<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
OMB Approval
OMB Number: xxxx-xxxx
Expires: Approval Pending
Estimated Average Burden Hours Per Response: 1.0
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended March 31, 1997
-------------------------------------------
[ ] Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from to
-------------------- ---------------------
Commission file number 0-3555
-------------------------------
David White, Inc.
-----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Wisconsin 39-0967642
--------- -----------------------------------
(State or Other (I. R. S. Employer
Jurisdiction of Identification No.)
Incorporation or Organization)
11711 River Lane, Germantown, WI 53022
----------------------------------------
(Address of Principal Executive Offices)
(414) 251-8100
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--------- ---------
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Outstanding at April 30, 1997 Common Stock,
- ------------------------- -------------------------------------------
$3.00 Par Value Per Share 457,323 Shares
X
Transitional small business disclosure format (Check One) ------ ------
Yes No
<PAGE> 2
DAVID WHITE, INC.
----------------
INDEX
-----
Sequential
Page No.
--------
Part I. Financial Information
Consolidated Condensed Balance Sheets -
March 31, 1997 and December 31, 1996 4
Consolidated Condensed Statements of Earnings -
Three Months Ended March 31, 1997 and 1996 5
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996 6
Notes to Unaudited Consolidated Condensed
Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of
Earnings 8 & 9
Part II. Other Information
Exhibits and Reports on Form 8-K 10
Signature 13
Exhibits
2.1 Agreement and Plan of Merger 14
10.11 Form of 1995 Stock Option Agreement 62
27 Financial Data Schedule (filed in
electronic format only) N/A
List of Schedules and Exhibits to Agreement and Plan of Merger
Schedule 3.05(a) Required Consents, Approvals, Authorizations or Permits
Schedule 3.07(c) Material Liability Not Disclosed on 12/31/96 Balance
Sheet
Schedule 3.09(a) Pending or Threatened Litigation, Claims, etc. (See
Schedule 3.21)
Schedule 3.09(b) Continuing Orders, Consent Decrees, Settlement
Agreements, Investigations (See Schedule 3.21)
<PAGE> 3
Schedule 3.10(a) Contracts or Agreements Concerning Partnership or Joint
Venture or Material to Company
1. See Exhibit Index of David White, Inc.'s Form
10-KSB for the period ending 12/31/96, items 10.1-10.19,
incorporated herein by reference.
2. Incentive Stock Option Agreement dated January 29,
1997, to Tony L. Mihalovich for 10,000 shares of common
stock at Seven Dollars and Eighty Seven 1/2 cents ($7.875)
per share.
3. Incentive Stock Option Agreement dated January 29,
1997, to Stephen M. Smith for 2,000 shares of common stock
at Seven Dollars and Eighty Seven 1/2 cents ($7.875) per
share.
4. Incentive Stock Option Agreement dated January 29,
1997, to Larry P. Hutzler for 2,000 shares of common stock
at Seven Dollars and Eighty Seven 1/2 cents ($7.875) per
share.
5. Incentive Stock Option Agreement dated January 29,
1997, to William L. Durkin for 1,000 shares of common stock
at Seven Dollars and Eighty Seven 1/2 cents ($7.875) per
share.
6. Incentive Stock Option Agreement dated January 29,
1997, to James L. Younk for 2,000 shares of common stock at
Seven Dollars and Eighty Seven 1/2 cents ($7.875) per share.
Schedule 3.11 Benefit Plans
Schedule 3.16 Cleary Gull Reiland & McDevitt Inc. Engagement Letter
Schedule 3.17 Description of Real Property
Schedule 3.19 Liens on Personal Property
Schedule 3.21 Environmental Permits, Licenses, Approvals, etc.
Schedule 3.22 Collection Bargaining Agreements/Labor Contracts
Schedule 3.23 Citations Issued by a Government Entity (See Schedule 3.21)
Schedule 3.24 Aging Schedule of Accounts Receivable
Schedule 3.25 Largest Customers/Suppliers
Schedule 3.26 Warranties Provided by Company
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DAVID WHITE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(000'S)
<TABLE>
<CAPTION>
Assets March 31, December 31,
------ 1997 1996
----------- -------------
(Unaudited)
<S> <C> <C>
Current Assets
- --------------
Cash and cash equivalents $ 136 $ 47
Trade accounts receivable, net 3,625 1,315
Inventories 3,192 3,681
Other current assets 168 142
-------- --------
Total current assets 7,121 5,185
Other Assets
- ------------
Technology and patents, net 141 141
Intangible pension asset 107 107
Other 52 54
-------- --------
300 302
Property, plant and equipment, net 1,805 1,816
-------- --------
Total assets $ 9,226 $ 7,303
======== ========
Liabilities and Stockholders' Investment
----------------------------------------
Current Liabilities
- -------------------
Notes payable to bank $ 1,315 $ 0
Trade accounts payable 711 354
Accrued liabilities 578 630
Income taxes 89 0
Current maturities of long-term debt 230 225
-------- --------
Total current liabilities 2,923 1,209
Long-term debt, less current maturities 899 958
Long-term pension liability 133 133
Stockholders' Investment
- ------------------------
Preferred stock, par value $1 a share:
Authorized 1,000,000 shares; none issued
Common stock, par value $3 a share:
Authorized 5,000,000 shares; issued 692,240 shares 2,077 2,077
Additional paid-in capital 1,024 1,024
Retained earnings 4,490 4,222
Additional pension liability (26) (26)
Treasury stock at cost - 234,917 shares (2,294) (2,294)
--------- --------
Total stockholders' investment 5,271 5,003
-------- --------
Total liabilities and stockholders' investment $ 9,226 $ 7,303
======== ========
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
-4-
<PAGE> 5
DAVID WHITE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(000'S) EXCEPT SHARE AND PER SHARE DATA
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1997 1996
-------- --------
<S> <C> <C>
Net sales $ 4,128 $ 3,953
Cost of goods sold 2,962 2,845
-------- --------
Gross margin 1,166 1,108
Selling and administrative expenses 767 737
-------- --------
Earnings from operations before
other income (expenses) and income taxes 399 371
Other income (expenses)
Other income 0 0
Interest expense (42) (86)
--------- --------
Earnings before income taxes 357 285
Income taxes 89 57
-------- --------
Net earnings $ 268 $ 228
======== ========
Net earnings per common share $ .59 $ .50
Average common shares outstanding 457,323 457,323
Dividends per common share outstanding $ .00 $ .00
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
-5-
<PAGE> 6
DAVID WHITE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(000'S)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 268 $ 228
Adjustments to reconcile net earnings to net
cash used in operating activities:
Depreciation 129 129
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable (2,310) (1,103)
Inventories 489 (51)
Prepaid expenses and other assets (24) 78
Increase (decrease) in:
Accounts payable and accrued liabilities 305 172
Income taxes 89 57
------- -------
Net cash used in operating activities (1,054) (1,490)
Cash flows from investing activities:
Additions to property, plant & equipment (118) (70)
-------- -------
Net cash used in investing activities (118) (70)
Cash flows from financing activities:
Principal payments on debt (54) (75)
Net increase in notes payable to bank 1,315 1,635
------- -------
Net cash provided by financing activities 1,261 1,560
Net increase (decrease) in cash and cash equivalents 89 0
Cash and cash equivalents at beginning of year 47 0
------- -------
Cash and cash equivalents at end of period $ 136 $ 0
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 42 86
Income taxes 0 0
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
-6-
<PAGE> 7
DAVID WHITE, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that
the disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed financial statements be
read in conjunction with the audited financial statements and the notes
thereto incorporated by reference in the Company's latest annual report on
Form 10-KSB.
2. In the opinion of management, the aforementioned statements reflect
all adjustments (consisting only of normal recurring adjustments) necessary
for a fair presentation of the results for the interim periods. The results
of operations for the three months ended March 31, 1997 are not necessarily
indicative of the results to be expected for the full year.
3. It is not practicable to segregate the amounts of raw materials, work in
progress, finished goods or supplies.
-7-
<PAGE> 8
DAVID WHITE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors that have affected the Company's earnings during the periods included
in the accompanying consolidated condensed statements of operations.
A summary of the period to period changes in the principal items included in
the consolidated condensed statements of operations is shown below:
<TABLE>
<CAPTION>
Comparison of
------------------
Three Months Ended
March 31,
1997 and 1996
-------------------
Increase (Decrease)
(000's)
<S> <C>
Net sales 175
Cost of goods sold 117
Selling and administrative expenses 30
Other income 0
Interest expense (44)
Earnings before income taxes 72
Income taxes 32
Net earnings 40
</TABLE>
-8-
<PAGE> 9
RESULTS OF OPERATIONS
- ---------------------
FIRST QUARTER 1997 COMPARED TO FIRST QUARTER 1996
- -------------------------------------------------
Sales of $4.13 million for the first quarter of 1997 were up 4% from 1996's
arter sales of $3.95 million. On the higher volume, gross margins also
improved. For the first quarter of 1997, gross margins improved to 28.2% from
28.0% in 1996. Selling and administrative expenses were up 4% or $30,000 on
the 4% increase in sales. Interest expense for the first quarter of 1997 was
down $44,000 due to a significant decrease in bank borrowing. The Company has
reduced inventories $1.5 million since March 31, 1996. Much of this reduction
was the direct result of the installation of a new manufacturing software
package during the second quarter of 1996. Net earnings improved from $228,000
for the first quarter of 1996 to $268,000 for the first quarter of 1997.
The working capital at the end of the first quarter 1997 improved to $4.2
from $3.9 million at the end of the first quarter 1996. The Company's current
ratio at the end of the first quarter 1997 improved to 2.4:1 from 1.9:1 at the
end of the first quarter 1996.
LIQUIDITY
- ---------
Each year receivables increase during the first quarter as the Company
offers a deferred payment program to its key distributors. The Company will
be reducing its outstanding borrowings in the second quarter as the deferred
payments are collected. The interest rate on the revolving line is the bank's
prime rate, which is currently 8.5%.
CAPITAL RESOURCES
- -----------------
No significant capital commitments were outstanding at the end of the first
quarter.
OTHER MATERIAL EVENTS
- ---------------------
On April 30, 1997, the Board of Directors of the Company signed a
definitive agreement for the sale of the Company to Choucroute Partners, a
limited liability company formed by Milwaukee, Wisconsin businessman Robert T.
Foote, Jr. Under the agreement, which is subject to a financing contingency and
approval by the Company's shareholders, Mr. Foote will make a $12 per share cash
offer to shareholders of the Company. The sale is subject to SEC review, and
the closing is of the transaction is expected to occur mid-summer.
-9-
<PAGE> 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
2.1 Agreement and Plan of Merger, dated April 30, 1997 (without
schedules or exhibits)
3.1 Restated Articles of Incorporation [Incorporated by reference
to Exhibit 3 to the Company's Form 8-K dated May 8, 1992]
3.2 By-Laws, as amended through January 29, 1997 [Incorporated by
reference to Exhibit 3.2 of the Company's Form 10-KSB for the
year ended December 31, 1996]
4.1 Rights Agreement, dated as of August 29, 1988, between Company
and First Wisconsin Trust Company, as Rights Agent
[Incorporated by reference to Exhibit 4 to the Company's Form
8-K dated September 15, 1988]
4.2 Amendment to Rights Agreement, dated as of November 9, 1988,
between Company and First Wisconsin Trust Company, as Rights
Agent [Incorporated by reference to Exhibit 4.1 to the
Company's Form 8-K dated November 10, 1988]
4.3 Amendment No. 2 to Rights Agreement dated as of June 30, 1989
between the Company and First Wisconsin Trust Company, as
Rights Agent [Incorporated by reference to Exhibit 4.2 to the
Company's Form 8-K dated June 30, 1989]
4.4 Amendment No. 3 to Rights Agreement dated as of January 22,
1992, between the Company and First Wisconsin Trust Company,
as Rights Agent [Incorporated by reference to Exhibit 4.3 to
the Company's Form 8-K dated February 7, 1992]
10.1 Form of Key Executive Employment and Severance
Agreement ("KEESA"), dated as of January 25, 1990,
entered into between the Company and each of the
following: Tony L. Mihalovich, Ronald J. Jansen,
James L. Younk, E. Gustav Malm, Larry Clark, Walker
J. Young and Robert L. Underberg. The KEESA with
James L. Younk is the only one that remains in effect
[Incorporated by reference to Exhibit 10.4 to the
Company's Form 10-K for the year ended December 31,
1992]*
10.2 Employment Agreement, dated as of January 1, 1994,
between the Company and Tony L. Mihalovich
[Incorporated by reference to Exhibit 10.5 of the
Company's Form 10-KSB for the year ended December 31,
1993, as amended by Form 8 dated April 20, 1994]*
10.3 Amendment to Employment Agreement, dated as of
December 5, 1995, between the Company and Tony L.
Mihalovich [Incorporated by reference to Exhibit 10.6
to the Company's Form 10-KSB for the year ended
December 31, 1995]*
10.4 Stock Option Agreement, dated as of January 1, 1994,
between the Company and Tony L. Mihalovich.
[Incorporated by reference to Exhibit 10.6 at the
Company's Form 10-KSB for the year ended December 31, 1993]*
-10-
- ---------------
* management contract or compensatory plan or arrangement.
<PAGE> 11
10.5 Amendment to Stock Option Agreement, dated as of
December 5, 1995, between the Company and Tony L.
Mihalovich [Incorporated by reference to Exhibit 10.8
to the Company's Form 10-KSB for the year ended
December 31, 1995]*
10.6 Stock Option Agreement, dated as of January 11, 1990,
between Company and R. Ron Heiligenstein
[Incorporated by reference to Exhibit 10.11 to the
Company's Form 10-K for the year ended December 31,
1989]*
10.7 Form of Indemnity Agreement, dated as of January 24,
1990, entered into between the Company and each of
the following: Charles D. Jacobus, Hans-Rudolf
Ammann, E. Gustav Malm, R. Ron Heiligenstein,
Marshall A. Loewi, Michael S. Ariens and Richard H.
Bromley [Incorporated by reference to Exhibit 10.12
to the Company's Form 10-K for the year ended
December 31, 1989]
10.8 1992 Stock Option Plan [Incorporated by reference to
Exhibit 10.9 to the Company's Form 10-K for the year
ended December 31, 1992]*
10.9 Form of 1992 Incentive Stock Option Agreement
[Incorporated by reference to Exhibit 10.10 to the
Company's Form 10-K for the year ended December 31,
1992]*
10.10 1995 Stock Option Plan [Incorporated by reference to
Exhibit 10.11 to the Company's Form 10-QSB for the
end of the second quarter of 1995]*
10.11 Form of 1995 Incentive Stock Option Agreement,
entered into between the Company and Tony L.
Mihalovich (for 10,000 shares), Steven M. Smith
(for 2,000 shares), Larry P. Hutzler (for 2,000 shares),
William L. Durkin (for 1,000 shares) and James L.
Younk (for 2,000 shares)*
10.12 Stock Purchase Agreement, dated as of May 31, 1995,
entered into between the Company and Hans-Rudolf
Ammann, Jolanda Ammann, Konrad Bachmaier and Thomas
Ammann [Incorporated by reference to Exhibit 10.12 to
the Company's Form 10-QSB for the end of the second
quarter of 1995]
10.13 License Agreement, dated as of May 31, 1995, entered
into between the Company and Ammann Lasertechnik, AG
[Incorporated by reference to Exhibit 10.13 to the
Company's Form 10-QSB for the end of the second
quarter of 1995]
10.14 Ammann Lasertechnik AG Supply Agreement, dated as of
May 31, 1995, entered into between the Company and
Ammann Lasertechnik, AG [Incorporated by reference
to Exhibit 10.14 to the Company's Form 10-QSB for the
end of the second quarter of 1995]**
10.15 David White, Inc. Supply Agreement, dated as of May
31, 1995, entered into between the Company and Ammann
Lasertechnik, AG [Incorporated by reference to
Exhibit 10.15 to the Company's Form 10-QSB for the
end of the second quarter of 1995]**
10.16 Transfer and Assignment Agreement, dated as of May
31, 1995, entered into between the Company and Ammann
Lasertechnik, AG [Incorporated by reference to
Exhibit 10.16 to the Company's Form 10-QSB for the
end of the second quarter of 1995]
-11-
- ---------------
* management contract or compensatory plan or arrangement.
** Certain information in this Exhibit was omitted pursuant to a request
for confidential treatment. The information and the request were
separately filed with the Commission.
<PAGE> 12
10.17 Pledge Agreement, dated as of May 31, 1995, entered
into between the Company and Hans-Rudolf Ammann,
Jolanda Ammann, Konrad Bachmaier and Thomas Ammann
[Incorporated by reference to Exhibit 10.17 to the
Company's Form 10-QSB for the end of the second
quarter of 1995]
10.18 Summary [English Translation] of German Joint Venture
Ammann Lasertechnik GmbH, March 1991 [Incorporated by
reference to Exhibit 10.8 to the Company's Form 10-K
for the year ended December 31, 1991]
10.19 Offer, Addendum and Accepted Counter-Offer between
Tony L. Mihalovich and the Company regarding the
Purchase of the Company's Germantown, Wisconsin
property by Mr. Mihalovich [Incorporated by reference
to Exhibit 10.21 to the Company's Form 10-QSB for the
end of the third quarter of 1996]
10.20 Lease dated October 31, 1996, entered into between
the Company and Tony L. Mihalovich [Incorporated by
reference to Exhibit 10.22 to the Company's Form
10-QSB for the end of the third quarter of 1996]
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the Company
with the Securities and Exchange Commission during the first quarter
of 1997.
-12-
<PAGE> 13
SIGNATURE
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 thereunto duly authorized.
DAVID WHITE, INC.
--------------------------------
(Registrant)
/s/ Tony L. Mihalovich
--------------------------------
Tony L. Mihalovich
(President)
/s/ James L. Younk
--------------------------------
James L. Younk
(Vice President-Finance)
Date: May 9, 1997
--------------------------------
-13-
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
By and Among
CHOUCROUTE PARTNERS LLC,
FC SUB CORPORATION
and
DAVID WHITE, INC.
April 30, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
1.01 The Merger 1
1.02 Effective Time 1
1.03 Effect of the Merger 2
1.04 Articles of Incorporation; By-Laws 2
1.05 Directors and Officers 2
1.06 Taking Necessary Action; Further Action 2
1.07 The Closing 2
ARTICLE II
CONVERSION OF SECURITIES
2.01 Conversion of Securities 3
2.02 Dissenting Shares 3
2.03 Exchange of Certificates 4
2.04 Stock Options 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification; Subsidiaries 6
3.02 Articles of Incorporation; By-Laws 7
3.03 Capitalization 7
3.04 Authority; Vote Required 8
3.05 No Conflict; Required Filings and Consents 8
3.06 Permits; Compliance 9
3.07 Reports; Financial Statements 9
3.08 Absence of Certain Changes or Events 10
3.09 Absence of Litigation 11
3.10 Contracts; No Default 12
3.11 Employee Benefit Plans 13
3.12 Taxes 15
<PAGE> 3
Page
3.13 Intellectual Property Rights 16
3.14 Certain Business Practices and Regulations 16
3.15 Insurance 16
3.16 Brokers 16
3.17 Title to Properties 16
3.18 Inventory 18
3.19 Title to Personal Property 18
3.20 Product Liability 18
3.21 Compliance with Environmental Laws 18
3.22 Labor Matters 20
3.23 Compliance with Law 21
3.24 Accounts Receivable 21
3.25 Major Customers and Suppliers 21
3.26 Product Warranty 22
3.27 Disclosure 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
AND ACQUIROR SUB
4.01 Organization and Qualification; Subsidiaries 22
4.02 Authority 22
4.03 No Conflict; Required Filings and Consents 23
4.04 Ownership of Acquiror and Acquiror Sub;
No Prior Activities 23
4.05 Brokers 24
ARTICLE V
COVENANTS
5.01 Affirmative Covenants of the Company 24
5.02 Negative Covenants of the Company 25
5.03 Acquisition Proposals 26
ii
<PAGE> 4
Page
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Proxy Statement 27
6.02 Meeting of Shareholders 28
6.03 Appropriate Action; Consents; Filings 29
6.04 Update Disclosure; Breaches 30
6.05 Public Announcements 30
6.06 Indemnification 31
6.07 Obligations of Acquiror Sub 32
6.08 Employee Benefits and Compensation 32
ARTICLE VII
CLOSING CONDITIONS
7.01 Conditions to Obligations of Each Party
Under This Agreement 32
7.02 Additional Conditions to Obligations
of Acquiror and Acquiror Sub 34
7.03 Additional Conditions to Obligations of the Company 36
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination 38
8.02 Effect of Termination 39
8.03 Expenses 39
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations and Warranties 40
9.02 Notices 40
9.03 Amendment 41
9.04 Waiver 42
9.05 Headings 42
9.06 Severability 42
iii
<PAGE> 5
Page
9.07 Entire Agreement 42
9.08 Assignment 43
9.09 Parties in Interest 43
9.10 Governing Law 43
9.11 Counterparts 43
iv
<PAGE> 6
THIS AGREEMENT AND PLAN OF MERGER dated as of April 30, 1997 (the
"Agreement"), is made and entered into among CHOUCROUTE PARTNERS LLC, a
Wisconsin limited liability company ("Acquiror"), FC SUB CORPORATION, a
Wisconsin corporation and a wholly owned subsidiary of Acquiror ("Acquiror
Sub"), and DAVID WHITE, INC., a Wisconsin corporation (the "Company").
RECITAL
The Manager of Acquiror and the respective Boards of Directors of Acquiror
Sub and the Company have determined that it is advisable and in the best
interests of the respective corporations and their shareholders that Acquiror
Sub be merged with and into the Company in accordance with the Wisconsin
Business Corporation Law (the "Wisconsin Law") and the terms of this Agreement,
pursuant to which the Company will be the surviving corporation and will become
a wholly owned subsidiary of Acquiror (the "Merger").
AGREEMENTS
In consideration of the representations, warranties, covenants and
agreements set forth in this Agreement, the parties agree:
ARTICLE I
THE MERGER
1.01 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Wisconsin Law, at the Effective
Time, Acquiror Sub shall be merged with and into the Company. As a result of
the Merger, the separate corporate existence of Acquiror Sub shall cease and
the Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation"). Acquiror Sub and the Company are sometimes
collectively referred to in this Agreement as the "Constituent Corporations."
1.02 Effective Time. As promptly as practicable after the satisfaction
or, if permissible, waiver of the conditions set forth in Article VII, the
parties shall cause the Merger to be consummated by filing articles of merger
(the "Articles of Merger") with the Department of Financial Institutions of the
State of Wisconsin in such form as required by, and executed in accordance
with, the relevant provisions of the Wisconsin Law and shall take all such
further actions as may be required by law to make the Merger effective upon the
issuance of a certificate of merger by the Department of Financial Institutions
of the State of Wisconsin (the date and time of such issuance being the
"Effective Time").
<PAGE> 7
1.03 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the Wisconsin Law.
Without limiting the generality of, and subject to the provisions of, the
Wisconsin Law, at the Effective Time, except as otherwise provided in this
Agreement, all the property, interests, assets, rights, privileges, immunities,
powers and franchises of Acquiror Sub and the Company shall vest in the
Surviving Corporation, and all debts, liabilities, duties and obligations of
Acquiror Sub and the Company shall become the debts, liabilities, duties and
obligations of the Surviving Corporation.
1.04 Articles of Incorporation; By-Laws. At the Effective Time, the
Articles of Incorporation, as amended by the amendments thereto set forth in
Exhibit 1.04 (which amendments shall become effective only at the Effective
Time), and the By-Laws of Acquiror Sub shall be the Articles of Incorporation
and the By-Laws of the Surviving Corporation. The name of the Surviving
Corporation shall be David White, Inc.
1.05 Directors and Officers. The directors of Acquiror Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
Acquiror Sub immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified.
1.06 Taking Necessary Action; Further Action. Acquiror, Acquiror Sub and
the Company, respectively, shall each use its reasonable efforts to take all
such action as may be necessary or appropriate to effectuate the Merger under
the Wisconsin Law at the time specified in section 1.02. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all properties, interests, assets, rights,
privileges, immunities, powers and franchises of either of the Constituent
Corporations, the officers of the Surviving Corporation are fully authorized in
the name of each Constituent Corporation or otherwise to take, and shall take,
all such lawful and necessary action.
1.07 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Reinhart, Boerner,
Van Deuren, Norris & Rieselbach, s.c., 1000 North Water Street, Milwaukee,
Wisconsin 53202, within ten business days after the satisfaction or waiver of
the conditions set forth in Article VII, or at such other time or place as the
parties hereto shall mutually agree, and will be effective at the Effective
Time.
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ARTICLE II
CONVERSION OF SECURITIES
2.01 Conversion of Securities. At the Effective Time by virtue of
the Merger and without any further action on the part of Acquiror, Acquiror
Sub, the Company, the Surviving Corporation or the holders of any of the
following securities:
(a) each share of the $3.00 par value common stock, of the
Company ("Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than (i) shares of Company Common Stock owned by Acquiror,
Acquiror Sub or the Company or any direct or indirect subsidiary of Acquiror,
Acquiror Sub or the Company and (ii) any Dissenting Shares (as defined in
section 2.02)) shall be canceled and extinguished and be converted into and
become a right to receive a cash payment of $12.00 per share, without interest
(the "Merger Consideration");
(b) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time and owned by Acquiror, Acquiror Sub or
the Company or any direct or indirect subsidiary of Acquiror, Acquiror Sub or
the Company shall be canceled and extinguished and no payment shall be made with
respect thereto; and
(c) each share of common stock, $.01 par value, of Acquiror Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into one fully paid and nonassessable share of common stock, $.01 par
value, of the Surviving Corporation ("Surviving Corporation Common Stock").
2.02 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary,
if sections 180.1301 through 180.1331 of the Wisconsin Law ("Subchapter XIII")
shall be applicable to the Merger, shares of Company Common Stock that are
issued and outstanding immediately prior to the Effective Time and which are
held by shareholders who have not voted such shares in favor of the Merger, who
shall have delivered, prior to any vote on the merger, a written objection to
the Merger in the manner provided in Subchapter XIII and who as of the Effective
Time, shall not have effectively withdrawn or lost such right to dissenters'
rights ("Dissenting Shares") shall not be converted into or represent a right to
receive the Merger Consideration pursuant to section 2.01, but the holders
thereof shall be entitled only to such rights as are granted by Subchapter XIII.
Each holder of Dissenting Shares who becomes entitled to payment for such shares
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pursuant to Subchapter XIII shall receive payment therefor from the Surviving
Corporation in accordance with the Subchapter XIII; provided, however, that if
any such holder of Dissenting Shares shall have effectively withdrawn such
holder's demand for appraisal of such shares or lost such holder's right to
appraisal and payment of such shares under Subchapter XIII, such holder or
holders (as the case may be) shall forfeit the right to appraisal of such
shares and each such share shall thereupon be deemed, as of the Effective Time,
to have been canceled, extinguished and converted into and represent the right
to receive payment from the Surviving Corporation of the Merger Consideration
as provided in section 2.01.
(b) The Company shall give Acquiror (i) prompt notice of any
written demand for fair value, any withdrawal of a demand for fair value and any
other instrument served pursuant to Subchapter XIII received by the Company ,
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for fair value under such Subchapter XIII. The Company shall not,
except with the prior written consent of Acquiror, voluntarily make any payment
with respect to any demand for fair value or offer to settle or settle any such
demand.
2.03 Exchange of Certificates.
(a) Prior to the Effective Time, Acquiror shall designate a bank
or trust company (the "Exchange Agent") to act as exchange agent in effecting
the exchange of the Merger Consideration for certificates representing shares of
Company Common Stock entitled to payment pursuant to section 2.01 (the
"Certificates"). Immediately prior to the Effective Time, Acquiror shall
deposit with the Exchange Agent an amount equal to the aggregate Merger
Consideration (assuming there are no Dissenting Shares). The Exchange Agent
shall hold such sums in escrow for the purposes set forth in section 2.01(b).
(b) Promptly after the Effective Time, the Exchange Agent shall
mail to each record holder of Certificates a letter of transmittal and
instructions for use in surrendering Certificates and receiving the applicable
Merger Consideration therefor. The form of the transmittal letter shall have
been prepared by Acquiror, subject to the approval of the Company, prior to the
Effective Time. Upon the surrender of each Certificate, together with such
letter of transmittal duly executed and completed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor an amount equal to the applicable Merger
Consideration multiplied by the number of shares of Company Common Stock
represented by such Certificate, and such Certificate shall be canceled. Until
so surrendered and exchanged, each such Certificate shall represent solely the
right to receive an amount equal to the Merger
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Consideration multiplied by the number of shares of Company Common Stock
represented by such Certificate. No interest shall be paid or accrued on the
Merger Consideration upon the surrender of the Certificates. If any Merger
Consideration is to be paid to a person other than the person in whose name the
Certificate surrendered in exchange therefor is registered, it shall be a
condition to such exchange that the person requesting such exchange shall pay
to the Exchange Agent any transfer or other similar taxes required by reason of
the payment of such Merger Consideration to a person other than the registered
holder of the Certificate surrendered, or such person shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of shares of Company Common Stock for
any Merger Consideration delivered to a public official pursuant to applicable
abandoned property, escheat and similar laws.
(c) Promptly following the date which is 180 days after the
Effective Time, the Exchange Agent's duties shall terminate and any portion of
the sum not disbursed pursuant to section 2.01(b) shall be released to the
Surviving Corporation. Thereafter, each holder of a Certificate may surrender
Certificates to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefor an amount equal
to the Merger Consideration multiplied by the number of shares of Company Common
Stock represented by such Certificate, without any interest thereon, but shall
have no greater rights against the Surviving Corporation than may be accorded to
general creditors of the Surviving Corporation.
(d) After the Effective Time there shall be no transfers on the
stock transfer books of the Surviving Corporation of any shares of Company
Common Stock. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent, they shall be canceled and
exchanged for the Merger Consideration, as provided in this Article II, subject
to applicable law in the case of Dissenting Shares.
2.04 Stock Options. At the Effective Time, each outstanding option to
purchase shares of Company Common Stock (a "Company Stock Option") issued
pursuant to any stock option plan of the Company (together, the "Company Stock
Plans") shall be canceled and extinguished and be converted into and become the
right to receive a cash payment equal in amount to the difference between (i)
the Merger Consideration and (ii) the exercise price of such Company Stock
Option. At Closing, the Surviving Corporation shall pay out such amount,
without interest, on each Company Stock Option to the extent vested at the
Effective Time (including those that vest solely as a result of the Merger).
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The term "Company Material Adverse Effect" as used in this Agreement
shall mean any change or effect that, individually or when taken together with
all other such changes or effects, is materially adverse to the condition
(financial or otherwise), results of operations, businesses, properties, assets
or liabilities of the Company, taken as a whole.
The term "Affiliate" as used in this Agreement shall mean, with
respect to any Person, a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
first mentioned Person. The term "control" (including the terms "controlled by"
and "under common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person whether through the ownership of stock or as
trustee or executor, by contract or credit arrangement or otherwise.
The term "knowledge of the Company" as used in this Agreement shall
mean the collective actual knowledge of the members of the senior management of
the Company based upon reasonable inquiry of those employees of the Company
responsible for the relevant area.
The term "Person" as used in this Agreement shall mean an
individual, corporation, partnership, association, trust, unincorporated
organization, other entity or group (as defined in section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act")).
The Company makes the following representations and warranties to
Acquiror and Acquiror Sub.
3.01 Organization and Qualification; Subsidiaries. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of Wisconsin incorporation, has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as it is
now being conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary,
except such jurisdictions if any, where the failure to be so qualified would not
have a Company Material Adverse Effect. The Company has no subsidiaries and
does not own any equity interests of any other business entity.
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3.02 Articles of Incorporation; By-Laws. The Company has furnished to
Acquiror complete and correct copies of the Articles of Incorporation and the
By-Laws, as amended or restated, of the Company. The Company is not in
violation of any of the provisions of its Articles of Incorporation or By-Laws,
as amended or restated.
3.03 Capitalization.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of 5,000,000 shares of Company Common Stock and
1,000,000 shares of Preferred Stock, of which 457,323 shares of Common Stock
were issued and outstanding, 46,750 shares of Common Stock were reserved for
issuance pursuant to the Company Stock Plans and 46,750 Company Stock Options
are outstanding (excluding Company Stock Options granted to Acquiror in
connection with this Agreement).
(b) Except as described in this section 3.03, no shares of
Company Common Stock are reserved for any other purpose. Since December 31,
1996, no shares of Company Common Stock have been issued by the Company, except
pursuant to the exercise of outstanding Company Stock Options in accordance with
their terms. Except as contemplated by this Agreement or as described on
Schedule 3.03(c), there have been no changes in the terms of any outstanding
Company Stock Options or the grant of any additional Company Stock Options since
December 31, 1996. All outstanding shares of Company Common Stock have been
duly authorized and are validly issued, fully paid and nonassessable (except as
provided in section 180.0622(2)(b) of the Wisconsin Law, as interpreted) and are
not subject to preemptive rights under the Wisconsin Law, the Company's Articles
of Incorporation or By-Laws or any agreement to which the Company is a party.
Except as contemplated by this Agreement or described in section 3.03(a) there
are no options, warrants or other rights, agreements, arrangements or
commitments to which the Company is a party of any character relating to the
issued or unissued capital stock of, or other equity interests in, the Company
or obligating the Company to grant, issue, sell or register for sale any shares
of the capital stock of, or other equity interests in, the Company. Except as
set forth on Schedule 3.03(c), as of the date of this Agreement, there are no
obligations, contingent or otherwise, of the Company to repurchase, redeem or
otherwise acquire any shares of Company Common Stock. The transactions
contemplated by this Agreement will not cause the Company's Common Stock
Repurchase Rights to become exercisable.
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3.04 Authority; Vote Required.
(a) The Company has the requisite corporate power and authority
to execute and deliver this Agreement, to perform its obligations under this
Agreement and to consummate the transactions contemplated by this Agreement,
subject to required shareholder approval. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action, including such corporate action as may be required by section
180.1140 et seq. of the Wisconsin Law, and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to consummate
the transactions contemplated by this Agreement (other than with respect to the
approval of this Agreement by the holders of Company Common Stock in accordance
with the Wisconsin Law and the Company's Articles of Incorporation and By-Laws).
This Agreement has been duly executed and delivered by the Company and
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws relating to or
affecting the rights and remedies of creditors generally and by general
principles of equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance, injunctive relief or other equitable remedies, regardless
of whether enforceability is considered in a proceeding in equity or at law.
(b) The affirmative vote of the holders of at least a majority of
the outstanding shares of Company Common Stock is the only vote of the holders
of any class or series of capital stock of the Company necessary to approve the
Merger.
3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company
do not, and the performance of this Agreement by the Company will not: (i)
violate the Articles of Incorporation or By-Laws of the Company; (ii) subject to
(x) obtaining the requisite approval of this Agreement by the holders of at
least a majority of the outstanding shares of Company Common Stock in accordance
with the Wisconsin Law and the Company's Articles of Incorporation and By-Laws,
(y) obtaining the consents, approvals, authorizations and permits of, and making
filings with or notifications to, any governmental or regulatory authority,
domestic or foreign ("Governmental Entities"), pursuant to the applicable
requirements, if any, of the Exchange Act, the requirements of the National
Association of Securities Dealers, Inc. ("NASD") or the NASDAQ Small Cap Market
System,
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and the filing and recordation of appropriate merger documents as required by
the Wisconsin Law, and (z) giving the notices and obtaining the consents,
approvals, authorizations or permits described on Schedule 3.05(a), violate any
laws applicable to the Company or by which any of their respective properties
is bound, other than a potential violation under any federal or state antitrust
or similar laws, rules or regulations; or (iii), except as set forth on
Schedule 3.05(a) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company is a party or by which the
Company or any of the Company's properties is bound except for such breaches or
defaults described in clause (iii) as would not have a Company Material Adverse
Effect.
(b) The execution and delivery of this Agreement by the Company
do not, and the performance of this Agreement by the Company shall not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entities, except for applicable requirements,
if any, of (i) the Exchange Act, and the requirements of the NASD and the NASDAQ
Small Cap Market System, (ii) the consents, approvals, authorizations or permits
described on Schedule 3.05(a) and (iii) the filing and recordation of
appropriate merger documents as required by the Wisconsin Law.
3.06 Permits; Compliance. Except as set forth on Schedule 3.06, the
Company is in possession of all franchises, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary for the Company to own, lease and operate its properties or to carry
on its business as it is now being conducted (the "Company Permits''). To the
knowledge of the Company, no suspension, revocation or cancellation of any of
the Company Permits is pending or threatened. The Company is not operating in
default under or violation of (i) any law applicable to the Company or by which
any of the Company's properties is bound or (ii) any of the Company Permits.
3.07 Reports; Financial Statements.
(a) Since December 31, 1996, (x) the Company has filed all forms,
reports, statements and other documents required to be filed with (i) the
Securities and Exchange Commission (the "SEC") including, without limitation,
(A) all Annual Reports on Form 10-KSB, (B) all Quarterly Reports on Form 10-QSB,
(C) all proxy statements relating to meetings of shareholders (whether annual or
special), (D) all required Current Reports on Form 8-K, (E) all other
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reports or registration statements and (F) all amendments and supplements to
all such reports and registration statements, which amendments and supplements
have been, to the knowledge of the Company, required to be filed (collectively,
as amended or supplemented, the "Company SEC Reports"), and (ii) any applicable
state securities authorities; and (y) the Company has filed all forms, reports,
statements and other documents required to be filed with any other applicable
federal or state regulatory authorities, except as set forth on Schedule
3.07(a) (all such forms, reports, statements and other documents in clauses (x)
and (y) of this section 3.07(a) being collectively referred to as the "Company
Reports"). Such Company SEC Reports and Company Reports do not contain any
untrue statement of a material fact or omit any material fact required to be
stated therein or necessary to make the statements therein not misleading.
(b) Each of the consolidated financial statements (including, in
each case, any related notes to such statements) contained in the Company SEC
Reports (i) have been prepared in all material respects in accordance with the
published rules and regulations of the SEC and generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except (x) to the extent required by changes in GAAP and (y) as may be
indicated in the notes thereto) and (ii) fairly represent the consolidated
financial position of the Company as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements).
(c) Except as and to the extent reflected on, or reserved against
in, the consolidated balance sheet of the Company at December 31, 1996,
including all notes thereto (the "Company Balance Sheet"), or as set forth on
Schedule 3.07(c), the Company does not have any liabilities or obligations
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on, or reserved against in, a balance sheet of the Company or in
the notes thereto, prepared in accordance with the published rules and
regulations of the SEC and GAAP, except for liabilities or obligations incurred
in the ordinary course of business since December 31, 1996, consistent with the
Company's past practice, that, individually or in the aggregate, would not have
a Company Material Adverse Effect.
3.08 Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Reports (or the notes thereto) or as contemplated by this Agreement,
since December 31, 1996:
(a) the Company has conducted its business in the ordinary course
and consistent with the Company's past practice;
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(b) there has not been any Company Material Adverse Effect;
(c) the Company has not made any material increase in compensation to
officers or key employees or any material increase in any or created any new
bonus, insurance, pension or other employee benefit plan, payment or
arrangement (including, but not limited to, the granting of stock options)
other than in the ordinary course of business and consistent with the Company's
past practice;
(d) the Company has not made any loans or advances to any officer,
director, shareholder or Affiliate of the Company (except for travel and
business expenses payments);
(e) there has not been any change in the accounting methods or practices
followed by the Company, except as required by GAAP;
(f) the Company has not entered into any commitment or other agreement
to do any of the foregoing;
(g) there has not been any notice or indication to the Company (i) that
any customer of the Company which accounted for 2% or more of the Company's
total net sales for the 12 months ended December 31, 1996 may terminate or
significantly reduce its relationship with the Company or (ii) of termination
or potential termination of any other material contract, lease or relationship,
including relationships with suppliers, which, in any case or in the aggregate,
has or may have a Company Material Adverse Effect;
(h) there has not been any (i) failure by the Company to replenish its
inventories and supplies in a normal and customary manner consistent with its
prior practice; or (ii) other change in the selling, pricing, advertising or
personnel practices inconsistent with the Company's prior practice; and
(i) there has not been any labor union organizing activity, any actual
or threatened employee strikes, work stoppages, slow-downs or lockouts or any
material adverse change in the Company's relations with its employees, agents,
customers or suppliers.
3.09 Absence of Litigation.
(a) Schedule 3.09(a) lists all claims, actions, suits, litigations, or
arbitrations or, to the knowledge of the Company, investigations or proceedings
affecting the Company, at law or in equity, which are pending or, to
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the knowledge of the Company, threatened. There is no action pending seeking
to enjoin or restrain the Merger.
(b) Except as set forth on Schedule 3.09(b), the Company is not
subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with or, to the knowledge of the Company,
continuing investigation by, any Governmental Entity.
3.10 Contracts; No Default.
(a) Schedule 3.10(a) sets forth as of the date of this Agreement
a list of each contract or agreement of the Company:
(i) concerning a partnership or joint venture with another
Person; or
(ii) which is material to the Company.
(b) Schedule 3.10(b) lists each contract or agreement to which
the Company is a party materially limiting the right of the Company prior to the
Effective Time, or Acquiror or any of its Subsidiaries at or after the Effective
Time, to engage in, or to compete with any Person in, any business including
each contract or agreement containing exclusivity provisions restricting the
geographical area in which, or the method by which, any business may be
conducted by the Company prior to the Effective Time, or by the Acquiror after
the Effective Time. For the purpose of this Agreement "Company Contract" means
the contracts and agreements listed on Schedules 3.10 (a) and 3.10(b). Correct
and complete copies of all written Company Contracts have been made available to
Acquiror.
(c) Each Company Contract is in full force and effect, each is a
valid and binding contract or agreement enforceable against the Company in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar laws relating to or affecting the rights and
remedies of creditors generally and by general principles of equity including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance, injunctive
relief or other equitable remedies, regardless of whether enforceability is
considered in a proceeding in equity or at law, and there is no default by the
Company in the performance of any obligation to be performed or paid under any
such contract or agreement.
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3.11 Employee Benefit Plans.
(a) Schedule 3.11 lists all "employee pension benefit plans," as
such term is defined in section 3(2) of the Employee Retirement Income Security
Act of 1974 ("ERISA") without regard to any exemptions from any requirements
thereunder issued by the United States Department of Labor in regulations or
otherwise, maintained, sponsored or contributed to by the Company (the "Pension
Plans"). The term "Pension Plan" shall also include any terminated "employee
pension benefit plan" previously maintained, sponsored or contributed to by the
Company which, as of the Closing Date, has not distributed all of its assets in
full satisfaction of accrued benefits.
(b) The Company has made available to Acquiror true and complete
copies of (i) the documents governing each of the Pension Plans as in effect on
the Closing Date; (ii) the most recent annual report prepared on the appropriate
Internal Revenue Service Form 5500 series, including all required attachments,
for each of the Pension Plans subject to such reporting requirements; and (iii)
the most recent determination letter issued by the Internal Revenue Service
concerning the qualification of any Pension Plan pursuant to section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
(c) None of the assets of the Company are subject to any lien,
constructive or otherwise, arising under ERISA section 4068.
(d) The Company maintains a Savings Plan (the "Profit Sharing
Plan"). The Profit Sharing Plan is subject to a favorable determination letter
issued by the Internal Revenue Service, dated April 26, 1995 relating to the tax
qualification of the Profit Sharing Plan under Code section 401(a). There are
no amendments necessary to maintain the Profit Sharing Plan as a qualified plan
under Code section 401(a). The Profit Sharing Plan has operated in accordance
with the requirements of the Code in all material respects, including but not
limited to, compliance with Code sections 401(k)(3) and 401(m).
(e) Schedule 3.11 lists all "employee welfare benefit plans," as
defined in ERISA section 3(1) without regard to any exemptions from any
requirements thereunder issued by the United States Department of Labor in
regulations or otherwise, maintained, sponsored or contributed to by the Company
(the "Welfare Plans"). The term "Welfare Plans" shall also include any
terminated employee welfare benefit plan previously maintained, sponsored or
contributed to by the Company which, as of the Closing Date, has not distributed
all of its assets.
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(f) The Company has made available to Acquiror true and complete copies of
the documents governing or relating to each of the Welfare Plans as in effect
on the Closing Date.
(g) The schedule to this section lists all plans, agreements or programs
to provide fringe or other benefits to the Company's employees (other than
Pension Plans, Profit Sharing Plan and Welfare Plans) including, but not
limited to, vacation, holiday, sick leave, disability, retirement, stock bonus,
savings, thrift, bonus, stock appreciation, deferred compensation, severance,
employment, consulting, medical, hospitalization, welfare, life insurance and
other insurance plans, group insurance or other benefit plans, agreements or
programs (the "Fringe Benefit Plans").
(h) The Company has made available to Acquiror true and complete copies of
the documents governing or affecting each Fringe Benefit Plan together with any
summary plan description or other document describing such Fringe Benefit Plan.
(i) Except as described in Schedule 3.11, the Company has no direct or
indirect, formal or informal, plan, fund or program to change any Pension Plan,
Profit Sharing Plan, Welfare Plan or Fringe Benefit Plan (collectively, the
"Plans") that would affect any of the Company employees to be hired by
Acquiror. The Company has made no material modification, within the meaning of
ERISA section 102 and the regulations thereunder, to any existing Plans.
(j) Except as disclosed on the schedule to this section, the Company has
never been obligated to contribute to any multi-employer plan within the
meaning of ERISA section 3(37).
(k) Except as set forth on Schedule 3.11, neither the Company nor any
employee benefit Plan maintained or contributed to by the Company provides or
has any obligation to provide (or contribute towards the cost of)
post-retirement, welfare benefits with respect to current or former employees
of the Company or any other entity, including, without limitation,
post-retirement, medical, dental, life insurance, severance, or any other
similar benefit, whether provided on an insured or self insured basis.
(l) Except as disclosed on Schedule 3.11, with respect to each of the
Plans (i) all payments due from any such Plan (or from the Company with respect
to any such Plan) have been made, and all amounts properly accrued to date as
liabilities of the Company which have not been paid have been properly
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recorded on the books of the Company; (ii) the Company has complied with, and
each such Plan conforms in form and operation to, all applicable laws and
regulations, including, but not limited to, ERISA and the Code in all material
respects, and all reports and information relating to such Plans required to be
filed with any governmental entity have been timely filed; (iii) all reports
and information required to be disclosed or provided to participants or the
beneficiaries have been timely disclosed or provided; (iv) there have been no
prohibited transactions within the meaning of sections 406 and 407 of ERISA or
section 4975 of the Code with respect to any Plan resulting from actions or
omissions of the Company or any of its employees; (v) no event or omission has
occurred in connection with any Plan that would subject the Company or the Plan
to a fine, penalty, tax or liability, whether pursuant to any agreement,
instrument, indemnification obligation, or statute regulation or rule of law;
and (vi) there are no actions, suits or claims pending (other than routine
claims for benefits) or, to the knowledge of the Company, threatened with
respect to any Plan or against the assets of any Plan.
(m) Except as set forth in Schedule 3.11, the consummation of the
transactions contemplated by this Agreement will not entitle any current or
former employee of the Company to severance pay, unemployment compensation or
any other payment, or accelerate the time of payment or vesting, or increase the
amount of compensation due to any such employee or former employee. Except as
set forth in Schedule 3.11, the Company has not announced any new type of plan
or binding commitment to create any additional employee benefit or fringe
benefit or to amend or modify any existing Plan.
3.12 Taxes. The Company has filed or caused to be filed with the
appropriate Governmental Entities, all federal, state, municipal, and local
income, franchise, excise, real and personal property, and other tax returns and
reports that are required to be filed and the Company is not delinquent in the
payment of any material taxes shown on such returns or response or on any
material assessments for any such taxes received by it and has otherwise
complied in all material respects with all legal requirements applicable to the
Company with respect to all income, sales, use, real or personal property,
excise or other taxes. The Company Balance Sheet includes adequate reserves for
the payment of all accrued but unpaid federal, state, municipal and local taxes
of the Company, including, without limitation, interest and penalties, whether
or not disputed, for the year ended December 31, 1996 and for all fiscal years
prior thereto. The Company has not executed or filed with the Internal Revenue
Service any agreement extending the period for assessment and collection of any
federal tax. The Company is not a party to any pending action or proceeding,
nor, to the knowledge of the Company,
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has any action or proceeding been threatened, by any Governmental Entity for
assessment or collection of taxes, and no claim for assessment or collection of
taxes has been asserted against the Company.
3.13 Intellectual Property Rights. The Company owns or possesses the
right to use (in the manner and the geographic areas in which they are currently
used) all patents, patents pending, trademarks, service marks, trade names,
service names, slogans, registered copyrights, trade secrets and other
intellectual property rights it currently uses, without any conflict or alleged
conflict with the rights of others.
3.14 Certain Business Practices and Regulations. Neither the Company,
nor any of its or their respective executive officers or directors has (i) made
or agreed to make any contribution, payment or gift to any customer, supplier,
governmental official, employee or agent where either the contribution, payment
or gift or the purpose thereof was illegal under any law; (ii) established or
maintained any material unrecorded fund or asset of the Company for any improper
purpose or made any material false entries on its books and records for any
reason; or (iii) made or agreed to make any contribution, or reimbursed any
political gift or contribution made by any other Person, to any candidate for
federal, state or local public office in violation of any law.
3.15 Insurance. All policies and binders of insurance for
professional liability, directors and officers, property and casualty, fire,
liability, worker's compensation and other customary matters held by or on
behalf of the Company (''Insurance Policies") have been made available to
Acquiror. The Insurance Policies are in full force and effect. To the
knowledge of the Company, the Company has not failed to give any notice of any
claim under any Insurance Policy in due and timely fashion, nor to the knowledge
of the Company, has any coverage for claims been denied, which failure or denial
has had or would have a Company Material Adverse Effect.
3.16 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon any arrangements made by
or on behalf of the Company, with the exception of advisory fees and expenses in
the amount payable to Cleary, Gull, Reiland & McDevitt, Inc. pursuant to the
engagement letter, a copy of which is attached as Schedule 3.16.
3.17 Title to Properties.
(a) Schedule 3.17 sets forth a true and complete list and
description of all real property owned, used or occupied by the Company (the
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"Real Property") including a description of all land, and all encumbrances,
easements, or rights of way of record (or, if not of record, of which the
Company has notice or knowledge) granted on or otherwise affecting such real
property. Except as set forth on Schedule 3.17, there are no leases,
contracts, options, agreements or enforceable rights or obligations relating to
or affecting the Real Property to which the Company is a party or by which the
Real Property is otherwise bound or affected. There are no material structural
or nonstructural defects (including, without limitation, inadequacy for normal
use of mechanical systems and fixtures) in any building or its systems or
fixtures (including, without limitation, the HVAC system, plumbing system,
electrical system, sprinkler system and sewer and water systems) or other
improvements situated on the Real Property and all building systems, fixtures,
structures, fixtures and improvements, owned, leased or used by the Company,
are in all material respects in good condition and working order (reasonable
wear and tear excepted) and are adequate in quality and quantity for the normal
operation of the Company's business and the Real Property. None of the Real
Property is located in a recognized wetland, flood prone area, flood risk area,
flood plain or similarly restricted area or is subject to any shoreland
regulations. The Company has no notice or knowledge of capital expenditures on
the Real Property (excluding only normal repair made consistently with past
practice and which are required to be expensed for federal income tax purposes)
that would be necessary to conduct the Company's business as presently
conducted nor are any such expenditures planned by the Company. The Company
has all easements and rights, including without limitation, easements for all
utilities, services, roadways, and other ways on ingress and egress, adequate
and sufficient to conduct the Company's business. Neither the whole or any
portion of the Real Property has been condemned, requisitioned or otherwise
taken by any public authority, no notice of such condemnation, requisition or
taking has been served upon the Company and to the Company's knowledge, no such
condemnation, requisition or taking is threatened or contemplated. No public
improvements have been commenced and to the Company's knowledge there are no
public improvements planned which may reasonably be expected to result in
special assessments against or otherwise adversely affect any of the Real
Property. Except for increases consistent with past experience, the Company
has no notice or knowledge of any proposed increases in any real estate taxes
or assessed valuations applicable to the Real Property, and there are no
challenges or appeals pending regarding the amount and/or payments of such real
estate taxes or assessed valuations. No governmental agency has issued any
work order, and there have been no court orders requiring repairs, alterations
or corrections of any condition on the Real Property. As of the date of
Closing, all work performed or materials furnished for the Real Property shall
have been fully paid for, the Company shall deliver an affidavit to that effect
to Acquiror's title insurance company at Closing, and the Company shall provide
Acquiror with appropriate
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lien waivers from any and all contractors, subcontractors, laborers or material
men furnishing labor or material for the improvement of the Real Property
during the six months preceding the date of Closing.
3.18 Inventory. The Company's inventory is of a quality and quantity
usable and salable in the ordinary course of business consistent with the
Company's past practice without discount for obsolescence. The value at which
the Company carried its inventory on the Company Balance Sheet reflects its
customary inventory valuation policy of stating inventory on the FIFO method at
the lesser of cost or market all in accordance with generally accepted
accounting principles. No inventory has been consigned to others. The
quantity of inventory is sufficient and adequate for, but is not materially in
excess of the level appropriate to, the conduct of the Company's business as it
previously has been conducted. The Company has not made any purchase
commitments in excess of normal, ordinary and usual requirements.
3.19 Title to Personal Property. The Company has good and marketable
title to all personal property shown on the Company Balance Sheet, free and
clear of all mortgages, security interests, title retention agreements, options
to purchase, rights of first refusal, liens, easements, encumbrances and other
restrictions of any nature whatsoever ("Liens"), except for those Liens
described on Schedule 3.19.
3.20 Product Liability. There have been no product liability Claims
relating to products manufactured or sold by the Company, or services rendered
by the Company which are presently pending or which, to the Company's
knowledge, are threatened, or which have been asserted or commenced against the
Company within the five years prior to the date hereof, in which a party
thereto either requested injunctive relief (whether temporary or permanent) or
alleged damages in excess of $25,000 (whether or not covered by insurance).
The Company's products have been designed and manufactured so as to meet and
comply with all applicable governmental standards and specifications currently
in effect.
3.21 Compliance with Environmental Laws.
(a) The term "Environmental Laws" shall mean all federal, state
and local laws including statutes, regulations and other governmental
restrictions and requirements relating to the discharge of air pollutants, water
pollutants or process wastewater or the disposal of solid or hazardous waste or
otherwise relating to the environment or hazardous substances or employee health
and safety.
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(b) The term "Hazardous Substances" shall mean all hazardous
and toxic substances, wastes and materials; any pollutants or contaminants
(including, without limitation, petroleum products, asbestos and raw materials
which include hazardous constituents); and any other similar substances or
materials which are regulated under Environmental Laws.
(c) Schedule 3.21 describes:
(i) With expiration dates, all permits, licenses,
approvals and consents issued by or received from government agencies (including
local sewerage districts) relating to Environmental Laws or Hazardous Substances
which are held by the Company (the "Environmental Permits").
(ii) In general terms, the storage, use or generation
of Hazardous Substances by the Company at the Real Property during the period
the Company has owned or occupied the Real Property or of which the Company has
notice or knowledge.
(iii) All above- and below-ground storage tanks on the
Real Property and identifies all products and materials ever to have been stored
in such tanks.
(d) The Environmental Permits are in full force and effect
and constitute all permits, licenses, approvals and consents relating to
Environmental Laws or Hazardous Substances required of the Company for the
conduct of the Business and the use of the Real Property (as presently conducted
and used). No applications for permits or reports filed by the Company in
connection with any Environmental Law or Environmental Permit contained any
untrue statement of material fact or omitted any statement of material fact
necessary to make the statements made not misleading.
(e) The Company has filed all reports, returns and other
filings required to be filed with respect to the Real Property and the Company's
business under Environmental Laws and the Environmental Permits. The Company
has furnished Acquiror complete copies of all environmental filings made by the
Company since January 1, 1992.
(f) Except as disclosed on Schedule 3.21: (i) the Company's
business and the Real Property have been and are being operated by the Company
in accordance with all Environmental Laws and Environmental Permits; and (ii)
the Company has not received any notice nor does the Company have any knowledge
that the Company's business or the Real Property are not in compliance with all
Environmental Laws and Environmental Permits and no proceeding for
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the suspension, revocation or cancellation of any Environmental Permit is
pending or, to the Company's knowledge, threatened.
(g) Except as disclosed on Schedule 3.21, there are no
actions pending, or to the Company's knowledge, actions, claims or
investigations threatened against the Company, the business or the Real
Property, which in any case asserts or alleges (i) the Company or the Real
Property violated any Environmental Law or Environmental Permit or is in default
with respect to any Environmental Permit or any order, writ, judgment, variance,
award or decree of any government authority; (ii) the Company is required to
clean up or take remedial or other responsive action due to the disposal,
discharge or other release of any Hazardous Substance on the Real Property or
elsewhere; (iii) the Company is required to contribute to the cost of any past,
present or future cleanup or remedial or other response action which arises out
of or is related to the disposal, discharge or other release of any Hazardous
Substance by the Company; or (iv) the Company and the Real Property are not
subject to any judgment, stipulation, order, decree or other agreement arising
under any Environmental Laws.
(h) Except as disclosed on Schedule 3.21: (i) no Hazardous
Substances have been treated, recycled or disposed of (intentionally or
unintentionally) on, under or at the Real Property; (ii) there has been no
release or threatened release of any Hazardous Substance from the Real Property;
(iii) there have not been nor are there now any materials containing asbestos or
PCBs on the Real Property; and (iv) there have been no activities on the Real
Property which would subject the Company or any subsequent owner or lessee of
the Real Property to damages, penalties, injunctive relief or cleanup costs
under any Environmental Laws or common law theory of liability. Except as
disclosed on Schedule 3.21, to the Company's knowledge, no property adjacent to
the Real Property has ever been used for the treatment, recycling or disposal
(intentional or unintentional) of Hazardous Substances nor has there been a
release or threatened release of any Hazardous Substances from such adjacent
property.
3.22 Labor Matters.
(a) Except as set forth on Schedule 3.22, the Company is not
a party to or bound by any union collective bargaining agreements or other labor
contracts. The Company is not a party to any pending arbitration or grievance
proceeding or other claim relating to any labor contract nor, to the Company's
knowledge, is any such action threatened and no set of facts would reasonably be
expected to constitute a basis for any such action. Within the last five years,
the Company has not experienced any labor disputes, union organization attempts
or any work stoppage due to labor disagreements in connection with its business,
and there is currently no labor strike, dispute, request
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for representation, slow down or stoppage actually pending, or to the Company's
knowledge, threatened against or affecting the Company nor a secondary boycott
with respect to the products of the Company.
(b) The Company is not bound by any court, administrative
agency, tribunal, commission or board decree, judgment, decision, arbitration
agreement or settlement relating to collective bargaining agreements, conditions
of employment, employment discrimination or attempts to organize a collective
bargaining unit. The Company has no notice or knowledge of any employment
discrimination, safety or unfair labor practice or other employment-related
investigation, claim or allegation against the Company or any set of facts which
would reasonably be expected to constitute a basis for such an action.
(c) The Company has provided Acquiror all of the Company's
written employment policies presently in effect.
3.23 Compliance with Law. To the knowledge of the Company, the
Company is in substantial compliance with all applicable federal, state, local
and international laws or ordinances and any other rule or regulation of any
international federal, state or local agency or body, including, without
limitation, all energy, safety, environmental, zoning, health, export, import,
trade practice, antidiscrimination, antitrust, wage, hour and price control
laws, orders, rules or regulations. Schedule 3.23 lists all citations issued to
the Company in the three years prior to the date hereof from any city, state or
federal agency. All citations that have been issued have been properly
remedied. No notice from any governmental body or other person has been served
upon the Company claiming any violation or alleged violation of any law,
ordinance, code, rule or regulation with which the Company has not complied.
3.24 Accounts Receivable. All accounts receivable reflected on the
Company Balance Sheet and those existing as of the Closing Date represent valid
claims for bona fide, arms length sales of goods and services actually made by
the Company in the ordinary course of its business and none of such accounts or
notes receivable is subject to any set off or counterclaim or is in dispute.
Schedule 3.24 sets forth an aging schedule of the accounts and notes receivable
of the Company as of March 31, 1997, and such schedule is correct and complete
in all material respects.
3.25 Major Customers and Suppliers. Schedule 3.25 sets forth a true
and correct list of the ten largest customers of the Company for each of the
fiscal years ended December 31, 1996 and December 31, 1995 (determined on the
basis of the total dollar amount of net revenues) showing the dollar amount of
net revenues from each such customer during each such year. Schedule 3.25 also
sets
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forth a true and correct list of the ten largest suppliers of the Company in
terms of dollar volume of purchases during such fiscal years.
3.26 Product Warranty. Section 3.26 sets forth a description of all
warranties provided by the Company with respect to its products.
3.27 Disclosure. To the knowledge of the Company, no warranty or
representation by the Company contained, or deemed to be made by the Company, in
this Agreement or in any writing to be furnished pursuant hereto or previously
furnished to Acquiror contains or will contain any untrue statement of fact or
omits or will omit to state any fact required to make the statements therein
contained not misleading. All statements and information contained in any
certificate, instrument, disclosure schedule or documents delivered by or on
behalf of the Company to Acquiror or its representatives pursuant hereto shall
be deemed representations and warranties by the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR AND ACQUIROR SUB
The term "Acquiror Material Adverse Effect" as used in this Agreement
shall mean any change or effect that, individually or when taken together with
all such other changes or effects, is materially adverse to the condition
(financial or otherwise), results of operations business, properties, assets or
liabilities of Acquiror and its Subsidiaries, taken as a whole.
Acquiror and Acquiror Sub jointly and severally represent and warrant
to the Company that:
4.01 Organization and Qualification; Subsidiaries. Acquiror is a
limited liability company, duly organized and validly existing under the laws of
the State of Wisconsin, with all requisite limited liability company power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. Acquiror Sub is a corporation, duly incorporated,
validly existing and in good standing under the laws of Wisconsin, and Acquiror
Sub has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted.
4.02 Authority. Each of Acquiror and Acquiror Sub has the requisite
limited liability company or corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder, and to consummate
the transactions contemplated hereby. The execution and delivery of this
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Agreement by Acquiror and Acquiror Sub, and the consummation by Acquiror and
Acquiror Sub of the transactions contemplated hereby, have been duly authorized
by all necessary corporate action and no other limited liability company or
corporate proceedings on the part of Acquiror or Acquiror Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated by this
Agreement. This Agreement has been duly executed and delivered by Acquiror and
Acquiror Sub and constitutes a legal, valid and binding obligation of Acquiror
and Acquiror Sub enforceable against Acquiror and Acquiror Sub in accordance
with its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, moratorium and
other similar laws relating to or affecting the rights and remedies of
creditors generally and by general principles of equity including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance, injunctive
relief or other equitable remedies, regardless of whether enforceability is
considered in a proceeding in equity or at law.
4.03 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Acquiror Sub
does not, and the performance of this Agreement by Acquiror Sub will not, (i)
violate the Articles of Organization or Operating Agreement of Acquiror or the
Articles of Incorporation or By-Laws of Acquiror Sub, (ii) subject to the filing
and recordation of appropriate merger documents as required by the Wisconsin
Law, conflict with or violate any laws applicable to Acquiror or Acquiror Sub or
by which any of their respective properties is bound or affected, except such as
would not have an Acquiror Material Adverse Effect.
(b) The execution and delivery of this Agreement by Acquiror and
Acquiror Sub do not, and the performance of this Agreement by Acquiror and
Acquiror Sub shall not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entities, except as
described in section 4.03(a) above.
4.04 Ownership of Acquiror and Acquiror Sub; No Prior Activities.
(a) Each of Acquiror and Acquiror Sub was formed for the purpose
of engaging in the transactions contemplated by this Agreement.
(b) As of the Effective Time, all of the outstanding capital
stock of Acquiror Sub will be owned directly by Acquiror. All of the
outstanding member interests of Acquiror are owned by entities controlled by or
affiliated with Robert T. Foote, Jr. As of the Effective Time, there will be no
options, warrants or
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other rights (including registration rights), agreements, arrangements or
commitments to which Acquiror or Acquiror Sub is a party of any character
relating to the issued or unissued capital stock of, or other equity interests
in, Acquiror or Acquiror Sub or obligating Acquiror or Acquiror Sub to grant,
issue or sell any shares of the capital stock of, or other equity interests in,
Acquiror or Acquiror Sub, by sale, lease, license or otherwise. There are no
obligations, contingent or otherwise, of Acquiror or Acquiror Sub to repurchase,
redeem or otherwise acquire any shares of the capital stock of Acquiror or
Acquiror Sub.
(c) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, neither
Acquiror nor Acquiror Sub has incurred, directly or indirectly, through any
subsidiary or affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any agreement
or arrangements with any Person.
4.05 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Acquiror.
ARTICLE V
COVENANTS
5.01 Affirmative Covenants of the Company. The Company covenants and
agrees that prior to the Effective Time, unless otherwise contemplated by this
Agreement or consented to in writing by Acquiror, the Company will:
(a) operate its business in the ordinary course of business and
consistent with its past practice;
(b) use reasonable efforts to preserve intact its business
organization and assets, maintain its rights and franchises, retain the services
of its respective officers and key employees and maintain the relationships with
its respective key customers and suppliers;
(c) use reasonable efforts to keep in full force and effect
liability insurance and bonds comparable in amount and scope of coverage to that
currently maintained;
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(d) confer with Acquiror at its reasonable request to report
operational matters of a material nature and to report the general status of the
ongoing operations of the business of the Company; and
(e) From the date hereof until the Closing Date, the Company (i)
will give Acquiror, its counsel, financial advisors, auditors and other
authorized representatives reasonable access to the offices, properties, books
and records of the Company, (ii) will furnish to Acquiror, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information relating to the Company as such persons
may reasonably request, and (iii) will instruct the employees, counsel and
financial advisors of the Company to cooperate in all reasonable respects with
Acquiror in its investigation of the Company; provided that no investigation
pursuant to this subsection shall affect any representation or warranty given by
the Company hereunder.
5.02 Negative Covenants of the Company. Except as contemplated by
this Agreement or consented to in writing by Acquiror, from the date of this
Agreement until the Effective Time, the Company shall not do any of the
following:
(a) (i) increase the compensation payable to any director,
officer or employee of the Company; (ii) grant any severance or termination pay
(other than pursuant to the normal severance policy of the Company currently in
effect) to, or enter into any severance agreement with, any director or officer;
(iii) subject to clause (i), enter into or amend any employment agreement with
any director or officer that would extend beyond the Effective Time except on an
at-will basis; or (iv) establish, adopt, enter into or amend any Employee
Benefit Plan, except as may be required to comply with applicable law;
(b) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock;
(c) (i) redeem, purchase or otherwise acquire any shares of its
capital stock or any securities or obligations convertible into or exchangeable
for any shares of its capital stock, or any options, warrants or conversion or
other rights to acquire any shares of its capital stock; (ii) effect any
reorganization or recapitalization; or (iii) split, combine or reclassify any of
its capital stock (except for the issuance of shares upon the exercise of
options or warrants in accordance with their terms);
(d) issue, deliver, award, grant or sell, or authorize the
issuance, delivery, award, grant or sale (including the grant of any security
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interests, liens, claims, pledges, limitations on voting rights, charges or
other encumbrances) of, any shares of any class of its capital stock, any
securities convertible into or exercisable or exchangeable for any such shares,
or any rights, warrants or options to acquire any such shares (except for the
issuance of shares upon the exercise of options or warrants in accordance with
their terms), or amend or otherwise modify the terms of any such rights,
warrants or options the effect of which shall be to make such terms more
favorable to the holders thereof, except as contemplated by this Agreement;
(e) to the extent material, acquire or agree to acquire, by
merging or consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets of any other Person (other than
the purchase of assets from suppliers or vendors in the ordinary course of
business and consistent with the Company's past practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any material amount of any of its assets,
except for dispositions in the ordinary course of business and consistent with
the Company's past practice;
(g) adopt any amendments to its Articles of Incorporation or
By-Laws;
(h) except as set forth in Schedule 5.02(h); (A) change any of
its methods of accounting in effect at December 31, 1994 or (B) make or rescind
any express or deemed election relating to taxes, settle or compromise any
claim, action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to taxes, or change any of its methods of reporting
income or deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year ending
December 31, 1994, except in either case as may be required by law, the IRS, or
GAAP or in the ordinary course of business consistent with past practice;
(i) except with respect to increased bank debt pursuant to the
Company's existing revolving credit facility, incur any obligation for borrowed
money or purchase money indebtedness, whether or not evidenced by a note, bond,
debenture or similar instrument, except as approved by Acquiror in advance; or
(j) agree in writing or otherwise to do any of the foregoing.
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5.03 Acquisition Proposals. Upon execution of this Agreement, the
Company and its officers, directors, employees, agents and advisors will
immediately cease any existing discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposal (as hereinafter
defined). The Company may, directly or indirectly, furnish information and
access, in each case only in response to requests that were not solicited by the
Company (or any officer, director, employee, agent or advisor on its behalf)
after the date of this Agreement, to any corporation, partnership, person or
other entity or group (each, a "Potential Acquiror") pursuant to confidentiality
agreements, and may participate in discussions and negotiate with a Potential
Acquiror concerning any merger, sale of assets, sale of shares of capital stock
or similar transaction involving the Company, if such Potential Acquiror has
submitted a written proposal to the Board of Directors relating to any such
transaction, and the Board of Directors determines in good faith after
consultation with independent legal counsel that the failure to provide such
information or access or to engage in such discussions or negotiations would be
inconsistent with their fiduciary duties to the Company's shareholders under
applicable law. The Company shall notify Acquiror immediately if any such
request or proposal, or any inquiry or contact with any Person with respect
thereto, is made and shall keep Acquiror apprised of all developments that could
reasonably be expected to culminate in the Board withdrawing, modifying or
amending its recommendation of the Merger and the other transactions
contemplated by this Agreement. For purposes of this section 5.03, the term
"Acquisition Proposal" means any proposal or offer for a merger, asset
acquisition or other business combination (other than the Merger contemplated by
this Agreement) involving the Company and any Potential Acquiror, or any
proposal or offer to acquire a significant equity interest in, or a significant
portion of the assets of, the Company by a Potential Acquiror.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Proxy Statement.
(a) As promptly as practicable after the execution of this
Agreement, the Company shall prepare and file with the SEC a proxy statement and
a form of proxy to be sent to the shareholders of the Company in connection with
the meeting of the Company's shareholders to consider the Merger (the
"Shareholders' Meeting") (such proxy statement, together with any amendments
thereof or supplements thereto, in each case in the form or forms mailed to the
Company's shareholders, being the "Proxy Statement"). The Proxy Statement shall
include the recommendation of the Company's Board of Directors in favor of the
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Merger and approval of this Agreement, unless outside legal counsel to the
Company advise the Company's Board of Directors that the directors' fiduciary
duties under applicable law require them not to do so.
(b) The information included in the Proxy Statement shall not, at
the date the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to shareholders or at the time of the Shareholders' 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. If at any time prior to the Shareholders' Meeting, any event or
circumstance relating to the Company, or its officers or directors, is
discovered by the Company which should be set forth in a supplement to the Proxy
Statement, the Company shall promptly inform Acquiror. All documents that the
Company is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in all
material respects with the applicable requirements of the Exchange Act.
(c) Acquiror and Acquiror Sub each consents to the use of its
name and to the inclusion of business information relating to such party (in
each case, to the extent required by applicable securities laws) in the Proxy
Statement. The Company, Acquiror and Acquiror Sub each hereby agrees to (i) use
its reasonable efforts to obtain the written consent of any Person retained by
it which may be required to be named (as an expert or otherwise) in the Proxy
Statement; provided, that such party shall not be required to make any material
payment to such Person in connection with such party's efforts to obtain any
such consent, and (ii) cooperate, and agrees to use its reasonable efforts to
cause its Affiliates to cooperate, with any legal counsel, investment banker,
accountant or other agent or representative retained by any of the parties in
connection with the preparation of any and all information required as
determined after consultation with each party's counsel, by applicable
securities laws to be disclosed in the Proxy Statement.
6.02 Meeting of Shareholders. The Company shall take all action
necessary in accordance with the Wisconsin Law and its Articles of Incorporation
and By-Laws to convene the Shareholders' Meeting, and the Company shall consult
with Acquiror in connection therewith. The Company shall use reasonable efforts
to solicit from the shareholders of the Company proxies in favor of the Merger
and shall take all other actions necessary or advisable to secure the vote or
consent of shareholders required by the Wisconsin Law to approve this Agreement,
including the retention of proxy solicitation agents if requested by Acquiror,
unless otherwise required by the applicable fiduciary duties of directors or
officers of the Company.
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6.03 Appropriate Action; Consents; Filings.
(a) Subject to the terms and conditions herein provided, the
Company, Acquiror and Acquiror Sub shall use all reasonable efforts to (i) take,
or cause to be taken, all appropriate action, and do or cause to be done, all
things necessary, proper or advisable under applicable law or otherwise to
consummate and make effective the transactions contemplated by this Agreement as
promptly as practicable, (ii) obtain from any Governmental Entities any
consents, licenses or orders required to be obtained by Acquiror or the Company
in connection with the authorization, execution and delivery of this Agreement
and the consummation of the transactions contemplated by this Agreement,
including, without limitation, the Merger, and (iii) make all necessary
notifications and filings and thereafter make any other required submissions
with respect to this Agreement and the Merger required under (A) the Exchange
Act and any other applicable federal or state securities laws, and (B) any other
applicable law; provided that Acquiror and the Company shall cooperate with each
other in connection with the making of all such filings. The Company and
Acquiror shall furnish to each other all information required for any
application or other filing to be made pursuant to the rules and regulations of
any applicable law (including all information required to be included in the
Proxy Statement) in connection with the transactions contemplated by this
Agreement.
(b) (i) The Company and Acquiror shall give any notices to third
parties, and use all reasonable efforts to obtain any third-party consents, (A)
necessary to consummate the transactions contemplated in this Agreement, (B)
disclosed or required to be disclosed in the disclosure schedules to this
Agreement, or (c) required to prevent a Company Material Adverse Effect from
occurring prior to the Effective Time.
(ii) In the event that any party shall fail to obtain any
third-party consent described in subsection (b)(i) above, such party shall use
reasonable efforts, and shall take any such actions reasonably requested by the
Company and Acquiror to minimize any adverse effect upon the Company and its
businesses resulting, or which could reasonably be expected to result after the
Effective Time, from the failure to obtain such consent.
(c) From the date of this Agreement until the Effective Time, the
Company shall promptly notify Acquiror in writing of any pending or, to the
knowledge of the Company, threatened action, proceeding or investigation by any
Governmental Entity or any other Person (i) challenging or seeking material
damages in connection with the Merger, (ii) alleging that the consent of such
Governmental Entity or Person may be required in connection with the Merger or
this Agreement or (iii) seeking to restrain or prohibit the consummation of the
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Merger or otherwise limit the right of Acquiror or, to the knowledge of the
Company, to own or operate all or any portion of the businesses or assets of
the Company.
(d) From the date of this Agreement until the Effective Time,
Acquiror shall promptly notify the Company in writing of any pending or, to the
knowledge of Acquiror, threatened action, proceeding or investigation by any
Governmental Entity or any other Person (i) challenging or seeking material
damages in connection with the Merger or (ii) seeking to restrain or prohibit
the consummation of the Merger or otherwise limit the right of Acquiror to own
or operate all or any portion of the business or assets of the Company.
6.04 Update Disclosure; Breaches. From and after the date of this
Agreement until the Effective Time, each party shall promptly notify the other
parties hereto by written update to its disclosure schedules ("Update Schedule")
of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be reasonably likely to cause any condition to the
obligations of any party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied, (ii) the failure of the
Company or Acquiror, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it pursuant to this
Agreement which would be reasonably likely to result in any condition to the
obligations of any party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied, or (iii) of any changes to
the information contained in its disclosure schedule (including any change to
any representations or warranties herein as to which no schedule has been
created as of the date hereof but as to which a schedule would have been
required hereunder to have been created on or before the date hereof if such
change had existed on the date hereof); provided, however, that the delivery of
any Update Schedule pursuant to this section 6.04 shall not cure any breach of
any representation or warranty requiring disclosure of such matter prior to the
date of this Agreement or otherwise limit or affect the remedies available to
the party receiving such notice.
6.05 Public Announcements. The parties to this Agreement shall
consult in good faith with each other before issuing any press release or
otherwise making any public statements with respect to the Merger and shall not
issue any such press release or make any such public statement without the prior
written agreement of the other party, except as may be required by law or the
requirements of the NASDAQ market.
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6.06 Indemnification.
(a) From and after the Effective Time, Acquiror shall, and shall
cause the Surviving Corporation to, indemnify, defend and hold harmless the
present and former officers, directors, employees, agents and representatives of
the Company (collectively, the "Indemnified Parties") against all losses,
expenses, claims, damages or liabilities arising out of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the full extent permitted or
required under the Wisconsin Law or other applicable state law (and shall also
advance reasonable expenses as incurred to the fullest extent permitted under
the Wisconsin Law or other applicable state law, provided that the persons to
whom expenses are advanced provides an undertaking to repay such advances
contemplated by the Wisconsin Law). Acquiror and Acquiror Sub agree that all
rights to indemnification, including provisions relating to advances of expenses
incurred in defense of any claim, action, suit, proceeding or investigation (a
"Claim") existing in favor of the Indemnified Parties as provided in the
Company's Articles of Incorporation or By-Laws or other agreement or provisions,
as in effect as of the date hereof, with respect to matters occurring through
the Effective Time, shall survive the Merger and shall continue in full force
and effect.
(b) Without limiting the foregoing, in the event any Claim is
brought against any Indemnified Party (whether arising before or after the
Effective Time) after the Effective Time (i) the Indemnified Parties may retain
counsel satisfactory to them (subject to approval by Acquiror and the Surviving
Corporation, which approval will not be unreasonably withheld or delayed), (ii)
Acquiror and the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received subject to the ability of Acquiror and the Surviving
Corporation to receive such information relative to the legal services provided
as is customarily provided and reasonably requested by Acquiror and the
Surviving Corporation, and (iii) Acquiror and the Surviving Corporation will use
all reasonable efforts to assist in the vigorous defense of any such matter,
provided that neither Acquiror nor the Surviving Corporation shall be liable for
any settlement of any Claim effected without its written consent, which consent,
however, shall not be unreasonably withheld or delayed. Any Indemnified Party
wishing to claim indemnification under this section 6.06, upon learning of any
such Claim, shall notify Acquiror (but the failure so to notify Acquiror shall
not relieve it from any liability which it may have under this section 6.06
except to the extent such failure materially prejudices Acquiror). The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to each such
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matter unless there is, as evidenced by the written opinion of counsel
reasonably acceptable to Acquiror and the Surviving Corporation, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
(c) The Surviving Corporation shall use reasonable efforts to
obtain extended reporting endorsements on the fiduciary liability, professional
liability and directors and officers liability policies currently covering the
Company or any of the Indemnified Parties, and will submit to the applicable
insurer a full and complete list of any potential claims under the policy issued
by such insurer. In the event the Surviving Corporation is unable to obtain
extended coverage under its existing directors and officers liability insurance
policies, Acquiror shall use reasonable efforts to provide similar coverage for
the Indemnified Parties under policies then maintained by Acquiror; provided
that such similar coverage is available to Acquiror at a cost not substantially
higher than the Company's present coverage.
(d) This section 6.06 is intended to benefit the Indemnified
Parties and shall be binding on all successors and assigns of Acquiror, Acquiror
Sub, the Company and the Surviving Corporation.
6.07 Obligations of Acquiror and Acquiror Sub. Acquiror shall take
all action necessary to cause Acquiror Sub to perform its obligations under this
Agreement and the bank commitment letter referred to below and to consummate the
Merger on the terms and conditions set forth in this Agreement. Upon the
execution of this Agreement, Acquiror has delivered to the Company a letter, in
a form typical to such a transaction, from a financial institution evidencing
such institution's commitment to provide acquisition and working capital
financing sufficient to allow Acquiror and Acquiror Sub to consummate the
Merger.
6.08 Employee Benefits and Compensation. After the Effective Time,
the employee benefit plans of the Surviving Corporation shall recognize for
eligibility, vesting, accrual and all other purposes the credited service of
employees of the Company and its Subsidiaries credited as of the Effective Time
under the Company's Employee Benefit Plans on a basis that is consistent with
the manner in which the Employee Benefit Plans of the Company recognized such
employment for similar purposes.
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ARTICLE VII
CLOSING CONDITIONS
7.01 Conditions to Obligations of Each Party Under This Agreement.
The respective obligations of each party to effect the Merger and the other
transactions contemplated by this Agreement shall be subject to the satisfaction
at or prior to the Effective Time of the following conditions, any or all of
which may be waived, in whole or in part, to the extent permitted by applicable
law:
(a) Shareholder Approval. This Agreement and the Merger shall
have been approved by the requisite vote of the shareholders of the Company.
(b) No Action or Proceeding. There shall not have been
instituted and there shall not be pending any action or proceeding by a
Governmental Entity, and no such action or proceeding shall have been approved
by a Governmental Entity with authority to institute such an action or
proceeding, before any court of competent jurisdiction or governmental agency or
regulatory or administrative body, and no order or decree shall have been
entered in any action or proceeding before such court, agency or body of
competent jurisdiction: (i) imposing or seeking to impose limitations on the
ability of Acquiror to acquire or hold or to exercise full rights of ownership
of any securities of the Company; (ii) imposing or seeking to impose limitations
on the ability of Acquiror to combine and operate the business and assets of the
Company with Acquiror or Acquiror Sub; (iii) imposing or seeking to impose other
sanctions, damages or liabilities arising out of the Merger on Acquiror,
Acquiror Sub, the Company or any of their officers or directors; (iv) requiring
or seeking to require divestiture by Acquiror of all or any material portion of
the business, assets or property of the Company; or (v) restraining, enjoining
or prohibiting or seeking to restrain, enjoin or prohibit the consummation of
the Merger, in each case, with respect to clauses (i) through (iv) above, which
would or is reasonably likely to result in a Company Material Adverse Effect at
or prior to or after the Effective Time or, with respect to clauses (i) through
(v) above, which would or is reasonably likely to subject any of their
respective officers or directors to any penalty or criminal liability.
Notwithstanding the foregoing, prior to invoking the condition set forth in this
section 7.01(b), the party seeking to invoke it shall have used its reasonable
efforts to have any pending or approved such action or proceeding withdrawn or
dismissed or such order or decree vacated.
(c) Other Approvals or Notices. All other consents, waivers,
approvals and authorizations required to be obtained from, and all filings
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or notices required to be made with, any Government Entity by Acquiror or the
Company prior to consummation of the transactions contemplated in this
Agreement (other than the filing and recordation of Merger documents in
accordance with the Wisconsin Law) shall have been obtained from and made with
all required Governmental Entities, except for such consents, waivers,
approvals or authorizations which the failure to obtain, or such filings or
notices which the failure to make, would not have a Company Material Adverse
Effect prior to or after the Effective Time or an Acquiror Material Adverse
Effect before or after the Effective Time or be reasonably likely to subject
the Company, Acquiror or Acquiror Sub or any of their respective officers,
directors, employees, agents or representatives to substantial penalty or
criminal liability.
7.02 Additional Conditions to Obligations of Acquiror and Acquiror
Sub. The obligations of Acquiror and Acquiror Sub to effect the Merger and the
other transactions contemplated in this Agreement are also subject to the
satisfaction at or prior to the Effective Time of the following conditions, any
or all of which may be waived, in whole or in part:
(a) Representations and Warranties. Each of the representations
and warranties of the Company contained in this Agreement shall have been true
and correct in all material respects when made and the information contained
therein, as updated by any Update Schedule, taken as a whole, shall not have
materially adversely changed; each of the representations and warranties
contained in this Agreement shall be true and correct in all material respects
as of the Effective Time. Acquiror shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of the Company to that
effect.
(b) Agreements and Covenants. The Company shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time, except to the extent failure to perform is caused by or is
consented to by Acquiror or Acquiror Sub. Any breach by the Company of its
obligations under section 5.02(d) shall be deemed to be material noncompliance
for purposes of this section 7.02(b). Acquiror shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of the
Company to that effect.
(c) Consents Under Agreements. The Company shall have obtained
the third-party consents described in subsection 6.03(b)(i), except those for
which the failure to obtain such consents and approvals would not have a Company
Material Adverse Effect prior to or after the Effective Time or an Acquiror
Material Adverse Effect before or after the Effective Time, other than as
contemplated by subsection 6.03(b)(ii).
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(d) Opinion of Counsel. The Acquiror and the Acquiror Sub shall
have received an opinion of von Briesen, Purtell & Roper, s.c. counsel to the
Company, addressed to Acquiror and Acquiror Sub, dated as of the Effective Time,
and satisfactory in form and substance to Acquiror, Acquiror Sub and its
counsel, to the following effect:
(i) The Company is a corporation existing under the laws of
the State of Wisconsin and, based solely on a certificate of the Secretary of
State of Wisconsin, (a) has filed with the Secretary of State during its most
recently completed report year the required annual report; (b) is not the
subject of a proceeding under Wisconsin Statutes section 180.1421, to cause its
administrative dissolution; (c) no determination has been made by the Secretary
of State that grounds exist for such action with respect to the Company; (d) no
filing has been made with the Secretary of State of a decree of dissolution with
respect to the Company; and (e) Articles of Dissolution of the Company have not
been filed with the Secretary of State. The Company has the corporate power to
carry on their respective businesses as currently being conducted.
(ii) The Agreement and Plan of Merger (the "Agreement") is a
legal, valid and binding obligation of the Company (a) except as the Agreement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally;
and (b) subject to general principles of equity including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance, injunctive relief or other
equitable remedies, regardless of whether considered in a proceeding in equity
or at law. The execution, delivery and performance by the Company of the
Agreement have been duly authorized by all necessary corporation action,
including the requisite approval of the shareholders of the Company. Under the
Wisconsin Business Corporation Law and the Company's Articles of Incorporation
and By-Laws, the Company's shareholders and Board of Directors properly approved
the Merger in accordance with the terms of the Agreement. Upon filing the
Articles of Merger as contemplated by the Agreement, the Merger shall be
effective under Wisconsin law.
(iii) The execution and delivery of the Agreement and the
performance by the Company of its terms do not [a] contravene or conflict with
any provision of the Articles of Incorporation or By-Laws of the Company; or [b]
violate any order, judgment or decree of any Wisconsin or federal court or
governmental instrumentality to which the Company is subject and of which such
counsel has knowledge.
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(iv) The authorized capital stock of the Company consists of
6,000,000 shares of capital stock which are comprised of 1,000,000 shares of
preferred stock, par value $1.00 per share, none of which are issued and
outstanding, and 5,000,000 authorized shares of Company Common Stock, par value
$3.00 per share, of which 457,323 shares are issued and outstanding, fully paid
and nonassessable except as set forth in Wisconsin Statutes section
180.0622(2)(b), as interpreted. To the knowledge of such counsel, the Company
does not have outstanding any stock or securities convertible into or
exchangeable for any shares of capital stock or any preemptive rights or other
rights to subscribe for or to purchase, or any options for the purchase of, or
any agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments, rights or claims of any other character relating to the
issuance of, any capital stock or any stock or securities convertible into or
exchangeable for any capital stock other than as set forth in [a] the Articles
of Incorporation and [b] the Agreement or the Disclosure Schedules. To the
knowledge of such counsel, except as set forth in the Articles of Incorporation
and as set forth in the Agreement or the Disclosure Schedules, the Company is
not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of capital stock of the Company. The
transactions contemplated by this Agreement will not cause the Company's Common
Stock Repurchase Rights to become exercisable.
(v) There are no preemptive rights of stockholders under the
Articles of Incorporation of the Company or as a matter of law under the
Business Corporation Law of Wisconsin with respect to the Agreement or the
Merger.
(vi) To the knowledge of such counsel, there is no action,
suit, investigation or proceeding pending or threatened against the Company or
any properties or rights of the Company by or before any court, arbitrator or
administrative or governmental body which questions the validity of the
Agreement or any action which has been or is to be taken by the Company
thereunder.
(e) Financing. Acquiror shall have obtained acquisition and
working capital financing on substantially the terms and conditions contained in
the bank commitment letter described in section 6.07 of this Agreement.
7.03 Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger and the other transactions
contemplated in this Agreement is also subject to the satisfaction at or prior
to the Effective Time of the following conditions, any or all of which may be
waived, in whole or in part;
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(a) Representations and Warranties. Each of the representations
and warranties of Acquiror contained in this Agreement: (A) with respect to
those representations and warranties that are qualified by reference to
"materiality" or "Acquiror Material Adverse Effect," shall be true and correct
in all respects as of the Effective Time, as though made on and as of the
Effective Time and (B) with respect to all other representations and warranties,
shall be true and correct in all material respects as of the Effective Time, as
though made on and as of the Effective Time. The Company shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of
Acquiror to that effect.
(b) Agreements and Covenants. Acquiror and Acquiror Sub shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by each of
them on or prior to the Effective Time. The Company shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of
Acquiror to that effect.
(c) Opinion of Counsel. The Company shall have received an
opinion of Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c., counsel to
Acquiror and Acquiror Sub, addressed to the Company, dated as of the Effective
Time, and satisfactory in form and substance to the Company and its counsel, to
the following effect:
(i) Acquiror is a corporation existing under the laws of the
State of Wisconsin and, based solely on a certificate of the Secretary of State
of Wisconsin, (a) has filed with the Secretary of State during its most recently
completed report year the required annual report; (b) is not the subject of a
proceeding under Wisconsin Statutes section 180.1421, to cause its
administrative dissolution; (c) no determination has been made by the Secretary
of State that grounds exist for such action with respect to Acquiror; (d) no
filing has been made with the Secretary of State of a decree of dissolution with
respect to Acquiror; and (e) Articles of Dissolution of Acquiror have not been
filed with the Secretary of State. Acquiror has the corporate power to carry on
their respective businesses as currently being conducted.
(ii) The execution, delivery and performance of the
Agreement and Plan of Merger (the "Agreement") has been duly authorized by all
requisite corporate action on the part of Acquiror and Acquiror Sub. The
Agreement constitutes the legally valid and binding obligations of Acquiror and
Acquiror Sub, enforceable in accordance with its terms, subject to the following
qualifications: [a] the enforceability against Acquiror or Acquiror Sub of the
Agreement in accordance with its terms may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally;
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[b] the enforceability of the Agreement is subject to the effect of general
principles of equity and the possible unavailability of specific performance or
injunctive relief regardless of whether considered in a proceeding in equity or
at law; and [c] no opinion is expressed as to any provision of the Agreement
providing for the indemnification of persons for liability under federal or
other securities laws.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of this Agreement and
the Merger by the shareholders of the Company:
(a) by mutual written consent of Acquiror and the Company;
(b) by either Acquiror or the Company in the event the conditions
to such party's (the "Nonfailing Party") obligations under Article VII shall not
have been met or waived by the Nonfailing Party on or prior to July 31, 1997
(provided, however, that this date may be extended by any party by written
notice to the other parties for not more than 60 days thereafter if the Merger
shall not have been consummated as a direct result of such party's (the "Failing
Party") having failed (i) to satisfy the conditions in subsection 7.01(c), (ii)
to resolve any action or proceeding as required by subsection 7.01(b) or (iii)
to cure any failure by the Failing Party to perform in all material respects any
other covenant or agreement required by this Agreement to be performed or
complied with by the Failing Party prior to the Effective Time which is capable
of being cured), but only if the party terminating has not caused the condition
giving rise to termination to be not satisfied through its own action or
inaction;
(c) by either Acquiror or the Company if any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction or any Governmental Entity preventing or prohibiting consummation
of the Merger shall have become final and nonappealable;
(d) by Acquiror, if (A) the Board of Directors of the Company
withdraws, modifies or changes in a manner materially adverse to Acquiror its
recommendation of this Agreement or Merger or shall have resolved to do any of
the foregoing, or (B) the Board of Directors of the Company shall have
recommended to the shareholders of the Company any proposed acquisition of the
Company by any Person or any "group" (as such term is defined under
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section 13(d) of the Exchange Act) other than Acquiror and its Affiliates by
(i) merger, consolidation, share exchange, business combination or other
similar transaction, (ii) purchase of all or a substantial part of the assets
of the Company and its Subsidiaries, taken as a whole, or (iii) the acquisition
of more than 50% of the Company's outstanding equity securities (a "Competing
Transaction") or resolved to do so, or (C) a tender offer or exchange offer for
50% or more of the outstanding shares of capital stock of the Company is
commenced, the Board of Directors of the Company, within 10 business days after
such tender offer or exchange offer is so commenced, either fails to recommend
against acceptance of such tender offer or exchange offer by its shareholders
or takes no position with respect to the acceptance of such tender offer or
exchange offer by its shareholders;
(e) by the Company if, in the exercise of its judgment as to its
fiduciary duties to its shareholders as imposed by applicable law and, after
consultation with and receipt of advice from outside legal counsel, the
Company's Board of Directors determines that such termination is required by
reasons of any Competing Transaction being made or proposed.
(f) by Acquiror, if any Update Schedule contains disclosures of
any fact or condition which makes untrue, or shows to have been untrue, any
representation or warranty by the Company in this Agreement, unless concurrently
with the delivery of the Update Schedule, the Company represents and warrants
that the disclosed fact or condition can and will be corrected at the Company's
expense prior to the Effective Time; provided that the effect of the fact or
condition so disclosed upon the representation or warranty so affected
constitutes a Company Material Adverse Effect.
8.02 Effect of Termination. Subject to the remedies of the parties
set forth in section 8.03(c), in the event of the termination of this Agreement
pursuant to section 8.01, this Agreement shall forthwith become void, and,
subject to sections 8.03(c) and (d), there shall be no liability under this
Agreement on the part of Acquiror, Acquiror Sub or the Company or any of their
respective officers or directors and all rights and obligations of each party
hereto shall cease. The Acquiror's Confidentiality Agreement shall survive any
termination of this Agreement.
8.03 Expenses.
(a) If the Merger is consummated, all Expenses will be paid by
the Surviving Corporation. If the Merger is not consummated and this Agreement
is terminated, all Expenses incurred by the parties shall be borne solely
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and entirely by the party which has incurred the same, except as provided in
section 8.03(d).
(b) "Expenses" as used in this Agreement shall include all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, experts and consultants to a party and its
Affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and performance of
this Agreement, the preparation, printing, filing and mailing of the Proxy
Statement, the solicitation of shareholder approvals and all other matters
related to the closing of the transactions contemplated by this Agreement.
(c) If all conditions to the obligations of a party at Closing
contained in Article VII of this Agreement have been satisfied (or waived by the
party entitled to waive such conditions), and the other party does not proceed
with the Closing, the right to seek specific performance of this Agreement shall
be preserved and shall survive any termination of this Agreement.
(d) The Company agrees that if this Agreement is terminated
pursuant to section 8.01(d) or section 8.01(e), the Company shall reimburse
Acquiror for all Expenses incurred subsequent to the date of this Agreement and
shall in addition pay to Acquiror the sum of $200,000. If the Agreement is
terminated pursuant to section 8.01(b) as a direct result of a material
intentional breach by a party of any of its covenants or agreement contained in
this Agreement, the party in breach shall reimburse the other party for all
Expenses (whether incurred before or after the date of this Agreement) and shall
in addition pay such party the sum of $200,000. If the Agreement is terminated
by the Acquiror as a result of its inability to obtain financing (except for
such inability as arises as a result of the Company's failure to accurately
disclose relevant facts or circumstances to Acquiror, Acquiror Sub or Acquiror's
financing sources), the Acquiror shall reimburse the Company for all Expenses
incurred subsequent to April 15, 1997, but such Expenses shall not exceed
$75,000, in any event.
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations and Warranties. The respective
representations and warranties of the parties in this Agreement shall expire
with, and be terminated and extinguished upon, consummation of the Merger or
termination of this Agreement, and thereafter neither the Company, Acquiror nor
any of their respective officers, directors or employees shall have any
liability whatsoever with respect to any such representation or warranty. This
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section 9.01 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after consummation of the Merger.
9.02 Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made upon receipt, if delivered personally, on the third business
day following deposit in the U.S. mail if mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or when sent by electronic transmission to the telecopier
number specified below with receipt acknowledged:
(a) If to Acquiror or Acquiror Sub:
Choucroute Partners LLC
32451 Oakland Road
Nashotah, WI 53058
Telecopier No.: 414-367-3323
Attention: Robert T. Foote, Jr.
With a copy to:
Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c.
1000 North Water Street
Suite 2100
Milwaukee, WI 53202
Telecopier No.: 414-298-8097
Attention: Michael T. Pepke, Esq.
(b) If to the Company:
David White, Inc.
11711 River Lane
Germantown, WI 53022
Telecopier No.: 414-251-5696
With a copy to:
von Briesen, Purtell & Roper, s.c.
411 East Wisconsin Avenue, Suite 700
Milwaukee, WI 53202
41
<PAGE> 47
Telecopier No.: 414-273-7897
Attention: Robert J. Loots, Esq.
9.03 Amendment. This Agreement may be amended by the parties by
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that after approval of this
Agreement by the shareholders of the Company, no amendment may be made without
further approval of such shareholders, which amendment would reduce the amount
or change the type of consideration into which each share of Company Common
Stock shall be converted pursuant to this Agreement upon consummation of the
Merger. This Agreement may not be amended except by an instrument in writing
signed by each of the parties hereto.
9.04 Waiver. At any time prior to the Effective Time, any party may
(a) extend the time for the performance of any of the obligations or other acts
of any other party, (b) waive any inaccuracies in the representations and
warranties of any other party contained in this Agreement or in any document
delivered pursuant to this Agreement and (c) waive compliance by any other party
with any of the agreements or conditions contained in this Agreement.
Notwithstanding the foregoing, no failure or delay by either party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by a party or parties to be bound thereby.
9.05 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.06 Severability. If any term or other provision of this Agreement
is finally adjudicated by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
42
<PAGE> 48
9.07 Entire Agreement. This Agreement (together with the disclosure
schedules to this Agreement and the other documents delivered pursuant hereto),
constitutes the entire agreement of the parties and supersedes all prior
agreements and undertakings, both written and oral, between the parties, or any
of them, with respect to the subject matter hereof. The parties hereby
acknowledge that, no party shall have the right to acquire or shall be deemed to
have acquired shares of common stock of the other party pursuant to the Merger
until the consummation thereof.
9.08 Assignment. This Agreement shall not be assigned, whether by
operation of law or otherwise.
9.09 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of and be enforceable by each party and its
respective successors, and nothing in this Agreement, express or implied, other
than pursuant to section 2.04 and sections 6.06 and 6.08 or the right to receive
the consideration payable in the Merger pursuant to Article II, is intended to
or shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
9.10 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
9.11 Counterparts. This Agreement may be executed by facsimile and in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
CHOUCROUTE PARTNERS LLC
BY /s/ Robert T. Foote, Jr.
-------------------------------
Robert T. Foote, Jr., Manager
FC SUB CORPORATION
BY /s/ Robert T. Foote, Jr.
-------------------------------
Robert T. Foote, Jr., President
DAVID WHITE, INC.
BY /s/ Tony L. Mihalovich
-------------------------------
Tony L. Mihalovich, President
43
<PAGE> 1
DAVID WHITE, INC. EXHIBIT 10.11
1995 INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the _____ day of __________, 199___(the "Grant
Date"), by and between David White, Inc., a Wisconsin corporation with its
principal office in Germantown, Wisconsin (the "Company"), and
__________________, (the "Optionee");
WITNESSETH:
WHEREAS, with the approval and ratification by the Company's stockholders,
the Board of Directors of the Company has adopted the David White, Inc. 1995
Stock Option Plan, (the "Plan"), to permit options to purchase shares of the
Company's common stock, $3 par value ("Common Stock"), to be granted to certain
key employees of the Company or any present or future subsidiary corporation,
as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended
("Subsidiary"); and
WHEREAS, the Optionee is a key employee of the Company or a Subsidiary and
the Company desires Optionee to remain in such employ and to increase
Optionee's incentive and personal interest in the welfare of the employer
corporation.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements herein set forth, the parties hereby mutually covenant and agree as
follows:
1. Subject to the terms and conditions of the Plan, the terms of which are
hereby incorporated by reference, and this Agreement, the Company grants to the
Optionee the option (the "Option") to purchase from the Company all or any part
of an aggregate number of _____ shares of Common Stock, authorized and
unissued, or at the Company's option, treasury stock ("the Optioned Shares").
2. The price to be paid for the Optioned Shares shall be
____________________ ($_______) per share, which was not less than 100% (110%,
if the Optionee owns, directly or indirectly, stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company and its subsidiaries) of the fair market value of the Optioned Shares
on the Grant Date. Such fair market value was the average of the closing bid
and asked prices in the Over-the-Counter Market on the Grant Date as reported
in The Milwaukee Journal/Sentinel.
<PAGE> 2
3. Subject to the terms and conditions of the Plan and this Agreement, the
Option may be exercised by the Optionee during the period beginning on the
Grant Date and ending _____________________(the "Option Period") *** with
respect to all or any part of:
(a) ___ percent of the Optioned Shares (to the nearest whole share)
from and after ______________________;
(b) an additional ___ percent of the Optioned Shares (to the nearest
whole share) from and after ______________________;
(c) an additional ___ percent of the Optioned Shares (to the nearest
whole share) from and after ______________________; or
(d) all of the Optioned Shares from and after ___________________.
4. The Option may be exercised only by written notice, delivered or mailed
by postpaid registered or certified mail addressed to the Secretary of the
Company at its office in Germantown, Wisconsin, specifying the number of
Optioned Shares being purchased. Such notice shall be accompanied, at the
election of the Optionee, by payment of the entire purchase price of the
Optioned Shares being purchased; (i) in cash or with a certified check or bank
draft to the order of he Company; (ii) by tendering previously acquired shares
of Common Stock, duly endorsed in blank, valued at their fair market value at
the time of exercise; (iii) of any combination of (i) and (ii); or (iv) if the
Optionee is employed by the Company at the time of exercise, by tendering an
Employee Installment Payment Stock Purchase Agreement in the form attached
hereto as Exhibit 1, executed by the Optionee; provided, however, that not more
than 50 percent of the Optioned Shares purchased in any single exercise of the
Option may be paid for on an installment basis. For purposes of this
paragraph, fair market value shall be as determined in Paragraph 2 hereof, or
if the Common Stock is no longer traded on the Over-the-Counter Market on the
date of exercise, by such other reasonable method as may be prescribed by the
Committee from time to time. Upon receipt of the payment of the entire
purchase price of the Optioned Shares so purchased, certificates for such
Optioned Shares shall be issued to the Optionee, subject to the terms of any
Employee Installment Payment Stock Purchase Agreement executed by the Optionee.
The Optioned Shares so purchased shall be fully paid and nonassessable except
insofar as statutory liability may be imposed under Section 180.0622(2)(b) of
the Wisconsin Statutes.
- ---------------
***The Option Period may not exceed five years from the Grant Date if the
Optionee owns, directly or indirectly, stock possessing more than ten percent
of the combined voting power of all classes of stock of the Company and its
subsidiaries.
2
<PAGE> 3
5. If the Optionee ceases to be an employee of the Company or any
Subsidiary for any reason other than disability, death or retirement, then the
Option shall terminate. If the Optionee ceases to be an employee of the
Company or any Subsidiary by reason of disability within the meaning of Section
22(e)(3) of the Internal Revenue Code of 1986, as amended, death or retirement,
then the Option shall terminate six months after the Optionee ceases to be an
employee, but in no event beyond the Option Period.
6. The Optionee shall not be deemed for any purposes to be a stockholder
of the Company with respect to any shares which may be acquired hereunder
except to the extent that the Option shall have been exercised with respect
thereto and a stock certificate issued therefor.
7. The Option herein granted shall not be transferable by the Optionee
otherwise than by will or the laws of descent and distribution, and may be
exercised during the life of the Optionee only by the Optionee.
8. The Optionee agrees, for himself or herself and his or her personal
representatives, that (i) he, she or they will not transfer such shares except
upon compliance with the requirements of all applicable federal and state
securities laws; (ii) the Company may as a condition to exercise require him,
her or them to execute a letter representing that the Optioned Shares are taken
for investment and not with a view to distribution and have not been registered
under the Securities Act of 1933; and (iii) the Company may require that the
certificates for Optioned Shares contain the following legend on the face
thereof:
"The shares of David White, Inc. Common Stock, $3 par value, represented by
this certificate have not been registered under the Securities Act of 1933,
as amended (the 'Act'). These shares have been acquired for investment and
may not be sold or otherwise transferred without registration under the Act
or an exemption from registration."
9. The existence of the Option shall not affect in any way the right or
power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issuance of bonds, debentures, preferred, or prior
preference stock ahead of or affecting the Common Stock or the rights thereof,
or dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
3
<PAGE> 4
10. In the event that a dividend shall be declared upon the Common Stock
payable in shares of Common Stock, the Optioned Shares shall be adjusted by
adding to each such share the number of shares which would be distributable
thereon if such share had been outstanding on the date fixed for determining
the stockholders entitled to receive such stock dividend. In the event that
the outstanding shares of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, merger or consolidation, then there
shall be substituted for each Optioned Share the number and kind of shares of
stock or other securities into which each outstanding share of Common Stock
shall be so changed or for which each such share shall be exchanged. In the
event there shall be any change other than as specified above in this paragraph
in the number or kind of outstanding shares of Common Stock or of any stock or
other securities into which such Common Stock shall have been changed or for
which it shall have been exchanged, then if the Committee shall in its sole
discretion determine that such change equitably requires an adjustment in the
number or kind of Optioned Shares, such adjustment shall be made by the
Committee and shall be effective and binding for all purposes of this
Agreement. The option price specified in Paragraph 2 hereof for each Optioned
Share prior to such substitution or adjustment shall be adjusted by dividing
such option price by the number of shares or the fraction of a share
substituted for such share or to which such share shall have been adjusted. No
adjustment or substitution provided for in this paragraph shall apply to any
share in respect of which the Option has been exercised prior to the effective
date of such substitution or adjustment or shall require the Company to sell a
fractional share.
11. At any time and from time to time the Committee may direct execution of
an instrument providing for the modification of the Option, provided no such
modification, extension or renewal shall confer on the Optionee any right or
benefit which could not be conferred on Optionee by the grant of a new option
under the Plan at such time or impair the Option without the consent of the
Optionee.
12. It is understood that nothing herein contained shall be deemed to
confer upon the Optionee any right to continue in the employ of the Company,
nor to interfere in any way with the right of the Company to terminate the
employment of the Optionee at any time.
13. As a condition of the granting of the Option, the Optionee agrees for
himself or herself and his or her legal representatives, that any dispute or
disagreement which may arise under or as a result of or pursuant to this
Agreement shall be determined by the Committee in its sole discretion, and any
interpretation by the
4
<PAGE> 5
Committee of the terms of this Agreement shall be final, binding and
conclusive.
14. (a) Notwithstanding any other provision of this Agreement,
including particularly Paragraph 3 hereof, upon the occurrence of a Change in
Control (as hereinafter defined) this Option shall become immediately
exercisable in full for the remainder of the Option Period and the Optionee
shall have the right to require the Company to purchase this Option (by giving
notice to such effect to the Company) for cash for a period of thirty days
following a Change in Control at the aggregate Acceleration Price (as
hereinafter defined) for all Optioned Shares, provided that, if the Optionee is
an officer or director of the Company, he or she shall have the right to
require such purchase of Options only if at least six months has elapsed from
the Grant Date at the date of the Change in Control.
(b) The "Acceleration Price" is the excess of the highest
of the following over the option price specified in Paragraph 2 hereof for each
Optioned Share, as such may be adjusted from time to time pursuant to Paragraph
10, on the date of a Change in Control:
(i) the highest reported sales price of the
Common Stock during the sixty days prior to and including the date of the
Change in Control, as reported on the principal securities exchange or market
upon which the Common Stock is then listed or traded;
(ii) the highest price of the Common Stock
reported in a Schedule 13D or an amendment thereto as paid on or within the
sixty days preceding the date of the Change in Control;
(iii) the highest tender offer price paid for the
Common Stock; and
(iv) any cash merger or similar price.
(c) A "Change in Control" is the occurrence of any one of
the following events:
(i) the first day of receipt by the Company of a
Schedule 13D, any amendment thereto or notice of a public announcement
confirming that any Person (other than any employee benefit plan of the Company
or of any subsidiary of the Company or any Person organized, appointed or
established pursuant to the terms of any such benefit plan or any Optionee) is
or becomes the Beneficial Owner of securities of the Company representing at
least 20% of the combined voting power of the Company's then outstanding
securities unless such ownership is approved by the Continuing Directors prior
to such ownership;
5
<PAGE> 6
(ii) the first day on which two (2) or more of the
members of the Company's Board of Directors are not Continuing Directors;
(iii) stockholder approval of (i) any consolidation
or merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Company's Common Stock
would be converted into cash, securities or other property, other than a merger
of the Company in which the holders of the Company's Common Stock immediately
prior to the merger have the same proportionate ownership of common stock of
the surviving corporation immediately after the merger; or (ii) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company,
unless, in either case such transaction is approved by the Continuing Directors
prior to submission for such stockholder approval; or
(iv) the stockholders of the Company approve any
plan or proposal for the liquidation or dissolution of the Company, unless
approved by the Continuing Directors prior to submission for such stockholder
approval.
(d) For purposes of this Paragraph 14:
(1) a "person" shall mean any individual, firm,
corporation, partnership, trust or other entity.
(2) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended.
(3) a Person shall be a "Beneficial Owner" of
Common Stock (i) which such Person beneficially owns, directly or indirectly;
or (ii) which such Person has the right to acquire (whether such right is
exercisable immediately or only with the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants, options or
otherwise.
(4) "Continuing Directors" means any member of
the Board of Directors who was a member of the Board of Directors on the day
and year first set forth herein and any successor of a Continuing Director who
is recommended or elected to succeed the Continuing Director by a majority of
the remaining Continuing Directors.
6
<PAGE> 7
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officers and its corporate seal hereunto
affixed, and the Optionee has hereunto affixed his hand and seal, as of the day
and year first abovewritten.
DAVID WHITE, INC.
By:
--------------------------------
Tony L. Mihalovich, President
[CORPORATE SEAL]
Attest:
By:
-------------------------------
James L. Younk, Secretary
------------------------------------
Optionee: -------------------------
7
<PAGE> 8
EXHIBIT 1
EMPLOYEE INSTALLMENT PAYMENT
STOCK PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into as of the ____ day of
__________, 19__, by and between David White, Inc., a Wisconsin corporation with
its principal offices at Germantown, Wisconsin (hereinafter called the
"Company"), and _________________________ (hereinafter called "Employee").
W I T N E S S E T H :
WHEREAS, the Employee has this date pursuant to the exercise of his
incentive stock option or a portion thereof purchased _____ shares of the
common stock, $3.00 par value (hereinafter called the "Common Stock") of the
Company at the option price of $_____ per share or an aggregate price of
$_____; and
WHEREAS, the Employee desires to pay the purchase price of the shares
of such stock less the amount of $ _____ which the Employee has
this day paid to the Company as a down payment (the net of such amounts
hereinafter referred to as the "Purchase Price") in installments upon the terms
and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements herein set forth, the parties hereby mutually covenant and agree
as follows:
1. For all purposes of this Agreement, the term "Pledged Shares"
shall mean the _____ shares of Common Stock of the Company purchased this date
by the Employee from the Company as well as:
a. all shares of stock of the Company at any time
hereafter issued as a dividend upon the Pledged Shares, and
b. all shares of stock or other securities of the Company
or of any other corporation into which the Pledged Shares shall be
changed, or for which the Pledged Shares shall be exchanged, whether
through reorganization, recapitalization, stock split-ups, combination
of shares, merger or consolidation.
2. The Employee shall pay the Purchase Price including interest
on the unpaid balance of the Purchase Price, from time to time, at the rate of
ten percent (10%) per annum, in [forty-eight (48) monthly] [ninety-six (96)
semimonthly] installments of Purchase Price and interest, each in the amount of
______________ ($ ), payable on the [fifteenth and] last day of each
calendar month, commencing ________ ________, until the Purchase Price is paid
in full. All payments hereunder shall be applied first to interest accrued to
the date of payment and then to the unpaid balance of the Purchase Price. The
Employee agrees and hereby authorizes the Company to withhold from the
Employee's pay the installments due pursuant to this Agreement; provided,
however, that failure of the Company to so withhold will not release the
Employee from any of his obligations under this Agreement.
<PAGE> 9
3. The Employee hereby sells, assigns and transfers the Pledged
Shares to the Company as collateral security for Employee's obligations to pay
the Purchase Price and accrued interest thereon (hereinafter referred to as the
"Obligations"). Upon payment of the Obligations in full, the Company shall
release the Pledged Shares to the Employee. The Company may, if it shall for
any reason deem itself insecure, demand from Employee additional collateral
satisfactory to the Company, and Employee shall comply with any such demand.
4. Employee shall not take any action or permit any event to
occur which materially impairs Employee's ability to pay any of the Obligations
when due, including without limitation, the Employee becoming insolvent or
being unable to pay his debts as they mature or admitting in writing his
inability to pay his debts as they mature or making a general assignment for
the benefit of creditors or becoming or being adjudicated a bankrupt or
voluntarily filing a petition in bankruptcy, or to effect plan or other
arrangement with creditors, or filing an answer to a creditor's petition or
other petition filed against him (admitting the material allegations thereof)
for an adjudication of bankruptcy or to effect a plan or other arrangement with
creditors, or applying for or suffering the appointment of a receiver or
trustee for any of his property or assets.
5. Upon the occurrence of any one or more of the following events
of default:
a. Employee has failed to make a payment hereunder within
fifteen (15) days after such payment becomes due;
b. Employee fails to observe or perform any of his other
covenants or duties contained in this Agreement if the failure
materially impairs the condition, value or protection of the Company's
right in any collateral, or materially impairs Employee's ability to
pay any of the Obligations when due.
The Company shall have all the rights and remedies for default provided by the
Wisconsin Uniform Commercial Code and the Wisconsin Consumer Act, if
applicable, as well as any other applicable law. With respect to such rights
and remedies:
c. Upon the occurrence of an event of default hereunder,
the Obligations shall, at the option of the Company and without
further notice or demand, become immediately payable unless notice to
the Employee and an opportunity to cure are required by Section
425.105 Wis. Stats. and, in that event, the Obligations shall become
payable if such default is not cured as provided in that statute
within 15 calendar days after mailing of such notice to the Employee.
2
<PAGE> 10
d. Employee shall reimburse the Company for any expenses
incurred in taking possession, holding, preparing for disposition and
disposing of the Pledged Shares to the extent not prohibited by law.
After deduction of such expenses, the Company shall apply the proceeds
of disposition first against interest accrued and then against the
principal of the Obligations. If such proceeds are insufficient to
pay the Obligations in full, Employee remains liable to the Company
for any deficiency.
e. The Company may waive any default without waiving any
other subsequent or prior default by the Employee.
6. If the Employee terminates his employment with the Company at
any time without the Company's consent or approval or fails to pay the
Obligations in full within fifteen (15) days after receipt of written notice
from the Company of the occurrence of any event of default specified in
paragraph 5 hereof, the Company shall have the right, in addition to any rights
it may have under paragraph 5 above, to repurchase all or any part of the
Pledged Shares upon the terms and conditions hereinafter set forth; provided,
however, that the right herein granted may be exercised only by written notice
of repurchase served upon the Employee after the date of Employee's termination
or the notice of default mentioned above, specifying the number of shares to be
repurchased (hereinafter referred to as the "Repurchased Shares"). The date of
such notice of repurchase by the Company shall be deemed to be the date of
repurchase of such shares.
a. The Company shall only have the right to repurchase
such number of the Pledged Shares as may be necessary in order to
permit payment in full of the Obligations.
b. The repurchase price of the Repurchased Shares shall be
the closing bid price of such stock in the OTC market on the date of
such notice as reported in The Wall Street Journal (Midwestern
Edition) or if there is no such report for such date then the most
recently published report of such bid price prior to such date.
c. The Company shall apply the repurchase price as a
credit against the Obligations in the following manner:
(i) In the case of a termination of employment
with the Company by the Employee which does not also
constitute an event of default under paragraph 5 hereof, the
Company shall apply the credit against the scheduled
installments of the Purchase Price in the inverse order of
their maturities and then against accrued interest. Any
portion of the Purchase Price still unpaid shall continue to
be payable in the scheduled installments, but the interest
rate applicable to such unpaid Purchase Price shall be
increased to twelve percent (12%) per
3
<PAGE> 11
annum commencing on the date of repurchase. The additional interest
pursuant to this paragraph shall be paid monthly on each payment date
in addition to the payment then due under paragraph 2 hereof.
(ii) In the case of an event of default under paragraph 5
hereof, the Company shall apply the credit first against accrued
interest and then against the unpaid balance of the Purchase Price.
Any portion of the Purchase Price still unpaid shall continue to be due
and payable and shall bear interest at the rate of twelve percent
(12%) per annum from the date of repurchase until paid.
7. This Agreement benefits the Company, its successors and
assigns, and binds the Employee and Employee's heirs, personal representatives,
successors and assigns. The validity, construction and enforcement of this
Agreement are governed by the internal laws of Wisconsin. Unless otherwise
required by law, invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officers and its corporate seal hereunto
affixed, and the Employee has hereto affixed his hand and seal as of the day
and year first above written.
NOTICE TO EMPLOYEE
(a) DO NOT SIGN THIS BEFORE YOU READ THE ENTIRE AGREEMENT, EVEN IF
OTHERWISE ADVISED.
(b) DO NOT SIGN THIS IF IT CONTAINS ANY BLANK SPACES.
(c) YOU ARE ENTITLED TO AN EXACT COPY OF ANY AGREEMENT YOU SIGN.
(d) YOU HAVE THE RIGHT AT ANY TIME TO PAY IN ADVANCE THE UNPAID BALANCE
DUE UNDER THIS AGREEMENT AND YOU MAY BE ENTITLED TO A PARTIAL REFUND
OF THE FINANCE CHARGE.
David White, Inc.
By
-------------------------------
(Corporate Seal) Attest
---------------------------
(SEAL)
-----------------------------
Employee
4
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000082414
<NAME> WHITE DAVID, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 136
<SECURITIES> 0
<RECEIVABLES> 3720
<ALLOWANCES> (95)
<INVENTORY> 3192
<CURRENT-ASSETS> 7121
<PP&E> 7689
<DEPRECIATION> (5884)
<TOTAL-ASSETS> 9226
<CURRENT-LIABILITIES> 2923
<BONDS> 899
0
0
<COMMON> 2077
<OTHER-SE> 3194
<TOTAL-LIABILITY-AND-EQUITY> 9226
<SALES> 4128
<TOTAL-REVENUES> 4128
<CGS> 2962
<TOTAL-COSTS> 767
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> 357
<INCOME-TAX> 89
<INCOME-CONTINUING> 268
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 268
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
</TABLE>
