SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 28, 2000
Date of Report
(Date of earliest event reported)
ADVANCED TECHNICAL PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-01298 11-1581582
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
200 MANSELL COURT, EAST, SUITE 505
ROSWELL, GEORGIA 30076
(Address of principal executive offices)(Zip Code)
(770) 993-0291 (Registrant's telephone number,
including area code)
NOT APPLICABLE
(Former name and former address, if changed since last report)
262344
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Item 5. Other Events.
Introduction
On January 28, 2000, Advanced Technical Products, Inc. (the
"Company") and two affiliates of The Veritas Capital Fund, L.P., ATP Holding
Corp. ("Veritas Holding") and ATP Acquisition Corp. ("Veritas Acquisition" and
together with the Company and Veritas Holding, the "Parties"), pursuant to the
Termination Agreement among the Parties, mutually agreed to terminate that
certain Agreement and Plan of Merger among the Parties dated September 3, 1999
(the "September Merger Agreement"). The Parties simultaneously entered into a
new January 2000 Agreement and Plan of Merger dated January 28, 2000 (the
"January 2000 Merger Agreement"), pursuant to which it is contemplated that
Veritas Holding will essentially acquire 100% of the outstanding stock of the
Company pursuant to a merger of ATP Acquisition with and into the Company.
Veritas Acquisition is a wholly owned subsidiary of Veritas Holding which is
beneficially owned by The Veritas Capital Fund, L.P.
The January 2000 Merger Agreement provides that the amount
paid for each share of the Company's common stock shall be $12.75, without
interest, (a reduction from $14.50, without interest, per share, as provided for
in the September Merger Agreement), gives Veritas Holding the right to terminate
the January 2000 Merger Agreement in its discretion during the Optional
Termination Period (as defined herein) and does not provide for a deposit
securing the obligations of Veritas Holding.
Background
The Parties executed the September Merger Agreement on
September 3, 1999, and the Company's stockholders approved the September Merger
Agreement on October 21, 1999. Pursuant to its terms, the September Merger
Agreement was to have been consummated or terminated by January 31, 2000.
Due to certain developments which occurred at the Company
since September 3, 1999, the Parties mutually agreed to terminate the September
Merger Agreement without liability to any of the Parties in consideration of the
agreement of the Parties to enter into the January 2000 Merger Agreement. These
developments included: (i) the decrease in the Company's revenues and earnings
due primarily to the decrease in revenues and earnings at Alcore, Inc.
("Alcore"), one of the Company's subsidiaries, in the fourth quarter of 1999;
(ii) the Company's receipt of notification that it may be deemed a potentially
responsible party for some portion of the cleanup costs associated under
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applicable environmental statutes with the municipal landfill site in Babylon,
New York; (iii) the pending governmental investigation into Alcore reflected in
a United States government search warrant served to Alcore on January 7, 2000,
and the affidavit supporting the application for such search warrant (the
"Alcore Investigation"); and (iv) certain tax issues.
Summary of Material Transaction Terms
Under the January 2000 Merger Agreement, Veritas Acquisition
will be merged with and into the Company (the "Merger") with the Company
continuing as the "Surviving Corporation." At the effective time of the
Merger (the "Effective Time"), each of the outstanding shares of the Company's
common stock (except for shares held by those dissenting stockholders who
exercise and perfect their appraisal rights) will be converted into the
right to receive a cash payment of $12.75 without interest.
Holders of certain options and warrants to buy the Company's
common stock will also be entitled to receive a cash payment at the Effective
Time. Under the January 2000 Merger Agreement, the term (i) "Option" means each
unexercised option, warrant or other security that is outstanding at the
Effective Time pursuant to which the holder thereof has the right to purchase
the Company's common stock from the Company (whether or not such option is
vested or exercisable) and (ii) "In the Money Option" means each Option that by
its terms is exercisable from and after the Effective Time and has an exercise
price which is less than $12.75 per share.
As of the Effective Time, each vested and exercisable portion
of any In the Money Option (a"Vested In the Money Option") will be extinguished
and represent at the Effective Time the right to receive a cash amount equal to
the product of (x) the excess of (a) $12.75 over (b) the exercise price of such
Vested In the Money Option multiplied by (y) the aggregate number of shares of
the Company's common stock issuable upon the exercise of such Vested In the
Money Option as of the Effective Time (the "Vested Option Consideration"). A
holder of a Vested In the Money Option will be entitled to receive the Vested
Option Consideration from the Company upon the cancellation of such Vested In
the Money Option and the surrender and cancellation of the applicable option
agreement.
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In addition, as of the Effective Time, each unvested and
unexercisable portion of any In the Money Option (an "Unvested In the Money
Option") shall be extinguished and represent a right to receive equity in, or an
option for the purchase of equity in, the Surviving Corporation or a holding
entity owning, directly or indirectly, 100% of the Surviving Corporation (the
"Replacement Security"), which Replacement Security shall (i) have a value
equivalent to the value of such Unvested In the Money Option as of the Effective
Time, (ii) shall vest in full or cease to be subject to forfeiture upon a change
in control of the Surviving Corporation and (iii) bear terms and conditions
which are substantially similar to the terms currently contained in such
Unvested In the Money Option or terms more favorable to the holder except
that the vesting/forfeiture provisions of such Replacement Security may be
changed to a vesting/forfeiture period of five (5) years commencing at the
Effective Time so long as the holder of such Unvested In the Money Option is
issued, in addition to the Replacement Security, additional equity or an
additional equity right pursuant to a stock or option plan implemented for
employees of the Surviving Corporation.
In addition, (a) each Option that is not an In the Money
Option shall terminate at the Effective Time (i) by determination of the
Company's board or any applicable committee thereof if the stock option
agreement and the stock option plan of the Company relating such Option permits
such a determination, or (ii) by the agreement of the holder of such Option on
or before the Effective Time and (b) all stock option plans of the Company 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 subsidiary of the Company
shall be terminated as of the Effective Time.
Pursuant to the terms of the January 2000 Merger Agreement and
in accordance with the terms of the Company's Restated Certificate of
Incorporation, each share of the Company's outstanding preferred stock
immediately prior to the Effective Time will be redeemed by the Company for
$1.00 per share, without interest, plus accrued but unpaid dividends.
Optional Termination Period
Under the January 2000 Merger Agreement, promptly after the
Company's receipt of its audited financial statements for the year ended
December 31, 1999 together with a restatement of its financial statements
for prior periods, if any, which are currently being prepared by KPMG LLP (the
"Audited Statements"), the Company shall deliver to Veritas Holding and Veritas
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Acquisition such Audited Statements together with a certificate which will bring
the Company's representations and warranties in the January 2000 Merger
Agreement current to the date of such delivery (the "Audit Delivery Date") and
related amendments and supplements to the Disclosure Schedule of the January
2000 Merger Agreement (the "Disclosure Updates"). Veritas Holding shall then
have ten days commencing on the Audit Delivery Date (the "Optional Termination
Period") in which to terminate the January 2000 Merger Agreement in accordance
with Section 7.1(h) therein, and, unless Veritas Holding so terminates the
January 2000 Merger Agreement during the Optional Termination Period, then
Veritas Holding and Veritas Acquisition shall be deemed to have accepted and
agreed to the Audited Statements and the Disclosure Updates which shall be fully
incorporated therein and shall be deemed to be an integral part of the January
2000 Merger Agreement. Veritas Holding shall also have the right to terminate
the January 2000 Merger Agreement if the Company fails to disclose the Audited
Statements and the Disclosure Updates on or before April 15, 2000.
Transaction Requirements
The Company's Board of Directors has approved the January 2000
Merger Agreement and the transactions contemplated thereby, including the
Merger. Consummation of the transactions, including the Merger, is subject to
certain conditions, including (i) the approval of the Company's stockholders;
(ii) the Company's obtaining certain third-party consents to the Merger; and
(iii) the absence of a material adverse change to the Company from the Audit
Delivery Date.
As part of the January 2000 Merger Agreement, the Parties
expressly acknowledged and agreed that the following developments since
September 3, 1999, have been disclosed and considered, and for purposes of
the January 2000 Merger Agreement shall not as of the date thereof, and will not
as of or after the Audit Delivery Date, individually or in the aggregate,
constitute a circumstance or circumstances which have caused or will be deemed
to cause, a material adverse change to the Company: (i) notification that the
Company may be deemed a potentially responsible party for some portion of the
cleanup costs associated under applicable environmental statutes with the
municipal landfill site in Babylon, New York; (ii) the Family Medical Leave Act
claim and the Americans with Disabilities Act claim filed against the Company's
Marion Composites division; (iii) the pending governmental investigation into
Alcore reflected in the government's search warrant served January 7, 2000, and
the affidavit supporting the application for such search warrant, copies of each
of which have been provided to Veritas Holding and Veritas Acquisition. The
<PAGE>
Parties further agreed that any and all consequences or effects on any aspect of
the Company or its subsidiaries which arise out of the business or operations of
Alcore, including without limitation, Alcore's financial results and any
liability or damages relating to the allegations in the pending governmental
investigation, shall specifically be excluded for any determinations made
thereunder.
Termination
The January 2000 Merger Agreement may be terminated pursuant
to certain specified events, including by Veritas Holding in its sole discretion
within 10 days of the Audit Delivery Date. Unlike the September Merger
Agreement, pursuant to the January 2000 Merger Agreement Veritas Holding will
not deposit any money in escrow as a good faith deposit securing its obligations
in connection with the Merger, but in the event the January 2000 Merger
Agreement is terminated after the Optional Termination Period due to the failure
of Veritas Holding and Veritas Acquisition to obtain financing by June 30, 2000,
then Veritas Holding shall pay the Company $3,000,000 and reimburse the Company
for its expenses incurred in connection with the Merger up to a maximum amount
of $750,000.
In the event that the January 2000 Merger Agreement is
terminated as a result of the Company's election to consummate an Alternative
Transaction (as defined in Section 5.8(b) of the January 2000 Merger Agreement),
then the Company is required to pay Veritas Holding $2,500,000 (the "Break-up
Fee") together with an amount equal to the expenses of Veritas Holding and
Veritas Acquisition incurred in connection with the Merger up to a maximum
amount of $750,000. The similar provision in the September Merger Agreement
provided for a Break-up Fee of $4,125,000 and an obligation to reimburse the
expenses of Veritas Holding and Veritas Acquisition without limit. In addition,
in the event of termination for certain other reasons as specified in the
January 2000 Merger Agreement, either the Company, on the one hand, or Veritas
Holding and Veritas Acquisition, on the other hand, is obligated to reimburse
the other Party for expenses incurred by such Party in connection with the
Merger up to a maximum amount of $750,000.
The foregoing summary of the January 2000 Merger Agreement,
the Termination Agreement and the transactions contemplated thereby is qualified
in its entirety by reference to the January 2000 Merger Agreement and the
Termination Agreement which are attached hereto as Exhibit 2.1 and Exhibit 2.2,
respectively, and are incorporated herein by reference.
<PAGE>
As of September 3, 1999, the Company had 5,286,206 shares of
its Common Stock outstanding.
<PAGE>
Item 7. Financial Statements and Exhibits.
(c) Exhibits. The following exhibits are provided in accordance with the
provisions of Item 601 of Regulation S-K and are filed herewith unless otherwise
noted.
Exhibit No. Description
2.1* January 2000 Agreement and Plan of Merger dated
January 28, 2000 by and among Advanced Technical
Products, Inc., ATP Acquisition Corp. and ATP Holding
Corp.
2.2 Termination Agreement dated January 28, 2000 by and
among Advanced Technical Products, Inc., ATP
Acquisition Corp. and ATP Holding Corp.
99.1 Press Release dated January 31, 1999
*The schedules thereto have been omitted but copies thereof will be furnished
supplementally to the Commission upon request.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
ADVANCED TECHNICAL PRODUCTS, INC.
By: /s/ Garret L. Dominy
Name: Garret L. Dominy
Title: Executive Vice President
& Chief Financial Officer
Dated: February 15, 2000
269945
<PAGE>
EXHIBIT 2.1
JANUARY 2000 AGREEMENT AND PLAN OF MERGER
This JANUARY 2000 AGREEMENT AND PLAN OF MERGER, dated January 28, 2000
(this "Agreement"), by and among ATP HOLDING CORP., a Delaware corporation
("Parent"), ATP ACQUISITION CORP., a Delaware corporation ("Sub"), and ADVANCED
TECHNICAL PRODUCTS, INC. a Delaware corporation (the "Company"). Capitalized
terms used herein have the meanings ascribed to them in Section 8.3.
WHEREAS, each of Parent, Sub and the Company previously entered into
that certain Agreement and Plan of Merger dated September 3, 1999 (the
"September Merger Agreement") pursuant to which a merger of Sub with and into
the Company (the "Merger") was contemplated; and
WHEREAS, as a result of certain events occurring at the Company since
September 3, 1999 each of Parent, Sub and the Company have mutually agreed to
terminate the September Merger Agreement pursuant to that certain Termination
Agreement of even date herewith (the "Termination Agreement") and to
simultaneously enter into this Agreement regarding the Merger with the terms and
conditions provided herein; and
WHEREAS, the Board of Directors of each of Parent, Sub and the Company
have adopted resolutions in accordance with the Delaware General Corporation Law
(the "DGCL") approving this Agreement and the Termination Agreement, and deem it
advisable and in the best interests of their respective companies and
stockholders to consummate the Merger upon the terms and subject to the
conditions set forth herein; and
WHEREAS, pursuant to the Merger, shares of the Company's common stock
will be converted into the right to receive the Merger Consideration (as defined
below) in the manner set forth herein, and the Company shall become a wholly
owned subsidiary of Parent.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements contained in this
Agreement, and intending to be legally bound, the parties agree as follows:
Article I
THE MERGER
Section 1.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Sub shall be merged
with and into the Company at the Effective Time (as hereinafter defined). Upon
<PAGE>
the Effective Time, the separate existence of Sub shall cease, and the Company
shall continue as the surviving corporation (the "Surviving
Corporation").
Section 1.2. INTENTIONALLY OMITTED.
Section 1.3. CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1, and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "Closing") will take place
at 10:00 a.m., New York City time, on the third business day following the date
on which the last to be fulfilled or waived of the conditions set forth in
Article VI shall be fulfilled or waived in accordance with this Agreement (the
"Closing Date"), at the offices of Whitman Breed Abbott & Morgan LLP, 200 Park
Avenue, New York, New York or such other date, time or place as agreed to in
writing by the Parties.
Section 1.4. EFFECTIVE TIME. The Company and Sub, with the consent of
Parent, will file with the Secretary of State of the State of Delaware (the
"Delaware Secretary of State") on the Closing Date (or on such other date as
Parent and the Company may agree) a certificate of merger or other appropriate
documents, executed in accordance with the relevant provisions of the DGCL, and
make all other filings or recordings required under the DGCL in connection with
the Merger. The Merger shall become effective upon the filing of the certificate
of merger with the Delaware Secretary of State, or at such later time as is
specified in the certificate of merger and is agreed to by the parties (the
"Effective Time").
Section 1.5. EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 259 of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company, which shall continue
as the Surviving Corporation, and Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of the Company and Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 1.6. CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) At the Effective Time, the Company's Restated Certificate of
Incorporation (the "Restated Charter") shall be amended so as to read
in its entirety as set forth in Exhibit 1.6(a) to this Agreement and
as so amended shall become the certificate of incorporation of the
Surviving Corporation until amended in accordance with applicable law.
(b) The By-laws of Sub as in effect at the Effective Time shall be, from
and after the Effective Time, the By-laws of the Surviving Corporation
until thereafter changed or amended as provided therein or by
applicable law.
<PAGE>
Section 1.7. DIRECTORS. The directors of Sub at the Effective Time shall
become, from and after the Effective Time, the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
Section 1.8. OFFICERS. The officers of the Sub at the Effective Time shall
become, from and after the Effective Time, the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
Article II
EFFECT OF THE MERGER ON THE SECURITIES
OF THE CONSTITUENT CORPORATIONS
Section 2.1. EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue
of the Merger and without any action on the part of any holder:
(a) COMMON STOCK OF SUB. Each share of common stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into one
share of Common Stock of the Surviving Company ("Surviving Company Securities"),
which Surviving Company Securities shall be validly issued, fully paid and
nonassessable upon such conversion.
(b) CANCELLATION OF TREASURY STOCK. Each share of the Company's Common
Stock, $0.01 par value (the "Common Stock") or Preferred Stock,
$1.00 par value (the "Preferred Stock"), issued or outstanding
immediately prior to the Effective Time that is owned by the Company
or any of its wholly-owned Subsidiaries (as defined in Section 3.1(b),
below) shall be canceled automatically and shall cease to exist, and
no cash or other consideration shall be delivered or deliverable in
exchange therefor.
(c) CONVERSION OF COMPANY SHARES. Each share of Common Stock that is then
issued and outstanding (such shares of Common Stock being hereinafter
referred to collectively as the "Company Shares", other than shares to
be canceled pursuant to subsection 2.1(b) above and other than
Dissenting Shares (as hereinafter defined), which shares will not
constitute "Company Shares" hereunder) shall be converted into and
become the right to receive, upon surrender of the certificate
representing such Company Shares in accordance with Section 2.3,
$12.75 in cash, without interest thereon (the "Merger Consideration").
(d) REDEMPTION OF PREFERRED STOCK. Each share of Preferred Stock that is
then issued and outstanding, other than shares to be canceled pursuant
to subsection 2.1(b) above, shall be redeemed by the Company in
accordance with Article IV, Section (C)(1)(d) of the Company's
Restated Charter immediately prior to the Effective Time by virtue of
<PAGE>
the Merger and without any action by the holders thereof. Upon
surrender of a certificate representing Preferred Stock, $1.00 per
share in cash, without interest thereon, plus any accrued but unpaid
dividends thereon shall be paid to the holder thereof.
(e) DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, shares of Common Stock issued and outstanding immediately prior to the
Effective Time held by a holder (a "Dissenting Shareholder") (if any) who has
the right to demand, and who properly demands, an appraisal of such shares in
accordance with Section 262 of the DGCL (or any successor provision)
("Dissenting Shares")shall not be converted into a right to receive the Merger
Consideration unless such Dissenting Shareholder fails to perfect or otherwise
loses such Dissenting Shareholder's right to such appraisal. If, after the
Effective Time, such Dissenting Shareholder fails to perfect or loses any such
right to appraisal, each such share of such Dissenting Shareholder shall be
treated as a share that had been converted as of the Effective Time into the
right to receive the Merger Consideration in accordance with this Section 2.1,
without interest or dividends thereon. The Company shall give prompt notice to
Parent of any demands received by the Company for appraisal of any Company
Shares, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands.
(f) CANCELLATION AND RETIREMENT OF COMMON STOCK. As of the Effective Time,
all certificates representing shares of Common Stock issued and outstanding
immediately prior to the Effective Time shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate representing any such shares of Common Stock shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with Section 2.3,
or, in the case of Dissenting Shares, the rights, if any, accorded under
Section 262 of the DGCL.
Section 2.2. STOCK OPTIONS. For purposes of this Agreement, the term (i)
"Option" means each unexercised option, warrant or other security that is
outstanding at the Effective Time pursuant to which the holder thereof has the
right to purchase Common Stock from the Company (whether or not such option is
vested or exercisable) and (ii) "In the Money Option" means each Option that by
its terms is exercisable from and after the Effective Time and has an exercise
price which is less than $12.75 per share. As of the Effective Time, each vested
and exercisable portion of any In the Money Option (a "Vested In the Money
Option") shall be extinguished and represent at the Effective Time the right to
receive a cash amount (the "Vested Option Consideration") equal to the product
of (x) the excess of (a) the Merger Consideration over (b) the exercise price of
such Option (the "Cash Option Amount") multiplied by (y) the aggregate number of
shares of Common Stock issuable upon the exercise of such vested and exercisable
portion of the Option as of the Effective Time. In addition, as of the Effective
<PAGE>
Time, each unvested and unexercisable portion of any In the Money Option (an
"Unvested In the Money Option") shall be extinguished and represent a right to
receive equity in, or an option for the purchase of equity in, the Surviving
Corporation or a holding entity owning directly or indirectly 100% of the
Surviving Corporation (the "Replacement Security"), which Replacement Security
shall (i) have a value equivalent to the value of such Unvested In the Money
Option as of the Effective Time, (ii) shall vest in full or cease to be subject
to forfeiture upon a change in control of the Surviving Corporation and (ii)
bear terms and conditions which are substantially similar to the terms currently
contained in such Unvested In the Money Option or terms more favorable to the
holder except that the vesting/forfeiture provisions of such Replacement
Security may be changed to a vesting/forfeiture period of five (5) years
commencing at the Effective Time so long as the holder of such Unvested In the
Money Option is issued, in addition to the Replacement Security, additional
equity or an additional equity right pursuant to a stock or option plan
implemented for employees of the Surviving Corporation (the "Unvested Option
Consideration"). In addition, (a) each Option that is not an In the Money
Option shall terminate at the Effective Time (i) by determination of the
Company's board or any applicable committee thereof if the stock option
agreement and Company Stock Option Plan relating such Option permits such a
determination, or (ii) by the agreement of the holder of such Option on or
before the Effective Time and (b) the Company Stock Option Plans (as defined in
Section 3.1(c)) 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
Subsidiary shall be terminated as of the Effective Time.
Section 2.3. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, Sub (or the Company, as the
Surviving Corporation) shall deposit with or for the account of a bank or trust
company designated prior to the Effective Time by Sub, which shall be reasonably
satisfactory to the Company (the "Exchange Agent"), for the benefit of the
holders of Certificates (as defined herein), or shall cause to be deposited,
with the Exchange Agent:
(i) cash in an aggregate amount (the "Exchange Fund") equal to the sum of
(x) the product of (A) the number of Company Shares issued and outstanding at
the Effective Time multiplied by (B) the Merger Consideration plus (y) the
product of (A) the aggregate number of shares of Common Stock issuable upon
exercise in full of all of the Vested In the Money Options as of the Effective
Time multiplied by (B) the Cash Option Amount with respect to such Vested In the
Money Options, and
(ii) certificates representing, or other certified evidence of
the issuance of, the Unvested Option.
<PAGE>
(b) EXCHANGE PROCEDURES. As soon as practicable following the Effective
Time, the Surviving Corporation shall cause the Exchange Agent to mail
or deliver to each record holder, as of the Effective Time, of an
outstanding certificate or certificates or option grant which
immediately prior to the Effective Time represented either Common
Shares or In the Money Options (the "Certificates"), a 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 effecting the surrender of the Certificates
for payment therefor. Upon surrender to the Exchange Agent of a
Certificate, together with a duly executed letter of transmittal and
any other reasonably required documents, the holder of such
Certificate shall promptly receive in exchange therefor the amount of
cash to which such holder is entitled pursuant to Section 2.1(c) or
Section 2.2 (as applicable), without interest, together with the
Unvested Option Consideration to which such holder is entitled
pursuant to Section 2.2, if any, less any required withholding of U.S.
federal income taxes and such Certificate shall be canceled. If, in
the case of Certificates representing Company Shares, payment or
delivery is to be made to a Person other than the Person in whose name
a Certificate so surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed
or otherwise in proper form for transfer, that the signatures on the
certificate or any related stock power shall be properly guaranteed
and that the Person requesting such payment either pay any transfer or
other taxes required by reason of the payment to a Person other than
the registered holder of the Certificate so surrendered or establish
to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered in accordance with
the provisions of this Section 2.3, each Certificate (other than
Certificates canceled pursuant to Section 2.1(b), and Dissenting
Shares) shall represent for all purposes only the right to receive the
Merger Consideration or the Vested Option Consideration, in each case
without interest, payable, or the Unvested Option Consideration
issuable, pursuant to Section 2.1(c) or 2.2, as the case may be, in
the form provided for by this Agreement.
(c) TERMINATION OF EXCHANGE FUND. If Certificates are not surrendered prior
to the date that is 180 days after the Effective Time, unclaimed
amounts (including interest thereon) remaining in the Exchange Fund
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. Any stockholders or
optionholders of the Company who have not theretofore complied with
the provisions of this Section 2.3 shall thereafter look only to the
Surviving Corporation and only as general creditors thereof for
payment for their claims in the form and amounts to which such
stockholders or optionholders are entitled without any interest or
dividends thereon (subject to applicable abandoned property, escheat
and similar laws). Neither Parent nor Surviving Corporation will be
liable to any stockholder or optionholder of the Company for any
amount paid to a public official in accordance with applicable
abandoned property, escheat or similar laws.
(d) NO FURTHER RIGHTS IN COMMON STOCK. After the Effective Time, there
shall be no transfers on the stock transfer books of the Surviving
Corporation of the shares of Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged for the Merger Consideration, Vested
Option Consideration and/or Unvested Option Consideration, as the
case may be, as provided for and in accordance with the provisions of
this Section 2.3.
(e) INVESTMENT OF THE EXCHANGE FUND. The Exchange Agent shall invest
the Exchange Fund as directed by Parent on a daily basis as provided herein.
Any interest and other income resulting from such investments shall promptly be
paid to Parent. The Exchange Agent shall invest the Exchange Fund, as directed
by Parent, in (i)direct obligations of the United States of America, (ii)
obligations for which the full faith and credit of the United States of America
is pledged to provide for the payment of principal and interest, (iii)
commercial paper rated the highest quality by either Moody's Investors Services,
Inc. or Standard & Poor's Corporation, or (iv) certificates of deposit, bank
repurchase agreements or bankers acceptances, of commercial banks with capital
exceeding $100 million; provided that any such investment or any such payment
of earnings shall not delay the receipt by holders of Certificates of the Merger
Consideration, Vested Option Consideration or Unvested Option Consideration, as
the case may be, or otherwise impair such holders' respective rights hereunder.
(f) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the Company
Shares or Vested Option Consideration and/or Unvested Option Consideration with
respect to In the Money Options formerly represented thereby.
(g) WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the Merger Consideration,
Vested Option Consideration and Unvested Option Consideration otherwise payable
pursuant to this Agreement to any holder of Company Shares or In the Money
Options such amounts as it is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of 1986, as amended
(the "Code"), and the rules and regulations promulgated thereunder, or any
provision of any other law relating to taxes. To the extent that amounts are so
withheld by the Surviving Corporation or Parent, as the case may be, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Company Shares or In the Money Options in respect
to which such deduction and withholding was made by the Surviving Corporation or
Parent, as the case may be.
<PAGE>
Article III
REPRESENTATIONS AND WARRANTIES
Section 3.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Parent and Sub as follows, except as otherwise set
forth in the disclosure schedule attached hereto (the "Disclosure Schedule") and
except in all cases to the extent any of the following is affected by any
consequence relating to the pending governmental investigation into the
Company's Alcore, Inc. Subsidiary reflected in the government's search warrant
served January 7, 2000 and the affidavit supporting such search warrant and
relating to the allegations therein:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. The Company and each
Subsidiary (as defined in Section 3.1(b)) is a corporation duly organized,
validly existing and in good standing under the laws of its respective state of
incorporation and has the requisite corporate power and corporate authority to
own, lease and operate its properties and carry on its business as now being
conducted. The Company and each Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed would not have a Company Material Adverse Effect (as
defined below). As used in this Agreement, the term "Company Material Adverse
Affect" means any circumstance, event, change or effect that, individually or
when taken together with all other adverse circumstances, events, changes and
effects that are within the scope (excluding any qualification as to materiality
or Company Material Adverse Effect) of the representations and warranties made
by the Company in this Agreement, (A) is, or is reasonably likely to be,
materially adverse to the business or financial condition of the Company and its
Subsidiaries taken as a whole, or (B) impairs, or is reasonably likely to
impair, the consummation of the Merger or any of the other transactions
contemplated hereby. The Company has delivered to Parent complete and correct
copies of its Restated Charter and By-laws, as amended to the date of this
Agreement.
(b) SUBSIDIARIES. Section 3.1(b) of the Disclosure Schedule sets forth
the name, jurisdiction of incorporation, total capitalization and number of
shares of outstanding capital stock of each class owned, directly or indirectly,
by the Company of each corporation of which the Company owns, directly or
indirectly, a majority of the outstanding capital stock (individually, a
"Subsidiary" and, collectively, the "Subsidiaries"). All the issued and
outstanding shares of capital stock of each Subsidiary are validly issued, fully
paid and nonassessable. Other than 4 of the 3,000 shares of Alcore Brigantine
which are owned by officers of the Company and one of the Subsidiaries in
accordance with French law, all such shares owned, directly or indirectly, by
the Company are owned by the Company or a Subsidiary beneficially and of record,
free and clear of all liens, pledges, encumbrances or restrictions of any kind.
<PAGE>
No Subsidiary has outstanding any securities convertible into or exchangeable or
exercisable for any shares of its capital stock, and there are no outstanding
options, warrants, stock appreciation rights, phantom stock, stock equivalents,
subscription or other rights, agreements or commitments which either obligate
such Subsidiary to issue, sell or transfer or repurchase or redeem any shares of
its capital stock or other securities. Except for the Subsidiaries, the Company
does not own, directly or indirectly, any capital stock or other equity
securities of any corporation or have any direct or indirect equity interest in
any business. The Company has delivered to Parent complete and correct copies
of the Articles of Incorporation and By-laws of each Subsidiary, as amended to
the date of this Agreement.
(c) CAPITALIZATION. As of September 3, 1999, the authorized capital stock
of the Company consisted of 30,000,000 shares of Common Stock, par value $0.01
per share, and 2,000,000 shares of Preferred Stock, $1.00 par value per share
(1,000,000 shares of which had been designated "8% Cumulative Redeemable
Preferred Stock" and 1,000,000 shares of which remained undesignated).
At September 3, 1999, 5,286,206 shares of Common Stock and 1,000,000 shares of
Preferred Stock (all of which are 8% Cumulative Redeemable Preferred Stock) were
issued and outstanding, all of which are duly authorized, validly issued, fully
paid and non-assessable, and 536,835 shares of Common Stock were reserved for
issuance upon the exercise of outstanding Options of which 316,335 shares were
subject to In the Money Options. Except as set forth above, as of September 3,
1999 no shares of capital stock or other equity securities of the Company were
issued, reserved for issuance or outstanding. Section 3.1(c) of the Disclosure
Schedule sets forth each plan or agreement (collectively, the "Company Stock
Option Plans") pursuant to which any Options to acquire Common Stock have been,
or may be, granted as of September 3, 1999. Except as set forth above or in
Section 3.1(c) of the Disclosure Schedule, as of September 3, 1999 the Company
had no outstanding option, warrant, stock appreciation right, phantom stock,
stock equivalent, subscription or other right, agreement or commitment which
either obligated the Company to issue, sell or transfer, repurchase or redeem
any shares of the capital stock or other securities of the Company. As of
September 3, 1999 there were no voting trusts, proxies or other agreements or
understandings to which the Company or, to the best of Company's knowledge, any
stockholder of the Company, was a party with respect to the voting of the
capital stock of the Company.
(d) AUTHORITY; ENFORCEABILITY; NONCONTRAVENTION.
(i) The Company has the requisite corporate power and authority to enter
into this Agreement and the Termination Agreement and, subject to the adoption
of this Agreement by its stockholders as set forth in subsection 6.1(a) with
respect to the consummation of the Merger, to consummate the transactions
contemplated by this Agreement and the Termination Agreement. The execution
<PAGE>
and delivery of this Agreement and the Termination Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of the Company, subject to the adoption of this Agreement by its stockholders as
set forth in subsection 6.1(a). Each of this Agreement and the Termination
Agreement has been duly executed and delivered by the Company and, assuming this
Agreement and the Termination Agreement constitute the valid and binding
agreement of Parent and Sub, constitutes valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms except
that the enforceability hereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(ii) Subject to the receipt of consents or waivers from the parties listed in
Schedule 3.1(d) of the Disclosure Schedule and the receipt of the approvals and
completion of the filings referenced in Section 3.1(d)(iii) below, neither the
execution and delivery of this Agreement and the Termination Agreement nor the
consummation of the transactions contemplated hereby or thereby nor compliance
by the Company with any of the provisions hereof or thereof will (A) violate any
provision of its Restated Charter or By-laws or any of its Subsidiaries'
articles or certificates of incorporation or by-laws, (B) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default under, require notice to or the consent of any third party
under, or give rise to any right of termination, cancellation or acceleration or
any right which becomes effective upon the occurrence of a merger, consolidation
or change in control or ownership under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture or other instrument of
indebtedness for money borrowed to which the Company or any of its Subsidiaries
was a party, or by which the Company or any of its Subsidiaries or any of their
respective properties were bound as of September 3, 1999, except for violations,
breaches, defaults or rights which, individually or in the aggregate, would not
or could not reasonably be expected to result in a Company Material Adverse
Effect, (C) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default under, require notice to or the
consent of any third party under, or give rise to any right of termination,
cancellation or acceleration or any right which becomes effective upon the
occurrence of a merger, consolidation or change in control or ownership under,
any of the terms, conditions or provisions of any license, franchise, permit,
lease or agreement to which the Company or any of its Subsidiaries was a party,
or by which the Company or any of its Subsidiaries or any of their respective
properties may have been bound as of September 3, 1999, except for violations,
breaches, defaults or rights which, individually or in the aggregate, would not
or could not reasonably be expected to result in a Company Material Adverse
Effect, or (D) violate any law by which the Company or any of its Subsidiaries
or any of their respective properties was bound as of September 3, 1999, except
for violations, breaches, defaults or rights which, individually or in the
aggregate, would not or could not reasonably be expected to result in a Company
Material Adverse Effect.
(iii) No filing or registration with, notification to, or authorization, consent
or approval of, any governmental entity is required in connection with the
execution and delivery of this Agreement and the Termination Agreement by the
Company, or the consummation by the Company of the transactions contemplated
hereby or thereby, except (A) in connection, or in compliance, with the
provisions of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (B) the filing of a certificate of merger with the Delaware Secretary of
State, (C) such filings and consents as may be required under any environmental
law pertaining to any notification, disclosure or required approval triggered by
the Merger or the transactions contemplated by this Agreement, (D) filing with,
and approval of, the Securities and Exchange Commission (the "SEC") with respect
to the delisting and deregistration of the Common Stock, (E) in connection with
the applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "H-S-R Act") and (F) such other consents, approvals,
orders, authorizations, notifications, registrations, declarations and filings
not obtained or made prior to the consummation of the Merger, the failure of
which to be obtained or made would not, individually or in the aggregate,
materially impair the Company's ability to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby.
(e) SEC REPORTS; FINANCIAL STATEMENTS. (i) Except as set forth in Section 3.1(e)
of the Disclosure Schedule, as of September 3, 1999 the Company had filed all
required forms, reports and documents with the SEC since January 1, 1996, each
of which has complied in all material respects with all applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
Exchange Act, each as in effect on the dates such forms, reports and documents
were filed. The Company has heretofore made available to Parent, in the form
filed with the SEC (including any amendments thereto), (i) its Annual Reports on
Form 10-K for each of the fiscal years ended December 31, 1996, 1997 and 1998,
(ii) all definitive proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since January 1, 1996 through
September 3, 1999, and (iii) all other reports or registration statements filed
by the Company with the SEC since January 1, 1996 through September 3, 1999 (the
"SEC Reports"). Except as set forth on Section 3.1(e) of the Disclosure
Schedule, none of such forms, reports or documents, including, without
limitation, any financial statements or schedules included or incorporated by
reference therein, contained, when filed, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Except as
set forth on Section 3.1(e) of the Disclosure Schedule, the financial statements
and related schedules and notes thereto of the Company contained in the SEC
Reports (or incorporated therein by reference) were prepared in accordance with
generally accepted accounting principles applied on a consistent basis except as
noted therein, and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and, if
applicable, the cash flows for the periods then ended, subject (in the case of
interim unaudited financial statements) to normal year-end audit adjustments,
and such financial statements complied as of their respective dates in all
material respects with applicable rules and regulations of the SEC. Except as
set forth on Section 3.1(e) of the Disclosure Schedule, each SEC Report was
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as applicable. (ii) As of September 3, 1999 neither the Company
nor any of its Subsidiaries, nor any of their respective assets, businesses, or
operations, was a party to, or was bound by or affected by, or received any
benefits under any contract or agreement or amendment thereto, that in each case
was required to be filed as an exhibit to an SEC Report, that has not been, or
timely will not be, filed as an exhibit to an SEC Report. (f) ABSENCE OF CERTAIN
CHANGES OR EVENTS. Except as may be disclosed in the SEC Reports or disclosed in
Section 3.1(f) of the Disclosure Schedule, since June 30, 1999 up through
September 3, 1999 the Company and its Subsidiaries have conducted business in
the ordinary course, and there has not been (i) any change in the business,
assets, financial condition or results of operations of the Company or any other
event which in any such case has had or could reasonably be expected to have a
Company Material Adverse Effect; (ii) any damage, destruction or loss, whether
covered by insurance or not, having a material adverse effect upon the
properties or business of the Company; (iii) any declaration, setting aside or
payment of any dividend, or other distribution in respect of the capital stock
of the Company or any redemption or other acquisition by the Company of any of
its capital stock; (iv) any issuance by the Company, or commitment of the
Company to issue, any shares of its Common Stock or securities convertible into
or exchangeable for shares of its Common Stock or Preferred Stock other than the
issuance of Common Stock to any persons exercising Options; (v) any increase in
the rate or terms of compensation payable or to become payable by the Company to
its directors, officers or employees, except increases occurring in the ordinary
course of business in accordance with its customary past practices; (vi) any
grant or increase in the rate or terms of any bonus, insurance, pension,
severance or other employee benefit plan, payment or arrangement made to, for or
with any directors, officers or employees, except increases occurring in the
ordinary course of business in accordance with its customary past practices;
(vii) any change by the Company in accounting methods, principles or practices
except as required by generally accepted accounting principles; (viii) any stock
split, reverse stock split, combination or reclassification of the Common Stock;
(ix) any change in the terms and conditions of the Company Stock Option Plans
except as contemplated hereby; or (x) any agreement or commitment, whether in
writing or otherwise, to take any action described in this subsection 3.1(f).
(g) COMPANY PROXY MATERIALS. All of the information supplied by the Company for
inclusion in the Definitive Proxy Statement referred to in Section 5.2 hereof
will not, on the date when the Definitive Proxy Statement is first mailed to the
Company's shareholders, and the Definitive Proxy Statement, as then amended or
supplemented, will not, on the date of the Company's stockholders' meeting
referred to in Section 5.1 hereof or on the Closing Date (as defined in Section
1.3 hereof), contain any statement which is false or misleading with respect to
any material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty regarding information
furnished by Parent or Sub for inclusion in the Definitive Proxy Statement (or
any amendment or supplement thereto). (h) BOARD RECOMMENDATION. As of the date
hereof, the Board of Directors of the Company has recommended that the
stockholders of the Company vote for adoption of this Agreement, subject to
Section 5.8. (i) UNDISCLOSED LIABILITIES. Except as set forth in Section 3.1(i)
of the Disclosure Schedule, as of September 3, 1999 the Company had no material
liability (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due, including any liability for
taxes), except for (i) liabilities, obligations or contingencies that were
reflected or reserved against the audited consolidated balance sheet of the
Company and its Subsidiaries dated as of December 31, 1998, (ii) liabilities
which have arisen after December 31, 1998 in the ordinary course of business,
and (iii) liabilities which individually or in the aggregate would not have a
Company Material Adverse Effect. (j) BROKERS. Other than Allen & Company
Incorporated ("Allen"), the fees and expenses of which shall be paid by the
Company, no broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based on arrangements made by or on behalf of the Company or any of its
Affiliates. (k) LITIGATION. Except as disclosed by the Company in the SEC
Reports or in Section 3.1(k) of the Disclosure Schedule, as of September 3, 1999
there was no suit, claim, action, proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries or any of their respective properties or assets before any court or
governmental entity, nor, to the knowledge of the Company as of September 3,
1999, were there any facts that are reasonably likely to give rise to any such
suit, claim, action, proceeding or investigation. Except as disclosed in the SEC
Reports or in Section 3.1(k) of the Disclosure Schedule, as of September 3, 1999
neither the Company nor any of its Subsidiaries was subject to any outstanding
order, writ, injunction or decree. (l) COMPLIANCE WITH APPLICABLE LAW. Except as
disclosed by the Company in the SEC Reports, as of September 3, 1999 the Company
and its Subsidiaries held all permits, licenses, variances, exemptions, orders
and approvals of all governmental entities necessary for the lawful conduct of
their respective businesses (the "Company Permits") and as of September 3, 1999
the Company and its Subsidiaries were in compliance with the terms of the
Company Permits except for such failure or noncompliance which, individually or
in the aggregate, would not or could not reasonably be expected to have a
Company Material Adverse Effect. Except as disclosed in Section 3.1(l) of the
Disclosure Schedule, as of September 3, 1999 the businesses of the Company and
its Subsidiaries were not conducted in violation of any law, ordinance or
regulation of any governmental entity, except for such violations which,
individually or in the aggregate, would not or could not reasonably be expected
to have a Company Material Adverse Effect. Except as disclosed in Section 3.1(l)
of the Disclosure Schedule, as of September 3, 1999 no investigation by any
governmental entity with respect to the Company or any of its Subsidiaries was
pending or, to the Company's knowledge, threatened nor had any governmental
entity indicated an intention to conduct the same, except for such violations
which, individually or in the aggregate, would not or could not reasonably be
expected to have a Company Material Adverse Effect. (m) TAXES. (i) For purposes
of this Agreement, "Tax" or "Taxes shall mean taxes, fees, levies, duties,
tariffs, imposts and governmental impositions or charges of any kind in the
nature of (or similar to) taxes, payable to any federal, state, provincial,
local or foreign taxing authority, including, without limitation (A) income,
franchise, profits, gross receipts, ad valorem, net worth, value added, sales,
use, service, real or personal property, special assessments, capital stock,
license, payroll, withholding, employment, social security, workers'
compensation, unemployment compensation, utility, severance, production, excise,
stamp, occupation, premiums, windfall profits, transfer and gains taxes and (B)
interest, penalties, additional taxes and additions to tax imposed in respect
thereto; and "Tax Returns" shall mean returns, reports and information
statements with respect to Taxes required to be filed with the Internal Revenue
Service (the "IRS") or any other taxing authority, domestic or foreign,
including, without limitation, consolidated, combined and unitary tax returns.
(ii) Except as set forth in Section 3.1(m) of the Disclosure Schedule, as of
September 3, 1999 each of the Company and its Subsidiaries had filed, or caused
to be filed, within the time and in the manner prescribed by law, or had timely
applied for extensions of time to file, all material Tax Returns required to be
filed by it, and all such Tax Returns which have been filed are accurate and
complete in all material respects. Except as set forth in Section 3.1(m) of the
Disclosure Schedule, as of September 3, 1999 each of the Company and its
Subsidiaries had paid or discharged (or there has been paid or discharged on its
behalf) within the time and in the manner prescribed by law all Taxes required
to be paid, withheld or deducted or for which any of the Company or its
Subsidiaries was liable, except such Taxes as were being contested in good faith
by appropriate proceedings (to the extent that such proceedings are required)
and with respect to which the Company had set up an adequate reserve for payment
of such Taxes. Except as set forth in Section 3.1(m) of the Disclosure Schedule.
as of September 3, 1999 the Company had set up an adequate reserve on the
Company balance sheet for all Taxes required to be paid by the Company and each
of its Subsidiaries through September 3, 1999 and no Taxes have been incurred by
the Company or any of its Subsidiaries after such date which were not incurred
in the ordinary course of business. Except as set forth in Section 3.1(m) of the
Disclosure Schedule, as of September 3, 1999 no material deficiencies for any
taxes were proposed to, or asserted or assessed against the Company or any of
its Subsidiaries or were pending, and no requests for waivers of time to assess
any such Taxes were pending or were consented to by the Company or any of its
Subsidiaries. Except as set forth in Section 3.1(m) of the Disclosure Schedule,
as of September 3, 1999 neither the Company nor any Subsidiary had requested any
extension of time within which to file any Tax Return in respect of any taxable
year, which Tax Return has not since been filed. Except as set forth in Section
3.1(m) of the Disclosure Schedule, as of September 3, 1999 the federal income
Tax Returns of the Company and its Subsidiaries had not been examined by the IRS
during the past three years. None of the Company or its Subsidiaries has been a
member of an affiliated group of corporations which has filed a consolidated
federal income Tax Return (other than the group of which the Company is the
common parent) or otherwise has any liability for Taxes of any person (other
than the Company and its Subsidiaries) under Treas. Reg. Section 1.1502-6, any
similar provision of state, local or foreign law, or by reason of its status as
a transferee, successor, indemnitor or otherwise. (n) TERMINATION, SEVERANCE AND
EMPLOYMENT AGREEMENTS. Section 3.1(n) of the Disclosure Schedule contains a
complete and accurate list of each (i) employment or severance agreement as of
September 3, 1999 not terminable without liability or obligation on 30 days' or
less notice; (ii) agreement with any director, officer or other employee of the
Company or any of its Subsidiaries as of September 3, 1999 (A) the benefits of
which are contingent, or the terms of which are materially altered, on the
occurrence of a transaction involving the Company or any of its Subsidiaries of
the nature of any of the transactions contemplated by this Agreement or relating
to an actual or potential change in control of the Company or any of its
Subsidiaries or (B) providing any term of employment or other compensation
guarantee or extending severance benefits or other benefits after termination
not comparable to benefits available to employees of the Company or its
Subsidiaries generally; (iii) agreement, plan or arrangement as of September 3,
1999 under which any person may receive payments that may be subject to tax
imposed by Section 4999 of the Code or included in the determination of such
person's "parachute payment" under Section 280G of the Code; and (iv) agreement
or plan as of September 3, 1999, including, but not limited to, any stock option
plan, stock appreciation right plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement. Except as set forth in Section 3.1(n) of the Disclosure
Schedule, as of September 3, 1999 neither the Company nor any of its
Subsidiaries had entered into or amended any written employment or severance
agreement with any director, officer or other employee of the Company or any of
its Subsidiaries or granted any severance or termination pay to any director,
officer or employee of the Company or any of its Subsidiaries. (o) EMPLOYEE
BENEFIT PLANS, ERISA. (i) Except as set forth in Schedule 3.1(o) of the
Disclosure Schedule, as of September 3, 1999 the Company did not maintain,
administer, contribute to or have any liability under, and had not maintained,
administered, contributed to or had any liability under any: employee pension
benefit plan (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) ("Pension Plan"), including, without
limitation, any multiemployer plan as defined in Section 3(37) of ERISA
("Multiemployer Plan") or any non-qualified deferred compensation plan or
retirement plan; employee welfare benefit plan (as defined in Section 3(1) of
ERISA) ("Welfare Plan"), including any other plan, program, agreement or
arrangement under which former employees of the Company (or their beneficiaries)
are entitled, or current employees of the Company will be entitled, following
termination of employment, to medical, health or life insurance or other
benefits other than pursuant to benefit continuation rights granted by state or
federal law; or bonus, stock, stock purchase, or stock option plan, severance
plan, salary continuation, vacation, sick leave, fringe benefit, incentive,
insurance, welfare or similar plan or arrangement ("Employee Benefit Plan"). The
Pension Plans, Welfare Plans and Employee Benefit Plans shall be collectively
referred to herein as the "Plans". (ii) As of September 3, 1999 neither the
Company, nor any corporation or business which was then or at the relevant time
was an affiliate of the Company, as determined under Section 414(b), (c), (m) or
(o) of the Code (an "ERISA Affiliate"), (A) maintained, administered,
contributeed to or had any liability under any pension plan subject to the
minimum funding standards set forth in Section 412 of the Code or subject to
Title IV of ERISA; or (B) had ever maintained, administered, contributed to or
had any liability under any Pension Plan subject to either the Code Section 412
minimum funding standards or Title IV of ERISA, other than a Plan as to which
all liabilities have been satisfied in full. (iii) As of September 3, 1999 all
Plans and related trusts, insurance contracts or other funding arrangements had
been maintained and administered in all respects in material compliance with
each applicable provision of ERISA, the Code, other federal statutes, state law
(including, without limitation, state insurance law) and the regulations and
rules promulgated pursuant thereto or in connection therewith. As of September
3, 1999 each Pension Plan which was intended to be qualified under Code Section
401(a) had been administered in material compliance with such requirements and
had received a post-Tax Reform Act of 1986 determination letter from the IRS
that such Pension Plan satisfies the requirements of Section 401(a) of the Code,
and to the Company's knowledge, nothing has occurred since the issuance of such
letter that would adversely affect the tax qualified status of any of the
Pension Plans. (iv) Contributions with respect to all current Plan years (i.e.,
from the first day of the current plan year to the Closing Date) shall be made
or accrued prior to the Closing Date by Company with respect to each Pension
Plan. With respect to all other Welfare Plans and Employee Benefit Plans, all
required or recommended (in accordance with plan terms and past practice)
payments, premiums, contributions, reimbursements or accruals for all periods
ending prior to or as of the Closing Date shall have been made or properly
accrued on the financial statements. As of September 3, 1999 none of the Plans
had any material unfunded liabilities which were not reflected on the financial
statements of the Company. The Company has no plans, programs, arrangements or
made any other commitments to its employees, former employees or their
beneficiaries under which it has any obligation to provide any retiree or other
employee benefit payments which are not adequately funded through a trust,
insurance or other funding arrangement. As of September 3, 1999 there have been
no changes in the operation or interpretation of any of the Plans since the most
recent annual report which would have any material effect on the cost of
operating or maintaining such Plans. (v) No Pension Plan has been terminated
other than a Plan as to which all liabilities have been satisfied in full. Any
Plan which has been terminated has been terminated in compliance with ERISA and
the Code, all required reports, certifications or notices, have been or will be
appropriately filed or distributed and an application for a favorable
determination letter has been or will be filed with the IRS. (vi) The Company
has made available to Parent true and complete copies of: (A) the plan documents
and any related trusts or funding vehicles, policies or contracts and the
related summary plan descriptions with respect to each Plan as of September 3,
1999; (B) any pending applications, filings or notices as of September 3, 1999
with respect to any of the Plans with the IRS, the pension Benefit Guaranty
Corporation, the Department of Labor or any other governmental agency; (C) the
latest financial statements and annual reports for each of the Plans and related
trusts or funding vehicles, policies or contracts as of the end of the most
recent plan year with respect to which the filing date for such information had
passed as of September 3, 1999; and (D) all corporate resolutions or other
documents pertaining to the adoption of the Plans or any amendments thereto as
of September 3, 1999. (vii) As of September 3, 1999 there were no pending or, to
the Company's knowledge, threatened claims, lawsuits or arbitration asserted or
instituted against any of the Plans by any employee or beneficiary covered under
any Plans or otherwise involving any Plans (other than routine claims for
benefits); and as of September 3, 1999 the Company had no knowledge of any facts
which would give rise to or could reasonably be expected to give rise to any
such claims, lawsuits or arbitrations. (viii) Except as provided for in this
Agreement or as disclosed in Section 3.1(o) of the Disclosure Schedule, as of
September 3, 1999 the consummation of the transactions contemplated by this
Agreement would not (A) entitle any current or former director, officer or
employee of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, or (B) accelerate the time of payment or
vesting or increase the amount of compensation due any such employee or officer.
(ix) As of September 3, 1999 no liability had been or was expected to be
incurred by the Company or any ERISA Affiliate under or pursuant to the Code or
Title I or IV of ERISA or the penalty, excise tax or joint and several liability
provisions of the Code or ERISA relating to the Plans and, to the knowledge of
the Company as of September 3, 1999 no event, transaction or condition had
occurred or existed that could result in any such liability to the Company or
any ERISA Affiliate or, following the Closing, the Company, any ERISA Affiliate,
the Purchaser or any such Plan. (x) As of September 3, 1999 at no time had the
Company or any of its Subsidiaries contributed to, been required to contribute
to, or incurred any withdrawal liability (within the meaning of Section 4201 of
ERISA) with respect to any Plan which is a Multiemployer Plan. (xi) Except as
set forth in Schedule 3.1(o) of the Disclosure Schedule, with respect to all
Plans other than Multiemployer Plans, which are funded, or are required by
applicable law to be funded, the present value of all accrued benefits (vested
and non vested) of each such Plan as of the Closing Date, will not exceed the
fair market value of the assets of each such Plan as of the Closing Date. (xii)
As of September 3, 1999 no prohibited transaction (as defined in Section 4975 of
the Code or Section 406 of ERISA) had occurred with respect to any Plan listed
other than a Multiemployer Plan, which could subject any such Plan or any
related trust, the Company, any ERISA Affiliate, the Purchaser or any director
or employee of any of them to any tax or penalty imposed under Section 4975 of
the Code or Section 502(i) or 502(l) of ERISA, either directly or indirectly,
and whether by way of indemnity or otherwise. (p) ENVIRONMENTAL MATTERS. Other
than those the failure to obtain or comply with, individually or in the
aggregate, would not result or could not reasonably be expected to result in a
Company Material Adverse Effect, as of September 3, 1999 the Company and each of
its Subsidiaries had obtained and was in compliance in all material respects
with the terms and conditions of all required permits, licenses, registrations
and other authorizations required under Environmental Laws. Other than where
such, individually or in the aggregate, would not result or could not reasonably
be expected to result in a Company Material Adverse Effect, as of September 3,
1999 no asbestos in a friable condition, equipment containing polychlorinated
biphenyls, or leaking underground or above-ground storage tanks were contained
in or located at any facility then owned, leased or controlled by the Company or
any of its Subsidiaries, nor was any of the foregoing contained in or located at
any facility previously owned, leased or controlled by the Company or any of its
Subsidiaries. Other than as set forth in Section 3.1(p) of the Disclosure
Schedule and where such, individually or in the aggregate, would not result or
could not reasonably be expected to result in a Company Material Adverse Effect
with respect to each of the following matters, as of September 3, 1999 neither
the Company nor any of its Subsidiaries had released, discharged or disposed of
on, under or about any facility then or previously owned, leased or controlled
by the Company or any of its Subsidiaries, any Hazardous Substances, and no
third party had released, discharged or disposed of on, under or about any
facility then or previously owned, leased or controlled by the Company or any of
its Subsidiaries, any Hazardous Substances, except for ordinary and necessary
quantities of cleaning, pest control and office supplies and other chemicals
used in the ordinary course of business and used and stored in compliance with
applicable Environmental Laws, or ordinary rubbish, debris and non-hazardous
solid waste stored in garbage cans or bins for regular disposal off-site, or
petroleum contained in, and de minimis quantities discharged from, motor
vehicles in their ordinary operation on real property owned, used or leased by
the Company and its Subsidiaries. Except as disclosed in Secion 3.1(p) of the
Disclosure Schedule, as of September 3, 1999. The Company and each of its
Subsidiaries was in compliance with all applicable Environmental Laws, except
for such non-compliances which, individually or in the aggregate, would not
result or could not reasonably be expected to result in a Company Material
Adverse Effect. Section 3.1(p) of the Disclosure Schedule contains a true and
accurate list of (i) all past and present until September 3, 1999 material
noncompliance by the Company and each of its Subsidiaries with, or liability
under, Environmental Laws and (ii) all past discharges, emissions, leaks,
releases or disposals by it as of September 3, 1999 of any substance or waste
regulated under or defined by Environmental Laws that have formed or could
reasonably be expected to form the basis of any material claim, action, suit,
proceeding, hearing or investigation against the Company or any of its
Subsidiaries under any applicable Environmental Laws. Except as set forth in
Section 3.1(p) of the Disclosure Schedule, with respect to environmental
matters, as of September 3, 1999 neither the Company nor any of its Subsidiaries
had received notice of any past or present events, conditions, circumstances,
activities, practices, incidents, actions or plans of the Company or its
Subsidiaries that have resulted in or threaten to result in any material common
law or legal liability, or otherwise form the basis of any material claim,
action, suit, proceeding, hearing or investigation under, any applicable
Environmental Laws. For purposes of this Section 3.1(p), (i) "Environmental
Laws" mean applicable federal, state, local and foreign laws, regulations and
codes relating in any respect to pollution or protection of the environment and
(ii) "Hazardous Substances" means any toxic, caustic, or otherwise dangerous
substance (whether or not regulated under federal, state or local environmental
statutes, rules, ordinances, or orders), including (A) "hazardous substance" as
defined in 42 U.S.C. Section 9601, and (B) petroleum products, derivatives,
byproducts and other hydrocarbons. (q) ASSETS; PROPERTY; INTELLECTUAL PROPERTY.
(i) As of September 3, 1999, the Company and its Subsidiaries owned or had
rights to use all assets necessary to permit the Company and its Subsidiaries to
conduct their businesses as they were currently being conducted, except where a
failure to own or have the right to use such assets, individually or in the
aggregate, would not or could not reasonably be expected to have a Company
Material Adverse Effect. (ii) Except as disclosed in Section 3.1(q) of the
Disclosure Schedule, as of September 3, 1999 the Company had, directly or
through its Subsidiaries, either (A) good, valid and marketable or indefeasible
title to all real property owned by the Company or any Subsidiary, all of which
is described in Section 3.1(q) of the Disclosure Schedule, and all personal
property material to its business operations which was owned by it was owned in
fee, and, in the case of both of such owned real property and such owned
personal property, free and clear of any liens, encumbrances, mortgages and
security interests other than Permitted Liens, or (B) rights by lease or other
agreement to use all the real and personal property material to its business
operations. The term "Permitted Liens" shall mean (A) liens or encumbrances for
water, sewage and similar charges and current taxes and assessments, in each
case, not yet due and payable or being contested in good faith and for which
adequate reserves have been established, (B) mechanics', carriers', workers',
repairers', materialmen's, warehousemen's and other similar liens or
encumbrances arising or incurred in the ordinary course of business, (C) liens,
encumbrances, mortgages and security interests arising or resulting from any
action taken by Parent, (D) liens, encumbrances, mortgages and security
interests of record or securing indebtedness described in Section 3.1(q) of the
Disclosure Schedule and (E) easements, rights of way, restrictions and other
similar charges or encumbrances that do not materially interfere with the
ordinary conduct of the Company's business. True and complete copies of all
mortgages encumbering the real property as of September 3, 1999 described in
Section 3.1(q) of the Disclosure Schedule, and all amendments thereto as of
September 3, 1999, have been delivered to Parent. All real property leases under
which the Company or any of its Subsidiaries was a lessee or lessor as of
September 3, 1999 (the "Leases") were valid, binding and enforceable in all
material respects in accordance with their terms, and there were no existing
defaults thereunder as of September 3, 1999. True and complete copies of the
Leases, and all amendments thereto as of September 3, 1999, have been delivered
to Parent. As of September 3, 1999, the Company had not received notice of and
did not otherwise have knowledge of any condemnation, requisition or taking by
any public authority of all or any portion of its owned or leased real property.
Except as disclosed in Section 3.1(q) of the Disclosure Schedule, as of
September 3, 1999 there was no construction work being done at, or construction
materials being supplied to, the real property owned or leased by the Company,
except in connection with routine maintenance projects. The Company is liable
for invoices for construction occurring prior to September 3, 1999 as set forth
in Section 3.1(q) of the Disclosure Schedule. (iii) Section 3.1(q) of the
Disclosure Schedule identifies all of the following which were used in the
Company's or any of its Subsidiaries' businesses or in which the Company or any
of its Subsidiaries claimed any ownership rights as of September 3, 1999: (A)
all trademarks, service marks, slogans, trade names, trade dress and the like
(collectively with the associated goodwill of each, "Trademarks"), together with
information regarding all registrations and pending applications to register any
such rights anywhere in the world; (B) all common law Trademarks; (C) all
patents on, and pending applications to patent, any technology or design
(collectively "Patents"); (D) all registrations of and applications to register
copyrights since 1978 (collectively, "Copyrights"); and (E) all rights in and
licenses to Trademarks, Patents and Copyrights, whether licensed to or by the
Company or any of its Subsidiaries. The proprietary rights required to be so
identified in clauses (A) - (E) herein are referred to herein collectively as
the "Intellectual Property". (iv) Except as identified in Section 3.1(q) of the
Disclosure Schedule: as of September 3, 1999 (A) the Company or one of its
Subsidiaries was the owner of or duly licensed to use each Trademark and its
associated goodwill; (B) each Trademark registration existed and had been
maintained in good standing; (C) each patent and application included in the
Intellectual Property existed, was owned by or licensed to the Company or one of
its Subsidiaries, and had been maintained in good standing; (D) each Copyright
existed and was owned by or licensed to the Company or its Subsidiaries; (E)
other than such as, individually or in the aggregate, would not or could not be
reasonably expected to result in a Company Material Adverse Effect, no other
firm, corporation, association or person claimed the right to use in connection
with similar or related goods and in any geographic area, any mark, logo, name,
symbol, device, or slogan which was identical or confusingly similar to any of
the Trademarks or which could serve to dilute the distinctiveness of the
Trademarks; (F) other than such as, individually or in the aggregate, would not
or could not reasonably be expected to result in a Company Material Adverse
Effect, no third party claimed or asserted ownership rights in any of the
Intellectual Property; (G) other than such as, individually or in the aggregate,
would not or could not reasonably be expected to result in a Company Material
Adverse Effect, the use by the Company or any of its Subsidiaries of any
Intellectual Property did not, and had never been alleged to, infringe any right
of any third party; and (H) other than such as, individually or in the
aggregate, would not or could not be reasonably expected to result in a Company
Material Adverse Effect, no third party was infringing, or had ever been accused
by the Company of infringing, on any rights of the Company or any of its
Subsidiaries in any of the Intellectual Property. Section 3.1(q) of the
Disclosure Schedule sets forth a description of all known claims made or facts
known to the Company or any of its Subsidiaries as of September 3, 1999
regarding any third party claims or actions to use a trademark confusingly
similar to the Trademarks then owned or used by the Company or any of its
Subsidiaries anywhere in the world or to use technology which infringes any of
the Company's Intellectual Property, other than such as, individually or in the
aggregate, would not or could not reasonably be expected to result in a Company
Material Adverse Effect . (r) SYSTEMS AND SOFTWARE. As of September 3, 1999 the
Company and its Subsidiaries owned or had the right to use pursuant to lease,
license, sublicense, agreement, or permission all computer hardware, software
and information systems necessary for the operation of the businesses of the
Company and its Subsidiaries as then conducted (collectively, "Systems"). Each
System owned or used by the Company or its Subsidiaries immediately prior to the
Effective Time will be owned or available for use by the Surviving Corporation
or its Subsidiaries on identical terms and conditions immediately subsequent to
the Effective Time. As of September 3, 1999 with respect to each System then
owned by a third party and used by the Company or its Subsidiaries pursuant to
lease, license, sublicense, agreement or permission: (i) the lease, license,
sublicense, agreement, or permission covering the System was legal, valid,
binding and enforceable, and in full force and effect; (ii) the lease, license,
sublicense, agreement, or permission will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
Effective Time; (iii) with respect to any such lease, license, sublicense,
agreement, or permission the Company was not in breach or default, and no event
had occurred which with notice or lapse of time would constitute a breach or
default by the Company or permit termination, modification, or acceleration
thereunder; (iv) no party to any such lease, license, sublicense, agreement, or
permission had repudiated any provision thereof; (v) neither the Company nor its
Subsidiaries had granted any sublicense, sublease or similar right with respect
to any such lease, license, sublicense, agreement, or permission; (vi) the
Company's or its Subsidiaries' use and continued use of such Systems will not
interfere with, infringe upon, misappropriate, or otherwise come into conflict
with, any intellectual property rights of third parties as a result of the
continued operation of its business as presently conducted other than such as,
individually or in the aggregate, would not or could not reasonably be expected
to result in a Company Material Adverse Effect. (s) LABOR MATTERS. (i) Neither
the Company nor any of its Subsidiaries had, since June 30, 1999 through
September 3, 1999, (A) been subject to, or threatened with, any material strike,
lockout or other labor dispute or engaged in any unfair labor practice, or (B)
received notice of any pending petition for certification before the National
Labor Relations Board with respect to any material group of employees of the
Company or any of its Subsidiaries who are not currently organized. Except as
set forth in Section 3.1(s) of the Disclosure Schedule, as of September 3, 1999
neither the Company nor any of its Subsidiaries had any collective bargaining
agreements. (ii) As of September 3, 1999 the Company and its Subsidiaries had
complied in all material respects with the Workers Adjustment and Retraining Act
of 1988, as amended, including, but not limited to, the provision of all
required notices or payments in lieu thereof. (t) AFFILIATE TRANSACTIONS. Except
as set forth in Section 3.1(t) of the Disclosure Schedule, the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 accurately describes
all arrangements, agreements, contracts and transactions (the "Affiliate
Transactions") to which the Company or any of its Subsidiaries or any of their
respective properties was subject as of September 3, 1999 involving (i) any
consultant, (ii) any person who is an officer, director or affiliate of the
Company or any of its Subsidiaries, (iii) any relative of any of the foregoing,
or (iv) any entity of which any of the foregoing is an affiliate. Copies of such
arrangements, agreements and contracts have previously been delivered or made
available to Parent and Sub, are listed in Section 3.1(t) of the Disclosure
Schedule and are true, correct and complete. Each Affiliate Transaction is on
terms at least as favorable to the Company or any relevant Subsidiary as could
have been obtained from an unaffiliated third party. (u) YEAR 2000. Except as
would not reasonably be expected to have a Company Material Adverse Affect, as
of September 3, 1999 no Systems have been materially adversely affected by Year
2000; provided, that the Company does not represent or warrant that the
databases and systems of its material suppliers and customers have not been
adversely affected due to the Year 2000. As of September 3, 1999, none of the
Intellectual Property or other material assets of the Company and its
Subsidiaries used in their then current business were materially adversely
affected notwithstanding Year 2000 other than such as, individually or in the
aggregate, would not or could not reasonably be expected to result in a Company
Material Adverse Effect. As used herein, the term "Year 2000" means the
occurrence of or calculation involving the Year 2000 A.D., or other calendar
dates occurring through December 31, 2010. (v) REPRESENTATIONS AND WARRANTIES.
None of the information contained in the representations and warranties of the
Company set forth in this Agreement or in any certificate or writing delivered
to Parent or Sub as contemplated by this Agreement contains as of the date
hereof, or as amended and supplemented by the Audited Statements and the
Disclosure Updates referenced in Section 5.13 herein will contain as of Closing
Date, any untrue statement of a material fact or omits or as amended and
supplemented by the Audited Statements and the Disclosure Updates referenced in
Section 5.13 herein will omit to state a material fact necessary to make the
statements contained herein or therein not misleading. Section 3.2.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Parent and Sub represent and
warrant to the Company as follows: (a) ORGANIZATION, STANDING AND CORPORATE
POWER. Each of Parent and Sub is a corporation duly organized and validly
existing under the laws of the State of Delaware. Neither Parent nor Sub nor any
of their affiliates may be deemed to be a "foreign person" within the meaning of
the Exon-Florio Act, 50 USC 2170. Each of Parent and Sub has the requisite power
(corporate or otherwise) and authority (corporate or otherwise) to carry on its
business as now being conducted. Each of Parent and Sub is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed would not have a Parent
Material Adverse Effect (as defined below). As used in this Agreement, the term
"Parent Material Adverse Effect" means any circumstance, event, change or effect
that, individually or taken together with all adverse circumstances, changes and
effects that are within the scope (excluding any qualification as to materiality
or Parent Material Adverse Effect) of the representations made by Parent or Sub
in this Agreement, impairs, or is reasonably likely to impair, the consummation
of the Merger or any of the other transactions contemplated hereby. (b)
AUTHORITY; ENFORCEABILITY; NONCONTRAVENTION. Parent and Sub have all requisite
corporate power and authority to enter into this Agreement and the Termination
Agreement and to consummate the transactions contemplated by this Agreement and
the Termination Agreement. The execution and delivery of this Agreement and the
Termination Agreement by Parent and Sub and the consummation by Parent and Sub
of the transactions contemplated by this Agreement and the Termination Agreement
have been duly authorized by all necessary corporate action on the part of
Parent and Sub. Each of this Agreement and the Termination Agreement has been
duly executed and delivered by and, assuming this Agreement and the Termination
Agreement constitute the valid and binding agreement of the Company, constitutes
a valid and binding obligation of each of Parent and Sub, enforceable against
such party in accordance with their terms, except that the enforceability hereof
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. The execution and
delivery of this Agreement and the Termination Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement and the Termination Agreement will not,
(i) violate any of the provisions of the Articles of Incorporation or By-laws of
the Parent or Sub or (ii) conflict with, result in a breach of or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, or require the consent of any person under, any
indenture or other agreement, or undertaking to which the Parent or the Sub is a
party or by which the Parent or the Sub or any of its assets is bound, which
would have a Parent Material Adverse Effect or prevent consummation of the
transactions contemplated . (c) PROXY MATERIALS. All of the information to be
furnished by Parent or Sub for inclusion in the Definitive Proxy Statement (or
any amendment or supplement thereto) will not, on the date it is first mailed to
the Company's stockholders, and, as then amended or supplemented, on the date of
the Company's stockholders' meeting referred to in Section 5.1 hereof or on the
Closing Date, contain any statement which is false or misleading with respect to
any material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. (d) BROKERS. No
broker, investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based on
arrangements made by or on behalf of Parent or any of its Affiliates. Article IV
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER Section 4.1. CONDUCT
OF BUSINESS OF THE COMPANY. Except as contemplated or otherwise permitted by
this Agreement, during the period from the Audit Delivery Date (as defined in
Section 5.13) to the Effective Time, the Company shall use its reasonable best
efforts to operate, and to cause each Subsidiary to operate, its business in the
ordinary course in all material respects and comply with applicable laws in all
material respects. Without limiting the generality of the foregoing, during the
period from the Audit Delivery Date to the Effective Time, except as expressly
contemplated by this Agreement and except as set forth in Section 4.1 of the
Disclosure Schedule, the Company shall not, and will not permit its Subsidiaries
to, without the prior written consent of Parent: (i) (x) declare, set aside or
pay any dividends on, or make any other distributions (whether in cash, stock or
property or any combination thereof) in respect of, any of the Company's or any
Subsidiary's outstanding capital stock, (y) split, combine or reclassify any of
its outstanding capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
outstanding capital stock, or (z) purchase, redeem or otherwise acquire any
shares of its outstanding capital stock or any rights, warrants or options to
acquire any such shares; (ii) authorize for issuance, issue, sell, grant,
deliver, or agree or commit to issue, sell or deliver (whether through the
issuance or granting of options, warrants, commitments, subscriptions, rights,
to exchange, rights to purchase or otherwise) pledge or otherwise encumber any
shares of the Company's or any Subsidiary's capital stock, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities, except for the issuance of shares of Common Stock upon exercise of
Options outstanding prior to the date of this Agreement and disclosed in Section
3.1(c), or take any action that would make the Company's representations and
warranties set forth in Section 3.1(c) not true and correct in all material
respects; (iii) except as contemplated hereby, amend or propose to amend the
Company's Restated Charter or By-laws or any Subsidiary's articles of
incorporation or by-laws or other comparable charter, organizational, or similar
constituent documents; (iv) acquire any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof (or any interest therein) in a transaction or series of
transactions involving aggregate consideration in excess of $1 million or form
any Subsidiary; (v) lease (other than office equipment leases entered into in
the ordinary course of business), sell or otherwise dispose of any of its
assets, except in the ordinary course of business or in a transaction or series
of transactions involving assets with an aggregate value of less than $1
million; (vi) make any capital expenditures or commitments with respect thereto,
except capital expenditures or commitments not exceeding the Company's forecasts
provided in Schedule 4.1 of the Disclosure Schedule by more than $100,000 in the
aggregate as the Company may, in its discretion, deem appropriate; (vii) (x)
mortgage or pledge any of its assets or create or suffer to exist any liens
thereon (excluding Permitted Liens), incur, assume or prepay any long-term or
short-term debt or issue any debt securities or incur any other indebtedness for
borrowed money or guaranty any such indebtedness of another person, other than
(A) borrowings in the ordinary course under existing lines of credit (or under
any refinancing of such existing lines), or (B) indebtedness owing to, or
guaranties of indebtedness owing to, the Company, or (y) make any loans or
advances to any other person, other than to the Company and other than routine
advances to employees; (viii) grant or agree to grant to any employee any
increase in wages or bonus (other than any increase in the ordinary course of
business consistent with past practices), severance, profit sharing, retirement,
deferred compensation, insurance or other compensation or benefits, or establish
any new compensation or benefit plans or arrangements, or amend or agree to
amend any existing Company Stock Option Plan; (ix) merge, amalgamate or
consolidate with any other entity in any transaction, sell all or substantially
all of its business or assets; (x) enter into or amend any employment,
consulting, severance or similar agreement with any individual which provides
for the payment of an annual base salary in excess of $125,000; (xi) change its
accounting policies in any material respect, except as required by generally
accepted accounting principals; (xii) except as contemplated by Section 5.8 and
Section 7.1(d) hereof, authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into an agreement in principle or an
agreement with respect to any merger, consolidation or business combination
(other than the Merger), any acquisition or disposition of a material amount of
assets or securities (including, without limitation, the assets or securities of
any Subsidiary and other than inventory in the ordinary course); (xiii) make any
changes in its senior management; or (xiv) except as contemplated by Section 5.8
and Section 7.1(d) hereof, commit or agree to take any of the foregoing actions.
Article V ADDITIONAL AGREEMENTS Section 5.1. MEETING OF STOCKHOLDERS. Promptly
after the Optional Termination Period (as defined in Section 5.13 herein), and
so long as this Agreement has not been terminated the Company will take all
action necessary in accordance with applicable law and its Restated Charter and
By-laws to duly call, give notice of, and convene a meeting of its stockholders
(the "Stockholders' Meeting") to consider and vote upon the adoption of this
Agreement. The board of directors of the Company shall recommend such adoption
and approval, and subject to fiduciary obligations under applicable law, shall
not withdraw or modify such recommendation other than in compliance with Section
5.8 and Section 7.1(d) or if the Fairness Opinion (as defined in Section 5.2) is
withdrawn, and shall take all lawful action necessary to obtain such approval.
Section 5.2. PROXY STATEMENT. In connection with the Stockholders' Meeting
contemplated by Section 5.1 above, promptly after the Optional Termination
Period (as defined in Section 5.13 herein), and so long as this Agreement has
not been terminated, the Company will prepare and file (after consultations with
Parent) a preliminary proxy statement relating to the transactions contemplated
by this Agreement (the "Preliminary Proxy Statement") with the SEC and will use
its commercially reasonable efforts to respond to the comments of the SEC
thereon and to cause a final proxy statement (the "Definitive Proxy Statement")
to be mailed to the Company's stockholders, in each case as soon as reasonably
practicable after providing Parent with reasonable opportunity to comment
thereon. The Company will notify the Parent promptly of the receipt of the
comments of the SEC, if any, and of any request by the SEC for amendments or
supplements to the Preliminary Proxy Statement or the Definitive Proxy Statement
or for additional information, and will supply Parent with copies of all
correspondence between the Company or its representatives, on the one hand, and
the SEC or members of its staff, on the other hand, with respect to the
Preliminary Proxy Statement, the Definitive Proxy Statement or the Merger. If at
any time prior to the Stockholders' Meeting, (i) any event should occur relating
to the Company or any of the Subsidiaries which should be set forth in an
amendment of, or a supplement to, the Definitive Proxy Statement, or (ii) any
event should occur relating to Parent or Sub or any of their respective
Associates or Affiliates, or relating to the plans of any such persons for the
Surviving Corporation after the Effective Time of the Merger, or relating to the
Financing (as defined in Section 5.5) in either case that should be set forth in
an amendment of, or a supplement to, the Definitive Proxy Statement, then the
Company or Parent (as applicable), will, upon learning of such event, promptly
inform the other of such event and the Company shall prepare, file and, if
required, mail such amendment or supplement to the Company's stockholders;
provided that, prior to such filing or mailing the Company shall consult with
Parent with respect to such amendment or supplement and shall afford Parent
reasonable opportunity to comment thereon. Parent will furnish to the Company
the information relating to Parent and Sub, their respective Associates and
Affiliates and the plans of such persons for the Surviving Corporation after the
Effective Time of the Merger, and relating to the Financing, which is required
to be set forth in the Preliminary Proxy Statement or the Definitive Proxy
Statement under the Exchange Act and the rules and regulations of the SEC
thereunder. The Definitive Proxy Statement shall contain a copy of the written
opinion (the "Fairness Opinion") of Allen that the Merger Consideration is fair
from a financial point of view to the Company's stockholders. Section 5.3.
ACCESS TO INFORMATION; CONFIDENTIALITY. (a) From the date hereof, the Parent,
Sub and their financing sources shall be entitled to make or cause to be made
such reasonable investigation of the Company and its Subsidiaries, and the
financial and legal condition thereof, as Parent, Sub and their financing
sources deem reasonably necessary or advisable, and the Company shall reasonably
cooperate with any such investigation. In furtherance of the foregoing, but not
in limitation thereof, the Company will, and will cause each of its Subsidiaries
to, provide the Parent, Sub and their financing sources and their respective
agents and representatives, or cause them to be provided, with reasonable access
to any and all of its management personnel, accountants, representatives,
premises, properties, contracts, commitments, books, records and other
information of the Company and each of its Subsidiaries upon reasonable notice
during regular business hours and shall furnish such financial and operating
data, projections, forecasts, business plans, strategic plans and other data
relating to the Company and its Subsidiaries and their respective businesses as
the Parent, Sub, their financing sources and their respective agents and
representatives shall reasonably request from time to time, including all
information necessary to satisfy closing conditions for obtaining the Financing;
provided, that until the Closing Date all information provided to Parent, Sub
and their financing sources and representatives pursuant hereto (other than the
information (i) contained in any offering memorandum prepared in connection with
the registration, offering, placement, or syndication of any of the Financing,
(ii) disclosed in the process of marketing the Financing, or (iii) contained in
any filing with the SEC, NASDAQ or any national securities exchange), shall be
subject to the confidentiality provisions set forth in Section 5.3(b). The
Company agrees to cause its and its Subsidiaries' officers, employees,
consultants, agents, accountants and attorneys to cooperate with the Parent, Sub
and their financing sources and representatives in connection with such review
and the Financing, including the preparation by the Parent, Sub and their
financing sources of any offering memorandum or related documents related to
such Financing. No investigation by the Parent or Sub heretofore or hereafter
made shall modify or otherwise affect any representations and warranties of the
Company, which shall survive any such investigation, or the conditions to the
obligation of the Parent and Sub to consummate the transactions contemplated
hereby. (b) Subject to Section 5.7 and Section 5.3(a), all information
disclosed, whether before or after the date hereof, pursuant to this Agreement
or in connection with the transactions contemplated by, or the discussions and
negotiations preceding, this Agreement to any other party (or its
representatives) shall constitute confidential information which shall be kept
confidential by such other party and its representatives and shall not be used
by any Person, other than in connection with evaluating and giving effect to the
Merger and the other the transactions contemplated by this Agreement including,
without limitation, in connection with procurement of the Financing. If the
Merger is not consummated and this Agreement is terminated in accordance with
its terms, at the request of the Company, Parent or Sub (as applicable) shall
return or destroy any information provided hereunder. Section 5.4. COMMERCIALLY
REASONABLE EFFORTS. Upon the terms and subject to the conditions and other
agreements set forth in this Agreement, each of the parties agrees to use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including the satisfaction of the
respective conditions set forth in Article VI. Notwithstanding the foregoing or
any other provision of this Agreement, nothing in this Section 5.4 shall require
Parent or the Company to dispose or hold separate any part of its business or
operations or agree not to compete in any geographic area or line of business.
The Company and Parent shall each furnish to one another and to one another's
counsel all such information as may be required in order to accomplish the
foregoing actions. If any state takeover statute or similar statute or
regulation becomes applicable to the Merger, this Agreement or any of the other
transactions contemplated hereby, the Company and Parent will take all
commercially reasonable action necessary to ensure that the Merger and the other
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated by this Agreement and otherwise to minimize the effect
of such statute or regulation on the Merger and the other transactions
contemplated by this Agreement. Section 5.5. DEBT FINANCING. Each of Parent and
Sub shall use their commercially reasonable efforts to obtain debt financing in
an amount sufficient to consummate the transactions contemplated hereby and to
pay all fees and expenses in connection therewith (the "Financing") on terms and
conditions reasonably satisfactory to them. The foregoing obligation shall
include, without limitation, Parent's obligation to commence substantial efforts
to fund its obligations hereunder, including preparing and, to the extent
appropriate, circulating any offering materials and, after circulating such
offering materials, holding any road shows Parent deems necessary or desirable,
no later than the date on which the Company holds the Stockholders' Meeting.
Section 5.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) From and
after the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, indemnify and hold harmless each person who is now, at any time
has been or who becomes prior to the Effective Time a director, officer,
employee or agent of the Company or any of its Subsidiaries (the "Indemnified
Parties") against any and all losses, claims, damages, liabilities, costs,
expenses (including reasonable fees and expenses of legal counsel), judgments,
fines or, subject to the last sentence of Section 5.6(b), amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation (each a "Claim") arising in whole or in part out of or pertaining
to any action or omission occurring prior to the Effective Time (including,
without limitation, any which arise out of or relate to the transactions
contemplated by this Agreement), based on or arising out of the fact that such
person is or was a director, officer, employee or agent of the Company or any of
its Subsidiaries, regardless of whether such Claim is asserted or claimed prior
to, at or after the Effective Time, to the full extent permitted under Delaware
law or the Surviving Corporation's Certificate of Incorporation or By-laws in
effect as of the Effective Date; provided, however, that in no event shall the
Surviving Corporation be required to indemnify, defend or hold harmless any
director, officer or employee of the Company or any of its Subsidiaries in
respect of any loss, cost, damage, expense or liability incurred by such party
in respect of any Common Stock or Options held by such persons prior to or after
the Effective Time. Without limiting the generality of the preceding sentence,
in the event any Indemnified Party becomes involved in any Claim, after the
Effective Time, Parent shall, and shall cause the Surviving Corporation to,
periodically advance to such Indemnified Party its legal and other expenses
(including the cost of any investigation and preparation incurred in connection
therewith), subject to the provisions of paragraph (b) of this Section 5.6, and
subject to the providing by such Indemnified Party of an undertaking to
reimburse all amounts so advanced in the event of a final and non-appealable
determination by a court of competent jurisdiction that such Indemnified Party
is not entitled thereto. (b) The Indemnified Party shall control the defense of
any Claim with counsel selected by the Indemnified Party, which counsel shall be
reasonably acceptable to Parent, provided that Parent and the Surviving
Corporation shall be permitted to participate in the defense of such Claim at
their own expense, and provided further that if any D&O Insurance (as defined in
paragraph (c) of this Section 5.5) in effect at the time shall require the
insurance company to control such defense in order to obtain the full benefits
of such insurance and such provision is consistent with the provisions of the
Company's D&O Insurance existing as of the date of this Agreement, then the
provisions of such policy shall govern the selection of counsel. Neither Parent
nor the Surviving Corporation shall be liable for any settlement effected
without its written consent, which consent shall not be withheld unreasonably.
(c) For a period of six years after the Effective Time (the "Insurance
Carry-Over Period"), Parent or the Surviving Corporation shall provide officers'
and directors' liability insurance ("D&O Insurance") covering each Indemnified
Party who is presently covered by the Company's officers' and directors'
liability insurance or will be so covered at the Effective Time with respect to
actions or omissions occurring prior to the Effective Time, on terms no less
favorable than such insurance maintained in effect by the Company as of the date
hereof in terms of coverage and amounts, provided that Parent and the Surviving
Corporation shall not be required to pay in the aggregate an annual premium for
D&O Insurance in excess of 150% of the last annual premium paid prior to the
date hereof, but in such case shall purchase as much coverage as possible for
such amount. (d) The Certificate of Incorporation and By-laws of the Surviving
Corporation shall contain substantially similar provisions with respect to
indemnification, personal liability and advancement of fees and expenses as set
forth in the Restated Charter and By-laws of the Company as of the Effective
Time, which provisions shall not be amended, repealed or otherwise modified
during the Insurance Carry-Over Period in any manner that would adversely affect
the rights thereunder of the Indemnified Parties in respect of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement), unless such
modification is required by law. Parent, Sub and the Company agree that all
rights existing in favor of any Indemnified Party under any indemnification
agreement in effect as of the date hereof (each of which shall be listed on
Section 5.6(d) of the Disclosure Schedule hereto) shall survive the Merger and
shall continue in full force and effect, without any amendment thereto. In the
event any Claim is asserted or made, any determination required to be made with
respect to whether an Indemnified Party's conduct complies with standards set
forth under such provisions of the Restated Charter or By-laws or under the DGCL
or any such indemnification agreement, as the case may be, shall be made by
independent legal counsel selected by such Indemnified Party and reasonably
acceptable to Parent unless the DGCL, the Restated Charter or By-laws provide
otherwise; and provided, that nothing in this Section 5.5 shall impair any
rights or obligations of any current or former director or officer of the
Company or any of its Subsidiaries, including pursuant to the respective
certificates of incorporation or bylaws of Parent, the Surviving Corporation or
the Company, or their respective Subsidiaries, under the DGCL or otherwise. (e)
The provisions of this Section 5.5 are intended to be for the benefit of, and
shall be enforceable by, each of the Indemnified Parties, his or her heirs and
his or her personal representatives and shall be binding on all successors and
assigns of Parent, Sub, the Company and the Surviving Corporation. Section 5.7.
PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand, and the Company, on the
other hand, will consult with each other before issuing, and provide each other
the opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger, and shall not issue any such press release or make any
such public statement prior to such consultation; provided, that any such party
may make any public statement which it in good faith believes, based on advice
of counsel, is necessary or advisable in connection with any requirement of
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange, it being understood and agreed
that each party shall promptly provide the other parties hereto with copies of
such public statement. Section 5.8. ACQUISITION PROPOSALS. (a) The Company shall
not, nor shall it authorize or permit any of its representatives to, directly or
indirectly, (i) solicit or initiate the submission of any Acquisition Proposal
(as hereinafter defined); (ii) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that the foregoing shall not prohibit
the independent directors from furnishing information or requiring the Company
to furnish information to, or entering into discussions or negotiations with,
any person in connection with an unsolicited bona fide Acquisition Proposal by
such person. For purposes of this Agreement, "Acquisition Proposal" means any
proposal with respect to a merger, consolidation, share exchange, business
combination or similar transaction involving the Company or any of its
Subsidiaries or any equity interest greater than 25% in the Company or any of
its Subsidiaries, other than the transactions contemplated hereby. (b) The
Company shall not enter into any agreement with respect to any Acquisition
Proposal or enter into any agreement, arrangement or understanding requiring it
to abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement unless the Company's Board of Directors
determines in good faith by a majority vote, after consultation with its
financial and legal advisors that such transaction (the "Alternative
Transaction") is more favorable to the stockholders of the Company from a
financial point of view than the transactions contemplated by this Agreement.
Section 5.9. BOARD ACTION RELATING TO STOCK OPTION PLANS AND OPTIONS. As soon as
reasonably practicable following the date of this Agreement, to the extent
permitted by the Company Stock Option Plans and applicable law, the Board of
Directors of the Company (or, if appropriate, any committee administering a
Company Stock Option Plans) shall adopt such resolutions or take such actions as
may be necessary or appropriate to adjust the terms of all outstanding Company
Stock Options in accordance with Section 2.2, and shall make such other changes
to the Company Stock Option Plans as it deems necessary or appropriate to give
effect to the Merger. In addition, prior to the Effective Time, the Board of
Directors of the Company shall adopt such resolutions and take such actions as
may be required to amend the terms of all outstanding Options in accordance with
Section 2.2, to the extent permitted by the Company Stock Option Plans and
applicable law, and shall make such other changes to the Options as it deems
appropriate to give effect to the Merger. Section 5.10. NOTICES OF CERTAIN
EVENTS. The Company and Parent shall promptly notify the other of: (a) the
receipt of any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the transactions
contemplated by this Agreement; (b) the receipt of any notice or other
communication from any governmental or regulatory agency or authority in
connection with the transactions contemplated by this Agreement; and (c) any
actions, suits, claims, investigations or proceedings commenced or, to the best
of its actual knowledge, threatened against, relating to or involving or
otherwise affecting the Company or any Subsidiary, on the one hand, or Parent or
Sub, on the other hand, which, in either case, could materially interfere with
the consummation of the transactions contemplated by this Agreement. Section
5.11. EXCHANGE ACT AND STOCK EXCHANGE FILINGS. Unless an exemption shall be
expressly applicable to the Company, or unless Parent agrees otherwise in
writing, the Company will file with the SEC and the NASDAQ all reports required
to be filed by it pursuant to the rules and regulations of the SEC and the
NASDAQ (including, without limitation, all required financial statements).
Section 5.12. AMENDMENT TO EMPLOYMENT AGREEMENTS. Parent, Sub, the Company
Garret L. Dominy ("Dominy") and James S. Carter ("Carter") hereby agree that,
effective upon the Effective Date and contingent upon the consummation of the
Merger, each of the Amended and Restated Employment Agreement between the
Company and (a) Carter dated as of November 1, 1997 and (b) the Amended and
Restated Employment Agreement between the Company and Dominy dated as of
November 1, 1997 (each, an "Employment Agreement"), shall automatically be
amended with regard to the provision in each such Employment Agreement relating
to Termination Without Cause to the effect that the second sentence of Section
4.3 in each Employment Agreement shall be deleted and in each case replaced with
the following: "If the Executive is terminated during the Term without Cause
(including any termination which is deemed to be a constructive termination
without Cause under Section 4.6 hereof), the Company's obligation to the
Executive shall be limited solely to (i) the vesting of all stock options
granted to the Executive by the Company and (ii) the payment, at the times
granted and upon the terms provided for herein, of the Executive's Annual Salary
for a period of 18 months, based on the Annual Salary of the Executive in effect
on the date of termination (or, if the Company has reduced the Executive's
Annual Salary in breach of this Agreement, the Executive's Annual Salary before
such reduction), together with all unpaid Incentive Bonus and Benefits awarded
or accrued up to the date of termination." This amendment shall be of no force
and effect in the event this Agreement is terminated or the Merger is not
otherwise consummated. Section 5.13. DELIVERY OF AUDITED STATEMENTS AND UPDATE
OF DISCLOSURE SCHEDULE. Promptly after the Company's receipt of its audited
financial statements for the year ended December 31, 1999 together with a
restatement of its financial statements for prior periods, if any, which are
currently being audited by KPMG Peat Marwick LLP (collectively, the "Audited
Statements"), the Company shall deliver to Parent such Audited Statements
together with any amendments and supplements to the Disclosure Schedule (the
"Disclosure Updates") which will bring the Company's representations and
warranties herein current to the date of such delivery (the date on which each
of the Audited Statements, the Disclosure Updates and the Bring Down Certificate
(as defined below) have been delivered to Parent being hereafter referred to as
the "Audit Delivery Date"). In addition to the Audited Statements and the
Disclosure Updates, on the Audit Delivery Date the Company shall deliver to
Parent and Sub a certificate executed on behalf of the Company by its Chief
Executive Officer dated the Audit Delivery Date which shall become an integral
part hereof (the "Bring Down Certificate") containing the identical
representations and warranties set forth in Section 3.1 herein, including the
limitations thereof, except (i) the representations and warranties shall be
amended and supplemented by the Audited Statements and the Disclosure Updates
and (ii) each reference in Section 3.1 herein to the date September 3, 1999
shall be changed to the Audit Delivery Date and the verbiage and tense of the
representations and warranties shall be adjusted accordingly. It is understood
that Parent shall have ten days commencing on the Audit Delivery Date (the
"Optional Termination Period") in which to terminate this Agreement in
accordance with Section 7.1(h) herein and, unless Parent so terminates this
Agreement during the Optional Termination Period, then Parent and Sub shall be
deemed to have accepted and agreed to the Audited Statements and the Disclosure
Updates which shall be fully incorporated herein and shall be deemed to be an
integral part of this Agreement. During the Optional Termination Period, Parent
and its representatives shall have reasonable access to KPMG Peat Marwick LLP
and the Company in connection with their review of the Audited Statements.
Section 5.14. DELIVERY OF FINANCING COMMITMENT. If Parent does not terminate
this Agreement pursuant to Section 7.1(h) during the Optional Termination Period
then Parent shall deliver to the Company on the last day of the Optional
Termination Period evidence of a commitment from a financial institution to
provide the Financing (the "Financing Commitment Letter"). Article VI CONDITIONS
PRECEDENT Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions: (a) STOCKHOLDER APPROVAL. This Agreement shall have been adopted by
the affirmative vote of holders of a majority of the outstanding shares of
Common Stock. (b) GOVERNMENTAL APPROVALS AND FILINGS. All filings required to be
made prior to the Effective Time with, and all consents, approvals, permits and
authorizations required to be obtained prior to the Effective Time from
governmental entities in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby by the
Company, Parent and Sub, and which if not obtained would have a Material Adverse
Effect or would prevent consummation of the Merger, will have been made or
obtained. Section 6.2. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver of the following conditions: (a) REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Company set forth in
Section 3.1 shall be true and correct as of the date of this Agreement, the
representations and warranties of the Company set forth in the Bring Down
Certificate shall be true and correct as of the Audit Delivery Date and as of
the Closing Date as though made on and as of the Closing Date, except (i) to the
extent such representations and warranties speak as of an earlier date, (ii) for
changes permitted or contemplated by this Agreement and (iii) for matters or
circumstances or events which would not have a Company Material Adverse Effect,
and Parent shall have received an officers' certificate signed on behalf of the
Company by its chief executive officer and chief financial officer to the effect
set forth in this paragraph. (b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The
Company shall have performed in all material respects all material obligations
required to be performed by it under this Agreement at or prior to the Closing
Date, and Parent shall have received an officers' certificate signed on behalf
of the Company by its chief executive officer and chief financial officer to
such effect. (c) THIRD PARTY CONSENTS. The Company shall have obtained, or
Parent and Sub shall have waived, the consent of any third parties the consent
of whom is required under any agreement, contract or license to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound or licensed for consummation of the Merger and the
transactions contemplated by this Agreement and as to which failure to obtain
such consent would have a Company Material Adverse Effect. (d) NO MATERIAL
ADVERSE CHANGE. There shall have been no event or circumstance which caused a
Company Material Adverse Effect from and after the Audit Delivery Date. The
parties expressly acknowledge and agree that the following developments since
September 3, 1999, have been disclosed and considered, and for purposes of this
Agreement shall not as of the date hereof, and will not as of or after the Audit
Delivery Date, individually or in the aggregate, constitute a circumstance or
circumstances which have caused or will be deemed to cause, a Material Adverse
Effect on the Company: (i) notification that the Company may be deemed a
potentially responsible party for some portion of the cleanup costs associated
under applicable environmental statutes with the municipal landfill site in
Babylon, New York; (ii) the Family Medical Leave Act claim and the Americans
with Disabilities Act claim filed against the Company's Marion Composites
division; (iii) the pending governmental investigation into the Company's
Alcore, Inc. Subsidiary reflected in the government's search warrant served
January 7, 2000, and the affidavit supporting the application for such search
warrant, copies of each of which have been provided to Parent and Sub. The
parties further agree that any and all consequences or effects on any aspect of
the Company or its Subsidiaries which arise out of the business or operations of
Alcore, including without limitation, Alcore's financial results and any
liability or damages relating to the allegations in the pending governmental
investigation, shall specifically be excluded for any determinations made
hereunder. Section 6.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation
of the Company to effect the Merger is further subject to the satisfaction or
waiver of the following conditions: (a) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Parent and Sub set forth in Section 3.2 shall
be true and correct, in each case as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, except (i) to the
extent such representations and warranties speak as of an earlier date, (ii) for
changes permitted or contemplated by this Agreement and (iii) for matters or
circumstances or events which would not have a Parent Material Adverse Effect,
and the Company shall have received a certificate signed on behalf of Parent by
the chief executive officer and the chief financial officer of Parent to the
effect set forth in this paragraph. (b) PERFORMANCE OF OBLIGATIONS OF PARENT AND
SUB. Parent and Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed on
behalf of Parent by the chief executive officer and the chief financial officer
of Parent to such effect. Article VII TERMINATION, AMENDMENT AND WAIVER Section
7.1. TERMINATION. This Agreement may only be terminated pursuant to, and in
accordance with, this Section 7.1 and any termination not in accordance with
this Section 7.1 shall be void and of no force and effect. This Agreement may be
terminated and abandoned, at any time prior to the Effective Time, whether
before or after adoption of this Agreement by the stockholders of the Company or
the Sub (except with respect to subsection 7.1(h) which may only be exercised
during the Optional Termination Period): (a) by either the Parent or the Company
in the event that the Parent and Sub are unable to procure the Financing, or are
otherwise unable to pay the Merger Consideration, on the Deadline Date; or (b)
by mutual written consent of Parent and the Company; or (c) by either Parent or
the Company: (i) if the adoption of this Agreement by the stockholders of the
Company required by Delaware law or of the amendments, pursuant to Section
1.6(a) herein, to the Company's Restated Charter shall not have been obtained by
June 20, 2000; or (ii) if the Merger shall not have been consummated on or
before the Deadline Date, provided that the failure to consummate the Merger is
not attributable to the failure of the terminating party to fulfill its
obligations pursuant to this Agreement; or (iii) if any governmental entity
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable;
or (d) by the Company, provided it is not in breach of Section 5.8, if the Board
of Directors of the Company shall have approved an Alternative Transaction after
determining in good faith that such transaction Alternative Transaction is more
favorable to the stockholders of the Company from a financial point of view than
the transactions contemplated by this Agreement; or (e) by Parent, if the
Company shall have (i) breached any provision of Section 5.8, (ii) withdrawn or
modified, in a manner materially adverse to Parent or Sub, the approval or
recommendation by the Board of Directors of the Company of this Agreement or the
transactions contemplated hereby or (iii) approved an Alternative Transaction;
or (f) by the Company, if Parent or Sub shall have (i) materially breached any
of their representations or warranties contained herein or (ii) failed to comply
in any material respect with any agreements, covenants or obligations provided
herein applicable to Parent and Sub (other than Section 5.14), in each case of
(i) and (ii) which breach or failure was not cured such within 10 business days
after written notice thereof; or (g) by Parent, if the Company shall have (i)
materially breached any of its representations or warranties contained herein or
(ii) failed to comply in any material respect with any agreements, covenants or
obligations provided herein applicable to the Company, in each case of (i) and
(ii) which breach or failure was not cured such within 10 business days after
written notice thereof; or (h) by Parent, (i) at any time during the Optional
Termination Period if the Audited Statements, the Bring Down Certificate or
Disclosure Updates are not acceptable to Parent in its sole discretion and (ii)
any time after April 15, 2000 if the Company has not delivered to Parent the
Audited Statements, the Bring Down Certificate and Disclosure Updates; or (i) by
the Company, in the event that the Parent and Sub are unable to provide the
Company with the Financing Commitment Letter on the last day of the Optional
Termination Period. For purposes hereof the "Deadline Date" shall mean the
earlier of June 30, 2000 and the tenth day following the day on which the Merger
is approved at the Stockholders' Meeting. Section 7.2. EFFECT OF TERMINATION. In
the event of termination of this Agreement by either the Company or Parent as
provided in Section 7.1, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Parent, Sub or the
Company, except as follows: (a) if this Agreement is terminated by the Company
pursuant to Section 7.1(d), or by Parent pursuant to Section 7.1(e), then the
Company shall immediately pay to Parent a cash amount equal to $2,500,000 as
compensation for lost opportunities and shall reimburse Parent for all of its
reasonable and documented out-of-pocket expenses incurred in connection with
this transaction up to a maximum amount of $750,000. The Company acknowledges
that the amount of damages that would be incurred by Parent as a result of such
a termination are difficult to ascertain, and that the amount of liquidated
damages provided by this Section 7.2(a) is reasonable; (b) if this Agreement is
terminated by Parent or the Company pursuant to Section 7.1(c)(i) or by Parent
pursuant to Sections 7.1(g) or 7.1(h), then the Company shall immediately
reimburse Parent for all of its reasonable and documented out-of-pocket expenses
incurred in connection with this transaction up to a maximum amount of $750,000;
and (c) if this Agreement is terminated by Parent or the Company pursuant to
Section 7.1(a), then Parent shall immediately pay to the Company a cash amount
equal to $3,000,000 as compensation for lost opportunities and Parent shall
reimburse the Company for all of its reasonable and documented out-of-pocket
expenses incurred in connection with this transaction (including the expenses of
Allen which the Company is obligated to bear but excluding the fees of Allen,
which the Company is obligated to bear) up to a maximum amount of $750,000.
Parent and Sub acknowledge that the amount of damages that would be incurred by
the Company as a result of such a termination are difficult to ascertain, and
that the amount of liquidated damages provided by this Section 7.2(c) is
reasonable. (d) if this Agreement is terminated by the Company pursuant to
Section 7.1(f), then Parent shall immediately reimburse the Company for all of
its reasonable and documented out-of-pocket expenses incurred in connection with
this transaction (including the expenses of Allen which the Company is obligated
to bear but excluding the fees of Allen, which the Company is obligated to bear)
up to a maximum amount of $750,000. SECTION 7.3 AMENDMENT. Subject to the
applicable provisions of the DGCL, at any time prior to the Effective Time,
whether before or after adoption of this Agreement by the stockholders of the
Company, the parties hereto may modify or amend this Agreement, by written
agreement executed and delivered by duly authorized officers of the respective
parties; provided, however, that after adoption of this Agreement by the
stockholders of the Company or the Sub, no amendment shall be made which by law
would require the further approval of such stockholders, without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties. SECTION 7.4 EXTENSION; WAIVER. At any
time prior to the Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties of the other
parties contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) waive compliance with any of the agreements or conditions
of the other parties contained in this Agreement. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights. SECTION 7.5 PROCEDURE FOR
TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A termination of this Agreement
pursuant to Section 7.1, an amendment of this Agreement pursuant to Section 7.3
or an extension or waiver pursuant to Section 7.4 shall, in order to be
effective and in addition to requirements of applicable law, require, in the
case of Parent, Sub or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors. Article VIII GENERAL PROVISIONS
Section 8.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time, including, without
limitation, Section 5.6. Section 8.2. FEES AND EXPENSES. Except as provided
otherwise herein, whether or not the Merger shall be consummated, each party
hereto shall pay its own expenses incident to preparing for, entering into and
carrying out this Agreement and the consummation of the transactions
contemplated hereby. Section 8.3. DEFINITIONS. For purposes of this Agreement:
(a) "Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act; (b) "person" or "Person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
Section 8.4. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) or telecopy to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice): if to Parent or
Sub, to c/o The Veritas Capital Fund, L.P. 660 Madison Avenue New York, NY 10021
Attention: Robert B. McKeon Fax: 212-688-9411 with a copy to: Whitman Breed
Abbott & Morgan LLP 200 Park Avenue New York, NY 10166 Attention: Benjamin M.
Polk, Esq. Fax: 212-351-3131 if to the Company, to Advanced Technical Products,
Inc. 200 Mansell Court, East, Suite 505 Roswell, Georgia 30076 Attention:
Garrett L. Dominy Fax: 770-993-1986 with a copy to: Valerie A. Price, Esq. 76
Parkview Road South Pound Ridge, NY 10576 Fax: 914-763-2590 Section 8.5.
INTERPRETATION. When a reference is made in this Agreement to a Section or
Schedule, such reference shall be to a Section of, or a Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The article and section
headings contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the parties and shall not in any way affect the
meaning or interpretation of this Agreement. Where the context or construction
requires, all words applied in the plural shall be deemed to have been used in
the singular, and vice versa; the masculine shall include the feminine and
neuter, and vice versa; and the present tense shall include the past and future
tense, and vice versa. Section 8.6. COUNTERPARTS. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. Section 8.7.
ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement, including the
exhibits and schedules hereto which are incorporated herein by this reference,
the Termination Agreement and the other agreements referred to herein constitute
the entire agreement, and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter of
this Agreement. This Agreement is not intended to confer upon any person, other
than the parties hereto and the third party beneficiaries referred to in the
following sentence, any rights or remedies. The parties hereto expressly intend
the provisions of Section 5.6 and Article II to confer a benefit upon and be
enforceable by, as third party beneficiaries of this Agreement, the third
persons referred to in, or intended to be benefited by, such provisions. Section
8.8. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Section 8.9. ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties and any such assignment
shall be null and void, except that Parent may assign this Agreement without the
consent of the Company (i) to any Affiliate of Parent or (ii) for collateral
security purposes to any source of financing to the Parent, Sub or Surviving
Company. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective
successors and assigns. Section 8.10. ENFORCEMENT. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
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 of this Agreement, this being in
addition to any other remedy to which they are entitled at law or in equity.
Section 8.11. SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any
provision, and this Agreement will be reformed, construed and enforced as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein. Section 8.12. WAIVER OF JURY TRIAL. Each of the
parties hereto waives any right it may have to trial by jury in respect of any
litigation based on, arising out of, under or in connection with this agreement
or any course of conduct, course of dealing, verbal or written statement or
action of any party hereto.
IN WITNESS WHEREOF, Parent, Sub and the Company
have caused this Agreement to be signed by their respective officers thereunto
duly authorized, all as of the date first written above. ADVANCED TECHNICAL
PRODUCTS, INC. By: ___________________________________ Name: Garrett L. Dominy
Title: Executive Vice President & CFO ATP HOLDING CORP. By:
_____________________________________ Name: Robert B. McKeon Title: President
ATP ACQUISITION CORP. By: _____________________________________ Name: Robert B.
McKeon Title: President For purposes of Section 5.12 herein only:
___________________________________ Garrett L. Dominy
___________________________________ James S. Carter
In consideration for the
agreements of Advanced Technical Products, Inc. contained herein, The Veritas
Capital Fund, L.P. agrees to pay to the Company, or to cause ATP Holding Corp.
("Parent") to pay to the Company, any and all amounts payable by Parent to the
Company pursuant to Section 7.2(c) and 7.2(d) of the foregoing January 2000
Agreement and Plan of Merger in accordance with all its terms and conditions.
THE VERITAS CAPITAL FUND, L.P. By:______________________________
EXHIBIT
1.6(a) FORM OF RESTATED CERTIFICATE OF INCORPORATION
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF ADVANCED TECHNICAL PRODUCTS, INC. (Pursuant to
Section 102 of the General Corporation Law of the State of Delaware)
================================================================================
ARTICLE i The name of the corporation is Advanced Technical Products, Inc. (the
"Corporation"). ARTICLE II The address of the Corporation's registered office in
the State of Delaware is 1209 Orange Street, City of Wilmington, County of New
Castle, Delaware 19801. The name of the Corporation's registered agent for
service of process at such address is The Corporation Trust Company. ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware. ARTICLE IV The total number of shares of stock which the
Corporation shall have authority to issue is 1,000 shares of common stock, par
value $0.01 per share. ARTICLE V The number of directors of the Corporation
shall be as fixed from time to time by or pursuant to the By-laws of the
Corporation. Each director shall serve until such director's successor is duly
elected and qualified or until such director's earlier death, resignation or
removal. article vi Unless and except to the extent that the By-laws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot. article vii A director of this Corporation shall not
be liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except to the extent such exemption from
liability or limitation thereof is not permitted under the General Corporation
Law of the State of Delaware or as the same exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph shall not adversely affect
any right or protection of a director of the Corporation existing hereunder with
respect to any act or omissions occurring prior to such repeal or modification.
article viii The Corporation shall indemnify to the full extent permitted by law
(such as it presently exists or may hereafter be amended) any person made, or
threatened to be made, a defendant or witness to any action, suit or proceeding
(whether civil, criminal, administrative or investigative) by reason of the fact
that he is or was a director or officer of the Corporation or by reason of the
fact that such director or officer, at the request of the Corporation, is or was
serving any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, in any capacity. Any repeal or modification of
the foregoing paragraph shall not adversely affect any right to indemnification
provided hereunder with respect to any act or omission occurring prior to such
repeal or modification.
EXHIBIT 2.2 TERMINATION AGREEMENT TERMINATION
AGREEMENT, dated January 28, 2000, among ADVANCED TECHNICAL PRODUCTS, INC., a
Delaware corporation (the "Company"), ATP HOLDING CORP., a Delaware corporation
("Parent"), and ATP ACQUISITION CORP., a Delaware corporation ("Sub"). WHEREAS,
the Company, Parent and Sub (collectively, the "Parties") are parties to that
certain Agreement and Plan of Merger, dated September 3, 1999, (the "September
Merger Agreement"); WHEREAS, capitalized terms used herein without definition
have the respective meanings set forth in the September Merger Agreement; and
WHEREAS, as a result of certain events occurring at the Company since September
3, 1999, each of the Parties desires to terminate the September Merger Agreement
and to simultaneously enter into a new merger agreement regarding the proposed
merger of Sub with and into the Company upon the terms and conditions provided
therein (the "January 2000 Merger Agreement"). FOR GOOD AND VALUABLE
CONSIDERATION, the receipt and sufficiency which are hereby acknowledged, the
Parties hereto hereby agree as follows: 1. Termination Pursuant to Section
7.1(b) of the September Merger Agreement, the Company and Parent mutually
consent to the termination of, and hereby terminate, the September Merger
Agreement. 2. The Deposit The Deposit, together with earnings thereon, shall be
disbursed to Parent forthwith and, simultaneously with the execution hereof,
Parent and the Company shall execute and deliver to the Escrow Agent a Joint
Written Instruction in the form attached as Exhibit A hereto directing the
disbursement of the Deposit to Parent in accordance with Section 2(c) of the
Escrow Agreement. 3. Termination of Obligations In accordance with Section 7.2
of the September Merger Agreement this termination pursuant to Section 7.1(b) of
the September Merger Agreement shall cause the September Merger Agreement to be
void and have no effect, without any liability or obligation of Parent, Sub or
the Company except as may be contained in the January 2000 Merger Agreement. IN
WITNESS WHEREOF, the parties hereunto set their hands the day first above
written. ADVANCED TECHNICAL PRODUCTS, INC. By:______________________________
Name: Garrett L. Dominy Title: Chief Executive Officer and President ATP HOLDING
CORP. By:______________________________ Name: Robert B. Mckeon Title: President
ATP ACQUISITION CORP. By:______________________________ Name: Robert B. Mckeon
Title: President
EXHIBIT 99.1 ATP Announces Execution of a New Merger
Agreement with Veritas Capital ROSWELL, Ga., Jan. 31 /PRNewswire/ -- Advanced
Technical Products, Inc. (Nasdaq: ATPX - news), and representatives of The
Veritas Capital Fund, L.P., affiliates of which had been parties to the merger
agreement (the "Buyer"), announced today that, due to recent developments at
ATP's Alcore Division, they have mutually terminated the merger agreement
entered into in September 1999 without liability to either party and agreed to
release the Buyer's escrow. The parties have simultaneously entered into a new
merger agreement pursuant to which the stockholders of ATP will receive in cash
$12.75 per share, without interest. The new merger agreement is subject to,
among other things, stockholder approval, delivery by no later than April 15,
2000 to the Buyer of ATP's December 31, 1999 audited financial statements and
the Buyer's ability to arrange financing. The Buyer will have ten days to
terminate the new merger agreement after receiving the audited financial
statements, and if it does not terminate within that ten-day period, the Buyer
must promptly provide ATP with evidence that the Buyer has obtained financing.
If the Buyer does not terminate the agreement within the ten-day period
following the delivery of ATP's December 31, 1999 audited financial statements,
the Buyer will be obligated to pay to ATP a cash amount of $3,000,000 if the
Buyer does not obtain financing and close the transaction on or before the
earlier of ten days after the approval of the new merger agreement by ATP's
stockholders and June 30, 2000. ATP designs, develops and manufactures advanced
composite based materials and products from continuous high strength fibers
which optimize structural performance while minimizing the components' weight.
ATP believes it is one of a very few with the ability to utilize multiple
processes, such as, autoclave lamination, filament winding, resin transfer
molding and metal bonding. Using these processes, the Company manufactures
products for the aerospace and defense markets, as well as for commercial
applications including oil and gas tubulars and fuel tanks for Natural Gas
Vehicles. The Company is also a leader in the development and production of
chemical defense systems. This press release includes forward-looking statements
regarding the present intentions and expectations of managementof ATP. Certain
factors beyond ATP's control could cause results to differ materially from those
in these forward-looking statements. Among these risk factors are the
possibility that the sale of Advanced Technical Products may not close due to
the failure to satisfy certain conditions including the satisfactory completion
of certain regulatory, third party and stockholder approval. Other risk factors
include general market conditions, dependence on the aerospace and defense
industries, the level of military expenditures and competition in the markets
for ATP's products, are more fully described in ATP's Form 10-K and other
documents filed with the Securities and Exchange Commission. SOURCE: Advanced
Technical Products, Inc.
filed with the Securities and Exchange Commission.
SOURCE: Advanced Technical Products, Inc.
