SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 46)*
CTS Corporation
(Name of issuer)
Common Stock - No par value
(Title of class of securities)
126 501 105
(CUSIP number)
Henry V. Kensing
Dynamics Corporation of America
475 Steamboat Road
Greenwich, Connecticut 06830-7197
(203) 869-3211
(Name, address and telephone number of person
authorized to receive notices and communications)
with a copy to:
Alan C. Myers
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
May 9, 1997
(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 Rule
13d-1(b)(3) or (4), check the following box ( ).
*Amendment No. 46 for Dynamics Corporation of America
Amendment No. 18 for LTB Investment Corporation
Dynamics Corporation of America and LTB Investment
Corporation hereby amend and supplement their Schedule 13D
relating to the shares of common stock of CTS Corporation.
Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Schedule 13D, as amended.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 is hereby amended to add the following at the
end thereof:
On May 9, 1997, DCA, CTS and CTS First Acquisition
Corp., a New York Corporation and a wholly-owned subsidiary of
CTS ("CTS Acquisition"), entered into an Agreement and Plan of
Merger (the "Merger Agreement"), pursuant to which, among other
things, (i) CTS Acquisition will commence a tender offer to
purchase up to 49.9% of DCA's outstanding common shares at a
price of $55 per share and (ii) DCA will merge (the "Merger")
into CTS Acquisition, with CTS Acquisition surviving, and each
outstanding common share of DCA will be converted into the right
to receive 0.88 shares of CTS Common Stock. As a result of the
Merger, DCA will become a wholly-owned subsidiary of CTS.
The Merger is subject to shareholder approval and other
customary conditions.
The foregoing summary of the Merger Agreement is
qualified in its entirety by reference to the text of the Merger
Agreement, a copy of which is filed as an exhibit hereto and
which is incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following items are hereby filed as Exhibits to
this Schedule 13D:
Exhibit 1 - Press Release issued by Dynamics Corporation of
America, dated May 12, 1997.
Exhibit 2 - Agreement and Plan of Merger, dated as of May 9,
1997, among Dynamics Corporation of America, CTS
Corporation and CTS First Acquisition Corp.
SIGNATURE
After reasonable inquiry and to the best of my knowl-
edge and belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: May 12, 1997
DYNAMICS CORPORATION OF AMERICA
LTB INVESTMENT CORPORATION
By: /s/ Henry V. Kensing
__________________________
Name: Henry V. Kensing
Title: Vice President
EXHIBIT INDEX
Exhibit No. Description
Exhibit 1 Press Release issued by Dynamics Corporation of
America, dated May 12, 1997
Exhibit 2 Agreement and Plan of Merger, dated as of May 9,
1997, among Dynamics Corporation of America, CTS
Corporation and CTS First Acquisition Corp.
PRESS RELEASE
Contact (CTS): Contact (Dynamics):
Gene Donati Henry V. Kensing
Clark & Weinstock Dynamics Corporation of America
212-953-2550 203-869-3211
CTS AND DYNAMICS CORPORATION OF AMERICA AGREE
TO STRATEGIC BUSINESS COMBINATION
Elkhart, Indiana, and Greenwich, Connecticut, May 12,
1997 - CTS Corporation (NYSE: CTS) and Dynamics Corporation
of America (NYSE: DYA) announced that they have entered into
a definitive agreement providing for a strategic business
combination. Under the agreement, CTS will promptly
commence a cash tender offer for approximately 50% of
Dynamics' common stock at $55 per share and all Dynamics'
shares not purchased in the tender offer will be converted
in a merger into 0.88 shares of CTS stock.
The combined company is expected to have annual
revenues of over $500 million, and assuming the purchase of
half of Dynamics' stock in the tender offer, a combined
market capitalization of more than $280 million, based on
the current market price. CTS also announced that, in
addition to issuing CTS shares in the merger, it will
declare a 1:1 stock dividend upon completion of the merger.
"We believe the merger begins another exciting new
chapter in CTS' 100-year history by positioning CTS for
further profitable growth," said Joseph P. Walker, Chairman
and Chief Executive Officer of CTS. He added, "We've spent
the last eight years focusing on reducing costs and
developing new products; we're strong and lean, and now well
positioned to grow. In particular, we've successfully
streamlined our cost structure and repositioned our
businesses."
Over the past five years, CTS' net earnings have
increased five fold based primarily on operational
improvements. Gross margins have increased from 18.5% in
1991 to 26.1% in 1996. Over the period, sales per employee
have increased 56% and return on assets has increased four
fold. These improvements are evident in CTS' 1997 first
quarter results; sales increased 14% to $91 million and
earnings increased 58% to $7 million. Bookings during the
first quarter of 1997 reached a record $112 million; an
increase of 23% over first quarter of 1996.
Walker said, "The Dynamics merger is a significant step
in CTS' external growth strategy. The combined company will
have enhanced financial and operational flexibility and the
transaction will result in a broadening of CTS' stock
ownership base and an improvement in CTS' stock market
liquidity."
"The agreement with CTS presents an opportunity for
Dynamics' shareholders to participate in the future growth
of the combined companies on a tax favored basis while
providing a substantial premium for those of our
shareholders who elect to tender their shares for cash,"
said Andrew Lozyniak, Chairman and Chief Executive Officer
of Dynamics. He continued, "Dynamics has had a major equity
stake in CTS for over a decade, and Dynamics' shareholders
are now in a position to benefit from direct ownership in a
profitable and growing company."
CTS' CEO Walker said, "the transaction allows CTS and
Dynamics to combine complementary product lines and cut
costs. Dynamics' frequency control and heat dissipating
product lines will be combined with CTS operations resulting
in operational synergies and cost savings."
Cost savings from the merger are expected to be over
$2.0 million annually, beginning after the completion of
the transaction. The transaction is expected to be
accretive to earnings in 1997 and beyond.
The management teams of the two companies will be
combined to further increase the resources of the merged
company. Mr. Walker will continue as Chairman and Chief
Executive Officer of the combined company, which will
continue to operate under the CTS name. Mr. Lozyniak will
join the combined company's Office of the Chairman with Mr.
Walker and focus on strategic issues while continuing to
oversee the management of Dynamics' continuing operations.
The board of directors of the combined company will
initially be CTS's current five-member board, which includes
Mr. Walker, Mr. Lozyniak, Patrick Dorme (Dynamics' Chief
Financial Officer) and two independent directors. The
combined company's board will increase by at least two
additional independent directors as promptly as practical
following the merger.
CTS has arranged financing for the tender officer,
which is expected to be completed in June, 1997. The merger
is expected to be completed this summer.
The merger is subject to approval by shareholders of
both companies and other customary conditions.
This press release is neither an offer to sell
securities nor a solicitation of offers to buy securities.
This press release contains forward-looking statements
within the meaning of federal securities laws. Such
forward-looking statements are subject to risks,
uncertainties and other factors that could cause actual
results to differ materially from these statements,
including as a result of general economic conditions,
competitive factors and pricing pressures, the impact of
present and future laws, availability and cost of financing
and events or circumstances outside of management's control
affecting its ability to realize expected cost savings.
CTS is a diversified manufacturer of electronic and
electromechanical components for the automotive, computer
equipment, communications equipment, instruments and
controls, defense and aerospace, and consumer electronics
markets. Headquartered in Elkhart, Indiana, CTS operates
manufacturing plants in the United States and abroad.
Dynamics is a diversified company which manufactures
electronic components, mobile vans and transportable
shelters for specialized electronics and medical diagnostic
equipment, portable electric housewares and commercial
appliances, air distribution equipment, specialized air-
conditioning equipment and generator sets. Dynamics
currently holds a 44.1% stake in CTS.
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 9, 1997,
among CTS Corporation, an Indiana corporation ("Parent"), CTS
First Acquisition Corp., a New York corporation and a wholly
owned subsidiary of Parent ("Sub"), and Dynamics Corporation of
America, a New York corporation (the "Company").
RECITALS
A. The Boards of Directors of Parent and the Company
have determined that it is in the best interests of the
shareholders of their respective companies that Parent and the
Company combine their respective businesses on the terms and
subject to the conditions set forth herein (the "Combination");
B. As a first step in the Combination, the Company
and Parent each desire that Parent cause Sub to commence an offer
to purchase up to 49.9% of the issued and outstanding shares of
Common Stock of the Company, together with the associated Company
Rights (the "Shares"), on the terms and subject to the conditions
set forth in this Agreement and the Offer Documents (the "Offer")
and the Board of Directors of the Company (the "Company Board")
has unanimously approved the Offer and has determined to
recommend that the Company's shareholders accept the Offer and
tender their Shares pursuant thereto;
C. To complete the Combination, the respective Boards
of Directors of the Parent, Sub and the Company have approved the
merger of the Company with and into Sub, wherein each issued and
outstanding Share not owned directly or indirectly by Parent, Sub
or the Company will be converted into the right to receive the
Merger Consideration, on the terms and subject to the conditions
of this Agreement (the "Merger");
D. The parties desire to make certain
representations, warranties and covenants in connection with the
Merger and the Offer and also to prescribe various conditions to
the Merger and the Offer; and
E. For federal income tax purposes, it is intended
that the Merger will qualify as a reorganization under the
provisions of Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the
representations, warranties and covenants contained in this
Agreement, the parties agree as follows:
I. THE OFFER
1.1. The Offer. (a) As promptly as practicable (but
in any event not later than five business days after the public
announcement of the execution and delivery of this Agreement),
Parent will cause Sub to commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), the Offer whereby Sub will offer to purchase up
to 49.9% of the Shares at a price of $55 per Share, net to the
seller in cash (as paid pursuant to the Offer, the "Offer
Consideration"). The obligation of Parent to cause Sub to
commence the Offer, to consummate the Offer and to accept for
payment and to pay for Shares validly tendered in the Offer and
not withdrawn in accordance therewith will be subject to, and
only to, those conditions set forth in Annex A hereto.
(b) Without the prior written consent of the Company,
Sub will not, and Parent will cause Sub not to, (i) decrease or
change the form of the Offer Consideration, (ii) change the
conditions to the Offer or impose additional conditions to the
Offer, (iii) increase the number of Shares to be purchased
pursuant to the Offer to more than 50.1% of the number of Shares
(calculated on a fully diluted basis), (iv) extend the expiration
date of the Offer (the "Expiration Date") except (A) as required
by Law and (B) that, in the event that any condition to the Offer
is not satisfied or waived at the time that the Expiration Date
would otherwise occur, (1) Sub must extend the Expiration Date
for an aggregate of 20 additional business days (the "First
Extension Date") to the extent necessary to permit such condition
to be satisfied and (2) Sub may, in its sole discretion, extend
the Expiration Date for up to 20 additional business days after
the First Extension Period, or (v) amend any term of the Offer in
any manner materially adverse to holders of Shares (including
without limitation to result in any extension which would be
inconsistent with the preceding provisions of this sentence),
provided, however, that (1) subject to applicable legal
requirements, Parent may cause Sub to waive any condition to the
Offer, other than the Minimum Share Condition and the Tax Opinion
Condition (each as defined in Annex A), in Parent's sole
discretion and (2) the Offer may be extended in connection with
an increase in the consideration to be paid pursuant to the Offer
so as to comply with applicable rules and regulations of the
Securities and Exchange Commission (the "SEC"). Assuming the
prior satisfaction or waiver of the conditions of the Offer,
Parent will cause Sub to accept for payment, and pay for, in
accordance with the terms of the Offer, all Shares validly
tendered and not withdrawn pursuant to the Offer as soon as
practicable after the Expiration Date or any extension thereof.
1.2. Offer Documents. (a) As soon as practicable on
the date of commencement of the Offer, Parent and Sub will file
or cause to be filed with the SEC a tender offer statement on
Schedule 14D-1 (the "Schedule 14D-1") which will contain an offer
to purchase and related letter of transmittal and other ancillary
Offer documents and instruments pursuant to which the Offer will
be made (collectively with any supplements or amendments thereto,
the "Offer Documents") and which Parent and Sub represent,
warrant and covenant will comply in all material respects with
the Exchange Act and other applicable Laws and will contain (or
will be amended in a timely manner so as to contain) all
information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations
thereunder and other applicable Laws; provided, however, that (i)
no agreement or representation hereby is made or will be made by
Parent or Sub with respect to information supplied by the Company
in writing expressly for inclusion in, or information derived
from the Company's public SEC filings which is incorporated by
reference in, the Offer Documents and (ii) no representation,
warranty or covenant is made or will be made herein by the
Company with respect to information contained in the Offer
Documents other than information supplied by the Company in
writing expressly for inclusion in or information derived from
the Company Filed SEC Documents which is incorporated by
reference in, the Offer Documents.
(b) Parent, Sub and the Company will each promptly
correct any information provided by them for use in the Offer
Documents if and to the extent that it becomes false or
misleading in any material respect and Parent and Sub will
jointly and severally take all lawful action necessary to cause
the Offer Documents as so corrected to be filed promptly with the
SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable Law. In conducting the
Offer, Parent and Sub will comply in all material respects with
the provisions of the Exchange Act and other applicable Laws.
Parent and Sub will endeavor to afford the Company and its
counsel a reasonable opportunity to review and comment on the
Offer Documents and any amendments thereto prior to the filing
thereof with the SEC.
1.3. Company Actions. The Company hereby consents to
the Offer and represents that (a) the Company Board (at a meeting
duly called and held) has (i) determined that this Agreement, the
Offer and the Merger are fair to and in the best interests of the
Company and its shareholders, (ii) approved this Agreement and
the transactions contemplated hereby, including the Offer and the
Merger, and such approval is sufficient to render Section 912 of
the New York Business Corporation Law (the "NYBCL") inapplicable
to this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, (iii) amended the Company
Rights Agreement as described in Section 4.01(n), and (iv)
resolved to recommend acceptance of the Offer by those
Shareholders who wish to receive cash for their Shares and
adoption of this Agreement by the holders of Shares and (b)
WP&Co. has delivered to the Company Board the Fairness Opinion as
described in Section 4.01(l). The Company hereby consents to the
inclusion in the Offer Documents of the recommendation referred
to in this Section 1.03; provided, however, that the Company
Board may withdraw, modify or change such recommendation to the
extent, and only to the extent and on the conditions, specified
in Section 5.02. The Company will file with the SEC
simultaneously with the filing by Parent and Sub of the Schedule
14D-1, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto, "Schedule
14D-9") containing such recommendations of the Company Board in
favor of the Offer and the Merger. The Company represents,
warrants and covenants that Schedule 14D-9 will comply in all
material respects with the Exchange Act and any other applicable
Laws and will contain (or will be amended in a timely manner so
as to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and
regulations thereunder and other applicable Laws. The Company
will include in the Schedule 14D-9 information furnished by
Parent in writing concerning Parent's Designees as required by
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder and
will use its reasonable best efforts to have the Schedule 14D-9
available for inclusion to the initial mailing (and any
subsequent mailing) of the Offer Documents to Shareholders. Each
of the Company and Parent will promptly correct any information
provided by them for use in Schedule 14D-9 if and to the extent
that it becomes false or misleading in any material respect and
the Company will further take all lawful action necessary to
cause Schedule 14D-9 as so corrected to be filed promptly with
the SEC and disseminated to the holders of Shares, in each case
as and to the extent required by applicable Law. Parent and its
counsel will be given a reasonable opportunity to review the
Schedule 14D-9 and any amendments thereto prior to the filing
thereof with the SEC. In connection with the Offer, the Company
will promptly furnish Parent with mailing labels, security
position listings and all available listings or computer files
containing the names and addresses of the record holders of
Shares as of the latest practicable date and will furnish Parent
such information and assistance (including updated lists of
shareholders, mailing labels and lists of security positions) as
Parent or its agents may reasonably request in communicating the
Offer to the record and beneficial holders of Shares. Subject to
the requirements of applicable Law, and except for such actions
as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger,
Parent and Sub will, and will instruct each of their respective
affiliates, associates, partners, employees, agents and advisors
to, hold in confidence the information contained in such labels,
lists and files, will use such information only in connection
with the Offer and the Merger, and, if this Agreement is
terminated in accordance with its terms, will deliver promptly to
the Company (or destroy and certify to the Company the
destruction of) all copies of such information (and any copies,
compilations or extracts thereof or based thereon) then in their
possession or under their control.
1.4. Directors. (a) Promptly upon the purchase of
Shares by Sub pursuant to the Offer, and from time to time
thereafter, (i) Parent will be entitled to designate such number
of directors ("Parent's Designees"), rounded up to the next whole
number as will give Parent, subject to compliance with Section
14(f) of the Exchange Act, representation on the Company Board
equal to the product of (A) the number of directors on the
Company Board (giving effect to any increase in the number of
directors pursuant to this Section 1.04) and (B) the percentage
that such number of Shares so purchased bears to the aggregate
number of Shares outstanding (such number being, the "Board
Percentage"), provided, however, that if the number of Shares
purchased pursuant to the Offer equals or exceeds 49.9% of the
outstanding Shares, the Board Percentage will in all events be at
least a majority of the members of the Company Board, and (ii)
the Company will, upon request by Parent, promptly satisfy the
Board Percentage by (A) increasing the size of the Company Board
or (B) using reasonable efforts to secure the resignations of
such number of directors as is necessary to enable Parent's
Designees to be elected to the Company Board and will use its
best efforts to cause Parent's Designees promptly to be so
elected, subject in all instances to compliance with Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder.
At the request of Parent, the Company will take all lawful action
necessary to effect any such election. Parent will supply to the
Company in writing and be solely responsible for any information
with respect to itself, the Parent's Designees and Parent's
officers, directors and affiliates required by Section 14(f) of
the Exchange and Rule 14f-1 promulgated thereunder to be included
in the Schedule 14D-9. Notwithstanding the foregoing, at all
times prior to the Effective Time, the Company Board will include
at least two Continuing Directors.
(b) Notwithstanding any other provision hereof, of the
articles of incorporation or bylaws of the Company or of
applicable Law to the contrary, following the election or
appointment of Parent's Designees pursuant to this Section 1.04
and prior to the Effective Time, any amendment or termination of
this Agreement by the Company, extension by the Company for the
performance or waiver of the obligations or other acts of Parent
or Sub hereunder or waiver by the Company of the Company's rights
hereunder will require the concurrence of a majority of directors
of the Company then in office who are directors on the date
hereof and who voted to approve this Agreement (such directors,
the "Continuing Directors").
(c) Notwithstanding any other provision hereof, of the
articles of incorporation or bylaws of Parent and Sub or of
applicable Law to the contrary, on or after the date hereof, any
amendment or termination of this Agreement by Parent or Sub,
extension by Parent or Sub for the performance or waiver of the
obligations or other acts of the Company hereunder or waiver by
Parent or Sub of the rights of Parent or Sub hereunder will be
taken by a majority of the members of the Board of Directors of
Parent (the "Parent Board") who are not employed by the Company
or any Subsidiary of the Company on the date hereof (such
directors being on the date hereof Messrs. Lawrence J. Ciancia,
Gerald H. Frieling, Jr., and Joseph P. Walker) (the "Unaffiliated
Directors") or any successor thereto elected to the Parent Board
with the prior approval of the Unaffiliated Directors.
1.5. Offer Completion Date. If (a) the Minimum Share
Condition is not satisfied on the Expiration Date and (b) the
Average Closing Price for the ten trading days prior to the
Expiration Date multiplied by the Exchange Ratio is at least
$55.00, Parent and Sub may elect, by written notice from Parent
to the Company not later than the first business day after the
Expiration Date, to proceed with the Merger, in which case the
Company, Parent and Sub will be obligated to effect the Merger
subject only to the conditions specified in Article VII other
than the conditions set forth in Section 7.02(b) and 7.03(b). As
used herein, "Offer Completion Date" means the earlier to occur
of (i) the date on which Sub purchases Shares pursuant to the
Offer and (ii) the Effective Time.
II. THE MERGER
2.1. The Merger. On the terms and subject to the
conditions set forth in this Agreement, and in accordance with
the NYBCL, the Company will be merged with and into Sub at the
Effective Time in the Merger. Following the Effective Time, Sub
will be the surviving corporation in the Merger (the "Surviving
Corporation") and will succeed to and assume all the rights and
obligations of the Company in accordance with the NYBCL.
2.2. Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be
specified by the parties (the "Closing Date"), which (subject to
satisfaction or waiver of the conditions set forth in Article
VII) will be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article
VII, unless another time or date is agreed to by the parties
hereto. The Closing will be held at the offices of Jones, Day,
Reavis & Pogue, 599 Lexington Avenue, New York, New York unless
another date, time or place is agreed to in writing by the
parties hereto.
2.3. Effective Time. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing
Date, the parties will file a certificate of merger or other
appropriate documents (the "Certificate of Merger") executed in
accordance with the relevant provisions of the NYBCL and will
make all other filings or recordings required under the NYBCL in
order to effect the Merger. The Merger will become effective at
such time as the Certificate of Merger for the Merger has been
duly filed with the New York Secretary of State or at such
subsequent date or time as Parent and the Company agree and
specify in the Certificate of Merger (the time the Merger becomes
effective being hereinafter referred to as the "Effective Time").
2.4. Effects of the Merger. The Merger will have the
effects set forth in Section 906 of the NYBCL.
2.5. Certificate of Incorporation and By-laws.
(a) The certificate of incorporation of Sub will be the
certificate of incorporation of the Surviving Corporation,
amended to change the name of the Surviving Corporation to "DCA
Incorporated", until thereafter changed or amended as provided
therein or by Law.
(b) The by-laws of Sub will be the by-laws of the
Surviving Corporation until thereafter changed or amended as
provided therein or by applicable Law.
2.6. Boards, Committees and Officers. The Board of
Directors, committees of the Board of Directors, composition of
such committees (including chairmen thereof) and officers of Sub
as of the Effective Time will serve as such as the directors and
officers of the Surviving Corporation until the earlier of the
resignation or removal of any such individual or until their
respective successors are duly elected and qualified, as the case
may be.
III. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATION; EXCHANGE OF CERTIFICATES
3.1. Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part
of the holder of any Shares:
(a) Cancellation of Treasury Stock and Sub-Owned
Stock. Each Share that is owned by the Company or by any wholly
owned Subsidiary of the Company or by Parent or any wholly owned
Subsidiary of Parent will automatically be cancelled and retired
and will cease to exist, and no consideration will be delivered
in exchange therefor.
(b) Conversion of Company Shares. Each issued and
outstanding Share (other than Shares to be cancelled in
accordance with Section 3.01(a) and other than Shares accepted
for payment by Sub pursuant to the Offer) will be converted into
the right to receive 0.88 (the "Exchange Ratio") fully paid and
nonassessable shares of Parent Common Stock (the "Merger
Consideration"), subject to adjustment as provided in Section
3.03. As of the Effective Time, all such Shares will no longer
be outstanding and will automatically be cancelled and retired
and will cease to exist, and each holder of a certificate
representing any such Shares (a "Certificate") will cease to have
any rights with respect thereto, except the right to receive the
Merger Consideration and any cash in lieu of fractional shares of
Parent Common Stock to be issued or paid in consideration
therefor upon surrender of such Certificate in accordance with
Section 3.02, without interest.
(c) Conversion of Sub Shares. At the Effective Time,
each share of common stock, without par value, of Sub issued and
outstanding immediately prior to the Effective Time will remain
outstanding unaffected by the Merger, with the result that the
Surviving Corporation will be a wholly owned Subsidiary of
Parent.
3.2. Exchange of Certificates. (a) Exchange Agent.
As of the Effective Time, Parent will enter into an agreement
with such bank or trust company as may be designated by Parent
(the "Exchange Agent"), which will provide that Parent will
deposit with the Exchange Agent as of the Effective Time, for the
benefit of the holders of Shares, for exchange in accordance with
this Article III, through the Exchange Agent, certificates
representing the shares of common stock, without par value, of
Parent ("Parent Common Stock") (such shares of Parent Common
Stock, together with any dividends or distributions with respect
thereto with a record date after the Effective Time, any Excess
Shares and any cash (including cash proceeds from the sale of the
Excess Shares) payable in lieu of any fractional shares of Parent
Common Stock, being hereinafter referred to as the "Exchange
Fund") issuable pursuant to Section 3.01 in exchange for
outstanding Shares.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Exchange Agent will
mail to each holder of record of a Certificate which immediately
prior to the Effective Time represented outstanding Shares whose
Shares were converted into the right to receive the Merger
Consideration pursuant to Section 3.01 (i) a letter of
transmittal (which will specify that delivery will be effected,
and risk of loss and title to the Certificates will pass, only
upon delivery of the Certificates to the Exchange Agent and will
be in such form and have such other provisions as Parent may
specify consistent with this Agreement) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate
for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Parent, together with such letter
of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such
Certificate will be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent
Common Stock and cash, if any, which such holder has the right to
receive pursuant to the provisions of this Article III, and the
Certificate so surrendered will forthwith be cancelled. In the
event of a transfer of ownership of Shares which are not
registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock
may be issued to a Person other than the Person in whose name the
Certificate so surrendered is registered if such Certificate is
properly endorsed or otherwise in proper form for transfer and
the Person requesting such issuance pays any transfer or other
taxes required by reason of the issuance of shares of Parent
Common Stock to a Person other than the registered holder of such
Certificate or establishes to the satisfaction of Parent that
such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 3.02, each Certificate will be
deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the Merger Consideration and
cash, if any, which the holder thereof has the right to receive
in respect of such Certificate pursuant to the provisions of this
Article III. No interest will be paid or will accrue on any cash
payable to holders of Certificates pursuant to the provisions of
this Article III.
(c) Distributions with Respect to Unexchanged Shares.
No dividends or other distributions with respect to Parent Common
Stock with a record date after the Effective Time will be paid to
the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby, no cash
payment in lieu of fractional shares will be paid pursuant to
Section 3.02(e) and all such dividends, other distributions and
cash in lieu of fractional shares of Parent Common Stock will be
paid by Parent to the Exchange Agent and will be included in the
Exchange Fund, in each case in accordance with this Article III.
Subject to the effect of applicable escheat or similar Laws,
following surrender of any Certificate in accordance herewith
there will be paid to the holder of the certificate representing
whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount
of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares
of Parent Common Stock and, in the case of Certificates formerly
representing Shares, the amount of any cash payable in lieu of a
fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 3.02(e) and (ii) at the appropriate
payment date, the amount of dividends or other distributions with
a record date after the Effective Time but prior to such
surrender and with a payment date subsequent to such surrender
payable with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Shares. All shares
of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article III
(including any cash paid pursuant to this Article III) will be
deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the Shares theretofore represented by such
Certificates, and there will be no further registration of
transfers on the stock transfer books of the Surviving
Corporation of previously outstanding Shares. If, after the
Effective Time, Certificates are presented to Parent, the
Surviving Corporation or the Exchange Agent for any reason, they
will be cancelled and exchanged as provided in this Article III.
(e) No Fractional Shares. (i) No certificates or
scrip representing fractional shares of Parent Common Stock will
be issued upon the surrender for exchange of Certificates, no
dividend or distribution of Parent will relate to such fractional
share interests and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a
shareholder of Parent.
(ii) As promptly as practicable following the Effective
Time, the Exchange Agent will determine the excess of (A) the
number of whole shares of Parent Common Stock delivered to the
Exchange Agent by Parent pursuant to Section 3.02(a) over (B) the
aggregate number of whole shares of Parent Common Stock to be
distributed to holders of Shares pursuant to Section 3.02(b)
(such excess being herein called the "Excess Shares"). Following
the Effective Time, the Exchange Agent will sell the Excess
Shares at then-prevailing prices on the New York Stock Exchange,
Inc. (the "NYSE"), all in the manner provided in Section
3.02(e)(iii).
(iii) The sale of the Excess Shares by the Exchange
Agent will be executed on the NYSE through one or more member
firms of the NYSE and will be executed in round lots to the
extent practicable. The Exchange Agent will use reasonable
efforts to complete the sale of the Excess Shares as promptly
following the Effective Time as, in the Exchange Agent's sole
judgment, is practicable consistent with obtaining the best
execution of such sales in light of prevailing market conditions.
Until the net proceeds of such sale or sales have been
distributed to the prior holders of Shares, the Exchange Agent
will hold such proceeds in trust for such holders entitled
thereto (the "Common Shares Trust"). The Surviving Corporation
will pay out of the Common Shares Trust all commissions, transfer
taxes and other out-of-pocket transaction costs, including the
expenses and compensation of the Exchange Agent incurred in
connection with such sale of the Excess Shares. The Exchange
Agent will determine the portion of the Common Shares Trust to
which each holder of Shares is entitled, if any, by multiplying
the amount of the aggregate net proceeds comprising the Common
Shares Trust by a fraction, the numerator of which is the amount
of the fractional share interest to which such holder of Shares
is entitled (after taking into account all Shares held at the
Effective Time by such holder) and the denominator of which is
the aggregate amount of fractional share interests to which all
holders of Shares are entitled.
(iv) Notwithstanding the provisions of Section
3.02(e)(ii) and (iii), Parent may elect at its option, exercised
prior to the Effective Time, in lieu of the issuance and sale of
Excess Shares and the making of the payments hereinabove
contemplated, to pay each holder of Shares an amount in cash
equal to the product obtained by multiplying (A) the fractional
share interest to which such holder (after taking into account
all Shares held at the Effective Time by such holder) would
otherwise be entitled by (B) the average closing price for a
share of Parent Common Stock as reported on the NYSE Composite
Combination Tape (as reported in the Wall Street Journal, or, if
not reported thereby, any other authoritative source) ("Average
Closing Price") for the ten trading days prior to the Closing
Date and, in such case, all references herein to the cash
proceeds of the sale of the Excess Shares and similar references
will be deemed to mean and refer to the payments calculated as
set forth in this Section 3.02(e)(iv).
(v) As soon as practicable after the determination of
the amount of cash, if any, to be paid to holders of Shares with
respect to any fractional share interests, the Exchange Agent
will make available such amounts to such holders of Shares
subject to and in accordance with the terms of Section 3.02(c).
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of the
Certificates for six months after the Effective Time will be
delivered to Parent, upon demand, and any holders of the
Certificates who have not theretofore complied with this
Article III will thereafter look only to Parent for payment of
their claim for Merger Consideration, any cash in lieu of
fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock.
(g) No Liability. None of Parent, Sub, the Company or
the Exchange Agent will be liable to any Person in respect of any
shares of Parent Common Stock (or dividends or distributions with
respect thereto) or cash from the Exchange Fund delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar Law. If any Certificate has not been
surrendered prior to one year after the Effective Time (or
immediately prior to such earlier date on which any Merger
Consideration, any cash payable to the holder of such Certificate
representing Shares pursuant to this Article III or any dividends
or distributions payable to the holder of such Certificate would
otherwise escheat to or become the property of any Governmental
Entity), any such Merger Consideration or cash, dividends or
distributions in respect of such Certificate will become the
property of the Surviving Corporation, free and clear of all
claims or interest of any Person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent
will invest any cash included in the Exchange Fund, as directed
by Parent, on a daily basis. Any interest and other income
resulting from such investments will be paid to Parent.
(i) Lost Certificates. If any Certificate is lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the
posting by such Person of a bond in such reasonable amount as the
Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration and, if
applicable, any cash in lieu of fractional shares, and unpaid
dividends and distributions on shares of Parent Common Stock or
deliverable in respect thereof, pursuant to this Agreement.
(j) Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary, no Share, the holder of which has
properly complied with the provisions of Section 623 of the NYBCL
as to appraisal rights (a "Dissenting Share"), will be deemed to
be converted into and to represent the right to receive share of
Parent Common Stock hereunder and the holders of Dissenting
Shares, if any, will be entitled to payment, solely from the
Surviving Corporation, of the appraised value of such Dissenting
Shares to the extent permitted by and in accordance with the
provisions of Section 623 of the NYBCL; provided, however, that
(i) if any holder of Dissenting Shares, under the circumstances
permitted by the NYBCL, subsequently delivers a written
withdrawal of his or her demand for appraisal of such Dissenting
Shares, (ii) if any such holder fails to establish his or her
entitlement to rights to payment as provided in such Section 623,
or (iii) if neither any holder of Dissenting Shares nor the
Surviving Corporation has instituted a proceeding to determine
the rights of holders of Dissenting Shares and to fix the fair
value of Dissenting Shares in any of the circumstances described
in subparagraph (h) of Section 623 within the time provided in
such Section 623, such holder will forfeit such right to payment
for such Dissenting Shares pursuant to such Section 623 and, as
of the later of Effective Time or the occurrence of such event,
such holder's Certificate formerly representing shares of Company
Common Stock will automatically be converted into and represent
only the right to receive shares of Parent Common Stock pursuant
to Section 3.01 hereof, without any interest thereon, upon
surrender of the Certificate or Certificates formerly
representing such shares of Company Common Stock. The Company
will give Parent (A) prompt notice of any written demands for
appraisal of any Dissenting Shares, attempted withdrawals of such
demands and any other instruments received by the Company
relating to shareholders' rights of appraisal, (B) the
opportunity to participate in all negotiations and proceedings
with respect to demands for appraisal under the NYBCL, and (C)
the right to approve any settlement of any such demand in
Parent's sole discretion.
3.3. Stock Split. In connection with its approval of
this Agreement, the Board of Directors of Parent approved a stock
split in the form of a dividend of one Parent Common Share for
each then outstanding Parent Common Share (the "Stock Split"), to
be effective, subject to certain conditions, immediately after
the Effective Time. If the Stock Split is so effective, without
further action, the Exchange Ratio will be adjusted so as to be
1.76 shares of Parent Common Stock for each Share.
IV. REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of the Company.
Except as disclosed in the Company Filed SEC Documents or as set
forth on the Disclosure Schedule delivered by the Company to
Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"), the Company represents and warrants to
Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The
Company and each of its Significant Subsidiaries is a corporation
or other legal entity duly organized, validly existing and in
good standing (with respect to jurisdictions which recognize such
concept) under the Laws of the jurisdiction in which it is
organized and has the requisite corporate or other power, as the
case may be, and authority to carry on its business as now being
conducted. The Company and each of its Significant Subsidiaries
is duly qualified or licensed to do business and is in good
standing (with respect to jurisdictions which recognize such
concept) in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions in which the failure to be so qualified or licensed
or to be in good standing individually or in the aggregate could
not be reasonably expected to have a material adverse effect on
the business, financial condition or results of operations of the
Company and each of its Subsidiaries, taken as a whole, or on the
ability of the Company to perform any of its obligations under
this Agreement (any such effect, a "Company MAE"). The Company
has delivered to Parent prior to the execution of this Agreement
complete and correct copies of its certificate of incorporation
and by-laws and has made available to Parent the certificate of
incorporation and by-laws (or comparable organizational
documents) of each of its Subsidiaries, in each case as amended
to date.
(b) Subsidiaries. Exhibit 21 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996
includes all of the Subsidiaries of the Company. All the
outstanding shares of capital stock of, or other equity interests
in, each such Subsidiary have been validly issued and are fully
paid and nonassessable and are owned directly or indirectly by
the Company, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens").
(c) Capital Structure. The authorized capital stock
of the Company consists of 10,600,000 Shares and 894,000 shares
of preferred stock of the Company ("Company Preferred Shares").
At the close of business on the last business day immediately
preceding the date hereof (the "Measurement Date"),
(i) 3,838,742 Shares were issued and outstanding, (ii) 3,336,419
Shares were held by the Company in its treasury, (iii) 106,000
shares of Series A Participating Preferred Stock, par value $1
per share (the "Participating Preferred"), were reserved for
issuance pursuant to the Company Rights Agreement, and (iv) other
than the Participating Preferred, no other Company Preferred
Shares have been designated or issued. Except as set forth
above, at the close of business on the Measurement Date, no
shares of capital stock or other voting securities of the Company
or any Subsidiary were issued, reserved for issuance or
outstanding. At the close of business on the Measurement Date,
there were no outstanding stock options, stock appreciation
rights or rights to receive Shares on a deferred basis. All
outstanding shares of capital stock of the Company are, and all
shares which may be issued will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to
preemptive rights. As of the close of business on the
Measurement Date, there were no bonds, debentures, notes, other
indebtedness or securities of the Company having the right to
vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which shareholders of the
Company may vote. Except as set forth above, as of the close of
business on the Measurement Date, there were no outstanding
securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the
Company or any of its Subsidiaries is a party or by which any of
them is bound obligating the Company or any of its Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting
securities of the Company or of any of its Subsidiaries or
obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking.
As of the close of business on the Measurement Date, there were
no outstanding contractual obligations of the Company or any of
its Subsidiaries to issue, repurchase, redeem, exchange or
otherwise acquire any shares of capital stock of the Company or
any of its Subsidiaries. As of the close of business on the
Measurement Date, there were no outstanding contractual
obligations of the Company to vote or to dispose of any shares of
the capital stock of any of its Subsidiaries. The Company has
delivered to Parent a complete and correct copy of the Rights
Agreement, dated as of January 10, 1986 (the "Company Rights
Agreement"), as amended and supplemented to the date hereof
relating to rights ("Company Rights") to purchase Participating
Preferred.
(d) Authority; Noncontravention. The Company has all
requisite corporate power and authority to enter into this
Agreement, and, subject to the Company Shareholder Approval, to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate
action on the part of the Company, subject to Company Shareholder
Approval. This Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof
will not, conflict with, breach or result in any violation of, or
default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit
under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its Significant
Subsidiaries under, (i) the certificate of incorporation or
by-laws of the Company or the comparable organizational documents
of any of its Subsidiaries, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable
to the Company or any of its Subsidiaries or their respective
properties or assets, or (iii) subject to the governmental
filings and other matters referred to in the following sentence,
any judgment, order or decree ("Order"), or statute, law,
ordinance, rule or regulation ("Law") applicable to the Company
or any of its Subsidiaries or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, breaches, violations, defaults, rights, losses or
Liens that individually or in the aggregate could not be
reasonably expected to have a Company MAE. No Order, consent,
approval or authorization of, or registration, declaration or
filing with, any federal, state, local or foreign government or
any court, administrative or regulatory agency or commission or
other governmental authority, agency or instrumentality (a
"Governmental Entity") is required by or with respect to the
Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated
hereby except for (1) the filing of a premerger notification and
report form by the Company under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"); (2) the
filing with the SEC of (A) a proxy statement relating to the
Company Shareholders Meeting (such proxy statement, together with
the proxy statement relating to the Parent Shareholders Meeting,
in each case as amended or supplemented from time to time, the
"Joint Proxy Statement"), (B) the Schedule 14D-9, and (C) such
reports under the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated hereby;
(3) the filing of the Certificate of Merger with the New York
Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to
do business and such filings with Governmental Entities to
satisfy the applicable requirements of state securities or "blue
sky" laws; (4) such other filings and consents as may be required
under any environmental, health or safety Law or regulation
pertaining to any notification, disclosure or required approval
necessitated by the Offer, the Merger or the transactions
contemplated hereby; and (5) such consents, approvals, Orders or
authorizations the failure of which to be made or obtained could
not reasonably be expected, individually or in the aggregate, to
have a Company MAE.
(e) SEC Documents; Undisclosed Liabilities. The
Company has filed all required reports, schedules, forms,
statements and other documents with the SEC since January 1, 1995
(the "Company SEC Documents"). As of their respective dates, the
Company SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents, and none of the Company
SEC Documents when filed contained any untrue statement of a
material fact or omitted to state a 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. Except to the extent that information
contained in any Company SEC Document has been revised or
superseded by a later Company Filed SEC Document, none of the
Company SEC Documents contains any untrue statement of a material
fact or omits 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. The financial statements of the Company included in
the Company SEC Documents comply as to form, as of their
respective dates of filing with the SEC, in all material respects
with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements,
to normal recurring year-end audit adjustments). Except (i) as
reflected in such financial statements or in the notes thereto,
(ii) for liabilities incurred in connection with this Agreement
or the transactions contemplated hereby, and (iii) for
liabilities and obligations incurred since March 31, 1997 in the
ordinary course of business consistent with past practice,
neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise), including liabilities arising
under any Laws relating to the protection of health, safety or
the environment ("Environmental Laws"), required by generally
accepted accounting principles to be reflected in a consolidated
balance sheet of the Company and its consolidated Subsidiaries
and which, individually or in the aggregate, could reasonably be
expected to have a Company MAE.
(f) Information Supplied. None of the information
supplied or to be supplied by the Company specifically for
inclusion or incorporation by reference in (i) the Offer
Documents, at the time such documents are first published, sent
or given to holders of Shares, and any time they are amended or
supplemented, (ii) the registration statement on Form S-4 to be
filed with the SEC by Parent in connection with the issuance of
Parent Common Stock in the Merger (the "Form S-4"), at the time
the Form S-4 is filed with the SEC or at the time it becomes
effective under the Securities Act, or (iii) the Joint Proxy
Statement, at the date it is first mailed to the Company's
shareholders or at the time of the Company Shareholders Meeting
will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The
Joint Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules
and regulations thereunder, including Rule 13e-3 (if applicable,
nothing herein being deemed to be an admission that Rule 13e-3 is
so applicable), except that no representation or warranty is made
by the Company with respect to statements made or incorporated by
reference therein based on information supplied by Parent or Sub
specifically for inclusion or incorporation by reference in the
Joint Proxy Statement or contained in any Parent Filed SEC
Documents incorporated by reference in the Offer Documents, the
Form S-4 or the Joint Proxy Statement.
(g) Absence of Certain Changes or Events. Except
(i) as disclosed in the Company SEC Documents filed and publicly
available prior to the date of this Agreement (as amended to the
date of this Agreement, the "Company Filed SEC Documents"),
(ii) for the transactions provided for herein or permitted by
Section 5.01(a), and (iii) for liabilities incurred in connection
with or as a result of this Agreement, since March 31, 1997, the
Company has conducted its business only in the ordinary course,
and there has not been (1) any Company MAE, (2) any declaration,
setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the
Company stock, other than regular semiannual cash dividends at
the rate in effect for the first half of 1997 ("Regular Company
Semiannual Dividends"), (3) any split, combination or
reclassification of any of the Company's capital stock or any
issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for
shares of the Company's capital stock, (4) any granting by the
Company or any of its Subsidiaries to any director, executive
officer or other key employee of the Company of any increase in
compensation, other than as contemplated by Section 4.01(o),
(5) any granting by the Company or any of its Subsidiaries to any
such director, executive officer or key employee of any increase
in severance or termination pay, except as was required under any
employment, severance or termination agreements in effect as of
the date of the most recent financial statements included in the
Company Filed SEC Documents or referred to in Section 4.01(o),
(6) any entry by the Company or any of its Subsidiaries into any
employment, severance or termination agreement with any such
director, executive officer or key employee, other than as
contemplated by Section 4.01(o), or (7) except insofar as may be
required by a change in generally accepted accounting principles,
any change in accounting methods, principles or practices by the
Company. For purposes of this Agreement, "key employee" means
any employee whose current salary and targeted bonus exceeds
$100,000 per annum. Section 4.01(g) of the Company Disclosure
Schedule contains a true and complete list of all agreements or
plans providing for termination or severance pay to any employee
of the Company.
(h) Litigation. There are no suits, actions or
proceedings pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its
Subsidiaries that individually or in the aggregate could
reasonably be expected to have a Company MAE, nor are there any
Orders of any Governmental Entity or arbitrator outstanding
against the Company or any of its Subsidiaries having, or which
could reasonably be expected to have, individually or in the
aggregate, a Company MAE.
(i) Voting Requirements. The affirmative vote of the
holders of two-thirds of the voting power of all outstanding
Shares, voting as a single class, at the Company Shareholders
Meeting (the "Company Shareholder Approval") to adopt this
Agreement is the only vote of the holders of any class or series
of the Company's capital stock necessary to approve and adopt
this Agreement and the transactions contemplated hereby.
(j) State Takeover Statutes. The Company Board has
approved this Agreement and the consummation of the Merger and
the other transactions contemplated by hereby. Such approval
constitutes approval of the Merger and the other transactions
contemplated hereby by the Company Board under the provisions of
Section 912 of the NYBCL and Article XV of the Company's
Certificate of Incorporation.
(k) Brokers. No broker, investment banker, financial
advisor or other Person, other than Wasserstein, Perella & Co.,
Inc. ("WP&Co."), the fees and expenses of which will be paid by
the Company, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company
has furnished to Parent true and complete copies of all
agreements under which any such fees or expenses are payable and
all indemnification and other agreements related to the
engagement of the Persons to whom such fees are payable.
(l) Opinion of Financial Advisor. The Company has
received the opinion of WP&Co. (the "Fairness Opinion") to the
effect that, as of the date thereof, the consideration in the
form of shares of Parent Common Stock issuable in the Merger and,
in the event Shares are purchased in the Offer, the cash price of
such Shares, collectively, to be received by the Company's
shareholders pursuant to this Agreement is fair to the Company's
shareholders from a financial point of view, a signed copy of
which opinion has been delivered to Parent.
(m) Ownership of Parent Common Stock. Except as set
forth in the Company Disclosure Schedule, neither the Company
nor, to its Knowledge, any of its Affiliates, (i) beneficially
owns (as such term is defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, or (ii) is party to any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, shares of capital
stock of Parent.
(n) The Company Rights Agreement. The Company Rights
Agreement has been amended (the "Company Rights Plan Amendment")
as set forth in the Company Disclosure Schedule to, among other
things, (i) render the Company Rights Agreement inapplicable to
the Offer, the Merger and the other transactions contemplated
hereby and (ii) ensure that (y) neither Parent nor any of its
Subsidiaries nor any of its permitted assignees or transferees is
an Acquiring Person (as defined in the Company Rights Agreement)
pursuant to the Company Rights Agreement and (z) a Stock
Acquisition Date or Distribution Date (in each case as defined in
the Company Rights Agreement) does not occur by reason of the
execution of this Agreement, the commencement or completion of
the Offer, the consummation of the Merger or the other
transactions contemplated hereby. Except as set forth in the
Company Disclosure Schedule, the Company Rights Agreement may not
be further amended by the Company without the prior consent of
Parent in its sole discretion.
(o) Employment Agreements. The Company, Parent and
each of the three executive officers of the Company identified in
Section 6.05(a) of the Company Disclosure Schedule (the
"Executives") have entered into employment agreements among the
Company, Parent and the Executives (the "Company Employment
Agreements") in the form attached to the Company Disclosure
Schedule. Without limiting the generality or effect of any other
provision hereof, none of the Company Employment Agreements will
be amended or modified, or any binding interpretation thereof
made, by the Company prior to the Effective Time without the
prior approval of the Parent Board.
4.2. Representations and Warranties of Parent and Sub.
Except as disclosed in the Parent Filed SEC Documents or as set
forth on the Disclosure Schedule delivered by Parent to the
Company prior to the execution of this Agreement (the "Parent
Disclosure Schedule"), Parent and Sub jointly and severally
represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each
of Parent and each of its Significant Subsidiaries is a
corporation or other legal entity duly organized, validly
existing and in good standing (with respect to jurisdictions
which recognize such concept) under the Laws of the jurisdiction
in which it is organized and has the requisite corporate or other
power, as the case may be, and authority to carry on its business
as now being conducted. The Parent and each of its Significant
Subsidiaries is duly qualified or licensed to do business and is
in good standing (with respect to jurisdictions which recognize
such concept) in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions in which the failure to be so qualified or licensed
or to be in good standing individually or in the aggregate could
not be reasonably expected to have a material adverse effect on
the business, financial condition or results of operations of
Parent and each of its Subsidiaries, taken as a whole, or on the
ability of Parent and Sub to perform their respective obligations
under this Agreement (any such effect, a "Parent MAE"). Parent
has delivered to the Company prior to the execution of this
Agreement complete and correct copies of its articles of
incorporation and bylaws, in each case as amended to date and as
proposed to be amended and restated at the Parent Shareholders
Meeting (as so amended and restated, the "Amended Parent
Constituent Documents") and has made available to the Company the
articles of incorporation and bylaws (or comparable
organizational documents) of each of its Subsidiaries, in each
case as amended to date.
(b) Subsidiaries. Exhibit 21 to Parent's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996
includes all of the Subsidiaries of Parent. All the outstanding
shares of capital stock of, or other equity interests in, each
such Subsidiary have been validly issued and are fully paid and
nonassessable and are owned directly or indirectly by Parent,
free and clear of all Liens.
(c) Capital Structure. The authorized capital stock
of Parent consists of 8,000,000 shares of Parent Common Stock.
The authorized capital stock of Sub consists of 1,000 shares of
common stock, without par value, 100 of which are issued and
outstanding and are held beneficially and of record by Parent.
At the close of business on the Measurement Date,
(i) 5,228,896 shares of Parent Common Stock were issued and
outstanding, (ii) 578,135 shares of Parent Common Stock were held
by Parent in its treasury, and (iii) 589,575 shares of Parent
Common Stock were reserved for issuance pursuant to the 1986
Stock Option Plan, the 1996 Stock Option Plan, the 1988
Restricted Stock and Cash Bonus Plan and the Stock Retirement
Plan for Nonemployee Directors (such plans, collectively, the
"Parent Stock Plans"). Except as set forth above, at the close
of business on the Measurement Date, no shares of capital stock
or other voting securities of Parent were issued, reserved for
issuance or outstanding. At the close of business on the
Measurement Date, there were no outstanding stock options, stock
appreciation rights or rights (other than employee stock options
or other rights ("Parent Employee Stock Options") to purchase or
receive Parent Common Stock granted under the Parent Stock Plans)
to receive shares of Parent Common Stock on a deferred basis
granted under the Parent Stock Plans or otherwise. The Parent
Disclosure Schedule sets forth a complete and correct list, as of
the Measurement Date, of the number of shares of Parent Common
Stock subject to Parent Employee Stock Options. All outstanding
shares of capital stock of Parent are, and all shares which may
be issued, including shares to be issued pursuant to this
Agreement, will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive
rights. As of the close of business on the Measurement Date,
there were no bonds, debentures, notes or other indebtedness or
securities of Parent having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote)
on any matters on which shareholders of Parent may vote. Except
as set forth above or as contemplated by Schedule 6.05(b), as of
the close of business on the Measurement Date, there were no
outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind
to which Parent or any of its Subsidiaries is a party or by which
any of them is bound obligating Parent or any of its Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting
securities of Parent or of any of its Subsidiaries or obligating
Parent or any of its Subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. Except for
agreements entered into with respect to the Parent Stock Plans,
as of the close of business on the Measurement Date, there were
no outstanding contractual obligations of Parent or any of its
Subsidiaries to issue, repurchase, redeem or otherwise acquire
any shares of capital stock of Parent or any of its Subsidiaries.
As of the close of business on the Measurement Date, there were
no outstanding contractual obligations of Parent to vote or to
dispose of any shares of the capital stock of any of its
Subsidiaries.
(d) Authority; Noncontravention. Parent and Sub have
all requisite corporate power and authority to enter into this
Agreement and, subject to the Parent Shareholder Approval, to
consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Parent and Sub and
the consummation by Parent and Sub of the transactions
contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Parent and Sub subject,
in the case of the adoption of this Agreement and the Amended
Parent Constituent Documents, to Parent Shareholder Approval.
This Agreement has been duly executed and delivered by Parent and
Sub and constitutes valid and binding obligations of Parent and
Sub, enforceable against each of them in accordance with its
terms. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated thereby and
compliance with the provisions thereof will not, conflict with,
breach, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to
a right of termination, cancellation or acceleration of any
obligation or loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of
Parent or any of its Significant Subsidiaries under, (i) the
articles of incorporation or bylaws of Parent or the comparable
organizational documents of any of its Subsidiaries, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or
license applicable to Parent or any of its Significant
Subsidiaries or their respective properties or assets, or
(iii) subject to the governmental filings and other matters
referred to in the following sentence, any Order or Law
applicable to Parent or any of its Subsidiaries or their
respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, breaches, violations,
defaults, rights, losses or Liens that individually or in the
aggregate could not be reasonably expected to have a Parent MAE.
No consent, approval, Order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required
by or with respect to Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by
Parent and Sub or the consummation by Parent and Sub of the
transactions contemplated hereby, except for (1) the filing of a
premerger notification and report form by Parent under the HSR
Act; (2) the filing with the SEC of (A) the Joint Proxy Statement
relating to the Parent Shareholders Meeting, (B) the Schedule
14D-1, (C) the Form S-4, and (D) such reports under the Exchange
Act as may be required in connection with this Agreement and the
transactions contemplated hereby; (3) the filing of the
Certificate of Merger with the New York Secretary of State and
appropriate documents with the relevant authorities of other
states in which Parent is qualified to do business and such
filings with Governmental Entities to satisfy the applicable
requirements of state securities or "blue sky" laws; (4) such
filings with and approvals of the NYSE to permit the shares of
Parent Common Stock that are to be issued in the Merger to be
listed for trading on the NYSE; (5) such other filings and
consents as may be required under any Environmental Law
pertaining to any notification, disclosure or required approval
necessitated by the Merger or the transactions contemplated by
this Agreement; and (6) such consents, approvals, Orders or
authorizations the failure of which to be made or obtained could
not reasonably be expected, individually or in the aggregate, to
have a Parent MAE.
(e) SEC Documents; Undisclosed Liabilities. Parent
has filed all required reports, schedules, forms, statements and
other documents with the SEC since January 1, 1995 (the "Parent
SEC Documents"). As of their respective dates, the Parent SEC
Documents complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of the Parent
SEC Documents when filed contained any untrue statement of a
material fact or omitted to state a 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. Except to the extent that information
contained in any Parent SEC Document has been revised or
superseded by a later Parent Filed SEC Document, none of the
Parent SEC Documents contains any untrue statement of a material
fact or omits 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. The financial statements of Parent included in the
Parent SEC Documents comply as to form, as of their respective
dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared
in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the
consolidated financial position of Parent and its consolidated
Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal
recurring year-end audit adjustments). Except (i) as reflected
in such financial statements or in the notes thereto, (ii) as
contemplated hereunder, (iii) for liabilities incurred in
connection with this Agreement or the transactions contemplated
hereby (including without limitation financing relating to the
transactions contemplated hereby), and (iv) for liabilities and
obligations incurred since March 31, 1997 in the ordinary course
of business consistent with past practice, neither Parent nor any
of its Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise),
including liabilities arising under any Environmental Laws,
required by generally accepted accounting principles to be
reflected in a consolidated balance sheet of Parent and its
consolidated Subsidiaries and which, individually or in the
aggregate, could reasonably be expected to have a Parent MAE.
(f) Information Supplied. None of the information
supplied or to be supplied by Parent specifically for inclusion
or incorporation by reference in (i) the Offer Documents, at the
time the Offer Documents are first published, sent or given to
holders of Company Common Stock, and any time they are amended or
supplemented, (ii) the Form S-4, at the time the Form S-4 is
filed with the SEC or at the time it becomes effective under the
Securities Act, or (iii) the Joint Proxy Statement, at the date
it is first mailed to Parent's shareholders or at the time of the
Parent Shareholders Meeting will contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading. The Offer Documents, the Joint Proxy Statement
and the Form S-4 will comply as to form in all material respects
with the requirements of the Exchange Act and the Securities Act,
respectively, and the rules and regulations thereunder, including
Rule 13e-3 under the Exchange Act, if applicable, except that no
representation or warranty is made by Parent or Sub with respect
to statements made or incorporated by reference therein based on
information supplied by the Company specifically for inclusion or
incorporation by reference in the Offer Documents, the Joint
Proxy Statement or the Form S-4 or contained in any Company Filed
SEC Documents incorporated by reference in the Offer Documents,
the Joint Proxy Statement or the Form S-4.
(g) Absence of Certain Events. Except (i) as
disclosed in the Parent SEC Documents filed and publicly
available prior to the date of this Agreement (as amended to the
date of this Agreement, the "Parent Filed SEC Documents"),
(ii) for the transactions provided for herein or permitted by
Section 5.01(b), and (iii) for liabilities incurred in connection
with or as a result of this Agreement, since March 31, 1997,
Parent has conducted its business only in the ordinary course,
and there has not been (1) any Parent MAE, (2) any declaration,
setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of
Parent's capital stock, other than regular quarterly cash
dividends at the rate in effect for the first quarter of 1997
("Regular Parent Quarterly Dividends"), (3) any split,
combination or reclassification of any of Parent's capital stock
or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for
shares of Parent's capital stock other than the Stock Split, or
(4) except insofar as may be required by a change in generally
accepted accounting principles, any change in accounting methods,
principles or practices by the Parent. Section 4.02(g) of the
Parent Disclosure Schedule contains a true and complete list of
all agreements or plans providing for termination or severance
pay to any employee of Parent.
(h) Litigation. There are no suits, actions or
proceedings pending or, to the Knowledge of Parent, threatened
against or affecting Parent or any of its Subsidiaries that
individually or in the aggregate could reasonably be expected to
have a Parent MAE, nor are there any Orders of any Governmental
Entity or arbitrator outstanding against Parent or any of its
Subsidiaries having, or which could reasonably be expected to
have, individually or in the aggregate, a Parent MAE.
(i) Voting Requirements. The consent actions executed
by Parent as sole shareholder of Sub on the date hereof (copies
of which have been previously furnished to the Company) and the
affirmative vote of the holders of a majority of the voting power
of all outstanding shares of Parent Common Stock, voting as a
single class, at the Parent Shareholders Meeting (the "Parent
Shareholder Approval") to approve the Amended Charter Documents
and the issuance of Parent Common Stock in connection with the
Merger are the only votes of the holders of any class or series
of Parent's or Sub's capital stock necessary to approve and adopt
this Agreement and the transactions contemplated hereby.
(j) Brokers. No broker, investment banker, financial
advisor or other Person, other than J.P. Morgan & Co., the fees
and expenses of which will be paid by Parent or, if the Merger
occurs, the Surviving Corporation, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent.
Parent has furnished to the Company true and complete copies of
all agreements under which any such fees or expenses are payable
and all indemnification and other agreements related to the
engagement of the Persons to whom such fees are payable.
(k) Opinion of Financial Advisor. Parent has received
the opinion of J.P. Morgan & Co. (the "Fairness Opinion") to the
effect that, as of the date hereof, terms of this Agreement are
fair to Parent from a financial point of view.
(l) Ownership of Company Common Stock. Except for
Shares owned by Benefit Plans maintained or contributed to by
Parent to any of its Subsidiaries (the "Parent Benefit Plans") or
as set forth in the Parent Disclosure Schedule, neither Parent
nor, to its Knowledge, any of its Affiliates (excluding for
purposes hereof any director of Parent other than the
Unaffiliated Directors), (i) beneficially owns (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of capital stock of Company.
(m) Tax Matters. Parent has no plan or intention to
(a) liquidate the Surviving Corporation, (b) merge the Surviving
Corporation with and into another corporation, (c) sell or
otherwise dispose of the stock of the Surviving Corporation, (d)
cause the Surviving Corporation to (i) violate the "continuity of
business" requirements of Treasury Regulation SECTION 1.368-1(d) by
selling or otherwise disposing of assets of the Company acquired
in the Merger, or (ii) sell or dispose of any shares of capital
stock of Parent owned by the Company, or (e) take any action that
would reasonably be expected to cause the Merger not to qualify
as a reorganization under Section 368(a) of the Code.
V. COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. Conduct of Business. (a) Conduct of Business by
the Company. Except as set forth in Section 5.01(a) of the
Company Disclosure Schedule, during the period from the date of
this Agreement to the Effective Time, the Company will, and will
cause its Subsidiaries to, carry on their respective businesses
in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted and in compliance in all
material respects with all applicable Laws and, to the extent
consistent therewith, use all reasonable efforts to preserve
intact their current business organizations, use reasonable
efforts to keep available the services of their current officers
and other key employees and preserve their relationships with
those Persons having business dealings with them to the end that
their goodwill and ongoing businesses will be unimpaired at the
Effective Time. Except as set forth in Section 5.01(a) of the
Company Disclosure Schedule, without limiting the generality or
effect of the foregoing, during the period from the date of this
Agreement to the Effective Time, the Company will not, and will
not permit any of its Subsidiaries to:
(i) other than dividends and distributions (including
liquidating distributions) by a direct or indirect wholly
owned Subsidiary of the Company to its parent, or by a
Subsidiary that is partially owned by the Company or any of
its Subsidiaries, provided that the Company or any such
Subsidiary receives or is to receive its proportionate share
thereof and Regular Company Semiannual Dividends,
(A) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock,
(B) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock, or (C) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its
Subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge or otherwise encumber
any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or
convertible securities;
(iii) amend its certificate of incorporation, by-laws or
other comparable organizational documents;
(iv) acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, limited
liability company, partnership, joint venture, association
or other business organization or division thereof;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any
of its properties or assets, other than (x) in the ordinary
course of business consistent with past practice and (y)
sales of assets which do not individually or in the
aggregate exceed $1.0 million;
(vi)(A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person, issue or
sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any of its
Subsidiaries, guarantee any debt securities of another
Person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another Person
or enter into any arrangement having the economic effect of
any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business consistent with
past practice, or (B) make any loans, advances or capital
contributions to, or investments in, any other Person, other
than to the Company or any Subsidiary of the Company or to
officers and employees of the Company or any of its
Subsidiaries for travel, business or relocation expenses in
the ordinary course of business;
(vii) make or agree to make any capital expenditure or
capital expenditures other than capital expenditures set
forth in the operating budget of the Company previously
furnished to Parent, the relevant portions of which are set
forth in Section 5.01(a)(vii) of the Company Disclosure
Schedule;
(viii) make any change to its accounting methods,
principles or practices, except as may be required by
generally accepted accounting principles;
(ix) except as required by Law or contemplated hereby,
enter into, adopt or amend in any material respect or
terminate any Company Benefit Plan or any other agreement,
plan or policy involving the Company or any of its
Subsidiaries and one or more of their directors, officers or
employees including without limitation the Company
Employment Agreements, or materially change any actuarial or
other assumption used to calculate funding obligations with
respect to any Company pension plans, or change the manner
in which contributions to any Company pension plans are made
or the basis on which such contributions are determined;
(x) increase the compensation of any director,
executive officer or other key employee of the Company or
pay any benefit or amount not required by a plan or
arrangement as in effect on the date of this Agreement to
any such Person;
(xi) enter into any contract or agreement, written or
oral, with any affiliate, associate or relative of Parent,
or make any payment to or for the benefit of, directly or
indirectly, any of the foregoing;
(xii) make any amendment to, or waive or enter into or
give any binding interpretation of, any term of the
Agreement, dated October 9, 1990, among the Company and
certain shareholders of the Company; or
(xiii) authorize, or commit or agree to take, any of the
foregoing actions.
(b) Conduct of Business by Parent. Except as set
forth in Section 5.01(b) of the Parent Disclosure Schedule,
during the period from the date of this Agreement to the
Effective Time, the Parent will, and will cause its Subsidiaries
to, carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as
heretofore conducted and in compliance in all material respects
with all applicable Laws and, to the extent consistent therewith,
use all reasonable efforts to preserve intact their current
business organizations, use reasonable efforts to keep available
the services of their current officers and other key employees
and preserve their relationships with those Persons having
business dealings with them to the end that their goodwill and
ongoing businesses will be unimpaired at the Effective Time.
Except as set forth in Section 5.01(b) of the Parent Disclosure
Schedule, without limiting the generality or effect of the
foregoing, during the period from the date of this Agreement to
the Effective Time, Parent will not, and will not permit any of
its Subsidiaries to:
(i) other than (A)(1) dividends and distributions
(including liquidating distributions) by a direct or
indirect wholly owned Subsidiary of Parent to its parent, or
by a Subsidiary that is partially owned by Parent or any of
its Subsidiaries, provided that Parent or any such
Subsidiary receives or is to receive its proportionate share
thereof, and (2) Regular Parent Quarterly Dividends, (B) the
Stock Split, and (C) in connection with rights that are
authorized by action of a majority of the Unaffiliated
Directors prior to the date on which directors of Parent are
elected at Parent's 1997 annual meeting of shareholders
("Parent's 1997 Annual Meeting") or any adjournment or
rescheduling thereof and, by the terms thereof, become
exercisable only after the Effective Time or, if earlier,
the termination of this Agreement ("Rights"), (1) declare,
set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock,
(2) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock, or (3) purchase, redeem or otherwise acquire
any shares of capital stock of Parent or any of its
Subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other
securities;
(ii) other than in connection with the Stock Split or
Rights or the issuance of Parent Common Stock upon the
exercise of Parent Employee Stock Options, issue, deliver,
sell, pledge or otherwise encumber any shares of its capital
stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible
securities;
(iii) amend its articles of incorporation, bylaws or
other comparable organizational documents;
(iv) make any change to its accounting methods,
principles or practices, except as may be required by
generally accepted accounting principles; or
(v) authorize, or commit or agree to take, any of the
foregoing actions.
(c) Other Actions. Except as required by Law, neither
the Company, on the one hand, nor Sub or Parent, on the other
hand, will, and will not permit any of their respective
Subsidiaries to, voluntarily take any action that would, or that
could reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in this
Agreement that are qualified as to materiality becoming untrue,
(ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect, or (iii) any
of the conditions to the Merger set forth in Article VIII not
being satisfied.
(d) Advice of Changes. The Company and Parent will
promptly advise the other party orally and in writing of (i) any
representation or warranty made by it or, in the case of Parent,
Sub contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect, (ii) the failure by
it or, in the case of Parent, Sub to comply in any material
respect with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it
under this Agreement, or (iii) any change or event having, or
which, insofar as can reasonably be foreseen, could reasonably be
expected to have, a material adverse effect on such party or on
the truth of their respective representations and warranties or
the ability of the conditions set forth in Article VIII to be
satisfied; provided, however, that no such notification will
affect the representations, warranties, covenants or agreements
of the parties or the conditions to the obligations of the
parties under this Agreement.
(e) Coordination of Dividends. Each of Parent and the
Company will coordinate with the other regarding the declaration
and payment of dividends in respect of the Parent Common Stock
and the Shares and the record dates and payment dates relating
thereto, it being the intention of Parent and the Company that
any holder of Shares will not receive two dividends, or fail to
receive one dividend, for any single calendar quarter with
respect to its Shares and/or any Parent Common Stock any such
holder receives in exchange therefor pursuant to the Merger.
5.2. No Solicitation by the Company. (a) The Company
will not, nor will it permit any of its Subsidiaries to, nor will
it authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor, attorney,
accountant or other representative retained by it or any of its
Subsidiaries to, directly or indirectly through another Person,
(i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action designed to
facilitate, any inquiries or the making of any proposal which
constitutes any Company Takeover Proposal or (ii) participate in
any discussions or negotiations regarding any Company Takeover
Proposal; provided, however, that if, at any time prior to the
Offer Completion Date, the Company Board determines in good
faith, after consultation with its financial advisor and outside
counsel, that failure to do so would create a reasonable
possibility of a breach of its fiduciary duties to the Company's
shareholders under applicable Law, the Company may, in response
to a Company Takeover Proposal which was not solicited by it or
which did not otherwise result from a breach of this
Section 5.02(a), (A) furnish information with respect to the
Company and each of its Subsidiaries to any Person pursuant to a
customary confidentiality agreement (as determined by the Company
after consultation with its outside counsel) and (B) participate
in negotiations regarding such Company Takeover Proposal. For
purposes of this Agreement, "Company Takeover Proposal" means any
inquiry, proposal or offer from any Person relating to any direct
or indirect acquisition or purchase of 20% or more of the assets
of the Company and its Subsidiaries or 20% or more of any class
of equity securities of the Company or any of its Subsidiaries,
any tender offer or exchange offer that if consummated would
result in any Person beneficially owning 20% or more of any class
of equity securities of the Company or any of its Subsidiaries,
or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
(b) Except as expressly permitted by this
Section 5.02(b), neither the Company Board nor any committee
thereof may (i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to Parent or Sub, the
approval or recommendation by the Company Board or such committee
of the Offer, the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any
Company Takeover Proposal, or (iii) cause the Company to enter
into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement related to any Company
Takeover Proposal (each, a "Company Acquisition Agreement").
Notwithstanding the foregoing, in the event that prior to the
Offer Completion Date, the Company Board determines in good
faith, after the Company has received a Company Takeover Proposal
and after consultation with its financial adviser and outside
counsel, that failure to do so would create a reasonable
possibility of a breach of its fiduciary duties to the Company's
shareholders under applicable Law, the Company Board may withdraw
or modify its approval or recommendation of the Offer, the Merger
or this Agreement, approve or recommend a Company Takeover
Proposal or terminate this Agreement pursuant to Section 8.01(i)
but only if (A) prior to any such approval, recommendation or
termination, the Company shall, simultaneously with giving such
notice, pay the Company Termination Fee, and (B) prior to any
such termination which is to be effective within two business
days of the date of the Parent's 1997 Annual Meeting and any
adjournment or rescheduling thereof, the Company shall have given
Parent at least two business days notice of the effectiveness of
such termination.
(c) In addition to the obligations of the Company set
forth in paragraphs (a) and (b) of this Section 5.02, the Company
will (i) immediately advise Parent orally and in writing of any
request for information or of any Company Takeover Proposal, the
material terms and conditions of such request or Company Takeover
Proposal and the identity of the Person making such request or
Company Takeover Proposal and (ii) keep Parent reasonably
informed of the status and details (including amendments or
proposed amendments) of any such request or Company Takeover
Proposal, provided, however, that the Company will not be
required to provide to Parent any information if and to the
extent that the Company Board determines, following consultation
with outside counsel, that so doing would create a reasonable
possibility of a breach of its fiduciary duties to the Company's
shareholders under applicable Law.
(d) Nothing contained in this Section 5.02 will
prohibit the Company from taking and disclosing to its
shareholders a position contemplated by Rule 14e-2(a) promulgated
under the Exchange Act or from making any disclosure to the
Company's shareholders if, in the good faith judgment of the
Company Board, after consultation with outside counsel, the
failure so to disclose would be inconsistent with its fiduciary
duties to the Company's shareholders under applicable Law;
provided, however, that neither the Company nor the Company Board
nor any committee thereof may, except as expressly permitted by
Section 5.02(b), withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to the Offer, this
Agreement or the Merger or approve or recommend, or propose
publicly to approve or recommend, a Company Takeover Proposal.
5.3. No Solicitation by Parent. (a) Parent will not,
nor will it permit any of its Subsidiaries to, nor will it
authorize or permit any of its officers, directors or employees
or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its Subsidiaries
to, directly or indirectly through another Person, (i) solicit,
initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate,
any inquiries or the making of any proposal which constitutes any
Parent Takeover Proposal or (ii) participate in any discussions
or negotiations regarding any Parent Takeover Proposal; provided,
however, that if, at any time prior to the Effective Time, the
Unaffiliated Directors determine in good faith, after
consultation with outside counsel, that failure to do so would
create a reasonable possibility of a breach of their fiduciary
duties to the Parent's shareholders under applicable Law, Parent
may, in response to a Parent Takeover Proposal which was not
solicited by it or which did not otherwise result from a breach
of this Section 5.03(a), (A) furnish information with respect to
Parent and each of its Subsidiaries to any Person pursuant to a
customary confidentiality agreement (as determined by Parent
after consultation with its outside counsel) and (B) participate
in negotiations regarding such Parent Takeover Proposal. For
purposes of this Agreement, "Parent Takeover Proposal" means any
inquiry, proposal or offer from any Person relating to any direct
or indirect acquisition or purchase of 20% or more of the assets
of Parent and its Subsidiaries or 20% or more of any class of
equity securities of Parent or any of its Subsidiaries, any
tender offer or exchange offer that if consummated would result
in any Person beneficially owning 20% or more of any class of
equity securities of the Parent or any of its Subsidiaries, or
any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving Parent or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
(b) Except as expressly permitted by this
Section 5.03(b), neither the Parent Board nor any committee
thereof may (i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to the Company, the
approval or recommendation by the Parent Board or such committee
of the Merger or this Agreement, (ii) approve or recommend, or
propose publicly to approve or recommend, any Parent Takeover
Proposal, or (iii) cause Parent to enter into any letter of
intent, agreement in principle, acquisition agreement or other
similar agreement related to any Parent Takeover Proposal (each,
a "Parent Acquisition Agreement"). Notwithstanding the
foregoing, in the event that prior to the Offer Completion Date,
the Unaffiliated Directors determine in good faith, after Parent
has received a Parent Takeover Proposal and after consultation
with its financial adviser and outside counsel, that failure to
do so would create a reasonable possibility of a breach of their
fiduciary duties to Parent's shareholders under applicable Law,
the Parent Board, by action of the Unaffiliated Directors, may
withdraw or modify its approval or recommendation of the Merger
or this Agreement, approve or recommend a Parent Takeover
Proposal or terminate this Agreement pursuant to Section 8.01(f)
but only if, prior to any such approval, recommendation or
termination in respect of a Parent Takeover Proposal, Parent
shall have paid the Parent Termination Fee.
(c) In addition to the obligations of Parent set forth
in paragraphs (a) and (b) of this Section 5.03, Parent will (i)
immediately advise the Company orally and in writing of any
request for information or of any Parent Takeover Proposal, the
material terms and conditions of such request or Parent Takeover
Proposal and the identity of the Person making such request or
Parent Takeover Proposal and (ii) keep the Company reasonably
informed of the status and details (including amendments or
proposed amendments) of any such request or Parent Takeover
Proposal, provided, however, that the Parent will not be required
to provide to the Company any information if and to the extent
that the Unaffiliated Directors determine, following consultation
with outside counsel, that so doing would create a reasonable
possibility of a breach of their fiduciary duties to the Parent's
shareholders under applicable Law.
(d) Nothing contained in this Section 5.03 will
prohibit Parent from taking and disclosing to its shareholders a
position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to Parent's
shareholders if, in the good faith judgment of the Unaffiliated
Directors, after consultation with outside counsel, the failure
so to disclose would be inconsistent with their fiduciary duties
to Parent's shareholders under applicable Law; provided, however,
that neither Parent nor the Parent Board nor any committee
thereof may, except as expressly permitted by Section 5.03(b),
withdraw or modify, or propose publicly to withdraw or modify,
its position with respect to this Agreement or the Merger or
approve or recommend, or propose publicly to approve or
recommend, a Parent Takeover Proposal.
5.4. Proposed Parent Charter and Bylaws Amendments.
Without further approval or consent of the Company, Parent may
take all such actions as are necessary or appropriate to make
amendments to its articles of incorporation or bylaws having the
terms and conditions described in Annex B (respectively, the
"Proposed Parent Charter Amendments" and the "Proposed Parent
Bylaw Amendments"), provided however, that such amendments shall
not be effective until the Effective Date. The Company will vote
all shares of Parent Common Stock beneficially owned by it or any
of its Subsidiaries in favor of the adoption of the Proposed
Parent Charter Amendments.
VI. ADDITIONAL COVENANTS
6.1. Preparation of the Form S-4 and the Joint Proxy
Statement; Shareholders Meetings. (a) As soon as practicable
following the date of this Agreement, the Company, Parent and Sub
will prepare and file with the SEC the Joint Proxy Statement and
Parent will prepare and file with the SEC the Form S-4, in which
the Joint Proxy Statement will be included as a prospectus. Each
of the Company and Parent will use all reasonable efforts to have
the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. The Company will use
all reasonable efforts to cause the Joint Proxy Statement to be
mailed to the Company's shareholders, and Parent will use all
reasonable efforts to cause the Joint Proxy Statement to be
mailed to Parent's shareholders, in each case as promptly as
practicable after the Form S-4 is declared effective under the
Securities Act. Parent will also take any action (other than
qualifying to do business in any jurisdiction in which it is not
now so qualified or to file a general consent to service of
process) required to be taken under any applicable state
securities Laws in connection with the issuance of Parent Common
Stock in the Merger and under the Company Stock Plans and Parent
Stock Plans and the Company will furnish all information
concerning the Company and the holders of Company Common Stock as
may be reasonably requested in connection with any such action.
(b) Subject to its rights to terminate this Agreement
pursuant to the applicable provisions of Section 8.01, the
Company will as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting
of its shareholders (the "Company Shareholders Meeting") for the
purpose of obtaining the Company Shareholder Approval and,
through the Company Board, subject to the provisions of Section
5.02(b), recommend to Shareholders the approval and adoption of
this Agreement, the Merger and the other transactions
contemplated hereby. Without limiting the generality or effect
of the foregoing but subject to its rights to terminate this
Agreement as aforesaid, the Company's obligations pursuant to the
first sentence of this Section 6.01(b) will not be affected by
the commencement, public proposal, public disclosure or
communication to the Company of any Company Takeover Proposal.
(c) Subject to its rights to terminate this Agreement
under the applicable provision of Section 8.01, Parent will, as
soon as practicable following the date of this Agreement, duly
call, give notice of, convene and hold a meeting of its
shareholders (the "Parent Shareholders Meeting") for the purpose
of obtaining the Parent Shareholder Approval and, through the
Parent's Board of Directors, subject to the provisions of Section
5.03(b), recommend that its shareholders approve the issuance of
Parent Common Stock pursuant to the Merger. Without limiting the
generality or effect of the foregoing but subject to its rights
to terminate this Agreement as aforesaid, Parent's obligations
pursuant to the first sentence of this Section 6.01(c) will not
be affected by the commencement, public proposal, public
disclosure or communication to Parent of any Parent Takeover
Proposal. Notwithstanding any other provision hereof, (i)
subject to future action by the Unaffiliated Directors, the
Proposed Parent Charter Amendments will be considered at the
Parent Shareholders Meeting, (ii) the Company will vote or cause
to be voted all Parent Common Stock having voting rights in
respect thereof in favor of adoption of the Proposed Parent
Charter Amendments, and (iii) neither the Offer or the Merger
will be subject to a condition that the Proposed Parent Charter
Amendments be approved or become effective, provided, however,
that the authorization of an increase in capitalization
sufficient to permit the Merger Consideration to be paid will be
a condition to the Merger as herein provided.
(d) Parent and the Company will use reasonable efforts
to hold the Parent Shareholders Meeting and the Company
Shareholders Meeting on the same date and as soon as practicable
after the date hereof.
6.2. Access to Information; Confidentiality. Each of
the Company and Parent will, and will cause each of its
respective Subsidiaries to, afford to the other party and to the
officers, employees, accountants, counsel, financial advisors and
other representatives of such other party, reasonable access
during normal business hours during the period prior to the
Effective Time to all their respective properties, books,
contracts, commitments, personnel and records and, during such
period, each of the Company and Parent will, and will cause each
of its respective Subsidiaries to, furnish promptly to the other
party (a) a copy of each report, schedule, registration statement
and other document filed by it during such period pursuant to the
requirements of federal or state securities Laws and (b) all
other information concerning its business, financial condition,
results of operations, properties and personnel as such other
party may reasonably request. Subject to the requirements of
applicable Law, and except for such actions as are necessary to
disseminate the Offer Documents and any other documents necessary
to consummate the Offer and the Merger, the parties will, and
will instruct each of their respective Affiliates, associates,
partners, employees, agents and advisors to, hold in confidence
all such information as is confidential or proprietary, will use
such information only in connection with the Offer and the Merger
and, if this Agreement is terminated in accordance with its
terms, will deliver promptly to the other (or destroy and certify
to the other the destruction of) all copies of such information
(and any copies, compilations or extracts thereof or based
thereon) then in their possession or under their control.
6.3. Reasonable Efforts. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of
the parties will use all reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the Merger and the
other transactions contemplated by this Agreement, including
without limitation, (i) obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental
Entities and making of all necessary registrations and filings
(including filings with Governmental Entities) and taking of all
reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) obtaining of all necessary consents,
approvals or waivers from third parties, (iii) defending of any
lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have
any adverse Order entered by any court or other Governmental
Entity vacated or reversed, and (iv) execution and delivery of
any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes
of, this Agreement. Nothing set forth in this Section 6.03(a)
will limit or affect actions permitted to be taken pursuant to
Section 5.02 or 5.03.
(b) In connection with and without limiting the
foregoing, the Company and Parent will, and Parent will cause Sub
to, (i) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes
applicable to the Offer, the Merger or any of the other
transactions contemplated hereby, and (ii) if any state takeover
statute or similar statute or regulation becomes applicable
thereto, take all action necessary to ensure that the Offer and
the Merger and such other transactions may be consummated as
promptly as practicable on the terms contemplated hereby and
otherwise to minimize the effect of such statute or regulation
thereon.
(c) Notwithstanding any other provision hereof, in no
event will Parent be required to agree to any divestiture, hold-
separate or other requirement in connection with this Agreement
or any of the transactions contemplated thereby.
6.4. Employee Benefit Matters. (a) With respect to
each Parent "employee benefit plan," as defined in Section 3(3)
of ERISA, including plans or policies providing severance
benefits and vacation entitlement ("Parent Plans"), if the
Effective Time occurs, service with the Company will be treated
as service with the Parent for purposes of determining
eligibility to participate, vesting and entitlement to benefits
(other than the accrual of benefits under any defined benefit
pension plan); provided, however, that such service will not be
recognized to the extent that such recognition would result in a
duplication of benefits. Such service also will apply for
purposes of satisfying any waiting periods, evidence of
insurability requirements or the application of any preexisting
condition limitations under any Parent Plan. Employees of the
Company will be given credit under any Parent Plan in which they
are eligible to participate for amounts paid under a
corresponding Company benefit plan during the same period for
purposes of applying deductibles, copayments and out-of-pocket
maximums as though such amounts had been paid in accordance with
the terms and conditions of the Parent Plans.
(b) Following the Effective Time, Parent will cause
the Surviving Corporation to honor in accordance with their terms
all employment, severance and other compensation agreements and
arrangements, including but not limited to severance benefit
plans, the existence or terms of which do not involve any
material breach of any representation, warranty or covenant of
the Company hereunder.
6.5. Certain Employee Matters; Parent Board
Composition; Etc. (a) The Company will take the actions
specified in Section 6.05(a) of the Company Disclosure Schedules.
(b) Parent will take the actions specified in Section
6.05(b) of the Parent Disclosure Schedule.
6.6. Fees and Expenses. (a) Except as set forth in
this Section 6.06, all fees and expenses incurred in connection
with the Offer, the Merger, this Agreement and the transactions
contemplated thereby will be paid by the party incurring such
fees or expenses, whether or not the Merger is consummated,
except that each of Parent and the Company will bear and pay one-
half of the costs and expenses incurred in connection with
(i) the filing, printing and mailing of the Joint Proxy Statement
(including SEC filing fees) and (ii) the filings of the premerger
notification and report forms under the HSR Act (including filing
fees).
(b) In the event that (i) a Company Takeover Proposal
(excluding for purposes of this Section 6.06(b)(i) only the
$45.00 per share cash tender offer made by WHX Corporation prior
to the date hereof (the "WHX $45.00 Bid")) is made known to the
Company or any of its Subsidiaries or has been made directly to
shareholders generally or any Person publicly announces an
intention (whether or not conditional) to make a Company Takeover
Proposal (excluding the WHX $45.00 Bid) and thereafter this
Agreement is terminated by either Parent or the Company pursuant
to Section 8.01(d)(i) or 8.01(d)(ii), or (ii) this Agreement is
terminated (x) by the Company pursuant to Section 8.01(i) or
(y) by Parent pursuant to Section 8.01(e), then the Company will
promptly, but in no event later than two days after the date of
such termination, pay Parent a fee equal to $3 million (the
"Company Termination Fee"), payable by wire transfer of same-day
funds. The Company acknowledges that the agreements contained in
this Section 6.06(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these
agreements, Parent and Sub would not enter into this Agreement;
accordingly, if the Company fails promptly to pay the amount due
pursuant to this Section 6.06(b), and, in order to obtain such
payment, Parent or Sub commences a suit which results in a
judgment against the Company for the fee set forth in this
Section 6.06(b), the Company will pay to Parent and Sub their
costs and expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amount
of the fee at the prime rate of Citibank N.A. in effect on the
date such payment was required to be made.
(c) In the event that (i) a Parent Takeover Proposal
is made known to Parent or any of its Subsidiaries or has been
made directly to shareholders generally or any Person publicly
announces an intention (whether or not conditional) to make a
Parent Takeover Proposal and thereafter this Agreement is
terminated by either Parent or the Company pursuant to Section
8.01(d)(i) or 8.01(d)(iii), or (ii) this Agreement is terminated
(x) by Parent pursuant to Section 8.01(f) or (y) by the Company
pursuant to Section 8.01(g), then Parent shall promptly, but in
no event later than two days after the date of such termination,
pay the Company a fee equal to $5 million (the "Parent
Termination Fee") payable by wire transfer of same-day funds.
Parent acknowledges that the agreements contained in this
Section 6.06(c) are an integral part of the transactions
contemplated by this Agreement, and that, without these
agreements, the Company would not enter into this Agreement;
accordingly, if Parent fails promptly to pay the amount due
pursuant to this Section 6.06(c), and, in order to obtain such
payment, the Company commences a suit which results in a judgment
against Parent or Sub for the fee set forth in this
Section 6.06(c), Parent will pay to the Company its costs and
expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee
at the prime rate of Citibank N.A. in effect on the date such
payment was required to be made.
(d) Notwithstanding any other provision hereof, as an
inducement to Parent and Sub to enter into this Agreement and
perform their respective obligations hereunder, the Company has
paid Parent a fee equal to $2 million (the "Inducement Fee")
simultaneously with the execution and delivery of this Agreement
by delivery of a check in such amount, which the Company hereby
irrevocably agrees to honor. The Inducement Fee is not subject
to refund or return for any reason whatever and may not be used
as an offset against or otherwise applied to any obligation of
the Company, including without limitation the obligation to pay
the Company Termination Fee.
6.7. Public Announcements. Parent and the Company
will consult with each other before issuing, and provide each
other the opportunity to review, comment upon and concur with,
any press release or other public statements with respect to the
transactions contemplated by this Agreement, and will not issue
any such press release or make any such public statement prior to
such consultation, except as either party may determine is
required by applicable Law, court process or by obligations
pursuant to any listing agreement with any national securities
exchange. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this
Agreement will be in the form heretofore agreed to by the
parties.
6.8. Affiliates. Prior to the Closing Date, the
Company shall deliver to Parent a letter identifying all Persons
who are, at the time this Agreement is submitted for adoption by
to the shareholders of the Company, "affiliates" of the Company
for purposes of Rule 145 under the Securities Act. The Company
will use all reasonable efforts to cause each such Person to
deliver to Parent on or prior to the Closing Date a written
agreement substantially in the form attached as Schedule 6.09
hereto.
6.9. NYSE Listing. Parent will use reasonable efforts
to cause the shares of Parent Common Stock to be issued in the
Merger and under the Company Stock Plans to be approved for
listing on the NYSE, subject to official notice of issuance,
prior to the Effective Time.
6.10. Shareholder Litigation. Each of the Company and
Parent will give the other the reasonable opportunity to
participate in the defense of any shareholder litigation against
the Company, Parent or Sub, as applicable, or their respective
directors relating to the transactions contemplated by this
Agreement.
6.11. Tax Treatment. Each of Parent and the Company
will use reasonable efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368 of the Code.
6.12. The Company Rights Agreement. The Company Board
will take all further action (in addition to that referred to in
Section 4.01(n)) reasonably requested in writing by Parent
(including redeeming the Company Rights immediately prior to the
Effective Time or amending the Company Rights Agreement) in order
to render the Company Rights inapplicable to the Offer and the
Merger and the other transactions contemplated hereby to the
extent provided herein and in the Company Rights Plan Amendment.
Except as provided above with respect to the Offer, the Merger
and the other transactions contemplated hereby or as set forth in
the Company Disclosure Schedule, the Company Board will not
(a) amend the Company Rights Agreement or (b) take any action
with respect to, or make any determination under, the Company
Rights Agreement, including a redemption of the Company Rights or
any action to facilitate a Company Takeover Proposal.
6.13. Voting of Common Stock. The Company and the
Parent agree that, during the period from the date hereof until
the Effective Time or the termination of this Agreement in
accordance with its terms (the "Restricted Period"), (i) the
Company and the Parent will not, and will cause each of their
respective Subsidiaries not to, sell, transfer, or pledge any
Securities of the other party or any interest therein directly or
indirectly therein beneficially owned (within the meaning of Rule
13d-3 under the Exchange Act) (such ownership, "Beneficially
Owned") by it or any of its Subsidiaries to any person, other
than a wholly owned Subsidiary of the Company (with respect to
sales of Parent Securities by the Company) or the Parent (with
respect to sales of Company Securities by Parent), and (ii) at
any meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of the other
party's Securities, however called, including without limitation
Parent's 1997 Annual Meeting, or in connection with any written
consent of the holders of the other party's Securities
(collectively, a "Meeting"), the Company (with respect to any
Parent Meeting) or Parent (with respect to any Company Meeting)
will appear at the meeting or otherwise cause the Securities of
the other party Beneficially Owned by the Company or Parent, as
the case may be, to be counted as present thereat for purposes of
establishing a quorum and vote or consent (or cause to be voted
or consented) the Securities (A) in favor of the adoption of this
Agreement, the Proposed Parent Charter Amendments (with respect
to any Parent Meeting) and the approval of other actions
contemplated by this Agreement and any actions required in
furtherance hereof, (B) against any action or agreement that
would result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement
of Parent or the Company under this Agreement, and (C) except as
otherwise agreed to in writing in advance by the other party (in
its sole discretion) or expressly contemplated herein, against
the following actions (other than the Merger and the transactions
contemplated by this Agreement): (1) except as provided in
Section 1.04, any change in the composition of the board of
directors of the issuer of such Securities not approved by (x) a
majority of the Company Board, in the case of changes in the
Company Board, or (y) the Unaffiliated Directors, in the case of
changes in the Parent Board, (2) except with respect to any
changes contemplated by this Agreement, any material change in
the present capitalization of the other party, including without
limitation any proposal to sell a substantial equity interest of
the other party or any of their respective Subsidiaries;
(3) except with respect to any amendment included in the Joint
Proxy Statement or contemplated by this Agreement, any amendments
of the other party's articles of incorporation or bylaws;
(4) except with respect to any changes contemplated by this
Agreement, any other change in the other party's corporate
structure or business; or (5) any other action which, in the case
of each of the matters referred to in clauses (1), (2), (3) or
(4), is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone or materially adversely affect
the Merger and the transactions contemplated by this Agreement.
Without limiting the generality or effect of the foregoing, (x)
during the period from the date hereof to the Offer Completion
Date plus two calendar days (unless the second calendar day is
not a business day, in which case the period will include the
business day following the second calendar day) (the "Open
Period"), at the request of Parent, the Company will take all
actions necessary, including without limitation voting of
Securities of Parent in furtherance of, the adjournment or
postponement of the Parent's 1997 Annual Meeting to such date
within the Open Period as may be so requested by Parent and (y)
the parties will in all events take all such actions as may be
required to adjourn Parent's 1997 Annual Meeting to June 24,
1997. The Company and Parent may not enter into any agreement or
understanding with any person the effect of which would be
inconsistent with or violative of any provision contained in this
Section 6.13. For purposes of this Section 6.13, "Securities"
mean (I) the shares of Parent Common Stock or the Company Common
Stock Beneficially Owned by the other party as of the relevant
date, including, without duplicative counting of the same shares
of Parent Common Stock or the Company Common Stock, shares of
Parent Common Stock or the Company Common Stock Beneficially
Owned by all other persons with whom Parent or the Company would
constitute a "group" within the meaning of Section 13(d) of the
Exchange Act, and (II) any shares of Parent Common Stock, Company
Common Stock or other securities of the Parent or the Company
acquired by the other party in any capacity after the date hereof
and prior to the Effective Time, whether upon the exercise of
options, warrants or rights, the conversion or exchange of
convertible or exchangeable securities or by means of purchase,
dividend, distribution, split-up, recapitalization, combination,
exchange of shares or the like, transfer or as a successor in
interest in any capacity or otherwise.
6.14. Indemnification, Exculpation and Insurance.
(a) All rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the
Effective Time existing in favor of the current or former
directors or officers of the Company or each of its Subsidiaries
as provided in their respective certificates of incorporation or
by-laws (or comparable organizational documents) will be assumed
by Parent and Parent will be directly responsible for such
indemnification, without further action, as of the Effective Time
and will continue in full force and effect in accordance with
their respective terms. In addition, from and after the
Effective Time, directors and officers of the Company who become
or remain directors or officers of Parent or Sub will be entitled
to the same indemnity rights and protections (including those
provided by directors' and officers' liability insurance) as are
afforded to other directors and officers of Parent.
Notwithstanding any other provision hereof, the provisions of
this Section 6.14 (i) are intended to be for the benefit of, and
will be enforceable by, each indemnified party, his or her heirs
and his or her representatives and (ii) are in addition to, and
not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract or
otherwise.
(b) Parent will, and will cause the Surviving
Corporation to, maintain in effect for not less than six years
after the Effective Time policies of directors' and officers'
liability insurance equivalent in all material respects to those
maintained by or on behalf of the Company and its Subsidiaries on
the date hereof (and having at least the same coverage and
containing terms and conditions which are no less advantageous to
the persons currently covered by such policies as insured) with
respect to matters existing or occurring at or prior to the
Effective Time; provided, however, that if the aggregate annual
premiums for such insurance at any time during such period exceed
200% of the per annum rate of premium currently paid by the
Company and its Subsidiaries for such insurance on the date of
this Agreement, then Parent will cause the Surviving Corporation
to, and the Surviving Corporation will, provide the maximum
coverage that shall then be available at an annual premium equal
to 200% of such rate.
6.15. Parent Board. If the Effective Time occurs,
from the date thereof until the date immediately following the
date of the Parent's 1998 annual shareholders meeting or any
adjournment or postponement thereof, the Parent Board will not
elect any additional member thereof who is not a member of the
Parent Board as of the Effective Time unless such person has been
elected or nominated therefor by the unanimous vote of a
committee of the Parent Board comprised of two Unaffiliated
Directors and one member thereof who is not an Unaffiliated
Director (or any successors thereto approved by vote of not less
than two thirds of the members of the Parent Board, provided
that, if Andrew Lozyniak is unable to serve as a member of the
committee, Patrick J. Dorme will be his successor if Mr. Dorme is
at that time a member of the Parent Board). The initial members
of such committee will be Gerald H. Frieling, Jr., Andrew
Lozyniak and Joseph P. Walker.
VII. CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation To Effect
the Merger. The respective obligation of each party to effect
the Merger is subject to the satisfaction or waiver on or prior
to the Closing Date of the following conditions (except to the
extent otherwise provided in Section 1.05):
(a) Shareholder Approvals. Each of the Company
Shareholder Approval and the Parent Shareholder Approval shall
have been obtained;
(b) No Injunctions or Restraints. No Order or Law
enacted, entered, promulgated, enforced or issued by any court of
competent jurisdiction or other Governmental Entity or other
legal restraint or prohibition (collectively, "Restraints")
preventing the consummation of the Merger shall be in effect; and
(c) Form S-4. The Form S-4 shall have become
effective under the Securities Act and shall not be the subject
of any stop order or proceedings seeking a stop order.
7.2. Conditions to Obligations of Parent and Sub. The
obligation of Parent and Sub to effect the Merger is further
subject to satisfaction or waiver on or prior to the Closing Date
of the following conditions:
(a) Performance of Obligations of the Company. The
Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement
on or before the earlier of (i) such time as Parent's Designees
constitute at least a majority of the Company Board pursuant to
Section 1.04 of this Agreement and (ii) the Closing Date; and
Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial
officer of the Company to such effect; and
(b) Completion of the Offer. Sub shall have accepted
for payment and paid for Shares pursuant to the Offer; provided,
however, that Parent may not invoke this condition if Sub shall
have failed to purchase Shares so tendered and not withdrawn in
violation of the terms of this Agreement.
7.3. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject
to satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Performance of Obligations of Parent and Sub.
Parent and Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement
at or prior to the Closing Date, and the Company shall have
received a certificate signed on behalf of Parent by the chief
executive officer and the chief financial officer of Parent to
such effect; and
(b) Completion of the Offer. Sub shall have accepted
for payment and paid for at least 25% of the outstanding Shares
pursuant to the Offer.
7.4. Tax Opinions. In the event that Parent and Sub
elect to proceed with the Merger under the circumstances
described in Section 1.05, the respective obligation of each of
Parent, Sub and the Company to effect the Merger will be subject
to the satisfaction or waiver on or prior to the Closing Date of
the condition that either Jones, Day, Reavis & Pogue or Skadden,
Arps, Meagher, Slate and Flom LLP shall have delivered to Parent
and the Company an opinion, dated as of the Closing Date, to the
effect that, based upon certain representations, assumptions and
conditions, the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a)
of the Code and that Parent, Sub and the Company will each be a
party to such reorganization within the meaning of Section 368(b)
of the Code.
7.5. Frustration of Closing Conditions. Neither
Parent nor the Company may rely on the failure of any condition
set forth in Section 7.01, 7.02, 7.03 or 7.04, as the case may
be, to be satisfied if such failure was caused by such party's
failure to use reasonable efforts to commence or complete the
Offer or consummate the Merger and the other transactions
contemplated by this Agreement, as required by and subject to
Section 6.03.
VIII. TERMINATION, AMENDMENT AND WAIVER
8.1. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after
Company Shareholder Approval or Parent Shareholder Approval:
(a) by mutual written consent of Parent and the
Company;
(b) by the Company if Parent shall have failed to
commence the Offer within five business days following the date
of the initial public announcement of the Offer;
(c) by Parent, subject to Section 1.05, if the Offer
shall have expired or have been withdrawn or terminated in
accordance with the terms thereof without any Shares being
purchased by Parent thereunder by reason of the failure of any
condition set forth in Annex A to be satisfied;
(d) by either Parent or the Company:
(i) if the Merger has not been consummated by
September 30, 1997; provided, however, that the right
to terminate this Agreement pursuant to this
Section 8.01(d)(i) will not be available to any party
whose failure to perform any of its obligations under
this Agreement results in the failure of the Merger to
be consummated by such time;
(ii) if the Company Shareholder Approval shall not
have been obtained at a Company Shareholders Meeting
duly convened therefor or at any adjournment or
postponement thereof;
(iii) if the Parent Shareholder Approval shall not
have been obtained at a Parent Shareholders Meeting
duly convened therefor or at any adjournment or
postponement thereof; or
(iv) if any Governmental Entity shall have issued
a Restraint or taken any other action permanently
enjoining, restraining or otherwise prohibiting the
consummation of the Offer, the Merger or any of the
other transactions contemplated by this Agreement and
such Restraint or other action shall have become final
and nonappealable;
(e) by Parent, if the Company Board or any committee
thereof shall have (i) withdrawn or modified in a manner adverse
to Parent its approval or recommendation of the Offer, the Merger
or this Agreement or failed to reconfirm its approval or
recommendation within five business days after a written request
to do so, (ii) approved or recommended, or proposed publicly to
approve or recommend, any Company Takeover Proposal, (iii) caused
the Company to enter into a Company Acquisition Agreement, or
(iv) resolved to take any of the foregoing actions;
(f) by Parent in accordance with Section 5.03(b) at
any time prior to the Offer Completion Date; provided that it has
complied with all provisions thereof, including the notice
provisions therein, and that it complies with applicable
requirements of Section 6.06;
(g) by the Company, if the Parent Board or any
committee thereof shall have (i) withdrawn or modified in a
manner adverse to the Company its approval or recommendation of
the Offer, the Merger or this Agreement or failed to reconfirm
its approval or recommendation within five business days after a
written request to do so, (ii) approved or recommended, or
proposed publicly to approve or recommend, any Parent Takeover
Proposal, (iii) caused Parent to enter into a Parent Acquisition
Agreement, or (iv) resolved to take any of the foregoing actions;
(h) by the Company at or prior to the Offer Completion
Date, if Parent or Sub shall have breached or failed to perform
in any material respect any of its representations, warranties or
covenants required to be performed by them under this Agreement
at or prior to the Offer Completion Date, which breach or failure
to perform cannot be or has not been cured within 30 days after
the giving of written notice to Parent and Sub of such breach
(provided that the Company is not then in material breach of any
representation, warranty, covenant or other agreement contained
in this Agreement that cannot or has not been cured within 30
days after giving notice to the Company of such breach); and
(i) by the Company in accordance with Section 5.02(b)
at any time prior to the Offer Completion Date; provided that it
has complied with all provisions thereof, including the notice
provisions therein, and that it complies with applicable
requirements of Section 6.06.
8.2. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as
provided in Section 8.01, this Agreement, other than the
provisions of Section 4.01(k), Section 4.02(j), Section 6.02,
Section 6.06, this Section 8.02 and Article IX, will forthwith
become void and have no effect, without any liability or
obligation on the part of Sub, Parent or the Company, except to
the extent that such termination results from the willful and
material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
8.3. Amendment. Subject to Section 1.04, this
Agreement may be amended by the parties at any time before or
after the Company Shareholder Approval or the Parent Shareholder
Approval; provided, however, that after any such approval, there
may not be made any amendment that by Law requires further
approval by the shareholders of the Company or Parent without the
further approval of such shareholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties.
8.4. Extension; Waiver. At any time prior to the
Effective Time, a party may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and
warranties of the other parties contained in this Agreements or
in any document delivered pursuant to this Agreement, or
(c) subject to the proviso of Section 8.03, waive compliance by
the other party with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a
party to any such extension or waiver will be valid only if set
forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise will not constitute a
waiver of such rights.
8.5. Procedure for Termination, Amendment, Extension
or Waiver. Subject to Section 1.04(b) and 1.04(c), a termination
of this Agreement pursuant to Section 8.01, an amendment of this
Agreement pursuant to Section 8.03 or an extension or waiver
pursuant to Section 8.04 will, in order to be effective, require,
in the case of Parent or the Company, action by its Board of
Directors or, with respect to any amendment to this Agreement,
the duly authorized committee of its Board of Directors.
IX. GENERAL PROVISIONS
9.1. Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or
in any instrument delivered pursuant to this Agreement will
survive the Effective Time. This Section 9.01 will not limit any
covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
9.2. Notices. All notices, requests, claims, demands
and other communications under this Agreement will be in writing
and will be deemed given if delivered personally, telecopied
(which is confirmed) or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses (or
at such other address for a party as specified by like notice):
(a) if to Parent or to Sub, to
CTS Corporation
905 West Boulevard North
Elkhart, Indiana 46514
Fax No.: (219) 293-8394
Attention: Jeannine M. Davis, Esq.
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue, 30th Floor
New York, New York 10022
Fax No.: (212) 755-7306
Attention: Robert A. Profusek, Esq.
(b) if to the Company, to
Dynamics Corporation of America
475 Steamboat Road
Greenwich, Connecticut 06830-7197
Fax No.: (203) 869-3211
Attention: Mr. Andrew Lozyniak
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Fax No.: (212) 735-2019
Attention: Morris J. Kramer, Esq.
9.3. Certain Definitions. For purposes of this
Agreement:
(a) An "Affiliate" of any Person means another Person
that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
first Person;
(b) a "Subsidiary" of any Person means another Person,
an amount of the voting securities, other voting ownership or
voting partnership interests of which is sufficient to elect at
least a majority of its Board of Directors or other governing
body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by
such first Person. A "Significant Subsidiary" means any
subsidiary of the Company or Parent, as the case may be, that
would constitute a "significant subsidiary" of such party within
the meaning of Rule 1-02 of Regulation S-X of the SEC and, in the
case of Parent, includes Sub;
(c) "Person" means an individual, corporation,
partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity;
and
(d) "Knowledge" of any Person which is not an
individual means the knowledge of any of such Person's executive
officers after reasonable inquiry.
9.4. Interpretation. When a reference is made in this
Agreement to an Article, Section, Annex or Exhibit, such
reference will be to an Article or Section of, or an Annex or
Exhibit to, this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for
reference purposes only and will not affect in any way the
meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement,
they will be deemed to be followed by the words "without
limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement will refer to
this Agreement as a whole and not to any particular provision of
this Agreement. All terms used herein with initial capital
letters have the meanings ascribed to them herein and all terms
defined in this Agreement will have such defined meanings when
used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such
term. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to
herein means such agreement, instrument or statute as from time
to time amended, modified or supplemented, including (in the case
of agreements or instruments) by waiver or consent and (in the
case of statutes) by succession of comparable successor statutes
and references to all attachments thereto and instruments
incorporated therein. References to a Person are also to its
permitted successors and assigns.
9.5. Counterparts. This Agreement may be executed in
one or more counterparts, all of which will be considered one and
the same agreement and will become effective when one or more
counterparts have been signed by each of the parties and
delivered to the other parties.
9.6. Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred
to herein), and the Confidentiality Agreement (a) constitute the
entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement and (b) except
for the provisions of Article III and Section 6.04 are not
intended to confer upon any Person other than the parties any
rights or remedies.
9.7. Governing Law. This Agreement will be governed
by, and construed in accordance with, the Laws of the State of
New York, regardless of the Laws that might otherwise govern
under applicable principles of conflict of Laws thereof.
9.8. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement may be
assigned, in whole or in part, by operation of Law or otherwise
by either of the parties hereto without the prior written consent
of the other party. Any assignment in violation of the preceding
sentence will be void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and
assigns.
9.9. Enforcement. The parties agree that irreparable
damage would occur and that the parties would not have any
adequate remedy at law in the event that any of the provisions of
this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly
agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any
federal court located in the State of New York or in New York
state court, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the
parties hereto (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of New
York or any New York state court in the event any dispute arises
out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for
leave from any such court, and (c) agrees that it will not bring
any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal
court sitting in the State of New York or a New York state court.
IN WITNESS WHEREOF, Parent, Sub and the Company have
caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the date first written
above.
CTS CORPORATION
By: /s/ Joseph P. Walker
_______________________
Name: Joseph P. Walker
Title: Chairman of the Board,
President and Chief
Executive Officer
CTS FIRST ACQUISITION CORP.
By: /s/ Joseph P. Walker
__________________________
Name: Joseph P. Walker
Title: President
DYNAMICS CORPORATION OF AMERICA
By: /s/ Andrew Lozyniak
____________________________
Name: Andrew Lozyniak
Title: Chairman of the Board
and President
ANNEX A
CONDITIONS TO COMPLETION OF THE OFFER
Notwithstanding any other provision of the Offer,
Sub will not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-
1(c) under the Exchange Act (relating to Sub's obligation to pay
for or return tendered Shares promptly after expiration or
termination of the Offer), to pay for any Shares, and may
postpone the acceptance for payment or, subject to the
restrictions referred to above, payment for any Shares tendered,
and, subject to the terms of the Agreement, may amend or
terminate the Offer (whether or not any Shares have theretofore
been purchased or paid for pursuant to the Offer) unless the
following conditions have been satisfied: (a) there have been
validly tendered and not withdrawn prior to the Expiration Date a
number of Shares which constitutes at least 25% of the Shares
outstanding on the date of purchase (the "Minimum Share
Condition"); (b) any applicable waiting periods under the HSR Act
shall have expired or been terminated prior to the expiration of
the Offer; (c) either Jones, Day, Reavis & Pogue or Skadden,
Arps, Meagher, Slate and Flom LLP shall have delivered to Parent
and the Company an opinion, dated as of the date of purchase, to
the effect that, based upon such representations, assumptions and
conditions as the firm delivering such opinion deems necessary or
appropriate, the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a)
of the Code, and that Parent, Sub and the Company will each be a
party to such reorganization within the meaning of Section 368(b)
of the Code and (d) if at any time on or after the date of the
Merger Agreement and before acceptance for payment of, or payment
for, such Shares, none of the following events shall have
occurred and be continuing:
(i) any United States or foreign governmental entity
or authority or any United States or foreign court of
competent jurisdiction in the United States or any foreign
country shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order,
decree, injunction or other order which is in effect and
which (a) restricts, prevents or prohibits consummation of
the transactions contemplated by any of this Agreement,
including the Offer or the Merger, (b) prohibits, limits or
otherwise adversely affects the ownership or operation by
Parent or any of its Subsidiaries of all or any portion of
the business or assets of the Company and its Subsidiaries
or compels the Company, Parent or any of their Subsidiaries
to dispose of or hold separate all or any portion of the
business or assets of the Company and its Subsidiaries, or
(c) imposes limitations on the ability of Parent, Sub or any
other subsidiary of Parent to exercise effectively full
rights of ownership of any Shares, including without
limitation the right to vote any Shares acquired by Sub
pursuant to the Offer or otherwise on all matters properly
presented to the Company's shareholders, including without
limitation the approval and adoption of the Agreement and
the transactions contemplated thereby;
(ii) there shall be instituted or pending any action or
proceeding before any United States or foreign court or
governmental entity or authority by any United States or
foreign governmental entity or authority seeking any order,
decree or injunction having any effect set forth in (i)
above;
(iii) the representations and warranties of the
Company contained in the Merger Agreement (without giving
effect to the materiality, material adverse effect or
knowledge limitations contained therein) shall not be true
and correct as of the expiration date of the Offer (as the
same may be extended from time to time) as though made anew
on and as of such date (except for representations and
warranties made as of a specified date, which shall not be
true and correct as of the specified date), except for any
breach or breaches which, in the aggregate, could not be
reasonably expected to have a material adverse effect on the
business, financial condition or results of operations of
the Company and its Subsidiaries, taken as a whole, or on
the ability of the Company to perform any of its obligations
under this Agreement;
(iv) the Company shall not have performed or complied
in all material respects with its covenants under any of
this Agreement to which it is a party and such failure
continues until the later of (i) 15 calendar days after
actual receipt by it of written notice from Parent setting
forth in detail the nature of such failure or (ii) the
expiration date of the Offer;
(v) there shall have occurred any material adverse
change, or any development that is reasonably likely to
result in a material adverse change, in the business,
financial condition or results of operations of the Company
and its Subsidiaries, taken as a whole;
(vi) the Merger Agreement shall have been terminated in
accordance with its terms;
(vii) the Company Board shall have withdrawn or
materially modified or changed (including by amendment of
Schedule 14D-9) in a manner adverse to Sub or Parent its
recommendation of the Offer, the Merger or any of this
Agreement;
(viii) there shall have occurred (i) any general
suspension of, or limitation on prices for, trading in
securities on the NYSE, (ii) a decline of at least 20% in
either the Dow Jones Average of Industrial Stocks or the
Standard & Poor's 500 Index from the date of the Agreement,
or (iii) the declaration of a banking moratorium or any
limitation or suspension of payments in respect of the
extension of credit by banks or other lending institutions
in the United States; or
(ix) it shall have been publicly disclosed or Parent
shall have otherwise learned that (a) any person or "group"
(as defined in Section 13(d)(3) of the Exchange Act), other
than Parent or its affiliates or any group of which any of
them is a member or any affiliate controlled by it or which
is referred to in clause (b) below, shall have acquired
beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of more than 20% of the
outstanding Shares, (b) any such person or group which has
filed a Schedule 13D prior to the date of the Merger
Agreement disclosing beneficial ownership of 20% or more of
the outstanding Shares shall have acquired beneficial
ownership of 25% or more of the outstanding Shares, or (c)
any person or group shall have entered into a definitive
agreement or agreement in principle with the Company with
respect to a merger, consolidation or other business
combination with the Company.
The foregoing conditions are for the sole benefit of
Sub and its affiliates and may be asserted by Sub, or Parent on
behalf of Sub, regardless of the circumstances (including without
limitation any action or inaction by the Sub or any of its
affiliates other than a material breach by the Sub or Parent of
the Agreement) giving rise to any such condition or may be waived
by the Sub, in whole or in part, from time to time in its sole
discretion, except as otherwise provided in the Agreement. The
failure by the Sub at any time to exercise any of the foregoing
rights will not be deemed a waiver of any such right and each
such right will be deemed an ongoing right and may be asserted at
any time and from time to time. Any good faith determination by
the Sub concerning any of the events described herein will be
final and binding.
ANNEX B
Amended and Restated
ARTICLES OF INCORPORATION
OF
CTS CORPORATION
ARTICLE I.
Name
The name of the corporation is CTS Corporation (the
"Corporation").
ARTICLE II.
Purposes
The purpose for which the Corporation is formed is to
engage in any lawful business or activity for which corporations
may be organized under the Indiana Business Corporation Law, as
amended (the "IBCL").
ARTICLE III.
Term of Existence
The period during which the Corporation shall continue is
perpetually.
ARTICLE IV.
Principal Office and Resident Agent
The post-office address of the principal office of the
Corporation is 905 West Blvd. North, Elkhart, Indiana; and the
name and post-office address of its Resident Agent in charge of
such office is Jeannine M. Davis, 3819 Augusta Lane, Elkhart,
Indiana.
ARTICLE V.
Amount of Capital Stock
The Corporation is authorized to issue two classes of
capital stock, designated Common Stock and Preferred Stock. The
total number of shares of capital stock that the Corporation is
authorized to issue is 100,000,000 shares, consisting of
75,000,000 shares of Common Stock, without par value, and
25,000,000 shares of Preferred Stock, without par value.
ARTICLE VI.
Terms of Capital Stock
(a) Preferred Stock. The Preferred Stock may be
issued in one or more series. The Board of Directors of the
Corporation is authorized to fix the designations, powers,
preferences, rights, qualifications, limitations or restrictions
of each such series by the adoption and filing in accordance with
the Indiana Business Corporation Law, before the issuance of any
Preferred Shares of such series, of an amendment or amendments to
these Articles of Incorporation determining the terms of such
series (an "Article IV Amendment"). The authority of the Board
of Directors with respect to each such series will include,
without limiting the generality of the foregoing, the
determination of any or all of the following:
(i) the number of shares of any series and the
designation to distinguish the shares of such series
from the shares of all other series;
(ii) the voting powers, if any, and whether such
voting powers are full or limited in such series;
(iii) the redemption provisions, if any,
applicable to such series, including the redemption
price or prices to be paid;
(iv) whether dividends, if any, will be
cumulative or noncumulative, the dividend rate of such
series and the dates and preferences of dividends on
such series;
(v) the rights of such series upon the voluntary
or involuntary dissolution of, or upon any distribution
of the assets of, the Corporation;
(vi) the provisions, if any, pursuant to which
the shares of such series are convertible into, or
exchangeable for, shares of any other class or classes
or of any other series of the same or any other class
or classes of stock, or any other security, of the
Corporation or any other corporation or other entity
and the rates or other determinants of conversion or
exchange applicable thereto;
(vii) the right, if any, to subscribe for or to
purchase any securities of the Corporation or any other
corporation or other entity;
(viii) the provisions, if any, of a sinking fund
for such series; and
(vix) any other relative, participating, optional
or other special powers, preferences or rights and
qualifications, limitations or restrictions thereof;
all as may be determined from time to time by the Board of
Directors and stated or expressed in the Article IV
Amendment for such shares of Preferred Stock (collectively,
a "Preferred Stock Designation").
(b) Preemptive Rights. Except as may be
specified in a Preferred Stock Designation, no holder of any
share or shares of any class of stock of the Corporation
shall have any preemptive right to subscribe for any shares
of stock of any class of the Corporation now or hereafter
authorized or for any securities, warrants or options
convertible into or carrying any rights to purchase any
shares of stock of any class of the Corporation now or
hereafter authorized, provided, however, that no provision
of these Articles of Incorporation shall be deemed to deny
to the Board of Directors the right, in its discretion, to
grant to the holders of shares of any class of stock at the
time outstanding the right to purchase or subscribe for
shares of stock of any class or any other securities of the
Corporation now or hereafter authorized, at such prices and
upon such other terms and conditions as the Board of
Directors, in its discretion, may fix.
ARTICLE VII.
Voting Rights of Capital Stock
Subject to the rights, if any, of the holders of any series
of Preferred Stock to vote under circumstances specified in a
Preferred Stock designation, the holders of the Common Stock,
without par value, shall be entitled to vote at all meetings of
the shareholders and shall be entitled to cast one vote for each
share of stock held by them respectively and standing in their
respective names on the books of the Corporation.
ARTICLE VIII.
Data Respecting Directors
Section 1. Number. Subject to the rights, if any, of the
holders of any series of Preferred Stock to elect additional
directors of the Board of Directors under circumstances specified
in a Preferred Stock Designation, the number of the directors of
the Corporation will not be less than three nor more than fifteen
and will be fixed from time to time in the manner provided in the
Bylaws of the Corporation.
Section 2. Qualifications. Directors need not be
shareholders of the Corporation. A majority of the Directors at
any time shall be citizens of the United States.
ARTICLE IX.
Provisions for Regulation of Business
and Conduct of Affairs of Corporation
(a) Issuance of Shares. The Board of Directors is hereby
authorized to direct the issuance by the Corporation of shares of
Common Stock and Preferred Stock at such times, in such amounts,
to such persons, for such consideration and upon such terms and
conditions as it may, from time to time, determine, subject only
to the restrictions, limitations, conditions and requirements
imposed by the Indiana Business Corporation Law, other applicable
laws and these Articles of Incorporation.
(b) The Corporation shall have power to carry on and
conduct its said business, or any part thereof, and to have one
or more officers in the State of Indiana, and in the various
other states, territories, colonies and dependencies of the
United States, in the District of Columbia, and in all or any
foreign countries;
(c) The Corporation reserves the right to take advantage of
the provisions of any amendment to The Indiana Business
Corporation Law, or of any new law applicable or relating to
corporations formed, organized under, or which have accepted the
provisions of, the law now in force, which may hereafter be
enacted, and all rights granted to, and conferred on, the
shareholders of the Corporation, are granted and conferred,
subject to this reservation;
(d) Annual or special meetings of the shareholders of the
Corporation may be held at the place, either within or without
the State of Indiana, which may be stated in the notice of said
meeting;
(e) These Amended and Restated Articles of Incorporation
shall amend and supersede and take the place of all heretofore
existing Articles of Incorporation or Articles of Acceptance (and
amendments thereto) of the Corporation.
ARTICLE X.
Liability
To the fullest extent permitted by applicable law as then in
effect, no director or officer shall be personally liable to the
Corporation or any of its shareholders for damages for breach of
fiduciary duty as a director or officer, except for liability (a)
for breach of duty if such breach constitutes wilful misconduct
or recklessness or (b) for the payment of distributions to
shareholders in violation of Section 23-1-28-3 of the Indiana
Business Corporation Law. Any amendment or repeal of, or
adoption of any provision inconsistent with, this Article X will
not adversely affect any right or protection existing hereunder,
or arising out of facts occurring, prior to such amendment,
repeal or adoption and no such amendment, repeal or adoption will
affect the legality, validity or enforceability of any contract
entered into or right granted prior to the effective date of such
amendment, repeal or adoption.
ARTICLE XI.
Indemnification
Each person who was or is involved in any manner (including
without limitation as a party or a witness), or is threatened to
be made so involved, in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal,
by reason of the fact that such person is or was a director or
officer of the Corporation, or who is or was serving at the
request of the Board of Directors as a director, officer,
partner, trustee, employee or agent of another corporation or a
partnership, joint venture, trust, employee benefit plan or other
entity, whether for profit or not for profit, whether or not the
basis of such proceeding is alleged action in an official
capacity while serving as a director, officer, employee or agent,
will be indemnified by the Corporation to the fullest extent to
which it is empowered to do so by the Indiana Business
Corporation Law, or any other applicable laws, as the same exists
or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than such
law permitted the Corporation to provide prior to such amendment)
against all expense, liability and loss (including attorneys'
fees and expenses, judgments, settlements, penalties, fines, and
excise taxes assessed with respect to employee benefit plans)
actually and reasonably incurred or suffered by such person in
connection therewith. The right of indemnification provided in
this Article XI (a) will not be exclusive of any other rights to
which any person seeking indemnification may otherwise be
entitled, including without limitation pursuant to any contract
approved by a majority of the Board of Directors (whether or not
the directors approving such contract are or are to be parties to
such contract or similar contracts), and (b) will be applicable
to matters otherwise within its scope (with each reference in the
first sentence of this Article XI to "the Corporation" being
deemed for purposes of this sentence to include any domestic or
foreign predecessor entity of the Corporation in a merger or
other transaction in which the predecessor's existence ceased
upon consummation of the transaction) whether or not such matters
arose or arise before or after the adoption of this Article XI.
Without limiting the generality or the effect of the foregoing,
the Corporation may adopt Bylaws, or enter into one or more
agreements with any person, which provide for indemnification
greater or different than that provided in this Article XI or the
Indiana Business Corporation Law. Any amendment or repeal of, or
adoption of any provision inconsistent with, this Article XI will
not adversely affect any right or protection existing hereunder,
or arising out of facts occurring, prior to such amendment,
repeal or adoption and no such amendment, repeal or adoption will
affect the legality, validity or enforceability of any contract
entered into or right granted prior to the effective date of such
amendment, repeal or adoption.
CTS CORPORATION
BY LAWS
(As Amended and in Effect on ________________, 1997)
ARTICLE I.
Officers
The officers of CTS Corporation (the "Corporation") shall be
a President, one or more Vice Presidents, a Secretary, a
Treasurer and a Controller. The Board of Directors may also
elect one or more Assistant Secretaries, Assistant Treasurers and
Assistant Controllers, and such other officers as may be
determined, from time to time, by the Board of Directors.
The President shall be a director of the Corporation. Any
offices, other than those of President and Secretary, may be held
by the same person.
The officers of the Corporation shall be elected by the
Board of Directors at the annual meeting of the Board of
Directors for the term of one year and until their successors
have been elected and qualified. Any vacancy occurring among the
above offices may be filled for the remainder of the term by the
Board of Directors at any regular or special meeting, and
officers so elected shall hold office until the next annual
meeting of the Board of Directors and until their successors have
been elected and qualified.
ARTICLE II.
Board of Directors Organization
Section 1. The Board of Directors shall elect, from the
members of the Board of Directors who are not officers of the
Corporation, an Audit Committee consisting of not less than three
members. The members of the Audit Committee shall be elected at
each annual meeting of the Board of Directors to serve, while
qualified, at the pleasure of the Board of Directors, or if
longer, for one year and until their successors have been elected
and qualified.
The Audit Committee shall be responsible directly to the
Board of Directors and, in addition to such authority and duties
specifically delegated by the Board of Directors, shall have the
authority to review the conduct and the report of the independent
financial audit of the Corporation and shall report to the Board
of Directors the findings, conclusions and recommendations of the
Audit Committee regarding the conduct and report of the
independent financial audit.
Unless the Board of Directors designates a Chairman, a
majority of the members of the Audit Committee may designate one
member of the Audit Committee as Chairman of the Audit Committee
to preside at all meetings of the Audit Committee.
Section 2. The Board of Directors shall elect from members
of the Board of Directors, who are not officers of the
Corporation, a Compensation Committee consisting of not less than
three members. The members of the Compensation Committee shall be
elected at each annual meeting of the Board of Directors to
serve, while qualified, at the pleasure of the Board of
Directors, or if longer, for one year and until their successors
have been elected and qualified.
The Compensation Committee shall be responsible directly to
the Board of Directors and, in addition to such authority and
duties specifically delegated by the Board of Directors, shall
have authority to review, and make recommendations to the Board
of Directors regarding the compensation, including fringe
benefits and stock options, for the officers of the Corporation.
Unless the Board of Directors designates a Chairman, a
majority of the members of the Compensation Committee may
designate one member of the Compensation Committee as Chairman of
the Compensation Committee to preside at all meetings of the
Compensation Committee.
Section 3. The Board of Directors shall designate from
members of the Board of Directors, a Chairman of the Board, who
shall preside at meetings of shareholders and of the Board of
Directors unless the Chairman shall designate an officer or other
director of the Corporation to do so. The Chairman of the Board
shall have such additional authority as granted by the Board of
Directors and shall perform such other duties as are assigned
from time to time by the Board of Directors.
ARTICLE III.
Corporate Officers
Section 1. The President shall exercise specific authority
and supervision over, and shall be responsible for the direction
of, the business and affairs of the Corporation, subject to the
direction of the Board of Directors. In addition, the President
may be designated the Chief Executive Officer and, if so, shall
have the additional authority and duties and responsibilities
specified in these Bylaws. The President shall also perform such
other duties as may be assigned from time to time, by the Board
of Directors. The President shall perform all the duties of the
Chairman of the Board in the absence or during any disability of
the Chairman.
Section 2. The Board of Directors shall designate the
Chairman of the Board or the President as the Chief Executive
Officer of the Corporation. In addition to other duties as an
officer, the Chief Executive Officer shall exercise general
authority and supervision over, and shall be responsible for,
management of the business and affairs of the Corporation,
subject to the direction of the Board of Directors.
The Chief Executive Officer shall determine the organization
of the officers of the Corporation, shall designate to whom such
officers shall report and be responsible, and subject to the
direction of the Board of Directors shall determine their
respective duties and responsibilities.
Section 3. Each Vice President shall perform such duties as
may be assigned from time to time by the President and shall
report to and be responsible to such officer as the President
shall designate. Each Vice President shall also have such
additional authority and shall perform such other duties assigned
from time to time, by the Board of Directors.
The Board of Directors may designate a word or words to be
placed before or after the title of Vice President to indicate
organizational or functional authority or duty.
Section 4. The Secretary shall attend all meetings of the
shareholders and Board of Directors and all committees, and shall
keep minutes of each meeting. The Secretary shall give proper
notice of all meetings of shareholders, directors and committees,
required in these Bylaws. The Secretary shall maintain proper
records of ownership and transfer of the stock of the
Corporation. The Secretary shall have the custody of, and affix,
the seal of the Corporation and perform such other duties as may
be assigned from time to time by the Board of Directors.
Section 5. The Vice President Finance/Chief Financial
Officer, shall be responsible for the financial affairs of the
Corporation, shall submit to the annual meeting of shareholders a
statement of the financial condition of the Corporation, and
whenever required by the Board of Directors, shall give account
of all transactions and of the financial condition of the
Corporation. The Treasurer shall report to the Vice President
Finance/Chief Financial Officer. The Treasurer shall establish
and maintain appropriate banking relations and arrangements on
behalf of the Corporation. The Treasurer shall receive and have
custody of, and shall disburse, all moneys of the Corporation,
and in the name of the Corporation, shall deposit all moneys in,
and disburse all moneys from, such bank, or banks, as the Board
of Directors shall designate, from time to time, as the
depositories of the Corporation. The Treasurer shall perform
such other duties and render such services for, and on behalf of,
the Corporation as may be assigned from time to time by the Vice
President Finance, Chief Financial Officer.
Section 6. The Controller shall be the accounting officer
of the Corporation and shall formulate accounting procedures to
record expenses, losses, gains, assets and liabilities of the
Corporation, to report and interpret results of operations of the
Corporation and to assure protection of the assets of the
Corporation. The Controller shall prepare and submit to the
Board of Directors and the Chief Executive Officer such periodic
balance sheets, profit and loss statements and other financial
statements as may be required to keep such persons currently
informed of the operations and the financial condition of the
Corporation. The Controller shall perform such other duties
assigned from time to time by the Chief Executive Officer.
Section 7. The Assistant Secretary or Secretaries,
Assistant Treasurer or Treasurer or Treasurers, and the Assistant
Controller or Controllers shall perform the duties of the
Secretary, of the Treasurer, and of the Controller, respectively,
in the absence of those officers and shall have such further
authority and perform such other duties as may be assigned.
ARTICLE IV.
Duties of Officers Delegated
In the absence or disability of any officer of the
Corporation, the Board of Directors may delegate the powers and
duties of any such officer to any other officer or director of
the Corporation for such period of time as said Board of
Directors may determine.
ARTICLE V.
Bonds
The Board of Directors or the Chief Executive Officer may
require any officer, agent, or employee of the Corporation to
furnish the Corporation a bond for the faithful performance of
duties and for the accounting of all moneys, securities, records,
or other property of the Corporation coming into the hands of
such agent or employee.
ARTICLE VI.
Meetings of Shareholders
Section 1. Meetings of the shareholders of the Corporation
shall be held at the place, either within or without the State of
Indiana, stated in the notice of said meeting.
Section 2. The annual meeting of shareholders of the
Corporation shall be held on the last Friday in April of each
year or at such other time established for such meeting by 80% of
the directors.
Section 3. A complete list of the shareholders entitled to
vote at any shareholders' meeting, arranged in alphabetical order
and containing the address and number of shares of stock so held
by each shareholder who is entitled to vote at said meeting,
shall be prepared by the Secretary and shall be subject to the
inspection by any shareholder at the time and place of an annual
meeting and at the principal office of the Corporation for five
(5) days prior thereto.
Section 4. At all shareholders' meetings a quorum shall
consist of a majority of all of the shares of stock outstanding
and entitled by the Articles of Incorporation to vote on the
business to be transacted at said meeting, but a meeting composed
of less than a quorum may adjourn the meeting from day to day
thereafter or until some future time.
Section 5. At the annual meeting of the shareholders, there
shall be elected, by plurality vote, a Board of Directors, who
shall hold office until the next annual meeting of shareholders
and until their successors have been elected and qualified.
Section 6. At all shareholders' meetings, each shareholder
shall be entitled to one (1) vote in person or by proxy for each
share of common stock registered in the shareholder's name on the
books of the Corporation as of the record date which shall be as
fixed by the Board of Directors and entitled, by the Articles of
Incorporation, to vote on the business to be transacted at said
meeting.
Section 7. The shareholders may be represented at any
meeting thereof by their duly appointed Attorney-in-Fact provided
the proxy so appointing said Attorney-in-Fact shall be filed with
the Secretary prior to the meeting.
Section 8. Special meetings of the shareholders of the
Corporation may be called by the Chairman of the Board, by the
President, by the Board of Directors, or by the shareholders
holding not less than one-fourth of all of the shares of stock
outstanding and entitled, by the Articles of Incorporation, to
vote on the business to be transacted at said special meeting
whenever in the opinion of such person or body such meeting is
necessary.
Whenever a special meeting of the shareholders shall be
called by the shareholders, the call shall be delivered to the
Secretary who shall issue the notice of said special meeting
which is required to be given.
Section 9. Written notice of each meeting of the
shareholders shall be given by the Secretary to each shareholder
of record at least ten (10) days prior to the time fixed for the
holding of such meeting; said notice shall state the place, day
and hour and the purpose for which said meeting is called, and
said notice shall be addressed to the last known place of
residence of each shareholder as shown by the stock books of the
Corporation. The ten (10) days shall be computed from the date
upon which said notice is deposited in the mails.
Section 10. Notice of any shareholders' meeting may be
waived in writing by any shareholder if the waiver sets forth in
reasonable detail the purpose or purposes for which the meeting
is called and the time and place thereof.
Section 11. No shares of stock shall be voted at any annual
or special meeting of shareholders upon which any installment is
due and unpaid, which are owned by the Corporation.
ARTICLE VII.
Directors
Section 1. The property and business affairs of the
Corporation shall be managed under the direction of the Board of
Directors. Directors shall be elected by a plurality vote at the
annual meeting or a special meeting of the shareholders and shall
hold office for a term of one year or until their successors are
elected and qualified. In case of the failure to hold the annual
meeting on the date fixed herein for the same to be held, the
directors shall hold over until the next annual meeting, unless
prior to said meeting a special meeting of the shareholders for
the purpose of electing directors has been held. Subject to the
rights, if any, of any series of Preferred Stock to elect
additional directors under circumstances specified in the
Articles of Incorporation and to the minimum and maximum number
of authorized directors provided in the Articles of
Incorporation, the authorized number of directors will be as
determined from time to time by the Board of Directors. If no
determination of the number of directors has been made by the
Board of Directors, the number of directors shall be [seven].
Section 2. Any vacancy occurring in the Board of Directors
caused by resignation, death or other incapacity, shall be filled
by majority vote of the remaining members of the Board until the
next annual meeting of shareholders; provided, however, that if
the vote of the remaining members of the Board of Directors shall
result in a tie, such vacancy shall be filled by the shareholders
at the next annual meeting of the shareholders or at a special
meeting of the shareholders called for that purpose.
Section 3. Any vacancy occurring in the Board of Directors,
caused by an increase in the number of directors, shall be filled
by a majority vote of the members of the Board until the next
annual meeting of shareholders; provided, however, that if the
vote of the members of the Board of Directors shall result in a
tie, such vacancy shall be filled by the shareholders at the next
annual meeting of the shareholders or at a special meeting of the
shareholders called for that purpose.
Section 4. A person shall not be nominated, stand for
election or be elected as a director of the Corporation who (I)
at the time of his election shall be seventy (70) years of age or
older, (ii) has retired from employment by the Corporation and is
sixty-five (65) years of age or older or (iii) has retired from
active business and professional vocations.
Article VIII.
Meetings of Directors
Section 1. Following the annual meeting of shareholders,
the annual meeting of the Board of Directors shall be held
without notice, each and every year hereafter, at the time and
place determined by the directors.
Section 2. Regular meetings of the Board of Directors shall
be held without notice at 9:00 A.M. on the last Friday of
February, June, August, October and December at the offices of
the Corporation, unless another time and place is designated.
Section 3. Special meetings of the Board of Directors may
be called by the Chairman of the Board, by the President, or by
three (3) members of the Board of Directors on three (3) days'
notice by mail, or an twenty-four (24) hours' notice by
telegraph, telephone, facsimile or other similar medium of
communication to each director, which notice shall be addressed
to the last known place of business or residence of each
director, and said meetings may be held either at the office of
the Corporation or at such other place as may be designated in
the notice of said meeting.
Whenever a special meeting of the Board of Directors shall
be called, in accordance with the provision of this section, by
members of the Board of Directors, the call shall be in writing,
signed by said directors and delivered to the secretary who shall
thereupon issue the notice calling said meeting.
Section 4. Not less than one-half at the whole Board of
Directors, shall constitute a quorum for the transaction of any
business except the filling of vacancies, but a smaller number
may adjourn, from time to time, until a future date or until a
quorum is secured.
For the purpose only of filling a vacancy or vacancies in
the Board of Directors, a quorum shall consist of a majority of
the whole Board of Directors, less the vacancy or vacancies
therein.
The act of a majority at the directors present at a duly
called, at which a quorum is present shall be the act of the
Board of Directors.
ARTICLE IX.
Compensation of Directors and
Members of Committees
The members of the Board of Directors and members of
committees of the Corporation, who are not salaried employees of
the Corporation, shall receive such compensation for their
services to be rendered as members of the Board of Directors, or
of committees, as may, from time to time, be fixed by the Board
of Directors and the compensation so fixed shall continue to be
payable until the Board of Directors shall have thereafter fixed
a different compensation, which it may do at any annual, regular
or special meeting.
ARTICLE X.
Certificates of Stock
Section 1. Certificates of stock shall be issued to those
legally entitled thereto, as may be shown by the books of the
Corporation, and shall be signed by the President and attested by
the Secretary.
Section 2. The Corporation may appoint one or more transfer
agents and/or registrars to issue, countersign, register, and
transfer certificates representing its capital stock and
signatures of the Corporation's officers and of the transfer
agents on stock certificates may be facsimiles. Upon surrender
to the Corporation or the transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it
shall be the duty of the Corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate and
record the transaction on its books.
Section 3. The holder of any stock of the Corporation shall
immediately notify the Corporation of any loss, theft,
destruction or mutilation of the certificate for any such stock.
A new certificate or certificates shall be issued upon the
surrender of the mutilated certificate or, in case of loss,
theft, or destruction, upon (I) delivery of an affidavit or
affirmation, and (ii) delivery of a bond in such sum and in such
form and with such surety or sureties as the Board of Directors
(by general or specific resolutions) or the President may
approve, indemnifying the Corporation against any claim with
respect to the certificate or certificates alleged to have been
lost, stolen or destroyed. However, the Board may, in its
discretion, refuse to issue new certificate or certificates, save
upon the order of some Court having jurisdiction in such matters.
ARTICLE XI.
Transfer of Stock
Section 1. The stock transfer books of the Corporation may
from time to time be closed by order of the Board of Directors
for any lawful purpose and for such period consistent with law,
but not exceeding thirty (30) days at any one time, as the Board
of Directors may deem advisable. In lieu of closing the stock
transfer books as aforesaid, the Board of Directors may, in its
discretion, fix in advance a date not exceeding fifty (50) days
or less than ten (10) days next preceding the date of any meeting
of shareholders or the date for the payment of any dividend or
the date for the allotment of rights or the date when any change
or conversion or exchange of capital stock shall go into effect,
as the record date for the determination of the shareholders
entitled to notice of and to vote at any such meeting or entitled
to receive any such dividend or to any such allotment of rights
or to exercise the rights of any such change, conversion or
exchange of capital stock; and, in such case, only such
shareholders as shall be shareholders of record at the close of
business on the date so fixed shall be entitled to notice of and
to vote at such meeting or to receive such payment of dividend or
to receive such allotment of rights or to exercise such rights as
the case may be, notwithstanding any transfer of stock on the
books of the Corporation after such record date fixed as
aforesaid. In the event the Board of Directors fails to fix in
advance the record date for the determination of the shareholders
entitled to notice of and to vote at any meeting, no share of
stock transferred on the books of the corporation within ten (10)
days next preceding the date of a meeting shall be voted at such
meeting.
Section 2. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the legal
owner thereof and accordingly shall not be bound to recognize any
equitable claim to or interest in such share or shares on the
part of any other person whether or not it shall have express or
other notice thereof, save as expressly provided in the laws of
the State of Indiana.
Section 3. The assignment of any certificate of stock shall
constitute an assignment to the assignee of the shares so
assigned and of all dividends on the shares assigned which are
declared payable as of a record date subsequent to the date the
assignment is recorded on the stock record books of the
Corporation.
ARTICLE XII.
Fiscal Year
The fiscal year of the Corporation shall correspond to the
calendar year.
ARTICLE XIII.
Checks for Money
All checks, drafts or other orders for the payment of funds
of the Corporation shall be signed by either the Chairman of the
Board, the President, or the Treasurer, or by such other
individual or individuals as may hereafter, from time to time, be
designated by the Board of Directors. No check, draft or other
order for the payment of funds of the Corporation shall be signed
in blank, either as to the amount of the check, draft or other
order, or as to the name of the payee.
ARTICLE XIV.
Dividends
The Board of Directors may declare and pay dividends out of
the unreserved and unrestricted earned surplus of the
Corporation. Dividends may be declared at any annual, regular or
special meeting of the Board of Directors. Dividends may be paid
in cash, in property or in the shares of the capital stock of the
Corporation, as provided by the Articles of Incorporation and the
laws of the State of Indiana.
ARTICLE XV.
Notices
Section 1. A notice required to be given under the
provisions of these Bylaws to any shareholder, director, officer
and member of any committee shall not be construed to mean
personal notice but may be given in writing by depositing the
same in a post office or letter box in a postpaid sealed wrapper
addressed to such shareholder, director, officer and member of
any committee at such address as appears upon the books of the
Corporation, and such notice shall be deemed to be given at the
time when the same shall be thus mailed.
Section 2. Any shareholder, director, officer and member of
any committee may waive, in writing, any notice required to be
given by these Bylaws, either before or after the time said
notice should have been issued.
ARTICLE XVI.
Compensation of Officers
The officers of the Corporation shall receive such
compensation for their services as may, from time to time, be
fixed by the Board of Directors, and the compensation so fixed
shall continue to be payable until the Board of Directors shall
have fixed a different compensation, which it may do at any
annual, regular, or special meeting.
ARTICLE XVII.
Corporate Seal
The seal of the Corporation shall be a plain circular disk
having engraved thereon, near the outer edge thereof, at least
the words, "CTS Corporation" and in the center thereof the word,
"Seal".
ARTICLE XVIII.
Indemnification
Section 1. General. Without limiting the generality or
effect of Article XI of the Articles of Incorporation, the
Corporation shall, to the fullest extent to which it is empowered
to do so by the Indiana Business Corporation Law (hereinafter the
"IBCL"), or any other applicable laws, as the same exists or may
hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than such law permitted
the Corporation to provide prior to such amendment), indemnify
and hold harmless any person who was or is involved in any manner
(including without limitation as a party or a witness), or is
threatened to be made so involved, in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal
(hereinafter a "proceeding"), by reason of the fact that such
person is or was a director or officer of the Corporation, or who
is or was serving at the request of the Board of Directors as a
director, officer, partner or trustee of another corporation or a
partnership, joint venture, trust, employee benefit plan or other
entity, whether for profit or not for profit, (any such person
hereinafter an "indemnitee"), whether or not the basis of such
proceeding is alleged action in an official capacity while
serving as a director, or officer, against all expense, liability
and loss (including attorneys' fees and expenses, judgments,
settlements, penalties, fines, and excise taxes assessed with
respect to employee benefit plans) actually and reasonably
incurred or suffered by such person in connection therewith;
provided, however, that, except as provided in Section 3 of this
Article XVIII with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such
indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the
Corporation.
Section 2. Right to Advancement of Expenses. The
right to indemnification conferred in Article XVIII shall include
the right to be paid by the Corporation the expenses (including,
without limitation, attorneys' fees and expenses) incurred in
defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however,
that, if the IBCL so requires, an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal
(hereinafter a "final adjudication") that such indemnitee is not
entitled to be indemnified for such expenses under this Section 2
or otherwise.
The rights to indemnification and to the advancement of
expenses conferred in Article XVIII shall be contract rights and
such rights shall continue as to an indemnitee who has ceased to
be a director or officer and shall inure to the benefit of the
indemnitee's heirs, executors and administrators. For purposes
of Article XVIII, references to "the Corporation" shall include
any domestic or foreign predecessor entity of the Corporation in
a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
Section 3. Right of Indemnitee to Bring Suit. If a
claim under Section 1 or Section 2 of this Article XVIII is not
paid in full by the Corporation within 60 calendar days after a
written claim has been received by the Corporation, except in the
case of a claim for an advancement of expenses, in which case the
applicable period shall be 20 calendar days, the indemnitee may
at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole
or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be
paid also the expense of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the
indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that, and (ii) any suit brought by the
Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the Corporation shall be entitled to
recover such expenses upon a final adjudication that, the
indemnitee has not met any applicable standard for
indemnification set forth in the IBCL. Neither the failure of
the Corporation (including its Board of Directors, independent
legal counsel or shareholders) to have made a determination prior
to the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the indemnitee
has met the applicable standard of conduct set forth in the IBCL,
nor an actual determination by the Corporation (including its
Board of Directors, independent legal counsel or shareholders)
that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not
met the applicable standard of conduct or, in the case of such a
suit brought by the indemnitee, be a defense to such suit. In
any suit brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, or
brought by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving
that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article XVIII or otherwise
shall be on the Corporation.
Section 4. Non-Exclusivity of Rights. The rights to
indemnification and to the advancement of expenses conferred in
this Article XVIII shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute,
the Corporation's Articles of Incorporation, Bylaws, agreement,
vote of shareholders or disinterested directors or otherwise.
Section 5. Insurance. The Corporation may maintain
insurance, at its expense, to protect itself and any director,
officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person
against such expense, liability or loss under the IBCL.
Section 6. Vested Right to Indemnification. The right
of any individual to indemnification under this Article XVIII
shall vest at the time of occurrence or performance of any event,
act or omission giving rise to any Proceeding and once vested,
shall not later be impaired as a result of any amendment, repeal,
alteration or other modification of any or all of these Bylaws.
Notwithstanding the foregoing, the indemnification afforded under
this Article XVIII shall be applicable to all alleged prior acts
or omissions of any individual seeking indemnification hereunder,
regardless of the fact that such alleged acts or omissions may
have occurred prior to the adoption of these Bylaws, and to the
extent such prior acts or omissions cannot be deemed to be
covered by these Bylaws, the right of any individual to
indemnification shall be governed by the indemnification
provisions in effect at the time of such prior acts or omissions.
Section 7. Indemnification of Employees and Agents of
the Corporation. The Corporation may, to the extent authorized
from time to time by the Board of Directors, grant rights to
indemnification and to the advancement of expenses to any
employee or agent of this corporation, or to any individual who
is or was serving at the request of the Board of Directors as an
employee or agent of another corporation or a partnership, joint
venture, trust, employee benefit plan or other entity, whether
for profit or not for profit, to the fullest extent of the
provisions of these Bylaws with respect to the indemnification
and advancement of expenses of directors and officers of this
corporation.
Section 8. Business Expense. Any payments made to any
indemnified party under these Bylaws or under any other right to
indemnification shall be deemed to be an ordinary and necessary
business expense of the Corporation, and payment thereof shall
not subject any person responsible for the payment, or the Board,
to any action for corporate waste or to any similar action.
Section 9. Severability. If any provision or
provisions of Article XVIII is or are held to be invalid,
illegal, or unenforceable for any reason whatsoever: (i) the
validity, legality, and enforceability of the remaining
provisions of such Article (including without limitation all
portions of any paragraph of such Article containing any such
provision held to be invalid, illegal, or unenforceable, that are
not themselves invalid, illegal, or unenforceable) will not in
any way be affected or impaired thereby and (ii) to the fullest
extent possible, the provisions of such Article (including
without limitation all portions of any paragraph of such Article
containing any such provision held to be invalid, illegal, or
unenforceable, that are not themselves invalid, illegal, or
unenforceable) will be construed so as to give effect to the
intent manifested by the provision held invalid, illegal, or
illegal, or unenforceable.
ARTICLE XIX.
Amendments
Section 1. These Bylaws may be amended, altered, repealed,
or added to at any annual or regular meeting of the directors, or
at any special meeting thereof.
Section 2. No amendment, alteration or addition to these
Bylaws shall become effective unless the same is adopted by the
affirmative vote of a majority of the members of the Board of
Directors.
ARTICLE XX.
Control Share Acquisitions
As provided for in Section 5 thereof, Chapter 42 of the
Indiana Business Corporation Law, relating to control share
acquisitions, shall not apply to control share acquisitions of
shares of the corporation made after March 3, 1987.
