UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 11, 1998
PORTEC, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-500 36-1637250
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
One Hundred Field Drive, Suite 120, Lake Forest, IL 60045
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 735-2800
<PAGE> 2
ITEM 5. OTHER EVENTS.
Portec, Inc. announced on March 11, 1998 that it had entered
into an Agreement and Plan of Merger dated as of March 11, 1998 with
MHD Acquisition Corp., an affiliate of J Richard Industries, L.P. (the
"Merger Agreement"). Under the Merger Agreement, each share of Portec
common stock will be converted into the right to receive $16.00 per
share in cash for a total transaction value of approximately $76
million. The transaction is subject to MHD's satisfactory completion
of due diligence and MHD obtaining acceptable financing arrangements
on or prior to April 10, 1998. In addition, the transaction is subject
to approval by Portec's stockholders and certain regulatory agencies,
and other customary conditions.
The foregoing summary is qualified in its entirety by
reference to the Merger Agreement, a copy of which is filed under Item
7 as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits.
99 Agreement and Plan of Merger Dated as of March 11, 1998 by and
between MHD Acquisition Corp. and Portec, Inc.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PORTEC, INC.
Date: March 13, 1998 By: /s/ N. A. Kindl
---------------------------
N. A. Kindl
Vice President and Secretary
<PAGE> 4
INDEX TO EXHIBITS
Exhibit Number Description
-------------- -----------
99 Agreement and Plan of Merger Dated as of March 11,
1998 by and between MHD Acquisition Corp. and
Portec, Inc.
EXHIBIT 99
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 11, 1998
BY AND BETWEEN
MHD ACQUISITION CORP.
AND
PORTEC, INC.
<PAGE> 6
TABLE OF CONTENTS
ARTICLE 1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 1.1 THE MERGER . . . . . . . . . . . . . . . . . . 9
SECTION 1.2 CLOSING . . . . . . . . . . . . . . . . . . . . 9
SECTION 1.3 EFFECTIVE TIME . . . . . . . . . . . . . . . . 10
SECTION 1.4 CERTIFICATE OF INCORPORATION . . . . . . . . . 10
SECTION 1.5 BY-LAWS . . . . . . . . . . . . . . . . . . . . 10
SECTION 1.6 DIRECTORS . . . . . . . . . . . . . . . . . . . 10
SECTION 1.7 OFFICERS . . . . . . . . . . . . . . . . . . . 10
SECTION 1.8 EFFECT OF MERGER ON ACQUIROR CAPITAL STOCK . . 10
SECTION 1.9 CONVERSION OF COMMON SHARES . . . . . . . . . . 10
Section 1.9.1 OUTSTANDING COMMON SHARES . . . . . . . 10
Section 1.9.2 TREASURY SHARES . . . . . . . . . . . . 11
SECTION 1.10 EXCHANGE OF CERTIFICATES AND RELATED MATTERS . 11
Section 1.10.1 PAYING AGENT . . . . . . . . . . . . . . 11
Section 1.10.2 EXCHANGE PROCEDURES . . . . . . . . . . 11
Section 1.10.3 LETTER OF TRANSMITTAL . . . . . . . . . 12
Section 1.10.4 NO FURTHER OWNERSHIP RIGHTS IN SHARES . 12
Section 1.10.5 TERMINATION OF PAYMENT FUND . . . . . . 12
Section 1.10.6 NO LIABILITY . . . . . . . . . . . . . . 13
SECTION 1.11 STOCK OPTIONS. . . . . . . . . . . . . . . . . 13
SECTION 1.12 DISSENTING SHARES . . . . . . . . . . . . . . . 13
SECTION 1.13 FURTHER ASSURANCES . . . . . . . . . . . . . . 14
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . 14
SECTION 2.1 ORGANIZATION, STANDING AND CORPORATE POWER . . . 14
SECTION 2.2 CAPITAL STRUCTURE . . . . . . . . . . . . . . . 15
SECTION 2.3 SUBSIDIARIES . . . . . . . . . . . . . . . . . . 15
SECTION 2.4 AUTHORITY; NONCONTRAVENTION . . . . . . . . . . 16
SECTION 2.5 SEC DOCUMENTS . . . . . . . . . . . . . . . . . 17
SECTION 2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . 18
SECTION 2.7 ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . 19
SECTION 2.8 BENEFIT PLANS . . . . . . . . . . . . . . . . . 19
SECTION 2.9 TAXES . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.10 COMPLIANCE WITH APPLICABLE LAWS . . . . . . . 22
SECTION 2.11 OPINION OF FINANCIAL ADVISOR . . . . . . . . . 23
SECTION 2.12 BROKERS . . . . . . . . . . . . . . . . . . . 23
SECTION 2.13 ENVIRONMENTAL . . . . . . . . . . . . . . . . 23
SECTION 2.14 LITIGATION . . . . . . . . . . . . . . . . . . 25
SECTION 2.15 LABOR RELATIONS . . . . . . . . . . . . . . . 25
SECTION 2.16 CONTRACTS . . . . . . . . . . . . . . . . . . 25
SECTION 2.17 INTELLECTUAL PROPERTY. . . . . . . . . . . . . 26
SECTION 2.18 REAL ESTATE . . . . . . . . . . . . . . . . . 26
SECTION 2.19 VOTING REQUIREMENTS . . . . . . . . . . . . . 26
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF ACQUIROR . . . . . . 27
SECTION 3.1 ORGANIZATION, STANDING AND CORPORATE POWER . . 27
SECTION 3.2 AUTHORITY; NONCONTRAVENTION . . . . . . . . . . 27
SECTION 3.3 FINANCING . . . . . . . . . . . . . . . . . . . 28
SECTION 3.4 BROKERS . . . . . . . . . . . . . . . . . . . . 28
<PAGE> 7
ARTICLE 4 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . 28
SECTION 4.1 PREPARATION OF PROXY STATEMENT. . . . . . . . . 28
Section 4.1.1 PROXY STATEMENT . . . . . . . . . . . . 28
Section 4.1.2 COMPANY INFORMATION . . . . . . . . . . 29
Section 4.1.3 ACQUIROR INFORMATION . . . . . . . . . . 29
SECTION 4.2 MEETING OF STOCKHOLDERS . . . . . . . . . . . . 29
SECTION 4.3 ACCESS TO INFORMATION; CONFIDENTIALITY . . . . 29
SECTION 4.4 REASONABLE EFFORTS . . . . . . . . . . . . . . 30
SECTION 4.5 PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . 30
SECTION 4.6 ACQUISITION PROPOSALS . . . . . . . . . . . . . 30
SECTION 4.7 FIDUCIARY DUTIES . . . . . . . . . . . . . . . 32
SECTION 4.8 FILINGS; OTHER ACTION . . . . . . . . . . . . . 32
SECTION 4.9 INDEMNIFICATION . . . . . . . . . . . . . . . . 33
SECTION 4.10 FAILURE TO CLOSE . . . . . . . . . . . . . . . 33
SECTION 4.11 FINANCING COMMITMENTS . . . . . . . . . . . . 34
ARTICLE 5 COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO
MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.1 CONDUCT OF BUSINESS BY THE COMPANY . . . . . . 34
SECTION 5.2 MANAGEMENT OF THE COMPANY AND SUBSIDIARIES . . 36
SECTION 5.3 CONDUCT OF BUSINESS BY ACQUIROR . . . . . . . . 36
SECTION 5.4 OTHER ACTIONS . . . . . . . . . . . . . . . . . 37
SECTION 5.5 NOTIFICATION . . . . . . . . . . . . . . . . . 37
ARTICLE 6 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . 37
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER . . . . . . . . . . . . . . . . . . . . . . 37
Section 6.1.1 STOCKHOLDER APPROVAL . . . . . . . . . . 37
Section 6.1.2 GOVERNMENTAL AND REGULATORY CONSENTS . . 37
Section 6.1.3 HSR ACT . . . . . . . . . . . . . . . . 38
Section 6.1.4 NO PROCEEDINGS . . . . . . . . . . . . . 38
Section 6.1.5 FINANCING . . . . . . . . . . . . . . . 38
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF ACQUIROR . . . . . 38
Section 6.2.1 REPRESENTATIONS AND WARRANTIES . . . . . 38
Section 6.2.2 PERFORMANCE OF OBLIGATIONS OF THE
COMPANY . . . . . . . . . . . . . . . . . . . . . 38
Section 6.2.3. THIRD PARTY APPROVALS . . . . . . . . . 38
Section 6.2.4 NO MATERIAL ADVERSE EFFECT . . . . . . . 38
SECTION 6.3 CONDITIONS TO OBLIGATION OF THE COMPANY . . . . 38
Section 6.3.1 REPRESENTATIONS AND WARRANTIES . . . . . 39
Section 6.3.2 PERFORMANCE OF OBLIGATIONS OF ACQUIROR . 39
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . 39
SECTION 7.1 TERMINATION . . . . . . . . . . . . . . . . . . 39
SECTION 7.2 EFFECT OF TERMINATION . . . . . . . . . . . . . 41
SECTION 7.3 AMENDMENT . . . . . . . . . . . . . . . . . . . 42
SECTION 7.4 EXTENSION; WAIVER . . . . . . . . . . . . . . . 43
SECTION 7.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION
OR WAIVER . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 8 SURVIVAL OF PROVISIONS . . . . . . . . . . . . . . . . 43
SECTION 8.1 SURVIVAL . . . . . . . . . . . . . . . . . . . 43
<PAGE> 8
ARTICLE 9 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.1 NOTICES . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.1 ENTIRE AGREEMENT . . . . . . . . . . . . . . . 45
SECTION 10.2 EXPENSES . . . . . . . . . . . . . . . . . . . 45
SECTION 10.3 COUNTERPARTS . . . . . . . . . . . . . . . . . 45
SECTION 10.4 NO THIRD PARTY BENEFICIARY . . . . . . . . . . 45
SECTION 10.5 GOVERNING LAW . . . . . . . . . . . . . . . . 45
SECTION 10.6 ASSIGNMENT; BINDING EFFECT . . . . . . . . . . 45
SECTION 10.7 DISCLOSURE SCHEDULE . . . . . . . . . . . . . 46
SECTION 10.8 ENFORCEMENT OF THIS AGREEMENT . . . . . . . . 46
SECTION 10.9 HEADINGS, GENDER, ETC . . . . . . . . . . . . 46
<PAGE> 9
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and
entered into as of March 11, 1998 by and between MHD Acquisition
Corp., a Delaware corporation ("Acquiror"), and Portec, Inc., a
Delaware corporation (the "Company").
PREAMBLE
WHEREAS, the respective Boards of Directors of Acquiror and the
Company have determined that the Merger (as defined in Section 1.1) is
in the best interests of their respective stockholders and have
approved the Merger, upon the terms and subject to the conditions set
forth herein;
WHEREAS, Acquiror and the Company desire to make certain
representations, warranties, covenants and agreements in connection
with such Merger; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1 THE MERGER. Subject to the terms and conditions of
this Agreement, at the Effective Time (as defined in Section 1.3),
Acquiror shall be merged with and into the Company (the "Merger"), in
accordance with the Delaware General Corporation Law (the "Delaware
Code"), and the separate corporate existence of Acquiror shall cease
and the Company shall continue as the surviving corporation under the
laws of the State of Delaware (as such, the "Surviving Corporation")
with all the rights, privileges, immunities and powers, and subject to
all the duties and liabilities, of a corporation organized under the
Delaware Code. The Merger shall have the effects set forth in the
Delaware Code.
SECTION 1.2 CLOSING. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 7.1, and subject to the satisfaction or
waiver of the conditions set forth in Article 6, the closing of the
Merger (the "Closing") will take place at 9:00 a.m. on the first
business day following the date on which the last of the conditions
set forth in Section 6.1 shall be fulfilled or waived in accordance
with this Agreement (the "Closing Date"), at the offices of Schiff
Hardin & Waite, 7200 Sears Tower, 233 Wacker Drive, Chicago, Illinois
60606, unless another date, time or place is agreed to in writing by
the parties hereto.
<PAGE> 10
SECTION 1.3 EFFECTIVE TIME. The parties hereto will file with
the Secretary of State of the State of Delaware (the "Delaware
Secretary of State") on the date of the Closing (or on such other date
as Acquiror and the Company may agree) a certificate of merger or
other appropriate documents, mutually satisfactory in form and
substance to Acquiror and the Company and executed in accordance with
the relevant provisions of the Delaware Code, and make all other
filings or recordings required under the Delaware Code in connection
with the Merger. The Merger shall become effective upon the filing of
the certificate of merger with the Delaware Secretary of State, or at
such later time as is specified in the certificate of merger (the
"Effective Time").
SECTION 1.4 CERTIFICATE OF INCORPORATION. At the Effective Time,
the Certificate of Incorporation of the Company shall be the
Certificate of Incorporation of the Surviving Corporation until
thereafter amended in accordance with its terms and as provided by
applicable law.
SECTION 1.5 BY-LAWS. The By-Laws of Acquiror, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by law, the
By-Laws or the Certificate of Incorporation of the Surviving
Corporation.
SECTION 1.6 DIRECTORS. The directors of Acquiror at the
Effective Time shall be the directors of the Surviving Corporation and
will hold office from the Effective Time until their respective
successors are duly elected or appointed and qualify in the manner
provided in the Certificate of Incorporation or By-Laws of the
Surviving Corporation, or as otherwise provided by law.
SECTION 1.7 OFFICERS. The officers of Acquiror at the Effective
Time shall be the officers of the Surviving Corporation and will hold
office from the Effective Time until their respective successors are
duly elected or appointed and qualify in the manner provided in the
Certificate of Incorporation or By-Laws of the Surviving Corporation,
or as otherwise provided by law.
SECTION 1.8 EFFECT OF MERGER ON ACQUIROR CAPITAL STOCK. Each
share of capital stock of Acquiror issued and outstanding immediately
prior to the Effective Time shall be converted into one validly
issued, fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation.
SECTION 1.9 CONVERSION OF COMMON SHARES.
Section 1.9.1 OUTSTANDING COMMON SHARES. Subject to the
other provisions of this Section 1.9, each share of common stock,
$1.00 par value, of the Company (the "Common Shares") issued and
outstanding immediately prior to the Effective Time (other than
shares held as treasury shares by the Company and Dissenting
<PAGE> 11
Shares (as defined in Section 1.12)) shall, by virtue of the
Merger and without any action on the part of the holder thereof,
be converted into the right to receive $16.00 in cash, without
interest (the "Merger Consideration").
Section 1.9.2 TREASURY SHARES. Each Common Share issued and
outstanding immediately prior to the Effective Time which is then
held as a treasury share by the Company immediately prior to the
Effective Time shall, by virtue of the Merger and without any
action on the part of the Company, be cancelled and retired and
cease to exist, without any conversion thereof.
SECTION 1.10 EXCHANGE OF CERTIFICATES AND RELATED MATTERS.
Section 1.10.1 PAYING AGENT. At the Effective Time,
Acquiror shall cause the Surviving Corporation to deposit with a
paying agent appointed by the Company and reasonably acceptable
to Acquiror (the "Paying Agent"), for the benefit of the holders
of Common Shares, cash in an aggregate amount equal to the
aggregate Merger Consideration (such amount being sometimes
hereinafter referred to as the "Payment Fund").
Section 1.10.2 EXCHANGE PROCEDURES. Upon surrender to the
Paying Agent for cancellation of a certificate which immediately
prior to the Effective Time represented Common Shares, together
with a letter of transmittal and such other customary documents
as may be required by the instructions to the letter of
transmittal (collectively, the "Certificate") and acceptance
thereof by the Paying Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor the amount of cash
into which the number of Common Shares previously represented by
such Certificate shall have been converted pursuant to Section
1.9.1. The Paying Agent shall accept such Certificate upon
compliance with such reasonable terms and conditions as the
Paying Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. If the Merger
Consideration (or any portion thereof) is to be delivered to any
person other than the person in whose name the Certificate
representing Common Shares surrendered in exchange therefor is
registered on the record books of the Company, it shall be a
condition to such exchange that the Certificate so surrendered
shall be properly endorsed or otherwise be 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 payment of such consideration to a person other
than the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of the Paying Agent that such
tax has been paid or is not applicable. After the Effective Time,
there shall be no further transfer on the records of the Company
or its transfer agent of any Certificate representing Common
Shares and if any such Certificate is presented to the Company
for transfer, it shall be cancelled against delivery of the
<PAGE> 12
Merger Consideration as hereinabove provided. Until surrendered
as contemplated by this Section 1.10.2, each Certificate
representing Common Shares (other than a Certificate representing
Common Shares to be cancelled in accordance with Section 1.9.2),
shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger
Consideration, without any interest thereon.
Section 1.10.3 LETTER OF TRANSMITTAL. Promptly after the
Effective Time (but in no event more than five business days
thereafter), the Surviving Corporation shall require the Paying
Agent to mail to each record holder of Certificates that
immediately prior to the Effective Time represented Common Shares
which have been converted pursuant to Section 1.9, a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title shall pass, only upon proper delivery
of Certificates representing Common Shares to the Paying Agent
and shall be in such form and have such provisions as the
Surviving Corporation reasonably may specify) and instructions
for use in surrendering such Certificates and receiving the
Merger Consideration to which such holder shall be entitled
therefor pursuant to Section 1.9. The Surviving Corporation also
shall require the Paying Agent to have such letter of transmittal
and instructions available at its offices immediately after the
Effective Date in order to accommodate record holders of
Certificates desiring to receive the Merger Consideration at the
earliest possible date.
Section 1.10.4 NO FURTHER OWNERSHIP RIGHTS IN SHARES. The
Merger Consideration paid upon the surrender for exchange of
Certificates representing Common Shares in accordance with the
terms of this Article I shall be deemed to have been issued and
paid in full satisfaction of all rights pertaining to the Common
Shares theretofore represented by such Certificates, subject,
however, to the Surviving Corporation's obligation (if any) to
pay any dividends or make any other distributions with a record
date prior to the Effective Time which may have been declared by
the Company on such Common Shares in accordance with the terms of
this Agreement or prior to the date of this Agreement and which
remain unpaid at the Effective Time.
Section 1.10.5 TERMINATION OF PAYMENT FUND. Any portion of
the Payment Fund which remains undistributed to the holders of
the Certificates representing Common Shares for 120 days after
the Effective Time shall be delivered to Acquiror, upon demand,
and any holders of Common Shares who have not theretofore
complied with this Article I shall thereafter look only to
Acquiror and only as general creditors thereof for payment,
without interest, of their claim for any Merger Consideration
with respect to their Common Shares.
<PAGE> 13
Section 1.10.6 NO LIABILITY. None of Acquiror, the Surviving
Corporation or the Paying Agent shall be liable to any person in
respect of any cash, shares, dividends or distributions payable
from the Payment Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any
Certificates representing Common Shares shall not have been
surrendered prior to seven years after the Effective Time (or
immediately prior to such earlier date on which any Merger
Consideration in respect of such Certificate would otherwise
escheat to or become the property of any Governmental Entity (as
defined in Section 2.4)), any such cash, shares, dividends or
distributions payable in respect of such Certificate shall, to
the extent permitted by applicable law, become the property of
the Surviving Corporation free and clear of all claims or
interest of any person previously entitled thereto.
SECTION 1.11 STOCK OPTIONS. Immediately prior to the Effective
Time, each outstanding option to purchase Common Shares (each, a
"Stock Option") granted under the 1988 Portec, Inc. Employees' Stock
Benefit Plan (the "Plan") or pursuant to any other stock option plan
or agreement entered into by the Company with any employee or director
of the Company or any Subsidiary (as defined in Section 2.3) thereof,
whether or not then vested or exercisable, shall become vested,
exercisable and cancelled, and each holder of a Stock Option shall be
entitled to receive as soon as practicable thereafter from the Company
in consideration for the cancellation of such Stock Option an amount
in cash (less applicable withholding taxes) equal to the product of
(i) the number of Common Shares previously subject to such Stock
Option multiplied by (ii) the excess, if any, of the Merger
Consideration over the exercise price per Common Share previously
subject to such Stock Option.
SECTION 1.12 DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, the Common Shares outstanding immediately
prior to the Effective Time and held by a holder who has not voted in
favor of the Merger or consented thereto in writing and who has
demanded properly in writing appraisal for such Common Shares in
accordance with Section 262 of the Delaware Code and who shall not
have withdrawn such demand or otherwise have forfeited appraisal
rights shall not be converted into or represent the right to receive
the Merger Consideration ("Dissenting Shares"). Such stockholders
shall be entitled to receive payment of the appraised value of such
Common Shares held by them in accordance with the provisions of such
Section 262, except that all Dissenting Shares held by stockholders
who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Common Shares held
by them under such Section 262 shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the Effective
Time, for the right to receive, without any interest thereon, the
Merger Consideration, upon surrender, in the manner provided in
Section 1.10.2, of the Certificate or Certificates that formerly
evidenced such Common Shares. The Company shall give Acquiror prompt
<PAGE> 14
notice of any demands for appraisal received by the Company,
withdrawals of such demands, and any other instruments served pursuant
to Delaware law and received by the Company, and Acquiror shall have
the right to participate in all negotiations and proceedings with
respect to such demands. Prior to the Effective Time, the Company
shall not, except with the prior written consent of Acquiror, make any
payment with respect to any demands for appraisal, or settle or offer
to settle, any such demands.
SECTION 1.13 FURTHER ASSURANCES. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised
that any deeds, bills of sale, assignments or assurances or any other
acts or things are necessary, desirable or proper (i) to vest, perfect
or confirm, of record or otherwise, in the Surviving Corporation its
right, title and interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of either of the
Company or Acquiror, or (ii) otherwise to carry out the purposes of
this Agreement, the Surviving Corporation and its proper officers and
directors or their designees shall be authorized to execute and
deliver, in the name and on behalf of either the Company or Acquiror,
all such deeds, bills of sale, assignments and assurances and do, in
the name and on behalf of such corporations, all such other acts and
things as may be necessary, desirable or proper to vest, perfect or
confirm the Surviving Corporation's right, title and interest in, to
and under any of the rights, privileges, powers, franchises,
properties or assets of such corporations and otherwise to carry out
the purposes of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquiror, except as
set forth in the written disclosure schedule delivered on or prior to
the date hereof by the Company (the "Disclosure Schedule") as follows:
SECTION 2.1 ORGANIZATION, STANDING AND CORPORATE POWER. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite
corporate power and authority to carry on its business as now being
conducted. The Company is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties
makes such qualification necessary, except where the failure to be so
qualified would not, individually or in the aggregate, have a Material
Adverse Effect. As used in this Agreement, the term "Material Adverse
Effect" means with respect to the Company a material adverse effect on
the business, assets, properties, liabilities, results of operations
or financial condition of the Company and its Subsidiaries (as defined
in Section 2.3) taken as a whole. The Company has delivered to
<PAGE> 15
Acquiror complete and correct copies of its Certificate of
Incorporation and By-Laws, as amended to the date of this Agreement.
SECTION 2.2 CAPITAL STRUCTURE. The authorized capital stock of
the Company consists of 10,000,000 Common Shares and 1,000,000 shares
of preferred stock, without par value. At the close of business on
March 10, 1998, (i) 4,449,601 Common Shares were issued and
outstanding; (ii) no Common Shares were held as treasury stock; (iii)
719,657 Common Shares were reserved for issuance upon the exercise of
Stock Options; and (iv) no shares of preferred stock were issued or
outstanding. All outstanding shares of capital stock of the Company
are duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. No bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any
matters on which the stockholders of the Company may vote are issued
or outstanding. Section 2.2 of the Disclosure Schedule sets forth the
following information with respect to each Stock Option outstanding on
the date hereof, (a) the name of the recipient, (b) the number of
Common Shares subject to such Stock Option, and (c) the applicable
exercise price for each Stock Option. Except as set forth above or in
Section 2.2 of the Disclosure Schedule, the Company does not have any
outstanding option, warrant, subscription or other right, agreement or
commitment which either obligates the Company to issue, sell or
transfer, repurchase, redeem or otherwise acquire or vote any shares
of capital stock of the Company, or which restricts the transfer of
Common Shares.
SECTION 2.3 SUBSIDIARIES. (i) Section 2.3(i) of the Disclosure
Schedule sets forth the name of each Subsidiary (as defined below) of
the Company and the state or jurisdiction of its incorporation. Each
Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation
and has the corporate power and authority and all necessary government
approvals to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and
authority or necessary governmental approvals would not, individually
or in the aggregate, have a Material Adverse Effect. Each Subsidiary
is duly qualified or licensed and in good standing to do business in
each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good
standing has not had and would not, individually or in the aggregate,
have a Material Adverse Effect. As used herein, "Subsidiary" means
any corporation, partnership, joint venture or other legal entity and
of which the Company (either alone or through or together with any
other Subsidiary), owns, directly or indirectly, 50% or more of the
capital stock or other equity interests the holders of which are
generally entitled to vote with respect to matters to be voted on in
such corporation, partnership, joint venture or other legal entity.
<PAGE> 16
Except as disclosed in the Filed SEC Documents (as herein defined),
the Company and its Subsidiaries are not subject to any material joint
venture, joint operating or similar arrangement or any material
shareholders agreement relating thereto.
(ii) Section 2.3(ii) of the Disclosure Schedule sets forth, as to
each Subsidiary, its authorized capital stock and the number of its
issued and outstanding shares of capital stock. The Company is,
directly or indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each of the Subsidiaries, and
no capital stock of any Subsidiary is or may become required to be
issued by reason of any options, warrants, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable or exercisable
for, shares of any capital stock of any Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may be bound to issue, redeem,
purchase or sell additional shares of capital stock of any Subsidiary
or securities convertible into or exchangeable or exercisable for any
such shares. All of such shares so owned by the Company are validly
issued, fully paid and nonassessable and are owned by it or by another
wholly-owned Subsidiary thereof free and clear of all liens, claims,
encumbrances, restraints on alienation, or any other restrictions with
respect to the transferability or assignability thereof (other than
restrictions on transfer imposed by federal or state securities laws).
SECTION 2.4 AUTHORITY; NONCONTRAVENTION. The Company has the
requisite corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder. The execution and delivery
of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of the Company, subject, in
the case of the Merger, to the approval of its stockholders as set
forth in Section 4.2. The Board of Directors of the Company has
determined that the Merger is advisable and fair to and in the best
interests of the stockholders of the Company and has approved (and has
resolved to recommend to stockholders for approval) the Merger and
this Agreement. This Agreement has been duly executed and delivered
by the Company and, assuming this Agreement has been duly executed and
delivered by Acquiror, constitutes a valid and binding obligation of
the Company, enforceable against the Company in accordance with its
terms except that the enforcement thereof may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or similar laws now
or hereafter in effect relating to creditor's rights generally and (b)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity). Except as disclosed
in Section 2.4 of the Disclosure Schedule, the execution and delivery
of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions
hereof will not, (i) conflict with or violate any of the provisions of
the Certificate of Incorporation or By-Laws of the Company, (ii)
subject to the governmental filings and other matters referred to in
<PAGE> 17
the following sentence, conflict with, result in a breach of or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a material benefit under, or require the
consent of any person under, any loan agreement, note, indenture or
other agreement, permit, concession, franchise, lease, contract,
license or similar instrument, obligation or undertaking to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their assets is bound or
affected, or (iii) subject to the governmental filings and other
matters referred to in the following sentence, contravene any law,
rule or regulation of any state or of the United States or any
political subdivision thereof or therein, or any order, writ,
judgment, injunction, decree, determination or award currently in
effect, subject, in the case of clauses (ii) and (iii), to those
conflicts, breaches, defaults and similar matters, which, individually
or in the aggregate, have not had and would not reasonably be expected
to have a Material Adverse Effect, nor materially and adversely
affect the Company's ability to consummate the transactions
contemplated hereby. No consent, approval or authorization of, or
declaration or filing with, or notice to, any governmental agency or
regulatory body, court, agency, commission, division, department,
public body or other authority (a "Governmental Entity") which has not
been received or made, is required by or with respect to the Company
or any Subsidiary in connection with the execution and delivery of
this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except for (i) the filing of
premerger notification and report forms under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") with
respect to the Merger, (ii) the filing with the SEC of (x) a proxy
statement relating to the approval by the stockholders of the Company
of the Merger (the "Proxy Statement"), and (y) such reports under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
may be required in connection with this Agreement and the transactions
contemplated by this Agreement, (iii) the filing of the certificate of
merger with the Delaware Secretary of State and appropriate documents
with the relevant authorities of other states in which the Company is
qualified to do business, and (iv) such other consents, approvals,
authorizations, filings or notices as are set forth in Section 2.4 of
the Disclosure Schedule.
SECTION 2.5 SEC DOCUMENTS. The Company has timely filed all
required reports, schedules, forms, statements and other documents
with the SEC since January 1, 1996 (such reports, schedules, forms,
statements and other documents are hereinafter referred to as the "SEC
Documents"). As of their respective dates, the SEC Documents complied
with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to
such SEC Documents, and none of the SEC Documents as of such dates
contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to
<PAGE> 18
make the statements therein, in light of the circumstances under which
they were made, not misleading. The consolidated financial statements
of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as permitted by Rule
10-01 of Regulation S-X) and fairly present, in all material respects,
the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited interim financial statements, to
normal recurring adjustments).
SECTION 2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the SEC Documents filed prior to the date hereof (the
"Filed SEC Documents") or in Section 2.6 of the Disclosure Schedule or
as otherwise contemplated or permitted by this Agreement, since the
date of the most recent audited financial statements included in the
Filed SEC Documents, the Company and its Subsidiaries have conducted
their business only in the ordinary course (which conduct has not had
a Material Adverse Effect), and except as otherwise expressly
permitted by this Agreement, there has not been (i) any event, effect
or change which has had or which would reasonably be expected to have
a Material Adverse Effect, (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of the Company's outstanding capital
stock (other than regular quarterly cash dividends of $.08 per Common
Share in accordance with usual record and payment dates and in
accordance with the Company's present dividend policy), (iii) any
split, combination or reclassification of any of its outstanding
capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its outstanding capital stock, (iv) (a) any granting by the
Company or any of its Subsidiaries to any director, officer or other
employee of the Company or any of its Subsidiaries of any increase in
compensation, except in the case of employees in the ordinary course
of business consistent with prior practice, or as was required under
employment agreements in effect as of the date of the most recent
audited financial statements included in the Filed SEC Documents, (b)
any granting by the Company or any of its Subsidiaries to any such
director, officer or other employee of any increase in severance or
termination pay, except as was required under any employment,
severance or termination agreements in effect as of the date of the
most recent audited financial statements included in the Filed SEC
Documents, (c) any entry by the Company or any of its Subsidiaries
into any employment, severance, change of control, termination or
similar agreement with any officer, director or other employee, (v)
any change in the method of accounting or policy used by the Company
or any of its Subsidiaries, except as disclosed in the financial
<PAGE> 19
statements included in the Filed SEC Documents, (vi) any loss or
material interference with the Company's business or assets from fire,
accident, flood or other casualty (whether or not covered by
insurance) that has had or would reasonably be expected to have a
Material Adverse Effect; or (viii) any material increase in
indebtedness.
SECTION 2.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as
disclosed in the Filed SEC Documents or in Section 2.7 of the
Disclosure Schedule or which were incurred after December 31, 1997 in
the ordinary course of business (which has not had a Material Adverse
Effect), or in connection with the transactions contemplated by this
Agreement, the Company and its Subsidiaries (i) do not have any
material liabilities or obligations (whether direct or indirect,
contingent or otherwise) and (ii) have not entered into any material
oral or written agreement or other transaction which has had or would
reasonably be expected to have a Material Adverse Effect.
SECTION 2.8 BENEFIT PLANS. Schedule 2.8 sets forth a complete
and correct list of all Benefit Plans (as defined below). Except as
disclosed in Section 2.8 of the Disclosure Schedule:
(i) Each "employee pension benefit plan" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (hereinafter a "Pension Plan"),
"employee welfare benefit plan" (as defined in Section 3(1) of
ERISA) (hereinafter a "Welfare Plan"), and each other plan,
arrangement or policy (written or oral) relating to stock
options, stock purchases, stock incentives, compensation,
deferred compensation, severance, employment, consulting,
vacation, bonus, fringe benefits or other employee benefits, in
each case maintained or contributed to, or required to be
maintained or contributed to, by the Company or any person or
entity that together with the Company is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each
a "Commonly Controlled Entity") for the benefit of any present or
former officers, employees, agents, directors or independent
contractors (or their beneficiaries) of the Company or its
Commonly Controlled Entities or with respect to which the Company
or its Commonly Controlled Entities may have any liability (all
the foregoing being herein called "Benefit Plans") has been
administered in accordance with its terms. The Company, its
Subsidiaries and all the Benefit Plans are in compliance with the
applicable provisions of ERISA, the Internal Revenue Code of
1986, as amended (the "Code"), all other applicable laws and all
applicable collective bargaining agreements. Complete and correct
copies of all current and prior documents, including all
amendments thereto, with respect to each Benefit Plan have been
delivered to Acquiror.
(ii) None of the Company or any Commonly Controlled Entity
has incurred any liability to a Pension Plan covered by Title IV
<PAGE> 20
of ERISA (other than for contributions not yet due) or to the
Pension Benefit Guaranty Corporation (other than for the payment
of premiums not yet due) which liability has not been fully paid
as of the date hereof. The aggregate present value of all
benefits, including the maximum value of all subsidized benefits
pursuant to each Benefit Plan covered by Title IV or ERISA,
determined on an ongoing basis and on the basis of projected
compensation for active participants, and earnings, mortality and
other actuarial assumptions set forth in the most recent
actuarial report for the Benefit Plan does not exceed the current
fair market value of the Benefit Plan's assets. All
contributions and other amounts payable as of the Effective Time
by the Company or its Subsidiaries with respect to each Benefit
Plan in respect of current or prior plan years have been either
paid or accrued on the balance sheet of the Company or its
Subsidiaries.
(iii) No Commonly Controlled Entity is required to
contribute to, or has or could have any liability with respect
to, any "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA) or has withdrawn from any multiemployer plan where such
withdrawal has resulted or could result in any "withdrawal
liability" (within the meaning of Section 4201 of ERISA) that has
not been fully paid.
(iv) No matter is pending or, to the knowledge of the
Company threatened, relating to any Benefit Plan before any court
or governmental agency.
(v) Neither the Company nor a Commonly Controlled Entity,
nor any of their respective employees or directors, nor any
fiduciary, has engaged in any transaction, including the
execution and delivery of this Agreement and other agreements,
instruments and documents for which execution and delivery by the
Company is contemplated herein, in violation of Section 406(a) or
(b) of ERISA or which is a "prohibited transaction" (as defined
in Section 4975(c)(i) of the Code) for which no exemption exists
under Section 408(b) of ERISA or Section 4975(d) of the Code or
for which no administrative exemption has been granted under
Section 408(a) of ERISA.
(vi) The Benefit Plans and their related trusts intended to
qualify under Sections 401 and 501(a) of the Code, respectively,
received favorable determination letters from the Internal
Revenue Service and the Company believes such Plans and their
related trusts continue to qualify and operate as designed. Any
voluntary employee benefit association which provides benefits to
current or former employees of the Company and its Subsidiaries,
or their beneficiaries received a favorable determination letter
from the Internal Revenue Service and the Company believes such
associations continue to qualify and operate as designed. Each
Benefit Plan which is intended to meet the requirements of
<PAGE> 21
Section 125 of the Code meets those requirements and each program
of benefits for which employee contributions are provided
pursuant to elections under any such Benefit Plan meets the
requirements of the Code applicable thereto.
(vii) Neither the Company nor any of its Subsidiaries has
any liability (contingent or otherwise) under Section 4069,
Section 4212(c) or Section 4062(c) of ERISA.
(viii) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby
will, as a result of such transactions or any event occurring
thereafter (i) result in any payment becoming due to any employee
(current, former or retired) director or consultant of the
Company or its Subsidiaries, or to a trustee under any "rabbi
trust" or similar arrangement, (ii) increase any benefits under
any Benefit Plan or (iii) result in the acceleration of the time
of payment of, vesting of or other rights with respect to any
such benefits. Neither the Company nor any Subsidiary has made
any payments or provided any compensation or benefits nor are
they or any successor under any agreement, arrangement or Benefit
Plan obligated to make any payments or provide any compensation
or benefits, the deductibility of which may be limited by Section
280G or 162(m) of the Code. Neither the Company nor any Commonly
Controlled Entity or any officer or employee thereof has made any
promises, commitments or representations, whether legally binding
or not, to create any additional benefit plan, agreement or
arrangement, or modify or change any existing Benefit Plan. No
event, condition or circumstance exists that would prevent the
amendment or termination of any Benefit Plan.
SECTION 2.9 TAXES. Except as disclosed in Section 2.9 of the
Disclosure Schedule:
(i) Each of the Company and its Subsidiaries has filed all
tax returns and reports required to be filed by it or requests
for extensions to file such returns or reports have been timely
filed, granted and have not expired. All tax returns filed by
the Company and each of its Subsidiaries are complete and
accurate except to the extent that such failure to be complete
and accurate would not have a Material Adverse Effect. The
Company and each of its Subsidiaries has paid (or the Company has
paid on the Subsidiaries' behalf) all taxes shown as due on such
returns and all taxed required to be paid. The most recent
financial statements contained in the SEC Documents reflect an
adequate reserve for all taxes payable by the Company and the
Subsidiaries for all taxable periods and portions thereof accrued
through the date of such financial statements.
(ii) No deficiencies for any taxes have been proposed,
asserted or assessed against the Company or any of its
Subsidiaries that are not adequately reserved for, and, except as
<PAGE> 22
set forth on Section 2.9 of the Disclosure Schedule, no requests
for waivers of the time to assess any such taxes have been
granted or are pending. The Federal income tax returns of the
Company and each of its Subsidiaries consolidated in such returns
have been examined by and settled with the United States Internal
Revenue Service, or the statute of limitations on assessment or
collection of any Federal income taxes due from the Company or
the any of its Subsidiaries has expired, through such taxable
years as are set forth in Section 2.9 of the Disclosure Schedule.
(iii) As used in this Agreement, "taxes" shall include all
Federal, state, local and foreign income, property, premium,
franchise, sales, excise, employment, payroll, withholding and
other taxes, tariffs or governmental charges of any nature
whatsoever and any interest, penalties, additional amounts and
additions to taxes relating thereto.
(iv) Neither the Company nor any of its Subsidiaries has
made any election, filed any consent or entered into any
agreement with respect to taxes that is not reflected on the
federal income tax returns of the Company and its Subsidiaries
for the three years ended December 31, 1996 (copies of which
returns have been made available to Acquiror for review prior to
the date of this Agreement) and that would reasonably be expected
to be material to the Company and the Subsidiaries taken as a
whole.
SECTION 2.10 COMPLIANCE WITH APPLICABLE LAWS. Except as
disclosed in Section 2.10 of the Disclosure Schedule:
(i) The business of the Company and each of the Subsidiaries
is being, and has been since December 31, 1995, conducted in
compliance in all material respects with all applicable federal,
state, local and foreign laws, statutes, ordinances, rules and
regulations, decrees, judgments and orders of any Governmental
Entity, and all material notices, reports, documents and other
information required to be filed thereunder within the last three
years were properly filed and were in compliance in all material
respects with such laws. The assets, properties, facilities and
operations of the Company and each of the Subsidiaries are in
compliance in all material respects with all applicable laws
relating to public and worker health and safety.
(ii) The Company, and each of the Subsidiaries, has all
licenses, permits, authorizations, franchises, and rights
("Licenses") which are necessary for it to own, lease or operate
its properties and assets and to conduct its business as now
conducted. The business of the Company and each of the
Subsidiaries has been and is being conducted in compliance in all
material respects with all such Licenses. All such Licenses are
in full force and effect, and there is no proceeding or
investigation pending or, to the knowledge of the Company,
<PAGE> 23
threatened which would reasonably be expected to lead to the
revocation, amendment, failure to renew, limitation, suspension
or restriction of any such License.
SECTION 2.11 OPINION OF FINANCIAL ADVISOR. The Company has
received the written opinion of Wasserstein Perella & Co., dated the
date of the Board's approval of this Agreement, to the effect that, as
of such date, the Merger Consideration to be received in the Merger is
fair to the Company's stockholders from a financial point of view.
SECTION 2.12 BROKERS. Except for Wasserstein Perella & Co.,
whose fees will be paid by the Company pursuant to its amended
agreement with the Company (a copy of which has been or will be
furnished to Acquiror), all negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by the
Company directly with Acquiror, and no person or entity is entitled to
a finder's fee, brokerage commission, or similar payment in connection
with the Merger.
SECTION 2.13 ENVIRONMENTAL. Except as set forth in Section 2.13
of the Disclosure Schedule:
(i) The operations and properties of the Company and the
Subsidiaries (a) are in compliance in all material respects with
all applicable Environmental Laws (as defined) and (b) have not
generated, used, stored, transported, manufactured, released or
disposed of any Hazardous Materials (as defined) on or off the
Company's premises in material violation of Environmental Laws.
No material expenditure will be required to comply with
Environmental Laws in connection with the operation or continued
operation of the business of the Company and the Subsidiaries
after the Effective Date in a manner consistent with the current
operation thereof by the Company and the Subsidiaries. To the
knowledge of the Company and the Subsidiaries, no material
expenditure will be required to remediate, clean up, abate or
remove any Hazardous Materials on any of any real property owned,
operated or leased by the Company or the Subsidiaries.
(ii) There are no actions, complaints, citations,
investigations or proceedings pending or, to the knowledge of the
Company, threatened against the Company or the Subsidiaries
alleging the violation of or seeking to impose liability pursuant
to any Environmental Law or Environmental Permit (as defined
below);
(iii) The Company has provided or will provide Acquiror with
copies of all environmental audits, assessments, studies,
reports, analyses, investigation results or similar
environmentally-related documents of any real property currently
or formerly owned, operated or leased by the Company or any of
its Subsidiaries that are in the possession, custody or control
of the Company or its subsidiaries.
<PAGE> 24
(iv) The Company has provided or will provide Acquiror with
copies of all requests for information (and responses thereto),
notices of violation, complaints, claims or other documents or
correspondence related to or referring to any actual or alleged
violations of Environmental Laws, including but not limited to
the Federal Comprehensive Environmental, Response, Cleanup and
Liability Act ("CERCLA") and similar state laws, at (a) any real
property currently or formerly owned, operated or leased by the
Company or any Subsidiaries, including but not limited to
facilities located in Pittsburgh, Pennsylvania, Novi, Michigan
and Troy, New York, or (b) at CERCLA or similar state sites at
which the Company or any Subsidiaries are named as potentially
responsible parties, or for which the Company or any Subsidiaries
have received a CERCLA Section 122(c), Section 104(e) or similar
notice or request for information.
(v) The Company and Subsidiaries possess, and have
maintained in full force and effect, all Environmental Permits
required for the operation of their respective businesses, and
are in compliance with the provisions of all such Environmental
Permits. No modification, revocation, reissuance, alteration,
transfer or amendment of any material Environmental Permit, or
any review by, or approval of, any third party of any
Environmental Permit is required in connection with the execution
or delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(vi) The Company and the Subsidiaries have not contractually
created or assumed any liabilities or obligations or
indemnifications under any Environmental Laws at or related to
any real property currently or formerly owned, operated or leased
by the Company or any Subsidiaries.
(vii) As used in this Section 2.13, each of the following
terms shall have the following meanings: (a) "Environmental Law"
means any applicable federal, state, local, or foreign law,
statute, code, ordinance, rule, regulation or other requirement
(including common law) relating to the environment (including
air, soil, surface water, groundwater, drinking water, plant life
and animal life), or public or employee health and safety; (b)
"Environmental Permit" means any permit, consent, approval,
authorization, license, variance, registration, identification
number or permission required under or issued pursuant to any
applicable Environmental Law or order, writ, injunction or
decree; and (c) "Hazardous Materials" means any hazardous, toxic
or dangerous substances, materials and wastes, including but not
limited to naturally occurring or man-made petroleum or other
hydrocarbons, flammable explosives, asbestos containing
materials, urea formaldehyde insulation, radioactive materials,
radioactive wastes, by-products and/or ores, polychlorinated
biphenyls, pesticides, herbicides and any other pollutants or
contaminants (including materials with hazardous constituents),
<PAGE> 25
sewage, sludge, industrial and/or mining slag, tailings, solvent
and/or any other similar substance, material, or waste and
including any other substances, materials or wastes regulated
under Environmental Law.
SECTION 2.14 LITIGATION. Except as set forth in the Filed SEC
Documents or in Section 2.14 of the Disclosure Schedule: (i) there are
no outstanding orders, judgments, injunctions, awards or decrees of
any Governmental Entity against the Company or any of its
Subsidiaries, any of its or their properties, assets or business, any
Pension Plan or Welfare Plan ("Company Plan") or, to the knowledge of
the Company, any of its or their current or former directors or
officers, as such, that have had or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect;
(ii) there are no actions, suits or claims or legal, administrative or
arbitration proceedings or investigations pending or, to the knowledge
of the Company, threatened against the Company or any of its
Subsidiaries, any of its or their properties, assets or business, any
Company Plan or, to the knowledge of the Company, any of its or their
current or former directors or officers, as such, that have had or
would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect; and (iii) there are no actions,
suits or claims or legal, administrative or arbitration proceedings or
investigations pending or, to the knowledge or the Company, threatened
against the Company or any of its Subsidiaries, any of its or their
properties, assets or business, any Company Plan or, to the knowledge
of the Company, any of its or their current or former directors or
officers, as such, relating to the transactions contemplated by this
Agreement.
SECTION 2.15 LABOR RELATIONS. Except as set forth in Section
2.15 of the Disclosure Schedule:
(i) Neither the Company nor any Subsidiary is a party to any
collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any Subsidiary
and there are no known organizational campaigns, petitions or
other unionization activities seeking recognition of a collective
bargaining unit.
(ii) There are no strikes, slowdowns, work stoppages or
material labor relations controversies pending or, to the
knowledge of the Company, threatened between the Company or any
Subsidiary and any of their respective employees, and neither the
Company nor any Subsidiary has experienced any such strike,
slowdown, work stoppage or material controversy within the past
three years.
SECTION 2.16 CONTRACTS. Except as set forth in the Filed SEC
Documents or as set forth in Section 2.16 of the Disclosure Schedule,
there are no agreements, contracts or other instruments to which the
Company is a party or by which the Company or any of its Subsidiaries
<PAGE> 26
or any of their assets is bound or affected that are material to the
business, financial condition or results of operations of the Company
or its Subsidiaries taken as a whole ("Company Agreements"). Neither
the Company or any of its Subsidiaries nor, to the knowledge of the
Company, any other party is in breach of or default under any Company
Agreements which are currently in effect, except for such breaches and
defaults which would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect. Except as set forth
in the Filed SEC Documents or as set forth in Section 2.16 of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries
is a party to or bound by any non-competition agreement or any other
agreement or obligation which purports to limit in any material
respect the manner in which, or the localities in which, the Company
or any such Subsidiary is entitled to conduct all or any material
portion of the business of the Company or its Subsidiaries.
SECTION 2.17 INTELLECTUAL PROPERTY. Except as set forth in
Section 2.17 of the Disclosure Schedule:
(i) the Company and each Subsidiary has exclusive ownership
of and title to each issued patent, pending patent application,
registered trademark, registered trade name, registered service
mark and registered copyright owned or used in the business of
the Company and its Subsidiaries taken as a whole (collectively,
the "Registered Intellectual Property"), and to the knowledge of
the Company, the Company and each Subsidiary has ownership of and
rights to use each material patent application, unregistered
trademark application, unregistered trade name, unregistered
service mark, unregistered copyright and other trade secret or
other proprietary intellectual property (the "Other Intellectual
Property" and collectively with the Registered Intellectual
Property, the "Intellectual Property") owned or used in the
business of the Company and its Subsidiaries taken as a whole.
(ii) To the Company's knowledge, the use by the Company and
each Subsidiary of such Intellectual Property does not infringe
upon the rights of any other person, and no other person is
infringing upon the rights of the Company or any Subsidiary in
any such Intellectual Property, except for any such
infringements, that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 2.18 REAL ESTATE. The Company and its Subsidiaries do
not own any real estate other than the premises identified in the
Filed SEC Documents or as set forth in Section 2.18 of the Disclosure
Schedule as being so owned. The Company and its Subsidiaries do not
lease any real estate other than the premises identified in the Filed
SEC Documents or as set forth in Section 2.18 of the Disclosure
Schedule as being so leased.
SECTION 2.19 VOTING REQUIREMENTS. The affirmative vote of the
holders of a majority of the outstanding Common Shares entitled to
<PAGE> 27
vote at the Stockholders Meeting (as defined in Section 4.2) is the
only vote of the holders of any class of the Company's capital stock
necessary to approve this Agreement and the transactions contemplated
by this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to the Company as follows:
SECTION 3.1 ORGANIZATION, STANDING AND CORPORATE POWER.
Acquiror is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Acquiror has not
engaged in any business since it was incorporated other than in
connection with its organization and the transactions contemplated by
this Agreement.
SECTION 3.2 AUTHORITY; NONCONTRAVENTION. Acquiror has all
requisite corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder. The execution and delivery
of this Agreement by Acquiror and the consummation by Acquiror of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Acquiror. This Agreement has
been duly executed and delivered by and, assuming this Agreement has
been duly executed and delivered by the Company, constitutes a valid
and binding obligation of Acquiror, enforceable against it in
accordance with its terms except that the enforcement thereof may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditor's rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity). The
execution and delivery of this Agreement do not, and the consummation
of the transactions contemplated by this Agreement and compliance with
the provisions of this Agreement will not (i) conflict with or violate
any of the provisions of the Certificate of Incorporation or By-Laws
of Acquiror, (ii) subject to the governmental filings and other
matters referred to in the following sentence, conflict with, result
in a breach of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or
require the consent of any person under, any indenture, or other
agreement, permit, concession, franchise, license or similar
instrument or undertaking to which Acquiror or any of its subsidiaries
is a party or by which Acquiror or any of its subsidiaries or any of
their assets is bound or affected, or (iii) subject to the
governmental filings and other matters referred to in the following
sentence, contravene any law, rule or regulation of any state or of
the United States or any political subdivision thereof or therein, or
any order, writ, judgment, injunction, decree, determination or award
currently in effect, subject, in the case of clauses (ii) and (iii),
to those conflicts, breaches, defaults and similar matters, which,
<PAGE> 28
individually or in the aggregate, would not materially and adversely
affect Acquiror's ability to consummate the transactions contemplated
hereby. No consent, approval or authorization of, or declaration or
filing with, or notice to, any Governmental Entity which has not been
received or made is required by or with respect to Acquiror in
connection with the execution and delivery of this Agreement by
Acquiror or the consummation by Acquiror of any of the transactions
contemplated hereby, except for (i) the filing of premerger
notification and report forms under the HSR Act with respect to the
Merger, (ii) the filing of the certificate of merger with the Delaware
Secretary of State, and appropriate documents with the relevant
authorities of the other states in which the Company is qualified to
do business, and (iii) such other consents, approvals, authorizations,
filings or notices as are set forth in Section 2.4 of the Disclosure
Schedule.
SECTION 3.3 FINANCING. Acquiror has delivered to the Company
true and correct copies of letters from PNC Bank and PNC Equity
Management Corp (collectively, the "Lenders"), stating Lenders'
interest in providing the debt financing ("Financing") which, together
with equity to be obtained by Acquiror will be in an amount necessary
to pay the Merger Consideration and consummate the transactions
contemplated hereby, subject to the negotiation, preparation and
execution of binding financing commitments with respect to the
Financing ("Financing Commitments"), and to the fulfillment of the
conditions precedent to be contained in the Financing Commitments.
SECTION 3.4 BROKERS. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried
out by Acquiror directly with the Company, without the intervention of
any person on behalf of Acquiror in such manner as to give rise to any
valid claim by any person against Acquiror, the Company or any
Subsidiary for a finder's fee, brokerage commission, or similar
payment.
ARTICLE 4
ADDITIONAL AGREEMENTS
SECTION 4.1 PREPARATION OF PROXY STATEMENT.
Section 4.1.1 PROXY STATEMENT. As soon as practicable
following the date of this Agreement, the Company shall prepare
and file with the SEC the Proxy Statement. The Company will use
its reasonable efforts to cause the Proxy Statement to be mailed
to the Company's stockholders as promptly as practicable.
Notwithstanding anything in this Agreement to the contrary, the
Company reserves the right to use an Information Statement in
lieu of the Proxy Statement if it determines to obtain the
approval of this Agreement and the Merger by means of a written
consent procedure in lieu of a vote at the Stockholders Meeting
(as defined in Section 4.2).
<PAGE> 29
Section 4.1.2 COMPANY INFORMATION. The Company agrees that
none of the information supplied or to be supplied by the Company
specifically for inclusion in the Proxy Statement will, at the
date it is first mailed to the Company's stockholders or at the
time of the 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 are made,
not misleading. The Proxy Statement will comply as to form in all
material respect with the requirements of the Exchange Act and
the rules and regulations thereunder.
Section 4.1.3 ACQUIROR INFORMATION. Acquiror agrees that
none of the information supplied or to be supplied by Acquiror
specifically for inclusion in the Proxy Statement will, at the
date it is first mailed to the Company's stockholders or at the
time of the 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 are made,
not misleading.
SECTION 4.2 MEETING OF STOCKHOLDERS. The Company will take all
action necessary in accordance with applicable law and its Certificate
of Incorporation and By-laws to convene a meeting of its stockholders
(the "Stockholders Meeting") to consider and vote upon the approval of
this Agreement and the Merger. Subject to Section 4.7 hereof, the
Company will, through its Board of Directors, recommend to its
stockholders approval of this Agreement and the Merger. Without
limiting the generality of the foregoing, the Company agrees that,
subject to its right to terminate this Agreement pursuant to Section
7.1(vi), its obligations pursuant to the first sentence of this
Section 4.2 shall not be affected by (i) the commencement, public
proposal, public disclosure or communication to the Company of any
Acquisition Proposal (as defined in Section 4.6) or (ii) the
withdrawal or modification by the Board of Directors of the Company of
its approval or recommendation of this Agreement or the Merger. The
Company will use its reasonable efforts to hold the Stockholders
Meeting as soon as practicable after the date hereof. Notwithstanding
anything in this Agreement to the contrary, the Company reserves the
right to obtain the approval of this Agreement and the Merger by means
of a written consent procedure in lieu of a vote at the Stockholders
Meeting.
SECTION 4.3 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon
reasonable notice, the Company shall, and shall cause its Subsidiaries
to, afford to Acquiror and to the officers, employees, accountants,
counsel, financial advisors, financing sources and other
representatives of Acquiror reasonable access during normal business
hours during the period prior to the Effective Time to all its
properties, books, contracts, commitments, personnel and records.
During such period, the Company shall furnish promptly to, upon
<PAGE> 30
request, a copy of (i) each SEC Document filed by it during such
period, and (ii) all correspondence or written communication with any
Governmental Entity which relates to the transactions contemplated
hereby or which is otherwise material to the financial condition or
operations of the Company and its Subsidiaries taken as a whole.
Except as required by law, Acquiror will hold, and will cause its
respective directors, officers, partners, employees, accountants,
counsel, financial advisors and other representatives and affiliates
to hold, any nonpublic information obtained from the Company in
confidence to the extent required by, and in accordance with, the
provisions of the letter dated August 18, 1997, between Acquiror and
the Company (the "Confidentiality Agreement").
SECTION 4.4 REASONABLE EFFORTS. Upon the terms and subject to
the conditions and other agreements set forth in this Agreement, each
of the parties agrees to use its reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement.
Notwithstanding any provision in this Agreement to the contrary,
in connection with any filing or submission or other action required
to be made or taken by either Acquiror or the Company to effect the
Merger and to consummate the transactions contemplated hereby, neither
Acquiror nor the Company shall, without the other's prior written
consent, commit to any divestiture transaction, and neither Acquiror,
the Company nor any of their affiliates shall be required to divest or
hold separate or otherwise take or commit to take any action that
limits its freedom of action with respect to, or its ability to
retain, the Company and its Subsidiaries or any material portions
thereof.
SECTION 4.5 PUBLIC ANNOUNCEMENTS. Acquiror and the Company will
consult with each other before issuing, and shall provide each other a
reasonable opportunity to review and comment upon, any press release
or public statement with respect to this Agreement or the transactions
contemplated hereby, except to the extent disclosure prior to such
consultation, review and comment may be required by applicable law,
court process or obligations pursuant to any listing agreement with
any national securities exchange.
SECTION 4.6 ACQUISITION PROPOSALS. The Company shall not, nor
shall it authorize or permit any officer, director or employee of, or
any investment banker, attorney or other advisor or representative of,
the Company or any of its Subsidiaries to, directly or indirectly, (i)
solicit, initiate or encourage the submission of any Acquisition
Proposal (as defined below), (ii) participate in any discussions or
negotiations regarding, or furnish to any person any non-public
information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, an
<PAGE> 31
Acquisition Proposal or (iii) enter into any agreement with respect to
an Acquisition Proposal; provided, however, that nothing contained in
this Section 4.6 shall prohibit the Company or the Board of Directors
of the Company from furnishing non-public information to, or entering
into discussions or negotiations with, any person or entity with
respect to an unsolicited Acquisition Proposal if (but only if), (a)
the Board determines reasonably and in good faith, after due
investigation and after consultation with and based upon the advice of
its outside financial advisor, that such Acquisition Proposal is or
could reasonably be expected to lead to a Superior Proposal (as
defined below); (b) the Board determines reasonably and in good faith,
after due investigation and after consultation with and based upon the
advice of outside counsel, that the failure to take such action would
cause the Board to violate its fiduciary duties to stockholders under
applicable law and (c) the Company (x) provides at least two business
days' notice to Acquiror to the effect that it is taking such action
and (y) receives from such person or entity an executed
confidentiality agreement substantially similar to the Confidentiality
Agreement, except that such confidentiality agreement need not
prohibit such person or entity from making an unsolicited Acquisition
Proposal directly and privately to the Board of Directors of the
Company. In the event that the Company executes such a
confidentiality agreement, the Confidentiality Agreement shall
automatically be amended to provide Acquiror with the right to make an
unsolicited Acquisition Proposal directly and privately to the Board
of Directors of the Company. Notwithstanding anything in this
Agreement to the contrary, the Company shall promptly advise Acquiror
orally and in writing of the receipt by it (or by any of the other
entities or persons referred to above) after the date hereof of any
Acquisition Proposal or any inquiry which could reasonably lead to an
Acquisition Proposal, the material terms and conditions of such
Acquisition Proposal or inquiry, and the identity of the person or
entity making any such Acquisition Proposal, provided that the Company
shall have no obligation to disclose the identity of such person or
entity if such disclosure would violate the terms of any agreement
with such person or entity, or the Board of Directors, after
consultation with and based upon the advice of outside counsel,
concludes in good faith that such disclosure would violate its
fiduciary duties. The Company agrees that it will fully enforce
(including by way of obtaining an injunction), and not waive any
provision of, any confidentiality agreement to which it is a party.
For purposes of this Agreement, "Acquisition Proposal" means any bona
fide proposal with respect to a merger, consolidation, share exchange
or similar transaction involving the Company or any significant
Subsidiary or any purchase of all or any significant portion of the
assets or capital stock of the Company or any significant Subsidiary
or any other business combination (including without limitation the
acquisition of an equity interest therein) involving the Company other
than the transactions contemplated hereby; and "Superior Proposal"
means an Acquisition Proposal which the Board believes in good faith,
after due investigation (taking into account, among other things, the
financing terms and the likelihood of consummation) and based upon the
<PAGE> 32
advice of its outside legal and financial advisors, is more favorable
to the Company's stockholders from a financial point of view than the
Merger.
SECTION 4.7 FIDUCIARY DUTIES. The Board of Directors of the
Company shall not (i) withdraw or modify the approval or
recommendation by such Board of Directors of this Agreement or the
Merger, or (ii) approve or recommend an Acquisition Proposal, unless
the Company receives an unsolicited Acquisition Proposal in accordance
with Section 4.6 and the Board of Directors of the Company determines
in good faith, after due investigation and after consultation with and
based upon the advice of outside counsel, that the failure of the
Board of Directors to withdraw or modify its approval or
recommendation of this Agreement or the Merger, or approve or
recommend such Acquisition Proposal would cause the Board to violate
its fiduciary duties to stockholders under applicable law. Nothing
contained in this Section 4.7 shall prohibit the Company from taking
and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders which, in the good faith
judgment of the Board of Directors of the Company based on advice of
outside counsel, is required under applicable law; provided that the
Company does not withdraw or modify its position with respect to the
Merger or approve or recommend an Acquisition Proposal, except under
the circumstances described in the immediately preceding sentence and
on two business days' notice to Acquiror to the effect that it is
taking such action. Notwithstanding anything contained in this
Agreement to the contrary, any action by the Board of Directors
permitted by this Section 4.7 shall not constitute a breach of this
Agreement by the Company.
SECTION 4.8 FILINGS; OTHER ACTION. As promptly as practicable
after the date of this Agreement, (i) the Company and Acquiror shall
make all filings and submissions under the HSR Act, and (ii) the
Company and Acquiror shall cooperate in all reasonable respects with
each other in (a) determining if other filings are required to be made
prior to the Effective Time with, or if other material consents,
approvals, permits, notices or authorizations are required to be
obtained prior to the Effective Time from any Governmental Entity in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (b) timely
making all such filings and timely seeking all such consents,
approvals, permits, notices or authorizations. In connection with the
foregoing, the Company will provide Acquiror, and Acquiror will
provide the Company, with copies of correspondence, filings or
communications (or memoranda setting forth the substance thereof)
between such party or any of its representatives, on the one hand, and
any Governmental Entity or members of their respective staffs, on the
other hand, with respect to this Agreement and the transactions
contemplated hereby. Each of Acquiror and the Company acknowledge that
certain actions may be necessary with respect to the foregoing in
making notifications and obtaining clearances, consents, approvals,
<PAGE> 33
waivers or similar third party actions which are material to the
consummation of the transactions contemplated hereby, and each of
Acquiror and the Company agree to take such action as is reasonably
necessary to complete such notifications and obtain such clearances,
approvals, waivers or third party actions.
SECTION 4.9 INDEMNIFICATION. (i) From and after the Effective
Time, the Surviving Corporation will indemnify and hold harmless each
present and former director and officer of the Company and its
Subsidiaries, determined as of the Effective Time (the "Indemnified
Parties"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or
pertaining to matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the
Effective Time, to the fullest extent that the Company or such
Subsidiary would have been permitted under applicable law and the
Certificate of Incorporation or By-Laws of the Company or such
Subsidiary in effect on the date hereof to indemnify such person (and
the Surviving Corporation shall also advance expenses as incurred to
the fullest extent permitted under applicable law, provided the person
to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such person is not
entitled to indemnification).
(ii) For a period of six (6) years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the
current policies of directors' and officers' liability insurance
maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous in all
material respects to the Indemnified Parties) with respect to claims
arising from facts or events which occurred before the Effective Time;
provided, however, that the Surviving Corporation shall not be
obligated to make annual premium payments for such insurance to the
extent such premiums exceed 200% of the premiums paid as of the date
hereof by the Company for such insurance.
(iv) The provisions of this Section 4.9 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party,
his heirs and his personal representatives, and shall be binding on
all successors and assigns of the Surviving Corporation.
SECTION 4.10 FAILURE TO CLOSE. If this Agreement is terminated
for any reason pursuant to Article 7, the parties agree that for a
period of two (2) years from the date of termination, Acquiror and its
Subsidiaries will not solicit for employment any officer or employee
of the Company or its Subsidiaries.
<PAGE> 34
SECTION 4.11 FINANCING COMMITMENTS. Promptly following the date
of this Agreement, Acquiror will use its reasonable efforts to (i)
negotiate, execute and deliver the Financing Commitments with the
Lenders or such other reputable financing sources reasonably
acceptable to the Company, (ii) satisfy the covenants and the
conditions included in the Financing Commitments and (iii) obtain the
proceeds of the Financing.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
SECTION 5.1 CONDUCT OF BUSINESS BY THE COMPANY. Except as
contemplated by this Agreement or as set forth in Section 5.1 of the
Disclosure Schedule, during the period from the date of this Agreement
to the Effective Time, the Company shall, and shall cause its
Subsidiaries to, act and carry on their respective businesses in the
ordinary course of business and, to the extent consistent therewith,
use reasonable efforts to preserve intact their current business
organizations, keep in full force and effect their Licenses, keep
available the services of their current key officers, employees and
agents, and preserve the goodwill of regulators or those engaged in
material business relationships with them. Without limiting the
generality of the foregoing, during the period from the date of this
Agreement to the Effective Time, the Company shall not, and shall not
permit any of the Subsidiaries to, without the prior consent of
Acquiror:
(i) adopt or propose any change to its Certificate of
Incorporation or By-Laws;
(ii) (a) declare, set aside or pay any dividends on, or make
any other distributions with respect to, any of the Company's
outstanding capital stock, other than regular quarterly cash
dividends not in excess of $.08 per Common Share so long as the
Common Shares remain outstanding, in accordance with usual record
and payment dates and in accordance with the Company's present
dividend policy (except that no dividends shall be declared, set
aside or paid prior to July 31, 1998), (b) split, combine or
reclassify any of its outstanding capital stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its outstanding capital
stock or (c) purchase, redeem or otherwise acquire any shares of
capital stock or other securities of, or other ownership
interests of the Company other than the Stock Options to be
purchased as contemplated by Section 1.11 above and as may be
necessary to fund matching contributions under the Company's
401(k) plan;
(iii) issue, sell, grant, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options
<PAGE> 35
to acquire, any such shares, voting securities or convertible
securities other than upon the exercise of Stock Options
outstanding on the date of this Agreement;
(iv) acquire any business or any corporation, partnership,
joint venture, association or other business organization or
division or acquire any material assets or make any investment in
any person or enter into any reorganization;
(v) take any action that, if taken prior to the date of this
Agreement, would have been required to be disclosed in Section
2.6 of the Disclosure Schedule or that would otherwise cause any
of the representations and warranties contained in Article 2 not
to be true and correct in all material respects at any time;
(vi) sell, mortgage or otherwise encumber or subject to any
lien or otherwise dispose of any of its properties or assets that
are material to the Company and its Subsidiaries taken as a
whole, except in the ordinary course of business;
(vii) (a) except for the dollar amount required to cancel
and cash out the Stock Options as contemplated by Section 1.11
above, incur any indebtedness for borrowed money or guarantee or
otherwise become responsible for any such indebtedness of another
person, other than indebtedness owing to or guarantees of
indebtedness owing to the Company or any direct or indirect
wholly-owned Subsidiary of the Company or enter into any
agreement for indebtedness or (b) make any loans or advances to
any other person, other than to the Company, or to any direct or
indirect wholly-owned Subsidiary of the Company and other than
routine advances in the ordinary course of business to employees
or agents;
(viii) make any tax election or settle or compromise any
income tax liability that would reasonably be expected to be
material to the Company and its Subsidiaries taken as a whole;
(ix) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms
of liabilities reflected or reserved against in, or contemplated
by, the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Filed SEC Documents
or incurred since the date of such financial statements in the
ordinary course of business consistent with past practice;
(x) except in the ordinary course of business, modify, amend
or terminate, or waive, release or assign any material rights or
claims under any material agreement, permit, concession,
<PAGE> 36
franchise, license or similar instrument to which the Company or
any Subsidiary is a party;
(xi) authorize any of, or commit or agree to take any of the
foregoing actions;
(xii) make any capital expenditures other than as
contemplated by the Company's annual budget;
(xiii) (a) enter into, adopt or amend or increase the amount
or accelerate the payment or vesting of any benefit or amount
payable under, any Benefit Plan, or increase in any manner, the
compensation or fringe benefits, or otherwise extend, expand or
enhance the engagement, employment or any related rights, of any
director, officer or other employee of the Company or any of its
Subsidiaries, except for normal increases in the ordinary course
of business consistent with past practice that, in the aggregate,
do not result in a material increase in benefits or compensation
expense to the Company or any of its Subsidiaries; (b) enter into
or amend any employment, severance or special pay arrangement
with respect to the termination of employment with any director
or officer or other employee other than in the ordinary course of
business consistent with past practice; or (c) deposit into any
trust (including any "rabbi trust") amounts in respect of any
employee benefit obligations or obligations to directors;
(xiv) make any changes in accounting methods, except as
required by law, rule, regulation, the SEC or GAAP; or
(xv) enter into any agreement or arrangement with any
Affiliate (other than wholly owned Subsidiaries). As used in
this Agreement, the term "Affiliate," shall mean, as to any
person, any other person which directly or indirectly controls,
or in under common control with, or is controlled by, such
person. As used in this definition, "control" (including, with
its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise).
SECTION 5.2 MANAGEMENT OF THE COMPANY AND SUBSIDIARIES. The
Company shall, from the date of this Agreement through the Effective
Time, cause its management and that of the Subsidiaries to consult on
a regular basis and in good faith with the employees and
representatives of Acquiror concerning the management of the Company
and its Subsidiaries' businesses.
SECTION 5.3 CONDUCT OF BUSINESS BY ACQUIROR. Except as
contemplated by this Agreement, during the period from the date of
this Agreement to the Effective Time, Acquiror shall, and shall cause
its subsidiaries to, act and carry on their respective businesses in
<PAGE> 37
the ordinary course of business except where the failure to do so
would not adversely affect Acquiror's ability to pay the Merger
Consideration.
SECTION 5.4 OTHER ACTIONS. The Company and Acquiror shall not,
and shall not permit any of their respective subsidiaries to, take or
omit to take any action that would, or that would reasonably be
expected to, result in (i) any of the representations and warranties
of such party set forth in this Agreement becoming untrue in any
material respect at any time or (ii) any of the conditions of the
Merger set forth in Article 6 not being satisfied.
SECTION 5.5 NOTIFICATION. The Company shall give prompt notice
to Acquiror and Acquiror shall give prompt notice to the Company of
(i) the occurrence, or non-occurrence of any event whose occurrence or
non-occurrence would reasonably be expected to cause (a) any
representation or warranty contained in this Agreement which is
qualified as to materiality or Material Adverse Effect to be untrue or
inaccurate at any time from the date hereof to the Effective Time, (b)
any other representation or warranty made contained in this Agreement
to be untrue or inaccurate at any time from the date hereof to the
Effective Time, or (c) any condition set forth in Article 6 to be
unsatisfied at any time from the date hereof to the Effective Time,
and (ii) any failure of the Company, or Acquiror, as the case may be,
to comply with or satisfy in any material respect any material
covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.5 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice or the
right of such party to terminate this Agreement.
ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger
is subject to the satisfaction or waiver on or prior to the Closing
Date of the following conditions:
Section 6.1.1 STOCKHOLDER APPROVAL. This Agreement and the
Merger shall have been approved and adopted by an affirmative
vote of the holders of the requisite number of shares present, in
person or by proxy, and entitled to vote on the Merger at the
Stockholders Meeting.
Section 6.1.2 GOVERNMENTAL AND REGULATORY CONSENTS. The
Company and Acquiror shall have made all such filings, and
obtained such authorizations, consents, or approvals required by
any Governmental Entity to consummate the transactions
contemplated hereby; provided, however that such authorizations,
<PAGE> 38
consents or approvals shall impose no conditions that could
reasonably be expected to have a Material Adverse Effect.
Section 6.1.3 HSR ACT. The waiting period (and any
extension thereof) applicable to the Merger under the HSR Act
shall have been terminated or shall have otherwise expired.
Section 6.1.4 NO PROCEEDINGS. No proceeding shall have
been commenced and be continuing, seeking to restrain or enjoin
the consummation of the Merger.
Section 6.1.5 FINANCING. Acquiror shall have obtained the
proceeds of the Financing contemplated by the Financing
Commitments.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF ACQUIROR. The
obligations of Acquiror to effect the Merger are further subject to
the following conditions:
Section 6.2.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company contained in this
Agreement shall be true and correct on the date hereof and
(except to the extent specifically given as of an earlier date)
on and as of the Closing Date as though made on the Closing Date,
and the Company shall have delivered to Acquiror a certificate
dated as of the Closing Date signed by an executive officer to
the effect set forth in this Section 6.2.1.
Section 6.2.2 PERFORMANCE OF OBLIGATIONS OF THE COMPANY.
The Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement
at or prior to the Closing Date, and the Company shall have
delivered to Acquiror a certificate dated as of the Closing Date
signed by an executive officer to the effect set forth in this
Section 6.2.2.
Section 6.2.3. THIRD PARTY APPROVALS. All authorizations,
consents and approvals of any third party required to be obtained
by the Company which, if not obtained, would have a Material
Adverse Effect, shall have been obtained and shall be in full
force and effect.
Section 6.2.4 NO MATERIAL ADVERSE EFFECT. Since the date
of this Agreement, no event, effect or change shall have occurred
which has had or which would reasonably be expected to have a
Material Adverse Effect, and the Acquiror shall have received a
certificate signed by the Chief Executive Officer or Chief
Financial Officer of the Company to such effect.
SECTION 6.3 CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is further subject to
the following conditions:
<PAGE> 39
Section 6.3.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Acquiror contained in this
Agreement shall be true and correct on the date hereof and
(except to the extent specifically given as of an earlier date)
on and as of the Closing Date as though made on the Closing Date,
and Acquiror shall have delivered to the Company a certificate
dated as of the Closing Date, signed by an executive officer and
to the effect set forth in this Section 6.3.1.
Section 6.3.2 PERFORMANCE OF OBLIGATIONS OF ACQUIROR.
Acquiror shall have performed in all material respects all
obligations required to be performed by it under this Agreement
at or prior to the Closing Date, and Acquiror shall have
delivered to the Company a certificate dated as of the Closing
Date, signed by an executive officer and to the effect set forth
in this Section 6.3.2.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 TERMINATION. This Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before or
after approval of matters presented in connection with the Merger by
the stockholders of the Company:
(i) by mutual written consent of Acquiror and the Company;
(ii) by either Acquiror or the Company:
(a) if, upon a vote at a duly held Stockholders
Meeting, this Agreement and the Merger shall fail to receive
the requisite vote for approval and adoption by the
stockholders of the Company at the Stockholders Meeting;
(b) if the Merger shall not have been consummated on or
before July 31, 1998; provided, that either party may
terminate this Agreement on or after such earlier date on
which it can be reasonably determined that it will be
impossible to consummate the Merger by July 31, 1998; and
provided, further, that the party seeking to terminate this
Agreement pursuant to this Section 7.1(ii)(b) shall not have
breached in any material respect its obligations under this
Agreement in any manner that shall have caused or
contributed to the failure to consummate the Merger by July
31, 1998;
(c) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action, or there
shall be enacted any law having the effect of, permanently
enjoining, restraining or otherwise prohibiting, or making
illegal the Merger and such order, decree, ruling or other
<PAGE> 40
action shall have become final and nonappealable, provided
the party seeking to terminate this Agreement under this
clause (c) shall have used reasonable efforts to remove or
overturn such order, decree, ruling or other action; or
(d) if, on or before April 10, 1998, Acquiror has not
delivered to the Company executed Financing Commitments
providing that the Financing is subject only to conditions
substantially similar to the conditions set forth in
Sections 6.1 and 6.2, and such other commercially reasonable
conditions as may be required by the Lenders or such other
reputable financing sources reasonably acceptable to the
Company (which conditions shall be reasonably acceptable to
the Company), and to definitive documentation;
(iii) by the Company, upon a material breach of any
representation or warranty of Acquiror or Acquiror fails to
comply in any material respect with any of its covenants or
agreements, or if any representation or warranty of Acquiror
shall be or become untrue in any material respect, which breach
or non-compliance is not curable or, if curable, is not cured by
Acquiror within 30 days after written notice of such breach or
non-compliance from the Company;
(iv) by Acquiror, upon a material breach of any
representation, or warranty of the Company or the Company fails
to comply in any material respect with any of its covenants or
agreements, or if any representation or warranty of the Company
shall be or become untrue in any material respect, which breach
or non-compliance is not curable or, if curable, is not cured by
the Company within 30 days after written notice of such breach or
non-compliance from Acquiror;
(v) by Acquiror, at any time before 5:00 p.m. Chicago time
on April 10, 1998 if Acquiror shall determine in good faith that
it is not satisfied with the results of its due diligence
investigation of the Company; provided, however, that Acquiror
must advise the Company orally and in writing of any such
determination prior to terminating this Agreement pursuant to
this Section 7.1(v);
(vi) by the Company, if the Board determines to enter into
and enters into a definitive agreement providing for a Superior
Proposal which was obtained consistent with Section 4.6;
provided, however, that the Company shall have no right to
terminate this Agreement under this Section 7.1(vi) unless (a)
the Company has provided Acquiror with written notice of the
material terms of the Superior Proposal at least two business
days prior to such termination, and (b) the Company
simultaneously pays to Acquiror the Termination Penalty (as
defined herein) required under Section 7.2(ii); or
<PAGE> 41
(vii) by Acquiror, if: (a) the Board shall have taken any
action contemplated by Section 4.7, (b) a tender offer or
exchange offer for 30% or more of the Common Shares of the
Company is commenced, and the Board fails to recommend against
acceptance of such tender offer or exchange offer by its
stockholder within the time period required by Section 14e-2 of
the Exchange Act (the taking of no position by the expiration of
such period with respect to the acceptance of such tender offer
or exchange offer by its stockholders constituting such a
failure), (c) the Company shall have intentionally breached any
of its covenants or agreements in Section 4.6, or (d) after April
10, 1998 there shall be pending any proceeding seeking material
damages on account of the consummation of the Merger which
Acquiror determines in good faith, after due investigation and
consultation with counsel representing the Company in such
proceeding, could reasonably be expected to result in the Company
incurring a material amount of damages or expenses, after taking
into account applicable insurance coverage; provided, however,
Acquiror shall not then be in material breach of its obligations
under this Agreement.
SECTION 7.2 EFFECT OF TERMINATION. (i) In the event of
termination of this Agreement by either the Company or Acquiror as
provided in Section 7.1, except as provided below in Section 7.2(ii),
(iii) or (iv), this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Acquiror or
the Company, other than the last sentence of Section 4.3 and Sections
7.2 and 10.2. Nothing contained in this Section shall relieve any
party from any liability resulting from any material breach of the
representations, warranties, covenants or agreements set forth in this
Agreement.
(ii) In the event of termination of this Agreement by the Company
pursuant to Section 7.1(vi) or by Acquiror pursuant to Section
7.1(vii)(a) or (b), the Company shall (a) pay Acquiror $2,500,000 in
cash as liquidated damages and not as a penalty, immediately upon such
termination, in same-day funds (the "Termination Payment"), by wire
transfer to an account designated by Acquiror; provided however, that
the Termination Payment shall be $2,000,000 if such termination occurs
on or before April 10,1998; and (b) reimburse Acquiror for its out-of-
pocket costs and expenses reasonably incurred and due to third parties
in connection with this Agreement and the transactions contemplated
thereby (including fees and disbursements of counsel, accountants,
financial advisors and consultants, commitment fees, due diligence
expenses, travel costs, filing fees and similar fees, all of which
shall be conclusively established by vouchers or other statements
therefor) (collectively, "Covered Expenses"), up to a maximum of
$500,000, by wire transfer of same-day funds to an account designated
by Acquiror, immediately following receipt and verification of the
Covered Expenses set forth in such vouchers or other statements.
<PAGE> 42
(iii) The Company shall pay Acquiror the Termination Payment
(less the amount, if any, of Covered Expenses paid under Section
7.2(iv) in excess of $500,000) if: (x) this Agreement is terminated
pursuant to Section 7.1(ii)(a), AND (y) the Company, within twelve
(12) months from the date of this Agreement, enters into a written
agreement to effect an Acquisition Proposal with, or an Acquisition
Proposal is made by, a party other than Acquiror or any of its
subsidiaries, AND (z) in each such case the Acquisition Proposal is
thereafter consummated within such twelve-month period. The
Termination Payment contemplated by the prior sentence shall be paid
in same-day funds by wire transfer to an account designated by
Acquiror on the earlier of the consummation of such Acquisition
Proposal or within sixty (60) days after a meeting at which the
stockholders of the Company approve such Acquisition Proposal.
Notwithstanding anything in this Agreement to the contrary, the
Termination Payment, if payable, shall be paid only once and shall be
Acquiror's sole and exclusive remedy hereunder for the termination of
the Agreement under the circumstances in which the Termination Payment
is paid (regardless of any breach of this Agreement), except for the
reimbursement of Acquiror's Covered Expenses, and upon such delivery
of the Termination Payment to Acquiror, no person shall have any
further claim or rights against the Company under this Agreement with
respect thereto; provided, however that this sentence shall not apply
to and shall in no way restrict the right of Acquiror to assert a
counterclaim in response to any action brought by the Company against
Acquiror with respect to such events. The Company shall reimburse
Acquiror for all costs incurred in connection with the collection of
the Termination Payment and the Covered Expenses under this Agreement.
(iv) In the event of (x) termination of this Agreement pursuant
to Section 7.1(ii)(a), or (y) termination of this Agreement pursuant
to Section 7.1(iv) based solely on the Company's intentional breach of
a representation or warranty or intentional non-compliance of a
covenant, the Company shall reimburse Acquiror for its Covered
Expenses up to a maximum of $1,100,000, by wire transfer of same-day
funds to an account designated by Acquiror, immediately following
receipt and verification of the Covered Expenses set forth in
Acquiror's vouchers or other statements. In the event of termination
of this Agreement by Acquiror pursuant to Section 7.1 (vii)(d), the
Company shall reimburse Acquiror for one-half of its Covered Expenses
up to a maximum obligation of the Company of $350,000, by wire
transfer of same-day funds to an account designated by Acquiror,
immediately following receipt and verification of the Covered Expenses
set forth in Acquiror's vouchers or other statements.
SECTION 7.3 AMENDMENT. Subject to the applicable provisions of
the Delaware Code, at any time prior to the Effective Time, the
parties hereto may modify or amend this Agreement, by written
agreement executed and delivered by duly authorized officers of the
respective parties; provided, however, that after approval of the
Merger by the stockholders of the Company, no amendment shall be made
which reduces the amount of the Merger Consideration payable in the
<PAGE> 43
Merger or adversely affects the rights of the Company's stockholders
hereunder without the approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf
of each of the parties.
SECTION 7.4 EXTENSION; WAIVER. At any time prior to the
Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and
warranties of the other parties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to
Section 7.3, waive compliance with any of the agreements or conditions
of the other parties contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of
such rights.
SECTION 7.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. A termination of this Agreement pursuant to Section 7.1, an
amendment of this Agreement pursuant to Section 7.3 or an extension or
waiver pursuant to Section 7.4 shall, in order to be effective,
require in the case of Acquiror or the Company, action by its Board of
Directors or the duly authorized designee of its Board of Directors.
ARTICLE 8
SURVIVAL OF PROVISIONS
SECTION 8.1 SURVIVAL. The representations and warranties
respectively made by the Company, Acquiror in this Agreement, or in
any certificate, respectively, delivered by the Company, Acquiror
pursuant to Section 6.2 or Section 6.3 hereof, will terminate upon the
Closing and be of no further force or effect.
ARTICLE 9
NOTICES
SECTION 9.1 NOTICES. Any notice or communication given pursuant
to this Agreement must be in writing and will be deemed to have been
duly given if mailed (by registered or certified mail, postage
prepaid, return receipt requested), or, if transmitted by facsimile,
or if delivered by courier, as follows:
<PAGE> 44
If to the Company, to:
Portec, Inc.
M. T. Yonker
Chief Executive Officer and President
100 Field Drive
Lake Forest, IL 60045
Telecopy: (847) 735-2828
with a copy to:
Schiff Hardin & Waite
233 South Wacker Drive
Suite 7300
Chicago, Illinois 60606
Attention: Robert J. Regan, Esq.
Telecopy: (312) 258-5600
If to Acquiror, to:
c/o Code Hennessy & Simmons LLC
10 South Wacker Drive
Suite 3175
Chicago, Illinois 60606
Attention: Thomas J. Formolo
Telecopy: (312) 876-3854
with copies to:
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Attention: Mark T. Kindelin, Esq.
Telecopy: (312) 715-8400
All notices and other communications required or permitted under this
agreement that are addressed as provided in this Section 9.1 will,
whether sent by mail, facsimile, or courier, be deemed given upon the
first Business Day after actual delivery to the addressed destination
to which such notice or other communication is sent (as evidenced by
the return receipt or shipping invoice signed by a representative of
such party or by facsimile confirmation). Any party from time to time
may change its address for the purpose of notices to that party by
giving a similar notice specifying a new address, but no such notice
will be deemed to have been given until it is actually received by the
party sought to be charged with the contents thereof. For purposes of
this Section 9.1, "Business Day" shall mean a day other than Saturday,
Sunday or any day on which the principal commercial banks located in
Chicago, Illinois are authorized or obligated to close under the laws
of Illinois.
<PAGE> 45
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 ENTIRE AGREEMENT. This Agreement and the
Confidentiality Agreement constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede
all prior communications, agreements, understandings, representations,
and warranties whether oral or written between the parties hereto.
There are no oral or written agreements, understandings,
representations, or warranties between the parties hereto with respect
to the subject hereof other than those set forth in this Agreement and
the Confidentiality Agreement. In the event of any conflict between
the terms of this Agreement and the terms of the Confidentiality
Agreement, the terms of this Agreement shall control.
SECTION 10.2 EXPENSES. Except as otherwise provided in this
Agreement, the Company and Acquiror each will pay its own costs and
expenses incident to preparing for, entering into and carrying out
this Agreement and the consummation of the transactions contemplated
hereby except that the expenses incurred in connection with the
printing, mailing and distribution of the Proxy Statement (or an
Information Statement in lieu thereof) shall be borne equally by the
Company and Acquiror. Notwithstanding anything in this Agreement to
the contrary, the Company covenants and agrees that, assuming the
Closing Date occurs on or before July 31, 1998, the fees and expenses
of the Company incurred in connection with this Agreement and the
Merger shall not exceed $1,100,000 in the aggregate, and all such fees
and expenses shall have been accrued or paid as of the Effective Time.
SECTION 10.3 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which will be deemed an original, but
all of which will constitute one and the same instrument and shall
become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 10.4 NO THIRD PARTY BENEFICIARY. Except as otherwise
specifically provided in Section 4.9, this Agreement is not intended
and may not be construed to create any rights in any parties other
than the Company and Acquiror and their respective successors or
assigns, and it is not the intention of the parties to confer third-
party beneficiary rights upon any other person.
SECTION 10.5 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware
(without regard to the principles of conflicts of law) applicable to a
contract executed and to be performed in such State.
SECTION 10.6 ASSIGNMENT; BINDING EFFECT. Neither this Agreement
nor any of the rights, interests or obligations under this Agreement
shall be assigned, in whole or in part, by operation of law or
<PAGE> 46
otherwise by any of the parties without the prior written consent of
the other parties, such consent not to be unreasonably withheld and
any such assignment that is not consented to shall be null and void,
except that Acquiror shall have the right to assign this Agreement to
affiliate of J. Richard Industries, L.P. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by, the parties and their respective successors and
assigns.
SECTION 10.7 DISCLOSURE SCHEDULE. The Company shall have the
right to amend or supplement the Disclosure Schedule at any time prior
to April 10, 1998, provided no such amendment or supplement shall be
deemed to cure or otherwise alter or change any representation or
warranty of the Company made as of the date hereof. If the amended or
supplemented disclosure (if originally made at the closing in the
certificate required by Section 6.2.1) would excuse Acquiror from
performing its obligations under this Agreement or otherwise permit
Acquiror to terminate this Agreement, Acquiror may then elect to
terminate this Agreement. If Acquiror does not terminate this
Agreement within five (5) days after receipt of such amended or
supplemented disclosure, Acquiror will be deemed to have waived the
right to terminate this Agreement on the basis of such amended or
supplemented disclosure.
SECTION 10.8 ENFORCEMENT OF THIS AGREEMENT. The parties hereto
agree that irreparable damage would occur in the event that any of the
terms or provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that each of the parties hereto shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any
court of the United States of America or any state having
jurisdiction, such remedy being in addition to any other remedy to
which any party may be entitled at law or in equity.
SECTION 10.9 HEADINGS, GENDER, ETC. The headings used in this
Agreement have been inserted for convenience and do not constitute
matter to be construed or interpreted in connection with this
Agreement. Unless the context of this Agreement otherwise requires,
(a) words of any gender are deemed to include each other gender; (b)
words using the singular or plural number also include the plural or
singular number, respectively; (c) the terms "hereof," "herein,"
"hereby," "hereto," and derivative or similar words refer to this
entire Agreement; (d) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement; (e) all references to
"dollars" or "$" refer to currency of the United States of America;
(f) the term "person" shall include any natural person, corporation,
limited liability company, general partnership, limited partnership,
or other entity, enterprise, authority or business organization; and
(g) the term "or" is disjunctive but not necessarily exclusive.
<PAGE> 47
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the Company and Acquiror
effective as of the date first written above.
MHD ACQUISITION CORP.
By: /s/ THOMAS J. FORMOLO
----------------------------
Name: Thomas J. Formolo
Its: Vice President
PORTEC, INC.
By: /s/ M. T. YONKER
----------------------------
Name: M. T. Yonker
Its: Chief Executive Officer
and President
