<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Instron Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
INSTRON CORPORATION
100 ROYALL STREET
CANTON, MASSACHUSETTS 02021
August 6, 1999
Dear Stockholders:
On July 23, 1999 Instron Corporation mailed to you a Proxy Statement
relating to a Special Meeting of Stockholders (the "Special Meeting") of Instron
originally to be held on August 20, 1999 to consider and vote upon the
acquisition of Instron by Kirtland Capital Partners III L.P. for a cash purchase
price of $22.00 per share. As a result of recent market conditions, Kirtland's
financial advisors advised it that accessing the private or public capital
markets in August 1999 to obtain the financing necessary to consummate the
Merger would be more difficult than in September 1999. Based on this advice,
Kirtland and Instron agreed to permit the closing of the Merger to occur in
September rather than in August, as originally contemplated, to allow Kirtland
to access the capital markets in September. In exchange for certain
modifications to the Merger Agreement, which are described below, Instron agreed
to permit the closing of the Merger to occur no later than September 30, 1999,
assuming satisfaction or waiver of all the conditions to the closing of the
Merger. In addition, Instron has rescheduled the Special Meeting to Friday,
September 3, 1999, at 10:00 a.m., local time, at the Hilton Dedham Place, 25
Allied Drive, Dedham, Massachusetts 02026 in order for you to have additional
time to receive and review the enclosed supplemental proxy materials, including
this letter.
In exchange for Instron's agreement to permit the closing of the Merger to
occur in September and to reschedule the Special Meeting to September 3, 1999,
Kirtland has agreed to certain modifications to the Merger Agreement (the
"Amendment"), which are described below:
- Kirtland shall pay Instron an amount equal to $2,000,000 if the Merger
Agreement is terminated because there occurs a material adverse change in
Instron's business (a "Company Material Adverse Change") subsequent to
August 24, 1999 (the date on which the parties originally contemplated
that the closing of the Merger would occur) and certain other conditions
are met. Thus, in the event that a Company Material Adverse Change occurs
after the originally contemplated closing date of the Merger and the
Merger Agreement is terminated, Instron will be entitled to receive
$2,000,000 from Kirtland if all other closing conditions are met.
- Kirtland shall pay Instron an amount equal to $1,000,000 if the Merger
Agreement is terminated because Kirtland's lenders are unable to provide
the financing necessary for Kirtland to consummate the Merger as a result
of a material adverse change in the financial markets (a "Market Material
Adverse Change") subsequent to August 24, 1999 and certain other
conditions are met. Thus, in the event that a Market Material Adverse
Change occurs after the originally contemplated closing date of the
Merger and the Merger Agreement is terminated, Instron will be entitled
to receive $1,000,000 from Kirtland if all other closing conditions are
met.
- Kirtland acknowledged that as of the date of the Amendment, there had not
occurred a material disruption or material adverse change in the banking,
financial or capital markets generally or in the market for senior credit
facilities or for new issuances of high yield securities which has caused
either of its lenders to withdraw its commitment to provide financing.
Thus, Kirtland acknowledged that recent market conditions did not
represent a Market Material Adverse Change and, assuming satisfaction or
waiver of all of the conditions to the closing of the Merger, Kirtland
will be required to close the Merger unless a Market Material Adverse
Change occurs only after the date of the Amendment.
- The representations and warranties of Instron contained in the Merger
Agreement are required to be true and correct in certain respects as of
August 24, 1999, instead of as of the closing of the Merger. Assuming
such representations and warranties are true and correct as of August 24,
1999, Kirtland
<PAGE> 3
will thereafter not be permitted to terminate the Merger Agreement for breaches
by Instron of its representations and warranties. This modification eliminates
the ability of Kirtland to abandon the Merger in the event that any of Instron's
representations and warranties contained in the Merger Agreement are not
true and correct subsequent to August 24, 1999, and accordingly, reduces
the risk to Instron that the transaction fails to close.
- Assuming the satisfaction or waiver of all of the conditions to the
closing of the Merger, the closing shall occur not later than September
30, 1999, instead of within two business days following the satisfaction
or waiver of such conditions.
Stockholders are urged to read the Merger Agreement and the Amendment,
copies of which are attached as Appendix A and Appendix B, respectively, to this
letter.
The Special Committee of the Board of Directors of Instron which had been
formed to consider and evaluate the Merger and had unanimously recommended to
Instron's Board of Directors that the Merger Agreement be approved, has
considered the Amendment and has unanimously approved the Merger Agreement and
the Amendment and recommended to Instron's Board of Directors that the Merger
Agreement, as amended, be approved.
INSTRON'S BOARD OF DIRECTORS, BASED ON THE RECOMMENDATION OF THE SPECIAL
COMMITTEE, HAS APPROVED THE MERGER AGREEMENT, AS AMENDED. INSTRON'S BOARD OF
DIRECTORS CONTINUES TO BELIEVE THAT THE TERMS OF THE MERGER UNDER THE MERGER
AGREEMENT, AS AMENDED, ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS
OF INSTRON. INSTRON'S BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" APPROVAL OF THE MERGER AGREEMENT, AS AMENDED.
We have enclosed a blue proxy card with this letter. Proxies that have been
properly completed, dated, signed and returned prior to the distribution of this
letter will be voted as directed thereon. If you wish to revoke or change your
vote, please complete, date, sign and return the enclosed blue proxy card. If
you have not previously voted, please complete, date, sign and return the
enclosed blue proxy card. WHETHER OR NOT YOU PLAN TO ATTEND, IT IS IMPORTANT
THAT YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING.
Sincerely,
/s/ James M. McConnell
JAMES M. MCCONNELL
President and Chief Executive Officer
<PAGE> 4
INSTRON CORPORATION
100 ROYALL STREET
CANTON, MASSACHUSETTS 02021
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 3, 1999
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of Instron Corporation, a Massachusetts corporation ("Instron"), will
be held on Friday, September 3, 1999 at 10:00 a.m., local time, at the Hilton
Dedham Place, 25 Allied Drive, Dedham, Massachusetts 02026, for the following
purposes:
(1) To consider and vote upon a proposal to approve an Agreement and
Plan of Merger dated as of May 6, 1999 (the "Merger Agreement"), as amended
by Amendment No. 1 to the Merger Agreement dated as of August 5, 1999 (the
"Amendment"), pursuant to which ISN Acquisition Corporation ("MergerCo"), a
corporation newly formed by Kirtland Capital Partners III L.P., will be
merged (the "Merger") with and into Instron with Instron being the
surviving corporation (the "Surviving Corporation"). In the Merger, each
outstanding share of common stock, par value $1.00 per share, of Instron
(the "Instron Common Stock") issued and outstanding at the effective time
of the Merger, other than shares held by Instron, its subsidiaries,
MergerCo, or dissenting stockholders, will be canceled and converted
automatically into the right to receive $22.00 in cash, without interest. A
copy of the Merger Agreement and the Amendment is attached as Appendix A
and Appendix B, respectively, to the accompanying supplemental proxy
materials.
(2) If a motion to adjourn the Special Meeting is properly brought, to
vote upon the adjournment of the Special Meeting.
(3) To consider and act upon such other matters as may properly come
before the Special Meeting or any adjournment or postponement thereof.
Instron's Board of Directors (the "Instron Board") had fixed the close of
business on July 12, 1999, as the record date for determining the stockholders
having the right to receive notice of, and to vote at, the Special Meeting or
any adjournment or postponement thereof. July 12, 1999 shall remain the record
date for purposes of the rescheduled Special Meeting. A new form of proxy, a
letter to stockholders and the appendices attached thereto containing more
detailed information regarding the Amendment accompany and form a part of this
notice, and should be read in conjunction with the Proxy Statement mailed to
stockholders on July 23, 1999.
Approval of the Merger Agreement, as amended, requires the affirmative vote
of the holders of two-thirds of the outstanding shares of Instron Common Stock
entitled to vote at the Special Meeting.
THE INSTRON BOARD HAS APPROVED THE MERGER AGREEMENT, AS AMENDED, AND
RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT, AS AMENDED.
In accordance with Section 87, Chapter 156B of the Massachusetts General
Laws, you are advised as follows with respect to the proposal to approve the
Merger Agreement, as amended: if the Merger Agreement, as amended, is approved
by the Instron stockholders at the Special Meeting and effected by Instron, then
any Instron stockholder (i) who files with Instron, before the taking of the
vote on the approval of the Merger Agreement, as amended, written objection to
the Merger Agreement, as amended, stating that he or she intends to demand
payment for his or her shares if the Merger Agreement, as amended, is approved
by the Instron stockholders at the Special Meeting and (ii) whose shares are not
voted in favor of the Merger Agreement, as amended, has or may have the right to
demand in writing from Instron as the Surviving Corporation of the Merger,
within 20 days after the date of mailing to him or her of notice in writing that
such approval has become effective, payment for his or her shares and an
appraisal of the value thereof. Instron and any such stockholder shall in such
cases have the rights and duties and shall follow the procedure set forth in
Sections 85 to 98, inclusive, of Chapter 156B of the Massachusetts General Laws.
See "Appraisal Rights" in the Proxy Statement mailed to stockholders on July 23,
1999 and the full text of Sections 85 to 98
<PAGE> 5
of Chapter 156B of the Massachusetts General Laws, which is attached as Appendix
C to such Proxy Statement and is described therein.
By order of the Instron Board,
/s/ Jill E. Peebles
Jill E. Peebles, Clerk
Canton, Massachusetts
August 6, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. PLEASE DO NOT SEND IN
ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.
THE MERGER HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
THE MERGER NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN
THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<PAGE> 6
APPENDIX A
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
KIRTLAND CAPITAL PARTNERS III L.P.,
ISN ACQUISITION CORPORATION
AND
INSTRON CORPORATION
DATED AS OF MAY 6, 1999
================================================================================
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C> <C>
ARTICLE I
THE MERGER.............................................................. A-1
1.1 The Merger.................................................. A-1
1.2 Effective Time.............................................. A-2
1.3 Closing..................................................... A-2
1.4 Directors and Officers...................................... A-2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS........................................................... A-2
2.1 Effect on Capital Stock..................................... A-2
2.2 Company Stock Options and Related Matters................... A-3
ARTICLE III
PAYMENT FOR SHARES; DISSENTING SHARES................................... A-4
3.1 Payment for Shares of Company Common Stock.................. A-4
3.2 Appraisal Rights............................................ A-5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO................... A-5
4.1 Organization................................................ A-5
4.2 Authorization; Validity of Agreement; Necessary Action...... A-6
4.3 Consents and Approvals; No Violations....................... A-6
4.4 Required Financing.......................................... A-6
4.5 Takeover Laws............................................... A-7
4.6 Formation of MergerCo; No Prior Activities.................. A-7
4.7 Beneficial Ownership........................................ A-7
4.8 Financial Condition of Parent............................... A-7
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... A-7
5.1 Existence; Good Standing; Authority; Compliance With Law.... A-7
5.2 Authorization, Validity and Effect of Agreements............ A-8
5.3 Capitalization.............................................. A-8
5.4 Subsidiaries................................................ A-9
5.5 Other Interests............................................. A-10
5.6 No Violation; Consents...................................... A-10
5.7 SEC Documents............................................... A-10
5.8 Litigation.................................................. A-11
5.9 Absence of Certain Changes.................................. A-11
5.10 Taxes....................................................... A-11
5.11 Books and Records........................................... A-11
5.12 Properties.................................................. A-12
5.13 Intellectual Property....................................... A-12
5.14 Environmental Matters....................................... A-13
5.15 Employee Benefit Plans...................................... A-14
5.16 Labor Matters............................................... A-16
5.17 No Brokers.................................................. A-16
5.18 Opinion of Financial Advisors............................... A-16
5.19 Year 2000................................................... A-16
5.20 Insurance................................................... A-16
5.21 Contracts................................................... A-16
5.22 Takeover Laws............................................... A-17
</TABLE>
A-(i)
<PAGE> 8
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
5.23 Vote Required............................................... A-17
5.24 Definition of the Company's Knowledge....................... A-17
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER.................................. A-17
6.1 Conduct of Business by the Company.......................... A-17
ARTICLE VII
ADDITIONAL AGREEMENTS................................................... A-19
7.1 Stockholders Meeting........................................ A-19
7.2 Other Filings............................................... A-20
7.3 Additional Agreements....................................... A-20
7.4 Fees and Expenses........................................... A-21
7.5 No Solicitations............................................ A-21
7.6 Officers' and Directors' Indemnification.................... A-22
7.7 Access to Information; Confidentiality...................... A-23
7.8 Financial and Other Statements.............................. A-24
7.9 Public Announcements........................................ A-24
7.10 Employee Benefit Arrangements............................... A-24
7.11 Required Financing.......................................... A-24
7.12 Recapitalization Accounting Treatment....................... A-25
7.13 Delisting................................................... A-25
7.14 Exchange of Common Stock.................................... A-25
7.15 Solvency Letters............................................ A-25
7.16 Purchase of Company Shares.................................. A-25
ARTICLE VIII
CONDITIONS TO THE MERGER................................................ A-26
8.1 Conditions to the Obligations of Each Party to Effect the
Merger.................................................... A-26
8.2 Conditions to Obligations of MergerCo....................... A-26
8.3 Conditions to Obligations of the Company.................... A-28
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER....................................... A-28
9.1 Termination................................................. A-28
9.2 Effect of Termination....................................... A-29
9.3 Amendment................................................... A-30
9.4 Extension; Waiver........................................... A-31
ARTICLE X
GENERAL PROVISIONS...................................................... A-31
10.1 Notices..................................................... A-31
10.2 Interpretation.............................................. A-31
10.3 Non-Survival of Representations, Warranties, Covenants and
Agreements................................................ A-31
10.4 Miscellaneous............................................... A-32
10.5 Assignment.................................................. A-32
10.6 Severability................................................ A-32
10.7 Choice of Law/Consent to Jurisdiction....................... A-32
10.8 No Agreement Until Executed................................. A-32
</TABLE>
A-(ii)
<PAGE> 9
PARENT AND MERGERCO DISCLOSURE SCHEDULE
<TABLE>
<CAPTION>
SECTION TITLE
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<S> <C>
4.2 Exceptions to Parent's and MergerCo's Representations
</TABLE>
COMPANY DISCLOSURE SCHEDULE
<TABLE>
<CAPTION>
SECTION TITLE
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<S> <C>
2.2 Rollover of Certain Options
5.1 Organizational and Good Standing
5.1(d) Organizational Documents of the Company Subsidiaries
5.3 Capitalization
5.4 Subsidiaries
5.5 Other Interests
5.6 Consents
5.8 Litigation
5.9 Absence of Changes
5.10 Taxes
5.12 Properties
5.13 Intellectual Property
5.14 Environmental Matters
5.15 Employee Benefit Plans
5.16 Labor Matters
5.20 Insurance
5.24 Definition of Knowledge
6.1(a) Rollover Stockholders
6.1(c) Conduct of Business Pending the Merger
6.1(g) Certain Executive Officers
6.1(h) Rights, Preferences and Designations of the Series B Stock
7.10 Employee Benefit Arrangements
8.2(c) Consents of Third Parties
</TABLE>
A-(iii)
<PAGE> 10
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of May 6, 1999, by
and among Kirtland Capital Partners III L.P., an Ohio limited partnership
("Parent"), ISN Acquisition Corporation, a Massachusetts corporation and a
wholly owned subsidiary of Parent ("MergerCo"), and Instron Corporation, a
Massachusetts corporation (the "Company").
RECITALS
WHEREAS, the respective Boards of Directors of MergerCo and the Company and
the general partner of Parent (the "General Partner") have approved the merger
of MergerCo with and into the Company (the "Merger") in accordance with the
Massachusetts Business Corporation Law (the "MBCL") and, upon the terms and
subject to the conditions set forth in this Agreement, holders of shares of
common stock, par value $1.00 per share, of the Company (the "Common Stock")
issued and outstanding immediately prior to the Effective Time (as hereinafter
defined) will be entitled, subject to the terms and conditions hereof, to the
right to receive cash;
WHEREAS, the Board of Directors of the Company (the "Company Board") has,
in light of and subject to the terms and conditions set forth herein, (i)
determined that (A) the consideration to be paid for each share of Common Stock
in the Merger is fair to the stockholders of the Company, and (B) the Merger is
otherwise in the best interests of the Company and its stockholders, and (ii)
resolved to approve and adopt this Agreement and the transactions contemplated
or required by this Agreement, including the Merger (collectively, the
"Transactions"), and to recommend approval and adoption by the stockholders of
the Company of this Agreement and the Transactions;
WHEREAS, as a condition to the willingness of Parent and MergerCo to enter
into this Agreement, certain stockholders of the Company (the "Voting Agreement
Stockholders") have entered into a Voting Agreement, dated as of the date
hereof, with Parent and MergerCo (the "Voting Agreement"), pursuant to which
each Voting Agreement Stockholder has agreed, among other things, to vote his
shares of Common Stock in favor of the approval of the Transactions and the
approval of any other matter relating to consummation of the Transactions, upon
the terms and subject to the conditions set forth in the Voting Agreement;
WHEREAS, Parent, MergerCo and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Transactions, and also to prescribe various conditions to the Transactions; and
WHEREAS, it is intended that the Merger be recorded as a recapitalization
for financial reporting purposes.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, Parent, MergerCo and the Company hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, the Company and MergerCo shall consummate the Merger
pursuant to which (a) MergerCo shall be merged with and into the Company and the
separate corporate existence of MergerCo shall thereupon cease, (b) the Company
shall be the successor or surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation") and shall continue to be
governed by the laws of the Commonwealth of Massachusetts, and (c) the separate
corporate existence of the Company with all its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger. The Company shall
take such steps as are permitted under the MBCL to (i) amend the Articles of
Organization of the Company (the "Articles of Organization") so that the
Articles of Organization of MergerCo, as in effect immediately prior
A-1
<PAGE> 11
to the Effective Time, shall be the Articles of Organization of the Surviving
Corporation until thereafter amended as provided by law and such Articles of
Organization, and (ii) amend the Bylaws of the Company (the "Bylaws") so that
the Bylaws of MergerCo, as in effect immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation until thereafter amended as
provided by law, by the Articles of Organization of the Surviving Corporation
and by such Bylaws. Notwithstanding the foregoing, the name of the Surviving
Corporation shall be "Instron Corporation" and the Articles of Organization and
Bylaws of the Surviving Corporation shall so provide. The Merger shall have the
effects specified in the MBCL. The purpose of the Surviving Corporation shall be
to carry on a manufacturing, contracting, merchandising, and research business,
and in general, to carry on any business or other activity which may be lawfully
carried on by a corporation organized under Chapter 156B of the Massachusetts
General Laws (the "MGL").
1.2 Effective Time. On the Closing Date (as hereinafter defined), MergerCo
and the Company shall duly execute and file articles of merger (the "Articles of
Merger") with the Secretary of State of the Commonwealth of Massachusetts in
accordance with the MBCL. The Merger shall become effective at such time as the
Articles of Merger, accompanied by payment of the filing fee (as provided in
Chapter 156B, Section 114 of the MBCL), have been examined by and received the
endorsed approval of the Secretary of State of the Commonwealth of Massachusetts
(the "Effective Time").
1.3 Closing. The closing of the Merger (the "Closing") shall occur as
promptly as practicable (but in no event later than the second business day)
after all of the conditions set forth in Article VIII shall have been satisfied
or, if permissible, waived by the party entitled to the benefit of the same,
and, subject to the foregoing, shall take place at such time and on a date to be
specified by the parties (the "Closing Date"); provided, however, that in no
event shall the Closing occur earlier than July 8, 1999. The Closing shall take
place at the offices of Jones, Day, Reavis & Pogue, 901 Lakeside Avenue,
Cleveland, Ohio 44114, unless another place is agreed to by the parties hereto.
1.4 Directors and Officers. The directors of MergerCo immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation
and the officers of the Company immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation, each to hold office in
accordance with the Articles of Organization and Bylaws of the Surviving
Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1 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 of Common
Stock or Series B Stock (as hereinafter defined) or any shares of capital stock
of MergerCo:
(a) Each share of common stock, par value $.01 per share, of MergerCo
(the "MergerCo Common Stock") issued and outstanding immediately prior to
the Effective Time shall be converted into one fully paid and nonassessable
share of common stock, par value $1.00 per share, of the Surviving
Corporation (the "Surviving Corporation Common Stock") following the
Merger.
(b) Each share of Common Stock that is owned by the Company, or by any
wholly owned Subsidiary (as defined in Section 10.2) of the Company or by
MergerCo shall automatically be canceled and retired and shall cease to
exist, and no cash or other consideration shall be delivered or deliverable
in exchange therefor.
(c) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares owned by the Company, any of
its wholly owned Subsidiaries or MergerCo and Dissenting Shares (as defined
in Section 3.2)) shall be converted into the right to receive $22.00 per
share, net to the seller in cash, payable to the holder thereof, without
any interest thereon (the "Merger Consideration"), upon surrender and
exchange of the Certificate (as hereinafter defined) representing such
share of Common Stock.
A-2
<PAGE> 12
(d) Each share of Series B Preferred Stock, par value $1.00 per share,
of the Company (the "Series B Stock") issued and outstanding immediately
prior to the Effective Time (other than shares owned by the Company or any
of its wholly owned Subsidiaries) shall be converted into one fully paid
and nonassessable share of Surviving Corporation Common Stock following the
Merger.
(e) All shares of Common Stock, when converted as provided in Section
2.1(c), shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each Certificate (as hereinafter
defined) previously evidencing such shares shall thereafter represent only
the right to receive the Merger Consideration. The holders of Certificates
previously evidencing shares of Common Stock outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to the
Common Stock except as otherwise provided herein or by law and, upon the
surrender of Certificates in accordance with the provisions of Section 3.1,
shall only represent the right to receive for their shares of Common Stock,
the Merger Consideration, without any interest thereon.
(f) All shares of Series B Stock, when converted as provided in
Section 2.1(d) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate
previously evidencing such shares of Series B Stock shall thereafter
represent only the right to receive shares of Surviving Corporation Common
Stock. The holders of certificates previously evidencing shares of Series B
Stock outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to the Series B Stock except as otherwise
provided herein or by law.
2.2 Company Stock Options and Related Matters.
(a) Each option (collectively, the "Options") granted under the Company's
1992 Stock Incentive Plan (the "1992 Plan"), the 1984 United Kingdom Share
Option Scheme (the "1984 Plan"), the 1982 Incentive Stock Option Plan (the "1982
Plan") and the 1979 Non-Qualified Plan (the "1979 Plan" and, together with the
1992 Plan, the 1984 Plan and the 1982 Plan, the "Stock Option Plans"), which is
outstanding (whether or not then exercisable) as of immediately prior to the
Effective Time and which has not been exercised or canceled prior thereto (other
than the Options identified in Section 2.2 of the Company Disclosure Schedule
(as hereinafter defined), such Options being hereinafter referred to as the
"Rollover Options"), shall, at the Effective Time, be canceled and upon the
surrender and cancellation of the option agreement representing such Option, the
Company shall (x) pay to the holder thereof cash in an amount equal to the
product of (i) the number of shares of Common Stock provided for in such Option
and (ii) the excess, if any, of the Merger Consideration over the exercise price
per share provided for in such Option, which cash payment shall be treated as
compensation and shall be net of any applicable federal or state withholding tax
(the "Option Consideration"). The Company shall take all actions necessary to
ensure that (i) all Options, to the extent not exercised prior to the Effective
Time, shall terminate and be canceled as of the Effective Time and thereafter be
of no further force or effect, and (ii) no Options are granted after the date of
this Agreement.
(b) Each Rollover Option which is outstanding (whether or not then
exercisable) as of immediately prior to the Effective Time shall, at the
Effective Time, be automatically converted into an option to acquire 0.2 fully
paid and nonassessable shares of Surviving Corporation Common Stock at an
exercise price per share equal to (i) five (5) multiplied by (ii) the exercise
price per share provided for in the Option for which such Rollover Option is
surrendered; provided, however, that such exercise price shall be rounded up to
the nearest whole cent. From and after the Effective Time, the Rollover Options
shall be governed by the terms of the Stock Option Plans applicable to the
Option for which such Rollover Option is surrendered. The adjustments provided
herein with respect to any Rollover Options that are "incentive stock options"
as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), shall be and are intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
(c) Except as set forth in Section 2.2 of the Company Disclosure Schedule,
the Stock Option Plans shall terminate as of the Effective Time and the
provisions in any other plan, program or arrangement providing for the issuance
or grant of any other interest in respect of the capital stock of the Company or
any of the Company Subsidiaries shall be of no further force and effect and
shall be deemed to be deleted as of the Effective Time and no holder of an
Option or any participant in any Stock Option Plan or any other plans,
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programs or arrangements (other than holders of Rollover Options) shall have any
right thereunder to acquire any equity securities of the Company, the Surviving
Corporation or any Subsidiary thereof.
(d) Except as set forth in Section 2.2 of the Company Disclosure Schedule,
Parent and MergerCo acknowledge that all restricted stock awards granted under
the Stock Option Plans shall immediately vest and the restrictions associated
therewith shall automatically be deemed waived as provided by the Stock Option
Plans but in no event later than the date on which the Company's stockholders
approve this Agreement and the Transactions.
ARTICLE III
PAYMENT FOR SHARES; DISSENTING SHARES
3.1 Payment for Shares of Company Common Stock.
(a) From and after the Effective Time, such bank or trust company as shall
be mutually acceptable to MergerCo and the Company shall act as exchange agent
(the "Exchange Agent"). At or prior to the Effective Time, MergerCo shall
deposit, or MergerCo shall otherwise take all steps necessary to cause to be
deposited, with the Exchange Agent in an account (the "Exchange Fund") the
aggregate Merger Consideration (net of any applicable withholding taxes) to
which holders of shares of Common Stock shall be entitled at the Effective Time
pursuant to Section 2.1(c).
(b) Promptly after the Effective Time, MergerCo shall cause the Exchange
Agent to mail to each record holder of Certificates (the "Certificates") that
immediately prior to the Effective Time represented shares of Common Stock a
form of letter of transmittal which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent and instructions for
use in surrendering such Certificates and receiving the Merger Consideration in
respect thereof.
(c) In effecting the payment of the Merger Consideration with respect to
shares of Common Stock represented by Certificates entitled to payment of the
Merger Consideration pursuant to Section 2.1(c) (the "Cashed Shares"), upon the
surrender of each such Certificate, the Exchange Agent shall pay the holder of
such Certificate the Merger Consideration multiplied by the number of Cashed
Shares (net of any applicable withholding taxes), in consideration therefor.
Upon such payment such Certificate shall forthwith be canceled.
(d) Until surrendered in accordance with paragraph (c) above, each such
Certificate (other than Certificates representing shares of Common Stock held by
MergerCo or any of its affiliates, in the treasury of the Company or by any
wholly owned Subsidiary of the Company or Dissenting Shares) shall represent
solely the right to receive the Merger Consideration relating thereto. No
interest or dividends shall be paid or accrued on the Merger Consideration. If
the Merger Consideration (or any portion thereof) is to be delivered to any
person other than the person in whose name the Certificate formerly representing
shares of Common Stock surrendered therefor is registered, it shall be a
condition to such right to receive such Merger Consideration that the
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person surrendering such shares of Common Stock
shall pay to the Exchange Agent any transfer or other taxes required by reason
of the payment of the Merger Consideration to a person other than the registered
holder of the Certificate surrendered, or shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable.
(e) No dividends or other distributions with respect to shares of Common
Stock shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Common Stock represented thereby.
(f) Promptly following the date which is 180 days after the Effective Time,
the Exchange Agent shall deliver to the Surviving Corporation all cash,
Certificates and other documents in its possession relating to the Transactions,
and the Exchange Agent's duties shall terminate. Thereafter, each holder of a
Certificate formerly representing a share of Common Stock may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in consideration therefor the Merger
Consideration relating thereto without any interest or dividends thereon.
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(g) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any shares of Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates formerly representing shares of Common Stock are
presented to the Surviving Corporation or the Exchange Agent, they shall be
surrendered and canceled in return for the payment of the Merger Consideration
relating thereto, as provided in this Article III.
(h) None of Parent, MergerCo, the Company or the Exchange Agent shall be
liable to any person in respect of any cash from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificate shall not have been surrendered prior to seven
years after the Effective Time, any such shares, cash, dividends or
distributions in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
3.2 Appraisal Rights.
(a) Notwithstanding anything in this Agreement to the contrary, any shares
of Common Stock ("Dissenting Shares") which are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders of
the Company who have filed with the Company, before the taking of the vote of
the stockholders of the Company to approve this Agreement, written objections to
such approval stating their intention to demand payment for such shares of
Common Stock, and who have not voted such shares of Common Stock in favor of the
adoption of this Agreement, will not be converted as described in Section 2.1
hereof, but will thereafter constitute only the right to receive payment of the
fair value of such shares of Common Stock in accordance with the applicable
provisions of Chapter 156B of the MBCL (the "Appraisal Rights Provisions");
provided, however, that all shares of Common Stock held by stockholders who
shall have failed to perfect or who effectively shall have withdrawn or lost
their rights to appraisal of such shares of Common Stock under the Appraisal
Rights Provisions shall thereupon be deemed to have been canceled and retired
and to have been converted, as of the Effective Time, into the right to receive
the Merger Consideration, without interest, in the manner provided in Section
2.1. Persons who have perfected statutory rights with respect to Dissenting
Shares as aforesaid will not be paid by the Surviving Corporation as provided in
this Agreement and will have only such rights as are provided by the Appraisal
Rights Provisions with respect to such Dissenting Shares. Notwithstanding
anything in this Agreement to the contrary, if Parent, MergerCo or the Company
abandon or are finally enjoined or prevented from carrying out, or the
stockholders rescind their adoption of, this Agreement, the right of each holder
of Dissenting Shares to receive the fair value of such Dissenting Shares in
accordance with the Appraisal Rights Provisions will terminate, effective as of
the time of such abandonment, injunction, prevention or rescission. The Company
shall give MergerCo prompt notice of any demands received by the Company for the
exercise of appraisal rights with respect to shares of Common Stock and Parent
shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of Parent (which shall not be unreasonably withheld), make any payment
with respect to, or settle or offer to settle, any such demands.
(b) Each dissenting stockholder who becomes entitled under the MBCL to
payment for Dissenting Shares shall receive payment therefor after the Effective
Time from the Surviving Corporation (but only after the amount thereof shall
have been agreed upon or finally determined pursuant to the MBCL), and such
shares of Common Stock shall be canceled.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGERCO
Parent and MergerCo jointly and severally hereby represent and warrant to
the Company as follows:
4.1 Organization. Parent is a limited partnership duly organized and
validly existing under the laws of the State of Ohio and MergerCo is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts, and each has all requisite power and
authority and all
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necessary governmental approvals to own, lease and operate their properties and
to carry on their businesses as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority,
and governmental approvals would not have a material adverse effect on the
business, results of operations or condition (financial or otherwise) of Parent
(a "Parent Material Adverse Effect"). Parent is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not, individually or in
the aggregate, have a Parent Material Adverse Effect.
4.2 Authorization; Validity of Agreement; Necessary Action. Each of Parent
and MergerCo has full power and authority to execute and deliver this Agreement
and to consummate the Transactions. The execution, delivery and performance by
Parent and MergerCo of this Agreement and the consummation of the Transactions
have been duly authorized by all necessary partnership action on behalf of
Parent (the "Parent Board") and the Board of Directors of MergerCo (the
"MergerCo Board") and by the stockholders of MergerCo, and, except as set forth
in Section 4.2 of the schedule attached to this Agreement setting forth
exceptions to Parent's and MergerCo's representations and warranties set forth
herein (the "Parent and MergerCo Disclosure Schedule"), no other action on the
part of Parent and MergerCo is necessary to authorize the execution and delivery
by Parent and MergerCo of this Agreement and the consummation of the
Transactions. This Agreement has been duly executed and delivered by Parent and
MergerCo and, assuming due and valid authorization, execution and delivery
hereof by the Company, is a valid and binding obligation of each of Parent and
MergerCo, as the case may be, enforceable against each of them in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
4.3 Consents and Approvals; No Violations. Except as set forth in Section
4.2 of the Parent and MergerCo Disclosure Schedule and except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Securities Act of 1933, as amended (the
"Securities Act"), the HSR Act (as hereinafter defined), the antitrust and
competition laws of foreign countries and state securities or state "Blue Sky"
laws, none of the execution, delivery or performance of this Agreement by Parent
or MergerCo, the consummation by Parent or MergerCo of the Transactions or
compliance by Parent or MergerCo with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the limited
partnership agreement of Parent or the articles of organization or bylaws of
MergerCo, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity (as hereinafter defined), (iii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or MergerCo is a party or by which
either of them or any of their respective properties or assets may be bound, or
(iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent or MergerCo or any of their properties or assets, excluding
from the foregoing clauses (ii), (iii) and (iv) such violations, breaches or
defaults which would not, individually or in the aggregate, have a Parent
Material Adverse Effect.
4.4 Required Financing. Parent and MergerCo have revolving credit facility
and high yield bridge financing commitments in place which, if funded in
accordance with their terms, together with equity capital commitments from the
limited partners of Parent and certain additional equity capital commitments
from certain of the limited partners of Parent (the "Side-by-Side Equity
Commitments"), will provide sufficient funds to consummate the Transactions
(collectively, the "Transaction Costs"), including, without limitation, to (i)
pay the Merger Consideration pursuant to Section 2.1(c), (ii) refinance the
outstanding indebtedness of the Company, (iii) pay any fees and expenses in
connection with the Transactions or the financing thereof and (iv) provide for
the working capital needs of the Company following the Merger, including,
without limitation, if applicable, letters of credit. Neither Parent nor
MergerCo has any reason to believe that any condition to such financing
commitments cannot or will not be waived or satisfied prior to the Effective
Time. Parent has provided to the Company true, complete and correct copies of
all financing commitment letters
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executed by the revolving credit facility lender and the high yield bridge
lender (collectively, the "Lenders"), including any exhibits, schedules or
amendments thereto (the "Financing Letters"). Parent has provided to the Company
true, complete and correct copies of each Side-by-Side Equity Commitment letter
executed by the limited partner of Parent signatory thereto, including any
exhibits, schedules or amendments thereto. The advisory board of Parent has
approved an investment by Parent of $40,000,000 of Fund Capital (as hereinafter
defined) in the Company and, from and after the date of this Agreement, the
advisory board of Parent shall not withdraw or change such approval unless this
Agreement shall have been terminated in accordance with its terms.
4.5 Takeover Laws. Neither Parent nor MergerCo was, immediately prior to
the execution of this Agreement, an "interested stockholder" within the meaning
of Chapter 110F of the MGL.
4.6 Formation of MergerCo; No Prior Activities. MergerCo was formed solely
for the purpose of engaging in the transactions contemplated by this Agreement.
As of the date hereof and as of the Effective Time, except for (i) obligations
or liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement and (ii) this Agreement and any
other agreements or arrangements contemplated by this Agreement or in
furtherance of the transactions contemplated hereby, MergerCo has not incurred,
directly or indirectly, through any subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind whatsoever
or entered into any agreements or arrangements with any person.
4.7 Beneficial Ownership. Except to the extent permitted by Section 7.16
hereof or as a result of the execution by Parent and MergerCo of the Voting
Agreement, neither Parent nor MergerCo "beneficially owns" (as defined in Rule
13d-3 under the Exchange Act) any shares of Common Stock or any securities
convertible into or exchangeable for Common Stock.
4.8 Financial Condition of Parent. Parent has provided to the Company true,
complete and correct copies of the audited financial statements of Parent for
the fiscal year ended December 31, 1998 and the unaudited financial statements
of Parent for the interim period ended March 31, 1999. Such financial statements
fairly present the financial position of Parent as of the respective dates
thereof, and the other related statements (including the related notes) included
therein fairly present the results of operations of Parent for the respective
fiscal periods set forth above. Parent has equity commitments from its limited
partners in an aggregate amount in excess of $185,000,000 (the "Fund Capital").
The General Partner may, in its sole discretion, call such portion of the Fund
Capital as is necessary to satisfy any of Parent's or MergerCo's obligations
under or arising out of this Agreement and the performance by Parent and
MergerCo thereof. None of the Fund Capital has been pledged or is subject to any
material lien, security interest or other encumbrance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered at or prior to
the execution hereof to Parent and MergerCo, which shall refer to the relevant
Sections of this Agreement (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent and MergerCo as follows:
5.1 Existence; Good Standing; Authority; Compliance With Law.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts and has all
requisite corporate or other power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power, authority and governmental approvals
would not reasonably be expected to have a Company Material Adverse Effect (as
hereinafter defined). Except as set forth in Section 5.1 of the Company
Disclosure Schedule, the Company is duly qualified or licensed to do business
and is in good standing (with respect to jurisdictions that recognize such
concept) in each jurisdiction in which the nature of its business or the
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ownership, leasing or operation of its properties makes such qualification or
licensing necessary, except for those jurisdictions where the failure to be so
qualified or licensed or to be in good standing, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect. For purposes of this Agreement, a "Company Material Adverse Effect"
shall mean a material adverse effect on the business, results of operations or
condition (financial or otherwise) of the Company and the Company Subsidiaries
taken as a whole.
(b) Except as set forth in Section 5.1 of the Company Disclosure Schedule,
each of the Company Subsidiaries is a corporation, partnership or limited
liability company (or similar entity or association in the case of those Company
Subsidiaries organized and existing other than under the laws of a State of the
United States) duly incorporated or organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
has the corporate or other power and authority to own its properties and to
carry on its business as it is now being conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in which the ownership of
its property or the conduct of its business requires such qualification, except
for jurisdictions in which such failure to be so qualified or to be in good
standing could not reasonably be expected to have a Company Material Adverse
Effect.
(c) Neither the Company nor any of the Company Subsidiaries is in violation
of any order of any court, governmental authority or arbitration board or
tribunal, or any law, ordinance, governmental rule or regulation to which the
Company or any Company Subsidiary or any of their respective properties or
assets is subject, where such violation could have a Company Material Adverse
Effect. The Company and the Company Subsidiaries have obtained all licenses,
permits and other authorizations and have taken all actions required by
applicable law or governmental regulations in connection with their businesses
as now conducted, where the failure to obtain any such license, permit or
authorization or to take any such action could have a Company Material Adverse
Effect.
(d) Except as set forth in Section 5.1(d) of the Company Disclosure
Schedule, copies of the Articles of Organization and Bylaws and the other
charter documents, bylaws, organizational documents and partnership, limited
liability company and joint venture agreements (and in each such case, all
amendments thereto) of each of the Company Subsidiaries have been provided to
MergerCo or its representatives and are true and correct in all material
respects.
5.2 Authorization, Validity and Effect of Agreements. Each of the Company
and the Company Subsidiaries has the requisite power and authority to enter into
the Transactions and to execute and deliver this Agreement. The Company Board
has approved this Agreement and the Transactions. In connection with the
foregoing, the Company Board has taken such actions and votes as are necessary
on its part to render the provisions of Chapter 110C and Chapter 110F of the MGL
and all other applicable takeover statutes inapplicable to this Agreement and
the Transactions. Subject only to the approval of this Agreement by the holders
of the Common Stock, the execution by the Company of this Agreement and
consummation of the Transactions have been duly authorized by all requisite
corporate action on the part of the Company. This Agreement, assuming due and
valid authorization, execution and delivery thereof by Parent and MergerCo,
constitutes a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
5.3 Capitalization. The authorized capital stock of the Company consists of
10,000,000 shares of Common Stock and 1,000,000 shares of preferred stock, par
value $1.00 per share, of the Company (the "Preferred Stock"). As of the date of
this Agreement, (i) 6,956,838 shares of Common Stock were issued and
outstanding, (ii) 791,500, 650,000, 190,000 and 900,000 shares of Common Stock
have been authorized and reserved for issuance pursuant to the 1979 Plan, the
1982 Plan, the 1984 Plan and the 1992 Plan, respectively, subject to adjustment
on the terms set forth in the applicable Stock Option Plans, (iii) 200,588,
69,546 and 437,851 Options were outstanding under the 1979 Plan, the 1984 Plan
and the 1992 Plan, respectively, (iv) no Options were outstanding under the 1982
Plan, (v) no shares of Preferred Stock were issued and outstanding, (vi) 108,262
shares of Common Stock and no shares of Preferred Stock were held in the
treasury of the Company and (vii) 100,000 shares of Preferred Stock had been
designated as Series A
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Junior Participating Cumulative Preferred Stock, par value $1.00 per share. As
of the date of this Agreement, the Company had no shares of Common Stock
reserved for issuance other than as described above. Section 5.3 of the Company
Disclosure Schedule sets forth a description of the Common Stock, the Preferred
Stock and the Series A Junior Participating Cumulative Preferred Stock. All such
issued and outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. The parties acknowledge and agree that 75,000 shares of Preferred Stock
will be designated by the Company as the Series B Stock prior to the Closing
Date and up to such amount will be issued to the Rollover Stockholders (as
hereinafter defined) prior to the Closing Date in accordance with Section 7.14
hereof. The Series B Stock, when issued, will be duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. The Company has
no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter. Except as set forth above and for the Options (all of which have been
issued under the Stock Option Plans), there are not as of the date of this
Agreement issued, reserved for issuance or outstanding, (i) any shares of
capital stock or other voting securities of the Company, (ii) any securities
convertible into or exchangeable or exercisable for shares of capital stock or
voting securities of the Company, or (iii) any warrants, calls, options or other
rights to acquire from the Company or any Company Subsidiary, and no obligation
of the Company or any Company Subsidiary to issue, any capital stock or voting
securities of the Company. Section 5.3 of the Company Disclosure Schedule sets
forth a full list of Options, including the name of the person to whom such
Options have been granted, the number of shares subject to each Option, the per
share exercise price for each Option and the vesting schedule for each Option.
Except as set forth in Section 2.2 hereof and Section 5.3 of the Company
Disclosure Schedule and as provided in the Stock Option Plans, the vesting
schedule of all Options shall not be changed or affected by the execution of
this Agreement or consummation of the Transactions. Other than the Voting
Agreement and other than awards made pursuant to any of the Stock Option Plans,
there are no agreements or understandings to which the Company or any Company
Subsidiary is a party with respect to the voting of any shares of capital stock
of the Company or which restrict the transfer of any such shares, nor does the
Company have knowledge of any third party agreements or understandings with
respect to the voting of any such shares or which restrict the transfer of any
such shares. Other than (i) as set forth above, (ii) awards made pursuant to any
of the Stock Option Plans, and (iii) as expressly contemplated by this Agreement
and the Transactions, there are no outstanding contractual obligations of the
Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any
shares of capital stock, partnership interests or any other securities of the
Company or any Company Subsidiary. Except as set forth in Section 5.3 of the
Company Disclosure Schedule and as expressly contemplated by this Agreement and
the Transactions, neither the Company nor any Company Subsidiary is under any
obligation, contingent or otherwise, by reason of any agreement to register the
offer and sale or resale of any of their securities under the Securities Act.
5.4 Subsidiaries. Except as set forth in Section 5.4 of the Company
Disclosure Schedule, the Company owns directly or indirectly each of the
outstanding shares of capital stock or other equity interest of each of the
Company Subsidiaries. Each of the outstanding shares of capital stock of each of
the Company Subsidiaries having corporate form is duly authorized, validly
issued, fully paid and nonassessable. Except as set forth in Section 5.4 of the
Company Disclosure Schedule, each of the outstanding shares of capital stock or
other equity interest of each of the Company Subsidiaries is owned, directly or
indirectly, by the Company free and clear of all liens, pledges, security
interests, claims or other encumbrances. The following information for each
Company Subsidiary as of the date of this Agreement is set forth in Section 5.4
of the Company Disclosure Schedule: (i) its name and jurisdiction of
incorporation or organization; (ii) its authorized capital stock, share capital
or other equity interest, to the extent applicable; and (iii) the name of each
stockholder or equity interest holder and the number of issued and outstanding
shares of capital stock, share capital or other equity interest held by it.
There are no (i) securities convertible into or exchangeable or exercisable for
shares of capital stock or voting securities of any Company Subsidiary, or (ii)
warrants, calls, options or other rights to acquire from any Company Subsidiary,
and no obligation of any Company Subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible into
or exchangeable or exercisable for any capital stock, voting securities or
ownership interests
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in, any Company Subsidiary. There are no outstanding contractual obligations of
any Company Subsidiary to repurchase, redeem or otherwise acquire any such
securities of Company Subsidiaries or to issue, deliver or sell, or cause to be
issued, delivered or sold, any such securities.
5.5 Other Interests. Except as set forth in Section 5.5 of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary owns
directly or indirectly any interest or investment (whether equity or debt) in
any corporation, partnership, limited liability company, joint venture,
business, trust or other entity (other than investments in short-term investment
securities).
5.6 No Violation; Consents. Except as set forth in Section 5.6 of the
Company Disclosure Schedule, neither the execution and delivery by the Company
of this Agreement nor consummation by the Company of the Transactions in
accordance with the terms hereof, will conflict with or result in a breach of
any provisions of the Articles of Organization, Bylaws, or the organizational
documents of the Company or any Company Subsidiary. Except as set forth in
Section 5.6 of the Company Disclosure Schedule, the execution and delivery by
the Company of this Agreement and consummation by the Company of the
Transactions in accordance with the terms hereof will not violate, or conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination or in a right of termination or cancellation
of, or accelerate the performance required by, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties of the
Company or the Company Subsidiaries under, or result in being declared void,
voidable or without further binding effect, any of the terms, conditions or
provisions of (x) any note, bond, mortgage, indenture, deed of trust or (y) any
license, franchise, permit, lease, contract, agreement or other instrument,
commitment or obligation to which the Company or any of the Company Subsidiaries
is a party, or by which the Company or any of the Company Subsidiaries or any of
their properties is bound, except as otherwise would not have a Company Material
Adverse Effect. Other than the filings provided for in Article II of this
Agreement, the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act"), the antitrust and competition laws of foreign countries, the Exchange
Act, the Securities Act, or applicable state securities and "Blue Sky" laws
(collectively, the "Regulatory Filings"), the execution and delivery of this
Agreement by the Company does not, and the performance of this Agreement by the
Company and consummation of the Transactions does not, require any consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority, except where the failure to obtain any
such consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority would not have a
Company Material Adverse Effect.
5.7 SEC Documents. The Company has filed all required forms, reports and
documents with the Securities and Exchange Commission (the "SEC") since December
31, 1995 (collectively, the "Company SEC Reports"), all of which were prepared
in accordance with the applicable requirements of the Exchange Act, the
Securities Act and the rules and regulations promulgated thereunder (the
"Securities Laws"). All required Company SEC Reports have been filed with the
SEC and constitute all forms, reports and documents required to be filed by the
Company under the Securities Laws since December 31, 1995. As of their
respective dates, the Company SEC Reports (i) complied as to form in all
material respects with the applicable requirements of the Securities Laws and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets of the Company included in
or incorporated by reference into the Company SEC Reports (including the related
notes and schedules) fairly presents the consolidated financial position of the
Company and the Company Subsidiaries as of its date and each of the consolidated
statements of income, retained earnings and cash flows of the Company included
in or incorporated by reference into the Company SEC Reports (including any
related notes and schedules) fairly presents the results of operations, retained
earnings or cash flows, as the case may be, of the Company and the Company
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which would not be
material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein and except, in the case of the unaudited
statements, as permitted by Form 10-Q pursuant to Section 13 or 15(d) of the
Exchange Act.
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5.8 Litigation. Except as set forth in Section 5.8 of the Company
Disclosure Schedule, no action, proceeding or investigation by any Governmental
Entity and no suit, action or proceeding by any person, in each such case, with
respect to the Company or any Company Subsidiary or any of their respective
properties, is pending, or, to the knowledge of the Company, threatened, other
than, in each case, those the outcome of which, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect or that would not reasonably be expected to prevent or materially delay
consummation of the Transactions.
5.9 Absence of Certain Changes. Except as set forth in Section 5.9 of the
Company Disclosure Schedule, since December 31, 1998 the Company and the Company
Subsidiaries have conducted their businesses only in the ordinary course of
business and there has not been: (i) any Company Material Adverse Effect; (ii)
any declaration, setting aside or payment of any dividend or other distribution
with respect to the Common Stock; (iii) any material commitment, contractual
obligation (including, without limitation, any management or franchise
agreement, any lease (capital or otherwise) or any letter of intent), borrowing,
liability, guaranty, capital expenditure or transaction (each, a "Commitment")
entered into by the Company or any of the Company Subsidiaries outside the
ordinary course of business except for Commitments for expenses of attorneys,
accountants and investment bankers incurred in connection with the Transactions;
or (iv) any material change in the Company's accounting principles, practices or
methods.
5.10 Taxes.
(a) Except as set forth in Section 5.10 of the Company Disclosure Schedule,
each of the Company and the Company Subsidiaries (i) has timely filed all Tax
Returns (as hereinafter defined) which the Company was required to file (after
giving effect to any filing extension granted by a Governmental Entity) and (ii)
has paid all Taxes (as hereinafter defined) required to be paid by it, except,
in each case, where the failure to file such Tax Returns or pay such Taxes would
not have a Company Material Adverse Effect. Except as set forth in Section 5.10
of the Company Disclosure Schedule, the most recent audited financial statements
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 reflect, to the knowledge of the Company, an adequate reserve
for all material Taxes payable by the Company and the Company Subsidiaries for
all taxable periods and portions thereof through the date of such financial
statements in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis. Except as set forth in
Section 5.10 of the Company Disclosure Schedule, (w) no deficiencies for any
Taxes have been proposed, asserted or assessed against the Company or any of the
Company Subsidiaries, (x) no federal income Tax Returns for a taxable period
beginning after December 31, 1990 have been or are being audited, (y) no
agreements or consents are in effect for the extension or waiver of the time in
which to file any Tax Return or assess or collect any Taxes from the Company or
any Company Subsidiary, and (z) neither the Company nor any Company Subsidiary
is a party to any Tax sharing agreement, agreement for an exemption with any
Governmental Entity, or agreement, contract, arrangement or plan that would
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(b) For purposes of this Agreement, "Taxes" means all federal, state, local
and foreign net or gross income, alternative or add-on minimum, environmental,
gross receipts, property, sales, use, franchise, employment, withholding, excise
and other taxes, tariffs or governmental charges of any nature whatsoever,
together with any interest, penalties or additions to Tax with respect thereto.
(c) For purposes of this Agreement, "Tax Returns" means all reports,
returns (including information returns), declarations, statements or other
information required to be supplied to a Governmental Entity in connection with
Taxes.
5.11 Books and Records.
(a) The books of account and other financial records of the Company and
each of the Company Subsidiaries are true, complete and correct in all material
respects, have been maintained in accordance with good business practices, and
are accurately reflected in all material respects in the financial statements
included in the Company SEC Reports.
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(b) The minute books and other records of the Company and each of the
Company Subsidiaries have been made available to MergerCo or its
representatives, contain in all material respects accurate records of all
meetings and accurately reflect in all material respects all other corporate
action of the stockholders and directors and any committees of the Company Board
and the boards of directors of each of the Company Subsidiaries and all actions
of the partners or managers of each of the Company Subsidiaries, as applicable,
except in each such case as would otherwise not have a Company Material Adverse
Effect.
5.12 Properties.
(a) All of the real estate properties owned or leased by the Company or any
of the Company Subsidiaries and material to the business and operations of the
Company and the Company Subsidiaries taken as a whole are set forth in Section
5.12 of the Company Disclosure Schedule. Except as set forth in Section 5.12 of
the Company Disclosure Schedule, the Company or a Company Subsidiary owns fee
simple title to each of the owned real properties identified in Section 5.12 of
the Company Disclosure Schedule (the "Company Properties"), free and clear of
liens which secure the payment of money, mortgages or deeds of trust, monetary
charges which are liens, security interests or other encumbrances on title which
secure the payment of money (collectively, "Encumbrances"), and the Company
Properties are not subject to any easements, rights of way, covenants,
conditions, restrictions or other written agreements, laws, ordinances and
regulations materially and adversely affecting the current use or occupancy of
any of the Company Properties by the Company or the Company Subsidiaries, as
applicable (collectively, "Property Restrictions"), except for (i) Property
Restrictions imposed or promulgated by law or any governmental body or authority
with respect to real property, including zoning regulations, that do not
materially and adversely affect the current use of the property by the Company,
(ii) Property Restrictions disclosed on any title policies or reports or surveys
received by, made available to, or otherwise obtained by, MergerCo, (iii)
Property Restrictions that would be disclosed by current, accurate surveys or
title policies or reports, and (iv) mechanics', carriers', suppliers', workmen's
or repairmen's liens and other Encumbrances, Property Restrictions and other
limitations of any kind, if any, which, individually or in the aggregate, are
not material in amount, do not materially detract from the value of or
materially interfere with the present use of any of the Company Properties
subject thereto or affected thereby, and do not otherwise materially impair
business operations conducted by the Company and the Company Subsidiaries and
which have arisen or been incurred only in the ordinary course of business.
Except as set forth in Section 5.12 of the Company Disclosure Schedule, (A) the
Company has not received any written notice of any material violation of any
federal, state or municipal law, ordinance, order, regulation or requirement
affecting any portion of any of the Company Properties by any Governmental
Entity; (B) to the Company's knowledge, there are no material structural defects
relating to any of the Company Properties; (C) to the Company's knowledge, there
is no Company Property whose building systems are not in working order in any
material respect; and (D) to the Company's knowledge, there is no physical
damage, other than ordinary wear and tear, for which the Company is responsible
to any Company Property in excess of $250,000 for which there is no insurance in
effect covering the full cost of the restoration.
(b) The Company and the Company Subsidiaries own good title, free and clear
of all Encumbrances, to all of the personal property and assets shown on the
Company's balance sheet at December 31, 1998 as reflected in the Company SEC
Reports (the "Balance Sheet") or acquired after December 31, 1998, except for
(A) assets which have been disposed of to nonaffiliated third parties since
December 31, 1998 in the ordinary course of business, (B) Encumbrances reflected
in the Balance Sheet, (C) Encumbrances or imperfections of title which are not,
individually or in the aggregate, material in character, amount or extent and
which do not materially detract from the value or materially interfere with the
present or presently contemplated use of the assets subject thereto or affected
thereby, and (D) Encumbrances for current Taxes not yet due and payable. All of
the machinery, equipment and other tangible personal property and assets owned
or used by the Company and the Company Subsidiaries are in good condition and
repair to the extent necessary to permit the Company and the Company
Subsidiaries to conduct their businesses as they are currently being conducted.
5.13 Intellectual Property. The Company or the Company Subsidiaries are the
owner of, or a licensee under a valid license for, all items of intangible
property which are material to the business of the Company
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and the Company Subsidiaries as currently conducted, taken as a whole,
including, without limitation, trade names, unregistered trademarks and service
marks, brand names, software, patents and copyrights, except where the failure
to own or be a licensee for such intangible property would not have a Company
Material Adverse Effect. Except as disclosed in Section 5.13 of the Company
Disclosure Schedule, there are no claims pending or, to the Company's knowledge,
threatened, that the Company or any Company Subsidiary is in violation of any
such intellectual property right of any third party which would have a Company
Material Adverse Effect, and, to the Company's best knowledge, no third party is
in violation of any intellectual property rights of the Company or any Company
Subsidiary which would have a Company Material Adverse Effect.
5.14 Environmental Matters. The Company and the Company Subsidiaries are in
compliance with all Environmental Laws (as hereinafter defined), except for any
noncompliance that, either singly or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect. As used in this Agreement,
"Environmental Laws" shall mean all federal, state, local and foreign laws,
rules, regulations, ordinances and orders that purport to regulate the release
of hazardous substances or other materials into the environment, or impose
limitations, requirements or obligations relating to environmental protection.
As used in this Agreement, "Hazardous Materials" means any "hazardous waste" as
defined in either the United States Resource Conservation and Recovery Act or
regulations adopted pursuant to said act, any "hazardous substance" or
"pollutant or contaminant" as defined in the United States Comprehensive
Environmental Response, Compensation and Liability Act and, to the extent not
included in the foregoing, any medical waste, petroleum or oil or fractions
thereof. There is no administrative or judicial enforcement or cost recovery
proceeding pending, or to the best knowledge of the Company threatened, against
the Company or any Company Subsidiary under any Environmental Law. Neither the
Company nor any Company Subsidiary or, to the best knowledge of the Company, any
legal predecessor of the Company or any Company Subsidiary, has received any
written notice that it is potentially responsible under any Environmental Law
for any costs of response or for damages to natural resources, as those terms
are defined under the Environmental Laws, at any location and neither the
Company nor any Company Subsidiary has transported or disposed of, or allowed or
arranged for any third party to transport or dispose of, any waste containing
Hazardous Materials at any location included on the National Priorities List, as
defined under the Comprehensive Environmental Response, Compensation, and
Liability Act, or any location proposed for inclusion on that list or at any
location on any analogous state list. Except for any release that, either
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect, there has been no release on the real property
owned or leased by the Company or any Company Subsidiary, or, to the Company's
knowledge, on the real property owned or leased by any predecessor entity, which
real property currently is owned or leased by the Company or any Company
Subsidiary, of Hazardous Materials, or, with respect to any real property
located outside of the United States, any hazardous or toxic material or
substance regulated under any foreign Environmental Law, in a manner that could
result in an order to perform a response action or in material liability under
the Environmental Laws and, except as set forth in Section 5.14 of the Company
Disclosure Schedule, there is no hazardous waste treatment, storage or disposal
facility, underground storage tank, landfill, surface impoundment, underground
injection well, or, to the Company's knowledge, friable asbestos or PCB's, as
those terms are defined under the Environmental Laws, located at any of the real
property owned or leased by the Company or any Company Subsidiary or, to the
Company's knowledge, any predecessor entity, or at any facilities utilized by
the Company or the Company Subsidiaries. The Company has disclosed and made
available to MergerCo all studies, analyses and test results in the possession,
custody or control of the Company or any Company Subsidiary relating to the
environmental conditions on or under any of the properties or assets owned,
leased or operated by the Company or any Company Subsidiary. Except as set forth
in Section 5.14 of the Company Disclosure Schedule, the Company and the Company
Subsidiaries hold all permits, licenses or authorizations required under
applicable Environmental Laws ("Environmental Permits" ) or have submitted on a
timely basis complete applications for the renewal of any Environmental Permit
which has expired but has not yet been renewed.
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5.15 Employee Benefit Plans.
(a) Section 5.15 of the Company Disclosure Schedule sets forth a list of
every Company Benefit Plan (as hereinafter defined) that is maintained by the
Company or an Affiliate (as hereinafter defined) on the date hereof.
(b) Each Company Benefit Plan which has been intended to qualify under
Section 401(a) of the Code has received a favorable determination or approval
letter from the Internal Revenue Service (the "IRS") regarding its qualification
under such section and neither the Company nor any Affiliate knows that any such
Company Benefit Plan has been maintained in a manner that would preclude
qualified status.
(c) Except as set forth in Section 5.15 of the Company Disclosure Schedule,
neither the Company nor any Affiliate knows of any failure of any party to
comply with any laws applicable with respect to the Company Benefit Plans. With
respect to any Company Benefit Plan, there has been no (i) "prohibited
transaction," as defined in Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Code Section 4975, for which an
exemption is not available or (ii) material failure to comply with any provision
of ERISA, other applicable law, or any agreement, which, in either case, would
subject the Company or any Affiliate to liability (including, without
limitation, through any obligation of indemnification or contribution) for any
damages, penalties, or taxes, or any other material loss or expense. No
litigation or governmental administrative proceeding (or investigation) or other
proceeding (other than those relating to routine claims for benefits) is pending
or, to the Company's knowledge, threatened with respect to any such Company
Benefit Plan.
(d) Neither the Company nor any Affiliate has incurred any liability under
title IV of ERISA which has not been paid in full as of the date of this
Agreement. There has been no "accumulated funding deficiency" (whether or not
waived) with respect to any employee pension benefit plan ever maintained by the
Company or any Affiliate and subject to Code Section 412 or ERISA Section 302.
With respect to any Company Benefit Plan maintained by the Company or any
Affiliate and subject to Title IV of ERISA, there has been no (nor will there be
any as a result of the Transactions) (i) "reportable event," within the meaning
of ERISA Section 4043 or the regulations thereunder, for which the notice
requirement is not waived by the regulations thereunder, and (ii) event or
condition which presents a material risk of a plan termination or any other
event that may cause the Company or any Affiliate to incur liability or have a
lien imposed on its assets under Title IV of ERISA. Neither the Company nor any
Affiliate has ever maintained a Multiemployer Plan (as hereinafter defined).
(e) With respect to each Company Benefit Plan, complete and correct copies
of the following documents (if applicable to such Company Benefit Plan) have
previously been delivered to MergerCo or its representatives: (i) all documents
embodying or governing such Company Benefit Plan, and any funding medium for
such Company Benefit Plan (including, without limitation, trust agreements) as
they may have been amended to the date hereof; (ii) the most recent IRS
determination or approval letter with respect to such Company Benefit Plan under
Code Section 401(a), and any applications for determination or approval
subsequently filed with the IRS; (iii) the three most recently filed IRS Forms
5500, with all applicable schedules and accountants' opinions attached thereto;
(iv) the current summary plan description for such Company Benefit Plan (or
other descriptions of such Company Benefit Plan provided to employees) and all
modifications thereto; and (v) any insurance policy (including any fiduciary
liability insurance policy or fidelity bond) related to such Company Benefit
Plan.
(f) With respect to each group health plan benefitting any current or
former employee of the Company or any Affiliate that is subject to Section 4980B
of the Code, or was subject to Section 162(k) of the Code, the Company and each
Affiliate have complied in all material respects with (i) the continuation
coverage requirements of Section 4980B of the Code and Section 162(k) of the
Code, as applicable, and Part 6 of Subtitle B of Title I of ERISA and (ii) the
Health Insurance Portability and Accountability Act of 1996, as amended.
(g) With respect to any insurance policy providing funding for benefits
under any Company Benefit Plan, (i) there is no liability of the Company or any
Affiliate in the nature of a retroactive rate adjustment,
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<PAGE> 24
loss sharing arrangement, or other actual or contingent liability, nor would
there be any such liability if such insurance policy was terminated on the date
hereof, and (ii) to the knowledge of the Company, no insurance company issuing
any such policy is in receivership, conservatorship, liquidation or similar
proceeding and no such proceedings with respect to any insurer are imminent.
(h) Except as set forth in Section 5.15 of the Company Disclosure Schedule,
no Company Benefit Plan provides benefits, including, without limitation, death
or medical benefits, beyond termination of service or retirement other than (i)
coverage mandated by law, (ii) death or retirement benefits under any qualified
Company Benefit Plan, or (iii) deferred compensation benefits reflected on the
books of the Company or an Affiliate.
(i) Except as set forth in Section 5.15 of the Company Disclosure Schedule,
the execution and performance of this Agreement will not (i) constitute a stated
triggering event under any Company Benefit Plan that will result in any payment
(whether of severance pay or otherwise) becoming due from the Company or any
Affiliate to any officer, employee, or former employee (or dependents of such
employee), or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due to any employee, officer or director of the Company
or any Affiliate.
(j) Except as set forth in Section 5.15 of the Company Disclosure Schedule,
(i) any amount that could be received (whether in cash or property or the
vesting of property) as a result of any of the transactions contemplated by this
Agreement by any employee, officer or director of the Company or any Affiliate
who is a "disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Company Benefit Plan currently in
effect would not be characterized as an "excess parachute payment" (as such term
is defined in Section 280G(b)(1) of the Code), and (ii) the disallowance of a
deduction under Section 162(m) of the Code for employee remuneration will not
apply to any amount paid or payable by the Company or any Affiliate under any
contract, Company Benefit Plan, program, arrangement or understanding currently
in effect.
(k) For purposes of this Section:
(i) "Company Benefit Plan" means (A) all employee benefit plans within
the meaning of ERISA Section 3(3) maintained by the Company or any
Affiliate, including, but not limited to, multiple employer welfare
arrangements (within the meaning of ERISA Section 3(40)), plans to which
more than one unaffiliated employer contributes and employee benefit plans
(such as foreign or excess benefit plans) which are not subject to ERISA;
(B) all stock option plans, stock purchase plans, bonus or incentive award
plans, severance pay policies or agreements, deferred compensation
agreements, supplemental income arrangements, vacation plans, and all other
employee benefit plans, agreements, and arrangements not described in (A)
above maintained by the Company or any Affiliate, including without
limitation, any arrangement intended to comply with Code Section 120, 125,
127, 129 or 137; and (C) all plans or arrangements providing compensation
to employee and non-employee directors maintained by the Company or any
Affiliate. In the case of a Company Benefit Plan funded through a trust
described in Code Section 401(a), or any other funding vehicle, each
reference to such Company Benefit Plan shall include a reference to such
trust, organization or other vehicle;
(ii) An entity "maintains" a Company Benefit Plan if such entity
sponsors, contributes to, or provides benefits under or through such
Company Benefit Plan, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under or through such
Company Benefit Plan, or if such Company Benefit Plan provides benefits to
or otherwise covers employees of such entity (or their spouses, dependents,
or beneficiaries);
(iii) An entity is an "Affiliate" of the Company for purposes of this
Section 5.15 if it would have ever been considered a single employer with
the Company under ERISA Section 4001(b) or part of the same "controlled
group" as the Company for purposes of ERISA Section 302(d)(8)(C); and
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(iv) "Multiemployer Plan" means an employee pension or welfare benefit
plan to which more than one unaffiliated employer contributes and which is
maintained pursuant to one or more collective bargaining agreements.
5.16 Labor Matters. Except as set forth in Section 5.16 of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary is a party
to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor union organization. There
is no unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the Company
Subsidiaries relating to their business, except for any such proceeding which
would not reasonably be expected to have a Company Material Adverse Effect. To
the Company's knowledge there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made or threatened
involving employees of the Company or any of the Company Subsidiaries.
5.17 No Brokers. Neither the Company nor any of the Company Subsidiaries
has entered into any contract, arrangement or understanding with any person or
firm which may result in the obligation of such entity or MergerCo to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or consummation of
the Transactions, except that the Company has retained The Beacon Group Capital
Services, L.L.C. ("Beacon Group") as its financial advisor in connection with
the Transactions, a true copy of any and all agreements between the Company and
Beacon Group, including the engagement letter entered into between the Company
and Beacon Group, have been delivered to MergerCo. Other than the foregoing
arrangements, the Company is not aware of any claim for payment of any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or consummation of the Transactions.
5.18 Opinion of Financial Advisors. The Company has received the opinion of
Beacon Group to the effect that, as of the date hereof, the Merger Consideration
is fair to the holders of the Common Stock from a financial point of view.
5.19 Year 2000. There is no impediment to the Company being year 2000
compliant by December 31, 1999 (i.e., that products, hardware, software and
other date-sensitive equipment manufactured, sold, owned, licensed or used by
the Company will be capable of correctly processing date data (including, but
not limited to, calculating, comparing and sequencing) accurately prior to,
during and after the calendar year 2000 when used, assuming that all third party
products, hardware, software and other date-sensitive equipment used in
combination therewith are capable of properly exchanging date data), except to
the extent that any such impediment would not have a Company Material Adverse
Effect.
5.20 Insurance. The Company and the Company Subsidiaries are covered by
insurance in scope and amount customary and reasonable for the businesses in
which they are engaged. Except as disclosed in Section 5.20 of the Disclosure
Schedule, each insurance policy to which the Company or any of the Company
Subsidiaries is a party is in full force and effect and will not require any
consent as a result of the consummation of the Transactions. Neither the Company
nor any of the Company Subsidiaries is in material breach or default (including
with respect to the payment of premiums or the giving of notices) under any
insurance policy to which it is a party, and no event has occurred which, with
notice or the lapse of time, would constitute such a material breach or default
by the Company or any of the Company Subsidiaries or would permit termination,
modification or acceleration, under such policies; and the Company has not
received any notice from the insurer disclaiming coverage or reserving rights
with respect to any material claim or any such policy in general.
5.21 Contracts. Neither the Company nor any of the Company Subsidiaries is
in breach, nor has the Company or any Company Subsidiary received in writing any
claim that it has breached, any of the terms or conditions of any material
agreement, contract or commitment (excluding leases) to which it is a party or
by which any of its assets and properties are bound (collectively, "Material
Contracts") in such a manner as would permit any other party to cancel or
terminate the same prior to its stated term or would permit any other party to
collect material damages from the Company under any such Material Contract.
Neither the Company nor any of the Company Subsidiaries is in breach, nor has
the Company or any Company
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Subsidiary received in writing any claim that it has breached, any of the terms
or conditions of any lease to which it is a party and which is material to the
business of the Company and the Company Subsidiaries taken as a whole
(collectively, "Material Leases"), in such a manner as would permit any other
party to cancel or terminate the same prior to its stated term or would permit
any other party to collect material damages from the Company under any such
Material Lease. Each Material Contract and Material Lease is in full force and
effect and to the Company's knowledge is not subject to any material default
thereunder by any party obligated to the Company or any of the Company
Subsidiaries thereunder. The Company is not a party to any "poison pill,"
shareholder rights plan, rights agreement or similar agreement, instrument, plan
or arrangement.
5.22 Takeover Laws. No "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation enacted under
state or federal laws in the United States including, without limitation,
Chapter 110F of the MGL, applicable to the Company or any of the Company
Subsidiaries is applicable to the execution, delivery and performance of this
Agreement or the consummation of the Merger or the other Transactions.
5.23 Vote Required. The affirmative vote of the holders of two-thirds of
the outstanding shares of Common Stock entitled to vote thereon is the only vote
of any class of capital stock of the Company required by the MBCL, the Articles
of Organization or the Bylaws to adopt this Agreement and approve the
Transactions.
5.24 Definition of the Company's Knowledge. As used in this Agreement, the
phrase "to the knowledge of the Company" or any similar phrase means the actual
(and not the constructive or imputed) knowledge (following a reasonable inquiry)
of those individuals identified in Section 5.24 of the Company Disclosure
Schedule.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
6.1 Conduct of Business by the Company. During the period from the date of
this Agreement to the Effective Time, except as otherwise contemplated by this
Agreement, the Company shall, and shall cause each of the Company Subsidiaries
to, carry on their respective businesses in the usual, regular and ordinary
course, consistent with past practice, and use their best efforts to preserve
intact their present business organizations, keep available the services of
their present advisors, managers, officers and employees and preserve their
relationships with customers, suppliers, licensors and others having business
dealings with them and continue existing contracts as in effect on the date
hereof (for the term provided in such contracts). Without limiting the
generality of the foregoing, neither the Company nor any of the Company
Subsidiaries will (except as expressly permitted by this Agreement or as
contemplated by the Transactions or to the extent that Parent or MergerCo shall
otherwise consent in writing):
(a) (i) declare, set aside or pay any dividend or other distribution
(whether in cash, stock, property or any combination thereof) in respect of
any of its capital stock, (ii) split, combine or reclassify any of its
capital stock or (iii) repurchase, redeem or otherwise acquire any of its
securities, except, in the case of clause (iii), for (X) the acquisition of
shares of Common Stock from holders of Options in full or partial payment
of the exercise price payable by such holders upon exercise of Options
outstanding on the date of this Agreement and (Y) the acquisition of shares
of Common Stock from the stockholders of the Company set forth in Section
6.1(a) of the Company Disclosure Schedule (collectively, the "Rollover
Stockholders") upon the exchange of such shares for shares of Series B
Stock in connection with the Transactions;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities (including
indebtedness having the right to vote) or equity equivalents (including,
without limitation, stock appreciation rights), other than (X) the issuance
of shares of Common Stock upon the exercise of Options outstanding on the
date of this
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Agreement in accordance with their present terms and (Y) the issuance of
the Series B Stock to the Rollover Stockholders in exchange for shares of
Common Stock in connection with the Transactions;
(c) acquire, sell, lease, encumber, transfer or dispose of any assets
outside the ordinary course of business (whether by asset acquisition,
stock acquisition or otherwise), except as set forth in Section 6.1(c) of
the Company Disclosure Schedule;
(d) make any loans, advances or capital contributions other than in
the ordinary course of business consistent with prior practice;
(e) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than any payment, discharge or satisfaction (i) in the ordinary course of
business consistent with past practice, or (ii) in connection with the
Transactions;
(f) change any of the accounting principles or practices used by it
(except as required by generally accepted accounting principles, in which
case written notice shall be provided to MergerCo prior to any such
change);
(g) except as required by law, (i) enter into, adopt, amend or
terminate any Company Benefit Plan, (ii) enter into, adopt, amend or
terminate any agreement, arrangement, plan or policy between the Company or
any of the Company Subsidiaries (other than terminations of agreements,
arrangements, plans or policies in accordance with the terms thereof
existing on the date of this Agreement) and one or more of their directors
or officers, or (iii) increase in any manner the compensation or fringe
benefits of any director of the Company or the compensation or fringe
benefits of any officer of the Company or any Company Subsidiary set forth
in Section 6.1(g) of the Company Disclosure Schedule, or, except for normal
increases in the ordinary course of business consistent with past practice,
any employee of the Company or any Company Subsidiary, or pay any benefit
not required by any Company Benefit Plan or arrangement as in effect as of
the date hereof;
(h) adopt any amendments to the Articles of Organization or Bylaws,
other than (X) to authorize the shares of Series B Stock to be issued to
the Rollover Stockholders and to establish the rights, preferences and
designations thereof (such rights, preferences and designations of such
Series B Stock shall be as set forth in Section 6.1(h) of the Company
Disclosure Schedule) and (Y) as otherwise expressly provided by the terms
of this Agreement;
(i) except as set forth in Section 5.1 of the Company Disclosure
Schedule, adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
(j) settle or compromise any litigation (whether or not commenced
prior to the date of this Agreement);
(k) waive, release or amend its rights under any confidentiality,
"standstill" or similar agreement that the Company entered into in
connection with its consideration of a potential strategic transaction;
provided, however, that the Company may waive, release or amend its rights
under any such confidentiality, "standstill" or similar agreement if the
Company Board determines based on the advice of independent legal counsel
that failure to do so would be reasonably likely to constitute a breach of
its fiduciary duties to the Company's stockholders under applicable law; or
(l) enter into an agreement to take any of the foregoing actions.
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ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Stockholders Meeting.
(a) The Company, acting through the Company Board, shall, in accordance
with applicable law:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting") as soon as practicable following
the execution of this Agreement for the purpose of considering and taking
action upon this Agreement and the Transactions (it being understood that
the date of the Special Meeting shall be reasonably acceptable to Parent);
(ii) as promptly as practicable (but in no event later than
twenty-five (25) days following the date of this Agreement) prepare and
file with the SEC a preliminary proxy statement relating to this Agreement
and the Transactions;
(iii) use its reasonable efforts to (A) obtain and furnish the
information required to be included by the SEC in a definitive proxy
statement (the "Proxy Statement") and, after consultation with MergerCo, to
respond promptly to any comments made by the SEC with respect to the
preliminary proxy statement and cause the Proxy Statement to be mailed to
its stockholders not later than five (5) business days following clearance
from the SEC, and (B) obtain the necessary approval of this Agreement and
the Transactions by its stockholders; and
(iv) subject to the fiduciary duties of the Company Board as provided
in Section 7.5, include in the Proxy Statement the recommendation of the
Company Board that stockholders of the Company vote in favor of the
approval of this Agreement and the Transactions.
(b) Each of the Company, on the one hand, and Parent and MergerCo, on the
other hand, agree promptly to correct any information provided by either of them
for use in the Proxy Statement if and to the extent that such information shall
have become false or misleading, and the Company further agrees to take all
necessary steps to cause the Proxy Statement as so corrected to be filed with
the SEC and to be disseminated to the stockholders of the Company, in each case,
as to the extent required by applicable federal securities laws.
(c) As soon as practicable following the date of this Agreement, the
Company and MergerCo shall together prepare and file with the SEC a Rule 13e-3
Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3"). The Company and
MergerCo shall use all reasonable best efforts to have the Schedule 13E-3
cleared by the SEC as soon as practicable following such filing. Each of the
Company, Parent and MergerCo shall furnish all information about itself, its
business and operations and its owners and all financial information to Parent
and MergerCo as may be reasonably necessary in connection with the preparation
of the Schedule 13E-3. Each of the Company, Parent and MergerCo agrees promptly
to correct any information provided by it for use in the Schedule 13E-3 if and
to the extent that such information shall have become false or misleading in any
material respect. Each of the Company and MergerCo shall notify the other of the
receipt of any comments of the SEC with respect to the Schedule 13E-3. Each of
the Company and MergerCo shall give the other and its counsel the opportunity to
review Schedule 13E-3 prior to its being filed with the SEC and shall give the
other and its counsel the opportunity to review all amendments and supplements
to the Schedule 13E-3 and all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the SEC.
(d) None of the information supplied by the Company specifically for
inclusion or incorporation by reference in (i) the Proxy Statement, (ii) the
Schedule 13E-3 or (iii) the Other Filings (as hereinafter defined), will, at the
respective times filed with the SEC or other Governmental Entity and, in
addition, in the case of the Proxy Statement and the Schedule 13E-3, as of the
date it or any amendment or supplement thereto is mailed to stockholders and at
the time of any meeting of stockholders to be held in connection with the
Merger, 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 Proxy Statement and the Schedule 13E-3, insofar as they relate
to the
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Company or other information supplied by the Company for inclusion therein, will
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder. The Company makes no
representation, warranty or covenant with respect to information concerning
Parent or MergerCo included in the Proxy Statement or the Schedule 13E-3 or
information supplied by Parent or MergerCo for inclusion in the Proxy Statement
or the Schedule 13E-3.
(e) None of the information supplied by Parent or MergerCo specifically for
inclusion or incorporation by reference in (i) the Proxy Statement, (ii) the
Schedule 13E-3 or (iii) the Other Filings, will, at the respective times filed
with the SEC or other Governmental Entity and, in addition, in the case of the
Proxy Statement and the Schedule 13E-3, as of the date it or any amendment or
supplement thereto is mailed to stockholders and at the time of any meeting of
stockholders to be held in connection with the Merger, 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 Proxy Statement
and the Schedule 13E-3, insofar as they relate to Parent or MergerCo or other
information supplied by Parent or MergerCo for inclusion therein, will comply as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations promulgated thereunder.
7.2 Other Filings. As promptly as practicable (but in no event later than
thirty (30) days following the date of this Agreement in the case of any filing
under the HSR Act), the Company, Parent and MergerCo each shall properly prepare
and file any other filings required under the Exchange Act or any other federal,
state or foreign law relating to the Merger and the Transactions (including
filings, if any, required under the HSR Act) (collectively, the "Other
Filings"). Each of the Company, MergerCo and Parent shall promptly notify the
other of the receipt of any comments on, or any request for amendments or
supplements to, any of the Other Filings by the SEC or any other Governmental
Entity or official, and each of the Company, Parent and MergerCo shall supply
the other with copies of all correspondence between it and each of its
Subsidiaries and representatives, on the one hand, and the SEC or the members of
its staff or any other appropriate governmental official, on the other hand,
with respect to any of the Other Filings. The Company, Parent and MergerCo each
shall use its respective reasonable best efforts to obtain and furnish the
information required to be included in any of the Other Filings. Parent and
MergerCo hereby covenant and agree to use their respective reasonable best
efforts to secure termination of any waiting periods under the HSR Act and
obtain the approval of the Federal Trade Commission (the "FTC") or any other
Governmental Entity for the Transactions, including without limitation, promptly
entering into a consent decree or other arrangement with the FTC or other
Governmental Entity as may be necessary to secure termination of such waiting
periods or obtain such other approval. Parent and MergerCo shall make any
undertakings (including undertakings to make divestitures) required in order to
comply with the antitrust requirements or laws of any Governmental Entity,
including the HSR Act, in connection with the Transactions.
7.3 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the Transactions and to cooperate with each other in
connection with the foregoing, including the taking of such actions as are
necessary to obtain any necessary consents, approvals, orders, exemptions and
authorizations by or from any public or private third party, including without
limitation any that are required to be obtained under any federal, state or
local law or regulation or any contract, agreement or instrument to which the
Company or any Company Subsidiary is a party or by which any of their respective
properties or assets are bound, to defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the Transactions,
to cause to be lifted or rescinded any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
Transactions, and to effect all necessary registrations and Other Filings,
including, but not limited to, filings under the HSR Act, if any, and
submissions of information requested by governmental authorities. For purposes
of the foregoing sentence, the obligation of the Company, Parent and MergerCo to
use their "reasonable best efforts" to obtain waivers, consents and approvals to
loan agreements, leases and other contracts shall not include any obligation to
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agree to an adverse modification of the terms of such documents or to prepay or
incur additional obligations to such other parties.
7.4 Fees and Expenses. Except as set forth in Section 9.2 hereof, whether
or not the Merger is consummated, all fees, costs and expenses incurred in
connection with this Agreement and the Transactions shall be paid by the party
incurring such costs or expenses.
7.5 No Solicitations.
(a) The Company represents and warrants that it has terminated any
discussions or negotiations relating to, or that may be reasonably be expected
to lead to, any Acquisition Proposal (as hereinafter defined) and will promptly
request the return of all confidential information regarding the Company
provided to any third party prior to the date of this Agreement pursuant to the
terms of any confidentiality agreements. Except as permitted by this Agreement,
the Company shall not, and shall not authorize or permit any of its officers,
directors or employees or any investment banker, financial advisor, attorney,
accountant or other representative retained by it to, directly or indirectly,
(i) solicit, initiate or encourage (including by way of furnishing non-public
information), or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes an Acquisition Proposal, or (ii)
participate in any discussions or negotiations regarding an Acquisition
Proposal; provided, however, that, at any time prior to the approval of this
Agreement by the stockholders of the Company, if the Company receives an
Acquisition Proposal that was unsolicited or that did not otherwise result from
a breach of this Section 7.5(a), the Company may furnish non-public information
with respect to the Company and the Company Subsidiaries to the person who made
such Acquisition Proposal (a "Third Party") and may participate in negotiations
regarding such Acquisition Proposal if (A) the Company Board determines based on
the advice of independent legal counsel that failure to do so would be
reasonably likely to constitute a breach of its fiduciary duties to the
Company's stockholders under applicable law, and (B) the Company Board
determines that such Acquisition Proposal is reasonably likely to lead to a
Superior Proposal (as hereinafter defined). Notwithstanding the foregoing, the
Company shall, prior to furnishing non-public information with respect to the
Company and the Company Subsidiaries to such Third Party, enter into a
confidentiality agreement with such Third Party with terms no less favorable to
the Company than those contained in the Confidentiality Agreement, provided that
such confidentiality agreement need not include the same standstill provisions
as those contained in the Confidentiality Agreement, it being understood that if
there are no standstill provisions in such confidentiality agreement or if such
provisions are more favorable to such Third Party than those in the
Confidentiality Agreement, the Confidentiality Agreement shall be deemed amended
to exclude the existing standstill provision or include such more favorable
provisions, as the case may be. The Company shall promptly notify (but in any
event within two (2) calendar days) MergerCo of the Company's first receipt of a
written Acquisition Proposal by such Third Party and of the material terms and
conditions thereof. Notwithstanding anything to the contrary in this Agreement,
the Company shall not be required to disclose to Parent or MergerCo the identity
of the Third Party making any such Acquisition Proposal and, except as provided
in Section 9.1(c)(i), shall have no duty to notify or update Parent or MergerCo
on the status of discussions or negotiations (including the status of such
Acquisition Proposal or any amendments or proposed amendments thereto) between
the Company and such Third Party.
(b) Subject to Section 9.1(d)(ii) hereof, at any time prior to the approval
of this Agreement by the stockholders of the Company, the Company Board may (i)
withdraw or modify in a manner material and adverse to Parent or MergerCo its
approval or recommendation of this Agreement or the Merger, (ii) approve or
recommend an Acquisition Proposal to its stockholders or (iii) cause the Company
to enter into any definitive acquisition agreement with respect to an
Acquisition Proposal, in each such case if (A) the Company Board determines
based on the advice of independent legal counsel that failure to take such
action would be reasonably likely to constitute a breach of its fiduciary duties
to the Company's stockholders under applicable law, and (B) the Company Board
determines based on the advice of its financial advisors that such Acquisition
Proposal constitutes a Superior Proposal. Any such withdrawal, modification or
change of the recommendation of the Company Board of this Agreement shall not
change the approval of the Company Board of this Agreement for purposes of
causing any state takeover statute or other state law to be inapplicable to the
Transactions, including the Merger.
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(c) Nothing contained in this Section 7.5 shall prohibit the Company from
at any time taking and disclosing to its stockholders a position contemplated by
Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act or making any
disclosure required by Rule 14a-9 promulgated under the Exchange Act.
(d) As used in this Agreement, the term "Acquisition Proposal" shall mean
any proposed or actual (i) merger, consolidation or similar transaction
involving the Company, (ii) sale, lease or other disposition, directly or
indirectly, by merger, consolidation, share exchange or otherwise, of any assets
of the Company or the Company Subsidiaries representing 15% or more of the
consolidated assets of the Company and the Company Subsidiaries, (iii) issue,
sale or other disposition by the Company of (including by way of merger,
consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase, or securities convertible into, such
securities) representing 15% or more of the votes associated with the
outstanding securities of the Company, (iv) tender offer or exchange offer in
which any person shall acquire beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act), or the right to acquire beneficial
ownership, or any "group" (as such term is defined under the Exchange Act) shall
have been formed which beneficially owns or has the right to acquire beneficial
ownership of, 15% or more of the outstanding shares of Common Stock, (v)
recapitalization, restructuring, liquidation, dissolution, or other similar type
of transaction with respect to the Company or (vi) transaction which is similar
in form, substance or purpose to any of the foregoing transactions; provided,
however, that the term "Acquisition Proposal" shall not include the Merger and
the Transactions.
(e) As used in this Agreement, the term "Superior Proposal" means an
Acquisition Proposal that the Company Board determines based on the advice of
its financial advisors is more favorable to the stockholders of the Company from
a financial point of view than the Transactions (taking into account all of the
terms and conditions of such Acquisition Proposal, including any conditions to
consummation and the likelihood of such Acquisition Proposal being consummated).
7.6 Officers' and Directors' Indemnification.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date hereof, or who becomes prior to the Effective Time, a director,
officer, employee, fiduciary or agent of the Company or any of the Company
Subsidiaries (the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director, officer, employee,
fiduciary or agent of the Company or any of the Company Subsidiaries, or is or
was serving at the request of the Company or any of the Company Subsidiaries as
a director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (ii) the negotiation,
execution or performance of this Agreement or any of the Transactions, whether
in any case asserted or arising before or after the Effective Time, the parties
hereto agree to cooperate and use their reasonable best efforts to defend
against and respond thereto. It is understood and agreed that the Company shall
indemnify and hold harmless, and after the Effective Time the Surviving
Corporation shall indemnify and hold harmless, as and to the full extent
permitted by applicable law, each Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorneys' fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any such threatened or actual claim, action, suit, proceeding or investigation,
and in the event of any such threatened or actual claim, action, suit,
proceeding or investigation (whether asserted or arising before or after the
Effective Time), (A) the Company, and the Surviving Corporation after the
Effective Time, shall promptly pay expenses in advance of the final disposition
of any claim, suit, proceeding or investigation to each Indemnified Party to the
full extent permitted by law, (B) the Indemnified Parties may retain counsel
satisfactory to them, and the Company and the Surviving Corporation, shall pay
all fees and expenses of such counsel for the Indemnified Parties within thirty
days after statements therefor are received, and (C) the Company and the
Surviving Corporation will use their respective reasonable best efforts to
assist in the vigorous defense of any such matter; provided, however, that
neither the Company nor the Surviving Corporation shall be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld); and provided further, however, that the Surviving
Corporation shall have no obligation hereunder to any Indemnified Party when
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and if a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and non-appealable, that indemnification
of such Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim indemnification under
this Section 7.6, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Company and, after the Effective Time, the
Surviving Corporation, thereof, provided that the failure to so notify shall not
affect the obligations of the Company and the Surviving Corporation except to
the extent such failure to notify materially prejudices such party.
(b) Parent and MergerCo agree that all rights to indemnification existing
in favor of, and all limitations on the personal liability of, the directors,
officers, employees and agents of the Company and the Company Subsidiaries
provided for in the Articles of Organization or Bylaws as in effect as of the
date hereof with respect to matters occurring prior to the Effective Time, and
including the Merger and the Transactions, shall continue in full force and
effect for a period of six (6) years from the Effective Time; provided, however,
that all rights to indemnification in respect of any claims (each a "Claim")
asserted or made within such period shall continue until the disposition of such
Claim. Prior to the Effective Time, the Company shall purchase an extended
reporting period endorsement ("Reporting Tail Coverage") under the Company's
existing directors' and officers' liability insurance coverage for the Company's
directors and officers in a form acceptable to the Company which shall provide
such directors and officers with coverage for six (6) years following the
Effective Time of not less than the existing coverage under, and have other
terms not materially less favorable to, the insured persons than the directors'
and officers' liability insurance coverage presently maintained by the Company;
provided, however, than in any event the total aggregate cost of such Reporting
Tail Coverage shall not exceed $175,000 (the "Maximum Amount"); and provided,
further, that if such coverage cannot be obtained for such cost, the Company
will maintain, for such six-year period, the maximum amount of comparable
coverage as shall be available for the Maximum Amount on such terms.
(c) This Section 7.6 is intended for the irrevocable benefit of, and to
grant third party rights to, the Indemnified Parties and shall be binding on all
successors and assigns of Parent, MergerCo, the Company and the Surviving
Corporation. Each of the Indemnified Parties shall be entitled to enforce the
covenants contained in this Section 7.6.
(d) In the event that the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person or entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any person or entity, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Surviving Corporation assume the obligations set forth in this Section 7.6.
7.7 Access to Information; Confidentiality. From the date hereof until the
Effective Time, the Company shall, and shall cause each of the Company
Subsidiaries and each of the Company's and Company Subsidiaries' officers,
employees, customers, suppliers, lenders and agents to, afford to MergerCo and
to the officers, employees and agents of MergerCo complete access at all
reasonable times to such officers, employees, agents, properties, books, records
and contracts, and shall furnish MergerCo such financial, operating and other
data and information as MergerCo may reasonably request. Prior to the Effective
Time, Parent and MergerCo shall hold in confidence all such information on the
terms and subject to the conditions contained in that certain confidentiality
agreement between Parent and the Company dated October 30, 1998 (the
"Confidentiality Agreement"). The Company hereby waives the provisions of the
Confidentiality Agreement as and to the extent necessary to permit the making
and consummation of the Transactions. At the Effective Time, such
Confidentiality Agreement shall terminate. Each party shall give prompt written
notice to the other of any fact, event or circumstance known to it that would be
reasonably likely to cause or constitute a material breach of any of its
representations or warranties contained herein or a Company Material Adverse
Effect or Parent Material Adverse Effect, as applicable.
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7.8 Financial and Other Statements. Notwithstanding anything contained in
Section 7.7, during the term of this Agreement, the Company shall also provide
to MergerCo or its representatives the following documents and information:
(a) As soon as reasonably available after filing with the SEC, the
Company will deliver to MergerCo or its representatives the Company's
Quarterly Report on Form 10-Q as filed under the Exchange Act for each
fiscal quarter ending after the date of this Agreement. As soon as
reasonably available after filing with the SEC, the Company will deliver to
MergerCo or its representatives the Company's Annual Report on Form 10-K,
as filed under the Exchange Act for each fiscal year ending after the date
of this Agreement. The Company will also deliver to MergerCo or its
representatives, contemporaneously with its being filed with the SEC, a
copy of each Current Report on Form 8-K. As soon as reasonably available,
the Company will deliver to MergerCo or its representatives copies of
financial reports for each calendar month ending after the date of this
Agreement prepared by the Company's management in the ordinary course of
business.
(b) Promptly upon receipt thereof, the Company will furnish to
MergerCo or its representatives copies of all internal control reports
submitted to the Company or any Company Subsidiary by independent
accountants in connection with each annual, interim or special audit of the
books of the Company or any such Company Subsidiary made by such
accountants.
(c) As soon as practicable, the Company will furnish to MergerCo or
its representatives copies of all such financial statements and reports as
the Company or any Company Subsidiary shall send to its stockholders, the
SEC or any other regulatory authority, to the extent any such reports
furnished to any such regulatory authority are not confidential and except
as legally prohibited thereby.
7.9 Public Announcements. The Company and MergerCo shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement or any of the Transactions and shall not issue
any such press release or make any such public statement without the prior
consent of the other party, which consent shall not be unreasonably withheld;
provided, however, that a party may, without the prior consent of the other
party, issue such press release or make such public statement as may be required
by law or the applicable rules of any stock exchange if it has used its best
efforts to consult with the other party and to obtain such party's consent but
has been unable to do so in a timely manner. In this regard, the parties shall
make a joint public announcement of the Transactions contemplated thereby no
later than (i) the close of trading on the American Stock Exchange on the day
this Agreement is signed, if such signing occurs during a business day or (ii)
the opening of trading on the American Stock Exchange on the business day
following the date on which this Agreement is signed, if such signing does not
occur during a business day.
7.10 Employee Benefit Arrangements. Section 7.10 of the Company Disclosure
Schedule sets forth each employment or severance agreement to which the Company
or any Company Subsidiary is presently a party. MergerCo agrees that the Company
will honor, and from and after the Effective Time, the Surviving Corporation
will honor, all obligations under such employment and severance agreements.
7.11 Required Financing. Each of Parent and MergerCo hereby agrees to use
its reasonable best efforts to arrange the financing in respect of the
Transactions and to satisfy the conditions set forth in the Financing Letters.
Parent and MergerCo shall keep the Company informed of the status of their
financing arrangements for the Transactions, including providing written
notification to the Company as promptly as possible (but in any event within
forty-eight (48) hours) with respect to (i) any indication that either of the
Lenders may be unable to provide the financing as contemplated by the Financing
Letters, including without limitation, any indication from either of the Lenders
that there has occurred a material disruption or material adverse change in the
banking, financial or capital markets generally or in the market for senior
credit facilities or for new issuances of high yield securities which has caused
or could cause such Lender to withdraw its commitment to provide financing as
contemplated by the Financing Letters, (ii) the ability of Parent or MergerCo to
satisfy any of the conditions set forth in the Financing Letters, and (iii) any
adverse developments relating to the financing contemplated by the Financing
Letters. Parent shall provide written notice to the Company within twenty-four
(24) hours if either of the Lenders has indicated to Parent or MergerCo that
such Lender
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will be unable to provide the financing contemplated by the applicable Financing
Letter (a "Parent Financing Notice"). In the event Parent and MergerCo are
unable to arrange any portion of such financing in the manner or from the
sources contemplated by the Financing Letters, Parent and MergerCo shall arrange
(or, in the event that such inability to arrange financing arises under the
circumstances contemplated by Section 8.2(f) hereof, use its reasonable best
efforts to arrange) any such portion from alternative sources on substantially
the same terms and with substantially the same conditions as the portion of the
financing that Parent and MergerCo were unable to arrange. The Company shall use
its reasonable best efforts to assist Parent and MergerCo in obtaining their
financing; provided, however, that the obligation of the Company to use its
reasonable best efforts in connection with the foregoing shall only apply to
reasonable and customary activities in this regard and shall not include any
obligation to obtain any extraordinary waivers, consents or approvals to loan
agreements, leases or other contracts or to agree to an adverse modification of
the terms of any of such documents, to prepay or incur additional obligations to
any other parties or to incur or become liable for any other costs or expenses.
7.12 Recapitalization Accounting Treatment. Each of the Company, Parent and
MergerCo shall use its reasonable best efforts to cause the Transactions,
including the Merger, to be accounted for as a recapitalization and such
accounting treatment to be accepted by their respective accountants and by the
SEC, and each of the Company, Parent and MergerCo agrees that it shall not take
or omit to take any action that would cause such accounting treatment not to be
obtained.
7.13 Delisting. Each of the parties hereto agrees to cooperate with each
other in taking, or causing to be taken, all actions necessary to delist the
Common Stock from the American Stock Exchange, provided that such delisting
shall not be effective until after the Effective Time of the Merger.
7.14 Exchange of Common Stock. Not later than the Effective Time, the
Company shall (i) designate 75,000 shares of Preferred Stock of the Company as
the Series B Stock and (ii) take all such actions as may be necessary to
exchange each share of Common Stock held by the Rollover Stockholders that is
set forth opposite their respective names in Section 6.1(a) of the Company
Disclosure Schedule for 0.2 shares of Series B Stock and complete such exchange,
in each case, pursuant to documentation reasonably acceptable in form and
substance to MergerCo. In effecting such exchange, all fractional shares of
Series B Stock otherwise issuable in connection therewith shall not be issued
but shall be rounded to the nearest number of whole shares of Series B Stock.
7.15 Solvency Letters. Parent or MergerCo shall engage an appraisal firm,
reasonably satisfactory to the Company, to deliver a letter (the "Solvency
Letter") addressed to the Company, the Company Board, MergerCo and the MergerCo
Board (and on which the Company Board and the MergerCo Board shall be entitled
to rely), which Solvency Letter shall be reasonably satisfactory to the Company
and the Company Board, indicating that immediately after the Effective Time, and
after giving effect to the Merger, the financings contemplated by this Agreement
and any other of the Transactions, the Surviving Corporation will not (i) be
insolvent or (ii) have unreasonably small capital with which to engage in its
business. Notwithstanding anything to the contrary in this Agreement, Parent
and/or MergerCo shall pay all fees, costs and expenses of such appraisal firm in
connection with the preparation and delivery of the Solvency Letter.
7.16 Purchase of Company Shares. The Company acknowledges that MergerCo may
acquire up to 9.9% of the outstanding shares of Common Stock prior to the
Effective Time in one or more privately negotiated transactions. In connection
with the foregoing, Parent and MergerCo hereby represent and warrant that they
are (a) aware that the United States securities laws prohibit any person who has
material, non-public information concerning a company from purchasing or selling
securities of such company or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities, and (b) familiar with the
Exchange Act and that they will not purchase or sell any shares of Common Stock
in contravention of the Exchange Act, including, without limitation, Rule 10b-5
thereunder. Each of Parent and MergerCo agrees that it shall indemnify and hold
harmless the Company and each of its directors, officers, employees and agents
against any losses, claims, damages, liabilities, costs, expenses (including
reasonable attorneys' fees and expenses), judgments, fines and amounts paid in
settlement in connection with any threatened or actual claim, action,
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suit, proceeding or investigation, whether civil, criminal or administrative,
arising out of or relating to any transactions in the Common Stock contemplated
by the first sentence of this Section 7.16.
ARTICLE VIII
CONDITIONS TO THE MERGER
8.1 Conditions to the Obligations of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment or waiver, where permissible, at or prior to the Closing Date,
of each of the following conditions:
(a) Stockholder Approval. This Agreement and the Transactions,
including the Merger, shall have been approved and adopted by the
affirmative vote of the stockholders of the Company as required by the MBCL
and the Articles of Organization.
(b) Hart-Scott-Rodino Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act
shall have expired or been terminated.
(c) Other Regulatory Approvals. All necessary approvals,
authorizations and consents of any governmental or regulatory entity
required to consummate the Merger shall have been obtained and remain in
full force and effect, and all waiting periods relating to such approvals,
authorizations and consents shall have expired or been terminated.
(d) No Injunctions, Orders or Restraints; Illegality. No preliminary
or permanent injunction or other order, decree or ruling issued by a court
of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission (an "Injunction") nor any statute,
rule, regulation or executive order promulgated or enacted by any
governmental authority shall be in effect which would (i) make the
consummation of the Merger illegal, or (ii) otherwise restrict, prevent or
prohibit the consummation of any of the Transactions, including the Merger.
(e) Solvency Letter. Each of the Company Board and the MergerCo Board
shall have received the Solvency Letter.
8.2 Conditions to Obligations of MergerCo. The obligations of MergerCo to
effect the Merger are further subject to the following conditions:
(a) Representations and Warranties. Those representations and
warranties of the Company set forth in this Agreement which are qualified
by materiality or a Company Material Adverse Effect or words of similar
effect shall be true and correct as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (except to
the extent such representations and warranties expressly relate to a
specific date, in which case such representations and warranties shall be
true and correct as of such date), and those representations and warranties
of the Company set forth in this Agreement which are not so qualified shall
be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the
Closing Date (except to the extent such representations and warranties
expressly relate to a specific date, in which case such representations and
warranties shall be true and correct in all material respects as of such
date). Notwithstanding the foregoing, the representations and warranties of
the Company set forth in Section 5.3 shall be true and correct on the date
of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except to the extent such representations and warranties
expressly relate to a specific date, in which case such representations and
warranties shall be true and correct as of such date).
(b) Performance and Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement, including, without limitation, the covenants
contained in Articles 6 and 7 hereof.
(c) Consents, etc. Any consent, authorization, order or approval of
(or filing or registration with) any third party (i) identified on Section
8.2(c) of the Company Disclosure Schedule, or (ii) otherwise
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identified by MergerCo after the date of this Agreement shall have been
obtained or made, except, in the case of clause (ii) hereof, where the
failure to have obtained or made any such consent, authorization, order,
approval, filing or registration, would not reasonably be expected to have
a Company Material Adverse Effect.
(d) No Injunction. There shall not have been entered any order in any
action or proceeding by any state or federal government or governmental
authority or by any United States or state court of competent jurisdiction
(a "Governmental Entity") which prohibits or limits the ownership or
operation by the Company (or any of the Company Subsidiaries) of any
portion of the Company's or the Company Subsidiaries' business, properties
or assets which is material to the Company and the Company Subsidiaries as
a whole, or compels the Company (or any Company Subsidiary) to dispose of
or hold separate any portion of the Company's or the Company Subsidiaries'
business, properties or assets which is material to the Company and the
Company Subsidiaries as a whole.
(e) No Company Material Adverse Change. There shall not have occurred
any material adverse change in the business, assets, condition (financial
or otherwise) or results of operations of the Company and the Company
Subsidiaries taken as a whole nor any event or other circumstance which
would, individually or in the aggregate, reasonably be expected to result
in any such material adverse change.
(f) No Financing Material Adverse Change. There shall not have
occurred any material disruption or material adverse change in the banking,
financial or capital markets generally or in the market for senior credit
facilities or for new issuances of high yield securities which has caused
either of the Lenders to withdraw its commitment to provide financing as
contemplated by the Financing Letters.
(g) Dissenting Shares. As of immediately prior to the Effective Time,
no more than 5% of the outstanding shares of Common Stock shall have taken
actions to assert dissenter's rights under Chapter 156B of the MBCL.
(h) Accounting Treatment. The Proxy Statement shall contain a
statement to the effect that the Merger shall be treated as a
recapitalization for accounting purposes and the SEC shall not have
disapproved such statement in the Proxy Statement.
(i) Governmental Litigation. There shall not be pending any action,
claim, proceeding or investigation instituted by any Governmental Entity
challenging or prohibiting the consummation of the Merger and the
Transactions.
(j) Exchange Complete. The exchange contemplated by Section 7.14
hereof shall have been completed to the reasonable satisfaction of
MergerCo.
(k) Indebtedness. On the Closing Date the Company shall have no more
than $13,000,000 of Net Indebtedness as reflected in a certificate signed
by the Chief Financial Officer of the Company in form and substance
reasonably satisfactory to MergerCo. For purposes of this Section 8.2(k),
"Net Indebtedness" shall mean all obligations of the Company and the
Company Subsidiaries for borrowed money (including the current portion
thereof) or evidenced by a bond, note, debenture or similar instrument,
including without limitation, all obligations arising under the credit
facility identified in Section 5.6 of the Company Disclosure Schedule,
minus all cash and cash equivalents of the Company and the Company
Subsidiaries. Furthermore, for purposes of determining the Company's Net
Indebtedness under this Section 8.2(k), (i) all checks deposited by the
Company on or prior to the Closing Date, even if such checks have not
"cleared" the bank or financial institution into which such checks were
deposited, shall be deemed to be an increase in "cash", and (ii) all checks
issued by the Company on or prior to the Closing Date, even if such checks
have not been "cashed" by the recipients thereof on or prior to the Closing
Date, shall be deemed to be a decrease in "cash." Notwithstanding the
foregoing, the term "Net Indebtedness" shall not include any obligations of
the Company or any Company Subsidiary under any letters of credit.
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(l) Officer's Certificate. The Company shall have furnished MergerCo
with a certificate dated as of the Closing Date signed on its behalf by an
executive officer to the effect that the conditions set forth in Sections
8.1 and 8.2 have been satisfied.
8.3 Conditions to Obligations of the Company. The obligation of the Company
to effect the Merger is further subject to the following conditions:
(a) Representations and Warranties. Those representations and
warranties of Parent and MergerCo set forth in this Agreement which are
qualified by materiality or a Parent Material Adverse Effect or words of
similar effect shall be true and correct as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date
(except to the extent such representations and warranties expressly relate
to a specific date, in which case such representations shall be true and
correct as of such date), and those representations and warranties of
Parent and MergerCo set forth in this Agreement which are not so qualified
shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made on the Closing Date
(except to the extent such representations and warranties expressly relate
to a specific date, in which case such representations and warranties shall
be true and correct in all material respects as of such date).
(b) Performance of Obligations of Parent and MergerCo. Each of Parent
and MergerCo shall have performed all obligations required to be performed
by it under this Agreement, including, without limitation, the covenants
contained in Articles 6 and 7 hereof, except where any failure to perform
would, individually or in the aggregate, not materially impair or
significantly delay the ability of the Company to consummate the Merger.
(c) MergerCo Officer's Certificate. MergerCo shall have furnished the
Company with a certificate dated as of the Closing Date signed on its
behalf by an executive officer to the effect that the conditions to be
satisfied by MergerCo set forth in Sections 8.1 and 8.3 have been
satisfied.
(d) Parent Officer's Certificate. Parent shall have furnished the
Company with a certificate dated as of the Closing Date signed on its
behalf by an executive officer to the effect that the conditions to be
satisfied by Parent set forth in Sections 8.1 and 8.3 have been satisfied.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after stockholder approval thereof:
(a) by the mutual written consent of MergerCo and the Company.
(b) by either of the Company or MergerCo:
(i) if the stockholders of the Company shall have failed to give
the required approval at the Special Meeting (including any
adjournment or postponement thereof); or
(ii) if any Governmental Entity shall have issued an Injunction
or taken any other action (which Injunction or other action the
parties hereto shall use their reasonable best efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the Merger, and
such Injunction shall have become final and non-appealable; or
(iii) if, without any material breach by the terminating party of
its obligations under this Agreement, the Merger shall not have
occurred on or before November 30, 1999.
(c) by the Company:
(i) in connection with entering into a definitive agreement to
effect a Superior Proposal in accordance with Section 7.5; provided,
however, that prior to terminating this Agreement pursuant to this
Section 9.1(c)(i), (A) the Company shall have paid the Liquidated
Amount, as set forth in
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Section 9.2(b), and (B) the Company shall have provided MergerCo with
forty-eight (48) hours' prior written notice of the Company's decision
to so terminate. Such notice shall indicate in reasonable detail the
terms and conditions of such Superior Proposal, including, without
limitation, the amount and form of the proposed consideration and
whether such Superior Proposal is subject to any material conditions.
Notwithstanding the foregoing, the Company is not required to disclose
to Parent or MergerCo the identity of the person making such Superior
Proposal; or
(ii) if Parent or MergerCo shall have breached in any material
respect any of their respective representations, warranties, covenants
or other agreements contained in this Agreement, which breach cannot
be or has not been cured within fifteen (15) days after the giving of
written notice to Parent or MergerCo except, in any case, for such
breaches which are not reasonably likely to affect adversely Parent's
or MergerCo's ability to consummate the Merger; or
(iii) after sixty (60) days following receipt by the Company of a
Parent Financing Notice.
(d) by MergerCo:
(i) if the Company shall have breached in any respect any of its
representations, warranties or covenants contained in this Agreement,
which breach cannot be or has not been cured within fifteen (15) days
after the giving of written notice to the Company except, in any case,
for breaches of such representations and warranties which are not
reasonably likely to result in a Company Material Adverse Effect;
(ii) if the Company Board shall (A) fail to include a
recommendation in the Proxy Statement of this Agreement and the
Transactions, including the Merger, (B) withdraw or modify or change,
or propose or announce any intention to withdraw or modify or change,
in a manner material and adverse to MergerCo, the approval or
recommendation by the Company Board of this Agreement or the
Transactions, including the Merger, (C) approve or recommend or
propose to announce any intention to approve or recommend any
Acquisition Proposal, or (D) propose or announce any intention to
enter into any agreement (other than a confidentiality agreement
contemplated by Section 7.5 hereof) with respect to an Acquisition
Proposal; or
(iii) after sixty (60) days following delivery by Parent or
MergerCo to the Company of a Parent Financing Notice.
9.2 Effect of Termination.
(a) Subject to Sections 9.2(b) and (d) hereof, in the event of the
termination of this Agreement pursuant to Section 9.1 hereof, this Agreement
shall forthwith become null and void and have no effect, without any liability
on the part of any party hereto or its affiliates, trustees, directors, officers
or stockholders and all rights and obligations of any party hereto shall cease
except for the agreements contained in Section 7.4, the third sentence of
Section 7.16 and Articles 9 and 10; provided, however, that nothing contained in
this Section 9.2(a) shall relieve any party from liability for any fraud or
willful breach of this Agreement.
(b) The Company shall pay to MergerCo an amount in cash equal to (A)
$5,000,000 (the "Liquidated Amount"), plus (B) the Parent/MergerCo Expenses (as
hereinafter defined) if (W) MergerCo terminates this Agreement under Section
9.1(d)(i) as a result of the Company having wilfully breached its obligations
under Section 7.1(a)(i) or Section 7.1(a)(iii), or (X) the Company terminates
this Agreement pursuant to Section 9.1(c)(i) or (Y) MergerCo terminates this
Agreement pursuant to Section 9.1(d)(ii) or (Z) either the Company or MergerCo
terminates this Agreement pursuant to Section 9.1(b)(i), if, prior to the
Special Meeting, (i) an Acquisition Proposal shall have been made directly to
the Company's stockholders generally or any person shall have publicly announced
an Acquisition Proposal or solicited proxies or consents in opposition to the
Merger and (ii) within nine (9) months immediately following the date of such
termination the Company and the party who shall have made such Acquisition
Proposal or any affiliate thereof enter into a definitive agreement with respect
thereto. Notwithstanding the foregoing, in no event shall the Company be
obligated to pay the Liquidated Amount or the Parent/MergerCo Expenses more than
once. For purposes of this Section 9.2, "Parent/MergerCo Expenses" shall be an
amount equal to the reasonable out-of-pocket costs
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and expenses incurred by Parent and MergerCo in connection with this Agreement
and the Transactions, including without limitation, fees and disbursements of
its outside legal counsel, investment bankers, accountants and other consultants
retained by or on behalf of Parent and MergerCo together with the other
out-of-pocket costs and expenses incurred by Parent and MergerCo in connection
with analyzing and structuring the Transactions, negotiating the terms and
conditions of this Agreement and any other agreements or other documents
relating to the Transactions, arranging financing, conducting due diligence and
other activities related to this Agreement and the Transactions (collectively,
the "Parent/MergerCo Expenses"); provided, however, that the aggregate amount of
all Parent/MergerCo Expenses to be reimbursed by the Company shall not exceed
$1,000,000.
(c) Any payment of the Liquidated Amount required by Section 9.2(b) hereof
shall be payable by the Company to MergerCo by wire transfer of immediately
available funds (i) in the case of clause (W) or (Y) thereof, within three (3)
business days after the date of termination, (ii) in the case of clause (Z)
thereof, within three (3) business days after the date of entering into such
definitive agreement, and (iii) in the case of clause (X) thereof, prior to
terminating this Agreement pursuant to Section 9.1(c)(i) hereof, in any such
case to an account designated by MergerCo. Any payment of the Parent/MergerCo
Expenses required by Section 9.2(b) hereof shall be payable by the Company to
MergerCo by wire transfer of immediately available funds promptly following
receipt by the Company of reasonable documentation of all Parent/ MergerCo
Expenses.
(d) Notwithstanding anything to the contrary in this Agreement, Parent and
MergerCo hereto expressly acknowledge and agree that, with respect to any
termination of this Agreement pursuant to Section 9.1(c)(i) or Section
9.1(d)(ii) hereof, or Section 9.1(b)(i) or Section 9.1(d)(i) hereof in
circumstances where the Liquidated Amount and the Parent/MergerCo Expenses are
payable in accordance with Section 9.2(b) hereof, the payment of the Liquidated
Amount and the Parent/MergerCo Expenses shall constitute liquidated damages with
respect to any claim for damages or any other claim which Parent or MergerCo
would otherwise be entitled to assert against the Company or any of the Company
Subsidiaries or any of their respective assets, or against any of their
respective directors, officers, employees, partners, managers, members or
shareholders, with respect to this Agreement and the Transactions and shall
constitute the sole and exclusive remedy available to Parent and MergerCo. The
parties hereto expressly acknowledge and agree that, in light of the difficulty
of accurately determining actual damages with respect to the foregoing upon any
termination of this Agreement pursuant to Section 9.1(c)(i) or Section
9.1(d)(ii) hereof, or Section 9.1(b)(i) or Section 9.1(d)(i) hereof in
circumstances where the Liquidated Amount and the Parent/MergerCo Expenses are
payable in accordance with Section 9.2(b) hereof, the rights to payment under
Section 9.2(b): (i) constitute a reasonable estimate of the damages that will be
suffered by reason of any such proposed or actual termination of this Agreement
pursuant to Section 9.1(c)(i) or Section 9.1(d)(ii) hereof, or Section 9.1(b)(i)
or Section 9.1(d)(i) hereof in circumstances where the Liquidated Amount and the
Parent/MergerCo Expenses are payable in accordance with Section 9.2(b) hereof,
and (ii) shall be in full and complete satisfaction of any and all damages
arising as a result of the foregoing. Except for nonpayment of the amounts set
forth in Section 9.2(b), Parent and MergerCo hereby agree that, upon any
termination of this Agreement pursuant to Section 9.1(c)(i) or Section
9.1(d)(ii) hereof, or Section 9.1(b)(i) or Section 9.1(d)(i) hereof in
circumstances where the Liquidated Amount and the Parent/MergerCo Expenses are
payable in accordance with Section 9.2(b) hereof, in no event shall Parent or
MergerCo (A) seek to obtain any recovery or judgment against the Company or any
of the Company Subsidiaries or any of their respective assets, or against any of
their respective directors, officers, employees, partners, managers, members or
shareholders, and (B) be entitled to seek or obtain any other damages of any
kind, including, without limitation, consequential, indirect or punitive
damages.
9.3 Amendment. This Agreement may be amended by the parties hereto by an
instrument in writing signed on behalf of each of the parties hereto at any time
before or after any approval hereof by the stockholders of the Company and
MergerCo, but in any event following authorization by the MergerCo Board and the
Company Board; provided, however, that after any such stockholder approval, no
amendment shall be made which by law requires further approval by stockholders
without obtaining such approval.
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9.4 Extension; Waiver. At any time prior to the Closing, the parties hereto
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered or sent if delivered personally or sent by facsimile or
sent by prepaid overnight carrier to the parties at the following addresses (or
at such other addresses as shall be specified by the parties by like notice):
(a) if to Parent or MergerCo:
Kirtland Capital Partners
2550 SOM Center Road
Suite 105
Willoughby Hills, OH 44904
Attn: Raymond A. Lancaster
Facsimile: (440) 585-9699
with a copy to:
Jones, Day, Reavis & Pogue
901 Lakeside Avenue
Cleveland, OH 44114
Attn: Charles W. Hardin, Esq.
Facsimile: (216) 579-0212
(b) if to the Company:
Instron Corporation
100 Royall Street
Canton, MA 02021
Attn: James M. McConnell
Facsimile: (781) 575-5765
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attn: Stuart M. Cable, P.C.
Joseph L. Johnson III, P.C.
Facsimile: (617) 570-8150
10.2 Interpretation. When a reference is made in this Agreement to a
subsidiary or subsidiaries of Parent, MergerCo or the Company, the word
"Subsidiary" means any corporation more than 50% of whose outstanding voting
securities, or any partnership, joint venture or other entity more than 50% of
whose total equity interest, is directly or indirectly owned by Parent, MergerCo
or the Company, as the case may be. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.3 Non-Survival of Representations, Warranties, Covenants and
Agreements. Except for Sections 7.6, 7.16 and 10.7 none of the representations,
warranties, covenants and agreements contained in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, and thereafter
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there shall be no liability on the part of either Parent, MergerCo or the
Company or any of their respective officers, directors or stockholders in
respect thereof. Except as expressly set forth in this Agreement, there are no
representations or warranties of any party hereto, express or implied.
10.4 Miscellaneous. This Agreement (i) constitutes, together with the
Confidentiality Agreement, the Company Disclosure Letter and the Parent and
MergerCo Disclosure Schedule, the entire agreement and supersedes all of the
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof, (ii) shall be binding
upon and inure to the benefits of the parties hereto and their respective
successors and assigns and is not intended to confer upon any other person
(except as set forth below) any rights or remedies hereunder and (iii) may be
executed in two or more counterparts which together shall constitute a single
agreement. Section 7.6 is intended to be for the benefit of those persons
described therein and the covenants contained therein may be enforced by such
persons. The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in the Massachusetts Courts (as hereinafter
defined), this being in addition to any other remedy to which they are entitled
at law or in equity.
10.5 Assignment. Except as expressly permitted by the terms hereof, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto without the prior written consent of
the other parties.
10.6 Severability. If any provision of this Agreement, or the application
thereof to any person or circumstance is held invalid or unenforceable, the
remainder of this Agreement, and the application of such provision to other
persons or circumstances, shall not be affected thereby, and to such end, the
provisions of this Agreement are agreed to be severable.
10.7 Choice of Law/Consent to Jurisdiction. All disputes, claims or
controversies arising out of or relating to this Agreement, or the negotiation,
validity or performance of this Agreement, or the Transactions shall be governed
by and construed in accordance with the laws of the Commonwealth of
Massachusetts without regard to its rules of conflict of laws. Each of the
Company, Parent and MergerCo hereby irrevocably and unconditionally consents to
submit to the sole and exclusive jurisdiction of the courts of the Commonwealth
of Massachusetts and of the United States District Court for the District of
Massachusetts (the "Massachusetts Courts") for any litigation arising out of or
relating to this Agreement, or the negotiation, validity or performance of this
Agreement, or the Transactions (and agrees not to commence any litigation
relating thereto except in such courts), waives any objection to the laying of
venue of any such litigation in the Massachusetts Courts and agrees not to plead
or claim in any Massachusetts Court that such litigation brought therein has
been brought in any inconvenient forum. Each of the parties hereto agrees, (a)
to the extent such party is not otherwise subject to service of process in the
Commonwealth of Massachusetts, to appoint and maintain an agent in the
Commonwealth of Massachusetts as such party's agent for acceptance of legal
process, and (b) that service of process may also be made on such party by
prepaid certified mail with a proof of mailing receipt validated by the United
States Postal Service constituting evidence of valid service. Service made
pursuant to (a) or (b) above shall have the same legal force and effect as if
served upon such party personally within the Commonwealth of Massachusetts. For
purposes of implementing the parties' agreement to appoint and maintain an agent
for service of process in the Commonwealth of Massachusetts, each of Parent and
MergerCo does hereby appoint CT Corporation, 2 Oliver Street, Boston,
Massachusetts 02109, as such agent.
10.8 No Agreement Until Executed. Irrespective of negotiations among the
parties or the exchanging of drafts of this Agreement, this Agreement shall not
constitute or be deemed to evidence a contract, agreement, arrangement or
understanding among the parties hereto unless and until (i) the Board of
Directors of the Company has approved, for purposes of Chapter 110F of the MGL
and any applicable provision of the Articles of Organization, the terms of this
Agreement, and (ii) this Agreement is executed by the parties hereto.
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IN WITNESS WHEREOF, Parent, MergerCo and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
KIRTLAND CAPITAL PARTNERS III L.P.
By: Kirtland Partners Ltd.,
its General Partner
By: /s/ Raymond A. Lancaster
---------------------------------
Name: Raymond A. Lancaster
Title: Executive Vice President
ISN ACQUISITION CORPORATION
By: /s/ Raymond A. Lancaster
---------------------------------
Name: Raymond A. Lancaster
Title: President
By: /s/ Thomas N. Littman
---------------------------------
Name: Thomas N. Littman
Title: Treasurer
INSTRON CORPORATION
By: /s/ James M. McConnell
---------------------------------
Name: James M. McConnell
Title: President
By: /s/ John R. Barrett
---------------------------------
Name: John R. Barrett
Title: Treasurer
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APPENDIX B
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
This Amendment No. 1 ("Amendment No. 1") to the Agreement and Plan of
Merger (the "Merger Agreement") dated as of May 6, 1999 by and among Kirtland
Capital Partners III L.P., an Ohio limited partnership ("Parent"), ISN
Acquisition Corporation, a Massachusetts corporation and a wholly owned
subsidiary of Parent ("MergerCo"), and Instron Corporation, a Massachusetts
corporation (the "Company"), is made as of August 5, 1999 by and among Parent,
MergerCo and the Company. Capitalized terms used herein but not otherwise
defined herein shall have the meanings ascribed thereto in the Merger Agreement.
RECITALS
WHEREAS, the parties desire to amend the Merger Agreement in certain
respects, subject to the terms, conditions, covenants and agreements set forth
herein; and
WHEREAS, the respective Boards of Directors of MergerCo and the Company
have approved this Amendment No. 1 in accordance with Section 9.3 of the Merger
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. Section 1.3 of the Merger Agreement is hereby amended and restated in
its entirety as follows:
"Closing. The closing of the Merger (the "Closing") shall occur as
promptly as practicable after all of the conditions set forth in Article
VIII shall have been satisfied or, if permissible, waived by the party
entitled to the benefit of the same, and, subject to the foregoing,
shall take place at such time and on a date to be specified by MergerCo
(the "Closing Date"); provided, however, that, assuming the prior
satisfaction or, if permissible, waiver, of all of the conditions set
forth in Article VIII, in no event shall the Closing occur later than
September 30, 1999. The Closing shall take place at the offices of
Jones, Day, Reavis & Pogue, 901 Lakeside Avenue, Cleveland, Ohio 44114,
unless another place is agreed to by the parties hereto."
2. Section 8.2(a) of the Merger Agreement is hereby amended and restated in
its entirety as follows:
"Representations and Warranties. Those representations and warranties
of the Company set forth in this Agreement which are qualified by
materiality or a Company Material Adverse Effect or words of similar
effect shall be true and correct as of the date of this Agreement and as
of August 24, 1999 as though made on and as of August 24, 1999 (except
to the extent such representations and warranties expressly relate to a
specific date, in which case such representations and warranties shall
be true and correct as of such date), and those representations and
warranties of the Company set forth in this Agreement which are not so
qualified shall be true and correct in all material respects as of the
date of this Agreement and as of August 24, 1999 as though made on and
as of August 24, 1999 (except to the extent such representations and
warranties expressly relate to a specific date, in which case such
representations and warranties shall be true and correct in all material
respects as of such date). Notwithstanding the foregoing, the
representations and warranties of the Company set forth in Section 5.3
shall be true and correct on the date of this Agreement and as of August
24, 1999 as though made on and as of August 24, 1999 (except to the
extent such representations and warranties expressly relate to a
specific date, in which case such representations and warranties shall
be true and correct as of such date)."
3. Section 8.2(l) of the Merger Agreement is hereby amended and restated in
its entirety as follows:
"Officer's Certificates. The Company shall have furnished MergerCo with
a certificate dated as of August 24, 1999 signed on its behalf by an
executive officer to the effect that the conditions set
B-1
<PAGE> 44
forth in Section 8.2(a) and Section 8.2(e) have been satisfied (a
"Section 8.2 Certificate"). The Company also shall have furnished
MergerCo with a certificate dated as of the Closing Date signed on its
behalf by an executive officer to the effect that the conditions set
forth in Sections 8.1 and 8.2, other than those set forth in Section
8.2(a), have been satisfied."
4. Section 9.2 of the Merger Agreement is hereby amended by adding the
following subsection (e):
"(e) Parent shall pay the Company an amount in cash equal to $2,000,000
if (A) there shall have occurred subsequent to August 24, 1999 any
material adverse change in the business, assets, condition (financial or
otherwise) or results of operations of the Company and the Company
Subsidiaries taken as a whole or any event or other circumstance which
would, individually or in the aggregate, reasonably be expected to
result in any such material adverse change (a "Material Adverse
Change"), (B) this Agreement is terminated by the parties in accordance
with Section 9.1(a) or by one of the parties in accordance with Section
9.1(b)(iii), (C) all of the conditions set forth in Section 8.1 and 8.2,
other than those set forth in Section 8.2(e) and Section 8.2(f), have
been satisfied, or, if permissible, waived by the party entitled to the
benefit thereof, and (D) the Company shall have furnished to MergerCo
the Section 8.2 Certificate."
5. Section 9.2 of the Merger Agreement is hereby amended by adding the
following subsection (f):
"(f) Parent shall pay the Company an amount in cash equal to $1,000,000
if (A) Parent shall have delivered to the Company a Parent Financing
Notice subsequent to August 24, 1999, (B) this Agreement is terminated
either (x) by the parties in accordance with Section 9.1(a) or by one of
the parties in accordance with Section 9.1(b)(iii), (y) by the Company
in accordance with Section 9.1(c)(iii) or (z) by MergerCo in accordance
with Section 9.1(d)(iii), and (C) all of the conditions set forth in
Section 8.1 and 8.2, other than those set forth in Section 8.2(e) and
Section 8.2(f), have been satisfied, or, if permissible, waived by the
party entitled to the benefit thereof."
6. Section 9.2 of the Merger Agreement is hereby amended by adding the
following subsection (g):
"(g) Any payments to be made by Parent under Sections 9.2(e) and 9.2(f)
hereof shall be payable by Parent to the Company by wire transfer of
immediately available funds within three (3) business days after the
date of termination to an account designated by the Company. If Parent
shall become obligated to make more than one of the payments under
Section 9.2(e) and Section 9.2(f), Parent shall pay to the Company the
amount set forth in Section 9.2(f), but only if Parent shall have
delivered to the Company a Parent Financing Notice prior to the
occurence of a Material Adverse Change; otherwise, Parent shall pay to
the Company the amount set forth in Section 9.2(e)."
7. Parent and MergerCo each hereby waives any claim it has or may have
against the Company resulting from or with respect to (i) the originally
scheduled date of August 20, 1999 of the Special Meeting and the mailing by the
Company of the Proxy Statement to its stockholders on July 23, 1999, or any
actions taken by the Company in connection therewith, or (ii) the agreement by
the parties herein contained to reschedule the Special Meeting to September 3,
1999 and to extend the anticipated Closing Date to not later than September 30,
1999.
8. The Company hereby waives any claim it has or may have against Parent or
MergerCo resulting from or with respect to (i) the originally scheduled date of
August 20, 1999 of the Special Meeting and the mailing by the Company of the
Proxy Statement to its stockholders on July 23, 1999, or any actions taken by
Parent and MergerCo in connection therewith, or (ii) the agreement by the
parties herein contained to reschedule the Special Meeting to September 3, 1999
and to extend the anticipated Closing Date to not later than September 30, 1999.
9. Parent and MergerCo acknowledge and agree that, from and after delivery
by the Company to MergerCo of the Section 8.2 Certificate, the condition to
MergerCo's obligation to effect the Merger set forth in Section 8.2(a) of the
Merger Agreement shall be deemed to be satisfied and MergerCo shall no longer
have any right to terminate the Merger Agreement under Section 9.1(d)(i) thereof
for breaches by the Company of any of the representations or warranties made by
the Company therein.
B-2
<PAGE> 45
10. Section 9.1(d)(i) of the Merger Agreement is hereby amended and
restated in its entirety as follows:
"if, prior to the delivery by the Company to MergerCo of the Section 8.2
Certificate, the Company shall have breached in any respect any of its
representations, warranties or covenants contained in this Agreement,
which breach cannot be or has not been cured within fifteen (15) days
after the giving of written notice to the Company except, in any case,
for breaches of such representations and warranties which are not
reasonably likely to result in a Company Material Adverse Effect;"
11. Section 9.1(d) of the Merger Agreement is hereby amended by adding the
following subsection (iv):
"if, subsequent to the delivery by the Company to MergerCo of the
Section 8.2 Certificate, the Company shall have breached in any respect
any of its covenants contained in this Agreement, which breach cannot be
or has not been cured within fifteen (15) days after the giving of
written notice to the Company;"
12. MergerCo and Parent each hereby expressly acknowledges and agrees that
as of the date hereof there has not occurred any material disruption or material
adverse change in the banking, financial or capital markets generally or in the
market for senior credit facilities or for new issuances of high yield
securities which has caused either of the Lenders to withdraw its commitment to
provide financing as contemplated by the Financing Letters.
13. Pursuant to Section 7.1(a)(i) of the Merger Agreement, Parent and the
Company hereby agree that the date of the Special Meeting shall be rescheduled
to September 3, 1999, and that the Company shall mail supplemental proxy
materials to its stockholders concerning such rescheduled Special Meeting date
substantially in the form attached hereto as Exhibit A. The Company shall give
MergerCo and its counsel the opportunity to review such supplemental proxy
materials prior to their being filed with the SEC.
14. Except as expressly provided herein, the Merger Agreement shall remain
in full force and effect.
B-3
<PAGE> 46
IN WITNESS WHEREOF, Parent, MergerCo and the Company have caused this
Amendment No. 1 to be executed as of the date first written above by their
respective officers thereunto duly authorized.
KIRTLAND CAPITAL PARTNERS III L.P.
By: Kirtland Partners Ltd.,
its General Partner
By: /s/ RAYMOND A. LANCASTER
----------------------------------
Name: Raymond A. Lancaster
Title: Executive Vice President
ISN ACQUISITION CORPORATION
By: /s/ RAYMOND A. LANCASTER
----------------------------------
Name: Raymond A. Lancaster
Title: President
By: /s/ THOMAS N. LITTMAN
----------------------------------
Name: Thomas N. Littman
Title: Treasurer
INSTRON CORPORATION
By: /s/ JAMES M. MCCONNELL
----------------------------------
Name: James M. McConnell
Title: President
By: /s/ JOHN R. BARRETT
----------------------------------
Name: John R. Barrett
Title: Treasurer
B-4
<PAGE> 47
[0411 - INSTRON CORPORATION] [FILE NAME: INS02B.ELX] [VERSION - 3] [6/25/99]
INS02B DETACH HERE
- --------------------------------------------------------------------------------
PROXY
INSTRON CORPORATION
100 ROYALL STREET
CANTON, MASSACHUSETTS 02021
P
The undersigned stockholder of Instron Corporation ("Instron") hereby
R appoints James M. McConnell, Linton A. Moulding and John R. Barrett, and
each of them, as Proxies, each with the power of substitution and
resubstitution for and in the name of the undersigned, to vote all of the
O shares of Instron Common Stock, par value $1.00 per share, held of record
by the undersigned as of July 12, 1999 at Instron's Special Meeting of
Stockholders (the "Special Meeting") to be held on September 3, 1999, at
X the Hilton Dedham Place, 25 Allied Drive, Dedham, Massachusetts 02026
commencing at 10:00 A.M. (local time), and at all adjournments or
postponements thereof, with all powers the undersigned would possess if
Y then and there personally present. Without limiting the general
authorization and power hereby given, the undersigned directs said Proxies
to cast the undersigned's vote as specified on the reverse side hereof. IF
NO DIRECTION IS GIVEN, THE UNDERSIGNED'S VOTE WILL BE CAST "FOR" THE
PROPOSALS IN PARAGRAPHS 1 AND 2 ON THE REVERSE SIDE HEREOF. IN THEIR
DISCRETION, THE PROXIES ARE EACH AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING AND ANY
ADJOURNMENT OR POSTPONEMENT THEREOF. Stockholders who plan to attend the
Special Meeting may revoke their proxy by casting their vote at the meeting
in person.
- ---------------- ----------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ---------------- ----------------
<PAGE> 48
DETACH HERE
- -------------------------------------------------------------------------------
[X] Please mark
votes as in
this example.
FOR AGAINST ABSTAIN
1. To approve the Agreement and Plan [ ] [ ] [ ]
of Merger dated as of May 6, 1999,
as amended, by and among Instron
Corporation, ISN Acquisition
Corporation and Kirtland Capital
Partners III L.P.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. If a motion to adjourn the
Special Meeting is properly
brought, to vote upon the
adjournment of the Special Meeting.
3. To vote at the discretion of the Proxies upon such other matters as may
properly come before the Special Meeting or any adjournment or postponement
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INSTRON
CORPORATION.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
(You may attend the Special Meeting even if you
fail to return this Proxy or fail to mark the
above box)
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE DATE, SIGN AND MAIL THIS PROXY TODAY IN THE
ENCLOSED ENVELOPE.
For joint accounts, each owner should sign.
Executors, administrators, trustees, corporate
officers and other acting in a representative
capacity should give full title or authority.
Signature: Date: Signature: Date:
--------------- --------- ---------------- -------
<PAGE> 49
[0411 - INSTRON CORPORATION] [FILE NAME: INS02B.ELX] [VERSION - 3] [6/25/99]
INS02B DETACH HERE
- --------------------------------------------------------------------------------
PROXY
INSTRON CORPORATION
100 ROYALL STREET
CANTON, MASSACHUSETTS 02021
P
The undersigned hereby instructs the VANGUARD FIDUCIARY TRUST COMPANY, as
R Trustee under the Instron Corporation Savings and Security Plan Trust (the
"Plan"), to vote all of the shares of Common Stock, par value $1.00 per
share, of Instron Corporation ("Instron") for which the undersigned has
O voting rights under the Plan as of July 12, 1999 (the "Shares") at
Instron's Special Meeting of Stockholders (the "Special Meeting") to be
held on September 3, 1999, at the Hilton Dedham Place, 25 Allied Drive,
X Dedham, Massachusetts 02026 commencing at 10:00 A.M. (local time), and at
all adjournments or postponements thereof. WHEN THIS CARD IS PROPERLY
EXECUTED, THE SHARES WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
Y UNDERSIGNED PARTICIPANT. IF THIS VOTING INSTRUCTION CARD IS PROPERLY
EXECUTED AND NO DIRECTION IS GIVEN, THE UNDERSIGNED'S VOTE WILL BE CAST
"FOR" THE PROPOSALS IN PARAGRAPHS 1 AND 2 ON THE REVERSE SIDE HEREOF. IN
ITS DISCRETION, THE TRUSTEE IS AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING AND ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
- ---------------- ----------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ---------------- ----------------
<PAGE> 50
DETACH HERE
- -------------------------------------------------------------------------------
[X] Please mark
votes as in
this example.
FOR AGAINST ABSTAIN
1. To approve the Agreement and Plan [ ] [ ] [ ]
of Merger dated as of May 6, 1999,
as amended, by and among Instron
Corporation, ISN Acquisition
Corporation and Kirtland Capital
Partners III L.P.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. If a motion to adjourn the
Special Meeting is properly
brought, to vote upon the
adjournment of the Special Meeting.
3. To vote at the discretion of the Trustee upon such other matters as may
properly come before the Special Meeting or any adjournment or postponement
thereof.
THIS VOTING INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
INSTRON CORPORATION.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE DATE, SIGN AND MAIL THIS VOTING INSTRUCTION
CARD TODAY IN THE ENCLOSED ENVELOPE.
Signature: Date: Signature: Date:
--------------- --------- ---------------- -------
