UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _____)*
MOD-U-KRAF HOMES, INC.
(Name of Issuer)
Common Stock, $1.00 per value
(Title of Class of Securities)
607496
(CUSIP Number)
James E. Jack
Executive Vice President & Chief Financial Officer
Coachmen Industries, Inc.
2831 Dexter Drive, P.O. Box 3300, Elkhart, Indiana 46514 (219) 262-0123
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
May 8, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this schedule 13D, and is
filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f), or
240.13d-1(g), check the following box. |__|
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the act (however, see the
Notes).
Page 1 of 5
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SCHEDULE 13D
CUSIP No. 607496
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS S.S. OR
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
COACHMEN INDUSTRIES, INC.; 35-1101097
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/__/
(b)/__/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
INDIANA
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7 SOLE VOTING POWER
NUMBER OF SHARES 437,614
BENEFICIALLY -----------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING -----------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 49,889
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
437,614
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
53%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 2 of 5
<PAGE>
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER
The class of equity securities to which this Statement relates is the common
stock, par value $1.00 per share (the "Shares"), of Mod-U-Kraf Homes, Inc. (the
"Company"). The principal executive offices of the Company are located at 822
Pell Avenue, Rocky Mount, Virginia 24151.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed by Coachmen Industries, Inc., an Indiana corporation
("Coachmen"), which serves two general industries: recreational vehicles and
housing. The Recreational Vehicle Segment produces a full line of recreational
vehicles. The Housing Segment supplies modular housing to builders. These
products are marketed through a nationwide dealer network. Coachmen's principal
offices are located at 2831 Dexter Drive, Elkhart, Indiana 46514.
The name, business address and present principal occupation or employment of
each director and executive officer of Coachmen are set forth in Schedule I
hereto and are incorporated herein by reference. Each such person is a citizen
of the United States.
During the last five years, to the best of Coachmen's knowledge, neither
Coachmen nor any of its executive officers or directors has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
has been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction resulting in a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws, or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Coachmen has entered into an Agreement and Plan of Merger dated as of May 1,
2000 (the "Merger Agreement"), by and among the Company, Coachmen and Coachmen
Acquisition Corporation, a wholly owned subsidiary of Coachmen, pursuant to
which Coachmen will acquire all of the outstanding Shares of the Company for
$11.75 per share, or $9,701,375.75 (the "Merger").
As an inducement to Coachmen to enter into the Merger Agreement with the
Company, six stockholders of the Company entered into Voting Agreements and
Irrevocable Proxies with Coachmen. These agreements were executed in April,
2000, and as a result, Coachmen has irrevocable proxies to vote 387,725 Shares
of the Company.
In order to facilitate the approval of the Merger Agreement, Coachmen also
purchased Shares of the Company in two transactions, using Koonce Securities as
its broker. Coachmen purchased 34,762 Shares on May 5, 2000 for $410,626.13, and
15,127 Shares on May 8, 2000 for $178,687.69. The total amount purchased was
49,889 Shares, for a total of $589,313.82.
The source of the funds used to acquire all Shares described above was from
available working capital of Coachmen.
Page 3 of 5
<PAGE>
ITEM 4. PURPOSE OF TRANSACTION
The stockholders entered into the Voting Agreements and Irrevocable Proxies in
order to induce Coachmen to enter into the Merger Agreement. Pursuant to the
Voting Agreements, the stockholders agreed to vote their Shares in favor of
approval of the Merger and the adoption and approval of the Merger Agreement,
and against approval of any proposal made in opposition to the consummation of
the Merger and the Merger Agreement. Concurrently with the execution of the
Voting Agreement, each stockholder delivered to Coachmen an irrevocable proxy
with respect to their Shares. Coachmen also purchased 49,889 Shares of the
Company, as discussed in Item 3, in order to facilitate the approval of the
Merger Agreement.
(a)-(c), (j) The Merger Agreement provides, among other things, that upon the
terms and subject to the conditions therein, Coachmen Acquisition Corporation
will be merged with and into the Company, with the Company being the corporation
surviving the Merger and a wholly owned subsidiary of Coachmen. At the effective
time of the Merger (the "Effective Time"), each outstanding share will be
converted into and represent the right to receive $11.75 in cash.
(d) Not applicable.
(e) Not applicable.
(f) Upon completion of the Merger, Coachmen intends to conduct a detailed review
of the Company and its assets, corporate structure, capitalization, operations,
policies, management and personnel. After such review, Coachmen will determine
what actions or changes, if any, would be desirable in light of the
circumstances which then exist.
(g) Not applicable.
(h)-(i) The Shares are currently registered under the Exchange Act. Such
registration will be terminated upon application of the Company to the
Securities and Exchange Commission ("SEC") following the Merger.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) and (b) According to the Company's Form 10QSB, filed with the
SEC on May 8, 2000, there were a total of 825,649
Shares outstanding on March 31, 2000. As of the date
hereof, Coachmen has the sole power to vote 437,614
Shares, and the sole power to dispose of 49,889
shares. This total represents 53% of the total Shares
outstanding at such date. The total number of shares
beneficially owned by Coachmen is 49,889, or 6%.
(c) Transactions within the past sixty days were as
follows:
Number of Price per
Purchaser Date of Transaction Shares Share
--------- ------------------- ------ -----
Coachmen Industries, Inc. 5/05/00 34,762 $11.75
Coachmen Industries, Inc. 5/08/00 15,127 $11.75
All purchases were made in the open market, through one broker.
Page 4 of 5
<PAGE>
(d) and (e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
The following summary of certain provisions of the Voting Agreement and
Irrevocable Proxy, a copy of which is filed as Exhibit A to this Schedule 13D,
is qualified in its entirety by reference to the text of the Voting Agreements.
Pursuant to the Voting Agreement, the stockholders have agreed to vote their
Shares in favor of approval of the Merger and the adoption and approval of the
Merger Agreement, and against approval of any proposal made in opposition to the
consummation of the Merger and the Merger Agreement. Concurrently with the
execution of the Voting Agreement, each stockholder delivered to Coachmen an
irrevocable proxy with respect to their Shares.
The Voting Agreements and the Irrevocable Proxies shall terminate as of the
earlier to occur of (i) the Effective Time of the Merger or (ii) such date and
time as the Merger Agreement shall have been terminated in accordance with its
terms.
Except for the Voting Agreement and Irrevocable Proxy, none of the persons named
in Item 2 has any contracts, arrangements, understandings or relationships
(legal or otherwise) with any persons with respect to any securities of the
Issuer, including, but not limited to, transfers or voting of any securities,
finder's fees, joint ventures, loan or option agreements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or withholding
of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT 99.A Form of Voting Agreement and Irrevocable Proxy between
Coachmen Industries, Inc. and the stockholders listed on
SCHEDULE A attached hereto.
EXHIBIT 99.B Agreement and Plan of Merger, dated as of May 1, 2000, by and
among Mod-U-Kraf Homes, Inc., Coachmen Industries, Inc. and
Coachmen Acquisition Corporation.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, correct and
complete.
COACHMEN INDUSTRIES, INC.
May 12, 2000 /s/ James E. Jack
- ----------------------------------- -----------------------------------------
Date By: James E. Jack
Executive Vice President &
Chief Financial Officer
Page 5 of 5
<PAGE>
SCHEDULE I
The name and present principal occupation of each director and executive officer
of Coachmen Industries, Inc. are set forth below. The business address for each
person listed below is c/o Coachmen Industries, Inc., 2831 Dexter Drive, P.O.
Box 3300, Elkhart, Indiana 46514.
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NAME TITLE
- ---- -----
- --------------------------------------------------------------------------------
Claire C. Skinner Director; Chairman of the Board & Chief
Executive Officer
- --------------------------------------------------------------------------------
Keith D. Corson Director; President & Chief Operating Officer
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Thomas H. Corson Director; Chairman Emeritus
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Geoffrey B. Bloom Director; Chairman and Chief Executive Officer,
Wolverine World Wide
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Robert J. Deputy Director; President & Chief Executive Officer,
Godfrey Marine, Inc.
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Donald W. Hudler Director; Chairman & Chief Executive Officer,
Saturn Retail Enterprises, Inc.
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William P. Johnson Director; Chairman & Chief Executive Officer,
Goshen Rubber Companies, Inc.
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Philip G. Lux Director; Retired Present & Chief Operating Officer
- --------------------------------------------------------------------------------
Edwin W. Miller Director; Founder, Chairman & Chief Executive
Officer, Millenium Capital Group
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Fredrick M. Miller Director; Partner, Dykema & Gossett
- --------------------------------------------------------------------------------
James E. Jack Executive Vice President & Chief Financial Officer
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Richard M. Lavers Executive Vice President, General Counsel & Secretary
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Gene E. Stout Executive Vice President, Corporate Development
- --------------------------------------------------------------------------------
James P. Skinner Senior Vice President, Operations Development
and Parts & Supply
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John T. Trant Senior Vice President, Housing Group
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William M. Angelo Vice President & Chief Accounting Officer
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James O. Baxter Vice President, Marketing Group
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Gary L. Duncan Vice President, Corporate Engineering
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James R. Frahm Vice President, Human Resources
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James M. Lindhorn Vice President, Corporate Procurement
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Justin Stebbins Vice President & Chief Information Officer
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Donald P. Rockwell Corporate Treasurer
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Melanie A. DeMorrow Assistant Vice President, Shareholder Relations
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VOTING AGREEMENT
This Voting Agreement (this "AGREEMENT") is made and entered into as of
April __, 2000, between Coachmen Industries, Inc., an Indiana corporation
("COACHMEN"), and the undersigned shareholder ("SHAREHOLDER") of Mod-U-Kraf
Homes, Inc., a Virginia corporation (the "COMPANY").
RECITALS
A. Concurrently with the execution of this Agreement, Coachmen and the
Company are entering into an Agreement and Plan of Reorganization (the "MERGER
AGREEMENT") which provides, among other things, for the acquisition of the
Company by Coachmen pursuant to the merger (the "MERGER") of a wholly owned
subsidiary of Coachmen ("NEWCO') with and into the Company. Pursuant to the
Merger, all of the issued and outstanding shares of capital stock of the Company
owned by Shareholder will be converted at the Effective Time (as defined in the
Merger Agreement) into the right to receive cash on the basis described in the
Merger Agreement;
B. Shareholder is the beneficial owner (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of the
number of outstanding shares of capital stock of the Company indicated on Annex
I to this Agreement; and
C. As a material inducement to enter into the Merger Agreement,
Coachmen and Newco desire Shareholder to agree, and in consideration for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Shareholder is willing to agree, to vote the Shares and New Shares
(as defined below) so as to facilitate consummation of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:
1. Agreement to Vote Shares; Additional Purchases; Transfers and
Encumbrance.
1.1 Agreement to Vote Shares. During the term of this
Agreement, at every meeting of the stockholders of the Company called with
respect to any of the following, and at every adjournment thereof, and on every
action or approval by written consent of the stockholders of the Company with
respect to any of the following, Shareholder shall cause the Shares and any New
Shares (as defined below) to be voted:
(i) in favor of approval of the Merger and the
adoption and approval of the Merger Agreement including all actions contemplated
thereby; and
(ii) against approval of any proposal made in
opposition to, or in competition with, consummation of the Merger and the Merger
Agreement.
1.2 Definition. For purposes of this Agreement, "SHARES" shall
mean all issued and outstanding shares of capital stock of the Company for which
Shareholder is the beneficial owner or over which Shareholder has voting
control, including any securities convertible into, or exercisable or
<PAGE>
exchangeable for shares of the Company's capital stock, all as set forth on
Annex I attached hereto.
1.3 Additional Purchases. Shareholder agrees that any shares
of capital stock of the Company that Shareholder purchases, or with respect to
which Shareholder otherwise acquires beneficial ownership or voting control
after the execution of this Agreement and prior to the date of termination of
this Agreement ("NEW SHARES"), shall be subject to the terms and conditions of
this Agreement to the same extent as if they constituted Shares.
1.4 Transfer and Encumbrance. Without the prior written
consent of Coachmen, Shareholder agrees not to transfer, sell, exchange, pledge,
gift, or otherwise dispose of or encumber (collectively, "TRANSFER") any of the
Shares or any New Shares or to discuss, negotiate, or make any offer or
agreement relating thereto. Shareholder acknowledges that the intent of the
foregoing sentence is to ensure that Coachmen retains the right under the Proxy
(as defined in Section 2 hereof) to vote the Shares and any New Shares in
accordance with the terms of the Proxy.
2. Irrevocable Proxy. Concurrently with the execution of this
Agreement, Shareholder agrees to deliver to Coachmen a proxy in the form
attached hereto as Exhibit A (the "PROXY") with respect to the Shares and New
Shares, which, subject to Section 5 hereof, shall be irrevocable to the fullest
extent permitted by applicable law.
3. Representations and Warranties of the Shareholder. Shareholder is
the beneficial owner of the Shares free and clear of any liens, claims, options,
charges or other encumbrances. Shareholder has full authority to vote and direct
the voting of the Shares with respect to the matters contemplated hereby and has
full power and authority to make, enter into and carry out the terms of this
Agreement and the Proxy.
4. Additional Documents. Shareholder agrees to execute and deliver any
additional documents necessary or desirable, in the reasonable opinion of
Coachmen, to carry out the intent of this Agreement.
5. Termination. This Agreement and the Proxy shall terminate as of the
earlier to occur of (i) such date and time as the Merger shall become effective
in accordance with the terms and provisions of the Merger Agreement or (ii) such
date and time as the Merger Agreement shall have been terminated in accordance
with its terms.
6. Miscellaneous.
6.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
6.2 Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns and any
person or entity to which legal or beneficial ownership of such Shares or New
2
<PAGE>
Shares shall pass, whether by operation of law or otherwise, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other.
6.3 Amendments and Modification. 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.
6.4 Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Coachmen will be irreparably harmed and that there will
be no adequate remedy at law for a violation of any of the covenants or
agreements of Shareholder set forth herein. Therefore, it is agreed that, in
addition to any other remedies that may be available to Coachmen upon any such
violation, Coachmen shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other means
available to Coachmen at law or in equity.
6.5 Indemnity by Coachmen. Both Coachmen and the Shareholder
believe that the Merger, Merger Agreement and the consideration and transactions
contemplated thereby are on fair terms and have been negotiated at arms length
and in good faith. In the event (i) the Shareholder's Shares or New Shares are
voted in favor of the Merger and Merger Agreement, and (ii) a claim is made by
any stockholder of the Company (who is not a signatory to a voting agreement in
form and substance as this Agreement) that the Shareholder has breached
Shareholder's fiduciary duty as an officer or director of the Company by the
making and execution of this Agreement, then Coachmen agrees to defend,
indemnify and hold harmless the Shareholder from any such claim. Coachmen shall
have the right to defend any such claim at its sole discretion and expense.
6.6 Notices. All notices and other communications relating to
this Agreement shall be in writing, shall be (i) upon delivery, if delivered
personally or by commercial messenger or courier service, (ii) one business day
after the day of a facsimile transmission, if sent by facsimile with confirming
copy by U.S. mail (first class, postage prepaid), or (iv) one business day after
the business day of deposit with Federal Express or similar carrier for
overnight delivery, freight prepaid, in each case to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
3
<PAGE>
If to Coachmen or Newco: Coachmen Industries, Inc.
2831 Dexter Drive
P.O. Box 3300
Elkhart, Indiana 46515
Attn: Richard M. Lauers, Esq.
Telephone: (219) 262-0123
Facsimile: (219) 262-8723
With a copy to: Wyatt, Tarrant & Combs
250 W. Main Street, Suite 1700
Lexington, Kentucky 40507-1746
Attn: Judge B. Wilson II, Esq.
Telephone: (606) 233-2012
Facsimile: (606) 259-0649
If to the Shareholder: To the address for notice set forth
on the signature page hereof.
With a copy to: Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Attn: Randall S. Parks, Esq.
Telephone: (804) 788-7375
Facsimile: (804) 788-8218
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall only be
effective upon receipt.
6.7 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the corporate laws of the State of
Virginia and, with respect to matters of law other than corporate law, the laws
of the State of Virginia as they apply to contracts entered into and wholly to
be performed within such state by residents thereof.
6.8 Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
6.9 Effective Date. This Agreement shall become effective upon
execution of the Merger Agreement.
4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
COACHMEN INDUSTRIES, INC.
By: /s/ G. E. Stout
--------------------------------------
Name: G. E. Stout
------------------------------------
Title: Executive Vice President
-----------------------------------
SHAREHOLDER:
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Shareholder's Address for Notice:
-----------------------------------------
-----------------------------------------
-----------------------------------------
5
<PAGE>
ANNEX I
-------
Shareholder beneficially owns and has voting control over the following
capital stock of the Company:
<PAGE>
EXHIBIT A
---------
IRREVOCABLE PROXY
The undersigned Shareholder of Mod-U-Kraf Homes, Inc., a Virginia
corporation (the "COMPANY"), hereby irrevocably appoints the directors on the
Board of Directors of Coachmen Industries, Inc., an Indiana corporation
("COACHMEN"), and each of them, as the sole and exclusive attorneys and proxies
of the undersigned, with full power of substitution and resubstitution, to the
full extent of the undersigned's rights with respect to the voting of the Shares
and New Shares (as each such term is defined in the Voting Agreement of even
date between Coachmen and the Stockholder (the "VOTING AGREEMENT")) on the
matters described below (and on no other matter), until such time as the Voting
Agreement shall be terminated in accordance with its terms. Upon the execution
hereof, all prior proxies given by the undersigned with respect to the Shares
and any and all other shares or securities issued or issuable in respect thereof
on or after the date hereof are hereby revoked and no subsequent proxies will be
given.
This proxy is irrevocable (to the fullest extent permitted by law and
subject to the termination of the Proxy as set forth in Section 5 of the Voting
Agreement), is granted pursuant to the Voting Agreement, is granted in
consideration of Coachmen entering into the Merger Agreement (as defined in the
Voting Agreement) and is coupled with an interest. The attorneys and proxies
named above will be empowered at any time prior to the termination of this proxy
pursuant to Section 5 of the Voting Agreement to exercise all voting rights
(including, without limitation, the power to execute and deliver written
consents with respect to the Shares and the New Shares) of the undersigned at
every annual, special or adjourned meeting of the Company's stockholders, and in
every written consent in lieu of such a meeting, or otherwise, to vote the
Shares and the New Shares:
(i) in favor of approval of the Merger (as defined in the Voting
Agreement) and the adoption and approval of the Merger
Agreement including all actions contemplated thereby; and
(ii) against approval of any proposal made in opposition to, or in
competition with, consummation of the Merger and the Merger
Agreement (collectively, the matters identified in clauses
"(i)" and "(ii)" hereof are referred to herein as the
"SPECIFIED MATTERS").
The attorneys and proxies named above may only exercise this proxy to
vote the Shares and any New Shares subject hereto at any time prior to the
termination of this proxy pursuant to Section 5 of the Voting Agreement, at
every annual, special or adjourned meeting of the stockholders of the Company
and in every written consent in lieu of such meeting. The undersigned
Shareholder may vote the Shares and New Shares on all matters other than the
Specified Matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
<PAGE>
This proxy is irrevocable and coupled with an interest.
Dated: April __, 2000
Signature of Shareholder:
------------------------------
Print Name of Shareholder:
-----------------------------
***PROXY***
<PAGE>
SCHEDULE A
----------
The following persons have executed Voting Agreements and Irrevocable Proxies in
the form attached hereto:
- --------------------------------------------------------------------------------
NAME AMOUNT OF SHARES
- ---- ----------------
- --------------------------------------------------------------------------------
Bobbie L. Oliver 173,406
- --------------------------------------------------------------------------------
Dale H. Powell 69,000
- --------------------------------------------------------------------------------
Mary L. Fitts & Robert K. Fitts 66,000
- --------------------------------------------------------------------------------
Robert K. Fitts 12,547
- --------------------------------------------------------------------------------
Edwin J. Campbell & Barbara E. Campbell 30,052
- --------------------------------------------------------------------------------
W. Curtis Carter 36,720
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
COACHMEN INDUSTRIES, INC.,
COACHMEN ACQUISITION CORPORATION AND
MOD-U-KRAF HOMES, INC.
DATED AS OF MAY 1, 2000
<PAGE>
TABLE OF CONTENTS
ARTICLE I THE REORGANIZATION...................................................1
1.1 The Merger............................................................1
1.2 Effective Time........................................................2
1.3 Effect of the Merger..................................................2
1.4 Certificate of Incorporation and Bylaws...............................2
1.5 Directors and Officers................................................2
1.6 Effect of Merger on the Capital Stock of the Constituent
Corporations..........................................................3
1.7 Dissenting Shares.....................................................5
1.8 Surrender of Certificates.............................................6
1.9 No Further Ownership Rights in Company Capital Stock..................6
1.10 Lost, Stolen or Destroyed Certificates................................6
1.11 Taking of Necessary Action; Further Action............................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................7
2.1 Organization of the Company...........................................7
2.2 Company Capital Structure.............................................7
2.3 Authority.............................................................8
2.4 No Conflict...........................................................9
2.5 Consents 9
2.6 Company Financial Statements.........................................10
2.7 SEC Filings
2.8 Information Supplied
2.9 Opinion of Financial Advisor
2.10 No Undisclosed Liabilities............................................9
2.11 No Changes...........................................................10
2.12 Tax Matters..........................................................12
2.13 Restrictions on Business Activities..................................15
2.14 Title of Properties; Absence of Liens and Encumbrances;
Condition of Equipment...............................................15
2.15 Intellectual Property................................................16
2.16 Agreements, Contracts and Commitments................................18
2.17 Interested Party Transactions........................................19
2.18 Governmental Authorization...........................................19
2.19 Litigation...........................................................19
2.20 Accounts Receivable/Inventory........................................20
2.21 Minute Books.........................................................20
2.22 Environmental Matters................................................20
2.23 Brokers' and Finders' Fees...........................................21
2.24 Employee Benefit Plans and Compensation..............................21
2.25 Insurance............................................................25
2.26 Compliance with Laws.................................................25
2.27 Warranties; Indemnities..............................................25
2.28 Complete Copies of Materials.........................................25
2.29 Representations Complete.............................................25
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
Page
----
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO................26
3.1 Organization, Standing and Power.....................................26
3.2 Authority............................................................26
3.3 No Conflict..........................................................26
3.4 Capital Resources....................................................26
3.5 Consents 26
3.6 Brokers' and Finders' Fees...........................................27
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME................................27
4.1 Conduct of Business of the Company...................................27
4.2 No Solicitation......................................................29
4.3 Break-Up Fee.........................................................31
ARTICLE V ADDITIONAL AGREEMENTS...............................................31
5.1 Shareholders' Meeting................................................31
5.2 Access to Information................................................32
5.3 Confidentiality......................................................32
5.4 Company's Expenses...................................................32
5.5 Public Disclosure....................................................33
5.6 Consents.............................................................33
5.7 Reasonable Efforts...................................................33
5.8 Notification of Certain Matters......................................33
5.9 Additional Documents and Further Assurances..........................33
5.10 Release of Liens.....................................................33
5.12 Indemnification
ARTICLE VI CONDITIONS TO THE MERGER...........................................34
6.1 Conditions to Obligations of Each Party to Effect the Merger.........34
6.2 Conditions to the Obligations of Parent and Newco....................34
6.3 Conditions to Obligations of the Company.............................36
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.................................37
7.1 Termination..........................................................37
7.2 Effect of Termination................................................38
7.3 Amendment............................................................38
7.4 Extension; Waiver....................................................38
ARTICLE VIII GENERAL PROVISIONS...............................................38
8.1 Notices 38
8.2 Interpretation.......................................................40
8.3 Counterparts.........................................................40
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TABLE OF CONTENTS
(CONTINUED)
Page
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8.4 Entire Agreement; Assignment.........................................40
8.5 Severability.........................................................40
8.6 Other Remedies.......................................................40
8.7 Governing Law........................................................40
8.8 Rules of Construction................................................41
8.9 Approval of Parent
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INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
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Exhibit A Form of Employment and Noncompete Agreement
Exhibit B Principal Shareholders
Exhibit C Form of Voting Agreement
Exhibit D Form of Plan of Merger
Exhibit E List of Key Employees
Exhibit F Form of Legal Opinion of Counsel to the Company
Exhibit G Form of Legal Opinion of Counsel to Parent
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of May 1, 2000 by and among Coachmen Industries, Inc., an Indiana
corporation ("Parent"), Coachmen Acquisition Corporation, a Virginia corporation
("Newco"), and Mod-U-Kraf Homes, Inc., a Virginia corporation (the "Company").
RECITALS
A. The Boards of Directors of each of Parent, Newco and the Company
believe it is in the best interests of each company and its respective
shareholders for Parent to acquire the Company by the statutory merger of Newco
with and into the Company pursuant to which the shareholders of the Company
shall be entitled to receive cash (the "Merger").
B. The Company, on the one hand, and Parent and Newco, on the other
hand, desire to make certain representations, warranties, covenants and other
agreements in connection with the Merger.
C. Concurrently with the execution and delivery of this Agreement, as a
material inducement to Parent and Newco to enter into this Agreement, (i) Dale
H. Powell and Edwin J. Campbell as well as certain other Key Employees
(hereinafter defined) shall enter into Employment and Noncompete Agreements,
each in the form attached hereto as Exhibit A which shall become effective at
Closing (the "Employment Agreements"), with Parent and (ii) as a material
inducement to Parent and Newco to enter into this Agreement, the principal
shareholders of the Company listed on Exhibit B hereto (each a "Principal
Shareholder" and collectively the "Principal Shareholders") are entering into
voting agreements in the form attached hereto as Exhibit C (the "Voting
Agreements").
NOW, THEREFORE, in consideration of the mutual agreements, covenants
and other promises set forth herein, the mutual benefits to be gained by the
performance thereof, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and accepted, the parties
hereby agree as follows:
ARTICLE I
THE REORGANIZATION
1.1 The Merger. At the Effective Time and subject to and upon the terms
and conditions of this Agreement and the applicable provisions of the Virginia
Stock Corporation Act ("VSCA"), Newco shall be merged with and into the Company,
the separate corporate existence of Newco shall cease and the Company shall
continue as the surviving corporation and as a wholly-owned subsidiary of
Parent. The corporation surviving the Merger of Newco into the Company is
sometimes referred to hereinafter as the "Surviving Corporation."
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1.2 Effective Time. Unless this Agreement is earlier terminated
pursuant to Section 7.1 hereof, the closing of the Merger (the "Closing") will
take place no later than five (5) business days following satisfaction or waiver
of the conditions set forth in Article VI hereof, at the offices of Brown,
Edwards and Company, 319 McClanahan Street, S.W., Roanoke, Virginia, unless
another time and/or place is mutually agreed upon in writing by Parent and the
Company. The date upon which the Closing actually occurs shall be referred to
herein as the "Closing Date." On the Closing Date, the parties hereto shall
cause the Merger to be consummated by filing a Plan of Merger (or like
instrument) in the form attached hereto as Exhibit D, with the Virginia State
Corporation Commission (the "Plan of Merger"), in accordance with the applicable
provisions of Virginia Law (the time of acceptance by the Virginia State
Corporation Commission of such filing shall be referred to herein as the
"Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the VSCA. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property, rights, privileges, powers and franchises of the Company
and Newco shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Newco shall become the debts, liabilities and
duties of the Surviving Corporation.
1.4 Certificate of Incorporation and Bylaws.
(a) Unless otherwise determined by Parent prior to the
Effective Time, the articles of incorporation of Newco, as in effect immediately
prior to the Effective Time, shall be the articles of incorporation of the
Surviving Corporation at the Effective Time until thereafter amended in
accordance with applicable law and as provided in such articles of
incorporation; provided, however, that at the Effective Time, Article I of the
articles of incorporation of the Surviving Corporation shall be amended and
restated in their entirety to read as follows: "The name of the corporation is
Mod-U-Kraf Homes, Inc."
(b) Unless otherwise determined by Parent prior to the
Effective Time, the bylaws of Newco, as in effect immediately prior to the
Effective Time but amended to reflect that the name of the corporation is
"Mod-U-Kraf Homes, Inc.", shall be the bylaws of the Surviving Corporation at
the Effective Time until thereafter amended in accordance with applicable law
and as provided in the articles of incorporation of the Surviving Corporation
and such bylaws.
1.5 Directors and Officers. Unless otherwise determined by Parent prior
to the Effective Time, the directors of Newco immediately prior to the Effective
Time shall be the directors of the Surviving Corporation immediately after the
Effective Time, each to hold the office of a director of the Surviving
Corporation in accordance with the provisions of applicable law, and the
articles of incorporation and bylaws of the Surviving Corporation, as
applicable, until their successors are duly elected and qualified. Unless
otherwise determined by Parent prior to the Effective Time, the officers of
Newco immediately prior to the Effective Time shall be the officers of the
Surviving Corporation immediately after the Effective Time, each to hold office
in accordance with the provisions of the bylaws of the Surviving Corporation.
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1.6 Effect of Merger on the Capital Stock of the Constituent
Corporations.
(a) Definitions. For all purposes of this Agreement, the
following terms shall have the following respective meanings:
"1933 Act" means the Securities Act of 1933, as
amended.
"1934 Act" means the Securities Exchange Act of 1934,
as amended.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company Capital Stock" shall mean (i) shares of
Company Common Stock, and (ii) any other shares of capital stock of the Company.
"Company Common Stock" shall mean shares of common
stock, $1.00 par value, of the Company.
"Company Options" shall mean all issued and
outstanding options, warrants or other rights to purchase or otherwise acquire
Company Capital Stock (whether or not vested) held by any person or entity.
"Exchange Amount" shall mean an amount equal to the
quotient obtained by dividing (x) the Total Consideration by (y) the Total
Outstanding Shares.
"GAAP" shall mean United States generally accepted
accounting principles consistently applied.
"Key Employees" shall mean those employees of the
Company listed on Exhibit E hereto.
"Knowledge" and similar terms used herein shall mean,
with respect to the Company, the knowledge that the Company's officers,
directors, Key Employees, and Principal Shareholders who are also officers of
the Company have concerning the Company, its business, assets, liabilities and
operations.
"Material Adverse Effect" on a Party shall mean an
event, change or occurrence which, individually or together with any other
event, change or occurrence, has a material adverse impact on (a) the financial
position, business, or results of operations of such Party and its subsidiaries,
taken as a whole, or (b) the ability of such party to perform its obligations
under this Agreement or to consummate the Merger, other than any event, change
or occurrence relating to (i) the United States economy, the southeastern
regional economy or securities markets in general or (ii) this Agreement or the
transactions contemplated hereby or announcement thereof.
"Newco Common Stock" shall mean shares of Common
Stock, no par value, of Newco.
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<PAGE>
"Party" shall mean any of the Company, Parent or
Newco, and "Parties" shall mean the Company, Parent and Newco.
"Person" shall mean a natural person or any legal,
commercial or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited liability
company, trust, business association, group acting in concert, or any person
acting in a representative capacity.
"Principal Officers/Shareholders" shall jointly and
severally refer to and mean (i) Dale H. Powell, (ii) Edwin J. Campbell, (iii)
the Key Employees who are also Shareholders, and (iv) the Principal Shareholders
who are also officers or directors of the Company .
"SEC" means the Securities and Exchange Commission.
"Shareholder" or "Shareholders" shall mean each
holder of any Company Capital Stock immediately prior to the Effective Time.
"Subsidiary" when used with respect to any party
means any corporation or other organization, whether incorporated or
unincorporated, (i) of which such party or any other Subsidiary of such party is
a general partner (excluding partnerships, the general partnership interests of
which held by such party or any Subsidiary of such party do not have a majority
of the voting interests in such partnership) or (ii) at least a majority of the
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the Board of Directors or other performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
"Total Consideration" shall be the sum of NINE
MILLION SEVEN HUNDRED ONE THOUSAND THREE HUNDRED SEVENTY-FIVE U.S. DOLLARS AND
SEVENTY-FIVE U.S. CENTS ($9,701,375.75).
"Total Outstanding Shares" shall be the aggregate
number of shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time, (including the maximum number of shares of Company
Common Stock or other Company Capital Stock issuable on exercise and/or
conversion of all outstanding Company Options and other rights convertible into,
or exercisable or exchangeable for, shares of Company Common Stock or Company
Capital Stock assuming full conversion, exercise or exchange thereof).
(b) Effect on Company Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of Newco, the Company,
Parent or any of the Shareholders, each share of Company Capital Stock issued
and outstanding immediately prior to the Effective Time (other than any
Dissenting Shares (as defined in Section 1.7 hereof)) shall be canceled and
extinguished, and automatically converted into the right to receive from Parent,
upon surrender of the certificate representing such shares of Company Capital
Stock in the manner provided in Sections 1.8(c) and 1.8(d) hereof, but subject
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to conditions set forth below in this Section 1.6 and throughout this Agreement,
the Exchange Amount.
(c) Capital Stock of Newco. At the Effective Time, by virtue
of the Merger and without any action on the part of Parent, Newco or the
Company, each share of Newco Common Stock, issued and outstanding immediately
prior to the Effective Time shall be converted into and exchanged for one
validly issued, fully paid and nonassessable share of Common Stock of the
Surviving Corporation. Each stock certificate evidencing ownership of any such
shares of Newco Common Stock shall thereafter evidence ownership of an
equivalent number of shares of Common Stock of the Surviving Corporation.
(d) Withholding Taxes. Any cash amounts payable to any
Shareholder pursuant to Article I hereof shall be subject to, and reduced by an
amount equal to, the amount of any requisite state, local, federal and foreign
withholding taxes.
(e) Shareholder Loans. Except as set forth in Section 1.6(e)
of the Disclosure Schedule there are no outstanding loans from the Company to
the Shareholders. In the event that any Shareholder has outstanding loans from
the Company as of the Effective Time, the cash amounts payable to such
Shareholder pursuant to Section 1.6(b) hereof shall be reduced by an amount
equal to the outstanding principal plus accrued interest of such Shareholder's
loans as of the Effective Time, and such loans shall be deemed paid in full.
1.7 Dissenting Shares. Notwithstanding any other provisions of this
Agreement to the contrary, any shares of Company Capital Stock held by a holder
who has exercised and perfected dissenters' rights for such shares in accordance
with the VSCA and who, as of the Effective Time, has not effectively withdrawn
or lost such dissenters' rights ("Dissenting Shares"), shall not be converted
into or represent a right to receive the consideration for Company Capital Stock
set forth in Section 1.6 hereof, but the holder thereof shall only be entitled
to such rights as are provided by the VSCA in respect of dissenters' shares.
(a) Notwithstanding the provisions of Section 1.6(a) hereof,
if any holder of Dissenting Shares shall effectively withdraw or lose (through
failure to perfect or otherwise) such holder's dissenters' rights under the
VSCA, then, as of the later of the Effective Time and the occurrence of such
event, such holder's shares shall automatically be converted into and represent
only the right to receive the consideration for Company Capital Stock set forth
in Section 1.6 hereof, without interest thereon, upon surrender of such holder's
certificate representing such shares.
(b) The Company shall give Parent (i) prompt notice of any
written demand for dissenters' rights received by the Company pursuant to the
applicable provisions of the VSCA and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to any such demands or offer to settle or settle any such demands.
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1.8 Surrender of Certificates
(a) Exchange Agent. First Union National Bank, Charlotte,
North Carolina, or such other agent reasonably acceptable to Parent and the
Company, shall serve as the exchange agent (the "Exchange Agent") for the
Merger.
(b) Parent to Provide Consideration. On the Closing Date,
Parent shall make available to the Exchange Agent for exchange in accordance
with this Article I the consideration issuable pursuant to Section 1.6 hereof in
exchange for the outstanding shares of Company Capital Stock being exchanged in
the Merger.
(c) Exchange Procedures. On or after the Closing Date, the
Shareholders will surrender the certificates representing their Company Capital
Stock (the "Company Stock Certificates") to the Exchange Agent for cancellation
together with a letter of transmittal in such form and having such provisions
that Parent may reasonably request. Upon surrender of a Company Stock
Certificate for cancellation to the Exchange Agent, or such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
subject to the terms of Section 1.6 (d) and (e) hereof, the holder of such
Company Stock Certificate shall be entitled to receive from the Exchange Agent
in exchange therefor the amount of cash (without interest) payable in exchange
for such Company Stock Certificate pursuant to this Article I, and the Company
Stock Certificate so surrendered shall be canceled. Until so surrendered, each
outstanding Company Stock Certificate will be deemed from and for all corporate
purposes, to evidence only the right to receive payment (without interest)
pursuant to this Article I. Payment due to each Shareholder pursuant to this
Section 1.8 shall be made as promptly as practicable following the later of (i)
receipt by Parent of confirmation of filing of the Plan of Merger and (ii)
Parent's receipt of such Shareholder's properly completed letter of transmittal
and Company Stock Certificates pursuant to this Section 1.8.
(d) No Liability. Notwithstanding anything to the contrary in
this Section 1.8, neither the Exchange Agent, the Surviving Corporation nor any
party hereto shall be liable to a holder of shares of Company Capital Stock for
any amount properly paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
1.9 No Further Ownership Rights in Company Capital Stock The
consideration paid in respect of the surrender for exchange of shares of Company
Capital Stock in accordance with the terms hereof shall be deemed to be full
satisfaction of all rights pertaining to such shares of Company Capital Stock,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Capital Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time, Company
Stock Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.10 Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing shares of Company Capital Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed certificates, upon the making of an affidavit in a form
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<PAGE>
satisfactory to Parent, of that fact by the holder thereof, such amount, if any,
as may be required pursuant to Section 1.6 hereof; provided, however, that
Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the Shareholder who is the owner of such lost, stolen or
destroyed certificates to deliver a bond in such amount as it may reasonably
direct against any claim that may be made against Parent or the Exchange Agent
with respect to the certificates alleged to have been lost, stolen or destroyed.
1.11 Taking of Necessary Action; Further Action. If at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company, Parent, Newco and the officers and directors of
the Company, Parent and Newco are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and
necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Newco, subject
to such exceptions as are specifically disclosed in the disclosure schedule
(referencing the appropriate section and paragraph numbers) supplied by the
Company to Parent (the "Disclosure Schedule") and dated as of the date hereof,
that on the date hereof and as of the Closing Date as though made at the Closing
Date as follows (provided, that the representations and warranties made as of a
specified date will be true and correct as of such date):
2.1 Organization of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. The Company has the corporate power to own its
properties and to carry on its business as now being conducted. The Company is
duly qualified or licensed to do business in each jurisdiction listed on Section
2.1 of the Disclosure Schedule and is in good standing as a foreign corporation
in each such jurisdiction. The Company has delivered a true and correct copy of
its Articles of Incorporation and bylaws, each as amended to date and in full
force and effect on the date hereof, to Parent. Section 2.1 of the Disclosure
Schedule lists the directors and officers of the Company. The operations now
being conducted by the Company are not now conducted by the Company under any
other name. The Company does not have any Subsidiaries.
2.2 Company Capital Structure.
(a) The authorized capital stock of the Company consists of
2,000,000 shares of Common Stock, of which 825,649 shares are issued and
outstanding as of the date hereof. All outstanding shares of Company Capital
Stock are duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights created by statute, the articles of incorporation
or bylaws of the Company, or any agreement to which the Company is a party or by
which it is bound, and have been issued in compliance with federal and state
securities laws. There are no declared or accrued but unpaid dividends with
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respect to any shares of Company Capital Stock. The Company has no other capital
stock authorized, issued or outstanding.
(b) The Company does not presently have any stock option plan
or other stock-related plan providing for equity compensation of any person.
There are no options, warrants, calls, rights, commitments or agreements of any
character, written or oral, to which the Company is a party or by which it is
bound obligating the Company to issue, deliver, sell, repurchase or redeem, or
cause to be issued, delivered, sold, repurchased or redeemed, any shares of
Company Capital Stock and the Company is not obligated to grant, extend,
accelerate the vesting of, change the price of, otherwise amend or enter into
any option, warrant, call, right, commitment or agreement upon the closing of
the transaction contemplated hereby or upon the occurrence of any other event.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting stock of the Company.
2.3 Authority. The Company has all requisite power and authority to
enter into this Agreement and any Related Agreements (as hereinafter defined in
this Section 2.3) to which it is a party and to consummate the transactions
contemplated hereby and thereby. Except for the requisite approval of the
shareholders of the Company, the execution and delivery of this Agreement and
any Related Agreements to which the Company is a party and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of the Company and no further action
is required on the part of the Company to authorize the Agreement and any
Related Agreements to which it is a party and the transactions contemplated
hereby and thereby. This Agreement, the Plan of Merger and the Merger have been
unanimously approved and adopted by the Board of Directors of the Company in
accordance with Virginia Law, and the articles of incorporation and bylaws of
the Company. The only vote of the holders of any class or series of capital
stock of the Company necessary to approve this Agreement and the transactions
contemplated hereby is the affirmative vote of the holders of more than 66-2/3%
of the outstanding shares of Company Common Stock (the "Company Stockholders'
Approval"). This Agreement and each of the Related Agreements to which the
Company is a party has been duly executed and delivered by the Company, and
assuming the due authorization, execution and delivery by the other parties
hereto and thereto, constitute the valid and binding obligations of the Company,
enforceable against it in accordance with their respective terms, except as such
enforceability may be subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies. The Company
has taken all action necessary to exempt the Merger and this Agreement and the
transactions contemplated hereby from the restrictions of the VSCA Control Share
Acquisition statute, and, accordingly, neither such statute nor any other
antitakeover or similar statute or regulation applies to any such transactions.
No other "control share acquisition," "fair price," "moratorium" or other
antitakeover laws or regulations enacted under U.S. state or federal laws apply
to this Agreement or any of the transactions contemplated hereby. For all
purposes of this Agreement, the term "Related Agreements" shall mean all
ancillary agreements contemplated by this Agreement to be executed and delivered
in connection with the transactions contemplated hereby.
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2.4 No Conflict. The execution and delivery by the Company of this
Agreement and any Related Agreement to which the Company is a party, and the
consummation of the transactions contemplated hereby and thereby, will not
conflict with or result in any violation of or default under (with or without
notice or lapse of time, or both) or give rise to a right of termination,
cancellation, modification or acceleration of any obligation or loss of any
benefit under (any such event, a "Conflict") (i) any provision of the articles
of incorporation or bylaws of the Company, (ii) any mortgage, indenture, lease,
contract, covenant or other agreement, instrument or commitment, permit,
concession, franchise or license (individually a "Contract") to which the
Company or any of its properties or assets (including intangible assets), is
subject, or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any of its properties (tangible and
intangible). The Company is in compliance with in all material respects and has
not breached, violated or defaulted under, or received notice that it has
breached, violated or defaulted under, any of the terms or conditions of any
Contract, nor to the Company's Knowledge is there any event that would
constitute such a breach, violation or default with the lapse of time, giving of
notice or both. Each Contract is in full force and effect and the Company is not
subject to any default thereunder, nor to the Knowledge of the Company is any
party obligated to the Company pursuant to any such Contract subject to any
default thereunder.
2.5 Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with any court, administrative agency or
commission or other federal, state, county, local or foreign governmental
authority, instrumentality, agency or commission (each, a "Governmental Entity")
or any third party, including a party to any agreement with the Company (so as
not to trigger any Conflict), is required by the Company in connection with the
execution and delivery of this Agreement and any Related Agreement to which the
Company is a party or with respect to the consummation of the transactions
contemplated hereby and thereby, except for the filing of the Plan of Merger
with the Virginia State Corporation Commission (or other appropriate state
filing authority). The Company has obtained, or will obtain prior to the
Effective Time, all necessary consents, waivers and approvals of parties to any
Contract as are required thereunder in connection with the Merger, or for any
such Contract to remain in full force and effect without limitation,
modification or alteration after the Effective Time. Following the Effective
Time, the Company will be permitted to exercise all of its rights under the
Contracts without the payment of any additional amounts or consideration other
than ongoing fees, royalties or payments which the Company would otherwise be
required to pay had the transactions contemplated by this Agreement not
occurred.
2.6 Company Financial Statements. The Company has delivered to Parent
(i) the Company's audited balance sheet as of December 31, 1999 and 1998, and
the related audited statements of income and cash flow for the twelve months
ending December 31, 1999, 1998 and 1997 (collectively, the "Audited Financials")
and (ii) the Company's unaudited balance sheet as of March 31, 2000 and the
related unaudited statements of income and cash flow for the three (3) month
period then ended (the "Interim Financials"). The Audited Financials and the
Interim Financials are correct in all material respects and have been prepared
in accordance with GAAP consistently applied on a basis consistent throughout
the periods indicated and consistent with each other (except that the Interim
Financials do not contain footnotes and other presentation items that may be
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required by GAAP). The Audited Financials and Interim Financials present fairly
the financial condition, operating results and cash flows of the Company as of
the dates and during the periods indicated therein, subject, if applicable, to
normal year-end adjustments, which will not be material in amount or
significance in any individual case or in the aggregate. The Company's balance
sheet referred to above as of March 31, 2000 may be referred to hereinafter as
the "Current Balance Sheet."
2.7 SEC Filings. The Company has filed all required registration
statements, prospectuses, reports, schedules, forms, statements and other
documents required to be filed by it with the SEC since January1,1998
(collectively, including all exhibits thereto, the "Company SEC Documents"). As
of its filing date, each Company SEC Document complied as to form in all
material respects with the applicable requirements of the 1933 Act and the 1934
Act, as the case may be. None of the Company SEC Documents as of their
respective dates contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
2.8 Information Supplied. The information supplied by the Company for
inclusion in the proxy statement or any amendment or supplement thereto (the
"Proxy Statement") to be sent to the stockholders of Company in connection with
their meeting to consider this Agreement and the Merger (the "Company
Stockholders' Meeting") shall not, on the date the Proxy Statement is first
mailed to the stockholders of Company or at the time of the Company
Stockholders' Meeting or 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 were made, not misleading.
2.9 Opinion of Financial Advisor. The Company has received an opinion
of Davenport & Company, LLC, financial advisor to the Company, to the effect
that, as of the date of this Agreement, from a financial point of view, the
Exchange Amount is fair to the holders of Company Common Stock.
2.10 No Undisclosed Liabilities. The Company does not have any
liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent, matured,
unmatured or other (whether or not required to be reflected in its financial
statements in accordance with GAAP), which individually or in the aggregate (i)
has not been reflected in the Current Balance Sheet, or (ii) has not arisen in
the ordinary course of business consistent with past practices since December
31, 1999.
2.11 Changes. Since December 31, 1999 to the date hereof, there has not
been, occurred or arisen any:
(a) transaction by the Company, except in the ordinary course
of business as conducted on the date hereof and consistent with past practices;
(b) amendments or changes to the articles of incorporation or
bylaws of the Company;
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(c) capital expenditure or commitment by the Company exceeding
$12,000 individually or $60,000 in the aggregate;
(d) payment, discharge or satisfaction, in any amount in
excess of $12,000 in any one case, or $60,000 in the aggregate, of any claim,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise), except for the payment of trade payables incurred in the ordinary
course of business;
(e) destruction of, damage to or loss of any material assets,
material business or material customer of the Company (whether or not covered by
insurance);
(f) labor trouble or claim of wrongful discharge or other
unlawful labor practice or action;
(g) change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by the Company other
than as required by GAAP;
(h) change in any material election in respect of Taxes (as
defined below), adoption or change in any accounting method in respect of Taxes,
agreement or settlement of any material claim or assessment in respect of Taxes
in excess of $10,000 in any one case, or $20,000 in the aggregate, or extension
or waiver of the limitation period applicable to any claim or assessment in
respect of Taxes;
(i) revaluation by the Company of any of its assets;
(j) declaration, setting aside or payment of a dividend or
other distribution (whether in cash, stock or property) in respect of any
Company Capital Stock, or any split, combination or reclassification in respect
of any shares of Company Capital Stock, or any issuance or authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of Company Capital Stock, or any direct or indirect repurchase,
redemption, or other acquisition by the Company of any shares of Company Capital
Stock (or options, warrants or other rights convertible into, exercisable or
exchangeable therefor), except in accordance with the agreements evidencing
Company Options;
(k) other than in the ordinary course of business consistent
with past practices, (i) increase in the salary or other compensation payable or
to become payable by the Company to any of its officers or directors or to any
of its employees or advisors, or (ii) the declaration, payment or commitment or
obligation of any kind for the payment, by the Company, of a severance payment,
termination payment, bonus or other additional salary or compensation to any
such person;
(l) agreement, contract, covenant, instrument, lease, license
or commitment to which the Company is a party or by which it or any of its
assets (including intangible assets) are bound or any termination, extension,
amendment or modification of the terms of any agreement, contract, covenant,
instrument, lease, license or commitment to which the Company is a party or by
which it or any of its assets are bound, other than any such agreement in the
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ordinary course of business or otherwise described in the Disclosure Schedule;
(m) except for sales of modular homes in the ordinary course
of business, sale, lease, license or other disposition of any of the material
assets or material properties of the Company or any creation of any security
interest in such material assets or material properties;
(n) loan by the Company to any person or entity, incurrence by
the Company of any indebtedness, guarantee by the Company of any indebtedness,
issuance or sale of any debt securities of the Company or guarantee of any debt
securities of others, except in the ordinary course of business consistent with
past practices;
(o) waiver or release of any right or claim of the Company,
including any write-off or other compromise of any account receivable of the
Company;
(p) the commencement, settlement, notice or, to the Knowledge
of the Company, threat of any lawsuit or proceeding or other investigation
against the Company or its affairs, or any reasonable basis for any of the
foregoing;
(q) notice of any claim or potential claim of ownership by any
person other than the Company of the Company Intellectual Property (as defined
in Section 2.15 hereof) owned by or developed or created by the Company or of
infringement by the Company of any other person's Intellectual Property (as
defined in Section 2.15 hereof);
(r) issuance or sale, or contract to issue or sell, by the
Company of any shares of Company Capital Stock or securities convertible into,
or exercisable or exchangeable for, shares of Company Capital Stock, or any
securities, warrants, options or rights to purchase any of the foregoing;
(s) agreement or modification to any agreement pursuant to
which any other party was granted marketing, distribution, development or
similar rights of any type or scope with respect to any products or technology
of the Company;
(t) any event or condition of any character that has had, or
is reasonably likely to have, a Material Adverse Effect on the Company; or
(u) agreement by the Company, or any officer or employees on
behalf of the Company, to do any of the things described in the preceding
clauses (a) through (t) of this Section 2.11 (other than negotiations with
Parent and its representatives regarding the transactions contemplated by this
Agreement).
2.12 Tax Matters.
(a) Definition of Taxes. For the purposes of this Agreement,
the term "Tax" or, collectively, "Taxes" shall mean (i) any and all federal,
state, local and foreign taxes, assessments and other governmental charges,
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duties, impositions and liabilities, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts, (ii) any liability for the payment of any
amounts of the type described in clause (i) of this Section 2.12(a) as a result
of being a member of an affiliated, consolidated, combined or unitary group for
any period, and (iii) any liability for the payment of any amounts of the type
described in clauses (i) or (ii) of this Section 2.12(a) as a result of any
express or implied obligation to indemnify any other person or as a result of
any obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
or transferor entity.
(b) Tax Returns and Audits.
(i) As of the Closing Date, the Company will have
prepared and timely filed all required federal, state, local and foreign
returns, estimates, information statements and reports (collectively, "Returns")
relating to any and all Taxes concerning or attributable to the Company or its
respective operations and such Returns are true and correct in all material
respects and have been completed in accordance with applicable law.
(ii) The Company is and has been for the past four
years a member of an affiliated group, within the meaning of Section 1504(a) of
the Code, of which the Company is the common parent, and such affiliated group
files a consolidated federal income Tax Return.
(iii) The Company is not a Person other than a United
States person within the meaning of the Code.
(iv) The Company does not have and has not had a
permanent establishment in any foreign country, as defined in any applicable Tax
treaty or convention between the United States of America and such foreign
country.
(v) The Company is not a party to any joint venture,
partnership, or other arrangement or contract which is required to be treated as
a partnership for federal income tax purposes.
(vi) To the Company's Knowledge, each material asset
with respect to which the Company claims depreciation, amortization or similar
expense for income Tax purposes is owned for income Tax purposes by the Company.
(vii) There are no pending requests for rulings with
any Tax authority that if issued would be binding on the Company.
(viii) As of the Closing Date, the Company (A) will
have timely paid all material Taxes it is required to have paid and will have
withheld, with respect to its employees, all federal and state income taxes,
Federal Insurance Contribution Act ("FICA"), Federal Unemployment Tax Act
("FUTA") and other Taxes required to be withheld, and (B) will have accrued on
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the Current Balance Sheet all Taxes attributable to the periods covered by the
Current Balance Sheet and not yet required to be paid, and will not have
incurred any liability for Taxes for the period commencing after the date of the
Current Balance Sheet and ending immediately prior to the Closing Date other
than in the ordinary course of business. Neither the Company nor any subsidiary
of the Company (A) has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common parent of
which was the Company) or (B) has any liability for the income Taxes of any
other party (other than the Company and its subsidiaries) under Treas. Reg. ss.
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise.
(ix) There is no Tax deficiency outstanding, assessed
or proposed against the Company, nor has the Company executed any waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax for any currently open taxable period
(x) No audit or other examination of any Return of
the Company is presently in progress, nor has the Company been notified of any
request for such an audit or other examination.
(xi) The Company has made available to Parent, copies
of all foreign, federal, state and local income and all state and local sales
and use Returns for the Company filed for the past three(3) years.
(xii) There are (and immediately following the
Closing Date there will be) no liens, pledges, charges, claims, restrictions on
transfer, mortgages, security interests or other encumbrances of any sort
(collectively, "Liens") on the assets of the Company relating to or attributable
to Taxes other than customary Liens for Taxes not yet due and payable.
(xiii) The Company does not have any Knowledge of any
proposed assertion of any claim relating or attributable to Taxes which, if
adversely determined, would result in any Lien on the assets of the Company.
(xiv) None of the Company's assets is treated as
"tax-exempt use property," within the meaning of Section 168(h) of the Code.
(xv) The Company has not filed any consent agreement
under Section 341(f) of the Code or agreed to have Section 341(f)(4) of the Code
apply to any disposition of a subsection (f) asset (as defined in Section
341(f)(4) of the Code) owned by the Company.
(xvi) The Company is not a party to any tax sharing,
indemnification or allocation agreement nor does the Company owe any amount
under any such agreement.
(xvii) The Company's tax basis in its assets for
purposes of determining its future amortization, depreciation and other federal
income Tax deductions is accurately reflected on the Company's tax books and
records.
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(xviii) The Company has not been at any time, a
"United States Real Property Holding Corporation" within the meaning of Section
897(c)(2) of the Code.
(xix) No adjustment relating to any Return filed by
the Company has been proposed in writing by any tax authority to the Company or
any representative thereof.
(xx) Since April 16, 1997, the Company has not been a
"distributing corporation" or a "controlled corporation" in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code.
(xxi) The Company has no "excess loss accounts" under
Treas. Reg. ss. 1.1502-19.
(c) Executive Compensation Tax. There is no contract,
agreement, plan or arrangement to which the Company is a party, including,
without limitation, the provisions of this Agreement, covering any employee or
former employee of the Company, which, individually or collectively, could give
rise to the payment of any amount that would not be deductible pursuant to
Sections 280G or 162(m) of the Code (or any corresponding provision of state,
local or foreign income tax law).
2.13 Restrictions on Business Activities. There is no agreement
(non-compete or otherwise), commitment, judgment, injunction, order or decree to
which the Company is a party or otherwise binding upon the Company which has or
may reasonably be expected to have the effect of prohibiting or impairing any
business practice of the Company, any acquisition of property (tangible or
intangible) by the Company, the conduct of business by the Company or otherwise
limiting the freedom of the Company to engage in any line of business or to
compete with any person. Without limiting the generality of the foregoing, the
Company has not entered into any agreement under which the Company is restricted
from selling, licensing or otherwise distributing any of its technology or
products to, or providing services to, customers or potential customers or any
class of customers, in any geographic area, during any period of time or in any
segment of the market.
2.14 Title of Properties; Absence of Liens and Encumbrances; Condition
of Equipment.
(a) Section 2.14(a) of the Disclosure Schedule sets forth the
real property owned by the Company. With respect to real property leased by or
for the Company, Section 2.14(a) of the Disclosure Schedule also sets forth a
list of all leases, the name of the lessor, the date of the lease and each
amendment thereto and, with respect to any current lease, the aggregate annual
rental payable under any such lease. All such current leases are in full force
and effect, are valid and effective in accordance with their respective terms,
and there is not, under any of such leases, any existing default or event of
default (or event which with notice or lapse of time, or both, would constitute
a default).
(b) The Company has good and valid title to all real property
owned by the Company and valid leasehold interests in, all of its properties and
assets, real, personal and mixed, tangible or intangible, used or held for use
in its business, free and clear of any Liens, except those Liens listed and
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disclosed on Section 2.14(b) of the Disclosure Schedule and (i) as reflected in
the Current Balance Sheet, (ii) Liens for Taxes not yet due and payable, and
(iii) such imperfections of title and encumbrances, if any, which do not detract
from the value or interfere with the present use of the property subject thereto
or affected thereby.
(c) Section 2.14(c) of the Disclosure Schedule lists all
material items of equipment (the "Equipment") owned or leased by the Company
and, except as noted on the Disclosure Schedule, such Equipment is (i) adequate
for the conduct of the business of the Company as currently conducted, and (ii)
in good operating condition, regularly and properly maintained, subject to
normal wear and tear.
(d) The Company has sole and exclusive ownership, free and
clear of any Liens, of all customer lists, customer contact information,
customer correspondence and customer licensing and purchasing histories relating
to its current and former customers (the "Customer Information"). No person
other than the Company possesses any claims or rights with respect to use of the
Customer Information.
2.15 Intellectual Property.
(a) Definitions. For all purposes of this Agreement, the
following terms shall have the following respective meanings:
"Intellectual Property" shall mean any or all of the
following: (i) works of authorship including, without limitation, computer
programs, source code and executable code, whether embodied in software,
firmware or otherwise, documentation, designs, files, records, data and mask
works, (ii) inventions (whether or not patentable), improvements, and
technology, (iii) proprietary and confidential information, trade secrets and
know how, (iv) databases, data compilations and collections and technical data,
(v) logos, trade names, trade dress, trademarks and service marks, (vi) domain
names, web addresses and sites, (vii) manufacturing and construction processes
and sectional home technology; (viii) manufacturing, construction or building
designs, blueprints or floor plans, (ix) tools, methods and processes, and (x)
all instantiations of the foregoing in any form and embodied in any media.
"Intellectual Property Rights" shall mean worldwide
common law and statutory rights associated with (i) patents and patent
applications, (ii) copyrights, copyright registrations and copyright
applications and "moral" rights, (iii) the protection of trade and industrial
secrets and confidential information, (iv) other proprietary rights relating to
intangible intellectual property, (v) trademarks, trade names and service marks,
(vi) analogous rights to those set forth above, and (vii) divisions,
continuations, renewals, reissuances and extensions of the foregoing (as
applicable).
"Company Intellectual Property" shall mean any
Intellectual Property and Intellectual Property Rights that are owned by or
exclusively licensed to the Company.
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"Registered Intellectual Property Rights" shall mean
Intellectual Property Rights that have been registered, filed, certified or
otherwise perfected by recordation with any state, government or other public
legal authority.
(b) Section 2.15(b) of the Disclosure Schedule lists all
Registered Intellectual Property Rights owned by, or filed in the name of, the
Company.
(c) Each item of Company Intellectual Property is free and
clear of any Liens or other encumbrances. The Company is the exclusive owner of
all Company Intellectual Property.
(d) The Company has not transferred ownership of, or granted
any exclusive license of or exclusive right to use, or authorized the retention
of any exclusive rights to use or joint ownership of, any Intellectual Property
or Intellectual Property Rights that is or was Company Intellectual Property, to
any other person.
(e) The Company Intellectual Property constitutes all the
Intellectual Property and Intellectual Property Rights used in and/or necessary
to the conduct of the business of the Company as it currently is conducted or
planned to be conducted, including, without limitation, the design, development,
manufacture, use, and sale of products, technology and services (including
products, technology or services currently under development).
(f) The operation of the business of the Company as it
currently is conducted or planned by the Company, including but not limited to
the design, development, use, import, manufacture and sale of the products,
technology or services (including products, technology or services currently
under development) of the Company does not infringe or misappropriate the
Intellectual Property Rights of any person or entity, violate the rights of any
person or entity (including rights to privacy or publicity), or constitute
unfair competition or trade practices under the laws of any jurisdiction, and
the Company has not received notice from any person or entity claiming that such
operation or any act, product, technology or service (including products,
technology or services currently under development) of the Company infringes or
misappropriates the Intellectual Property Rights of any person or entity or
constitutes unfair competition or trade practices under the laws of any
jurisdiction (nor is the Company or the CEO aware of any basis therefor).
(g) To the Knowledge of the Company, no person or entity is
infringing or misappropriating any Company Intellectual Property.
(h) The Company has taken all reasonable steps that are
required to protect the Company's rights in confidential information and trade
secrets of the Company or provided by any other person or entity to the Company.
(i) No Company Intellectual Property is subject to any
proceeding or outstanding decree, order, judgment or settlement agreement or
stipulation that restricts in any manner the use, transfer or licensing thereof
by the Company or may affect the validity, use or enforceability of such Company
Intellectual Property.
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(j) All of the Company's Information Technology (as defined
below) that contains or uses a calendar function, including without limitation
any function indexed to a CPU clock and any function providing specific dates or
days or calculating spans of dates or days, records, stores, processes does
provide, and where appropriate inserts true and accurate calendar dates and
calculation for all such dates and spans (collectively, "Year 2000 Compliant"),
and has not caused any interruption in the ongoing operations of the Company's
business on or after January 1, 2000. The Company has not given any assurances,
warranties or indemnities nor undertaken any obligation with respect to products
or technology sold or licensed by the Company being Year 2000 Compliant. For
purposes of the foregoing, the term "Information Technology" shall mean and
include all software, hardware, firmware, telecommunications systems, network
systems, embedded systems and other systems, components and/or services that are
owned or used by the Company in the conduct of its business, or purchased by the
Company from third party suppliers.
2.16 Agreements, Contracts and Commitments.
(a) The Company is not a party to or bound by:
(i) any employment or consulting agreement, contract
or commitment with an employee or individual consultant or salesperson or
consulting or sales agreement, contract or commitment with a firm or other
organization;
(ii) any agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement;
(iii) any fidelity or surety bond or completion bond;
(iv) any lease of personal property having a value in
excess of $5,000 individually or $10,000 in the aggregate;
(v) any agreement, contract or commitment relating to
capital expenditures and involving future payments in excess of $12,000
individually or $60,000 in the aggregate;
(vi) any agreement, contract or commitment relating
to the disposition or acquisition of assets or any interest in any business
enterprise outside the ordinary course of the Company's business;
(vii) any mortgages, indentures, industrial revenue
or other bonds, guarantees, loans or credit agreements, security agreements or
other agreements or instruments relating to the borrowing of money or extension
of credit;
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(viii) other than in the ordinary course of business,
any purchase order or contract for the purchase of materials involving in excess
of $25,000 individually or $100,000 in the aggregate;
(ix) other than in the ordinary course of business,
any construction contracts;
(x) any dealer, distribution, joint marketing or
development agreement;
(xi) any sales representative, original equipment
manufacturer, value added, remarketer, reseller or independent vendor or other
agreement for sale, use or distribution of the Company's products, technology or
services; or
(xii) any other agreement, contract or commitment
that involves in excess of $25,000 individually or $100,000 in the aggregate and
is not cancellable without penalty within thirty (30) days.
2.17 Interested Party Transactions. No officer, director or, to the
Knowledge of the Company, Principal Shareholder of the Company (nor to the
knowledge of the Company any ancestor, sibling, descendant or spouse of any of
such persons, or any trust, partnership or corporation in which any of such
persons has an interest), has, directly or indirectly, (i) an interest in any
entity which furnished or sold, or furnishes or sells, services, products or
technology that the Company furnishes or sells, or proposes to furnish or sell,
or (ii) any interest in any entity that purchases from or sells or furnishes to
the Company, any goods or services, or (iii) a beneficial interest in any
Contract to which the Company is a party; provided, however, that ownership of
no more than five percent (5%) of the outstanding voting stock of a publicly
traded corporation shall not be deemed to be an "interest in any entity" for
purposes of this Section 2.17.
2.18 Governmental Authorization. Each consent, license, permit, grant
or other authorization (i) pursuant to which the Company currently operates or
holds any interest in any of its properties, or (ii) which is required for the
operation of the Company's business as currently conducted or the holding of any
such interest (collectively, "Company Authorizations") has been issued or
granted to the Company. The Company Authorizations are in full force and effect
and constitute all Company Authorizations required to permit the Company to
operate or conduct its business or hold any interest in its properties or
assets.
2.19 Litigation. There is no action, suit, claim or proceeding of any
nature pending, or to the Knowledge of the Company threatened, against the
Company, its properties (tangible or intangible) or any of its officers or
directors, nor to the Knowledge of the Company, is there any reasonable basis
for any such action, suit, claim or proceeding of any nature that could lead to
damages or losses to the Company in excess of $1,000. There is no investigation
or other proceeding pending, or to the Knowledge of the Company, threatened,
against the Company, any of its properties (tangible or intangible) or any of
its officers or directors by or before any Governmental Entity, nor, to the
Knowledge of the Company, is there any reasonable basis therefor. No
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Governmental Entity has at any time challenged or questioned the legal right of
the Company to conduct its operations as presently or previously conducted.
2.20 Accounts Receivable/Inventory.
(a) The Company has made available to Parent a list of all
accounts receivable and notes receivable of the Company as of the date of the
Current Balance Sheet, together with a range of days elapsed since invoice
evidencing such accounts or the making of such notes which shall be included on
Section 2.20(a) of the Disclosure Schedule.
(b) All of the Company's accounts receivable and notes
receivable arose in the ordinary course of business, are carried at values
determined in accordance with GAAP consistently applied, and are collectible
except to the extent of reserves therefor set forth in the Current Balance Sheet
or, for any such receivables arising subsequent to the date of the Current
Balance Sheet, as reflected on the books and records of the Company (which are
prepared in accordance with GAAP consistently applied). No person or entity has
any Lien on any of the Company's accounts receivable or notes receivable and no
request or agreement for deduction or discount has been made with respect to any
of the Company's accounts receivable or notes receivable.
(c) All of the inventories of the Company reflected on the
Interim Financials and the Company's books and records were purchased, acquired
or produced in the ordinary and regular course of business and in a manner
consistent with the Company's regular inventory practices and are set forth on
the Company's books and records in accordance with the practices and principles
of the Company consistent with the method of treating said items in prior
periods. None of the inventory of the Company reflected on the Interim
Financials or on the Company's books and records (in either case net of the
reserve therefor) is obsolete, defective or in excess of the needs of the
business of the Company reasonably anticipated for the normal operation of its
business consistent with past practices and outstanding customer contracts. The
presentation of inventory on the Interim Financials conforms to GAAP
consistently applied and such inventory is stated at the lower of cost
(determined using the first-in, first-out method) or net realizable value.
2.21 Minute Books. The minutes of the Company made available to the
Parent are the only minutes of the Company and contain accurate summaries of all
meetings of the Board of Directors (or committees thereof) of the Company and
their shareholders or actions by written consent since the time of incorporation
of the Company.
2.22 Environmental Matters.
(a) Hazardous Material. The Company has not: (i) operated any
underground storage tanks at any property that the Company has at any time
owned, operated, occupied or leased, or (ii) illegally released any amount of
any substance that has been designated by any Governmental Entity or by
applicable foreign, federal, state or local law to be radioactive, toxic,
hazardous or otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, petroleum, and urea-formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or defined as a
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hazardous waste pursuant to the United States Resource Conservation and Recovery
Act of 1976, as amended, and the regulations promulgated pursuant to said laws
(a "Hazardous Material"), but excluding office and janitorial supplies properly
and safely maintained. No Hazardous Materials are present in, on or under any
property, including the land and the improvements, ground water and surface
water thereof, that the Company has at any time owned, operated, occupied or
leased.
(b) Hazardous Materials Activities. The Company has not
transported, stored, used, manufactured, disposed of, released or exposed its
employees or others to Hazardous Materials in violation of any law in effect on
or before the Effective Time, nor has the Company disposed of, transported,
sold, or manufactured any product containing a Hazardous Material (any or all of
the foregoing being collectively referred to herein as "Hazardous Materials
Activities") in violation of any rule, regulation, treaty or statute promulgated
by any Governmental Entity in effect prior to or as of the date hereof to
prohibit, regulate or control Hazardous Materials or any Hazardous Material
Activity.
(c) Permits. The Company currently holds all environmental
approvals, permits, licenses, clearances and consents (the "Environmental
Permits") necessary for the conduct of the Company's Hazardous Material
Activities, respectively, and other businesses of the Company as such activities
and businesses are currently being conducted.
(d) Environmental Liabilities. No action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to the Knowledge of the Company, threatened, concerning any
Environmental Permit, Hazardous Material or any Hazardous Materials Activity of
the Company. The Company does not have any Knowledge of any fact or circumstance
which could involve the Company in any environmental litigation or impose upon
the Company any environmental liability.
2.23 Brokers' and Finders' Fees. The Company has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with the Agreement
or any transaction contemplated hereby. Section 2.20 of the Disclosure Schedule
sets forth the principal terms and conditions of any agreement, written or oral,
with respect to such fees.
2.24 Employee Benefit Plans and Compensation.
(a) Definitions. For all purposes of this Agreement, the
following terms shall have the following respective meanings:
"Affiliate" shall mean any other person or entity
under common control with the Company within the meaning of Section 414(b), (c),
(m) or (o) of the Code, and the regulations issued thereunder.
"Company Employee Plan" shall mean any plan, program,
policy, practice, contract, agreement or other material arrangement providing
for compensation, severance, termination pay, deferred compensation, performance
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awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written, unwritten or otherwise,
funded or unfunded, including without limitation, each "employee benefit plan,"
within the meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by the Company or any
Affiliate for the benefit of any Employee, or with respect to which the Company
or any Affiliate has or may have any liability or obligation.
"COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
"DOL" shall mean the United States Department of
Labor.
"Employee" shall mean any current or former employee,
consultant or director of the Company or any Affiliate.
"Employee Agreement" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or other agreement, or contract between the Company or any
Affiliate and any Employee.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"FMLA" shall mean the Family Medical Leave Act of
1993, as amended.
"IRS" shall mean the United States Internal Revenue
Service.
"PBGC" shall mean the United States Pension Benefit
Guaranty Corporation.
"Pension Plan" shall mean each Company Employee Plan
which is an "employee pension benefit
plan," within the meaning of Section 3(2) of ERISA.
(b) Schedule. Section 2.24(b) of the Disclosure Schedule
contains an accurate and complete list of each Company Employee Plan and each
form of Employee Agreement under each Company Employee Plan, and each other
Employee Agreement. The Company does not have any plan or commitment to
establish any new Company Employee Plan or Employee Agreement, to modify any
Company Employee Plan or Employee Agreement (except to the extent required by
law or to conform any such Company Employee Plan or Employee Agreement to the
requirements of any applicable law, in each case as previously disclosed to
Parent in writing, or as required by this Agreement), or to adopt or enter into
any Company Employee Plan or Employee Agreement. The Company has no employees
performing services outside the United States.
(c) Documents. The Company has made available to Parent (i)
correct and complete copies of all documents embodying each Company Employee
Plan and each Employee Agreement including, without limitation, all amendments
thereto and all related trust documents, (ii) the three (3) most recent annual
reports (Form Series 5500 and all schedules and financial statements attached
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thereto), if any, required under ERISA or the Code in connection with each
Company Employee Plan, (iii) if the Company Employee Plan is funded, the most
recent annual and periodic accounting of Company Employee Plan assets, (iv) the
most recent summary plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with respect to each Company
Employee Plan, (v) all material written agreements and contracts relating to
each Company Employee Plan, including, without limitation, administrative
service agreements and group insurance contracts, (vi) all communications
material to any Employee or Employees relating to any Company Employee Plan and
any proposed Company Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
liability to the Company, (vii) all correspondence to or from any governmental
agency relating to any Company Employee Plan, (viii) all COBRA forms and related
notices used by the Company (or such forms and notices as required under
comparable law), (ix) all policies pertaining to fiduciary liability insurance
covering the fiduciaries for each Company Employee Plan, (x) all discrimination
tests for each Company Employee Plan for the most recent plan year for which
tests have been required to be performed, and (xi) all registration statements,
annual reports (Form 11-K and all attachments thereto) and prospectuses prepared
in connection with each Company Employee Plan.
(d) Employee Plan Compliance. The Company has performed in all
material respects all obligations required to be performed by it under, is not
in default or violation of, and has no Knowledge of any default or violation by
any other party to each Company Employee Plan, and each Company Employee Plan
has been established and maintained in all material respects in accordance with
its terms and in compliance with all applicable laws, statutes, orders, rules
and regulations, including but not limited to ERISA or the Code. No "prohibited
transaction," within the meaning of Section 4975 of the Code or Sections 406 and
407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred
with respect to any Company Employee Plan. There are no actions, suits or claims
pending, or, to the Knowledge of the Company, threatened or reasonably
anticipated (other than routine claims for benefits) against any Company
Employee Plan or against the assets of any Company Employee Plan. Each Company
Employee Plan can be amended, terminated or otherwise discontinued after the
Effective Time in accordance with its terms, without liability to Parent, the
Company or any Affiliate (other than ordinary administration expenses). There
are no audits, inquiries or proceedings pending or to the Knowledge of the
Company, threatened by the IRS, DOL or any other Governmental Entity with
respect to any Company Employee Plan. Neither the Company nor any Affiliate is
subject to any penalty or tax with respect to any Company Employee Plan under
Section 502(i) of ERISA or Sections 4975 through 4980 of the Code.
(e) No Pension Plans. Neither the Company nor any other
Affiliate has ever maintained, established, sponsored, participated in, or
contributed to, any (i) Pension Plans subject to Title IV of ERISA, or (ii)
"multiemployer plan" within the meaning of Section (3)(37) of ERISA.
(f) No Post-Employment Obligations. No Company Employee Plan
provides, reflects or represents any liability to provide, retiree life
insurance, retiree health or other retiree employee welfare benefits to any
person for any reason, except as may be required by COBRA or other applicable
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statute, and the Company has never represented to, promised to, or contracted
with, (whether in oral or written form) any Employee (either individually or to
Employees as a group) or any other person that such Employee(s) or other person
would be provided with retiree life insurance, retiree health or other retiree
employee welfare benefit, except to the extent required by statute or as
disclosed in Section 2.24(f) of the Disclosure Schedule.
(g) Health Care Compliance. Neither the Company nor any
Affiliate has, prior to the Effective Time and in any material respect, violated
any of the health care continuation requirements of COBRA, the requirements of
FMLA, the requirements of the Health Insurance Portability and Accountability
Act of 1996, the requirements of the Women's Health and Cancer Rights Act of
1998, the requirements of the Newborns' and Mothers' Health Protection Act of
1996, or any amendment to each such act, or any similar provisions of any state
law applicable to its Employees.
(h) Effect of Transaction. The execution of this Agreement and
the consummation of the transactions contemplated hereby will not (either alone
or upon the occurrence of any additional or subsequent event) constitute an
event of default under any Company Employee Plan, Employee Agreement, trust or
loan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
Employee, except as expressly required by or disclosed in this Agreement.
(i) Employment Matters. The Company (i) is in compliance with
all applicable foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to Employees, (ii) has withheld
and reported all amounts required by law or by agreement to be withheld and
reported with respect to wages, salaries and other payments to Employees, (iii)
is not liable for any arrears of wages or any taxes or any penalty for failure
to comply with any of the foregoing, and (iv) is not liable for any payment to
any trust or other fund governed by or maintained by or on behalf of any
governmental authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for Employees (other than
routine payments to be made in the normal course of business and consistent with
past practice). There are no pending or, to the Knowledge of the Company,
threatened, or reasonably anticipated claims or actions against the Company
under any worker's compensation policy or long-term disability policy.
(j) Labor. No work stoppage or labor strike against the
Company is pending or, to the Knowledge of the Company, threatened, or
reasonably anticipated. The Company does not know of any activities or
proceedings of any labor union to organize any Employees. There are no actions,
suits, claims, labor disputes or grievances pending, or to the Knowledge of the
Company, threatened, or reasonably anticipated relating to any labor, safety or
discrimination matters involving any Employee, including, without limitation,
charges of unfair labor practices or discrimination complaints. The Company has
not engaged in any unfair labor practices within the meaning of the National
Labor Relations Act. The Company is not presently, nor has it been in the past,
a party to, or bound by, any collective bargaining agreement or union contract
with respect to Employees and no collective bargaining agreement is being
negotiated by the Company.
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(k) No Interference or Conflict. To the Knowledge of the
Company, no shareholder, officer, employee or consultant of the Company is
obligated under any contract or agreement subject to any judgment, decree or
order of any court or administrative agency that would interfere with such
person's efforts to promote the interests of the Company or that would interfere
with the Company's business. Neither the execution nor delivery of this
Agreement, nor the carrying on of the Company's business as presently conducted
or proposed to be conducted nor any activity of such officers, directors,
employees or consultants in connection with the carrying on of the Company's
business as presently conducted or currently proposed to be conducted, will, to
the Knowledge of the Company, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract or
agreement under which any of such officers, directors, employees or consultants
is now bound.
2.25 Insurance. Section 2.25 of the Disclosure Schedule lists all
insurance policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of the Company or any
Affiliate. There is no claim by the Company or any Affiliate pending under any
of such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid, and the Company and
its Affiliates are otherwise in material compliance with the terms of such
policies and bonds (or other policies and bonds providing substantially similar
insurance coverage). The Company does not have any Knowledge of any threatened
termination of, or premium increase with respect to, any of such policies.
2.26 Compliance with Laws. The Company has complied in all material
respects with, is not in violation of, and has not received any notices of
violation with respect to, any foreign, federal, state or local statute, law or
regulation.
2.27 Warranties; Indemnities. Except for warranties implied by law, the
Company has not given any warranties or indemnities relating to products or
technology sold or services rendered by the Company.
2.28 Complete Copies of Materials. The Company has delivered or made
available true and complete copies of each document (or summaries of same)
referenced, listed, described or required to be disclosed on the Disclosure
Schedule.
2.29 Representations Complete. Neither any of the representations or
warranties made by the Company (as modified by the Disclosure Schedule) in this
Agreement, nor any statements made in any exhibit, schedule or certificate
furnished by the Company pursuant to this Agreement contains or will contain at
the Effective Time, any untrue statement of a material fact, or omits or will
omit at the Effective Time to state any material fact necessary in order to make
the statements contained herein or therein, in the light of the circumstances
under which made, not misleading.
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF
PARENT AND NEWCO
Parent and Newco hereby represent and warrant to the Company that on
the date hereof and as of the Closing Date, as though made at the Closing Date,
as follows:
3.1 Organization, Standing and Power. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Indiana. Newco is or will be prior to the Effective Time a corporation duly
organized, validly existing and in good standing under the laws of the State of
Indiana. Each of Parent and Newco has the corporate power to own its properties
and to carry on its business as now being conducted and is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the failure to be so qualified or licensed would have a material adverse effect
on the business, assets (including intangible assets), condition (financial or
otherwise), results of operations or capitalization of Parent (a "Parent
Material Adverse Effect").
3.2 Authority. Each of Parent and Newco has all requisite corporate
power and authority to enter into this Agreement and any Related Agreements to
which it is a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and any Related Agreements
to which it is a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Parent and Newco. This Agreement and any Related Agreements to
which Parent and Newco are parties have been duly executed and delivered by
Parent and Newco and constitute the valid and binding obligations of Parent and
Newco, enforceable in accordance with their terms, except as such enforceability
may be limited by principles of public policy and subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
3.3 No Conflict. The execution and delivery by the Parent and Newco of
this Agreement and any Related Agreement to which the Parent and/or the Newco is
a party, and the consummation of the transactions contemplated hereby and
thereby, will not conflict with (i) any provision of the certificate of
incorporation or bylaws of Parent or Newco, (ii) any contract to which Parent or
Newco or any of their respective properties or assets (including intangible
assets) is subject, or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or Newco or any of their
respective properties (tangible or intangible) or assets.
3.4 Capital Resources. Parent has sufficient capital resources to pay
the Total Consideration and to consummate all of the transactions contemplated
by the Agreement and the Related Agreements.
3.5 Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity, or any
third party is required by or with respect to Parent or Newco in connection with
the execution and delivery of this Agreement and any Related Agreements to which
Parent or Newco is a party or the consummation of the transactions contemplated
hereby and thereby, except for such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings which, if not obtained
or made, would not have a Parent Material Adverse Effect, and the filing of the
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Plan of Merger with the Virginia State Corporation Commission.
3.6 Brokers' and Finders' Fees. Neither Parent nor Newco has incurred,
nor will it incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or any similar charges in connection with
this Agreement or any transaction contemplated hereby.
3.7 Representations Complete. Neither any of the representations or
warranties made by the Parent in this Agreement nor any statements made in any
exhibit, schedule or certificate furnished by the Parent or Newco pursuant to
this Agreement contains or will contain at the Effective Time, any untrue
statement or a material fact, or omits or will omit at the Effective Time to
state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading. The information supplied by Parent for inclusion in the Proxy
Statement shall not, on the date the Proxy Statement is first mailed to the
stockholders of the Company or at the time of the Company Stockholders' Meeting
or 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 to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business of the Company. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, the Company agrees to use commercially
reasonable efforts to cause the Company, except to the extent that Parent shall
otherwise consent in writing, which consent shall not be unreasonably withheld
or delayed, to carry on the Company's business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted, to pay
the debts and Taxes of the Company when due, to pay or perform other obligations
when due, and, to the extent consistent with such business, use commercially
reasonable efforts, consistent with past practice and policies, to preserve
intact the Company's present business organizations, keep available the services
of the Company's present officers and Key Employees and preserve the Company's
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, all with the goal of preserving
unimpaired the Company's goodwill and ongoing businesses at the Effective Time.
The Company shall promptly notify Parent of any event or occurrence or emergency
not in the ordinary course of business of the Company and any material event
involving the Company. Except as expressly contemplated by this Agreement as set
forth in Section 4.1 of the Disclosure Schedule, the Company shall not, without
the prior written consent of Parent, which consent shall not be unreasonably
withheld or delayed:
(a) make any expenditures or enter into any commitment or
transaction exceeding $75,000 individually or $150,000 in the aggregate or any
commitment or transaction of the type described in Section 2.8 hereof, other
than in the ordinary course of business consistent with past practices;
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(b) make any purchases, or enter into any Contract to
purchase, any inventory, exceeding $75,000 individually or $150,000 in the
aggregate, other than in the ordinary course of business consistent with past
practices;
(c) enter into or amend any Contract pursuant to which any
other party is granted marketing, distribution, development or similar rights of
any type or scope with respect to any products or technology of the Company;
(d) amend or otherwise modify (or agree to do so), except in
the ordinary course of business or except as would not be reasonably likely to
have a Material Adverse Effect on the Company, or violate the terms of, any of
the Contracts set forth or described in the Disclosure Schedule;
(e) declare, set aside or pay any dividends on or make any
other distributions (whether in cash, stock or property) in respect of any
Company Capital Stock, or split, combine or reclassify any Company Capital Stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of Company Capital Stock, or repurchase,
redeem or otherwise acquire, directly or indirectly, any shares of Company
Capital Stock (or options, warrants or other rights exercisable therefor);
(f) issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose the purchase of,
any shares of Company Capital Stock or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue or purchase any such shares
or other convertible securities;
(g) cause or permit any amendments to the articles of
incorporation, bylaws or other organizational documents of the Company;
(h) acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
Company's business;
(i) except as allowed pursuant to Section 4.1 hereof, sell,
lease, license or otherwise dispose of any of its properties or assets, except
in the ordinary course of business and consistent with past practices;
(j) incur any indebtedness, except for trade credit or
advances to employees in the ordinary course of business consistent with past
practices, or guarantee any indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
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(k) grant any loans to others, except to contractors or
customers in the ordinary course of business consistent with past practices, or
purchase debt securities of others or amend the terms of any outstanding loan
agreement;
(l) grant any severance or termination pay (i) to any director
or officer, or (ii) to any other employee except consistent with prior practices
of the Company as disclosed in the Disclosure Schedule;
(m) adopt or amend any employee benefit plan, or enter into
any employment contract or, except as otherwise contemplated by this Agreement,
non-competition agreement, pay or agree to pay any special bonus or special
remuneration to any director or employee, or, increase the salaries or wage
rates of its employees except payments made pursuant to standard written
agreements in place on the date hereof and disclosed in the Disclosure Schedule;
(n) revalue any of its assets, including without limitation
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business;
(o) pay, discharge or satisfy, in an amount in excess of
$10,000 in any one case, or $30,000 in the aggregate, any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in the Current Balance
Sheet or subsequently incurred in the ordinary course of business;
(p) except as may be required by applicable law, make or
change any material election in respect of Taxes, adopt or change any accounting
method in respect of Taxes, enter into any closing agreement, settle any
material claim or assessment in respect of Taxes, or consent to any extension or
waiver of the limitation period applicable to any claim or assessment in respect
of Taxes;
(q) enter into any strategic alliance or joint marketing
arrangement or agreement;
(r) except in a manner consistent with the Company's past
practices, hire, terminate or enter into settlement agreements with any
employees, or encourage any employees to resign from the Company; or
(s) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through 4.1(r) hereof, or any other action
that would make any of its representations or warranties contained in this
Agreement untrue or incorrect or prevent the Company or any of the Principal
Officers/Shareholders from performing or cause the Company or any of the
Principal Officers/Shareholders not to perform their respective covenants
hereunder.
4.2 No Solicitation. Until the earlier of (i) the Effective Time, or
(ii) the date of termination of this Agreement pursuant to the provisions of
Section 7.1 hereof and except with respect to this Agreement and the
transactions contemplated hereby, the Company shall not (nor shall the Company
permit, as applicable, any of its officers, directors, employees, shareholders,
agents, representatives or affiliates, including any investment banker, attorney
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or accountant retained by it, to), directly or indirectly, take any of the
following actions with any party other than Parent and its designees: (a)
solicit, encourage, initiate, facilitate or participate in any inquiry,
negotiations or discussions, or enter into any agreement, with respect to any
offer or proposal to acquire all or any material part of the Company's business
or properties, or 20% or more of any Company Capital Stock (whether or not
outstanding), whether by merger, purchase of assets, tender offer or otherwise,
or effect any such transaction (an "Acquisition Proposal"), (b) disclose any
information not customarily disclosed to any person or entity concerning the
Company's business or properties, or afford to any person or entity access to
their respective properties, technologies, books or records, not customarily
afforded such access, or (c) assist or cooperate with any person or entity to
make any proposal to purchase all or any portion of the Company Capital Stock or
assets of the Company, other than in the ordinary course of business, or (d)
approve or recommend or propose to approve or recommend or execute or enter into
any letter of intent or agreement with any person or entity providing for the
acquisition of the Company, whether by merger, purchase of assets, tender offer
or otherwise or propose publicly or agree to do any of the foregoing. In the
event that the Company or any of the Company's affiliates shall receive, prior
to the Effective Time or the termination of this Agreement, any offer, proposal,
or request, directly or indirectly, of the type referenced in clause (a) or (c)
above, or any request for disclosure or access pursuant to clause (b) above, the
Company shall immediately notify Parent thereof, including information as to the
identity of the offeror or the party making any such offer or proposal and the
specific terms of such offer or proposal, as the case may be, and such other
information related thereto as Parent may reasonably request.
Notwithstanding anything in this Agreement to the contrary, the Company
shall be permitted to (A) to the extent applicable, comply with Rule 14d-9 and
Rule 14e-2 promulgated under the 1934 Act with regard to an Acquisition Proposal
and (B) engage in any discussions or negotiations with, or provide any
information to, any Person in response to an unsolicited bona fide Acquisition
Proposal by any such Person, if and only to the extent that, in any such case
referred to in clause (B), (i) the Company Stockholders' Meeting shall not have
occurred, (ii) the Company has received an unsolicited bona fide Acquisition
Proposal from a third party and the Board of Directors concludes in good faith
that such Acquisition Proposal constitutes a Superior Proposal (as defined
below), (iii) the Board of Directors after consultation with outside counsel
determines in good faith that the failure to take such action would be
inconsistent with its fiduciary duties under applicable law, and (iv) prior to
providing any information or data to any Person in connection with an
Acquisition Proposal by any such Person, its Board of Directors receives from
such Person an executed confidentiality agreement having provisions that are
customary in such agreements, as advised by counsel. Nothing in this Section 4.2
shall permit the Company to terminate this Agreement except as specifically
provided in Article VII hereof or affect any other obligation of the Company
hereunder. During the term of this Agreement, the Company shall not submit to
the vote of its stockholders any Acquisition Proposal other than the Merger. For
purposes of this Agreement, a "Superior Proposal" means a bonafide written
proposal or offer with respect to a merger, reorganization, share exchange,
consolidation or sale of all or substantially all of the assets of the Company
or a tender or exchange offer for more than 50% of the equity securities of the
Company, that the Board of Directors of the Company determines in good faith
after consultation with its financial advisor and outside counsel, taking into
account, among other things, all legal, financial, regulatory and other aspects
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of the proposal and the Person making the proposal would, if consummated, be
more favorable to the Company's shareholders (in their capacities as
shareholders) from a financial point of view than the Merger and is reasonably
capable of being completed. Any such offer, proposal or request having already
occurred after the effective date of the Letter of Intent previously signed by
the Parent and the Company shall be disclosed in Section 4.2 of the Disclosure
Schedule.
4.3 Break-Up Fee. If (a) the Company breaches any provisions of Section
4.2 above or the Company provides to the Parent written notice that this
Agreement is terminated in the absence of a material breach of the
representations, warranties and covenants of the Parent and Newco hereunder or
the failure of the conditions set forth in Sections 6.1(b) or (c), and (b)
within six months after the later of the date of such termination or the
Termination Date, as the case may be, the Company signs a letter of intent or
other agreement relating to the acquisition of a material portion of the Company
Capital Stock or of the Company, its assets, or business, in whole or in part,
whether directly or indirectly, through purchase, merger, consolidation, or
otherwise (other than sales of inventory or immaterial portions of the Company's
assets in the ordinary course) and such transaction is ultimately consummated,
then, immediately upon the closing of such transaction, the Company will pay to
the Parent the sum of $500,000 (the "Break-Up Fee") by wire transfer of
immediately available funds. This Break-Up Fee will serve as the exclusive
remedy to the Parent under this Agreement in the event of a breach by the
Company of the provisions of Section 4.2 and in any other case where the
Break-Up Fee is payable.
The parties acknowledge that the agreements contained in Section 4.2
and this Section 4.3 are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Parent would not enter into
this Agreement; accordingly, if the Company fails promptly to pay any amount due
pursuant to this Section 4.3, and, in order to obtain such payment, Parent
commences a suit which results in a judgment against the Company for the fee set
forth in this Section 4.3, the Company shall pay to Parent its costs and
expenses (including reasonable attorneys' fees and expenses) in connection with
such suit, together with interest on the amount of the fee at the prime rate
published in the Wall Street Journal on the date such payment was required to be
made. Where the Break-Up Fee is not payable under this Section 4.3, the parties
agree that any remedy or amount payable pursuant to this Section 4.3 shall not
be an exclusive remedy for any breach of any representation, warranty, covenant
or agreement contained in this Agreement; provided that there shall be no
remedies for any breaches resulting in a loss of less than $10,000 individually
or in the aggregate.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Shareholders' Meeting. This Agreement, the Plan of Merger and the
Merger shall be submitted for approval to the Shareholders of the Company at the
Company Stockholders' Meeting to be called and held in accordance with the
applicable provisions of Virginia law and the articles of incorporation and
bylaws of the Company. The Company shall cause the Company Stockholders' Meeting
to be held as promptly as practicable and in any event within fifty (50) days
from the date hereof or, if later, within forty (40) days of the Company's
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receipt of notice from the SEC that it has no further comments with respect to
the Company's Proxy Statement relating to the Company Stockholders' Meeting and
shall disseminate to its Shareholders all materials required of it under law to
be disseminated in connection with the consideration by the Shareholders of this
Agreement and the Merger. Parent shall cooperate in the preparation of the
shareholder materials and shall furnish all material information concerning it
as the Company may reasonably request. In connection with the Company
Stockholders' Meeting, (i) the Board of Directors of the Company shall recommend
to the Shareholders the approval of the matters submitted for approval (unless
the Board of Directors of the Company, after consultation with outside counsel,
determines in good faith that the making of such recommendation, or the failure
to withdraw or modify its recommendation, would constitute a breach of the
fiduciary duties of the Board of Directors), and (ii) the Company shall use its
commercially reasonably efforts to obtain the Shareholders' approval (unless the
Board of Directors of the Company, after consultation with outside counsel,
determines in good faith that the taking of such actions would constitute a
breach of the fiduciary duties of the Board of Directors).
5.2 Access to Information. The Company shall afford Parent and its
accountants, counsel and other representatives, reasonable access during the
period prior to the Effective Time to (i) all of the Company's properties,
books, contracts, commitments and records, including the Company's source code,
(ii) all other information concerning the business, properties and personnel
(subject to restrictions imposed by applicable law) of the Company as Parent may
reasonably request, and (iii) all employees of the Company as identified by
Parent. The Company agrees to provide to Parent and its accountants, counsel and
other representatives copies of internal financial statements (including Tax
returns and supporting documentation) promptly upon request. No information or
knowledge obtained in any investigation pursuant to this Section 5.2 shall
affect or be deemed to modify any representation or warranty contained herein or
the conditions to the obligations of the parties to consummate the Merger in
accordance with the terms and provisions hereof.
5.3 Confidentiality. Each of the parties hereto hereby agrees that the
information obtained in any investigation pursuant to Section 5.2 hereof, or
pursuant to the negotiation and execution of this Agreement or the effectuation
of the transaction contemplated hereby, shall be governed by the terms of the
Nondisclosure Agreement effective as of December 10, 1999 between the Company
and Parent, which is incorporated herein by this reference.
5.4 Company's Expenses. The Parent and the Company will be responsible
for and bear all of their own costs and expenses incurred at any time in
connection with pursuing or consummating the Merger. If Parent terminates this
Agreement other than a result of any of (i) a breach by the Company of this
Agreement, (ii) Parent's discovery that the business or financial condition of
the Company is materially and adversely different from that disclosed in the
Audited Financials and Interim Financials, (iii) the failure of the condition
set forth in Section 6.2(i) hereof, or (iv) the existence of litigation
involving the Company or the Company capital Stock which has not been previously
disclosed in writing to Parent, then Parent shall promptly reimburse the Company
for all of its reasonable out-of-pocket expenses incurred in connection with the
Merger, up to a maximum of $25,000.
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5.5 Public Disclosure. Neither party shall issue any statement or
communication to any third party (other than their respective agents) regarding
the subject matter of this Agreement or the transactions contemplated hereby,
including, if applicable, the termination of this Agreement and the reasons
therefor, without the consent of the other party, which consent shall not be
unreasonably withheld, except that this restriction shall be subject to Parent
and the Company's obligation to comply with applicable securities laws.
5.6 Consents. The Company shall use commercially reasonable efforts to
obtain the consents, waivers and approvals under any of the Contracts to which
the Company is a party deemed appropriate or necessary by any party in
connection with the Merger, including all consents, waivers and approvals set
forth in the Disclosure Schedule, so as to preserve all rights of, and benefits
to, the Company thereunder from and after the Effective Time.
5.7 Reasonable Efforts. Subject to the terms and conditions provided in
this Agreement, each of the parties hereto shall use commercially reasonable
efforts to take promptly, or cause to be taken, all actions, and to do promptly,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereby, to obtain all necessary waivers, consents and approvals and
to effect all necessary registrations and filings and to remove any injunctions
or other impediments or delays, legal or otherwise, in order to consummate and
make effective the transactions contemplated by this Agreement for the purpose
of securing to the parties hereto the benefits contemplated by this Agreement.
5.8 Notification of Certain Matters. 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 is likely to cause any representation or
warranty of the Company contained in this Agreement to be untrue or inaccurate
at or prior to the Effective Time, and (ii) any failure of the Company 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 5.8 shall not (a) limit or otherwise affect any
remedies available to the party receiving such notice or (b) constitute an
acknowledgment or admission of a breach of this Agreement. No disclosure by the
Company pursuant to this Section 5.8, however, shall be deemed to amend or
supplement the Disclosure Schedule or prevent or cure any misrepresentations,
breach of warranty or breach of covenant.
5.9 Additional Documents and Further Assurances. Each party hereto, at
the request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of the Merger and the
transactions contemplated hereby.
5.10 Release of Liens. At the request of the Parent, the Company shall
enter into all agreements, instruments, certificates and other documents, in
form and substance reasonably satisfactory to Parent, that are necessary or
appropriate to evidence the release of all Liens on the assets of the Company,
except for the Liens listed on Section 2.14(b) of the Disclosure Schedule or
otherwise expressly permitted in this Agreement.
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5.11 Indemnification. Parent agrees that all rights to indemnification
and exculpation from liabilities for acts or omissions occurring at or prior to
the Effective Time now existing in favor of the current or former directors,
officers or agents of the Company as provided in its articles of incorporation
or bylaws, shall continue in full force and effect in accordance with their
terms for at least six years after the Effective Time. Parent further agrees to
guarantee the payment of any amounts due to such persons under such provisions
and that all determinations about the availability of indemnification and
exculpation pursuant to this Section 5.11 shall be made in good faith after
consultation with independent legal counsel. In addition, from and after the
Effective Time, directors and officers of the Company who become or continue as
directors or officers of the Surviving Corporation will be entitled to the same
indemnity rights and protections as are afforded to other directors and officers
of the Surviving Corporation. In the event that the Surviving Corporation or any
of its successors or assigns (i) consolidates with or merges into any other
Person and is not the continuing or surviving corporation or entity or such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, proper
provision will be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 5.11.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of the Company, Newco, and Parent to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Shareholder Approval. The Shareholders of the Company
holding not less than the minimum number of shares necessary to approve this
Agreement, the Merger and the transactions contemplated hereby and thereby shall
have voted all their respective shares of Capital Stock in favor of approval of
this Agreement, the Merger and the transactions contemplated hereby and thereby.
(b) No Order. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger.
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending.
6.2 Conditions to the Obligations of Parent and Newco. The obligation
of Parent and Newco to effect the Merger shall be subject to the satisfaction at
or prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, exclusively by Parent and Newco:
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(a) Representations, Warranties and Covenants. (i) The
representations and warranties of the Company in this Agreement shall have been
true and correct in all material respects on the date they were made and shall
be true and correct in all material respects on and as of the Closing Date as
though such representations and warranties were made on and as of such time
(other than the representations and warranties of the Company as of a specified
date, which will be true and correct in all material respects as of such date),
and (ii) the Company shall have performed and complied in all material respects
with all covenants and obligations under this Agreement required to be performed
and complied with by such parties as of the Closing.
(b) Governmental Approval. Approvals from any court,
administrative agency or commission or other federal, state, county, local or
other foreign governmental authority, instrumentality, agency or commission (if
any) deemed appropriate or necessary by Parent shall have been timely obtained.
(c) Litigation. There shall be no action, suit, claim or
proceeding of any nature pending, or overtly threatened, against Parent, Newco
or the Company, their respective properties or any of their respective officers
or directors, arising out of, or in any way connected with, the Merger or the
other transactions contemplated by the terms of this Agreement.
(d) Third Party Consents. Parent shall have received all
consents, waivers, approvals, and assignments listed in Schedule 6.2(d) to this
Agreement.
(e) Release of Liens. Parent shall have received from the
Company a duly and validly executed copy of all agreements, instruments,
certificates and other documents, in form and substance reasonably satisfactory
to Parent, that are necessary or appropriate to evidence the release of all
Liens set forth in Section 6.2(e) of the Disclosure Schedule except for the
Permitted Encumbrances listed in Section 2.14(b) of the Disclosure Schedule to
this Agreement.
(f) Legal Opinion. Parent shall have received a legal opinion
from Hunton & Williams, legal counsel to the Company, substantially in the form
attached hereto as Exhibit F.
(g) No Material Adverse Effect. There shall not have occurred
any event or condition of any character that has had, or is reasonably likely to
have, a Material Adverse Effect on the Company since the date of this Agreement.
(h) Noncompete Agreements. Each of the Key Employees shall,
prior to the Effective Time, have executed and delivered to Parent an Employment
and Noncompete Agreement in the form attached hereto as Exhibit A, and all of
such Agreements shall be in full force and effect.
(i) Certificate of the Company. Parent shall have received a
certificate, validly executed by or on behalf of the Company to the effect that,
as of the Closing:
(i) all representations and warranties made by the
Company in this Agreement are true and correct in all material respects on and
as of the Closing Date as though such representations and warranties were made
on and as of such time (other than the representations and warranties of the
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Company as of a specified date, which will be true and correct in all material
respects as of such date); and
(ii) all covenants and obligations under this
Agreement to be performed by the Company on or before the Closing have been so
performed in all material respects.
(j) Certificate of Secretary of Company. Parent shall have
received a certificate, validly executed by the Secretary of the Company,
certifying as to (i) the terms and effectiveness the articles of incorporation
and the bylaws of the Company, (ii) the valid adoption of resolutions of the
Board of Directors and Shareholders of the Company approving this Agreement and
the approval of the transactions contemplated hereby and that such approvals are
in full force and effect without modification, (iii) the incumbency of the
officers of the Company executing this Agreement and the Related Agreements or
other instruments or certificates relating hereto or thereto.
(k) Certificate of Good Standing. Parent shall have received
current certificates of good standing with respect to the Company from the State
Corporation Commission of the State of Virginia.
(m) Settlement of Outstanding Litigation. The Company shall
have settled or shall otherwise no longer be subject to the actions, suits or
proceedings listed in Section 6.2(m) of the Disclosure Schedule.
(n) Receipt of Permits. The Company shall have obtained the
permits listed in Section 6.2(n) of the Disclosure Schedule.
6.3 Conditions to Obligations of the Company. The obligations of the
Company to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, exclusively by the Company:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Parent and Newco in this Agreement (other than
the representations and warranties of Parent and Newco as of a specified date,
which will be true and correct in all material respects as of such date) shall
be true and correct in all material respects on the date they were made and
shall be true and correct in all material respects on and as of the Closing Date
as though such representations and warranties were made on and as of such time,
and (ii) Parent and Newco shall have performed and complied in all material
respects with all covenants and obligations of this Agreement required to be
performed and complied with by such parties as of the Closing.
(b) Certificate of Parent. The Company shall have received a
certificate executed on behalf of Parent by a corporate officer to the effect
that, as of the Closing:
(i) all representations and warranties made by Parent
and Newco in this Agreement (other than the representations and warranties of
Parent and Newco as of a specified date, which will be true and correct as of
such date) are true and correct in all material respects on and as of the
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Closing Date as though such representations and warranties were made on and as
of such time; and
(ii) all covenants and obligations under this
Agreement to be performed by Parent and Newco on or before the Closing have been
so performed in all material respects.
(c) Legal Opinion. The Company shall have received a legal
opinion from Wyatt, Tarrant & Combs, legal counsel to Parent,
substantially in the form attached hereto as Exhibit G.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. Except as provided in Section 7.2 hereof, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Closing:
(a) by mutual, written agreement of the Company and the
Parent;
(b) by Parent or by the Company, if the Closing Date shall not
have occurred by June 30, 2000, provided, however, that the right to terminate
this Agreement under this Section 7.1(b) shall not be available to any party
whose action or failure to act has been a principal cause of or resulted in the
failure of the Merger to occur on or before such date and such action or failure
to act constitutes breach of this Agreement;
(c) by Parent or by the Company if: (i) there shall be a final
non-appealable order of a federal or state court in effect preventing
consummation of the Merger, or (ii) there shall be any statute, rule, regulation
or order enacted, promulgated or issued or deemed applicable to the Closing by
any Governmental Entity that would make consummation of the Closing illegal;
(d) by Parent if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any Governmental Entity, which would prohibit
Parent's ownership or operation of any portion of the business of the Company,
or (ii) compel Parent or the Company to dispose of or hold separate all or a
material portion of the business or assets of the Company or Parent as a result
of the Merger;
(e) by Parent if it is not in material breach of its
obligations under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement of the Company contained in this
Agreement such that the conditions set forth in Section 6.2(a) would not be
satisfied and such breach has not been cured within ten (10) calendar days after
written notice thereof to the Company; provided, however, that no cure period
shall be required for a breach which by its nature cannot be cured; or
(f) by the Company if the Company is not in material breach
its obligations under this Agreement and there has been a material breach of any
representation. warranty, covenant or agreement of the Parent or Newco contained
in this Agreement such that the conditions set forth in Section 6.3(a) would not
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be satisfied and such breach has not been cured within ten (10) calendar days
after written notice thereof to Parent; provided, however, that no cure period
shall be required for a breach which by its nature cannot be cured.
(g) by the Company, if, prior to the Effective Time, a
Superior Proposal has been made and the Board of Directors of the Company
authorizes the Company to enter into a definitive agreement concerning such
transaction; provided, that the Company shall not terminate this Agreement
pursuant to this Section 7.1(g) if Parent makes, within five business day of
receiving written notice of such Superior Proposal (specifying the material
terms and conditions of such Superior Proposal (and including a copy thereof and
all accompanying documentation), identifying the person making such Superior
Proposal and stating whether the Company intends to enter into a definitive
agreement with such person) an offer that the Board of Directors of the Company
determines, in good faith after consultation with its financial advisor, is at
least as favorable to the Company and its stockholders as the Superior Proposal.
7.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1 hereof, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of Parent,
the Company or the Shareholders, or their respective officers, directors or
shareholders, if applicable; provided, however, that each party hereto shall
remain liable for any breaches of this Agreement prior to its termination; and
provided further, however, that, the provisions of Sections 4.3, 5.4, 5.5 and
5.6 hereof, Article VIII hereof and this Section 7.2 shall remain in full force
and effect and survive any termination of this Agreement pursuant to the terms
of this Article VII.
7.3 Amendment. This Agreement may be amended by the parties hereto at
any time by execution of an instrument in writing signed (i) on behalf of
Parent, and (ii) on behalf of the Company.
7.4 Extension; Waiver. At any time prior to the Closing, Parent, on the
one hand, and the Company may, to the extent legally allowed, (i) extend the
time for the performance of any of the obligations of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a 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.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Notices. All notices and other communications hereunder shall be in
writing, shall be effective when received, and shall in any event be deemed
received and effectively given (i) upon delivery, if delivered personally or by
commercial messenger or courier service, (ii) three days after deposit in the
U.S. mail, if delivered by registered or certified mail (postage prepaid, return
receipt requested), (iii) one business day after the day of facsimile
transmission, if sent by facsimile with confirming copy by U.S. mail (first
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class, postage prepaid), or (iv) one business day after the business day of
deposit with Federal Express or similar carrier for overnight delivery, freight
prepaid, in each case to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent, to:
Coachmen Industries, Inc.
2831 Dexter Drive
P. O. Box 3300
Elkhart, Indiana 46515
Attention: Mr. Jim Jack
Richard M. Lavers, Esq.
Telephone No.: (219) 262-0123
Facsimile No.: (219) 262-8823
with a copy to:
Wyatt, Tarrant & Combs
250 W. Main Street, Suite 1700
Lexington, Kentucky 40507-1746
Attention: Caryn F. Price, Esq.
and Judge B. Wilson II, Esq.
Telephone No.: (606) 233-2012
Facsimile No.: (606) 259-0649
(b) if to the Company, to:
Mod-U-Kraf Homes, Inc.
201 Old Franklin Turnpike
P. O. Box 573
Rocky Mount, Virginia 24151
Attention: Mr. Dale H. Powell
Telephone No.: (540) 483-0291
Facsimile No.: (540) 483-2228
with a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Attention: Randall S. Parks, Esq.
Telephone No.: (804) 788-7375
Facsimile No.: (804) 788-8218
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8.2 Interpretation. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be deemed originals, shall be considered one
and the same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other party, it
being understood that all parties need not sign the same counterpart.
8.4 Entire Agreement; Assignment. This Agreement, the Exhibits hereto,
the Disclosure Schedule, together with the Nondisclosure Agreement dated as of
December 10, 1999 between Parent and the Company, and the documents and
instruments and other agreements among the parties hereto referenced herein: (i)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings both written
and oral, among the parties with respect to the subject matter hereof, (ii) are
not intended to confer upon any other person or entity any rights or remedies
hereunder, and (iii) shall not be assigned by operation of law or otherwise,
except that Parent and Newco may assign their respective rights and delegate
their respective obligations hereunder to any entity or entities that are
wholly-owned by Parent, directly or indirectly.
8.5 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as to
reasonably effect the intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.6 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with,
and not exclusive of, any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
8.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Virginia, as applied to contracts
entered into and wholly to be performed within such state by residents thereof.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction
and venue of the federal district courts located within the Western District of
Virginia, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein unless otherwise provided herein,
agrees that process may be served upon them in any manner authorized by the laws
of the Commonwealth of Virginia for such persons and waives and covenants not to
assert or plead any objection which they might otherwise have to such
jurisdiction, venue and such process.
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8.8 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefor, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.9 Approval of Parent. The approval of this Agreement by Parent
constitutes the approval of the same and the transactions contemplated herein by
Parent as the sole Shareholder of Newco.
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IN WITNESS WHEREOF, Parent, Newco, and the Company have caused this
Agreement to be signed, all as of the date first written above.
COACHMEN INDUSTRIES, INC.
By: G. E. Stout
--------------------------------------
Title: Executive Vice President
-----------------------------------
COACHMEN ACQUISITION CORPORATION
By: G. E. Stout
--------------------------------------
Title: Vice President
-----------------------------------
MOD-U-KRAF HOMES, INC.
By: Edwin J. Campbell
--------------------------------------
Title: Executive Vice President and
Corporate Secretary
-----------------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
<PAGE>
The directors of Mod-U-Kraf Homes, Inc. execute this Agreement to
indicate their approval of the transactions contemplated herein, subject to the
terms and conditions of this Agreement, in their capacities as directors.
BOARD OF DIRECTORS OF MOD-U-KRAF
HOMES, INC.
/s/ Bobbie L. Oliver
------------------------------------------
BOBBIE L. OLIVER, DIRECTOR
/s/ Mary L. Fitts
------------------------------------------
MARY L. FITTS, DIRECTOR
/s/ Dale H. Powell
------------------------------------------
DALE H. POWELL, DIRECTOR
/s/ W. Curtis Carter
------------------------------------------
W. CURTIS CARTER, DIRECTOR
/s/ Edwin J. Campbell
------------------------------------------
EDWIN J. CAMPBELL, DIRECTOR
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
