<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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) SEPTEMBER 23, 1996
CLARCOR INC.
(Exact name of registrant as specified in Charter)
<TABLE>
<S> <C> <C>
DELAWARE 0-3801 36-0922490
(State or Other Jurisdiction (Commission File Number) (IRS Employer Identification No.)
of Incorporation)
</TABLE>
2323 Sixth Street, P.O. Box 7007
Rockford, Illinois 61125
(Zip Code)(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (815) 962-8867
N/A
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 5. OTHER EVENTS.
On September 23, 1996, CLARCOR Inc., a Delaware corporation ("CLARCOR"),
entered into an Agreement and Plan of Merger (the "Merger Agreement") with CUAC
Inc., an Ohio corporation and a wholly-owned subsidiary of CLARCOR ("Sub"), and
United Air Specialists, Inc., an Ohio corporation ("UAS"). The Merger Agreement
provides for a merger (the "Merger") of Sub with and into UAS, with UAS
surviving as a wholly-owned subsidiary of CLARCOR.
Pursuant to the Merger Agreement, each share of Common Stock, without par
value, of UAS ("UAS Common Stock"), outstanding immediately prior to the
Effective Time (as defined in the Merger Agreement) of the Merger (other than
shares owned directly or indirectly by CLARCOR or UAS, which shares will be
cancelled) will be converted into .3698577 (the "Conversion Number") of a share
of Common Stock, par value $1 per share, of CLARCOR ("CLARCOR Common Stock"),
including the corresponding number of rights to purchase shares of Series B
Junior Participating Preferred Stock of CLARCOR. The Conversion Number is
subject to adjustment based on the number of fully diluted shares of UAS
Common Stock outstanding immediately prior to the Effective Time. Approximately
1.2 million shares of CLARCOR Common Stock would become issuable pursuant to
the Merger Agreement, which would represent an increase of approximately 8.1%
over the number of shares of CLARCOR Common Stock currently outstanding.
Each holder of a certificate representing prior to the Effective Time
shares of UAS Common Stock will cease to have any rights with respect thereto
after the Merger, except the right to receive (i) certificate(s) representing
the shares of CLARCOR Common Stock into which such shares of UAS Common Stock
have been converted, (ii) certain dividends and other distributions previously
withheld in accordance with Section 1.7 of the Merger Agreement pending the
exchange of stock certificate(s) and (iii) any cash, without interest, to be
paid in lieu of any fractional share of CLARCOR Common Stock in accordance with
Section 1.8 of the Merger Agreement. Notwithstanding the foregoing, holders of
UAS Common Stock will be entitled to appraisal rights in accordance with
applicable Ohio law.
Prior to its execution, the Merger Agreement was approved by the respective
Boards of Directors of CLARCOR and UAS. A fairness opinion was delivered by
J.J.B. Hilliard, W.L. Lyons Inc. to the Board of Directors of UAS. The
consummation of the Merger is subject, among other things, to the approval of
the Merger by the shareholders of UAS and to certain regulatory approvals. No
vote of CLARCOR shareholders will be required. In connection with the execution
of the Merger Agreement, certain holders of UAS Common Stock, who have voting
power with respect to an aggregate of approximately 50% of the shares of UAS
Common Stock outstanding on the date hereof, entered into agreements obligating
them to vote such shares in favor of the Merger (the "Stockholder Agreements").
Copies of the Merger Agreement, the Stockholder Agreements and CLARCOR's
Press Release dated September 23, 1996 with respect to the Merger Agreement are
attached hereto as Exhibits 2, 10.1, 10.2, 10.3 and 20, respectively, and each
is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired:
Not applicable.
(b) Pro forma financial information:
Not applicable.
(c) Exhibits:
2 Agreement and Plan of Merger dated as of September 23, 1996 among CLARCOR
Inc., CUAC Inc. and United Air Specialists, Inc.
10.1 Stockholder Agreement dated as of September 23, 1996 between CLARCOR Inc.
and Durwood G. Rorie, Jr.
2
<PAGE> 3
10.2 Stockholder Agreement dated as of September 23, 1996 between CLARCOR Inc.
and William A. Cheney.
10.3 Stockholder Agreement dated as of September 23, 1996 between CLARCOR Inc.
and Margaret Stewart Rorie.
20 Press release issued by CLARCOR Inc., dated September 23, 1996.
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.
CLARCOR INC.
September 23, 1996
/S/ LAWRENCE E. GLOYD
By:
Lawrence E. Gloyd
Chairman and Chief Executive
Officer
3
<PAGE> 4
EXHIBIT INDEX
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT PAGE
- ------ ------
<S> <C> <C>
2 Agreement and Plan of Merger dated as of September 23, 1996 among CLARCOR
Inc., CUAC Inc. and United Air Specialists, Inc...............................
10.1 Stockholder Agreement dated as of September 23, 1996 between CLARCOR Inc. and
Durwood G.Rorie, Jr...........................................................
10.2 Stockholder Agreement dated as of September 23, 1996 between CLARCOR Inc. and
William A. Cheney.............................................................
10.3 Stockholder Agreement dated as of September 23, 1996 between CLARCOR Inc. and
Margaret Stewart Rorie........................................................
20 Press release issued by CLARCOR Inc., dated September 23, 1996................
</TABLE>
4
<PAGE> 1
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
AMONG
CLARCOR INC.,
CUAC INC.
AND
UNITED AIR SPECIALISTS, INC.
DATED AS OF SEPTEMBER 23, 1996
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
THE MERGER
<TABLE>
<S> <C> <C>
Section 1.1 The Merger................................................................. 2
Section 1.2 Effective Time............................................................. 3
Section 1.3 Effects of the Merger...................................................... 4
Section 1.4 Articles of Incorporation and Regulations; Officers and Directors.......... 4
Section 1.5 Conversion of Securities................................................... 5
Section 1.6 Parent to Make Stock Certificates Available................................ 7
Section 1.7 Dividends; Transfer Taxes; Withholding..................................... 9
Section 1.8 No Fractional Shares....................................................... 11
Section 1.9 Return of Exchange Fund.................................................... 12
Section 1.10 Adjustment of Conversion Number............................................ 12
Section 1.11 No Further Ownership Rights in Company Common Stock........................ 13
Section 1.12 Closing of Company Transfer Books.......................................... 14
Section 1.13 Further Assurances......................................................... 14
Section 1.14 Closing.................................................................... 15
</TABLE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
<TABLE>
<S> <C> <C>
Section 2.1 Organization, Standing and Power........................................... 16
Section 2.2 Capital Structure.......................................................... 18
Section 2.3 Authority.................................................................. 19
Section 2.4 Consents and Approvals; No Violation....................................... 21
Section 2.5 SEC Documents and Other Reports............................................ 23
Section 2.6 Registration Statement and Proxy Statement................................. 24
Section 2.7 Absence of Certain Changes or Events....................................... 25
Section 2.8 No Existing Violation, Default, Etc........................................ 26
Section 2.9 Licenses and Permits....................................................... 28
Section 2.10 Environmental Matters...................................................... 29
Section 2.11 Tax Matters................................................................ 30
Section 2.12 Actions and Proceedings.................................................... 31
Section 2.13 Labor Matters.............................................................. 33
Section 2.14 Contracts.................................................................. 34
Section 2.15 ERISA...................................................................... 34
Section 2.16 Liabilities................................................................ 37
Section 2.17 Intellectual Properties.................................................... 37
Section 2.18 Propriety of Past Payments................................................. 38
Section 2.19 Takeover Statutes.......................................................... 39
Section 2.20 Pooling of Interests; Reorganization....................................... 39
Section 2.21 Operations of Sub.......................................................... 39
Section 2.22 Brokers.................................................................... 40
</TABLE>
<PAGE> 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
<TABLE>
<S> <C> <C>
Section 3.1 Organization, Standing and Power........................................... 40
Section 3.2 Capital Structure.......................................................... 41
Section 3.3 Authority.................................................................. 42
Section 3.4 Consents and Approvals; No Violation....................................... 43
Section 3.5 Company SEC Documents and Financial Statements............................. 45
Section 3.6 Registration Statement and Proxy Statement................................. 47
Section 3.7 Absence of Certain Changes or Events....................................... 48
Section 3.8 No Existing Violation, Default, Etc........................................ 49
Section 3.9 Licenses and Permits....................................................... 51
Section 3.10 Environmental Matters...................................................... 51
Section 3.11 Tax Matters................................................................ 52
Section 3.12 Actions and Proceedings.................................................... 53
Section 3.13 Labor Matters.............................................................. 55
Section 3.14 Contracts.................................................................. 56
Section 3.15 ERISA...................................................................... 56
Section 3.16 Liabilities................................................................ 59
Section 3.17 Intellectual Properties.................................................... 59
Section 3.18 Propriety of Past Payments................................................. 60
Section 3.19 Opinion of Financial Advisor............................................... 61
Section 3.20 Takeover Statutes.......................................................... 61
Section 3.21 Pooling of Interests; Reorganization....................................... 61
Section 3.22 Brokers.................................................................... 62
</TABLE>
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
<TABLE>
<S> <C> <C>
Section 4.1 Conduct of Business Pending the Merger..................................... 62
Section 4.2 No Solicitation............................................................ 71
Section 4.3 Third Party Standstill Agreements.......................................... 73
Section 4.4 Pooling of Interests; Reorganization....................................... 74
</TABLE>
ARTICLE V
ADDITIONAL AGREEMENTS
<TABLE>
<S> <C> <C>
Section 5.1 Stockholder Meeting........................................................ 74
Section 5.2 Preparation of the Registration Statement and the Proxy Statement.......... 75
Section 5.3 Comfort Letters............................................................ 76
Section 5.4 Access to Information...................................................... 77
Section 5.5 Compliance with the Securities Act......................................... 78
Section 5.6 Stock Exchange Listings.................................................... 79
Section 5.7 Fees and Expenses.......................................................... 79
Section 5.8 Company Stock Options...................................................... 83
Section 5.9 Reasonable Best Efforts; Pooling of Interests.............................. 84
Section 5.10 Public Announcements....................................................... 87
Section 5.11 Real Estate Transfer and Gains Tax......................................... 87
Section 5.12 Takeover Statutes.......................................................... 88
Section 5.13 Indemnification; Directors and Officers Insurance.......................... 88
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 5.14 Notification of Certain Matters............................................ 89
Section 5.15 Reorganization Status...................................................... 89
Section 5.16 Employee Benefit Plans..................................................... 90
</TABLE>
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
<TABLE>
<S> <C> <C>
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger................. 90
Section 6.2 Conditions to Obligation of the Company to Effect the Merger............... 92
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger........... 103
</TABLE>
ARTICLE VII
TERMINATION; AMENDMENT AND WAIVER
<TABLE>
<S> <C> <C>
Section 7.1 Termination................................................................ 113
Section 7.2 Effect of Termination...................................................... 119
Section 7.3 Amendment.................................................................. 119
Section 7.4 Waiver..................................................................... 120
</TABLE>
ARTICLE VIII
GENERAL PROVISIONS
<TABLE>
<S> <C> <C>
Section 8.1 Non-Survival of Representations and Warranties............................. 121
Section 8.2 Notices.................................................................... 121
Section 8.3 Interpretation............................................................. 123
Section 8.4 Counterparts............................................................... 124
Section 8.5 Entire Agreement; No Third-Party Beneficiaries............................. 124
Section 8.6 Governing Law.............................................................. 124
Section 8.7 Assignment................................................................. 125
Section 8.8 Severability............................................................... 125
Section 8.9 Enforcement of this Agreement.............................................. 125
</TABLE>
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of September 23, 1996 (this
"Agreement") among CLARCOR Inc., a Delaware corporation ("Parent"), CUAC Inc.,
an Ohio corporation and a wholly-owned subsidiary of Parent ("Sub"), and United
Air Specialists, Inc., an Ohio corporation (the "Company") (Sub and the Company
being hereinafter collectively referred to as the "Constituent Corporations").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved and declared advisable the merger of Sub into the Company (the
"Merger"), upon the terms and subject to the conditions herein set forth,
whereby each issued and outstanding share of Common Stock, without par value, of
the Company ("Company Common Shares"), not owned directly or indirectly by
Parent or the Company, will be converted into shares of Common Stock, par value
$1 per share, of Parent ("Parent Common Stock");
WHEREAS, the respective Boards of Directors of Parent and the Company have
determined that the Merger is in furtherance of and consistent with their
respective long-term business strategies and is fair to and in the best
interests of their respective stockholders;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, it is intended that the Merger shall be recorded for accounting
purposes as a pooling of interests.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
herein set forth, and in accordance with the General Corporation Law of the
State of Ohio (the "OGCL"), Sub shall be merged with and into the Company at the
Effective Time (as hereinafter defined). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub in accordance with the OGCL.
Notwithstanding any provision of this Agreement to the contrary, at the election
of Parent, any direct wholly-owned Subsidiary (as hereinafter defined) of Parent
may be substituted for Sub as a constituent corporation in the Merger. In such
event, the parties hereto agree to execute an appropriate amendment to this
Agreement, in form and substance reasonably satisfactory to Parent and the
Company, in order to reflect such substitution.
Section 1.2 EFFECTIVE TIME. The Merger shall become effective when a
certificate of merger (the "Certificate of Merger"), executed in accordance with
the relevant provisions of the OGCL, is accepted for filing by the Secretary of
State of the State of Ohio; PROVIDED, HOWEVER, that, upon the mutual consent of
the Constituent Corporations, the Certificate of Merger may provide for a later
date of effectiveness of the Merger, but not to exceed 30 days after the date
that the Certificate of Merger is accepted for filing. When used in this
Agreement, the term "Effective Time" means the later of the date and time at
which the Certificate of Merger is accepted for filing or such later date and
time as is established by the Certificate of Merger. The filing of the
Certificate of Merger shall be made as soon as practicable after the
satisfaction or waiver of the conditions to the Merger herein set forth.
Section 1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 1701.82 of the OGCL.
<PAGE> 6
Section 1.4 ARTICLES OF INCORPORATION AND REGULATIONS; OFFICERS AND
DIRECTORS. (a) The Articles of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended at the Effective Time
as a result of the Merger so that the first sentence of Article Fourth thereof
reads in its entirety as follows: "The authorized capital stock of the
corporation shall be 1,000 shares of Common Stock, without par value". As so
amended, such Articles of Incorporation shall be the Articles of Incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The Regulations of the Company, as in effect immediately prior to
the Effective Time, shall be the Regulations of the Surviving Corporation
at the Effective Time as a result of the Merger until thereafter changed or
amended as provided therein or in the Articles of Incorporation of the
Surviving Corporation or as provided by applicable law.
Section 1.5 CONVERSION OF SECURITIES. As of the Effective Time, by virtue of
the Merger and without any action on the part of any shareholder of either of
the Constituent Corporations:
(a) Each issued and outstanding share of Common Stock, par value $1
per share, of Sub shall be converted into one share of Common Stock of the
Surviving Corporation.
(b) All Company Common Shares that are held in the treasury of the
Company or by any wholly-owned Subsidiary of the Company and any Company
Common Shares owned by Parent or by any wholly-owned Subsidiary of Parent
shall be cancelled and no capital stock of Parent or other consideration
shall be delivered in exchange therefor. (c) Subject to the provisions of
SECTIONS 1.8 and 1.10, each Company Common Share issued and outstanding
immediately prior to the Effective Time (other than shares to be cancelled
in accordance with SECTION 1.5(B)) shall be converted into .3698577 (such
number being hereinafter referred to as the "Conversion Number") shares of
validly issued, fully paid and nonassessable Parent Common Stock, including
the corresponding number of rights (such rights being hereinafter referred
to collectively as the "Parent Rights") to purchase shares of Series B
Junior Participating Preferred Stock of Parent (the "Parent Series B
Preferred Stock") pursuant to the Stockholders Rights Agreement dated as of
March 28, 1996 (the "Parent Rights Agreement") between Parent and First
Chicago Trust Company of New York, as Rights Agent. Prior to the
Distribution Date (as defined in the Parent Rights Agreement), all
references in this Agreement to Parent Common Stock to be received in
accordance with the Merger shall be deemed to include the associated Parent
Rights. All such Company Common Shares, when so converted, shall no longer
be outstanding and shall automatically be cancelled and retired; and each
holder of a certificate representing any such Company Common Shares shall
cease to have any rights with respect thereto, except the right to receive
(i) certificates representing the shares of Parent Common Stock into which
such Company Common Shares have been converted, (ii) any dividends and
other distributions in accordance with SECTION 1.7 and (iii) any cash,
without interest, to be paid in lieu of any fractional share of Parent
Common Stock in accordance with SECTION 1.8.
(d) Notwithstanding any other provisions of this Agreement to the
contrary, Company Common Shares that are outstanding immediately prior to
the Effective Time and which are held by shareholders who shall not have
voted in favor of the Merger or consented thereto in writing and who shall
have demanded properly in writing appraisal for such shares in accordance
with Section 1701.85 of the OGCL (collectively, the "Dissenting Shares")
shall not be converted into or represent the right to receive the
consideration provided in SECTION 1.5(C). Such shareholders shall be
entitled to receive payment of the appraised value of such Company Common
Shares held by them in accordance with the provisions of such Section
1701.85, except that all Dissenting Shares held by shareholders who shall
have failed to perfect or who effectively shall have withdrawn or lost
their rights to appraisal of such Company Common Shares under such Section
1701.85 shall thereupon be deemed to have been converted into and to have
become exchangeable for, as of the Effective Time, the right to receive the
consideration, without any interest thereon, upon surrender of the
certificate or certificates that formerly evidenced such Company Common
Shares in the manner provided in SECTION 1.5(C).
<PAGE> 7
Section 1.6 PARENT TO MAKE STOCK CERTIFICATES AVAILABLE. (a) EXCHANGE OF
CERTIFICATES. Parent shall authorize a commercial bank (or such other person or
persons as shall be acceptable to Parent and the Company) to act as exchange
agent hereunder (the "Exchange Agent"). As soon as practicable, but not later
than five business days after the Effective Time, Parent shall deposit with the
Exchange Agent, in trust for the holders of certificates (the "Company
Certificates") which immediately prior to the Effective Time represented Company
Common Shares converted in the Merger, certificates (the "Parent Certificates")
representing the shares of Parent Common Stock (such shares of Parent Common
Stock, together with any dividends or distributions with respect thereto in
accordance with SECTION 1.7, being hereinafter referred to as the "Exchange
Fund") issuable pursuant to SECTION 1.5(C) in exchange for the outstanding
Company Common Shares.
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time, the
Exchange Agent shall mail to each record holder of a Company Certificate a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Company Certificates shall pass, only
upon actual delivery thereof to the Exchange Agent and shall contain
instructions for use in effecting the surrender of the Company Certificates
in exchange for the property described in the next sentence). Upon
surrender for cancellation to the Exchange Agent of all Company
Certificate(s) held by any record holder of a Company Certificate, together
with such letter of transmittal duly executed, such holder shall be
entitled to receive in exchange therefor a Parent Certificate representing
the number of whole shares of Parent Common Stock into which the Company
Common Shares represented by the surrendered Company Certificate(s) shall
have been converted at the Effective Time pursuant to this ARTICLE I, cash
in lieu of any fractional share of Parent Common Stock in accordance with
SECTION 1.8 and certain dividends and other distributions in accordance
with SECTION 1.7; and the Company Certificate(s) so surrendered shall
forthwith be cancelled.
Section 1.7 DIVIDENDS; TRANSFER TAXES; WITHHOLDING. No dividends or other
distributions that are declared on or after the Effective Time on Parent Common
Stock, or are payable to the holders of record thereof on or after the Effective
Time, shall be paid to any person entitled by reason of the Merger to receive
Parent Certificates representing Parent Common Stock, and no cash payment in
lieu of any fractional share of Parent Common Stock shall be paid to any such
person pursuant to SECTION 1.8, until such person shall have surrendered its
Company Certificate(s) as provided in SECTION 1.6. Subject to applicable law,
there shall be paid to each person receiving a Parent Certificate representing
such shares of Parent Common Stock: (i) at the time of such surrender or as
promptly as practicable thereafter, the amount of any dividends or other
distributions theretofore paid with respect to the shares of Parent Common Stock
represented by such Parent Certificate and having a record date on or after the
Effective Time and a payment date prior to such surrender; and (ii) at the
appropriate payment date or as promptly as practicable thereafter, the amount of
any dividends or other distributions payable with respect to such shares of
Parent Common Stock and having a record date on or after the Effective Time but
prior to such surrender and a payment date on or subsequent to such surrender.
In no event shall the person entitled to receive such dividends or other
distributions be entitled to receive interest on such dividends or other
distributions. If any cash or Parent Certificate representing shares of Parent
Common Stock is to be paid to or issued in a name other than that in which the
Company Certificate surrendered in exchange therefor is registered, it shall be
a condition of such exchange that the Company Certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the issuance of such Parent Certificate and
the distribution of such cash payment in a name other than that of the
registered holder of the Company Certificate so surrendered, or shall establish
to the satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Parent or the Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Company Common Shares such amounts as Parent or the Exchange Agent
are required to deduct and withhold under the Code, or any provision of state,
local or foreign tax law, with respect to the making of such payment. To the
extent that amounts are so withheld by Parent or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Company Common Shares in respect of whom such
deduction and withholding was made by Parent or the Exchange Agent.
<PAGE> 8
Section 1.8 NO FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Company Certificates pursuant to this ARTICLE I; no dividend or
other distribution by Parent and no stock split shall relate to any such
fractional share; and no such fractional share shall entitle the record or
beneficial owner thereof to vote or to any other rights of a stockholder of
Parent. In lieu of any such fractional share, each holder of Company Common
Shares who would otherwise have been entitled thereto upon the surrender of
Company Certificate(s) for exchange pursuant to this ARTICLE I will be paid an
amount in cash (without interest) rounded to the nearest whole cent, determined
by multiplying (i) the per share closing price on the New York Stock Exchange,
Inc. (the "NYSE") of Parent Common Stock (as reported in the NYSE Composite
Transactions) on the date on which the Effective Time shall occur (or, if the
Parent Common Stock shall not trade on the NYSE on such date, the first day of
trading in Parent Common Stock on the NYSE thereafter) by (ii) the fractional
share to which such holder would otherwise be entitled.
Section 1.9 RETURN OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the former holders of Company Common Shares for
one year after the Effective Time shall be delivered to Parent, upon its
request, and any such former holders who have not theretofore complied with this
ARTICLE I shall thereafter look only to Parent for payment of their claim for
shares of Parent Common Stock, any cash in lieu of fractional shares of Parent
Common Stock and any dividends or distributions with respect to such shares of
Parent Common Stock. Neither Parent nor the Company shall be liable to any
former holder of Company Common Shares for any such shares of Parent Common
Stock held in the Exchange Fund which is delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
Section 1.10 ADJUSTMENT OF CONVERSION NUMBER. In the event that the sum
of the aggregate number of Company Common Shares issued and outstanding
immediately prior to the Effective Time (other than shares to be cancelled in
accordance with SECTION 1.5(B)) and the aggregate number of Company Common
Shares issuable in connection with the Company Stock Options which are
outstanding immediately prior to the Effective Time pursuant to the Company
Stock Plans (as defined in SECTION 5.8) is either less than or greater than
3,269,641, then the Conversion Number shall be adjusted such that it will equal
the quotient, rounded up or down to the seventh decimal place, obtained by
dividing 1,209,302 by such sum, and all references in this Agreement to the
Conversion Number shall be deemed to be to the Conversion Number as so adjusted.
In addition, in the event of any reclassification, stock split or stock dividend
with respect to Parent Common Stock, any change or conversion of Parent Common
Stock into other securities or any other dividend or distribution with respect
to Parent Common Stock (other than normal quarterly cash dividends as the same
may be modified from time to time in the ordinary course), or if a record date
with respect to any of the foregoing should occur, prior to the Effective Time,
appropriate and proportionate adjustments shall be made to the Conversion
Number, and thereafter all references in this Agreement to the Conversion Number
shall be deemed to be to the Conversion Number as so adjusted.
Section 1.11 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Parent Common Stock issued upon the surrender for exchange of any
Company Certificate in accordance with the terms hereof (including any cash paid
pursuant to SECTION 1.7 or 1.8) shall be deemed to have been issued (and paid)
in full satisfaction of all rights pertaining to the Company Common Shares
represented by such Company Certificate.
Section 1.12 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time,
the stock transfer books of the Company shall be closed, and no transfer of
Company Common Shares shall thereafter be made. If, after the Effective Time,
Company Certificates are presented to the Surviving Corporation, they shall be
cancelled and exchanged as provided in this ARTICLE I.
Section 1.13 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 (i) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title and interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations or (ii) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be
<PAGE> 9
authorized to execute and deliver, in the name and on behalf of either
Constituent Corporation, all such deeds, bills of sale, assignments and
assurances and to do, in the name and on behalf of either Constituent
Corporation, all such other acts and things as may be necessary, desirable or
proper to vest, perfect or confirm the Surviving Corporation's right, title and
interest in, to and under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
Section 1.14 CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Sidley &
Austin, One First National Plaza, Chicago, Illinois at 10:00 a.m., local time,
on the day on which the last of the conditions set forth in ARTICLE VI shall
have been fulfilled or waived, or at such other time and place as Parent and the
Company may agree, but in no event prior to the fifteenth day after the date of
the Company Stockholder Meeting (as hereinafter defined).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 2.1 ORGANIZATION, STANDING AND POWER. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Ohio, and all of its outstanding
shares of capital stock are owned directly by Parent; and each of Parent and Sub
has the requisite corporate power and authority to carry on its business as now
being conducted. Each Subsidiary of Parent is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate power and authority to
carry on its business as now being conducted. Parent and each of its
Subsidiaries are duly qualified to do business, and are in good standing, in
each jurisdiction where the character of their properties owned or held under
lease or the nature of their activities makes such qualification necessary,
except where the failure to be so qualified would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent. For
purposes of this Agreement: (i) "Material Adverse Change" or "Material Adverse
Effect" means, when used with respect to Parent or the Company, as the case may
be, any change or effect that is or would reasonably be expected (so far as can
be foreseen at the time) to be materially adverse to the business, properties,
assets, liabilities, condition (financial or otherwise) or results of operations
of Parent and its Subsidiaries taken as a whole, or the Company and its
Subsidiaries taken as a whole, as the case may be; provided, however, that (A)
no Material Adverse Change or Material Adverse Effect shall be deemed to have
occurred by reason of a change or effect resulting from general economic
conditions, general industry conditions or a general deterioration in the
financial markets and (B) if the Company's results of operations for the first
and second quarters of fiscal year 1997 are not materially less than the
forecasted results of operations for such quarters set forth in the forecasts
previously delivered by the Company to Parent and included in the Company Letter
(as hereinafter defined), such results shall not be considered to be a Material
Adverse Change or a Material Adverse Effect; and (ii) "Subsidiary" means any
corporation, partnership, joint venture or other legal entity of which Parent or
the Company, as the case may be (either alone or through or together with any
other Subsidiary), owns, directly or indirectly, 50% or more of the capital
stock or other equity interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation, partnership, joint venture or other legal entity.
Section 2.2 CAPITAL STRUCTURE. As of the date hereof, the authorized
capital stock of Parent consists of: 30,000,000 shares of Parent Common Stock;
and 1,300,000 shares of Preferred Stock, without par value (the "Parent
Preferred Stock"), of which 300,000 shares have been designated as "Series B
Junior Participating Preferred Stock" (the "Parent Series B Preferred Stock").
At the close of business on August 30, 1996, 14,877,612 shares of Parent Common
Stock were issued and outstanding, all of which were validly issued, are fully
paid and nonassessable and are free of preemptive rights. No shares of Parent
Preferred Stock have been issued. All of the shares of Parent Common Stock
issuable in exchange for
<PAGE> 10
Company Common Shares at the Effective Time in accordance with this Agreement
will be, when so issued, duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights. As of the date of this Agreement,
except for this Agreement, except (a) as provided in Parent's Restated
Certificate of Incorporation, (b) for the Parent Rights, and (c) except for
stock options covering not in excess of 1,334,800 shares of Parent Common Stock
(collectively, the "Parent Stock Options"), there are no options, warrants,
calls, rights or agreements to which Parent or any of its Subsidiaries is a
party or by which any of them is bound obligating Parent or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of Parent or any such Subsidiary or
obligating Parent or any such Subsidiary to grant, extend or enter into any such
option, warrant, call, right or agreement. Each outstanding share of capital
stock of each Subsidiary of Parent is duly authorized, validly issued, fully
paid and nonassessable and, except as disclosed in the Parent SEC Documents or
the Parent Letter (as such terms are hereinafter defined), each such share is
beneficially owned by Parent or another Subsidiary of Parent, free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever. Exhibit 21 to Parent's Annual Report on
Form 10-K for the fiscal year ended December 2, 1995, as filed with the
Securities and Exchange Commission (the "SEC") (the "Parent Annual Report"), is
a true, accurate and correct statement in all material respects of all of the
information required to be set forth therein by the regulations of the SEC.
Section 2.3 AUTHORITY. The Board of Directors of Parent has declared as
advisable and fair to and in the best interests of the stockholders of Parent
the Merger, and the issuance (the "Parent Share Issuance") of shares of Parent
Common Stock in accordance with the Merger and has approved this Agreement. The
Board of Directors and sole shareholder of Sub has approved this Agreement.
Parent has all requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. Sub has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
Sub and the consummation by Parent and Sub of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Parent and Sub. This Agreement has been duly executed and delivered by Parent
and Sub and (assuming the valid authorization, execution and delivery thereof by
the Company and the validity and binding effect thereof on the Company)
constitutes the valid and binding obligation of Sub and Parent, enforceable
against Sub and Parent in accordance with its terms. The Parent Share Issuance
and the filing of a registration statement on Form S-4 with the SEC by Parent
under the Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"), for the purpose of
registering the shares of Parent Common Stock to be issued in connection with
the Merger (together with any amendments or supplements thereto, whether prior
to or after the effective date thereof, the "Registration Statement") have been
duly authorized by Parent's Board of Directors.
Section 2.4 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in
the letter dated and delivered to the Company on the date hereof (the "Parent
Letter"), which relates to this Agreement and is designated therein as being the
Parent Letter, the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of Parent
or any of its Subsidiaries under: (i) any provision of the Restated Certificate
of Incorporation or By-laws of Parent or the comparable charter or organization
documents or by-laws of any of its Subsidiaries as amended, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease, agreement, instrument,
permit, concession, franchise or license applicable to Parent or any of its
Subsidiaries or (iii) any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Parent or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such violations, defaults, rights, liens, security interests, charges
or encumbrances that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Parent and would not materially
impair the ability of Parent or Sub to perform their respective obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby. No filing or registration with, or authorization, consent or approval
of, any domestic (federal and state), foreign or supranational court,
commission, governmental body,
<PAGE> 11
regulatory agency, authority or tribunal (a "Governmental Entity") is required
by or with respect to Parent or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by Sub and Parent or is necessary for
the consummation of the Merger and the other transactions contemplated by this
Agreement, except: (i) in connection, or in compliance, with the provisions of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Securities Act and the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act"), (ii) for the filing of the Certificate of Merger with the Secretary of
State of the State of Ohio, (iii) for such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
the laws of any foreign country in which the Company or any of its Subsidiaries
conducts any business or owns any property or assets and (iv) for such other
consents, orders, authorizations, registrations, declarations and filings the
failure of which to obtain or make would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent and would not
materially impair the ability of Parent or Sub to perform their respective
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby.
Section 2.5 SEC DOCUMENTS AND OTHER REPORTS. Parent has filed all required
documents with the SEC since January 1, 1991 (the "Parent SEC Documents"). As of
their respective dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and none of the Parent SEC Documents contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of Parent included in the Parent SEC Documents complied as
to form in all material respects with the applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of the unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto) and fairly present the consolidated
financial position of Parent and its consolidated Subsidiaries as at the
respective dates thereof and the consolidated results of their operations and
their consolidated cash flows for the respective periods then ended (subject, in
the case of the unaudited statements, to normal year-end audit adjustments and
to any other adjustments described therein). Since December 2, 1995, Parent has
not made any change in the accounting practices or policies applied in the
preparation of its financial statements.
Section 2.6 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by Parent or Sub for inclusion or incorporation by
reference in the Registration Statement or the proxy statement/prospectus
included therein (together with any amendments or supplements thereto, the
"Proxy Statement") relating to the Company Stockholder Meeting (as defined in
SECTION 5.1) will (i) in the case of the Registration Statement, at the time it
becomes effective, 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 not misleading or (ii) in the case of the Proxy
Statement, at the time of the mailing of the Proxy Statement, the time of the
Company Stockholder Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Parent, its directors and
officers or any of its Subsidiaries shall occur which is required to be
described in the Proxy Statement or the Registration Statement, such event shall
be so described, and an appropriate amendment or supplement shall be promptly
filed with the SEC and, to the extent required by law, disseminated to the
shareholders of the Company. The Registration Statement will comply (with
respect to Parent) as to form in all material respects with the provisions of
the Securities Act, and the Proxy Statement will comply (with respect to Parent)
as to form in all material respects with the provisions of the Exchange Act.
Section 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Parent SEC Documents or the Parent Letter, since December 2, 1995: (i)
Parent and its Subsidiaries have not incurred any material liability or
obligation (indirect, direct or contingent), or entered into any material oral
or written agreement or other transaction, that is not in the ordinary course of
business or that would reasonably be
<PAGE> 12
expected to result in a Material Adverse Effect on Parent; (ii) Parent and its
Subsidiaries have not sustained any loss or interference with their business or
properties from fire, flood, windstorm, accident or other calamity (whether or
not covered by insurance) that has had or that would reasonably be expected to
have a Material Adverse Effect on Parent; (iii) there has been no material
change in the indebtedness of Parent and its Subsidiaries, no change in the
outstanding shares of capital stock of Parent except for the issuance of shares
of Parent Common Stock pursuant to the Parent Stock Options and no dividend or
distribution of any kind declared, paid or made by Parent on any class of its
capital stock except for regular quarterly dividends of not more than $0.1625
per share on Parent Common Stock and (iv) there has been no event causing a
Material Adverse Effect on Parent, nor any development that would, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect on Parent; and except as set forth in the Parent Letter, during the
period from December 2, 1995 through the date of this Agreement, neither Parent
nor any of its Subsidiaries has taken any action that, if taken during the
period from the date of this Agreement through the Effective Time, would
constitute a breach of SECTION 4.1(A).
Section 2.8 NO EXISTING VIOLATION, DEFAULT, ETC. Neither Parent nor any of its
Subsidiaries is in violation of (i) its charter or other organization documents
or by-laws, (ii) any applicable law, ordinance or administrative or governmental
rule or regulation or (iii) any order, decree or judgment of any Governmental
Entity having jurisdiction over Parent or any of its Subsidiaries, except for
any violations that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Parent. The properties, assets and
operations of Parent and its Subsidiaries are in compliance in all material
respects with all applicable federal, state, local and foreign laws, rules and
regulations, orders, decrees, judgments, permits and licenses relating to public
and worker health and safety (collectively, "Worker Safety Laws") and the
protection and clean-up of the environment and activities or conditions related
thereto, including, without limitation, those relating to the generation,
handling, disposal, transportation or release of hazardous materials
(collectively, "Environmental Laws"), except for any violations that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Parent. With respect to such properties, assets and
operations, including any previously owned, leased or operated properties,
assets or operations, there are no past, present or reasonably anticipated
future events, conditions, circumstances, activities, practices, incidents,
actions or plans of Parent or any of its Subsidiaries that may interfere with or
prevent compliance or continued compliance in all material respects with
applicable Worker Safety Laws and Environmental Laws, other than any such
interference or prevention as would not, individually or in the aggregate with
any such other interference or prevention, reasonably be expected to have a
Material Adverse Effect on Parent. The term "hazardous materials" shall mean
those substances that are regulated by or form the basis for liability under any
applicable Environmental Laws.
Except as may be set forth in the Parent SEC Documents or the Parent
Letter, prior to the date of this Agreement, no event of default or event that,
but for the giving of notice or lapse of time, or both, would constitute an
event of default exists or, upon the consummation by Parent of the transactions
contemplated by this Agreement, will exist under any loan or credit agreement,
note, bond, mortgage, indenture or guarantee of indebtedness for borrowed money
or any other material lease, agreement or instrument to which Parent or any of
its Subsidiaries is a party or by which Parent or any such Subsidiary or any of
their respective properties, assets or business is bound.
Section 2.9 LICENSES AND PERMITS. Parent and its Subsidiaries have
received such certificates, permits, licenses, franchises, consents, approvals,
orders, authorizations and clearances from appropriate Governmental Entities
(the "Parent Licenses") as are necessary to own or lease and operate their
respective properties and to conduct their respective businesses substantially
in the manner described in the Parent SEC Documents and as currently owned or
leased and conducted, and all such Parent Licenses are valid and in full force
and effect, except for any such certificates, permits, licenses, franchises,
consents, approvals, orders, authorizations and clearances which the failure to
have or to be in full force and effect would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent. Parent
and its Subsidiaries are in compliance in all material respects with their
respective obligations under the Parent Licenses, with only such exceptions as,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse
<PAGE> 13
Effect on Parent, and no event has occurred that allows, or after notice or
lapse of time, or both, would allow, revocation or termination of any material
Parent License.
Section 2.10 ENVIRONMENTAL MATTERS. Except as set forth in the Parent SEC
Documents or the Parent Letter, neither Parent nor any of its Subsidiaries is
the subject of any federal, state, local, foreign or provincial investigation,
and neither Parent nor any of its Subsidiaries has received any notice or claim
(or is aware of any facts that would form a reasonable basis for any claim), or
entered into any negotiations or agreements with any other person, relating to
any liability or remedial action, or potential liability or remedial action,
under any Environmental Laws that would reasonably be expected to have a
Material Adverse Effect on Parent; and there are no pending, reasonably
anticipated or, to the knowledge of Parent, threatened actions, suits or
proceedings against or affecting Parent, any of its Subsidiaries or any of their
respective properties, assets or operations asserting any such liability or
seeking any such remedial action in connection with any Environmental Laws that
would reasonably be expected to have a Material Adverse Effect on Parent.
Section 2.11 TAX MATTERS. Except as otherwise set forth in the Parent Letter:
(i) Parent and each of its Subsidiaries have filed all federal, and all material
state, local and foreign, Tax Returns (as hereinafter defined), required to have
been filed on or prior to the date hereof or appropriate extensions therefor
have been properly obtained; (ii) all Taxes (as hereinafter defined), shown to
be due on such Tax Returns have been timely paid or extensions for payment have
been duly obtained, or such Taxes are being timely and properly contested; (iii)
neither Parent nor any of its Subsidiaries has waived any statute of limitations
in respect of its Taxes; (iv) any such Tax Returns relating to federal and state
income Taxes have been audited by the Internal Revenue Service or the
appropriate state taxing authority or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired; (v) no
issues that have been raised in writing by the relevant taxing authority in
connection with the audit of such Tax Returns are currently pending; and (vi)
all deficiencies asserted or assessments made as a result of any audit of such
Tax Returns by any taxing authority have been paid in full or adequately
provided for or are being timely and properly contested. For purposes of this
Agreement: (i) "Taxes" means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed by
any Governmental Entity and (ii) "Tax Return" means any return, report or
similar statement (including any attached schedules) required to be filed with
respect to any Tax, including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax. The charges,
accruals and reserves on the books of Parent and its Subsidiaries in respect of
Taxes and other governmental charges are adequate. To the knowledge of Parent,
the representations set forth in the Parent Tax Certificate (as defined in
SECTION 6.2(B)) attached to the Parent Letter are true and correct in all
material respects.
Section 2.12 ACTIONS AND PROCEEDINGS. Except as set forth in the Parent
SEC Documents or the Parent Letter, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against or affecting
Parent or any of its Subsidiaries, any of its or their current or former
directors, officers, employees, consultants, agents or stockholders, as such,
any of its or their properties, assets or business or any Parent Plan (as
defined in SECTION 2.15) that would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Parent. Except as set forth in
the Parent Letter, there are no actions, suits or claims or legal,
administrative or arbitration proceedings or investigations pending or, to the
knowledge of Parent, threatened against or affecting Parent or any of its
Subsidiaries, any of its or their current or former directors, officers,
employees, consultants, agents or stockholders, as such, any of its or their
properties, assets or business or any Parent Plan that if brought (if not now
pending) would reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Parent. There are no actions, suits or claims or
legal, administrative or arbitration proceedings or investigations or labor
disputes pending or, to the knowledge of Parent, threatened against or affecting
Parent or any of its Subsidiaries, any of its or their current or former
directors, officers, employees, consultants, agents or stockholders, as such,
any of its or their properties, assets or business or any Parent Plan relating
to the transactions contemplated by this Agreement.
Section 2.13 LABOR MATTERS. Except as disclosed in the Parent SEC
Documents or the Parent Letter, neither Parent nor any of its Subsidiaries has
any labor contracts, collective bargaining agreements or material
<PAGE> 14
employment or consulting agreements with any persons employed by or otherwise
performing services primarily for Parent or any of its Subsidiaries (the "Parent
Business Personnel") or any representative of any Parent Business Personnel.
Except as disclosed in the Parent SEC Documents or the Parent Letter, neither
Parent nor any of its Subsidiaries has engaged in any unfair labor practice with
respect to Parent Business Personnel, and there is no unfair labor practice
complaint pending against Parent or any of its Subsidiaries with respect to
Parent Business Personnel. There is no labor strike, dispute, slowdown or
stoppage pending or, to the knowledge of Parent, threatened against or affecting
Parent or any of its Subsidiaries that would reasonably be expected to have a
Material Adverse Effect on Parent, and neither Parent nor any of its
Subsidiaries has experienced any primary work stoppage or other material labor
difficulty involving its employees during the last five years that has had or
would reasonably be expected to have a Material Adverse Effect on Parent. Parent
is in compliance with the requirements of the Workers Adjustment and Retraining
Notification Act (the "WARN Act") and has no liabilities pursuant to the WARN
Act.
Section 2.14 CONTRACTS. All of the material contracts of Parent and its
Subsidiaries that are required to be described in the Parent SEC Documents or to
be filed as exhibits thereto have been described or filed as required. Neither
Parent or any of its Subsidiaries nor, to the knowledge of Parent, any other
party is in breach of or default under any such contracts which are currently in
effect, except for such breaches and defaults which would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent.
Section 2.15 ERISA. Each Parent Plan complies in all material respects
with the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
the Code and all other applicable laws and administrative or governmental rules
and regulations. No "reportable event" (within the meaning of Section 4043 of
ERISA) has occurred with respect to any Parent Plan for which the 30-day notice
requirement has not been waived (other than with respect to the transactions
contemplated by this Agreement), and no condition exists which would subject
Parent or any ERISA Affiliate (as hereinafter defined) to any fine under Section
4071 of ERISA; except as disclosed in the Parent Letter, neither Parent nor any
of its ERISA Affiliates has withdrawn from any Parent Plan or Parent
Multiemployer Plan (as hereinafter defined) or has taken, or is currently
considering taking, any action to do so; and no action has been taken, or is
currently being considered, to terminate any Parent Plan subject to Title IV of
ERISA. No Parent Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived. To the knowledge of Parent, there are no actions, suits or claims
pending or threatened (other than routine claims for benefits) with respect to
any Parent Plan which would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent. Neither Parent nor any of
its ERISA Affiliates has incurred or would reasonably be expected to incur any
material liability under or pursuant to Title IV of ERISA. No prohibited
transactions described in Section 406 of ERISA or Section 4975 of the Code have
occurred which would reasonably be expected to result in material liability to
Parent or its Subsidiaries. Except as set forth in the Parent Letter, all Parent
Plans that are intended to be qualified under Section 401(a) of the Code have
received a favorable determination letter as to such qualification from the
Internal Revenue Service, and no event has occurred, either by reason of any
action or failure to act, which would cause the loss of any such qualification.
Parent is not aware of any reason why any Parent Plan is not so qualified in
operation. Neither Parent nor any of its ERISA Affiliates has been notified by
any Parent Multiemployer Plan that such Parent Multiemployer Plan is currently
in reorganization or insolvency under and within the meaning of Section 4241 or
4245 of ERISA or that such Parent Multiemployer Plan intends to terminate or has
been terminated under Section 4041A of ERISA. Parent and its Subsidiaries have
complied with the health care continuation requirements of Part 6 of Title I of
ERISA. Except as set forth in the Parent Letter, the execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof will not, result in an increase
in the amount of compensation or benefits or accelerate the vesting or timing of
payment of any compensation or benefits payable by Parent or its Subsidiaries to
or in respect of any employee or other person. As used in this Agreement: (i)
"Parent Plan" means a "pension plan" (as defined in Section 3(2) of ERISA, other
than a Parent Multiemployer Plan) or a "welfare plan" (as defined in Section
3(1) of ERISA) established or maintained by Parent or any of its ERISA
Affiliates or to which Parent or any of its ERISA Affiliates has contributed or
otherwise may have any liability; (ii) "Parent Multiemployer Plan" means
<PAGE> 15
a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) to which
Parent or any of its ERISA Affiliates is or has been obligated to contribute or
otherwise may have any liability; and (iii) with respect to any person, "ERISA
Affiliate" means any trade or business (whether or not incorporated) which is
under common control or would be considered a single employer with such person
pursuant to Section 414(b), (c), (m) or (o) of the Code and the regulations
promulgated thereunder or pursuant to Section 4001(b) of ERISA and the
regulations promulgated thereunder.
Section 2.16 LIABILITIES. Except as fully reflected or reserved against
in the consolidated financial statements included in the Parent Annual Report to
Stockholders for the fiscal year ended December 2, 1995, or disclosed in the
footnotes thereto, Parent and its Subsidiaries had no liabilities (including,
without limitation, Tax liabilities) at the date of such consolidated financial
statements, absolute or contingent, that would reasonably be expected to have a
Material Adverse Effect on Parent or not incurred in the ordinary course of
business. Except as so reflected, reserved or disclosed, Parent and its
Subsidiaries have no commitments which would reasonably be expected to have a
Material Adverse Effect on Parent.
Section 2.17 INTELLECTUAL PROPERTIES. All of the material patents,
trademarks, trademark registrations, servicemarks, mailing lists, trade names,
copyrights and other proprietary intellectual property rights that are owned by
Parent and its Subsidiaries or used in their respective businesses are valid and
in full force and effect. Neither Parent nor any of its Subsidiaries is
infringing upon, or otherwise violating, the rights of any person with respect
to any material patent, patent right, trademark, servicemark, software license,
software use agreement, license trade name, copyright or registration thereof.
Section 2.18 PROPRIETY OF PAST PAYMENTS. Since January 1, 1991: (i) no
funds or assets of Parent or any of its Subsidiaries have been used for illegal
purposes, (ii) no unrecorded fund or assets of Parent or any of its Subsidiaries
has been established for any purpose, (iii) no accumulation or use of the
corporate funds of Parent or any of its Subsidiaries has been made without being
properly accounted for on the respective books and records of Parent or such
Subsidiary, (iv) all payments by or on behalf of Parent or any of its
Subsidiaries have been duly and properly recorded and accounted for on the books
and records of Parent and its Subsidiaries, (v) no false or artificial entry has
been made on the books and records of Parent or any of its Subsidiaries for any
reason, (vi) no payment has been made by or on behalf of Parent or any of its
Subsidiaries with the understanding that any part of such payment is to be used
for any purpose other than that described in the documents supporting such
payment and (vii) neither Parent nor any of its Subsidiaries has made any
illegal contributions to any political party or candidate, either domestic or
foreign, except for such uses, payments, contributions or actions which, or the
cessation of which, would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent or result in material adverse
publicity for Parent.
Section 2.19. TAKEOVER STATUTES. The Board of Directors of Parent has
duly taken all action (which is valid and binding on Parent), to the extent
necessary, to provide a valid and irrevocable exemption from Section 203 of the
Delaware General Corporation Law and Article Eleventh of the Restated
Certificate of Incorporation of Parent for all of the transactions contemplated
by this Agreement. No "fair price," "moratorium," "control share acquisition" or
similar takeover statute or regulation enacted under any federal or state or
other foreign law ("Takeover Statute") applicable to Parent or Sub is applicable
to the Merger or the other transactions contemplated hereby.
Section 2.20 POOLING OF INTERESTS; REORGANIZATION. To the knowledge of
Parent after due investigation, neither Parent nor any of its Subsidiaries has
(i) taken any action or failed to take any action which action or failure would
jeopardize the treatment of the Merger as a pooling of interests for accounting
purposes or (ii) taken any action or failed to take any action which action or
failure would jeopardize the qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
Section 2.21 OPERATIONS OF SUB. Sub has been formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
<PAGE> 16
Section 2.22 BROKERS. No broker, investment banker or other person is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 3.1 ORGANIZATION, STANDING AND POWER. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being conducted.
Except as disclosed in the Company Letter (as hereinafter defined), the Company
and each of its Subsidiaries are duly qualified to do business, and are in good
standing, in each jurisdiction where the character of their properties owned or
held under lease or the nature of their activities makes such qualification
necessary, except where the failure to be so qualified would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
Section 3.2 CAPITAL STRUCTURE. As of the date hereof, the authorized
capital stock of the Company consists of: 4,000,000 Company Common Shares. On
the date hereof, 2,908,828 Company Common Shares were issued and outstanding,
all of which were validly issued, are fully paid and nonassessable and are free
of preemptive rights. As of the date of this Agreement, except as provided in
the Company's Articles of Incorporation, as amended, except as set forth in the
Company Letter (as hereinafter defined), and except for stock options issued
prior to the date hereof covering not in excess of 360,813 Company Common Shares
(collectively, the "Company Stock Options"), there are no options, warrants,
calls, rights or agreements to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of the Company or any such Subsidiary
or obligating the Company or any such Subsidiary to grant, extend or enter into
any such option, warrant, call, right or agreement. Each outstanding share of
capital stock of each Subsidiary of the Company is duly authorized, validly
issued, fully paid and nonassessable and, except as disclosed in the Company SEC
Documents or the Company Letter (as such term is hereinafter defined), each such
share is beneficially owned by the Company or another Subsidiary of the Company,
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on voting rights, charges and
other encumbrances of any nature whatsoever. Exhibit 21 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1995, as filed with the
SEC (the "Company Annual Report"), is a true, accurate and correct statement in
all material respects of all of the information required to be set forth therein
by the regulations of the SEC.
Section 3.3 AUTHORITY. The Board of Directors of the Company has declared
as advisable and fair to and in the best interests of the shareholders of the
Company the Merger and approved this Agreement, and the Company has all
requisite power and authority to enter into this Agreement and, subject to
approval of the Merger by the shareholders of the Company, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject, in the case of this Agreement, to approval
of the Merger by the shareholders of the Company. This Agreement has been duly
executed and delivered by the Company and (assuming the valid authorization,
execution and delivery thereof by Sub and Parent and the validity and binding
effect thereof on Sub and Parent) constitutes the valid and binding obligation
of the Company enforceable against the Company in accordance with its terms. The
filing of the Proxy Statement with the SEC has been duly authorized by the
Company's Board of Directors.
<PAGE> 17
Section 3.4 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in the
letter dated and delivered to Parent on the date hereof (the "Company Letter"),
which relates to this Agreement and is designated therein as being the Company
Letter, the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries under: (i) any provision of the Articles of
Incorporation or Regulations of the Company or the comparable charter or
organization documents or by-laws of any of its Subsidiaries as amended, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease, agreement,
instrument, permit, concession, franchise or license applicable to the Company
or any of its Subsidiaries or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such violations, defaults, rights, liens,
security interests, charges or encumbrances that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company and would not materially impair the ability of the Company to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by or
with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or is necessary for the
consummation of the Merger and the other transactions contemplated by this
Agreement, except: (i) in connection, or in compliance, with the provisions of
the HSR Act, the Securities Act and the Exchange Act, (ii) for the filing of the
Certificate of Merger with the Secretary of State of the State of Ohio, (iii)
for such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the laws of any foreign
country in which the Company or any of its Subsidiaries conducts any business or
owns any property or assets and (iv) for such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
obtain or make would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company and would not
materially impair the ability of the Company to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
Section 3.5 COMPANY SEC DOCUMENTS AND FINANCIAL STATEMENTS. The Company
has filed all required documents with the SEC since January 1, 1991 (the
"Company SEC Documents"). As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of the Company
SEC Documents contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company Letter includes the consolidated balance sheets of
the Company and its consolidated subsidiaries as of June 30, 1996 and 1995 and
the related consolidated statements of income (the "Statements of Income"),
stockholders' investment and cash flows for each of the fiscal years then ended,
together with the appropriate notes to such financial statements, accompanied by
the report thereon of Arthur Andersen LLP, independent public accountants (the
"Audited Financial Statements"). The consolidated financial statements of the
Company included in the Company SEC Documents and the Company Letter complied as
to form in all material respects with the applicable accounting requirements and
the published rules and regulations with respect thereto. The consolidated
financial statements included in the Company SEC Documents and the Audited
Financial Statements have been prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly present in all material respects the consolidated financial position
of the Company and its consolidated Subsidiaries as at the respective dates
thereof and the consolidated results of their operations and their consolidated
cash flows for the respective periods then ended (subject, in the case of the
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). None of the financial statements referred to in
this SECTION 3.5 contains any material items of special or
<PAGE> 18
nonrecurring income except as expressly specified therein. Since June 30, 1996,
the Company has not made any change in the accounting practices or policies
applied in the preparation of its financial statements.
Section 3.6 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by the Company for inclusion or incorporation by
reference in the Registration Statement or the Proxy Statement will (i) in the
case of the Registration Statement, at the time it becomes effective, 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 not misleading or (ii) in the case of the Proxy Statement, at the time
of the mailing of the Proxy Statement, the time of the Company Stockholder
Meeting and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. If at any time prior to the Effective
Time any event with respect to the Company, its directors and officers or any of
its Subsidiaries shall occur which is required to be described in the Proxy
Statement or the Registration Statement, such event shall be so described, and
an appropriate amendment or supplement shall be promptly filed with the SEC and,
to the extent required by law, disseminated to the shareholders of the Company.
The Registration Statement will comply (with respect to the Company) as to form
in all material respects with the provisions of the Securities Act, and the
Proxy Statement will comply (with respect to the Company) as to form in all
material respects with the provisions of the Exchange Act.
Section 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Company SEC Documents or the Company Letter, since June 30, 1996: (i) the
Company and its Subsidiaries have not incurred any material liability or
obligation (indirect, direct or contingent), or entered into any material oral
or written agreement or other transaction, that is not in the ordinary course of
business or that would reasonably be expected to result in a Material Adverse
Effect on the Company; (ii) the Company and its Subsidiaries have not sustained
any loss or interference with their business or properties from fire, flood,
windstorm, accident or other calamity (whether or not covered by insurance) that
has had or that would reasonably be expected to have a Material Adverse Effect
on the Company; (iii) there has been no material change in the indebtedness of
the Company and its Subsidiaries, no change in the outstanding shares of capital
stock of the Company except for the issuance of Company Common Shares pursuant
to the Company Stock Options and no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock; (iv)
there has been no event causing a Material Adverse Effect on the Company, nor
any development that would, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on the Company; and except as
set forth in the Company Letter, during the period from June 30, 1996 through
the date of this Agreement, neither the Company nor any of its Subsidiaries has
taken any action that, if taken during the period from the date of this
Agreement through the Effective Time, would constitute a breach of SECTION
4.1(B).
Section 3.8 NO EXISTING VIOLATION, DEFAULT, ETC. Neither the Company nor
any of its Subsidiaries is in violation of (i) its charter or other organization
documents or by-laws, (ii) any applicable law, ordinance or administrative or
governmental rule or regulation or (iii) any order, decree or judgment of any
Governmental Entity having jurisdiction over the Company or any of its
Subsidiaries, except for any violations that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on the
Company. The properties, assets and operations of the Company and its
Subsidiaries are in compliance in all material respects with all applicable
Worker Safety Laws and Environmental Laws, except for any violations that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company. With respect to such properties, assets
and operations, including any previously owned, leased or operated properties,
assets or operations, there are no past, present or reasonably anticipated
future events, conditions, circumstances, activities, practices, incidents,
actions or plans of the Company or any of its Subsidiaries that may interfere
with or prevent compliance or continued compliance in all material respects with
applicable Worker Safety Laws and Environmental Laws, other than any such
interference or prevention as would not, individually or in the aggregate with
any such other interference or prevention, reasonably be expected to have a
Material Adverse Effect on the Company.
Except as may be set forth in the Company SEC Documents or the Company
Letter, prior to the date of this Agreement, no event of default or event that,
but for the giving of notice or lapse of time, or both, would
<PAGE> 19
constitute an event of default exists or, upon the consummation by the Company
of the transactions contemplated by this Agreement, will exist under any loan or
credit agreement, note, bond, mortgage, indenture or guarantee of indebtedness
for borrowed money or any other material lease, agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which the Company or any
such Subsidiary or any of their respective properties, assets or business is
bound.
Section 3.9 LICENSES AND PERMITS. The Company and its Subsidiaries have
received such certificates, permits, licenses, franchises, consents, approvals,
orders, authorizations and clearances from appropriate Governmental Entities
(the "Company Licenses") as are necessary to own or lease and operate their
respective properties and to conduct their respective businesses substantially
in the manner described in the Company SEC Documents and as currently owned or
leased and conducted, and all such Company Licenses are valid and in full force
and effect, except for any such certificates, permits, licenses, franchises,
consents, approvals, orders, authorizations and clearances which the failure to
have or to be in full force and effect would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company. The
Company and its Subsidiaries are in compliance in all material respects with
their respective obligations under the Company Licenses, with only such
exceptions as, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company, and no event has
occurred that allows, or after notice or lapse of time, or both, would allow,
revocation or termination of any material Company License.
Section 3.10 ENVIRONMENTAL MATTERS. Except as set forth in the Company
SEC Documents or the Company Letter, neither the Company nor any of its
Subsidiaries is the subject of any federal, state, local, foreign or provincial
investigation, and neither the Company nor any of its Subsidiaries has received
any notice or claim (or is aware of any facts that would form a reasonable basis
for any claim), or entered into any negotiations or agreements with any other
person, relating to any liability or remedial action, or potential liability or
remedial action, under any Environmental Laws that would reasonably be expected
to have a Material Adverse Effect on the Company; and there are no pending,
reasonably anticipated or, to the knowledge of the Company, threatened actions,
suits or proceedings against or affecting the Company, any of its Subsidiaries
or any of their respective properties, assets or operations asserting any such
liability or seeking any such remedial action in connection with any
Environmental Laws that would reasonably be expected to have a Material Adverse
Effect on the Company.
Section 3.11 TAX MATTERS. Except as otherwise set forth in the Company
Letter: (i) the Company and each of its Subsidiaries have filed all federal, and
all material state, local and foreign, Tax Returns required to have been filed
on or prior to the date hereof or appropriate extensions therefor have been
properly obtained; (ii) all Taxes shown to be due on such Tax Returns have been
timely paid or extensions for payment have been properly obtained, or such Taxes
are being timely and properly contested; (iii) neither the Company nor any of
its Subsidiaries has waived any statute of limitations in respect of its Taxes;
(iv) any such Tax Returns relating to federal and state income Taxes have been
audited by the Internal Revenue Service or the appropriate state taxing
authority or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired; (v) no issues that have been
raised in writing by the relevant taxing authority in connection with the audit
of such Tax Returns are currently pending; and (vi) all deficiencies asserted or
assessments made as a result of any audit of such Tax Returns by any taxing
authority have been paid in full or adequately provided for or are being timely
and properly contested. Except as set forth in the Company Letter, the charges,
accruals and reserves on the books of the Company and its Subsidiaries in
respect of Taxes and other governmental charges are adequate. To the knowledge
of the Company, the representations set forth in the Company Tax Certificate (as
defined in Section 6.2(b)) attached to the Company Letter are true and correct
in all material respects.
Section 3.12 ACTIONS AND PROCEEDINGS. Except as set forth in the Company
SEC Documents or the Company Letter, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against or affecting
the Company or any of its Subsidiaries, or any of its or their current or former
directors, officers, employees, consultants, agents or stockholders, as such,
any of its or their properties, assets or business or any Company Plan (as
defined in SECTION 3.15) that would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company. Except as set
<PAGE> 20
forth in the Company Letter or the Company SEC Documents, there are no actions,
suits or claims or legal, administrative or arbitration proceedings or
investigations pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its Subsidiaries, any of its or their current
or former directors, officers, employees, consultants, agents or stockholders,
as such, any of its or their properties, assets or business or any Company Plan
that if brought (if not now pending) would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
There are no actions, suits or claims or legal, administrative or arbitration
proceedings or investigations or labor disputes pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries, any of its or their current or former directors, officers,
employees, consultants, agents or stockholders, as such, any of its or their
properties, assets or business or any Company Plan relating to the transactions
contemplated by this Agreement.
Section 3.13 LABOR MATTERS. Except as disclosed in the Company SEC
Documents or the Company Letter, neither the Company nor any of its Subsidiaries
has any labor contracts, collective bargaining agreements or material employment
or consulting agreements with any persons employed by or otherwise performing
services primarily for the Company or any of its Subsidiaries (the "Company
Business Personnel") or any representative of any Company Business Personnel.
Except as disclosed in the Company SEC Documents or the Company Letter, neither
the Company nor any of its Subsidiaries has engaged in any unfair labor practice
with respect to Company Business Personnel, and there is no unfair labor
practice complaint pending against the Company or any or its Subsidiaries with
respect to Company Business Personnel. There is no labor strike, dispute,
slowdown or stoppage pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries that would
reasonably be expected to have a Material Adverse Effect on the Company, and
neither the Company nor any of its Subsidiaries has experienced any primary work
stoppage or other material labor difficulty involving its employees during the
last five years that has had or would reasonably be expected to have a Material
Adverse Effect on the Company. The Company is in compliance with the
requirements of the Workers Adjustment and Retraining Notification Act (the
"WARN Act") and has no liabilities pursuant to the WARN Act.
Section 3.14 CONTRACTS. All of the material contracts of the Company and
its Subsidiaries are listed and described in the Company Letter or if required
to be described in the Company SEC Documents or to be filed as exhibits thereto
have been described or filed as required. For the purposes of this Section 3.14,
the term "material" means contracts required to be disclosed by Item 601(10) of
Regulation S-K promulgated by the SEC. Neither the Company or any of its
Subsidiaries nor, to the knowledge of the Company, any other party is in breach
of or default under any such contracts which are currently in effect, except for
such breaches and defaults which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Section 3.15 ERISA. Each Company Plan complies in all material respects
with ERISA, the Code and all other applicable laws and administrative or
governmental rules and regulations. No "reportable event" (within the meaning of
Section 4043 of ERISA) has occurred with respect to any Company Plan for which
the 30-day notice requirement has not been waived (other than with respect to
the transactions contemplated by this Agreement), and no condition exists which
would subject the Company or any ERISA Affiliate to any fine under Section 4071
of ERISA; except as disclosed in the Company Letter neither the Company nor any
of its ERISA Affiliates has withdrawn from any Company Plan or Company
Multiemployer Plan (as hereinafter defined) or has taken, or is currently
considering taking, any action to do so; and no action has been taken, or is
currently being considered, to terminate any Company Plan subject to Title IV of
ERISA. No Company Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived. To the knowledge of the Company, there are no actions, suits or
claims pending or threatened (other than routine claims for benefits) with
respect to any Company Plan which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Neither the Company nor any of its ERISA Affiliates has incurred or would
reasonably be expected to incur any material liability under or pursuant to
Title IV of ERISA. No prohibited transactions described in Section 406 of ERISA
or Section 4975 of the Code have occurred which would reasonably be expected to
result in material liability to the Company or its Subsidiaries. Except as set
forth in
<PAGE> 21
the Company Letter, all Company Plans that are intended to be qualified under
Section 401(a) of the Code have received a favorable determination letter as to
such qualification from the Internal Revenue Service, and no event has occurred,
either by reason of any action or failure to act, which would cause the loss of
any such qualification. Except as set forth in the Company Letter, the Company
is not aware of any reason why any Company Plan is not so qualified in
operation. Neither the Company nor any of its ERISA Affiliates has been notified
by any Company Multiemployer Plan that such Company Multiemployer Plan is
currently in reorganization or insolvency under and within the meaning of
Section 4241 or 4245 of ERISA or that such Company Multiemployer Plan intends to
terminate or has been terminated under Section 4041A of ERISA. The Company and
its Subsidiaries have complied with the health care continuation requirements of
Part 6 of Title I of ERISA. Except as set forth in the Company Letter, the
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, result in an increase in the amount of compensation or benefits or
accelerate the vesting or timing of payment of any compensation or benefits
payable by the Company or its Subsidiaries to or in respect of any employee or
other person. As used in this Agreement: (i) "Company Plan" means a "pension
plan" (as defined in Section 3(2) of ERISA, other than a Company Multiemployer
Plan) or a "welfare plan" (as defined in Section 3(1) of ERISA) established or
maintained by the Company or any of its ERISA Affiliates or to which the Company
or any of its ERISA Affiliates has contributed or otherwise may have any
liability; and (ii) "Company Multiemployer Plan" means a "multiemployer plan"
(as defined in Section 4001(a)(3) of ERISA) to which the Company or any of its
ERISA Affiliates is or has been obligated to contribute or otherwise may have
any liability.
Section 3.16 LIABILITIES. Except as fully reflected or reserved against
in the consolidated financial statements referred to in SECTION 3.5, or
disclosed in the footnotes thereto, or as set forth in Items 1-3 of Section 3.16
of the Company Letter, the Company and its Subsidiaries had no liabilities
(including, without limitation, Tax liabilities) at the date of such
consolidated financial statements, absolute or contingent, that would reasonably
be expected to have a Material Adverse Effect on the Company or, except as
disclosed in the Company Letter or the Company SEC Documents, were not incurred
in the ordinary course of business. Except as so reflected, reserved or
disclosed, or as disclosed in the Company Letter or the Company SEC Documents,
the Company and its Subsidiaries have no commitments which would reasonably be
expected to have a Material Adverse Effect on the Company.
Section 3.17 INTELLECTUAL PROPERTIES. Except as disclosed in the Company
Letter, all of the material patents, trademarks, trademark registrations,
servicemarks, mailing lists, trade names, copyrights and other proprietary
intellectual property rights that are owned by the Company and its Subsidiaries
or used in their respective businesses are valid and in full force and effect.
Neither the Company nor any of its Subsidiaries is infringing upon, or otherwise
violating, the rights of any person with respect to any material patent, patent
right, trademark, servicemark, software license, software use agreement, license
trade name, copyright or registration thereof.
Section 3.18 PROPRIETY OF PAST PAYMENTS. Except as disclosed in the
Company Letter, since January 1, 1991: (i) no funds or assets of the Company or
any of its Subsidiaries have been used for illegal purposes, (ii) no unrecorded
fund or assets of the Company or any of its Subsidiaries has been established
for any purpose, (iii) no accumulation or use of the corporate funds of the
Company or any of its Subsidiaries has been made without being properly
accounted for on the respective books and records of the Company or such
Subsidiary, (iv) all payments by or on behalf of the Company or any of its
Subsidiaries have been duly and properly recorded and accounted for on the books
and records of the Company and its Subsidiaries, (v) no false or artificial
entry has been made on the books and records of the Company or any of its
Subsidiaries for any reason, (vi) no payment has been made by or on behalf of
the Company or any of its Subsidiaries with the understanding that any part of
such payment is to be used for any purpose other than that described in the
documents supporting such payment and (vii) neither the Company nor any of its
Subsidiaries has made any illegal contributions to any political party or
candidate, either domestic or foreign, except for such uses, payments,
contributions or actions which, or the cessation of which, would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company or result in material adverse publicity for the Company.
<PAGE> 22
Section 3.19 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of J.J.B. Hilliard, W.L. Lyons Inc., dated the date hereof, to the
effect that, as of the date hereof, the consideration to be received in the
Merger by the Company's shareholders is fair to the Company's shareholders from
a financial point of view, a copy of which opinion has been delivered to Parent.
Section 3.20 TAKEOVER STATUTES. The Board of Directors of the Company has
duly taken all necessary action (which is valid and binding on the Company) to
provide a valid and irrevocable exemption from Sections 1704.01 through 1707.042
of the OGCL for all of the transactions contemplated by this Agreement. No
Takeover Statute applicable to the Company is applicable to the Merger or the
other transactions contemplated hereby.
Section 3.21 POOLING OF INTERESTS; REORGANIZATION. To the knowledge of
the Company after due investigation, neither the Company nor any of its
Subsidiaries has (i) taken any action or failed to take any action which action
or failure would jeopardize the treatment of the Merger as a pooling of
interests for accounting purposes or (ii) taken any action or failed to take any
action which action or failure would jeopardize the qualification of the Merger
as a reorganization within the meaning of Section 368(a) of the Code.
Section 3.22 BROKERS. No broker, investment banker or other person, other
than J.J.B. Hilliard, W.L. Lyons Inc., the fees and expenses of which will be
paid by the Company (as reflected in an agreement between J.J.B. Hilliard, W.L.
Lyons Inc. and the Company, a copy of which has been furnished to Parent), is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 CONDUCT OF BUSINESS PENDING THE MERGER.
(a) ACTIONS BY PARENT. During the period from the date of this
Agreement through the Effective Time, except as otherwise expressly
required by this Agreement or as set forth in the Parent Letter, Parent
shall, and shall cause each of its Subsidiaries to, in all material
respects carry on its business in, and not enter into any material
transaction other than in accordance with, the ordinary course of its
business as currently conducted and, to the extent consistent therewith,
use its reasonable best efforts to preserve intact its current business
organization, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and
others having business dealings with it, all to the end that its goodwill
and ongoing business shall be unimpaired at the Effective Time. Without
limiting the generality of the foregoing, and except as otherwise expressly
contemplated by this Agreement, Parent shall not, and shall not permit any
of its Subsidiaries to, without the prior written consent of the Company:
(i) (A) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions in respect of, any of
its capital stock, or otherwise make any payments to its stockholders in
their capacity as such (other than (I) regular quarterly dividends of
not more than $0.1625 per share on Parent Common Stock, (II) stock
dividends on Parent Common Stock and \(III) any dividends on, or
distributions in respect of, the capital stock of any Subsidiary of
Parent); (B) combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock; or (C) purchase,
redeem or otherwise acquire any shares of its capital stock or those of
any Subsidiary or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities or
equity equivalent or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities,
equity equivalent or convertible securities (other than the issuance of
shares of Parent Common Stock pursuant to a stock dividend
<PAGE> 23
or stock split or upon the exercise of Parent Stock Options and the
issuance of stock options to employees of Parent or any of its
Subsidiaries);
(iii) amend its charter or organization documents or by-laws;
(iv) sell, lease or otherwise dispose of, or agree to sell, lease
or otherwise dispose of, any of its assets, other than (A) transactions
that are in the ordinary course of business and consistent with past
practice and not material to Parent and its Subsidiaries taken as a
whole or (B) dispositions for an aggregate consideration paid or payable
to Parent and its Subsidiaries (valuing any non-cash consideration at
its fair market value and any contingent payments at the maximum amount
payable and treating any liabilities assumed as consideration paid) of
not to exceed $30,000,000 or (C) as set forth in the Parent Letter;
(v) incur any indebtedness for borrowed money or guarantee any
such indebtedness or make any loans, advances or capital contributions
to, or other investments in, any other person, other than (A) borrowings
or guarantees incurred in the ordinary course of business and consistent
with past practice, (B) any loans, advances or capital contributions to,
or other investments in, Parent or any wholly-owned Subsidiary of Parent
or (C) as set forth in the Parent Letter;
(vi) enter into or adopt any Parent Plan, or amend any existing
Parent Plan, other than as required by law;
(vii) violate or fail to perform any material obligation or duty
imposed upon Parent or any Subsidiary by any applicable federal, state,
local, foreign or provincial law, rule, regulation, guideline or
ordinance;
(viii) take any action, other than reasonable and usual actions in
the ordinary course of business consistent with past practice, with
respect to accounting policies or procedures; or
(ix) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing.
Parent shall promptly advise the Company orally and in writing of any
change or event having, or which would reasonably be expected to have, a
Material Adverse Effect on Parent.
(b) ACTIONS BY THE COMPANY. During the period from the date of this
Agreement through the Effective Time, except as otherwise expressly
required by this Agreement or as set forth in the Company Letter, the
Company shall, and shall cause each of its Subsidiaries to, in all material
respects carry on its business in, and not enter into any material
transaction other than in accordance with, the ordinary course of its
business as currently conducted and, to the extent consistent therewith,
use its reasonable best efforts to preserve intact its current business
organization, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and
others having business dealings with it, all to the end that its goodwill
and ongoing business shall be unimpaired at the Effective Time. Without
limiting the generality of the foregoing, and except as otherwise expressly
contemplated by this Agreement, the Company shall not, and shall not permit
any of its Subsidiaries to, without the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions in respect of, any of
its capital stock, or otherwise make any payments to its shareholders in
their capacity as such; (B) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital
stock; or (C) purchase, redeem or otherwise acquire any shares of its
capital stock or those of any Subsidiary or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities or
equity equivalent or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities,
equity equivalent or convertible
<PAGE> 24
securities (other than the issuance of Company Common Shares upon the
exercise of Company Stock Options outstanding on the date of this
Agreement in accordance with their current terms);
(iii) amend its charter or organization documents or Regulations;
(iv) acquire or agree to acquire, by merging or consolidating
with, by purchasing a substantial portion of the assets of or equity in
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets, other than (A)
transactions that are in the ordinary course of business and consistent
with past practice and not material to the Company and its Subsidiaries
taken as a whole or (B) as set forth in the Company Letter;
(v) sell, lease or otherwise dispose of, or agree to sell, lease
or otherwise dispose of, any of its assets, other than (A) transactions
that are in the ordinary course of business and consistent with past
practice and not material to the Company and its Subsidiaries taken as a
whole or (B) dispositions for an aggregate consideration paid or payable
to the Company and its Subsidiaries (valuing any non-cash consideration
at its fair market value and any contingent payments at the maximum
amount payable and treating any liabilities assumed as consideration
paid) of not to exceed $150,000 or (C) as set forth in the Company
Letter; PROVIDED, HOWEVER, that the aggregate consideration received by
the Company and its Subsidiaries from all transactions permitted by this
clause (v) shall not exceed $250,000 and the aggregate fair market value
(as determined in good faith by the Board of Directors of the Company)
of the assets sold, leased or otherwise disposed of shall not exceed
$250,000;
(vi) incur any indebtedness for borrowed money or guarantee any
such indebtedness, or make any loans, advances or capital contributions
to, or other investments in, any other person, or retire any currently
outstanding indebtedness for borrowed money, other than (A) borrowings
or guarantees incurred in the ordinary course of business and consistent
with past practice, (B) any loans, advances or capital contributions to,
or other investments in, the Company or any wholly-owned Subsidiary of
the Company or (C) as set forth in the Company Letter;
(vii) enter into or adopt any Company Plan, or amend any existing
Company Plan, other than as required by law;
(viii) increase the compensation payable or to become payable to
its officers or employees, except for increases in the ordinary course
of business and consistent with past practice, or grant any severance or
termination pay to, or enter into, or amend or modify, any employment,
severance or consulting agreement with, any director or officer of the
Company or any of its Subsidiaries, or establish, adopt, enter into, or,
except as may be required to comply with applicable law, amend in any
material respect or take action to enhance in any material respect or
accelerate any rights or benefits under, any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;
(ix) violate or fail to perform any material obligation or duty
imposed upon the Company or any Subsidiary by any applicable federal,
state, local, foreign or provincial law, rule, regulation, guideline or
ordinance;
(x) take any action, other than reasonable and usual actions in
the ordinary course of business consistent with past practice, with
respect to accounting policies or procedures; or
(xi) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing.
The Company shall promptly advise Parent orally and in writing of any
change or event having, or which would reasonably be expected to have, a
Material Adverse Effect on the Company.
<PAGE> 25
Section 4.2 NO SOLICITATION. From and after the date hereof, the Company
shall not, directly or indirectly, solicit, initiate or knowingly encourage
(including by way of furnishing non-public information) any Takeover Proposal
(as hereinafter defined) from any person, or engage in or continue discussions
or negotiations relating to any Takeover Proposal and shall use its reasonable
best efforts to prevent any of its directors, officers, employees, attorneys,
financial advisors, agents and other authorized representatives and those of any
of its Subsidiaries from taking any such action; PROVIDED, HOWEVER, that the
Company may (i) engage in discussions or negotiations with, or furnish
information concerning the Company and its properties, assets and business to,
any person which makes, or indicates in writing an intention to make, a Superior
Proposal (as hereinafter defined) if the Board of Directors of the Company shall
conclude in good faith on the basis of the written advice of its outside counsel
that the failure to take such action would violate the fiduciary obligations of
such Board of Directors under applicable law, or (ii) comply with Rule 14d-9 or
14e-2 promulgated by the SEC under the Exchange Act with regard to a Takeover
Proposal. The Company shall promptly notify Parent upon receipt of any Takeover
Proposal, including the material terms and conditions thereof and the identity
of the person (or group) making such Takeover Proposal, and the name of all
persons to whom the Company has furnished any information and the nature of such
information. As used in this Agreement: (i) "Takeover Proposal" means any
proposal or offer for, or any expression of interest (by public announcement or
otherwise) by any person (other than a proposal or offer by Parent or any of its
Subsidiaries or Affiliates) in, any tender or exchange offer for 20% or more of
the equity of the Company, any merger, consolidation or other business
combination involving the Company or any of its Significant Subsidiaries (as
hereinafter defined), any acquisition in any manner of 20% or more of the equity
of, or 20% or more of the assets of, the Company or any of its Significant
Subsidiaries or any inquiry by any person with respect to the Company's
willingness to receive or discuss any of the foregoing; (ii) "Superior Proposal"
means a bona fide unsolicited proposal or offer made by any person (or group)
(other than Parent or its Subsidiaries or Affiliates) to acquire the Company
pursuant to any Takeover Proposal on terms which a majority of the members of
the Board of Directors of the Company determines in good faith, and in the
exercise of reasonable judgment (based on the advice of independent financial
advisors), to be more favorable to the Company and its shareholders than the
transactions contemplated hereby and for which any required financing is
committed or which, in the good faith and reasonable judgment of a majority of
such members, is reasonably capable of being financed by such person; and (iii)
"Significant Subsidiary" has the meaning specified in Rule 1-02(w) of Regulation
S-X promulgated by the Securities and Exchange Commission.
Section 4.3 THIRD PARTY STANDSTILL AGREEMENTS. During the period from the
date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which the Company or any of its Subsidiaries is a party
(other than any involving Parent). During such period, the Company shall
enforce, to the fullest extent permitted under applicable law, the provisions of
any such agreement, including, but not limited to, by obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the terms
and provisions thereof in any court of the United States of America or of any
state having jurisdiction.
Section 4.4 POOLING OF INTERESTS; REORGANIZATION. During the period from
the date of this Agreement through the Effective Time, unless the other parties
hereto shall otherwise agree in writing, none of Parent, the Company or any of
their respective Subsidiaries shall (i) knowingly take or fail to take any
action which action or failure would jeopardize the treatment of the Merger as a
pooling of interests for accounting purposes or (ii) knowingly take or fail to
take any action which action or failure would jeopardize qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the Code.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 STOCKHOLDER MEETING. The Company shall call a meeting of its
stockholders (the "Company Stockholder Meeting") to be held as promptly as
practicable following the effectiveness of the Registration Statement for the
purpose of voting upon the Merger. The Company shall, through its Board of
<PAGE> 26
Directors, recommend to its stockholders approval of such matters and shall not
withdraw such recommendation; PROVIDED, HOWEVER, that such Board of Directors
shall not be required to make, and shall be entitled to withdraw, such
recommendation if such Board of Directors concludes in good faith on the basis
of the written advice of its outside counsel that the making of, or the failure
to withdraw, such recommendation would violate the fiduciary obligations of such
Board of Directors under applicable law. The respective Boards of Directors of
the Company, Parent and Sub shall not withdraw their respective declarations
that the Merger is advisable unless, in any such case, any such Board of
Directors concludes in good faith on the basis of the written advice of its
outside counsel that the failure to rescind such determination would violate the
fiduciary obligations of such Board of Directors under applicable law.
Section 5.2 PREPARATION OF THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT. The Company and Parent shall promptly prepare and file with the SEC
the Registration Statement, which will include the Proxy Statement. Each of the
Company and Parent shall use its reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. Parent shall also take any action (other than
qualifying to do business in any jurisdiction in which it is now not so
qualified) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock in connection with the
Merger and upon any exercise of the Substitute Options (as defined in SECTION
5.8). The Company shall furnish all information concerning the Company and the
holders of Company Common Shares as may be reasonably requested by Parent in
connection with any such action.
Section 5.3 COMFORT LETTERS. (a) The Company shall use its reasonable
best efforts to cause to be delivered to Parent "comfort" letters of Arthur
Andersen LLP, the Company's independent public accountants, dated the date on
which the Registration Statement shall become effective and as of the Effective
Time, and addressed to Parent and the Company, in form and substance reasonably
satisfactory to Parent and as is reasonably customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
(b) Parent shall use its reasonable best efforts to cause to be delivered to
the Company "comfort" letters of Coopers & Lybrand LLP, Parent's independent
public accountants, dated the date on which the Registration Statement
shall become effective and as of the Effective Time, and addressed to the
Company and Parent, in form and substance reasonably satisfactory to the
Company and as is reasonably customary in scope and substance for letters
delivered by independent public accountants in connection with transactions
such as those contemplated by this Agreement.
Section 5.4 ACCESS TO INFORMATION. Subject to currently existing
contractual and legal restrictions applicable to Parent (which Parent represents
and warrants are not material) or to the Company (which the Company represents
and warrants are not material), Parent and the Company shall, and shall cause
each of its respective Subsidiaries to, afford, during normal business hours
during the period from the date of this Agreement through the Effective Time, to
the accountants, counsel, financial advisors, officers and other representatives
of the other reasonable access to, and permit them to make such inspections as
they may reasonably request of, the other's properties, books, contracts,
commitments and records (including, without limitation, the work papers of
independent public accountants) and permit such interviews with its officers and
employees as may be reasonably requested; and, during such period, Parent and
the Company shall, and shall cause each of its respective Subsidiaries to,
furnish promptly to the other (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (ii) all other information
concerning its properties, assets, business and personnel as the other may
reasonably request. No investigation pursuant to this SECTION 5.4 shall affect
any representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto. All information obtained by
Parent or the Company pursuant to this SECTION 5.4 shall be kept confidential in
accordance with the Confidentiality Agreement dated January 15, 1996, as the
same has been amended to date, between Parent and the Company.
Section 5.5 COMPLIANCE WITH THE SECURITIES ACT. Prior to the Effective
Time, the Company shall cause to be prepared and delivered to Parent a list
(reasonably satisfactory to counsel for Parent) identifying all persons who, at
the time of the Company Stockholder Meeting, may be deemed to be an "affiliate"
of the
<PAGE> 27
Company, as such term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (the "Rule 145 Affiliates"). The Company shall use its reasonable
best efforts to cause each person who is identified as a Rule 145 Affiliate in
such list to deliver to Parent on or prior to the Effective Time a written
agreement, in the form previously approved by the parties hereto, that such Rule
145 Affiliate shall not (i) sell, pledge, transfer or otherwise dispose of any
shares of Parent Common Stock issued to such Rule 145 Affiliate in connection
with the Merger, except pursuant to an effective registration statement or in
compliance with such Rule 145 or another exemption from the registration
requirements of the Securities Act and (ii) sell or in any other way reduce such
Rule 145 Affiliate's risk relative to any shares of Parent Common Stock received
in the Merger (within the meaning of Section 201.01 of the SEC's Financial
Reporting Release No. 1) until such time as the financial results (including
combined sales and net income) covering at least 30 days of post-Merger
operations have been published, except as permitted by Staff Accounting Bulletin
No. 76 issued by the SEC. After the Effective Time, Parent shall satisfy the
conditions set forth in Rule 144(c)(1) promulgated by the SEC under the
Securities Act for so long as any Rule 145 Affiliate is subject to the
provisions of Rule 145(d).
Section 5.6 STOCK EXCHANGE LISTINGS. Parent shall use its reasonable best
efforts to list on the NYSE, upon official notice of issuance, the shares of
Parent Common Stock to be issued in connection with the Merger and upon any
exercise of the Substitute Options.
Section 5.7 FEES AND EXPENSES. (a) Except as otherwise provided in this
SECTION 5.7 and in SECTION 5.11, whether or not the Merger shall be consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including, without limitation, the fees and
disbursements of counsel, financial advisors, accountants, actuaries and
consultants, shall be paid by the party incurring such costs and expenses,
provided that all printing expenses and filing fees shall be divided equally
between Parent and the Company.
(b) Notwithstanding any provision in this Agreement to the contrary,
if this Agreement shall be terminated by Parent pursuant to SECTION
7.1(B)(I) or SECTION 7.1(D), then, in either such case, the Company shall
(without prejudice to any other rights of Parent against the Company)
reimburse Parent upon demand for all out-of-pocket fees and expenses
incurred or paid by or on behalf of Parent and its Subsidiaries in
connection with this Agreement and the transactions contemplated hereby,
including all fees and expenses of counsel, financial advisors,
accountants, actuaries and consultants; PROVIDED, HOWEVER, that the Company
shall not be obligated to make aggregate payments pursuant to this sentence
in excess of $400,000. In addition, if within one year after the date of
such termination, the Company shall enter into a definitive agreement with
respect to any Takeover Proposal, or if any Takeover Proposal shall have
been completed or the Board of Directors of the Company shall have
recommended to the shareholders of the Company any Takeover Proposal or
adopted a resolution to do so, then, upon the earliest of such occurrences,
the Company shall immediately pay to Parent an amount in cash equal to
$1,000,000, less any amount paid to Parent pursuant to the immediately
preceding sentence; PROVIDED that no amount shall be payable to Parent
pursuant to this sentence in the event that the Company would have had the
right to terminate this Agreement pursuant to SECTION 7.1(C) or 7.1(D).
(c) Notwithstanding any provision in this Agreement to the contrary,
if this Agreement shall be terminated by Parent pursuant to SECTION
7.1(B)(II) or by the Company pursuant to SECTION 7.1(C)(II) and, in either
such case, within one year after the date of such termination, any of the
occurrences described in the second sentence of SECTION 5.7(B) shall have
occurred, the Company shall immediately pay to Parent an amount in cash
equal to $1,000,000; provided that no payment shall be due by the Company
under this SECTION 5.7(C) unless the Board of Directors of the Company
determines that such transaction is a Superior Proposal.
(d) Notwithstanding any provision in this Agreement to the contrary,
if this Agreement shall be terminated by Parent pursuant to SECTION 7.1(F),
SECTION 7.1(G) or SECTION 7.1(H) or by the Company pursuant to SECTION
7.1(F), the Company shall immediately pay to Parent an amount in cash equal
to $1,000,000; provided that in the event that this Agreement is terminated
by Parent: (i) pursuant to SECTION 7.1(F), the Company shall be required to
pay such cash amount to Parent only upon the
<PAGE> 28
occurrence of the events set forth in clauses (i) and (ii) thereof unless
the Company shall have failed to timely provide such written notice to, or
cooperated fully with, Parent as required by such clause (i); and (ii)
pursuant to SECTION 7.1(G), the Company shall not be required to pay such
cash amount to Parent if, (A) at the time that the Board of Directors of
the Company took such action described in SECTION 7.1(G), the Company would
have been entitled to terminate this Agreement pursuant to SECTION
7.1(I)(assuming, for the purpose of this clause (A) that the Calculation
Date (as such term is used in SECTION 7.1(I)) is a date occurring within
ten business days preceding the date the Board of Directors of the Company
took such action); or (B) the Board of Directors of the Company shall have
taken the action or actions specified by SECTION 7.1(G) in connection with
a Superior Proposal.
(e) Notwithstanding any provision in this Agreement to the contrary,
if this Agreement shall be terminated by the Company pursuant to SECTION
7.1(C)(I) or SECTION 7.1(D), then, in either such case, Parent shall
(without prejudice to any other rights of the Company against Parent)
reimburse the Company upon demand for all out-of-pocket fees and expenses
incurred or paid by or on behalf of the Company and its Subsidiaries in
connection with this Agreement and the transactions contemplated hereby,
including all fees and expenses of counsel, financial advisors,
accountants, actuaries and consultants; PROVIDED, HOWEVER, that Parent
shall not be obligated to make aggregate payments pursuant to this sentence
in excess of $400,000.
Section 5.8 COMPANY STOCK OPTIONS. Not later than the Effective Time,
each Company Stock Option which is outstanding immediately prior to the
Effective Time pursuant to any stock option plan (other than any "stock purchase
plan" within the meaning of Section 423 of the Code) of the Company in effect on
the date hereof (the "Company Stock Plans") shall become and represent an option
to purchase the number of shares of Parent Common Stock (a "Substitute Option"),
increased to the nearest whole share, determined by multiplying (i) the number
of Company Common Shares subject to such Company Stock Option immediately prior
to the Effective Time by (ii) the Conversion Number, at an exercise price per
share of Parent Common Stock (increased to the nearest whole cent) equal to the
exercise price per Company Common Share immediately prior to the Effective Time
divided by the Conversion Number. After the Effective Time, except as provided
above in this SECTION 5.8, each Substitute Option shall be exercisable upon the
same terms and conditions as were applicable to the related Company Stock Option
immediately prior to the Effective Time; provided, that any conditions to the
exercise of the Company Stock Options which are expressed in terms of the market
price of the Company Common Stock shall be adjusted by dividing such price by
the Conversion Number. This SECTION 5.8 shall be subject to any contrary
provision contained in the applicable Company Stock Plan or in the option
agreement with respect to any Company Stock Option outstanding thereunder, but
the Company shall use its reasonable best efforts to obtain any necessary
consents of the holders of such Company Stock Options to effect this SECTION
5.8. The Company shall not grant any stock appreciation rights or limited stock
appreciation rights and shall not permit cash payments to holders of Company
Stock Options in lieu of the substitution therefor of Substitute Options as
provided in this SECTION 5.8. At the Effective Time, the Parent Common Stock
issuable upon exercise of the Substitute Options shall be registered under the
Securities Act.
Section 5.9 REASONABLE BEST EFFORTS; POOLING OF INTERESTS. (a) Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
hereto agrees to use its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or advisable, to
consummate and make effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this Agreement, including, but
not limited to: (i) the obtaining of all necessary actions or non-actions,
waivers, consents and approvals from all Governmental Entities and the making of
all necessary registrations and filings with, and the taking of all other
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Governmental Entity (including those in
connection with the HSR Act and any Takeover Statute); (ii) the obtaining of all
necessary consents, approvals or waivers from persons other than Governmental
Entities; (iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental
<PAGE> 29
Entity vacated or reversed; and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by
this Agreement.
(b) Each of Parent and the Company shall take, together with its
respective accountants, all actions reasonably necessary in order to obtain
a favorable determination from the SEC that the Merger may be accounted for
as a pooling of interests in accordance with generally accepted accounting
principles.
(c) Each party hereto shall use its reasonable best efforts not to
take any action, or to enter into any transaction, which would cause any of
its representations or warranties contained in this Agreement to be untrue
or to result in a breach of any of its covenants in this Agreement.
(d) Notwithstanding any provision in this Agreement to the contrary:
(i) neither Parent nor the Company shall be obligated to use its reasonable
best efforts or to take any action pursuant to this SECTION 5.9 if the
Board of Directors of Parent or the Company, as the case may be, shall
conclude in good faith on the basis of the written advice of its outside
counsel that such action would violate the fiduciary obligations of such
Board of Directors under applicable law; and (ii) in connection with any
filing or submission required or action to be taken by either Parent or the
Company to effect the Merger and to consummate the other transactions
contemplated hereby, the Company shall not, without Parent's prior written
consent, commit to any divestiture transaction, and, except as may be set
forth in the Parent Letter, neither Parent nor any of its Affiliates shall
be required to divest or hold separate or otherwise take or commit to take
any action that limits its freedom of action with respect to, or its
ability to retain, the Company or any material portions thereof or any of
the business, product lines, properties or assets of Parent or any of its
Affiliates.
Section 5.10 PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation and without the approval (which need not be in writing and
shall not unreasonably be withheld) of the other, except as may be required by
applicable law or by existing obligations pursuant to any listing agreement with
any national securities exchange or with NASDAQ.
Section 5.11 REAL ESTATE TRANSFER AND GAINS TAX. Parent and the Company
agree that either the Company or the Surviving Corporation shall pay all state
or local taxes, if any (collectively, the "Gains Taxes"), attributable to the
transfer of the beneficial ownership of the Company's and its Subsidiaries' real
properties, and any penalties or interest with respect thereto, payable in
connection with the consummation of the Merger. The Company shall cooperate with
Parent in the filing of any returns with respect to the Gains Taxes, including
supplying in a timely manner a complete list of all real property interests held
by the Company and its Subsidiaries and any information with respect to such
properties that is reasonably necessary to complete such returns. The portion of
the consideration allocable to the real properties of the Company and its
Subsidiaries shall be determined by Parent in its reasonable discretion. The
shareholders of the Company shall be deemed to have agreed to be bound by the
allocation established pursuant to this SECTION 5.11 in the preparation of any
return with respect to the Gains Taxes.
Section 5.12 TAKEOVER STATUTES. If any Takeover Statute shall become
applicable to the transactions contemplated hereby, Parent and the Company and
their respective Boards of Directors shall use their reasonable best efforts to
grant such approvals and to take such other actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and shall otherwise act to minimize the effects
of any such statute or regulation on the transactions contemplated hereby.
Section 5.13 INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. Parent
shall cause the Surviving Corporation to (a) maintain continuously in effect,
for six years after the Effective Time, directors' and officers' liability
insurance covering those persons currently covered by the Company's policies for
acts or omissions occurring at or prior to the Effective Time on terms no less
favorable than current coverages and (b) indemnify and hold harmless (and
advance expenses to) all past and current directors, officers, employees
<PAGE> 30
and agents of the Company and of its Subsidiaries, for claims made within six
years after the Effective Time arising out of acts or omissions occurring at or
prior to the Effective Time, to the same extent such persons are currently
indemnified by the Company pursuant to the Company's Amended Articles of
Incorporation and Amended and Restated Code of Regulations.
Section 5.14 NOTIFICATION OF CERTAIN MATTERS. Parent shall give prompt
notice to the Company, and the Company shall give prompt notice to Parent, of:
(i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause (A) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect or (B) any covenant, condition or agreement contained in this Agreement
not to be complied with or satisfied; and (ii) any failure of Parent or the
Company, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; PROVIDED,
HOWEVER, that the delivery of any notice pursuant to this Section 5.14 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 5.15 REORGANIZATION STATUS. Parent agrees that it will not take
any action after the Effective Time that would cause the Merger to fail to
qualify as a reorganization within the meaning of Section 368(a) of the Code for
failure to satisfy the "continuity of business enterprise" requirements of such
a reorganization.
Section 5.16 EMPLOYEE BENEFIT PLANS. For a period of not less than one
year after the Effective Time, Parent will provide employee benefit plans
(including perquisites) for employees employed by the Company or any of its
Subsidiaries immediately prior to the Effective Time and for former employees of
the Company currently receiving benefits which are, in the aggregate, no less
favorable than those currently provided by the Company and its Subsidiaries, it
being understood that the Company Stock Plans will be terminated and no further
options will be granted under the Company Stock Plans.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party hereto to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) SHAREHOLDER APPROVAL. The Merger shall have been duly approved by
the requisite vote of the shareholders of the Company in accordance with
applicable law and the Articles of Incorporation and Regulations of the
Company.
(b) STOCK EXCHANGE LISTINGS. The shares of Parent Common Stock
issuable in accordance with the Merger and upon exercise of the Substitute
Options shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
(c) HSR AND OTHER APPROVALS. (i) The waiting period (and any
extension thereof) applicable to the consummation of the Merger under the
HSR Act shall have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or
approvals of, or filings with, or terminations or expirations of waiting
periods imposed by, any Governmental Entity, which the failure to
obtain, make or occur would have the effect of making the Merger or any
of the transactions contemplated hereby illegal or would have a Material
Adverse Effect on Parent or the Company (as the Surviving Corporation),
assuming the Merger had taken place, shall have been obtained, shall
have been made or shall have occurred.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act.
No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall
have been initiated or, to the knowledge of Parent or the Company,
threatened by the SEC. All necessary state
<PAGE> 31
securities authorizations (including approvals in connection with any
Takeover Statutes) shall have been received.
(e) NO ORDER. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered
any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect
and has the effect of making the Merger or any of the transactions
contemplated hereby illegal.
Section 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. Each
of Parent and Sub shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed at or prior
to the Effective Time, each of the representations and warranties of Parent
and Sub contained in this Agreement that is qualified by materiality shall
be true and correct at and as of the Effective Time as if made at and as of
the Effective Time and each of such representa-tions and warranties that is
not so qualified shall be true and correct in all material respects at and
as of the Effective Time as if made at and as of the Effective Time, in
each case except as contemplated or permitted by this Agreement; and the
Company shall have received a certificate signed on behalf of Parent by its
Chief Executive Officer and its Chief Financial Officer to such effect.
(b) TAX OPINION. The Company shall have received an opinion of
Graydon, Head & Ritchey, in form and substance reasonably satisfactory to
the Company, dated the Effective Time, substantially to the effect that, on
the basis of facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing as of the
Effective Time, for federal income tax purposes:
(i) The Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Company, Sub and Parent
will each be a party to such reorganization within the meaning of
Section 368(b) of the Code;
(ii) No gain or loss will be recognized by the Company as a result
of the Merger;
(iii) No gain or loss will be recognized by the non-dissenting
shareholders of the Company upon the conversion of their Company Common
Shares into shares of Parent Common Stock in accordance with the Merger,
except with respect to cash, if any, received in lieu of fractional
shares of Parent Common Stock;
(iv) The aggregate tax basis of the shares of Parent Common Stock
received by a shareholder in exchange for Company Common Shares in
accordance with the Merger (including fractional shares of Parent Common
Stock for which cash is received) will be the same as the aggregate tax
basis of such Company Common Shares;
(v) The holding period for shares of Parent Common Stock received
by a shareholder in exchange for Company Common Shares in accordance
with the Merger will include the period that such Company Common Shares
were held by the shareholder, provided such Company Common Shares were
held as capital assets by such shareholder at the Effective Time; and
(vi) A shareholder of the Company who receives cash in lieu of a
fractional share of Parent Common stock will recognize gain or loss
equal to the difference, if any, between such shareholder's basis in
such fractional share and the amount of cash received.
In rendering such opinion, Graydon, Head & Ritchey may receive and rely upon
representations contained in a certificate of the Company substantially in the
form attached to the Company Letter (the "Company Tax Certificate"), a
certificate of Parent substantially in the form attached to the Parent Letter
(the "Parent Tax Certificate") and other appropriate certificates of the
Company, Parent and others, and may condition such opinion on the receipt from
each shareholder of the Company holding a substantial amount of the Company
<PAGE> 32
Common Shares (a "Major Shareholder") of a certificate substantially in the form
attached to the Company Letter (the "Shareholder Certificate").
(c) OPINION OF SIDLEY & AUSTIN. The Company shall have received an opinion
from Sidley & Austin, dated the Effective Time, substantially to the effect
that:
(i) The incorporation, existence and good standing in their
respective jurisdictions of incorporation of Parent and Sub are as
stated in the first sentence of SECTION 2.1; the authorized shares of
capital stock of Parent are as stated in the first sentence of SECTION
2.2; and all outstanding shares of Parent Common Stock have been duly
and validly authorized and issued, are fully paid and nonassessable and
have not been issued in violation of any preemptive right of any
stockholders;
(ii) Each of Parent and Sub has full corporate power and authority
to execute, deliver and perform this Agreement, and this Agreement has
been duly authorized, executed and delivered by Parent and Sub and
(assuming its due and valid authorization, execution and delivery by the
Company and its validity and binding effect upon the Company)
constitutes the legal, valid and binding obligation of Parent and Sub
enforceable against Parent and Sub in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of
general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law);
(iii) The execution and performance by Parent and Sub of this
Agreement will not violate the Restated Certificate of Incorporation or
By-laws of Parent or the Articles of Incorporation or Regulations of
Sub;
(iv) To the knowledge of such counsel, the execution and
performance by Parent and Sub of this Agreement will not violate, result
in a breach of or constitute a default under any material indenture,
mortgage, evidence of indebtedness, lease, agreement, instrument, law,
rule, regulation, judgment, order or decree to which Parent or any of
its Subsidiaries is a party or by which any of them or any of their
respective properties or assets are bound;
(v) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or other Governmental Entity which
has not been obtained is required on behalf of Parent or any of its
Subsidiaries for the consummation of the transactions contemplated by
this Agreement;
(vi) To the knowledge of such counsel, there are no actions, suits
or proceedings, pending or overtly threatened, against or affecting
Parent or any of its Subsidiaries, at law or in equity or before or by
any court or other Governmental Entity or before any arbitrator, which
seek to restrain, prohibit or invalidate any of the transactions
contemplated by this Agreement;
(vii) (A) At the time the Registration Statement became effective,
the Registration Statement (other than the financial statements,
financial data, statistical data and supporting schedules included
therein, and information relating to or supplied by the Company, as to
which such counsel need express no opinion) complied as to form in all
material respects with the requirements of the Securities Act; and (B)
in the course of the preparation of the Registration Statement and the
Proxy Statement, such counsel has considered the information set forth
therein in light of the matters required to be set forth therein, and
has participated in conferences with officers and representatives of the
Company and Parent, including their respective counsel and independent
public accountants, during the course of which the contents of the
Registration Statement and the Proxy Statement and related matters were
discussed; such counsel has not independently checked the accuracy or
completeness of, or otherwise verified, and accordingly is not passing
upon, and does not assume responsibility for, the accuracy, completeness
or fairness of the statements contained in the Registration Statement or
the Proxy Statement; such counsel has relied as to materiality, to a
large extent, upon the judgment of officers and representatives of the
Company and Parent; however, as a result of such consideration and
participation, nothing has come to such counsel's attention which causes
such counsel to believe that the Registration Statement (other than the
financial statements,
<PAGE> 33
financial data, statistical data and supporting schedules included
therein, and information relating to or supplied by the Company, as to
which such counsel need express no belief), at the time it became
effective, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Proxy Statement
(other than the financial statements, financial data, statistical data
and supporting schedules included therein, and information relating to
or supplied by the Company, as to which such counsel need express no
belief), at the time the Registration Statement became effective and at
the time of the Company Stockholder Meeting, included any untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(viii) The shares of Parent Common Stock being issued at the
Effective Time pursuant to this Agreement have been duly authorized and
validly issued and are fully paid and nonassessable.
In rendering such opinion, Sidley & Austin may rely as to matters of fact
upon the representations contained herein and in certificates of officers of
Parent and its Subsidiaries delivered to such counsel and certificates of public
officials. Such opinion may state that it is limited to the General Corporation
Law of the State of Delaware, the laws of the State of Illinois and the federal
laws of the United States of America and that, insofar as the laws of the State
of Ohio are applicable, such counsel has relied upon the opinion of Taft,
Stettinius & Hollister delivered to the Company pursuant to SECTION 6.2(D).
(d) OPINION OF TAFT, STETTINIUS & HOLLISTER. The Company shall have
received an opinion of Taft, Stettinius & Hollister, dated the Effective
Time, substantially to the effect that: (i) Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Ohio; (ii) Sub has full corporate power and authority to execute,
deliver and perform this Agreement; (iii) this Agreement has been duly
authorized, executed and delivered by Sub and (assuming its due and valid
authorization, execution and delivery by Parent and the Company and its
validity and binding effect upon the Company) constitutes the legal, valid
and binding obligation of Parent and Sub enforceable against Parent and Sub
in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights and by the effect of general
principles of equity (regardless of whether enforceability is considered in
a proceeding in equity or at law); and (iv) the Merger has been duly
consummated and become effective in accordance with the OGCL. In rendering
such opinion, Taft, Stettinius & Hollister may rely as to matters of fact
upon the representations contained herein and in certificates of officers
of Parent and its Subsidiaries delivered to such counsel and certificates
of public officials. Such opinion may state that it is limited to the laws
of the State of Ohio.
(e) CONSENTS UNDER AGREEMENTS. Parent shall have obtained the
consent or approval of each person (other than the Governmental Entities
referred to in SECTION 6.1(C)) whose consent or approval shall be required
in connection with the transactions contemplated hereby under any
indenture, mortgage, evidence of indebtedness, lease or other agreement or
instrument, except where the failure to obtain the same would not
reasonably be expected, in the good faith opinion of the Company,
individually or in the aggregate, to have a Material Adverse Effect on
Parent or upon the consummation of the transactions contemplated hereby.
(f) NON-COMPETE AGREEMENTS. The Agreement, dated as of September 23,
1996, by and among Parent, the Company and Durwood G. Rorie, Jr. ("Rorie"),
and the Agreement, dated as of September 23, 1996, by and among Parent, the
Company and William A. Cheney ("Cheney") (collectively, the "Non-Compete
Agreements") shall become effective at the Effective Time.
(g) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no Material Adverse Change with respect to Parent; and the
Company shall have received a certificate signed on behalf of Parent by its
Chief Executive Officer and its Chief Financial Officer to such effect.
<PAGE> 34
Section 6.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE
MERGER. The obligation of Parent and Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. The
Company shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed at or prior
to the Effective Time, each of the representations and warranties of the
Company contained in this Agreement that is qualified by materiality shall
be true and correct at and as of the Effective Time as if made at and as of
the Effective Time and each of such representations and warranties that is
not so qualified shall be true and correct in all material respects at and
as of the Effective Time as if made at and as of the Effective Time, in
each case except as contemplated or permitted by this Agreement; and Parent
shall have received a certificate signed on behalf of the Company by its
Chief Executive Officer and its Chief Financial Officer to such effect.
(b) TAX OPINION. Parent shall have received an opinion of Sidley &
Austin, in form and substance reasonably satisfactory to Parent, dated the
Effective Time, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which are
consistent with the state of facts existing as of the Effective Time, for
federal income tax purposes:
(i) The Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Company, Sub and Parent
will each be a party to such reorganization within the meaning of
Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Parent or the Company
as a result of the Merger;
(iii) No gain or loss will be recognized by the non-dissenting
shareholders of the Company upon the conversion of their Company Common
Shares into shares of Parent Common Stock in accordance with the Merger,
except with respect to cash, if any, received in lieu of fractional
shares of Parent Common Stock;
(iv) The aggregate tax basis of the shares of Parent Common Stock
received by a shareholder in exchange for Company Common Shares in
accordance with the Merger (including fractional shares of Parent Common
Stock for which cash is received) will be the same as the aggregate tax
basis of such Company Common Shares;
(v) The holding period for shares of Parent Common Stock received
by a shareholder in exchange for Company Common Shares in accordance
with the Merger will include the period that such Company Common Shares
were held by the shareholder, provided such Company Common Shares were
held as capital assets by such shareholder at the Effective Time; and
(vi) A shareholder of the Company who receives cash in lieu of a
fractional share of Parent Common Stock will recognize gain or loss
equal to the difference, if any, between such shareholder's basis in
such fractional share and the amount of cash received.
In rendering such opinion, Sidley & Austin may receive and rely upon
representations contained in a certificate of the Company substantially in the
form of the Company Tax Certificate, a certificate of Parent substantially in
the form of the Parent Tax Certificate and other appropriate certificates of the
Company, Parent and others, and may condition such opinion on the receipt from
each Major Shareholder of a Shareholder Certificate.
(c) OPINION OF JACK W. PAINTER, ESQ., Parent shall have received an
opinion from Jack W. Painter, Esq., dated the Effective Time, substantially
to the effect that:
(i) The Company is a corporation in good standing under the laws of
the State of Ohio, and the authorized shares of the capital stock of the
Company are as stated in the first sentence of SECTION 3.2;
(ii) The Company has full corporate power and authority to
execute, deliver and perform this Agreement, and this Agreement has been
duly authorized, executed and delivered by the Company
<PAGE> 35
and (assuming its due and valid authorization, execution and delivery by
Parent and Sub and its validity and binding effect upon Parent and Sub)
constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of
general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law);
(iii) The execution and performance by the Company of this
Agreement will not violate the Articles of Incorporation or Regulations
of the Company or the charter or organization documents or by-laws of
any of its Subsidiaries;
(iv) To the knowledge of such counsel, the execution and
performance by the Company of this Agreement will not violate, result in
a breach of or constitute a default under any material indenture,
mortgage, evidence of indebtedness, lease, agreement, instrument, law,
rule, regulation, judgment, order or decree to which the Company or any
of its Subsidiaries is a party or by which any of them or any of their
respective properties or assets are bound;
(v) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or other Governmental Entity which
has not been obtained is required on behalf of the Company or any of its
Subsidiaries for consummation of the transactions contemplated by this
Agreement;
(vi) To the knowledge of such counsel, there are no actions, suits
or proceedings, pending or overtly threatened, against or affecting the
Company or any of its Subsidiaries, at law or in equity or before or by
any court or other Governmental Entity or before any arbitrator, which
seek to restrain, prohibit or invalidate any of the transactions
contemplated by this Agreement; and
(vii) (A) At the time the Registration Statement became effective,
the Registration Statement (other than the financial statements,
financial data, statistical data and supporting schedules included
therein, and information relating to or supplied by Parent, as to which
such counsel need express no opinion) complied as to form in all
material respects with the requirements of the Securities Act; and (B)
in the course of the preparation of the Registration Statement and the
Proxy Statement, such counsel has considered the information set forth
therein in light of the matters required to be set forth therein, and
has participated in conferences with officers and representatives of the
Company and Parent, including their respective counsel and independent
public accountants, during the course of which the contents of the
Registration Statement and the Proxy Statement and related matters were
discussed; such counsel has not independently checked the accuracy or
completeness of, or otherwise verified, and accordingly is not passing
upon, and does not assume responsibility for, the accuracy, completeness
or fairness of the statements contained in the Registration Statement or
the Proxy Statement; such counsel has relied as to materiality, to a
large extent, upon the judgment of officers and representatives of the
Company and Parent; however, as a result of such consideration and
participation, nothing has come to such counsel's attention which causes
such counsel to believe that the Registration Statement (other than the
financial statements, financial data, statistical data and supporting
schedules included therein, and information relating to or supplied by
Parent, as to which such counsel need express no belief), at the time it
became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Proxy Statement (other than the financial statements, financial data,
statistical data and supporting schedules included therein, and
information relating to or supplied by Parent, as to which such counsel
need express no belief), at the time the Registration Statement became
effective and at the time of the Company Stockholder Meeting, included
any untrue statement of a material fact or omitted to state any material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
<PAGE> 36
In rendering such opinion, such counsel may rely as to matters of fact upon
the representations contained herein and on certificates of officers of the
Company delivered to such counsel and certificates of public officials. Such
opinion may state that it is limited to the laws of the State of Ohio, the
General Corporation law of the State of Delaware and the federal laws of the
United States of America.
(d) OPINION OF GRAYDON, HEAD & RITCHEY. Parent shall have received
an opinion from Graydon, Head & Ritchey, dated the Effective Time,
substantially to the effect that (i) the Company is a corporation duly
organized and validly existing under the laws of the State of Ohio; and
(ii) all outstanding Company Common Shares have been duly and validly
authorized and issued, are fully paid and nonassessable and have not been
issued in violation of any preemptive right of shareholders.
In rendering such opinion, such counsel may rely as to matters of fact upon
the representations contained herein and in certificates of officers of the
Company delivered to such counsel. Such opinion may state that it is limited to
the laws of the State of Ohio.
(e) CONSENTS UNDER AGREEMENTS. The Company shall have obtained the
consent or approval of each person (other than the Governmental Entities
referred to in SECTION 6.1(C)) whose consent or approval shall be required
in connection with the transactions contemplated hereby under any
indenture, mortgage, evidence of indebtedness, lease or other agreement or
instrument, except where the failure to obtain the same would not
reasonably be expected, in the good faith opinion of Parent, individually
or in the aggregate, to have a Material Adverse Effect on the Company or
Parent or upon the consummation of the transactions contemplated hereby.
(f) AFFILIATE AGREEMENTS. Parent shall have received the written
agreements from the Rule 145 Affiliates of the Company described in SECTION
5.5.
(g) LITIGATION. There shall not have been instituted or be pending,
or threatened, any suit, action or proceeding before any Governmental
Entity as a result of this Agreement or any of the transactions
contemplated hereby which, if such Governmental Entity were to prevail,
would reasonably be expected, in the good faith opinion of Parent, to have
a Material Adverse Effect on Parent or the Company (as the Surviving
Corporation).
(h) ACCOUNTING. Parent shall have received an opinion of Coopers &
Lybrand LLP, in form and substance reasonably satisfactory to Parent, that
the Merger will qualify as a pooling of interests under generally accepted
accounting principles; and based on such opinion and such other advice as
Parent may deem relevant, Parent shall have no reasonable basis for
believing that the Merger may not be accounted for as a pooling of
interests in accordance with generally accepted accounting principles.
(i) NON-COMPETE AGREEMENTS. The Non-Compete Agreements shall become
effective at the Effective Time.
(j) The following agreements shall have been terminated and be of no
further force or effect prior to the Effective Time: (i) Stock Transfer,
Restriction, Purchase and Redemption Agreement, dated December 2, 1985,
between Rorie, Cheney and the Company; (ii) Transfer of Stock Agreement,
dated August 1, 1994, between Rorie, Margaret Stewart Rorie, Cheney, the W.
A. Cheney Family Trust and the Company; and (iii) Stock Purchase and Sale
Agreement, dated January 2, 1992, among Meiko Mercantile, Limited, Cheney
and Rorie.
(k) APPRAISAL RIGHTS. The holders of not more than 10% of the issued
and outstanding Company Common Shares shall have properly demanded
appraisal or dissenters rights pursuant to the OGCL.
(l) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there
shall have been no Material Adverse Change with respect to the Company; and
Parent shall have received a certificate signed on behalf of the Company by
its Chief Executive Officer and its Chief Financial Officer of the Company
to such effect.
<PAGE> 37
ARTICLE VII
TERMINATION; AMENDMENT AND WAIVER
Section 7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after any approval by the
shareholders of the Company of the matters presented in connection with the
Merger:
(a) by mutual written consent of Parent, Sub and the Company, as
authorized by their respective Boards of Directors;
(b) by Parent, as authorized by its Board of Directors, if (i) the
Company shall have failed to comply in any material respect with any of its
covenants or agreements contained in this Agreement required to be complied
with prior to the date of such termination, which failure to comply has not
been cured within five business days after receipt by the Company of notice
of such failure to comply, or (ii) the shareholders of the Company shall
not approve the Merger at the Company Stockholder Meeting or any
adjournment thereof;
(c) by the Company, as authorized by its Board of Directors, if (i)
Parent or Sub shall have failed to comply in any material respect with any
of its respective covenants or agreements contained in this Agreement
required to be complied with prior to the date of such termination, which
failure to comply has not been cured within five business days after
receipt by Parent of notice of such failure to comply, or (ii) the
shareholders of the Company shall not approve the Merger at the Company
Stockholder Meeting or any adjournment thereof;
(d) by either Parent or the Company, as authorized by its Board of
Directors, if there has been (i) a material breach by the other (or Sub if
the Company is the terminating party) of any representation or warranty
that is not qualified as to materiality or (ii) a breach by the other (or
Sub if the Company is the terminating party) of any representation or
warranty that is qualified as to materiality, in each case which breach has
not been cured within five business days after receipt by the breaching
party of notice of the breach;
(e) by either Parent or the Company, as authorized by its Board of
Directors, if: (i) the Merger has not been effected on or prior to the
close of business on March 31, 1997; PROVIDED, HOWEVER, that the right to
terminate this Agreement pursuant to this clause (e) shall not be available
to any party whose failure to fulfill any obligation of this Agreement has
been the cause of, or re-sulted in, the failure of the Merger to have
occurred on or prior to such date; or (ii) any court or other Governmental
Entity having jurisdiction over a party hereto shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become
final and nonappealable;
(f) by either Parent or the Company, as authorized by its Board of
Directors, if the Board of Directors of the Company shall determine that a
Takeover Proposal constitutes a Superior Proposal; PROVIDED, HOWEVER, that
the Company may not terminate this Agreement pursuant to this clause (f)
unless (i) 15 days shall have elapsed after delivery to Parent of a written
notice of such determination by such Board of Directors and during such
15-day period the Company shall have fully cooperated with Parent,
including, without limitation, informing Parent of the terms and conditions
of such Takeover Proposal and the identity of the person or group making
such Takeover Proposal, with the intent of enabling Parent to agree to a
modification of the terms and conditions of this Agreement so that the
transactions contemplated hereby may be effected, and (ii) at the end of
such 15-day period such Board of Directors shall continue reasonably to
believe that such Takeover Proposal constitutes a Superior Proposal and
simultaneously therewith the Company shall enter into a definitive
acquisition, merger or similar agreement to effect such Superior Proposal;
PROVIDED, further, that Parent may only terminate this Agreement pursuant
to this clause (f) at any time after the close of business on the 10th day
following any date on which the Board of Directors of the Company
determines that a Takeover Proposal constitutes a Superior Proposal and
only if, prior to such termination by Parent, the Board of Directors of
<PAGE> 38
the Company has not rejected such Takeover Proposal and has not terminated
all discussions and negotiations pertaining to such Takeover Proposal;
PROVIDED, further that the immediately preceding proviso shall apply only
to the first Takeover Proposal determined by the Board of Directors of the
Company to be a Superior Proposal; upon, and at any time after, any
subsequent determination by the Board of Directors of the Company that any
Takeover Proposal is a Superior Proposal, Parent shall have the right to
terminate this Agreement pursuant to this clause (f);
(g) by Parent, as authorized by its Board of Directors, if the Board
of Directors of the Company shall not have recommended the Merger to the
Company's shareholders, or shall have resolved not to make such
recommendation, or shall have modified or rescinded its recommendation of
the Merger to the Company's shareholders as being advisable and fair to and
in the best interests of the Company and its shareholders, or shall have
modified or rescinded its approval of this Agreement, or shall have
resolved to do any of the foregoing;
(h) by Parent, as authorized by its Board of Directors, if any
Takeover Proposal (other than the Merger) involving the Company shall
result in the acquisition by any person, entity or group (other than the
Parent or any of its Subsidiaries) of 20% or more of the equity of, or 20%
or more of the assets of, the Company or any of its Significant
Subsidiaries; or
(i) by the Company, as authorized by its Board of Directors, in the
event that on any date (the "Calculation Date") occurring within ten
business days preceding the Closing, the per share closing price of Parent
Common Stock on the NYSE (as shown in THE WALL STREET JOURNAL, New York
Stock Exchange Composite Transactions) is less than the dollar amount
calculated by multiplying the Index Adjusted Price by 85%. The "Index
Adjusted Price" is equal to the product obtained by multiplying (A) 21- 1/2
by (B) the decimal determined by dividing the S&P 500 Index on the
Calculation Date by the S&P 500 Index on the date of this Agreement
(provided that in no event shall such decimal exceed 100%).
The right of Parent or the Company to terminate this Agreement pursuant to
this SECTION 7.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of such party, whether prior to or
after the execution of this Agreement.
Section 7.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement by either Parent or the Company as provided in SECTION 7.1, this
Agreement shall forthwith become void without any liability hereunder on the
part of the Company, Parent, Sub or their respective directors or officers,
except for the last sentence of SECTION 5.4 and the entirety of SECTION 5.7,
which shall survive any such termination; PROVIDED, HOWEVER, that nothing
contained in this SECTION 7.2 shall relieve any party hereto from any liability
for any breach of this Agreement.
Section 7.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after approval by the shareholders of the Company of the
matters presented to them in connection with the Merger; PROVIDED, HOWEVER, that
after any such approval, no amendment shall be made if applicable law would
require further approval by such shareholders, unless such further approval
shall be obtained. This Agreement shall not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
Section 7.4 WAIVER. At any time prior to the Effective Time, the parties
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any instrument delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein which may legally be waived; PROVIDED, HOWEVER, that
after approval by the shareholders of the Company of the matters presented to
them in connection with the Merger, no waiver shall be made if applicable law
would require further approval by such shareholders, unless such further
approval shall be obtained. Any agreement on the part of any party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
<PAGE> 39
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant hereto shall survive the Effective Time.
Section 8.2 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered personally, one day after
being delivered to an overnight courier or when telecopied (with a confirmatory
copy sent by overnight courier) to the other parties hereto at the following
addresses (or at such other address for any party as shall be specified by like
notice):
(a) if to Parent or Sub, to
CLARCOR Inc.
2323 Sixth Street
Rockford, IL 61104
Attention: Bruce A. Klein
Vice President-Finance and
Chief Financial Officer
Tel. 815/961-5717
Fax 815/968-5879
with a copy to:
David J. Boyd, Esq.
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Tel. 312/853-7444
Fax 312/853-7036
(b) if to the Company, to
United Air Specialists, Inc.
4440 Creek Road
Cincinnati, OH 45242-2832
Attention: Durwood G. Rorie, Jr.
President
Tel. 513/891-0400
Fax 513/984-2684
with a copy to:
Jack W. Painter, Esq.
5820 Graves Lake Drive
Cincinnati, OH 45243
Tel. 513/395-4011
Fax 513/561-1396
Section 8.3 INTERPRETATION. When reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
Section 8.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts shall have been signed by
each of the parties hereto and delivered to the other parties.
<PAGE> 40
Section 8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement, except as provided in the last sentence of SECTION 5.4, constitutes
the entire agreement of the parties hereto and supersedes all prior agreements
and understandings, both written and oral, among such parties with respect to
the subject matter hereof. This Agreement, except for the provisions of SECTION
5.13, is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
Section 8.6 GOVERNING LAW. Except to the extent that the laws of the
State of Ohio are mandatorily applicable to the Merger, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflict of laws of such state.
Section 8.7 ASSIGNMENT. Except as provided in the next to last sentence
of SECTION 1.1, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties.
Section 8.8 SEVERABILITY. If any term or provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other terms, provisions and conditions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party hereto. Upon any determination that any term or
other provision hereof is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of such parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
may be consummated as originally contemplated to the fullest extent possible.
Section 8.9 ENFORCEMENT OF THIS AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the terms or provisions
of this Agreement were not performed in accordance with their specific wording
or were otherwise breached. It is accordingly agreed that each of the parties
hereto shall be entitled to 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 of America or any state having jurisdiction, such
remedy being in addition to any other remedy to which any party may be entitled
at law or in equity.
<PAGE> 41
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be executed and attested by their respective officers thereunto duly
authorized, all as of the date first written above.
CLARCOR INC.
/S/ LAWRENCE E. GLOYD
By:
Lawrence E. Gloyd
Chairman and Chief Executive
Officer
/S/ MARCIA S. BLAYLOCK
Attest:
Marcia S. Blaylock
Vice President and Corporate
Secretary
CUAC INC.
/S/ LAWRENCE E. GLOYD
By:
Lawrence E. Gloyd
President
/S/ MARCIA S. BLAYLOCK
Attest:
Marcia S. Blaylock
Vice President and Corporate
Secretary
UNITED AIR SPECIALISTS, INC.
By:
Durwood G. Rorie
President and CEO
/S/ WILLIAM A. CHENEY
Attest:
William A. Cheney
Secretary
<PAGE> 1
EXHIBIT 10.1
STOCKHOLDER AGREEMENT
This Stockholder Agreement ("Agreement") is entered into effective for all
purposes as of September 23, 1996, by and between CLARCOR Inc., a Delaware
corporation ("Parent"), and the undersigned (the "Stockholder", and together
with the other persons who execute agreements in the same form as this
Agreement, the "Signatory Stockholders").
WHEREAS, Parent, CUAC Inc., an Ohio corporation and wholly-owned subsidiary
of Parent ("Sub"), and United Air Specialist, Inc., an Ohio corporation (the
"Company"), are simultaneously entering into an Agreement and Plan of Merger,
(the "Merger Agreement"), pursuant to which Sub will merge with and into the
Company (the "Merger"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have required that each of the Signatory Stockholders
enter into, and each of the Signatory Stockholders has agreed to enter into,
this Agreement or an agreement in the same form as this Agreement (together, the
"Stockholder Agreements"); and
WHEREAS, the Board of Directors of the Company has, prior to the execution
of the Merger Agreement and the Stockholder Agreements, approved the Merger
Agreement, the Merger and this Agreement;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, the parties agree as follows:
ARTICLE 1
AGREEMENT TO SUPPORT MERGER
Section 1.1 VOTING. The Stockholder hereby agrees that, during the term
that this Agreement is in effect, at any meeting of the stockholders of the
Company, however called, or in connection with any written consent of the
stockholders of the Company, the Stockholder shall vote (or cause to be voted)
all voting Shares (as defined in Section 2.1) held of record (or beneficially)
by the Stockholder:
(a) in favor of the Merger and the adoption of the Merger Agreement;
(b) against any action or agreement that would result in a breach of
any covenant, representation or warranty, or any other obligation or
agreement, of the Company under the Merger Agreement; or
(c) except as otherwise agreed to in writing in advance by Parent,
against the following actions (other than the Merger and the transactions
contemplated by the Merger Agreement):
(i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or any
of its subsidiaries (as defined in the Merger Agreement);
(ii) a sale, lease or transfer of a material amount of assets of
the Company or any of its subsidiaries or a reorganization,
recapitalization, dissolution or liquidation of the Company or any of
its subsidiaries;
(iii) any change in the Board of Directors of the Company;
(iv) any change in the present capitalization of the Company or any
amendment to the Company's Articles of Incorporation or By-laws;
(v) any change in the Company's corporate structure or business; or
(vi) any other action that is intended, or that could reasonably be
expected, to impede, interfere with, delay, postpone or discourage, or
adversely affect the contemplated economic benefits to Parent of the
Merger and the actions or transactions contemplated by the Merger
Agreement or this Agreement.
<PAGE> 2
The Stockholder further agrees that the Stockholder will not enter into any
agreement or understanding with any person or entity prior to the termination of
this Agreement that is in any manner inconsistent with the provisions of this
Section 1.1.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES. The Stockholder hereby
represents and warrants to Parent as follows:
(a) OWNERSHIP OF SHARES. The Stockholder is the record and beneficial
owner of the number of shares of Common Stock, without par value, of the
Company ("Common Stock"), as set forth on Schedule A hereto (the "Existing
Shares" and, together with any shares of Common Stock acquired by the
Stockholder hereafter and prior to the termination of this Agreement,
whether upon exercise of options, conversion of convertible securities,
purchase, exchange or otherwise, the "Shares"). On the date hereof, the
Existing Shares constitute all of the shares of Common Stock owned of
record or beneficially by the Stockholder. Except as described on Schedule
A attached hereto, the Stockholder has sole voting power and sole power of
disposition, sole power to demand an appraisal of any Existing Shares
entitled to appraisal pursuant to Section 1701.85 of the Ohio General
Corporation Law and sole power to engage in the actions set forth herein,
including those set forth in Article 3 hereof, in each case with respect to
all of the Existing Shares, with no restrictions on such rights except
pursuant to the terms of this Agreement.
(b) POWER; BINDING AGREEMENT. The Stockholder has the legal
capacity, power and authority to enter into and perform all of the
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Stockholder will not violate any other
agreement to which the Stockholder is a party or by which the Stockholder
or any of the Stockholder's properties or assets are or may be bound,
including, without limitation, any trust agreement, voting agreement,
irrevocable proxy, stockholders agreement or voting trust. This Agreement
has been duly and validly executed and delivered by the Stockholder and
constitutes a valid and binding agreement of the Stockholder, enforceable
against the Stockholder in accordance with its terms. There is no
beneficiary, or holder of a voting trust certificate or other interest, of
any trust of which the Stockholder is a trustee whose consent is required
for the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby with respect to any Existing Shares. If
the Shares constitute community property, this Agreement has been duly
authorized, executed and delivered by, and constitutes a valid and binding
agreement of, each person having community property rights in the Shares,
enforceable against such person in accordance with its terms.
(c) NO CONFLICTS. Except pursuant to the Securities Exchange Act of
1934, as amended, no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority or any other
person (or entity) is necessary for the execution of this Agreement by the
Stockholder and the performance by the Stockholder of the actions
contemplated hereby. Neither the execution and delivery of this Agreement
by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated hereby nor compliance by the Stockholder with any
of the provisions hereof will (i) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, material
modification or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which the Stockholder is a party or by which the
Stockholder or any of the Stockholder's properties or assets are or may be
bound or (ii) violate any order, writ, injunction, decree, judgment,
statute, rule or regulation applicable to the Stockholder or any of the
Stockholder's properties or assets.
(d) NO ADVERSE CLAIMS. The Shares and the certificates representing
such Shares are now and at all times during the term of this Agreement will
be held by the Stockholder, or by a nominee or custodian for the benefit of
the Stockholder, free and clear of all liens, claims, security interests,
proxies, voting
<PAGE> 3
trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such encumbrances or proxies
arising under this Agreement.
(e) NO BROKERS. No broker, investment banker, financial advisor or
other person is entitled to receive from the Company or any subsidiary any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated hereby based on
arrangements made by or on behalf of the Stockholder.
(f) MATERIAL RELIANCE. The Stockholder understands and acknowledges
that Parent is entering into, and causing Sub to enter into, the Merger
Agreement in material reliance upon the Stockholder's execution and
delivery of this Agreement.
(g) NO INTENTION TO DISPOSE. The Stockholder has no plan or
intention to, directly or indirectly, sell, exchange, or otherwise dispose
of, reduce the risk of loss by short sale or otherwise, or enter into any
contract or other arrangement with respect to, or consent to, the sale,
exchange or other disposition of any interest in any shares of Parent
Common Stock (as defined in the Merger Agreement) received pursuant to the
Merger. The Stockholder acknowledges that the Stockholder is giving this
representation to enable Graydon, Head & Ritchey and Sidley and Austin to
opine that the Merger constitutes a reorganization within the meaning of
Section 368(a) of the Code and further recognizes that significant adverse
tax consequences might result if such representation is not true. The
Stockholder understands and agrees that, in connection with the Merger, the
Stockholder will give written notice to the Company and Parent in the event
that, at the Effective Time of the Merger (as defined in the Merger
Agreement) there is any change in any of the representations of the
Stockholder set forth in this Section 2.1(g).
ARTICLE 3
CERTAIN COVENANTS AND AGREEMENTS
Section 3.1 CERTAIN COVENANTS OF STOCKHOLDER. Except in accordance with
the terms of this Agreement, during the term of this Agreement, the Stockholder
hereby covenants and agrees as follows:
(a) NO SOLICITATION. (i) The Stockholder will immediately cease and
cause to be terminated all existing discussions and negotiations, if any,
with any parties conducted heretofore by the Stockholder with respect to
any Takeover Proposal. As used in this Agreement, "Takeover Proposal" means
any tender offer or exchange offer for 20% or more of the outstanding
shares of Common Stock or any proposal or offer for a merger,
consolidation, amalgamation or other business combination involving the
Company or its subsidiaries or any equity securities (or securities
convertible into equity securities) of the Company, or any proposal or
offer to acquire in any manner a 20% or greater equity or beneficial
interest in, or a material amount of the assets or value of, the Company or
its subsidiaries, other than pursuant to the transactions contemplated by
the Merger Agreement.
(ii) The Stockholder will not, and will not permit any of the
Stockholder's representatives or agents to, directly or indirectly, (A)
solicit, initiate or (excluding any action referred to in clauses (B) and
(C) of this sentence) encourage or take any action to facilitate the making
of, any offer or proposal that constitutes or that is reasonably likely to
lead to any Takeover Proposal, (B) participate in any discussions (other
than as necessary to clarify the terms and conditions of any unsolicited
offer, including any financing or other contingencies and other relevant
facts with respect thereto) or negotiations regarding any Takeover Proposal
(other than with the Stockholder's legal counsel, other Signatory
Stockholders or officers or directors of the Company) or (C) furnish to any
person (other than Parent or its representatives) any nonpublic information
or nonpublic data regarding the Company. The Stockholder will notify Parent
or officers or directors of the Company orally and in writing of any such
inquiries, offers or proposals to the Stockholder (including the terms and
conditions of any offer or proposal and the identity of the person making
any inquiry, offer or proposal) as promptly as possible and in any event
within 24 hours after receipt thereof.
(b) RESTRICTION ON TRANSFER; PROXIES AND NON-INTERFERENCE;
RESTRICTION ON WITHDRAWAL. The Stockholder shall not, directly or
indirectly:
<PAGE> 4
(i) except pursuant to the terms of the Merger Agreement and as
set forth on Exhibit A, offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of (or in any other way reduce the
Stockholder's risk of ownership in), or enter into any contract, option
or other arrangement or understanding with respect to or consent to the
offer for sale, sale, transfer, tender, pledge, encumbrance, assignment
or other disposition of (or in any other way reduce the Stockholder's
risk of ownership in), any or all of the Shares or any other equity
securities of the Company or any interest therein;
(ii) except as contemplated by this Agreement, grant any proxies
or powers of attorney, deposit any Shares into any voting trust or enter
into any voting agreement with respect to any Shares; or
(iii) take any action that would make any representation or
warranty of the Stockholder contained herein untrue or incorrect or have
the effect of preventing or disabling the Stockholder from performing
the Stockholder's obligations under this Agreement.
(c) WAIVER OF APPRAISAL RIGHTS. The Stockholder hereby waives any
and all rights of appraisal or rights to require the Company to purchase
any of the Shares that the Stockholder may have under the Ohio General
Corporation Law.
Section 3.2 CERTAIN AGREEMENTS WITH RESPECT TO SHARES FOR PURPOSES OF RULE
145. If the Stockholder may be deemed to be an "affiliate" of the Company
pursuant to Rule 145 under the Securities Act of 1933, as amended, the
Stockholder has delivered, or agrees to deliver to the Parent prior to the
closing of the Merger, an Affiliate Agreement in the form previously approved by
the parties to the Merger Agreement with respect to the Shares and future
transactions with respect to Parent Shares by the Stockholder ("Affiliate
Agreement"). Each representation of the Stockholder made in Section 2.1(b) and
Section 2.1(c) hereof with respect to this Agreement is hereby confirmed to be
true and correct with respect to the Affiliate Agreement, if any.
Section 3.3 BINDING OBLIGATIONS. The Stockholder agrees that this
Agreement and the Stockholder's obligations hereunder and, if applicable, under
the Affiliate Agreement shall attach to the Shares and shall be binding upon any
person or entity to which legal or beneficial ownership of the Shares shall
pass, whether by operation of law or otherwise, including without limitation the
Stockholder's heirs, guardians, administrators or successors.
Section 3.4 STOP TRANSFER. The Stockholder agrees with, and covenants to,
Parent that the Stockholder shall not request that the Company register any
transfer of any certificate representing any of the Shares, if such transfer
would violate any provision of this Agreement.
ARTICLE 4
TERMINATION
Section 4.1 TERMINATION. This Agreement shall terminate if the Merger
Agreement is terminated in accordance with its terms other than as a result of
the effectiveness of the Merger. Such termination shall not affect the rights of
any party for any breach of any covenants, agreements, representations or
warranties contained herein.
ARTICLE 5
MISCELLANEOUS
Section 5.1 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and the
Affiliate Agreement, if applicable, executed by the Stockholder, (i) constitute
the entire agreement between the parties with respect to the subject matter
hereof and thereof and supersede all other prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof and
<PAGE> 5
(ii) shall not be assigned by operation of law or otherwise
without the prior written consent of the other party; provided that
Parent may assign, in its sole discretion, its rights and obligations
hereunder and thereunder to any direct or indirect wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such
obligations. Subject to the preceding sentence, this Agreement and the
Affiliate Agreement, if applicable, shall be binding upon and inure to
the benefit of the parties hereto and their respective successors,
heirs, personal representatives, legal representatives and permitted
assigns.
Section 5.2 AMENDMENTS. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by the parties hereto. The Merger Agreement may be amended in
accordance with the terms thereof, and each reference herein to the Merger
Agreement shall mean the Merger Agreement as amended, provided that any such
amendment that changes the Conversion Number as provided in Section 1.5 of the
Merger Agreement or that in any way materially adversely affects the rights of
the stockholders of the Company shall have been approved in writing by the
Stockholder.
Section 5.3 STOCKHOLDER CAPACITY. If the Stockholder is or becomes during
the term hereof a director of the Company, then the Stockholder makes no
agreement or understanding herein in his or her capacity as a director. The
Stockholder signs solely in his, her or its capacity as the record and
beneficial owner of the Shares.
Section 5.4 WRITTEN NOTICES. All written notices, requests, claims,
demands and other communication hereunder shall be given (and shall be deemed to
have been duly received if so given) by hand delivery, telegram, telex or
telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery, to the respective parties at the following addresses:
(a) if to Parent, to
CLARCOR Inc.
2323 Sixth Street
Rockford, Illinois 61104
Attention: Bruce A. Klein
Telephone: 815/961-5717
Telecopy: 815/968-5879
with a copy (which shall not constitute notice) to:
David J. Boyd, Esq.
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Telephone: 312/853-7444
Telecopy: 312/853-7036
(b) if to the Stockholder, to
Durwood G. Rorie, Jr.
7915 Lone Oak Court
Cincinnati, Ohio 45243
Telephone: 513/272-0030
with a copy (which shall not constitute notice) to:
Jack W. Painter, Esq.
5820 Graves Lake Drive
Cincinnati, Ohio 45243
Telephone: 513/395-4011
<PAGE> 6
Telecopy: 513/561-1396
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 5.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 5.6 SPECIFIC PERFORMANCE. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which there
would be no adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief, in addition to any other
remedy to which such party may be entitled, at law or in equity.
Section 5.7 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
Section 5.8 DESCRIPTIVE HEADING. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 5.9 FURTHER ASSURANCES. From time to time, at Parent's reasonable
request and without further consideration, the Stockholder shall execute and
deliver such additional documents and take all such further action as may be
necessary or appropriate to consummate and make effective, in the most
expeditious manner practicable, the agreements, covenants and transactions
contemplated by this Agreement.
Section 5.10 SEVERABILITY. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable,
such invalidity, illegality or unenforceability will not affect any other
provision or portion of any provision, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.
Section 5.11 REGISTRATION RIGHTS AGREEMENT. Prior to the closing of the
Merger, the parties will enter into an agreement for registration of the shares
of Parent Common Stock to be received by Stockholder in the Merger, which
agreement shall provide for one demand registration at the time that Parent
prepares its Annual Report on Form 10-K for the fiscal year ended November 30,
1998 and limited piggyback registration rights and which shall contain other
terms and conditions customary for transactions that are similar to the Merger.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered effective for all purposes as of the date first above
written.
CLARCOR INC.
<TABLE>
<S> <C>
By: /s/ Lawrence E. Gloyd
----------------------------------------
Name: Lawrence E. Gloyd
----------------------------------------
Title: Chairman and Chief Executive Officer
----------------------------------------
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
STOCKHOLDER:
Signature: /s/ Durwood G. Rorie, Jr.
------------------------------------------------
Printed Name: Durwood G. Rorie, Jr., in his individual
capacity and in his capacities as custodian and
trustee as set forth on Exhibit A hereto
Address: 7915 Lone Oak Court
Cincinnati, Ohio 45243
</TABLE>
<PAGE> 8
EXHIBIT A
OWNERSHIP OF SHARES
BY
DURWOOD G. RORIE, JR.
(1) 216,448 shares of UAS common stock owned of record, and beneficially, by Mr.
Rorie individually
(2) 187,500 shares of UAS common stock owned beneficially, directly by Mr. Rorie
individually, subject to stock options granted by UAS
(3) 2,000 shares of UAS common stock owned of record by Durwood G. Rorie, Jr.,
Trustee UA April 18, 1996 FBO Diane Stewart Barnhart, and owned
beneficially by Mr. Rorie individually
(4) 750 shares of UAS common stock owned of record by Durwood G. Rorie, Jr. as
custodian for Rachel Lee Rorie and owned beneficially by Mr. Rorie
individually
(5) 62,072 shares of UAS common stock owned of record by the UAS 401(k) Plan, of
which Mr. Rorie is a Trustee, and owned beneficially by Mr. Rorie
individually
Mr. Rorie has sole voting power and sole dispositive power of the shares
identified in (1) through (4) above. Mr. Rorie has shared voting power and no
dispositive power of the shares identified in (5) above.
For estate planning purposes, Mr. and Mrs. Rorie have been contemplating
for several months prior to the date of the Stockholders Agreement to which this
Exhibit A is attached, the transfer by Mr. Rorie of 44,889 shares of UAS common
stock and by Mrs. Rorie of 5,000 shares of UAS common stock to a family limited
partnership of which Mr. Rorie is the general partner. Such transfer may occur
after the date hereof and prior to the consummation of the merger.
<PAGE> 1
EXHIBIT 10.2
STOCKHOLDER AGREEMENT
This Stockholder Agreement ("Agreement") is entered into effective for all
purposes as of September 23, 1996, by and between CLARCOR Inc., a Delaware
corporation ("Parent"), and the undersigned (the "Stockholder", and together
with the other persons who execute agreements in the same form as this
Agreement, the "Signatory Stockholders").
WHEREAS, Parent, CUAC Inc., an Ohio corporation and wholly-owned subsidiary
of Parent ("Sub"), and United Air Specialist, Inc., an Ohio corporation (the
"Company"), are simultaneously entering into an Agreement and Plan of Merger,
(the "Merger Agreement"), pursuant to which Sub will merge with and into the
Company (the "Merger"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have required that each of the Signatory Stockholders
enter into, and each of the Signatory Stockholders has agreed to enter into,
this Agreement or an agreement in the same form as this Agreement (together, the
"Stockholder Agreements"); and
WHEREAS, the Board of Directors of the Company has, prior to the execution
of the Merger Agreement and the Stockholder Agreements, approved the Merger
Agreement, the Merger and this Agreement;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, the parties agree as follows:
ARTICLE 1
AGREEMENT TO SUPPORT MERGER
Section 1.1 VOTING. The Stockholder hereby agrees that, during the term
that this Agreement is in effect, at any meeting of the stockholders of the
Company, however called, or in connection with any written consent of the
stockholders of the Company, the Stockholder shall vote (or cause to be voted)
all voting Shares (as defined in Section 2.1) held of record (or beneficially)
by the Stockholder:
(a) in favor of the Merger and the adoption of the Merger Agreement;
(b) against any action or agreement that would result in a breach of
any covenant, representation or warranty, or any other obligation or
agreement, of the Company under the Merger Agreement; or
(c) except as otherwise agreed to in writing in advance by Parent,
against the following actions (other than the Merger and the transactions
contemplated by the Merger Agreement):
(i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or any
of its subsidiaries (as defined in the Merger Agreement);
(ii) a sale, lease or transfer of a material amount of assets of
the Company or any of its subsidiaries or a reorganization,
recapitalization, dissolution or liquidation of the Company or any of
its subsidiaries;
(iii) any change in the Board of Directors of the Company;
(iv) any change in the present capitalization of the Company or any
amendment to the Company's Articles of Incorporation or By-laws;
(v) any change in the Company's corporate structure or business;
or
(vi) any other action that is intended, or that could reasonably be
expected, to impede, interfere with, delay, postpone or discourage, or
adversely affect the contemplated economic benefits
<PAGE> 2
to Parent of the Merger and the actions or transactions contemplated by
the Merger Agreement or this Agreement.
The Stockholder further agrees that the Stockholder will not enter into any
agreement or understanding with any person or entity prior to the termination of
this Agreement that is in any manner inconsistent with the provisions of this
Section 1.1.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES. The Stockholder hereby
represents and warrants to Parent as follows:
(a) OWNERSHIP OF SHARES. The Stockholder is the record and
beneficial owner of the number of shares of Common Stock, without par
value, of the Company ("Common Stock"), as set forth on Schedule A hereto
(the "Existing Shares" and, together with any shares of Common Stock
acquired by the Stockholder hereafter and prior to the termination of this
Agreement, whether upon exercise of options, conversion of convertible
securities, purchase, exchange or otherwise, the "Shares"). On the date
hereof, the Existing Shares constitute all of the shares of Common Stock
owned of record or beneficially by the Stockholder. Except as described on
Schedule A attached hereto, the Stockholder has sole voting power and sole
power of disposition, sole power to demand an appraisal of any Existing
Shares entitled to appraisal pursuant to Section 1701.85 of the Ohio
General Corporation Law and sole power to engage in the actions set forth
herein, including those set forth in Article 3 hereof, in each case with
respect to all of the Existing Shares, with no restrictions on such rights
except pursuant to the terms of this Agreement.
(b) POWER; BINDING AGREEMENT. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance
of this Agreement by the Stockholder will not violate any other agreement
to which the Stockholder is a party or by which the Stockholder or any of
the Stockholder's properties or assets are or may be bound, including,
without limitation, any trust agreement, voting agreement, irrevocable
proxy, stockholders agreement or voting trust. This Agreement has been duly
and validly executed and delivered by the Stockholder and constitutes a
valid and binding agreement of the Stockholder, enforceable against the
Stockholder in accordance with its terms. There is no beneficiary, or
holder of a voting trust certificate or other interest, of any trust of
which the Stockholder is a trustee whose consent is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby with respect to any Existing Shares. If
the Shares constitute community property, this Agreement has been duly
authorized, executed and delivered by, and constitutes a valid and binding
agreement of, each person having community property rights in the Shares,
enforceable against such person in accordance with its terms.
(c) NO CONFLICTS. Except pursuant to the Securities Exchange Act of
1934, as amended, no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority or any other
person (or entity) is necessary for the execution of this Agreement by the
Stockholder and the performance by the Stockholder of the actions
contemplated hereby. Neither the execution and delivery of this Agreement
by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated hereby nor compliance by the Stockholder with any
of the provisions hereof will (i) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, material
modification or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which the Stockholder is a party or by which the
Stockholder or any of the Stockholder's properties or assets are or may be
bound or (ii) violate any order, writ, injunction, decree, judgment,
statute, rule or regulation applicable to the Stockholder or any of the
Stockholder's properties or assets.
<PAGE> 3
(d) NO ADVERSE CLAIMS. The Shares and the certificates representing
such Shares are now and at all times during the term of this Agreement will
be held by the Stockholder, or by a nominee or custodian for the benefit of
the Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except for any such encumbrances or proxies
arising under this Agreement.
(e) NO BROKERS. No broker, investment banker, financial advisor or
other person is entitled to receive from the Company or any subsidiary any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated hereby based on
arrangements made by or on behalf of the Stockholder.
(f) MATERIAL RELIANCE. The Stockholder understands and acknowledges
that Parent is entering into, and causing Sub to enter into, the Merger
Agreement in material reliance upon the Stockholder's execution and
delivery of this Agreement.
(g) NO INTENTION TO DISPOSE. The Stockholder has no plan or intention
to, directly or indirectly, sell, exchange, or otherwise dispose of, reduce
the risk of loss by short sale or otherwise, or enter into any contract or
other arrangement with respect to, or consent to, the sale, exchange or
other disposition of any interest in any shares of Parent Common Stock (as
defined in the Merger Agreement) received pursuant to the Merger. The
Stockholder acknowledges that the Stockholder is giving this representation
to enable Graydon, Head & Ritchey and Sidley and Austin to opine that the
Merger constitutes a reorganization within the meaning of Section 368(a) of
the Code and further recognizes that significant adverse tax consequences
might result if such representation is not true. The Stockholder
understands and agrees that, in connection with the Merger, the Stockholder
will give written notice to the Company and Parent in the event that, at
the Effective Time of the Merger (as defined in the Merger Agreement) there
is any change in any of the representations of the Stockholder set forth in
this Section 2.1(g).
ARTICLE 3
CERTAIN COVENANTS AND AGREEMENTS
Section 3.1 CERTAIN COVENANTS OF STOCKHOLDER. Except in accordance with
the terms of this Agreement, during the term of this Agreement, the Stockholder
hereby covenants and agrees as follows:
(a) NO SOLICITATION. (i) The Stockholder will immediately cease and
cause to be terminated all existing discussions and negotiations, if any,
with any parties conducted heretofore by the Stockholder with respect to
any Takeover Proposal. As used in this Agreement, "Takeover Proposal" means
any tender offer or exchange offer for 20% or more of the outstanding
shares of Common Stock or any proposal or offer for a merger,
consolidation, amalgamation or other business combination involving the
Company or its subsidiaries or any equity securities (or securities
convertible into equity securities) of the Company, or any proposal or
offer to acquire in any manner a 20% or greater equity or beneficial
interest in, or a material amount of the assets or value of, the Company or
its subsidiaries, other than pursuant to the transactions contemplated by
the Merger Agreement.
(ii) The Stockholder will not, and will not permit any of the
Stockholder's representatives or agents to, directly or indirectly, (A)
solicit, initiate or (excluding any action referred to in clauses (B)
and (C) of this sentence) encourage or take any action to facilitate the
making of, any offer or proposal that constitutes or that is reasonably
likely to lead to any Takeover Proposal, (B) participate in any
discussions (other than as necessary to clarify the terms and conditions
of any unsolicited offer, including any financing or other contingencies
and other relevant facts with respect thereto) or negotiations regarding
any Takeover Proposal (other than with the Stockholder's legal counsel,
other Signatory Stockholders or officers or directors of the Company) or
(C) furnish to any person (other than Parent or its representatives) any
nonpublic information or nonpublic data regarding the Company. The
Stockholder will notify Parent or officers or directors of the Company
<PAGE> 4
orally and in writing of any such inquiries, offers or proposals to the
Stockholder (including the terms and conditions of any offer or proposal
and the identity of the person making any inquiry, offer or proposal) as
promptly as possible and in any event within 24 hours after receipt
thereof.
(b) RESTRICTION ON TRANSFER; PROXIES AND NON-INTERFERENCE;
RESTRICTION ON WITHDRAWAL. The Stockholder shall not, directly or
indirectly:
(i) except pursuant to the terms of the Merger Agreement, offer
for sale, sell, transfer, tender, pledge, encumber, assign or otherwise
dispose of (or in any other way reduce the Stockholder's risk of
ownership in), or enter into any contract, option or other arrangement
or understanding with respect to or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, assignment or other disposition
of (or in any other way reduce the Stockholder's risk of ownership in),
any or all of the Shares or any other equity securities of the Company
or any interest therein;
(ii) except as contemplated by this Agreement, grant any proxies
or powers of attorney, deposit any Shares into any voting trust or enter
into any voting agreement with respect to any Shares; or
(iii) take any action that would make any representation or
warranty of the Stockholder contained herein untrue or incorrect or have
the effect of preventing or disabling the Stockholder from performing
the Stockholder's obligations under this Agreement.
(c) WAIVER OF APPRAISAL RIGHTS. The Stockholder hereby waives any
and all rights of appraisal or rights to require the Company to purchase
any of the Shares that the Stockholder may have under the Ohio General
Corporation Law.
Section 3.2 CERTAIN AGREEMENTS WITH RESPECT TO SHARES FOR PURPOSES OF RULE
145. If the Stockholder may be deemed to be an "affiliate" of the Company
pursuant to Rule 145 under the Securities Act of 1933, as amended, the
Stockholder has delivered, or agrees to deliver to the Parent prior to the
closing of the Merger, an Affiliate Agreement in the form previously approved by
the parties to the Merger Agreement with respect to the Shares and future
transactions with respect to Parent Shares by the Stockholder ("Affiliate
Agreement"). Each representation of the Stockholder made in Section 2.1(b) and
Section 2.1(c) hereof with respect to this Agreement is hereby confirmed to be
true and correct with respect to the Affiliate Agreement, if any.
Section 3.3 BINDING OBLIGATIONS. The Stockholder agrees that this
Agreement and the Stockholder's obligations hereunder and, if applicable, under
the Affiliate Agreement shall attach to the Shares and shall be binding upon any
person or entity to which legal or beneficial ownership of the Shares shall
pass, whether by operation of law or otherwise, including without limitation the
Stockholder's heirs, guardians, administrators or successors.
Section 3.4 STOP TRANSFER. The Stockholder agrees with, and covenants to,
Parent that the Stockholder shall not request that the Company register any
transfer of any certificate representing any of the Shares, if such transfer
would violate any provision of this Agreement.
ARTICLE 4
TERMINATION
Section 4.1 TERMINATION. This Agreement shall terminate if the Merger
Agreement is terminated in accordance with its terms other than as a result of
the effectiveness of the Merger. Such termination shall not affect the rights of
any party for any breach of any covenants, agreements, representations or
warranties contained herein.
<PAGE> 5
ARTICLE 5
MISCELLANEOUS
Section 5.1 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and the
Affiliate Agreement, if applicable, executed by the Stockholder, (i) constitute
the entire agreement between the parties with respect to the subject matter
hereof and thereof and supersede all other prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof and (ii) shall not be assigned by operation of law or otherwise without
the prior written consent of the other party; provided that Parent may assign,
in its sole discretion, its rights and obligations hereunder and thereunder to
any direct or indirect wholly owned subsidiary of Parent, but no such assignment
shall relieve Parent of its obligations hereunder if such assignee does not
perform such obligations. Subject to the preceding sentence, this Agreement and
the Affiliate Agreement, if applicable, shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs, personal
representatives, legal representatives and permitted assigns.
Section 5.2 AMENDMENTS. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by the parties hereto. The Merger Agreement may be amended in
accordance with the terms thereof, and each reference herein to the Merger
Agreement shall mean the Merger Agreement as amended, provided that any such
amendment that changes the Conversion Number as provided in Section 1.5 of the
Merger Agreement or that in any way materially adversely affects the rights of
the stockholders of the Company shall have been approved in writing by the
Stockholder.
Section 5.3 STOCKHOLDER CAPACITY. If the Stockholder is or becomes during
the term hereof a director of the Company, then the Stockholder makes no
agreement or understanding herein in his or her capacity as a director. The
Stockholder signs solely in his, her or its capacity as the record and
beneficial owner of the Shares.
Section 5.4 WRITTEN NOTICES. All written notices, requests, claims,
demands and other communication hereunder shall be given (and shall be deemed to
have been duly received if so given) by hand delivery, telegram, telex or
telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery, to the respective parties at the following addresses:
(a) if to Parent, to
CLARCOR Inc.
2323 Sixth Street
Rockford, Illinois 61104
Attention: Bruce A. Klein
Telephone: 815/961-5717
Telecopy: 815/968-5879
with a copy (which shall not constitute notice) to:
David J. Boyd, Esq.
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Telephone: 312/853-7444
Telecopy: 312/853-7036
(b) if to the Stockholder, to
William A. Cheney
9395 Old Plainfield Road
Apt. #9
Cincinnati, Ohio 45236
Telephone: 513/891-3820
<PAGE> 6
with a copy (which shall not constitute notice) to:
Jack W. Painter, Esq.
5820 Graves Lake Drive
Cincinnati, Ohio 45243
Telephone: 513/395-4011
Telecopy: 513/561-1396
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 5.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 5.6 SPECIFIC PERFORMANCE. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which there
would be no adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief, in addition to any other
remedy to which such party may be entitled, at law or in equity.
Section 5.7 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
Section 5.8 DESCRIPTIVE HEADING. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 5.9 FURTHER ASSURANCES. From time to time, at Parent's reasonable
request and without further consideration, the Stockholder shall execute and
deliver such additional documents and take all such further action as may be
necessary or appropriate to consummate and make effective, in the most
expeditious manner practicable, the agreements, covenants and transactions
contemplated by this Agreement.
Section 5.10 SEVERABILITY. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable,
such invalidity, illegality or unenforceability will not affect any other
provision or portion of any provision, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.
Section 5.11 REGISTRATION RIGHTS AGREEMENT. Prior to the closing of the
Merger, the parties will enter into an agreement for registration of the shares
of Parent Common Stock to be received by Stockholder in the Merger, which
agreement shall provide for one demand registration at the time that Parent
prepares its Annual Report on Form 10-K for the fiscal year ended November 30,
1998 and limited piggyback registration rights and which shall contain other
terms and conditions customary for transactions that are similar to the Merger.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered effective for all purposes as of the date first above
written.
CLARCOR INC.
By: /s/ Lawrence E. Gloyd
Name: Lawrence E. Gloyd
Title: Chairman and Chief Executive Officer
<PAGE> 7
STOCKHOLDER:
Signature: /s/ William A. Cheney
Printed Name: William A. Cheney, in his individual
capacity and in his capacity as trustee as
set forth on Exhibit A hereto
Address: 9395 Old Plainfield Road
Apt.9
Cincinnati, Ohio 45236
<PAGE> 8
EXHIBIT A
OWNERSHIP OF SHARES
BY
WILLIAM A. CHENEY
(1) 750 shares of UAS common stock owned of record, and beneficially, by Mr.
Cheney individually
(2) 623,227 shares of UAS common stock owned of record by the W.A. Cheney Family
Trust of which William A. Cheney is the trustee, and owned beneficially by
Mr. Cheney individually
Mr. Cheney has sole voting power and sole dispositive power of the shares
identified in (1) through (2) above.
Mr. Cheney's wife also owns of record and beneficially 4,250 shares of UAS
common stock, however, Mr. Cheney has previously disclaimed beneficial ownership
of such 4,250 shares and does not have voting or dispositive power over such
shares.
<PAGE> 1
EXHIBIT 10.3
EXECUTION COPY
STOCKHOLDER AGREEMENT
This Stockholder Agreement ("Agreement") is entered into effective for all
purposes as of September 23, 1996, by and between CLARCOR Inc., a Delaware
corporation ("Parent"), and the undersigned (the "Stockholder", and together
with the other persons who execute agreements in the same form as this
Agreement, the "Signatory Stockholders").
WHEREAS, Parent, CUAC Inc., an Ohio corporation and wholly-owned subsidiary
of Parent ("Sub"), and United Air Specialist, Inc., an Ohio corporation (the
"Company"), are simultaneously entering into an Agreement and Plan of Merger,
(the "Merger Agreement"), pursuant to which Sub will merge with and into the
Company (the "Merger"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have required that each of the Signatory Stockholders
enter into, and each of the Signatory Stockholders has agreed to enter into,
this Agreement or an agreement in the same form as this Agreement (together, the
"Stockholder Agreements"); and
WHEREAS, the Board of Directors of the Company has, prior to the execution
of the Merger Agreement and the Stockholder Agreements, approved the Merger
Agreement, the Merger and this Agreement;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, the parties agree as follows:
ARTICLE 1
AGREEMENT TO SUPPORT MERGER
Section 1.1 VOTING. The Stockholder hereby agrees that, during the term
that this Agreement is in effect, at any meeting of the stockholders of the
Company, however called, or in connection with any written consent of the
stockholders of the Company, the Stockholder shall vote (or cause to be voted)
all voting Shares (as defined in Section 2.1) held of record (or beneficially)
by the Stockholder:
(a) in favor of the Merger and the adoption of the Merger Agreement;
(b) against any action or agreement that would result in a breach of
any covenant, representation or warranty, or any other obligation or
agreement, of the Company under the Merger Agreement; or
(c) except as otherwise agreed to in writing in advance by Parent,
against the following actions (other than the Merger and the transactions
contemplated by the Merger Agreement):
(i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or any
of its subsidiaries (as defined in the Merger Agreement);
(ii) a sale, lease or transfer of a material amount of assets of
the Company or any of its subsidiaries or a reorganization,
recapitalization, dissolution or liquidation of the Company or any of
its subsidiaries;
(iii) any change in the Board of Directors of the Company;
(iv) any change in the present capitalization of the Company or
any amendment to the Company's Articles of Incorporation or By-laws;
(v) any change in the Company's corporate structure or business;
or
<PAGE> 2
(vi) any other action that is intended, or that could reasonably
be expected, to impede, interfere with, delay, postpone or discourage,
or adversely affect the contemplated economic benefits to Parent of the
Merger and the actions or transactions contemplated by the Merger
Agreement or this Agreement.
The Stockholder further agrees that the Stockholder will not enter into any
agreement or understanding with any person or entity prior to the termination of
this Agreement that is in any manner inconsistent with the provisions of this
Section 1.1.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES. The Stockholder hereby
represents and warrants to Parent as follows:
(a) OWNERSHIP OF SHARES. The Stockholder is the record and
beneficial owner of the number of shares of Common Stock, without par
value, of the Company ("Common Stock"), as set forth on Schedule A hereto
(the "Existing Shares" and, together with any shares of Common Stock
acquired by the Stockholder hereafter and prior to the termination of this
Agreement, whether upon exercise of options, conversion of convertible
securities, purchase, exchange or otherwise, the "Shares"). On the date
hereof, the Existing Shares constitute all of the shares of Common Stock
owned of record or beneficially by the Stockholder. Except as described on
Schedule A attached hereto, the Stockholder has sole voting power and sole
power of disposition, sole power to demand an appraisal of any Existing
Shares entitled to appraisal pursuant to Section 1701.85 of the Ohio
General Corporation Law and sole power to engage in the actions set forth
herein, including those set forth in Article 3 hereof, in each case with
respect to all of the Existing Shares, with no restrictions on such rights
except pursuant to the terms of this Agreement.
(b) POWER; BINDING AGREEMENT. The Stockholder has the legal
capacity, power and authority to enter into and perform all of the
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Stockholder will not violate any other
agreement to which the Stockholder is a party or by which the Stockholder
or any of the Stockholder's properties or assets are or may be bound,
including, without limitation, any trust agreement, voting agreement,
irrevocable proxy, stockholders agreement or voting trust. This Agreement
has been duly and validly executed and delivered by the Stockholder and
constitutes a valid and binding agreement of the Stockholder, enforceable
against the Stockholder in accordance with its terms. There is no
beneficiary, or holder of a voting trust certificate or other interest, of
any trust of which the Stockholder is a trustee whose consent is required
for the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby with respect to any Existing Shares. If
the Shares constitute community property, this Agreement has been duly
authorized, executed and delivered by, and constitutes a valid and binding
agreement of, each person having community property rights in the Shares,
enforceable against such person in accordance with its terms.
(c) NO CONFLICTS. Except pursuant to the Securities Exchange Act of
1934, as amended, no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority or any other
person (or entity) is necessary for the execution of this Agreement by the
Stockholder and the performance by the Stockholder of the actions
contemplated hereby. Neither the execution and delivery of this Agreement
by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated hereby nor compliance by the Stockholder with any
of the provisions hereof will (i) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, material
modification or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to
<PAGE> 3
which the Stockholder is a party or by which the Stockholder or any of the
Stockholder's properties or assets are or may be bound or (ii) violate any
order, writ, injunction, decree, judgment, statute, rule or regulation
applicable to the Stockholder or any of the Stockholder's properties or
assets.
(d) NO ADVERSE CLAIMS. The Shares and the certificates representing
such Shares are now and at all times during the term of this Agreement will
be held by the Stockholder, or by a nominee or custodian for the benefit of
the Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except for any such encumbrances or proxies
arising under this Agreement.
(e) NO BROKERS. No broker, investment banker, financial advisor or
other person is entitled to receive from the Company or any subsidiary any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated hereby based on
arrangements made by or on behalf of the Stockholder.
(f) MATERIAL RELIANCE. The Stockholder understands and acknowledges
that Parent is entering into, and causing Sub to enter into, the Merger
Agreement in material reliance upon the Stockholder's execution and
delivery of this Agreement.
(g) NO INTENTION TO DISPOSE. The Stockholder has no plan or
intention to, directly or indirectly, sell, exchange, or otherwise dispose
of, reduce the risk of loss by short sale or otherwise, or enter into any
contract or other arrangement with respect to, or consent to, the sale,
exchange or other disposition of any interest in any shares of Parent
Common Stock (as defined in the Merger Agreement) received pursuant to the
Merger. The Stockholder acknowledges that the Stockholder is giving this
representation to enable Graydon, Head & Ritchey and Sidley and Austin to
opine that the Merger constitutes a reorganization within the meaning of
Section 368(a) of the Code and further recognizes that significant adverse
tax consequences might result if such representation is not true. The
Stockholder understands and agrees that, in connection with the Merger, the
Stockholder will give written notice to the Company and Parent in the event
that, at the Effective Time of the Merger (as defined in the Merger
Agreement) there is any change in any of the representations of the
Stockholder set forth in this Section 2.1(g).
ARTICLE 3
CERTAIN COVENANTS AND AGREEMENTS
Section 3.1 CERTAIN COVENANTS OF STOCKHOLDER. Except in accordance with
the terms of this Agreement, during the term of this Agreement, the Stockholder
hereby covenants and agrees as follows:
(a) NO SOLICITATION. (i) The Stockholder will immediately cease and
cause to be terminated all existing discussions and negotiations, if any,
with any parties conducted heretofore by the Stockholder with respect to
any Takeover Proposal. As used in this Agreement, "Takeover Proposal" means
any tender offer or exchange offer for 20% or more of the outstanding
shares of Common Stock or any proposal or offer for a merger,
consolidation, amalgamation or other business combination involving the
Company or its subsidiaries or any equity securities (or securities
convertible into equity securities) of the Company, or any proposal or
offer to acquire in any manner a 20% or greater equity or beneficial
interest in, or a material amount of the assets or value of, the Company or
its subsidiaries, other than pursuant to the transactions contemplated by
the Merger Agreement.
(ii) The Stockholder will not, and will not permit any of the
Stockholder's representatives or agents to, directly or indirectly, (A)
solicit, initiate or (excluding any action referred to in clauses (B) and
(C) of this sentence) encourage or take any action to facilitate the making
of, any offer or proposal that constitutes or that is reasonably likely to
lead to any Takeover Proposal, (B) participate in any discussions (other
than as necessary to clarify the terms and conditions of any unsolicited
offer, including any financing or other contingencies and other relevant
facts with respect thereto) or
<PAGE> 4
negotiations regarding any Takeover Proposal (other than with the
Stockholder's legal counsel, other Signatory Stockholders or officers or
directors of the Company) or (C) furnish to any person (other than Parent
or its representatives) any nonpublic information or nonpublic data
regarding the Company. The Stockholder will notify Parent or officers or
directors of the Company orally and in writing of any such inquiries,
offers or proposals to the Stockholder (including the terms and conditions
of any offer or proposal and the identity of the person making any inquiry,
offer or proposal) as promptly as possible and in any event within 24 hours
after receipt thereof.
(b) RESTRICTION ON TRANSFER; PROXIES AND NON-INTERFERENCE;
RESTRICTION ON WITHDRAWAL. The Stockholder shall not, directly or
indirectly:
(i) except pursuant to the terms of the Merger Agreement and as
set forth on Exhibit A, offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of (or in any other way reduce the
Stockholder's risk of ownership in), or enter into any contract, option
or other arrangement or understanding with respect to or consent to the
offer for sale, sale, transfer, tender, pledge, encumbrance, assignment
or other disposition of (or in any other way reduce the Stockholder's
risk of ownership in), any or all of the Shares or any other equity
securities of the Company or any interest therein;
(ii) except as contemplated by this Agreement, grant any proxies
or powers of attorney, deposit any Shares into any voting trust or enter
into any voting agreement with respect to any Shares; or
(iii) take any action that would make any representation or
warranty of the Stockholder contained herein untrue or incorrect or have
the effect of preventing or disabling the Stockholder from performing
the Stockholder's obligations under this Agreement.
(c) WAIVER OF APPRAISAL RIGHTS. The Stockholder hereby waives any
and all rights of appraisal or rights to require the Company to purchase
any of the Shares that the Stockholder may have under the Ohio General
Corporation Law.
Section 3.2 CERTAIN AGREEMENTS WITH RESPECT TO SHARES FOR PURPOSES OF RULE
145. If the Stockholder may be deemed to be an "affiliate" of the Company
pursuant to Rule 145 under the Securities Act of 1933, as amended, the
Stockholder has delivered, or agrees to deliver to the Parent prior to the
closing of the Merger, an Affiliate Agreement in the form previously approved by
the parties to the Merger Agreement with respect to the Shares and future
transactions with respect to Parent Shares by the Stockholder ("Affiliate
Agreement"). Each representation of the Stockholder made in Section 2.1(b) and
Section 2.1(c) hereof with respect to this Agreement is hereby confirmed to be
true and correct with respect to the Affiliate Agreement, if any.
Section 3.3 BINDING OBLIGATIONS. The Stockholder agrees that this
Agreement and the Stockholder's obligations hereunder and, if applicable, under
the Affiliate Agreement shall attach to the Shares and shall be binding upon any
person or entity to which legal or beneficial ownership of the Shares shall
pass, whether by operation of law or otherwise, including without limitation the
Stockholder's heirs, guardians, administrators or successors.
Section 3.4 STOP TRANSFER. The Stockholder agrees with, and covenants to,
Parent that the Stockholder shall not request that the Company register any
transfer of any certificate representing any of the Shares, if such transfer
would violate any provision of this Agreement.
ARTICLE 4
TERMINATION
Section 4.1 TERMINATION. This Agreement shall terminate if the Merger
Agreement is terminated in accordance with its terms other than as a result of
the effectiveness of the Merger. Such termination shall not
<PAGE> 5
affect the rights of any party for any breach of any covenants, agreements,
representations or warranties contained herein.
ARTICLE 5
MISCELLANEOUS
Section 5.1 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and the
Affiliate Agreement, if applicable, executed by the Stockholder, (i) constitute
the entire agreement between the parties with respect to the subject matter
hereof and thereof and supersede all other prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof and (ii) shall not be assigned by operation of law or otherwise without
the prior written consent of the other party; provided that Parent may assign,
in its sole discretion, its rights and obligations hereunder and thereunder to
any direct or indirect wholly owned subsidiary of Parent, but no such assignment
shall relieve Parent of its obligations hereunder if such assignee does not
perform such obligations. Subject to the preceding sentence, this Agreement and
the Affiliate Agreement, if applicable, shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs, personal
representatives, legal representatives and permitted assigns.
Section 5.2 AMENDMENTS. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by the parties hereto. The Merger Agreement may be amended in
accordance with the terms thereof, and each reference herein to the Merger
Agreement shall mean the Merger Agreement as amended, provided that any such
amendment that changes the Conversion Number as provided in Section 1.5 of the
Merger Agreement or that in any way materially adversely affects the rights of
the stockholders of the Company shall have been approved in writing by the
Stockholder.
Section 5.3 STOCKHOLDER CAPACITY. If the Stockholder is or becomes during
the term hereof a director of the Company, then the Stockholder makes no
agreement or understanding herein in his or her capacity as a director. The
Stockholder signs solely in his, her or its capacity as the record and
beneficial owner of the Shares.
Section 5.4 WRITTEN NOTICES. All written notices, requests, claims, demands
and other communication hereunder shall be given (and shall be deemed to have
been duly received if so given) by hand delivery, telegram, telex or telecopy,
or by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any courier service, such as Federal Express, providing proof
of delivery, to the respective parties at the following addresses:
(a) if to Parent, to
CLARCOR Inc.
2323 Sixth Street
Rockford, Illinois 61104
Attention: Bruce A. Klein
Telephone: 815/961-5717
Telecopy: 815/968-5879
with a copy (which shall not constitute notice) to:
David J. Boyd, Esq.
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Telephone: 312/853-7444
Telecopy: 312/853-7036
<PAGE> 6
(b) if to the Stockholder, to
Margaret Stewart Rorie
7915 Lone Oak Court
Cincinnati, Ohio 45243
Telephone: 513/272-0030
with a copy (which shall not constitute notice) to:
Jack W. Painter, Esq.
5820 Graves Lake Drive
Cincinnati, Ohio 45243
Telephone: 513/395-4011
Telecopy: 51 3/561-1396
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 5.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 5.6 SPECIFIC PERFORMANCE. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which there
would be no adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief, in addition to any other
remedy to which such party may be entitled, at law or in equity.
Section 5.7 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
Section 5.8 DESCRIPTIVE HEADING. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 5.9 FURTHER ASSURANCES. From time to time, at Parent's reasonable
request and without further consideration, the Stockholder shall execute and
deliver such additional documents and take all such further action as may be
necessary or appropriate to consummate and make effective, in the most
expeditious manner practicable, the agreements, covenants and transactions
contemplated by this Agreement.
Section 5.10 SEVERABILITY. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable,
such invalidity, illegality or unenforceability will not affect any other
provision or portion of any provision, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.
Section 5.11 REGISTRATION RIGHTS AGREEMENT. Prior to the closing of the
Merger, the parties will enter into an agreement for registration of the shares
of Parent Common Stock to be received by Stockholder in the Merger, which
agreement shall provide for one demand registration at the time that Parent
prepares its Annual Report on Form 10-K for the fiscal year ended November 30,
1998 and limited piggyback registration rights and which shall contain other
terms and conditions customary for transactions that are similar to the Merger.
<PAGE> 7
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered effective for all purposes as of the date first above
written.
CLARCOR INC.
By: /s/ Lawrence E. Gloyd
Name: Lawrence E. Gloyd
Title: Chairman and Chief Executive Officer
STOCKHOLDER:
Signature: /s/ Margaret Stewart Rorie
Printed Name: Margaret Stewart Rorie
Address: 7915 Lone Oak Court
Cincinnati, Ohio 45243
<PAGE> 8
EXHIBIT A
OWNERSHIP OF SHARES
BY
MARGARET STEWART RORIE
(1) 525,078 shares of UAS common stock owned of record, and beneficially, by
Mrs. Rorie individually
Mrs. Rorie has sole voting power and sole dispositive power of the shares
identified in (1) above.
For estate planning purposes, Mr. and Mrs. Rorie have been contemplating
for several months prior to the date of the Stockholders Agreement to which this
Exhibit A is attached, the transfer by Mr. Rorie of 44,889 shares of UAS common
stock and by Mrs. Rorie of 5,000 shares of UAS common stock to a family limited
partnership of which Mr. Rorie is the general partner. Such transfer may occur
after the date hereof and prior to the consummation of the merger.
<PAGE> 1
EXHIBIT 20
FOR FURTHER INFORMATION CONTACT:
Lawrence E. Gloyd
Chairman of the Board and Chief Executive Officer
Rockford, Illinois
815-962-8867
FOR IMMEDIATE RELEASE
September 23, 1996
CLARCOR TO ACQUIRE UNITED AIR SPECIALISTS
ROCKFORD, IL, SEPTEMBER 23, 1996 -- CLARCOR Inc. (NYSE: CLC) today
announced the signing of a definitive agreement to acquire United Air
Specialists, Inc. (NASDAQ: UASI) in an exchange of common stock. CLARCOR is a
diversified marketer and manufacturer of mobile, industrial and environmental
filtration products and packaging products, while United Air Specialists is
primarily a manufacturer of environmental and industrial air filtration
products. As a result of the acquisition, United Air Specialists will become a
subsidiary of CLARCOR.
The Boards of Directors of each company unanimously approved the
transaction which will be structured as a merger under which each fully diluted
share of United Air Specialists will be converted into 0.36986 shares of common
stock of CLARCOR. The exchange ratio is subject to adjustment based on the
actual number of fully diluted United Air Specialists shares outstanding at
closing. United Air Specialists currently has approximately 3,270,000 fully
diluted shares outstanding. CLARCOR currently has approximately 14,880,000
shares outstanding. To complete the merger, CLARCOR will issue approximately
1,210,000 shares of its common stock, bringing total outstanding shares to
approximately 16,090,000.
To cover the costs of the merger, CLARCOR is expected to take a one-time
charge to earnings in an amount yet to be determined in the quarter the merger
is completed. CLARCOR had sales of approximately $290 million and net earnings
of $22.0 million for its fiscal year ended November 30, 1995, and expects fiscal
1996 sales to be approximately $330 million, excluding the UAS acquisition.
United Air Specialists had sales of approximately $40 million and net earnings
of $1.5 million for its fiscal year ended June 30, 1996.
Larry Gloyd, CLARCOR's Chairman and Chief Executive Officer, said, "The
combination of CLARCOR and United Air Specialists will significantly strengthen
and expand our presence in the fast growing environmental and industrial air
filtration industry. In addition, we will have opportunities to increase
shareholder value through business synergies, such as the potential for filter
cartridges manufactured by our Airguard Industries operation to be used in
filter housings manufactured by UAS. We are also very pleased that the UAS
management team and key employees, with their tremendous experience and industry
reputation, will become a part of the CLARCOR team, and we look forward to their
significant contributions."
Durk Rorie, United Air Specialists' President and Chief Executive Officer,
said, "We believe that the merger of UAS and CLARCOR is very positive for the
shareholders and employees of UAS. I doubt we could have found a company with a
better strategic fit for UAS than CLARCOR. There are many complementary
operational, geographic and product opportunities available as a result of the
combination of our two businesses."
Consummation of the merger is subject, among other things, to approval by
the shareholders of United Air Specialists and regulatory approvals. It is
intended that the merger qualify as a tax-free reorganization to United Air
Specialists shareholders and be accounted for as a pooling of interests. The
merger is currently expected to close in early 1997. The three largest
shareholders of United Air Specialists, who collectively own approximately 50%
of the outstanding shares, have agreed to vote their shares in favor of the
merger.
<PAGE> 2
CLARCOR, based in Rockford, Illinois, is a diversified manufacturer and
marketer of mobile, industrial air and environmental filtration products and
consumer packaging products sold to domestic and international markets.
United Air Specialists, based in Cincinnati, Ohio, is engaged in the
business of manufacturing commercial and industrial air cleaners, energy
recovery systems, fluid contamination control equipment and high precision fluid
spraying systems.
