<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
MET-COIL SYSTEMS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
[MET-COIL LOGO]
April 24, 2000
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders
(including any adjournment or postponement thereof, the "Special Meeting") of
Met-Coil Systems Corporation to be held on June 1, 2000 at 9:00 a.m., Central
Time at the Crowne Plaza Hotel, 350 First Avenue NE, Cedar Rapids, Iowa.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Reorganization dated as
of March 13, 2000 (the "Merger Agreement"), by and among Met-Coil, Formtek,
Inc., a Delaware corporation which is a wholly-owned subsidiary of Mestek, Inc.,
a Pennsylvania corporation, and Formtek Acquisition, Inc., a Delaware
corporation which is a wholly-owned subsidiary of Formtek, providing for the
merger (the "Merger") of Met-Coil with and into Formtek Acquisition, with
Formtek Acquisition continuing as the surviving corporation. A description of
the Merger Agreement is included in the accompanying Proxy Statement and a copy
of the Merger Agreement is attached as Appendix A to the Proxy Statement.
In accordance with the terms of the Merger Agreement, all holders of shares
of the common stock, par value $0.01 per share, of Met-Coil ("Common Stock")
will be entitled to receive $7.10 in cash, without interest (the "Merger
Consideration") in exchange for each outstanding share of Common Stock held by
them at the effective time of the Merger, except dissenting stockholders who
have perfected their rights of appraisal in accordance with Delaware law. Each
outstanding option will be cancelled and converted into a right to receive an
amount equal to $7.10 less the applicable exercise price per share multiplied by
the number of shares into which the option is exercisable.
In accordance with the terms of the Delaware General Corporation Law, the
affirmative vote of holders of at least a majority of all of the outstanding
shares of Common Stock is required to approve and adopt the Merger Agreement.
Ten of Met-Coil's stockholders have entered into agreements with Formtek and
Formtek Acquisition pursuant to which they have agreed to vote their aggregate
2,232,365 shares of Common Stock, representing approximately 49.3% of the
outstanding Common Stock, in favor of the Merger Agreement and the Merger.
Accordingly, the Merger Agreement and the Merger will be approved and adopted if
approximately 0.7% of the remaining outstanding Common Stock is voted in favor
of the Merger Agreement and the Merger.
The Board of Directors has unanimously approved the Merger Agreement and
the Merger as being in the best interests of Met-Coil and its stockholders. The
Board recommends that you vote FOR approval and adoption of the Merger Agreement
and the Merger.
Attached is a Notice of Special Meeting of Stockholders and a Proxy
Statement containing a discussion of the background of, reasons for and terms of
the Merger. We urge you to read this material carefully. Whether or not you plan
to attend the Special Meeting, we ask that you sign and return the enclosed
proxy as promptly as possible. If you attend the Special Meeting, your proxy may
be revoked if you elect to vote in person. Your prompt cooperation will be
greatly appreciated.
Very truly yours,
/s/ Raymond H. Blakeman
Raymond H. Blakeman
Chairman of the Board
<PAGE> 3
MET-COIL SYSTEMS CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 1, 2000
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of MET-COIL
SYSTEMS CORPORATION, a Delaware corporation, will be held on June 1, 2000 at
9:00 a.m., Central Time, at the Crowne Plaza Hotel, 350 First Avenue NE, Cedar
Rapids, Iowa, for the following purposes:
(1) To consider and vote upon the adoption and approval of an Agreement
and Plan of Reorganization dated as of March 13, 2000 (the "Merger Agreement"),
by and among Met-Coil, Formtek, Inc., a Delaware corporation which is a
wholly-owned subsidiary of Mestek, Inc., a Pennsylvania corporation, and Formtek
Acquisition, Inc., a Delaware corporation which is a wholly-owned subsidiary of
Formtek, and the merger (the "Merger") of Met-Coil with and into Formtek
Acquisition, with Formtek Acquisition continuing as the surviving corporation;
and
(2) To transact such other business as may properly come before the
Special Meeting or any postponements or adjournments thereof.
Please read carefully the accompanying Proxy Statement. A copy of the
Merger Agreement is attached as Appendix A to the Proxy Statement. The Proxy
Statement and its appendices form a part of this Notice.
Only holders of Common Stock of record on the books of Met-Coil at the
close of business on April 27, 2000 are entitled to notice of, and to vote at,
the Special Meeting and any adjournment thereof. A list of such stockholders
will be available from May 22, 2000 until prior to the meeting, as required by
law, at the office of Met-Coil located at 5486 Sixth Street SW, Cedar Rapids,
Iowa. This list will also be available at the Special Meeting. The stock
transfer books will not be closed.
Under Delaware law, appraisal rights will be available to holders of
Met-Coil's common stock. In order for stockholders to exercise such appraisal
rights, they must follow the procedures set forth in Delaware law, which are
summarized in "Rights of Dissenting Stockholders" in the accompanying Proxy
Statement. A copy of the Delaware law is attached as Appendix C to the Proxy
Statement.
You are cordially invited to the meeting. Whether or not you plan to attend
the meeting, we ask that you sign and return the enclosed proxy as promptly as
possible. If you attend the meeting, your proxy will be revoked if you elect to
vote in person. The proxy is solicited by and on behalf of the Board of
Directors.
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME. UPON APPROVAL OF
THE MERGER, YOU WILL BE SENT INSTRUCTIONS REGARDING THE PROCEDURES TO EXCHANGE
YOUR EXISTING CERTIFICATES EVIDENCING MET-COIL COMMON STOCK FOR THE
CONSIDERATION TO BE PAID.
By Order of the Board of Directors
/s/ Carroll J. Reasoner
CARROLL J. REASONER
Secretary
Cedar Rapids, Iowa
April 24, 2000
<PAGE> 4
MET-COIL SYSTEMS CORPORATION
5486 SIXTH STREET SW
CEDAR RAPIDS, IOWA 52404
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 1, 2000
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Met-Coil Systems Corporation for use at the special meeting of stockholders
to be held on June 1, 2000 at 9:00 a.m., Central Time, at the Crowne Plaza
Hotel, 350 First Avenue NE, Cedar Rapids, Iowa and any adjournment thereof (the
"Meeting"). The matters to be considered and acted upon at the Meeting are
described in the Notice of Special Meeting of Stockholders and this Proxy
Statement. Shares of Met-Coil's common stock, $.01 par value, represented by
proxies, will be voted as described in this Proxy Statement or as otherwise
specified by the stockholder. Any proxy given by a stockholder may be revoked by
the stockholder at any time, prior to the voting of the proxy, by delivering a
written notice to the Secretary of Met-Coil, by executing and delivering a
later-dated proxy or by attending the Meeting and voting in person.
THE DATE OF THIS PROXY STATEMENT IS APRIL 24, 2000. THIS PROXY STATEMENT
AND THE RELATED FORM OF PROXY ARE BEING MAILED ON OR ABOUT APRIL 28, 2000
TO ALL STOCKHOLDERS OF RECORD ON APRIL 27, 2000.
<PAGE> 5
SUMMARY
This summary highlights information included elsewhere in this Proxy
Statement. This summary may not contain all of the information you should
consider before voting whether to adopt and approve the merger agreement and the
merger. You should read the entire Proxy Statement carefully, including the
Appendices attached hereto.
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Q. WHEN AND WHERE WILL THE MEETING A. The stockholders meeting will be held on June 1, 2000 at
TAKE PLACE? 9:00 a.m., Central Time, at the Crowne Plaza Hotel, 350
First Avenue NE, Cedar Rapids, Iowa.
Q. WHAT IS THE PURPOSE OF THE A. At the meeting, you will be asked to vote upon the
MEETING? adoption and approval of the merger agreement and the
merger. The parties to the merger agreement are Met-Coil,
Formtek, Inc. and Formtek Acquisition, Inc. Mestek, Inc.,
the parent company of Formtek, has guaranteed the
performance of all obligations and agreements of Formtek
and Formtek Acquisition under the merger agreement. After
the merger, the business of Met-Coil will be conducted as
a wholly-owned subsidiary of Formtek. A copy of the merger
agreement is attached as Appendix A to this Proxy
Statement.
Q. WHAT WILL I RECEIVE IN THE A. Under the terms of the merger agreement, each share of
MERGER? Met-Coil common stock that you own will be converted into
the right to receive $7.10 in cash, without interest and
subject to applicable backup withholding tax. Each
outstanding option to purchase Met-Coil common stock that
you own will be canceled and converted into the right to
receive an amount equal to $7.10 less the applicable
exercise price per share, multiplied by the number of
shares which the option may purchase.
Q. WHAT IS THE TOTAL CONSIDERATION A. Based upon a per share price of $7.10, and a total of
BEING OFFERED TO MET-COIL'S 4,525,075 outstanding shares of common stock, Met-Coil's
STOCKHOLDERS AND OPTION HOLDERS stockholders and option holders will receive a total of
IN THE MERGER? approximately $33,311,056.
Q. WHERE WILL FORMTEK GET THE A. Mestek has guaranteed the obligations of Formtek and
MONEY TO PAY THE MERGER Formtek Acquisition under the merger agreement and there
CONSIDERATION? is no financing contingency. Met-Coil's board of directors
believes that Mestek has the financial resources to pay
the total merger consideration.
Q. WHAT DOES THE MET-COIL BOARD OF A. Met-Coil's board of directors has unanimously determined
DIRECTORS RECOMMEND? that the merger is advisable and in the best interests of
Met-Coil and its stockholders and recommends a vote FOR
approval and adoption of the merger agreement and the
merger. See "Purpose of and Reasons for the Merger" and
"Determination of Fairness of the Merger by the Board of
Directors" for a description of the factors considered by
the board of directors.
Four of Met-Coil's directors have signed stockholder
agreements in which they have agreed to vote their shares
in favor of the merger agreement and the merger and have
granted to Formtek an option to purchase their shares for
$7.10 in cash per share. In addition, James D. Heitt, who
is a director and the President and Chief Operating
Officer of Met-Coil, has signed an employment agreement in
which he has agreed to become an employee of the surviving
company following the merger.
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Q. WHAT IS THE OPINION OF A. Met-Coil retained Lincoln Partners, LLC to act as its
MET-COIL'S FINANCIAL ADVISORS? financial advisor in connection with the merger. Lincoln
Partners has delivered its opinion to the Board of
Directors that the merger consideration of $7.10 in cash
per share of common stock to be received by Met-Coil's
stockholders in the merger is fair to the stockholders
from a financial point of view. See "Opinion of Financial
Advisor to the Company" for a description of the analysis
of, and factors considered by, Lincoln Partners, as well
as the assumptions, qualifications and limitations of its
opinion.
Q. WHAT VOTE IS REQUIRED TO A. The merger agreement and the merger will be adopted and
APPROVE THE MERGER? approved if a majority of the outstanding shares of
Met-Coil common stock vote in favor of their adoption and
approval.
Ten of Met-Coil's stockholders, including four directors,
have signed stockholder agreements in which they have
agreed to vote their shares (representing approximately
49.3% of the outstanding common stock) in favor of the
merger agreement and the merger. Accordingly, the merger
agreement and the merger will be adopted and approved if
approximately 0.7% or more of the remaining outstanding
common stock is voted in favor of the merger agreement and
the merger.
If you sign and send in your proxy and do not indicate how
you want to vote, your proxy will be counted as a vote in
favor of the merger and the merger agreement. If you do
not vote or abstain, it will have the effect of a vote
against the proposal. You may withdraw your proxy at any
time prior to its use at the stockholders meeting by
following the directions set forth in "The
Meeting -- Voting Rights."
Q. DO I HAVE APPRAISAL RIGHTS IN A. Under Delaware law, if you do not vote in favor of the
CONNECTION WITH THE MERGER? merger agreement and the merger and if you file a demand
for appraisal prior to the stockholder vote, you will have
the right to obtain a cash payment for the "fair value" of
your shares of common stock upon the consummation of the
merger . The "fair value" will be determined in judicial
proceedings, the result of which cannot be predicted.
In order to exercise this right, you must comply with all
of the procedural requirements of Section 262 of the
General Corporation Law of the State of Delaware. If you
fail to take any of the steps required under Section 262,
you may lose your dissenter's rights. See "Rights of
Dissenting Stockholders" for a description of the steps
necessary to exercise dissenter's rights and what happens
if you fail to take any of the necessary steps. The full
text of Section 262 of the Delaware General Corporation
Law is attached to this Proxy Statement as Appendix C.
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Q. WHAT ARE THE TAX CONSEQUENCES A. The receipt of cash for shares of Met-Coil common stock,
OF THE MERGER TO MET-COIL or for cancellation of options, in the merger is expected
STOCKHOLDERS? to be a taxable transaction to the stockholders for
federal income tax purposes.
THE TAX CONSIDERATIONS TO YOU RESULTING FROM YOUR OWN
INDIVIDUAL POSITION AND THE MERGER MAY BE COMPLEX.
MET-COIL RECOMMENDS THAT YOU READ CAREFULLY THE DISCUSSION
OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER SET FORTH IN "CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER" AND CONSULT WITH YOU OWN
ADVISORS AS TO THE U.S. FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES.
Q. WHERE CAN I FIND MORE A. Additional information about Met-Coil and Mestek can be
INFORMATION? obtained from the various sources described under
"Available Information" in this proxy statement.
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<PAGE> 8
At the Meeting, holders of Met-Coil's common stock on April 27, 2000 (the
"Record Date") will consider and vote upon the approval and adoption of an
Agreement and Plan of Reorganization dated as of March 13, 2000 (the "Merger
Agreement") by and among Met-Coil, Formtek, Inc. ("Formtek"), a Delaware
corporation which is a wholly-owned subsidiary of Mestek, Inc. ("Mestek"), a
Pennsylvania corporation, and Formtek Acquisition, Inc. ("FAI"), a Delaware
corporation which is a wholly-owned subsidiary of Formtek, and the merger
contemplated by the Merger Agreement. The Merger Agreement provides, subject to
the approval of the stockholders of Met-Coil at the Meeting and subject to the
satisfaction or waiver of certain other conditions, that: (a) Met-Coil will be
merged with and into FAI (the "Merger"), with FAI continuing as the surviving
corporation (the "Surviving Corporation") of the Merger; (b) each share of
common stock that is outstanding at the Effective Time (as hereinafter defined)
of the Merger, other than shares as to which dissenters' rights are perfected in
accordance with Delaware law, will be converted into the right to receive $7.10
per share in cash, without interest, subject to applicable back-up withholding
taxes (the "Merger Consideration"); and (c) each existing option (whether vested
or unvested) to purchase shares of common stock will be canceled in exchange for
a cash payment equal to $7.10 per share of common stock which could be purchased
less the applicable exercise price.
Met-Coil's Board of Directors (the "Board of Directors" or "Board") has
unanimously approved the Merger Agreement and the Merger as being advisable and
in the best interests of the Company and holders of the common stock and
recommends to the Company's stockholders that they vote FOR the approval and
adoption of the Merger Agreement and the Merger.
The Delaware General Corporation Law (the "DGCL") provides that the
affirmative vote of holders of at least a majority of all of the outstanding
shares of common stock is required to approve and adopt the Merger Agreement and
the Merger. Ten of the Company's stockholders (collectively, the "Major
Stockholders") have entered into agreements with Formtek and FAI (the
"Stockholder Agreements") pursuant to which, among other things, they have
agreed to vote their aggregate 2,232,365 shares of common stock, representing
approximately 49.3% of the outstanding common stock, in favor of the Merger
Agreement and the Merger. Accordingly, if 0.7% of the remaining shares of common
stock vote in favor of the Merger Agreement and the Merger, then the Merger
Agreement and the Merger will be adopted and approved.
All shares of common stock represented by properly executed proxies
received prior to or at the Meeting and not revoked will be voted in accordance
with the instructions indicated in such proxies. If no instructions are
indicated, such proxies will be voted FOR the Merger Agreement and the Merger,
and in the discretion of the persons named in the proxy with respect to such
other matters as may properly come before the Meeting. A stockholder may revoke
his or her proxy at any time prior to its use by delivering to the Secretary of
Met-Coil a signed notice of revocation or a later-dated and signed proxy or by
attending the Meeting and voting in person.
v
<PAGE> 9
The persons named as proxies in the enclosed proxy are Raymond H. Blakeman,
Chairman of the Board of Met-Coil, and Carroll J. Reasoner, Secretary of
Met-Coil. The Board of Directors knows of no additional matters that will be
presented for consideration at the Meeting. Execution of the accompanying proxy,
however, confers on the designated proxy holders discretionary authority to vote
the shares of common stock covered thereby in accordance with their best
judgment on such other business, if any, that may properly come before, and all
matters incident to the conduct of, the Meeting or any adjournments or
postponements thereof.
The costs of preparing, assembling and mailing the proxy, this Proxy
Statement and the other material enclosed and all clerical and other expenses of
solicitation will be shared equally by Met-Coil and FAI; provided, however, if
the Merger is not consummated, Met-Coil or FAI, as the case may be, will be
required under certain circumstances to reimburse the other for its share of the
costs of the solicitation. These circumstances are described in "The Merger
Agreement -- Fees and Expenses." In addition to the solicitation of proxies by
use of the mails, directors, officers and employees of Met-Coil, without
receiving additional compensation, may solicit proxies by telephone, telecopier
or personal interview. Met-Coil also will request brokerage houses and other
custodians, nominees and fiduciaries to forward soliciting material to the
beneficial owners of common stock held of record by such custodians and will
reimburse such custodians for their expenses in forwarding soliciting materials.
---------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
---------------------------
vi
<PAGE> 10
AVAILABLE INFORMATION
Met-Coil and Mestek are subject to the information requirements of the
Securities Exchange Act of 1934, as amended, and file reports, proxy statements
and other information with the Securities and Exchange Commission ("SEC"). These
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the SEC's Regional Offices at Suite
1300, Seven World Trade Center, New York, New York 10048, and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of these materials also can be obtained at prescribed rates from the
Public Reference Section of the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The SEC maintains an Internet site on the World Wide Web
at "http://www.sec.gov." which contains reports, proxy and information
statements and other information regarding issuers, such as Met-Coil and Mestek,
that file electronically with the SEC.
Except as otherwise indicated herein, all information appearing in this
Proxy Statement concerning Met-Coil has been supplied by Met-Coil, including the
narrative under "Background of the Merger," and all information appearing in
this Proxy Statement concerning FAI, Formtek and Mestek has been supplied by
Mestek or is based upon publicly available documents on file with the SEC and
other public records. Met-Coil assumes no responsibility for the accuracy or
completeness of the information furnished by Mestek or contained in such
documents and records other than those filed by Met-Coil or for any failure of
Mestek to disclose events that may have occurred and may affect the significance
or accuracy of such information and that are unknown to Met-Coil. Likewise,
Mestek assumes no responsibility for the accuracy or completeness of the
information furnished by Met-Coil or contained in such documents and records
other than that provided by Mestek or for any failure by Met-Coil to disclose
events that may have occurred and that may affect the significance or accuracy
of such information and that are unknown to Mestek.
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT IN CONNECTION
WITH THE SOLICITATION OF PROXIES MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY MET-COIL OR ANY OTHER PERSON.
vii
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TABLE OF CONTENTS
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SUMMARY..................................................... ii
AVAILABLE INFORMATION....................................... vii
THE PARTIES................................................. 1
Met-Coil.................................................. 1
FAI....................................................... 1
THE MEETING................................................. 1
Time, Date And Place...................................... 1
Voting Rights............................................. 2
Required Vote............................................. 2
BACKGROUND OF THE MERGER.................................... 3
PURPOSE OF AND REASONS FOR THE MERGER....................... 5
DETERMINATION OF FAIRNESS OF THE MERGER BY THE BOARD OF
DIRECTORS................................................. 5
OPINION OF FINANCIAL ADVISOR TO MET-COIL.................... 7
Acquisition Premium Analysis.............................. 8
Comparison of Selected Publicly Traded Comparable
Companies.............................................. 9
Analysis of Selected Merger and Acquisition Transactions
in the Metal Forming
Equipment Industry..................................... 9
Comparison of Historical Stock Price Performance.......... 10
Analysis of Discussions Held with Various Potential
Acquirors.............................................. 10
Other Factors Considered.................................. 10
CERTAIN EFFECTS OF THE MERGER............................... 11
RIGHTS OF DISSENTING STOCKHOLDERS........................... 12
EXPENSES.................................................... 14
THE MERGER AGREEMENT........................................ 14
The Merger................................................ 15
Effective Time............................................ 15
Certificate of Incorporation And By-laws of The Surviving
Corporation............................................ 15
Directors And Officers of The Surviving Corporation....... 15
Conversion of Securities in The Merger; Treatment of
Options................................................ 15
Payment For And Surrender of Shares....................... 16
Closing of Stock Transfer Records......................... 17
Representations And Warranties............................ 17
Alternative Proposals..................................... 17
Interim Operations of Met-Coil............................ 18
Certain Filings And Other Actions......................... 19
Access to Information..................................... 20
Indemnity................................................. 20
Employee Benefits......................................... 21
Conditions................................................ 21
Termination............................................... 23
Fees and Expenses......................................... 24
Amendment................................................. 24
Guarantee................................................. 25
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viii
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THE STOCKHOLDER AGREEMENTS.................................. 25
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGER.................................................... 25
ACCOUNTING TREATMENT OF THE MERGER.......................... 27
REGULATORY APPROVALS........................................ 27
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 27
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS............. 27
SECURITY OWNERSHIP OF MANAGEMENT............................ 28
TRANSACTION OF OTHER BUSINESS............................... 29
STOCKHOLDER PROPOSALS....................................... 29
Appendix A -- Agreement and Plan of Merger dated as of March
13, 2000
Appendix B -- Opinion of Lincoln Partners, LLC
Appendix C -- Text of Section 262 of the Delaware General
Corporation Law
Appendix D -- Form of Stockholder Agreement
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ix
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THE PARTIES
MET-COIL
Met-Coil designs, engineers, markets and manufactures, sells and
distributes metal forming and fabricating machinery, computer-controlled
fabrication systems, high-speed automated material handling and press line
automation equipment. While its systems and their application are highly
specialized, the end products that such systems produce are commonly-used
products such as metal cabinets and shelving, automotive garage doors, metal
poles, window frames, heating ventilation and air conditioning ductwork and
electrical boxes and covers. Met-Coil conducts its operations through two
subsidiaries, Iowa Precision Industries, Inc. ("Iowa Precision"), which
manufactures sheet metal processing equipment, and The Lockformer Company
("Lockformer"), which is a leading manufacturer of rollforming machines.
Met-Coil's common stock is quoted on the NASDAQ Small Cap Market under the
symbol METS.
Met-Coil is a Delaware corporation with its principal executive offices
located at 5486 Sixth Street SW, Cedar Rapids, Iowa 52404. Its telephone number
is (319) 363-6566.
FAI
FAI is a Delaware corporation recently organized by Mestek solely for the
purpose of effecting the Merger. FAI is wholly-owned by Formtek, which is
wholly-owned by Mestek. FAI has no material assets, and will have no material
assets prior to the Merger. FAI has not engaged in any activities except in
connection with the Merger. FAI's address is 260 North Elm Street, Westfield,
Massachusetts 01085, and its telephone number is (413) 568-9571.
MESTEK
Mestek, through its various subsidiaries, is a diversified manufacturer of
heating, ventilating and air conditioning equipment, metal hose and hose
products, aluminum extrusions, metal forming machinery and vertically integrated
software systems. As of December 31, 1999, Mestek and its subsidiaries together
employed approximately 3,050 persons. Mestek's common stock is listed on the New
York Stock Exchange, and traded under the symbol MCC.
Mestek is a Pennsylvania corporation with its principal executive offices
located at 260 North Elm Street, Westfield, MA 01085. Its telephone number is
(413) 568-9571.
FORMTEK
Formtek is a wholly owned subsidiary of Mestek. Formtek designs,
manufactures and sells a variety of metal handling and metal forming products
under tradenames such as Cooper-Weymouth-Peterson, Dahlstrom(R), Hill
Engineering, CoilMate(R)-Dickerman(R), Rowe(R), and B&K. These products include
roll formers, roll forming systems, wing benders, presses, servo-feeds,
straighteners, cradles, reels, pallet decoilers, cut-to-length lines, specialty
dies, tube cut-off systems, hydraulic punching blanking and cutoff systems,
rotary punching and shearing, and flying cut-off-saws. The products are sold
through independent dealers in most cases to end-users and in some cases to
other original equipment manufacturers.
Formtek is a Delaware corporation with its principal executive offices
located at 260 North Elm Street, Westfield, MA 01085. Its telephone number is
(413) 568-9571.
THE MEETING
TIME, DATE AND PLACE
The Meeting of the stockholders of Met-Coil will be held on June 1, 2000 at
9:00 a.m., Central Time, at the Crowne Plaza Hotel, 350 First Avenue NE, Cedar
Rapids, Iowa.
<PAGE> 14
VOTING RIGHTS
Only holders of shares of Met-Coil common stock of record at the close of
business on April 27, 2000, will be entitled to vote at the Meeting. On April
24, 2000, Met-Coil had 4,525,075 outstanding shares of common stock and shares
of common stock to be issued prior to the record date. Each share of Met-Coil
common stock entitles the holder to one vote on the Merger and on any other
matter properly brought before the meeting. Holders of shares of common stock
are not entitled to cumulative voting rights. The presence at the Meeting, in
person or by proxy, of the holders of a majority of the shares of common stock
entitled to vote shall constitute a quorum at the Meeting. Shares which
expressly abstain from voting and broker non-votes (shares held by brokers and
other nominees or fiduciaries that are present at the Meeting but not voted on a
particular matter) are counted for quorum purposes, but since they are not cast
"for" a particular matter, they will have the same effect as negative votes or
votes "against" a particular matter. Any proxy given by a stockholder may be
revoked by the stockholder at any time, prior to the voting of the proxy, by
delivering a written notice of revocation to Met-Coil's Secretary, by executing
and delivering a later-dated proxy or by attending the Meeting and voting in
person.
Unless contrary instructions are indicated on the proxy card, all shares of
common stock represented by valid proxies will be voted FOR the approval and
adoption of the Merger Agreement and the Merger, and will be voted at the
discretion of the persons named as proxies in respect of such other business as
may properly be brought before the Meeting. As of the date of this Proxy
Statement, the Board of Directors knows of no other business that will be
presented for consideration at the Meeting other than the vote on the Merger and
the Merger Agreement. If a stockholder gives specific voting instructions by
checking the boxes on the proxy card, the shares of common stock will be voted
in accordance with such instructions. In the absence of instructions to the
contrary, it is the intention of the persons named in the accompanying proxy to
vote the shares represented thereby in accordance with their best judgment on
any other matters properly brought before the Meeting and discretionary
authority to do so is included in the proxy.
The persons named as proxies are Raymond H. Blakeman, Chairman of the Board
of Met-Coil, and Carroll J. Reasoner, Secretary of Met-Coil.
The costs of preparing, assembling and mailing the proxy, this Proxy
Statement and the other material enclosed and all clerical and other expenses of
solicitation will be shared equally by Met-Coil and FAI; provided, however, if
the Merger is not consummated, Met-Coil or FAI, as the case may be, will be
required under some circumstances to reimburse the other for its share of the
costs of the solicitation. These circumstances are described in "The Merger
Agreement -- Fees and Expenses." In addition to the solicitation of proxies by
use of the mails, directors, officers and employees of Met-Coil, without
receiving additional compensation, may solicit proxies by telephone, telecopier
or personal interview. Met-Coil also will request brokerage houses and other
custodians, nominees and fiduciaries to forward soliciting material to the
beneficial owners of common stock held of record by such custodians and will
reimburse such custodians for their expenses in forwarding soliciting materials.
REQUIRED VOTE
Pursuant to the DGCL, the affirmative vote of holders of at least a
majority of all of the outstanding shares of common stock is required to approve
and adopt the Merger Agreement and the Merger.
The Major Stockholders have entered into the Stockholders Agreements
pursuant to which they have agreed to vote their aggregate of 2,232,365 shares
of common stock (representing approximately 49.3% of the outstanding common
stock) in favor of the Merger Agreement and the Merger and have granted to
Formtek an option to purchase their shares of common stock for a purchase price
equal to the Merger Consideration. Accordingly, if approximately 0.7% of the
remaining shares of common stock vote in favor of the Merger Agreement and the
Merger, then the Merger Agreement and the Merger will be adopted and approved. A
copy of the form of Stockholder Agreement entered into by each of the Major
Stockholders is attached as Appendix D to this Proxy Statement and incorporated
by reference.
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<PAGE> 15
BACKGROUND OF THE MERGER
In March of 1998, a company in the same industry (the "Interested Party")
made an unsolicited informal inquiry to Raymond H. Blakeman, Chairman of the
Board of Met-Coil, for the purpose of considering a transaction in which the
Interested Party would purchase for cash all of the stock of Met-Coil. On August
5, 1998, Met-Coil and the Interested Party entered into a confidentiality
agreement in order to allow the Interested Party the opportunity to perform
limited due diligence as a precondition to their obtaining financing
commitments. Limited due diligence was conducted in the fall of 1998. Throughout
the fall, the Interested Party sought financing commitments in order to offer a
proposal. In January of 1999, after failing to obtain its financing commitments,
the Interested Party sought to engage Met-Coil in discussions regarding other
possible transactions on an other than all cash basis. Met-Coil declined to
engage in discussions with the Interested Party on that basis.
On April 21, 1999, Met-Coil's Board of Directors met and determined that in
light of prevailing market conditions, the general economic outlook of the
machinery industry and Met-Coil's stock performance, it was advisable and in the
best interests of Met-Coil and its stockholders to pursue strategic business
alternatives including the possible sale of Met-Coil. On June 3, 1999, the Board
of Directors authorized the engagement of Lincoln Partners, LLC to act as
Met-Coil's investment bankers and to assist and advise the Board of Directors
regarding financial matters. Lincoln Partners was formally engaged in such
capacity on June 9, 1999. The retention of Lincoln Partners and the fact that
Met-Coil was pursuing strategic alternatives, including the possible sale of
Met-Coil, were announced in a press release issued June 17, 1999. The bid price
for Met-Coil's common stock on June 16, 1999, the day before the press release,
was $3.25 per share.
Following its retention, Lincoln Partners contacted approximately 160
prospective purchasers. Of these prospective purchasers, approximately 47 were
sent a confidential descriptive memorandum prepared by Lincoln Partners (the
"Offering Memorandum"). Each recipient signed a confidentiality agreement prior
to receipt of an Offering Memorandum. Lincoln Partners continually updated
Met-Coil's management on an informal basis regarding indications of interest
received.
Met-Coil received eight indications of interest. Of these eight indications
of interest, two were at a value deemed by the Board of Directors to be worthy
of pursuing. The Board of Directors instructed Lincoln Partners to move forward
with these two groups and to provide them with the requested due diligence
materials. These two groups, one of which was Mestek, were invited to visit
Met-Coil's headquarters in Cedar Rapids, Iowa, and its subsidiary, The
Lockformer Company, in Lisle, Illinois.
From August 10, 1999 to September 2, 1999, each of the invited parties
visited Met-Coil's headquarters and The Lockformer Company. During these visits
the prospective purchasers met with representatives of Lincoln Partners and
Met-Coil's management. Management presentations were given by Mr. James D.
Heitt, President and Chief Operating Officer, Mr. Randall J. Stodola, Vice
President and Corporate Controller, Rian Scheel, Vice President Sales and
Marketing and other members of Met-Coil's management. The Board of Directors was
briefed on these visits by Lincoln Partners. These prospective purchasers were
evaluated by Lincoln Partners and the Board of Directors for, among other
things, their level of interest, financial strength and ability to consummate a
transaction.
The Board of Directors was apprised of the status of the prospective
purchasers at meetings of the Board held on August 26, 1999, September 24, 1999,
October 1, 1999 and October 26, 1999.
On September 20, 1999, Mr. Blakeman met with John E. Reed, Chairman,
President and Chief Executive Officer of Mestek, along with representatives from
Lincoln Partners at a meeting room at O'Hare Airport in Chicago. At this meeting
Mr. Reed indicated that Mestek was interested in pursuing a possible acquisition
of Met-Coil and discussed on a preliminary basis alternative transaction
structures and a potential purchase price of $6.00 per share, comprised of $3.00
in cash and $3.00 per share of preferred stock of Mestek.
On September 24, 1999, at a special meeting of the Board, Mr. Blakeman
discussed the Mestek proposal and was directed by the Board of Directors to
continue discussions with Mestek and attempt to increase the amount of
consideration in the potential offer.
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<PAGE> 16
On September 28, 1999, Mr. Blakeman wrote to Mr. Reed stating that
Met-Coil's Board of Directors did not believe $6.00 per share, comprised of
$3.00 per share in cash and $3.00 per share of preferred stock of Mestek, was
adequate, and suggesting another meeting to continue the earlier preliminary
discussion.
On October 8, 1999, Mr. Blakeman and representatives of Lincoln Partners
met at Mestek's headquarters in Westfield, Massachusetts with Mr. Reed, Mr. R.
Bruce Dewey, Senior Vice President of Mestek, and Mr. Stephen Shea, Senior Vice
President, Finance of Mestek. At this meeting, Mr. Reed indicated that Mestek
continued to be interested in pursuing a possible acquisition of Met-Coil and
discussed on a preliminary basis various alternative transaction structures of a
possible transaction.
On October 12, 1999, Mr. Reed sent Mr. Blakeman a letter expressing
continued interest in Met-Coil and outlining several possible transaction
structures including a potential all cash transaction at $7.00 per share of
common stock.
On October 14, 1999, representatives of Lincoln Partners had a telephone
conversation with a representative of a large diversified company. The
representative of this company had expressed an unsolicited indication of
interest in acquiring Met-Coil at a price below the Merger Consideration and the
price then being discussed with Mestek. The oral indication from this company
had been determined based on publicly available information about Met-Coil. The
representative of this company restated an indication of interest in a range
below that being discussed with Mestek.
On October 20, 1999, at a special telephone meeting of the Board of
Directors, representatives of Lincoln Partners and Met-Coil's management updated
the Board of Directors on the discussions. The Board of Directors authorized
management to continue discussions with Mestek and to state its interest in a
possible transaction that included an all cash price above $7.00 per share.
Shortly after that Board meeting, Mr. Blakeman had a telephone conversation with
Mr. Reed during which he advised Mr. Reed that, although the Board appreciated
Mestek's most recent offer and considered it a serious proposal, the purchase
price remained insufficient. Mr. Reed stated he would consult with the Mestek
Board of Directors.
During the week of October 25, 1999, Mr. Blakeman and Mr. Reed had a number
of telephone calls in one of which Mr. Reed mentioned the possibility of raising
Mestek's offer to $7.10 per share of common stock subject to final due
diligence, execution of a definitive merger agreement, exclusivity and other
factors.
During the week of November 1, 1999, Mr. Blakeman reviewed with each Board
member his discussions with Mr. Reed. The Board of Directors by unanimous
written consent authorized management to continue the discussions with Mestek
and to allow Mestek to perform additional due diligence.
On November 9, 1999, Mr. Blakeman received a letter from Mr. Reed proposing
a business transaction whereby Mestek, through an affiliate or subsidiary, would
acquire Met-Coil for $7.10 per share of common stock. The proposal was subject
to final due diligence, execution of a definitive merger agreement, exclusivity
and other factors.
Beginning November 15, 1999, legal, financial and accounting
representatives from Mestek continued their due diligence review of Met-Coil and
that due diligence review remains ongoing.
On January 6, 2000, Mr. Blakeman met with Mr. Reed and Mr. Dewey at The
Lockformer Company in Lisle, Illinois and discussed the results of Mestek's due
diligence and due diligence items remaining.
On January 14, 2000, counsel for Mestek delivered to counsel for Met-Coil a
draft Merger Agreement. On January 18, 2000, counsel for Met-Coil reviewed this
draft Merger Agreement with the Board of Directors.
During the period from January 18, 2000 until March 10, 2000,
representatives of Met-Coil and its legal counsel and representatives of Mestek
and its legal counsel engaged in further negotiations regarding the terms of the
proposed Merger Agreement and the Stockholders Agreement. In addition,
representatives of certain Met-Coil stockholders and their legal counsel,
representatives of Met-Coil and its legal counsel and representatives of Mestek
and its legal counsel engaged in negotiations regarding the terms of the
proposed Stockholders Agreement.
At a special meeting held on March 10, 2000, the Board of Directors met to
consider the proposed transaction. The Board of Directors reviewed and discussed
the terms of the transaction. Representatives of Lincoln Partners presented
financial and other analyses and their oral opinion that the $7.10 per share
cash
4
<PAGE> 17
consideration to be received by Met-Coil's stockholders in the Merger is fair to
such stockholders from a financial point of view. The Board of Directors
adjourned the meeting until March 13, 2000. At the reconvened meeting on March
13, 2000, the Board of Directors unanimously adopted a resolution approving and
adopting the Merger Agreement and the Merger and approving the Stockholders
Agreements to the extent the transactions contemplated by such agreements would
result in Formtek or FAI being, or being deemed to be, an "interested
stockholder" for purposes of the Delaware General Corporation Law, and voted to
recommend approval and adoption of the Merger Agreement and the Merger to
Met-Coil's stockholders. Lincoln Partners delivered their written opinion that
as of March 13, 2000, based upon and subject to the assumptions, qualifications
and limitations contained in the opinion, the $7.10 per share cash consideration
to be received by Met-Coil's stockholders in the Merger is fair to such
stockholders from a financial point of view.
In the evening of March 13, 2000, the parties executed and delivered the
Merger Agreement. On the morning of March 14, 2000, the transaction was publicly
announced.
PURPOSE OF AND REASONS FOR THE MERGER
The principal purposes for the Merger are: (a) for Formtek to acquire all
of the equity interest in Met-Coil; and (b) to give Met-Coil's stockholders the
opportunity to dispose of their shares of common stock at a fair value.
As a result of the proposed Merger, the Surviving Corporation, whose common
stock will be entirely owned by Formtek, will continue the business of Met-Coil.
The resulting ownership position of Formtek will permit Formtek to manage the
Surviving Corporation without concern for the positions of minority or
unaffiliated holders of common stock, and it will permit Formtek to receive all
of the cash flow of the Surviving Corporation in excess of the cash flow
required to service indebtedness or for operations of the Surviving Corporation.
The assumption by Met-Coil of the status of a private company will allow
Met-Coil to eliminate the time devoted by its management and certain other
employees to matters which relate exclusively to Met-Coil being a public
company. Additionally, Met-Coil will be able to reduce certain other costs which
relate to being a public company, including the following: the costs of certain
accounting, auditing and SEC counsel activities, the cost of preparing, printing
and mailing corporate reports and proxy statements, the expense of a transfer
agent and the cost of investor relations activities.
DETERMINATION OF FAIRNESS OF THE MERGER BY THE BOARD OF DIRECTORS
At its March 13, 2000 meeting, the Board of Directors determined that the
Merger, including the Merger Consideration, is fair to, and in the best
interests of, Met-Coil and Met-Coil's stockholders and unanimously resolved to
recommend to Met-Coil's stockholders that they approve and adopt the Merger
Agreement and the Merger and the transactions contemplated thereby.
In making its determination with respect to the fairness of the Merger,
including the Merger Consideration, and in approving the Merger Agreement, the
Board of Directors considered a number of factors, including those listed below.
1. The financial condition and results of operations of Met-Coil, as well
as the projected financial performance and prospects of Met-Coil, taking into
account the risks involved in achieving those results and prospects in
Met-Coil's industry. The Board of Directors considered that achievement of share
values comparable to the Merger Consideration through growth of Met-Coil's
business could not be anticipated with near term certainty.
2. Historical market prices and trading information with respect to the
common stock, including the fact that the Merger Consideration to be received by
Met-Coil's stockholders represents a premium of 23% over the closing market
price of $5.75 per share of common stock on March 10, 2000 (the last trading day
prior to the Board of Directors' approval of the Merger) and of 118% over the
closing market price of $3.25
5
<PAGE> 18
per share of common stock on June 16, 1999 (the last trading day prior to
Met-Coil's public announcement that it had engaged Lincoln Partners).
3. Presentations to the Board of Directors by Lincoln Partners and the
opinion of Lincoln Partners that, as of March 13, 2000, based upon and subject
to the assumptions, qualifications and limitations contained in the opinion, the
Merger Consideration to be received by the holders of shares of common stock in
the Merger was fair to such stockholders from a financial point of view. A copy
of the written opinion of Lincoln Partners, which sets forth assumptions made,
procedures followed, matters considered and limits on their review is attached
to this Proxy Statement as Appendix B and is incorporated by reference. In
conjunction with delivering its opinion, Lincoln Partners made a presentation to
Met-Coil's Board of Directors, as to various financial and other matters
underlying such opinion including, among other things:
- a review of Met-Coil's historical and projected operating performance;
- review of the historical stock prices and trading volume of the common
stock;
- an analysis of the Merger Consideration as a multiple of various
measures of Met-Coil's operating performance;
- a review of the public market value and trading multiples of selected
publicly traded companies in the machinery industry;
- a review of the acquisitions made in the machinery industry; and
- a review of premiums paid on merger and acquisition transactions of
public companies.
See "Opinion of the Financial Advisor to Met-Coil" for a description of the
presentation to the Board of Directors. The Lincoln Partners Opinion is directed
only to the fairness, from a financial point of view, of the Merger
Consideration to be received in the Merger by holders of common stock and is not
intended to constitute, and does not constitute, a recommendation as to whether
any stockholder should vote in favor of approval of the Merger. Holders of
common stock are urged to read the Lincoln Partners Opinion carefully and in its
entirety.
4. The terms and conditions of the Merger Agreement and the fact that
there is no financing or due diligence contingency to the Merger. In this
connection, the Board of Directors also considered the likelihood that the
proposed acquisition would be consummated, including the likelihood of
satisfaction of the conditions to the Merger contained in the Merger Agreement,
and the risks to Met-Coil if the acquisition was not consummated.
5. The Board of Directors' view, after consultation with Met-Coil's
management and Lincoln Partners, regarding the likelihood of the existence of
other qualified buyers on terms as favorable as those in the Merger, including
the Merger Consideration, and the Board of Directors' view that it was unlikely
that the stockholders of Met-Coil would receive a comparable offer on as
favorable terms.
6. Developments in the machine tool industry, including the trends toward
consolidation within the industry, the dependence of Met-Coil on a favorable
long-term interest rate environment, housing starts and commercial construction
activity.
7. The recommendation of Met-Coil's management with respect to the
proposed transaction.
The members of the Board of Directors evaluated the factors described above
in view of their knowledge of the business and operations of Met-Coil and their
own business judgment. In light of the wide variety of factors considered in
connection with its evaluation of the Merger, the Board of Directors did not
find it practicable to, and did not, quantify or otherwise assign relative
weights to the specific factors considered in reaching its determination. In
addition, individual members of Met-Coil's Board of Directors may have given
different weight to different factors.
The Board of Directors recognized that, while the consummation of the
Merger gives the stockholders of Met-Coil the opportunity to realize a premium
over the prices at which the common stock was traded prior to
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<PAGE> 19
the public announcement of the Merger, consummation of the Merger would
eliminate the opportunity for stockholders of Met-Coil to participate in the
future growth and profits of Met-Coil.
It is expected that, if the Merger is not consummated in accordance with
the terms of the Merger Agreement, Met-Coil's current management, under the
general direction of the Board of Directors, will continue to manage Met-Coil as
an ongoing business in accordance with Met-Coil's current long-term strategic
plan.
OPINION OF FINANCIAL ADVISOR TO MET-COIL
In its role as financial advisor to Met-Coil, Lincoln Partners was asked by
Met-Coil to render an opinion to the Board of Directors as to the fairness from
a financial point of view to Met-Coil's stockholders of the Merger Consideration
to be received by Met-Coil's stockholders pursuant to the terms of the Merger
Agreement. Pursuant to the Merger Agreement, each share of common stock held by
Met-Coil's stockholders will be converted into the right to receive the Merger
Consideration. On March 10, 2000, Lincoln Partners delivered its oral opinion
and on March 13, 2000, Lincoln Partners delivered its written opinion (the
"Lincoln Partners Opinion"), to the effect that, as of such dates and based upon
and subject to the assumptions, limitations and qualifications set forth in such
opinions, the Merger Consideration to be received by Met-Coil's stockholders
pursuant to the terms of the Merger Agreement is fair to Met-Coil's stockholders
from a financial point of view.
A COPY OF THE LINCOLN PARTNERS OPINION IS ATTACHED HERETO AS APPENDIX B.
MET-COIL'S STOCKHOLDERS ARE URGED TO READ THE LINCOLN PARTNERS OPINION CAREFULLY
IN ITS ENTIRETY FOR THE ASSUMPTIONS MADE, THE PROCEDURES FOLLOWED, THE MATTERS
CONSIDERED AND THE LIMITS OF THE REVIEW MADE BY LINCOLN PARTNERS IN CONNECTION
WITH SUCH OPINION.
The Lincoln Partners Opinion was prepared for the Board of Directors and
addresses only the fairness of the Merger Consideration to be received by
Met-Coil's stockholders from a financial point of view. The Lincoln Partners
Opinion does not address any other aspects of the Merger and does not constitute
a recommendation to any stockholder as to how such stockholder should vote on
the Merger. Lincoln Partners advised Met-Coil in arm's length negotiations of
the Merger Consideration. No restrictions or limitations were imposed by
Met-Coil upon Lincoln Partners with respect to the investigations made or the
procedures followed by Lincoln Partners in rendering the Lincoln Partners
Opinion. As part of its investment banking business, Lincoln Partners is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, and other corporate purposes.
In arriving at its opinion, Lincoln Partners reviewed the Merger Agreement
and related documents. Lincoln Partners also reviewed financial and other
information that was publicly available or furnished to it by Met-Coil,
including information provided during discussions with Met-Coil's management.
Included in the information provided during discussions with Met-Coil's
management were some financial projections of Met-Coil prepared by the
management of Met-Coil. In addition, Lincoln Partners reviewed prices and
premiums paid in some other business combinations, compared certain financial
and securities data of Met-Coil with similar data of various other companies
whose securities are traded in public markets and with selected merger and
acquisition transactions of related companies, reviewed the historical stock
prices and trading activity of the common stock, and performed such other
analyses and considered such other factors as Lincoln Partners deemed
appropriate for purposes of rendering its opinion.
In rendering its opinion, Lincoln Partners relied upon and assumed the
accuracy and completeness of all of the financial and other information that was
available to it from public sources, that was provided to it by Met-Coil or its
representatives or that was otherwise reviewed by it and has neither attempted
independently to verify nor assumed any responsibility for independently
verifying any of such information. With respect to the financial projections
supplied to it, Lincoln Partners assumed that management's projections were
prepared based on assumptions reflecting the best currently available estimates
and judgments of the management of Met-Coil as to the expected future operating
and financial performance of Met-Coil. Lincoln Partners has not conducted and
did not assume any responsibility for making an independent valuation or
7
<PAGE> 20
appraisal of any assets or liabilities nor have any such valuations or
appraisals been provided to it. Lincoln Partners relied as to certain legal
matters on advice of counsel to Met-Coil.
The Lincoln Partners Opinion is necessarily based on economic, market,
financial and other conditions as they existed on, and on the information made
available to it as of March 13, 2000, the date of its opinion.
The following is a summary of the presentation made by Lincoln Partners to
the Board of Directors at its March 10, 2000 board meeting, setting forth
certain factors and the principal financial analyses performed by Lincoln
Partners to arrive at its opinion. This summary is not a complete description of
the analyses performed by Lincoln Partners. Lincoln Partners drew no specific
conclusions from any of these analyses but subjectively factored its
observations from these analyses into its qualitative assessment of the relevant
facts and circumstances.
ACQUISITION PREMIUM ANALYSIS
Lincoln Partners reviewed publicly available information to determine the
premiums paid in (i) 512 merger and acquisition transactions occurring in the
calendar year ending December 31, 1998 ("M&A Transactions") and (ii) 54 merger
and acquisition transactions ranging in size from approximately $25 to $50
million and occurring in the calendar year ending December 31, 1998 ("Selected
M&A Transactions"). None of the preceding merger and acquisition transactions
are directly comparable to the Merger.
For the M&A Transactions, the average premium to each seller's average
closing price for the five business days before the initial transaction
announcement was 40.7%. For the Selected M&A Transactions, the average premium
to each seller's average closing price for the five business days before the
initial transaction announcement was 34.7%. Since a transaction announcement had
not been made for the Merger prior to delivery of the Lincoln Partners Opinion,
the percentage amount by which the Merger Consideration exceeds the stock price
of the common stock at certain points in time ("Merger Premiums") was analyzed.
The points in time that were chosen to compare Merger Premiums to the premiums
paid in the M&A Transactions and Selected M&A transactions were (i) June 16,
1999, the day prior to Met-Coil's public announcement regarding seeking
strategic alternatives; (ii) October 20, 1999, the day prior to Met-Coil's Board
of Directors' meeting where Met-Coil's Board of Directors voted to proceed
negotiating a transaction with Formtek; and (iii) March 6, 2000, five days
before the signing of the Merger Agreement. The percentage amount by which the
Merger Consideration exceeded the closing stock price of Met-Coil on these dates
was 118%, 49%, and 21%, respectively.
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<PAGE> 21
COMPARISON OF SELECTED PUBLICLY TRADED COMPARABLE COMPANIES
Lincoln Partners analyzed the operating performance of Met-Coil relative to
a peer group of selected companies (the "Comparable Public Companies") Lincoln
Partners deemed to have similar operating characteristics as Met-Coil. The
Comparable Public Companies were Genesis Worldwide Inc.; Hardinge, Inc.; Hurco
Companies, Inc.; Mestek, Inc.; and Milacron Inc. Lincoln Partners compared total
enterprise value (defined as market value of common equity plus book value of
total debt and other long-term liabilities less cash and cash equivalents)
(based on reported closing prices for the comparable Public Companies on March
6, 2000) as a multiple of latest twelve months ("LTM") revenue, LTM and
three-year average earnings before interest, taxes, depreciation and
amortization ("EBITDA") and LTM and three-year average earnings before interest
and taxes ("EBIT"). The table below shows the results of this analysis.
<TABLE>
<CAPTION>
ENTERPRISE VALUE DIVIDED BY:
-------------------------------------------------------------------------
3-YEAR 3-YEAR
LTM LTM LTM AVERAGE AVERAGE
REVENUE EBIT(1) EBITDA(1) EBIT(1) EBITDA(1)
------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Range of Comparable
Companies............... 0.4x to 1.1x 6.4x to 13.7x 4.7x to 6.6x 5.2x to 8.3x 3.8x to 5.9x
Mean of Comparable
Companies............... 0.7x 9.7x 5.9x 6.8x 5.0x
Median of Comparable
Companies............... 0.7x 9.4x 6.1x 6.8x 5.2x
Met-Coil (Based on the
Merger Consideration)... 0.8 7.5x 6.3x 11.5x 8.7x
</TABLE>
- ---------------
(1) Excludes Genesis Worldwide Inc.
No company used in this analysis is identical to Met-Coil. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the Comparable Public Companies and Met-Coil and other
factors that could affect the public trading value of the Comparable Public
Companies. Mathematical analyses such as determining the mean or median are not
in themselves meaningful methods of using comparable company data.
ANALYSIS OF SELECTED MERGER AND ACQUISITION TRANSACTIONS IN THE METAL FORMING
EQUIPMENT INDUSTRY
Lincoln Partners identified and analyzed six acquisitions of companies
Lincoln Partners deemed to have similar operating characteristics of Met-Coil
("Comparable M&A Transactions"). Each of the Comparable M&A Transactions had an
enterprise value less than $350 million. Using publicly available information
for the Comparable M&A Transactions, Lincoln Partners reviewed the consideration
paid in such transactions in terms of the total enterprise value as a multiple
of LTM and three-year average EBITDA and EBIT of the acquired entity prior to
its announcement. The table below summarizes the results of this analysis.
<TABLE>
<CAPTION>
ENTERPRISE VALUE DIVIDED BY:
-----------------------------------------------------------------------
3-YEAR 3-YEAR
LTM LTM LTM AVERAGE AVERAGE
REVENUE EBIT(1) EBITDA(1) EBIT EBITDA
------------ ------------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C>
Range of M&A Transactions... 0.4x to 1.0x 7.5x to 13.0x 5.6x to 9.8x 6.6x to 16.0x 4.7x 8.0x
Mean of M&A Transactions.... 0.7x 10.5x 7.1x 9.7x 6.5x
Median of M&A
Transactions.............. 0.7x 9.8x 6.4x 8.6x 6.5x
Met-Coil (Based on the
Merger Consideration)..... 0.8 7.5x 6.3x 11.5x 8.7x
</TABLE>
- ---------------
(1) Excludes one of the Comparable M&A Transactions due to LTM EBIT being
negative.
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No transaction used in this analysis is identical to the Merger.
Accordingly, an analysis of the results of the foregoing necessarily involves
complex considerations and judgments concerning differences in financial and
operating characteristics of Met-Coil and the companies involved in the selected
transactions and other factors that could affect the acquisition value of the
companies to which Met-Coil is being compared. Mathematical analyses such as
determining the mean or median are not in themselves meaningful methods of using
comparable transactions data.
COMPARISON OF HISTORICAL STOCK PRICE PERFORMANCE
To provide comparative market data, Lincoln Partners compared Met-Coil's
historical common stock performance relative to the Comparable Public Companies.
Lincoln Partners compared the performance of the Comparable Public Companies
from June 16, 1999, the day prior to Met-Coil's public announcement regarding
seeking strategic alternatives, to March 6, 2000. Over this time, all of the
Comparable Public Companies' stock prices declined. The change in their stock
prices ranged from a decline of 15% to a decline of 53%. The median decline was
30% and the mean decline was 31%. During this same period and based on the
Merger Consideration, Met-Coil's common stock increased 118%.
ANALYSIS OF DISCUSSIONS HELD WITH VARIOUS POTENTIAL ACQUIRERS
As part of Lincoln Partners' engagement with Met-Coil, Lincoln Partners
held discussions with a number of companies Lincoln Partners believed or was
advised by Met-Coil might be interested in acquiring Met-Coil ("Potential
Acquirers"). Lincoln Partners held preliminary discussions with over 160
Potential Acquirers. Lincoln Partners provided 47 of these Potential Acquirers
materials describing the historical results of Met-Coil and the near-term
outlook for Met-Coil. Lincoln Partners held discussions with each of these
Potential Acquirers concerning their interest in Met-Coil and solicited from the
Potential Acquirers an amount these groups would be willing to offer to acquire
Met-Coil ("Indications of Interest"). All of the Indications of Interest for
Met-Coil that were received from the Potential Acquirers were less than the
Merger Consideration. Lincoln Partners conducted only limited investigation into
the financial wherewithal of these Potential Acquirers and their ability to
complete a transaction.
OTHER FACTORS CONSIDERED
In rendering its opinion, Lincoln Partners considered some other factors
and conducted other comparative analyses, including, among other things, a
discounted cash flow analysis. A discounted cash flow analysis is based on
numerous projections and assumptions including sales growth rates, profit
margins, capital expenditures, tax rates, the cost of capital for a business and
the ability of a company to invest at a rate above its cost of capital. For the
purposes of the Lincoln Partners Opinion, Lincoln Partners believed a discounted
cash flow analysis would not provide additional insight into the fairness from a
financial point of view of the Merger. Lincoln Partners based this conclusion on
the fact that Met-Coil's sales and profitability had varied widely and that only
limited assurances could be made as to the future stability or growth of these
factors.
The summary set forth above is not a complete description of the analyses
performed by Lincoln Partners, but describes, in summary form, the principal
elements of the presentation made by Lincoln Partners to the Board on March 10,
2000. The preparation of a fairness opinion involves various determinations as
to the most appropriate and relevant methods of financial analysis and the
application of these methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to summary description. Lincoln
Partners did not form a conclusion as to whether any individual analysis,
considered in isolation, supported or failed to support an opinion as to
fairness from a financial point of view. Lincoln Partners did not place
particular reliance or weight on any individual analysis, but instead concluded
that its analyses, taken as a whole, supported its determination. Accordingly,
notwithstanding the separate factors summarized above, Lincoln Partners believes
that its analysis must be considered as a whole and that selecting portions of
its analysis and the factors considered by it, without considering all analyses
and factors, could create an incomplete or misleading view of the evaluation
process underlying its opinion. In performing its analyses, Lincoln Partners
made numerous assumptions with respect to industry performance, business and
economic conditions and other matters. The analyses performed by Lincoln
Partners are not necessarily indicative of
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actual values or future results, which may be significantly more or less
favorable than suggested by such analyses. The Lincoln Partners Fairness Opinion
was one of many factors taken into consideration by Met-Coil's Board of
Directors in making its determination to approve the merger. The Merger
Consideration was determined through arms length negotiations between Met-Coil
and Formtek.
In an engagement letter dated June 9, 1999, Met-Coil retained Lincoln
Partners to:
- identify potential strategic alternatives for Met-Coil;
- provide advice with respect to the feasibility, timing, and methodology
for pursuing such alternatives; and
- if requested, provide assistance in analyzing, structuring and
negotiating each opportunity, including a sale, merger, consolidation,
or certain other actions.
In this engagement letter, Met-Coil agreed to pay Lincoln Partners:
- a fee of $50,000 upon delivery of an oral or written opinion;
- an initial cash retainer of $25,000 which will be credited against the
Success Fee (defined below);
- monthly cash retainers of $10,000 per month but not to exceed $60,000 in
total and;
- a fee payable upon consummation of the Merger which will result in an
additional payment to Lincoln Partners of approximately $600,000 upon
consummation of the Merger (the "Success Fee").
Met-Coil also agreed to reimburse Lincoln Partners promptly for all
reasonable out-of-pocket expenses (including the reasonable fees and expenses of
counsel) incurred by Lincoln Partners in connection with its engagement, and to
indemnify Lincoln Partners and certain related persons against certain
liabilities in connection with its engagement, including liabilities under the
federal securities laws. The terms of the fee arrangement with Lincoln Partners,
which Lincoln Partners and Met-Coil believe are customary in transactions of
this nature, were negotiated at arm's length between Met-Coil and Lincoln
Partners, and the Board of Directors was aware of such arrangement, including
the fact that a significant portion of the aggregate fee payable to Lincoln
Partners is contingent upon consummation of the Merger.
CERTAIN EFFECTS OF THE MERGER
Following the Merger, Formtek will own 100% of the Surviving Corporation's
outstanding capital stock, and will have a 100% interest in the net book value
and net earnings of the Surviving Corporation. Formtek will be the sole
beneficiary of any future earnings and growth of the Surviving Corporation and
will have the ability to benefit from any divestitures, strategic acquisitions
or other corporate opportunities that may be pursued by the Surviving
Corporation in the future. Upon the consummation of the Merger, Met-Coil's
stockholders will cease to have any ownership interest in Met-Coil or rights as
stockholders. Met-Coil's stockholders will no longer benefit from any increases
in the value of Met-Coil or the payment of dividends on the common stock and
will no longer bear the risk of any decreases in value of Met-Coil.
As a result of the Merger, the Surviving Corporation will be privately held
and there will be no public market for its common stock. Upon consummation of
the Merger, the common stock will cease to be quoted on the NASDAQ Small Cap
Market System. In addition, registration of the common stock under the
Securities Exchange Act of 1934 will be terminated, and accordingly, Met-Coil
will no longer be required to file periodic reports with the SEC.
Met-Coil believes that the Merger will be treated for Federal income tax
purposes as a redemption of the common stock held by Met-Coil's stockholders
and, therefore, will not give rise to gain, loss or other income to Met-Coil or
to FAI. Met-Coil will be entitled to deduct amounts paid in cancellation of
options.
The employee benefit and compensation plans for employees of the Surviving
Corporation will be not materially less favorable in the aggregate than
Met-Coil's present benefit plans for a period ending on the earlier of one year
from the date of consummation of the Merger (the "Closing Date") and May 31,
2001. See
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"The Merger Agreement -- Employee Benefits" for a complete description of the
terms and conditions of this obligation of the Surviving Corporation.
RIGHTS OF DISSENTING STOCKHOLDERS
The following summary is not a complete statement of the provisions of
Delaware law relating to the appraisal rights of stockholders and is qualified
in its entirety by reference to the provisions of Section 262 of the DGCL set
forth in full as Appendix C to this Proxy Statement.
Holders of record of shares of common stock who comply with the applicable
procedures summarized herein will be entitled to appraisal rights under Section
262 of the DGCL. A person having a beneficial interest in shares of common stock
held of record in the name of another person, such as a broker or nominee, must
act promptly to cause the record holder to follow the steps summarized below
properly and in a timely manner to perfect appraisal rights.
ALL REFERENCES IN SECTION 262 AND IN THIS SUMMARY TO A "STOCKHOLDER" ARE TO
THE RECORD HOLDER OF SHARES OF COMMON STOCK AS TO WHICH APPRAISAL RIGHTS ARE
ASSERTED. VOTING AGAINST, ABSTAINING FROM VOTING OR FAILING TO VOTE ON APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER WILL NOT CONSTITUTE A DEMAND
FOR APPRAISAL WITHIN THE MEANING OF SECTION 262 OF THE DGCL.
Stockholders who follow the procedures set forth in Section 262 may
receive, in lieu of the $7.10 cash per share of common stock to be paid in the
Merger, a cash payment equal to the "fair value" of their shares, exclusive of
any element of value arising from the accomplishment or expectation of the
Merger, together with a fair rate of interest, if any, as determined by the
Delaware Court of Chancery. Such fair value is to be determined by judicial
appraisal and could be more than, the same as, or less than, the Merger
Consideration. The statutory right of appraisal granted by Section 262 is
subject to strict compliance with the procedures set forth below. Failure to
follow any of these procedures may result in a termination or waiver of
appraisal rights under Section 262.
To be entitled to receive payment of the fair value of the shares of common
stock, a stockholder:
- must file a written demand for appraisal of his or her shares of common
stock with Met-Coil prior to the voting by stockholders on the Merger
Agreement and the Merger at the Meeting (such demand must reasonably
inform Met-Coil of the identity of the stockholder and that the
stockholder intends thereby to demand an appraisal of his or her shares
of common stock);
- must not vote his or her shares of common stock in favor of approval and
adoption of the Merger Agreement and the Merger; and
- must have his or her shares of common stock valued in an appraisal
proceeding, as described below.
A proxy or vote against approval and adoption of the Merger Agreement and
the Merger will not satisfy the requirement that a stockholder file a written
demand for appraisal as set forth above. The requirement of a written demand is
separate from, and should not be confused with, the requirement that a
stockholder not vote in favor of approval and adoption of the Merger Agreement
and the Merger. A failure to vote on the Merger Agreement and the Merger will
not be construed as a vote in favor of approval and adoption of the Merger
Agreement and the Merger and will not constitute a waiver of a stockholder's
rights of appraisal. A stockholder who returns a signed proxy indicating that he
or she abstains from voting will similarly not waive his or her rights of
appraisal. However, because a proxy signed and left blank will, unless properly
revoked, be voted in favor of approval and adoption of the Merger Agreement and
the Merger, a stockholder who returns a signed proxy left blank will waive his
or her rights of appraisal. Therefore, a stockholder electing to exercise
appraisal rights who votes by proxy must not leave his or her proxy blank, but
must either vote against approval and adoption of the Merger Agreement and the
Merger or abstain from voting.
A holder of shares of common stock wishing to exercise such holder's
appraisal rights must be the record holder of such shares of common stock on the
date the written demand for appraisal is made and must continue to hold such
shares of record until the Effective Time of the Merger. Accordingly, a holder
of shares
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of common stock who is the record holder of shares of common stock on the date
the written demand for appraisal is made, but who thereafter transfers such
shares prior to the Effective Time of the Merger, will lose any right to
appraisal in respect of such shares of common stock.
Only a holder of record of shares of common stock is entitled to assert
appraisal rights for the shares of common stock registered in that holder's
name. A demand for appraisal should be executed by or on behalf of the holder of
record, fully and correctly, as such holder's name appears on such holder's
stock certificates. If the shares of common stock are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian, execution of
the demand should be made in that capacity, and if the shares of common stock
are owned of record by more than one person as in a joint tenancy or tenancy in
common, the demand should be executed by or on behalf of all joint owners. An
authorized agent, including an agent for two or more joint owners, may execute a
demand for appraisal on behalf of a holder of record; however, the agent must
identify the record owner or owners and expressly disclose the fact that, in
executing the demand, the agent is agent for such owner or owners. A record
holder such as a broker who holds shares as nominee for several beneficial
owners may exercise appraisal rights with respect to the shares held for one or
more beneficial owners while not exercising such rights with respect to the
shares held for other beneficial owners; in such case, the written demand should
set forth the number of shares as to which appraisal is sought, and where no
number of shares of common stock is expressly mentioned the demand will be
presumed to cover all shares of common stock held in the name of the record
owner. Stockholders who hold their shares of common stock in brokerage accounts
or other nominee forms and who wish to exercise appraisal rights are urged to
consult with their brokers to determine the appropriate procedures for the
making of a demand for appraisal by such a nominee.
If the Merger Agreement and the Merger is approved and adopted by the
stockholders, Met-Coil or the Surviving Corporation, as the case may be, will
send a notice, either before the Effective Time or within ten days thereafter,
stating that appraisal rights are available to each stockholder who has filed an
adequate written demand for appraisal with Met-Coil and who has not voted in
favor of approval and adoption of the Merger Agreement and the Merger. Within
120 days after the Effective Time, Met-Coil or any stockholder seeking appraisal
rights may file a petition in the Court of Chancery demanding a determination of
the value of the shares of common stock of all stockholders seeking appraisal
rights. Met-Coil is under no obligation, and has no present intention, to file
such a petition, and all stockholders seeking to exercise appraisal rights
should initiate all necessary action with respect to the perfection of their
appraisal rights within the time periods and in the manner prescribed in Section
262. Within 120 days after the Effective Time, any stockholder who has complied
with the provisions of Section 262, upon written request, shall be entitled to
receive from Met-Coil a statement setting forth the aggregate number of shares
not voted in favor of approval and adoption of the Merger Agreement and the
Merger and with respect to which demands for appraisal have been received and
the aggregate number of holders of such shares of common stock. Such written
statement must be mailed to any such stockholder within ten days after his or
her written request for such a statement is received by Met-Coil or within ten
days after expiration of the period for delivery of demands for appraisal under
Section 262(d), whichever is later.
If a petition for appraisal is timely filed, the Court of Chancery will
conduct a hearing on such petition to determine whether the stockholders seeking
appraisal rights have complied with Section 262 and have thereby become entitled
to appraisal rights. The Court of Chancery will then determine the fair value of
the shares of common stock exclusive of any element of value arising from the
expectation or accomplishment of the Merger, but including a fair rate of
interest, if any, to be paid on the amount determined to be the fair value. In
determining fair value, the Court of Chancery is to take into account all
relevant factors. Stockholders considering appraisal should bear in mind that
the fair market value of their shares determined under Section 262 could be more
than, the same as, or less than, the consideration they will receive pursuant to
the Merger Agreement if they do not seek appraisal of their shares of common
stock, and that the Lincoln Partners Opinion set forth as Annex B hereto is not
necessarily an opinion regarding fair value under Section 262. The Delaware
Supreme Court has stated that "proof of value by any techniques or methods which
are generally considered acceptable in the financial community and otherwise
admissible in court" should be considered in the appraisal proceedings.
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The Court of Chancery will determine the amount of interest, if any, to be
paid upon the amounts to be received by persons whose shares have been
appraised. The costs of the appraisal proceeding may be assessed against one or
more parties to the proceeding as the Court of Chancery may consider equitable.
Upon application by a stockholder, the Court of Chancery may order all or a
portion of the expenses incurred by any stockholder in connection with the
appraisal proceedings (including, without limitation, reasonable attorneys' fees
and the fees and expenses of experts) to be charged pro rata against the value
of all of the shares entitled to an appraisal.
A stockholder will fail to perfect his or her right of appraisal if he or
she:
- does not deliver a written demand for appraisal to Met-Coil prior to the
vote for approval and adoption of the Merger Agreement and the Merger;
- votes his or her shares in favor of approval and adoption of the Merger
Agreement and the Merger;
- does not file a petition for appraisal within 120 days after the
Effective Time; or
- delivers to Met-Coil both a written withdrawal of his or her demand for
appraisal and an acceptance of the terms of the Merger Agreement, except
that any such attempt to withdraw such demand not made within 60 days
after the Effective Time requires the written approval of Met-Coil.
If any stockholder who properly demands appraisal of such stockholder's shares
of common stock under Section 262 fails to perfect, or effectively withdraws or
loses, such stockholder's right to appraisal as provided above, the shares of
common stock of such stockholder will be converted into the right to receive the
Merger Consideration receivable with respect to such shares of common stock in
accordance with the Merger Agreement.
If an appraisal proceeding is properly instituted, such proceeding may not
be dismissed as to any stockholder who has perfected his or her right of
appraisal without the approval of the Court of Chancery, and any such approval
may be conditioned on such terms as the Court of Chancery deems just.
After the Effective Time, no stockholder who has demanded appraisal rights
will be entitled to vote his or her shares for any purpose or to receive
dividends on, or other distributions in respect of, such shares of common stock
(except dividends or distributions payable to stockholders as of a record date
prior to the Effective Time).
FAILURE BY A STOCKHOLDER TO FOLLOW THE STEPS REQUIRED BY DELAWARE LAW FOR
PERFECTING RIGHTS OF APPRAISAL MAY RESULT IN THE LOSS OF THOSE RIGHTS. IN VIEW
OF THE COMPLEXITY OF THESE PROVISIONS OF THE DGCL, STOCKHOLDERS WHO ARE
CONSIDERING DISSENTING FROM THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT
AND THE MERGER AND EXERCISING THEIR RIGHTS UNDER SECTION 262 SHOULD CONSULT
THEIR LEGAL ADVISORS.
All written communications from stockholders with respect to the exercise
of appraisal rights should be mailed to Met-Coil Systems Corporation, 5486 6th
Street SW, Cedar Rapids, Iowa 52404, Attention: Secretary.
EXPENSES
Each party will pay its own expenses relating to the Merger whether or not
the Merger is consummated, except that the expenses incurred in connection with
printing and mailing the Proxy Statement will be shared equally by Met-Coil and
FAI and all filing fees incurred in connection with filings under the Hart-Scott
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), will be
borne by Formtek. In addition, in certain circumstances, one party may be
responsible for the payment of expenses of the other party. See "The Merger
Agreement -- Fees and Expenses."
THE MERGER AGREEMENT
The following discussion is a summary of the material provisions of the
Merger Agreement. This summary and all other discussions of the terms and
conditions of the Merger and the Merger Agreement
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included elsewhere in this Proxy Statement are qualified in their entirety by
reference to the Merger Agreement, a copy of which is attached as Appendix A to
this Proxy Statement and incorporated by reference. Capitalized terms used but
not defined in this Proxy Statement have the meanings set forth in the Merger
Agreement.
THE MERGER
On the terms and subject to the conditions of the Merger Agreement, at the
Effective Time Met-Coil will be merged with and into FAI in accordance with the
applicable provisions of the DGCL and the separate corporate existence of
Met-Coil will thereupon cease and FAI will be the Surviving Corporation under
the corporate name Met-Coil Systems Corporation. The Merger will have the
effects specified in the DGCL.
EFFECTIVE TIME
Within three business days after the date on which the last of the
conditions set forth in the Merger Agreement is fulfilled or waived, FAI and
Met-Coil will cause a certificate of merger to be filed with the Secretary of
State of the State of Delaware as provided in the DGCL. The Merger will become
effective at such time as the certificate of merger is duly filed with the
Delaware Secretary of State or at such later time as is specified in the
certificate of merger. The time and date on which the Merger becomes effective
is referred to as the "Effective Time."
CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING CORPORATION
The Merger Agreement provides that the certificate of incorporation and
by-laws of the Surviving Corporation as in effect immediately prior to the
Effective Time shall continue in full force and effect following the Effective
Time until amended or repealed in accordance with their terms.
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
The Merger Agreement provides that immediately after the Effective Time the
directors of the Surviving Corporation will be John E. Reed, R. Bruce Dewey,
Donald Hill, James Heitt and Raymond Blakeman and the officers of the Surviving
Corporation will be John E. Reed, as Chairman, James Heitt, as President,
Stephen M. Shea as Senior Vice President-Finance and Treasurer, and Timothy P.
Scanlan, as Secretary. Those people will continue as directors or officers, as
the case may be, of the Surviving Corporation until their successors have been
elected and qualified, subject to the provisions of the Surviving Corporation's
by-laws and the DGCL.
CONVERSION OF SECURITIES IN THE MERGER; TREATMENT OF OPTIONS
The Merger Agreement provides that, at the Effective Time:
- each share of Met-Coil common stock issued and outstanding immediately
prior to the Effective Time (other than Dissenting Shares (as defined
below), shares of common stock held by any Subsidiary or in the treasury
of Met-Coil, and shares of common stock held, directly or indirectly, by
Formtek or any direct or indirect Subsidiary of Formtek), by virtue of
the Merger and without any action on the part of Formtek, FAI, Met-Coil
or the holders thereof, will be cancelled and converted into the right
to receive the Merger Consideration;
- each share of Met-Coil common stock issued and outstanding and held by
any Subsidiary or in the treasury of Met-Coil, or held, directly or
indirectly, by Formtek or any direct or indirect Subsidiary of Formtek
immediately prior to the Effective Time will, by virtue of the Merger
and without any action on the part of Formtek, FAI, Met-Coil or the
holder thereof, be cancelled without payment of any Merger Consideration
therefor; and
- each share of FAI issued and outstanding immediately prior to the
Effective Time will, by virtue of the Merger and without any action on
the part of Formtek, FAI, Met-Coil or the holder thereof, be converted
into one share of common stock, par value $0.01 per share, of the
Surviving Corporation.
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The word "Subsidiary," when used with respect to any person, means any person of
which more than (i) 50% of the equity and (ii) 50% of the voting interests are
owned, directly or indirectly, by such first person.
At the Effective Time, each outstanding option and warrant, by virtue of
the Merger and without any action on the part of Formtek, FAI, Met-Coil or the
holders thereof, will be cancelled and converted into the right to receive an
amount (the "Cash Payment") equal to the product of (i) the total number of
shares as to which such option or warrant is exercisable or convertible and (ii)
the excess of the Merger Consideration over the exercise price per share of
common stock subject to such option or warrant.
PAYMENT FOR AND SURRENDER OF SHARES
At the Effective Time, Formtek or FAI will deposit with a bank or trust
company designated by Formtek and reasonably satisfactory to Met-Coil (the
"Paying Agent"), for the benefit of the holders of common stock, cash equal to
(i) the product of (x) the number of shares of common stock outstanding
immediately prior to the Effective Time (other than shares which are held by any
Subsidiary of Met-Coil or in the treasury of Met-Coil or which are held directly
or indirectly by Formtek or any direct or indirect Subsidiary of Formtek or a
person known at the time of such deposit to be a Dissenting Stockholder) and (y)
the Merger Consideration and (ii) the product of (x) options and warrants in
respect of Shares of common stock and (y) the excess of the Merger Consideration
over the exercise price per share in respect of such options or warrants (being
hereinafter referred to as the "Payment Fund"). The Paying Agent will, pursuant
to irrevocable instructions, deliver the Merger Consideration and the Cash
Payment out of the Payment Fund, and, except as described herein, the Payment
Fund will not be used for any other purpose.
Promptly after the Effective Time, the Paying Agent will mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of common stock (the
"Certificates") (i) a form of letter of transmittal (which will specify that
delivery will be effected, and risk of loss and title to the Certificates will
pass, only upon proper delivery of the Certificates to the Paying Agent) and
(ii) instructions for use in effecting the surrender of the Certificates for
payment therefor. Upon surrender of Certificates for cancellation to the Paying
Agent, together with such letter of transmittal duly executed and any other
required documents, the holder of such Certificates will be entitled to receive
for each of the shares represented by such Certificates the Merger
Consideration, and the Certificates so surrendered will promptly be cancelled.
Until so surrendered, Certificates will represent solely the right to receive
the Merger Consideration. If any Merger Consideration is to be paid to or issued
in a name other than that in which the Certificate surrendered in exchange
therefor is registered, it will be a condition of such exchange that the
Certificate so surrendered be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange pay to the Paying Agent
any transfer or other taxes required by reason of the payment of such Merger
Consideration in a name other than that of the registered holder of the
Certificate surrendered, or establish to the satisfaction of the Paying Agent
that such tax has been paid or is not applicable. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost, stolen or
destroyed, the Paying Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration deliverable in respect thereof as
determined in accordance with the Merger Agreement, provided that the person to
whom the Merger Consideration is paid shall, if required by the Surviving
Corporation, give the Surviving Corporation a bond in such reasonable amount as
it may direct.
Any portion of the Payment Fund which remains unclaimed by the former
stockholders of Met-Coil for six months after the Effective Time will be
delivered to the Surviving Corporation and any former stockholders of Met-Coil
will thereafter look only to the Surviving Corporation for payment of their
claim for the Merger Consideration for the shares of common stock.
None of Met-Coil, Formtek, FAI or the Paying Agent shall be liable to any
holder of shares of common stock for any Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar laws.
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CLOSING OF STOCK TRANSFER RECORDS
At the close of business on the day prior to the Effective Time, the stock
transfer books of Met-Coil will be closed and there shall be no further
registration of transfers of shares of common stock thereafter on the stock
transfer books of Met-Coil.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of the
parties thereto. These include representations and warranties by Met-Coil with
respect to corporate standing, Subsidiaries, authority, capitalization, the
receipt of a fairness opinion of Met-Coil's financial advisor, operation of
Met-Coil's business, litigation, employee benefit plans, taxes, intellectual
property, reports and financial statements, the absence of certain charges or
events, registration rights and certain other agreements, brokers and finders,
the proxy statement, title to assets, contracts, compliance with laws,
insurance, preferred stock, year 2000, disposition of assets, environmental and
health and safety matters, related party transactions, increases in salaries and
wages, employee salaries and benefits, customer and supplier relationships and
warranty claims, accounts receivable and notes receivable and bonds and
guarantees. Formtek has made certain representations and warranties with respect
to corporate standing, authority, information supplied in connection with
Met-Coil's proxy statement and the availability of adequate financing. FAI has
also made certain representations and warranties regarding corporate standing,
authority and the absence of any business activities to date.
ALTERNATIVE PROPOSALS
Under the Merger Agreement, Met-Coil has agreed to cease any existing
discussions or negotiations with any parties that may have been ongoing prior to
execution of the Merger Agreement with respect to any Acquisition Proposal (as
defined below). Met-Coil has agreed that, prior to the Effective Time, neither
it nor any of its affiliates will, nor will it or any of its affiliates permit
their respective officers, directors, employees, representatives, consultants,
investment bankers, attorneys, accountants or other agents or affiliates to,
encourage, solicit, initiate or facilitate the making of any Acquisition
Proposal or, except as set forth below, engage in any discussions or
negotiations with, or furnish or disclose any information to, any person in
connection with, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal.
An "Acquisition Proposal" means (i) any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of Met-Coil or any of its material Subsidiaries or
of over 50% of any class of equity securities of Met-Coil or any of its material
Subsidiaries, (ii) any tender offer or exchange offer that, if consummated,
would result in any person beneficially owning 50% or more of any class of
equity securities of Met-Coil or any of its Subsidiaries, or (iii) any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction involving
Met-Coil or any of its Subsidiaries. Notwithstanding the foregoing, in the event
Met-Coil receives an unsolicited Acquisition Proposal, Met-Coil may participate
in discussions or negotiations with or furnish information (pursuant to a
confidentiality agreement with terms not more favorable to such third party than
the confidentiality agreement entered into by Formtek and Met-Coil) to any third
party which makes an Acquisition Proposal, if (i) the Board of Directors
reasonably determines (in consultation with Met-Coil's independent financial
advisor) that such Acquisition Proposal is likely to lead to a Superior Proposal
(as defined below) and (ii) the Board of Directors believes (in consultation
with Met-Coil's independent legal counsel) that failing to take such action may
constitute a breach of its fiduciary duties. In addition, under the Merger
Agreement, neither the Board of Directors nor any committee thereof shall
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Formtek or FAI the approval and recommendation of the Merger and the Merger
Agreement, or approve or recommend, or propose to approve or recommend, any
Acquisition Proposal or enter into any agreement with respect to any Acquisition
Proposal or enter into any arrangement, understanding or agreement requiring it
to abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by the Merger Agreement, except that Met-Coil may recommend to its
stockholders an Acquisition Proposal and in connection therewith withdraw or
modify its approval or recommendation of the Merger and enter into an
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agreement with respect to such Acquisition Proposal if a third party makes a
Superior Proposal, and three business days have elapsed following delivery to
Formtek of a written notice of the determination by the Board of Directors of
Met-Coil to take such action and during such three business day period Met-Coil
has informed Formtek of the significant terms and conditions of such Superior
Proposal and the identity of the Person making such Superior Proposal, and at
the end of such three business day period the Acquisition Proposal continues to
constitute a Superior Proposal.
A "Superior Proposal" means a bona fide proposal made by a third party to
acquire all of the shares of Met-Coil's common stock pursuant to a tender offer,
a merger or a sale of all of the assets of Met-Coil on terms which a majority of
the members of the Board of Directors of Met-Coil determines in its good faith
reasonable judgment (in consultation with Met-Coil's independent financial
advisor) to be more favorable to Met-Coil and its stockholders than the
transactions contemplated hereby, for which financing is then available, and
which is not subject to any financing condition.
INTERIM OPERATIONS OF MET-COIL
In the Merger Agreement, Met-Coil has agreed that, prior to the Closing
Date, except as contemplated by any other provision of the Merger Agreement,
Met-Coil will and will cause each of its Subsidiaries to:
- conduct its operations in the ordinary and normal course, consistent
with past practice; and
- use its reasonable best efforts, and cause each of its Subsidiaries to
use its reasonable best efforts, to preserve intact their business
organizations, keep available the services of their current officers and
employees, and preserve their relationships with customers, suppliers
and others having business relationships with them.
Without limitation of the foregoing, Met-Coil has agreed that it will not, and
will not permit any of its Subsidiaries to, without the prior written consent of
Formtek:
- issue, sell or pledge, or authorize or propose the issuance, sale or
pledge, of any additional shares of its capital stock of any class, or
any voting debt or any securities or rights convertible into or
exchangeable for any shares of its capital stock or voting debt, or any
other securities in respect of, in lieu of, or in substitution for,
shares of common stock outstanding on the date of the Merger Agreement;
- redeem, purchase or otherwise acquire, any of its outstanding
securities, other than pursuant to existing agreements requiring
Met-Coil to repurchase or acquire any shares of its capital stock;
- split, combine, subdivide or reclassify any shares of its capital stock
or declare, set aside for payment or pay any dividend;
- grant any increases in the compensation of any of its directors,
officers or employees, except for increases granted to employees other
than officers in the ordinary course of business consistent with past
practice, pay or award any pension, retirement allowance, or other
non-equity incentive awards, or other employee benefit, except for
payments or awards to current employees other than officers that are in
the ordinary course of business, consistent with past practice, pay or
award any stock option or equity incentive awards, enter into any new or
amend any existing employment agreement with any director, officer or
employee, enter into any new or amend any existing severance agreement
with any current or former director, officer or employee, or become
obligated under any new employee plan, or amend any such employee plan,
except as may be contemplated by the Merger Agreement;
- adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization
of Met-Coil or any Subsidiary of Met-Coil other than the Merger;
- make any acquisition of any direct or indirect ownership interest in or
assets comprising any business enterprise or operation or, except in the
ordinary course and consistent with past practice, any other assets;
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- dispose of any interest in any material business enterprise or operation
of Met-Coil or any of its Subsidiaries, make any other disposition of
any other direct or indirect ownership interest in any material assets
of Met-Coil or any of its Subsidiaries, or, except in the ordinary
course and consistent with past practice, dispose of any other assets of
Met-Coil or any of its Subsidiaries;
- adopt any amendments to Met-Coil's certificate of incorporation or its
bylaws or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or
ownership of any Subsidiary of Met-Coil, except as required by the
Merger Agreement or as required by applicable law;
- incur any indebtedness (other than pursuant to and not exceeding its
existing secured credit facilities in the ordinary course) for borrowed
money or guarantee any indebtedness of any other person or make any
loans, advances or capital contributions to, or investments in, any
other person;
- engage in the conduct of any business other than Met-Coil's existing
businesses;
- enter into any agreement or exercise any discretion providing for
acceleration of payment or performance as a result of a change of
control of Met-Coil or its Subsidiaries, except in connection with the
Merger;
- enter into any contracts, arrangements or understandings requiring in
the aggregate the purchase of equipment, materials, supplies or services
in excess of Met-Coil's budget plus $250,000 in the aggregate;
- enter into or amend, modify, terminate or waive any right under any
agreement with any affiliates of Met-Coil (other than its Subsidiaries);
- settle or compromise any litigation or tax controversy with respect to
Met-Coil or its Subsidiaries or waive, release or assign any rights or
claims with respect to any litigation or tax controversy involving
Met-Coil or its Subsidiaries;
- effect any change in any of its methods of accounting, except as may be
required by law or generally accepted accounting principles;
- take any action, including without limitation, the adoption of any
shareholder rights plan or amendments to Met-Coil's certificate of
incorporation, which would, directly or indirectly, restrict or impair
the ability of Formtek to vote, or otherwise to exercise the rights and
receive the benefits of a stockholder with respect to, securities of
Met-Coil that may be acquired or controlled by Formtek or FAI, or permit
any stockholder to acquire securities of Met-Coil on a basis not
available to Formtek in the event that Formtek were to acquire
securities of Met-Coil; or
- authorize, recommend or propose (other than to Formtek), or announce an
intention to do any of the foregoing, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
CERTAIN FILINGS AND OTHER ACTIONS
Met-Coil and Formtek have agreed, and have agreed to use their commercially
reasonable efforts to cause their respective Subsidiaries, as applicable, to (a)
promptly make all filings and seek to obtain all authorizations (including,
without limitation, all filings required under the HSR Act) required under all
applicable laws with respect to the Merger and the other transactions
contemplated by the Merger Agreement and to reasonably consult and cooperate
with each other with respect thereto; (b) not take any action which would impair
the ability of the parties to consummate the Merger; and (c) promptly take, or
cause to be taken, all other actions and do, or cause to be done, all other
things reasonably necessary, proper or appropriate to satisfy the closing
conditions set forth in the Merger Agreement and to consummate and make
effective the transactions contemplated by the Merger Agreement on the terms and
conditions set forth therein.
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ACCESS TO INFORMATION
Met-Coil has agreed that, subject to currently existing contractual and
legal restrictions applicable to Met-Coil, Met-Coil shall, and shall cause each
of its Subsidiaries to, afford to officers, employees, counsel, accountants and
other authorized representatives of Formtek reasonable access, during normal
business hours throughout the period prior to the Closing Date, to its
properties, books and records, and shall, and shall cause each of its
Subsidiaries to, furnish promptly to such persons all information concerning its
business, properties and personnel as may reasonably be requested. In addition,
Formtek's representatives may conduct, within the two-week period prior to the
Closing Date, an investigation of Met-Coil's financial and other records and
accounts. Formtek may also conduct, and Met-Coil will permit and cooperate with,
environmental audits of Met-Coil's Cedar Rapids and Lisle facilities. Met-Coil
shall, at its discretion, introduce the representatives of Formtek to Met-Coil's
principal suppliers, customers, dealers and employees to facilitate discussions
between such persons and Formtek in regard to Formtek's conduct of the business
following the Closing Date. The officers and management of Met-Coil agree to
cooperate with Formtek's representatives and to make themselves available to the
extent necessary to complete the investigation process and the closing of the
Merger.
INDEMNITY
The Merger Agreement provides that, from the Effective Time and for a
period of six years after the Effective Time, Formtek and FAI will jointly and
severally (a) indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of Met-Coil and its Subsidiaries and
of FAI (collectively, the "Indemnified Parties"), from and against, and pay or
reimburse the Indemnified Parties for, all losses, obligations, expenses,
claims, damages or liabilities resulting from third party claims (and involving
claims by or in the right of Met-Coil) and including interest, penalties,
out-of-pocket expenses and attorneys' fees incurred in the investigation or
defense of any of the same or in asserting any of their rights under the Merger
Agreement resulting from or arising out of actions or omissions of such
Indemnified Parties occurring on or prior to the Effective Time (including,
without limitation, the transactions contemplated by the Merger Agreement) to
the fullest extent permitted or required under applicable law, the certificate
of incorporation or Bylaws of Met-Coil or its applicable Subsidiary in effect on
the date of the Merger Agreement, including, without limitation, provisions
relating to advances of expenses incurred in the defense of any action or suit,
or any indemnification agreement between the Indemnified Party and Met-Coil or
its Subsidiaries; and (b) advance to any Indemnified Parties expenses incurred
in defending any action or suit with respect to such matters, in each case to
the extent such Indemnified Parties are entitled to indemnification or
advancement of expenses under Met-Coil's or its applicable Subsidiary's
certificate of incorporation and Bylaws in effect on the date hereof and subject
to the terms of such certificate of incorporation and Bylaws; provided, however,
that in the event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of each such claim shall
continue until final disposition of such claim.
With respect to any claim as to which indemnity may be sought, Formtek may,
at its expense, assume the defense of any claim or any litigation resulting
therefrom; provided, however, that counsel for Formtek who conducts the defense
of such claim or litigation must be reasonably satisfactory to the Indemnified
Party and the Indemnified Party may participate in such defense at such
Indemnified Party's expense. In the event that Formtek does not accept the
defense of any matter, or counsel for the Indemnified Parties advises the
Indemnified Parties in writing that there are issues that raise conflicts of
interest between Formtek and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and Formtek is required to pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided that Formtek will not be
liable for any settlement effected without its prior written consent; and
provided that Formtek will not be responsible for the fees and expenses of more
than one counsel for all of the Indemnified Parties. Formtek may not, in the
defense of any such claim or litigation, except with the consent of the
Indemnified Party, consent to entry of any judgment or enter into any settlement
that provides for injunctive or other nonmonetary relief affecting the
Indemnified Party or that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability with respect to such claim or litigation.
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EMPLOYEE BENEFITS
The Merger Agreement provides that, starting on the day after the Closing
Date and ending on the earlier of (a) one year from the Closing Date and (b) May
31, 2001, Formtek will cause the Surviving Corporation to provide employee
benefit plans for eligible employees of Met-Coil that are not materially less
favorable in the aggregate than the employee benefit plans provided to them by
Met-Coil. With respect to any employee benefit plans established by Formtek and
made available by Formtek to employees of Met-Coil or any of its Subsidiaries,
to the extent an employee of Met-Coil or any of its Subsidiaries becomes
eligible to participate in any such plans, Formtek shall grant to such employee
from and after the Closing Date, credit for all service with Met-Coil and its
Subsidiaries (and any other service credited by Met-Coil under similar benefit
plans) prior to the Closing Date for eligibility to participate and vesting
purposes but only to the extent such prior service credit is permitted by the
terms of the applicable plan of Formtek and applicable law. To the extent
Formtek's benefit plans provide medical or dental welfare benefits and an
employee of Met-Coil or any of its Subsidiaries becomes eligible to participate
in any such plans, such plans will waive any preexisting conditions and actively
at-work exclusions with respect to employees of Met-Coil and any of its
Subsidiaries (but only to the extent such employees were provided coverage under
such plans) and shall provide that any expenses incurred on or before the
Closing Date in the applicable plan year by or on behalf of such employees shall
be taken into account under such Formtek's benefit plans for the purposes of
satisfying applicable deductible, co-insurance and maximum out-of- pocket
provisions for such employees. Pursuant to the Merger Agreement, Katie Michael,
Human Resource Director of Met-Coil, shall be appointed agent by Met-Coil for
and on behalf of employees of Met-Coil, to take all actions necessary or
appropriate for the accomplishment and enforcement of the provisions of the
Merger Agreement regarding Formtek's obligation to provide employee benefits as
stated therein, including, but not limited to, (x) giving and receiving notices
and communications, (y) negotiating and entering into agreements and
settlements, and (z) filing lawsuits to enforce such provisions and enforcing
and complying with any orders of courts.
CONDITIONS
Conditions to Obligation of Formtek and FAI to Effect the Merger. Under
the Merger Agreement, the obligation of Formtek and FAI to effect the Merger
will be subject to the fulfillment of the following conditions:
- the warranties and representations of Met-Coil contained in the Merger
Agreement shall have been true and correct as of the date of the Merger
Agreement, and shall be true and correct as of the Closing Date as if
then originally made (other than representations and warranties which
address matters only as of a certain date which shall be true and
correct as of that date ), except as affected by the transactions
contemplated by the Merger Agreement and except where such failure would
not have a Material Adverse Effect (as defined below);
- Met-Coil shall have complied with each of the covenants required of it
on or prior to the Closing Date, except where such failures would not
have a Material Adverse Effect;
- the Merger Agreement and the Merger shall have been approved and adopted
by the Board of Directors of Met-Coil and by the necessary vote of
holders of the capital stock of Met-Coil;
- Met-Coil shall have delivered to Formtek and FAI a certificate of its
President and Chief Financial Officer, dated the date of the Closing
Date, certifying, to the best of the knowledge and belief of such
persons, that each of the warranties and representations of Met-Coil
contained in the Merger Agreement are true and correct as of the Closing
Date (other than representations and warranties which address matters
only as of a certain date which shall be true and correct as of such
certain date) except as affected by the transactions contemplated by the
Merger Agreement and except where such failures would not have a
Material Adverse Effect, and that Met-Coil shall have complied with each
of the covenants required of it on or prior to the Closing Date, except
where such failures would not have a Material Adverse Effect;
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- Met-Coil shall have delivered to Formtek and FAI a legal opinion from
Shuttleworth & Ingersoll, P.L.C. counsel to Met-Coil;
- there shall have been no change resulting in a Material Adverse Effect
(or changes which in the aggregate result in a Material Adverse Effect)
since the date of the Merger Agreement;
- Met-Coil shall not be the subject of a petition for reorganization or
liquidation under the Federal bankruptcy laws, or under state or foreign
insolvency laws, nor shall an assignment for the benefit of creditors or
any similar protective proceeding or act or event of bankruptcy have
occurred;
- FAI shall have obtained an employment agreement with James Heitt
satisfactory to FAI;
- no action, suit or proceeding shall have been instituted before a court,
arbitration panel or governmental authority, and no regulatory
enforcement proceeding shall be pending before any governmental agency
or governmental authority with respect to the business or operations of
Met-Coil or its Subsidiaries or any products manufactured or services
rendered by Met-Coil or its Subsidiaries, except where such action,
suits or proceeding would not reasonably be expected to have a Material
Adverse Effect;
- no temporary restraining order, preliminary or permanent injunction or
other order issued by a court or other governmental authority shall be
in effect and have the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger;
- any waiting period (and any extension thereof) under the HSR Act
applicable to the Merger shall have expired or been terminated;
- holders of more than 25% of the outstanding shares of Met-Coil's common
stock shall not have perfected or otherwise provided written notice of
their intention to perfect their dissenters' rights; and
- there shall not have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the Nasdaq Stock Market's
National Market or Small Cap Market, the New York Stock Exchange or the
American Stock Exchange (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market index),
(ii) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States, or any state, or (iii) any
material limitation (whether or not mandatory) by any United States or
state governmental authority which would prohibit Formtek's bank or
other financial institution from lending funds to Formtek for the
purpose of consummating the Merger.
"Material Adverse Effect," in respect of any entity means a material
adverse effect on the business, properties, assets, liabilities, operations,
results of operations or conditions (financial or otherwise) of such entity and
its Subsidiaries taken as a whole, or which would prevent the consummation of
the transactions contemplated by the Merger Agreement on the terms and
conditions contained therein.
Conditions to Obligation of Met-Coil to Effect the Merger. Under the
Merger Agreement, the obligations of Met-Coil to effect the Merger will be
subject to the fulfillment of the following conditions:
- the warranties and representations of Formtek and FAI contained in the
Merger Agreement shall have been true and correct as of the date of the
Merger Agreement, and shall be true and correct as of the Closing Date
as if then originally made (other than representations and warranties
which address matters only as of a certain date which shall be true and
correct as of such certain date), except as affected by the transactions
contemplated by the Merger Agreement and except where such failure would
not have a Material Adverse Effect;
- Formtek and FAI shall have complied with each of the covenants required
of them on or prior to the Closing Date, except where such failures
would not have a Material Adverse Effect;
- Formtek and FAI shall have each delivered to Met-Coil a certificate of
the President and Chief Financial Officer of Formtek and FAI, dated the
date of the Closing Date, certifying, to the best of the knowledge and
belief of such persons, that each of the warranties and representations
of Formtek
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and FAI contained in the Merger Agreement are true and correct as of the
Closing Date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct as of
such certain date) except as affected by the transactions contemplated
hereby and except where such failures would not have a Material Adverse
Effect, and that Formtek and FAI shall have complied with each of the
covenants required of it on or prior to the Closing Date, except where
such failure would not have a Material Adverse Effect;
- Formtek and FAI shall have delivered to Met-Coil a legal opinion from
Baker & McKenzie, counsel to Formtek and FAI;
- no temporary restraining order, preliminary or permanent injunction or
other order issued by a court or other governmental authority of
competent jurisdiction shall be in effect and have the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger;
and
- any waiting period (and any extension thereof) under the HSR Act
applicable to the Merger shall have expired or been terminated.
TERMINATION
Termination by Mutual Consent. The Merger Agreement may be terminated and
the Merger may be abandoned at any time prior to the Closing Date, before or
after approval of the matters presented in connection with the Merger by the
stockholders of Met-Coil, by the mutual written consent of Met-Coil, Formtek and
FAI.
Termination by Either Met-Coil or Formtek. The Merger Agreement may be
terminated and the Merger may be abandoned by either Met-Coil or Formtek if
- the Closing Date shall not have occurred by June 15, 2000 (the
"Termination Date"); provided that the right to terminate the Merger
Agreement will not be available to any party whose failure to fulfill
any obligation under the Merger Agreement has been the cause of or
resulted in the failure of the Closing Date to occur on or before the
Termination Date; provided, further, that the Termination Date shall be
June 29, 2000 if (i) any waiting period (and any extension thereof)
under the HSR Act applicable to the Merger shall not have expired or
been terminated by June 15, 2000, or (ii) the SEC shall have refused to
allow Met-Coil to file a definitive proxy statement with respect to the
Merger by June 1, 2000; or
- any court of competent jurisdiction or governmental authority shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the payment of the
Merger Consideration for the shares of common stock or the making of any
Cash Payment pursuant to the Merger and such order, decree, ruling or
other action shall have become final and nonappealable.
Termination by Met-Coil. The Merger Agreement may be terminated and the
Merger may be abandoned by Met-Coil if:
- Formtek or FAI breaches or fails to perform or comply with its covenants
and agreements contained in the Merger Agreement or breaches its
representations and warranties in any material respect and such breach
cannot or has not been cured within 15 days after the giving of written
notice of such breach to Formtek and FAI, other than any breach which is
not reasonably likely to result in a Material Adverse Effect; or
- the Board of Directors of Met-Coil, after complying with all of the
provisions of the Merger Agreement, accepts and enters into a definitive
agreement with respect to a Superior Proposal.
Termination by Formtek and FAI. The Merger Agreement may be terminated and
the Merger may be abandoned by Formtek or FAI if:
- Met-Coil breaches any representation, warranty, covenant or agreement
contained in the Merger Agreement which cannot or has not been cured
prior to 15 days after the giving of written notice of
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such breach to Met-Coil, and has not been waived by Formtek or FAI
pursuant to the provisions of the Merger Agreement, other than any breach
which is not reasonably likely to result in a Material Adverse Effect; or
- the Board of Directors of Met-Coil shall have withdrawn or modified its
approval or recommendation of the Merger Agreement or the Merger; or
- any parties (other than Formtek or FAI) to any Stockholder Agreements
whose signatories own of record or beneficially more than 10% of the
common stock of Met-Coil issued and outstanding on the date of the
Merger Agreement shall have materially breached or repudiated any such
agreement.
Effect of Termination and Abandonment. In the event of termination of the
Merger Agreement and abandonment of the Merger by Met-Coil, Formtek or FAI,
pursuant to the terms of the Merger Agreement, no party to the Merger Agreement
(or any of its directors or officers) shall have any liability or further
obligation to any other party to the Merger Agreement, except with respect to
the obligations of the parties to pay expenses as provided in the Merger
Agreement, except that nothing in the Merger Agreement will relieve any party
from liability for any breach of the Merger Agreement.
FEES AND EXPENSES
The Merger Agreement provides that if Met-Coil (a) receives an Acquisition
Proposal prior to termination of the Merger Agreement, and the Merger Agreement
terminates for any reason (other than a breach of the Merger Agreement by
Formtek or FAI), and within twelve months of termination either (1) an
Acquisition Proposal is consummated, or (2) Met-Coil enters into an Acquisition
Proposal that is consummated, or (b) terminates the Merger Agreement because it
has accepted and entered into a definitive agreement with respect to a Superior
Proposal, then, in either case, Met-Coil will pay to Formtek within two days of
consummation of the Acquisition Proposal or Superior Proposal, as the case may
be, a fee in the amount of $1,277,000.
In addition, the Merger Agreement provides that all expenses incurred in
connection with the Merger Agreement and the transactions contemplated by the
Merger Agreement will be paid by the party incurring such expenses except as
otherwise expressly provided in the Merger Agreement and except that the
expenses incurred in connection with printing, filing and mailing this Proxy
Statement will be shared equally by Met-Coil and FAI and all filing fees
incurred in connection with filings under the HSR Act will be the sole
responsibility of Formtek. In addition, in the event that the Merger Agreement
is terminated by Formtek or FAI because Met-Coil has breached any of its
representations or warranties contained therein and/or failed to fulfill or
perform any of its covenants or agreements contained therein or because any
parties (other than Formtek or FAI) to any Stockholder Agreements whose
signatories own of record or beneficially more than 10% of the common stock of
Met-Coil issued and outstanding on the date of the Merger Agreement shall have
materially breached or repudiated any such agreement, then Met-Coil shall
reimburse all reasonable out-of-pocket expenses incurred by Formtek in
connection with the Merger Agreement and the transactions contemplated thereby
up to an aggregate amount of $1,000,000. In the event that the Merger Agreement
is terminated by Met-Coil because Formtek or FAI has breached any of their
representations or warranties contained therein and/or failed to fulfill or
perform any of its covenants or agreements contained therein, then Formtek shall
reimburse all reasonable out-of-pocket expenses incurred by Met-Coil in
connection with the Merger Agreement and the transactions contemplated thereby
up to an aggregate amount of $1,000,000.
AMENDMENT
The Merger Agreement may be amended, changed, supplemented, waived or
otherwise modified only by an instrument in writing signed by the party against
whom enforcement is sought; provided that, after the adoption of the Merger
Agreement by the stockholders of Met-Coil, no such amendment, change, supplement
or waiver may be made without the further requisite approval of such
stockholders if such amendment, change, supplement or waiver by law requires the
further approval by such stockholders.
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GUARANTEE
Mestek has executed the Merger Agreement for the limited purpose of
guaranteeing the full and timely performance of all of the obligations and
agreements of Formtek and FAI in accordance with the terms of the Merger
Agreement.
THE STOCKHOLDER AGREEMENTS
The following discussion is a summary of the material terms of the
Stockholder Agreements. The summary and all other discussions of the terms and
conditions of the Stockholder Agreements included elsewhere in this Proxy
Statement are qualified in their entirety by reference to the form of
Stockholder Agreement, as amended, a copy of which is attached to this Proxy
Statement as Appendix D to this Proxy Statement and incorporated by reference
herein.
Each of the Major Stockholders, Formtek and FAI have entered into a
Stockholders Agreement in the form attached to this Proxy Statement as Appendix
D. The Major Stockholders include Raymond H. Blakeman, Roy J. Carver, Jr., James
D. Heitt, Thomas A Harenburg, Sam Kupresin, David R. Casazza, Harold D. Spriggs,
Steven J. Strulowitz, Michael J. Nonnenmann and Construction Technology, Inc.
Mr. Blakeman is a director and the Chairman of the Board of Met-Coil, Mr. Heitt
is a director and the President and Chief Operating Officer of Met-Coil and
Messrs. Carver and Nonnenmann are directors of Met-Coil.
Pursuant to the Stockholder Agreements, each of the Major Stockholders has
agreed to vote the shares of common stock owned by him in favor of the Merger
Agreement and the Merger. Each of the Major Stockholders has also granted to
Formtek (i) an irrevocable option to purchase shares owned by him at a purchase
price per share equal to $7.10 and (ii) an irrevocable option to purchase
existing options or warrants owned by him at a purchase price per share equal to
$7.10 per share less the exercise price of such options or warrants. The
Stockholder Agreements contain certain representations and warranties of the
Major Stockholders regarding issues such as the Major Stockholder's ownership of
shares and power to enter into the agreement, the absence of conflicts, finder's
fees and encumbrances on the shares, and an acknowledgment of the reliance by
Formtek on such representations and warranties. Each of the Major Stockholders
has also agreed not to take certain actions, including any actions that
constitute or reasonably may be expected to lead to an Acquisition Proposal, and
has released and discharged Met-Coil, Formtek and FAI from all actions, suits
and claims which the Major Stockholder has or may have against Met-Coil, Formtek
or FAI. The Stockholder Agreements also provide that, notwithstanding anything
therein to the contrary, none of the covenants or agreements of a Major
Stockholder therein shall prevent such Major Stockholder from taking action
while acting in his capacity as a director of Met-Coil. The Stockholder
Agreements terminate in accordance with their terms upon termination of the
Merger Agreement.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion summarizes certain United States Federal income
tax consequences of the Merger to stockholders of Met-Coil. It is based upon
laws, regulations (whether final, temporary, or proposed), rulings and judicial
decisions now in effect, all of which are subject to change, possibly with
retroactive effect. It does not address all aspects of Federal income taxation
that may be relevant to a particular stockholder in light of that stockholder's
personal circumstances, nor does it address Federal income tax consequences to
types of taxpayers subject to special treatment under the Federal income tax
laws (e.g., life insurance companies, tax exempt organizations, foreign
taxpayers, securities dealers, and persons who have entered into hedging
transactions with respect to the common stock or who hold the common stock as
part of a conversion transaction or straddle), nor does it address any aspect of
state, local, foreign or other tax laws. It is assumed that the shares of common
stock are held as capital assets by a United States person within the meaning of
the Internal Revenue Code of 1986, as amended (the "Code") (generally a citizen
or resident of the United States or a domestic corporation). Met-Coil has not
requested any ruling from the Internal Revenue Service with respect to the
Merger.
25
<PAGE> 38
The receipt of cash for common stock pursuant to the Merger will be a
taxable transaction to the stockholders for Federal income tax purposes under
the Code. In general, for Federal income tax purposes, a stockholder will
recognize gain (or loss) equal to the amount by which the cash received in
exchange for the common stock exceeds (or is exceeded by) the tax basis for such
common stock. Based on the assumption (stated above) that the shares of common
stock are held as capital assets by a United States person, such gain or loss
will be capital gain or loss. Any capital gain or loss will be (a) long-term
capital gain or loss if the stockholder held the common stock for more than 12
months or (b) short-term capital gain or loss if the stockholder held the common
stock for 12 months or less as of the date of the Merger. Long-term capital gain
of individuals is currently taxed at a maximum rate of 20%. Short-term capital
gain of individuals is taxed as ordinary income, which is currently taxed at a
maximum rate of 39.6%. Capital losses of individuals are generally deductible in
any year only to the extent of capital gains plus $3,000.
The foregoing discussion may not be applicable to stockholders who acquired
their common stock pursuant to the exercise of options or other compensation
arrangements or who are subject to special tax treatment under the Code.
For example, a stockholder who acquired common stock pursuant to the
exercise of qualified stock options received under Met-Coil's 1993 Employee
Stock Option Plan may recognize ordinary income rather than capital gain if the
Merger occurs less than two years after the option was granted to the
stockholder or less than one year after the stockholder exercised the option. In
such a situation, the stockholder would generally recognize compensation income
equal to the difference between the exercise price of the option and the fair
market value of the common stock at the time the option was exercised, and
capital gain equal to the difference between the amount of cash received for the
common stock pursuant the Merger and fair market value of the common stock at
the time the option was exercised. However, if the cash received by the
stockholder for such common stock pursuant to the Merger is less than the fair
market value of the common stock at the time the option was exercised, the
stockholder would recognize no capital gain and the amount of the compensation
income recognized by the stockholder would be equal to the difference between
the cash received for such common stock pursuant to the Merger and the exercise
price of the option.
The receipt of cash by the holder of an option will be a taxable
transaction to the holder for Federal income tax purposes. In general, the
holder of an option issued under Met-Coil's 1993 Employee Stock Option Plan
(whether a qualified or a nonqualified stock option) or under Met-Coil's 1997
Non-Employee Director Stock Option Plan will recognize compensation income equal
to the amount of the cash payment received upon cancellation of the option
pursuant to the Merger. In addition, the receipt of a cash payment by certain
option holders may constitute a "parachute payment" under Code Section 280G. If
such payment also constitutes an "excess parachute payment" under Code Section
280G, the option holder will be subject to an excise tax equal to 20% of the
amount of the excess parachute payment. Whether a cash payment will constitute
an excess parachute payment to an option holder depends upon the particular
circumstances of each option holder. Each option holder is therefore urged to
consult such option holder's tax adviser to determine if a cash payment will
constitute an excess parachute payment.
Cash payments to stockholders pursuant to the Merger may be subject to a
backup withholding tax at a rate of 31% on the gross amount of such payments
unless the stockholder has complied with certain reporting and/or certification
procedures. A letter of transmittal, which will be sent to the former
stockholders of Met-Coil following the Effective Time if the Merger is
consummated, will include a substitute Form W-9 on which stockholders can
provide the information required to avoid backup withholding. Any amount
withheld from a stockholder under the backup withholding rules will be allowed
as a credit against such stockholder's Federal income tax liability and may
entitle the stockholder to a refund, provided that the required information is
timely furnished to the Internal Revenue Service. Stockholders should consult
their tax advisors regarding the application of information reporting and backup
withholding in their particular circumstances.
THE FOREGOING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER IS INCLUDED FOR GENERAL INFORMATION ONLY. EACH STOCKHOLDER IS URGED
TO CONSULT SUCH STOCKHOLDER'S OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO SUCH STOCKHOLDER OF THE MERGER IN VIEW OF THE STOCKHOLDER'S OWN
PARTICULAR CIRCUMSTANCES.
26
<PAGE> 39
ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for as a "purchase", as that term is used
under generally accepted accounting principles, for accounting and financial
reporting purposes.
REGULATORY APPROVALS
Under the HSR Act and the rules that have been promulgated thereunder by
the Federal Trade Commission ("FTC"), certain acquisition transactions may not
be consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the FTC and
certain waiting period requirements have been satisfied. Consummation of the
Merger is subject to the HSR Act requirements.
Under the provisions of the HSR Act applicable to the Merger, unless early
termination of the waiting period is granted or Met-Coil receives a request for
additional information or documentary material prior thereto (which could extend
the waiting period), the Merger may not be consummated until the expiration of a
30-calendar day waiting period following the required filing by Met-Coil and
Mestek. Met-Coil and Mestek made their required filings on April 3, 2000. The
FTC granted early termination of the waiting period effective April 14, 2000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables furnish information as of March 30, 2000 as to: (i)
shares of Met-Coil common stock beneficially owned by any person owning
beneficially more than 5% of the outstanding shares; and (ii) shares of Met-Coil
common stock beneficially owned by each director of Met-Coil and shares of
Met-Coil common stock beneficially owned by all directors and officers of
Met-Coil, as a group. (Except as indicated hereinafter, all such shares are
beneficially owned directly by the person indicated in the table.)
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
- ------------------- ----------------------- ----------------
<S> <C> <C>
Construction Technology, Inc.............................. 239,452 5.29%
570 Taxter Road
Elmsford, New York 10523
Thomas A. Harenburg....................................... 255,300 5.64%
6360 East Decorah
Oshkosh, Wisconsin 54910
Met-Coil Retirement Trust................................. 254,771(2) 5.63%
5486 Sixth Street SW
Cedar Rapids, Iowa 52404
</TABLE>
- ---------------
(1) Nature of beneficial ownership is direct unless otherwise indicated by
footnote. Beneficial ownership as shown in the table arises from sole voting
and investment power unless otherwise indicated by footnote.
(2) Includes a total of 254,771 shares held by the Met-Coil Retirement 401(K)
Plan, which have been allocated to the accounts of participants. The
participants have voting power with respect to these shares.
27
<PAGE> 40
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
- ------------------- ----------------------- ----------------
<S> <C> <C>
Roy J. Carver, Jr......................................... 797,196(2) 16.9%
Dr. Michael J. Nonnenmann................................. 293,576(3) 6.2%
Raymond H. Blakeman....................................... 133,168(4) 2.8%
E. Keith Moore............................................ 43,165(5) *
Gary M. Neal.............................................. 26,391(6) *
James D. Heitt............................................ 105,052(7) 2.2%
Randall J. Stodola........................................ 31,666(8) *
John J. Toben............................................. 20,654(9) *
---------
All Directors & Executive Officers as a Group (8 1,450,868 31.5%
individuals)............................................
</TABLE>
- ---------------
(1) Nature of beneficial ownership is direct, and beneficial ownership arises
from sole voting and investment power, unless otherwise indicated by
footnote. The business address for all beneficial owners is 5486 Sixth
Street SW, Cedar Rapids, IA 52404.
(2) Includes 740 shares held in the name of minor children, with respect to
which Mr. Carver disclaims beneficial ownership. Includes 4,033 shares
subject to options exercisable by Mr. Carver within 60 days. Includes
120,000 shares held by the John A. Carver, Trust, with respect to which Mr.
Carver disclaims beneficial ownership.
(3) Includes 4,344 shares subject to options exercisable by Dr. Nonnenmann
within 60 days.
(4) Includes 10,866 shares allocated to his retirement accounts with respect to
which Mr. Blakeman has sole voting power.
(5) Includes 4,466 shares subject to options exercisable by Mr. Moore within 60
days.
(6) Includes 4,223 shares subject to options exercisable by Mr. Neal within 60
days.
(7) Includes 85,000 shares subject to options exercisable by Mr. Heitt within 60
days. Also includes 11,249 shares allocated to his retirement accounts with
respect to which he has sole voting power.
(8) Includes 20,750 shares subject to options exercisable by Mr. Stodola within
60 days. Also includes 6,507 shares allocated to his retirement accounts
with respect to which he has sole voting power.
(9) Includes 7,750 shares subject to options exercisable by Mr. Toben within 60
days. Also includes 6,125 shares allocated to his retirement accounts with
respect to which he has sole voting power.
* Ownership is less than 1% of the class.
28
<PAGE> 41
TRANSACTION OF OTHER BUSINESS
The Board of Directors knows of no other matters which may be presented at
the Meeting, but if other matters do properly come before the Meeting, it is
intended that the persons named in the Proxy will vote, pursuant to their
discretionary authority, according to their best judgment in the interest of
Met-Coil.
STOCKHOLDER PROPOSALS
In the event that the Merger is not consummated, Met-Coil anticipates that
its 2000 annual meeting of stockholders will be held in October, 2000. In such
event, any stockholder wishing to submit a proposal for presentation to
Met-Coil's annual meeting must have submitted the proposal to Met-Coil not later
than April 26, 2000 for inclusion, if appropriate, in Met-Coil's proxy statement
and form of proxy relating to Met-Coil's annual meeting. Pursuant to the SEC
rules regarding stockholder proposals, if Met-Coil has not received notice by
July 10, 2000, of any matter a stockholder intends to propose for a vote at
Met-Coil's annual meeting, then a proxy solicited by Met-Coil's Board of
Directors may be voted on such matter in the discretion of the proxy holders,
without discussion of the matter in the proxy statement soliciting such proxy
and without such matter appearing as a separate item on the proxy card.
29
<PAGE> 42
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
OF
FORMTEK ACQUISITION, INC.
(A CORPORATION OF THE STATE OF DELAWARE),
FORMTEK, INC.
(A CORPORATION OF THE STATE OF DELAWARE),
AND
MET-COIL SYSTEMS CORPORATION
(A CORPORATION OF THE STATE OF DELAWARE)
DATED MARCH 13, 2000
BAKER & MCKENZIE
815 CONNECTICUT AVENUE, N.W.
WASHINGTON, D.C. 20006
TELEPHONE: (202) 452-7000
FACSIMILE: (202) 452-7074
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<PAGE> 43
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
March 13, 2000, by and among Formtek Acquisition, Inc., a corporation organized
under the laws of the State of Delaware ("Merger Sub" or "Surviving
Corporation"); Formtek, Inc., a corporation organized under the laws of the
State of Delaware ("Parent"); and Met-Coil Systems Corporation, a corporation
organized under the laws of the State of Delaware (the "Company"). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned
thereto in Article XI.
WITNESSETH:
WHEREAS, Merger Sub is the wholly-owned Subsidiary of Parent;
WHEREAS, the Board of Directors of the Company, Parent and Merger Sub have
each approved the merger of the Company with and into Merger Sub (the "Merger"),
pursuant to the terms and conditions of this Agreement;
WHEREAS, the Board of Directors of the Company has (x) determined that the
terms of the Merger are advisable and in the best interests of the holders of
capital stock of the Company, (y) approved the Merger, and (z) recommended the
approval of the Merger and the approval and adoption of this Agreement by the
stockholders of the Company;
WHEREAS, the Board of Directors of Merger Sub has deemed it advisable to
merge with the Company and has recommended to its sole stockholder, Parent, that
it approve the Merger on the terms and conditions of this Agreement;
WHEREAS, Parent, as the sole stockholder of Merger Sub, has approved and
consented to the Merger of the Company with and into Merger Sub on the terms and
conditions of this Agreement;
WHEREAS, Parent and Merger Sub are unwilling to enter into this Agreement
unless certain holders of Shares, immediately following the execution and
delivery of this Agreement, enter into stockholder agreements (the "Stockholder
Agreements") among Parent, Merger Sub and each of certain holders of Shares
providing for, among other things, the agreement of such holders to vote all of
their Shares in favor of the Merger and granting to Parent and Merger Sub an
option to purchase such Shares;
WHEREAS, the Board of Directors of the Company has approved the
transactions contemplated by the terms of the Stockholder Agreements to the
extent such transactions result in Parent or Merger Sub being interested
stockholders for purposes of Section 203 of the DGCL; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger;
NOW, THEREFORE, it is agreed as follows by all of the parties,
acknowledging the receipt and sufficiency of the consideration exchanged herein
and intending to be legally bound hereby:
ARTICLE I
THE MERGER
1.1 Surviving Corporation. At the Effective Time, the Company shall merge
with and into Merger Sub, with Merger Sub as the surviving corporation, pursuant
to the terms and conditions contained herein. The Surviving Corporation shall
continue to be governed by the laws of the State of Delaware, but the separate
corporate existence of the Company shall cease forthwith upon the Effective
Time. Following the Merger, the existence of the Surviving Corporation shall
continue unaffected and unimpaired by the Merger, with all the rights,
privileges, immunities, and powers, and subject to all the duties and
liabilities, of a corporation organized under the laws of the State of Delaware.
1.2 Effective Time. The closing of the Merger (the "Closing") shall take
place (i) at the offices of Baker & McKenzie at 815 Connecticut Avenue, N.W.,
Washington, D.C., as soon as practicable, but in any event within three business
days after the day on which the last to be fulfilled or waived of the conditions
set
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<PAGE> 44
forth in Articles VII and VIII (other than those conditions that by their nature
are to be fulfilled at the Closing, but subject to the fulfillment or waiver of
such conditions) shall be fulfilled or waived in accordance with this Agreement
or (ii) at such other place and time or on such other date as the Company and
Parent may agree in writing. The date on which the Closing takes place shall be
referred to hereinafter as the "Closing Date," at which time the Company and
Merger Sub will file a certificate of merger with the Delaware Secretary of
State and make all other filings and recordings required by Delaware law in
connection with the Merger. The Merger shall become effective at such time (the
"Effective Time") as the certificate of merger is duly filed with the Delaware
Secretary of State or at such later time as is specified in the certificate of
merger.
1.3 Name. The name of Surviving Corporation shall be changed as of the
Effective Time to Met-Coil Systems Corporation.
1.4 Certificate of Incorporation. The Certificate of Incorporation of the
Surviving Corporation as in effect immediately prior to the Effective Time,
shall continue in full force and effect and, except as provided in Section 1.3
above, shall not be changed in any manner by the Merger and shall be the
Certificate of Incorporation of the Surviving Corporation following the
Effective Time unless and until the same be amended or repealed in accordance
with the provisions thereof, which power to amend or repeal is hereby expressly
reserved, and all rights or powers of whatsoever nature conferred in such
Certificate of Incorporation or herein upon any shareholder or director or
officer of the Surviving Corporation or upon any other persons whomsoever are
subject to the reserve power. Such Certificate of Incorporation shall constitute
the Certificate of Incorporation of the Surviving Corporation separate and apart
from this Agreement and may be separately certified as the Certificate of
Incorporation of the Surviving Corporation.
1.5 Bylaws. The Bylaws of the Surviving Corporation as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation following the Effective Time unless and until the same shall be
amended or repealed in accordance with the provisions thereof.
1.6 Directors and Officers. The members of the Board of Directors of the
Surviving Corporation immediately after the Effective Time shall be John E.
Reed, R. Bruce Dewey, Donald Hill, James Heitt and Raymond Blakeman. The
officers of the Surviving Corporation immediately after the Effective Time of
the Merger shall include John E. Reed as Chairman, James Heitt as President,
Stephen M. Shea as Senior Vice President Finance and Treasurer, and Timothy
Scanlan as Secretary. All such directors and officers shall serve in such
offices until their respective successors are elected and qualified, subject to
the provisions of the Bylaws and of the DGCL.
1.7 Additional Acts. If at any time the Surviving Corporation shall
consider or be advised that any acknowledgments or assurances in law or other
similar actions are necessary or desirable in order to acknowledge or confirm in
and to the Surviving Corporation any right, title, or interest of the Company
held immediately prior to the Effective Time, the Company and its proper
officers, directors and representatives shall and will, without further
consideration, on behalf of the Company, execute and deliver all such
acknowledgments or assurances in law and do all things necessary or proper to
acknowledge or confirm such right, title, or interest in the Surviving
Corporation as shall be necessary to carry out the purposes of this Agreement,
and the Surviving Corporation and the proper officers and directors thereof are
fully authorized to take any and all such action in the name of the Company or
otherwise.
1.8 Transfer of Property and Liabilities. At and after the Effective Time:
The Surviving Corporation shall succeed to and possess, without further act
or deed, all of the estate, rights, privileges, powers, and franchises, both
public and private, all of the property, real, personal, and mixed, of the
Company and Surviving Corporation; all debts due to the Company shall be vested
in the Surviving Corporation; all claims, demands, property, rights, privileges,
powers and franchises and every other interest of either of the parties to the
Merger shall be as effectively the property of the Surviving Corporation as they
were of the respective parties to the Merger; the title to any real estate
vested by deed or otherwise in the Company shall not revert or be in any way
impaired by reason of the Merger, but shall be vested in the Surviving
Corporation; all rights of creditors and all liens upon any property of either
of the parties to the
A-3
<PAGE> 45
Merger shall be preserved unimpaired, limited in lien to the property affected
by such lien at the Effective Time of the Merger; and all debts, liabilities,
and duties of the respective parties to the Merger shall thenceforth attach to
the Surviving Corporation and may be enforced against it to the same extent as
if such debts, liabilities, and duties had been incurred or contracted by it.
ARTICLE II
CONVERSION OF SHARES OF CAPITAL STOCK
2.1 Merger Consideration. Subject to the provisions of this Article, at the
Effective Time, by virtue of the Merger and without any action on the part of
Parent, Merger Sub or the Company or the shareholders thereof, each share of
capital stock of Merger Sub and the Company issued and outstanding immediately
prior to the Effective Time shall be converted or cancelled as follows:
(a) Each share of Merger Sub that is issued and outstanding immediately
prior to the Effective Time shall become one fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving Corporation.
(b) Each Share that is issued and outstanding immediately prior to the
Effective Time (other than (i) any Shares which are held by any Subsidiary or in
the treasury of the Company, or which are held, directly or indirectly, by
Parent or any direct or indirect Subsidiary of Parent (including Merger Sub),
all of which shall be cancelled and none of which shall receive any payment with
respect thereto and (ii) Shares held by Dissenting Stockholders) shall be
cancelled and converted into and represent the right to receive an amount in
cash, without interest, equal to Seven Dollars and Ten Cents ($7.10) per Share
(the "Merger Consideration").
2.2 Stock Options and Warrants.
(a) Each Option and Warrant which is outstanding at the Effective Time
shall be canceled by virtue of the Merger and without any action on the part of
Parent, Merger Sub or the Company or the shareholders thereof, without
consideration except as provided in this Section 2.2(a), and shall cease to
exist. Each holder of an Option or Warrant, whether or not such Option or
Warrant is then exercisable, shall be entitled to receive, subject to applicable
withholding requirements, a cash payment (the "Cash Payment"), without interest,
at the Effective Time, equal to the product of (i) the total number of Shares as
to which such Option or Warrant could have been exercisable or convertible ("the
Option Shares") and (ii) the excess of the Merger Consideration over the
exercise price per Share subject to such Option or Warrant. Each such Cash
Payment shall be paid to each holder of an outstanding Option or Warrant
promptly after the Effective Time.
(b) The Company will ensure that any then-outstanding stock appreciation
rights or limited stock appreciation rights shall be cancelled as of immediately
prior to the Effective Time without any payment therefor. The Company will
ensure that the Met-Coil Systems Corporation 1997 Non-Employee Directors Stock
Option Plan, the Met-Coil Systems Corporation 1999 Non-Employee Directors Stock
Purchase Plan, the Met-Coil Systems Corporation 1993 Employees Stock Option Plan
and any other plan, program or arrangement (other than the Met-Coil Systems
Corporation Retirement Plan and the Met-Coil Systems Employee Stock Ownership
Plan) providing for the issuance or grant of any other interest in respect of
the capital stock of the Company or any of its subsidiaries (collectively
referred to as the "Stock Incentive Plans") shall terminate as of the Effective
Time.
2.3 Exchange of Certificates. The manner of making payment for Shares in
the Merger shall be as follows:
(a)(i) Prior to the Effective Time, Parent shall designate a bank or trust
company located in the United States reasonably satisfactory to the Company to
act as Paying Agent (the "Paying Agent") for the holders of Shares in connection
with the Merger and to receive the funds which holders of Shares will be
entitled to receive pursuant to Sections 2.1 and 2.2. Promptly after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Company Certificates") (other than those
which are held by any Subsidiary of the
A-4
<PAGE> 46
Company or in the treasury of the Company or which are held directly or
indirectly by Parent or any direct or indirect Subsidiary of Parent (including
Merger Sub)) (1) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon proper delivery of the Company Certificates
to the Paying Agent) and (2) instructions for use in effecting the surrender of
the Company Certificates for payment therefor. Upon surrender of Company
Certificates for cancellation to the Paying Agent, together with such letter of
transmittal duly executed and any other required documents, the holder of such
Company Certificates shall be entitled to receive the Merger Consideration
deliverable in respect thereof and the Company Certificates shall forthwith be
cancelled. Until so surrendered, Company Certificates shall represent solely the
right to receive the Merger Consideration payable in respect of the Shares
represented thereby.
(ii) If the Merger Consideration is to be paid to or issued in a name other
than that in which the Company Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Company
Certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the Person requesting such exchange shall pay to the
Paying Agent any transfer or other taxes required by reason of the foregoing or
shall establish to the reasonable satisfaction of the Paying Agent that such tax
has been paid or is not applicable.
(b) In the event that any Company Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Company Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Company Certificate, the Paying
Agent will deliver to the Person delivering such affidavit the Merger
Consideration payable in respect of the Shares represented by such lost, stolen
or destroyed Company Certificates.
(c) Concurrently with or immediately prior to the Effective Time, Parent
shall, or shall cause Merger Sub to, deposit in trust with the Paying Agent cash
in United States dollars in an aggregate amount equal to (i) the product of (x)
the number of Shares outstanding immediately prior to the Effective Time (other
than Shares which are held by any Subsidiary of the Company or in the treasury
of the Company or which are held directly or indirectly by Parent or any direct
or indirect Subsidiary of Parent (including Merger Sub) or a Person known at the
time of such deposit to be a Dissenting Stockholder) and (y) the Merger
Consideration and (ii) the product of (x) the Option Shares and (y) the excess
of the Merger Consideration over the exercise price per Share in respect of such
Options or Warrants (such aggregate amount being hereinafter referred to as the
"Payment Fund"). The Payment Fund shall be invested by the Paying Agent as
directed by Parent in direct obligations of the United States, obligations for
which the full faith and credit of the United States is pledged to provide for
the payment of principal and interest, commercial paper rated of the highest
quality by Moody's Investors Services, Inc. or Standard & Poor's Ratings Group
or certificates of deposit, bank repurchase agreements or bankers' acceptances
of a commercial bank having at least $100,000,000 in assets (collectively
"Permitted Investments") or in money market funds which are invested in
Permitted Investments, and any net earnings with respect thereto shall be paid
to Parent as and when requested by Parent. The Paying Agent shall, pursuant to
irrevocable instructions, make the payments referred to in Sections 2.1 and 2.2
hereof out of the Payment Fund. The Payment Fund shall not be used for any other
purpose except as otherwise agreed to by Parent. Promptly following the date
which is six months after the Effective Time, the Paying Agent shall return to
the Surviving Corporation all cash, certificates and other instruments in its
possession that constitute any portion of the Payment Fund (other than net
earnings on the Payment Fund which shall be paid to Parent), and the Paying
Agent's duties shall terminate. Thereafter, each holder of a Company Certificate
may surrender such Company Certificate to the Surviving Corporation and (subject
to applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Merger Consideration, without interest, but shall have no greater
rights against the Surviving Corporation or Parent than may be accorded to
general creditors of the Surviving Corporation or Parent under applicable law.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to a holder of Shares for any Merger Consideration delivered to
a public official pursuant to applicable abandoned property, escheat and similar
laws.
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<PAGE> 47
2.4 Transfer of Shares Immediately Prior to and 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. No transfer of Shares shall be made on the stock transfer books
of the Surviving Corporation. Company Certificates presented to the Surviving
Corporation after the Effective Time shall be canceled and exchanged for cash as
provided in this Article. At and after the Effective Time, each holder of a
Company Certificate shall cease to have any rights as a stockholder of the
Company, except for, in the case of a holder of a Company Certificate (other
than Shares to be canceled pursuant to Section 2.1 hereof, and other than Shares
held by Dissenting Stockholders), the right to surrender his or her Company
Certificate in exchange for payment of the Merger Consideration or, in the case
of a Dissenting Stockholder, the right to perfect his or her right to receive
payment for his or her Shares pursuant to Delaware law if such holder has
validly perfected and not withdrawn his or her right to receive payment for his
or her Shares.
2.5 Dissenting Shares. Notwithstanding anything contained in this Agreement
to the contrary but only to the extent required by the DGCL, Shares that are
issued and outstanding immediately prior to the Effective Time and are held by
holders of Shares who comply with all the provisions of the law of the State of
Delaware concerning the right of holders of Shares to dissent from the Merger
and require appraisal of their Shares (such holders being referred to
hereinafter as "Dissenting Stockholders", and such Shares being referred to
hereinafter as "Dissenting Shares") shall not be converted into the right to
receive the Merger Consideration but shall become the right to receive such
consideration as may be determined to be due such Dissenting Stockholder
pursuant to the law of the State of Delaware; provided, however, that (i) if any
Dissenting Stockholder shall subsequently deliver a written withdrawal of his or
her demand for appraisal (with the written approval of the Surviving
Corporation, if such withdrawal is not tendered within 60 days after the
Effective Time), or (ii) if any Dissenting Stockholder fails to establish and
perfect his or her entitlement to appraisal rights as provided by applicable
law, or (iii) if within 120 days of the Effective Time neither any Dissenting
Stockholder nor the Surviving Corporation has filed a petition demanding a
determination of the value of all Shares outstanding at the Effective Time and
held by Dissenting Stockholders in accordance with applicable law, then such
Dissenting Stockholder or Dissenting Stockholders, as the case may be, shall
forfeit the right to appraisal of such Shares and such Shares shall thereupon be
deemed to have been converted into the right to receive, as of the Effective
Time, the applicable Merger Consideration, without interest, as provided in
Section 2.3, and such Shares shall no longer be Dissenting Shares. The Company
shall give Parent and Merger Sub (x) prompt notice of any written demands for
appraisal, withdrawals of demands for appraisal and any other related
instruments received by the Company, and (y) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal. The Company
shall not voluntarily make any payment with respect to any demands for appraisal
and shall not, except with the prior written consent of Parent, settle or offer
to settle any such demand.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
All representations and warranties contained herein shall terminate at the
Effective Time. The Company represents and warrants to Parent and the Merger Sub
the following as of the date hereof.
3.1 Corporate Standing.
(a) The Company is organized, validly existing, and in good standing under
the laws of its jurisdiction of incorporation. The Company has full corporate
authority to own, lease and operate its properties and businesses. Schedule 3.1
to the Company Disclosure Statement sets forth a list of the jurisdictions in
which the Company is qualified to conduct business as a foreign corporation. The
Company is in good standing as a foreign corporation under the laws of the
states listed in Schedule 3.1.
(b) The Company has made available to Parent and Merger Sub complete and
correct copies of the Company Charter and Bylaws and the certificates of
incorporation, bylaws and other similar organizational documents of each of its
Subsidiaries, in each case as amended to the date of this Agreement.
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3.2 Subsidiaries. Schedule 3.2 to the Company Disclosure Statement contains
a complete and accurate list of all of the Subsidiaries of the Company as of the
date hereof. Each Subsidiary of the Company is a corporation or other legal
entity duly organized, validly existing and (if applicable) in good standing
under the laws of the jurisdiction of its organization and has all requisite
corporate, partnership or similar power and authority to own its properties and
conduct its business and operations as currently conducted. Schedule 3.2 to the
Company Disclosure Statement sets forth a list of the jurisdictions in which
each Subsidiary of the Company is qualified to conduct business as a foreign
corporation. Each Subsidiary is in good standing under the laws of the states
listed under their names in Schedule 3.2.
3.3 Authority.
(a) The Company has the full corporate power and authority to enter into,
execute, deliver and perform this Agreement and all Exhibits to which it is a
party. The execution, delivery and performance of this Agreement and such
Exhibits, and the consummation of all transactions contemplated herein and
therein, have been duly authorized by all necessary corporate and other action
of the Company and no other corporate action on the part of the Company is
necessary to authorize the execution, delivery and performance of this Agreement
and such Exhibits by the Company and the consummation of the transactions
contemplated hereby except for the approval of the Company's stockholders
contemplated by Section 6.4. This Agreement has been duly executed and delivered
by a duly authorized officer of the Company and (assuming the due execution and
delivery of this Agreement by the other parties hereto) constitutes a valid and
binding agreement of the Company, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency and other similar laws affecting the
rights of creditors generally and except that the remedies of specific
performance, injunction and other forms of equitable relief may not be
available. The Exhibits to which the Company is a party, when duly executed and
delivered by the Company (assuming the due execution and delivery of such
Exhibits by the other parties hereto) constitute valid and binding agreements of
the Company enforceable against it in accordance with their terms, subject to
bankruptcy, insolvency and other similar laws affecting the rights of creditors
generally and except that the remedies of specific performance, injunction and
other forms of mandatory equitable relief may not be available.
(b) The Board of Directors of the Company has approved the transactions
contemplated by this Agreement and the Exhibits to which the Company is a party,
including the Merger and, solely for purposes of Section 203 of the DGCL, the
provisions contained in the Stockholder Agreements which could result in Parent
or Merger Sub becoming an interested stockholder under Section 203 of the DGCL.
(c) The Board of Directors of the Company has directed that this Agreement
be submitted to the stockholders of the Company for their approval. The
affirmative approval, by vote or written consent, of the holders of Shares
representing a majority of the outstanding Shares is the only vote of the
holders of any class or series of capital stock of the Company necessary to
approve and adopt this Agreement and approve the Merger.
(d) Except as set forth in Schedule 3.3(d) to the Company Disclosure
Statement, neither the execution and delivery of this Agreement nor the
execution and delivery of the certificates and documents set forth as Exhibits
hereto nor the consummation of the transactions contemplated hereby or thereby
will (i) conflict with or violate any provision of the Company Charter or Bylaws
of the Company or the certificates of incorporation, bylaws or other similar
organizational documents of any Subsidiary of the Company, (ii) conflict with or
violate any law, rule, regulation, ordinance, order, writ, injunction, judgment
or decree applicable to the Company or any Subsidiary of the Company or their
businesses or by which any of their assets is affected, except to the extent any
such conflict or violation would not, individually or in the aggregate, have a
Material Adverse Effect, or (iii) conflict with or result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination or
cancellation of, or accelerate the performance required by or maturity of, or
result in the creation of any security interest, lien, charge or encumbrance on
the assets of the Company or any Subsidiary of the Company pursuant to any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
permit, license, franchise, lease, contract, or other instrument or obligation
to which either the Company or any Subsidiary of the Company is a party or by
which any of the assets of the Company or any Subsidiary of
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the Company are affected, except to the extent any such conflict, breach,
default, right of termination or cancellation, acceleration or creation of any
such security interest, lien, charge or encumbrance would not, individually or
in the aggregate, have a Material Adverse Effect.
(e) Except as set forth in Schedule 3.3(e) to the Company Disclosure
Statement, none of the Company or any Subsidiary of the Company are required to
submit any notice, declaration, report or other filing or registration with any
governmental or regulatory authority or instrumentality, and no approvals or
non-objections are required to be obtained or made by the Company or any
Subsidiary of the Company in connection with the execution, delivery or
performance by the Company or any Subsidiary of the Company of this Agreement or
any Exhibit or the consummation of the transactions contemplated hereby or
thereby, except for approvals that may be required under the DGCL, the HSR Act
and the Exchange Act.
3.4 Capitalization.
(a) Schedule 3.4(a) to the Company Disclosure Statement sets forth the
aggregate number of the authorized, issued and outstanding shares of capital
stock of the Company as of the date hereof. The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable. None of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company. Except as disclosed in Schedule
3.4(a) of the Company Disclosure Statement, (i) there are no shares of capital
stock of the Company authorized, issued or outstanding and (ii) there are not as
of the date hereof, and at the Closing Date there will not be, any outstanding
or authorized options, warrants, rights, subscriptions, claims of any character,
agreements, obligations, convertible or exchangeable securities, or other
commitments, contingent or otherwise, relating to Shares or any other shares of
capital stock of the Company, pursuant to which the Company is or may become
obligated to issue Shares or any other shares of its capital stock or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of the capital stock of the Company. The Company has
no authorized or outstanding bonds, debentures, notes or other indebtedness the
holders of which have the right to vote (or convertible or exchangeable into or
exercisable for securities having the right to vote) with the stockholders of
the Company or any of its Subsidiaries on any matter ("Voting Debt"). After the
Closing Date, the Surviving Corporation will have no obligation, as a result of
the Company's actions, to issue, transfer or sell any Shares or any shares of
capital stock of the Surviving Corporation.
(b) No class of capital stock of the Company is entitled to pre-emptive
rights.
(c) There are no Warrants or Options held in the treasury of the Company.
(d) Except as disclosed in Schedule 3.4(d) to the Company Disclosure
Statement, all of the issued and outstanding capital stock of each Subsidiary of
the Company has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through its wholly-owned
Subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity and none of the outstanding shares of capital stock
of such Subsidiaries was issued in violation of any preemptive or similar rights
arising by operation of law, or under the charter or bylaws (or other similar
organizational documents) of any Subsidiary of the Company or under any
agreement to which the Company or any of its Subsidiaries is a party. No shares
of capital stock of any of the Subsidiaries are reserved for issuance and there
are no outstanding or authorized options, warrants, rights, subscriptions,
claims of any character, agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to the
capital stock of any Subsidiary of the Company, pursuant to which such
Subsidiary is or may become obligated to issue any shares of capital stock of
such Subsidiary or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of such Subsidiary. Except as
disclosed in Schedule 3.4(d) to the Company Disclosure Statement and except as
required by applicable Law, there are no restrictions of any kind which prevent
the payment of dividends by any of the Subsidiaries of the Company. Except as
disclosed in Schedule 3.4(d) to the Company Disclosure Statement, the Company
does not own, directly or indirectly, any capital stock or other equity interest
in any Person or have any direct or indirect equity or ownership interest in any
Person and neither the Company nor any of its Subsidiaries is subject to
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any obligation or requirement to provide funds for or to make any investment (in
the form of a loan, capital contribution or otherwise) to or in any Person. The
Company's Subsidiaries have no Voting Debt.
3.5 Opinion of the Company's Financial Advisor. The Board of Directors of
the Company has received (i) the opinion, as of the date hereof, of Lincoln
Partners L.L.C. to the effect that the Merger Consideration is fair to the
stockholders of the Company from a financial point of view, subject to the
assumptions and qualifications contained in such opinion, and (ii) a commitment
from Lincoln Partners L.L.C. to deliver such opinion in written format to the
Board of Directors of the Company as promptly as reasonably practicable after
the date hereof.
3.6 Operation of the Company's Business. The Company and its Subsidiaries
own and retain all such assets, tangible or intangible, contractual, license and
leasehold rights necessary for the Surviving Corporation (i) to operate the
business of the Company and its Subsidiaries as they operate them on the date
hereof, and (ii) to utilize the assets and contractual, license and leasehold
rights in the same manner as they are used on the date hereof, except to the
extent such lack of ownership or failure to retain would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
With the exception of those assets used in the business of the Company and its
Subsidiaries pursuant to license and leasehold rights in favor of the Company
and its Subsidiaries, all of the assets used in the business of the Company and
its Subsidiaries are owned by the Company and its Subsidiaries, and none are
owned by any other party.
3.7 Litigation. Except as set forth in Schedule 3.7 to the Company
Disclosure Statement, there are no actions, proceedings, suits, inquiries or
investigations before or by any Governmental Authority or any arbitrator or any
other alternative dispute resolution forum, now pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries which
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, and none of the Company, any of its Subsidiaries or any
of their assets is subject to any judgment, order or decree entered in any
lawsuit, action or proceeding.
3.8 Employee Benefit Plans.
(a) Schedule 3.8(a) to the Company Disclosure Statement contains a complete
and accurate list of all Company Plans, Company Multiemployer Plans and Company
Other Benefit Obligations (other than those Company Other Benefit Obligations
that would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect).
(b) Schedule 3.8(b) to the Company Disclosure Statement sets forth the
financial cost of all obligations owed under any Company Plan or Company Other
Benefit Obligation (other than those Company Other Benefit Obligations that
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect) that is not subject to the disclosure and reporting
requirements of ERISA.
(c) Schedule 3.8(c) to the Company Disclosure Statement sets forth, for
each Company Multiemployer Plan, as of its last valuation date, the amount of
potential withdrawal liability of the Company and any ERISA Affiliates of the
Company, calculated according to information made available pursuant to ERISA
Section 4221(e).
(d) the Company has delivered to Parent and the Merger Sub:
(i) all documents that set forth the terms of each Company Plan,
Company Multiemployer Plan or Company Other Benefit Obligation (other than
those Company Other Benefit Obligations that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect), and of any related trust, including all summary plan descriptions,
summaries and descriptions furnished to participants and beneficiaries;
(ii) all personnel, payroll, and employment manuals and policies;
(iii) a written description of any Company Plan or Company Other
Benefit Obligation (other than those Company Other Benefit Obligations that
would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect) that is not otherwise in writing;
(iv) all registration statements filed with respect to any Company
Plan;
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(v) all insurance policies purchased by or to provide benefits under
any Company Plan;
(vi) all reports submitted to the Company or any Subsidiary within the
three years preceding the date of this Agreement by third party
administrators, actuaries, investment managers, trustees, consultants, or
other independent contractors with respect to any Company Plan or Company
Other Benefit Obligation (other than those Company Other Benefit
Obligations that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect);
(vii) the Form 5500 filed in each of the most recent three plan years
with respect to each Company Plan and Company Other Benefit Obligation,
including all schedules thereto and the opinions of independent
accountants;
(viii) all notices that were given by the Company or any ERISA
Affiliate of the Company or any Company Plan to the IRS, the PBGC, or any
participant or beneficiary, pursuant to ERISA or the Code, within the three
years preceding the date of this Agreement, including notices that are
expressly mentioned elsewhere in this Section 3.8;
(ix) all notices that were given by the IRS, the PBGC, or the
Department of Labor to the Company, any ERISA Affiliate of the Company, or
any Company Plan within the three years preceding the date of this
Agreement;
(x) with respect to Qualified Plans, the most recent determination
letter for each Plan of the Company that is a Qualified Plan;
(xi) with respect to Title IV Plans, the Form PBGC-1 filed for each of
the three most recent plan years for each Plan of the Company that is a
Title IV Plan; and
(xii) with respect to Company Multiemployer Plans, the most recent
estimate of potential withdrawal liability prepared by each Company
Multiemployer Plan for the Company and each ERISA Affiliate of the Company.
(e) Except as set forth in Schedule 3.8(e) to the Company Disclosure
Statement:
(i) The Company and its Subsidiaries have performed all of their
respective obligations under all Company Plans, Company Multiemployer Plans
and Company Other Benefit Obligations other than any such obligations that
would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect. The Company and its Subsidiaries have made
appropriate entries in their financial records and statements for all
obligations and liabilities under such Plans, Company Multiemployer Plans
and Company Other Benefit Obligations that have accrued but are not due
other than any such obligations and liabilities that would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
(ii) The Company and its Subsidiaries, with respect to all Company
Plans and Company Other Benefit Obligations, are, and each Company Plan and
Company Other Benefit Obligation is, in compliance with ERISA, the Code,
and other applicable Laws including the provisions of such Laws expressly
mentioned in this Section 3.8, and with any applicable collective
bargaining agreement other than any noncompliance that would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect. Except to the extent that any of the following would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect:
(A) No transaction prohibited by ERISA Section 406 and no
"prohibited transaction" under Code Section 4975(c) has occurred with
respect to any Company Plan.
(B) Neither the Company nor any of its Subsidiaries has any
liability to the IRS with respect to any Plan, including any liability
imposed by Chapter 43 of the Code.
(C) Neither the Company nor any of its Subsidiaries has any
liability to the PBGC with respect to any Plan or has any liability
under ERISA Section 502 or Section 4071.
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(D) All contributions and payments made or accrued with respect to
all Company Plans, Company Multiemployer Plans and Company Other Benefit
Obligations are deductible under Code Section 162 or Section 404.
(iii) No event has occurred or, to Company's knowledge, circumstance
exists that could result in an increase in premium costs of Company Plans
and Company Other Benefit Obligations that are insured or an increase in
benefit costs of such Plans and Company Other Benefit Obligations that are
self-insured other than any such increases that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
(iv) Other than routine claims for benefits submitted by participants
or beneficiaries, no claim against, or legal proceeding or investigation
involving, any Company Plan or Company Other Benefit Obligation is pending
or is threatened.
(v) Each Qualified Plan of the Company and each of its Subsidiaries
has received a favorable determination letter from the Internal Revenue
Service that it is qualified under Code Section 401(a) and that its related
trust is exempt from federal income tax under Code Section 501(a), and each
such Plan complies in form and in operation with the requirements of the
Code and meets the requirements of a "qualified plan" under Section 401(a)
of the Code except to the extent that any noncompliance or failure to meet
such requirements would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. No event has occurred or
circumstance exists that will or could give rise to disqualification or
loss of tax-exempt status of any such Plan or trust other than any such
events or circumstances that would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect.
(vi) The Company and each ERISA Affiliate of the Company has met the
minimum funding standard, and has made all contributions required under
each Company Plan and Company Multiemployer Plan, under ERISA Section 302
and Code Section 412, and there is no unfunded liability under any Company
Plan.
(vii) The Company and each of its Subsidiaries has paid all amounts
due to the PBGC pursuant to ERISA Section 4007.
(viii) Neither the Company nor any ERISA Affiliate of the Company has
ceased operations at any facility or has withdrawn from any Title IV Plan
in a manner that would subject the Company to liability under ERISA
Sections 4062(e), 4063, or 4064.
(ix) Neither the Company nor any ERISA Affiliate of the Company has
filed a notice of intent to terminate any Plan or has adopted any amendment
to treat a Plan as terminated. The PBGC has not instituted proceedings to
treat any Company Plan as terminated. No event has occurred or circumstance
exists that may constitute grounds under ERISA Section 4042 for the
termination of, or the appointment of a trustee to administer, any Company
Plan other than any such events or circumstances that would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
(x) No amendment has been made, or is reasonably expected to be made,
to any Company Plan that has required or could require the provision of
security under ERISA Section 307 or Code Section 401(a)(29).
(xi) No accumulated funding deficiency, whether or not waived, exists
with respect to any Company Plan; no event has occurred or circumstance
exists that may result in an accumulated funding deficiency as of the last
day of the current plan year of any such Plan other than any such events or
circumstances that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(xii) The actuarial report for each Company Plan that is a Pension
Plan fairly presents the financial condition and the results of operations
of each such Plan in accordance with GAAP.
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(xiii) The actuarially determined present value of all accrued
benefits under each Title IV Plan of the Company (determined on a projected
benefits basis) does not exceed, as of the Closing Date, the fair market
value of the assets of each such Title IV Plan.
(xiv) No reportable event (as defined in ERISA Section 4043 and in
regulations issued thereunder) has occurred.
(xv) Neither the Company nor any of its Subsidiaries has ever
established or contributed to, or had an obligation to contribute to, any
VEBA, any organization or trust described in Code Section 501(c)(17) or
Code Section 501(c)(20), or any welfare benefit fund as defined in Code
Section 419(e).
(xvi) Neither the Company nor any ERISA Affiliate of the Company has
withdrawn from any Multiemployer Plan with respect to which there is any
outstanding liability as of the date of this Agreement. No event has
occurred or circumstance exists that presents a risk of the occurrence of
any withdrawal from, or the participation, termination, reorganization, or
insolvency of, any Multiemployer Plan that could result in any liability of
either the Company or Parent to a Multiemployer Plan other than any such
events that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(xvii) Except to the extent required under ERISA Section 601 et seq.
and Code Section 4980B, neither the Company nor any of its ERISA Affiliates
provides health or welfare benefits for any retired or former employee or
is obligated to provide health or welfare benefits to any active employee
following such employee's retirement or other termination of service.
(xviii) The Company and each of its Subsidiaries have the right to
modify and terminate benefits to retirees (other than pensions) with
respect to both retired and active employees.
(xix) The Company and each of its Subsidiaries have complied with the
provisions of ERISA Section 601 et seq. and Code Section 4980B and with the
provisions of ERISA Section 701 et seq. and Subtitle K of the Code.
(xx) No payment that is owed or may become due to any director,
officer, employee, or agent of the Company will be non-deductible to the
Company or any of its Subsidiaries under Code Section 280G or subject to
tax under Code Section 4999; nor will the Company or any of its
Subsidiaries be required to "gross up" or otherwise compensate any such
person because of the imposition of any excise tax on a payment to such
person.
(xxi) Each Company Plan that is or is purported to be an "employee
stock ownership plan", as such term is defined in Code Section 4975(e)(7)
(the "ESOP"), complies with all of the requirements set forth in Code
Section 4975(e)(7), Treas. Reg. Section 54.4975-11 and ERISA Section
407(d)(6) except to the extent that any noncompliance would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect. To the extent that there is or has been a loan or other extension
of credit made to the ESOP, that loan or other extension of credit meets or
has met the requirements of Treas. Reg. Section 54.4975-7 and ERISA Reg.
Section 2550.408b-3 except to the extent that any failure to meet such
requirements would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. The execution, delivery and
performance of this Agreement by the parties hereto and the consummation of
the transactions contemplated hereby will not: (A) constitute a violation
of, or give rise to any liability under, Title I of ERISA or Code Section
4975; (B) result in a disqualification of the ESOP under Code Section
401(a); (C) cause the ESOP to fail to comply with all of the requirements
set forth in Code Section 4975(e)(7), Treas. Reg. Section 54.4975-11 and
ERISA Section 407(d)(6); or (D) result in the imposition of a tax under
Chapter 43 of the Code or Code Section 4978A (as in effect prior to the
Revenue Reconciliation Act of 1989).
(f) Since May 31, 1999, except as set forth on Schedule 3.8 (f) to the
Company Disclosure Statement attached hereto or as required by applicable law,
neither the Company nor an ERISA Affiliate has (i) instituted or agreed to
institute any new employee benefit plan or practice for any employee, (ii) made
or agreed to make any change in any Company Plan, (iii) made or agreed to make
any increase in the
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compensation payable or to become payable by the Company or an ERISA Affiliate
to any employee, other than regularly scheduled increases, or (iv) except
pursuant to this Agreement and except for contributions required to provide
benefits pursuant to the provisions of the Company Plans, paid or accrued or
agreed to pay or accrue any bonus, percentage of compensation, or other like
benefit to, or for the credit of, any employee.
(g) Any contribution, insurance premium, excise tax, interest charge or
other liability or charge imposed or required with respect to any Company Plan
which is attributable to any period or any portion of any period prior to the
Closing shall, to the extent required by GAAP, be reflected as a liability on
the Company's balance sheet at Closing, including, without limitation, any
portion of the matching contribution required with respect to each Company Plan
for its respective plan year ending after the Closing which is attributable to
elective contributions made by employees in such plan prior to the Closing.
3.9 Taxes. Except as set forth on Schedule 3.9 to the Company Disclosure
Statement:
(a) The Company and its Subsidiaries have timely filed or caused to be
timely filed all federal income Tax Returns. The Company and its Subsidiaries
have timely filed all other United States federal, state county, local and
foreign Tax Returns required to be filed by or with respect to them, except to
the extent that a failure to file such Tax Returns would not, in the aggregate
with all other undisclosed items covered by this Section 3.9, have a Material
Adverse Effect. Such Tax Returns have accurately reflected the liability for
Taxes of the Company and its Subsidiaries for the periods covered thereby,
except to the extent that any inaccuracies would not, in the aggregate with all
other undisclosed items covered by this Section 3.9, have a Material Adverse
Effect. All Taxes shown to be payable on such Tax Returns or on subsequent
assessments with respect thereto have been paid in full on a timely basis other
than assessments which are being contested in good faith, except to the extent
that any failures to pay any such Taxes would not, in the aggregate with all
other undisclosed items covered by this Section 3.9, have a Material Adverse
Effect. The amount of the liability of the Company and its Subsidiaries for
unassessed and/or unpaid Taxes for all periods ending on or before the Closing
Date, would not exceed the amount of the current liability accrual for Taxes
(including reserves for deferred Taxes) reflected on the Company's November 30,
1999 balance sheet, by an amount that would, when aggregated with all other
undisclosed items covered by this Section 3.9, have a Material Adverse Effect.
(b) There are no Tax assessments or adjustments that have been asserted
against the Company or its Subsidiaries for any period that would, in the
aggregate with all other undisclosed items covered by this Section 3.9, have a
Material Adverse Effect.
(c) There are no audits, examinations, actions, suits, proceedings,
investigations, claims or assessments pending or threatened, in writing or
otherwise to the knowledge of the Company, against the Company or any of its
Subsidiaries for any alleged deficiency in any Tax (a "Tax Controversy") and the
Company has not been notified in writing of any proposed Tax Controversy against
the Company or any of its Subsidiaries (other than a Tax Controversy set forth
in Schedule 3.9 to the Company Disclosure Statement which is being contested in
good faith). There are no "deferred intercompany transactions" or "intercompany
transactions" the gain or loss on which has not yet been taken into account
under the appropriate consolidated return Treasury Regulations that would, in
the aggregate with all other undisclosed items covered by this Section 3.9, have
a Material Adverse Effect. Except for the consolidated return of the Company and
its Subsidiaries, neither the Company nor any of its Subsidiaries have been
included in any "consolidated," "unitary" or "combined" Tax Return with respect
to Taxes for any taxable period for which the statute of limitations has not
expired. The Company has delivered to Parent correct and complete copies of all
United States federal, state, and foreign income Tax Returns (to the extent
filed as of the date hereof or, if due but not filed, correct and complete
copies of extensions thereof), examination reports, statements of deficiencies
assessed against or agreed to by the Company and any of its Subsidiaries, or any
other similar correspondence from a taxing authority, relating to taxable years
1996, 1997, 1998 and 1999. Schedule 3.9 (c)(i) of the Company Disclosure
Statement lists all of the jurisdictions in which the Company has filed or is
filing returns on sales and use tax. Schedule 3.9 (c)(ii) of the Company
Disclosure Statement lists all of the jurisdictions in which the Company has
filed or is filing returns on income tax.
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(d) There are no liens on the assets of the Company or any of its
Subsidiaries for Taxes that would, in the aggregate with all other undisclosed
items in this Section 3.9, have a Material Adverse Effect.
(e) (i) Neither the Company nor any of its Subsidiaries has entered into an
agreement or waiver or been requested to enter into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
Taxes of the Company or any of its Subsidiaries.
(ii) All Taxes which the Company or any of its Subsidiaries is (or
was) required by law to withhold or collect (other than immaterial amounts)
have been duly withheld or collected, and have been timely paid over to the
proper authorities to the extent due and payable.
(iii) No claim has ever been made by any taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not file a
Tax Return that the Company or any of its Subsidiaries is or may be subject
to taxation by that jurisdiction, except to the extent that a failure to
file such Tax Returns would not, in the aggregate with all other
undisclosed items covered by this Section 3.9, have a Material Adverse
Effect.
(iv) There are no tax sharing, allocation, indemnification or similar
agreements in effect as between the Company or its Subsidiaries or any
predecessor or affiliate thereof or any other party under which the
Company, Parent or Merger Sub could be liable for Taxes.
(v) Neither the Company nor any of its Subsidiaries has applied for,
been granted, or agreed to any accounting method change for which it will
be required to take into account any adjustment under Section 481 of the
Code or any similar provision of the Code or the corresponding tax laws of
any nation, state or locality.
(vi) No election under Section 341(f) of the Code has been made or
shall be made prior to the Closing Date to treat the Company or any of its
Subsidiaries as a consenting corporation, as defined in Section 341 of the
Code.
(vii) Neither the Company nor any of its Subsidiaries is a party to
any agreement that would require the Company or any of its Subsidiaries or
any affiliate thereof to make any payment that would constitute an "excess
parachute payment" for purposes of Sections 280G and 4999 of the Code.
(viii) Neither the Company nor any of its Subsidiaries is a "United
States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
(f) For purposes of this Agreement, the term "Tax" means any United States
federal, state, county or local, or foreign or provincial income, gross
receipts, profits, capital gains, capital stock, occupation, severance, stamp,
withholding, property, sales, use, license, excise, franchise, employment,
payroll, value added, alternative or added minimum, ad valorem or transfer tax,
or any other tax, levy, custom, duty or governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Authority, and shall include any liability
for such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group or of a contractual obligation to
indemnify any person or other entity. The term "Tax Return" means a report,
return or other information (including any attached schedules or any amendments
to such report, return or other information) required to be supplied to or filed
with any Governmental Authority with respect to any Tax, including an
information return, claim for refund, amended return or declaration or estimated
Tax.
3.10 Intellectual Property. Except as disclosed in Schedule 3.10 to the
Company Disclosure Statement, the Company and its Subsidiaries own or have a
valid and enforceable license to use the rights to all patents, trademarks,
tradenames, service marks and copyrights, together with any registrations and
applications therefor, licenses, inventions, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) or other intellectual property
(collectively, "Intellectual Property") used in and necessary to carry on the
business now operated by them; provided, however, that the enforceability of
such license may be subject to bankruptcy, insolvency and other similar laws
affecting debtors' rights or creditors' rights generally and except that the
remedies of specific performance, injunction and other forms of equitable relief
may not be available. Except as disclosed in
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Schedule 3.10 to the Company Disclosure Statement, neither the Company nor any
of its Subsidiaries has received any written notice or otherwise has knowledge
of any infringement of or conflict with asserted rights of others with respect
to any Intellectual Property or of any facts or circumstances which would render
any Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its Subsidiaries therein, and which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material Adverse
Effect. There are no amounts owing or to be owed by the Company to any other
Person, as a result of the consummation of the Merger or otherwise, with respect
to any claims relating to any Intellectual Property (or any intellectual
property rights of any other Person) or any settlement thereof.
3.11 Reports and Financial Statements.
(a) The Company has filed all forms, reports and documents with the SEC
required to be filed by it since January 1, 1997 pursuant to the federal
securities laws and the SEC rules and regulations thereunder (collectively, the
"Company SEC Reports"). None of the Company SEC Reports, as of their respective
dates, contained any untrue statement of material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets (including the related
notes) included in the Company SEC Reports presents fairly, in all material
respects, the consolidated financial position of the Company and its
Subsidiaries as of the respective dates thereof, and the other related
statements (including the related notes) included in the Company SEC Reports
present fairly, in all material respects, the results of operations and the
changes in financial position of the Company and its Subsidiaries for the
respective periods or as of the respective dates set forth therein, all in
conformity with generally accepted accounting principles consistently applied
during the periods involved, except as otherwise noted therein and subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments. All of the Company SEC Reports, as of their respective dates,
complied as to form in all material respects with the requirements of the
Exchange Act or the Securities Act, as applicable, and the applicable rules and
regulations thereunder.
(b) Except (i) as and to the extent disclosed or reserved against on the
balance sheet of the Company as of November 30, 1999 included in the Company SEC
Reports or (ii) as incurred after the date thereof in the ordinary course of
business consistent with prior practice and not prohibited by this Agreement and
not involving borrowing by the Company or its Subsidiaries, the Company does not
have any liabilities or obligations of any nature, absolute, accrued, contingent
or otherwise and whether due or to become due, that, individually or in the
aggregate, have or would reasonably be expected to have a Material Adverse
Effect on the Company.
3.12 Absence of Certain Changes or Events. During the period since May 31,
1999, except as disclosed in the Company SEC Reports filed prior to the date
hereof:
(a) The business of the Company and its Subsidiaries has been conducted
only in the ordinary course, consistent with past practice, except for
activities related to possible strategic alternatives for the Company, including
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and except as otherwise expressly permitted or
required by this Agreement;
(b) Neither the Company nor any of its Subsidiaries has taken any action or
omitted to take any action, or entered into any contract, agreement, commitment
or arrangement to take any action or omit to take any action, which, if taken or
omitted after the date hereof, would violate Section 6.1.; and
(c) There has not been, and, to the best knowledge of the Company, nothing
has occurred that would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
3.13 Registration Rights and Certain Other Agreements. Set forth in
Schedule 3.13 to the Company Disclosure Statement is an accurate and complete
listing, as of the date hereof, of (a) all contracts, leases, agreements or
understandings, whether written or (to the knowledge of the Company) oral, to
which the Company or any of its Subsidiaries is a party or is otherwise bound
which contain any restriction or limitation on the ability of the Company or any
of its Affiliates to engage in any business anywhere in the world, and (b) all
contracts, leases, agreements or understandings, whether written or (to the
knowledge of the
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Company) oral, giving any Person the right to require the Company to register
securities of any type or to participate in any registration of securities of
any type. The Company has previously provided or made available to Parent true
and complete copies of each of the foregoing agreements.
3.14 Brokers and Finders. Except for the fees and expenses payable to
Lincoln Partners L.L.C. (whose fees and expenses will be paid by the Company),
which fees and expenses are reflected in its agreements with the Company, copies
of which have been furnished to Parent by the Company, no agent, broker, Person
or firm acting on behalf of the Company is, or will be, entitled to any fee,
commission or broker's or finder's fees from any of the parties hereto, or from
any Person controlling, controlled by, or under common control with any of the
parties hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
3.15 Proxy Statement. The definitive proxy statement and related materials
to be furnished to the holders of Common Stock in connection with the Merger
(the "Proxy Statement") will comply in all material respects with the Exchange
Act and the rules and regulations thereunder and any other applicable laws. If
at any time prior to the Company Stockholders' Meeting any event occurs which
should be described in an amendment or supplement to the Proxy Statement, the
Company will file and disseminate, as required, an amendment or supplement which
complies in all material respects with the Exchange Act and the rules and
regulations thereunder and any other applicable laws. Prior to its filing with
the SEC, the amendment or supplement shall be delivered to Parent and Merger Sub
and their counsel. None of the information supplied by the Company for inclusion
or incorporation by reference in the Proxy Statement, will, at the date such
information is supplied and at the Closing Date, contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made, in light of the circumstance under which they are made, not
misleading. Notwithstanding the foregoing, no representation or warranty is made
by the Company with respect to any information with respect to Parent, Merger
Sub or their officers, directors or affiliates provided to the Company by Parent
or Merger Sub for inclusion or incorporation by reference in the Proxy
Statement.
3.16 Title To Assets. Except as reflected in the Company's financial
statements as of November 30, 1999 or disclosed in Schedule 3.16 to the Company
Disclosure Statement, the Company and each of its Subsidiaries has good and
marketable title to (or in the case of leases or other contracts, the full and
unencumbered right to exercise its rights under such leases or other agreements)
the properties and assets used by it, free and clear of all mortgages, deeds of
trust, liens, security interests, pledges, encumbrances, encroachments,
easements, leases, agreements, covenants, charges, restrictions, option, joint
ownership or adverse claims or rights whatsoever (collectively, "Liens"), except
for Permitted Liens, and except for properties and assets disposed of in the
ordinary course of business since November 30, 1999. "Permitted Liens" means:
(i) rights of lessors or lessee under the terms of leases (x) which have been
disclosed to Parent in this Agreement or Schedule 3.16 to the Company Disclosure
Statement or (y) for office equipment entered into in the ordinary course of
business; (ii) Liens for Taxes not yet due or payable; (iii) Liens imposed by
applicable law and incurred in the ordinary course of business for obligations
not yet due and payable to laborers, materialmen and the like; (iv) liens in
favor of the lender listed on Schedule 3.16 in connection with the Company's
secured credit facilities; (v) zoning and other restrictions, variances,
covenants, rights-of-way, encumbrances, easements and or other minor
irregularities of title, none of which, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on the value of any of
the real property of the Company or of any Subsidiary of the Company, or would
impair in any material respect the ability of the Company or the relevant
Subsidiary of the Company to utilize such property for its current use; and (vi)
rights which would not, singly or in the aggregate, have a Material Adverse
Effect.
3.17 Contracts. Schedule 3.17 to the Company Disclosure Statement sets
forth the following oral or written contracts and other agreements to which the
Company or any of its Subsidiaries is a party:
(a) Any agreement (or group of related agreements, with the same third
party or any of its Affiliates) for the lease of personal property providing for
lease payments in excess of $50,000 per annum;
(b) Any agreement (or group of related agreements) for the purchase or sale
of supplies, products or other personal property, or for the furnishing or
receipt of services, the performance of which involve consideration in excess of
$50,000 per annum, except for agreements for the sale of inventory in the
ordinary
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course of business, for the purchase of raw materials, for the purchase of
machine component parts and for the receipt of legal services; provided,
however, that this clause (b) shall not include any employment agreement
included pursuant to clause (e) below;
(c) Any agreement concerning a partnership or joint venture;
(d) Any agreement (or group of related agreements, with the same third
party or any of its Affiliates) under which the Company or any of its
Subsidiaries has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation the performance of which
involves consideration in excess of $50,000 per annum, or under which it has
imposed a Lien (excluding Permitted Liens as that term is defined in Section
3.16 of this Agreement) on any of its material assets, tangible or intangible;
(e) Any individual agreement with an employee of the Company or any of its
Subsidiaries;
(f) Any other agreement (or group of related agreements with the same third
party) the performance of which involves consideration in excess of $25,000 per
annum.
The foregoing are referred to hereafter as the "Material Contracts". With
respect to each of the Material Contracts, except as set forth in Schedule 3.17
to the Company Disclosure Statement: (i) they are in full force and effect and
enforceable against the counterparties in accordance with their terms, except
that such enforceability may be subject to bankruptcy, insolvency and other
similar laws affecting debtors' rights or creditors' rights generally and except
that the remedies of specific performance, injunction and other forms of
equitable relief may not be available; (ii) neither the Company nor any of its
Subsidiaries and to the Company's knowledge no other party thereto is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration under the agreement; (iii) neither the Company nor any of its
Subsidiaries has assigned any of its rights or obligations under any of the
Material Contracts; (iv) neither the Company nor any of its Subsidiaries has
received any outstanding notice of cancellation or termination in connection
with any of them; and (v) neither the Company nor any of its Subsidiaries is,
and to the Company's knowledge no party thereto is, the subject of bankruptcy
proceedings, nor has had a trustee appointed on its behalf or is insolvent. The
Company has delivered to the Parent and Merger Sub a correct and complete copy
of each written Material Contract (as amended to the date of this Agreement) and
a written summary setting forth the terms and conditions of each oral agreement
constituting a Material Contract referred to in Schedule 3.17 to the Company
Disclosure Statement. With respect to agreements for the purchase or receipt of
legal services, there are no such agreements in which the Company or any of its
Subsidiaries are obligated to pay any type of success fee, contingency fee or
fee determined with reference to the size or consummation of the transactions
contemplated by this Agreement.
3.18 Compliance. Except as set forth in Schedule 3.18 to the Company
Disclosure Statement, neither the Company nor any of its Subsidiaries is in
conflict with, or in default or violation of any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, except for such conflicts, defaults or violations that would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.
3.19 Insurance. The Company and its Subsidiaries have obtained and
maintained in full force and effect insurance (including director's and
officer's insurance) with insurance companies or associations in such amounts as
disclosed in Schedule 3.19 to the Company Disclosure Statement.
3.20 Company Preference Shares. Except as set forth in Schedule 3.20 to the
Company Disclosure Statement, the former holders of the Preferred Shares are not
entitled to receive any accrued dividends or redemption payments which have not
been paid when due.
3.21 Year 2000. Except to the extent that it would not reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect,
all internal computer systems, computer software or technology that are material
to the business, finances or operations of the Company and its Subsidiaries or
were sold or
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licensed to customers of the Company and its Subsidiaries (collectively,
"Material Systems") are (i) able to receive, record, store, process, calculate,
manipulate and output dates from and after September 9, 1999, time periods that
include any Relevant Date and information that is dependent on or relates to
such dates or time periods, in the same manner and with the same accuracy,
functionality, data integrity and performance as when dates or time periods
prior to September 9, 1999 are involved and (ii) able to store and output date
information in a manner that is unambiguous as to century (the circumstances set
forth in clauses (i) and (ii), collectively, "Year 2000 Compliant"). The
Company's costing system for inventory properly reflects the actual costs of any
inventory with a maximum deviation of plus or minus five percent (5%) of such
actual costs in the aggregate at any given date of determination. The term
"Relevant Date" means each of the following dates: September 9, 1999, December
31, 1999, January 1, 2000, February 28, 2000, February 29, 2000, March 1, 2000,
December 31, 2000, and January 1, 2001.
3.22 Disposition of Assets. Other than inventory sold in the ordinary
course of business, no tangible asset of the Company having a fair value in
excess of $20,000 per item, or $50,000 in the aggregate, and no intangible asset
which is part of the assets of the Company, has been disposed of since November
30, 1999, except as set forth on Schedule 3.22 to the Company Disclosure
Statement.
3.23 Environmental and Health and Safety Matters.
(a) Set forth on Schedule 3.23(a) to the Company Disclosure Statement
attached hereto is a true, accurate and complete list of all real property,
currently owned, leased and/or otherwise used or occupied by the Company (the
"Property").
(b) Except as set forth in Schedule 3.23(b) to the Company Disclosure
Statement, the Company, and the Property, have been at all times and are in
compliance with (and the formerly owned real property located at Rockford,
Illinois (the "Rockford Property") was, subsequent to April 12, 1988, and prior
to December 7, 1993, in compliance with) the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation, and Liability Act,
the Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act, the Clean Water Act, the Clean Air Act, the Occupational Safety and
Health Act, and all other federal, state and local laws, regulations and
ordinances relating to pollution, health and safety, or protection of the
environment, including, without limitation, those relating to containment,
emissions, discharges, releases or threatened releases of industrial, toxic or
hazardous substances, materials or wastes or other pollutants, contaminants,
petroleum products, asbestos, polychlorinated biphenyls ("PCBs"), or chemicals
(collectively, "Hazardous Substances") into the environment (including without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) or otherwise relating to the manufacturing, processing, recycling,
distribution, use, treatment, labeling, storage, disposal, release, abatement,
transport or handling of Hazardous Substances (the "Environmental Laws"), except
for such failures to comply which would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
(c) The Company has obtained and is in compliance (except for such failures
to comply which would not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect) with all permits, licenses and other
consents or authorizations which are required with respect to the operation of
its business at the Property under the Environmental Laws ("Environmental
Permits"), including without limitation those that are required to (a) operate
or install any equipment or facilities and (b) generate, manufacture, formulate,
store, treat, handle, transport, discharge, emit or dispose of Hazardous
Substances generated by its business, a true and complete list of which
Environmental Permits is included in Schedule 3.23(c) to the Company Disclosure
Schedule.
(d) Except as listed in Schedules 3.23(b) and (d) to the Company Disclosure
Statement, there are and have been no Hazardous Substances generated, used,
treated, stored, maintained, disposed of, or otherwise deposited in, located on,
released from, under or on, the Property or the Rockford Property (or released
onto, from or on any geologically or hydrologically adjoining property), the
business of the Company, or any premises at which the business of the Company is
being conducted, or is located, except in compliance with Environmental Laws.
Additionally, except as described in Schedule 3.23(d) to the Company Disclosure
Statement, there are and were no underground storage tanks maintained or located
on the Property or the
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Rockford Property, the business of the Company, or any premises at which the
business of the Company is located.
(e) Except as set forth in Schedules 3.23(b), (d) and (e) of the Company
Disclosure Statement, neither the Company nor its predecessors have any basis to
expect, nor have they, or any other Person for whose conduct they are or may be
held responsible received, any actual or threatened notice, document,
information, report or other communication (written or oral) from any Person,
Governmental Authority or person acting in the public interest, of any actual or
threatened failure to comply with any Environmental Law, or that any of them
have any potential liability with respect to Environmental Health and Safety
Liabilities.
(f) The Company has made available to Parent and Merger Sub true and
complete copies and results of any reports, correspondence, information or
studies possessed or initiated by the Company since January 1, 1990, pertaining
to Hazardous Substances in, on, under, or adjacent to the Property or the
Rockford Property, or concerning compliance by the Company or any other Person
for whose conduct they are or may be held responsible, with Environmental Laws.
3.24 Related Party Transactions. No officer or director of the Company or
any affiliate thereof has, directly or indirectly, entered into any transaction
with the Company, except for any arrangements which are either (i) expressly
disclosed on or incorporated by reference in the Company's Annual Report on Form
10-K or (ii) listed on Schedule 3.24 to the Company Disclosure Statement. For
purposes of this Section 3.24 only, the term "affiliate" of the Company shall
mean and include any officer or director of the Company or any shareholder
owning or controlling more than 5% of the outstanding Common Stock or any person
related to any such officer, director or shareholder of the Company by blood or
by marriage, or any corporation, partnership, proprietorship, trust or other
entity in which such officer or director or shareholder of the Company (or any
spouse, ancestor or descendant of the same) has more than a 5% legal or
beneficial interest, or any corporation, partnership, proprietorship, trust or
other entity which controls, is controlled by or is under common control with
the Company.
3.25 Increases in Salaries and Wages. Except in the ordinary course of
business or as listed in Schedule 3.25 to the Company Disclosure Statement, the
Company has not, since November 30, 1999, paid any salary, wage, bonus payments
or any other benefits to its employees at rates exceeding the respective rates
paid to such employees which were in effect at November 30, 1999.
3.26 Employee Salaries and Benefits. The Company has provided Parent with
an accurate list of all salaried employees of the Company and its Subsidiaries,
and the current rate of compensation for each such employee (including a
separate statement of bonuses and fringe benefits). Except in the ordinary
course of business or as listed on Schedule 3.26 to the Company Disclosure
Statement, there is no liability for unpaid salary or wages, bonuses, vacation
time, or other employee benefits due or accrued, nor liability for withheld or
deducted amounts from employees' earnings, for the period ending on or
immediately prior to the Closing Date, including without limitation commission
payments to agents, representatives or employees. There are no labor disputes,
strikes, work stoppages or other interruptions in service or performance that
would reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect, and, to the Company's knowledge, all relationships
between the Company and each of its Subsidiaries and their employees are
generally stable and satisfactory.
3.27 Customer and Supplier Relationships; Warranty Claims. Neither the
Company nor any of its Subsidiaries has received any written notice or otherwise
has knowledge that any of the ten largest customers or suppliers of The
Lockformer Company or any of the ten largest customers or suppliers of Iowa
Precision Industries, Inc. intends to discontinue or alter the prices or terms
of, or substantially diminish, its relationship with the Company or any of its
Subsidiaries. Outstanding warranty claims against the Company or any of its
Subsidiaries by any customers with respect to products sold or services rendered
do not, in the aggregate, exceed two percent (2%) of the Company's and its
Subsidiaries' aggregate gross sales in the 12 months prior to the date hereof
and in the 12 months prior to the date of any subsequent determination. There
are no defects in any of the product lines designed or manufactured by the
Company or any of its Subsidiaries, except for defects which would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.
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3.28 Accounts Receivable and Notes Receivable. The accounts receivable and
notes receivable of the Company and its Subsidiaries, other than those listed on
Schedule 3.28 to the Company Disclosure Schedule, represent bona fide claims
which the Company or its Subsidiaries have against debtors for sales or services
arising on or before the Closing Date are not subject to counterclaims, setoffs
or deductions of any kind except to the extent such counterclaims, setoffs or
deductions would not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect, and are not subject to additional
requirements of performance by the Company or any Subsidiary of the Company. The
aggregate amount of customer advance payments (i.e., payments in excess of
actual work performed or materials supplied as of the date of such payment)
received by the Company or any Subsidiary of the Company at or prior to the
Closing Date with respect to such accounts receivable does not exceed $750,000.
All of the accounts receivable and notes receivable have been created since the
date of incorporation of the Company or any Subsidiary of the Company, pursuant
to shipments of goods or services conforming to the terms of purchase orders
executed by and received from unrelated third parties in the normal course of
business. Such receivables have been recorded in accordance with the Company's
historical revenue recognition policy. To the Company's knowledge, there are no
pending insolvency, bankruptcy or similar proceedings involving any of the
Company's or its Subsidiaries' customers, distributors, dealers or
representatives.
3.29 Bonds; Guarantees. Other than as listed on Schedule 3.29 to the
Company Disclosure Schedule, there are no bonds, guarantees, notes, sureties,
letters of credit, or other similar credit agreements or debt obligations that
exist with respect to the Company or any of its Subsidiaries, their businesses
or any of their assets. Neither the Company nor any Subsidiary of the Company is
in default on the payment of any principal or interest on any indebtedness for
borrowed money, nor is the Company or any Subsidiary of the Company otherwise in
default under any indemnity, fidelity or contract bond or letter of credit,
note, guarantee or other credit agreement or debt obligation or instrument.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
As of the date of this Agreement, Parent represents and warrants to the
Company as follows:
4.1 Corporate Standing. Parent is a corporation duly organized, validly
existing, and in good standing under the laws of its state of incorporation.
Parent has full corporate authority to own, lease and operate its properties and
businesses. Schedule 4.1 to the Parent Disclosure Statement sets forth a list of
the jurisdictions in which Parent is qualified to conduct business as a foreign
corporation. Parent is in good standing as a foreign corporation under the laws
of the states listed in Schedule 4.1.
4.2 Authority.
(a) Parent has full corporate power and authority to enter into, execute,
deliver, and perform this Agreement and all Exhibits to which it is a party. The
execution, delivery and performance of this Agreement and such Exhibits, and the
consummation of all transactions contemplated herein and therein, have been duly
authorized by all necessary corporate action of Parent. This Agreement has been
duly executed and delivered by a duly authorized officer of the Parent and
(assuming the due execution and delivery of this Agreement by the other parties
hereto other than Merger Sub and Ultimate Parent) constitutes a valid and
binding agreement of the Parent, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency and other similar laws affecting the
rights of creditors generally and except that the remedies of specific
performance, injunction and other forms of equitable relief may not be
available. Such Exhibits, when duly executed and delivered by Parent (assuming
the due execution and delivery of such Exhibits by the other parties hereto
other than Merger Sub and Ultimate Parent) shall be valid and binding agreements
of Parent enforceable against it in accordance with the terms hereof and
thereof, subject to bankruptcy, insolvency and other similar laws affecting the
rights of creditors generally and except that the remedies of specific
performance, injunction and other forms of equitable relief may not be
available.
(b) The Board of Directors of Parent has approved the transactions
contemplated by this Agreement and the Exhibits to which Parent is a party.
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(c) Neither the execution and delivery of this Agreement nor the execution
and delivery of the certificates and documents set forth as Exhibits hereto nor
the consummation of the transactions contemplated hereby or thereby will (i)
conflict with or violate any provision of the Articles of Incorporation or
Bylaws of Parent, (ii) conflict with or violate any law, rule, regulation,
ordinance, order, writ, injunction, judgment or decree applicable to Parent or
its business or by which any of its assets are affected, except to the extent
any such conflict or violation would not have a Material Adverse Effect, or
(iii) conflict with or result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination or cancellation of or accelerate the
performance required by or maturity of, or result in the creation of any
security interest, lien, charge or encumbrance on the assets of Parent pursuant
to any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, permit, license, franchise, lease, contract, or other instrument or
obligation to which Parent is a party or by which any of its assets are
affected, except to the extent any such conflict, breach, default, right of
termination or cancellation, acceleration or creation of any such security
interest, lien, charge, or encumbrance would not have a Material Adverse Effect.
(d) Parent is not required to submit any notice, declaration, report or
other filing or registration with any governmental or regulatory authority or
instrumentality, and no approvals or non-objections are required to be obtained
or made by Parent in connection with the execution, delivery or performance by
Parent of this Agreement or any Exhibit or the consummation of the transactions
contemplated hereby or thereby, except for approvals that may be required under
the DGCL, the HSR Act and the Exchange Act.
4.3 Information Supplied. None of the information supplied by Ultimate
Parent, Parent or Merger Sub for inclusion or incorporation by reference in the
Proxy Statement (and provided to Ultimate Parent, Parent and Merger for review
and comment prior to printing of the Proxy Statement) will, on the date it is
first mailed to the Company's stockholders or at the time of the Company's
stockholders meeting, 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.
4.4 Adequate Financing. Parent has adequate funds to consummate the Merger
and perform its other obligations under this Agreement, including payment of the
Merger Consideration and the Cash Payment.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MERGER SUB
As of the date of this Agreement, Merger Sub represents and warrants to the
Company as follows:
5.1 Corporate Standing. Merger Sub is a corporation duly organized, validly
existing, and in good standing under the laws of its state of incorporation.
Merger Sub has full corporate authority to own, lease and operate its properties
and businesses. Schedule 5.1 to the Merger Sub Disclosure Statement sets forth a
list of the jurisdictions in which Merger Sub is qualified to conduct business
as a foreign corporation. Merger Sub is in good standing as a foreign
corporation under the laws of the states listed in Schedule 5.1.
5.2 Authority.
(a) Merger Sub has full corporate power and authority to enter into,
execute, deliver, and perform this Agreement and all Exhibits to which it is a
party. The execution, delivery and performance of this Agreement and such
Exhibits, and the consummation of all transactions contemplated herein and
therein, have been duly authorized by all necessary corporate action of Merger
Sub. This Agreement has been duly executed and delivered by a duly authorized
officer of Merger Sub and (assuming the due execution and delivery of this
Agreement by the other parties hereto other than Parent and Ultimate Parent)
constitutes a valid and binding agreement of Merger Sub, enforceable against it
in accordance with its terms, subject to bankruptcy, insolvency and other
similar laws affecting the rights of creditors generally and except that the
remedies of specific performance, injunction and other forms of equitable relief
may not be available. Such Exhibits, when duly executed and delivered by Merger
Sub (assuming the due execution and delivery of such Exhibits by the
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other parties hereto other than Parent and Ultimate Parent) shall be valid and
binding agreement of Merger Sub enforceable against it in accordance with the
terms hereof and thereof, subject to bankruptcy, insolvency and other similar
laws affecting the rights of creditors generally and except that the remedies of
specific performance, injunction and other forms of equitable relief may not be
available.
(b) The Board of Directors and stockholders of Merger Sub have approved the
transactions contemplated by this Agreement and the Exhibits to which Merger Sub
is a party.
(c) Neither the execution and delivery of this Agreement nor the execution
and delivery of the certificates and documents set forth as Exhibits hereto nor
the consummation of the transactions contemplated hereby or thereby will (i)
conflict with or violate any provision of the Articles of Incorporation or
Bylaws of Merger Sub, (ii) conflict with or violate any law, rule, regulation,
ordinance, order, writ, injunction, judgment or decree applicable to Merger Sub
or its business or by which any of its assets are affected, except to the extent
any such conflict or violation would not have a Material Adverse Effect, or
(iii) conflict with or result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination or cancellation of or accelerate the
performance required by or maturity of, or result in the creation of any
security interest, lien, charge or encumbrance on the assets of Merger Sub
pursuant to any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, permit, license, franchise, lease, contract, or other
instrument or obligation to which Merger Sub is a party or by which any of its
assets are affected, except to the extent any such conflict, breach, default,
right of termination or cancellation, acceleration or creation of any such
security interest, lien, change or encumbrance would not have a Material Adverse
Effect.
(d) Merger Sub is not required to submit any notice, declaration, report or
other filing or registration with any governmental or regulatory authority or
instrumentality, and no approvals or non-objections are required to be obtained
or made by Merger Sub in connection with the execution, delivery or performance
by Merger Sub of this Agreement or any Exhibit or the consummation of the
transactions contemplated hereby or thereby, except for approvals that may be
required under the DGCL, the HSR Act and the Exchange Act.
5.3 No Business Activities. Merger Sub is not a party to any material
agreements and has not conducted any activities other than in connection with
the organization of Merger Sub, the negotiation and execution of this Agreement
and the consummation of the transactions contemplated hereby. Merger Sub has no
Subsidiaries.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 Conduct of Business of the Company. Except as set forth in Schedule 6.1
to the Company Disclosure Statement, as expressly permitted by this Agreement
(including any transaction permitted by Schedule 6.1 to the Company Disclosure
Statement), as required by any change in applicable Law, or as otherwise agreed
by Parent in writing, during the period from the date of this Agreement to the
Closing Date, (i) the Company will, and will cause each of its Subsidiaries to,
conduct their businesses in the ordinary course of business consistent with past
practice, and (ii) to the extent consistent with the foregoing, the Company
will, and will cause each of its Subsidiaries to, use their reasonable best
efforts to preserve intact their current business organizations, keep available
the service of their current officers and employees, and preserve their
relationships with customers, suppliers and others having business dealings with
them (but without the obligation to pay any additional compensation to any such
officers, employees, customers, suppliers and other persons), in each case with
respect to the Company's and its Subsidiaries' current businesses. Without
limiting the generality of the foregoing, from and including the date hereof to
the Closing Date, the Company will not, and will not permit any of its
Subsidiaries to, without the prior written consent of Parent (except to the
extent set forth in Schedule 6.1 to the Company Disclosure Statement):
(a) Except for Shares issued upon exercise of Options or other rights
outstanding as of the date hereof under Stock Incentive Plans or Company Plans
in accordance with the terms thereof, issue, deliver, sell, dispose of, pledge
or otherwise encumber, or authorize or propose the issuance, sale, disposition
or pledge or
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other encumbrance (in each instance, whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
of (A) any additional shares of its capital stock of any class, or any Voting
Debt or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for any shares of its capital stock or Voting
Debt or any rights, warrants, options, calls, commitments or any other
agreements of any character to purchase or acquire any shares of its capital
stock or Voting Debt or any securities or rights convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of its capital stock,
or (B) any other securities in respect of, in lieu of, or in substitution for,
Shares outstanding on the date hereof;
(b) Redeem, purchase or otherwise acquire, or propose to redeem, purchase
or otherwise acquire, any of its outstanding securities, other than pursuant to
existing agreements requiring the Company to repurchase or acquire any shares of
its capital stock (provided that such repurchase or acquisition is in accordance
with the terms of such agreement as in effect on the date hereof);
(c) Split, combine, subdivide or reclassify any shares of its capital stock
or declare, set aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any shares of its capital
stock or otherwise make any payments to stockholders in their capacity as such
(other than dividends or distributions paid by any Wholly Owned Subsidiary of
the Company to the Company or another Wholly Owned Subsidiary of the Company);
(d) (i) grant any increases in the compensation of any of its directors,
officers or employees, except for increases granted to employees other than
officers in the ordinary course of business consistent with past practice, (ii)
pay or award or agree to pay or award any pension, retirement allowance, or
other non-equity incentive awards, or other employee benefit, not required by
any of the Company Plans to any current or former director, officer or
employees, whether past or present, or to any other Person, except for payments
or awards to current employees other than officers that are in the ordinary
course of business, consistent with past practice, (iii) pay or award or agree
to pay or award any stock option or equity incentive awards, (iv) enter into any
new or amend any existing employment agreement with any director, officer or
employee, (v) enter into any new or amend any existing severance agreement with
any current or former director, officer or employee, or (vi) become obligated
under any new Company Plan which was not in existence on the date hereof, or
amend any such Company Plan in existence on the date hereof, except as may be
contemplated by this Agreement;
(e) Adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any Subsidiary of the Company (other than the Merger);
(f) Make any acquisition, by means of stock or asset purchase,
recapitalization, merger, consolidation or otherwise, of (i) any direct or
indirect ownership interest in or assets comprising any business enterprise or
operation or (ii) except in the ordinary course and consistent with past
practice, any other assets; provided that such acquisitions do not and would not
prevent or materially delay the consummation of the Merger;
(g) (i) dispose of any interest in any material business enterprise or
operation of the Company or any of its Subsidiaries; (ii) make any other
disposition of any other direct or indirect ownership interest in any material
assets of the Company or any of its Subsidiaries; or (iii) except in the
ordinary course and consistent with past practice, dispose of any other assets
of the Company or any of its Subsidiaries;
(h) Adopt any amendments to the Company Charter or its Bylaws or alter
through merger, liquidation, reorganization, restructuring or in any other
fashion the corporate structure or ownership of any Subsidiary of the Company,
except as required by this Agreement or as required by applicable laws, rules or
regulations, including any NASDAQ rule or regulation;
(i) Incur any indebtedness (other than pursuant to and not exceeding its
existing secured credit facilities listed on Schedule 6.1(i) in the ordinary
course) for borrowed money or guarantee any indebtedness of any other Person or
make any loans, advances or capital contributions to, or investments in, any
other Person (other than to any Wholly Owned Subsidiary of the Company);
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(j) Engage in the conduct of any business other than the Company's existing
businesses;
(k) Enter into any agreement or exercise any discretion providing for
acceleration of payment or performance as a result of a change of control of the
Company or its Subsidiaries, except in connection with the Merger;
(l) enter into any contracts, arrangements or understandings requiring in
the aggregate the purchase of equipment, materials, supplies or services in
excess of the Company's budget attached hereto as Schedule 6.1(l) plus $250,000
in the aggregate;
(m) enter into or amend, modify, terminate or waive any right under any
agreement with any Affiliates of the Company (other than its Subsidiaries);
(n) settle or compromise any litigation or Tax Controversy with respect to
the Company or its Subsidiaries or waive, release or assign any rights or claims
with respect to any litigation or Tax Controversy involving the Company or its
Subsidiaries;
(o) effect any change in any of its methods of accounting, except as may be
required by law or generally accepted accounting principles;
(p) Take any action, including without limitation, the adoption of any
shareholder rights plan or amendments to the Company Charter, which would,
directly or indirectly, restrict or impair the ability of Parent to vote, or
otherwise to exercise the rights and receive the benefits of a stockholder with
respect to, securities of the Company that may be acquired or controlled by
Parent or Merger Sub or permit any stockholder to acquire securities of the
Company on a basis not available to Parent in the event that Parent were to
acquire securities of the Company; or
(q) Authorize, recommend or propose (other than to Parent), or announce an
intention to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
The Company shall also continue to undertake all usual corporate,
stockholder, accounting and regulatory matters on a routine and regular basis.
The Company shall notify Parent in advance in writing of any material
developments or activities that would be outside of the ordinary course of
business in manufacturing carried on at the Company's facilities in Cedar
Rapids, Iowa and Lisle, Illinois, including, without limitation, the proposed
acquisition and/or disposition of assets material to the efficient operation of
the business, the pending or threatened loss of an important customer of the
Company, the receipt of a pending or threatened claim that would be material to
the business or the assets of the Company and its Subsidiaries taken as a whole,
or the existence of labor unrest at the Company or any of its Subsidiaries.
6.2 No Solicitation of Other Offers.
(a) The Company and its Affiliates and each of their respective officers,
directors, employees, representatives, consultants, investment bankers,
attorneys, accountants and other agents shall immediately cease any discussions
or negotiations with any other parties that may be ongoing with respect to any
Acquisition Proposal. Neither the Company nor any of its Affiliates shall,
directly or indirectly, take (and the Company shall not authorize or permit its
or its Affiliates' officers, directors, employees, representatives, consultants,
investment bankers, attorneys, accountants or other agents or Affiliates, to so
take) any action to (i) encourage, solicit, initiate or facilitate the making of
any Acquisition Proposal (including, without limitation, by taking any action
that would make Section 203 of the DGCL inapplicable to an Acquisition Proposal)
or (ii) participate in any way in discussions or negotiations with, or, furnish
or disclose any information to, any Person (other than Parent or Merger Sub) in
connection with, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal; provided, however, that the Company, in response
to an unsolicited Acquisition Proposal and in compliance with its obligations
under Section 6.2(b) hereof, may participate in discussions or negotiations with
or furnish information (pursuant to a confidentiality agreement with terms not
more favorable to such third party than the terms of the Confidentiality
Agreement) to any third party which makes an Acquisition Proposal if (i) the
Board of Directors reasonably determines (in consultation with the Company's
independent financial advisor) that such Acquisition Proposal is likely to lead
to a Superior
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Proposal and (ii) the Board of Directors reasonably believes (in consultation
with the Company's independent legal counsel) that failing to take such action
would constitute a breach of its fiduciary duties. In addition, neither the
Board of Directors of the Company nor any committee thereof shall (A) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent or
Merger Sub the approval and recommendation of the Merger and this Agreement, (B)
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal, or (C) enter into any agreement with respect to any Acquisition
Proposal or enter into any arrangement, understanding or agreement requiring it
to abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement; provided that the Company may recommend to its
stockholders an Acquisition Proposal and in connection therewith withdraw or
modify its approval or recommendation of the Merger and enter into an agreement
with respect to such Acquisition Proposal if (1) a third party makes a Superior
Proposal, and (2) (a) three (3) business days have elapsed following delivery to
Parent of a written notice of the determination by the Board of Directors of the
Company to take such action and during such (3) business day period the Company
has informed Parent of the terms and conditions of such Superior Proposal, and
the identity of the Person making such Superior Proposal, and (b) at the end of
such three (3) business day period the Acquisition Proposal continues to
constitute a Superior Proposal.
"Acquisition Proposal" shall mean (i) any inquiry, proposal or offer from
any Person relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Company or any of its material Subsidiaries
or of 50% or more of any class of equity securities of the Company or any of its
material Subsidiaries, (ii) any tender offer or exchange offer that, if
consummated, would result in any Person beneficially owning 50% or more of any
class of equity securities of the Company or any of its Subsidiaries, or (iii)
any merger, consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries.
"Superior Proposal" shall mean a bona fide proposal made by a third party
to acquire all of the Shares pursuant to a tender offer, a merger or a sale of
all of the assets of the Company (w) on terms which a majority of the members of
the Board of Directors of the Company determines in its good faith reasonable
judgment (in consultation with the Company's independent financial advisor) to
be more favorable to the Company and its stockholders than the transactions
contemplated hereby, (x) for which financing is then available (it being
understood that financing evidenced by highly confident letters and similar
letters shall be considered "available" for purposes of this Section), and (y)
which is not subject to any financing condition.
(b) From and after the date hereof, in addition to the obligations of the
Company set forth in paragraph (a), on the date of receipt thereof, the Company
shall advise Parent of any request for information or of any Acquisition
Proposal, or any inquiry, proposal, discussions or negotiation with respect to
any Acquisition Proposal. The Company shall promptly provide to Parent any
non-public information concerning the Company provided to any other Person in
connection with any Acquisition Proposal which was not previously provided to
Parent.
(c) Immediately following the execution of this Agreement, the Company
shall request each Person which has heretofore executed a confidentiality
agreement in connection with its consideration of acquiring the Company or any
portion thereof to return all confidential information heretofore furnished to
such Person by or on behalf of the Company.
6.3 Proxy Statement. As promptly as practicable, the Company will prepare
and file a preliminary Proxy Statement with the SEC and will use its reasonable
best efforts to respond to the comments of the SEC, if any, in connection
therewith and to furnish all information regarding the Company required in the
definitive Proxy Statement (including, without limitation, financial statements
and supporting schedules and certificates and reports of independent public
accountants). Parent, Merger Sub and Company will cooperate with each other in
the preparation of the Proxy Statement. Without limiting the generality of the
foregoing, each of Parent and Merger Sub will furnish to the Company the
information relating to it required by the Exchange Act to be set forth in the
Proxy Statement. As promptly as is reasonably practicable, the Company will
cause the definitive Proxy Statement to be mailed to the stockholders of the
Company and, if necessary, after the definitive Proxy Statement shall have been
so mailed, promptly circulate amended, supplemental or
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supplemented proxy material and, if required in connection therewith, re-solicit
proxies. The Company will provide Ultimate Parent, Parent and Merger Sub the
opportunity to review and comment on the Proxy Statement (and any amended,
supplemental or supplemented proxy material) before it is printed and mailed to
the stockholders of the Company. The Company's obligations under this Section
6.3 are subject to its right to withdraw or modify its approval or
recommendation of the Merger in accordance with Section 6.2.
6.4 Stockholder Approval. As promptly as is reasonably practicable, the
Company, acting through its Board of Directors, shall, in accordance with
applicable Law, duly call, give notice of, convene and hold a meeting of the
holders of Shares (the "Company Stockholders' Meeting") for the purpose of
voting upon this Agreement and the Merger, and the Company agrees that this
Agreement and the Merger shall be submitted at such meeting. The Company shall
use its reasonable best efforts to solicit from its stockholders proxies, and
shall take all other action necessary and advisable, to obtain the approval of
stockholders required by applicable law and the Company Charter or its Bylaws
for this Agreement and the Merger. The Company agrees that it will include in
the Proxy Statement the recommendation of its Board of Directors that holders of
Shares approve and adopt this Agreement and approve the Merger. The Company's
obligations under this Section 6.4 are subject to its right to withdraw or
modify its approval or recommendation of the Merger in accordance with Section
6.2.
6.5 Commercially Reasonable Efforts. The Company and Parent shall, and
shall use their commercially reasonable efforts to cause their respective
Subsidiaries, as applicable, to: (i) promptly make all filings and seek to
obtain all Authorizations (including, without limitation, all filings required
under the HSR Act) required under all applicable Laws with respect to the Merger
and the other transactions contemplated hereby and will reasonably consult and
cooperate with each other with respect thereto; (ii) not take any action
(including effecting or agreeing to effect or announcing an intention or
proposal to effect, any acquisition, business combination or other transaction
except as set forth in the Company Disclosure Statement) which would impair the
ability of the parties to consummate the Merger; and (iii) use their
commercially reasonable efforts to promptly (x) take, or cause to be taken, all
other actions and (y) do, or cause to be done, all other things reasonably
necessary, proper or appropriate to satisfy the conditions set forth in Articles
VII and VIII (unless waived) and to consummate and make effective the
transactions contemplated by this Agreement on the terms and conditions set
forth herein (including seeking to remove promptly any injunction or other legal
barrier that may prevent such consummation); provided, however, that no loan
agreement or contract for borrowed money shall be repaid except as currently
required by its terms, in whole or in part, and, subject to Section 6.1, no
contract shall be amended to increase the amount payable thereunder or otherwise
to be more burdensome to the Company or any of its Subsidiaries in order to
obtain any such consent, approval or authorization without first obtaining the
written approval of Parent and Merger Sub. Each party shall promptly notify the
other party of any communication to that party from any Governmental Authority
in connection with any required filing with, or approval or review by, such
Governmental Authority in connection with the Merger and the other transactions
contemplated hereby and permit the other party to review in advance any proposed
communication to any Governmental Authority in such connection to the extent
permitted by applicable law.
6.6 Access to Information. Subject to currently existing contractual and
legal restrictions applicable to the Company, the Company shall (and shall cause
each of its Subsidiaries to) afford to officers, employees, counsel, accountants
and other authorized representatives of Parent ("Parent Representatives")
reasonable access, during normal business hours throughout the period prior to
the Closing Date, to its properties, books and records (including, subject to
execution of customary access letters, the work papers of independent
accountants), such access not to unreasonably interfere with the Company's
business or operations, and, during such period, shall (and shall cause each of
its Subsidiaries to) furnish promptly to such Parent Representatives all
information concerning its business, properties and personnel as may reasonably
be requested, including but not limited to all purchase order and customer order
logs. In addition, Parent Representatives may conduct, within the two-week
period prior to the Closing Date expected by Parent, a complete investigation of
the Company's financial and other records and accounts (including but not
limited to the work papers of the Company's independent accountants), and
Company will permit and cooperate fully with such investigation. Parent may
further conduct, and the Company will permit and cooperate fully with,
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environmental audits of the Company's Cedar Rapids and Lisle facilities. The
Company shall, at its discretion which shall not be unreasonably withheld,
introduce Parent Representatives to the Company's principal suppliers,
customers, dealers and employees to facilitate discussions between such persons
and Parent in regard to Parent's conduct of the business following the Closing
Date. The officers and management of the Company agree to cooperate with the
Parent Representatives and agents and to make themselves available to the extent
necessary to complete the Parent Representatives' investigation process and the
closing of the Merger. All information obtained pursuant to this Section 6.6
shall be subject to the Confidentiality Agreement, which shall remain in full
force and effect until consummation of the Merger or, if the Merger is not
consummated, for the period specified therein; provided, however, that neither
Parent nor the Company shall be precluded from making any disclosure which it
deems required by law or applicable rule or regulation of any Governmental
Authority or self-regulatory organization in connection with the Merger. Parent
acknowledges the Company's interest that the Parent Representatives'
investigations be as discreet as possible and not unduly disrupt the operations
of the Company, and Parent will work diligently to complete the Parent
Representatives' investigations in a timely manner so long as the Company
cooperates in making the records and personnel available to Parent in a timely
fashion.
6.7 Employee Matters.
(a) Starting on the day after the Closing Date and ending on the earlier of
(i) one year from the Closing Date and (ii) May 31, 2001 (the "Initial Period"),
Parent will cause Surviving Corporation to provide employee benefit plans for
eligible employees of the Company (i.e., employees who satisfy the eligibility
requirements of the Company Plans as in effect immediately prior to the date of
this Agreement, and who continue to satisfy such eligibility requirements
through the end of the Initial Period) that are not materially less favorable in
the aggregate than the employee benefit plans provided to them as set forth on
Schedule 3.8(a) of the Company Disclosure Statement on the date of this
Agreement. With respect to any employee benefit plans established by Parent and
made available by Parent to employees of the Company or any of its Subsidiaries,
to the extent an employee of the Company or any of its Subsidiaries becomes
eligible to participate in any such plans, Parent shall grant to such employee
from and after the Closing Date, credit for all service with the Company and its
Subsidiaries (and any other service credited by the Company under similar
Company Plans) prior to the Closing Date for eligibility to participate and
vesting purposes. Notwithstanding the preceding sentence, no employee of the
Company or any of its Subsidiaries shall receive credit for service with the
Company and its Subsidiaries prior to the Closing Date for purposes of
eligibility for, or vesting of, profit sharing contributions under the Mestek,
Inc. Savings & Retirement Plan. To the extent Parent employee benefit plans
provide medical or dental welfare benefits and an employee of the Company or any
of its Subsidiaries becomes eligible to participate in any such plans, such
plans shall waive any preexisting conditions and actively at-work exclusions
with respect to employees of the Company and any of its Subsidiaries (but only
to the extent such employees were covered under corresponding Company Plans
immediately prior to the date they became eligible for coverage under such
Parent employee benefit plans) and shall provide that any expenses incurred on
or before the Closing Date in the applicable plan year by or on behalf of such
employees shall be taken into account under such Parent employee benefit plans
for the purposes of satisfying applicable deductible, co-insurance and maximum
out-of- pocket provisions for such employees.
(b) The Company may amend and/or take action with respect to its Stock
Incentive Plans prior to the Closing Date to provide that upon the Merger, all
options, stock appreciation rights or other awards granted under such plans and
outstanding as of the Closing Date shall be fully vested, and in the case of
stock options or stock appreciation rights, be immediately exercisable.
(c) Katie Michael (the "Agent") shall be appointed and constituted agent by
the Company for and on behalf of the employees of the Company, to take all
actions necessary or appropriate for the accomplishment and enforcement of
Section 6.7(a), for the time period stated therein, including but not limited to
(i) giving and receiving notices and communications, (ii) negotiating and
entering into agreements and settlements with the parties of this Agreement, and
(iii) filing lawsuits to enforce Section 6.7(a), and enforcing and complying
with any orders of courts. The Agent, as far as required to perform her duties
hereunder, shall have reasonable access to information about the employee
benefit plans provided to the employees of the Company, and the
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reasonable assistance of the parties to this Agreement with respect thereto;
provided, however, that the Agent shall treat such information as confidential
and not disclose any nonpublic information from or about the Company, Ultimate
Parent, any of their Subsidiaries, any employee of the Company or any of its
Subsidiaries, any employee benefit plan of the Company, Ultimate Parent or any
of their Subsidiaries, any fiduciary of such employee benefit plans, or any
insurance company under contract with the Company, Ultimate Parent or any of
their Subsidiaries, to anyone (except on a need to know basis to his legal
counsel and other individuals who agree in writing with the Company to treat
such information as confidential). The Agent shall receive no compensation for
her services, and shall not be personally liable to the parties of this
Agreement or to any employee of the Company for any act done or omitted
hereunder as Agent while acting in good faith, and any act performed or omitted
pursuant to the advice of counsel shall be conclusive evidence of good faith.
6.8 Preparation of Tax Returns and Payment of Taxes. The Company and its
Subsidiaries shall prepare and timely file all Tax Returns and amendments
thereto required to be filed by or with respect to them on or before the Closing
Date. Parent shall have a reasonable opportunity to review all such Tax Returns
and amendments thereto prior to filing. The Company and its Subsidiaries shall
timely pay all Taxes shown to be payable on such Tax Returns.
6.9 Indemnification.
(a) From the Effective Time and for a period of six years after the
Effective Time, Parent and Merger Sub shall jointly and severally (i) indemnify,
defend and hold harmless the present and former officers, directors, employees
and agents of the Company and its Subsidiaries and of Merger Sub (collectively,
the "Indemnified Parties"), from and against, and pay or reimburse the
Indemnified Parties for, all losses, obligations, expenses, claims, damages or
liabilities resulting from third party claims (and involving claims by or in the
right of the Company) and including interest, penalties, out-of-pockets expenses
and attorneys' fees incurred in the investigation or defense of any of the same
or in asserting any of their rights hereunder resulting from or arising out of
actions or omissions of such Indemnified Parties occurring on or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement) to the fullest extent permitted or required under (A) applicable
law, (B) the certificate of incorporation or Bylaws of the Company or its
applicable Subsidiary in effect on the date of this Agreement, including,
without limitation, provisions relating to advances of expenses incurred in the
defense of any action or suit, or (C) any indemnification agreement between the
Indemnified Party and the Company or its Subsidiaries; and (ii) advance to any
Indemnified Parties expenses incurred in defending any action or suit with
respect to such matters, in each case to the extent such Indemnified Parties are
entitled to indemnification or advancement of expenses under the Company's or
its applicable Subsidiary's certificate of incorporation and Bylaws in effect on
the date hereof and subject to the terms of such certificate of incorporation
and Bylaws; provided, however, that in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of each such claim shall continue until final disposition of such claim.
(b) Any Indemnified Party wishing to claim indemnification under Section
6.9(a) shall provide notice to Parent promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought, and the
Indemnified Party shall permit the Parent (at its expense) to assume the defense
of any claim or any litigation resulting therefrom; provided, however, that (i)
counsel for Parent who shall conduct the defense of such claim or litigation
shall be reasonably satisfactory to the Indemnified Party and the Indemnified
Party may participate in such defense at such Indemnified party's expense, and
(ii) the omission by any Indemnified Party to give notice as provided herein
shall not relieve Parent of its indemnification obligation under this Agreement,
except to the extent that such omission results in a failure of actual notice to
Parent, and Parent is actually prejudiced as a result of such failure to give
notice. In the event that Parent does not accept the defense of any matter as
above provided, or counsel for the Indemnified Parties advises the Indemnified
Parties in writing that there are issues that raise conflicts of interest
between Parent and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and Parent shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that Parent shall not be liable for
any settlement effected without its prior written consent (which consent shall
not be unreasonably withheld); provided, further, however, that Parent shall not
be responsible for the fees and expenses of more than one counsel for all of the
Indemnified Parties. In any
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event, Parent and the Indemnified Parties shall cooperate in the defense of any
action or claim. Parent shall not, in the defense of any such claim or
litigation, except with the consent of the Indemnified Party, consent to entry
of any judgment or enter into any settlement that provides for injunctive or
other nonmonetary relief affecting the Indemnified Party or that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability with respect to such
claim or litigation.
(c) This Section 6.9 is intended for the benefit of, and to grant third
party rights to, persons entitled to indemnification under this Section 6.9,
whether or not parties to this Agreement, and each of such persons shall be
entitled to enforce the covenants contained in this Section 6.9.
(d) If Parent or Merger Sub, as the case may be, or any of their respective
successors or assigns (i) reorganizes or consolidates with or merges into any
other person and is not the resulting, continuing or surviving corporation or
entity of such reorganization, consolidation or merger, or (ii) liquidates,
dissolves or transfers all or substantially all of its properties and assets to
any person or persons, then, and in such case, proper provision will be made so
that the successors and assigns of Parent or Merger Sub assume all of the
obligations of Parent or Merger Sub, as the case may be, as set forth in this
Section 6.9.
6.10 Employment Agreements. During the period from the date of this
Agreement to the Closing Date, the Company shall use its best efforts to assist
Merger Sub to obtain employment agreements with James Heitt, to be effective as
of the Effective Time and containing terms which are reasonably satisfactory to
Merger Sub.
ARTICLE VII
CONDITIONS PRECEDENT TO PARENT'S AND MERGER SUB'S OBLIGATIONS
Parent and Merger Sub shall not be required to proceed on the Closing Date
with the transactions contemplated by this Agreement unless the following
conditions precedent shall have been fulfilled and satisfied, or shall have been
waived in writing by Parent or Merger Sub:
7.1 Representations and Warranties. Each of the warranties and
representations of the Company contained herein shall be true and correct as of
the date of this Agreement, and shall also be true and correct as of the Closing
Date as if then originally made (other than representations and warranties which
address matters only as of a certain date which shall be true and correct as of
such certain date), except as affected by the transactions contemplated hereby
and except where such failures would not, individually or in the aggregate have
a Material Adverse Effect.
7.2 Covenants. The Company shall have complied with each of the covenants
required of it on or prior to the Closing Date, except where such failures would
not, individually or in the aggregate, have a Material Adverse Effect.
7.3 Board and Shareholder Approval. This Agreement and the Merger shall
have been approved and adopted by the Board of Directors of the Company and by
the necessary vote of holders of the capital stock of the Company.
7.4 Certificate. The Company shall have delivered to Parent and Merger Sub
a certificate of its President and Chief Financial Officer, dated the date of
the Closing Date, certifying, to the best of the knowledge and belief of such
persons, that each of the warranties and representations of the Company
contained herein are true and correct as of the Closing Date (other than
representations and warranties which address matters only as of a certain date
which shall be true and correct as of such certain date) except as affected by
the transactions contemplated hereby and except where such failures would not,
individually or in the aggregate, have a Material Adverse Effect, and that the
Company shall have complied with each of the covenants required of it on or
prior to the Closing Date, except where such failures would not, individually or
in the aggregate, have a Material Adverse Effect.
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7.5 Legal Opinion. The Company shall have delivered to Parent and Merger
Sub a legal opinion, in substantially the form attached hereto as Exhibit A,
from Shuttleworth & Ingersoll, P.L.C., Cedar Rapids, Iowa, counsel to the
Company.
7.6 Material Adverse Change. There shall have been no change resulting in a
Material Adverse Effect (or changes which in the aggregate result in a Material
Adverse Effect) since the date hereof.
7.7 Bankruptcy. The Company shall not be the subject of a petition for
reorganization or liquidation under the Federal bankruptcy laws, or under state
or foreign insolvency laws, nor shall an assignment for the benefit of creditors
or any similar protective proceeding or act or event of bankruptcy have
occurred.
7.8 Employment Agreements. Merger Sub shall have obtained an employment
agreement with James Heitt which has been duly executed by the employee and by
Merger Sub and is effective as of the Closing Date.
7.9 Lawsuits. No action, suit or proceeding shall have been instituted
before a court, arbitration panel or Governmental Authority, and no regulatory
enforcement proceeding shall be pending before any governmental agency or
Governmental Authority, with respect to the business or operations of the
Company or its Subsidiaries or any products manufactured or services rendered by
the Company or its Subsidiaries, except where such actions, suits or proceedings
would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.
7.10 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by a court or other
Governmental Authority of competent jurisdiction shall be in effect and have the
effect of making the Merger illegal or otherwise prohibiting consummation of the
Merger.
7.11 HSR Act. Any waiting period (and any extension thereof) under the HSR
Act applicable to the Merger shall have expired or been terminated.
7.12 Dissenters' Rights. Holders of more than 25% of the outstanding Shares
shall not have perfected or otherwise provided written notice of their intention
to perfect their dissenters' rights.
7.13 Market Condition. There shall not have occurred (i) any general
suspension of trading in or limitation on prices for, securities on the Nasdaq
Stock Market's National Market or Small Cap Market, the New York Stock Exchange
or the American Stock Exchange (excluding any coordinated trading halt triggered
solely as a result of a specified decrease in a market index), (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States or any state, or (iii) any material limitation
(whether or not mandatory) by any United States or state Governmental Authority
which would prohibit Parent's bank or other financial institution from lending
funds to Parent for the purpose of consummating the Merger.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING BY THE COMPANY
The Company shall not be required to proceed at the Closing Date with the
transactions contemplated by this Agreement unless the following conditions
precedent shall have been fulfilled and satisfied, or shall have been waived in
writing by the Company:
8.1 Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub contained herein shall be true and correct
as of the date of this Agreement and shall be true and correct as of the Closing
Date as if then originally made (other than representations and warranties which
address matters only as of a certain date which shall be true and correct as of
such certain date ), except as affected by the transactions contemplated hereby
and except where such failure would not, individually or in the aggregate, have
a Material Adverse Effect.
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8.2 Covenants. Parent and Merger Sub shall have complied with each of the
covenants required of them on or prior to the Closing Date, except where such
failure would not, individually or in the aggregate, have a Material Adverse
Effect.
8.3 Officers' Certificate. Parent and Merger Sub shall each have delivered
to the Company a certificate of the Chief Executive Officer and Chief Financial
Officer of Parent and Merger Sub, dated the date of the Closing Date,
certifying, to the best of the knowledge and belief of such officers, that each
of the warranties and representations of Parent and Merger Sub contained herein
are true and correct as of the Closing Date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct as of such certain date), except as affected by the transactions
contemplated hereby, and except where such failures would not, individually or
in the aggregate, have a Material Adverse Effect and that Parent and Merger
shall have complied with each of the covenants required of them on or prior to
the Closing Date, except where such failures would not, individually or in the
aggregate, have a Material Adverse Effect.
8.4 Legal Opinion. Parent and Merger Sub shall have delivered to the
Company, a legal opinion as of the Closing Date, in substantially the form
attached hereto as Exhibit B, from Baker & McKenzie, counsel to Parent and
Merger Sub.
8.5 HSR Act. Any waiting period (and any extension thereof) under the HSR
Act applicable to the Merger shall have expired or been terminated.
8.6 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by a court or other
Governmental Authority of competent jurisdiction shall be in effect and have the
effect of making the Merger illegal or otherwise prohibiting consummation of the
Merger.
ARTICLE IX
TERMINATION
9.1 Termination by Mutual Consent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Closing Date, before or after
the approval by stockholders, by the mutual written consent of Parent, Merger
Sub and the Company.
9.2 Termination by Either Parent or the Company. This Agreement may be
terminated (upon notice from the terminating party to the other parties) and the
Merger may be abandoned by either Parent or the Company if:
(a) The Closing Date shall not have occurred by June 15, 2000 (the
"Termination Date"); provided that the right to terminate this Agreement under
this clause shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the failure
of the Closing Date to occur on or before the Termination Date; and provided
further that the Termination Date shall be June 29, 2000 if (i) any waiting
period (and any extension thereof) under the HSR Act applicable to the Merger
shall not have expired or been terminated by June 15, 2000, or (ii) the SEC
shall have refused to allow the Company to file a definitive proxy statement
with respect to the Merger by June 1, 2000.
(b) Any court of competent jurisdiction or Governmental Authority shall
have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the payment of the Merger
Consideration for the Shares or the making of any Cash Payment pursuant to the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable.
9.3 Termination by the Company. This Agreement may be terminated (upon
notice to Parent) by the Company and the Merger may be abandoned by the Company
if:
(a) Parent or Merger Sub breaches or fails to perform or comply with its
covenants and agreements contained herein or breaches its representations and
warranties in any material respect and such breach cannot or has not been cured
within 15 days after the giving of written notice of such breach to Parent and
Merger Sub, other than any breach which is not reasonably likely to result in a
Material Adverse Effect; or
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(b) the Board of Directors of the Company, after complying with all of the
provisions of Section 6.2, accepts and enters into a definitive agreement with
respect to a Superior Proposal.
9.4 Termination by Parent and Merger Sub. This Agreement may be terminated
(upon notice to the Company) by Parent or Merger Sub, and the Merger may be
abandoned by Parent or Merger Sub if:
(a) The Board of Directors of the Company shall have withdrawn or modified
its approval or recommendation of this Agreement or the Merger;
(b) In the event of a breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement which cannot or has
not been cured prior to 15 days after the giving of written notice of such
breach to the Company and has not been waived by Parent or Merger Sub pursuant
to the provisions hereof, other than any breach which is not reasonably likely
to result in a Material Adverse Effect; or
(c) Any parties (other than Parent or the Merger Sub) to any Stockholder
Agreements whose signatories own of record or beneficially more than ten percent
(10%) of the Common Stock of the Company issued and outstanding on the date of
this Agreement shall have materially breached or repudiated any such agreements.
9.5 Effect of Termination and Abandonment. In the event of termination of
this Agreement and abandonment of the Merger pursuant to this Article IX, no
party hereto (or any of its directors or officers) shall have any liability or
further obligation to any other party to this Agreement, except as provided in
Section 9.6 and 10.1, except that nothing herein will relieve any party from
liability for any breach of this Agreement.
9.6 Payment of Certain Fees upon Termination.
(a)(i) If either (A)(i) the Company receives a bona fide Acquisition
Proposal at any time after the date of this Agreement and prior to the
termination of this Agreement, (ii) this Agreement terminates prior to the
consummation of the Merger for any reason (other than a breach of this Agreement
by Parent or Merger Sub), and (iii) by the date which is twelve (12) months
after the date of termination of this Agreement, either (1) an Acquisition
Proposal with a third party is consummated, or (2) the Company enters into an
agreement for an Acquisition Proposal with a third party which is thereafter
consummated, or (B) the Company terminates this Agreement pursuant to Section
9.3(b), then, in either event, the Company shall pay to Parent, by wire transfer
of immediately available funds, within two days after the consummation of the
Acquisition Proposal or Superior Proposal, as the case may be, a fee in the
amount of One Million Two Hundred Seventy-Seven Thousand Dollars ($1,277,000).
(b) In the event of termination of this Agreement by Parent or Merger Sub
pursuant to Section 9.4(b) or Section 9.4(c), then the Company shall reimburse
Parent for its reasonable out-of-pocket expenses (including but not limited to
expenses referenced in Section 10.1(i) and 10.1(ii)) actually incurred in
connection with this Agreement and the transactions contemplated hereby, up to
an aggregate amount of One Million Dollars ($1,000,000), which amount shall be
payable by wire transfer of immediately available funds within three business
days of written demand therefor, accompanied by a reasonable detailed statement
of such expenses and appropriate supporting documentation therefor.
(c) In the event of termination of this Agreement by the Company pursuant
to Section 9.3(a), then Parent shall reimburse the Company for its reasonable
out-of-pocket expenses (including but not limited to expenses referenced in
Section 10.1(i)) actually incurred in connection with this Agreement and the
transactions contemplated hereby, up to an aggregate amount of One Million
Dollars ($1,000,000), which amount shall be payable by wire transfer of
immediately available funds within three business days of written demand
therefor, accompanied by a reasonably detailed statement of such expenses and
appropriate supporting documentation therefor.
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ARTICLE X
MISCELLANEOUS AND GENERAL
10.1 Expenses. Each party shall bear its own expenses, including the fees
and expenses of any attorneys, accountants, investment bankers, brokers, finders
or other intermediaries or other Persons engaged by it, incurred in connection
with this Agreement and the transactions contemplated hereby, except (i) the
expenses incurred in connection with the printing, filing and mailing to
stockholders of the Proxy Statement and the solicitation of stockholder
approvals shall be shared equally by the Company and Parent, (ii) all filing
fees incurred, or to be incurred, in connection with filings under the HSR Act
and any other applicable antitrust laws and regulations shall be the sole
responsibility of Parent, and (iii) as otherwise provided in Section 9.6.
10.2 Notices, Etc. All notices, requests, demands or other communications
required by or otherwise with respect to this Agreement shall be in writing and
shall be deemed to have been duly given to any party when delivered personally,
when scheduled for delivery when sent by courier service guaranteeing delivery
by a specific date, when sent by telecopy and confirmed by return telecopy, or
upon receipt after being mailed by first-class mail (or other class of mail),
postage prepaid and return receipt requested in each case to the applicable
addresses set forth below:
If to the Company:
Met-Coil Systems Corporation
5486 Sixth Street, SW
Cedar Rapids, IA 52404
Attn: James D. Heitt
President and Chief Operating Officer
Facsimile: (319) 362-0225
With a copy to:
Carroll Reasoner, Esq.
Shuttleworth & Ingersoll
115 Third Street SE, Suite 500
Cedar Rapids, IA 52406-2107
Facsimile: (319)-365-8725
If to Parent or Merger Sub:
Formtek, Inc.
260 North Elm Street
Westfield, MA 01085
Attn: Stephen Shea
Senior Vice President and Chief Financial Officer
Facsimile: (413) 568-7428
With a copy to:
Baker & McKenzie
815 Connecticut Ave, N.W.
Washington, DC 20006
Attn: Marc R. Paul, Esq.
Facsimile: (202) 452-7074
or to such other address as such party shall have designated by notice so given
to each other party.
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10.3 Amendments, Waivers, Etc. This Agreement may be amended, changed,
supplemented, waived or otherwise modified only by an instrument in writing
signed by the party against whom enforcement is sought; provided that, after the
adoption of this Agreement by the stockholders of the Company, no such
amendment, change, supplement or waiver shall be made without the further
requisite approval of such stockholders if such amendment, change, supplement or
waiver by law requires the further approval by such stockholders.
10.4 No Assignment. This Agreement shall be binding upon and shall inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns; provided that, except as otherwise expressly set forth in this
Agreement, neither the rights nor the obligations of any party may be assigned
or delegated without the prior written consent of the other parties.
10.5 Entire Agreement. Except as otherwise provided herein, this Agreement
(together with the Company Disclosure Statement, the Parent/Merger Sub
Disclosure Statement, Exhibits, and the Confidentiality Agreement and the other
agreements expressly contemplated hereby) embodies the entire agreement and
understanding between the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter. There are no representations, warranties or covenants by the parties
hereto relating to such subject matter other than those expressly set forth in
this Agreement (including the Company Disclosure Statement, the Parent/Merger
Sub Disclosure Statement, Exhibits and the Confidentiality Agreement) and any
writings expressly required hereby.
10.6 Specific Performance. The parties acknowledge that money damages are
not an adequate remedy for violations of this Agreement and that any party may,
in its sole discretion, apply to a court of competent jurisdiction for specific
performance or injunctive or such other relief as such court may deem just and
proper in order to enforce this Agreement or prevent any violation hereof and,
to the extent permitted by applicable Law, each party waives any objection to
the imposition of such relief.
10.7 Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
10.8 No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
10.9 No Third Party Beneficiaries. Except as otherwise provided in Section
6.7 (with respect to the Agent only) and Section 6.9, this Agreement is not
intended to be for the benefit of and shall not be enforceable by any Person or
entity who or which is not a party hereto.
10.10 Public Announcements. Parent and the Company will agree upon the
timing and content of the initial press release to be issued describing the
transactions contemplated by this Agreement, and will not make any public
announcement thereof prior to reaching such agreement unless required to do so
by applicable Law or regulation or NASDAQ or stock exchange requirement. To the
extent reasonably requested by any other party, each party will thereafter
consult with and provide reasonable cooperation to the others in connection with
the issuance of further press releases or other public documents describing the
transactions contemplated by this Agreement.
10.11 Governing Law. This Agreement and all disputes hereunder shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Delaware, without regard to principles of conflict of laws.
10.12 Name, Captions, Etc. The names assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof. Unless otherwise specified,
(a) the terms "hereof", "herein" and similar terms refer to this Agreement as a
whole and
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(b) references herein to Articles or Sections refer to articles or sections of
this Agreement. Wherever appearing herein, the word "including" shall be deemed
to be followed by the words "without limitation."
10.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
10.14 Survival of Representations, Warranties, Covenants and
Agreements. The respective representations and warranties of the Company
contained herein or in any certificates or other documents delivered prior to or
at the Closing Date shall terminate at the Effective Time. The respective
representations and warranties of the Parent and Merger Sub contained herein or
in any certificates or other documents delivered prior to or at the Closing Date
shall terminate at the Effective Time. The respective covenants and agreements
of the parties contained herein or in any other documents delivered prior to or
at the Closing Date shall survive the execution and delivery of this Agreement
and shall only terminate in accordance with their respective terms.
10.15 Severability. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable in a jurisdiction, such provision shall be
modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other jurisdiction.
10.16 Disclosure Statements. The parties acknowledge that the disclosures
contained in the Company Disclosure Statement and Parent/Merger Sub Disclosure
Statement to this Agreement (i) relate to certain matters concerning the
disclosures required and transactions contemplated by this Agreement, (ii) are
qualified in their entirety by reference to specific provisions of this
Agreement, and (iii) are not intended to constitute and shall not be construed
as indicating that such matter is required to be disclosed, nor shall such
disclosure be construed as an admission that such information is material with
respect to the Company, Parent or Merger Sub, as the case may be, except to the
extent required by this Agreement.
10.17 Waiver.
(a) Any of the parties may:
(i) Extend in writing the time for the performance of any of the
obligations herein contained to be performed for the benefit of such party;
(ii) Waive in writing any inaccuracies in the representations and
warranties made to it contained in this Agreement or any Exhibit or Company
Disclosure Statement or Parent/Merger Sub Disclosure Statement or any
certificate or certificates delivered by another party to this Agreement;
(iii) Waive in writing the failure in performance of any of the
conditions herein expressed for its benefit; and
(iv) Waive in writing compliance with any of the covenants herein
contained for its benefit.
(b) No such waiver or extension shall be valid unless in writing and signed
by the party granting the waiver or extension, and no such waiver or extension
shall be construed to excuse or mitigate any subsequent breach or violation of
this Agreement not specifically covered by such waiver.
ARTICLE XI
DEFINITIONS
As used in this Agreement, the following terms shall have the respective
meanings set forth below:
"Acquisition Proposal": As defined in Section 6.2(a).
"Affiliate": As defined in Rule 12b-2 under the Exchange Act.
"Agent": As defined in Section 6.7(c).
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"Agreement": As defined in the preamble hereto.
"Authorization": Any consent, approval or authorization of, expiration or
termination of any waiting period requirement (including pursuant to the HSR
Act) by, or filing, registration, qualification, declaration or designation
with, any Governmental Authority.
"Bylaws": In respect of any Person, the bylaws of such Person.
"Cash Payment": As defined in Section 2.2(a).
"Certificate of Merger": The certificate of merger with respect to the
merger of the Company with and into Merger Sub, containing the provisions
required by, and executed in accordance with, Section 251 of the DGCL.
"Closing": As specified in Section 1.2.
"Closing Date": As defined in Section 1.2.
"Code": The Internal Revenue Code of 1986, as amended, and all regulations
promulgated thereunder, as in effect from time to time.
"Common Stock": The Company's common stock, par value $0.01 per share.
"Company": Met-Coil Systems Corporation, a Delaware corporation.
"Company Certificates": As defined in Section 2.3.
"Company Charter": The Certificate of Incorporation of the Company, as
amended to the date hereof and as it may be further amended prior to the Closing
Date with the consent of Parent pursuant to Section 6.1.
"Company Disclosure Statement": The disclosure statement, dated the date of
this Agreement, delivered by the Company to Parent.
"Company Multiemployer Plan" means all Multiemployer Plans to which the
Company or an ERISA Affiliate of the Company contributes or has contributed, or
in which the Company or an ERISA Affiliate of the Company otherwise participates
or has participated.
"Company Other Benefit Obligation" means an Other Benefit Obligation owed,
adopted, or followed by the Company or an ERISA Affiliate of the Company.
"Company Plan" means all Plans, other than Multiemployer Plans, of which
the Company or an ERISA Affiliate of the Company is or was a Plan Sponsor, or to
which the Company or an ERISA Affiliate of the Company otherwise contributes or
has contributed, or in which the Company or an ERISA Affiliate of the Company
otherwise participates or has participated. All references to Plans are to
Company Plans unless the context requires otherwise.
"Company SEC Reports": As defined in Section 3.11.
"Company Stockholders' Meeting": As defined in Section 6.4.
"Confidentiality Agreement": That certain Confidentiality Agreement dated
July 21, 1999 between the Company and Ultimate Parent.
"Control": With respect to any Person, the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract, or
otherwise.
"DGCL": The Delaware General Corporation Law.
"Dissenting Shares": As defined in Section 2.5.
"Dissenting Stockholder": As defined in Section 2.5.
"Effective Time": As defined in Section 1.2.
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"Environmental, Health, and Safety Liabilities": Any cost, damages,
attorneys' fees, expense, liability, obligation, or other responsibility arising
from or under Environmental Laws and consisting of or relating to:
(a) any environmental, health, or safety matters or conditions including
on-site or off-site contamination, occupational safety and health, and
regulation of Hazardous Substances;
(b) any events, facts, conditions or circumstances which may give rise to
common law or other legal liability, or otherwise form the basis of any fines,
penalties, judgments, awards, settlements, suits, notices of violation, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses;
(c) financial responsibility under Environmental Laws for cleanup costs or
corrective action, including any investigation, cleanup, removal, containment,
or other remediation or response actions ("Cleanup") required by applicable
Environmental Laws (whether or not such Cleanup has been required or requested
by any Governmental Authority or any other Person) and for any natural resource
damages; or
(d) any other compliance, corrective, investigative, response, removal or
remedial measures required under Environmental Laws.
The terms "removal," "remedial," and "response action," include the types
of activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. sec. 9601 et seq., as amended
("CERCLA"), or equivalent state "Superfund" laws, and include removal, remedial
and investigatory activities under federal, state, or local voluntary site
remediation programs.
"Environmental Laws": As defined in Section 3.23.
"ERISA Affiliate" means, with respect to the Company, any other person
that, together with the Company, would be treated as a single employer under
Code Section 414.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended,
and all regulations promulgated thereunder, as in effect from time to time.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Executive Agreements": As defined in Section 6.7.
"Governmental Authority": Any
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and any court
or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hazardous Substances": As defined in Section 3.23.
"HSR Act": The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"Initial Period": As defined in Section 6.7(a).
"Intellectual Property": As defined in Section 3.10.
"Knowledge of the Company", "to the Company's knowledge" and words of
similar import shall mean the actual knowledge of Raymond Blakeman, James Heitt,
Gary Dickerson, Rian Scheel, Randall Stodola, J.R. Svehla, John Toben or John
Welty.
"Law": Any foreign or domestic law, statute, code, ordinance, rule,
regulation promulgated, or order, judgment, writ, stipulation, award, injunction
or decree entered by any Governmental Authority.
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"Lien": As defined in Section 3.16.
"Material Adverse Effect": In respect of any Person, a material adverse
effect on the business, properties, assets, liabilities, operations, results of
operations or condition (financial or otherwise) of such Person and its
Subsidiaries taken as a whole, or which would prevent the consummation of the
transactions contemplated by this Agreement on the terms and conditions
contained herein.
"Material Contracts": As defined in Section 3.17.
"Material Systems": As defined in Section 3.21.
"Merger": As defined in the recitals hereto.
"Merger Consideration": As defined in Section 2.1.
"Merger Sub": Formtek Acquisition, Inc., a Delaware corporation.
"Merger Sub Common Stock": Merger Sub's common stock, par value $0.01 per
share.
"Multiemployer Plan" has the meaning given in ERISA Section 3(37)(A).
"NASDAQ": The Nasdaq Stock Market, National Market System.
"Options": Options to purchase Shares.
"Other Benefit Obligation" means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, or agents, other than obligations, arrangements, and
practices that are Plans or Multiemployer Plans. Other Benefit Obligations
include consulting agreements under which the compensation paid does not depend
upon the amount of service rendered, sabbatical policies, severance payment
policies, and fringe benefits within the meaning of Code Section 132.
"Parent": Formtek, Inc., a Delaware corporation.
"Parent/Merger Sub Disclosure Statement": The disclosure statement, dated
the date hereof, delivered by Parent and Merger Sub to the Company.
"Parent Representatives": As defined in Section 6.6.
"Paying Agent": As defined in Section 2.3.
"Payment Fund": As defined in Section 2.3.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Pension Plan" has the meaning given in ERISA Section 3(2)(A).
"Permitted Investments": As defined in Section 2.3.
"Permitted Liens": As defined in Section 3.16.
"Person": Any individual or corporation, company, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture or other entity of any kind.
"Plan" has the meaning given in ERISA Section 3(3).
"Plan Sponsor" has the meaning given in ERISA Section 3(16)(B).
"Preferred Shares" The Company's Cumulative Preferred Shares, par value
$1.00 per share.
"Property": As defined in Section 3.23.
"PCBs": As defined in Section 3.23.
"Proxy Statement": As defined in Section 3.15.
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"Qualified Plan" means any Plan that meets or purports to meet the
requirements of Code Section 401(a).
"Relevant Date": As defined in Section 3.21.
"SEC": The Securities and Exchange Commission.
"Securities Act": The Securities Act of 1933, as amended.
"Shares": Shares of common stock of the Company, par value $0.01 per share.
"Stockholder Agreements": As defined in the recitals hereof.
"Stock Incentive Plans": As defined in Section 2.2(b).
"Subsidiary": As to any Person, any other Person of which more than (i) 50%
of the equity and (ii) 50% of the voting interests are owned, directly or
indirectly, by such first Person. For the avoidance of doubt, the term
"Subsidiary", when applied to the Company, includes any Person listed as a
Subsidiary on Schedule 3.2 to the Company Disclosure Statement.
"Superior Proposal": As defined in Section 6.2.
"Surviving Corporation": Shall mean the Merger Sub in its capacity as the
surviving corporation in the Merger pursuant to Section 1.1 of this Agreement.
"Tax": As defined in Section 3.9.
"Tax Controversy": As defined in Section 3.9.
"Tax Return": As defined in Section 3.9.
"Termination Date": As defined in Section 9.2.
"Title IV Plans" means all Pension Plans that are subject to Title IV of
ERISA other than Multiemployer Plans.
"Ultimate Parent": Mestek, Inc., a Pennsylvania corporation.
"VEBA" means a voluntary employees' beneficiary association under Code
Section 501(c)(9).
"Voting Debt": As defined in Section 3.4(a).
"Warrants": Warrants to purchase Shares.
"Welfare Plan" has the meaning given in ERISA Section 3(1).
"Wholly Owned Subsidiary": As to any Person, a Subsidiary of such Person
100% of the equity and voting interest in which (other than directors'
qualifying shares) is owned, directly or indirectly, by such Person.
"Year 2000 Compliant": As defined in Section 3.21.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties set forth below.
FORMTEK, INC.
By: /s/ STEPHEN M. SHEA
------------------------------------
Name: Stephen M. Shea
Title: Senior Vice President
FORMTEK ACQUISITION, INC.
By: /s/ STEPHEN M. SHEA
------------------------------------
Name: Stephen M. Shea
Title: Senior Vice President
MET-COIL SYSTEMS CORPORATION
By: /s/ RAYMOND H. BLAKEMAN
------------------------------------
Name: Raymond H. Blakeman
Title: Chairman
In order to induce the Company to execute this Agreement, Ultimate Parent
hereby jointly and severally unconditionally guarantees to the Company the full
and timely performance of all of the obligations and agreements of Parent and
Merger Sub in accordance with the terms hereof. The Company may, at its option,
proceed against Ultimate Parent for the performance of any such obligation or
agreement, or for damages for default in the performance thereof, without first
proceeding against Parent or Merger Sub or against any of their properties.
Ultimate Parent further agrees that its guarantee shall be an irrevocable
guarantee and shall continue in effect notwithstanding any extension or
modification of any guaranteed obligation, any assumption of any such guaranteed
obligation by any other party, or any other act or thing which might otherwise
operate as a legal or equitable discharge of a guarantor and Ultimate Parent
hereby waives all special suretyship defenses and notice requirements. Ultimate
Parent represents and warrants to the Company that (i) Ultimate Parent is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation; (ii) Ultimate Parent has full corporate power and
authority to enter into, execute, deliver and perform its obligations under this
Agreement, (iii) this Agreement has been duly executed and delivered by a duly
authorized officer of Ultimate Parent and (assuming the due execution and
delivery of this Agreement by the other parties hereto other than Merger Sub and
Parent) constitutes a valid and binding agreement of the Ultimate Parent,
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency and other similar laws affecting the rights of creditors generally
and except that the remedies of specific performance, injunction and other forms
of equitable relief may not be available, and (iv) neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will conflict with or violate any provision of the Articles of
Incorporation or Bylaws of Ultimate Parent or conflict with or violate any law,
rule, regulation, ordinance, order, writ, injunction, judgment or decree
applicable to Ultimate Parent or its business or by which any of its assets are
affected, except to the extent any such conflict or violation would not have a
Material Adverse Effect.
MESTEK, INC.
By: /s/ STEPHEN M. SHEA
------------------------------------
Name: Stephen M. Shea
Title: Senior Vice President
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APPENDIX B
LOGO
March 13, 2000
Board of Directors
Met-Coil Systems Corporation
5486 Sixth Street SW
Cedar Rapids, Iowa 52404
Members of the Board:
You have asked for our opinion as to the fairness, from a financial point
of view, to the holders (the "Shareholders") of the Common Stock, par value
$0.01 per share (the "Shares") of Met-Coil Systems Corporation ("Met-Coil
Systems" or the "Company") of the Consideration (as defined herein) to be
received by the Shareholders pursuant to the terms and subject to the conditions
set forth in the Agreement and Plan of Reorganization dated March 13, 2000 (the
"Agreement"), by and between Met-Coil Systems, Mestek, Inc. ("Mestek") and an
indirect wholly-owned subsidiary of Mestek ("Merger Sub"). Pursuant to the
Agreement, Company will be merged with and into the Merger Sub (the "Merger")
and each Outstanding Share (other than Shares owned by the Company, Parent, or
any of its subsidiaries, including Merger Sub, or dissenting Shareholders) will
be converted into the right to receive $7.10 per Share in cash. The cash
consideration to be received by the Shareholders pursuant to the Merger is
referred to herein as the "Consideration".
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning the Company prepared by the
management of the Company;
(iii) analyzed certain financial projections prepared by the
management of the Company;
(iv) discussed the past and current operations and financial condition
and the prospects of the Company with senior executives of the Company;
(v) reviewed the reported prices and trading activity for Company
Common Stock;
(vi) compared the financial performance of the Company and the prices
and trading activity of Company Common Stock with that of certain other
publicly-traded companies (and their securities) that we considered
relevant;
(vii) reviewed the financial terms, to the extent publicly available,
of certain acquisition transactions that we considered relevant;
(viii) participated in discussions and negotiations among
representatives of the Company and Mestek;
(ix) reviewed the draft Merger Agreement and certain related
documents; and
(x) performed such other analyses and considered such other factors as
we have deemed appropriate.
We have assumed and relied upon the accuracy and completeness of the
information reviewed by us for the purposes of this opinion and we have neither
attempted independently to verify, nor assumed any responsibility for
independently verifying, any of such information. We have not conducted, nor
assumed any responsibility for conducting, any valuation or appraisal of any
assets or liabilities, nor have any such valuations or appraisals been provided
to us. In relying on financial analyses and forecasts provided to us, we
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have assumed that they have been reasonably prepared based on assumptions
reflecting the best currently available estimates and judgments by management as
to the expected future results of operations and financial condition of the
Company. We have further assumed that all material governmental, regulatory or
other consents and approvals necessary for the consummation of the Merger as
contemplated by the Agreement will be obtained without any meaningful adverse
effect on the Company. We have relied as to all legal matters relevant to
rendering our opinion upon the advice of counsel.
Our opinion is necessarily based on economic, market and other conditions
as in effect on, and the information made available to us as of, the date
hereof.
Lincoln Partners LLC, as a customary part of its investment banking
business, is engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions and other corporate purposes. We have
been engaged to explore strategic alternatives for Met-Coil Systems including a
potential sale of the Company to interested third parties. For these and other
advisory services provided to the Board of Directors of the Company and to
Met-Coil Systems in connection with the Merger, Lincoln Partners LLC will
receive a fee contingent upon the consummation of the Merger in addition to a
retainer fee which is being paid prior to the transaction a portion of which
will be credited towards the contingency fee. In addition, we will receive a
separate fee for providing this opinion. This opinion fee is not contingent upon
the consummation of the Merger. In addition, the Company has agreed to indemnify
us for certain liabilities that may arise out of rendering this opinion.
Our advisory services and the opinion expressed herein are provided only
for the use of the Board of Directors of Met-Coil Systems in its evaluation of
the proposed Merger. Our opinion is not intended to be and does not constitute a
recommendation to any Shareholder as to how such Shareholder should vote at any
Shareholders' meeting which might be held in connection with the Merger. It is
understood that this letter may be included in its entirety in a proxy statement
relating to the Merger or as may otherwise be required by law or by a court of
competent jurisdiction.
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, our experience as investment bankers, the process that
was undertaken by us to identify strategic alternatives for the Company, and our
work as described above, we are of the opinion that, as of the date hereof, the
value of the Consideration is fair, from a financial point of view, to the
Shareholders.
Sincerely,
/s/ Lincoln Partners LLC
LINCOLN PARTNERS LLC
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APPENDIX C
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
(SEC.)262. APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to (sec.)228
of this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to (sec.)251 (other than a merger effected pursuant to
(sec.)251(g) of this title), (sec.)252, (sec.)254, (sec.)257, (sec.)258,
(sec.)263 or (sec.)264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date
fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting of stockholders to act upon the agreement of merger
or consolidation, were either (i) listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or (ii) held of record by more than 2,000 holders; and
further provided that no appraisal rights shall be available for any
shares of stock of the constituent corporation surviving a merger if the
merger did not require for its approval the vote of the stockholders of
the surviving corporation as provided in subsection (f) of (sec.)251 of
this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of any class
or series of stock of a constituent corporation if the holders thereof
are required by the terms of an agreement of merger or consolidation
pursuant to (sec.)(sec.)251, 252, 254, 257, 258, 263 and 264 of this
title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective
date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market
system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more
than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c. of
this paragraph.
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(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under (sec.)253 of this title is
not owned by the parent corporation immediately prior to the merger,
appraisal rights shall be available for the shares of the subsidiary
Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days
prior to the meeting, shall notify each of its stockholders who was such
on the record date for such meeting with respect to shares for which
appraisal rights are available pursuant to subsection (b) or (c) hereof
that appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of
this section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking
of the vote on the merger or consolidation, a written demand for
appraisal of such stockholder's shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such stockholder's shares. A proxy or vote against the
merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate
written demand as herein provided. Within 10 days after the effective
date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to
(sec.)228 or (sec.)253 of this title, each constituent corporation,
either before the effective date of the merger or consolidation or
within ten days thereafter, shall notify each of the holders of any
class or series of stock of such constituent corporation who are
entitled to appraisal rights of the approval of the merger or
consolidation and that appraisal rights are available for any or all
shares of such class or series of stock of such constituent corporation,
and shall include in such notice a copy of this section; provided that,
if the notice is given on or after the effective date of the merger or
consolidation, such notice shall be given by the surviving or resulting
corporation to all such holders of any class or series of stock of a
constituent corporation that are entitled to appraisal rights. Such
notice may, and, if given on or after the effective date of the merger
or consolidation, shall, also notify such stockholders of the effective
date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation
the appraisal of such holder's shares. Such demand will be sufficient if
it reasonably informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of such
holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the effective
date of the merger or consolidation notifying each of the holders of any
class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent
more than 20 days following the sending of the first notice, such second
notice need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such holder's shares
in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given shall, in
the absence of fraud, be prima facie evidence
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of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more
than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective
date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's
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certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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APPENDIX D
FORM OF
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (the "Agreement"), dated as of March 13, 2000,
is among Formtek, Inc., a corporation organized under the laws of the State of
Delaware ("Parent"), Formtek Acquisition, Inc., a Delaware corporation and
wholly owned subsidiary of Parent ("Sub"), and the other parties signatory
hereto (individually and collectively, the "Stockholder").
W I T N E S S E T H :
WHEREAS, prior to entering into this Agreement, Parent, Sub and Met-Coil
Systems Corporation, a Delaware corporation (the "Company"), entered into an
Agreement and Plan of Reorganization (as such agreement may hereafter be amended
from time to time, the "Merger Agreement"; capitalized terms used and not
defined herein have the respective meanings ascribed to them in the Merger
Agreement), pursuant to which the Company will be merged with and into Sub (the
"Merger"); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholder agree, and the Stockholder
has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Company Common Stock" shall mean at any time the common stock,
$.01 par value, of the Company.
(b) "Company Securities" shall mean the Existing Options and the
Existing Company Warrants, together with any Options or Company
Warrants acquired by the Stockholder after the date hereof and
prior to the termination of this Agreement, whether upon the
exercise of options, warrants or rights, the conversion or exchange
of convertible or exchangeable securities, or by means of purchase,
dividend, distribution or otherwise.
(c) "Existing Company Warrants" shall mean the Company Warrants set
forth opposite the Stockholder's name on Schedule I hereto.
(d) "Existing Options" shall mean the Options set forth opposite the
Stockholder's name on Schedule I hereto.
(e) "Existing Shares" shall mean the shares of Company Common Stock set
forth opposite the Stockholder's name of Schedule I hereto.
(f) "Person" shall mean an individual, corporation, partnership, joint
venture, limited liability company, association, trust,
unincorporated organization or other entity.
(g) "Shares" shall mean the Existing Shares and any shares of Company
Common Stock acquired by the Stockholder after the date hereof and
prior to the termination of this Agreement whether upon the
exercise of options, warrants or rights, the conversion or exchange
of convertible or exchangeable securities, or by means of purchase,
dividend, distribution or otherwise.
2. PROXY STATEMENT. The Stockholder hereby agrees to permit Parent and
Sub to publish and disclose in any proxy statement relating to the
Merger (including all documents and schedules filed with the
Securities and Exchange Commission) its identity and ownership of
Company Common Stock and the nature of its commitments, arrangements
and understandings under this Agreement.
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3. PROVISIONS CONCERNING COMPANY COMMON STOCK. The Stockholder hereby
agrees that during the period commencing on the date hereof and
continuing until the first to occur of (i) the Effective Time, (ii) the
last date the Option (as defined below) is exercisable pursuant to
Section 4 and (iii) the termination date set forth in Section 9, at any
meeting of the holders of Company Common Stock, however called, or in
connection with any written consent of the holders of Company Common
Stock, the Stockholder shall vote (or cause to be voted) the Shares (if
any) owned by the Stockholder whether issued, heretofore owned or
hereafter acquired, (i) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval of the
terms thereof and each of the other actions contemplated by the Merger
Agreement and this Agreement and any actions required in furtherance
thereof and hereof; (ii) against any action or agreement that would
result in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Company under the
Merger Agreement; and (iii) except as otherwise agreed to in writing in
advance by Parent, against the following actions (other than the Merger
and the transactions contemplated by the Merger Agreement): (A) any
extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company or its subsidiaries;
(B) a sale, lease or transfer of a material amount of assets of the
Company or its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (C) (1)
any change in a majority of the persons who constitute the board of
directors of the Company; (2) any change in the present capitalization
of the Company or any amendment of the Company's Certificate of
Incorporation or By-laws; (3) any other material change in the Company's
corporate structure or business; or (4) any other action involving the
Company or its subsidiaries which is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, or materially
adversely affect the Merger and the transactions contemplated by this
Agreement and the Merger Agreement. The Stockholder shall not enter into
any agreement or understanding with any Person or entity the effect of
which would be to violate the provisions and agreements contained in
this Section 3.
4. STOCK OPTION; CERTAIN PURCHASE OBLIGATIONS.
The Stockholder hereby grants to Parent (x) an irrevocable option (the
"Stock Option") to purchase the Shares at a purchase price per Share
(the "Purchase Price") equal to $7.10, payable in cash, and (y) an
irrevocable option (the "Securities Option" and, together with the Stock
Option, the "Option") to purchase the Company Securities at a price per
Company Security equal to the Purchase Price LESS the exercise price of
such Company Security, payable in cash, in each case until the
termination date set forth in Section 9. In the event that Parent wishes
to exercise the Option, Parent shall send a written notice to the
Stockholder identifying the place for the closing of such purchase at
least three business days prior to such closing.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
hereby represents and warrants to Parent and Sub that, except as set
forth in Schedule I hereto:
(h) OWNERSHIP OF SHARES. The Stockholder is the record and beneficial
owner of the number of Shares and Company Securities set forth
opposite such Stockholder's name on Schedule I hereto. On the date
hereof, the Existing Shares, Existing Options and Existing Company
Warrants set forth opposite such Stockholder's name on Schedule I
hereto constitute all of the Shares and Company Securities owned
beneficially or of record by such Stockholder. The Stockholder has
sole voting power and sole power to issue instructions with respect
to the matters set forth in Sections 2, 3 and 4 hereof, sole power
of disposition, sole power of conversion, sole power to demand
appraisal rights and sole power to agree to all of the matters set
forth in this Agreement, in each case with respect to all of the
Existing Shares, Existing Options and Existing Company Warrants set
forth opposite Stockholder's name on Schedule I hereto, with no
limitations, qualifications or restrictions on such rights, subject
to applicable securities laws and the terms of this Agreement.
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(i) POWER; BINDING AGREEMENT. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the
Stockholder's obligations under this Agreement. The execution,
delivery and performance of this Agreement by such Stockholder will
not violate any other agreement to which the Stockholder is a party
including, without limitation, any voting agreement, stockholders
agreement or voting trust. This Agreement has been duly and validly
executed and delivered by the Stockholder and constitutes a valid
and binding agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms. There is no beneficiary
or holder of voting trust certificate or other interest of any
trust of which the Stockholder is trustee whose consent is required
for the execution and delivery of this Agreement or the
consummation by the Stockholder of the transactions contemplated
hereby.
(j) NO CONFLICTS. Except for (i) filings and approvals under the HSR
Act or any other applicable Laws related to competition, antitrust,
monopoly or similar matters, (A) no filing with, and no permit,
authorization, consent or approval of, any state or federal public
body or authority is necessary for the execution of this Agreement
by such Stockholder and the performance by such Stockholder of its
obligations hereunder and (B) none of the execution and delivery of
this Agreement by such Stockholder, the performance by such
Stockholder of its obligations hereunder or compliance by such
Stockholder with any of the provisions hereof shall (1) conflict
with or result in any breach of any applicable organizational
documents applicable to such Stockholder, or (2) violate any order,
writ, injunction, decree, judgment, statute, rule or regulation
applicable to such Stockholder or any of such Stockholder's
properties or assets.
(k) NO FINDER'S FEES. Except as disclosed in the Merger Agreement, no
broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of
such Stockholder.
(l) NO ENCUMBRANCES. The Stockholder's Shares and Company Securities
and the certificates representing such Shares and Company
Securities are now, and at all times during the term hereof will
be, held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising
hereunder. The transfer by the Stockholder of its Shares and
Company Securities to Parent pursuant to the Merger Agreement or
hereunder shall pass to and unconditionally vest in Parent good and
valid title to all such Shares and Company Securities, free and
clear of all claims, liens, restrictions, security interests,
pledges, limitations and encumbrances whatsoever.
(m) RELIANCE BY PARENT. The Stockholder understands and acknowledges
that Parent is entering into, and causing Sub to enter into, the
Merger Agreement in reliance upon the Stockholder's execution and
delivery of this Agreement.
6. COVENANTS OF THE STOCKHOLDER. The Stockholder covenants and agrees as
follows:
(n) NO SOLICITATION. Beginning on the date hereof and ending at the
termination hereof, the Stockholder shall not, in its capacity as
such, directly or indirectly, initiate, solicit (including by way
of furnishing information), encourage or respond to or take any
other action knowingly to facilitate, any inquiries or the making
of any proposal by any person or entity (other than Parent or any
affiliate of Parent) with respect to the Company that constitutes
or reasonably may be expected to lead to, an Acquisition Proposal,
or enter into or maintain or continue discussions or negotiate with
any person or entity in furtherance of such inquiries or to obtain
any Acquisition Proposal, or agree to or endorse any Acquisition
Proposal, or authorize or permit any Person or entity acting on
behalf of the Stockholder to do any of the foregoing. If the
Stockholder receives any inquiry or proposal regarding any
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Acquisition Proposal, the Stockholder shall promptly inform Parent
of that inquiry or proposal and the details thereof.
(o) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. Beginning on
the date hereof and ending at the termination hereof, except as
expressly contemplated by this Agreement, the Stockholder shall not
(i) directly or indirectly, offer for sale, sell, transfer, tender,
pledge, encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect
to or consent to the offer for sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Shares and Company Securities or any interest
therein; provided that the Stockholder may transfer any shares
and/or Company Securities to any Affiliate of the Stockholder;
provided, further that such transferee shall have become a party to
this Agreement (or an agreement identical to this Agreement) and
shall be deemed to make all representations and warranties set
forth in Section 5 hereof and all covenants set forth in this
Section 6 on the date of the transfer of such Shares and/or Company
Securities; (ii) grant any proxies or powers of attorney (except
for powers of attorney granted to Affiliates of the Stockholder
solely for administrative purposes and which require the holder
thereof to vote any and all Shares subject to such powers in
accordance with this Agreement), deposit any Shares and/or Company
Securities into a voting trust or enter into a voting agreement
with respect to any Shares and/or Company Securities; or (iii) take
any action that would make any representation or warranty of such
Stockholder contained herein untrue or incorrect or that would have
the effect of preventing the Stockholder from performing the
Stockholder's obligations under this Agreement.
(p) WAIVER OF APPRAISAL RIGHTS. The Stockholder hereby irrevocably
waives any rights of appraisal or rights to dissent from the Merger
that the Stockholder may have.
(q) STOP TRANSFER; CHANGES IN SHARES. The Stockholder agrees with, and
covenants to, Parent that the Stockholder shall not request that
the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of the
Stockholder's Shares or Company Securities, unless such transfer is
made in compliance with this Agreement. In the event of a stock
dividend or distribution, or any change in the Company Common Stock
by reason of any stock dividend, split-up, recapitalization,
combination, exchange of shares or the like, the term "Shares"
shall be deemed to refer to and include the Shares as well as all
such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged and
the Purchase Price shall be appropriately adjusted. The Stockholder
shall be entitled to receive any cash dividend paid by the Company
during the term of this Agreement until Shares are purchased in the
Merger Agreement or hereunder.
(r) GENERAL RELEASE. The Stockholder hereby releases and forever
discharges the Company, Parent, Sub, their respective officers,
directors, affiliates, employees, shareholders, agents, heirs,
representatives, executors, successors and assigns from all manner
of actions, causes of action, suits, debts, dues, sums of money,
accounts, covenants, contracts, controversies, agreements,
promises, judgments, claims and demands whatsoever, of whatever
kind, whether absolute or contingent, known or unknown, matured or
unmatured, in law, in equity, in arbitration or other proceeding
which the Stockholder ever had and now has or may have against the
Company, Parent, Sub, their officers, directors, affiliates,
employees, shareholders, agents, heirs, representatives, executors,
successors and assigns for, upon, or by reason of any matter, cause
or information. The Stockholder will not hereafter, in any action
in law, equity, arbitration or other proceeding, attempt to make or
prosecute any claim, demand, or cause of action for any matter
whatsoever that is released hereunder, against the Company, Parent,
Sub, or any of their respective officers, directors, affiliates,
employees, shareholders, agents, heirs, representatives, executors,
successors and assigns. The Stockholder agrees that if this
covenant is breached, the Stockholder shall (a) pay all of the
damages resulting from
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such breach, and (b) reimburse the attorneys' fees and all other
costs and expenses of investigation and defense incurred by the
Company, Parent, Sub, their respective officers, directors,
affiliates, employees, shareholders, agents, heirs,
representatives, executors, successors and assigns.
7. FIDUCIARY DUTIES. Notwithstanding anything in this Agreement to the
contrary, the covenants and agreements set forth herein shall not
prevent of the Stockholder (or any of its designees) from taking any
action, subject to the applicable provisions of the Merger Agreement,
while acting in his or her (or such designee's) capacity as a director
of the Company. Parent acknowledges and agrees that the Stockholder has
signed this Agreement solely in his or her capacity as a stockholder of
the Company, and not in his or her capacity as a director, officer or
employee of the Company, and that such action on behalf of the
Stockholder does not limit or restrict his or her ability to vote, or
otherwise act, in his or her capacity as a director, officer or employee
of the Company.
8. MISCELLANEOUS.
(a) FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute
and deliver such additional documents and take all such further
lawful action as may be necessary or desirable to consummate and
make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement.
(b) ENTIRE AGREEMENT. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all other prior agreements
and understanding, both written and oral, between the parties with
respect to the subject matter hereof.
(c) CERTAIN EVENTS. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and
shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by
operation of law or otherwise, including, without limitation, such
Stockholder's heirs, legal representatives, guardians,
administrators, executors, and successors. Notwithstanding any
transfer of Shares, the transferor shall remain liable for the
performance of all obligations under this Agreement of the
transferor in the event such transferee does not perform such
obligations.
(d) ASSIGNMENT. This Agreement shall not be assigned or assignable, by
operation of law or otherwise, without the prior written consent to
the other parties hereto; provided that Parent may assign, at its
sole discretion, its rights and obligations hereunder to any direct
or indirect wholly-owned subsidiary of Parent, although no such
assignment shall relieve Parent of its obligations hereunder if
such assignee does not perform such obligations.
(e) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement
executed by the relevant parties hereto.
(f) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given
(and shall be deemed to have been duly received if so given) by
hand delivery, telegram, telex or telecopy, or by mail (registered
or certified mail, postage prepaid, return receipt requested) or by
any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective
parties at the following addresses:
If to the Stockholders: At the addresses set forth on Schedule I
hereto
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If to Parent or Sub:
c/o Formtek, Inc.
260 North Elm Street
Westfield, MA 01085
Attention: Stephen Shea
Senior Vice President and Chief Financial Officer
Facsimile: (413) 568-7428
copy to: Baker & McKenzie
815 Connecticut Avenue, N.W.
Washington, DC 20006
Attention: Marc R. Paul, Esq.
Facsimile: (202) 452-7034
or to such other address as the person to whom notice is given may
have previously furnished to the others in writing in the manner
set forth above.
(g) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such a manner as
to be effective and valid under applicable law but if any provision
or portion of any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision
or portion of any provision had never been contained herein.
(h) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain
damages for which it would not have an adequate remedy at law for
money damages, and therefore each of the parties hereto agrees that
in the event of any such breach the aggrieved party shall be
entitled to the remedy of specific performance of such covenants
and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or
in equity.
(i) REMEDIES CUMULATIVE. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise
of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such
party.
(j) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations
hereunder, and any custom or practice of the parties at variance
with the terms hereof shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy
or to demand such compliance.
(k) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to be
for the benefit of, and shall not be enforceable by, any person or
entity who or which is not a party hereto.
(l) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(m) JURISDICTION. Each party hereby irrevocably submits to the
exclusive jurisdiction of any United States District Court or any
court of the State of Illinois, in each case located in
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the city of Chicago, Illinois, in any action, suit or proceeding
arising in connection with this Agreement, and agrees that any
such action, suit or proceeding may be brought in such court (and
waives any objection based on forum non conveniens or any other
objection to venue therein); provided, however, that such consent
to jurisdiction is solely for the purpose referred to in this
paragraph (m) and shall not be deemed to be a general submission
to the jurisdiction of said Courts or in the State of Illinois
other than for such purposes. EACH PARTY HERETO HEREBY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT
OR PROCEEDING.
(n) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this
Agreement.
(o) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
(p) SEVERAL OBLIGATIONS. The obligations of each Stockholder under this
Agreement are several and not joint.
9. TERMINATION. This Agreement shall terminate, and no party shall have
any rights or obligations hereunder and this Agreement shall become
null and void and have no effect upon the valid termination of the
Merger Agreement.
10. BINDING AGREEMENT. All authority and rights herein conferred or
agreed to be conferred by the Stockholder shall survive the death or
incapacity of the Stockholder. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective heirs, personal representatives, successors and assigns.
IN WITNESS WHEREOF, Parent, Sub and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
Formtek, Inc.
By:
Name:
Title:
Formtek Acquisition, Inc.
By:
Name:
Title:
By:
Name:
Title:
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<PAGE> 95
FORM OF
AMENDMENT TO THE
STOCKHOLDERS AGREEMENT
THIS AMENDMENT (the "Amendment") to that certain Stockholders Agreement
(the "Agreement"), dated as of March 13, 2000, between Formtek, Inc., a
corporation organized under the laws of the State of Delaware ("Parent"),
Formtek Acquisition, Inc., a Delaware corporation and wholly owned subsidiary of
Parent ("Sub"), and the other parties signatory thereto (individually and
collectively, the "Stockholder"), is made by Parent, Sub and the Stockholder on
this ______ day of April, 2000.
WHEREAS, Parent, Sub, and the Stockholder desire to amend the Agreement on
the terms and conditions hereinafter stated.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the parties hereto, intending to be legally bound
hereby agree as follows:
1. Nothing in this Agreement shall be construed as to release, discharge,
impair, limit or otherwise modify the rights of Stockholder under Section 6.9 of
that certain Agreement and Plan of Reorganization dated March 13, 2000 between
Parent, Sub, and Met-Coil Systems Corporation, a Delaware corporation.
2. All other provisions of the Agreement shall remain in full force and
effect.
3. This Amendment may be executed in counterparts, each of which shall be
deemed an original, but all of which, taken together, shall constitute one and
the same Amendment.
IN WITNESS WHEREOF, Parent, Sub and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
Formtek, Inc.
By:
Name:
Title:
Formtek Acquisition, Inc.
By:
Name:
Title:
Name:
Title:
SHAREHOLDER
<PAGE> 96
MET-COIL SYSTEMS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Raymond H. Blakeman and Carroll J. Reasoner
and/or any one of them acting singly, with full power of substitution, as the
proxy or proxies of the undersigned to attend the Special Meeting of
Stockholders of Met-Coil Systems Corporation, to be held on June 1, 2000, at
9:00 a.m., Central time, at the Crowne Plaza Hotel, 350 First Avenue NE, Cedar
Rapids, Iowa, and any adjournments or postponements thereof, to vote all shares
of stock that the undersigned would be entitled to vote if personally present in
the manner indicated below and on the reverse side, and with discretionary
authority to vote on any other matters properly brought before the meeting or
any adjournments or postponements thereof, all as set forth in the accompanying
Proxy Statement.
THIS PROXY OR PROXIES MAY BE REVOKED BY THE UNDERSIGNED AT ANY TIME, PRIOR
TO THE VOTING OF THE PROXY, BY DELIVERING A WRITTEN NOTICE TO THE SECRETARY OF
THE COMPANY, BY EXECUTING AND DELIVERING A LATER-DATED PROXY OR BY ATTENDING THE
MEETING AND VOTING IN PERSON.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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<PAGE> 97
<TABLE>
<CAPTION>
<S><C>
MET-COIL SYSTEMS CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
1. PROPOSAL TO APPROVE AND ADOPT THE MERGER AND The Board of Directors recommends a vote FOR
THE AGREEMENT AND PLAN OF REORGANIZATION, dated For Against Abstain the Proposal to approve and adopt the Merger
as of March 13, 2000, by and among Met-Coil Systems [ ] [ ] [ ] and the Agreement and Plan of Reorganization
Corporation, Formtek, Inc., a Delaware corporation, and in the discretion of the proxies on all
and Formtek Acquisition, Inc., a Delaware corporation other matters properly brought before the
and Mestek, Inc. a Pennsylvania corporation, as meeting.
guarantor.
In the absence of instructions to the contrary,
2. In the discretion of the proxies, on any other matter For Against Abstain the shares represented will be voted in
that may be properly brought before the meeting. [ ] [ ] [ ] accordance with the Board's recommendation to
approve the Agreement and Plan of
Reorganization and the Merger, and in the
discretion of the proxies on all other matters
properly brought before the meeting.
Dated: , 2000
-------------------------
Signature:
---------------------------
Signature:
---------------------------
NOTE: Please date this proxy and sign
your name exactly as it appears
hereon. When there is more than one
owner each should sign. When signing
as an attorney, administrator,
executor, guardian, or trustee,
please add your title as such. If
executed by a corporation, this proxy
should be signed by a duly authorized
officer. If a partnership, please
sign in partnership name by
authorized persons. Please date, sign
and return this proxy card in the
enclosed envelope. No postage
required if mailed in the United
States.
- ------------------------------------------------------------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
</TABLE>
