SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported) May 26, 2000
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ACME ELECTRIC CORPORATION
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(Exact Name of Registrant as Specified in Charter)
New York 1-8277 16-0324980
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(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
400 Quaker Road, East Aurora, New York 14052
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(Address of Principal Executive Offices (Zip Code)
Registrant's telephone number, including area code (716) 655-3800
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events.
On May 26, 2000, the Company entered into an Agreement and Plan of Merger
with Key Components, LLC and KCI Merger Corp. (collectively, "Key") pursuant to
which the shareholders of the Company will be asked to approve the merger of the
Company into Key for a consideration of $9.00 per share. By reason of the
foregoing, the Company's merger agreement of April 26, 2000 with Miranda
Holdings, Inc. and Miranda Acquisition Corp. (collectively, "Miranda") which had
provided a consideration to shareholders of the Company of $8.00 per share was
terminated. The determination by the Company to accept the Key merger proposal
and the consequent termination of the Miranda merger agreement require the
Company to pay Miranda a termination fee of $2.5 million.
Item 7. Exhibits.
(c) The following exhibits are filed as a part of this report:
(i) Agreement and Plan of Merger among Acme Electric Corporation,
Key Components, LLC and KCI Merger Corp. dated as of May 26, 2000.
Pursuant to Rule 601(b)(2) of Regulation S-K, schedules to this
Agreement have been omitted. The Company agrees to supplementally
provide the Securities and Exchange Commission copies of the schedules
upon request.
(ii) Press Release of May 26, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACME ELECTRIC CORPORATION
(Registrant)
Date: May 31, 2000 By: Robert J. McKenna
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Robert J. McKenna
Chairman and Chief
Executive Officer
<PAGE>
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
ACME ELECTRIC CORPORATION,
KEY COMPONENTS, LLC
AND
KCI MERGER CORP.
Dated as of May 26, 2000
<PAGE>
- 1 -
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER ..........................................................1
1.01 The Merger ..................................................1
1.02 Effective Time ..............................................1
1.03 Certificate of Incorporation ................................2
1.04 By-Laws .....................................................2
1.05 Directors and Officers ......................................2
1.06 Further Assurances ..........................................2
1.07 Shareholders' Meeting .......................................2
ARTICLE II CONVERSION OR CANCELLATION OF SHARES; STOCK RIGHTS .................4
2.01 Conversion or Cancellation of Shares ........................4
2.02 Exchange of Certificates; Paying Agent ......................4
2.03 Dissenters' Rights ..........................................6
2.04 Transfer of Shares After the Effective Time .................6
2.05 Options .....................................................6
2.06 Shares under Employee Stock Purchase Plan and 401K Plan .....7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY .....................7
3.01 Organization; Qualification .................................7
3.02 The Company's Capitalization ................................7
3.03 Company Equity Investments ..................................8
3.04 Authority Relative to this Agreement ........................8
3.05 Consents and Approvals; No Violation ........................8
3.06 SEC Reports; Financial Statements ...........................9
3.07 Proxy Statement ............................................10
3.08 Undisclosed Liabilities ....................................10
3.09 Absence of Certain Changes or Events .......................11
3.10 Title, Etc .................................................11
3.11 Intellectual Property ......................................12
3.12 Insurance ..................................................13
3.13 Employee Benefit Plans .....................................14
3.14 Legal Proceedings, Etc .....................................17
3.15 Taxes ......................................................17
3.16 Material Agreements ........................................18
3.17 Compliance with Law ........................................18
3.18 Insider Interests ..........................................18
3.19 Officers, Directors and Employees ..........................19
3.20 Environmental Protection ...................................19
3.21 Brokers and Finders ........................................20
3.22 Voting Requirements ........................................20
3.23 Board Approval .............................................20
3.24 Labor Matters ..............................................20
3.25 Termination ................................................21
3.26 No Other Representations or Warranties .....................21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE PURCHASER ....22
4.01 Corporation Organization ...................................22
4.02 Authorized Capital .........................................22
4.03 Corporation Authority ......................................22
4.04 No Prior Activities ........................................22
4.05 Governmental Filings; No Violations ........................23
4.06 Brokers and Finders ........................................23
4.07 Proxy Statement; Other Information .........................23
4.08 Ownership of Company Capital Stock .........................24
4.09 No Other Representations or Warranties .....................24
ARTICLE V COVENANTS OF THE PARTIES ...........................................24
5.01 Conduct of Business of the Company .........................24
5.02 Notification of Certain Matters ............................26
5.03 Access to Information ......................................27
5.04 Shareholders' Meeting ......................................27
5.05 Proxy Statement ............................................27
5.06 Further Information ........................................28
5.07 Further Assurances .........................................28
5.08 Interim Financial Statements ...............................28
5.09 Best Efforts ...............................................28
5.10 Filings ....................................................29
5.11 Public Announcements .......................................29
5.12 Indemnity; D&O Insurance ...................................29
5.13 Other Potential Bidders ....................................31
5.14 Shareholder Litigation .....................................32
5.15 Financing Commitments ......................................32
ARTICLE VI CONDITIONS TO THE MERGER ..........................................32
6.01 Conditions to Each Party's Obligation
to Effect the Merger . .....................................32
6.02 Conditions to the Obligations of the Parent
and the Purchaser to Effect the Merger .....................33
6.03 Conditions to the Obligations of the Company
to Effect the Merger .......................................34
ARTICLE VII CLOSING ..........................................................34
7.01 Time and Place .............................................34
7.02 Filings at the Closing .....................................34
ARTICLE VIII TERMINATION; AMENDMENT; WAIVER ..................................34
8.01 Termination ................................................34
8.02 Effect of Termination ......................................35
8.03 Fees and Expenses ..........................................35
ARTICLE IX MISCELLANEOUS .....................................................36
9.01 Survival of Representations and Warranties .................36
9.02 Amendment and Modification .................................36
9.03 Waiver of Compliance; Consents .............................36
9.04 Counterparts ...............................................36
9.05 Governing Law ..............................................36
9.06 Notices ....................................................36
9.07 Entire Agreement, Assignment, Etc ..........................37
9.08 Validity ...................................................38
9.09 Headings ...................................................38
9.10 Specific Performance .......................................38
Exhibit A - Amended and Restated Certificate of Incorporation of
the Company
Exhibit B - By-Laws of the Company
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated
as of May 26, 2000, among Acme Electric Corporation, a New York corporation (the
"Company"), Key Components, LLC, a Delaware limited liability company (the
"Parent"), and KCI Merger Corp., a New York corporation (the "Purchaser").
WHEREAS, the respective Boards of Directors of the Parent and the Purchaser
have determined that it is in the best interests of their respective
shareholders for the Purchaser to merge with and into the Company (the "Merger")
upon the terms and subject to the conditions of this Agreement; and
WHEREAS, the Board of Directors of the Company (the "Board"), based upon
the unanimous recommendation of a special committee of independent directors of
the Company (the "Special Committee"), has determined that the Merger, upon the
terms and subject to the conditions of this Agreement, is advisable, fair and in
the best interests of the Company and its shareholders, has approved the Merger,
this Agreement and the other transactions contemplated hereby and has
recommended approval of the Merger and this Agreement by the shareholders of the
Company.
NOW, THEREFORE, in consideration of the mutual representations, warranties
and agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I THE MERGER
1.01 The Merger. Subject to the terms and conditions of this Agreement and
the New York Business Corporation Law (the "BCL"), at the Effective Time, the
Parent shall cause the Purchaser to merge with and into the Company and the
separate corporate existence of the Purchaser shall thereupon cease. The Company
shall be the surviving corporation in the Merger (the Purchaser and the Company
are sometimes hereinafter referred to as the "Constituent Corporations" and the
Company is sometimes hereinafter referred to as the "Surviving Corporation") and
shall, following the Merger, be governed by the laws of the State of New York,
and the separate corporate existence of the Company, with all its rights,
privileges, immunities, powers and franchises, of a public as well as of a
private nature, shall continue unaffected by the Merger. From and after the
Effective Time, the Merger shall have the effects specified in the BCL.
1.02 Effective Time. At the Closing contemplated in Section 7.01, the
Company and the Parent will cause a Certificate of Merger (the "New York
Certificate of Merger") to be executed and filed by the Company and the
Purchaser with the Secretary of State of the State of New York as provided in
the BCL. The Merger shall become effective as of the date and at the time the
New York Certificate of Merger is duly filed with the Secretary of State of the
State of New York, and such time is hereinafter referred to as the "Effective
Time."
1.03 Certificate of Incorporation. At the Effective Time, the certificate
of incorporation of the Company, shall be amended and restated in its entirety
to read substantially as set forth on Exhibit A (the "Restated Certificate"),
and such amended and restated certificate of incorporation shall be the
certificate of incorporation of the Surviving Corporation, until duly amended in
accordance with the terms thereof and the BCL.
1.04 ByLaws. At the Effective Time, the By-Laws of the Company shall be
amended and restated in their entirety to read substantially as set forth on
Exhibit B, and such amended and restated By-Laws shall be the By-Laws of the
Surviving Corporation, until duly amended in accordance with the terms thereof
and the BCL.
1.05 Directors and Officers. At the Effective Time, the directors of the
Purchaser immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, each of such directors to hold office, subject to the
applicable provisions of the Restated Certificate and By-Laws of the Surviving
Corporation, until their respective successors shall be duly elected or
appointed and qualified. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, in
each case until their respective successors are duly elected or appointed and
qualified.
1.06 Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the proper officers and directors of the Surviving Corporation are
hereby authorized on behalf of the respective Constituent Corporations to
execute and deliver, in the name and on behalf of the respective Constituent
Corporations, all such deeds, bills of sale, assignments and assurances and do,
in the name and on behalf of the Constituent Corporations, all such other acts
and things necessary, desirable or proper to vest, perfect or confirm its right,
title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of the Constituent Corporations and otherwise
to carry out the purposes of this Agreement.
1.07 Shareholders' Meeting.
(a) As soon as practicable following delivery by the Parent to the Company
of the financing commitment letters contemplated by Section 5.15 (the "Financing
Commitments"), the Company, acting through the Board, shall, in accordance with
the Certificate of Incorporation and By-Laws of the Company and with applicable
law:
(i) duly call, give notice of, convene and hold a special meeting of its
shareholders (the "Shareholders' Meeting"), to be held as soon as practicable
for the purpose of approving and adopting this Agreement and the Merger; and
(ii) file with the Securities and Exchange Commission ("SEC") a preliminary
Proxy Statement and, after consultation with the Parent and the Purchaser,
respond promptly to any comments made by the SEC with respect to the Proxy
Statement and any preliminary version thereof and cause the Proxy Statement to
be mailed to its shareholders at the earliest practicable time after responding
to all such comments to the satisfaction of the staff of the SEC.
(b) Subject to its fiduciary obligations under applicable law, the Board
will include in the Proxy Statement (as defined in Section 3.07) the
recommendation of the Board that shareholders of the Company vote in favor of
the approval and adoption of this Agreement and the Merger and a statement that
the cash consideration to be received by the shareholders of the Company
pursuant to the Merger is fair to such shareholders.
Without limiting the generality of the foregoing, the Company agrees,
except as provided in this Section 1.07, that its obligations pursuant to this
Section 1.07 shall not be affected by either the commencement, public proposal,
public disclosure or other communication to the Company of any offer to acquire
some or all of the Shares (as defined below) or all or any substantial portion
of the assets of the Company or any change in the recommendation of the Board.
(c) Upon receipt of the Financing Commitments, the Company, the Parent and
the Purchaser, as the case may be, shall promptly file any other filings
required under the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder (the "Exchange Act") or any other Federal or state
securities or corporate laws relating to the Merger and the transactions
contemplated herein (the "Other Filings"). Each of the parties hereto shall
notify the other parties hereto promptly of the receipt by it of any comments
from the SEC or its staff and of any request of the SEC for amendments or
supplements to the Proxy Statement or by the SEC or any other governmental
officials with respect to any Other Filings or for additional information and
will supply the other parties hereto with copies of all correspondence between
it and its representatives, on the one hand, and the SEC or the members of its
staff or any other governmental officials, on the other hand, with respect to
the Proxy Statement, any Other Filings or the Merger. The Company, the Parent
and the Purchaser each shall use its best efforts to obtain and furnish the
information required to be included in the Proxy Statement, any Other Filings or
the Merger. If at any time prior to the time of approval of this Agreement by
the Company's shareholders there shall occur any event that should be set forth
in an amendment or supplement to the Proxy Statement, the Company shall promptly
prepare and mail to its shareholders such amendment or supplement. The Company
shall not mail the Proxy Statement or, except as required by the Exchange Act or
the rules and regulations promulgated thereunder, any amendment or supplement
thereto, to the Company's shareholders unless the Company has first obtained the
consent of the Parent to such mailing (which consent shall not be unreasonably
withheld or delayed).
ARTICLE II CONVERSION OR CANCELLATION OF SHARES; STOCK RIGHTS
2.01 Conversion or Cancellation of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the holders thereof:
(a) Each share of Common Stock, par value $1.00 per share of the Company
(the "Shares"), issued and outstanding immediately prior to the Effective Time
(other than Shares held by shareholders exercising appraisal rights pursuant to
Sections 623 and 910 of the BCL (the "Dissenting Shareholders"), and any shares
held in the treasury of the Company) shall be converted into and represent the
right to receive, without interest, an amount in cash equal to $9.00 (the
"Merger Consideration") upon surrender of the certificate or certificates that,
immediately prior to the Effective Time, represented issued and outstanding
Shares (the "Certificates"). As of the Effective Time, all such Shares shall no
longer be outstanding, shall be automatically canceled and shall cease to exist,
and each holder of a Certificate representing any such Shares shall thereafter
cease to have any rights with respect to such Shares, except the right to
receive the Merger Consideration without interest for such Shares upon the
surrender of such Certificate or Certificates in accordance with Section 2.02.
(b) Each Share held in the Company's treasury immediately prior to the
Effective Time shall no longer be outstanding, shall be canceled without payment
of any consideration therefor and shall cease to exist, and each holder of a
Certificate representing any such Shares shall thereafter cease to have any
rights with respect to such Shares.
(c) Each share of Common Stock, no par value per share, of the Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully-paid and non-assessable share of Common
Stock, no par value per share, of the Surviving Corporation.
2.02 Exchange of Certificates; Paying Agent.
(a) Not less than ten (10) days prior to the Closing, the Parent shall
select a bank or trust company to act as paying agent (the "Paying Agent") for
the payment of the Merger Consideration specified in Section 2.01 upon surrender
of Certificates converted into the right to receive cash pursuant to the Merger.
At the Effective Time, the Parent shall pay to, or cause the Purchaser or the
Surviving Corporation to pay to, the Paying Agent in immediately available funds
an amount necessary for the payment of the aggregate Merger Consideration (the
"Funds") upon surrender of Certificates pursuant to Section 2.01, it being
understood that any and all interest earned on the Funds shall be paid over by
the Paying Agent as the Parent shall direct.
(b) Promptly after the Effective Time, the Paying Agent shall mail to each
person who was, at the Effective Time, a holder of record of Shares, a letter of
transmittal and instructions for use in effecting the surrender of Certificates
representing Shares, in exchange for payment in cash therefor. The letter of
transmittal shall specify that delivery shall be effected, and risk of loss and
title shall pass, only upon proper delivery to and receipt of such Certificates
by the Paying Agent and shall be in such form and have such provisions as the
Parent shall reasonably specify. Upon surrender to the Paying Agent of such
Certificates, together with the letter of transmittal, duly executed and
completed in accordance with the instructions thereto and such other documents
as may be reasonably required by the Paying Agent, the Paying Agent shall
promptly pay to the persons entitled thereto, out of the Funds, a check in the
amount to which such persons are entitled pursuant to Section 2.01(a), after
giving effect to any required tax withholdings, and such Certificate shall
forthwith be canceled. No interest will be paid or will accrue on the amount
payable upon the surrender of any such Certificates. If payment is to be made to
a person other than the registered holder of the Certificates surrendered, it
shall be a condition of such payment that the Certificates so surrendered shall
be properly endorsed or otherwise in proper form for transfer and that the
person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificates surrendered or establish to the satisfaction of the Surviving
Corporation or the Paying Agent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the amount of cash, without
interest, into which the Shares theretofore represented by such Certificate
shall have been converted pursuant to Section 2.01. No interest shall accrue or
be paid on any portion of the Merger Consideration.
(c) One hundred eighty days following the Effective Time, the Surviving
Corporation shall be entitled to cause the Paying Agent to deliver to it any
Funds (including any interest, dividends, earnings or distributions received
with respect thereto which shall be paid as directed by the Parent) made
available to the Paying Agent by the Parent which have not been disbursed, and
thereafter holders of Certificates who have not theretofore complied with the
instructions for exchanging their Certificates shall be entitled to look only to
the Surviving Corporation for payment as general creditors thereof with respect
to the cash payable upon due surrender of their Certificates.
(d) The Surviving Corporation shall pay all charges and expenses of the
Paying Agent.
(e) Notwithstanding anything to the contrary in this Section 2.02, none of
the Paying Agent, the Parent, the Company, the Surviving Corporation or the
Purchaser shall be liable to a holder of a Certificate formerly representing
Shares for any amount properly delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If Certificates are not
surrendered prior to two years after the Effective Time (or immediately prior to
such earlier date on which any payment pursuant to this Article II would
otherwise escheat or become the property of any Federal, state or local
government agency or authority, court or commission), 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.
2.03 Dissenters' Rights. Shares that have not been voted in favor of the
approval and adoption of the Merger and with respect to which dissenters' rights
shall have been demanded and perfected in accordance with Sections 623 and 910
of the BCL (the "Dissenting Shares") and not withdrawn shall not be converted
into the right to receive cash at or after the Effective Time, but such Shares
shall become the right to receive such consideration as may be determined to be
due to holders of Dissenting Shares pursuant to the laws of the State of New
York unless and until the holder of such Dissenting Shares withdraws such
holders' demand for such appraisal or becomes ineligible for such appraisal. If
a holder of Dissenting Shares shall withdraw such holders' demand for such
appraisal or shall become ineligible for such appraisal (through failure to
perfect or otherwise), then, as of the Effective Time or the occurrence of such
event, whichever last occurs, such holder's Dissenting Shares shall
automatically be converted into and represent the right to receive the Merger
Consideration, without interest, as provided in Section 2.01(a). The Company
shall give the Parent (i) prompt notice of any demands for appraisal of Shares
received by the Company and (ii) the opportunity to participate in and direct
all negotiations and proceedings with respect to any such demands. The Company
shall not, without the prior written consent of the Parent (which shall not be
unreasonably withheld or delayed), make any payment with respect to, or settle,
offer to settle or otherwise negotiate, any such demands.
2.04 Transfer of Shares After the Effective Time. No transfers of Shares
shall be made in the stock transfer books of the Surviving Corporation at or
after the Effective Time. If, after the Effective Time, Certificates formerly
representing Shares are presented to the Surviving Corporation, they shall be
canceled and exchanged for the Merger Consideration set forth in Section 2.01.
2.05 Options. With respect to options to purchase shares of Common Stock of
the Company (the "Options") outstanding pursuant to the Miranda Corporation's
1989 and 1998 Stock Option Plans and the Directors' Stock Option Plan (the
"Stock Option Plans"), the Board (or if appropriate, any committee administering
the Stock Option Plans) shall, as soon as practicable after the date hereof,
adopt such resolutions or take such other actions as may be required to provide
that each Option outstanding as of the date of this Agreement shall be
accelerated so as to be fully exercisable prior to the Effective Time, subject
to the condition that the holder of each such Option shall surrender all of such
holder's outstanding and unexercised Options (whether or not presently
exercisable) in consideration of the payment at the Effective Time of an amount
of cash per share subject to each such Option equal to the difference between
the exercise price of such Option and the Merger Consideration. At or prior to
the Effective Time, the Company shall have procured the surrender of all
outstanding Options or the consent of the holder of the Option to acquire upon
payment of the exercise price an amount of cash equal to the Merger
Consideration in lieu of each Share formerly covered thereby, such consent to be
subject to consummation of the Merger.
2.06 Shares under Employee Stock Purchase Plan and 401K Plan. With respect
to orders to purchase shares of Common Stock of the Company entered pursuant to
the operation of the Acme Electric Employee Stock Purchase Plan or the Savings
and Protection Plan for Employees of Acme Electric Corporation or the Savings
and Protection Plan for New York Hourly Employees (the "Purchase Plans"), which
have not been filled as of the Effective Time, the Company's Board (or if
appropriate, any committee administering the Purchase Plans) shall, as soon as
practicable after the date hereof, adopt such resolutions or take such other
actions as may be required to provide that each outstanding order to purchase
shares of Common Stock under the Purchase Plans which is unfilled at the
Effective Time, shall be canceled in consideration of the payment at the
Effective Time of an amount in cash equal to the number of shares to be acquired
pursuant to the order multiplied by the Merger Consideration less the aggregate
unpaid purchase price for such shares under the Purchase Plans. At or prior to
the Effective Time, the Company shall procure the consents of any persons
holding such orders to payment of the foregoing cash consideration in lieu of
receipt of shares covered by the order.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Parent and the Purchaser
that:
3.01 Organization; Qualification. The Company and the Subsidiaries (as
defined in Section 3.03) are corporations duly organized, validly existing and
in good standing under the laws of the jurisdiction of their incorporation, and
have all requisite corporate power and authority to own, lease and operate their
properties and carry on their business as now being conducted. The Company is
duly qualified to do business and is in good standing in each jurisdiction in
which the nature of the Company's business or the location of its properties
makes such qualification necessary, except for any such failure to qualify or be
in good standing as shall not have a Material Adverse Effect (as defined in
Section 3.05). The Company has heretofore made available to the Parent, complete
and correct copies of the Certificate of Incorporation and By-Laws of the
Company, as currently in effect.
3.02 The Company's Capitalization. The authorized capital stock of the
Company consists solely of 8,000,000 Shares and 500,000 shares of Preference
Stock, par value $10.00 per share. As of the date of this Agreement, there were
5,077,587 Shares issued and outstanding and 699 Shares held in the Company's
treasury. There are no shares of Preference Stock issued and outstanding. All
outstanding Shares have been duly authorized and validly issued, and, except as
provided in Section 630 of the BCL, are fully paid, nonassessable and were
issued free of preemptive rights. Except for the Options and rights under the
Purchase Plans described in Section 2.05 and Section 2.06 hereof and except as
set forth in Schedule 3.02 of the Company Disclosure Letter delivered to Parent
as of the date hereof (the "Company Disclosure Letter"), there are no
subscriptions, options, warrants, calls, rights, agreements or commitments
relating to the issuance, sale, delivery or transfer by the Company (including
any right of conversion or exchange under any outstanding security or other
instrument) of its Shares. Except as contemplated by this Agreement, there are
no outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any outstanding Shares. Schedule 3.02 of the Company
Disclosure Letter contains a complete and accurate list of all holders of
Options and any other options or rights of any kind to purchase or acquire
shares of the Common Stock of the Company, together with the number of such
options and the terms of such options held by each such holder.
3.03 Company Equity Investments. Schedule 3.03 of the Company Disclosure
Letter sets forth, as of the date of this Agreement: (i) the name of each
subsidiary, the jurisdiction of its incorporation and each jurisdiction in which
it is qualified to do business as a foreign corporation (the "Subsidiaries");
(ii) the name of each corporation, partnership, joint venture or other person
(other than Subsidiaries) in which the Company, directly or indirectly, has, or
pursuant to any agreement or agreements will have the right to acquire by any
means, an equity interest or investment exceeding 10% of the equity capital
thereof. Except as set forth in Schedule 3.03 of the Company Disclosure Letter,
the Company does not own, directly or indirectly, or have the right to acquire,
any equity security of another entity and has not made any loan or advance to
any other entity.
3.04 Authority Relative to this Agreement. The Company has full corporate
power and authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly adopted by the Board, and the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board and, except for the approval of
the Merger by the shareholders of the Company in accordance with the BCL, no
other corporate actions on the part of the Company are necessary to authorize
this Agreement or the Merger. This Agreement has been duly and validly executed
and delivered by the Company and, assuming due authorization, execution and
delivery by the Parent and the Purchaser, constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
3.05 Consents and Approvals; No Violation. Except as set forth in Schedule
3.05 of the Company Disclosure Letter, and except for any required approval of
the Merger by the shareholders of the Company and the filing of the New York
Certificate of Merger in accordance with the BCL, neither the execution,
delivery and performance of this Agreement by the Company nor the consummation
by it of the transactions contemplated hereby will (i) conflict with or result
in any breach of any provision of the Certificate of Incorporation or By-Laws of
the Company or the Subsidiaries, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, except (A) in connection with the Hart-Scott-Rodino
Antitrust of 1976, as amended (the "HSR Act"), if applicable, (B) in connection
with applicable requirements of the BCL, (C) in connection with the Exchange
Act, (D) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not have a Material
Adverse Effect, and (E) for any requirements which became applicable to the
Company or the Subsidiaries as a result of the specific regulatory status of the
Parent or the Purchaser or as a result of any other facts that specifically
relate to the business or activities in which the Parent or the Purchaser is or
proposes to be engaged; (iii) constitute a breach or result in a default under,
or give rise to any right of termination, amendment, cancellation or
acceleration under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation of any kind to which the Company or the Subsidiaries is a party or by
which the Company or the Subsidiaries or any of their assets may be bound,
except for any such breach, default or right as to which requisite waivers or
consents have been obtained or which, in the aggregate, would not have a
Material Adverse Effect; or (iv) assuming compliance with the BCL and the HSR
Act, violate any order, writ, injunction, judgment, decree, law, statute, rule,
regulation or governmental permit or license applicable to the Company or the
Subsidiaries or any of their assets, which violation would have a Material
Adverse Effect.
For purposes of this Agreement, "Material Adverse Effect" means any event,
change, occurrence, effect, fact or circumstance having, or which would
reasonably be expected to have, a material adverse effect on (x) the business,
assets, condition (financial or otherwise) or results of operation of the
Company and the Subsidiaries, if any, taken as a whole or (y) the ability of the
Company to consummate the transactions contemplated by this Agreement.
3.06 SEC Reports; Financial Statements.
(a) Since January 1, 1995, the Company has filed with the SEC all forms,
reports, schedules, registration statements and definitive proxy statements (the
"SEC Reports") required to be filed by it with the SEC pursuant to the federal
securities laws and SEC rules and regulations. As of their respective dates, the
SEC Reports complied with the requirements of the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act, as the case may be, and the
rules and regulations of the SEC thereunder applicable to such SEC Reports. As
of their respective dates and as of the date any information from such SEC
Reports has been incorporated by reference, the SEC Reports including, without
limitation, any financial statements or schedules included therein, did not at
the time filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) 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 Company has filed all contracts,
agreements and other documents or instruments required to be filed as exhibits
to the SEC Reports.
(b) The consolidated balance sheets of the Company as of June 30, 1999 and
1998 and the related consolidated statements of earnings, stockholders' equity
and cash flows for each of the two years then ended (including the related notes
and schedules thereto) contained in the Company's Form 10-K for the year ended
June 30, 1999 present fairly, in all material respects, the consolidated
financial position and the consolidated results of operations and cash flows of
the Company and its consolidated Subsidiaries as of the dates or for the periods
presented therein in conformity with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
and the published rules and regulations of the SEC with respect thereto, except
as otherwise noted therein, including in the related notes.
(c) The consolidated balance sheets and the related statements of earnings
and cash flows (including, in each case, the related notes thereto) of the
Company contained in the Form 10-Q for the quarterly period ended April 1, 2000
(the "Quarterly Financial Statements") have been prepared in accordance with the
requirements for interim financial statements contained in Regulation S-X. The
Quarterly Financial Statements reflect all adjustments necessary to present
fairly in accordance with GAAP (except as indicated), in all material respects,
the consolidated financial position, results of operations and cash flows of the
Company for all periods presented therein. The balance sheet of the Company as
of April 1, 2000 is hereinafter referred to as the "Company Balance Sheet."
3.07 Proxy Statement. None of the information to be supplied by and
relating to the Company for inclusion or incorporation by reference in the forms
of proxy in connection with the vote of the Company's shareholders with respect
to the Merger and this Agreement, together with any amendments thereof or
supplements thereto, in each case in the form or forms mailed to the Company's
shareholders (collectively the "Proxy Statement") will, at the time of the
mailing of the Proxy Statement and at the time of the Shareholders' Meeting,
contain any untrue statements of a material fact required to be stated therein
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. With respect to the information relating to the
Company, the Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act. For purposes of this Section 3.07,
any statement which is made or incorporated by reference in the Proxy Statement
shall be deemed modified or superseded to the extent any later filed document
incorporated by reference in the Proxy Statement or any statement included in
the Proxy Statement modifies or supersedes such earlier statement.
3.08 Undisclosed Liabilities. Except as disclosed in Schedule 3.08 of the
Company Disclosure Letter, or in the SEC Reports and liabilities incurred in the
ordinary course of business consistent with past practice since the date of the
Company Balance Sheet, there are no liabilities of the Company and the
Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, due,
to become due, determined, determinable or otherwise, having or which could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
3.09 Absence of Certain Changes or Events. Since the date of the Company
Balance Sheet and except with respect to the transactions contemplated by this
Agreement (i) the business of the Company and the Subsidiaries have been
conducted in the ordinary course consistent with past practice, (ii) there has
not been any change in the business of the Company and the Subsidiaries which
has had, or is expected to have, a Material Adverse Effect, and (iii) the
Company and the Subsidiaries have not taken any action described in Section
5.01.
3.10 Title, Etc.
(a) The SEC Reports set forth a list of all of the land, which includes the
buildings, structures and other improvements located thereon (the "Real
Property"), which is owned in fee or leased by the Company or the Subsidiaries.
The Company and the Subsidiaries have, with respect to personal property, good,
and, with respect to Real Property, good, marketable and insurable, title to all
of the properties and assets which they purport to own and which are material to
the business, operation or condition (financial or otherwise) of the Company and
the Subsidiaries, taken as a whole, free and clear of all mortgages, security
interests, liens, claims, charges or other encumbrances of any nature
whatsoever, except for (i) any liens, encumbrances or defects reflected in the
Company Balance Sheet; (ii) any liens, encumbrances or defects which do not,
individually or in the aggregate, materially detract from the fair market value
(free of such liens, encumbrances or defects) of the property or assets subject
thereto or materially interfere with the current use by the Company or the
Subsidiaries of the property or assets subject thereto or affected thereby or
otherwise have a Material Adverse Effect; (iii) any liens or encumbrances for
taxes not delinquent or which are being contested in good faith, provided that
adequate reserves for the same have been established on the Company Balance
Sheet; (iv) any liens or encumbrances for current taxes and assessments not yet
past due; (v) any inchoate mechanic's and materialmen's liens and encumbrances
for construction in progress; (vi) any workmen's, repairmen's, warehousemen's
and carriers' liens and encumbrances arising in the ordinary course of business,
so long as such liens have not been filed; (vii) any liens of the type referred
to in clause (vi) above that have been filed, so long as such liens do not
aggregate in excess of $25,000; (viii) liens securing obligations referred to in
Section 5.01(b); and (ix) with respect to Real Property, any liens, encumbrances
or defects which are matters of record, including but not limited to, easements,
quasi-easements, rights of way, land use ordinances and zoning plans.
(b) Schedule 3.10 of the Company Disclosure Letter sets forth a list of all
of the leases and subleases under which, as of the date hereof, the Company or
its Subsidiaries has the right to occupy space (the "Real Property Leases"). The
Company has heretofore delivered or made available to the Parent a true, correct
and complete copy of all of the Real Property Leases, including all amendments
thereto. All Real Property Leases and material leases pursuant to which the
Company or the Subsidiaries leases personal property from others are, in all
material respects, valid, binding and enforceable against the Company in
accordance with their terms, except to the extent that enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law; neither the Company nor its
Subsidiaries has received written or, to the Company's knowledge (as defined
below), oral notice of any default by the Company or its Subsidiaries under any
Real Property Lease which would have a Material Adverse Effect; there are no
existing defaults, or any condition or event which with the giving of notice or
lapse of time would constitute a default, by the Company or its Subsidiaries
thereunder which would have a Material Adverse Effect; and, with respect to the
Company's or its Subsidiaries' obligations thereunder, to the Company's
knowledge, no uncured default or event or condition on the part of any landlord
exists under any Real Property Lease which with the giving of notice or the
lapse of time would constitute a default thereunder which would have a Material
Adverse Effect. For the purposes of this Agreement, the phrase "to the Company's
knowledge" shall mean the actual knowledge of Robert J. McKenna, Michael A.
Simon, Daniel K. Corwin, Nicola T. Arena, John E. Gleason and Jorge A. Luna.
(c) All of the land, buildings, structures and other improvements occupied
by the Company or its Subsidiaries material to the conduct of its business are
included in the Real Property and the Real Property Leases.
(d) Except as contained in the Real Property Leases, neither the Company
nor its Subsidiaries owns or holds, nor is obligated under or a party to, any
option, right of first refusal or other contractual right to purchase, acquire,
sell or dispose of the Real Property and the Real Property Leases or any portion
thereof or interest therein.
(e) To the Company's knowledge, the Company has no ongoing or present
material obligations or liabilities with respect to the Real Property formerly
owned, leased or occupied by the Company or its Subsidiaries.
3.11 Intellectual Property.
(a) The Company and the Subsidiaries, directly or indirectly, own, or are
licensed or otherwise possess legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how and tangible or intangible proprietary
information or material that are material to the business of the Company and the
Subsidiaries as presently conducted (the "Company Intellectual Property
Rights").
(b) Either the Company or the Subsidiaries is the sole and exclusive owner
of, or the exclusive or non-exclusive licensee of, with all right, title and
interest in and to (free and clear of any liens or encumbrances), the Company
Intellectual Property Rights, and, in the case of the Company Intellectual
Property Rights owned by the Company or the Subsidiaries, has sole and exclusive
rights (and is not contractually obligated to pay any compensation to any third
party in respect thereof) to the use thereof or the material covered thereby in
connection with the services or products in respect of which the Company
Intellectual Property Rights are being used. Except as described in the SEC
Reports, no claims with respect to the Company Intellectual Property Rights have
been asserted or, to the Company's knowledge, are threatened by any person that
are reasonably likely to have a Material Adverse Effect. All registered
trademarks, service marks and copyrights held by the Company and the
Subsidiaries which are material to the business, and to the Company's knowledge,
all other registered trademarks, service marks and copyrights, are valid and
subsisting. To the Company's knowledge, there is no unauthorized use,
infringement or misappropriation of any of the Company Intellectual Property
Rights by any third party, including any employee or former employee of the
Company or the Subsidiaries that would have a Material Adverse Effect. No
Intellectual Property Right is subject to any outstanding decree, order,
judgment, or stipulation restricting in any manner the licensing thereof by the
Company or any Subsidiaries, except to the extent any such restriction would not
have a Material Adverse Effect. Except as set forth in Schedule 3.11(b) of the
Company Disclosure Letter, neither the Company nor the Subsidiaries has entered
into any agreement (other than exclusive distribution agreements) under which
the Company or the Subsidiaries is restricted from selling, licensing or
otherwise distributing any of its products to any class of customers, in any
geographic area, during any period of time or in any segment of the market,
except to the extent any such restriction would not have a Material Adverse
Effect.
(c) The Company and the Subsidiaries have taken all measures the Company
reasonably believes were necessary to make their computer systems, software,
hardware, firmware, middleware and other information technology (collectively,
"Information Technology") Year 2000 Ready (as defined below). The Company and
the Subsidiaries have previously made available to the Parent copies of all year
2000 warranties that the Company or the Subsidiaries has provided, and currently
provides, to customers. As used in this Agreement, "Year 2000 Ready" shall mean
that Information Technology is designed to be used prior to, during and after
the calendar year 2000 A.D. and such Information Technology will accurately
receive, provide and process date/time data (including, without limitation,
calculating, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries A.D., and leap year calculations and will not
malfunction, cease to function or provide invalid or incorrect results as a
result of date/time data (including, without limitation, to the extent that
other Information Technology used in combination with such Information
Technology properly exchanges date/time data with it).
3.12 Insurance. Schedule 3.12 of the Company Disclosure Letter identifies
all material property, general liability and casualty insurance policies which
currently insure the Company and the Subsidiaries. Such policies are adequate in
the view of the management of the Company for the assets and operations of the
Company and the Subsidiaries as currently conducted.
3.13 Employee Benefit Plans.
(a) Schedule 3.13 of the Company Disclosure Letter sets forth a complete
and correct list of all "employee benefit plans", as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
any other pension plans or employee benefit arrangements or payroll practices
(including, without limitation, severance pay, vacation pay, company awards,
salary continuation for disability, sick leave, deferred compensation, bonus or
other incentive compensation, stock option or stock purchase arrangements or
policies) maintained, or contributed to, by the Company, the Subsidiaries or any
trade or business (whether or not incorporated) which is treated with the
Company or the Subsidiaries as a single employer under Section 414(b), (c), (m)
or (o) of the Code ("ERISA Affiliate") with respect to employees of the Company,
the Subsidiaries or their ERISA Affiliates ("Company Benefit Plans"). Each
Company Benefit Plan is in writing, and the Company has previously furnished or
made available to the Parent a true and complete copy of each Company Benefit
Plan document, including all amendments thereto, and a true and complete copy of
each material document prepared in connection with each such Company Benefit
Plan, including, without limitation, if applicable, (i) a copy of each current
trust or other funding arrangement, (ii) the most recent summary plan
description and any summary of material modifications issued subsequent to such
summary plan description, (iii) the three most recently filed Form 5500's,
including all attachments thereto, (iv) the most recently received Internal
Revenue Service ("IRS") determination letter for each such Company Benefit Plan,
and (v) the most recently prepared actuarial report and financial statement in
connection with each such Company Benefit Plan. Neither the Company nor the
Subsidiaries have any express or implied commitment (i) to create or incur
liability with respect to or cause to exist any other employee benefit plan,
program or arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Plan, other than with respect to a modification, change or
termination required by ERISA, the Code or other applicable law.
(b) None of the Company, the Subsidiaries or any ERISA Affiliate has
incurred any liability under, arising out of or by operation of Title IV of
ERISA that has not been satisfied in full (other than liability for premiums to
the Pension Benefit Guaranty Corporation (the "PBGC") arising in the ordinary
course), including, without limitation, any liability in connection with the
termination or reorganization of any employee pension benefit plan subject to
Title IV of ERISA and no fact or event exists which could give rise to any such
liability. No complete or partial termination, as defined in Section 411(d) of
the Code has occurred within the six years preceding the date hereof with
respect to any Company Benefit Plan, which was intended to be a plan qualified
under Section 401 of the Code.
(c) Within the six years preceding the date hereof, there has been no
"reportable event" as that term is defined in Section 4043 of ERISA and the
regulations thereunder with respect to any of the Company Benefit Plans subject
to Title IV of ERISA which would require the giving of notice, or for which
notice has been waived, or any event requiring notice to be provided under
Section 4063(a) of ERISA.
(d) Within the six years preceding the date hereof, the Company, the
Subsidiaries or any ERISA Affiliate have not sponsored, funded or contributed to
any benefit plan that is a multiple employer plan subject to Sections 4063 and
4064 of ERISA or a multiemployer plan as defined in Section 3(37) of ERISA.
Within the six years preceding the date hereof, no Company Benefit Plan has
incurred any "accumulated funding deficiency" as such term is defined in Section
412 of the Code or Section 302 of ERISA. None of the Company, the Subsidiaries
or any ERISA Affiliate or any organization to which any is a successor or parent
corporation, has divested any business or entity maintaining or sponsoring a
defined benefit pension plan having unfunded benefit liabilities (within the
meaning of Section 4001(a)(18) of ERISA) or transferred any such plan to any
entity other than the Company, the Subsidiaries or any ERISA Affiliate during
the five-year period ending on the Effective Time.
(e) Each of the Company Benefit Plans intended to qualify under Section
401(a) of the Code ("Qualified Plans") (i) has received a favorable
determination letter from the Internal Revenue Service that such Plan is so
qualified or (ii) is a standardized prototype plan the form of which has been
approved by the Internal Revenue Service, and, except as disclosed on Schedule
3.13 of the Company Disclosure Letter, nothing has occurred with respect to the
form or operation of any such Plan which, either individually or in the
aggregate, would cause the loss of such qualification or the imposition of any
liability, penalty or tax under ERISA or the Code, which loss or imposition
would have a Material Adverse Effect.
(f) None of the Company, the Subsidiaries nor any ERISA Affiliate has
engaged in a non-exempt prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) with respect to any Company Benefit
Plan. Neither the Company nor any Subsidiaries is currently liable or has
previously incurred any liability within the six years preceding the date hereof
for any tax or penalty arising under Subtitle D, Chapter 43 of the Code or
Section 502 of ERISA which liability would have a Material Adverse Effect, and,
to the Company's knowledge, no fact or event exists which could give rise to any
such liability. Neither the Company nor any ERISA Affiliate has been required to
post any security under Section 307 of ERISA or Section 401(a)(29) of the Code;
and no fact or event exists which could give rise to any lien or requirement to
post any such security.
(g) To the Company's knowledge, all contributions and premiums required by
law or by the terms of any Company Benefit Plan or any agreement relating
thereto have been timely made (without regard to any waivers granted with
respect thereto).
(h) The liabilities of each Company Benefit Plan that has been terminated
or otherwise wound up have been fully discharged in compliance with applicable
law.
(i) There has been no violation of ERISA with respect to the filing of
applicable returns, reports, documents and notices regarding any of the Company
Benefit Plans with the Secretary of Labor or the Secretary of the Treasury or
the furnishing of such notices or documents to the participants or beneficiaries
of the Company Benefit Plans which, either individually or in the aggregate,
could result in a Material Adverse Effect.
(j) There are no pending legal proceedings which have been asserted or
instituted against any of the Company Benefit Plans, the assets of any such
Plans or the Company or any ERISA Affiliate or the plan administrator or any
fiduciary of the Company Benefit Plans with respect to the operation of such
plans (other than ordinary and usual benefits claims).
(k) Each of the Company Benefit Plans has been maintained, in all material
respects, in accordance with its terms and all provisions of applicable laws and
regulations. All amendments and actions required to bring each of the Company
Benefit Plans into conformity in all material respects with all of the
applicable provisions of ERISA and other applicable laws and regulations have
been made or taken except to the extent that such amendments or actions are not
required by law to be made or taken until a date after the Closing Date.
(l) Except as set forth on Schedule 3.13 of the Company Disclosure Letter,
the Company and the Subsidiaries have never maintained a welfare benefit plan
providing continuing benefits after the termination of employment (other than as
required by Section 4980B of the Code and at the former employee's own expense),
and the Company, the Subsidiaries and each of their ERISA Affiliates have
complied in all material respects with the notice and continuation requirements
of Section 4980B of the Code and the regulations thereunder.
(m) Other than as set forth in Schedule 3.13 of the Company Disclosure
Letter, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
retention bonus or golden parachute payment) becoming due to any director,
independent contractor or employee of the Company or the Subsidiaries, (ii)
increase any benefits otherwise payable under any Company Benefit Plan or (iii)
result in the acceleration of the time of payment or vesting of any such
benefits.
(n) The Company and the Subsidiaries are in compliance in all material
respects with applicable laws and collective bargaining agreements with respect
to all benefit plans contracts and arrangements covering non-U.S. Business
Employees ("Non-U.S. Benefit Plans"). The Company and the Subsidiaries have no
unfunded liabilities in violation of local law. All benefits payable under each
of the Non-U.S. Benefit Plans are provided in accordance with the terms of the
governing provisions of the relevant Non-U.S. Benefit Plan. The Company and the
Subsidiaries are not aware of any failure to comply with any applicable law
which would or is reasonably likely to result in the loss of tax approval or
qualification of any Non-U.S. Benefit Plans.
3.14 Legal Proceedings, Etc. Except as set forth in Schedule 3.14 of the
Company Disclosure Letter, (i) there is no claim, action, proceeding or
investigation pending or, to the Company's knowledge, threatened against the
Company or the Subsidiaries before any court or governmental or regulatory
authority or body with respect to which there is reasonable likelihood of a
determination which would have a Material Adverse Effect alone or in the
aggregate, and (ii) the Company and the Subsidiaries are not subject to any
outstanding order, writ, judgment, injunction or decree of any court or
governmental or regulatory authority or body including, but not limited to, the
SEC.
3.15 Taxes. The Company and the Subsidiaries have duly filed all material
foreign, federal, state and local income, franchise, excise, real and personal
property and other Tax (as defined below) returns and reports (including, but
not limited to, those filed on a consolidated, combined or unitary basis)
required to have been filed by the Company and the Subsidiaries prior to the
date hereof. All of the foregoing returns and reports are true and correct in
all material respects, and the Company and the Subsidiaries have paid or, prior
to the Effective Time will pay, all Taxes, interest and penalties (whether or
not shown on such returns or reports) as due or (except to the extent the same
are contested in good faith) claimed to be due to any federal, state, local or
other taxing authority. The Company has paid and will pay all installments of
estimated taxes due on or before the Effective Time. All taxes and state
assessments and levies which the Company and the Subsidiaries are required by
law to withhold or collect have been withheld or collected and have been paid to
the proper governmental authorities or are held by the Company for such payment.
The Company and the Subsidiaries have paid or made adequate provision in
accordance with GAAP in the financial statements of the Company for all Tax
payable in respect of all periods ending on or prior to the date of this
Agreement and will have made or provided for all Taxes payable in respect of all
periods ending on or prior to the Closing Date. As of the date hereof, all
deficiencies proposed as a result of any audits have been paid or settled. The
Company and the Subsidiaries have paid, collected or withheld, or caused to be
paid, collected or withheld, all amounts of Tax required to be paid, collected
or withheld, other than such Taxes for which adequate reserves in the financial
statements have been established or which are being contested in good faith. The
Company has not given nor been requested to give waivers or extensions (or is or
would be subject to a waiver or extension given by any other entity) of any
statute of limitations relating to the payment of Taxes. No claim has ever been
made by an authority in a jurisdiction in which the Company has not filed Tax
returns that it is or may be subject to taxation by that jurisdiction. There are
no claims or assessments pending against the Company or the Subsidiaries for any
alleged deficiency in any Tax, and the Company has not been notified in writing,
of any proposed Tax claims or assessments against the Company or the
Subsidiaries. There is no existing tax sharing agreement that may or will
require that any payment be made by or to the Company on or after the Closing
Date. The Company has never been part of an affiliated group filing consolidated
federal (or other) income tax returns (other than as a parent of such affiliated
group) and has no liability for Taxes of any other entity (i) under Treasury
Regulation 1.1502-6 (or any similar provision of state, local or foreign law),
(ii) as a transferee or successor, (iii) by contract, or (iv) otherwise. "Tax or
Taxes" shall mean all taxes, levies or other assessments of whatever kind,
including, without limitation, income, excise, property, sales, transfer, gross
receipts, employment, withholding, import and franchise taxes and customs duties
imposed by the United States, or any state, county, local or foreign government,
or subdivision or agency thereof, and including any interest, penalties or
additions attributable thereto.
3.16 Material Agreements. The Company has made available to the Parent true
and accurate copies of any material note, bond, mortgage, indenture, contract,
lease, license, agreement, understanding, instrument, bid or proposal that is
required to be described in or filed as an exhibit to any SEC Report (the
"Company Material Contracts"). All such Company Material Contracts are valid and
binding and are in full force and effect and enforceable against the Company or
the Subsidiaries in accordance with their respective terms, except to the extent
that enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law. Except as set
forth in Schedule 3.16 of the Company Disclosure Letter, no consent of any
person is needed in order that each such Company Material Contract shall
continue in full force and effect in accordance with its terms without penalty,
acceleration or rights of early termination by reason of the consummation of the
transactions contemplated by this Agreement, except for consents the absence of
which would not have a Material Adverse Effect, and neither the Company nor the
Subsidiaries is in material violation or breach of or default under any such
Company Material Contract; nor to the Company's knowledge is any other party to
any such Company Material Contract in violation or breach of or default under
any such Company Material Contract.
3.17 Compliance with Law. The Company and the Subsidiaries hold all
permits, licenses, variances, exemptions, orders and approvals of all
governmental entities necessary for them to own, lease or operate their
properties and assets and to carry on their businesses substantially as now
conducted, except for such permits, licenses, variances, exemptions, orders and
approvals the failure of which to hold would not have a Material Adverse Effect
(the "Company Permits"). The Company and the Subsidiaries are in material
compliance with applicable laws and the terms of the Company Permits. Except as
disclosed in the SEC Reports filed prior to the date of this Agreement, the
Company has not received any written, or to the Company's knowledge, oral notice
that the business operations of the Company and the Subsidiaries are being
conducted in violation of any law, ordinance or regulation of any governmental
entity.
3.18 Insider Interests. The SEC Reports set forth all material contracts,
agreements with and other obligations to officers, directors and employees or
shareholders of the Company and the Subsidiaries. Except as set forth in the SEC
Reports, no officer, director or shareholder of the Company or the Subsidiaries,
and no entity controlled by any such officer, director or shareholder, and no
relative or spouse who resides with any such officer, director or shareholder
(i) owns, directly or indirectly, any material interest in any person that is or
is engaged in business other than on an arm's-length basis as, a competitor,
lessor, lessee, customer or supplier of the Company or the Subsidiaries or (ii)
owns, in whole or in part, any tangible or intangible property material to the
conduct of the business that the Company or the Subsidiaries use in the conduct
of its business.
3.19 Officers, Directors and Employees. Schedule 3.19 of the Company
Disclosure Letter sets forth the name and current compensation of each officer,
director or employee of the Company and the Subsidiaries whose current annual
rate of compensation from the Company or the Subsidiaries (including bonuses but
excluding commission-only compensation) exceeds $100,000.
3.20 Environmental Protection. Notwithstanding anything in this Agreement
to the contrary, this Section 3.20 is the sole representation with respect to
environmental matters. Except as set forth in Schedule 3.20 of the Company
Disclosure Letter, the Company and the Subsidiaries have obtained all material
permits, certificates, licenses, approvals and other authorizations
(collectively "Environmental Permits") relating to health, safety, sanitation,
pollution or protection of the environment, including those relating to
emissions, discharges, releases of pollutants, contaminants or chemicals, or
industrial, toxic or hazardous substances or wastes into the environment
(including, without limitation, ambient air, surface water, ground water, or
land) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants, contaminants
or chemicals, or industrial, toxic or hazardous substances or wastes. Except as
set forth in Schedule 3.20 of the Company Disclosure Letter, the Environmental
Permits are in full force and effect and the Company and the Subsidiaries are in
material compliance with all terms and conditions of the Environmental Permits.
Except as set forth in Schedule 3.20 of the Company Disclosure Letter, the
Company and the Subsidiaries are also in compliance with all other material
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in all applicable foreign,
federal, state or local environmental health and safety laws or contained in any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, if any ("Pertinent
Environmental Laws"). Except as set forth in Schedule 3.20 of the Company
Disclosure Letter, to the Company's knowledge, there are no past or present
events, conditions, circumstances, activities, practices or incidents which,
with the passage of time or the giving of notice, or both, would constitute a
violation of Pertinent Environmental Law or contract, lease or agreement with
any third party, or noncompliance with any Environmental Permit, or which may
prevent compliance or continued compliance with Pertinent Environmental Laws, or
which may give rise to any material common law or legal liability, or otherwise
form the basis of any claim, action, demand, suit, proceeding or governmental
investigation. Except as set forth in Schedule 3.20 of the Company Disclosure
Letter, there is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice or demand letter, notice of violation, investigation, or
proceeding pending or, to the Company's knowledge, threatened against the
Company or the Subsidiaries relating in any way to any Pertinent Environmental
Laws. There are no agreements, consent orders, decrees, judgments, license or
permit conditions or other orders or directives of any foreign, federal, state
or local court, governmental agency or authority which require any material
change in the present use, operation or condition of the Real Property or,
pursuant to applicable Pertinent Environmental Laws, any material work, repairs,
construction, containment, cleanup, investigation, removal or other remedial
action or material capital expenditure.
3.21 Brokers and Finders. Other than Ernst & Young LLP, neither the Company
nor any of its officers, directors or employees has employed any broker, finder
or investment banker or incurred any liability for any brokerage fees,
commissions, finders' fees or investment banking fees in connection with the
transactions contemplated herein.
3.22 Voting Requirements. The affirmative vote of the holders of at least
two-thirds of the total number of votes entitled to be cast by the holders of
the Shares outstanding as of the record date for the Company Special Meeting is
the only vote of the holders of any class or series of the Company's capital
stock or other securities necessary to approve this Agreement and the
transactions contemplated by this Agreement.
3.23 Board Approval. The Board, by resolutions duly adopted by unanimous
vote of those voting at a meeting duly called and held and not subsequently
rescinded or modified in any way (the "Company Board Approval"), has duly (i)
determined, subject to and conditioned upon receipt of the fairness opinion
required pursuant to Section 6.01(d) hereof, that this Agreement and the Merger
are fair to and in the best interests of the Company and its shareholders, (ii)
approved this Agreement and the Merger and (iii) subject to its fiduciary
obligations under applicable law, recommended that the shareholders of the
Company adopt this Agreement and approve the Merger and directed that this
Agreement and the transactions contemplated hereby be submitted for
consideration by the Company's shareholders at the Shareholders' Meeting. The
Company Board Approval constitutes adoption of this Agreement for purposes of
Section 902 of the BCL. No state takeover statute is applicable to the Merger or
the other transactions contemplated hereby.
3.24 Labor Matters . (a) Schedule 3.24 of the Company Disclosure Letter
sets forth a list of all of the collective bargaining agreements to which the
Company or the Subsidiaries is a party or is subject. The Company has heretofore
delivered or made available to the Parent true, correct and complete copies of
all the collective bargaining agreements listed in Schedule 3.24, and copies of
all grievances, grievance responses, grievance settlement agreements, and labor
arbitrator decisions and awards arising under any such collective bargaining
agreements or predecessor agreements within the three years preceding the date
hereof. Except to the extent set forth in Schedule 3.24, and except for such
matters as would not have or result in a Material Adverse Effect (a) the Company
and the Subsidiaries are in compliance with all applicable laws and regulations
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and employee safety and health, and all of the
provisions of the aforementioned collective bargaining agreements listed in
Schedule 3.24; (b) neither the Company nor the Subsidiaries has received
written, or to the Company's knowledge, oral notice of any unfair labor practice
charge or complaint pending before the National Labor Relations Board; (c) there
is no labor strike, work slowdown or stoppage currently pending or, to the
Company's knowledge threatened by any authorized representative of any union or
other representative of employees against or affecting the Company or the
Subsidiaries and none has occurred since 1995; (d) neither the Company nor the
Subsidiaries has received written, or to the Company's knowledge, oral notice
that any representation petition has been filed with the National Labor
Relations Board respecting the employees of the Company or the Subsidiaries; (e)
no labor grievance or arbitration proceeding arising out of or arising under any
of the aforementioned collective bargaining agreements is pending against the
Company or the Subsidiaries; (f) neither the Company nor the Subsidiaries is
currently engaged in collective bargaining negotiations; and (g) neither the
Company nor the Subsidiaries has received written, or to the Company's
knowledge, oral notice of any discrimination, harassment or retaliation
allegations, charges or complaints pending before the Equal Employment
Opportunity Commission, New York State Division of Human Rights or any other
agency or Court, state or federal, or threat of same. (b) Schedule 3.24 lists
all individual employment agreements between the Company or the Subsidiaries and
one or more employees. The Company has heretofore delivered to the Parent true,
correct and complete copies of all such employment agreements with its
employees. All employment agreements to which the Company or the Subsidiaries is
a party are, in all material respects, valid and binding.
3.25 Termination. The Company has simultaneously with the execution and
delivery of this Agreement terminated that certain Agreement and Plan of Merger
among the Company, Miranda Holdings, Inc. and Miranda Acquisition Corp. dated
April 26, 2000 and such is no longer in force or effect.
3.26 No Other Representations or Warranties. Except for the representations
and warranties contained in this Agreement, anything described in or listed in
the Company Disclosure Letter, neither the Company nor any other person makes
any representation or warranty to the Parent or the Purchaser, express or
implied, and the Company hereby disclaims any such representation or warranty,
whether by or on behalf of the Company or any of its officers, directors,
employees, agents or representatives or any other person, notwithstanding the
delivery or disclosure to the Parent or the Purchaser or any of its officers,
directors, employees, agents or representatives or any other person of any
document or other information by the Company or any of its officers, directors,
employees, agents or representatives or any other person. Any material document
delivered by the Company pursuant to this Agreement is a true, correct and
complete copy of such document, and has not been modified or amended unless such
amendment or modification is included with such document.
ARTICLE IV REPRESENTATIONS AND WARRANTIES OFTHE PARENT AND THE PURCHASER
The Parent and the Purchaser represent and warrant to the Company that:
4.01 Corporation Organization. The Parent is a limited liability company
duly organized and validly existing and in good standing under the laws of the
State of Delaware, and the Purchaser is a corporation duly organized and validly
existing and in good standing under the laws of the State of New York. The
Parent and the Purchaser each has all requisite power and authority to own its
assets and carry on its business as now being conducted or proposed to be
conducted. Each of the Parent and the Purchaser has delivered to the Company
complete and correct copies of its Operating Agreement, Certificate or Articles
of Incorporation and By-Laws, as applicable, as in effect on the date hereof.
4.02 Authorized Capital. The authorized capital stock of the Purchaser
consists of 200 shares of Common Stock, no par value per share, of which one
share shall be outstanding as of the Effective Time. All of the issued and
outstanding shares of capital stock of the Purchaser are validly issued, fully
paid, nonassessable and free of preemptive rights and all liens.
4.03 Corporation Authority. Each of the Parent and the Purchaser has the
necessary power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by each of
the Parent and the Purchaser, the performance by the Parent and the Purchaser of
its obligations hereunder and the consummation by the Parent and the Purchaser
of the transactions contemplated hereby have been duly authorized by its Board
of Directors and no other corporate or limited liability company proceeding on
the part of the Parent or the Purchaser is necessary for the execution and
delivery of this Agreement by the Parent and the Purchaser and the performance
by the Parent and the Purchaser of its obligations hereunder and the
consummation by the Parent and the Purchaser of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of the
Parent and the Purchaser and, assuming the due authorization, execution and
delivery hereof by the Company, is a legal, valid and binding obligation of the
Parent and the Purchaser, enforceable against the Parent and the Purchaser in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general equitable principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
4.04 No Prior Activities. The Purchaser has not incurred, directly or
indirectly, any liabilities or obligations, except those incurred in connection
with its incorporation or with the negotiation of this Agreement and the
consummation of the transactions contemplated hereby and thereby. The Purchaser
has not engaged, directly or indirectly, in any business or activity of any type
or kind, or entered into any agreement or arrangement with any person or entity,
and is not subject to or bound by any obligation or undertaking, that is not
contemplated by or in connection with this Agreement and the transactions
contemplated hereby and thereby.
4.05 Governmental Filings; No Violations.
(a) Other than the filing of the New York Certificate of Merger in
accordance with the BCL, the Restated Certificate of Incorporation and the HSR
Filing, no notices, reports or other filings are required to be made by the
Parent or the Purchaser with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by the Parent or the Purchaser
from, any governmental or regulatory authorities of the United States, the
several States or any foreign jurisdictions in connection with the execution and
delivery of this Agreement by the Parent and the Purchaser and the consummation
by the Parent and the Purchaser of the transactions contemplated hereby, the
failure to make or obtain any or all of which could prevent, materially delay or
materially burden the transactions contemplated by this Agreement.
(b) Neither the execution and delivery of this Agreement by the Parent or
the Purchaser nor the consummation by the Parent or the Purchaser of the
transactions contemplated hereby nor compliance by the Parent or the Purchaser
with any of the provisions hereof will: (i) conflict with or result in any
breach of any provision of its Operating Agreement, Certificate or Articles of
Incorporation or By-Laws, as applicable, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, or require any consent under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, agreement or other
instrument or obligation to which the Parent or the Purchaser is a party or by
which it or any of its properties or assets may be bound, (iii) require the
creation or imposition of any lien upon or with respect to the properties of the
Parent or the Purchaser or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Parent or the Purchaser or any of
its properties or assets, excluding from the foregoing clauses (iii) and (iv)
violations, breaches or defaults which in the aggregate, would not have a
material adverse effect on the business, financial condition or operations of
the Parent or the Purchaser or which would not prevent, materially delay or
materially burden the transactions contemplated by this Agreement.
4.06 Brokers and Finders. Neither the Parent, the Purchaser nor any of its
officers, directors or employees has employed any broker, finder or investment
banker or incurred any liability for any brokerage fees, commissions, finders
fees or investment banking fees in connection with the transactions contemplated
herein.
4.07 Proxy Statement; Other Information. None of the information to be
supplied by and relating to the Parent or the Purchaser for inclusion or
incorporation in the Proxy Statement or any schedules required to be filed with
the SEC in connection therewith and described therein as being supplied by the
Parent or the Purchaser will, at the respective times that the Proxy Statement
or any amendments or supplements thereto or any such schedules are filed with
the SEC, 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.
4.08 Ownership of Company Capital Stock. As of the date of this Agreement,
neither the Parent, the Purchaser nor any of their respective affiliates or
associates (as such terms are defined under the Exchange Act) (i) beneficially
owns, directly or indirectly, or (ii) is a party to any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting or disposing of,
in case of either clause (i) or (ii), shares of capital stock of the Company.
4.09 No Other Representations or Warranties. Except for the representations
and warranties contained in this Agreement, or any other document delivered
pursuant to this Agreement, neither the Parent or the Purchaser nor any other
person makes any representations or warranty to the Company, express or implied,
and the Parent and the Purchaser hereby disclaim any such representation or
warranty, whether by the Parent or the Purchaser or any of its or their
officers, directors, employees, agents or representatives or any other person,
notwithstanding the delivery or disclosure to the Company or any of its
officers, directors, employees, agents or representatives or any other person of
any document or other information by the Parent and the Purchaser or any of
their officers, directors, employees, agents or representatives or any other
person. Any document delivered by the Parent or the Purchaser pursuant to this
Agreement is a true, correct and complete copy of such document, and has not
been modified or amended unless such amendment or modification is included with
such document.
ARTICLE V COVENANTS OF THE PARTIES
5.01 Conduct of Business of the Company. Except as contemplated by this
Agreement or as set otherwise agreed by the Parent in writing, during the period
from the date of this Agreement to the Effective Time, each of the Company and
the Subsidiaries will conduct its business and operations only in the ordinary
and usual course of business consistent with past practice and will seek to
preserve intact the current business organization, and preserve its
relationships with customers, suppliers and others having business dealings with
the Company to the end that the goodwill and ongoing business shall be
unimpaired in all material respects at the Effective Time. Without limiting the
generality of the foregoing, and, except as contemplated in this Agreement,
prior to the Effective Time, without the advance written consent of the Parent,
neither the Company nor any of the Subsidiaries will:
(a) Except to the extent required by applicable law, amend its Certificate
of Incorporation or By-Laws;
(b) (i) Create, incur or assume any indebtedness for money borrowed,
including obligations in respect of capital leases or other capital
expenditures, except indebtedness for borrowed money incurred in the ordinary
course of business, provided that the proceeds thereof are not distributed to
the shareholders of the Company; or (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person; provided, however, that the Company may
endorse negotiable instruments in the ordinary course of business consistent
with past practice;
(c) Declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of any of its
capital stock;
(d) Issue, sell, grant, purchase or redeem, or issue or sell any securities
convertible into, or options with respect to, or warrants to purchase or rights
to subscribe to, or subdivide or in any way reclassify, any shares of its
capital stock, except in any case above pursuant to Section 2.05 with respect to
the Options or pursuant to Section 2.06 with respect to the Purchase Plans;
provided, however, that from and after the date hereof, the Company will permit
no further orders for shares under the Purchase Plans;
(e) Other than funding in the aggregate amount of $25,000 in connection
with those certain Supplemental Executive Compensation Agreements between the
Company and each of Robert McKenna and Daniel Corwin, (i) increase the rate of
compensation payable or to become payable by the Company to its directors,
officers or employees, whether by salary or bonus, other than in the ordinary
course of business consistent with past practice or (ii) icrease the rate or
term of, or otherwise alter, any bonus, insurance, pension, severance or other
employee benefit plan, payment or arrangement made to, for or with any such
directors, officers or employees other than renewals of contractual arrangements
made in the ordinary course of business consistent with past practice;
(f) Enter into any agreement, commitment or transaction (other than
borrowings permitted by Section 5.01(b)), except agreements, commitments or
transactions in the ordinary course of business consistent with past practice;
(g) Sell, transfer, mortgage, pledge, grant any security interest or permit
the imposition of any lien or other encumbrance on any asset other than in the
ordinary course of business consistent with past practice and except pursuant to
the Credit Agreement (other than with respect to the assets constituting the
Company's aerospace division);
(h) Waive any right under any contract or other agreement identified in the
Company Disclosure Letter if such waiver would have a Material Adverse Effect;
(i) Except as required by GAAP, the SEC or applicable law, make any
material change in its accounting methods or practices or make any material
change in depreciation or amortization policies or rates adopted by it for
accounting purposes or, other than normal writedowns or writeoffs consistent
with past practices, make any writedowns of inventory or writeoffs of notes or
accounts receivable; (j) Make any loan or advance to any of its shareholders,
officers, directors, employees (other than advances to field sales personnel,
vacation advances, relocation advances and travel advances in each case made in
the ordinary course of business in a manner consistent with past practice) or
make any other loan or advance to any other person or group otherwise than in
the ordinary course of business consistent with past practice;
(k) Terminate or fail to renew any contract including, all current
insurance policies, or other agreements (excluding customer leases or
contracts), the termination or failure of which to renew would have a Material
Adverse Effect;
(l) Enter into any collective bargaining agreement;
(m) Take, agree to take, or knowingly permit to be taken any action, or do
or, with respect to anything within the Company's control, knowingly permit to
be done anything in the conduct of its business which would be contrary to or in
breach of any of the terms or provisions of this Agreement, or which would cause
any of the representations of the Company to be or become untrue in any material
respect;
(n) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or other
business organization or division thereof, or any assets that are material,
individually or in the aggregate, to the Company and the Subsidiaries taken as a
whole;
(o) make any Tax election that would reasonably be expected to have a
Material Adverse Effect or settle or compromise any material Tax liability;
(p) settle or compromise any claim (including arbitration) or litigation
involving payments by the Company in excess of $50,000 individually, or $100,000
in the aggregate, which is not subject to insurance reimbursement without the
prior written consent of the Parent; or
(q) Agree to do any of the foregoing.
5.02 Notification of Certain Matters. The Company shall give prompt notice
to the Parent of: (a) written, or to the Company's knowledge, oral notice or
other communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement; (b) any written, or to the Company's knowledge, oral notice or
other communication from any regulatory authority in connection with the
transactions contemplated by this Agreement; and (c) any claims, actions,
proceedings or investigations commenced or, to the best of its knowledge,
threatened or involving the Company or the Subsidiaries, or any of their
respective properties or assets, which, if pending on the date hereof, would
have been required to have been disclosed in the Company Disclosure Letter
pursuant to the provisions of Section 3.14; and (d) the occurrence of any event
having, or which insofar as can be reasonably foreseen would have, a Material
Adverse Effect.
5.03 Access to Information. Between the date of this Agreement and the
Effective Time, the Company will during ordinary business hours and upon
reasonable advance notice, (i) give the Parent and the Parent's authorized
representatives access the Parent shall reasonably request to all of its books,
records (including, without limitation, the workpapers of the Company's outside
accountants), contracts, commitments, plants, offices and other facilities and
properties, and its personnel, representatives, accountants and agents
(including prospective lenders); (ii) permit the Parent to make such inspections
thereof as it may reasonably request (including, without limitation, observing
the Company's physical inventory of its assets), (iii) cause its officers and
advisors to furnish to the Parent its financial and operating data and such
other existing information with respect to its business, properties, assets,
liabilities and personnel (including, without limitation, title insurance
reports, real property surveys and environmental reports, if any), as the Parent
may from time to time reasonably request, (iv) take such actions as the Parent
reasonably deems appropriate to verify the existence and condition of equipment
leased by the Company to its customers, and (v) permit the Parent's accountants
to conduct such confirmation and testing procedures with respect to the
Company's receivables as the Parent reasonably deems appropriate; provided,
however, that any such investigation shall be conducted in such a manner as not
to interfere unreasonably with the operation of the business of the Company. Any
and all information disclosed by or on behalf of the Company to the Parent or
the Parent's authorized representatives in accordance with this Section 5.03
shall be subject to the terms of the Confidentiality Agreement, dated May 3,
2000, between the Company and Key Components, Inc. (the "Confidentiality
Agreement").
5.04 Shareholders' Meeting. Subject to the requirements of Section 5.15,
the Company shall take all action necessary, in accordance with applicable law
and its Certificate of Incorporation and By-Laws, to convene the Shareholders'
Meeting as promptly as reasonably practicable after the date on which the
definitive Proxy Statement has been mailed to the Company's shareholders for the
purpose of considering and taking action upon the Merger and this Agreement.
Subject to the fiduciary obligations of the Board under applicable law and as
otherwise contemplated by this Agreement, the Company shall, through the Board,
recommend to its shareholders approval of the Merger and this Agreement.
5.05 Proxy Statement. The Parent and the Company shall, as promptly as
possible, prepare and, subject to the requirements of Section 5.15, file with
the SEC the Proxy Statement, and forms of proxy in connection with the vote of
the Company's shareholders with respect to the Merger and this Agreement and any
required Other Filings. The Company and the Parent shall each use all reasonable
efforts to cause the Proxy Statement to be mailed to shareholders of the Company
at the earliest practicable date contemplated by Section 1.07. If at any time
prior to the Effective Time any event with respect to the Company should occur
and is required to be described in an amendment of, or a supplement to, the
Proxy Statement, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the shareholders of the Company.
5.06 Further Information. The Company and the Parent shall give prompt
written notice to the other of (i) any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in any material
respect (including the Company, the Parent or the Purchaser receiving knowledge
of any fact, event or circumstance which may cause any representation qualified
as to knowledge to be or become untrue in any material respect) or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this Merger
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.07 Further Assurances. Consistent with the terms and conditions hereof,
each party hereto will execute and deliver such instruments and take such other
action as the other parties hereto may reasonably require in order to carry out
this Agreement and the transactions contemplated hereby and thereby.
5.08 Interim Financial Statements. Within 45 days after the end of each
fiscal quarter and 90 days after the end of any fiscal year after the date of
this Agreement, and until the Effective Time, the Company will deliver to the
Parent its Form 10-Q's or 10-K's, as the case may be, for such quarter or year.
The financial statements contained therein shall fairly present in all material
respects their respective financial condition, results of operations and cash
flows and changes in financial position as at the date or for the periods
indicated in accordance with GAAP consistently applied in accordance with past
practice, shall be prepared in conformity with the requirements of Regulation
S-X under the Exchange Act and shall be accompanied by a certificate of the
principal financial officer (or independent certified public accountant in the
case of year end financials) of the Company to such effect.
5.09 Best Efforts. Subject to the terms and conditions of this Agreement,
each of the parties hereto will use their commercially reasonable best efforts
to take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and shall use its commercially reasonable best efforts to satisfy the conditions
to the transactions contemplated hereby and to obtain all waivers, permits,
consents and approvals and to effect all registrations, filings and notices with
or to third parties or governmental or public bodies or authorities which are
necessary or desirable in connection with the transactions contemplated by this
Agreement, including, but not limited to, filings to the extent required under
the Exchange Act and HSR Act. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers or directors of each of the parties hereto shall
take such action. Without limiting the generality of the foregoing, the Company,
the Parent and the Purchaser will defend against any lawsuit or proceeding,
whether judicial or administrative, challenging this Agreement or the
consummation of any of the transactions contemplated hereby. From time to time
after the date hereof, without further consideration, the Company will, at its
own expense, execute and deliver such documents to the Parent as the Parent may
reasonably request in order to consummate such transactions. From time to time
after the date hereof, without further consideration, the Parent will, at its
own expense, execute and deliver such documents to the Company as the Company
may reasonably request in order to consummate the Merger.
5.10 Filings. The Company and the Parent will file, or cause to be filed,
as promptly as possible, with the United States Federal Trade Commission (the
"FTC") and the Antitrust Division of the United States Department of Justice
(the "Department of Justice") pursuant to the HSR Act the notification required
by the HSR Act, including all requisite documents, materials and information
therefor, and request early termination of the waiting period under the HSR Act.
Each of the Company and the Parent shall furnish to the other such necessary
information and reasonable assistance as the other may request in connection
with its preparation of any filing or submission which is necessary under the
HSR Act. The Company and the Parent shall each keep the other apprised of the
status of any inquiries or requests for additional information made by any
governmental authority and shall comply promptly with any such inquiry or
request.
5.11 Public Announcements. The initial press release relating to the
transactions contemplated hereby shall be a joint press release, and thereafter
the Company and the Parent shall consult with each other before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated hereby and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by law or any listing agreement with a national securities exchange or
with National Association of Securities Dealers, Inc.
5.12 Indemnity; D&O Insurance.
(a) The Parent shall cause all rights to indemnification by the Company now
existing in favor of each present and former director or officer of the Company
(hereinafter referred to in this Section as the "Indemnified Parties") as
provided in the Company's Certificate of Incorporation, By-Laws or
indemnification agreements to survive the Merger and to continue in full force
and effect as rights to indemnification by the Surviving Corporation for a
period of at least six years following the Effective Time.
(b) Subject to the terms set forth herein, the Surviving Corporation shall
indemnify and hold harmless, to the fullest extent permitted under applicable
law (and shall also advance expenses as incurred by an Indemnified Party to the
extent permitted under applicable law, provided the person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification), each
Indemnified Party against any costs or expenses (including attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to any action, alleged action, omission or alleged omission
occurring on or prior to the Effective Time in their capacity as director or
officer (including, without limitation, any claims, actions, suits, proceedings
and investigations which arise out of or relate to the transactions contemplated
by this Agreement) for a period of six years after the Effective Time, provided
that, in the event any claim or claims are asserted or made within such six year
period, all rights to indemnification in respect of any such claim or claims
shall continue until final disposition of any and all such claims.
(c) Any Indemnified Party wishing to claim indemnification under this
Section 5.12, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Surviving Corporation thereof, but the
failure to so notify shall not relieve the Surviving Corporation of any
obligation to indemnify such Indemnified Party or of any other obligation
imposed by this Section 5.12 unless and to the extent that such failure
materially prejudices the Parent or the Surviving Corporation; it being
understood that it shall be deemed to materially prejudice the Parent or the
Surviving Corporation, as the case may be, if, as a result of such failure to
notify, the Parent or the Surviving Corporation is not given an opportunity to
assume the defense of such claim, action, suit, proceeding or investigation
within a reasonably prompt time after such claim, action, suit, proceeding or
investigation is asserted or initiated. In the event of any such claim, action,
suit, proceeding or investigation, (i) the Surviving Corporation or the Parent
shall have the right to assume the defense thereof and shall not be liable to
such Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Party in connection with the
defense hereof, except that if the Parent or Surviving Corporation elects not to
assume such defense or counsel for the Indemnified Party advises that there are
issues which raise conflicts of interest between the Parent or Surviving
Corporation and the Indemnified Party, the Indemnified Party may retain counsel
satisfactory to it, and the Surviving Corporation shall pay all reasonable fees
and expenses of such counsel for the Indemnified Party promptly as statements
therefor are received; provided, however, that in no event shall the Parent or
Surviving Corporation be required to pay fees and expenses, including
disbursements and other charges, for more than one firm of attorneys in any one
legal action or group of related legal actions unless (A) counsel for the
Indemnified Party advises that there are issues which raise conflicts of
interest that require more than one firm of attorneys, or (B) local counsel of
record is needed in any jurisdiction in which any such action is pending, (ii)
the Parent and the Indemnified Party shall cooperate in the defense of any such
matter, and (iii) the Parent and the Surviving Corporation shall not be liable
for any settlement effected without the prior written consent of one of them
(which consent shall not be unreasonably withheld); and provided, further, that
the Parent and Surviving Corporation shall not have any obligation hereunder to
any Indemnified Party if and to the extent a court of competent jurisdiction
ultimately determines, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
(d) For a period of not less than six years after the Effective Time, the
Parent shall cause the Surviving Corporation to use its best reasonable efforts
to maintain, if available for an annual premium not in excess of $70,000,
officers' and directors' liability insurance covering the Indemnified Parties
who are presently covered by the Company's officers' and directors' liability
insurance, (copies of which have been delivered to the Parent), with respect to
acts or omissions occurring at or prior to the Effective Time, on terms no less
favorable than those in effect on the date hereof or at the Effective Time, or
if such insurance coverage is not available for an annual premium not in excess
of $70,000 to obtain the amount of coverage that is available for an annual
premium of $70,000.
(e) The covenants contained in this Section 5.12 shall survive the
Effective Time until fully discharged and are intended to benefit each of the
Indemnified Parties.
5.13 Other Potential Bidders. The Company, its affiliates and their
respective officers, directors, employees, investment bankers, attorneys and
other representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore with
respect to the acquisition of or an investment in the Company (other than with
respect to the assets constituting the Company's aerospace division), whether in
the form of a merger, amalgamation, consolidation, share exchange,
recapitalization, business combination, purchase of stock, acquisition of
assets, joint venture, strategic alliance or otherwise (an "Acquisition
Proposal"). Neither the Company nor any of its affiliates, nor any of its or
their respective officers, directors, employees, representatives or agents,
shall, directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than the Parent
and the Purchaser, any affiliate or associate of the Parent and the Purchaser or
any designees of the Parent and the Purchaser) concerning any Acquisition
Proposal, or take any other action to facilitate the making of a proposal that
constitutes or could reasonably be expected to lead to an Acquisition Proposal;
provided, however, that if at any time prior to the Effective Time, the Company
receives an unsolicited written, bona fide Acquisition Proposal from a third
party, the Board may, but only if, in the good faith judgment of the Board,
based as to legal matters, on the advice of legal counsel, the Board determines
that the failure to do so would be inconsistent with the discharge of its
fiduciary duties to the Company's shareholders under applicable law, proceed
with discussions regarding such Acquisition Proposal and (a) furnish information
and access, in each case only in response to unsolicited requests therefor, to
any corporation, partnership, person or other entity or group pursuant to
confidentiality agreements that do not prohibit or restrict disclosure of any
matter to the Parent, and (b) participate in discussions and negotiate with such
entity or group concerning any Acquisition Proposal. Notwithstanding the
foregoing, the Company shall immediately advise the Parent and the Purchaser
orally and in writing of the receipt of any Acquisition Proposal, the material
terms and conditions thereof and the identity of the person making such proposal
and shall immediately provide the Parent and the Purchaser with a copy of the
same and any related materials. Without limiting the foregoing, it is understood
that any violation of the preceding restrictions set forth in this Section 5.13
by any executive officer of the Company or any of the Subsidiaries, shall be
deemed to be a breach of this Section 5.13 by the Company. The Company shall use
its best efforts to ensure that the officers, directors and employees of the
Company and the Subsidiaries and any investment banker or other advisor or
representatives retained by the Company are aware of the restrictions set forth
in the preceding sentences, and the Company hereby represents that the Board has
adopted resolutions directing the officers, directors and employees of the
Company and the Subsidiaries to comply with such restrictions. The Company
promptly shall advise the Parent orally and in writing of any Acquisition
Proposal and any inquiries or developments with respect thereto.
5.14 Shareholder Litigation. In connection with any litigation which may be
brought against the Company or its directors relating to the transactions
contemplated by this Agreement, the Company shall keep the Parent and the
Purchaser and any counsel which either the Parent or the Purchaser may retain at
its own expense, informed of the status of such litigation.
5.15 Financing Commitments. On or before June 9, 2000, the Parent and the
Purchaser shall deliver executed copies of commitment letters from one or more
financing sources committing, subject to the terms and conditions of such
commitment letters, to provide financing in an amount sufficient to consummate
the Merger and the other transactions contemplated by this Agreement. The Parent
and the Purchaser agree to keep the Company reasonably informed, from
time-to-time, as to their progress in obtaining the Financing Commitments.
ARTICLE VI CONDITIONS TO THE MERGER
6.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to this Agreement to consummate the Merger
shall be subject to the following conditions, to the extent not waived at or
prior to the Closing:
(a) This Agreement and the Merger shall have been approved and adopted by
the requisite vote or consent of the shareholders of the Company;
(b) Any waiting period (and any extension thereof) applicable to the Merger
under the HSR Act shall have expired or been terminated;
(c) No order, statute, rule, regulation, execution order, stay, decree,
judgment, or injunction shall have been enacted, entered, issued, promulgated or
enforced by any court or governmental authority which prohibits or restricts the
consummation of the Merger; and
(d) The Company shall have received a signed written opinion from Ernst &
Young LLP that the Merger is fair to the Company's shareholders from a financial
point of view, and the Company shall have delivered a true and complete copy of
such opinion to the Purchaser.
6.02 Conditions to the Obligations of the Parent and the Purchaser to
Effect the Merger. The obligation of the Purchaser and the Parent to effect the
Merger shall be further subject to satisfaction of the following conditions,
unless waived by the Parent:
(a) the Company shall have performed and complied in all material respects
with the agreements and obligations contained in this Agreement required to be
performed and complied with by it at or prior to the Effective Time, the
representations and warranties of the Company set forth in this Agreement
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, in each case as of
the date hereof and at the Effective Time as though made as of the Effective
Time, except to the extent such representations and warranties expressly relate
to an earlier date (in which case such representations and warranties qualified
as to materiality shall be true and correct, and those not so qualified shall be
true and correct in all material respects, as of such earlier date) and the
Parent and the Purchaser shall have received a certificate of an authorized
officer of the Company to that effect;
(b) there shall have been no material adverse change in the business,
operations, condition (financial or otherwise) or results of operations of the
Company and the Subsidiaries, taken as a whole;
(c) the Parent and the Purchaser shall have obtained funding pursuant to
and in accordance with the Financing Commitments;
(d) the Company shall not have received notices of election to dissent
pursuant to Section 623(a) of the BCL from shareholders who, in the aggregate,
own 10% or more of the Shares;
(e) the Parent and the Purchaser shall have received Phase I Environmental
Reports for all of the Company's properties and facilities, each of such reports
(which shall be dated no earlier than sixty (60) days prior to the Effective
Time) shall be reasonably satisfactory to the Parent and the Purchaser and such
reports shall not recommend further investigation or remediation of the property
owned or leased by the Company which would cost in excess of $250,000; and
(f) the Company shall have terminated its Rights Agreement, dated November
9, 1993, by and between the Company and American Stock Transfer and Trust
Company.
6.03 Conditions to the Obligations of the Company to Effect the Merger. The
obligation of the Company to effect the Merger shall be further subject to the
Parent and the Purchaser having performed and complied in all material respects
with the agreements and obligations contained in this Agreement required to be
performed and complied with by each of them at or prior to the Effective Time,
and the representations and warranties of the Parent and the Purchaser contained
in this Agreement shall be true when made and at and as of the Effective Time
(except for representations and warranties made as of a specified date, which
need only be true as of such date) as if made at and as of such time, and the
Company shall have received a certificate of an authorized officer of the Parent
and the Purchaser to that effect. ARTICLE VII CLOSING
7.01 Time and Place. The closing of the Merger (the "Closing") shall take
place at the offices of Hodgson, Russ, Andrews, Woods & Goodyear LLP, Buffalo,
New York, at 10:00 a.m. local time on a date to be specified by the parties
which shall be no later than the third business day after the date on which the
last of the closing conditions set forth in Article VII is satisfied or waived
(if waivable) unless another time, date or place is agreed upon in writing by
the parties hereto. The date on which the Closing actually occurs is herein
referred to as the "Closing Date."
7.02 Filings at the Closing. At the Closing, the Purchaser shall cause the
New York Certificate of Merger to be filed and recorded with the Secretary of
State of the State of New York in accordance with the provisions of Section 904
or 905 of the BCL, and shall take any and all other lawful actions and do any
and all other lawful things necessary to cause the Merger to become effective.
ARTICLE VIII TERMINATION; AMENDMENT; WAIVER
8.01 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time: (a) by mutual written consent
of the Parent, the Purchaser and the Company; (b) by the Parent and the
Purchaser or the Company if (i) any court of competent jurisdiction in the
United States or other United States governmental body shall have issued an
order, decree or ruling or taken any other final action restraining, enjoining
or otherwise prohibiting the Merger and such order, decree, ruling or other
action is or shall have become nonappealable or (ii) the Merger shall not have
been consummated by October 2, 2000; (c) by the Company if prior to the
Effective Time, a corporation, partnership, person or other entity or group
shall have made an Acquisition Proposal that the Board by a majority vote,
determines in its good faith judgment and in the discharge of its fiduciary
duties, is more favorable to the Company's shareholders than the Merger; (d) by
the Parent and the Purchaser prior to the Effective Time, if (i) there shall
have been a breach of any representation or warranty on the part of the Company
such that the condition with respect to representations and warranties set forth
in Section 6.02(a) shall not be satisfied, (ii) there shall have been a breach
of any covenant or agreement on the part of the Company such that the condition
with respect to covenants and agreements set forth in Section 6.02(a) shall not
be satisfied, or (iii) the Board shall have withdrawn or modified its approval
or recommendation of this Agreement or the Merger or shall have recommended
another offer, or shall have adopted any resolution to effect any of the
foregoing and on or prior to such date an entity or group (other than the Parent
or the Purchaser) shall have made and not withdrawn an Acquisition Proposal; or
(e) by the Company if (i) there shall have been a breach of any representation
or warranty on the part of the Parent or the Purchaser such that the condition
with respect to representations and warranties set forth in Section 6.03 shall
not be satisfied or (ii) there shall have been a breach of any covenant or
agreement on the part of the Parent or the Purchaser such that the condition
with respect to covenants and agreements set forth in Section 6.03 shall not be
satisfied.
8.02 Effect of Termination. In the event of the termination and abandonment
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
hereto or its affiliates, directors, officers or shareholders, other than the
provision of this Section 8.02 and 8.03 hereof. Nothing contained in this
Section 8.02 shall relieve any party from liability for any breach of this
Agreement.
8.03 Fees and Expenses.
(a) In the event the Company terminates this Agreement pursuant to Section
8.01(c) or the Parent or the Purchaser terminates this Agreement pursuant to
Section 8.01(d) or the conditions set forth in either Section 6.01(a) or 6.02(d)
are not satisfied, the Company shall reimburse the Parent, the Purchaser and
their affiliates (not later than one business day after submission of statements
therefor) for all out-of-pocket fees and expenses, incurred by any of them or on
their behalf in connection with the Merger and the consummation of all
transactions contemplated by this Agreement (including, without limitation,
attorneys' fees, fees payable to financing sources, investment bankers, counsel
to any of the foregoing, and accountants and filing fees and printing costs)
(the "Expense Reimbursement Amount").
(b) In addition, in the event the Company terminates this Agreement
pursuant to Section 8.01(c) or in the event the Parent or the Purchaser
terminates this Agreement pursuant to Section 8.01(d)(iii), the Parent and the
Purchaser would suffer direct and substantial damages, which damages cannot be
determined with reasonable certainty. To compensate the Parent and the Purchaser
for such damages, the Company shall pay to the Purchaser, immediately upon such
termination, by wire transfer of immediately available funds to an account
designated by the Purchaser, the amount of $2,500,000 as liquidated damages, as
well as all amounts to which the Parent and the Purchaser would be entitled
pursuant to Section 8.03(a). It is specifically agreed that the amount to be
paid pursuant to this Section 8.03(b) represents liquidated damages and not a
penalty.
(c) (i) In the event the Company terminates this Agreement pursuant to (A)
Section 8.01(b)(i) (to the extent such nonappealable order, decree, ruling or
other final action restraining, enjoining or otherwise prohibiting the Merger
results from the Parent and/or the Purchaser being a party to this Agreement or
to the Merger and would not have resulted from any other person or persons being
a party to this Agreement or to the Merger), (B) Section 8.01(b)(ii) (to the
extent the failure to consummate the Merger results from the conditions to the
Merger set forth in Sections 6.01(b), 6.02(c) or 6.03 not being satisfied or, in
the case of Section 6.03, waived prior to October 2, 2000), or (C) Section
8.01(e)(i) or (ii) (collectively, the "Purchaser Related Terminations"), the
Company would suffer direct and substantial damages, which damages cannot be
determined with reasonable certainty. To compensate the Company for such
damages, the Parent will pay or cause to be paid to the Company, immediately
upon such termination, by wire transfer of immediately available funds to an
account designated by the Company, the amount of $2,500,000 as liquidated
damages. It is specifically agreed that the amount to be paid pursuant to this
Section 8.01(c)(i) represents liquidated damages and not a penalty.
(ii) In addition to the amounts payable by the Parent pursuant to Section
8.03(c)(i), in the event of a Purchaser Related Termination, the Parent shall
reimburse the Company and its affiliates (not later than one business day after
the submission of statements therefor) for all out-of-pocket fees and expenses,
incurred by any of them or on their behalf in connection with the Merger and the
consummation of all transactions contemplated by this Agreement and the
Agreement and Plan of Merger among the Company, Miranda Holdings, Inc. and
Miranda Acquisition Corp., dated April 26, 2000 (except for the liquidated
damages amount contemplated by Section 8.03(b) thereof) (including, without
limitation, attorneys' fees, fees payable to financing sources, investment
bankers, counsel to any of the foregoing, and accountants and filing fees and
printing costs).
(d) Except as specifically provided in this Section 8.03 each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby.
ARTICLE IX MISCELLANEOUS
9.01 Survival of Representations and Warranties. The representations and
warranties made herein shall not survive beyond the earlier of termination of
this Agreement or the Effective Time. This Section 9.01 shall not limit any
covenant or agreement of the parties hereto which by its terms contemplates
performance after the Effective Time.
9.02 Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of the Parent
(for itself and the Purchaser) and the Company at any time prior to the
Effective Time with respect to any of the terms contained herein executed by
duly authorized officers of the respective parties except that after approval of
the Merger by the shareholders, the Merger Consideration to be paid pursuant to
this Agreement to the holders of Shares shall in no event be decreased and the
form of consideration to be received by the holders of such Shares in the Merger
shall in no event be altered without the approval of such holders.
9.03 Waiver of Compliance; Consents. At any time prior to the Effective
Time, the parties hereto may extend the time for performance of any of the
obligations or other acts or waive any inaccuracies in the representations and
warranties contained herein or in the documents delivered pursuant hereto. Any
failure of the Parent (for itself and the Purchaser), on the one hand, or the
Company, on the other hand, to comply with any obligation, covenant, agreement
or condition herein may be waived in writing by the Parent (for itself and the
Purchaser) or the Company, respectively, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of or estoppel with respect to any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
Section 10.03.
9.04 Counterparts. This Agreement may be executed in any number of
counterparts (including execution of counterparts by facsimile) each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
9.05 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to its
conflicts of laws rules.
9.06 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
or by overnight courier service to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) If to the Company, to:
Acme Electric Corporation
400 Quaker Road
East Aurora, New York 14052
Telephone: (716) 655-3800
Telecopy: (716) 687-1594
Attention: Robert McKenna
with a copy to:
Hodgson, Russ, Andrews, Woods & Goodyear LLP
One M&T Plaza, Suite 2000
Buffalo, New York 14203
Telephone: (716) 848-1550
Telecopy: (716) 849-0349
Attention: John B. Drenning, Esq.
(b) if to the Parent or the Purchaser, to:
Key Components, LLC
200 White Plains Road
Tarrytown, New York 10591
Attn: Alan L. Rivera, Vice President
Telephone: (914) 332-8088
Telecopy: (914) 332-1441
with a copy to:
RubinBaum LLP
30 Rockefeller Plaza, 29th Floor
New York, New York 10112
Telephone: (212) 698-7864
Telecopy: (212) 698-7825
Attention: Michael J. Emont, Esq.
9.07 Entire Agreement, Assignment, Etc. This Agreement, which hereby
incorporates the Company Disclosure Letter, embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter hereof and,
except for Section 5.12, is not intended to confer upon any other person any
rights or remedies hereunder. This Agreement supersedes all prior agreements and
understanding of the parties with respect to the subject matter hereof other
than the Confidentiality Agreement. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interest or obligations hereunder shall be assigned by
any party hereto without the prior written consent of the other parties hereto
except that the Parent shall have the right to assign the rights of the
Purchaser to any other (directly or indirectly) wholly-owned Subsidiaries of the
Parent without the prior written consent of the Company.
9.08 Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
9.09 Headings. The Articles and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of the Agreement
of the parties and shall not effect in any way the meaning or interpretation of
this Agreement.
9.10 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to seek an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first above
written.
ACME ELECTRIC CORPORATION
By:
--------------------------
Name: Robert T. Brady
Title: Chairman of the Special
Committee of the Board of Directors
KEY COMPONENTS, LLC
By:
--------------------------
Name: Alan L. Rivera
Title: Vice President
KCI MERGER CORP.
By:
--------------------------
Name: Alan L. Rivera
Title: Vice President
<PAGE>
CONTACT:
Richard Becht
(716) 655-3800
FOR IMMEDIATE RELEASE
FOR IMMEDIATE RELEASE
ACME ELECTRIC ANNOUNCES MERGER AGREEMENT WITH KEY COMPONENTS
EAST AURORA, NY, MAY 26, 2000 -Acme Electric Corporation (NASDAQ:ACEE)
announced Today it has entered into a definitive merger agreement with Key
Components, LLC, a leading manufacturer of custom-engineered essential
componentry, under which Key Components will acquire Acme for $9.00 per share in
cash. The transaction is valued at approximately $56.7 million in total,
including the assumption of $11 million of Acme debt.
A special committee of independent directors of the Acme Board has
unanimously approved the agreement with Key Components. The special committee
retained Winthrop, Stimson, Putnam & Roberts as legal counsel and engaged Ernst
& Young LLP to render an opinion as to the fairness, from a financial point of
view, of the consideration to be received by Acme's shareholders. Closing of the
transaction is conditioned upon receipt of the fairness opinion from Ernst &
Young, approval by Acme's shareholders, the availability of the financing
necessary to consummate the transaction, and other customary conditions. The
transaction is expected to close within the next 90-to- 120 days.
Acme also announced that it has terminated its merger agreement with a
newly formed corporation controlled by Acme's Chairman and Chief Executive
Officer, Robert J. McKenna, and Strategic Investments & Holdings, Inc., which
provided for the acquisition of Acme for $8.00 per share. Acme exercised its
right under that agreement to accept Key Components's higher offer which also
requires a payment by Acme to Strategic of $2.5 million termination fee.
Robert J. Mckenna, Acme's Chairman and Chief Executive Officer, said, "We
have achieved the overarching mission of the Acme board and management team,
which is to maximize shareholder value. We will work alongside the management of
Key Components to maintain our strong customer relationships and commitments,
and ensure a smooth and seamless transition."
Founded in 1917, Acme Electric Corporation is a leader in the design and
manufacture of power conversion equipment for electronic and electrical systems
for industrial, commercial, residential, and military and aerospace
applications. Corporate headquarters are in East Aurora, NY, with operations in
Cuba, NY, Lumberton,NC, Tempe, AZ, and Monterrey, Mexico.
Key Components is a leading manufacturer of custom-engineered essential
componentry for application in a diverse array of end-use products.Key
Components targets original equipment manufacturer ("OEM") markets where Key
Components believes its value-added engineering and manufacturing capabilities,
along with its timely delivery, reliability, and customer service, enable it to
differentiate Key Components from its competitors and enhance profitability. Key
Components operates in two business segments, mechanical engineered components
and electrical components. The mechanical engineered components products consist
primarily of medium security lock products and accessories, flexible shaft and
remote valve control components, and turbocharger actuators and related
accessories. Key Components electrical components products include specialty
electrical components including, but not limited to , weather- and
corrosion-resisant wiring devices and battery chargers, and high-voltage utility
switches.
####
