agreement set forth
above in Section 6.10(a) shall be limited to cover claims only to the extent
that those claims are not covered under Bryan's current directors' and officers'
insurance policies and the continuation or maintenance thereof as required by
this Section 6.10(b) (or any substitute policies permitted by this Section
6.10(b)).
(c) In the event Buyer or any of its 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 or conveys all or substantially all of its properties and assets
to any person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of Buyer assume the
obligations set forth in this section.
(d) The provisions of this Section 6.10 (i) are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his heirs
and his representatives and (ii) are in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such person
may have by contract or otherwise.
6.11 Retention of Bryan Name. Until the 10th anniversary of the Closing
Date, Buyer shall cause the name of the Surviving Corporation to continue to be
"Bryan Steam Corporation", unless, due to a change in circumstances after the
Closing, such continuation shall be, in the opinion of the Board of Directors of
the Surviving Corporation at any time, materially adverse to Buyer or the
Surviving Corporation.
6.12 Takeover Laws. Bryan shall, upon the request of Buyer, take all
reasonable steps to exclude the applicability of, or to assist in any challenge
by Buyer or the Merger Sub of the validity or applicability to the Merger of,
any Takeover Laws. As used herein, "Takeover Laws" shall mean any "moratorium",
"control share acquisition", "business combination", "fair price" or other form
of antitakeover laws and regulations of any jurisdiction that may purport to be
applicable to this Agreement or the Merger.
6.13 Subsequent Financial Statements. Until the Effective Time, Bryan will
timely file with the SEC each form, report and document required to be filed by
Bryan under the Exchange Act and will promptly deliver to Buyer copies of each
such report filed with the SEC. As of their respective dates, none of such
reports shall contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited interim
financial statements of Bryan included in such reports shall be prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto) and shall fairly present the financial position of Bryan
and its Subsidiaries as at the dates thereof and the results of their operations
and changes in financial position for the periods then ended.
6.14 Termination Fee; Expenses. (a) In the event that this
Agreement is terminated as a result of the occurrence of any
Trigger Event (as defined below), then Bryan shall pay to Buyer a
fee equal to 1.5% of the Purchase Price plus all Reimbursable
Expenses (as defined in Section
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6.14(d)); provided, however, that if such termination is solely attributable to
events described in clause (iii) or (iv) of the definition of Trigger Event,
then Bryan shall pay to Buyer all Reimbursable Expenses (but not the 1.5% fee).
Amounts due hereunder shall be payable in immediately available funds at the
time of such termination.
(b) As used herein, "Trigger Event" shall mean the occurrence of any
of the following:
(i) the Board of Directors of Bryan (or any committee thereof)
shall approve, recommend, authorize, propose or facilitate any potential
Acquisition Transaction (as defined below) other than the Offer and the Merger
pursuant to this Agreement, or such Board (or any such committee) shall engage
in discussions or negotiations with a potential counterparty concerning any such
potential Acquisition Transaction, or such Board (or any such committee) shall
publicly announce its intention to do any of the foregoing;
(ii) the Board of Directors of Bryan (or any committee thereof)
shall fail to recommend the Offer and the Merger to stockholders of Bryan in the
Schedule 14D-9 or proxy statement required by this Agreement or within two
business days following Buyer's request from time to time that Bryan so confirm
its recommendation of the Offer and the Merger, or such Board (or any such
committee) shall withdraw, modify or amend in any manner adverse to Buyer the
authorization, approval or recommendation given by such Board (or such
committee) to the Offer and the Merger, or shall publicly announce that it does
not favor the Offer or the Merger;
(iii) the shareholders of Bryan holding at least 66-2/3% of the
outstanding shares of Bryan Common Stock shall fail to approve the Merger in
accordance with applicable law at the Shareholder Meeting, or if the Shareholder
Meeting shall not be held on or prior to December 31, 1998; or
(iv) any person, entity or "group" (as that term is used in
Section 13(d)(e) of the Exchange Act), other than those shareholders who have
executed and delivered Irrevocable Proxy and Option Agreements as described in
the recitals to this Agreement, becomes the beneficial owner (as defined in Rule
13d-3 promulgated under the Exchange Act) of 15% or more of outstanding Bryan
Common Stock.
(c) As used herein, "Acquisition Transaction" shall mean any tender
offer or exchange offer, any merger, consolidation, liquidation, dissolution,
recapitalization, reorganization or other business combination, any acquisition,
sale or other disposition of a material amount of assets or securities or any
other similar transaction involving Bryan, its securities or any of its
Subsidiaries or divisions.
(d) As used herein, "Buyer Reimbursable Expenses" means all
out-of-pocket costs (including without limitation reasonable legal and
accounting costs) heretofore and hereafter incurred by Buyer in connection with
the transactions contemplated by this Agreement including, without limitation,
costs and expenses incurred in connection with (i) Buyer's due diligence
investigations concerning Bryan and its Subsidiaries, (ii) Buyer's preparation
of preliminary and final proposals relating to the acquisition of Bryan, (iii)
Buyer's negotiation of this Agreement, (iv) Buyer's assistance in the
preparation of the proxy statement relating to the Merger, (v) fees
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and expenses of the Exchange Agent, and (vi) fees and expenses reasonably
incurred so as to facilitate and promote consummation of the Merger.
ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(a) Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by Bryan's shareholders in the
manner and to the extent required by applicable law and the Articles of
Incorporation and By-laws of Bryan.
(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 Injunctions or Restraints. No action or proceeding before a
court of competent jurisdiction or other competent governmental body by any
Governmental or Regulatory Authority shall have been instituted or threatened to
make illegal or otherwise restrain or prohibit (whether temporarily, preliminary
or permanently) the Merger or the other transactions contemplated by this
Agreement or to obtain an amount of damages or other material relief in
connection with the execution of the Agreement or the consummation of the Merger
or other transactions contemplated by this Agreement; and no governmental agency
shall have given notice to any party hereto to the effect that consummation of
the Merger or the other transactions contemplated by this Agreement would
constitute a violation of any law or that it intends to commence proceedings to
restrain consummation of the Merger (each party hereto, however, agrees to use
reasonable efforts promptly to have such prohibition or notice lifted).
(d) Board Resolutions. Each of Merger Sub and Bryan shall have
received from the other appropriately certified copies of all resolutions
adopted by their respective Boards of Directors and shareholders in connection
with this Agreement and the transactions contemplated hereby.
7.02 Conditions to Obligation of Buyer and Merger Sub to Effect the
Merger. The obligation of Buyer and Merger Sub to effect the Merger is further
subject to the fulfillment, at or prior to the Closing, of each of the following
additional conditions (all or any of which may be waived in whole or in part by
Buyer and Merger Sub in their sole discretion):
(a) Bryan shall have performed and complied with, in all material
respects, each agreement, covenant and obligation required by this Agreement to
be so performed or complied with by Bryan at or prior to the Closing, and Bryan
shall have delivered to Buyer a certificate, dated the Closing Date and executed
on behalf of Bryan by its President, to such effect.
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(b) All proceedings to be taken on the part of Bryan in connection
with the transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to Buyer, and
Buyer shall have received copies of all such documents and other evidences as
Buyer may reasonably request in order to establish the consummation of such
transactions and the taking of all proceedings in connection therewith. Such
documents shall include, but shall not be limited to:
(i) the certificates required by Section 7.02(a)
of this Agreement;
(ii) a certificate of existence or good standing regarding each
of Bryan and its Subsidiaries, certified in the case of Bryan by the New Mexico
Corporation Commission and certified in the case of Wendland and Memco by the
appropriate office of the jurisdiction of its respective incorporation, each
dated within ten (10) business days of the Closing Date; and
(iii) an incumbency certificate certifying the
identity of the officers of Bryan.
(iv) the resignations, effective the Closing Date, of such
directors and officers of Bryan, Wendland and Memco as Buyer shall specify
consistent with Section 1.05;
(c) Buyer shall have received a complete list of the signatories of
each account or safe deposit box of Bryan, Wendland and Memco;
(d) Bryan shall not have received written objections to the Merger
from holders who in the aggregate hold more than 10% of the outstanding shares
of Bryan Common Stock, and Bryan shall not have knowledge that holders of 10% or
more of the outstanding shares of Bryan Common Stock intend to file with Bryan
written objections to the Merger.
(e) Bryan shall have delivered to Buyer a final accounting of Bryan's
Transaction Expenses, in form reasonably satisfactory to Buyer, including copies
of applicable final invoices;
(f) Other than the filings provided for by Section 1.02, all
consents, approvals and actions of filings with and notices to any Governmental
or Regulatory Authority or any other public or private third party required of
Bryan or any of its Subsidiaries to consummate the Merger and the other
transactions contemplated hereby, the failure of which to be obtained or taken
could, individually or in the aggregate, be reasonably expected to have a
material adverse effect on Bryan and its Subsidiaries or on the ability of Bryan
to consummate the transactions contemplated hereby shall have been obtained, all
in form and substance reasonably satisfactory to Buyer and no such consent,
approval or action shall contain any term or condition which could be reasonably
expected to result in a material diminution of the benefits of the Merger to
Buyer.
7.03 Conditions to Obligation of Bryan to Effect the Merger. The
obligation of Bryan to effect the Merger is further subject to the fulfillment,
at or prior to the Closing, of each of the following additional conditions (all
or any of which may be waived in whole or in part by Bryan in its sole
discretion):
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(a) Each of the representations and warranties made by Buyer and
Merger Sub in this Agreement shall be true and correct in all material respects
as of the Closing Date as though made on and as of the Closing Date or, in the
case of representations and warranties made as of a specified date earlier than
the Closing Date, on and as of such earlier date, and Buyer and Merger Sub shall
each have delivered to Bryan a certificate, dated the Closing Date and executed
on behalf of Buyer by its President and on behalf of Merger Sub by its
President, to such effect.
(b) Buyer and Merger Sub shall have performed and complied with, in
all material respects, each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Buyer or Merger Sub at or prior
to the Closing, and Buyer and Merger Sub shall each have delivered to Bryan a
certificate, dated the Closing Date and executed on behalf of Buyer by its
President and on behalf of Merger Sub by its President, to such effect.
(c) Bryan shall have received a written opinion, dated as of the
Closing Date, from Krieg, Devault, Alexander & Capehart, Indiana counsel to
Buyer and Merger Sub, from Cleary, Gottlieb, Steen & Hamilton and/or from
Buyer's New Mexico counsel, as appropriate, in form and substance reasonably
satisfactory to Bryan, as to certain appropriate matters agreed upon by legal
counsel of Buyer and Merger Sub and of Bryan.
(d) All proceedings to be taken on the part of Buyer and Merger Sub
in connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Bryan, and Bryan shall have received copies of all such documents
and other evidences as Bryan may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith. Such documents shall include, but shall not be limited to:
(i) the certificates required by Section 7.03(a)
and 7.03(b) of this Agreement;
(ii) certificates of existence or good standing regarding each
of Buyer and Merger Sub, certified by the New York Secretary of State and the
New Mexico State Corporation Commission, respectively, dated within ten (10)
business days of the Closing Date; and
(iii) incumbency certificates certifying the identity of the
officers of Buyer and Merger Sub, respectively.
(e) The Exchange Fund shall have been funded with the full amount of
the Merger Price for all outstanding shares of the Bryan Common Stock.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether prior to or after Shareholders' Approval:
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(a) by mutual written agreement of the parties hereto duly authorized
by action taken by or on behalf of their respective Boards of Directors;
(b) by either Bryan or Buyer upon notification to the
non-terminating party by the terminating party:
(i) at any time after January 31, 1999 if the Merger shall not
have been consummated on or prior to such date and such failure to consummate
the Merger is not caused by a breach of this Agreement by the terminating party;
provided, however, the date may be extended indefinitely by the mutual written
agreement of the parties;
(ii) if Shareholders' Approval shall not be
obtained by January 31, 1999;
(iii) if any Governmental or Regulatory Authority, the taking of
action by which is a condition to the obligations of either Bryan or Buyer to
consummate the transactions contemplated hereby, shall have determined not to
take such action and all appeals of such determination shall have been taken and
have been unsuccessful; or
(iv) if any court of competent jurisdiction or other competent
Governmental or Regulatory Authority shall have issued an Order making illegal
or otherwise restricting, preventing or prohibiting the Merger and such Order
shall have become final and nonappealable.
(c) by Bryan, if (1) Merger Sub fails to commence the Offer as
provided in Section A-1.01 or fails to purchase validly tendered Shares in
violation of the terms of the Offer or this Agreement; (2) there has been a
breach by Buyer or Merger Sub of any representation or warranty contained in
this Agreement, or (3) there has been a material breach of any of the covenants
or agreements set forth in this Agreement on the part of Buyer or Merger Sub,
which breach is not curable or, if curable, is not cured within ten (10) days
after written notice of such breach is given by Bryan to Buyer or Merger Sub.
(d) by Buyer, if (1) the Offer is terminated or withdrawn on account
of the failure to be fulfilled of a condition specified in Annex A hereto, (2)
there has been a breach by Bryan of any representation or warranty contained in
this Agreement or (3) there has been a material breach of any of the covenants
or agreements set forth in this Agreement on the part of Bryan, which breach is
not curable or, if curable, is not cured within ten (10) days after written
notice of such breach is given by Buyer to Bryan.
(e) by Buyer if a Trigger Event occurs.
8.02 Effect of Termination. If this Agreement is validly terminated by
either Bryan or Buyer pursuant to Section 8.01, this Agreement will forthwith
become null and void and there will be no liability or obligation on the part of
either Bryan or Buyer (or any of their respective Representatives or
affiliates), except (i) that the provisions of Sections 6.01(b), 6.06, 6.07 and
6.14 will continue to apply following any such termination, and (ii) that
nothing contained herein shall relieve any party hereto from liability for any
breach of its representations, warranties, covenants or agreements contained in
this Agreement; provided however, that no breach of this
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Agreement by Bryan shall be deemed to have occurred if such termination is
solely due to the occurrence of a Trigger Event described in paragraph
6.14(b)(i) or 6.14(b)(ii), to the extent that such Trigger Event arose because
action was taken by the Board of Directors of Bryan based upon the belief, and
supported by a written opinion furnished by independent legal counsel, that the
failure to take such action would constitute a breach of fiduciary duties of
such Board of Directors under applicable law.
8.03 Amendment. This Agreement may be amended, supplemented or modified by
the parties hereto at any time prior to the Effective Time, whether prior to or
after adoption of this Agreement at the Shareholder Meeting, but after such
adoption only to the extent permitted by applicable law. No such amendment,
supplement or modification shall be effective unless set forth in a written
instrument duly executed by or on behalf of each party hereto.
8.04 Waiver. At any time prior to the Effective Time any party hereto may
to the extent permitted by applicable law (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties of the other
parties hereto contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any of the covenants, agreements or conditions of
the other parties hereto contained herein. No such extension or waiver shall be
effective unless set forth in a written instrument duly executed by or on behalf
of the party extending the time of performance or waiving any such inaccuracy or
noncompliance. No waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Agreement on any
future occasion.
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties, Covenants and
Agreements. None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement,
including any rights arising out of any breach of such representations,
warranties, covenants, and agreements, shall survive the Effective Time, except
for those covenants and agreements contained herein and therein that by their
terms apply or are to be performed in whole or in part after the Effective Time.
9.02 Knowledge. An individual will be deemed to have "knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter. Whenever a provision of this Agreement is qualified as to
"the best knowledge of" or "to the knowledge of" Bryan or Buyer, or is qualified
with words of similar meaning, then the current officers, directors and senior
management of such entity shall be deemed to have conducted a reasonable inquiry
into the question at hand. The entity will be deemed to have "knowledge" of a
particular fact or other matter if (i) any individual who is serving, or who has
at any time served, as a director, officer, senior manager or trustee of such
person (or in any similar capacity) has, or at any time had, knowledge of such
fact or other matter, or (ii) such individual would have had such knowledge if
such a reasonable inquiry had been conducted.
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9.03 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
If to Buyer or Merger Sub, to:
Burnham Corporation
1241 Harrisburg Pike
Lancaster, PA 17603
Attn: Albert Morrison III, President and CEO
Facsimile No.: (717) 293-5816
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attn: Donald A. Stern, Esquire
Facsimile No.: (212) 225-3999
If to Bryan, to:
Bryan Steam Corporation
Post Office Box 27
Peru, Indiana 46970
Facsimile No.: (765) 473-6651
Attn: Albert J. Bishop, Chairman
with a copy to:
Barnes & Thornburg
11 South Meridian Street
Indianapolis, Indiana 46204
Facsimile No.: (317) 231-7433
Attn: Eric R. Moy, Esquire
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other person to whom a
copy of such notice is to be delivered pursuant to this Section). Any party from
time to time may change its address, facsimile number or other information for
the purpose of notices to that party by giving notice specifying such change to
the other parties hereto.
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9.04 Entire Agreement. Except for the Confidentiality Agreement (as
defined in Section 6.01(b)), which shall remain in full force and effect as
provided therein, this Agreement supersedes all prior discussions and agreements
among the parties hereto with respect to the subject matter hereof and thereof
and contains the sole and entire agreement among the parties hereto with respect
to the subject matter hereof and thereof.
9.05 Public Announcements. Except as otherwise required by law or the
rules of any applicable securities exchange or national market system, so long
as this Agreement is in effect (until the Closing), Buyer and Bryan will not,
and will not permit any of their respective Representatives to, issue or cause
the publication of any press release or make any other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld. Buyer and
Bryan will cooperate with each other in the development and distribution of all
press releases and other public announcements (including announcements made to
the employees, managers, customers, suppliers and sales representatives of Bryan
and its Subsidiaries and including any interested community members or
governmental officials) with respect to this Agreement and the transactions
contemplated hereby, and will furnish the other with drafts of any such releases
and announcements as far in advance as practicable.
9.06 No Third Party Beneficiaries. Other than the Indemnified Parties (as
defined in Section 6.10), the terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and their respective
successors or permitted assigns and it is not the intention of the parties to
confer third party beneficiary rights upon any other person.
9.07 No Assignment, Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without the
prior written consent of the other parties hereto and any attempt to do so will
be void, except that Buyer and Merger Sub may assign any or all of their rights,
interests and obligations hereunder to another direct or indirect wholly-owned
Subsidiary of Buyer, provided that any such Subsidiary agrees in writing to be
bound by all of the terms, conditions and provisions contained herein. Subject
to the preceding sentence, this Agreement is binding upon, inures to the benefit
of and is enforceable by the parties hereto and their respective successors and
assigns.
9.08 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
9.09 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions, of this Agreement will remain in full force and
effect and will not be affected by the legal, invalid or unenforceable provision
or by its severance herefrom and (iv) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
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9.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana applicable to a contract
executed and performed in such State without giving effect to the conflicts of
laws principles thereof, except to the extent that the NMBCA, the Securities Act
and the Exchange Act shall apply to the transactions contemplated herein.
9.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. Each counterpart may
consist of a number of copies hereof each signed by less than all, but together
signed by all of the parties hereto.
9.12 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa and the words "include," "including" and the like shall be deemed not to
be limiting.
9.13 Incorporation of Exhibits. The Exhibits and Schedules attached hereto
and referred to herein are hereby incorporated herein and made a part hereof for
all purposes as if fully set forth herein.
9.14 Enforcement of Agreement; Injunctive Relief. (a) Buyer, Merger Sub
and Bryan hereby irrevocably and unconditionally consent to submit to the
exclusive jurisdiction of the United States District Court for the Southern
District of Indiana, Indianapolis Division for federal jurisdiction (unless such
court has no jurisdiction, in which case Buyer, Merger Sub and Bryan consent to
the exclusive jurisdiction of the courts of the State of Indiana located in
Marion County) for any actions, suits or proceedings arising out of or relating
to this Agreement and the transactions contemplated hereby (and Buyer, Merger
Sub and Bryan agree not to commence any action, suit or proceeding relating
thereto or to this Agreement except in such courts), and further agree that
service of any process, summons, notice or document by U.S. registered mail to
the addresses set forth herein shall be effective service of process for any
such action, suit or proceedings brought against Buyer, Merger Sub or Bryan in
such court. Bryan, Buyer and Merger Sub hereby irrevocably and unconditionally
waive any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby, in such
federal court (unless such court has no jurisdiction, in which case Buyer,
Merger Sub and Bryan consent to the laying of venue in the courts of the State
of Indiana in the County of Marion). Buyer, Merger Sub and Bryan hereby further
irrevocably and unconditionally waive and agree not to plead or to claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum; and agree not to oppose a motion to
dismiss an improperly filed action. Buyer, Merger Sub and Bryan waive, to the
fullest extent permitted by law, any rights they may have to a jury trial on any
matter related in any way to this Agreement or the transactions contemplated
hereby.
(b) Each of Bryan on the one hand and Buyer and Merger Sub on the
other hand recognize and acknowledge that a breach by it of any covenants or
agreements contained in this Agreement will cause the other party to sustain
damages for which it would not have an adequate remedy at law for money damages,
and therefore each of the parties hereto agrees that in the
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event of any such breach, if the aggrieved party so desires, the aggrieved party
shall be entitled to the remedy of specific performance, injunctive and other
equitable relief (without the requirement or need for the posting of any bond)
in addition to any other remedy to which the aggrieved party may be entitled, at
law or in equity.
9.15 Joint and Several Obligations. The obligations of
Buyer and Merger Sub hereunder are joint and several.
[signature page follows]
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
signed by its officer thereunto duly authorized as of the date first above
written.
BURNHAM CORPORATION
By:/s/ Albert Morrison, III
---------------------------
Name: Albert Morrison, III
Title: President and Chief
Executive Officer
BURNHAM ACQUISITION CORPORATION
By:/s/ Albert Morrison, III
---------------------------
Name: Albert Morrison, III
Title: President
BRYAN STEAM CORPORATION
By:/s/ Albert J. Bishop
---------------------------
Name: Albert J. Bishop
Title: Chairman
<PAGE>
ANNEX A
CONDITIONS TO THE OFFER
Capitalized terms used in this Annex A and not otherwise defined
herein shall have the meanings assigned to them in the Agreement to which this
Annex is attached (the "Merger Agreement").
Notwithstanding any other provision of the Offer, the obligation of
Merger Sub to accept for payment, purchase or pay for any Shares tendered prior
to the scheduled expiration date of the Offer or any extension thereof (the
"Offer Date") is subject to the fulfillment, at or prior to the Offer Date, of
the following conditions (and upon the failure of any such condition to be
fulfilled, unless waived by Merger Sub, Merger Sub may terminate the Offer as to
any Shares not then accepted for payment, and Merger Sub shall not be required
to accept for payment, purchase or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, pay for
any Shares):
(a) The number of Shares validly tendered and not withdrawn shall
constitute at least a two-thirds majority plus one of the outstanding
Shares on a fully diluted basis (the "Minimum Condition").
(b) Any waiting period (and any extension thereof) applicable to the
consummation of the Offer under the HSR Act shall have expired or
been terminated.
(c) No action or proceeding before a court of competent
jurisdiction or other competent governmental body by
any Governmental or Regulatory Authority shall have
been instituted or threatened to make illegal or
otherwise restrain or prohibit (whether temporarily,
preliminary or permanently) the Offer or the Merger or
the other transactions contemplated by the Merger
Agreement or to obtain an amount of damages or other
material relief in connection with the execution of
the Merger Agreement or the consummation of the Offer
or other transactions contemplated by the Merger
Agreement; and no governmental agency shall have given
notice to any party hereto to the effect that
consummation of the Offer or the Merger or the other
transactions contemplated by the Merger Agreement
would constitute a violation of any law or that it
intends to commence proceedings to restrain
consummation of the Offer or the Merger.
(d) Merger Sub shall have received from Bryan appropriately certified
copies of all resolutions adopted by Bryan's Boards of Directors in
connection with the Offer, the Merger, the Merger Agreement and the
transactions contemplated thereby.
(e) Each of the representations and warranties made by Bryan in the
Merger Agreement shall be true and correct in all respects (subject
to limitations as to materiality as may be contained therein) as
though made on and as of the Offer Date or, in the case of
representations and warranties made as of a specified date
<PAGE>
earlier than the Offer Date, on and as of such earlier date, and
Bryan shall have delivered to Buyer a certificate, dated the Offer
Date and executed on behalf of Bryan by its President to such effect.
(f) Bryan shall have performed and complied with, in all material
respects, each agreement, covenant and obligation required by the
Merger Agreement to be so performed or complied with by Bryan at or
prior to the Offer Date, and Bryan shall have delivered to Buyer a
certificate, dated the Offer Date and executed on behalf of Bryan by
its President, to such effect.
(g) Buyer and Merger Sub shall have received a written opinion, dated as
of the Offer Date, from Barnes & Thornburg, counsel to Bryan, in form
and substance reasonably satisfactory to Buyer and Merger Sub, as to
certain appropriate matters agreed upon by legal counsel of Buyer and
Merger Sub and of Bryan.
(h) All proceedings to be taken on the part of Bryan on or
before the consummation of the Offer in connection
with the transactions contemplated by the Merger
Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to
Buyer, and Buyer shall have received copies of all
such documents and other evidences as Buyer may
reasonably request in order to establish the
consummation of such transactions and the taking of
all proceedings in connection therewith. Such
documents shall include, but shall not be limited to:
(i) the certificates required by clauses (e) and (f)
of this Annex; (ii) a certificate of existence or good
standing regarding each of Bryan and its Subsidiaries,
certified in the case of Bryan by the New Mexico
Corporation Commission and certified in the case of
Wendland and Memco by the appropriate office of the
jurisdiction of its respective incorporation, each
dated within ten (10) business days of the Offer Date;
and (iii) an incumbency certificate certifying the
identity of the officers of Bryan.
(i) Bryan and each of its Subsidiaries shall have good,
marketable and insurable title to their respective
real properties, subject only to those encumbrances
identified in Schedule 7.02 to the Merger Agreement,
and Bryan shall have obtained and delivered to Buyer
reasonable assurances from the relevant municipalities
to the effect that such real properties and their
current operations are in compliance with local zoning
ordinances without constituting non- conforming uses.
(j) Bryan shall have delivered to Buyer a current survey
of the real property and facilities of Bryan located
in Peru, Indiana, which survey (i) shall have been
prepared by a licensed Indiana land surveyor, (ii)
shall fulfill the Minimum Detail Requirements for
ALTA/ACSM Land Title Surveys (1992) for an Urban
Survey and Table A thereof, and (iii) shall have been
certified to the Surviving Corporation, Buyer and
Buyer's title insurance company in a manner reasonably
satisfactory to Buyer; and such survey shall not show
encroachments or other
2
<PAGE>
matters which, individually or in the aggregate, materially adversely
affect the value or use of such real property and facilities.
(k) There shall not have occurred (A) any general
suspension of, or limitation on prices for, trading in
the securities of a general nature on any national
securities exchange that lasts more than 24 hours, (B)
the declaration of any banking moratorium or any
suspension of payments in respect of banks or any
limitation (whether or not mandatory) on the extension
of credit by lending institutions in the United
States, (C) the commencement of a war, armed
hostilities or any other international or national
calamity involving the United States or a substantial
terrorist attack or the threat thereof on a target in
United States that leads to the declaration of a
national emergency, (D) a material adverse change in
the United States currency exchange rates or a
suspension of, or limitation on, the markets therefor,
or (E) the Dow Jones Index shall fall below 6448
(which was the value of such Index on December 31,
1996).
(l) A Trigger Event shall not have occurred.
(m) Other than the filings provided for by Section 1.02 of
the Merger Agreement, all consents, approvals and
actions of, filings with and notices to any
Governmental or Regulatory Authority or any other
public or private third party required of Bryan or any
of its Subsidiaries to consummate the Offer, the
failure of which to be obtained or taken could,
individually or in the aggregate, be reasonably
expected to have a material adverse effect on Bryan
and its Subsidiaries or on the ability of Buyer to
consummate the purchase of Shares pursuant to the
Offer, shall have been obtained, all in form and
substance reasonably satisfactory to Buyer and no such
consent, approval or action shall contain any term or
condition which could be reasonably expected to result
in a material diminution of the benefits of the Offer
to Buyer.
(n) The Merger Agreement shall not have been terminated pursuant to its
terms and shall not have been amended pursuant to its terms to
provide for its termination.
3
<PAGE>
Exhibit A
Stockholders' Agreement
In order to induce Burnham Corporation, a New York
corporation ("Buyer"), to execute and deliver the Agreement and
Plan of Merger dated as of the date hereof (as the same may
hereafter be amended, the "Merger Agreement") among Buyer,
Burnham Acquisition Corporation, a New Mexico corporation
("Merger Sub") and Bryan Steam Corporation, a New Mexico
corporation (the "Company"), each undersigned stockholder of the
Company hereby (i) covenants as set forth in the remainder of
this Agreement (the "Agreement"), and (ii) irrevocably appoints
Burnham Corporation, as the exclusive attorney-in-fact and proxy
of such stockholder, with full power of substitution:
(a) to attend any and every meeting (whether annual or
special or both) of the stockholders of the Company,
including any adjournment or postponement thereof, on
behalf of such stockholder, and at each such meeting, with
respect to all shares of common stock of the Company owned
by such stockholder on the date hereof or acquired
hereafter that are entitled to vote at each such meeting or
over which such stockholder has voting power (and any and
all other shares of common or preferred stock of the
Company or other securities issued on or after the date
hereof in respect of any such shares), including, without
limitation, the shares indicated opposite such
stockholder's signature at the end of this Agreement:
(i) to vote in favor of the Merger (as such term
is defined in the Merger Agreement) and to vote in
favor of the adjournment of any meeting, which Buyer
believes may facilitate the obtaining the approval of
the Merger; and otherwise to act with respect to such
shares as said attorney-in-fact and proxy (or his
substitute) shall deem necessary or appropriate to
cause the approval of the Merger by the necessary
majority required under applicable law;
(ii) to vote and otherwise act with respect to
such shares in such a manner as said attorney-in-fact
and proxy (or his substitute) shall deem proper, with
respect to (x) proposals or offers (other than the
Merger) relating to (1) any proposed sale, lease or
other disposition of all or a substantial amount of
the assets of the Company or any of its subsidiaries,
(2) any proposed merger, consolidation or other
combination of the Company or any of its subsidiaries
with any other entity, (3) any sale, issuance,
disposition or granting of rights in respect of the
shares of the Company or of any subsidiary of the
Company or (4) any other proposed action of the
Company or any of its subsidiaries requiring
stockholder approval that would conflict with or
violate the Company's representations, covenants or
obligations under the Merger Agreement, adversely
affect the Company's ability to consummate the Merger
or the other transactions contemplated by the Merger
Agreement or otherwise impede, interfere with or
discourage the Merger (each of the actions described
in (1) - (4) above, an "Acquisition Proposal"), and
(y) any procedural matters presented at any such
meeting at which any action is scheduled to be taken
with respect to the Merger or any Acquisition
Proposal;
1
<PAGE>
(b) if no meeting of stockholders is scheduled in
accordance with the Merger Agreement or if any such meeting
is canceled, postponed or adjourned other than with Buyer's
approval, to call a special stockholders meeting of the
Company for the purpose of (i) approving the Merger or any
action with respect thereto, or (ii) taking action with
respect to any Acquisition Proposal; and
(c) to waive, for the duration of this proxy and
option, any and all rights such stockholder may have to
exercise any rights as dissenting shareholder under
Sections 53- 15-3 and 53-15-4 of the New Mexico Business
Corporation Act, subject to the right to receive the
consideration as specifically provided in the Merger
Agreement.
Each undersigned stockholder agrees (a) not to deposit
any of such stockholder's shares of common stock of the Company
into a voting trust or enter into a voting agreement with respect
to such shares; (b) not to sell, transfer or otherwise dispose of
or pledge or otherwise encumber, any shares of common stock of
the Company, or options or warrants to purchase such shares,
unless the purchaser or transferee of such shares or rights
agrees in writing (a copy of which shall be delivered by such
stockholder to Buyer and Merger Sub) prior to such sale, transfer
or disposition to be bound by and subject to the provisions
contained in this Agreement; and (c) not, in his or her capacity
as stockholder, to solicit, initiate, encourage, endorse, support
(including, by providing information) or participate in any
discussions regarding, any Acquisition Proposal other than the
Merger.
Each undersigned stockholder affirms that this proxy
is issued in connection with the Merger Agreement to facilitate
the transactions contemplated thereunder and in consideration of
Buyer and Merger Sub entering into the Merger Agreement and as
such is coupled with an interest and is irrevocable. This proxy
will terminate upon the earlier to occur of (a) the Effective
Time as defined in the Merger Agreement and (b) the termination
of the Merger Agreement in accordance with its terms. For
purposes of this proxy, any notice of any stockholders' meeting
shall be deemed delivered to the attorney-in-fact and proxy and
his substitutes when delivered to Buyer in accordance with the
Merger Agreement.
By execution and delivery of this Agreement, each
undersigned stockholder confirms that such stockholder has
received a copy of a substantially final form of the Merger
Agreement, and that all other information deemed necessary by
such stockholder concerning the Merger, the Merger Agreement and
the transactions contemplated thereunder or any other matters
considered by such stockholder to be relevant to the
stockholder's decision to execute this Agreement has been made
available to such stockholder.
All authority herein conferred or agreed to be
conferred shall survive the death, insolvency, or incapacity of
any undersigned stockholder and any obligation of any undersigned
stockholder hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of such undersigned
stockholder.
This proxy revokes any and all other proxies
heretofore granted by each and every undersigned stockholder to
vote or otherwise to act with respect to any of the shares to
which this proxy relates. No undersigned stockholder will give
any subsequent proxy or grant any option
2
<PAGE>
with respect to such shares (and such proxy or option if given
will be deemed not to be effective) with respect to such shares
that purports to grant authority within the scope of the
authority hereby conferred.
In order further to induce Merger Sub and Buyer to
enter into the Merger Agreement, each undersigned stockholder
hereby further agrees validly to tender (or cause the record
owner of such shares validly to tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not
later than the tenth business day after commencement of the Offer
pursuant to Section A-1.01 of the Merger Agreement and Rule 14d-2
under the Exchange Act, the number of shares of Bryan Common
Stock set forth opposite such stockholder's name below (the
"Existing Securities" and, together with any shares of Bryan
Common Stock acquired by such stockholder (whether beneficially
or of record) after the date hereof and prior to the termination
of this Agreement by means of purchase, dividend, distribution,
transfer, issuance, or exercise of options or other rights to
acquire Bryan Common Stock (the "Securities")). If any
undersigned stockholder acquires Securities after the date
hereof, such stockholder shall tender (or cause the record holder
to tender) such Securities on or before such tenth business day
or, if later, on or before the second business day after such
acquisition. Each undersigned stockholder hereby acknowledges and
agrees that Merger Sub's obligation to accept for payment,
purchase and pay for the Securities in the Offer, including the
Securities beneficially owned by such stockholder, is subject to
the terms and conditions of the Offer.
Each undersigned stockholder hereby permits Merger Sub
and Buyer to disclose in the Offer documents (and in the proxy
statement, if any, applicable to the Merger) such stockholder's
identity and ownership of the Securities and the content of this
Agreement.
Each undersigned stockholder acknowledges that money
damages would be both incalculable and an insufficient remedy for
any breach of this Agreement by it, and that any such breach
would cause Buyer and Merger Sub irreparable harm. Accordingly,
each undersigned stockholder agrees that in the event of any
breach or threatened breach of this Agreement, Buyer and Merger
Sub, in addition to any other remedies at law or in equity they
may have, shall be entitled, without the requirement of posting a
bond or other security, to equitable relief, including injunctive
relief and specific performance.
The invalidity or unenforceability of any provision of
this Agreement in any jurisdiction shall not affect the validity
or enforceability of any other provision of this Agreement in
such jurisdiction, or the validity or enforceability of any
provision of this Agreement in any other jurisdiction.
Each undersigned stockholder represents and warrants
that, as of the date hereof, such stockholder (a) owns personally
and directly the number of shares of Bryan Common Stock (as
defined in the Merger Agreement) set forth following such
stockholder's name below, (b) owns such stock free and clear of
all liens, security interests, encumbrances, options and other
adverse interests of every kind whatsoever, and (c) may execute
and deliver this Agreement, and perform its obligations
hereunder, without the consent or agreement of any other person
or entity.
3
<PAGE>
Each of the undersigned stockholders hereby
irrevocably waives and releases any and all claims such
stockholder may have as a holder of shares of the Company against
any employee, officer or director of Bryan or any of its
subsidiaries in respect of the conduct of such employee, officer
or director in his or her capacity as such prior to consummation
of the Merger.
For the convenience of the parties, this Agreement may
be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement will only become effective upon the
execution and delivery of the Merger Agreement by Buyer, Merger
Sub and the Company. Capitalized terms used and not defined
herein will have the respective meanings set forth in the Merger
Agreement.
This Agreement shall be governed by the laws of the
State of Indiana except that the provisions hereof with respect
to the granting of proxies, the exercise of the rights granted in
respect of such proxies and the associated appointment of
attorneys-in-fact will be governed by the laws of the
jurisdiction of incorporation of the Company.
Dated: as of September __, 1998
[signature pages follow]
4
<PAGE>
STOCKHOLDERS OF BRYAN STEAM CORPORATION
---------------------------
Robert Miller
R.R. #2, Box 26
Peru, Indiana 46970
Shares of Bryan Common
----------
Stock Owned
---------------------------
Ina Mae Miller
R.R. #2, Box 26
Peru, Indiana 46970
Shares of Bryan Common
----------
Stock Owned
---------------------------
Beverly Bryan
6299 Valley View Drive
Fishers, Indiana 46038
Shares of Bryan Common
----------
Stock Owned
Georgeanna Williams Revokable Living Trust
by:
---------------------------
Georgeanna Williams, Trustee
R.R., #3, Box 326A
Peru, Indiana 46970
Shares of Bryan Common
----------
Stock Owned
---------------------------
Lisa Lockhart
10778 Pine Valley Court
Fishers, Indiana 46038
Shares of Bryan Common
----------
Stock Owned
Shares of Bryan Common Stock Owned
Jointly with Beverly Bryan and Kenneth
Starkey
5
<PAGE>
---------------------------
Charles Miller
516B Chinworth Court
Warsaw, Indiana 46580
Shares of Bryan Common
----------
Stock Owned
---------------------------
Kenneth Starkey
10356 Leeward Boulevard
Indianapolis, Indiana 46256
Shares of Bryan Common
----------
Stock Owned
Shares of Bryan Common Stock Owned
Jointly with Beverly Bryan and Kenneth
Starkey
---------------------------
Bryan Herd and Sharon Herd
1208 Glenwick Drive
Logansport, Indiana 46947
Shares of Bryan Common
----------
Stock Owned Jointly
---------------------------
Marilyn Malott and Paul J. Malott
1500 Liberty Street
Logansport, Indiana 46947
Shares of Bryan Common
----------
Stock Owned Jointly
---------------------------
Victor Herd and Kristine G. Herd
4083 S.E. Honey Hill Lane
Stuart, Florida 34997
Shares of Bryan Common
----------
Stock Owned Jointly
6
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF )
Before me, a Notary Public, in and for said County and
State, personally appeared Robert Miller, and acknowledged the
execution of the foregoing instrument, this 22nd day of
September, 1998.
Witness my hand and Notarial Seal this 22nd day of
September, 1998.
---------------------------
Debra A. Eiler Notary Public
residing in Miami County,
Indiana
My Commission Expires:
- -------------------------
SEAL
STATE OF INDIANA )
)SS:
COUNTY OF )
Before me, a Notary Public, in and for said County and
State, personally appeared Ina Mae Miller, and acknowledged the
execution of the foregoing instrument, this 22nd day of
September, 1998.
Witness my hand and Notarial Seal this 22nd day of
September, 1998.
---------------------------
Debra A. Eiler Notary Public
residing in Miami County,
Indiana
My Commission Expires:
- -------------------------
7
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Beverly Bryan, and acknowledged the
execution of the foregoing instrument, this 21st day of
September, 1998.
Witness my hand and Notarial Seal this 21st day of
September, 1998.
---------------------------
Notary Public
residing in Miami County,
Indiana
My Commission Expires:
- -------------------------
8
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Georgeanna Williams, the Trustee of
the Georgeanna Willliams Revocable Trust, who acknowledged the
execution of the foregoing instrument, this 23rd day of
September, 1998.
Witness my hand and Notarial Seal this 23rd day of
September, 1998.
---------------------------
Notary Public
residing in Miami County,
Indiana
My Commission Expires:
- -------------------------
9
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF )
Before me, a Notary Public, in and for said County and
State, personally appeared Lisa Lockhart, and acknowledged the
execution of the foregoing instrument, this 22nd day of
September, 1998.
Witness my hand and Notarial Seal this 22nd day of
September, 1998.
---------------------------
Notary Public
residing in Hamilton County,
Indiana
My Commission Expires:
- -------------------------
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Charles Miller, and acknowledged the
execution of the foregoing instrument, this 21st day of
September, 1998.
Witness my hand and Notarial Seal this 21st day of
September, 1998.
---------------------------
Notary Public
residing in Miami County,
Indiana
My Commission Expires:
- -------------------------
10
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Kenneth Starkey, and acknowledged the
execution of the foregoing instrument, this 22nd day of
September, 1998.
Witness my hand and Notarial Seal this 22nd day of
September, 1998.
---------------------------
Notary Public
residing in Miami County,
Indiana
My Commission Expires:
- -------------------------
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Bryan Herd, and acknowledged the
execution of the foregoing instrument, this 21st day of
September, 1998.
Witness my hand and Notarial Seal this 21st day of
September, 1998.
---------------------------
Notary Public
residing in Miami County,
Indiana
My Commission Expires:
- -------------------------
11
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Marilyn Malott, and acknowledged the
execution of the foregoing instrument, this 21st day of
September, 1998.
Witness my hand and Notarial Seal this 21st day of
September, 1998.
---------------------------
Notary Public
residing in Miami County,
Indiana
My Commission Expires:
- -------------------------
STATE OF INDIANA )
)SS: Victor L. Herd
COUNTY OF Martin)
Before me, a Notary Public, in and for said County and
State, personally appeared Victor Herd, and acknowledged the
execution of the foregoing instrument, this 19 day of
September, 1998.
------------------
Witness my hand and Notarial Seal this 19th day of
September, 1998.
---------------------------
Notary Public
residing in Palm Beach County,
Florida
My Commission Expires: SEAL
- -------------------------
12
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Paul Malott, and acknowledged the
execution of the foregoing instrument, this 21st day of
September, 1998.
Witness my hand and Notarial Seal this 21st day of
September, 1998.
---------------------------
Notary Public
residing in Miami County,
Indiana
SEAL
My Commission Expires:
- -------------------------
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Sharon Herd, and acknowledged the
execution of the foregoing instrument, this 21st day of
September, 1998.
Witness my hand and Notarial Seal this 21st day of
September, 1998.
---------------------------
Notary Public
residing in Miami County,
Indiana
SEAL
My Commission Expires:
- -------------------------
13
<PAGE>
STATE OF FLORIDA )
)SS: STUART
COUNTY OF MARTIN )
Before me, a Notary Public, in and for said County and
State, personally appeared Kristine G. Herd and acknowledged the
execution of the foregoing instrument, this 23rd day of
September, 1998. /s/ Kristine G. Herd
--------------------
Witness my hand and Notarial Seal this 23 day of
September, 1998.
---------------------------
Notary Public
residing in Martin County,
Florida
My Commission Expires:
- ------------------------- SEAL
14
BURNHAM REACHES AGREEMENT TO ACQUIRE BRYAN STEAM
Lancaster, PA September 23, 1998
Peru, IN
Burnham Corporation and Bryan Steam Corporation announced today that they have
entered into a merger agreement pursuant to which Burnham will acquire all of
the outstanding common stock of Bryan Steam for $152.00 per share in cash.
Including transaction expenses of Bryan and certain other amounts that Burnham
has agreed to pay, the total value of the transaction is approximately $30.4
million. Bryan's Board of Directors unanimously approved the transaction after a
competitive auction process. The acquisition has the strong support of Bryan's
management.
In accordance with the merger agreement, a wholly owned subsidiary of Burnham
will make a cash tender offer, which is expected to commence on September 30,
1998, for all outstanding shares of Bryan at $152.00 per share. Any shares not
purchased in the tender offer will be acquired in a second-step merger for
$152.00 per share in cash. The transaction is subject to customary closing
conditions and regulatory approval.
Ten stockholders of Bryan Steam Corporation owning 55.6% of Bryan's outstanding
common stock in the aggregate have irrevocably agreed to tender their shares to
Burnham in the tender offer and have also granted Burnham an exclusive proxy to
vote their shares in favor of the merger.
Burnham has been a leader in the hydronics industry since producing its first
boiler in 1873. Burnham is a major U.S. manufacturer of boilers, furnaces,
radiators and related equipment, with sales of $174.6 minion in its fiscal year
ending December 31, 1997. Burnham's philosophy is to provide the safest, most
reliable products that are the best values available in the marketplace.
Bryan, a domestic manufacturer of watertube boilers, is located in Peru,
Indiana, with subsidiaries in Monticello, Indiana and San Angelo, Texas. Bryan
has been in business since 1916 and has developed a line of watertube boilers
that are unique in the industry. Bryan had sales of $26.3 million in its fiscal
year ending June 30, 1998. Bryan shares Burnham's, philosophy of safety,
reliability and value for its products.
After the acquisition, Bryan will operate as a wholly owned subsidiary of
Burnham. Jesse McVay, currently President of Bryan, will remain as President of
Bryan and will become part of Burnham's senior management. Bryan's products will
continue to be manufactured at its plants and will be marketed exclusively under
the Bryan label through its existing network of independent manufacturers'
representatives.
-1-
<PAGE>
The addition of Bryan will, allow Burnham to participate in the domestic
watertube boiler market to complement its position in the firetube and castiron
boiler markets and to develop an international market for the watertube product.
As a result of this acquisition, Burnham will be more competitive in the
commercial and industrial hydronics market and Bryan will have access to the
resources it needs for continued growth.
AUTHORIZED BY
Ronald L Griffith
Sr. Vice President
Burnham Corporation
717-293-5811
Stockholders' Agreement
In order to induce Burnham Corporation, a New York
corporation ("Buyer"), to execute and deliver the Agreement and
Plan of Merger dated as of the date hereof (as the same may
hereafter be amended, the "Merger Agreement") among Buyer,
Burnham Acquisition Corporation, a New Mexico corporation
("Merger Sub") and Bryan Steam Corporation, a New Mexico
corporation (the "Company"), each undersigned stockholder of the
Company hereby (i) covenants as set forth in the remainder of
this Agreement (the "Agreement"), and (ii) irrevocably appoints
Burnham Corporation, as the exclusive attorney-in-fact and proxy
of such stockholder, with full power of substitution:
(a) to attend any and every meeting (whether annual or
special or both) of the stockholders of the Company,
including any adjournment or postponement thereof, on
behalf of such stockholder, and at each such meeting, with
respect to all shares of common stock of the Company owned
by such stockholder on the date hereof or acquired
hereafter that are entitled to vote at each such meeting or
over which such stockholder has voting power (and any and
all other shares of common or preferred stock of the
Company or other securities issued on or after the date
hereof in respect of any such shares), including, without
limitation, the shares indicated opposite such
stockholder's signature at the end of this Agreement:
(i) to vote in favor of the Merger (as such term
is defined in the Merger Agreement) and to vote in
favor of the adjournment of any meeting, which Buyer
believes may facilitate the obtaining the approval of
the Merger; and otherwise to act with respect to such
shares as said attorney-in-fact and proxy (or his
substitute) shall deem necessary or appropriate to
cause the approval of the Merger by the necessary
majority required under applicable law;
(ii) to vote and otherwise act with respect to
such shares in such a manner as said attorney-in-fact
and proxy (or his substitute) shall deem proper, with
respect to (x) proposals or offers (other than the
Merger) relating to (1) any proposed sale, lease or
other disposition of all or a substantial amount of
the assets of the Company or any of its subsidiaries,
(2) any proposed merger, consolidation or other
combination of the Company or any of its subsidiaries
with any other entity, (3) any sale, issuance,
disposition or granting of rights in respect of the
shares of the Company or of any subsidiary of the
Company or (4) any other proposed action of the
Company or any of its subsidiaries requiring
stockholder approval that would conflict with or
violate the Company's representations, covenants or
obligations under the Merger Agreement, adversely
affect the Company's ability to consummate the Merger
or the other transactions contemplated by the Merger
Agreement or otherwise impede, interfere with or
discourage the Merger (each of the actions described
in (1) - (4) above, an "Acquisition Proposal"), and
(y) any procedural matters presented at any such
meeting at which any action is scheduled to be taken
with respect to the Merger or any Acquisition
Proposal;
1
<PAGE>
(b) if no meeting of stockholders is scheduled in
accordance with the Merger Agreement or if any such meeting
is canceled, postponed or adjourned other than with Buyer's
approval, to call a special stockholders meeting of the
Company for the purpose of (i) approving the Merger or any
action with respect thereto, or (ii) taking action with
respect to any Acquisition Proposal; and
(c) to waive, for the duration of this proxy and
option, any and all rights such stockholder may have to
exercise any rights as dissenting shareholder under
Sections 53- 15-3 and 53-15-4 of the New Mexico Business
Corporation Act, subject to the right to receive the
consideration as specifically provided in the Merger
Agreement.
Each undersigned stockholder agrees (a) not to deposit
any of such stockholder's shares of common stock of the Company
into a voting trust or enter into a voting agreement with respect
to such shares; (b) not to sell, transfer or otherwise dispose of
or pledge or otherwise encumber, any shares of common stock of
the Company, or options or warrants to purchase such shares,
unless the purchaser or transferee of such shares or rights
agrees in writing (a copy of which shall be delivered by such
stockholder to Buyer and Merger Sub) prior to such sale, transfer
or disposition to be bound by and subject to the provisions
contained in this Agreement; and (c) not, in his or her capacity
as stockholder, to solicit, initiate, encourage, endorse, support
(including, by providing information) or participate in any
discussions regarding, any Acquisition Proposal other than the
Merger.
Each undersigned stockholder affirms that this proxy
is issued in connection with the Merger Agreement to facilitate
the transactions contemplated thereunder and in consideration of
Buyer and Merger Sub entering into the Merger Agreement and as
such is coupled with an interest and is irrevocable. This proxy
will terminate upon the earlier to occur of (a) the Effective
Time as defined in the Merger Agreement and (b) the termination
of the Merger Agreement in accordance with its terms. For
purposes of this proxy, any notice of any stockholders' meeting
shall be deemed delivered to the attorney-in-fact and proxy and
his substitutes when delivered to Buyer in accordance with the
Merger Agreement.
By execution and delivery of this Agreement, each
undersigned stockholder confirms that such stockholder has
received a copy of a substantially final form of the Merger
Agreement, and that all other information deemed necessary by
such stockholder concerning the Merger, the Merger Agreement and
the transactions contemplated thereunder or any other matters
considered by such stockholder to be relevant to the
stockholder's decision to execute this Agreement has been made
available to such stockholder.
All authority herein conferred or agreed to be
conferred shall survive the death, insolvency, or incapacity of
any undersigned stockholder and any obligation of any undersigned
stockholder hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of such undersigned
stockholder.
This proxy revokes any and all other proxies
heretofore granted by each and every undersigned stockholder to
vote or otherwise to act with respect to any of the shares to
which this proxy relates. No undersigned stockholder will give
any subsequent proxy or grant any option
2
<PAGE>
with respect to such shares (and such proxy or option if given
will be deemed not to be effective) with respect to such shares
that purports to grant authority within the scope of the
authority hereby conferred.
In order further to induce Merger Sub and Buyer to
enter into the Merger Agreement, each undersigned stockholder
hereby further agrees validly to tender (or cause the record
owner of such shares validly to tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not
later than the tenth business day after commencement of the Offer
pursuant to Section A-1.01 of the Merger Agreement and Rule 14d-2
under the Exchange Act, the number of shares of Bryan Common
Stock set forth opposite such stockholder's name below (the
"Existing Securities" and, together with any shares of Bryan
Common Stock acquired by such stockholder (whether beneficially
or of record) after the date hereof and prior to the termination
of this Agreement by means of purchase, dividend, distribution,
transfer, issuance, or exercise of options or other rights to
acquire Bryan Common Stock (the "Securities")). If any
undersigned stockholder acquires Securities after the date
hereof, such stockholder shall tender (or cause the record holder
to tender) such Securities on or before such tenth business day
or, if later, on or before the second business day after such
acquisition. Each undersigned stockholder hereby acknowledges and
agrees that Merger Sub's obligation to accept for payment,
purchase and pay for the Securities in the Offer, including the
Securities beneficially owned by such stockholder, is subject to
the terms and conditions of the Offer.
Each undersigned stockholder hereby permits Merger Sub
and Buyer to disclose in the Offer documents (and in the proxy
statement, if any, applicable to the Merger) such stockholder's
identity and ownership of the Securities and the content of this
Agreement.
Each undersigned stockholder acknowledges that money
damages would be both incalculable and an insufficient remedy for
any breach of this Agreement by it, and that any such breach
would cause Buyer and Merger Sub irreparable harm. Accordingly,
each undersigned stockholder agrees that in the event of any
breach or threatened breach of this Agreement, Buyer and Merger
Sub, in addition to any other remedies at law or in equity they
may have, shall be entitled, without the requirement of posting a
bond or other security, to equitable relief, including injunctive
relief and specific performance.
The invalidity or unenforceability of any provision of
this Agreement in any jurisdiction shall not affect the validity
or enforceability of any other provision of this Agreement in
such jurisdiction, or the validity or enforceability of any
provision of this Agreement in any other jurisdiction.
Each undersigned stockholder represents and warrants
that, as of the date hereof, such stockholder (a) owns personally
and directly the number of shares of Bryan Common Stock (as
defined in the Merger Agreement) set forth following such
stockholder's name below, (b) owns such stock free and clear of
all liens, security interests, encumbrances, options and other
adverse interests of every kind whatsoever, and (c) may execute
and deliver this Agreement, and perform its obligations
hereunder, without the consent or agreement of any other person
or entity.
3
<PAGE>
Each of the undersigned stockholders hereby
irrevocably waives and releases any and all claims such
stockholder may have as a holder of shares of the Company against
any employee, officer or director of Bryan or any of its
subsidiaries in respect of the conduct of such employee, officer
or director in his or her capacity as such prior to consummation
of the Merger.
For the convenience of the parties, this Agreement may
be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement will only become effective upon the
execution and delivery of the Merger Agreement by Buyer, Merger
Sub and the Company. Capitalized terms used and not defined
herein will have the respective meanings set forth in the Merger
Agreement.
This Agreement shall be governed by the laws of the
State of Indiana except that the provisions hereof with respect
to the granting of proxies, the exercise of the rights granted in
respect of such proxies and the associated appointment of
attorneys-in-fact will be governed by the laws of the
jurisdiction of incorporation of the Company.
Dated: as of September __, 1998
[signature pages follow]
4
<PAGE>
STOCKHOLDERS OF BRYAN STEAM CORPORATION
/s/ Robert L. Miller
---------------------------
Robert Miller
R.R. #2, Box 26
Peru, Indiana 46970
12,198 Shares of Bryan Common
----------
Stock Owned
/s/ Ina Mae Miller
---------------------------
Ina Mae Miller
R.R. #2, Box 26
Peru, Indiana 46970
12,199 Shares of Bryan Common
----------
Stock Owned
/s/ Beverly Bryan
---------------------------
Beverly Bryan
6299 Valley View Drive
Fishers, Indiana 46038
11,591 Shares of Bryan Common
----------
Stock Owned
Georgeanna Williams Revokable Living Trust
by:/s/ Georgeanna Williams
---------------------------
Georgeanna Williams, Trustee
R.R., #3, Box 326A
Peru, Indiana 46970
5,491 Shares of Bryan Common
----------
Stock Owned
/s/ Lisa Lockhart
---------------------------
Lisa Lockhart
10778 Pine Valley Court
Fishers, Indiana 46038
3,060 Shares of Bryan Common
----------
Stock Owned
11,591 Shares of Bryan Common Stock Owned
Jointly with Beverly Bryan and Kenneth
Starkey
5
<PAGE>
/s/ Charles J. Miller
---------------------------
Charles Miller
516B Chinworth Court
Warsaw, Indiana 46580
5,492 Shares of Bryan Common
----------
Stock Owned
/s/ Kenneth Starkey
---------------------------
Kenneth Starkey
10356 Leeward Boulevard
Indianapolis, Indiana 46256
3,059 Shares of Bryan Common
----------
Stock Owned
11,591 Shares of Bryan Common Stock Owned
Jointly with Beverly Bryan and Kenneth
Starkey
/s/ Bryan Herd - Sharon Lee Herd
---------------------------
Bryan Herd and Sharon Herd
1208 Glenwick Drive
Logansport, Indiana 46947
17,706 Shares of Bryan Common
----------
Stock Owned Jointly
/s/ Marilyn Malott and
Paul J. Malott
---------------------------
Marilyn Malott and Paul J. Malott
1500 Liberty Street
Logansport, Indiana 46947
17,829 Shares of Bryan Common
----------
Stock Owned Jointly
/s/ Victor L. Herd and
Kristine G. Herd
---------------------------
Victor Herd and Kristine G. Herd
4083 S.E. Honey Hill Lane
Stuart, Florida 34997
17,690 Shares of Bryan Common
----------
Stock Owned Jointly
6
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF )
Before me, a Notary Public, in and for said County and
State, personally appeared Robert Miller, and acknowledged the
execution of the foregoing instrument, this 22nd day of
September, 1998.
Witness my hand and Notarial Seal this 22nd day of
September, 1998.
/s/ Debra A. Eiler
---------------------------
Debra A. Eiler Notary Public
residing in Miami County,
Indiana
My Commission Expires:
Aug 11, 2001
- -------------------------
SEAL
STATE OF INDIANA )
)SS:
COUNTY OF )
Before me, a Notary Public, in and for said County and
State, personally appeared Ina Mae Miller, and acknowledged the
execution of the foregoing instrument, this 22nd day of
September, 1998.
Witness my hand and Notarial Seal this 22nd day of
September, 1998.
/s/ Debra A. Eiler
---------------------------
Debra A. Eiler Notary Public
residing in Miami County,
Indiana
My Commission Expires:
Aug 11, 2001
- -------------------------
7
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Beverly Bryan, and acknowledged the
execution of the foregoing instrument, this 21st day of
September, 1998.
Witness my hand and Notarial Seal this 21st day of
September, 1998.
/s/ Laura L. Fulton
---------------------------
Notary Public
residing in Miami County,
Indiana
My Commission Expires:
Aug 25, 2000
- -------------------------
8
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Georgeanna Williams, the Trustee of
the Georgeanna Willliams Revocable Trust, who acknowledged the
execution of the foregoing instrument, this 23rd day of
September, 1998.
Witness my hand and Notarial Seal this 23rd day of
September, 1998.
/s/ Laura L. Fulton
---------------------------
Notary Public
residing in Miami County,
Indiana
My Commission Expires:
August 25, 2000
- -------------------------
9
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF )
Before me, a Notary Public, in and for said County and
State, personally appeared Lisa Lockhart, and acknowledged the
execution of the foregoing instrument, this 22nd day of
September, 1998.
Witness my hand and Notarial Seal this 22nd day of
September, 1998.
/s/ Denise A. Weaver
---------------------------
Notary Public
residing in Hamilton County,
Indiana
My Commission Expires:
9-20-02
- -------------------------
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Charles Miller, and acknowledged the
execution of the foregoing instrument, this 21st day of
September, 1998.
Witness my hand and Notarial Seal this 21st day of
September, 1998.
/s/ Laura L. Fulton
---------------------------
Notary Public
residing in Miami County,
Indiana
My Commission Expires:
August 25, 2000
- -------------------------
10
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Kenneth Starkey, and acknowledged the
execution of the foregoing instrument, this 22nd day of
September, 1998.
Witness my hand and Notarial Seal this 22nd day of
September, 1998.
/s/ Laura L. Fulton
---------------------------
Notary Public
residing in Miami County,
Indiana
My Commission Expires:
August 25, 2000
- -------------------------
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Bryan Herd, and acknowledged the
execution of the foregoing instrument, this 21st day of
September, 1998.
Witness my hand and Notarial Seal this 21st day of
September, 1998.
/s/ Laura L. Fulton
---------------------------
Notary Public
residing in Miami County,
Indiana
My Commission Expires:
August 25, 2000
- -------------------------
11
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Marilyn Malott, and acknowledged the
execution of the foregoing instrument, this 21st day of
September, 1998.
Witness my hand and Notarial Seal this 21st day of
September, 1998.
/s/ Laura L. Fulton
---------------------------
Notary Public
residing in Miami County,
Indiana
My Commission Expires:
August 25, 2000
- -------------------------
STATE OF INDIANA )
)SS: Victor L. Herd
COUNTY OF Martin)
Before me, a Notary Public, in and for said County and
State, personally appeared Victor Herd, and acknowledged the
execution of the foregoing instrument, this 19 day of
September, 1998. /s/ Victor L. Herd
------------------
Witness my hand and Notarial Seal this 19th day of
September, 1998.
/s/ Maynard L. Long
---------------------------
Notary Public
residing in Palm Beach County,
Florida
My Commission Expires: SEAL Maynard L. Long
5-23, 2000 Comm. No. CC 557144
- ------------------------- My Comm. Exp. May 23, 2000
Bonded thru Pichard Ins. Agcy.
12
<PAGE>
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Paul Malott, and acknowledged the
execution of the foregoing instrument, this 21st day of
September, 1998.
Witness my hand and Notarial Seal this 21st day of
September, 1998.
/s/ Laura L. Fulton
---------------------------
Notary Public
residing in Miami County,
Indiana
SEAL
My Commission Expires:
August 25, 2000
- -------------------------
STATE OF INDIANA )
)SS:
COUNTY OF MIAMI )
Before me, a Notary Public, in and for said County and
State, personally appeared Sharon Herd, and acknowledged the
execution of the foregoing instrument, this 21st day of
September, 1998.
Witness my hand and Notarial Seal this 21st day of
September, 1998.
/s/ Laura L. Fulton
---------------------------
Notary Public
residing in Miami County,
Indiana
SEAL
My Commission Expires:
August 25, 2000
- -------------------------
13
<PAGE>
STATE OF FLORIDA )
)SS: STUART
COUNTY OF MARTIN )
Before me, a Notary Public, in and for said County and
State, personally appeared Kristine G. Herd and acknowledged the
execution of the foregoing instrument, this 23rd day of
September, 1998. /s/ Kristine G. Herd
--------------------
Witness my hand and Notarial Seal this 23 day of
September, 1998.
/s/ Deloris Vance
---------------------------
Notary Public
residing in Martin County,
Florida
My Commission Expires:
9/2001
- ------------------------- SEAL DELORIS VANCE
Comm. No. CC 678543
My Comm. Exp. Sept 8, 2001
Bonded thru Pichard Ins. Agcy.
14
EMPLOYMENT AGREEMENT
H. Jesse McVay
This Agreement, is made and dated as of April 1, 1998, by and between Bryan
Steam Corporation, a New Mexico corporation ("Employer"), and H. Jesse McVay, a
resident of Miami County, Indiana ("Employee").
WITNESSETH
WHEREAS, Employee has been employed by Employer and has made valuable
contributions to the profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure reasonable and
commensurate compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee
on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of a change of control of
Employer;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of
Employee by Employer, each intending to be legally bound, covenant and agree as
follows:
1. Upon the terms and subject to the conditions set forth in
this Agreement, Employer employs Employee as Employer's
President, and Employee accepts such employment.
2. Employee agrees to serve as Employer's President, and to
perform such duties in that office as may be prescribed by the
Employer's Bylaws and as may reasonably be assigned to him by
Employer's Board of Directors and those generally associated
with the office held by Employee as determined by the Board of
Directors from time to time.
-1-
<PAGE>
Employer shall not, without the written consent of Employee,
relocate or transfer Employee to a location more than 30 miles
from his current employment location. While employed by
Employer, Employee shall devote substantially all his business
time and efforts to Employer's business and the business of
its subsidiaries.
3. The term of this Agreement shall be for an initial term of
three (3) years commencing on April 1, 1998 (the "Effective
Date"), and terminating March 31, 2001; provided, however,
that such term shall be extended for an additional year on
each annual anniversary of the Effective Date, unless either
party thereto gives written notice to the other party not to
so extend within the period of ninety (90) days prior to an
anniversary, in which case no further extension shall occur
and the term of this Agreement shall end two years subsequent
to the annual anniversary immediately following the
anniversary prior to which the notice not to extend for an
additional year is given (such term, including any extension
thereof shall herein be referred to as the "Term").
4. Employee shall receive an annual salary of $77,200 ("Base
Compensation"), payable at regular intervals in accordance
with Employer's normal payroll practices now or hereafter in
effect. Employer may consider and declare from time to time
increases in the salary it pays Employee and thereby increase
his Base Compensation.
5. So long as Employee is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all
present and future employee benefit, retirement, and
compensation plans generally available to employees of
Employer, consistent with his Base Compensation and his
position with Employer, including, without limitation, any
401(k) plan, stock incentive plan, employee stock purchase or
ownership plan, bonus plan, and group life and disability
insurance plans.
6. So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall receive reimbursement, either
directly or through use of an Employer credit card, from
Employer for all reasonable business expenses incurred in the
course of his employment by Employer, upon submission to
Employer of written vouchers and statements for reimbursement.
So long as Employee is employed by Employer pursuant to the
terms of this Agreement, Employer shall continue in effect
vacation policies applicable to Employee no less favorable
from his point of view than those written vacation policies in
effect on the date hereof. So long as Employee is employed by
Employer pursuant to this Agreement, Employee shall be
entitled to office space and working conditions no less
favorable than those in effect for him on the date hereof.
7. Employee's employment with the Employer may be terminated
prior to the expiration of the Term as follows:
-3-
<PAGE>
(A) The Employer may immediately upon written notice
terminate Employee for cause. "Cause" shall be
defined as (i) personal dishonesty, (ii) willful
misconduct, (iii) breach of fiduciary duty involving
personal profit, (iv) intentional failure to perform
stated duties, (v) conviction of a violation of any
law, rule, or regulation (other than traffic
violations or similar offenses) or cease-and-desist
order, (vi) moral turpitude reflecting adversely on
the reputation of the Employer, or (vii) any material
breach of any term, condition or covenant of this
Agreement. The Employer shall have no further
liability to Employee under this Agreement for any
period subsequent to the termination for Cause.
(B) Either party may terminate this Agreement during the
Term without Cause, upon thirty (30) days prior
written notice to the other party. If the Employer
terminates the Employee without Cause (as defined
above), or if Employee terminates his employment for
Good Reason (as defined below):
(i) Compensation provided for herein (including
Base Compensation) shall continue to be
paid, and Employee shall continue to
participate in the employee benefit,
retirement, and compensation plans and other
perquisites as provided in Sections 5 and 6
hereof, through the date of termination
specified in the notice of termination; and
any benefits payable under insurance,
health, retirement and bonus plans as a
result of Employee's participation in such
plans through such date shall be paid when
due under those plans;
(ii) In addition, the Employer shall pay the
Employee a lump sum severance payment equal
to Employee's total salary and bonus
compensation (excluding any transaction
bonus under Section 9) for the immediately
preceding full calendar year plus, if a
Change of Control has occurred, any unpaid
installment of any transaction bonus due
under Section 9 (or which would otherwise
later become due under Section 9); and
(iii) In addition, for one (1) year following
termination, Employer will maintain in full
force and effect for the continued benefit
of Employee and his dependents each employee
medical and life benefit plan (as such term
is defined in the Employee Retirement Income
Security Act of 1974, as amended) in which
Employee was entitled to participate
immediately prior to the date of his
termination, unless an essentially
equivalent benefit is provided by another
source. If the terms of any employee medical
and life benefit plan of Employer or
applicable laws do not permit continued
participation by Employee, Employer will
arrange to provide to Employee a benefit
substantially similar to, and
-4-
<PAGE>
no less favorable than, the benefit he was
entitled to receive under such plan at the
end of the period of coverage. The right of
Employee to continued coverage under the
health and medical insurance plans of
Employer pursuant to Section 4980B of the
Internal Revenue Code of 1986, as amended
(the "Code") shall commence upon the
expiration of such period; and
(iv) Employer will engage at Employer's cost an
out placement firm to assist Employee to
locate an alternative position for Employee
for a period of one (1) year; provided, that
Employer may terminate such firm's
engagement if Employee fails to attend two
or more interviews arranged by such firm or
if Employee is offered any position that
would provide a base compensation of at
least 80% of Employee's Base Compensation on
the date of termination. Employer will make
available reasonable office space and
telephone usage for a period not to exceed
ninety (90) days after terminations.
For purposes of this Agreement, "Good Reason" for
Employee to terminate his employment with Employer
means: a material breach of any term, condition or
covenant of Employer under this Agreement.
(C) Employee's employment with Employer shall terminate
in the event of Employee's death or disability. For
purposes hereof, "disability" shall be defined as
Employee's inability by reason of illness or other
physical or mental incapacity to perform the duties
required by his employment for a consecutive 180 day
period, provided that notice of any termination by
Employer because of Employee's "disability" shall
have been given to Employee prior to the full
resumption by him of the performance of such duties.
8. To induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) Unless otherwise required to do so by law, including
the order of a court or governmental agency, Employee
shall not divulge or furnish any trade secrets (as
defined in IND. CODEss.24-2-3-2) of Employer or any
confidential information acquired by him while
employed by Employer concerning the policies, plans,
procedures or customers of Employer to any person,
firm, corporation or other entity , other than
Employer or upon its written request, or use any such
trade secrets or confidential information directly or
indirectly for Employee's own benefit or for the
benefit of any person, firm, corporation or other
entity other then Employer, because such trade
secrets and confidential information are confidential
and shall at all times remain the property of
Employer.
-5-
<PAGE>
(B) For a period of twelve (12) months after termination
of Employee's employment with Employer for any
reason, Employee shall not (a) compete, directly or
indirectly, in any state or province of the U.S. or
Canada where Employer has a sales representative or
sold products within the 12 months prior to
Employee's termination, with the business of Employer
as conducted during the term of this Agreement (which
business shall include the manufacture or sale of any
products manufactured or sold by Employer during the
12 months prior to Employee's termination), or have
any significant interest (including any interest or
association, including but not limited to, that of
owner, part owner, partner, shareholder, director,
officer, employee, agent, consultant, lender or
advisor) in any person, firm or entity which competes
with Employer's business in the area described above
(each such person, firm or entity is referred to as
"Competitor"); (b) solicit or accept business for or
on behalf of any Competitor; or (c) solicit, induce
or persuade, or attempt to solicit, induce or
persuade, any person to work for or provide services
to or provide financial assistance to, any
Competitor.
(C) If Employee's employment by Employer is terminated
for any reason, Employee will turn over immediately
thereafter to Employer all business correspondence,
letters, papers, reports, customers' lists, financial
statements, records, drawings, credit reports, credit
cards, or other confidential information or documents
of Employer or its affiliates in the possession or
control of Employee, all of which writings are and
will continue to be the sole and exclusive property
of Employer or its affiliates.
(D) Employee acknowledges that the covenants of this
Section 8 are reasonable in scope and duration and
reasonably necessary and appropriate to protect the
goodwill and other appropriate interests of Employer
following Employee's termination and that any
violation of such covenants by Employee would result
in irreparable harm to Employer, for which any remedy
at law would be inadequate. In addition to any other
remedy to which it may be entitled, Employer shall be
entitled to equitable relief, including specific
performance, for any violation of Section 8.
(E) Employee shall, and hereby authorizes Employer to,
inform any successor or prospective employer of
Employee of the terms of this Section 8. Any such
disclosure by Employer and any effort by Employer to
seek Employee's compliance with this covenant, even
if such effort shall require that Employee perform
different duties for such successor employer or delay
his employment by such employer, is hereby expressly
authorized by Employee and shall not be deemed a
violation of any "blacklisting" or similar law.
-6-
<PAGE>
9. If there is a Change of Control of Employer as defined below,
Employee shall be paid a transaction bonus in the amount of
$30,000 payable one-half on the date of the Change of Control
and one-half on the date six (6) months after the Change of
Control, so long as Employer's Board of Directors shall not
have determined on a reasonable basis and in good faith (prior
to any installment date) that Employee has failed to comply
with the Bonus Conditions. "Bonus Conditions" means:
(A) Employee has cooperated fully with Employer and its
advisors and, to the extent directed by Employer, any
party who is engaged or may engage in negotiations
with Employer, regarding any proposed transaction
involving Employer or its shareholders;
(B) Employee shall not have engaged in any activity
intended to discourage any such interested party from
engaging in any such transaction or disparaging the
Employer, its condition, assets or prospects, in the
eyes of any such party;
(C) Employee shall have continued to perform his duties
for Employer with at least the same level of
diligence and performance as characterized Employee's
performance prior to the Effective Date; and
(D) Employee shall not be in breach of any provision of
this Agreement.
Disclosure or statements made by Employee in good faith in response to
appropriate requests from third parties or instructions by Employer that
Employee reasonably believes to be truthful shall not violate the Bonus
Conditions.
For purposes of this Agreement, a "Change of Control" shall mean the occurrence
of any of the following: (i) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger of consolidation), in one or a series
of related transactions, of all or substantially all of the assets of Employer
and it subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act), (ii) the consummation of any transaction
(including, without limitation, any merger of consolidation) the result of which
is that any "person" as defined above, becomes the beneficial owner (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the voting stock of Employer or (iii) the
first day on which a majority of the members of the Board of Directors of
Employer are not Continuing Directors. Notwithstanding the foregoing, a "Change
of Control" shall not occur and no transaction bonus will be payable if the
person that acquires assets or stock of Employer under part (i) or (ii) of the
foregoing definition, is an Employer sponsored employee stock ownership plan, H.
Jesse McVay, a management group led by H. Jesse McVay or a person whose
participation in such transaction was supported or sponsored by such management
group. "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Employer who (i) was a member of such Board of
Directors on the date hereof or (ii) was nominated for election or elected
-7-
<PAGE>
to such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination.
10. Any termination of Employee's employment with Employer as
contemplated by Section 7 hereof, except in the circumstances
of Employee's death, shall be communicated by written "Notice
of Termination" by the terminating party to the other party
hereto. Any "Notice of Termination" pursuant to Section 7
based on Cause or Good Reason shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis
for such termination.
11. If a dispute arises regarding the termination of Employee
pursuant to Section 7 hereof or as to the interpretation or
enforcement of this Agreement, said dispute shall be resolved
by binding arbitration in Indianapolis, Indiana determined in
accordance with the rules of the American Arbitration
Association. Notwithstanding the foregoing, Employer shall be
entitled to seek any remedy in a proceeding at law or in
equity in any court having jurisdiction for any breach of
Section 8.
12. Should Employee die after termination of his employment with
Employer while any amounts are payable to him hereunder, this
Agreement shall inure to the benefit of and ben enforceable by
Employee's executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall
be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there is
no such designee, to his estate.
13. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Employee: H. Jesse McVay
205 Adams Avenue
Peru, IN 46970
If to Employer: Bryan Steam Corporation
P.O. Box 27
Peru, Indiana 46970
Attn: Chairman
or to such address as either party hereto may have furnished
to the other party in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
-8-
<PAGE>
14. The validity, interpretation, and performance of this
Agreement shall be governed by the laws of the State of
Indiana, regardless of the principles of conflicts of laws.
15. Employer shall require any successor (whether direct or
indirect, by purchase, merger, or consolidation or otherwise)
to all or substantially all of the business or assets of
Employer, by agreement in form and substance reasonably
satisfactory to Employee to expressly assume and agree to
perform this Agreement in the same manner and same extent that
Employer would be required to perform it if no such succession
had taken place. As used in this Agreement, "Employer" shall
mean Employer as hereinbefore defined and any successor to its
business or assets as aforesaid.
16. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and Employer. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of dissimilar provisions or
conditions at the same or any prior subsequent time. No
agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement.
17. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in
full fore and effect. This is the entire agreement between
Employer and Employee concerning the subject matter hereof and
all prior agreements, written or oral, are superseded.
18. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
19. This Agreement is personal in nature and neither party hereto
shall, without consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder except as
provided in Section 12 and Section 15 above. Without limiting
the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other
than a transfer by his will or by the laws of descent or
distribution as set forth in Section 12 hereof, and in the
event of any attempted assignment or transfer contrary to this
paragraph, Employer shall have no liability to pay any amounts
so attempted to be assigned or transferred.
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed as of the date first written above.
-9-
<PAGE>
"Employer"
Bryan Steam Corporation
By: /s/ Albert J. Bishop
---------------------------
Its: Chairman
"Employee"
/s/ H. Jesse McVay
---------------------------
H. Jesse McVay
EMPLOYMENT AGREEMENT
Albert J. Bishop
This Agreement, is made and dated as of April 1, 1998, by and between Bryan
Steam Corporation, a New Mexico corporation ("Employer"), and Albert J. Bishop,
a resident of Miami County, Indiana ("Employee").
WITNESSETH
WHEREAS, Employee has been employed by Employer and has made valuable
contributions to the profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure reasonable and
commensurate compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee
on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of a change of control of
Employer;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of
Employee by Employer, each intending to be legally bound, covenant and agree as
follows:
1. Upon the terms and subject to the conditions set forth in
this Agreement, Employer employs Employee as Employer's
Chairman or another position commensurate with Employee's
experience and ability, and Employee accepts such employment.
2. Employee agrees to serve as Employer's Chairman or such other
position, and to perform such duties in that office as may be
prescribed by the Employer's Bylaws and as may reasonably be
assigned to him by Employer's Board of Directors and those
generally associated with the office held by Employee as
determined by the Board of Directors from time to time.
-1-
<PAGE>
Employer shall not, without the written consent of Employee,
relocate or transfer Employee to a location more than 30 miles
from his current employment location. While employed by
Employer, Employee shall devote his business time and efforts
to Employer's business and the business of its subsidiaries.
Employer shall not require Employee to work on a full-time
basis. Subject to special requirements of Employer's business
that may arise from time to time, Employee shall not generally
be required to devote more than 10 hours per week to
Employer's business.
3. The term of this Agreement shall be for an initial term of
five (5) years commencing on April 1, 1998 (the "Effective
Date"), (such term shall herein be referred to as the "Term").
4. Employee shall receive an annual salary of $12,000 ("Base
Compensation"), payable at regular intervals in accordance
with Employer's normal payroll practices now or hereafter in
effect. Employer may consider and declare from time to time
increases in the salary it pays Employee and thereby increase
his Base Compensation.
5. So long as Employee is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all
present and future employee benefit, retirement, and
compensation plans generally available to employees of
Employer, consistent with his Base Compensation and his
position with Employer, including, without limitation, any
401(k) plan, stock incentive plan, employee stock purchase or
ownership plan, bonus plan, and group life and disability
insurance plans. Employer shall continue to provide Employee
with an automobile for his personal and business use,
consistent with past practice.
6. So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall receive reimbursement, either
directly or through use of an Employer credit card, from
Employer for all reasonable business expenses incurred in the
course of his employment by Employer, upon submission to
Employer of written vouchers and statements for reimbursement.
So long as Employee is employed by Employer pursuant to the
terms of this Agreement, Employer shall continue in effect
vacation policies applicable to Employee no less favorable
from his point of view than those written vacation policies in
effect on the date hereof. So long as Employee is employed by
Employer pursuant to this Agreement, Employee shall be
entitled to office space and working conditions no less
favorable than those in effect for him on the date hereof.
7. Employee's employment with the Employer may be terminated
prior to the expiration of the Term as follows:
(A) The Employer may immediately upon written notice
terminate Employee for cause. "Cause" shall be
defined as (i) personal dishonesty, (ii) willful
-2-
<PAGE>
misconduct, (iii) breach of fiduciary duty involving
personal profit, (iv) intentional failure to perform
stated duties, (v) conviction of a violation of any
law, rule, or regulation (other than traffic
violations or similar offenses) or cease-and-desist
order, (vi) moral turpitude reflecting adversely on
the reputation of the Employer, or (vii) any material
breach of any term, condition or covenant of this
Agreement. The Employer shall have no further
liability to Employee under this Agreement for any
period subsequent to the termination for Cause.
(B) Either party may terminate this Agreement during the
Term without Cause, upon thirty (30) days prior
written notice to the other party. If the Employer
terminates the Employee without Cause (as defined
above):
(i) Compensation provided for herein (including
Base Compensation) shall continue to be
paid, and Employee shall continue to
participate in the employee benefit,
retirement, and compensation plans and other
perquisites as provided in Sections 5 and 6
hereof, through the date of termination
specified in the notice of termination; and
any benefits payable under insurance,
health, retirement and bonus plans as a
result of Employee's participation in such
plans through such date shall be paid when
due under those plans;
(ii) In addition, the Employer shall pay the
Employee as severance compensation monthly
payments equal to Employee's Base
Compensation for the full remainder of the
Term plus, if a Change of Control has
occurred, any unpaid installments of any
transaction bonus due under Section 9 at the
time such installments would otherwise
become due; and
(iii) In addition, for the full remainder of the
Term following termination, Employer will
maintain in full force and effect for the
continued benefit of Employee and his
dependents each employee medical and life
benefit plan (as such term is defined in the
Employee Retirement Income Security Act of
1974, as amended) in which Employee was
entitled to participate immediately prior to
the date of his termination, unless an
essentially equivalent benefit is provided
by another source. If the terms of any
employee medical and life benefit plan of
Employer or applicable laws do not permit
continued participation by Employee,
Employer will arrange to provide to
Employee, to the extent Employee is
eligible, a benefit substantially similar to
the benefit he was entitled to receive under
such plan at the end of the period of
coverage. Employee acknowledges that such
replacement coverage may consist of a
combination of Medicare and Medicare
Supplement
-3-
<PAGE>
coverage, that such coverage may not provide
as complete coverage for prescription
medication, for example, and may depend,
among other things, upon timely elections on
the part of Employee and/or his spouse, and
Employee's eligibility for such coverage.
The right of Employee, if any, to continued
coverage under the health and medical
insurance plans of Employer pursuant to
Section 4980B of the Internal Revenue Code
of 1986, as amended (the "Code") shall
commence upon the expiration of such period;
and
(iv) On the date of termination, Employer shall
transfer and convey to Employee the
automobile then being provided for
Employee's use under Section 5.
(C) Employee's employment with Employer shall terminate
in the event of Employee's death or disability. For
purposes hereof, "disability" shall be defined as
Employee's inability by reason of illness or other
physical or mental incapacity to perform the duties
required by his employment for a consecutive 180 day
period, provided that notice of any termination by
Employer because of Employee's "disability" shall
have been given to Employee prior to the full
resumption by him of the performance of such duties.
8. To induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) Unless otherwise required to do so by law, including
the order of a court or governmental agency, Employee
shall not divulge or furnish any trade secrets (as
defined in IND. CODEss.24-2-3-2) of Employer or any
confidential information acquired by him while
employed by Employer concerning the policies, plans,
procedures or customers of Employer to any person,
firm, corporation or other entity , other than
Employer or upon its written request, or use any such
trade secrets or confidential information directly or
indirectly for Employee's own benefit or for the
benefit of any person, firm, corporation or other
entity other then Employer, because such trade
secrets and confidential information are confidential
and shall at all times remain the property of
Employer.
(B) For a period of twelve (12) months after termination
of Employee's employment with Employer for any
reason, Employee shall not (a) compete, directly or
indirectly, in any state or province of the U.S. or
Canada where Employer has a sales representative or
sold products within the 12 months prior to
Employee's termination, with the business of Employer
as conducted during the term of this Agreement (which
business shall include the manufacture or sale of any
products manufactured or sold by Employer during the
12 months prior to Employee's termination), or have
any significant
-4-
<PAGE>
interest (including any interest or association,
including but not limited to, that of owner, part
owner, partner, shareholder, director, officer,
employee, agent, consultant, lender or advisor) in
any person, firm or entity which competes with
Employer's business in the area described above (each
such person, firm or entity is referred to as
"Competitor"); (b) solicit or accept business for or
on behalf of any Competitor; or (c) solicit, induce
or persuade, or attempt to solicit, induce or
persuade, any person to work for or provide services
to or provide financial assistance to, any
Competitor.
(C) If Employee's employment by Employer is terminated
for any reason, Employee will turn over immediately
thereafter to Employer all business correspondence,
letters, papers, reports, customers' lists, financial
statements, records, drawings, credit reports, credit
cards, or other confidential information or documents
of Employer or its affiliates in the possession or
control of Employee, all of which writings are and
will continue to be the sole and exclusive property
of Employer or its affiliates.
(D) Employee acknowledges that the covenants of this
Section 8 are reasonable in scope and duration and
reasonably necessary and appropriate to protect the
goodwill and other appropriate interests of Employer
following Employee's termination and that any
violation of such covenants by Employee would result
in irreparable harm to Employer, for which any remedy
at law would be inadequate. In addition to any other
remedy to which it may be entitled, Employer shall be
entitled to equitable relief, including specific
performance, for any violation of Section 8.
(E) Employee shall, and hereby authorizes Employer to,
inform any successor or prospective employer of
Employee of the terms of this Section 8. Any such
disclosure by Employer and any effort by Employer to
seek Employee's compliance with this covenant, even
if such effort shall require that Employee perform
different duties for such successor employer or delay
his employment by such employer, is hereby expressly
authorized by Employee and shall not be deemed a
violation of any "blacklisting" or similar law.
9. If there is a Change of Control of Employer as defined below,
Employee shall be paid a transaction bonus in the amount of
$50,000 payable immediately following the Change of Control,
unless Employee shall, prior to the Change of Control, deliver
to Employee an irrevocable written election to defer such
payment and determining the amounts and times (not more
frequently than monthly and not later than the end of the
Term) for deferred payment. In the case of deferral, Employer
shall pay the transaction bonus on the basis of Employee's
deferral election. Such transaction bonus shall not, however,
be paid if Employer's Board of Directors shall have determined
on a reasonable basis and in good faith (prior to such Change
of Control)
-5-
<PAGE>
that Employee has failed to comply with the Bonus Conditions.
"Bonus Conditions" means:
(A) Employee has cooperated fully with Employer and its
advisors and, to the extent directed by Employer, any
party who is engaged or may engage in negotiations
with Employer, regarding any proposed transaction
involving Employer or its shareholders;
(B) Employee shall not have engaged in any activity
intended to discourage any such interested party from
engaging in any such transaction or disparaging the
Employer, its condition, assets or prospects, in the
eyes of any such party;
(C) Employee shall have continued to perform his duties
for Employer with at least the same level of
diligence and performance as characterized Employee's
performance prior to the Effective Date; and
(D) Employee shall not be in breach of any provision of
this Agreement.
Disclosure or statements made by Employee in good faith in response to
appropriate requests from third parties or instructions by Employer that
Employee reasonably believes to be truthful shall not violate the Bonus
Conditions.
For purposes of this Agreement, a "Change of Control" shall mean the occurrence
of any of the following: (i) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger of consolidation), in one or a series
of related transactions, of all or substantially all of the assets of Employer
and it subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act), (ii) the consummation of any transaction
(including, without limitation, any merger of consolidation) the result of which
is that any "person" as defined above, becomes the beneficial owner (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the voting stock of Employer or (iii) the
first day on which a majority of the members of the Board of Directors of
Employer are not Continuing Directors. Notwithstanding the foregoing, a "Change
of Control" shall not occur and no transaction bonus will be payable if the
person that acquires assets or stock of Employer under part (i) or (ii) of the
foregoing definition, is an Employer sponsored employee stock ownership plan, H.
Jesse McVay, a management group led by H. Jesse McVay or a person whose
participation in such transaction was supported or sponsored by such management
group. "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Employer who (i) was a member of such Board of
Directors on the date hereof or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination.
10. Any termination of Employee's employment with Employer as
contemplated by Section 7 hereof, except in the circumstances
of Employee's death, shall be
-6-
<PAGE>
communicated by written "Notice of Termination" by the
terminating party to the other party hereto. Any "Notice of
Termination" pursuant to Section 7 based on Cause shall set
forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination.
11. If a dispute arises regarding the termination of Employee
pursuant to Section 7 hereof or as to the interpretation or
enforcement of this Agreement, said dispute shall be resolved
by binding arbitration in Indianapolis, Indiana determined in
accordance with the rules of the American Arbitration
Association. Notwithstanding the foregoing, Employer shall be
entitled to seek any remedy in a proceeding at law or in
equity in any court having jurisdiction for any breach of
Section 8.
12. Should Employee die after termination of his employment with
Employer while any amounts are payable to him hereunder, this
Agreement shall inure to the benefit of and ben enforceable by
Employee's executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall
be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there is
no such designee, to his estate.
13. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Employee: Albert J. Bishop
173 East Sixth Street
Peru, IN 46970
If to Employer: Bryan Steam Corporation
P.O. Box 27
Peru, Indiana 46970
Attn: President
or to such address as either party hereto may have furnished
to the other party in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
14. The validity, interpretation, and performance of this
Agreement shall be governed by the laws of the State of
Indiana, regardless of the principles of conflicts of laws.
15. Employer shall require any successor (whether direct or
indirect, by purchase, merger, or consolidation or otherwise)
to all or substantially all of the business or assets of
Employer, by agreement in form and substance reasonably
satisfactory to Employee
-7-
<PAGE>
to expressly assume and agree to perform this Agreement in the
same manner and same extent that Employer would be required to
perform it if no such succession had taken place. As used in
this Agreement, "Employer" shall mean Employer as hereinbefore
defined and any successor to its business or assets as
aforesaid.
16. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and Employer. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of dissimilar provisions or
conditions at the same or any prior subsequent time. No
agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement.
17. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in
full fore and effect. This is the entire agreement between
Employer and Employee concerning the subject matter hereof and
all prior agreements, written or oral, are superseded.
18. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
19. This Agreement is personal in nature and neither party hereto
shall, without consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder except as
provided in Section 12 and Section 15 above. Without limiting
the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other
than a transfer by his will or by the laws of descent or
distribution as set forth in Section 12 hereof, and in the
event of any attempted assignment or transfer contrary to this
paragraph, Employer shall have no liability to pay any amounts
so attempted to be assigned or transferred.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed as of the date first written above.
"Employer"
Bryan Steam Corporation
By: /s/ Jesse McVay
---------------------------
Its: President
"Employee"
/s/ Albert J. Bishop
---------------------------
Albert J. Bishop
EMPLOYMENT AGREEMENT
Richard D. Holmquist
This Agreement, is made and dated as of April 1, 1998, by and between Bryan
Steam Corporation, a New Mexico corporation ("Employer"), and Richard D.
Holmquist, a resident of Wabash County, Indiana ("Employee").
WITNESSETH
WHEREAS, Employee has been employed by Employer and has made valuable
contributions to the profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure reasonable and
commensurate compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee
on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of a change of control of
Employer;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of
Employee by Employer, each intending to be legally bound, covenant and agree as
follows:
1. Upon the terms and subject to the conditions set forth in this
Agreement, Employer employs Employee as Employer's Sales
Manager or another position commensurate with Employee's
experience and ability, and Employee accepts such employment.
2. Employee agrees to serve as Employer's Sales Manager or such
other position, and to perform such duties in that office as
may be prescribed by the Employer's Bylaws and as may
reasonably be assigned to him by Employer's President or Board
of Directors and those generally associated with the office
held by Employee as determined by the President or Board of
Directors from time to time.
-1-
<PAGE>
Employer shall not, without the written consent of Employee,
relocate or transfer Employee to a location more than 30 miles
from his current employment location. While employed by
Employer, Employee shall devote substantially all his business
time and efforts to Employer's business and the business of
its subsidiaries.
3. The term of this Agreement shall be for an initial term of two
(2) years commencing on April 1, 1998 (the "Effective Date"),
(such term shall herein be referred to as the "Term").
4. Employee shall receive an annual salary of $69,240 ("Base
Compensation"), payable at regular intervals in accordance
with Employer's normal payroll practices now or hereafter in
effect. Employer may consider and declare from time to time
increases in the salary it pays Employee and thereby increase
his Base Compensation.
5. So long as Employee is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all
present and future employee benefit, retirement, and
compensation plans generally available to employees of
Employer, consistent with his Base Compensation and his
position with Employer, including, without limitation, any
401(k) plan, stock incentive plan, employee stock purchase or
ownership plan, bonus plan, and group life and disability
insurance plans.
6. So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall receive reimbursement, either
directly or through use of an Employer credit card, from
Employer for all reasonable business expenses incurred in the
course of his employment by Employer, upon submission to
Employer of written vouchers and statements for reimbursement.
So long as Employee is employed by Employer pursuant to the
terms of this Agreement, Employer shall continue in effect
vacation policies applicable to Employee no less favorable
from his point of view than those written vacation policies in
effect on the date hereof. So long as Employee is employed by
Employer pursuant to this Agreement, Employee shall be
entitled to office space and working conditions no less
favorable than those in effect for him on the date hereof.
7. Employee's employment with the Employer may be terminated
prior to the expiration of the Term as follows:
(A) The Employer may immediately upon written notice
terminate Employee for cause. "Cause" shall be
defined as (i) personal dishonesty, (ii) willful
misconduct, (iii) breach of fiduciary duty involving
personal profit, (iv) intentional failure to perform
stated duties, (v) conviction of a violation of any
law, rule, or regulation (other than traffic
violations or similar offenses) or cease-and-desist
order, (vi) moral turpitude reflecting adversely on
the reputation of the Employer, or (vii) any material
breach of any term, condition
-2-
<PAGE>
or covenant of this Agreement. The Employer shall
have no further liability to Employee under this
Agreement for any period subsequent to the
termination for Cause.
(B) Either party may terminate this Agreement during the
Term without Cause, upon thirty (30) days prior
written notice to the other party. If the Employer
terminates the Employee without Cause (as defined
above), or if Employee terminates his employment for
Good Reason (as defined below):
(i) Compensation provided for herein (including
Base Compensation) shall continue to be
paid, and Employee shall continue to
participate in the employee benefit,
retirement, and compensation plans and other
perquisites as provided in Sections 5 and 6
hereof, through the date of termination
specified in the notice of termination; and
any benefits payable under insurance,
health, retirement and bonus plans as a
result of Employee's participation in such
plans through such date shall be paid when
due under those plans;
(ii) In addition, the Employer shall pay the
Employee a lump sum severance payment equal
to fifty percent (50%) of Employee's total
salary and bonus compensation (excluding any
transaction bonus under Section 9) for the
immediately calendar year plus, if a Change
of Control has occurred, any unpaid
installment of any transaction bonus due
under Section 9 (or which would otherwise
later become due under Section 9); and
(iii) In addition, for one (1) year following
termination, Employer will maintain in full
force and effect for the continued benefit
of Employee and his dependents each employee
medical and life benefit plan (as such term
is defined in the Employee Retirement Income
Security Act of 1974, as amended) in which
Employee was entitled to participate
immediately prior to the date of his
termination, unless an essentially
equivalent benefit is provided by another
source. If the terms of any employee medical
and life benefit plan of Employer or
applicable laws do not permit continued
participation by Employee, Employer will
arrange to provide to Employee a benefit
substantially similar to, and no less
favorable than, the benefit he was entitled
to receive under such plan at the end of the
period of coverage. The right of Employee to
continued coverage under the health and
medical insurance plans of Employer pursuant
to Section 4980B of the Internal Revenue
Code of 1986, as amended (the "Code") shall
commence upon the expiration of such period;
and
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<PAGE>
(iv) Employer will engage at Employer's cost an
out placement firm to assist Employee to
locate an alternative position for Employee
for a period of one (1) year; provided, that
Employer may terminate such firm's
engagement if Employee fails to attend two
or more interviews arranged by such firm or
if Employee is offered any position that
would provide a base compensation of at
least 80% of Employee's Base Compensation on
the date of termination. Employer will make
available reasonable office space and
telephone usage for a period not to exceed
ninety (90) days after terminations.
For purposes of this Agreement, "Good Reason" for
Employee to terminate his employment with Employer
means: a material breach of any term, condition or
covenant of Employer under this Agreement.
(C) Employee's employment with Employer shall terminate
in the event of Employee's death or disability. For
purposes hereof, "disability" shall be defined as
Employee's inability by reason of illness or other
physical or mental incapacity to perform the duties
required by his employment for a consecutive 180 day
period, provided that notice of any termination by
Employer because of Employee's "disability" shall
have been given to Employee prior to the full
resumption by him of the performance of such duties.
8. To induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) Unless otherwise required to do so by law, including
the order of a court or governmental agency, Employee
shall not divulge or furnish any trade secrets (as
defined in IND. CODEss.24-2-3-2) of Employer or any
confidential information acquired by him while
employed by Employer concerning the policies, plans,
procedures or customers of Employer to any person,
firm, corporation or other entity , other than
Employer or upon its written request, or use any such
trade secrets or confidential information directly or
indirectly for Employee's own benefit or for the
benefit of any person, firm, corporation or other
entity other then Employer, because such trade
secrets and confidential information are confidential
and shall at all times remain the property of
Employer.
(B) For a period of six (6) months after termination of
Employee's employment with Employer for any reason,
Employee shall not (a) compete, directly or
indirectly, in any state or province of the U.S. or
Canada where Employer has a sales representative or
sold products within the 12 months prior to
Employee's termination, with the business of Employer
as conducted during the term of this Agreement (which
business shall include the manufacture or sale of any
products manufactured or sold by Employer during the
12 months
-4-
<PAGE>
prior to Employee's termination), or have any
significant interest (including any interest or
association, including but not limited to, that of
owner, part owner, partner, shareholder, director,
officer, employee, agent, consultant, lender or
advisor) in any person, firm or entity which competes
with Employer's business in the area described above
(each such person, firm or entity is referred to as
"Competitor"); (b) solicit or accept business for or
on behalf of any Competitor; or (c) solicit, induce
or persuade, or attempt to solicit, induce or
persuade, any person to work for or provide services
to or provide financial assistance to, any
Competitor.
(C) If Employee's employment by Employer is terminated
for any reason, Employee will turn over immediately
thereafter to Employer all business correspondence,
letters, papers, reports, customers' lists, financial
statements, records, drawings, credit reports, credit
cards, or other confidential information or documents
of Employer or its affiliates in the possession or
control of Employee, all of which writings are and
will continue to be the sole and exclusive property
of Employer or its affiliates.
(D) Employee acknowledges that the covenants of this
Section 8 are reasonable in scope and duration and
reasonably necessary and appropriate to protect the
goodwill and other appropriate interests of Employer
following Employee's termination and that any
violation of such covenants by Employee would result
in irreparable harm to Employer, for which any remedy
at law would be inadequate. In addition to any other
remedy to which it may be entitled, Employer shall be
entitled to equitable relief, including specific
performance, for any violation of Section 8.
(E) Employee shall, and hereby authorizes Employer to,
inform any successor or prospective employer of
Employee of the terms of this Section 8. Any such
disclosure by Employer and any effort by Employer to
seek Employee's compliance with this covenant, even
if such effort shall require that Employee perform
different duties for such successor employer or delay
his employment by such employer, is hereby expressly
authorized by Employee and shall not be deemed a
violation of any "blacklisting" or similar law.
9. If there is a Change of Control of Employer as defined below,
Employee shall be paid a transaction bonus in the amount of
$4,000 payable one-half on the date of the Change of Control
and one-half on the date six (6) months after the Change of
Control, so long as Employer's Board of Directors shall not
have determined on a reasonable basis and in good faith (prior
to any installment date) that Employee has failed to comply
with the Bonus Conditions. "Bonus Conditions" means:
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<PAGE>
(A) Employee has cooperated fully with Employer and its
advisors and, to the extent directed by Employer, any
party who is engaged or may engage in negotiations
with Employer, regarding any proposed transaction
involving Employer or its shareholders;
(B) Employee shall not have engaged in any activity
intended to discourage any such interested party from
engaging in any such transaction or disparaging the
Employer, its condition, assets or prospects, in the
eyes of any such party;
(C) Employee shall have continued to perform his duties
for Employer with at least the same level of
diligence and performance as characterized Employee's
performance prior to the Effective Date; and
(D) Employee shall not be in breach of any provision of
this Agreement.
Disclosure or statements made by Employee in good faith in response to
appropriate requests from third parties or instructions by Employer that
Employee reasonably believes to be truthful shall not violate the Bonus
Conditions.
For purposes of this Agreement, a "Change of Control" shall mean the occurrence
of any of the following: (i) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger of consolidation), in one or a series
of related transactions, of all or substantially all of the assets of Employer
and it subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act), (ii) the consummation of any transaction
(including, without limitation, any merger of consolidation) the result of which
is that any "person" as defined above, becomes the beneficial owner (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the voting stock of Employer or (iii) the
first day on which a majority of the members of the Board of Directors of
Employer are not Continuing Directors. Notwithstanding the foregoing, a "Change
of Control" shall not occur and no transaction bonus will be payable if the
person that acquires assets or stock of Employer under part (i) or (ii) of the
foregoing definition, is an Employer sponsored employee stock ownership plan, H.
Jesse McVay, a management group led by H. Jesse McVay or a person whose
participation in such transaction was supported or sponsored by such management
group. "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Employer who (i) was a member of such Board of
Directors on the date hereof or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination.
10. Any termination of Employee's employment with Employer as
contemplated by Section 7 hereof, except in the circumstances
of Employee's death, shall be communicated by written "Notice
of Termination" by the terminating party to the other party
hereto. Any "Notice of Termination" pursuant to Section 7
based on
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<PAGE>
Cause or Good Reason shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for such
termination.
11. If a dispute arises regarding the termination of Employee
pursuant to Section 7 hereof or as to the interpretation or
enforcement of this Agreement, said dispute shall be resolved
by binding arbitration in Indianapolis, Indiana determined in
accordance with the rules of the American Arbitration
Association. Notwithstanding the foregoing, Employer shall be
entitled to seek any remedy in a proceeding at law or in
equity in any court having jurisdiction for any breach of
Section 8.
12. Should Employee die after termination of his employment with
Employer while any amounts are payable to him hereunder, this
Agreement shall inure to the benefit of and ben enforceable by
Employee's executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall
be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there is
no such designee, to his estate.
13. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Employee: Richard D. Holmquist
686 Valley Brook Lane
Wabash, IN 46992
If to Employer: Bryan Steam Corporation
P.O. Box 27
Peru, Indiana 46970
Attn: Chairman
or to such address as either party hereto may have furnished
to the other party in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
14. The validity, interpretation, and performance of this
Agreement shall be governed by the laws of the State of
Indiana, regardless of the principles of conflicts of laws.
15. Employer shall require any successor (whether direct or
indirect, by purchase, merger, or consolidation or otherwise)
to all or substantially all of the business or assets of
Employer, by agreement in form and substance reasonably
satisfactory to Employee to expressly assume and agree to
perform this Agreement in the same manner and same extent that
Employer would be required to perform it if no such succession
had
-7-
<PAGE>
taken place. As used in this Agreement, "Employer" shall mean
Employer as hereinbefore defined and any successor to its
business or assets as aforesaid.
16. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and Employer. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of dissimilar provisions or
conditions at the same or any prior subsequent time. No
agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement.
17. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in
full fore and effect. This is the entire agreement between
Employer and Employee concerning the subject matter hereof and
all prior agreements, written or oral, are superseded.
18. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
19. This Agreement is personal in nature and neither party hereto
shall, without consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder except as
provided in Section 12 and Section 15 above. Without limiting
the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other
than a transfer by his will or by the laws of descent or
distribution as set forth in Section 12 hereof, and in the
event of any attempted assignment or transfer contrary to this
paragraph, Employer shall have no liability to pay any amounts
so attempted to be assigned or transferred.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed as of the date first written above.
"Employer"
Bryan Steam Corporation
By: /s/ Jesse McVay
---------------------------
Its: President
"Employee"
/s/ Richard D. Holmquist
---------------------------
Richard D. Holmquist
-9-
EMPLOYMENT AGREEMENT
Kurt J. Krauskopf
This Agreement, is made and dated as of April 1, 1998, by and between Bryan
Steam Corporation, a New Mexico corporation ("Employer"), and Kurt J. Krauskopf,
a resident of Miami County, Indiana ("Employee").
WITNESSETH
WHEREAS, Employee has been employed by Employer and has made valuable
contributions to the profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure reasonable and
commensurate compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee
on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of a change of control of
Employer;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of
Employee by Employer, each intending to be legally bound, covenant and agree as
follows:
1. Upon the terms and subject to the conditions set forth in
this Agreement, Employer employs Employee as Employer's
Comptroller or another position commensurate with Employee's
experience and ability, and Employee accepts such employment.
2. Employee agrees to serve as Employer's Comptroller or such
other position, and to perform such duties in that office as
may be prescribed by the Employer's Bylaws and as may
reasonably be assigned to him by Employer's President or Board
of Directors and those generally associated with the office
held by Employee as determined by the President or Board of
Directors from time to time.
-1-
<PAGE>
Employer shall not, without the written consent of Employee,
relocate or transfer Employee to a location more than 30 miles
from his current employment location. While employed by
Employer, Employee shall devote substantially all his business
time and efforts to Employer's business and the business of
its subsidiaries.
3. The term of this Agreement shall be for an initial term of two
(2) years commencing on April 1, 1998 (the "Effective Date"),
(such term shall herein be referred to as the "Term").
4. Employee shall receive an annual salary of $40,560 ("Base
Compensation"), payable at regular intervals in accordance
with Employer's normal payroll practices now or hereafter in
effect. Employer may consider and declare from time to time
increases in the salary it pays Employee and thereby increase
his Base Compensation.
5. So long as Employee is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all
present and future employee benefit, retirement, and
compensation plans generally available to employees of
Employer, consistent with his Base Compensation and his
position with Employer, including, without limitation, any
401(k) plan, stock incentive plan, employee stock purchase or
ownership plan, bonus plan, and group life and disability
insurance plans.
6. So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall receive reimbursement, either
directly or through use of an Employer credit card, from
Employer for all reasonable business expenses incurred in the
course of his employment by Employer, upon submission to
Employer of written vouchers and statements for reimbursement.
So long as Employee is employed by Employer pursuant to the
terms of this Agreement, Employer shall continue in effect
vacation policies applicable to Employee no less favorable
from his point of view than those written vacation policies in
effect on the date hereof. So long as Employee is employed by
Employer pursuant to this Agreement, Employee shall be
entitled to office space and working conditions no less
favorable than those in effect for him on the date hereof.
7. Employee's employment with the Employer may be terminated
prior to the expiration of the Term as follows:
(A) The Employer may immediately upon written notice
terminate Employee for cause. "Cause" shall be
defined as (i) personal dishonesty, (ii) willful
misconduct, (iii) breach of fiduciary duty involving
personal profit, (iv) intentional failure to perform
stated duties, (v) conviction of a violation of any
law, rule, or regulation (other than traffic
violations or similar offenses) or cease-and-desist
order, (vi) moral turpitude reflecting adversely on
the reputation of the Employer, or (vii) any material
breach of any term, condition
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<PAGE>
or covenant of this Agreement. The Employer shall
have no further liability to Employee under this
Agreement for any period subsequent to the
termination for Cause.
(B) Either party may terminate this Agreement during the
Term without Cause, upon thirty (30) days prior
written notice to the other party. If the Employer
terminates the Employee without Cause (as defined
above), or if Employee terminates his employment for
Good Reason (as defined below):
(i) Compensation provided for herein (including
Base Compensation) shall continue to be
paid, and Employee shall continue to
participate in the employee benefit,
retirement, and compensation plans and other
perquisites as provided in Sections 5 and 6
hereof, through the date of termination
specified in the notice of termination; and
any benefits payable under insurance,
health, retirement and bonus plans as a
result of Employee's participation in such
plans through such date shall be paid when
due under those plans;
(ii) In addition, the Employer shall pay the
Employee a lump sum severance payment equal
to fifty percent (50%) of Employee's total
salary and bonus compensation (excluding any
transaction bonus under Section 9) for the
immediately preceding calendar year plus, if
a Change of Control has occurred, any unpaid
installment of any transaction bonus due
under Section 9 (or which would otherwise
later become due under Section 9); and
(iii) In addition, for one (1) year following
termination, Employer will maintain in full
force and effect for the continued benefit
of Employee and his dependents each employee
medical and life benefit plan (as such term
is defined in the Employee Retirement Income
Security Act of 1974, as amended) in which
Employee was entitled to participate
immediately prior to the date of his
termination, unless an essentially
equivalent benefit is provided by another
source. If the terms of any employee medical
and life benefit plan of Employer or
applicable laws do not permit continued
participation by Employee, Employer will
arrange to provide to Employee a benefit
substantially similar to, and no less
favorable than, the benefit he was entitled
to receive under such plan at the end of the
period of coverage. The right of Employee to
continued coverage under the health and
medical insurance plans of Employer pursuant
to Section 4980B of the Internal Revenue
Code of 1986, as amended (the "Code") shall
commence upon the expiration of such period;
and
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<PAGE>
(iv) Employer will engage at Employer's cost an
out placement firm to assist Employee to
locate an alternative position for Employee
for a period of one (1) year; provided, that
Employer may terminate such firm's
engagement if Employee fails to attend two
or more interviews arranged by such firm or
if Employee is offered any position that
would provide a base compensation of at
least 80% of Employee's Base Compensation on
the date of termination. Employer will make
available reasonable office space and
telephone usage for a period not to exceed
ninety (90) days after terminations.
For purposes of this Agreement, "Good Reason" for
Employee to terminate his employment with Employer
means: a material breach of any term, condition or
covenant of Employer under this Agreement.
(C) Employee's employment with Employer shall terminate
in the event of Employee's death or disability. For
purposes hereof, "disability" shall be defined as
Employee's inability by reason of illness or other
physical or mental incapacity to perform the duties
required by his employment for a consecutive 180 day
period, provided that notice of any termination by
Employer because of Employee's "disability" shall
have been given to Employee prior to the full
resumption by him of the performance of such duties.
8. To induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) Unless otherwise required to do so by law, including
the order of a court or governmental agency, Employee
shall not divulge or furnish any trade secrets (as
defined in IND. CODEss.24-2-3-2) of Employer or any
confidential information acquired by him while
employed by Employer concerning the policies, plans,
procedures or customers of Employer to any person,
firm, corporation or other entity , other than
Employer or upon its written request, or use any such
trade secrets or confidential information directly or
indirectly for Employee's own benefit or for the
benefit of any person, firm, corporation or other
entity other then Employer, because such trade
secrets and confidential information are confidential
and shall at all times remain the property of
Employer.
(B) For a period of six (6) months after termination of
Employee's employment with Employer for any reason,
Employee shall not (a) compete, directly or
indirectly, in any state or province of the U.S. or
Canada where Employer has a sales representative or
sold products within the 12 months prior to
Employee's termination, with the business of Employer
as conducted during the term of this Agreement (which
business shall include the manufacture or sale of any
products manufactured or sold by Employer during the
12 months
-4-
<PAGE>
prior to Employee's termination), or have any
significant interest (including any interest or
association, including but not limited to, that of
owner, part owner, partner, shareholder, director,
officer, employee, agent, consultant, lender or
advisor) in any person, firm or entity which competes
with Employer's business in the area described above
(each such person, firm or entity is referred to as
"Competitor"); (b) solicit or accept business for or
on behalf of any Competitor; or (c) solicit, induce
or persuade, or attempt to solicit, induce or
persuade, any person to work for or provide services
to or provide financial assistance to, any
Competitor.
(C) If Employee's employment by Employer is terminated
for any reason, Employee will turn over immediately
thereafter to Employer all business correspondence,
letters, papers, reports, customers' lists, financial
statements, records, drawings, credit reports, credit
cards, or other confidential information or documents
of Employer or its affiliates in the possession or
control of Employee, all of which writings are and
will continue to be the sole and exclusive property
of Employer or its affiliates.
(D) Employee acknowledges that the covenants of this
Section 8 are reasonable in scope and duration and
reasonably necessary and appropriate to protect the
goodwill and other appropriate interests of Employer
following Employee's termination and that any
violation of such covenants by Employee would result
in irreparable harm to Employer, for which any remedy
at law would be inadequate. In addition to any other
remedy to which it may be entitled, Employer shall be
entitled to equitable relief, including specific
performance, for any violation of Section 8.
(E) Employee shall, and hereby authorizes Employer to,
inform any successor or prospective employer of
Employee of the terms of this Section 8. Any such
disclosure by Employer and any effort by Employer to
seek Employee's compliance with this covenant, even
if such effort shall require that Employee perform
different duties for such successor employer or delay
his employment by such employer, is hereby expressly
authorized by Employee and shall not be deemed a
violation of any "blacklisting" or similar law.
9. If there is a Change of Control of Employer as defined below,
Employee shall be paid a transaction bonus in the amount of
$8,000 payable one-half on the date of the Change of Control
and one-half on the date six (6) months after the Change of
Control, so long as Employer's Board of Directors shall not
have determined on a reasonable basis and in good faith (prior
to any installment date) that Employee has failed to comply
with the Bonus Conditions. "Bonus Conditions" means:
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<PAGE>
(A) Employee has cooperated fully with Employer and its
advisors and, to the extent directed by Employer, any
party who is engaged or may engage in negotiations
with Employer, regarding any proposed transaction
involving Employer or its shareholders;
(B) Employee shall not have engaged in any activity
intended to discourage any such interested party from
engaging in any such transaction or disparaging the
Employer, its condition, assets or prospects, in the
eyes of any such party;
(C) Employee shall have continued to perform his duties
for Employer with at least the same level of
diligence and performance as characterized Employee's
performance prior to the Effective Date; and
(D) Employee shall not be in breach of any provision of
this Agreement.
Disclosure or statements made by Employee in good faith in response to
appropriate requests from third parties or instructions by Employer that
Employee reasonably believes to be truthful shall not violate the Bonus
Conditions.
For purposes of this Agreement, a "Change of Control" shall mean the occurrence
of any of the following: (i) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger of consolidation), in one or a series
of related transactions, of all or substantially all of the assets of Employer
and it subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act), (ii) the consummation of any transaction
(including, without limitation, any merger of consolidation) the result of which
is that any "person" as defined above, becomes the beneficial owner (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the voting stock of Employer or (iii) the
first day on which a majority of the members of the Board of Directors of
Employer are not Continuing Directors. Notwithstanding the foregoing, a "Change
of Control" shall not occur and no transaction bonus will be payable if the
person that acquires assets or stock of Employer under part (i) or (ii) of the
foregoing definition, is an Employer sponsored employee stock ownership plan, H.
Jesse McVay, a management group led by H. Jesse McVay or a person whose
participation in such transaction was supported or sponsored by such management
group. "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Employer who (i) was a member of such Board of
Directors on the date hereof or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination.
10. Any termination of Employee's employment with Employer as
contemplated by Section 7 hereof, except in the circumstances
of Employee's death, shall be communicated by written "Notice
of Termination" by the terminating party to the other party
hereto. Any "Notice of Termination" pursuant to Section 7
based on
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<PAGE>
Cause or Good Reason shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for such
termination.
11. If a dispute arises regarding the termination of Employee
pursuant to Section 7 hereof or as to the interpretation or
enforcement of this Agreement, said dispute shall be resolved
by binding arbitration in Indianapolis, Indiana determined in
accordance with the rules of the American Arbitration
Association. Notwithstanding the foregoing, Employer shall be
entitled to seek any remedy in a proceeding at law or in
equity in any court having jurisdiction for any breach of
Section 8.
12. Should Employee die after termination of his employment with
Employer while any amounts are payable to him hereunder, this
Agreement shall inure to the benefit of and ben enforceable by
Employee's executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall
be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there is
no such designee, to his estate.
13. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Employee: Kurt J. Krauskopf
996 Orchid Place
Peru, IN 46970
If to Employer: Bryan Steam Corporation
P.O. Box 27
Peru, Indiana 46970
Attn: Chairman
or to such address as either party hereto may have furnished
to the other party in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
14. The validity, interpretation, and performance of this
Agreement shall be governed by the laws of the State of
Indiana, regardless of the principles of conflicts of laws.
15. Employer shall require any successor (whether direct or
indirect, by purchase, merger, or consolidation or otherwise)
to all or substantially all of the business or assets of
Employer, by agreement in form and substance reasonably
satisfactory to Employee to expressly assume and agree to
perform this Agreement in the same manner and same extent that
Employer would be required to perform it if no such succession
had
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<PAGE>
taken place. As used in this Agreement, "Employer" shall mean
Employer as hereinbefore defined and any successor to its
business or assets as aforesaid.
16. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and Employer. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of dissimilar provisions or
conditions at the same or any prior subsequent time. No
agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement.
17. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in
full fore and effect. This is the entire agreement between
Employer and Employee concerning the subject matter hereof and
all prior agreements, written or oral, are superseded.
18. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
19. This Agreement is personal in nature and neither party hereto
shall, without consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder except as
provided in Section 12 and Section 15 above. Without limiting
the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other
than a transfer by his will or by the laws of descent or
distribution as set forth in Section 12 hereof, and in the
event of any attempted assignment or transfer contrary to this
paragraph, Employer shall have no liability to pay any amounts
so attempted to be assigned or transferred.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed as of the date first written above.
"Employer"
Bryan Steam Corporation
By: /s/ Jesse McVay
---------------------------
Its: President
"Employee"
/s/ Kurt J. Krauskopf
---------------------------
Kurt J. Krauskopf
-9-
EMPLOYMENT AGREEMENT
Terrence D. Kubly
This Agreement, is made and dated as of April 1, 1998, by and between Bryan
Steam Corporation, a New Mexico corporation ("Employer"), and Terrence D. Kubly,
a resident of Miami County, Indiana ("Employee").
WITNESSETH
WHEREAS, Employee has been employed by Employer and has made valuable
contributions to the profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure reasonable and
commensurate compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee
on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of a change of control of
Employer;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of
Employee by Employer, each intending to be legally bound, covenant and agree as
follows:
1. Upon the terms and subject to the conditions set forth in this
Agreement, Employer employs Employee as Employer's Manager of
Consulting or another position commensurate with Employee's
experience and ability, and Employee accepts such employment.
2. Employee agrees to serve as Employer's Manager of Consulting
or such other position, and to perform such duties in that
office as may be prescribed by the Employer's Bylaws and as
may reasonably be assigned to him by Employer's
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<PAGE>
President or Board of Directors and those generally associated
with the office held by Employee as determined by the
President or Board of Directors from time to time.
Employer shall not, without the written consent of Employee,
relocate or transfer Employee to a location more than 30 miles
from his current employment location. While employed by
Employer, Employee shall devote substantially all his business
time and efforts to Employer's business and the business of
its subsidiaries.
3. The term of this Agreement shall be for an initial term of
three (3) years commencing on April 1, 1998 (the "Effective
Date"), and terminating March 31, 2001; provided, however,
that such term shall be extended for an additional year on
each annual anniversary of the Effective Date, unless either
party thereto gives written notice to the other party not to
so extend within the period of ninety (90) days prior to an
anniversary, in which case no further extension shall occur
and the term of this Agreement shall end two years subsequent
to the annual anniversary immediately following the
anniversary prior to which the notice not to extend for an
additional year is given (such term, including any extension
thereof shall herein be referred to as the "Term").
4. Employee shall receive an annual salary of $66,500 ("Base
Compensation"), payable at regular intervals in accordance
with Employer's normal payroll practices now or hereafter in
effect. Employer may consider and declare from time to time
increases in the salary it pays Employee and thereby increase
his Base Compensation.
5. So long as Employee is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all
present and future employee benefit, retirement, and
compensation plans generally available to employees of
Employer, consistent with his Base Compensation and his
position with Employer, including, without limitation, any
401(k) plan, stock incentive plan, employee stock purchase or
ownership plan, bonus plan, and group life and disability
insurance plans.
6. So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall receive reimbursement, either
directly or through use of an Employer credit card, from
Employer for all reasonable business expenses incurred in the
course of his employment by Employer, upon submission to
Employer of written vouchers and statements for reimbursement.
So long as Employee is employed by Employer pursuant to the
terms of this Agreement, Employer shall continue in effect
vacation policies applicable to Employee no less favorable
from his point of view than those written vacation policies in
effect on the date hereof. So long as Employee is employed by
Employer pursuant to this Agreement, Employee shall be
entitled to office space and working conditions no less
favorable than those in effect for him on the date hereof.
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<PAGE>
7. Employee's employment with the Employer may be terminated
prior to the expiration of the Term as follows:
(A) The Employer may immediately upon written notice
terminate Employee for cause. "Cause" shall be
defined as (i) personal dishonesty, (ii) willful
misconduct, (iii) breach of fiduciary duty involving
personal profit, (iv) intentional failure to perform
stated duties, (v) conviction of a violation of any
law, rule, or regulation (other than traffic
violations or similar offenses) or cease-and-desist
order, (vi) moral turpitude reflecting adversely on
the reputation of the Employer, or (vii) any material
breach of any term, condition or covenant of this
Agreement. The Employer shall have no further
liability to Employee under this Agreement for any
period subsequent to the termination for Cause.
(B) Either party may terminate this Agreement during the
Term without Cause, upon thirty (30) days prior
written notice to the other party. If the Employer
terminates the Employee without Cause (as defined
above), or if Employee terminates his employment for
Good Reason (as defined below):
(i) Compensation provided for herein (including
Base Compensation) shall continue to be
paid, and Employee shall continue to
participate in the employee benefit,
retirement, and compensation plans and other
perquisites as provided in Sections 5 and 6
hereof, through the date of termination
specified in the notice of termination; and
any benefits payable under insurance,
health, retirement and bonus plans as a
result of Employee's participation in such
plans through such date shall be paid when
due under those plans;
(ii) In addition, the Employer shall pay the
Employee a lump sum severance payment equal
to fifty percent (50%) of Employee's total
salary and bonus compensation (excluding any
transaction bonus under Section 9) for the
immediately preceding calendar year plus, if
a Change of Control has occurred, any unpaid
installment of any transaction bonus due
under Section 9 (or which would otherwise
later become due under Section 9); and
(iii) In addition, for one (1) year following
termination, Employer will maintain in full
force and effect for the continued benefit
of Employee and his dependents each employee
medical and life benefit plan (as such term
is defined in the Employee Retirement Income
Security Act of 1974, as amended) in which
Employee was entitled to participate
immediately prior to the date of his
termination, unless an essentially
equivalent benefit is provided by another
source. If the terms of any
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<PAGE>
employee medical and life benefit plan of
Employer or applicable laws do not permit
continued participation by Employee,
Employer will arrange to provide to Employee
a benefit substantially similar to, and no
less favorable than, the benefit he was
entitled to receive under such plan at the
end of the period of coverage. The right of
Employee to continued coverage under the
health and medical insurance plans of
Employer pursuant to Section 4980B of the
Internal Revenue Code of 1986, as amended
(the "Code") shall commence upon the
expiration of such period; and
(iv) Employer will engage at Employer's cost an
out placement firm to assist Employee to
locate an alternative position for Employee
for a period of one (1) year; provided, that
Employer may terminate such firm's
engagement if Employee fails to attend two
or more interviews arranged by such firm or
if Employee is offered any position that
would provide a base compensation of at
least 80% of Employee's Base Compensation on
the date of termination. Employer will make
available reasonable office space and
telephone usage for a period not to exceed
ninety (90) days after terminations.
For purposes of this Agreement, "Good Reason" for
Employee to terminate his employment with Employer
means: a material breach of any term, condition or
covenant of Employer under this Agreement.
(C) Employee's employment with Employer shall terminate
in the event of Employee's death or disability. For
purposes hereof, "disability" shall be defined as
Employee's inability by reason of illness or other
physical or mental incapacity to perform the duties
required by his employment for a consecutive 180 day
period, provided that notice of any termination by
Employer because of Employee's "disability" shall
have been given to Employee prior to the full
resumption by him of the performance of such duties.
8. To induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) Unless otherwise required to do so by law, including
the order of a court or governmental agency, Employee
shall not divulge or furnish any trade secrets (as
defined in IND. CODEss.24-2-3-2) of Employer or any
confidential information acquired by him while
employed by Employer concerning the policies, plans,
procedures or customers of Employer to any person,
firm, corporation or other entity , other than
Employer or upon its written request, or use any such
trade secrets or confidential information directly or
indirectly for Employee's own benefit or for the
benefit of any person, firm, corporation or other
entity other then Employer, because such trade
secrets and
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<PAGE>
confidential information are confidential and shall
at all times remain the property of Employer.
(B) For a period of six (6) months after termination of
Employee's employment with Employer for any reason,
Employee shall not (a) compete, directly or
indirectly, in any state or province of the U.S. or
Canada where Employer has a sales representative or
sold products within the 12 months prior to
Employee's termination, with the business of Employer
as conducted during the term of this Agreement (which
business shall include the manufacture or sale of any
products manufactured or sold by Employer during the
12 months prior to Employee's termination), or have
any significant interest (including any interest or
association, including but not limited to, that of
owner, part owner, partner, shareholder, director,
officer, employee, agent, consultant, lender or
advisor) in any person, firm or entity which competes
with Employer's business in the area described above
(each such person, firm or entity is referred to as
"Competitor"); (b) solicit or accept business for or
on behalf of any Competitor; or (c) solicit, induce
or persuade, or attempt to solicit, induce or
persuade, any person to work for or provide services
to or provide financial assistance to, any
Competitor.
(C) If Employee's employment by Employer is terminated
for any reason, Employee will turn over immediately
thereafter to Employer all business correspondence,
letters, papers, reports, customers' lists, financial
statements, records, drawings, credit reports, credit
cards, or other confidential information or documents
of Employer or its affiliates in the possession or
control of Employee, all of which writings are and
will continue to be the sole and exclusive property
of Employer or its affiliates.
(D) Employee acknowledges that the covenants of this
Section 8 are reasonable in scope and duration and
reasonably necessary and appropriate to protect the
goodwill and other appropriate interests of Employer
following Employee's termination and that any
violation of such covenants by Employee would result
in irreparable harm to Employer, for which any remedy
at law would be inadequate. In addition to any other
remedy to which it may be entitled, Employer shall be
entitled to equitable relief, including specific
performance, for any violation of Section 8.
(E) Employee shall, and hereby authorizes Employer to,
inform any successor or prospective employer of
Employee of the terms of this Section 8. Any such
disclosure by Employer and any effort by Employer to
seek Employee's compliance with this covenant, even
if such effort shall require that Employee perform
different duties for such successor employer or delay
his employment
-5-
<PAGE>
by such employer, is hereby expressly authorized by
Employee and shall not be deemed a violation of any
"blacklisting" or similar law.
9. If there is a Change of Control of Employer as defined below,
Employee shall be paid a transaction bonus in the amount of
$8,000 payable one-half on the date of the Change of Control
and one-half on the date six (6) months after the Change of
Control, so long as Employer's Board of Directors shall not
have determined on a reasonable basis and in good faith (prior
to any installment date) that Employee has failed to comply
with the Bonus Conditions. "Bonus Conditions" means:
(A) Employee has cooperated fully with Employer and its
advisors and, to the extent directed by Employer, any
party who is engaged or may engage in negotiations
with Employer, regarding any proposed transaction
involving Employer or its shareholders;
(B) Employee shall not have engaged in any activity
intended to discourage any such interested party from
engaging in any such transaction or disparaging the
Employer, its condition, assets or prospects, in the
eyes of any such party;
(C) Employee shall have continued to perform his duties
for Employer with at least the same level of
diligence and performance as characterized Employee's
performance prior to the Effective Date; and
(D) Employee shall not be in breach of any provision of
this Agreement.
Disclosure or statements made by Employee in good faith in response to
appropriate requests from third parties or instructions by Employer that
Employee reasonably believes to be truthful shall not violate the Bonus
Conditions.
For purposes of this Agreement, a "Change of Control" shall mean the occurrence
of any of the following: (i) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger of consolidation), in one or a series
of related transactions, of all or substantially all of the assets of Employer
and it subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act), (ii) the consummation of any transaction
(including, without limitation, any merger of consolidation) the result of which
is that any "person" as defined above, becomes the beneficial owner (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the voting stock of Employer or (iii) the
first day on which a majority of the members of the Board of Directors of
Employer are not Continuing Directors. Notwithstanding the foregoing, a "Change
of Control" shall not occur and no transaction bonus will be payable if the
person that acquires assets or stock of Employer under part (i) or (ii) of the
foregoing definition, is an Employer sponsored employee stock ownership plan, H.
Jesse McVay, a management group led by H. Jesse McVay or a person whose
participation in such transaction was supported or sponsored by such management
group. "Continuing Directors" means,
-6-
<PAGE>
as of any date of determination, any member of the Board of Directors of
Employer who (i) was a member of such Board of Directors on the date hereof or
(ii) was nominated for election or elected to such Board of Directors with the
approval of a majority of the Continuing Directors who were members of such
Board at the time of such nomination.
10. Any termination of Employee's employment with Employer as
contemplated by Section 7 hereof, except in the circumstances
of Employee's death, shall be communicated by written "Notice
of Termination" by the terminating party to the other party
hereto. Any "Notice of Termination" pursuant to Section 7
based on Cause or Good Reason shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis
for such termination.
11. If a dispute arises regarding the termination of Employee
pursuant to Section 7 hereof or as to the interpretation or
enforcement of this Agreement, said dispute shall be resolved
by binding arbitration in Indianapolis, Indiana determined in
accordance with the rules of the American Arbitration
Association. Notwithstanding the foregoing, Employer shall be
entitled to seek any remedy in a proceeding at law or in
equity in any court having jurisdiction for any breach of
Section 8.
12. Should Employee die after termination of his employment with
Employer while any amounts are payable to him hereunder, this
Agreement shall inure to the benefit of and ben enforceable by
Employee's executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall
be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there is
no such designee, to his estate.
13. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Employee: Terrence D. Kubly
100 West Fifth Street
Peru, IN 46970
If to Employer: Bryan Steam Corporation
P.O. Box 27
Peru, Indiana 46970
Attn: Chairman
or to such address as either party hereto may have furnished
to the other party in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
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<PAGE>
14. The validity, interpretation, and performance of this
Agreement shall be governed by the laws of the State of
Indiana, regardless of the principles of conflicts of laws.
15. Employer shall require any successor (whether direct or
indirect, by purchase, merger, or consolidation or otherwise)
to all or substantially all of the business or assets of
Employer, by agreement in form and substance reasonably
satisfactory to Employee to expressly assume and agree to
perform this Agreement in the same manner and same extent that
Employer would be required to perform it if no such succession
had taken place. As used in this Agreement, "Employer" shall
mean Employer as hereinbefore defined and any successor to its
business or assets as aforesaid.
16. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and Employer. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of dissimilar provisions or
conditions at the same or any prior subsequent time. No
agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement.
17. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in
full fore and effect. This is the entire agreement between
Employer and Employee concerning the subject matter hereof and
all prior agreements, written or oral, are superseded.
18. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
19. This Agreement is personal in nature and neither party hereto
shall, without consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder except as
provided in Section 12 and Section 15 above. Without limiting
the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other
than a transfer by his will or by the laws of descent or
distribution as set forth in Section 12 hereof, and in the
event of any attempted assignment or transfer contrary to this
paragraph, Employer shall have no liability to pay any amounts
so attempted to be assigned or transferred.
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed as of the date first written above.
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<PAGE>
"Employer"
Bryan Steam Corporation
By: /s/ Albert J. Bishop
---------------------------
Its: Chairman
"Employee"
/s/ Terrence D. Kubly
---------------------------
Terrence D. Kubly
-9-
EMPLOYMENT AGREEMENT
P. Wayne McCune
This Agreement, is made and dated as of April 1, 1998, by and between Wendland
Manufacturing Corporation, an Indiana corporation ("Employer"), and P. Wayne
McCune, a resident of Tom Green County, Texas ("Employee").
WITNESSETH
WHEREAS, Employee has been employed by Employer and has made valuable
contributions to the profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure reasonable and
commensurate compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee
on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of a change of control of
Employer;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of
Employee by Employer, each intending to be legally bound, covenant and agree as
follows:
1. Upon the terms and subject to the conditions set forth in this
Agreement, Employer employs Employee as Employer's Executive
Vice President or another position commensurate with
Employee's experience and ability, and Employee accepts such
employment.
2. Employee agrees to serve as Employer's Executive Vice
President or such other position, and to perform such duties
in that office as may be prescribed by the Employer's Bylaws
and as may reasonably be assigned to him by Employer's
President or Board of Directors or by the President of
Employer's parent corporation
-1-
<PAGE>
and those generally associated with the office held by
Employee as determined by the President or Board of Directors
or by the President of Employer's parent corporation from time
to time.
Employer shall not, without the written consent of Employee,
relocate or transfer Employee to a location more than 30 miles
from his current employment location. While employed by
Employer, Employee shall devote substantially all his business
time and efforts to Employer's business and the business of
its subsidiaries.
3. The term of this Agreement shall be for an initial term of
three (3) years commencing on April 1, 1998 (the "Effective
Date"), and terminating March 31, 2001; provided, however,
that such term shall be extended for an additional year on
each annual anniversary of the Effective Date, unless either
party thereto gives written notice to the other party not to
so extend within the period of ninety (90) days prior to an
anniversary, in which case no further extension shall occur
and the term of this Agreement shall end two years subsequent
to the annual anniversary immediately following the
anniversary prior to which the notice not to extend for an
additional year is given (such term, including any extension
thereof shall herein be referred to as the "Term").
4. Employee shall receive an annual salary of $38,105.60 ("Base
Compensation"), payable at regular intervals in accordance
with Employer's normal payroll practices now or hereafter in
effect. Employer may consider and declare from time to time
increases in the salary it pays Employee and thereby increase
his Base Compensation.
5. So long as Employee is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all
present and future employee benefit, retirement, and
compensation plans generally available to employees of
Employer, consistent with his Base Compensation and his
position with Employer, including, without limitation, any
401(k) plan, stock incentive plan, employee stock purchase or
ownership plan, bonus plan, and group life and disability
insurance plans.
6. So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall receive reimbursement, either
directly or through use of an Employer credit card, from
Employer for all reasonable business expenses incurred in the
course of his employment by Employer, upon submission to
Employer of written vouchers and statements for reimbursement.
So long as Employee is employed by Employer pursuant to the
terms of this Agreement, Employer shall continue in effect
vacation policies applicable to Employee no less favorable
from his point of view than those written vacation policies in
effect on the date hereof. So long as Employee is employed by
Employer pursuant to this Agreement, Employee shall be
entitled to office space and working conditions no less
favorable than those in effect for him on the date hereof.
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<PAGE>
7. Employee's employment with the Employer may be terminated
prior to the expiration of the Term as follows:
(A) The Employer may immediately upon written notice
terminate Employee for cause. "Cause" shall be
defined as (i) personal dishonesty, (ii) willful
misconduct, (iii) breach of fiduciary duty involving
personal profit, (iv) intentional failure to perform
stated duties, (v) conviction of a violation of any
law, rule, or regulation (other than traffic
violations or similar offenses) or cease-and-desist
order, (vi) moral turpitude reflecting adversely on
the reputation of the Employer, or (vii) any material
breach of any term, condition or covenant of this
Agreement. The Employer shall have no further
liability to Employee under this Agreement for any
period subsequent to the termination for Cause.
(B) Either party may terminate this Agreement during the
Term without Cause, upon thirty (30) days prior
written notice to the other party. If the Employer
terminates the Employee without Cause (as defined
above), or if Employee terminates his employment for
Good Reason (as defined below):
(i) Compensation provided for herein (including
Base Compensation) shall continue to be
paid, and Employee shall continue to
participate in the employee benefit,
retirement, and compensation plans and other
perquisites as provided in Sections 5 and 6
hereof, through the date of termination
specified in the notice of termination; and
any benefits payable under insurance,
health, retirement and bonus plans as a
result of Employee's participation in such
plans through such date shall be paid when
due under those plans;
(ii) In addition, the Employer shall pay the
Employee a lump sum severance payment equal
to fifty percent (50%) of Employee's total
salary and bonus compensation (excluding any
transaction bonus under Section 9) for the
immediately preceding calendar year plus, if
a Change of Control has occurred, any unpaid
installment of any transaction bonus due
under Section 9 (or which would otherwise
later become due under Section 9); and
(iii) In addition, for one (1) year following
termination, Employer will maintain in full
force and effect for the continued benefit
of Employee and his dependents each employee
medical and life benefit plan (as such term
is defined in the Employee Retirement Income
Security Act of 1974, as amended) in which
Employee was entitled to participate
immediately prior to the date of his
termination, unless an essentially
equivalent benefit is provided by another
source. If the terms of any
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<PAGE>
employee medical and life benefit plan of
Employer or applicable laws do not permit
continued participation by Employee,
Employer will arrange to provide to Employee
a benefit substantially similar to, and no
less favorable than, the benefit he was
entitled to receive under such plan at the
end of the period of coverage. The right of
Employee to continued coverage under the
health and medical insurance plans of
Employer pursuant to Section 4980B of the
Internal Revenue Code of 1986, as amended
(the "Code") shall commence upon the
expiration of such period; and
(iv) Employer will engage at Employer's cost an
out placement firm to assist Employee to
locate an alternative position for Employee
for a period of one (1) year; provided, that
Employer may terminate such firm's
engagement if Employee fails to attend two
or more interviews arranged by such firm or
if Employee is offered any position that
would provide a base compensation of at
least 80% of Employee's Base Compensation on
the date of termination. Employer will make
available reasonable office space and
telephone usage for a period not to exceed
ninety (90) days after terminations.
For purposes of this Agreement, "Good Reason" for
Employee to terminate his employment with Employer
means: a material breach of any term, condition or
covenant of Employer under this Agreement.
(C) Employee's employment with Employer shall terminate
in the event of Employee's death or disability. For
purposes hereof, "disability" shall be defined as
Employee's inability by reason of illness or other
physical or mental incapacity to perform the duties
required by his employment for a consecutive 180 day
period, provided that notice of any termination by
Employer because of Employee's "disability" shall
have been given to Employee prior to the full
resumption by him of the performance of such duties.
8. To induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) Unless otherwise required to do so by law, including
the order of a court or governmental agency, Employee
shall not divulge or furnish any trade secrets (as
defined in IND. CODEss.24-2-3-2) of Employer or any
confidential information acquired by him while
employed by Employer concerning the policies, plans,
procedures or customers of Employer to any person,
firm, corporation or other entity , other than
Employer or upon its written request, or use any such
trade secrets or confidential information directly or
indirectly for Employee's own benefit or for the
benefit of any person, firm, corporation or other
entity other then Employer, because such trade
secrets and
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<PAGE>
confidential information are confidential and shall
at all times remain the property of Employer.
(B) For a period of six (6) months after termination of
Employee's employment with Employer for any reason,
Employee shall not (a) compete, directly or
indirectly, in any state or province of the U.S. or
Canada where Employer has a sales representative or
sold products within the 12 months prior to
Employee's termination, with the business of Employer
as conducted during the term of this Agreement (which
business shall include the manufacture or sale of any
products manufactured or sold by Employer during the
12 months prior to Employee's termination), or have
any significant interest (including any interest or
association, including but not limited to, that of
owner, part owner, partner, shareholder, director,
officer, employee, agent, consultant, lender or
advisor) in any person, firm or entity which competes
with Employer's business in the area described above
(each such person, firm or entity is referred to as
"Competitor"); (b) solicit or accept business for or
on behalf of any Competitor; or (c) solicit, induce
or persuade, or attempt to solicit, induce or
persuade, any person to work for or provide services
to or provide financial assistance to, any
Competitor.
(C) If Employee's employment by Employer is terminated
for any reason, Employee will turn over immediately
thereafter to Employer all business correspondence,
letters, papers, reports, customers' lists, financial
statements, records, drawings, credit reports, credit
cards, or other confidential information or documents
of Employer or its affiliates in the possession or
control of Employee, all of which writings are and
will continue to be the sole and exclusive property
of Employer or its affiliates.
(D) Employee acknowledges that the covenants of this
Section 8 are reasonable in scope and duration and
reasonably necessary and appropriate to protect the
goodwill and other appropriate interests of Employer
following Employee's termination and that any
violation of such covenants by Employee would result
in irreparable harm to Employer, for which any remedy
at law would be inadequate. In addition to any other
remedy to which it may be entitled, Employer shall be
entitled to equitable relief, including specific
performance, for any violation of Section 8.
(E) Employee shall, and hereby authorizes Employer to,
inform any successor or prospective employer of
Employee of the terms of this Section 8. Any such
disclosure by Employer and any effort by Employer to
seek Employee's compliance with this covenant, even
if such effort shall require that Employee perform
different duties for such successor employer or delay
his employment
-5-
<PAGE>
by such employer, is hereby expressly authorized by
Employee and shall not be deemed a violation of any
"blacklisting" or similar law.
9. If there is a Change of Control of Employer as defined below,
Employee shall be paid a transaction bonus in the amount of
$8,000 payable one-half on the date of the Change of Control
and one-half on the date six (6) months after the Change of
Control, so long as Employer's Board of Directors shall not
have determined on a reasonable basis and in good faith (prior
to any installment date) that Employee has failed to comply
with the Bonus Conditions. "Bonus Conditions" means:
(A) Employee has cooperated fully with Employer and its
advisors and, to the extent directed by Employer, any
party who is engaged or may engage in negotiations
with Employer, regarding any proposed transaction
involving Employer or its shareholders;
(B) Employee shall not have engaged in any activity
intended to discourage any such interested party from
engaging in any such transaction or disparaging the
Employer, its condition, assets or prospects, in the
eyes of any such party;
(C) Employee shall have continued to perform his duties
for Employer with at least the same level of
diligence and performance as characterized Employee's
performance prior to the Effective Date; and
(D) Employee shall not be in breach of any provision of
this Agreement.
Disclosure or statements made by Employee in good faith in response to
appropriate requests from third parties or instructions by Employer that
Employee reasonably believes to be truthful shall not violate the Bonus
Conditions.
For purposes of this Agreement, a "Change of Control" shall mean the occurrence
of any of the following: (i) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger of consolidation), in one or a series
of related transactions, of all or substantially all of the assets of Employer's
parent, Employer and it subsidiaries taken as a whole to any "person" (as such
term is used in Section 13(d)(3) of the Exchange Act), (ii) the consummation of
any transaction (including, without limitation, any merger of consolidation) the
result of which is that any "person" as defined above, becomes the beneficial
owner (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of more than 50% of the voting stock of Employer's
parent or Employer or (iii) the first day on which a majority of the members of
the Board of Directors of Employer's parent are not Continuing Directors.
Notwithstanding the foregoing, a "Change of Control" shall not occur and no
transaction bonus will be payable if the person that acquires assets or stock
under part (i) or (ii) of the foregoing definition, is an Employer or parent
sponsored employee stock ownership plan, H. Jesse McVay, a management group led
by H. Jesse McVay or a person whose participation in such transaction was
supported or sponsored by such management
-6-
<PAGE>
group. "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Employer's parent who (i) was a member of such
Board of Directors on the date hereof or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination.
10. Any termination of Employee's employment with Employer as
contemplated by Section 7 hereof, except in the circumstances
of Employee's death, shall be communicated by written "Notice
of Termination" by the terminating party to the other party
hereto. Any "Notice of Termination" pursuant to Section 7
based on Cause or Good Reason shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis
for such termination.
11. If a dispute arises regarding the termination of Employee
pursuant to Section 7 hereof or as to the interpretation or
enforcement of this Agreement, said dispute shall be resolved
by binding arbitration in Indianapolis, Indiana determined in
accordance with the rules of the American Arbitration
Association. Notwithstanding the foregoing, Employer shall be
entitled to seek any remedy in a proceeding at law or in
equity in any court having jurisdiction for any breach of
Section 8.
12. Should Employee die after termination of his employment with
Employer while any amounts are payable to him hereunder, this
Agreement shall inure to the benefit of and ben enforceable by
Employee's executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall
be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there is
no such designee, to his estate.
13. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Employee: P. Wayne McCune
1809 St. Mary's Street
San Angelo, TX 76904
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<PAGE>
If to Employer: Wendland Manufacturing Corporation
c/o Bryan Steam Corporation
P.O. Box 27
Peru, Indiana 46970
Attn: Chairman
or to such address as either party hereto may have furnished
to the other party in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
14. The validity, interpretation, and performance of this
Agreement shall be governed by the laws of the State of
Indiana, regardless of the principles of conflicts of laws.
15. Employer shall require any successor (whether direct or
indirect, by purchase, merger, or consolidation or otherwise)
to all or substantially all of the business or assets of
Employer, by agreement in form and substance reasonably
satisfactory to Employee to expressly assume and agree to
perform this Agreement in the same manner and same extent that
Employer would be required to perform it if no such succession
had taken place. As used in this Agreement, "Employer" shall
mean Employer as hereinbefore defined and any successor to its
business or assets as aforesaid.
16. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and Employer. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of dissimilar provisions or
conditions at the same or any prior subsequent time. No
agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement.
17. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in
full fore and effect. This is the entire agreement between
Employer and Employee concerning the subject matter hereof and
all prior agreements, written or oral, are superseded.
18. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
-8-
<PAGE>
19. This Agreement is personal in nature and neither party hereto
shall, without consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder except as
provided in Section 12 and Section 15 above. Without limiting
the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other
than a transfer by his will or by the laws of descent or
distribution as set forth in Section 12 hereof, and in the
event of any attempted assignment or transfer contrary to this
paragraph, Employer shall have no liability to pay any amounts
so attempted to be assigned or transferred.
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed as of the date first written above.
"Employer"
Wendland Manufacturing Corporation
By: /s/ Richard Salmon
-----------------------------------
Its: President
"Employee"
/s/ P. Wayne McCune
-----------------------------------
P. Wayne McCune
-9-
EMPLOYMENT AGREEMENT
Gregory A. Minard
This Agreement, is made and dated as of April 1, 1998, by and between Bryan
Steam Corporation, a New Mexico corporation ("Employer"), and Gregory A. Minard,
a resident of Miami County, Indiana ("Employee").
WITNESSETH
WHEREAS, Employee has been employed by Employer and has made valuable
contributions to the profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure reasonable and
commensurate compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee
on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of a change of control of
Employer;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of
Employee by Employer, each intending to be legally bound, covenant and agree as
follows:
1. Upon the terms and subject to the conditions set forth in this
Agreement, Employer employs Employee as Employer's Chief
Engineer or another position commensurate with Employee's
experience and ability, and Employee accepts such employment.
2. Employee agrees to serve as Employer's Chief Engineer or such
other position, and to perform such duties in that office as
may be prescribed by the Employer's Bylaws and as may
reasonably be assigned to him by Employer's President or Board
of Directors and those generally associated with the office
held by Employee as determined by the President or Board of
Directors from time to time.
-1-
<PAGE>
Employer shall not, without the written consent of Employee,
relocate or transfer Employee to a location more than 30 miles
from his current employment location. While employed by
Employer, Employee shall devote substantially all his business
time and efforts to Employer's business and the business of
its subsidiaries.
3. The term of this Agreement shall be for an initial term of two
(2) years commencing on April 1, 1998 (the "Effective Date"),
(such term shall herein be referred to as the "Term").
4. Employee shall receive an annual salary of $47,400 ("Base
Compensation"), payable at regular intervals in accordance
with Employer's normal payroll practices now or hereafter in
effect. Employer may consider and declare from time to time
increases in the salary it pays Employee and thereby increase
his Base Compensation.
5. So long as Employee is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all
present and future employee benefit, retirement, and
compensation plans generally available to employees of
Employer, consistent with his Base Compensation and his
position with Employer, including, without limitation, any
401(k) plan, stock incentive plan, employee stock purchase or
ownership plan, bonus plan, and group life and disability
insurance plans.
6. So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall receive reimbursement, either
directly or through use of an Employer credit card, from
Employer for all reasonable business expenses incurred in the
course of his employment by Employer, upon submission to
Employer of written vouchers and statements for reimbursement.
So long as Employee is employed by Employer pursuant to the
terms of this Agreement, Employer shall continue in effect
vacation policies applicable to Employee no less favorable
from his point of view than those written vacation policies in
effect on the date hereof. So long as Employee is employed by
Employer pursuant to this Agreement, Employee shall be
entitled to office space and working conditions no less
favorable than those in effect for him on the date hereof.
7. Employee's employment with the Employer may be terminated
prior to the expiration of the Term as follows:
(A) The Employer may immediately upon written notice
terminate Employee for cause. "Cause" shall be
defined as (i) personal dishonesty, (ii) willful
misconduct, (iii) breach of fiduciary duty involving
personal profit, (iv) intentional failure to perform
stated duties, (v) conviction of a violation of any
law, rule, or regulation (other than traffic
violations or similar offenses) or cease-and-desist
order, (vi) moral turpitude reflecting adversely on
the reputation of the Employer, or (vii) any material
breach of any term, condition
-2-
<PAGE>
or covenant of this Agreement. The Employer shall
have no further liability to Employee under this
Agreement for any period subsequent to the
termination for Cause.
(B) Either party may terminate this Agreement during the
Term without Cause, upon thirty (30) days prior
written notice to the other party. If the Employer
terminates the Employee without Cause (as defined
above), or if Employee terminates his employment for
Good Reason (as defined below):
(i) Compensation provided for herein (including
Base Compensation) shall continue to be
paid, and Employee shall continue to
participate in the employee benefit,
retirement, and compensation plans and other
perquisites as provided in Sections 5 and 6
hereof, through the date of termination
specified in the notice of termination; and
any benefits payable under insurance,
health, retirement and bonus plans as a
result of Employee's participation in such
plans through such date shall be paid when
due under those plans;
(ii) In addition, the Employer shall pay the
Employee a lump sum severance payment equal
to fifty percent (50%) of Employee's total
salary and bonus compensation (excluding any
transaction bonus under Section 9) for the
immediately preceding calendar year plus, if
a Change of Control has occurred, any unpaid
installment of any transaction bonus due
under Section 9 (or which would otherwise
later become due under Section 9); and
(iii) In addition, for one (1) year following
termination, Employer will maintain in full
force and effect for the continued benefit
of Employee and his dependents each employee
medical and life benefit plan (as such term
is defined in the Employee Retirement Income
Security Act of 1974, as amended) in which
Employee was entitled to participate
immediately prior to the date of his
termination, unless an essentially
equivalent benefit is provided by another
source. If the terms of any employee medical
and life benefit plan of Employer or
applicable laws do not permit continued
participation by Employee, Employer will
arrange to provide to Employee a benefit
substantially similar to, and no less
favorable than, the benefit he was entitled
to receive under such plan at the end of the
period of coverage. The right of Employee to
continued coverage under the health and
medical insurance plans of Employer pursuant
to Section 4980B of the Internal Revenue
Code of 1986, as amended (the "Code") shall
commence upon the expiration of such period;
and
-3-
<PAGE>
(iv) Employer will engage at Employer's cost an
out placement firm to assist Employee to
locate an alternative position for Employee
for a period of one (1) year; provided, that
Employer may terminate such firm's
engagement if Employee fails to attend two
or more interviews arranged by such firm or
if Employee is offered any position that
would provide a base compensation of at
least 80% of Employee's Base Compensation on
the date of termination. Employer will make
available reasonable office space and
telephone usage for a period not to exceed
ninety (90) days after terminations.
For purposes of this Agreement, "Good Reason" for
Employee to terminate his employment with Employer
means: a material breach of any term, condition or
covenant of Employer under this Agreement.
(C) Employee's employment with Employer shall terminate
in the event of Employee's death or disability. For
purposes hereof, "disability" shall be defined as
Employee's inability by reason of illness or other
physical or mental incapacity to perform the duties
required by his employment for a consecutive 180 day
period, provided that notice of any termination by
Employer because of Employee's "disability" shall
have been given to Employee prior to the full
resumption by him of the performance of such duties.
8. To induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) Unless otherwise required to do so by law, including
the order of a court or governmental agency, Employee
shall not divulge or furnish any trade secrets (as
defined in IND. CODEss.24-2-3-2) of Employer or any
confidential information acquired by him while
employed by Employer concerning the policies, plans,
procedures or customers of Employer to any person,
firm, corporation or other entity , other than
Employer or upon its written request, or use any such
trade secrets or confidential information directly or
indirectly for Employee's own benefit or for the
benefit of any person, firm, corporation or other
entity other then Employer, because such trade
secrets and confidential information are confidential
and shall at all times remain the property of
Employer.
(B) For a period of six (6) months after termination of
Employee's employment with Employer for any reason,
Employee shall not (a) compete, directly or
indirectly, in any state or province of the U.S. or
Canada where Employer has a sales representative or
sold products within the 12 months prior to
Employee's termination, with the business of Employer
as conducted during the term of this Agreement (which
business shall include the manufacture or sale of any
products manufactured or sold by Employer during the
12 months
-4-
<PAGE>
prior to Employee's termination), or have any
significant interest (including any interest or
association, including but not limited to, that of
owner, part owner, partner, shareholder, director,
officer, employee, agent, consultant, lender or
advisor) in any person, firm or entity which competes
with Employer's business in the area described above
(each such person, firm or entity is referred to as
"Competitor"); (b) solicit or accept business for or
on behalf of any Competitor; or (c) solicit, induce
or persuade, or attempt to solicit, induce or
persuade, any person to work for or provide services
to or provide financial assistance to, any
Competitor.
(C) If Employee's employment by Employer is terminated
for any reason, Employee will turn over immediately
thereafter to Employer all business correspondence,
letters, papers, reports, customers' lists, financial
statements, records, drawings, credit reports, credit
cards, or other confidential information or documents
of Employer or its affiliates in the possession or
control of Employee, all of which writings are and
will continue to be the sole and exclusive property
of Employer or its affiliates.
(D) Employee acknowledges that the covenants of this
Section 8 are reasonable in scope and duration and
reasonably necessary and appropriate to protect the
goodwill and other appropriate interests of Employer
following Employee's termination and that any
violation of such covenants by Employee would result
in irreparable harm to Employer, for which any remedy
at law would be inadequate. In addition to any other
remedy to which it may be entitled, Employer shall be
entitled to equitable relief, including specific
performance, for any violation of Section 8.
(E) Employee shall, and hereby authorizes Employer to,
inform any successor or prospective employer of
Employee of the terms of this Section 8. Any such
disclosure by Employer and any effort by Employer to
seek Employee's compliance with this covenant, even
if such effort shall require that Employee perform
different duties for such successor employer or delay
his employment by such employer, is hereby expressly
authorized by Employee and shall not be deemed a
violation of any "blacklisting" or similar law.
9. If there is a Change of Control of Employer as defined below,
Employee shall be paid a transaction bonus in the amount of
$4,000 payable one-half on the date of the Change of Control
and one-half on the date six (6) months after the Change of
Control, so long as Employer's Board of Directors shall not
have determined on a reasonable basis and in good faith (prior
to any installment date) that Employee has failed to comply
with the Bonus Conditions. "Bonus Conditions" means:
-5-
<PAGE>
(A) Employee has cooperated fully with Employer and its
advisors and, to the extent directed by Employer, any
party who is engaged or may engage in negotiations
with Employer, regarding any proposed transaction
involving Employer or its shareholders;
(B) Employee shall not have engaged in any activity
intended to discourage any such interested party from
engaging in any such transaction or disparaging the
Employer, its condition, assets or prospects, in the
eyes of any such party;
(C) Employee shall have continued to perform his duties
for Employer with at least the same level of
diligence and performance as characterized Employee's
performance prior to the Effective Date; and
(D) Employee shall not be in breach of any provision of
this Agreement.
Disclosure or statements made by Employee in good faith in response to
appropriate requests from third parties or instructions by Employer that
Employee reasonably believes to be truthful shall not violate the Bonus
Conditions.
For purposes of this Agreement, a "Change of Control" shall mean the occurrence
of any of the following: (i) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger of consolidation), in one or a series
of related transactions, of all or substantially all of the assets of Employer
and it subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act), (ii) the consummation of any transaction
(including, without limitation, any merger of consolidation) the result of which
is that any "person" as defined above, becomes the beneficial owner (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the voting stock of Employer or (iii) the
first day on which a majority of the members of the Board of Directors of
Employer are not Continuing Directors. Notwithstanding the foregoing, a "Change
of Control" shall not occur and no transaction bonus will be payable if the
person that acquires assets or stock of Employer under part (i) or (ii) of the
foregoing definition, is an Employer sponsored employee stock ownership plan, H.
Jesse McVay, a management group led by H. Jesse McVay or a person whose
participation in such transaction was supported or sponsored by such management
group. "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Employer who (i) was a member of such Board of
Directors on the date hereof or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination.
10. Any termination of Employee's employment with Employer as
contemplated by Section 7 hereof, except in the circumstances
of Employee's death, shall be communicated by written "Notice
of Termination" by the terminating party to the other party
hereto. Any "Notice of Termination" pursuant to Section 7
based on
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<PAGE>
Cause or Good Reason shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for such
termination.
11. If a dispute arises regarding the termination of Employee
pursuant to Section 7 hereof or as to the interpretation or
enforcement of this Agreement, said dispute shall be resolved
by binding arbitration in Indianapolis, Indiana determined in
accordance with the rules of the American Arbitration
Association. Notwithstanding the foregoing, Employer shall be
entitled to seek any remedy in a proceeding at law or in
equity in any court having jurisdiction for any breach of
Section 8.
12. Should Employee die after termination of his employment with
Employer while any amounts are payable to him hereunder, this
Agreement shall inure to the benefit of and ben enforceable by
Employee's executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall
be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there is
no such designee, to his estate.
13. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Employee: Gregory A. Minard
R.R. 4, Box 299
Peru, IN 46970
If to Employer: Bryan Steam Corporation
P.O. Box 27
Peru, Indiana 46970
Attn: Chairman
or to such address as either party hereto may have furnished
to the other party in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
14. The validity, interpretation, and performance of this
Agreement shall be governed by the laws of the State of
Indiana, regardless of the principles of conflicts of laws.
15. Employer shall require any successor (whether direct or
indirect, by purchase, merger, or consolidation or otherwise)
to all or substantially all of the business or assets of
Employer, by agreement in form and substance reasonably
satisfactory to Employee to expressly assume and agree to
perform this Agreement in the same manner and same extent that
Employer would be required to perform it if no such succession
had
-7-
<PAGE>
taken place. As used in this Agreement, "Employer" shall mean
Employer as hereinbefore defined and any successor to its
business or assets as aforesaid.
16. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and Employer. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of dissimilar provisions or
conditions at the same or any prior subsequent time. No
agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement.
17. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in
full fore and effect. This is the entire agreement between
Employer and Employee concerning the subject matter hereof and
all prior agreements, written or oral, are superseded.
18. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
19. This Agreement is personal in nature and neither party hereto
shall, without consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder except as
provided in Section 12 and Section 15 above. Without limiting
the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other
than a transfer by his will or by the laws of descent or
distribution as set forth in Section 12 hereof, and in the
event of any attempted assignment or transfer contrary to this
paragraph, Employer shall have no liability to pay any amounts
so attempted to be assigned or transferred.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed as of the date first written above.
"Employer"
Bryan Steam Corporation
By: /s/ Jesse McVay
---------------------------
Its: President
"Employee"
/s/ Gregory A. Minard
---------------------------
Gregory A. Minard
-9-
EMPLOYMENT AGREEMENT
Sandra A. Mitting
This Agreement, is made and dated as of April 1, 1998, by and between Bryan
Steam Corporation, a New Mexico corporation ("Employer"), and Sandra A. Mitting,
a resident of Wabash County, Indiana ("Employee").
WITNESSETH
WHEREAS, Employee has been employed by Employer and has made valuable
contributions to the profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure reasonable and
commensurate compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee
on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of a change of control of
Employer;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of
Employee by Employer, each intending to be legally bound, covenant and agree as
follows:
1. Upon the terms and subject to the conditions set forth in this
Agreement, Employer employs Employee as Employer's Human
Resources Manager or another position commensurate with
Employee's experience and ability, and Employee accepts such
employment.
2. Employee agrees to serve as Employer's Human Resources Manager
or such other position, and to perform such duties in that
office as may be prescribed by the Employer's Bylaws and as
may reasonably be assigned to him by Employer's
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<PAGE>
President or Board of Directors and those generally associated
with the office held by Employee as determined by the
President or Board of Directors from time to time.
Employer shall not, without the written consent of Employee,
relocate or transfer Employee to a location more than 30 miles
from his current employment location. While employed by
Employer, Employee shall devote substantially all his business
time and efforts to Employer's business and the business of
its subsidiaries.
3. The term of this Agreement shall be for an initial term of two
(2) years commencing on April 1, 1998 (the "Effective Date"),
(such term shall herein be referred to as the "Term").
4. Employee shall receive an annual salary of $36,260 ("Base
Compensation"), payable at regular intervals in accordance
with Employer's normal payroll practices now or hereafter in
effect. Employer may consider and declare from time to time
increases in the salary it pays Employee and thereby increase
his Base Compensation.
5. So long as Employee is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all
present and future employee benefit, retirement, and
compensation plans generally available to employees of
Employer, consistent with his Base Compensation and his
position with Employer, including, without limitation, any
401(k) plan, stock incentive plan, employee stock purchase or
ownership plan, bonus plan, and group life and disability
insurance plans.
6. So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall receive reimbursement, either
directly or through use of an Employer credit card, from
Employer for all reasonable business expenses incurred in the
course of his employment by Employer, upon submission to
Employer of written vouchers and statements for reimbursement.
So long as Employee is employed by Employer pursuant to the
terms of this Agreement, Employer shall continue in effect
vacation policies applicable to Employee no less favorable
from his point of view than those written vacation policies in
effect on the date hereof. So long as Employee is employed by
Employer pursuant to this Agreement, Employee shall be
entitled to office space and working conditions no less
favorable than those in effect for him on the date hereof.
7. Employee's employment with the Employer may be terminated
prior to the expiration of the Term as follows:
(A) The Employer may immediately upon written notice
terminate Employee for cause. "Cause" shall be
defined as (i) personal dishonesty, (ii) willful
misconduct, (iii) breach of fiduciary duty involving
personal profit, (iv) intentional failure to perform
stated duties, (v) conviction of a violation of any
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<PAGE>
law, rule, or regulation (other than traffic
violations or similar offenses) or cease-and-desist
order, (vi) moral turpitude reflecting adversely on
the reputation of the Employer, or (vii) any material
breach of any term, condition or covenant of this
Agreement. The Employer shall have no further
liability to Employee under this Agreement for any
period subsequent to the termination for Cause.
(B) Either party may terminate this Agreement during the
Term without Cause, upon thirty (30) days prior
written notice to the other party. If the Employer
terminates the Employee without Cause (as defined
above), or if Employee terminates his employment for
Good Reason (as defined below):
(i) Compensation provided for herein (including
Base Compensation) shall continue to be
paid, and Employee shall continue to
participate in the employee benefit,
retirement, and compensation plans and other
perquisites as provided in Sections 5 and 6
hereof, through the date of termination
specified in the notice of termination; and
any benefits payable under insurance,
health, retirement and bonus plans as a
result of Employee's participation in such
plans through such date shall be paid when
due under those plans;
(ii) In addition, the Employer shall pay the
Employee a lump sum severance payment equal
to fifty percent (50%) of Employee's total
salary and bonus compensation (excluding any
transaction bonus under Section 9) for the
immediately preceding calendar year plus, if
a Change of Control has occurred, any unpaid
installment of any transaction bonus due
under Section 9 (or which would otherwise
later become due under Section 9); and
(iii) In addition, for one (1) year following
termination, Employer will maintain in full
force and effect for the continued benefit
of Employee and his dependents each employee
medical and life benefit plan (as such term
is defined in the Employee Retirement Income
Security Act of 1974, as amended) in which
Employee was entitled to participate
immediately prior to the date of his
termination, unless an essentially
equivalent benefit is provided by another
source. If the terms of any employee medical
and life benefit plan of Employer or
applicable laws do not permit continued
participation by Employee, Employer will
arrange to provide to Employee a benefit
substantially similar to, and no less
favorable than, the benefit he was entitled
to receive under such plan at the end of the
period of coverage. The right of Employee to
continued coverage under the health and
medical insurance plans of Employer pursuant
to Section 4980B of the Internal Revenue
Code
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<PAGE>
of 1986, as amended (the "Code") shall
commence upon the expiration of such period;
and
(iv) Employer will engage at Employer's cost an
out placement firm to assist Employee to
locate an alternative position for Employee
for a period of one (1) year; provided, that
Employer may terminate such firm's
engagement if Employee fails to attend two
or more interviews arranged by such firm or
if Employee is offered any position that
would provide a base compensation of at
least 80% of Employee's Base Compensation on
the date of termination. Employer will make
available reasonable office space and
telephone usage for a period not to exceed
ninety (90) days after terminations.
For purposes of this Agreement, "Good Reason" for
Employee to terminate his employment with Employer
means: a material breach of any term, condition or
covenant of Employer under this Agreement.
(C) Employee's employment with Employer shall terminate
in the event of Employee's death or disability. For
purposes hereof, "disability" shall be defined as
Employee's inability by reason of illness or other
physical or mental incapacity to perform the duties
required by his employment for a consecutive 180 day
period, provided that notice of any termination by
Employer because of Employee's "disability" shall
have been given to Employee prior to the full
resumption by him of the performance of such duties.
8. To induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) Unless otherwise required to do so by law, including
the order of a court or governmental agency, Employee
shall not divulge or furnish any trade secrets (as
defined in IND. CODEss.24-2-3-2) of Employer or any
confidential information acquired by him while
employed by Employer concerning the policies, plans,
procedures or customers of Employer to any person,
firm, corporation or other entity , other than
Employer or upon its written request, or use any such
trade secrets or confidential information directly or
indirectly for Employee's own benefit or for the
benefit of any person, firm, corporation or other
entity other then Employer, because such trade
secrets and confidential information are confidential
and shall at all times remain the property of
Employer.
(B) For a period of six (6) months after termination of
Employee's employment with Employer for any reason,
Employee shall not (a) compete, directly or
indirectly, in any state or province of the U.S. or
Canada where Employer has a sales representative or
sold products within the 12 months prior to
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<PAGE>
Employee's termination, with the business of Employer
as conducted during the term of this Agreement (which
business shall include the manufacture or sale of any
products manufactured or sold by Employer during the
12 months prior to Employee's termination), or have
any significant interest (including any interest or
association, including but not limited to, that of
owner, part owner, partner, shareholder, director,
officer, employee, agent, consultant, lender or
advisor) in any person, firm or entity which competes
with Employer's business in the area described above
(each such person, firm or entity is referred to as
"Competitor"); (b) solicit or accept business for or
on behalf of any Competitor; or (c) solicit, induce
or persuade, or attempt to solicit, induce or
persuade, any person to work for or provide services
to or provide financial assistance to, any
Competitor.
(C) If Employee's employment by Employer is terminated
for any reason, Employee will turn over immediately
thereafter to Employer all business correspondence,
letters, papers, reports, customers' lists, financial
statements, records, drawings, credit reports, credit
cards, or other confidential information or documents
of Employer or its affiliates in the possession or
control of Employee, all of which writings are and
will continue to be the sole and exclusive property
of Employer or its affiliates.
(D) Employee acknowledges that the covenants of this
Section 8 are reasonable in scope and duration and
reasonably necessary and appropriate to protect the
goodwill and other appropriate interests of Employer
following Employee's termination and that any
violation of such covenants by Employee would result
in irreparable harm to Employer, for which any remedy
at law would be inadequate. In addition to any other
remedy to which it may be entitled, Employer shall be
entitled to equitable relief, including specific
performance, for any violation of Section 8.
(E) Employee shall, and hereby authorizes Employer to,
inform any successor or prospective employer of
Employee of the terms of this Section 8. Any such
disclosure by Employer and any effort by Employer to
seek Employee's compliance with this covenant, even
if such effort shall require that Employee perform
different duties for such successor employer or delay
his employment by such employer, is hereby expressly
authorized by Employee and shall not be deemed a
violation of any "blacklisting" or similar law.
9. If there is a Change of Control of Employer as defined below,
Employee shall be paid a transaction bonus in the amount of
$2,000 payable one-half on the date of the Change of Control
and one-half on the date six (6) months after the Change of
Control, so long as Employer's Board of Directors shall not
have determined on a
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<PAGE>
reasonable basis and in good faith (prior to any installment
date) that Employee has failed to comply with the Bonus
Conditions. "Bonus Conditions" means:
(A) Employee has cooperated fully with Employer and its
advisors and, to the extent directed by Employer, any
party who is engaged or may engage in negotiations
with Employer, regarding any proposed transaction
involving Employer or its shareholders;
(B) Employee shall not have engaged in any activity
intended to discourage any such interested party from
engaging in any such transaction or disparaging the
Employer, its condition, assets or prospects, in the
eyes of any such party;
(C) Employee shall have continued to perform his duties
for Employer with at least the same level of
diligence and performance as characterized Employee's
performance prior to the Effective Date; and
(D) Employee shall not be in breach of any provision of
this Agreement.
Disclosure or statements made by Employee in good faith in response to
appropriate requests from third parties or instructions by Employer that
Employee reasonably believes to be truthful shall not violate the Bonus
Conditions.
For purposes of this Agreement, a "Change of Control" shall mean the occurrence
of any of the following: (i) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger of consolidation), in one or a series
of related transactions, of all or substantially all of the assets of Employer
and it subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act), (ii) the consummation of any transaction
(including, without limitation, any merger of consolidation) the result of which
is that any "person" as defined above, becomes the beneficial owner (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the voting stock of Employer or (iii) the
first day on which a majority of the members of the Board of Directors of
Employer are not Continuing Directors. Notwithstanding the foregoing, a "Change
of Control" shall not occur and no transaction bonus will be payable if the
person that acquires assets or stock of Employer under part (i) or (ii) of the
foregoing definition, is an Employer sponsored employee stock ownership plan, H.
Jesse McVay, a management group led by H. Jesse McVay or a person whose
participation in such transaction was supported or sponsored by such management
group. "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Employer who (i) was a member of such Board of
Directors on the date hereof or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination.
10. Any termination of Employee's employment with Employer as
contemplated by Section 7 hereof, except in the circumstances
of Employee's death, shall be
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<PAGE>
communicated by written "Notice of Termination" by the
terminating party to the other party hereto. Any "Notice of
Termination" pursuant to Section 7 based on Cause or Good
Reason shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for such termination.
11. If a dispute arises regarding the termination of Employee
pursuant to Section 7 hereof or as to the interpretation or
enforcement of this Agreement, said dispute shall be resolved
by binding arbitration in Indianapolis, Indiana determined in
accordance with the rules of the American Arbitration
Association. Notwithstanding the foregoing, Employer shall be
entitled to seek any remedy in a proceeding at law or in
equity in any court having jurisdiction for any breach of
Section 8.
12. Should Employee die after termination of his employment with
Employer while any amounts are payable to him hereunder, this
Agreement shall inure to the benefit of and ben enforceable by
Employee's executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall
be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there is
no such designee, to his estate.
13. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Employee: Sandra A. Mitting
5802 S. Old State Road 15
Wabash, IN 46922
If to Employer: Bryan Steam Corporation
P.O. Box 27
Peru, Indiana 46970
Attn: Chairman
or to such address as either party hereto may have furnished
to the other party in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
14. The validity, interpretation, and performance of this
Agreement shall be governed by the laws of the State of
Indiana, regardless of the principles of conflicts of laws.
15. Employer shall require any successor (whether direct or
indirect, by purchase, merger, or consolidation or otherwise)
to all or substantially all of the business or assets of
Employer, by agreement in form and substance reasonably
satisfactory to Employee
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<PAGE>
to expressly assume and agree to perform this Agreement in the
same manner and same extent that Employer would be required to
perform it if no such succession had taken place. As used in
this Agreement, "Employer" shall mean Employer as hereinbefore
defined and any successor to its business or assets as
aforesaid.
16. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and Employer. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of dissimilar provisions or
conditions at the same or any prior subsequent time. No
agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement.
17. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in
full fore and effect. This is the entire agreement between
Employer and Employee concerning the subject matter hereof and
all prior agreements, written or oral, are superseded.
18. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
19. This Agreement is personal in nature and neither party hereto
shall, without consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder except as
provided in Section 12 and Section 15 above. Without limiting
the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other
than a transfer by his will or by the laws of descent or
distribution as set forth in Section 12 hereof, and in the
event of any attempted assignment or transfer contrary to this
paragraph, Employer shall have no liability to pay any amounts
so attempted to be assigned or transferred.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed as of the date first written above.
"Employer"
Bryan Steam Corporation
By: /s/ Jesse McVay
---------------------------
Its: President
"Employee"
/s/ Sandra A. Mitting
---------------------------
Sandra A. Mitting
-9-
EMPLOYMENT AGREEMENT
Michael D. Sturch
This Agreement, is made and dated as of April 1, 1998, by and between Bryan
Steam Corporation, a New Mexico corporation ("Employer"), and Michael D. Sturch,
a resident of Miami County, Indiana ("Employee").
WITNESSETH
WHEREAS, Employee has been employed by Employer and has made valuable
contributions to the profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure reasonable and
commensurate compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee
on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of a change of control of
Employer;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of
Employee by Employer, each intending to be legally bound, covenant and agree as
follows:
1. Upon the terms and subject to the conditions set forth in this
Agreement, Employer employs Employee as Employer's Vice
President of Production or another position commensurate with
Employee's experience and ability, and Employee accepts such
employment.
2. Employee agrees to serve as Employer's Vice President of
Production or such other position, and to perform such duties
in that office as may be prescribed by the Employer's Bylaws
and as may reasonably be assigned to him by Employer's
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<PAGE>
President or Board of Directors and those generally associated
with the office held by Employee as determined by the
President or Board of Directors from time to time.
Employer shall not, without the written consent of Employee,
relocate or transfer Employee to a location more than 30 miles
from his current employment location. While employed by
Employer, Employee shall devote substantially all his business
time and efforts to Employer's business and the business of
its subsidiaries.
3. The term of this Agreement shall be for an initial term of two
(2) years commencing on April 1, 1998 (the "Effective Date"),
(such term shall herein be referred to as the "Term").
4. Employee shall receive an annual salary of $59,520 ("Base
Compensation"), payable at regular intervals in accordance
with Employer's normal payroll practices now or hereafter in
effect. Employer may consider and declare from time to time
increases in the salary it pays Employee and thereby increase
his Base Compensation.
5. So long as Employee is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all
present and future employee benefit, retirement, and
compensation plans generally available to employees of
Employer, consistent with his Base Compensation and his
position with Employer, including, without limitation, any
401(k) plan, stock incentive plan, employee stock purchase or
ownership plan, bonus plan, and group life and disability
insurance plans.
6. So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall receive reimbursement, either
directly or through use of an Employer credit card, from
Employer for all reasonable business expenses incurred in the
course of his employment by Employer, upon submission to
Employer of written vouchers and statements for reimbursement.
So long as Employee is employed by Employer pursuant to the
terms of this Agreement, Employer shall continue in effect
vacation policies applicable to Employee no less favorable
from his point of view than those written vacation policies in
effect on the date hereof. So long as Employee is employed by
Employer pursuant to this Agreement, Employee shall be
entitled to office space and working conditions no less
favorable than those in effect for him on the date hereof.
7. Employee's employment with the Employer may be terminated
prior to the expiration of the Term as follows:
(A) The Employer may immediately upon written notice
terminate Employee for cause. "Cause" shall be
defined as (i) personal dishonesty, (ii) willful
misconduct, (iii) breach of fiduciary duty involving
personal profit, (iv) intentional failure to perform
stated duties, (v) conviction of a violation of any
-2-
<PAGE>
law, rule, or regulation (other than traffic
violations or similar offenses) or cease-and-desist
order, (vi) moral turpitude reflecting adversely on
the reputation of the Employer, or (vii) any material
breach of any term, condition or covenant of this
Agreement. The Employer shall have no further
liability to Employee under this Agreement for any
period subsequent to the termination for Cause.
(B) Either party may terminate this Agreement during the
Term without Cause, upon thirty (30) days prior
written notice to the other party. If the Employer
terminates the Employee without Cause (as defined
above), or if Employee terminates his employment for
Good Reason (as defined below):
(i) Compensation provided for herein (including
Base Compensation) shall continue to be
paid, and Employee shall continue to
participate in the employee benefit,
retirement, and compensation plans and other
perquisites as provided in Sections 5 and 6
hereof, through the date of termination
specified in the notice of termination; and
any benefits payable under insurance,
health, retirement and bonus plans as a
result of Employee's participation in such
plans through such date shall be paid when
due under those plans;
(ii) In addition, the Employer shall pay the
Employee a lump sum severance payment equal
to fifty percent (50%) of Employee's total
salary and bonus compensation (excluding any
transaction bonus under Section 9) for the
immediately preceding calendar year plus, if
a Change of Control has occurred, any unpaid
installment of any transaction bonus due
under Section 9 (or which would otherwise
later become due under Section 9); and
(iii) In addition, for one (1) year following
termination, Employer will maintain in full
force and effect for the continued benefit
of Employee and his dependents each employee
medical and life benefit plan (as such term
is defined in the Employee Retirement Income
Security Act of 1974, as amended) in which
Employee was entitled to participate
immediately prior to the date of his
termination, unless an essentially
equivalent benefit is provided by another
source. If the terms of any employee medical
and life benefit plan of Employer or
applicable laws do not permit continued
participation by Employee, Employer will
arrange to provide to Employee a benefit
substantially similar to, and no less
favorable than, the benefit he was entitled
to receive under such plan at the end of the
period of coverage. The right of Employee to
continued coverage under the health and
medical insurance plans of Employer pursuant
to Section 4980B of the Internal Revenue
Code
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<PAGE>
of 1986, as amended (the "Code") shall
commence upon the expiration of such period;
and
(iv) Employer will engage at Employer's cost an
out placement firm to assist Employee to
locate an alternative position for Employee
for a period of one (1) year; provided, that
Employer may terminate such firm's
engagement if Employee fails to attend two
or more interviews arranged by such firm or
if Employee is offered any position that
would provide a base compensation of at
least 80% of Employee's Base Compensation on
the date of termination. Employer will make
available reasonable office space and
telephone usage for a period not to exceed
ninety (90) days after terminations.
For purposes of this Agreement, "Good Reason" for
Employee to terminate his employment with Employer
means: a material breach of any term, condition or
covenant of Employer under this Agreement.
(C) Employee's employment with Employer shall terminate
in the event of Employee's death or disability. For
purposes hereof, "disability" shall be defined as
Employee's inability by reason of illness or other
physical or mental incapacity to perform the duties
required by his employment for a consecutive 180 day
period, provided that notice of any termination by
Employer because of Employee's "disability" shall
have been given to Employee prior to the full
resumption by him of the performance of such duties.
8. To induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) Unless otherwise required to do so by law, including
the order of a court or governmental agency, Employee
shall not divulge or furnish any trade secrets (as
defined in IND. CODEss.24-2-3-2) of Employer or any
confidential information acquired by him while
employed by Employer concerning the policies, plans,
procedures or customers of Employer to any person,
firm, corporation or other entity , other than
Employer or upon its written request, or use any such
trade secrets or confidential information directly or
indirectly for Employee's own benefit or for the
benefit of any person, firm, corporation or other
entity other then Employer, because such trade
secrets and confidential information are confidential
and shall at all times remain the property of
Employer.
(B) For a period of six (6) months after termination of
Employee's employment with Employer for any reason,
Employee shall not (a) compete, directly or
indirectly, in any state or province of the U.S. or
Canada where Employer has a sales representative or
sold products within the 12 months prior to
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<PAGE>
Employee's termination, with the business of Employer
as conducted during the term of this Agreement (which
business shall include the manufacture or sale of any
products manufactured or sold by Employer during the
12 months prior to Employee's termination), or have
any significant interest (including any interest or
association, including but not limited to, that of
owner, part owner, partner, shareholder, director,
officer, employee, agent, consultant, lender or
advisor) in any person, firm or entity which competes
with Employer's business in the area described above
(each such person, firm or entity is referred to as
"Competitor"); (b) solicit or accept business for or
on behalf of any Competitor; or (c) solicit, induce
or persuade, or attempt to solicit, induce or
persuade, any person to work for or provide services
to or provide financial assistance to, any
Competitor.
(C) If Employee's employment by Employer is terminated
for any reason, Employee will turn over immediately
thereafter to Employer all business correspondence,
letters, papers, reports, customers' lists, financial
statements, records, drawings, credit reports, credit
cards, or other confidential information or documents
of Employer or its affiliates in the possession or
control of Employee, all of which writings are and
will continue to be the sole and exclusive property
of Employer or its affiliates.
(D) Employee acknowledges that the covenants of this
Section 8 are reasonable in scope and duration and
reasonably necessary and appropriate to protect the
goodwill and other appropriate interests of Employer
following Employee's termination and that any
violation of such covenants by Employee would result
in irreparable harm to Employer, for which any remedy
at law would be inadequate. In addition to any other
remedy to which it may be entitled, Employer shall be
entitled to equitable relief, including specific
performance, for any violation of Section 8.
(E) Employee shall, and hereby authorizes Employer to,
inform any successor or prospective employer of
Employee of the terms of this Section 8. Any such
disclosure by Employer and any effort by Employer to
seek Employee's compliance with this covenant, even
if such effort shall require that Employee perform
different duties for such successor employer or delay
his employment by such employer, is hereby expressly
authorized by Employee and shall not be deemed a
violation of any "blacklisting" or similar law.
9. If there is a Change of Control of Employer as defined below,
Employee shall be paid a transaction bonus in the amount of
$4,000 payable one-half on the date of the Change of Control
and one-half on the date six (6) months after the Change of
Control, so long as Employer's Board of Directors shall not
have determined on a
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<PAGE>
reasonable basis and in good faith (prior to any installment
date) that Employee has failed to comply with the Bonus
Conditions. "Bonus Conditions" means:
(A) Employee has cooperated fully with Employer and its
advisors and, to the extent directed by Employer, any
party who is engaged or may engage in negotiations
with Employer, regarding any proposed transaction
involving Employer or its shareholders;
(B) Employee shall not have engaged in any activity
intended to discourage any such interested party from
engaging in any such transaction or disparaging the
Employer, its condition, assets or prospects, in the
eyes of any such party;
(C) Employee shall have continued to perform his duties
for Employer with at least the same level of
diligence and performance as characterized Employee's
performance prior to the Effective Date; and
(D) Employee shall not be in breach of any provision of
this Agreement.
Disclosure or statements made by Employee in good faith in response to
appropriate requests from third parties or instructions by Employer that
Employee reasonably believes to be truthful shall not violate the Bonus
Conditions.
For purposes of this Agreement, a "Change of Control" shall mean the occurrence
of any of the following: (i) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger of consolidation), in one or a series
of related transactions, of all or substantially all of the assets of Employer
and it subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act), (ii) the consummation of any transaction
(including, without limitation, any merger of consolidation) the result of which
is that any "person" as defined above, becomes the beneficial owner (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the voting stock of Employer or (iii) the
first day on which a majority of the members of the Board of Directors of
Employer are not Continuing Directors. Notwithstanding the foregoing, a "Change
of Control" shall not occur and no transaction bonus will be payable if the
person that acquires assets or stock of Employer under part (i) or (ii) of the
foregoing definition, is an Employer sponsored employee stock ownership plan, H.
Jesse McVay, a management group led by H. Jesse McVay or a person whose
participation in such transaction was supported or sponsored by such management
group. "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Employer who (i) was a member of such Board of
Directors on the date hereof or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination.
10. Any termination of Employee's employment with Employer as
contemplated by Section 7 hereof, except in the circumstances
of Employee's death, shall be
-6-
<PAGE>
communicated by written "Notice of Termination" by the
terminating party to the other party hereto. Any "Notice of
Termination" pursuant to Section 7 based on Cause or Good
Reason shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for such termination.
11. If a dispute arises regarding the termination of Employee
pursuant to Section 7 hereof or as to the interpretation or
enforcement of this Agreement, said dispute shall be resolved
by binding arbitration in Indianapolis, Indiana determined in
accordance with the rules of the American Arbitration
Association. Notwithstanding the foregoing, Employer shall be
entitled to seek any remedy in a proceeding at law or in
equity in any court having jurisdiction for any breach of
Section 8.
12. Should Employee die after termination of his employment with
Employer while any amounts are payable to him hereunder, this
Agreement shall inure to the benefit of and ben enforceable by
Employee's executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall
be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there is
no such designee, to his estate.
13. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Employee: Michael D. Sturch
R.R. 3, Box 218A
Peru, IN 46970
If to Employer: Bryan Steam Corporation
P.O. Box 27
Peru, Indiana 46970
Attn: Chairman
or to such address as either party hereto may have furnished
to the other party in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
14. The validity, interpretation, and performance of this
Agreement shall be governed by the laws of the State of
Indiana, regardless of the principles of conflicts of laws.
15. Employer shall require any successor (whether direct or
indirect, by purchase, merger, or consolidation or otherwise)
to all or substantially all of the business or assets of
Employer, by agreement in form and substance reasonably
satisfactory to Employee
-7-
<PAGE>
to expressly assume and agree to perform this Agreement in the
same manner and same extent that Employer would be required to
perform it if no such succession had taken place. As used in
this Agreement, "Employer" shall mean Employer as hereinbefore
defined and any successor to its business or assets as
aforesaid.
16. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and Employer. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of dissimilar provisions or
conditions at the same or any prior subsequent time. No
agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement.
17. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in
full fore and effect. This is the entire agreement between
Employer and Employee concerning the subject matter hereof and
all prior agreements, written or oral, are superseded.
18. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
19. This Agreement is personal in nature and neither party hereto
shall, without consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder except as
provided in Section 12 and Section 15 above. Without limiting
the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other
than a transfer by his will or by the laws of descent or
distribution as set forth in Section 12 hereof, and in the
event of any attempted assignment or transfer contrary to this
paragraph, Employer shall have no liability to pay any amounts
so attempted to be assigned or transferred.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed as of the date first written above.
"Employer"
Bryan Steam Corporation
By: /s/ Jesse McVay
---------------------------
Its: President
"Employee"
/s/ Michael D. Sturch
---------------------------
Michael D. Sturch
-9-
Mr. Jesse McVay
Bryan Steam Corporation
March 18, 1998
Page 1
[Goelzer & Co. Letterhead]
March 18, 1998
Mr. Jesse McVay
President
Bryan Steam Corporation
P O Box 27
Peru, Indiana 46970
Dear Mr. McVay:
Bryan Steam Corporation ("Bryan" or the "Company" hereby engages
Goelzer & Co., Inc. ("Goelzer") to put forth its best efforts to arrange a
buyout proposal for up to 100% of the common equity of the Company that is
supported by the management of Bryan. For purposes of this agreement,
"Management" means a group of the Company's incumbent management employees led
by H. Jesse McVay. In the event that Goelzer is successful in consummating a
sale, merger, consolidation or transfer to any entity, based on a proposal
submitted by Management, of any or all tangible or intangible assets or stock of
the Company, Bryan agrees to pay Goelzer a finders fee as a percentage of the
net proceeds of such sale or exchange, due at closing, as follows:
2% of all proceeds received at the time of closing
2% of future proceeds paid to the shareholders and
all related entities,
less the up front fee described below
The Company shall reserve the right to refuse or close, at its sole
discretion.
Goelzer has previously rendered an opinion of fair market value for
Bryan common equity. This opinion will be converted into an offering memorandum
for an up front fee of $6,000.00. All other costs incurred by Goelzer during the
course of this engagement shall be the sole responsibility of Goelzer, with the
exception of Bryan approved, major travel expenses. However, it is Goelzer's
understanding that the Board of Directors of Bryan is soliciting other offers to
purchase the equity of the Company in addition to the buyout proposal from
Management. Therefore, as an incentive for Goelzer to undertake this assignment,
the Company agrees to pay Goelzer a walk away fee of $35,000.00 (in addition to
the up front fee) if an offer for the Company is accepted by the Board of
Directors other than the proposal submitted by Management, provided that
Management is able to put forth an offer (identifying its sources of financing)
for no less than $90.00 per share for control of the Company.
Goelzer shall have the exclusive right to represent the Management for
a period of one (1) year. Unless the Company has previously consummated a
transaction (either with a third party or
<PAGE>
Mr. Jesse McVay
Bryan Steam Corporation
March 18, 1998
Page 2
pursuant to a proposal submitted by Management), if a sale, merger,
consolidation or conveyance of a substantial interest in Bryan Steam Corporation
occurs within one (1) year after the expiration of the exclusive representation
period set forth herein with a party first contacted for, or introduced to,
Management by Goelzer prior to such expiration, the company shall pay, or cause
to be paid, to Goelzer a fee equal to that which would have been paid if closed
during the one year exclusive term.
In no event shall H. Jesse McVay or any individual member of Management
be personally obligated to pay Goelzer's fees under this agreement.
This agreement will be effective upon your having signed and returned
this agreement via fax or mail. A copy of the original signed agreement will be
furnished to you for your records. If the need for additional services or
modifications arise, such revisions or modifications will be mutually agreed
upon by written addendum.
Sincerely,
GOELZER & CO., INC.
/s/ George G. Cassiere
----------------------------
George G. Cassiere, CFA
Managing Director
Agreed to and Accepted: Agreed to and Accepted as to
Payment of Fees Only:
The Management of
BRYAN STEAM CORPORATION BRYAN STEAM CORPORATION
By: /s/ Jesse McVay By: /s/ Albert J. Bishop
- ---------------------------- ----------------------------
Mr. Jesse McVay, President
Date: March 23, 1998 Date: March 23, 1998
<PAGE>
[Bryan Steam Corporation Letterhead]
August 26, 1998
George G. Cassiere, CFA
Managing Director
Goelzer & Co., Inc.
Bank One Center - Circle
111 Monument Circle - Suite 502
Indianapolis, IN 46204-5171
Re: Modification of Letter Agreement dated March 18, 1998
Dear George:
Reference is hereby made to the letter agreement dated March 18, 1998
among Bryan Steam Corporation ("Company"), Goelzer & Co. ("Goelzer"), and H.
Jesse McVay on behalf of the management group referred to therein (the
"Engagement Letter"). This letter confirms our agreement that upon payment by
the Company to Goelzer the amount of $200,000, the Engagement Letter shall
terminate and the parties thereto shall have no further rights or obligations
thereunder. Bryan shall pay such amount to Goelzer on or before October 10,
1998.
Please confirm your agreement with the foregoing by signing below.
Thank you very much.
Very truly yours,
Bryan Steam Corporation
By: /s/ Albert J. Bishop
----------------------------
Albert J. Bishop, Chairman
AGREED:
Goelzer & Co.
By:/s/ George G. Cassiere
- ----------------------------
Its: Managing Director
ACKNOWLEDGED:
/s/ H. Jesse McVay
- ----------------------------
H. Jesse McVay
LETTERHEAD OF
[Goelzer & Co. Inc.]
INVESTMENT BANKING
June 18, 1998
Mr. Albert Morrison, III
c/o Mr. Ron Griffith, CFO
Burnham Corporation
P.O. Box 3205
Lancaster, PA 17604
RE: Letter Agreement of Confidentiality
Dear Mr. Morrison:
In connection with your consideration of a possible
acquisition transaction with Bryan Steam Corporation (the
"Company"), you have requested information concerning the
Company. As a condition to your being furnished such information,
you agree to treat confidentially, in accordance with the
provisions of this letter agreement, all "Confidential Material",
means all information (in any form or media whatsoever)
concerning the Company that the Company, its agents or
representatives (including attorneys, accountants and advisors),
furnishes (in connection with a possible acquisition transaction
to you or your representatives, employees, agents, advisors,
lenders, affiliates or representatives of your agents, advisors,
lenders or affiliates (all of the foregoing a collectively
referred to as "your Representatives"), whether furnished before
or after the date of this letter agreement, and all notes,
analyses, compilations, studies or other materials, whether in
written, printed, electronic, magnetic or any other form or media
and whether prepared by you or others, that contain or otherwise
reflect such information; provided, however, that the term
"Confidential Material" does not include information that (i) is
or becomes generally available to the public other than as a
result of a disclosure by you or your Representatives, (ii) was
available to you on a non-confidential basis prior to its
disclosure to you by the Company, its agents or representatives,
or (iii) becomes available to you on a non- confidential basis
from a source other than the Company, its agents or
representatives, provided that such source is not known by you to
be bound by a confidentiality agreement with, or other Obligation
of secrecy to, the Company, its agents or representatives.
<PAGE>
Albert Morrison, III
Burnham Corporation
June 18, 1998
Page 2
You hereby agree that, for a period of five years from
the date hereof, (a) the Confidential Material will be used
solely for the purpose of evaluating a possible acquisition
transaction between the Company and you, and (b) the Confidential
Material will be kept confidential by you and your
Representatives and will not be used by you or your
Representatives other than for such purpose; provided, however,
that (i) any of such Confidential Material may be disclosed to
your Representatives who need to know such information for the
purpose of evaluating such a transaction (it being understood
that your Representatives shall be informed by you of the
confidential nature of such information and shall be directed by
you to treat such information confidentially) (ii) any disclosure
of the Confidential Material may be made to which the Company
consents in writing, and (iii) any disclosure required by law or
legal process is permitted (you agree to give the Company
reasonable prior notice before making any disclosure under this
clause (iii)). In addition, you hereby agree that, without the
prior written consent of the Company, you will not, and will
direct your Representatives not to, disclose to any person either
the fact that you have received the Confidential Material, the
fact that discussions or negotiations are taking place concerning
a possible transaction between the Company and you, or any of the
terms, conditions or other facts with respect to any such
possible transaction, including the status thereof.
Although the Company has endeavored to include in the
Confidential Material information known to it which it believes
to be relevant for the purpose of your evaluation, you understand
that neither the Company nor any of its officers, directors,
shareholders, employees, representatives or advisors have made or
make any representation or warranty as to the accuracy or
completeness of the confidential Material. You agree that neither
the Company nor its officers, directors, shareholders, employees,
representatives or advisors shall have any liability to you or
any of your Representatives resulting from the use of the
Confidential Material.
Upon the Company's request, you will promptly redeliver to
the company or destroy all Confidential Material provided to you
by the Company, its agents or representatives, and you will not
retain any copies, extracts or other reproductions in whole or in
part of such Confidential Material. All Confidential Material
prepared by you or your Representatives shall be destroyed, and
such destruction shall be certified in writing to the Company by
an authorized officer supervising such destruction.
Notwithstanding the redelivery or destruction of the Confidential
Material, you will continue to be bound by our obligations of
confidentiality and other obligations hereunder.
You also agree that money damages would be both
incalculable and an insufficient remedy for any breach of the
terms of this letter agreement by you or any of your
Representatives and that any such breach would cause the Company
irreparable
<PAGE>
Albert Morrison, III
Burnham Corporation
June 18, 1998
Page 3
harm. Accordingly, you also agree that, in the event of any
breach or threatened breach of the terms of this letter,
the Company, in addition to all other remedies available to it, shall
be entitled, to equitable relief, including injunctive relief and
specific performance.
It is understood and agreed that no failure or delay by the
Company in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege
hereunder. This letter agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
If the foregoing is in accordance with your understanding
of our agreement, please sign and return to us the enclosed
duplicate hereof, whereupon this letter agreement will become a
binding agreement between the Company and you in accordance with
its terms.
Very truly yours,
/s/ George G. Cassiere
-------------------------------
George G. Cassiere, CFA
Exclusive Agent for Management of the Company
Confirmed and agreed to
as of: 6-18-98
---------------
BURNHAM CORPORATION
By: /s/ Ronald L. Griffith
----------------------
[Bryan Steam Letterhead]
September 29, 1998
Dear Stockholder:
On behalf of the Board of Directors of Bryan Steam Corporation. ("Bryan"),
I am pleased to inform you that on September 23, 1998, Bryan entered into an
Agreement and Plan of Merger (the "Agreement") with Burnham Corporation
("Burnham") and Burnham Acquisition Corporation, a wholly-owned subsidiary of
Burnham ("Purchaser"), pursuant to which Purchaser has commenced today a tender
offer to purchase all of the outstanding shares of Bryan's common stock (the
"Shares"), at a price of $152.00 per Share in cash (the "Tender Offer"). The
Tender Offer is currently scheduled to expire at 12:00 midnight, New York City
time, on Wednesday, October 28, 1998.
Following the successful completion of the Tender Offer and upon approval
by stockholder vote, if required, Purchaser will be merged with and into Bryan
(the "Merger"), and all Shares not purchased pursuant to the Tender Offer will
be converted into the right to receive $152.00 per Share in cash.
THE BOARD OF DIRECTORS UNANIMOUSLY HAS DETERMINED THAT THE TENDER OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, BRYAN, ITS STOCKHOLDERS
AND ITS OTHER CONSTITUENCIES, HAS APPROVED THIS TENDER OFFER, THE AGREEMENT AND
THE MERGER, AND RECOMMENDS THAT YOU ACCEPT THE TENDER OFFER AND TENDER YOUR
SHARES PURSUANT TO THIS TENDER OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the enclosed
Solicitation/Recommendation Statement on Schedule 14D-9 which is being filed
with the Securities and Exchange Commission. Among other things, the Board
considered the opinion of McDonald & Company Securities, Inc. to the effect that
the consideration of $152.00 per Share to be received by the stockholders of
Bryan pursuant to the Tender Offer and Merger is fair, from a financial point of
view, to such stockholders. The enclosed Schedule 14D-9 describes the Board's
decision and contains other important information relating to that decision. I
urge you to read it carefully.
On behalf of the Board of Directors, I thank you for the support you have
given to Bryan.
Sincerely,
/s/ Albert J. Bishop
------------------------
Albert J. Bishop
Chairman
September 21, 1998
The Board of Directors
Bryan Steam Corporation
P.O. Box 27
Peru, Indiana 46970
Members of the Board:
You have requested our opinion (the "Opinion") as to the fairness, from a
financial point of view, of the consideration (the "Consideration") to be paid
to the holders (the "Holders") of the issued and outstanding shares of Common
Stock (the "Common Stock") of Bryan Steam Corporation (the "Company") pursuant
to the Agreement and Plan of Merger (the "Agreement") by and among Burnham
Corporation ("Burnham"), Burnham Acquisition Corporation, an affiliate of
Burnham ("Sub"), and the Company (the "Transaction"), pursuant to which Sub will
be merged with and into the Company (the "Merger").
You have advised us that, pursuant to the Agreement, Sub will commence a tender
offer for any and all outstanding shares of the Common Stock at a price of
$152.00 per share net in cash (the "Tender Offer"). The Tender Offer is to be
followed by the Merger in which the shares of all stockholders who did not
tender will be converted into the right to receive $152.00 per share in cash.
The consideration to be paid in the Tender Offer and the Merger shall hereafter
be referred to as the "Consideration." We understand that there are 191,284
shares of Bryan Common Stock issued and outstanding.
McDonald and Company Securities, Inc. ("McDonald"), as part of its investment
banking business, is customarily engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. McDonald has had an investment banking relationship with the
Company and has been involved in negotiating the price and terms of the
Transaction.
In rendering the Opinion, we have made such reviews and analyses as we have
deemed necessary. Among other things, we have reviewed and analyzed the
following information:
(i) a draft of the Agreement, received on September 17,
1998, which we understand to be in substantially
final form;
(ii) certain publicly available information concerning the
Company, including its Annual Reports to Shareholders
and Annual Reports on Form 10-K for the fiscal years
ending June 30, 1995, 1996 and 1997, respectively,
and audited financial statements for the year ended
June 30, 1998;
(iii) certain other internal information, primarily
financial in nature, concerning the business and
operations of the Company furnished to us by the
Company for purposes of our analysis;
(iv) certain publicly available information concerning the
trading of, and the trading markets for, the
Company's Common Stock;
(v) certain publicly available information with respect
to certain other companies that we believe to be
comparable to the Company and the trading markets for
certain of such other companies' securities;
(vi) certain publicly available information concerning the
nature and terms of certain other transactions that
we consider relevant to our inquiry;
(vii) data and explanations discussed during interviews
with the Company's Senior Management Team; and
(viii) the general indications of interest and offers
received as a result of McDonald's contacts with
prospective financial and strategic acquirors of the
Company.
We also considered such other data and information we judged necessary to render
the Opinion.
In our review and analysis and in arriving at our opinion, we have assumed and
relied upon the accuracy and completeness of all of the financial and other
information provided us or publicly available and have assumed and relied upon
the representations and warranties of the Company contained in the Agreement. We
have not been engaged to, and have not independently attempted to, verify any of
such information. In addition, we have not conducted an appraisal of any of the
assets, properties or facilities of the Company nor have we been furnished with
any such evaluation or appraisal. We have also assumed that the conditions to
the Transaction as set forth in the Agreement would be satisfied and that the
Transaction would be consummated on a timely basis in the manner contemplated by
the Agreement.
It should be noted that this opinion is based on economic and market conditions
and other circumstances existing on, and information made available as of, the
date hereof and does not address any matters subsequent to such date, including
the value of the Company's Common Stock. In addition, our opinion is, in any
event, limited to the fairness, as of the date hereof, from a financial point of
view, of the consideration to be paid by Burnham pursuant to the Agreement and
does not address the Company's underlying business decision to effect the
Transaction or any other terms of the Transaction.
We have acted as financial advisor to the Company in connection with the
Transaction and will receive from the Company a financial advisory fee for our
services, all of which is contingent upon the consummation of the Transaction
In the ordinary course of our business, we may actively trade securities of both
the Company and Burnham for our own account and for the accounts of customers
and, accordingly, may at any time hold a long or short position in such
securities.
<PAGE>
It is understood that this opinion was prepared for the confidential use of the
Board of Directors and Senior Management of the Company and may not be
disclosed, summarized, excerpted from or otherwise publicly referred to without
our prior written consent. Our opinion is directed to the Board of Directors and
does not constitute a recommendation to any stockholder of the Company as to how
such stockholder should vote at a stockholders' meeting held in connection with
the Transaction.
Based upon and subject to the foregoing and such other matters as we consider
relevant, it is our opinion that, as of the date hereof, the Consideration to be
paid by Burnham pursuant to the Agreement is fair, from a financial point of
view, to the stockholders of the Company.
Very truly yours,
/s/ McDONALD & COMPANY SECURITIES, INC.
---------------------------------------
McDONALD & COMPANY SECURITIES, INC.
