<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
January 8, 1996
MEDALIST INDUSTRIES, INC.
-------------------------
(Exact name of Registrant as specified in its charter)
Wisconsin 1-6322 39-0873294
--------- ------ ----------
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
10850 West Park Place
Suite 150
Milwaukee, Wisconsin
--------------------------
53224
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no. including area code: (414) 359-3000
-------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 5
Other Events
On January 8, 1996, Medalist Industries, Inc. ("Medalist") entered into
an Agreement and Plan of Merger (the "Agreement") with Illinois Tool Works Inc.
("ITW") and ITW Acq. Inc. ("Newco") and issued a press release related thereto.
The following description of the Agreement and press release is qualified in
its entirety by reference to the respective documents filed as exhibits to this
report.
Pursuant to the Agreement, and subject to the approval of the Medalist
shareholders and the satisfaction of other conditions, Newco and Medalist will
merge and ITW will own all of the outstanding shares of the surviving
corporation. In the merger, each outstanding share of Medalist Common Stock
will be valued at $14.50 per share and converted into a fraction of a share of
ITW Common Stock equal to that fraction (the "Per Share Conversion Ratio") of
which the numerator is $14.50 and the denominator is the average per share
closing price on the New York Stock Exchange of ITW Common Stock during the ten
consecutive trading days ending on the second trading day prior to the
effective date of the merger (the "Average Closing Price"). Outstanding
Medalist debentures convertible into Medalist shares will entitle their holders
to acquire instead the number of ITW shares into which such Medalist shares
would have been converted in the merger. ITW has expressed an intention to
redeem such debentures at par shortly after the merger. Outstanding employee
and director options for Medalist shares
<PAGE> 3
will be converted in the merger into the number of ITW shares determined by
multiplying the number of Medalist shares subject to the option by a fraction
equal to (a) the excess of $14.50 over the per share exercise price, divided by
(b) $14.50, then multiplied by the Per Share Conversion Ratio. Fractional ITW
shares will not be issued; instead, the value thereof will be paid in cash
based on the Average Closing Price.
The Agreement has been recommended to Medalist's Shareholders by its
Board of Directors, which has called a Special Meeting of Shareholders, to be
held as soon as reasonably practicable, to consider and vote upon the
Agreement.
The Board of Directors also voted to postpone Medalist's 1996 Annual
Meeting of Shareholders pending the outcome of the Special Meeting concerning
the Agreement.
-2-
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDALIST INDUSTRIES, INC.
(Registrant)
By:/s/ William C. O'Loughlin
--------------------------
William C. O'Loughlin
Vice President and
Secretary
Date: January 9, 1996
-3-
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MEDALIST INDUSTRIES, INC.
EXHIBIT INDEX
to
FORM 8-K CURRENT REPORT
Dated January 8, 1996
<TABLE>
<CAPTION>
Exhibit Number Description Filed Herewith
- -------------- ----------- --------------
<S> <C> <C>
2.1 Agreement and Plan of X
Merger by and among
Illinois Tool Works Inc.,
ITW Acq. Inc. and Medalist
Industries Inc., dated as
of January 8, 1996.
99.1 Press Release relating to X
Agreement and Plan of
Merger.
</TABLE>
<PAGE> 1
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ILLINOIS TOOL WORKS INC.,
ITW ACQ. INC.
and
MEDALIST INDUSTRIES, INC.
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TABLE OF CONTENTS
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ARTICLE I CERTAIN COMPANY ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Company Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II THE MERGER; EFFECTIVE TIME; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III SURVIVING CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1 Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 By-Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.5 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV CONVERSION OF SHARES IN THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . 3
4.1 Share Consideration for the Merger; Conversion of Shares in the Merger. . . . . . . . . . 3
4.2 Exchange of Certificates; No Fractional Shares; Return of Certificates. . . . . . . . . . 5
4.3 Transfer of Shares After the Effective Time. . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Company Stock Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.5 No Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Corporate Organization and Qualification. . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Authority Relative to Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Consents and Approvals; No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.5 SEC Reports; Financial Statements; Absence of Liabilities. . . . . . . . . . . . . . . . 10
5.6 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.8 Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.9 Patents, Trademarks and Like Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.10 Existing Contracts or Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.11 Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.12 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.13 Vital Parent Statistics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.15 Minute Book and Stock Ledger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.16 Sales Agency and Distribution Agreements. . . . . . . . . . . . . . . . . . . . . . . . 16
5.17 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.18 Employee Benefit Plans; Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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<TABLE>
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5.19 Compliance With Laws and Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.20 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.21 Opinions of Financial Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.22 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.23 Merger Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.24 Accuracy of Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.25 Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT
AND NEWCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1 Corporate Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . 23
6.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.3 Authority Relative to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.4 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 SEC Reports; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Merger Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.7 Information Supplied. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.8 Interim Operations of Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII ADDITIONAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 26
7.1 Conduct of Business of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.3 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.5 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.6 Indemnification of Directors and officers . . . . . . . . . . . . . . . . . . . . . . . 30
7.7 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.8 NYSE Listing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.9 Merger Proxy Statement and Registration Statement . . . . . . . . . . . . . . . . . . . 32
7.10 Agreements of Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.11 Tax Representation Letter of Parent and Newco; No Disqualifying Action. . . . . . . . . 34
7.12 Tax Representation Letters of Holders of Shares. . . . . . . . . . . . . . . . . . . . . 34
7.13 Tax Representation Letter of the Company; No Disqualifying Action. . . . . . . . . . . . 34
7.14 Supplemental Indenture of 7 1/2% Convertible Subordinated Debentures. . . . . . . . . . 34
ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE MERGER . . . . . . . . . . . . . . . . . . . . . 34
8.1 Conditions to Each Party's Obligations to Effect the Merger . . . . . . . . . . . . . . 34
8.2 Additional Conditions to the Obligations of Parent and Newco . . . . . . . . . . . . . . 35
8.3 Additional Conditions to the Obligations of the Company . . . . . . . . . . . . . . . . 36
ARTICLE IX TERMINATION; AMENDMENT; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
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9.1 Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.2 Termination by Either Parent or the Company . . . . . . . . . . . . . . . . . . . . . . 38
9.3 Termination by Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.4 Termination by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.5 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.6 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.7 Special Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE X MISCELLANEOUS AND GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.1 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.2 Survival of Representations and Warranties;
Survival of Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.3 Modification or Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.4 Waiver of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.8 Entire Agreement: Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.9 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.10 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.11 Obligation of Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.12 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.13 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
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<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of January
8, 1996, by and among Illinois Tool Works Inc., a Delaware corporation
("Parent"), ITW ACQ. Inc., a Wisconsin corporation and a direct wholly owned
subsidiary of Parent ("Newco"), and Medalist Industries, Inc., a Wisconsin
corporation (the "Company"),
RECITALS
WHEREAS, the Board of Directors of the Company has, subject to the
conditions of this Agreement, determined that the Merger (as defined below) is
in the best interests of the shareholders of the Company and approved and
adopted this Agreement and the transactions contemplated hereby; and
WHEREAS, each of the parties hereto intends that the Merger shall
qualify as a tax-free reorganization under Section 368(a) of the Code (defined
below).
WHEREAS, Parent, Newco and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, Parent,
Newco and the Company hereby agree as follows:
ARTICLE I
CERTAIN COMPANY ACTION
1.1 Certain Company Action. The Company hereby represents that the
Board of Directors, at a meeting duly called and held, has, subject to the
terms and conditions set forth herein, (i) approved this Agreement and the
transactions contemplated hereby, including the Merger, and that such approval
constitutes approval of this Agreement and the Merger for purposes of Section
180.1141 of the WBCL with the effect that any "business combinations" (as
defined in Section 180.1140 involving the Company and Parent or Newco is not
delayed for the three-year period specified therein and (ii) resolved to
recommend that the shareholders of the Company approve and adopt this Agreement
and the Merger; provided, that such recommendation may be withdrawn, modified
or amended if there exists at such time a proposal for a Third Party
Acquisition (defined in Section 9.7) and in the judgment of the Board of
Directors, after consultation with Company counsel, such withdrawal,
modification or amendment is required by its fiduciary duties to the Company's
shareholders or other constituencies under applicable law.
<PAGE> 6
ARTICLE II
THE MERGER; EFFECTIVE TIME; CLOSING
2.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 2.2), the Company and
Newco shall consummate a merger (the "Merger") in which (a) Newco shall be
merged with and into the Company and the separate corporate existence of Newco
shall thereupon cease, (b) the Company shall be the successor or surviving
corporation in the Merger and shall continue to be governed by the laws of the
State of Wisconsin, and (c) the separate corporate existence of the Company
with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger. The corporation surviving the Merger is
sometimes hereinafter referred to as the "Surviving Corporation." The Company
and Newco are sometimes collectively referred to herein as the "Constituent
Corporations". The Merger shall have the effects set forth in the WBCL.
2.2 Effective Time. Parent, Newco and the Company will cause
appropriate Articles of Merger (the "Articles of Merger") to be executed and
filed on the date of the Closing (as defined in Section 2.3) (or on such other
date as Parent and the Company may agree) as provided in the WBCL. The Merger
shall become effective on the date on which the Articles of Merger have been
duly filed with the Secretary of State of the State of Wisconsin or such time
as is agreed upon by the parties and specified in the Articles of Merger, and
such time is hereinafter referred to as the "Effective Time".
2.3 Closing. The closing of the Merger (the "Closing") shall take
place (a) at the offices of Jenner & Block, One IBM Plaza, Chicago, Illinois,
at 10:00 a.m. on the first business day following the date on which the last of
the conditions set forth in Article VIII hereof shall be fulfilled or waived in
accordance with this Agreement or (b) at such other place, time and date as
Parent and the Company may agree. The date on which the Closing occurs is
referred to herein as the "Closing Date."
ARTICLE III
SURVIVING CORPORATION
3.1 Articles of Incorporation. The Articles of Incorporation of
the Company, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation.
2
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3.2 By-Laws. The By-Laws of the Company, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation.
3.3 Directors. The directors of Newco at the Effective Time shall,
from and after the Effective Time, be the initial directors of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Articles of Incorporation and By-Laws.
3.4 Officers. The officers of the Company at the Effective Time
shall, from and after the Effective Time, be the initial officers of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Articles of Incorporation and
By-Laws.
3.5 Further Assurances. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Constituent Corporations acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger or otherwise to carry out and effectuate the purposes of this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of each of the
Constituent Corporations or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
each of the Constituent Corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out and effectuate the purposes
of this Agreement.
ARTICLE IV
CONVERSION OF SHARES IN THE MERGER
4.1 Share Consideration for the Merger; Conversion of Shares in the
Merger. At the Effective Time, by virtue of the Merger and without any action
on the part of the holders of capital stock of the Company or of capital stock
of Newco:
3
<PAGE> 8
(a) Each share of common stock, par value $1.00 per share, of
the Company (singly, "Share" and plural "Shares") issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent,
Newco, or any direct or indirect wholly owned subsidiary of Parent
(collectively, "Parent Companies") or any of the Company's direct or indirect
wholly owned subsidiaries or held in the treasury of the Company) shall, by
virtue of the Merger and without any action on the part of Newco, the Company
or the holder thereof, be converted into a fraction of a share of common stock,
without par value, of Parent ("Parent Common Stock") equal to that fraction
(the "Per Share Conversion Ratio") of which the numerator is $14.50 (the
"Company Valuation") and the denominator is the average per share closing price
on the New York Stock Exchange (the "NYSE") of Parent Common Stock (as reported
on the NYSE Composite Index) during the 10 consecutive trading days ending on
the second trading day prior to the Effective Time (the "Average Closing
Price"). The fraction of a share of Parent Common Stock into which a Share is
converted pursuant to the Merger is referred to herein as the "Merger
Consideration").
(b) At the Effective Time, each Share issued and outstanding
and owned by any of the Parent Companies or any of the Company's direct or
indirect wholly owned subsidiaries or authorized but unissued shares held by
the Company immediately prior to the Effective Time shall cease to be
outstanding, be cancelled and retired without payment of any consideration
therefor and cease to exist.
(c) At the Effective Time, each share of common stock of Newco
issued and outstanding immediately prior to the Effective Time shall be
converted into one validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation.
(d) If, between the date of this Agreement and the Effective
Time, the outstanding Shares or the Parent Common Stock shall have been changed
into a different number of shares or a different class by reason of any
reclassification, recapitalization, split up, combination, exchange of shares
or readjustment, or with respect to any such event there be declared a record
date within said period with a distribution date after the Effective Time or a
stock dividend on the Shares or the Parent Common Stock shall be declared with
a record date within said period, the Per Share Conversion Ratio shall be
appropriately adjusted.
4
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4.2 Exchange of Certificates; No Fractional Shares; Return of
Certificates.
(a) Except as set forth in Section 4.1 above, from and after
the Effective Time, each holder of a certificate which immediately prior to the
Effective Time represented outstanding Shares shall be entitled to receive in
exchange therefor, upon surrender thereof to a bank or trust company selected
by Parent (the "Exchange Agent"), a certificate or certificates representing
the number of shares of Parent Common Stock into which such holder's Shares
were converted and, if applicable, payment for any fractional shares in
accordance with Section 4.2(b). No holder of a certificate or certificates
which immediately prior to the Effective Time represented Shares shall be
entitled to receive any dividend or other distribution from Parent until
surrender of such holder's certificate or certificates for a certificate or
certificates representing shares of Parent Common Stock. Upon such surrender,
there shall be paid to the holder thereof the amount of any dividends or other
distributions (without interest) which theretofore became payable, but which
were not paid by reason of the failure to surrender such certificates, with
respect to the number of whole shares of Parent Common Stock represented by the
certificates issued upon such surrender. From and after the Effective Time,
Parent shall, however, be entitled to treat such certificates for Shares which
have not yet been surrendered for exchange as evidencing the ownership of that
number of shares of Parent Common Stock into which the Shares represented by
such certificates shall have been converted, notwithstanding any failure to
surrender such certificates. If any certificate for shares of Parent Common
Stock is to be issued in a name other than that in which the certificate for
Shares surrendered in exchange therefor is registered, it shall be a condition
of such issuance that the person requesting such issuance shall pay any
transfer or other tax required by reason of the issuance of certificates for
such shares of Parent Common Stock in a name other than that of the registered
holder of the certificate surrendered, or shall establish to the satisfaction
of Parent or the Exchange Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither Parent, Newco nor the
Company shall be liable to any holder of Shares for any shares of Parent Common
Stock (or dividends or distributions with respect thereto), delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(b) No fractional shares of Parent Common Stock shall be
issued upon the surrender for exchange of certificates which prior to the
Effective Time shall have represented Shares; no dividend or other distribution
of Parent shall relate to any fractional share and such fractional share
interests will not entitle the owner thereof to vote or to any rights as a
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stockholder of Parent. In lieu of any fractional shares, each holder of
certificates formerly representing Shares who would otherwise be entitled to
receive a fraction of a share of Parent Common Stock upon surrender of all of
the certificates formerly representing Shares registered in the name of such
holder shall be paid by the Exchange Agent an amount of cash (without interest)
equal to the Average Closing Price multiplied by the fraction of a share of
Parent Common Stock the holder would otherwise be entitled to receive.
(c) One hundred eighty (180) days after the Effective Time all
shares of Parent Common Stock, and all dividends or other distributions on
Parent Common Stock which have been received by the Exchange Agent and have not
been distributed as hereinbefore provided, shall be returned to Parent or its
agent and the duties of the Exchange Agent with respect thereto shall thereupon
terminate; thereafter, subject to applicable law, any holder of Shares who has
not theretofore surrendered the holder's certificate or certificates formerly
representing Shares in exchange for the Merger Consideration shall be entitled
upon surrender of such certificate or certificates to Parent or its agent to
receive a certificate for the number of whole shares of Parent Common Stock
into which the holder's Shares shall have been converted pursuant to the
Merger, the amount (without interest thereon) of all dividends and other
distributions which have theretofore become payable with respect to such shares
of Parent Common Stock and the amount (without interest thereon) of any payment
due the holders on account of fractional shares, if any, of Parent Common
Stock.
4.3 Transfer of Shares After the Effective Time. No transfers of
Shares shall be made on the stock transfer books of the Company after the close
of business on the day prior to the date of the Effective Time.
4.4 Company Stock Options. After the Effective Time, each option
("Option") to purchase shares which has been granted under the Company's 1990
Stock Option Plan and the Company's 1994 Stock Option Plan (together, the
"Option Plans") and is outstanding at the Effective Time, whether or not then
exercisable, will automatically be converted into that number of shares of
Parent Common Stock determined by multiplying the number of Shares subject to
such Option at the Effective Time by a fraction equal to (a) the amount by
which the Company Valuation exceeds the option exercise price divided by (b)
the Company Valuation, and then (c) multiplying the quotient by the Per Share
Conversion Ratio. The Company will use its best efforts to obtain an agreement
from each holder of an Option, in form and substance satisfactory to Parent, to
the effect that (i) the Option holder consents to the conversion of the
respective Option in accordance with this Section 4.4, (ii) the conversion
satisfies all obligations of the Company and of
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Parent under the Option, and (iii) upon receipt of Parent Common Stock (net of
applicable tax withholding) pursuant to the conversion, neither the Company nor
Parent shall have any obligations to the holder under the Option.
4.5 No Dissenting Shares. The parties hereto acknowledge that
under the WBCL the shareholders of the Company are not entitled to dissent from
the Merger and require appraisal of their Shares.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The schedules called for by the Company's representations and
warranties in this Article V have been prepared by Company management without
full involvement of non-management personnel because of the confidential nature
of this Agreement. Although management believes all of the information is
accurate and (except in respect to lists of intellectual property, permits and
contracts) complete, the Company shall have the right to complete or supplement
Schedules 5.9, 5.10, 5.16 and 5.19 within five business days after pubic
announcement of this Agreement (the "Schedule Supplement"). Parent shall have
the right to terminate this Agreement by written notice to the Company within
three business days after receipt of the Schedule Supplement if Parent in its
sole discretion determines that the information contained in the schedules as
supplemented constitutes, or is likely to have, a Significantly Material
Adverse Effect (defined in Section 10.10). In the event Parent terminates this
Agreement pursuant to the foregoing provision, this Agreement shall become null
and void and have no effect, without any liability on the part of any party
hereto or its affiliates, directors, officers or shareholders, except that the
Confidentiality Agreement shall survive and each party shall pay its own
expenses incurred in connection with this Agreement. In the event Parent does
not terminate this Agreement pursuant to the foregoing provision, the Schedule
Supplement shall be deemed delivered as of the date of this Agreement and made
a part of the Company's schedules to this Agreement.
Subject to the foregoing paragraph, the Company hereby represents and
warrants to Parent and Newco that:
5.1 Corporate Organization and Qualification. Each of the Company
and its subsidiaries (as hereinafter defined in Section 10.10) is a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and is qualified and in good standing
as a foreign corporation in each jurisdiction where the properties owned,
leased or operated, or the business conducted, by it require such
qualification. Each of the Company and its
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subsidiaries has all requisite power and authority (corporate or otherwise) to
own its properties and to carry on its business as it is now being conducted.
The Company has heretofore made available to Parent complete and correct copies
of its Articles of Incorporation and By-Laws. Set forth in Schedule 5.1 is a
list of all subsidiaries of the Company and the jurisdictions in which the
Company and each of its subsidiaries are qualified or otherwise authorized to
do business.
5.2 Capitalization. The authorized capital stock of the Company
consists of (i) 10,000,000 Shares of which, as of the date of this Agreement,
3,873,398 Shares are issued and outstanding and (ii) 10,000 shares of preferred
stock, par value $100.00 per share, none of which is issued or outstanding, and
(iii) 20,000 shares of preferred stock, par value of $50.00 per share, none of
which is outstanding. All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. As of the date of this Agreement, 180,214 Shares were reserved
for issuance upon exercise of outstanding options pursuant to the Option Plans
and 413,867 Shares were reserved for issuance on conversion of the Company's
7 1/2% Convertible Subordinated Debentures Due 2001. Except as set forth on
Schedule 5.2, as of the date hereof all outstanding shares of capital stock of
the Company's subsidiaries are owned by the Company or a direct or indirect
wholly owned subsidiary of the Company, free and clear of all liens, charges,
encumbrances, claims and options of any nature. Except as set forth above and
on Schedule 5.2, there are not as of the date hereof any outstanding or
authorized options, warrants, calls, rights (including preemptive rights),
commitments or any other agreements of any character which the Company or any
of its subsidiaries is a party to, or may be bound by, requiring it to issue,
transfer, sell, purchase, redeem or acquire any shares of capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for, any shares of capital stock of the Company or any of
its subsidiaries.
5.3 Authority Relative to Agreement.
(a) The Company has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than,
with respect to the Merger, the approval and adoption of this Agreement by the
shareholders of the Company in accordance with the WBCL). This Agreement has
been duly and validly executed and delivered by the Company and,
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assuming this Agreement constitutes the valid and binding agreement of Parent
and Newco, constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement hereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity
or at law).
(b) The Board of Directors of the Company has duly and validly
approved and taken all corporate action required to be taken by the Board of
Directors for the consummation of the transactions (including the Merger)
contemplated herein, including but not limited to, all actions required to
render the provisions of Section 180.1141 of the WBCL restricting business
combinations with "Interested Shareholders" inapplicable to such transactions.
5.4 Consents and Approvals; No Violation. Neither the execution
and delivery of this Agreement nor the consummation by the Company of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the respective Articles of Incorporation or By-Laws of the
Company or any of its subsidiaries; (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, except (i) in connection with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (ii) pursuant to the applicable requirements of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act"), and the Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder (the "Exchange Act"),
(iii) the filing of the Articles of Merger pursuant to the WBCL and appropriate
documents with the relevant authorities of other states in which the Company or
any of its subsidiaries is authorized to do business, (iv) in connection with
any state or local tax which is attributable to the beneficial ownership of the
Company's or its subsidiaries' real property, if any (collectively, the "Gains
Taxes"), (v) as may be required by any applicable state securities or "blue
sky" laws or state takeover laws, (vi) such filings and consents as may be
required under any environmental, health or safety law or regulation pertaining
to any notification, disclosure or required approval triggered by the Merger or
the transactions contemplated by this Agreement, or (vii) such filings,
consents, approvals, orders, registrations and declarations as may be required
under the laws of any foreign country in which the Company or any of its
subsidiaries conducts any business or owns any assets; (c) except as set forth
in Schedule 5.4(c), result in a violation or breach of, or constitute (with or
without due notice or lapse
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of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or lien or other charge or encumbrance) under any
of the terms, conditions or provisions of any material note, license, agreement
or other instrument or obligation to which the Company or any of its
subsidiaries or any of their assets may be bound, except for such violations,
breaches and defaults (or rights of termination, cancellation or acceleration
or lien or other charge or encumbrance) as to which requisite waivers or
consents have been obtained or shall be obtained prior to the Effective Time;
or (d) assuming the consents, approvals, authorizations or permits and filings
or notifications referred to in this Section 5.4 are duly and timely obtained
or made and, with respect to the Merger, the approval of this Agreement by the
Company's shareholders has been obtained, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company or any of its
subsidiaries or to any of their respective assets.
5.5 SEC Reports; Financial Statements; Absence of Liabilities.
(a) Prior to the date of this Agreement the Company has filed
all forms, reports and documents required to be filed by it with the Securities
and Exchange Commission (the "SEC") since December 31, 1991 pursuant to the
federal securities laws and the SEC rules and regulations thereunder, all of
which, as of their respective dates, complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act
(collectively, the "Company SEC Reports"). None of the Company SEC Reports,
including, without limitation, any financial statements or schedules included
therein, as of their respective dates contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated balance sheets and the related statements
of consolidated income, shareholders' equity and cash flows (including the
related notes thereto) of the Company included in the Company SEC Reports
complied in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with prior periods (except as otherwise noted therein), and
present fairly the consolidated financial position of the Company and its
consolidated subsidiaries as of their respective dates, and the consolidated
results of their operations and their cash flows for the periods presented
therein (subject, in
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the case of the unaudited interim financial statements, to normal year-end
adjustments).
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and its subsidiaries at September 30, 1995,
including the notes thereto, contained in the Company SEC Reports (the "Company
9/30/95 Balance Sheet"), neither the Company nor any of its subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected on a balance
sheet or in the notes thereto prepared in accordance with generally accepted
accounting principles, except for liabilities or obligations incurred in the
ordinary course of business since September 30, 1995, or which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(d) Except as may be set forth on Schedule 5.5, neither the
Company nor any of its subsidiaries has any liabilities or obligations (whether
accrued, absolute, contingent or otherwise) under any contract, order or
commitment expected to be or previously performed at a loss or other contingent
liability except for (i) expected losses and contingent liabilities known to
the Company for which adequate reserves are reflected in the Company 9/30/95
Balance Sheet, (ii) those arising in the ordinary course of business subsequent
to the date of the Company 9/30/95 Balance Sheet, or (iii) those which would
not individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
5.6 Absence of Certain Changes or Events. As of the date of this
Agreement, except as disclosed in the Company SEC Reports, as set forth on
Schedule 5.6 or contemplated by this Agreement, since December 31, 1994: (i)
the business of the Company has been carried on only in the ordinary and usual
course and in a manner consistent with past practices; (ii) the Company has not
suffered any Material Adverse Effect; (iii) neither the Company nor any of its
subsidiaries has incurred any material liabilities (direct, contingent or
otherwise) or engaged in any material transaction or entered into any material
agreement outside the ordinary course of business; (iv) there has not been any
damage, destruction or loss (whether or not covered by insurance) with respect
to any assets of the Company or any of its subsidiaries which would reasonably
be expected to, individually or in the aggregate, have a Material Adverse
Effect; (v) there has not been any revaluation by the Company of any of its
material assets, including but not limited to writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (vi) there has not been any entry by the Company
or any of its subsidiaries into any commitment or transactions material to the
Company taken as a whole other than those in the
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ordinary course of business; (vii) there has been no change by the Company in
accounting principles, practices or methods; (viii) any declaration, setting
aside or payment of any dividend or other distribution in respect of the Shares
or any direct or indirect redemption, purchase or other acquisition by the
Company of any of its shares of capital stock; (ix) there has not been any
increase in the compensation payable or to become payable by the Company or its
subsidiaries to any of their respective officers, or any significant increase
in the compensation payable to other employees or agents of the Company or any
of its subsidiaries or any adoption of any bonus, pension, retirement, profit
sharing, or stock option plan, arrangement or agreement made to or with any of
such officers of employees; (x) there has not been any labor strike or threat
thereof or labor trouble or other business event or condition which is likely
to have a Material Adverse Effect; and (xi) neither the Company nor any of its
subsidiaries has engaged in any transaction of a kind that would be prohibited
after execution and delivery hereof pursuant to the second sentence of Section
7.1 hereof.
5.7 Litigation. Schedule 5.7 sets forth a list of all suits,
actions, claims, proceedings, disputes and complaints involving potential loss
or liability of $10,000 or more. Except as set forth in Schedule 5.7, neither
the Company nor any of its subsidiaries has received notice or complaints of
noncompliance with any laws or rules and regulations promulgated thereunder
relating to occupational safety, environmental matters, equal opportunity, fair
employment, product labeling or similar laws or regulations affecting its
business and operations which have not been finally resolved. The Company SEC
Reports accurately disclose in all material respects as of the date of this
Agreement all actions, claims, suits, proceedings and governmental
investigations pending or, to the knowledge of the Company, threatened, which
are required to be disclosed therein by the Securities Act and the Exchange
Act. Except as disclosed in Schedule 5.7, there is no action, suit, proceeding
at law or in equity, or any arbitration or any administrative or other
proceeding by or before (or to the knowledge of the Company any investigation
by) any governmental or other instrumentality or agency, pending, or, to the
best knowledge of the Company, threatened, against or affecting the Company or
any of its subsidiaries, or any of their properties or rights. Except as
disclosed in Schedule 5.7, neither the Company nor any of its subsidiaries is
subject to any judgment, injunction, order, award or decree entered in any
lawsuit or proceeding which has or is reasonably expected to have a Material
Adverse Effect.
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5.8 Property.
(a) The Company and its subsidiaries have good and marketable
title to all of the properties and other assets reflected in the Company
9/30/95 Balance Sheet (except as since sold or otherwise disposed of in the
ordinary course of business) and except as shown in Schedule 5.8, their
properties are not subject to any mortgage, pledge, lien, conditional sales
agreement, encumbrance or charge, including leasehold interests, except for
liens securing specified liabilities as set forth on the Company 9/30/95
Balance Sheet (with respect to which no default exists), liens for current
taxes not in default, and minor imperfections in title, which are not
substantial in amount, do not materially detract from the value of the property
subject thereto, or materially impair their operations. All real estate leases
of the Company and its subsidiaries are listed on Schedule 5.8.
(b) The Company and its subsidiaries conduct their business in
those buildings and upon that land (the "Real Property") listed in Schedule
5.8, which Real Property is adequate for conducting present and currently
planned future operations. To the Company's knowledge, there are no claims
made by any municipal or other authorities in connection with the Real Property
for any violation of any applicable law, ordinance or regulation which is
likely to have a Material Adverse Effect. Any buildings included in the Real
Property are in good operating condition and in a reasonable state of repair
and the same conform in all material respects with all applicable ordinances
and regulations and building zoning, and other laws.
(c) All of the machinery and equipment owned or leased by the
Company and its subsidiaries and used in the conduct of their business is in
good working order and repair, reasonable wear and tear excepted, and is in
substantial conformity with all applicable ordinances, regulations and other
laws. Other than minor office equipment leases, there are no leases of
machinery and equipment, except as shown on Schedule 5.8.
(d) Except as set forth in Schedule 5.8, the assets owned or
leased by the Company or its subsidiaries constitute all of the assets which
are being used in their business; all such tangible assets are in good repair
(reasonable wear and tear excepted) and serviceable condition and suitable for
the uses for which they are intended, and no notice of any violation of
applicable ordinances or regulations relating to such assets or their use has
been received.
(e) The Company and its subsidiaries are in compliance with,
and not in default under, their obligations
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under their leases for real and personal property and to the knowledge of the
Company the other parties to such leases are not in default thereunder.
5.9 Patents, Trademarks and Like Assets. All trademarks, trade
names, copyrights and patents and applications therefor owned by or used by the
Company or any of its subsidiaries in its business are listed and described in
Schedule 5.9 hereto. No proceedings have been instituted or are pending or, to
the knowledge of the Company, threatened, which challenge the validity or the
ownership of such trademarks, trade names, copyrights, patents and applications
except as set forth in Schedule 5.9. The Company or any of the subsidiaries
has no knowledge of the use or the infringement of any of such trademarks,
trade names, copyrights, patents and applications by any other person except as
set forth in Schedule 5.9. Neither the Company nor any of its subsidiaries,
has entered into any patent or trademark license, technology transfer, or
non-competition agreement relating to its business except as set forth in
Schedule 5.9. The Company and its subsidiaries own (or possess adequate and
enforceable licenses or other rights to use) all trademarks, trade names,
copyrights, patents, inventions and processes now used in the conduct of their
business and to the knowledge of the Company no such use or any other practice
with respect to the business of the Company and its subsidiaries conflicts or
has conflicted with the rights of others except as set forth in Schedule 5.9.
5.10 Existing Contracts or Commitments. Except as listed on
Schedule 5.10, neither the Company nor any of its subsidiaries has any:
(i) presently existing employment agreements, or bonus labor
contract, or agreement for the purchase or sale of supplies,
materials, services or finished products, other than agreements in
the ordinary course of business, none of which individually or in the
aggregate are material; or
(ii) material contract or commitment extending beyond the
Closing which is not cancelable on ninety (90) days or less notice to
the other parties thereto; or
(iii) contract, commitment or other arrangement involving the
payment by or to it of more than $100,000; or
(iv) contract or instrument, charter or other corporate
restriction, materially and adversely affecting its business,
property, assets, operations or condition, financial or otherwise.
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True and complete copies of the agreements, plans, commitments and arrangements
listed in Schedule 5.10 have been delivered to Parent, and the Company and its
subsidiaries are currently in substantial compliance with all of the provisions
of each of the same and of all other contracts or commitments to which they are
parties.
5.11 Inventories. The inventories of supplies, raw materials, work
in progress and finished goods of the Company and its subsidiaries
("Inventories") as reflected in the Company 9/30/95 Balance Sheet are valued on
a basis consistent with generally accepted accounting principles. All
inventories of the Company and its subsidiaries as of the Closing will be good
and merchantable at customary prices in the ordinary course of business and of
a quality and quantity usable in ordinary limits as determined by past practice
except to the extent reflected in appropriate reserves on the Company 9/30/95
Balance Sheet.
5.12 Accounts Receivable. The accounts receivable relating to the
Company and its subsidiaries arose for products or services delivered or
performed and are collectible in the ordinary course of business, except for a
maximum aggregate reserve for or allowance for uncollectible accounts of
$653,077.
5.13 Vital Parent Statistics. The Company and its subsidiaries have
delivered to Parent true and complete lists as set forth in Schedule 5.13 as of
the date of this Agreement, showing:
(i) the names of all directors and officers of the Company and
each of its subsidiaries and the trustees or administrative committee
members of any pension or profit sharing plan of which the Company or
any of its subsidiaries is the settlor;
(ii) the names of all persons whose rate of compensation from
the Company or any of its subsidiaries for their current fiscal year
will be equal to or exceed $60,000;
(iii) the name of each bank in which the Company, or any of its
subsidiaries has an account, or safety deposit box, and the names of
all persons authorized to draw thereon, or to have access thereto.
5.14 Insurance. A true and complete list of all policies of
insurance owned by or in which the Company or any of its subsidiaries has an
interest is set forth in Schedule 5.14. The list also contains all claims for
insurance losses in excess of $25,000 per occurrence, filed by the Company or
any of its subsidiaries during the three-year period immediately
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preceding the Closing, including but not limited to workman's compensation,
automobile and general and product liability.
5.15 Minute Book and Stock Ledger. The minute books of the Company
and each of its subsidiaries contain full and complete minutes of all annual,
special and other meetings of the Board of Directors and shareholders since
February of 1982, and any consents in lieu thereof of the respective entity,
and the signatures therein are the true signatures of the persons purporting to
have signed them. The stock ledgers of the Company and each of its
subsidiaries are complete and all documentary stamp taxes, if any, required in
connection with the issuance and transfer of the shares of the Company and each
of its subsidiaries, have been affixed and cancelled.
5.16 Sales Agency and Distribution Agreements. Except as set forth
in Schedule 5.16, neither the Company nor any of its subsidiaries is a party to
any sales agency or distributorship agreement or franchise which is not
cancelable at any time and without cause. The Company has delivered to Parent
a copy of each written, and a written summary of each oral, sales
representative and distributor agreements currently in effect. To the
knowledge of the Company, there is no pending or threatened claim against the
Company or any of its subsidiaries based upon the termination thereof. To the
knowledge of the Company, all of such agreements are valid, binding and in full
force and effect, and there exists no default thereunder by the Company or any
of its subsidiaries nor has any event occurred which with the passage of time
or giving of notice would constitute such a default thereunder.
5.17 Taxes.
(a) The Company and its subsidiaries have filed when due all
federal, state, local and foreign returns for Taxes (defined below) that any of
them is required to file ("Tax Returns") and have paid all taxes shown to be
due on those returns. The Company's Federal income tax returns for the periods
up to and including December 31, 1989 have been audited by the Internal Revenue
Service. The Company has delivered to Parent true and complete copies of its
federal income tax returns for each of the three years ended December 31, 1992,
1993 and 1994. The Tax Returns reflect accurately all liability for Taxes for
the periods covered thereby. All Taxes payable by, or due from, the Company or
any of its subsidiaries have been fully paid or adequately disclosed and
provided for on the financial statements of the Company and its subsidiaries in
accordance with generally accepted accounting principles. Without limiting the
generality of the foregoing, (i) no material claim for unpaid Taxes (x) to the
best knowledge of the Company, has become a lien or encumbrance of any kind
against the property of the Company or any of its subsidiaries or (y)
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is being asserted against the Company or any of its subsidiaries; (ii) no audit
of any Tax Return of the Company or any of its subsidiaries is being conducted
by a Tax authority; (iii) no extension of time is in effect with respect to the
filing of any Tax Returns, the payment of Taxes by the Company or any of its
subsidiaries or any limitations period on the assessment of any Taxes of the
Company or any of its subsidiaries; (iv) there is no Tax deficiency or to the
knowledge of the Company any substantive basis on which any Tax deficiency
might be asserted against the Company or any of its subsidiaries in excess of
the reserve for Taxes set forth in the financial statements of the Company and
its subsidiaries as of the respective dates thereof; and (v) there are no
claims for refunds of Taxes of the Company or any of its subsidiaries pending.
(b) Except for the group of which Company is presently the
common parent corporation, neither the Company nor any of its subsidiaries has
been a member of an affiliated group of corporations, within the meaning of
Section 1504(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Neither the Company nor any of its subsidiaries is a party to or bound by any
tax indemnity, tax sharing, tax allocation or similar agreement. Neither the
Company nor any of its subsidiaries is a party to any joint venture,
partnership or other arrangement or contract which could be treated as a
partnership for federal income tax purposes. All material elections with
respect to Taxes affecting the Company or any of its subsidiaries as of the
date hereof are set forth on Schedule 5.17. After the date hereof, no election
with respect to Taxes will be made without the written consent of Parent.
(c) The net operating loss carryovers of the Company for
federal income tax purposes at December 31, 1994 of approximately $16,000,000
represent actual taxable losses incurred by the Company and/or its liquidated
subsidiaries. These losses are available, within restrictions relating to the
change of the Company's stock ownership under Section 382 of the Code, and the
Separate Return Limitation Year rules under Section 1502 of the Code, to be
offset against future profits of the Company or its successor in determining
the amount of income subject to federal income tax. The utilization of these
losses expire in 2006 to 2009 and management of the Company believes that as of
the date of this Agreement there has not been a technical change of control
under the Code or regulations thereunder which would adversely affect the
utilization of these losses.
(d) As used in this Agreement, "Tax" or "Taxes" shall mean any
tax or taxes of any kind, including but not limited to those imposed on or
measured by or referred to as income, gross receipts, capital, capital gains,
sales, ad
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valorem, franchise, profits, license withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall
profits taxes, customs, duties or similar fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any governmental authority, domestic or
foreign.
5.18 Employee Benefit Plans; Labor Matters.
(a) With respect to all pension, profit sharing, bonus,
disability, welfare or group insurance, deferred compensation, stock option,
paid vacation and all other employee benefit plans, programs and arrangements
maintained or contributed to by the Company or any of its subsidiaries (the
"Company Plans"), except as set forth in Schedule 5.18 or the Company SEC
Reports and except as would not in the aggregate have a Material Adverse
Effect: (i) each pension or profit sharing plan is qualified under Section
401(a) of the Code and each related trust is exempt from taxation pursuant to
Section 501 of the Code; (ii) each Company plan of the type and nature so
required is in material compliance with the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), has complied in
all material respects with the reporting and disclosure requirements of
applicable federal and state laws and regulations; (iii) no pension plan has
any unfunded past service cost other than, if any, in accordance with and as
set forth in its most recent actuarial evaluation nor has any incurred any
"accumulated funding deficiency" as defined in ERISA; (iv) no employee benefit
plan or related trust has had a "reportable event" as such term is defined in
ERISA nor has any such plan or any "fiduciary" or "party-in-interest" or
"disqualified person" entered into any "prohibited transaction" as such terms
are defined in ERISA or the Code; (v) there are no actions, suits, or claims
(other than routine claims for benefits) pending or, to the knowledge of the
Company, any facts which could give rise to any such actions, suits or claims
against any employee benefit plan or the assets thereof; (vi) neither the
Company nor any of its subsidiaries is a participating employer in any
multiemployer plan as defined in 3(37) of ERISA or Section 471 of the Code;
(vii) neither the Company nor any of its subsidiaries maintains a plan which
provides post-retirement health, medical or life insurance benefits for retired
employees; (viii) each Company Plan required to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service (the "IRS") that it is so qualified and nothing has
occurred since the date of such letter that could reasonably be expected to
affect the qualified status of such Company Plan; (ix) each Company Plan has
been operated in all material respects in accordance with its terms and the
requirements of applicable law; and (x) neither the Company nor any of its
subsidiaries has
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incurred any direct or indirect liability under, arising out of or by operation
of Title IV of ERISA, in connection with the termination of, or withdrawal
from, any Company Plan or other retirement plan or arrangement, and no fact or
event exists that could reasonably be expected to give rise to any liability.
Except as set forth in Schedule 5.18 or the Company SEC Reports, the aggregate
accumulated benefit obligations of each Company Plan subject to Title IV of
ERISA (as of the date of the most recent actuarial valuation prepared for such
Company Plan) do not exceed the fair market value of the assets of such Company
Plan (as of the date of such valuation). Schedule 5.18 includes a list of, and
the Company has delivered to Parent a copy of, (i) all Company Plans, as
amended to the date hereof, (ii) each summary plan description and statements
of material modification, (iii) Form 5500, if required, together with audited
financial statements, if any, for the most recent fiscal year of each such
plan, (iv) each Internal Revenue Service determination letter (and related
request therefor) with respect to each plan, (v) any trust agreements,
insurance policies or administrative contracts with respect to such plans and,
(vi) in the case of a pension plan, the latest actuarial evaluation.
(b) The Company has delivered to Parent a copy of all
collective bargaining or other labor union contracts to which the Company or
any of its subsidiaries is a party applicable to persons employed by the
Company or its subsidiaries as of the date of this Agreement. As of the date
of this Agreement, there is no pending or threatened in writing labor dispute,
strike or work stoppage against the Company or any of its subsidiaries which
may interfere with the respective business activities of the Company or its
subsidiaries, except where such dispute, strike or work stoppage would not have
a Material Adverse Effect.
5.19 Compliance With Laws and Regulations.
(a) Except as disclosed in Schedule 5.19, the Company and its
subsidiaries are in compliance in all material respects with all applicable
laws, regulations, orders, judgments and decrees. Without limiting the
generality of the foregoing, as of the date of this Agreement, except as
disclosed in Schedule 5.19, (i) the Company and each of its subsidiaries is in
compliance in all material respects with all applicable federal, state and
local laws and regulations relating to pollution or protection of human health
or safety or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata). The Company
and each of its subsidiaries is in compliance in all material respects with all
applicable federal, state and local laws and regulations with respect to the
conduct of its business and maintenance and operation of their property,
including but not limited to matters relating to the employment of labor,
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including the provisions thereof related to wages, hours, collective
bargaining, equal employment opportunity and the payment of social security
taxes.
(b) Except as disclosed in Schedule 5.19 or in any other
agreement contemporaneously entered into by the parties, to the knowledge of
the Company: (i) each of the Company and its subsidiaries holds all permits,
licenses, variances, exemptions, and approvals from governmental authorities
and has made all notifications, reports and applications to governmental
authorities which are legally required for the operation of the business or the
ownership of the properties and assets of the Company and its subsidiaries
(with only such exceptions as would not in the aggregate reasonably be expected
to have a Material Adverse Effect) (collectively "Permits"); (ii) the Company
and its subsidiaries are in full compliance with the terms of all Permits;
(iii) Schedule 5.19 lists all unexpired Permits currently held or applied for
by the Company or its subsidiaries; and (iv) the business of the Company and
its subsidiaries has not been and is not being conducted in violation of any
law, ordinance, rule, regulation or other legal requirement.
(c) The Company and its subsidiaries have not, except as
detailed in Schedule 5.19, filed or made any notifications to any governmental
authority respecting, and the Company and its subsidiaries have not been and
are not, except as detailed in Schedule 5.19: (i) burying or dumping, or to the
knowledge of the Company there has not been any leaking, tank failure,
spillage, excessive evaporation, underground injection, or similar disposition
of, any contaminants, oil, chemical product, or other pollutant in, on or upon
premises owned, leased, or operated by any of them; (ii) or to the knowledge of
the Company there has not been any discharge of pollutants, whether solid,
gaseous, or liquid, from its manufacturing operations which has caused or may
cause harm to human health or the environment; or (iii) to the knowledge of the
Company there are no reasonable grounds for a claim against the Company or its
subsidiaries, whether asserted or unasserted, based on any discharge of oil,
chemical product, or other pollutant.
(d) Schedule 5.19 lists, by company facility, all off-site
locations or facilities to which each waste has been transported or conveyed
for treatment, storage, disposal, re-use, recycling or other disposition during
the last five years.
(e) To the knowledge of the Company, there are no pending or
threatened claims nor any reasonable basis for claims against the Company or
its subsidiaries under any federal, state or local law or the common law
relating to
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health, safety or the environment, except as detailed in Schedule 5.19.
(f) Except as detailed in Schedule 5.19, after reasonable
inquiry and to the knowledge of the Company, the Company and its subsidiaries
do not own, possess, or control any polychlorinated biphenyls ("PCB") or PCB
contaminated fluids or equipment, nor does any facility owned, leased or
operated by the Company or its subsidiaries contain in or on its premises any
waste, scrap, raw material, work-in- process, inventory, product, residue or
other material or substance containing PCB.
(g) Except as detailed in Schedule 5.19, after having made
reasonable inquiry and to the knowledge of the Company, the Company and its
subsidiaries do not own, possess or control any asbestos or asbestos containing
materials, nor does any facility owned or operated by the Company or its
subsidiaries contain in or on its premises any waste, scrap, raw material,
work-in-process, inventory, product, residue, structural members, insulation,
roofing material, building components, or other material or substance
containing asbestos. Schedule 5.19 also sets forth the locations of any
asbestos or asbestos containing material identified in response to the
immediately preceding sentence of this paragraph.
(h) Schedule 5.19 lists all hazardous substances owned, used,
stored, or otherwise maintained on the premises of the Company or its
subsidiaries, currently, or in the past three years, and, with respect to each
such substance sets forth the approximate period of use, the average annual
inventory maintained during such period, and the purpose or purposes for which
such hazardous substance was used.
(i) To the knowledge of the Company, there are no known
pending or proposed environmental regulations, rules, ordinances, orders or
other official actions of any authority which would have a material adverse
effect on the business or operations of the Company or its subsidiaries.
5.20 Brokers and Finders. Except as set forth in Section 5.21, the
Company has not employed any investment banker, broker, finder, consultant or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to any investment banking, brokerage, finder's or
similar fee or commission in connection with this Agreement or the transactions
contemplated hereby.
5.21 Opinions of Financial Advisors. The Company has received the
opinion of Robert W. Baird & Co. Incorporated ("Baird") to the effect that the
Merger Consideration to be received by the shareholders of the Company pursuant
to the Merger is fair to such shareholders from a financial point of
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view (the "Fairness Opinion"), a copy of which opinion will be delivered to
Parent upon receipt of the formal written opinion. The Company will include a
copy of the Fairness Opinion in the Merger Proxy Statement (defined in Section
7.9) and Baird has authorized the inclusion of the Fairness Opinion in the
Merger Proxy Statement. The Company has disclosed to Parent the amounts paid
or payable to Baird in connection with the Fairness Opinion.
5.22 Certain Agreements. Except as disclosed in Schedule 5.22,
neither the Company nor any of its subsidiaries is party to any (i) agreements
with any executive officer or other key employee of the Company or any of its
subsidiaries (A) the benefits of which are contingent, or the terms of which
are materially altered, upon 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, (B) providing any term of employment or
compensation guarantee extending for a period longer than one year, or (C)
providing severance benefits or other benefits (which are conditioned upon a
change of control) after the termination of employment of such employee
regardless of the reason for such termination of employment or (ii) agreement
or plan, including, without limitation, any incentive or bonus plan, stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be materially increased, or the vesting of benefits of
which will be materially 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.
5.23 Merger Proxy Statement.
(a) Any proxy or similar materials distributed to the Company's
shareholders in connection with the Merger, including the Merger Proxy
Statement (and any amendments or supplements thereto) will comply in all
material respects with applicable federal securities laws and laws of Wisconsin
and at the time that they or any amendments or supplements thereto, are filed
with the SEC and are first published or sent or given to holders of Shares,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect
to information supplied by Newco or Parent for inclusion in the Merger Proxy
Statement.
5.24 Accuracy of Information. To knowledge of the Company, none of
the information included in this Agreement or the schedules or other documents
furnished or to be furnished
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by the Company or any of its authorized representatives to Parent or any of its
representatives pursuant to this Agreement is or will on the Closing Date be
false or misleading or make an omission as to any material fact required to be
stated to make any of the statements therein made not misleading.
5.25 Representations and Warranties. The representations and
warranties of the Company contained in this Agreement in the aggregate,
disregarding all qualifications and exceptions contained therein relating to
materiality or Material Adverse Effect, are true and correct with only such
exceptions as would not in the aggregate reasonably be expected to have a
Significantly Material Adverse Effect (defined in Section 10.10).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
AND NEWCO
Each of Parent and Newco represent and warrant jointly and severally
to the Company that:
6.1 Corporate Organization and Qualification. Each of Parent and
its Significant Subsidiaries and Newco is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation and is qualified and in good standing as a foreign corporation in
each jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification. Each of Parent and its
Significant Subsidiaries has all requisite power and authority (corporate or
otherwise) to own its properties and to carry on its business as it is now
being conducted. Parent and Newco have heretofore made available to the
Company complete and correct copies of their respective Certificates of
Incorporation and By-Laws.
6.2 Capitalization. The authorized capital stock of Parent
consists of (i) 150,000,000 shares of common stock, without par value of which,
as of November 30, 1995, 117,576,714 shares were issued and outstanding and
(ii) 300,000 shares of preferred stock, without par value per share, of which,
as of the date of this Agreement, none are issued and outstanding. All of the
outstanding shares of capital stock of Parent have been duly authorized and
validly issued and are fully paid and nonassessable.
6.3 Authority Relative to Agreement. Each of Parent and Newco has
the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the
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transactions contemplated hereby. This Agreement and the consummation by
Parent and Newco of the transactions contemplated hereby have been duly and
validly authorized by the respective Boards of Directors of Parent and Newco
and by Parent as sole shareholder of Newco, and no other corporate proceedings
on the part of Parent and Newco are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Newco and, assuming
this Agreement constitutes a valid and binding agreement of the Company,
constitutes a valid and binding agreement of each of Parent and Newco,
enforceable against each of them in accordance with its terms, except that the
enforcement hereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors, rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or
in equity).
6.4 Consents and Approvals; No Violation. Neither the execution
and delivery of this Agreement nor the consummation by Parent and Newco of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the Certificate of Incorporation or the By-Laws,
respectively, of Parent or Newco; (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, except (i) in connection with the applicable
requirements of the HSR Act, (ii) pursuant to the applicable requirements of
the Securities Act, the Exchange Act and rules and regulations under such acts,
(iii) the filing of the Articles of Merger pursuant to the WBCL and appropriate
documents with the relevant authorities of other states in which Parent is
authorized to do business, (iv) as may be required by any applicable state
securities or "blue sky" laws or state takeover laws, (v) such filings,
consents, approvals, orders, registrations, declarations and filings as may be
required under the laws of any foreign country in which Parent or any of its
subsidiaries conducts any business or owns any assets, or (vi) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or the transactions contemplated by this Agreement; (c)
except as set forth in Schedule 6.4(c), result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration or lien or
other charge or encumbrance) under any of the terms, conditions or provisions
of any note, license, agreement or other instrument or obligation to which
Parent or any of its Significant Subsidiaries may be bound, except for such
violations, breaches and defaults (or rights of termination, cancellation or
acceleration
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or lien or other charge or encumbrance) as to which requisite waivers or
consents have been obtained; or (d) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in this
Section 6.4 are duly and timely obtained or made, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent or any of
its subsidiaries or to any of their respective assets.
6.5 SEC Reports; Financial Statements.
(a) Parent has filed all forms, reports and documents required
to be filed by it with the SEC since December 31, 1991 pursuant to the federal
securities laws and the SEC rules and regulations thereunder, all of which as
of their respective dates complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act (collectively, the
"Parent SEC Reports"). None of the Parent SEC Reports, including, without
limitation, any financial statements or schedules included therein, as of their
respective dates contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(b) The consolidated balance sheets and the related statements
of consolidated income, shareholders, equity and cash flows (including the
related notes thereto) of Parent included in the Parent SEC Reports complied in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with prior periods (except as otherwise noted therein), and present
fairly the consolidated financial position of Parent and its consolidated
subsidiaries as of their respective dates, and the consolidated results of
their operations and their cash flows for the periods presented therein
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments).
6.6 Merger Consideration. The shares of Parent Common Stock to be
issued as Merger Consideration pursuant to the Merger upon issuance will be
validly issued, fully paid and nonassessable shares of Parent Common Stock.
6.7 Information Supplied. None of the information supplied by
Parent or Newco in writing for inclusion in the Merger Proxy Statement will at
the respective times that the Merger Proxy Statement, or any amendments or
supplements thereto, is filed with the SEC and is first published or sent or
given to holders of Shares for the Shareholders Meeting or at the Effective
Time, contain any untrue statement of a
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material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
6.8 Interim Operations of Newco. Newco was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not engaged
in any business activities or conducted any operations other than in connection
with the transactions contemplated hereby.
6.9 Brokers and Finders. Parent has not employed any investment
banker, broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
7.1 Conduct of Business of the Company.
(a) The Company agrees that during the period from the date of
this Agreement to the Effective Time (unless the other party shall otherwise
agree in writing and except as otherwise contemplated by this Agreement), the
Company will, and will cause each of its subsidiaries to, conduct its
operations according to its ordinary and usual course of business consistent
with past practice and, to the extent consistent therewith, with no less
diligence and effort than would be applied in the absence of this Agreement,
seek to preserve intact its current business organizations, keep available the
service of its current officers and employees and preserve its relationships
with customers, suppliers and others having business dealings with it to the
end that goodwill and ongoing businesses shall not be impaired in any material
respect at the Effective Time. Without limiting the generality of the
foregoing, and except as otherwise permitted in this Agreement (including
actions which may be required in the judgment of the Company's Board of
Directors, after consultation with Company counsel, in order to comply with the
Board of Director's fiduciary duties to the Company's shareholders and other
constituencies under applicable law) prior to the Effective Time, neither the
Company nor any of its subsidiaries will, without the prior written consent of
Parent (which consent shall not unreasonably be withheld):
(i) except for shares to be issued or delivered
pursuant to the Option Plans, issue, deliver,
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sell, dispose of, pledge or otherwise encumber, or authorize or propose
the issuance, sale, disposition or pledge or other encumbrance of (A) any
additional shares of capital stock of any class (including the Shares), or
any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for any shares of capital stock, or any rights,
warrants, options, calls, commitments or any other agreements of any
character to purchase or acquire any shares of capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for, any shares of capital stock, or (B) any other
securities in respect of, in lieu of, or in substitution for, Shares
outstanding on the date hereof;
(ii) except pursuant to the Company's stock-based
employee benefit plans, redeem, purchase or otherwise acquire, or propose
to redeem, purchase or otherwise acquire, any of its outstanding Shares;
(iii) split, combine, subdivide or reclassify any Shares
or declare, set aside for payment or pay any dividend, or make any other
actual, constructive or deemed distribution in respect of any Shares or
otherwise make any payments to shareholders in their capacity as such,
other than the declaration and payment of regular quarterly cash dividends
in accordance with past dividend policy and per share amount and except
for dividends by a wholly-owned subsidiary of the Company;
(iv) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its subsidiaries not
constituting an inactive subsidiary (other than the Merger);
(v) adopt any amendments to its Articles of
Incorporation or By-Laws or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of any subsidiary not constituting an inactive
subsidiary of the Company;
(vi) except as set forth on Schedule 7.1(a)(vi), make any
material acquisition, by means of merger, consolidation or otherwise, or
material disposition, of assets or securities;
(vii) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for borrowed money
or guarantee any such indebtedness or make any loans, advances or capital
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contributions to, or investments in, any other person, other than to the
Company or any wholly-owned subsidiary of the Company;
(viii) grant any material increases in the compensation
of any of its directors, officers or key employees, except in the ordinary
course of business and in accordance with past practice;
(ix) except as set forth on Schedule 7.1(a)(ix), pay or
agree to pay any pension, retirement allowance or other employee benefit
not required or contemplated by any of the existing benefit, severance,
termination, pension or employment plans, agreements or arrangements as in
effect on the date hereof to any such director or officer, whether past or
present;
(x) enter into any new or materially amend any
existing employment or severance or termination agreement with any such
director or officer;
(xi) except as set forth on Schedule 7.1(a)(xi) and
except in the ordinary course of business consistent with past practice or
as may be required to comply with applicable law, become obligated under
any new pension plan, welfare plan, multiemployer plan, employee benefit
plan, severance plan, benefit arrangement, or similar plan or arrangement,
which was not in existence on the date hereof, or amend any such plan or
arrangement in existence on the date hereof if such amendment would have
the effect of materially enhancing any benefits thereunder; or
(xii) authorize, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
7.2 Acquisition Proposals. The Company and its subsidiaries and
their respective officers, directors, employees, representatives and agents
will immediately cease any existing discussions or negotiations, if any, with
any parties conducted heretofore with respect to any proposal for a Third Party
Acquisition (as hereinafter defined in Section 9.7(d)). The Company may,
directly or indirectly, furnish information and access, in each case only in
response to requests which were not solicited by the Company after the date of
this Agreement, to any corporation, partnership, person or other entity or
group pursuant to confidentiality agreements, and may participate in
discussions and negotiate with such entity or group concerning any merger, sale
of assets, sale of shares of capital stock or
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similar transaction involving the Company or any subsidiary or division of the
Company, if (a) such entity or group has submitted a bona fide written proposal
to the Board of Directors relating to any such transaction, and (b) the Board
of Directors determines, in its good faith reasonable judgment after
consultation with Company counsel, that failing to take such action would be a
breach of the Board's fiduciary duties to the Company's shareholders or other
constituencies under applicable law. The Company shall promptly notify Parent,
if any proposal or offer, or any inquiry or contact with any person with
respect thereto, is made and shall, in any such notice to Parent, indicate in
reasonable detail the identity of the offeror and the terms and conditions of
any proposal or offer, or any such inquiry or contact. The Company shall keep
Parent promptly advised of all developments which could reasonably be expected
to culminate in the Board of Directors withdrawing, modifying or amending its
recommendation of the Merger and other transactions contemplated by this
Agreement. Except as set forth in this Section 7.2, neither the Company or any
of its affiliates, nor any of its or their respective officers, directors,
employees, representatives or agents, shall, directly or indirectly, knowingly
encourage, solicit, participate in or initiate discussions or negotiations
with, or provide any information to, any corporation, partnership, person or
other entity or group (other than Parent and Newco, any affiliate or associate
of Parent and Newco, or any designees of Parent or Newco) concerning any
merger, sale of assets, sale of shares of capital stock or similar transactions
(including an exchange of stock or assets) involving the Company or any
subsidiary or division of the Company.
7.3 Best Efforts.
(a) Subject to the terms and conditions provided in this
Agreement, each of the parties hereto shall use its best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using its commercially reasonable best efforts (i) to obtain all
necessary or appropriate waivers, consents and approvals, (ii) to effect all
necessary registrations, filings and submissions (including, but not limited
to, (A) filings under the Securities Act and under the Exchange Act, (B)
filings under the HSR Act and any other submissions requested by the Federal
Trade Commission or Department of Justice and (C) such filings, consents,
approvals, orders registrations and declarations as may be required under the
laws of the State of Wisconsin or of any other state or foreign country in
which the Company or any of its subsidiaries conducts any business or owns any
assets) and (iii) to lift any injunction or other legal bar to the Merger (and,
in such case, to proceed with the Merger as
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expeditiously as possible), subject, however, to the requisite votes of the
shareholders of any or all of the Company, Newco and Parent.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to use its commercially reasonable best efforts or take any action
pursuant to this Section 7.3 if in the judgment of the Board of Directors after
consultation with Company counsel such actions would be a breach of the Board's
fiduciary duties to the Company's shareholders or other constituencies under
applicable law.
7.4 Access to Information. Upon reasonable notice, the Company
shall (and shall cause each of its subsidiaries to) afford to officers,
employees, counsel, accountants and other authorized representatives of Parent
("Representatives"), in order to evaluate the transactions contemplated by this
Agreement, reasonable access, during normal business hours throughout the
period prior to the Effective Time, to its properties, books and records and,
during such period, shall (and shall cause each of its subsidiaries to) furnish
promptly to such Representatives all information concerning its business,
properties and personnel as may reasonably be requested. Parent agrees that it
will not, and will cause its Representatives not to, use any information
obtained pursuant to this Section 7.4 for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement. The
Confidentiality Agreement, dated October 31, 1995 (the "Confidentiality
Agreement"), by and between the Company and Parent shall apply with respect to
information furnished by the Company, its subsidiaries and the Company's
officers, employees, counsel, accountants and other authorized representatives
hereunder.
7.5 Publicity. The parties will consult with each other and will
mutually agree upon any press releases or public announcements pertaining to
the Merger and shall not issue any such press releases or make any such public
announcements prior to such consultation and agreement, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with any national securities exchange, in which case the party proposing to
issue such press release or make such public announcement shall use its
reasonable efforts to consult in good faith with the other party before issuing
any such press releases or making any such public announcements.
7.6 Indemnification of Directors and officers.
(a) The By-Laws of the Surviving Corporation shall contain the
provisions with respect to indemnification set forth in the By-Laws of the
Company on the date of this Agreement, which provisions shall not be amended,
repealed or
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otherwise modified for a period of four years after the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
any time prior to the Effective Time were directors or officers of the Company
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; provided, that in the
event any claim or claims are asserted or made within such four-year period,
all rights to indemnification in respect of any such claim or claims shall
continue until disposition of any and all such claims.
(b) Parent shall cause to be maintained in effect for the
Indemnified Parties (as defined below) for not less than three years the
current policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by the Company and the Company's subsidiaries
with respect to matters occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement); provided,
that Parent may substitute therefor policies of, or self insure on,
substantially the same coverage containing terms and conditions which are no
less advantageous, in any material respect, to the Company's present or former
directors and officers (the "Indemnified Parties").
(c) This Section 7.6 is intended to benefit the Indemnified
Parties and shall be binding on all successors and assigns of Parent, Newco,
the Company and the Surviving Corporation. Parent hereby guarantees the
performance by the Surviving Corporation of the indemnification obligations
pursuant to this Section 7.6.
7.7 Employees.
(a) Except as set forth on Schedule 7.7(a), for a period of
six months following the Effective Time, Parent agrees to cause to be provided
employee benefit plans, programs, arrangements and policies for the benefit of
employees of the Company and its subsidiaries that in the aggregate are no less
favorable to such employees than the Company Plans.
(b) Parent acknowledges that the Surviving Corporation will
honor the employment agreements, severance agreements and individual benefit
arrangements listed on Schedule 7.7(b), all as in effect at the Effective Time.
7.8 NYSE Listing. Parent shall use its best efforts to list, prior
to the Effective Time, on the New York Stock Exchange, subject to official
notice of issuance, the shares of Parent Common Stock to be issued to the
shareholders of the Company pursuant to the Merger.
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7.9 Merger Proxy Statement and Registration Statement.
(a) As soon as reasonably practicable after the date hereof,
the Company shall:
(i) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Shareholders Meeting"), to be held as soon as
practicable after the date hereof for the purpose of considering and taking
action upon the Merger;
(ii) prepare in accordance with the applicable provisions
of the federal securities laws and Wisconsin laws a proxy statement for the
Shareholders Meeting (the "Merger Proxy Statement") and include in the Merger
Proxy Statement the recommendation of the Board of Directors that shareholders
of the Company vote in favor of the approval and adoption of this Agreement and
the Merger unless there exists at such time a proposal for a Third Party
Acquisition and in the judgment of the Board of Directors after consultation
with Company counsel, the inclusion of such recommendation would be a breach of
its fiduciary duties to the Company's shareholders or other constituencies
under applicable law; and
(iii) use its reasonable efforts (A) to obtain and
furnish the information required to be included by it in the Merger Proxy
Statement and, after consultation wit Parent and Newco, respond promptly to any
comments made by the SEC with respect to the Merger Proxy Statement and any
preliminary version thereof and cause the Merger Proxy Statement to be mailed
to its shareholders at the earliest practicable time after the date hereof
(subject to the effectiveness of the Registration Statement (defined in Section
7.9(b) below)) and (B) obtain the necessary approvals by its shareholders of
this Agreement and the transactions contemplated hereby unless there exists at
such time a proposal for a Third Party Acquisition and, in the judgment of the
Board of Directors after consultation with Company counsel, obtaining such
approvals would be a breach of its fiduciary duties to the Company's
shareholders or other constituencies under applicable law.
(b) As soon as practicable after the date hereof, Parent shall
prepare a registration statement (the "Registration Statement"), of which the
Merger Proxy Statement shall be a part, under the Securities Act with respect
to the shares of Parent Common Stock to be issued pursuant to the Merger and
file the Registration Statement with the SEC.
(c) In connection with the Merger Proxy Statement and the
Registration Statement:
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(i) the Company and Parent shall comply fully with the
requirements of the Securities Act, the Exchange Act and the rules and
regulations of the SEC under such acts applicable to the offering and sale of
Parent Common Stock in connection with the Merger and the solicitation of
proxies for the Shareholders Meeting;
(ii) if either Parent or the Company shall reasonably
request to include in the Merger Proxy Statement or omit therefrom any
statement in order that the Merger Proxy Statement will not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, the Merger Proxy Statement shall not be mailed to any shareholders
of the Company without the mutual agreement of counsel for Parent and counsel
for the Company that such statement need not be included in or need not be
omitted from the Merger Proxy Statement; and
(iii) each party shall furnish to the other such
information relating to it and its affiliates and the transactions contemplated
by this Agreement and such further and supplemental information as may be
necessary or as may be reasonably requested by the other party, in light of
developments occurring after the date hereof, to ensure that the statements
regarding the parties hereto and their affiliates and such transactions
contained in the Merger Proxy Statement, as so supplemented, will not on the
effective date of the Registration Statement or the date of the Shareholders
Meeting or at the Effective Time include any untrue statement of a material
fact or omit to state a material fact required to be stated therein in order to
make the statements therein not misleading.
(d) Parent shall take any action required to be taken under
any applicable state blue sky or securities laws in connection with the
issuance of the shares of Parent Common Stock to be issued in connection with
the Merger and the Company shall furnish all information concerning the Company
and the holders of Shares and other assistance as Parent may reasonably request
in connection with any such action.
7.10 Agreements of Affiliates. Promptly after the Merger is
submitted to a vote of the shareholders of the Company, the Company shall
deliver to Parent a letter identifying all persons who are at the time of such
vote, "affiliates" of the Company for purposes of Rule 145 under the Securities
Act. The Company shall use its reasonable best efforts to cause each person
who is identified as an "affiliate" in the letter referred to above to deliver
to the Company on or prior to the Effective Time a written agreement in form
and substance as previously approved by Parent or such other form
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approved by Parent providing that each such person will agree not to sell,
pledge, transfer or otherwise dispose of the shares of Parent Common Stock
acquired by such person except in compliance with the applicable provisions of
the Securities Act and the applicable rules and regulations thereunder.
7.11 Tax Representation Letter of Parent and Newco; No Disqualifying
Action. Parent and Newco shall execute and deliver, at the Closing, the
representation letter for tax purposes in the form previously approved by the
Company or such other form approved by the Company. Neither Parent nor Newco
will take any action that would cause the Merger to fail to qualify as a
tax-free reorganization under Section 368(a) of the Code.
7.12 Tax Representation Letters of Holders of Shares. The Company
shall use its reasonable best efforts to have the holders of Shares listed on
Schedule 7.12 execute and deliver, at the Closing, a representation letter for
tax purposes in the form of previously approved by Parent and the Company for
such other form approved by Parent and Company.
7.13 Tax Representation Letter of the Company; No Disqualifying
Action. The Company shall execute and deliver, at the Closing, the certificate
and the representation letter for tax purposes in the form previously approved
by Parent. The Company will not take any action that would cause the Merger to
fail to qualify as a tax-free reorganization under Section 368(a) of the Code.
7.14 Supplemental Indenture of 7 1/2% Convertible Subordinated
Debentures. At the Closing Parent, Newco and the Company shall enter into a
supplemental indenture (the "Supplemental Indenture") with the trustee under
the Indenture (the "Indenture") dated as of July 1, 1986 between the Company
and The Marine Trust Company N.A., as Trustee, relating to the Company's 7 1/2%
Convertible Subordinated Debentures Due 2001 (the "Convertible Subordinated
Debentures"). The Supplemental Indenture shall provide for the right after the
Effective Time to convert Convertible Subordinated Debentures into Parent
Common Stock as contemplated by Section 10.15 of the Indenture. The Company
shall timely make all appropriate notices required under the Indenture with
respect to the Merger and the Supplemental Indenture.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
8.1 Conditions to Each Party's Obligations to Effect the Merger.
The respective obligations of each party to effect
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the Merger are subject to the satisfaction at or prior to the Effective Time of
the following conditions:
(a) To the extent required by applicable law, this Agreement
shall have been duly approved by the shareholders of the Company in accordance
with applicable law and the Articles of Incorporation of the Company.
(b) There shall not be in effect any statute, rule,
regulation, executive order, decree, ruling or injunction or other order of a
court or governmental or regulatory agency of competent jurisdiction directing
that the transactions contemplated herein not be consummated; provided,
however, that prior to invoking this condition each party shall use its
reasonable efforts to have any such decree, ruling, injunction or order
vacated.
(c) All governmental consents, orders and approvals legally
required for the consummation of the Merger and the transactions contemplated
hereby shall have been obtained and be in effect at the Effective Time, except
where the failure to obtain any such consent would not reasonably be expected
to have a Material Adverse Effect on Parent (assuming the Merger had taken
place), and the waiting periods under the HSR Act shall have expired or been
terminated.
(d) The Registration Statement covering shares of Parent
Common Stock to be issued pursuant to the Merger shall have been declared
effective by the SEC and no stop order with respect thereto shall be in effect.
(e) The shares of Parent Common Stock to be issued pursuant to
the Merger shall have been approved for listing on the New York Stock Exchange
subject to official notice of issuance.
8.2 Additional Conditions to the Obligations of Parent and Newco.
The obligations of Parent and Newco to consummate the Merger are subject to the
satisfaction, unless waived in writing by Parent, of the following further
conditions:
(a) The representation and warranty of the Company set forth
in Section 5.25 are true and correct both when made and as of the Closing as if
made, at and as of such time.
(b) the representations and warranties of the Company
(excluding those in Section 5.25) shall have been true and accurate both when
made and (except for those representations and warranties that address matters
only as of a particular date or only with respect to a specific period of time
which need only be true and accurate as of such date or
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with respect to such period) as of the Closing as if made, at and as of such
time other than changes resulting from actions expressly contemplated by this
Agreement, unless such representations and warranties which are not true and
accurate would not in the aggregate have a Significantly Material Adverse
Effect;
(c) the Company shall have performed its obligations hereunder
required to be performed by it at or prior to the Closing;
(d) all actions by or in respect of or filings with any
governmental entity (other than the filing of the Articles of Merger), required
to permit the consummation of the Merger shall have been obtained or completed;
(e) since the date of this Agreement there shall not have
occurred or be threatened any change in the financial condition, properties,
businesses or results of operations of the Company or any of its subsidiaries
that has or is reasonably likely to have a Significantly Material Adverse
Effect, and Parent shall not have become aware of any fact (including, but not
limited to, such change) that has or is reasonably likely to have a
Significantly Material Adverse Effect;
(f) Parent shall have received the executed letters of
affiliates of the Company as contemplated by Section 7.10.;
(g) Parent shall have received a copy of each of the
representation letters of certain shareholders of the Company as contemplated
by Section 7.12;
(h) Parent shall have received a copy of the certificate and
of the representation letter of the Company as contemplated by Section 7.13;
(i) the Company and the trustee under the Indenture shall have
executed and delivered the Supplemental Indenture;
(j) Parent shall have received from the Company such
certificate evidencing satisfaction of the conditions set forth in Section 8.2
as Parent may reasonably request; and
(k) Parent shall have received the written opinion of Quarles
& Brady substantially as set forth in Exhibit A hereto.
8.3 Additional Conditions to the Obligations of the Company. The
obligations of the Company to consummate the
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Merger are subject to the satisfaction (unless waived in writing by the
Company) of the following further conditions;
(a) the representations and warranties of Parent and Newco
shall have been true and accurate both when made and (except for those
representations and warranties that address matters only as of a particular
date or only with respect to a specific period of time, which need only be true
and accurate as of such date or with respect to such period) as of the Closing
as if made at and as of such time other than changes resulting from actions
expressly contemplated by this Agreement, unless such representations and
warranties which are not true and accurate would not have a material adverse
effect on Parent and its Significant Subsidiaries taken as a whole;
(b) Parent and Newco shall have performed all of their
obligations hereunder required to be performed by them at or prior to Closing;
(c) since the date of this Agreement, there shall not have
occurred or be threatened any change in the financial condition, properties,
businesses, or results of operations of Parent or any of its significant
Subsidiaries that has or is reasonably likely to have a material adverse effect
on Parent and its significant Subsidiaries taken as a whole, and the Company
shall not have become aware of any fact (including, but not limited to, such
change) that has or is reasonably likely to have a material adverse effect on
Parent and its Significant Subsidiaries taken as a whole or the value of the
Parent Common Stock;
(d) the Company shall have received the representation letter
of Parent and Newco as contemplated by Section 7.11;
(e) the Company shall have received from Parent and Newco such
certificate evidencing satisfaction of the conditions set forth in Section 8.3
as the Company may reasonably request;
(f) the Company shall have received the written opinion of
Stewart S. Hudnut, Esq., the General Counsel of Parent, substantially as set
forth in Exhibit B hereto; and
(g) Parent, Newco and the trustee under the Indenture shall
have executed and delivered the Supplemental Indenture.
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ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, by the mutual written consent of Parent and the Company.
9.2 Termination by Either Parent or the Company. This Agreement may
be terminated and the Merger may be abandoned by Parent or the Company if
(i) any court of competent jurisdiction in the United States
or any other governmental body or regulatory authority shall have
issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have
become final and nonappealable or
(ii) the Merger shall not have become effective prior to June
1, 1996;
provided, that the right to terminate this Agreement pursuant to this Section
9.2 shall not be available to any party whose failure to fulfill any of its
obligations under this Agreement results in such failure to purchase.
9.3 Termination by Parent. This Agreement may be terminated by Parent if
(i) the Company shall have failed to perform in any
material respect any of its material obligations under this Agreement to
be performed at or prior to such date of termination, which failure to
perform is incapable of being cured prior to June 1, 1996;
(ii) either (a) the representation and warranty set forth
in Section 5.25 shall not be true and correct or (b) any representation or
warranty of the Company contained in this Agreement (except for those in
Section 5.25) shall not be true and correct (except for changes permitted
or contemplated by this Agreement and those representations which address
matters only as of a particular date, which shall remain true and correct
as of such date), except, in any case, such failures to be true and
correct which in the aggregate are not reasonably likely to a have a
Significantly Material Adverse Effect; provided, that such failure to be
true and correct is incapable of being cured prior to June 1, 1996; or
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(iii) the Board of Directors of the Company withdraws or
materially modifies or changes its favorable recommendation of this
Agreement or the Merger.
9.4 Termination by the Company. This Agreement may be terminated
by the Company and the Merger may be abandoned at any time prior to the
Effective Time if;
(i) Newco or Parent shall have failed to perform in any
material respect any of their material obligations under this Agreement to
be performed at or prior to such date of termination, which failure to
perform is incapable of being cured prior to June 1, 1996;
(ii) any representation or warranty of Newco or Parent
contained in this Agreement shall not be true and correct (except for
changes permitted by this Agreement and those representations which
address matters only as of a particular date, which shall remain true and
correct as of such date), except, in any case, such failures to be true
and correct which in the aggregate are not reasonably likely to adversely
affect Parent's or Newco's ability to complete the Merger; provided, that
such failure to be true and correct is incapable of being cured prior to
June 1, 1996; or
(iii) the Board of Directors of the Company withdraws or
materially modifies or changes its favorable recommendation of this
Agreement or the Merger if there exists at such time a proposal for a
Third Party Acquisition and the Board of Directors of the Company after
consultation with Company counsel determines that the failure to take such
action would be a breach of the Board's fiduciary duties to the Company's
shareholders or other constituencies under applicable law; provided,
however, that such termination under this Section 9.4(iii) shall not be
effective until the Company has made payment to Parent of the Fee (as
defined in Section 9.7(a)) required to be paid pursuant to Section 9.7(a)
and has paid to Parent $300,000 for Expenses (as defined in Section
9.7(b)) (the Parent hereby agrees to refund any excess of such amount over
actual Expenses).
9.5 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Article IX, upon written notice to
the other party given by the party entitled under Article IX to terminate this
Agreement, this Agreement shall forthwith become void and have no effect,
without any liability on the part of any party hereto or its affiliates,
directors, officers or shareholders, other than the provisions of this Section
9.5 and the provisions of Sections 9.7, 10.1 and 10.2 and the last two
sentences of Section 7.4.
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Nothing contained in this Section 9.5 shall relieve any party from liability
for any breach of this Agreement.
9.6 Extension; Waiver. At any time prior to the Effective Time,
each of Parent, Newco and the Company may (i) extend the time for the
performance of any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance by the other party with any of the agreements
or conditions contained herein. Any agreement on the part of either party
hereto to any such extension or waiver shall be valid only if set forth in any
instrument in writing signed on behalf of such party. The failure of either
party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
9.7 Special Fees and Expenses.
(a) In the event that:
(i) this Agreement shall have been terminated pursuant to
Section 9.2(ii), 9.3(iii) or 9.4(iii) and within 12 months of
such termination (x) a Third Party Acquisition shall occur, or
(y) there is a letter of intent or similar instrument or other
agreement between the Company and a Third Party (defined in
Section 9.7(d)) for a Third Party Acquisition, or a public
announcement by the Company of the Company's intention or plans
to effect a Third Party Acquisition; or
(ii) any person or group (other than Parent or an
affiliate of Parent) shall have commenced, publicly proposed or
communicated to the Company a proposal that is publicly
disclosed for a tender or exchange offer for more than 20% (or
which, assuming the maximum amount of securities which could be
purchased, would result in any person or group beneficially
owning more than 20%) of the then outstanding Shares or
otherwise for the direct or indirect acquisition of the Company
or all or substantially all of its assets for a per Share
consideration having a value greater than the Per Share Amount,
and this Agreement shall have been terminated pursuant to
Section 9.2(ii), 9.3(iii) or 9.4(iii); or
(iii) this Agreement is terminated pursuant to Section
9.3(iii) or 9.4(iii);
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then, in any such event, the Company shall pay the
Parent promptly (but in no event later than one business day
after the first of such events shall have occurred) a fee of
$1,650,000 (the "Fee"), which amount shall be payable in
immediately available funds, plus all Expenses; provided that,
in the case described in clause (ii) of this Section 9.7(a), if
(x) the Parent has terminated this Agreement and (y) the Board
of Directors of the Company (A) shall not have withdrawn or
modified in a manner adverse to Newco or the Parent its
approval or favorable recommendation of this Agreement or the
Merger, (B) shall not have approved or recommended the proposal
of the person or group referred to in clause (ii) and (C) shall
not have resolved to do any of the foregoing, the Company shall
pay to the Company on such termination all Expenses and shall
pay the Fee only if, within 12 months of such termination, a
Third Party Acquisition shall occur.
(b) "Expenses" means all out-of-pocket expenses and
fees up to $300,000 in the aggregate (including, without
limitation, legal fees and expenses, fees and expenses payable
to all banks, investment banking firms, other financial
institutions and other persons and their respective agents and
counsel for arranging, committing to provide or providing any
financing or services for the Merger and any transactions
contemplated thereby or structuring the transactions, and all
fees of counsel, accountants, experts, consultants and
soliciting or information firms to Parent and Newco, and all
printing, mailing and advertising expenses) actually incurred
or accrued by any of them or on their behalf in connection with
the transactions, including, without limitation, any litigation
related thereto and the financing thereof, and actually
incurred or accrued by banks, investment banking firms, other
financial institutions and other persons and assumed by Parent
or Newco in connection with the negotiation, preparation,
execution and performance of this Agreement, the structuring
and financing of the Merger and any transactions contemplated
hereby and thereby and any litigation and any financing
commitments or agreements relating thereto.
(c) In the event that the Company shall fail to pay
the Fee or any Expenses when due, the term "Expenses" shall be
deemed to include the costs and expenses actually incurred or
accrued by the Parent and Newco (including, without limitation,
fees and expenses of counsel) in connection with the collection
under and enforcement of this Section 9.7, together with
interest on such unpaid Fee and Expenses, commencing on the
date that the Fee or such Expenses became due, at a rate equal
to the rate of interest publicly announced by Morgan Guaranty
Trust Company of New York, from time to time, in the City of
New York, as such bank's Prime Rate plus 1.00%.
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(d) "Third Party Acquisition" means the occurrence of
any of the following events: (i) the acquisition of the
Company by merger, consolidation or other business combination
transaction by any person other than the Parent, Newco or any
affiliate thereof (a "Third Party"); (ii) the acquisition by
any Third Party of, or any divestiture or other transaction
resulting in the Company owning less than, 50% or more (in book
value or market value) of the total assets of the Company and
its subsidiaries, taken as a whole as of the date hereof; (iii)
the acquisition by a Third Party of 50% or more of the
outstanding Shares whether by tender offer, exchange offer or
otherwise; or (iv) the adoption by the Company of a plan of
liquidation or a plan of recapitalization or the declaration or
payment of an extraordinary dividend.
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1 Payment of Expenses. Except as provided under Article IX,
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,
provided that the Surviving Corporation shall pay, with funds of the Company
and not with funds provided by any of Parent Companies, any and all property or
transfer taxes imposed on the Surviving Corporation or any Gains Taxes.
10.2 Survival of Representations and Warranties; Survival of
Confidentiality. The representations and warranties made herein shall not
survive beyond the earlier of (i) termination of this Agreement or (ii) the
Effective Time. This Section 10.2 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time. The Confidentiality Agreement shall survive any termination of
this Agreement, and the provisions of such Confidentiality Agreement shall
apply to all information and material delivered by any party hereunder.
10.3 Modification or Amendment. Subject to the applicable
provisions of the WBCL, at any time prior to the Effective Time, 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 any required approval of this Agreement by the shareholders
of the Company, no amendment shall be made which changes the consideration
payable in the Merger or adversely affects the rights of the Company's
shareholders hereunder without the approval of such shareholders.
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10.4 Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
10.5 Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof, applicable to contracts
made and to be performed in that state, except (i) for Articles II, III and IV
hereof and Section 7.9(a) which shall be governed by and construed in
accordance with the laws of the State of Wisconsin and (ii) any other
provisions relating to the internal governance of the Company and Newco or
other corporate matters or actions which are taken pursuant to or in reliance
on the statutory or judicial authority of Wisconsin, on the one hand, or
Parent, on the other hand, shall be governed by the laws of the States of
Wisconsin and Delaware, respectively.
10.7 Notices. Any notice, request, instruction or other document to
be given hereunder by any party to the other parties shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by facsimile transmission (with a confirming copy sent by overnight
courier), as follows:
(a) If to the Company, to
Medalist Industries, Inc.
Two Park Plaza, Suite 150
Milwaukee, Wisconsin 53224
Attention: President
(414) 359-3000 (telephone)
(414) 359-3005 (telecopier)
with a copy to:
Joseph D. Masterson
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 277-5169 (telephone)
(414) 271-3552 (telecopier)
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(b) If to Parent or Newco, to
Illinois Tool Works Inc.
3600 West Lake Avenue
Glenview, IL 60025-5811
Attention: Corporate Secretary
(708) 657-4074 (telephone)
(708) 657-4392 (telecopier)
with a copy to:
Charles J. McCarthy
Jenner & Block
37th Floor
One IBM Plaza
Chicago, Illinois 60611
(312) 222-9350 (telephone)
(312) 527-0484 (telecopier)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
10.8 Entire Agreement: Assignment. This Agreement and the
Confidentiality Agreement (a) constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof, and (b) shall not be
assigned by operation of law or otherwise.
10.9 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective
successors and assigns. Nothing in this Agreement, express or implied, other
than the right to receive the consideration payable in the Merger pursuant to
Article IV hereof is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of
this Agreement; provided, however, that the provisions of Section 7.6 shall
inure to the benefit of and be enforceable by the Indemnified Parties.
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10.10 Certain Definitions. As used herein:
(a) "Acquisition Proposal" means any proposal or offer for a
merger, asset acquisition or other business combination involving a person or
any proposal or offer to acquire a significant equity interest in, or a
significant portion of the assets of, such person other than the transactions
contemplated by this Agreement.
(b) "Counsel". Any reference herein to "counsel" shall mean
legal counsel.
(c) "Knowledge of the Company". Any reference to "knowledge
of the Company" shall mean the actual knowledge of an officer or director of
the Company or of a subsidiary of the Company.
(d) "Material Adverse Effect" shall mean any adverse change in
the financial condition, business or results of operations of the Company or
any of its subsidiaries which is material to the Company and its subsidiaries,
taken as a whole, other than any change or effect arising out of general
economic conditions; for purposes of determining "material" within the meaning
of the foregoing definition an amount in excess of $75,000 shall be deemed
material.
(e) "Significant Subsidiary" shall have the meaning ascribed
to it under Rule 1-02 of Regulation S-X of the SEC.
(f) "Subsidiary" shall mean, when used with reference to any
entity, any corporation a majority of the outstanding voting securities of
which are owned directly or indirectly by such former entity.
(g) "Significantly Material Adverse Effect" shall mean an
adverse effect on the financial condition, business, assets or results of
operations of the Company and its subsidiaries taken as a whole in the amount
of $2,000,000 or more.
10.11 Obligation of Parent. Whenever this Agreement requires Newco
to take any action, such requirement shall be deemed to include an undertaking
on the part of Parent to cause Newco to take such action and a guarantee of the
performance thereof.
10.12 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
45
<PAGE> 50
10.13 Captions. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the date first
above written.
ILLINOIS TOOL WORKS INC.
By:/s/ Frank S. Ptak
-----------------
Name: Frank S. Ptak
Title: Executive Vice President
ITW ACQ. Inc.
By:/s/ Thomas J. Hansen
--------------------
Name: Thomas J. Hansen
Title: President
MEDALIST INDUSTRIES, INC.
By:/s/ James S. Dahlke
-------------------
Name: James S. Dahlke
Title: President & CEO
46
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
January 8, 1996
For further information, contact:
John T. Paprocki and James S. Dahlke
414-359-3000
MEDALIST ANNOUNCES MERGER
The Medalist Industries, Inc. Board of Directors today approved merger plans
with Illinois Tool Works, Inc. The stock for stock transaction is subject to
certain conditions and shareholder approval.
Under the merger agreement, each share of Medalist Industries common stock will
be valued at $14.50 per share and will be converted into the equivalent value
of ITW common stock based on the ten day average closing price of ITW common
stock preceding the merger. Additionally, ITW has indicated that it
intends to redeem outstanding debentures soon after the merger. The Board of
Directors has determined that the merger is fair and in the best interest of
Medalist shareholders and has recommended that the shareholders approve the
merger at a special shareholders meeting, which is expected to be held in late
March 1996.
ITW is a multi-national manufacturer of highly engineered components and
industrial systems. The company has approximately 290 operations in 34
countries with 21,000 employees.
Medalist Industries, Inc. designs, manufactures and distributes industrial
fasteners and related hardware, and also provides quality assured, just-in-time
inventory management systems to other manufacturers. Medalist shares trade
over-the-counter on the NASDAQ National Market System under the symbol MDIN.
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