SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 15)*
KETEMA, INC.
(Name of Issuer)
Common Stock, $1.00 par value
(Title of Class of Securities)
492653100
(CUSIP Number)
David P. Steinmann
Secretary
American Securities Partners GP Corp.
122 East 42nd Street
New York, New York 10168
(212) 476-8000
___________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 21, 1994
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the
statement [ ]. (A fee is not required only if the reporting
person: (1) has a previous statement on file reporting
beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent
amendment containing information which would alter disclosures
provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
This Amendment No. 15 amends the Schedule 13D dated
February 22, 1989, as heretofore amended (the "Schedule 13D"),
filed by American Securities Partners, L.P. on behalf of the
Reporting Persons identified in Amendment No. 14 thereto in
respect of the Common Stock, par value $1.00 per share, of
Ketema, Inc., a Delaware corporation. Terms defined in the
Schedule 13D as heretofore amended are used herein with such
defined meanings.
This Amendment is being filed primarily to report
(i) the execution of a definitive merger agreement among Ketema,
KTM Holdings and KTM Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of KTM Holdings ("KTM
Acquisition"), and (ii) an amendment to the financing commitment
relating to the merger transaction referred to in Item 4
(Purpose of Transaction) of the Schedule 13D.
Item 3. Source and Amount of Funds and Other Consideration.
Item 3 of the Schedule 13D as last amended is hereby
further amended by adding thereto the following information:
On June 21, 1994, KTM Holdings received and accepted
an amendment to the written commitment from Chase, increasing
Chase's commitment to $50 million in financing which, together
with Ketema's available cash and marketable securities, would be
used to refinance Ketema's outstanding $45 million principal
amount of Senior Notes held by certain institutional investors
and to fund the Merger Consideration (as defined below in Item
4), related fees and expenses and ongoing working capital needs.
A copy of the amendment to the commitment letter from Chase (and
the Senior Facilities Term Sheet referred to therein) is
attached hereto as Exhibit (4) and incorporated herein in its
entirety by reference.
Item 4. Purpose of the Transaction.
Item 4 of the Schedule 13D as last amended is hereby
further amended by adding thereto the following information:
On June 21, 1994, KTM Holdings, Ketema and KTM
Acquisition entered into an Agreement and Plan of Merger (the
"Merger Agreement") relating to the merger previously proposed
by the Reporting Persons. Under the terms of the Merger
Agreement, the Merger Consideration has been increased to $15.00
per share payable in cash. Pursuant to the terms of the Merger
Agreement, KTM Acquisition will be merged with and into Ketema
and each stockholder of Ketema other than the Reporting Persons
will receive the Merger Consideration. The foregoing summary
of the Merger Agreement is qualified in its entirety by
reference to the copy of the Merger Agreement attached hereto as
Exhibit (5) and incorporated herein in its entirety by
reference.
Item 6. Contracts, Arrangements, Understandings or
Relationships with respect to Securities of the
Issuer.
Item 6 of the Schedule 13D as last amended is hereby
further amended by adding thereto the following information:
The information contained in Item 4 of this Amendment
No. 15 to the Schedule 13D is incorporated herein in its
entirety by reference.
Item 7. Material to be filed as Exhibits.
Item 7 of the Schedule 13D as last amended is hereby
further amended by adding thereto the following:
Exhibit (4) - Letter, dated June 21, 1994, from The
Chase Manhattan Bank, N.A. to KTM
Holdings Corp. amending the commitment
letter, dated May 5, 1994, and the
Senior Facilities Term Sheet annexed
thereto.
Exhibit (5) - Agreement and Plan of Merger, dated as
of June 21, 1994, among Ketema, Inc.,
KTM Holdings Corp. and KTM Acquisition
Corp.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of the
undersigned's knowledge and belief, the undersigned certifies
that the information set forth in this statement is true,
complete and correct.
AMERICAN SECURITIES PARTNERS, L.P.,
in its capacity as agent for the
Reporting Persons
By: AMERICAN SECURITIES PARTNERS
GP CORP., its general partner
By: /s/ David P. Steinmann
David P. Steinmann, Secretary
Exhibit (4)
THE CHASE MANHATTAN BANK, N.A.
ONE CHASE MANHATTAN PLAZA
NEW YORK, NEW YORK 10081
June 21, 1994
KTM Holdings Corp.
c/o American Securities Capital
Partners, L.P.
122 East 42nd Street
24th Floor
New York, NY 10168-0002
re Ketema, Inc. Acquisition
Financing
Ladies and Gentlemen:
Reference is made to our letter to you dated May 5,
1994 (the "Commitment Letter") concerning the financing of the
proposed Acquisition described therein. Terms defined in the
Commitment Letter shall have the same meaning when used herein.
The purpose of this letter is to amend the Commitment
Letter as set forth below. We hereby agree that the Commitment
Letter (and the Senior Facilities Term Sheet attached thereto)
shall be amended as follows:
1. The amount of the Senior Facilities shall be
$50,000,000, comprised of a $25,000,000 Term Loan Facility
and a $25,000,000 Revolving Credit Facility.
2. Clause (xx) under the heading "A. Conditions
Precedent" appearing in the Senior Facilities Term Sheet is
hereby amended to read in its entirety as follows:
"(xx) The per share purchase price of the
Acquisition shall in no case exceed $15.00."
Except to the extent modified hereby, the terms of the
Commitment Letter shall remain in full force and effect.
If you are in agreement with the foregoing, please
sign and return to us the enclosed copy of this letter. This
letter may be executed in any number of counterparts, and by
different parties hereto on separate counterparts, each of which
when executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
Very truly yours,
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Edward McNulty
Title: Managing Director
Agreed and Accepted this
21st day of June, 1994:
KTM HOLDINGS CORP.
By: /s/ Michael G. Fisch
Title: Executive Vice
President
AMERICAN SECURITIES CAPITAL
PARTNERS, L.P.
By: AMERICAN SECURITIES CAPITAL
PARTNERS GP CORP.
By: /s/ Michael G. Fisch
Title: President
<PAGE>
Exhibit (5)
AGREEMENT AND PLAN OF MERGER
dated as of
June 21, 1994
among
Ketema, Inc.,
KTM Holdings Corp.
and
KTM Acquisition Corp.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.01 Company Action. . . . . . . . . . . . . . 2
1.02 The Merger. . . . . . . . . . . . . . . . 3
1.03 Conversion of Shares. . . . . . . . . . . 3
1.04 Surrender and Payment . . . . . . . . . . 4
1.05 Dissenting Shares . . . . . . . . . . . . 5
1.06 Stock Options . . . . . . . . . . . . . . 6
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.01 Certificate of Incorporation. . . . . . . 7
2.02 Bylaws. . . . . . . . . . . . . . . . . . 7
2.03 Directors and Officers. . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
SECTION 3.01 Corporate Existence and Power . . . . . . 7
3.02 Corporate Authorization . . . . . . . . . 8
3.03 Governmental Authorization. . . . . . . . 8
3.04 Non-Contravention . . . . . . . . . . . . 8
3.05 Capitalization. . . . . . . . . . . . . . 9
3.06 Subsidiaries. . . . . . . . . . . . . . . 9
3.07 SEC Filings . . . . . . . . . . . . . . . 10
3.08 Financial Statements. . . . . . . . . . . 10
3.09 Disclosure Documents. . . . . . . . . . . 11
3.10 Litigation. . . . . . . . . . . . . . . . 11
3.11 Finders' and Bankers' Fees. . . . . . . . 11
_____________________
The Table of Contents is not a part of this Agreement.
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
Page
SECTION 4.01 Corporate Existence and Power . . . . . . 12
4.02 Corporate Authorization . . . . . . . . . 12
4.03 Governmental Authorization. . . . . . . . 12
4.04 Non-Contravention . . . . . . . . . . . . 13
4.05 Disclosure Documents. . . . . . . . . . . 13
4.06 Finders' and Bankers' Fees. . . . . . . . 13
4.07 Financing . . . . . . . . . . . . . . . . 13
4.08 Ownership of Shares . . . . . . . . . . . 14
4.09 Solvency; Adequate Capitalization . . . . 14
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.01 Conduct of the Company. . . . . . . . . . 14
5.02 Stockholder Meeting; Proxy
Material. . . . . . . . . . . . . . . . 16
5.03 Access to Information . . . . . . . . . . 16
5.04 Other Potential Bidders . . . . . . . . . 16
5.05 Notices of Certain Events . . . . . . . . 17
ARTICLE VI
COVENANTS OF BUYER
SECTION 6.01 Confidentiality . . . . . . . . . . . . . 17
6.02 Voting of Shares. . . . . . . . . . . . . 18
6.03 Director and Officer Liability. . . . . . 18
ARTICLE VII
COVENANTS OF BUYER
AND THE COMPANY
SECTION 7.01 Best Efforts. . . . . . . . . . . . . . . 19
7.02 Certain Filings . . . . . . . . . . . . . 19
7.03 Public Announcements. . . . . . . . . . . 19
7.04 Further Assurances. . . . . . . . . . . . 19
<PAGE>
ARTICLE VIII
CONDITIONS TO THE MERGER
Page
SECTION 8.01 Conditions to the Obligations
of Each Party . . . . . . . . . . . . . 20
8.02 Additional Conditions to the Obligations
of Buyer and Merger Subsidiary. . . . . 20
8.03 Conditions to the Obligations of
the Company . . . . . . . . . . . . . . 21
ARTICLE IX
TERMINATION
SECTION 9.01 Termination . . . . . . . . . . . . . . . 22
9.02 Effect of Termination . . . . . . . . . . 23
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Notices . . . . . . . . . . . . . . . . . 23
10.02 Survival of Representations and
Warranties. . . . . . . . . . . . . . . 24
10.03 Amendments; No Waivers. . . . . . . . . . 24
10.04 Fees and Expenses . . . . . . . . . . . . 25
10.05 Successors and Assigns. . . . . . . . . . 25
10.06 Governing Law . . . . . . . . . . . . . . 26
10.07 Counterparts; Effectiveness . . . . . . . 26
10.08 Actions of the Company Approved or
Taken by the Acquiring Group. . . . . . 26
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 21, 1994
among Ketema, Inc., a Delaware corporation (the "Company"), KTM
Holdings Corp., a Delaware corporation ("Buyer"), and KTM
Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Buyer ("Merger Subsidiary").
WHEREAS:
A. The Company is a corporation duly incorporated and validly
existing under the corporate laws of the State of Delaware with
it principal executive offices located at Suite 600, One Cherry
Center, 501 South Cherry Street, Denver, Colorado 80222.
B. The authorized capital stock of the Company consists of (i)
13,500,000 shares of common stock, $1 par value, (the "Company
Common Stock"), of which 3,490,202 shares are issued and
outstanding as of the date hereof, and (ii) 1,500,000 shares of
Preferred Stock, $1 par value, none of which shares are issued
and outstanding as of the date hereof.
C. Buyer is a corporation duly incorporated and validly
existing under the corporate laws of the State of Delaware with
its principal address located c/o American Securities Partners,
L.P. at 122 East 42nd Street, New York, New York 10168.
D. Immediately prior to the Effective Time (as defined in
Section 1.02(b) below), Buyer and/or Merger Subsidiary will own
or be deemed to own beneficially not less than 894,000 shares of
Company Common Stock, which shares are currently beneficially
owned by certain clients of American Securities Partners, L.P.
and by Hugh H. Williamson, III, the President and Chief
Executive Officer of the Company (collectively, the "Acquiring
Group"), and include shares of Company Common Stock issuable
upon conversion of certain convertible subordinated debentures
of the Company (or upon conversion of the convertible preferred
stock which is issuable under certain circumstances upon
conversion of such debentures) owned by members of the Acquiring
Group.
E. The Board of Directors of the Company, based in part on the
recommendation of a Special Committee of the Board of Directors
initially appointed on September 28, 1993 and comprised entirely
of Directors who are neither members of management nor
affiliated with American Securities Partners, L.P. or the
Acquiring Group (the "Special Committee"), (i) unanimously
approved the members of the Acquiring Group becoming an
"interested stockholder" within the meaning of Section 203 of
the Delaware General Corporation Law and the Company's
Certificate of Incorporation for purposes of proposing a
"business combination" (as defined in said Section 203 and the
Company's Certificate of Incorporation) between the Company and
an entity formed by the Acquiring Group for the purpose of
engaging in such a business combination, and (ii) has
unanimously determined that the Merger is fair and in the best
interests of the stockholders of the Company (other than the
Acquiring Group) and has unanimously resolved to approve and
adopt this Agreement and the transactions contemplated hereby
and, subject to the terms and conditions set forth herein, to
recommend the approval and adoption of this Agreement and the
Merger by the stockholders of the Company.
F. The Board of Directors of the Company, based in part on the
recommendation of the Special Committee, and the Boards of
Directors of Buyer and Merger Subsidiary each have approved the
merger of Merger Subsidiary with and into the Company (the
"Merger") in accordance with the General Corporation Law of the
State of Delaware and the terms and conditions provided below,
pursuant to which each Share (as defined in Section 1.03 hereof)
(other than Shares held by the Company as treasury stock, Shares
owned by Buyer, Merger Subsidiary or any other subsidiary of
Buyer immediately prior to the Effective Time and Shares as to
which appraisal rights have been perfected) shall be converted
into the right to receive the Merger Consideration (as defined
in Section 1.03(a) below).
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, representations, warranties and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 Company Action. The Company hereby
consents to the Merger (as defined in Section 1.02) and
represents that its Board of Directors, at a meeting duly called
and held and acting, in part, on the unanimous recommendation of
the Special Committee, has (i) unanimously determined that this
Agreement and the transactions contemplated hereby, including
the Merger, are fair to and in the best interest of the
Company's stockholders (other than the Acquiring Group), (ii)
unanimously approved and adopted this Agreement and the
transactions contemplated hereby, including the Merger, and
(iii) unanimously resolved to recommend approval and adoption of
this Agreement and the Merger by the Company's stockholders,
provided, that such recommendation may be withdrawn, modified or
amended by the Board of Directors of the Company if the Board
deems such withdrawal, modification or amendment appropriate in
light of its fiduciary obligations to the Company's stockholders
after consultation with counsel.
SECTION 1.02. The Merger. (a) At the Effective Time,
Merger Subsidiary shall be merged with and into the Company in
accordance with the General Corporation Law of the State of
Delaware (the "Delaware Law"), whereupon the separate existence
of Merger Subsidiary shall cease, and the Company shall be the
surviving corporation (the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to
the extent permitted hereunder, waiver of all conditions to the
Merger, the Company and Merger Subsidiary will file a
certificate of merger substantially in the form of Exhibit A
hereto with the Secretary of State of the State of Delaware and
make all other filings or recordings required by Delaware Law in
connection with the Merger. The Merger shall become effective
at such time as such certificate of merger is duly filed with
the Secretary of State of the State of Delaware or at such later
time as is specified in such certificate of merger (the
"Effective Time").
(c) From and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions,
disabilities and duties of the Company and Merger Subsidiary,
all as provided under Delaware Law.
SECTION 1.03. Conversion of Shares. At the Effective
Time:
(a) each share of Company Common Stock, together with
the right (a "Right") associated therewith entitling the
holder thereof to purchase one one-hundredth of a share of
Series A Junior Participating Preferred Stock of the Company
(each such share and associated Right being referred to
herein as a "Share" and collectively, the "Shares")
outstanding immediately prior to the Effective Time shall,
except as otherwise provided in Section 1.03(b) or as
provided in Section 1.05 with respect to Shares as to which
appraisal rights have been perfected, be converted into the
right to receive $15.00 in cash, without interest (the
"Merger Consideration");
(b) each Share held by the Company as treasury stock
or owned by Buyer, Merger Subsidiary or any other subsidiary
of Buyer immediately prior to the Effective Time shall be
cancelled, and no payment shall be made with respect
thereto;
(c) each outstanding share of 7% Cumulative Convertible
Voting Preferred Stock, $1 par value, of the Company (each,
a "Convertible Preferred Share" and collectively, the
"Convertible Preferred Shares"), if any, owned by Buyer,
Merger Subsidiary or any other subsidiary of Buyer
immediately prior to the Effective Time shall be cancelled,
and no payment shall be made with respect thereto;
(d) each outstanding Convertible Preferred Share, if
any, not owned by Buyer, Merger Subsidiary or any other
subsidiary of Buyer immediately prior to the Effective Time,
shall remain outstanding in accordance with its terms and
shall not be converted in the Merger; and
(e) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the
Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute
the only outstanding shares of capital stock of the
Surviving Corporation.
SECTION 1.04. Surrender and Payment. (a) At or prior
to the Effective Time, the Company shall appoint American Stock
Transfer & Trust Company as agent (the "Exchange Agent") for the
purpose of exchanging certificates representing Shares for the
Merger Consideration. At the Effective Time, the Surviving
Corporation will make available to the Exchange Agent the Merger
Consideration to be paid in respect of all outstanding Shares
entitled thereto as to which appraisal rights have not been
exercised. At or prior to the Effective Time, the Company or
Surviving Corporation will send, or will cause the Exchange
Agent to send, to each holder of Shares at the Effective Time a
letter of transmittal for use in such exchange (which shall
specify that the delivery shall be effected, and risk of loss
and title shall pass, only upon proper delivery of the
certificates representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted
into a right to receive the Merger Consideration, upon surrender
to the Exchange Agent of a certificate or certificates
representing such Shares, together with a properly completed
letter of transmittal covering such Shares, will be entitled to
receive the Merger Consideration payable in respect of such
Shares. Until so surrendered, each such certificate shall,
after the Effective Time, represent for all purposes, only the
right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to
be paid to a Person other than the registered holder of the
Shares represented by the certificate or certificates
surrendered in exchange therefor, it shall be a condition to
such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay
to the Exchange Agent any transfer or other taxes required as a
result of such payment to a Person other than the registered
holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
For purposes of this Agreement, "Person" means an individual, a
corporation, a partnership, an association, a trust or any other
entity or organization, including a government or political
subdivision or any agency or instrumentality thereof.
(d) After the Effective Time, there shall be no
further registration of transfers of Shares. If, after the
Effective Time, certificates representing Shares are presented
to the Surviving Corporation, they shall be cancelled and
exchanged for the Merger Consideration provided for, and in
accordance with the procedures set forth, in this Article I.
(e) Any portion of the Merger Consideration made
available to the Exchange Agent pursuant to Section 1.04(a) that
remains unclaimed by the holders of Shares one year after the
Effective Time shall be returned within one week after the end
of such one year period, without further action or request, to
the Surviving Corporation, and any such holder who has not
exchanged his Shares for the Merger Consideration in accordance
with this Section prior to that time shall thereafter look only
to the Surviving Corporation for payment of the Merger
Consideration in respect of his Shares. Notwithstanding the
foregoing, neither Buyer nor the Surviving Corporation shall be
liable to any holder of Shares for any amount paid to a public
official pursuant to applicable abandoned property laws. Any
amounts remaining unclaimed by holders of Shares two years after
the Effective Time (or such earlier date immediately prior to
such time as such amounts would otherwise escheat to or become
property of any governmental entity) shall, to the extent
permitted by applicable law, become the property of the
Surviving Corporation free and clear of any claims or interest
of any Person previously entitled thereto; provided, however,
that nothing herein shall limit the obligations of the Surviving
Corporation under Section 1.04(b).
SECTION 1.05. Dissenting Shares. Notwithstanding
Section 1.03, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor
of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Delaware
Law shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect or withdraws
or otherwise loses his right to appraisal. If after the
Effective Time such holder fails to perfect or withdraws or
loses his right to appraisal, such Shares shall be treated as if
they had been converted as of the Effective Time into a right to
receive the Merger Consideration. The Company shall give Buyer
prompt notice of any demands received by the Company for
appraisal of Shares, and Buyer shall have the right to
participate in all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior
written consent of Buyer, make any payment with respect to, or
settle or offer to settle, any such demands.
SECTION 1.06. Stock Options. (a) Except as otherwise
provided in paragraph (b) of this Section 1.06 and except for
outstanding options to purchase Shares and conjunctive stock
appreciation rights granted to Hugh H. Williamson, III, the
Company shall take all steps reasonably necessary such that, at
the Effective Time, the holder of each outstanding option to
purchase Shares granted under the Company's 1988 Stock Incentive
Plan, whether or not then vested or exercisable, shall be paid
by the Surviving Corporation for each such option an amount in
cash determined by multiplying (i) the excess, if any, of the
Merger Consideration over the applicable exercise price of the
option (the "Spread") by (ii) the number of Shares such holder
could have purchased had such holder exercised such option in
full immediately prior to the Effective Time (whether or not
such option is actually vested or exercisable at such time) and
each such option shall thereafter be cancelled. Any conjunctive
stock appreciation rights related to any such option shall also
be cancelled and, in accordance with the terms thereof and of
the Company's Stock Incentive Plan, each holder thereof shall be
entitled to receive from the Surviving Corporation an amount in
cash equal to 66-2/3% of the product obtained by multiplying (i)
the Spread by (ii) the number of Shares to which such stock
appreciation rights relate.
(b) Notwithstanding the provisions of paragraph (a)
above, Buyer may, at its option but subject to its receipt of
the requisite consent of the individual holder thereof,
including Hugh H. Williamson, III, issue in exchange for the
cancellation of all options held by such holder outstanding at
the Effective Time and any conjunctive stock appreciation rights
related thereto, a deeply discounted non-qualified option to
purchase shares of common stock of Buyer (a "Substitute
Option"). The number of shares of Buyer's common stock subject
to such Substitute Option shall be such number of shares as
shall have a fair market value immediately after the Effective
Time equal to the sum of the Aggregate Value (as hereinafter
defined) and the aggregate exercise price under the Substitute
Option. The Aggregate Value shall mean the sum of (A) the
amount determined by multiplying (i) the Spread with respect to
all options held by such individual holder by (ii) the number of
Shares such individual holder could have purchased had he
exercised such options in full immediately prior to the
Effective Time (whether or not such options are actually vested
or exercisable at such time) plus (B) 66-2/3% of the product
obtained by multiplying (i) the Spread with respect to all
options held by such individual holder which have conjunctive
stock appreciation rights related thereto by (ii) the number of
Shares to which such stock appreciation rights relate. The term
of each Substitute Option shall be ten years. Each Substitute
Option shall become vested and exercisable on the seventh
anniversary of the date of grant; provided, however, that the
Substitute Option shall have accelerated vesting and
exercisability provisions if certain pre-determined earnings
and/or debt reduction goals are met, in which case the
Substitute Option shall become vested and exercisable with
respect to up to 20% of the shares of Buyer's common stock
subject thereto on or after each of the first, second, third,
fourth and fifth anniversaries of the date of grant. The
Substitute Options shall contain such other terms and conditions
as shall be set forth in the non-qualified stock option
agreement executed by Buyer and the individual holder of an
option consenting to receive such Substitute Option pursuant to
this Section 1.06(b).
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.01. Certificate of Incorporation. The
certificate of incorporation of the Company in effect at the
Effective Time shall be the certificate of incorporation of the
Surviving Corporation until amended in accordance with
applicable law.
SECTION 2.02. Bylaws. The bylaws of the Company in
effect at the Effective Time shall be the bylaws of the
Surviving Corporation until amended in accordance with
applicable law.
SECTION 2.03. Directors and Officers. From and after
the Effective Time, until successors are duly elected or
appointed and qualified in accordance with applicable law,
(i) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation, and
(ii) the officers of the Company at the Effective Time shall be
the officers of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Buyer that:
SECTION 3.01. Corporate Existence and Power. The
Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and
has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted, except for those licenses,
authorizations, consents and approvals where the failure to so
obtain would not, individually or in the aggregate, have a
Material Adverse Effect. The Company is duly qualified to do
business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where
the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has
heretofore delivered to Buyer true and complete copies of the
Company's certificate of incorporation and bylaws as currently
in effect. For purposes of this Agreement, "Material Adverse
Effect" means with respect to any matter that such matter would
be expected to materially and adversely affect the business,
condition (financial or otherwise) or results of operations of
the Company and its consolidated Subsidiaries considered as a
whole.
SECTION 3.02. Corporate Authorization. The execution,
delivery and performance by the Company of this Agreement and
the consummation by the Company of the transactions contemplated
hereby are within the Company's corporate powers and, except for
any required approval by the Company's stockholders in
connection with the consummation of the Merger, have been duly
authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of the Company.
SECTION 3.03. Governmental Authorization. The
execution, delivery and performance by the Company of this
Agreement and the consummation of the Merger by the Company
require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than
(i) the filing of a certificate of merger in accordance with
Delaware Law; and (ii) compliance with applicable requirements
of the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "Exchange
Act").
SECTION 3.04. Non-Contravention. The execution,
delivery and performance by the Company of this Agreement and
the consummation by the Company of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the
certificate of incorporation or bylaws of the Company, or
(ii) assuming compliance with the matters referred to in Section
3.03, contravene or conflict with or constitute a violation of
any provision of any law, regulation, judgment, injunction,
order or decree binding upon or applicable to the Company or any
Subsidiary.
SECTION 3.05. Capitalization. The authorized capital
stock of the Company consists of 13,500,000 authorized shares of
Company Common Stock and 1,500,000 authorized shares of
Preferred Stock, $1 par value ("Preferred Shares"). As of May
31, 1994, (a) 3,490,202 shares of Company Common Stock were
issued and outstanding, (b) 1,041,619 shares of Company Common
Stock were held in the treasury of the Company, (c) 943,003
shares of Company Common Stock were reserved for future issuance
upon conversion of the Company's 8% Convertible Subordinated
Debentures due 2003 (the "Public Debentures") of which
$14,692,000 in aggregate principal amount were outstanding, (d)
48,192 shares of Company Common Stock were reserved for future
issuance upon conversion of the Company's 8% Convertible
Subordinated Debentures due 2003 (the "Private Debentures") of
which $500,000 principal amount were outstanding and held by
Hugh H. Williamson, III and (e) 461,479 shares of Company Common
Stock were reserved for future issuance pursuant to outstanding
employee stock options granted pursuant to the Company's Stock
Incentive Plan. As of May 31, 1994, (a) no Preferred Shares
were issued and outstanding, (b) no Preferred Shares were held
in the treasury of the Company, (c) 943,003 Convertible
Preferred Shares were reserved for future issuance upon
conversion, under certain circumstances, of the Public
Debentures and (d) one one-hundredth of a share of Series A
Junior Participating Preferred Stock is reserved for future
issuance upon exercise, under certain circumstances, of each
Right issued under the Company's Shareholder Rights Plan, dated
October 15, 1991, between the Company and American Stock
Transfer & Trust Company, as Rights Agent. All outstanding
shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. Except
as set forth in this Section and except for changes since May
31, 1994, resulting from the exercise of employee stock options
outstanding on such date, there are outstanding (i) no shares of
capital stock or other voting securities of the Company, (ii) no
securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company, and
(iii) no options or other rights to acquire from the Company,
and no obligation of the Company to issue, any capital stock,
voting securities or securities convertible into or exchangeable
for capital stock or voting securities of the Company (the items
in clauses (i), (ii) and (iii) being referred to collectively as
the "Company Securities"). There are no outstanding obligations
of the Company or any Subsidiary to repurchase, redeem or
otherwise acquire any Company Securities.
SECTION 3.06. Subsidiaries. All of the outstanding
capital stock of, or other ownership interests in, each
Subsidiary, is owned by the Company, directly or indirectly,
free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other
ownership interests). There are no outstanding (i) securities
of the Company or any Subsidiary convertible into or
exchangeable for shares of capital stock or other voting
securities or ownership interests in any Subsidiary, and
(ii) options or other rights to acquire from the Company or any
Subsidiary, and no other obligation of the Company or any
Subsidiary to issue, any capital stock, voting securities or
other ownership interests in, or any securities convertible into
or exchangeable for any capital stock, voting securities or
ownership interests in, any Subsidiary (the items in clauses (i)
and (ii) being referred to collectively as the "Subsidiary
Securities"). There are no outstanding obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise
acquire any outstanding Subsidiary Securities. For purposes of
this Agreement, "Subsidiary" means any corporation or other
entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are
directly or indirectly owned by the Company.
SECTION 3.07. SEC Filings. (a) The Company has
delivered to Buyer (i) the annual report on Form 10-K for its
fiscal year ended February 28, 1994 (the "Company 10-K"), (ii)
its proxy or information statements relating to meetings of, or
actions taken without a meeting by, the stockholders of the
Company held since June 24, 1993 and (iii) all of its other
reports, statements, schedules and registration statements filed
with the Securities and Exchange Commission (the "SEC") since
February 28, 1994.
(b) As of its filing date, each such report or
statement filed pursuant to the Exchange Act did not contain any
untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 3.08. Financial Statements. The audited
consolidated financial statements and unaudited consolidated
interim financial statements of the Company included in the
Company 10-K fairly present, in conformity with generally
accepted accounting principles applied on a consistent basis
(except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and their
consolidated statements of operations and of cash flows for the
periods then ended (subject to normal year-end adjustments in
the case of any unaudited interim financial statements). For
purposes of this Agreement, "Balance Sheet" means the
consolidated balance sheets of the Company as of February 28,
1994 set forth in the Company 10-K and "Balance Sheet Date"
means February 28, 1994.
SECTION 3.09. Disclosure Documents. (a) Each document
required to be filed by the Company with the SEC in connection
with the transactions contemplated by this Agreement (the
"Company Disclosure Documents"), including, without limitation,
the proxy statement of the Company (the "Company Proxy
Statement") to be filed with the SEC in connection with the
Merger, and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the
applicable requirements of the Exchange Act.
(b) At the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders
of the Company, at the time such stockholders vote on adoption
of this Agreement and at the Effective Time, the Company Proxy
Statement, as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were
made, not misleading. At the time of the filing of any Company
Disclosure Document other than the Company Proxy Statement and
at the time of any distribution thereof, such Company Disclosure
Document will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements made therein, in the light of the circumstances
under which they were made, not misleading. The representations
and warranties contained in this Section 3.09(b) will not apply
to statements or omissions included in any Company Disclosure
Documents (including, without limitation, the Company Proxy
Statement) based upon information furnished to the Company in
writing by Buyer specifically for use therein.
SECTION 3.10. Litigation. Except as set forth in the
Company 10-K or most recent quarterly report on Form 10-Q, there
is no action, suit, investigation or proceeding pending against,
or to the knowledge of the Company threatened against or
affecting, the Company or any of its officers or Directors which
in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the Merger or any of the other transactions
contemplated hereby.
SECTION 3.11. Finders' and Bankers' Fees. Except for
Bear, Stearns & Co. Inc. ("Bear Stearns"), a copy of whose
engagement agreement has been provided to Buyer, there is no
investment banker, broker, finder or other intermediary which
has been retained by or is authorized to act on behalf of the
Company, the Special Committee or any Subsidiary who might be
entitled to any fee or commission from Buyer or any of its
affiliates upon consummation of the transactions contemplated by
this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer represents and warrants to the Company that:
SECTION 4.01. Corporate Existence and Power. Each of
Buyer and Merger Subsidiary is a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and
all material governmental licenses, authorizations, consents and
approvals required to consummate the transactions contemplated
by this Agreement. Since the date of its incorporation, Merger
Subsidiary has not engaged in any material activities other than
in connection with or as contemplated by this Agreement or in
connection with arranging any financing required to consummate
the transactions contemplated hereby.
SECTION 4.02. Corporate Authorization. The execution,
delivery and performance by Buyer and Merger Subsidiary of this
Agreement and the consummation by Buyer and Merger Subsidiary of
the transactions contemplated hereby are within the corporate
powers of Buyer and Merger Subsidiary and have been duly
authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of Buyer and Merger
Subsidiary.
SECTION 4.03. Governmental Authorization. (a) The
execution, delivery and performance by Buyer and Merger
Subsidiary of this Agreement and the consummation by Buyer and
Merger Subsidiary of the transactions contemplated by this
Agreement require no action by or in respect of, or filing with,
any governmental body, agency, official or authority other than
(i) the filing of a certificate of merger in accordance with
Delaware Law and (ii) compliance with any applicable
requirements of the Exchange Act.
(b) With respect to the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, (i) Buyer is controlled by KTM
Partners, L.P., a New York limited partnership (the
"Partnership"); (ii) formation of Buyer requires no Premerger
Notification and Report Forms to be filed; (iii) neither the
Partnership, Buyer nor Merger Subsidiary will have any assets
other than capital consisting of cash and equity securities of
the Company that will be utilized in connection with the Merger;
and (iv) the Partnership, Buyer and Merger Subsidiary will not
have regularly prepared balance sheets prior to the consummation
of the Merger.
SECTION 4.04. Non-Contravention. The execution,
delivery and performance by Buyer and Merger Subsidiary of this
Agreement and the consummation by Buyer and Merger Subsidiary of
the transactions contemplated hereby do not and will not (i)
contravene or conflict with the certificate of incorporation or
bylaws of Buyer or Merger Subsidiary, or (ii) assuming
compliance with the matters referred to in Section 4.03,
contravene or conflict with any material provision of law,
regulation, judgment, order or decree binding upon Buyer or
Merger Subsidiary.
SECTION 4.05. Disclosure Documents. The information
with respect to Buyer and its affiliates that Buyer furnishes to
the Company in writing specifically for use in any Company
Disclosure Document will not contain any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading (i) in
the case of the Company Proxy Statement at the time the Company
Proxy Statement or any amendment or supplement thereto is first
mailed to stockholders of the Company, at the time the
stockholders vote on adoption of this Agreement and at the
Effective Time, and (ii) in the case of any Company Disclosure
Document other than the Company Proxy Statement, at the time of
the filing thereof and at the time of any distribution thereof.
SECTION 4.06. Finders' and Bankers' Fees. Except for
American Securities Corporation and its successor, American
Securities Partners, L.P., which have acted on behalf of the
Acquiring Group, and for The Bridgeford Group, which has been
engaged as a financial adviser to Buyer and its affiliates,
there is no investment banker, broker, finder or other
intermediary who might be entitled to any fee or commission from
the Company or any of its affiliates upon consummation of the
transactions contemplated by this Agreement.
SECTION 4.07 Financing. Buyer has received and
furnished copies to the Company of a commitment letter addressed
to Buyer (the "Commitment Letter") from The Chase Manhattan
Bank, N.A. (the "Lender") dated May 5, 1994, as amended on June
21, 1994, pursuant to which the Lender has committed, subject to
the terms and conditions thereof, to enter into a credit
agreement with Merger Subsidiary to provide financing for the
transactions contemplated herein (the "Financing"). The
aggregate proceeds of the Financing committed by the Lender in
the Commitment Letter, together with the then available cash and
marketable securities of the Company and equity financing to be
provided by the Acquiring Group and/or other investors, is in an
amount which Buyer believes is sufficient to provide all of the
requisite Merger Consideration, to effect all refinancing
required in connection with the transactions contemplated herein
and to pay all related fees and expenses. The equity to be
provided by the Acquiring Group and/or other investors to Buyer
shall, in any event, be not less than $15,000,000 consisting of
cash contributed by the Acquiring Group or by third party
investors (which may be substantial individuals and/or families,
financial institutions, public and private pension funds,
corporations and other sophisticated and substantial investors)
and/or Shares valued on the basis of the Merger Consideration
(or Public Debentures, Convertible Preferred Shares issued upon
conversion thereof or Private Debentures) contributed to Buyer
or Merger Subsidiary.
SECTION 4.08 Ownership of Shares. On the record date
applicable to the meeting of stockholders of the Company to be
held in connection with the Merger, the members of the Acquiring
Group, Buyer and/or Merger Subsidiary in the aggregate will own
beneficially not less than 894,000 Shares, including Shares
issuable upon conversion of the Public Debentures (or any
Convertible Preferred Shares) and the Private Debentures
beneficially owned by them.
SECTION 4.09 Solvency; Adequate Capitalization. After
giving effect to the Merger, the Surviving Corporation will be
solvent. For purposes of this Agreement, the term "solvent"
shall mean, with respect to the Surviving Corporation, that the
fair valuation of its property will be, on the date of
determination, greater than the total amount of liabilities of
the Surviving Corporation as of such date and that the present
fair saleable value of the Surviving Corporation's assets will
be, on the date of determination, greater than the amount that
will be required to pay the Surviving Corporation's probable
liability on its existing debts as they become absolute and
matured. After giving effect to the Merger, the Surviving
Corporation will not have unreasonably small capital with which
to conduct its business.
ARTICLE V
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 5.01. Conduct of the Company. From the date
hereof until the Effective Time, the Company and the
Subsidiaries shall conduct their business in the ordinary course
consistent with past practice and (except for acts necessary to
the Merger) shall use their best efforts to preserve intact
their business organizations and relationships with third
parties and to keep available the services of their present
officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time,
without the consent of Buyer:
(a) the Company will not adopt or propose any change
in its certificate of incorporation or bylaws;
(b) the Company will not, and will not permit any
Subsidiary to, acquire, whether by purchase of equity
securities, merger or consolidation, any other Person or
acquire a material amount of assets of any other Person;
(c) the Company will not, and will not permit any
Subsidiary to, sell, lease, license or otherwise dispose of
any material assets or property except (i) pursuant to
existing contracts or commitments and (ii) in the ordinary
course consistent with past practice;
(d) except as otherwise contemplated herein, the
Company will not, and will not permit any Subsidiary to,
agree or commit to do any of the foregoing;
(e) the Company will not authorize for issuance,
issue, sell, deliver or agree or commit to issue, sell or
deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or any other
securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights),
except upon conversion of the Public Debentures (or any
Convertible Preferred Shares) or the Private Debentures and
except as required by outstanding options or stock
appreciation rights under the Company's Stock Incentive Plan
as in effect as of the date hereof, or amend any of the
terms of any such securities, options or rights outstanding
as of the date hereof, except as specifically contemplated
by this Agreement;
(f) the Company will not split, combine or reclassify
shares of its capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its
capital stock, or redeem or otherwise acquire any of its
securities or any securities of its subsidiaries; and
(g) the Company will not, and will not permit any
Subsidiary to, except as may be required by law, enter into,
adopt or amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance or
other employee benefit agreement, trust, plan, fund or other
arrangement for the benefit or welfare of any director,
officer of employee in any manner, or (except for normal
increases in the ordinary course of business consistent with
past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the
Company, or as required under existing agreements) increase
in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not
required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of
stock appreciation rights or performance units).
SECTION 5.02. Stockholder Meeting; Proxy Material.
The Company shall cause a meeting of its stockholders (the
"Company Stockholder Meeting") to be duly called and held as
soon as reasonably practicable for the purpose of voting on the
approval and adoption of this Agreement and the Merger. The
Directors of the Company, acting in part on the unanimous
recommendation of the Special Committee, shall, subject to their
fiduciary duties after consultation with counsel, recommend
approval and adoption of this Agreement and the Merger by the
Company's stockholders. In connection with such meeting, but
subject to the terms hereof, including Section 10.08(b), the
Company (i) will promptly prepare and file with the SEC, will
use its best efforts to have cleared by the SEC and will
thereafter mail to its stockholders as promptly as practicable
the Company Proxy Statement, all other proxy materials for such
meeting and the Rule 13E-3 Transaction Statement required
pursuant to Section 13(e) of the Exchange Act (the "Schedule
13E-3"), (ii) will use its best efforts to obtain the necessary
approvals by its stockholders of this Agreement and the
transactions contemplated hereby and (iii) will otherwise comply
with all legal requirements applicable to such meeting.
SECTION 5.03. Access to Information. From the date
hereof until the Effective Time, the Company will give Buyer,
its counsel, financial advisors, auditors and other authorized
representatives full access to the offices, properties, books
and records of the Company and the Subsidiaries, will furnish to
Buyer, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and
other information as such Persons may reasonably request and
will instruct the Company's employees, counsel, financial
advisors and auditors to cooperate with Buyer in its
investigation of the business of the Company and the
Subsidiaries; provided that no investigation pursuant to this
Section shall affect any representation or warranty given by the
Company to Buyer hereunder.
SECTION 5.04. Other Potential Bidders. The Company
shall, directly or indirectly, furnish information and access,
in each case in response to unsolicited requests therefor,
received prior to or after the date of this Agreement, to the
same extent permitted by Section 5.03 hereof, to any
corporation, partnership, person or other entity or group
pursuant to appropriate confidentiality agreements, and may
participate in discussions and negotiate with any such entity or
group concerning any merger, sale of assets, sale of shares of
capital stock or similar transaction involving the Company or
any Subsidiary or division of the Company (any such transaction
being referred to herein as a "Competing Transaction"), if the
Special Committee determines that such action is appropriate in
light of its fiduciary obligations to the Company's stockholders
after consultation with counsel. In addition, the Company shall
direct its officers and other appropriate personnel to cooperate
with and be reasonably available to consult with any such entity
or group. Except as set forth above, the Company shall not
solicit, participate in or initiate discussions or negotiations
with, or provide any information to, any corporation,
partnership, person or other entity or group (other than Buyer
or its affiliates or associates) concerning any merger, sale of
assets, sale of shares of capital stock or similar transaction
involving the Company or any Subsidiary or division of the
Company.
SECTION 5.05. Notices of Certain Events. The Company
shall promptly notify Buyer of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by
this Agreement; and
(ii) any notice or other communication from any
governmental or regulatory agency or authority in connection
with the transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS OF BUYER
Buyer agrees that:
SECTION 6.01. Confidentiality. Prior to the Effective
Time and after any termination of this Agreement Buyer will
hold, and will instruct its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning the Company
and the Subsidiaries furnished to Buyer in connection with the
transactions contemplated by this Agreement, except to the
extent that such information can be shown to have been (i)
previously known on a nonconfidential basis by Buyer, (ii) in
the public domain other than as a result of a disclosure by
Buyer or (iii) later lawfully acquired by Buyer from sources
other than the Company; provided that Buyer may disclose such
information to its officers, directors, employees, accountants,
counsel, consultants, advisors and agents in connection with the
transactions contemplated by this Agreement and to its potential
sources of financing (both debt and equity) in connection with
obtaining the financing for the transactions contemplated by
this Agreement so long as such Persons are informed by Buyer of
the confidential nature of such information and are directed by
Buyer to treat such information confidentially. If this
Agreement is terminated, Buyer will, and will use its best
efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to,
destroy or deliver to the Company, upon request, all documents
and other materials, and all copies thereof, obtained by or on
behalf of Buyer from the Company in connection with this
Agreement that are subject to such confidentiality undertaking.
SECTION 6.02. Voting of Shares. Prior to the record
date applicable to the Company Stockholder Meeting to be held in
connection with the Merger, each of the members of the Acquiring
Group shall execute an agreement with the Company, substantially
in the form of Exhibit B attached hereto, to vote or cause to be
voted all of the Shares and Convertible Preferred Shares, if
any, then outstanding and beneficially owned by such member of
the Acquiring Group in favor of the approval and adoption of
this Agreement and the Merger.
SECTION 6.03. Director and Officer Liability. For six
years after the Effective Time, Buyer will or will cause the
Surviving Corporation to indemnify and hold harmless the present
and former officers and directors of the Company in respect of
acts or omissions occurring prior to the Effective Time to the
extent provided under the Company's certificate of incorporation
and bylaws in effect on the date hereof; provided that such
indemnification shall be subject to any limitation imposed from
time to time under applicable law. For such six years after the
Effective Time, Buyer will or will cause the Surviving
Corporation to use its best efforts to provide officers' and
directors' liability insurance in respect of acts or omissions
occurring prior to the Effective Time covering each such Person
currently covered by the Company's officers' and directors'
liability insurance policy on terms with respect to coverage and
amount no less favorable than those of such policy in effect on
the date hereof, provided that if such coverage is not
obtainable at a cost less than or equal to two times the amount
per annum the Company paid in its last full fiscal year, Buyer
shall or shall cause the Surviving Corporation to purchase such
lesser amount of coverage, on terms as similar in coverage as
practicable to such coverage in effect on the date hereof, as
may be obtained having a cost not to exceed two times the amount
per annum the Company paid in its last full fiscal year, which
amount has been disclosed to Buyer.
ARTICLE VII
COVENANTS OF BUYER
AND THE COMPANY
The parties hereto agree that:
SECTION 7.01. Best Efforts. Subject to the terms and
conditions of this Agreement, each party will use its best
efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate the
transactions contemplated by this Agreement. Buyer also will
use its best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to satisfy all
requirements of the Financing agreements or any alternative
arrangements which are conditions to closing the transactions
constituting the Financing.
SECTION 7.02. Certain Filings. The Company and Buyer
shall cooperate with one another (a) in connection with the
preparation of the Company Disclosure Documents and (b) in
determining whether any action by or in respect of, or filing
with, any governmental body, agency or official, or authority is
required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions
contemplated by this Agreement and (c) in seeking any such
actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith
or with the Company Disclosure Documents and seeking timely to
obtain any such actions, consents, approvals or waivers.
SECTION 7.03. Public Announcements. Buyer and the
Company will consult with each other before issuing any press
release or making any public statement with respect to this
Agreement and the transactions contemplated hereby and, except
as may be required by applicable law or any listing agreement
with any national securities exchange, will not issue any such
press release or make any such public statement prior to such
consultation.
SECTION 7.04. Further Assurances. At and after the
Effective Time, the officers and directors of the Surviving
Corporation will be authorized to execute and deliver, in the
name and on behalf of the Company or Merger Subsidiary, any
deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger
Subsidiary, any other actions and things they may deem desirable
to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in,
to and under any of the rights, properties or assets of the
Company acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each
Party. The obligations of the Company, Buyer and Merger
Subsidiary to consummate the Merger are 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, by each of the parties intended to benefit therefrom, to
the extent permitted by applicable law:
(i) this Agreement and the Merger shall have been
approved and adopted by the requisite vote of the
stockholders of the Company in accordance with Delaware Law;
(ii) no court, arbitrator or governmental body,
agency, official or authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is
in effect and which has the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger;
(iii) all actions by or in respect of or filings with
any governmental body, agency, official, or authority
required to permit the consummation of the Merger shall have
been obtained; and
(iv) at the time of mailing of the Company Proxy
Statement, Bear Stearns shall have reaffirmed in writing the
fairness opinion previously prepared and delivered by it to
the Special Committee and, at or prior to the time of the
Company Stockholder Meeting and the Effective Time, Bear
Stearns shall not have withdrawn such opinion.
SECTION 8.02. Additional Conditions to the Obligations
of Buyer and Merger Subsidiary. The obligations of Buyer and
Merger Subsidiary to consummate the Merger are also subject to
the satisfaction at or prior to the Effective Time of the
following further conditions, any or all of which may be waived,
in whole or in part, by each of the parties intended to benefit
therefrom, to the extent permitted by applicable law:
(i) the Company shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Effective Time, the
representations and warranties of the Company contained in
this Agreement and in any certificate or other writing
delivered by the Company pursuant hereto shall be true and
correct in all respects, except where the breach or
inaccuracy thereof would not, individually or in the
aggregate, have a Material Adverse Effect, at and as of the
Effective Time as if made at and as of such time, except
that those representations and warranties which address
matters only as of a particular date shall remain true and
correct as of such date, and Buyer shall have received a
certificate signed by the principal financial officer of the
Company to the foregoing effect;
(ii) Buyer shall have received or be satisfied that it
will receive all consents and approvals contemplated by
Section 3.03 or otherwise necessary in connection with the
consummation of the Merger; and
(iii) Buyer shall have obtained on behalf of Merger
Subsidiary the Financing pursuant to the Commitment Letter
in an amount which, together with then available cash and
marketable securities of the Company, exclusive of the
Company's investment in Pine Street Partners, L.P., is
sufficient to enable the Surviving Corporation to pay as of
the Effective Time the aggregate amount of the Merger
Consideration payable hereunder to holders of Shares, to
effect all necessary refinancing, and to pay all related
fees and expenses as contemplated by the Commitment Letter.
SECTION 8.03. Conditions to the Obligations of the
Company. The obligations of the Company to consummate the
Merger are also subject to the satisfaction at or prior to the
Effective Time of the following further conditions, any or all
of which may be waived, in whole or in part, by the Company to
the extent permitted by applicable law:
(i) Buyer and Merger Subsidiary shall have performed
in all material respects all of their respective obligations
hereunder required to be performed by them at or prior to
the Effective Time, the representations and warranties of
Buyer and Merger Subsidiary contained in this Agreement
shall be true and correct in all material respects at and as
of the Effective Time as if made at and as of such time,
except that those representations and warranties which
address matters only as of a particular date shall remain
true and correct as of such date, and the Company shall have
received a certificate signed by the President or any Vice
President of each of Buyer and Merger Subsidiary to the
foregoing effect;
(ii) the Company shall have received all documents it
may reasonably request relating to the existence of Buyer or
Merger Subsidiary and the authority of Buyer or Merger
Subsidiary to enter into this Agreement, all in form and
substance satisfactory to the Company; and
(iii) the Board shall have received a certificate
signed by the principal financial officer of the Company to
the effect that after the consummation of the Merger, the
Surviving Corporation will be solvent as defined above in
Section 4.09; provided, however, that if the Lender
providing the Financing shall require an opinion of an
independent appraiser to such effect, a copy of such opinion
addressed to the Board shall be received in lieu of the
certificate of the principal financial officer.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time (notwithstanding any approval of this
Agreement by the stockholders of the Company):
(i) by mutual written consent of the Company and
Buyer;
(ii) by either the Company or Buyer, if the Merger has
not been consummated by December 31, 1994;
(iii) by either the Company or Buyer, if there shall
be any law or regulation that makes consummation of the
Merger illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Buyer or the Company
from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and
nonappealable;
(iv) by either the Company or Buyer if this Agreement
and the Merger shall fail to receive the requisite vote for
approval and adoption by the stockholders of the Company at
the Company Stockholder Meeting called for such purpose;
(v) by Buyer or the Company (such determination to be
made on behalf of the Company by the Special Committee in
its sole discretion), if (a) the Board of Directors of the
Company or the Special Committee withdraws, modifies or
changes its recommendation of this Agreement or the Merger
in a manner adverse to Buyer or Merger Subsidiary or shall
have resolved to do any of the foregoing or the Board of
Directors of the Company or the Special Committee shall have
recommended to the stockholders of the Company any Competing
Transaction or resolved to do so, or (b) any Person shall
have acquired beneficial ownership or any "group" (as such
term is defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder and not including the
Acquiring Group) shall have been formed which beneficially
owns 50% or more of the Shares.
SECTION 9.02. Effect of Termination. If this
Agreement is terminated pursuant to Section 9.01, this Agreement
shall become void and of no effect with no liability on the part
of any party hereto, except that the agreements contained in
Sections 6.01, 10.04 and 10.08 shall survive the termination
hereof; provided, however, that, except as specifically provided
herein, nothing herein shall relieve any party hereto of
liability for any breach of this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and
other communications to any party hereunder shall be in writing
(including telecopy or similar writing) and shall be given,
if to Buyer or Merger Subsidiary, to:
KTM Holdings Corp.
c/o American Securities Partners, L.P.
122 East 42nd Street
New York, New York 10168
Telecopy: (212) 697-5524
Attention: Michael G. Fisch
with a copy to:
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
Telecopy: (212) 806-6006
Attention: David L. Finkelman, Esq.
if to the Company, to:
Ketema, Inc.
501 South Cherry Street
Suite 600
Denver, Colorado 80222
Telecopy: (303) 331-9430
Attention: Special Committee of the Board
of Directors
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telecopy: (212) 735-2001
Attention: Eileen Nugent Simon, Esq.
or such other address or telecopy number as such party may
hereafter specify for the purpose by notice to the other parties
hereto. Each such notice, request or other communication shall
be effective when delivered at the address specified in this
Section.
SECTION 10.02. Survival of Representations and
Warranties. The representations and warranties contained herein
and in any certificate or other writing delivered pursuant
hereto shall not survive the Effective Time or the termination
of this Agreement.
SECTION 10.03. Amendments; No Waivers. (a) Any
provision of this Agreement may be amended or waived prior to
the Effective Time if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by the
Company, Buyer and Merger Subsidiary or in the case of a waiver,
by the party against whom the waiver is to be effective;
provided that any such amendment and any such waiver by the
Company shall have been approved by the Board of Directors of
the Company, acting on the recommendation of the Special
Committee; and provided, further, that after the adoption of
this Agreement by the stockholders of the Company, no such
amendment or waiver shall, without the further approval of such
stockholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of
capital stock of the Company or (ii) any of the terms or
conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of
the Company.
(b) No failure or delay by any 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 thereof or the 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.
SECTION 10.04. Fees and Expenses. (a) Except as
otherwise provided in this Section, all Expenses (as defined
below) incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense.
(b) If (i) this Agreement is terminated (a) by the
Company or Buyer pursuant to Section 9.01(iv), (b) by the
Company pursuant to Section 9.01(v) if the Company or the
Special Committee shall have recommended to the stockholders of
the Company any Competing Transaction or (c) by the Company or
Buyer pursuant to Section 9.01(v)(b) or (ii) the Merger is not
consummated and the Company is in breach in any material respect
of its covenants, representations, warranties or agreements
contained herein, and in any of such events set forth in clause
(i) or (ii) Buyer and Merger Subsidiary are not in breach in any
material respect of their respective covenants, representations,
warranties or agreements contained herein, the Company shall,
promptly after a request by Buyer therefor, pay, or in the
discretion of Buyer, reimburse Buyer for, all Expenses, not to
exceed $1,500,000, incurred by or on behalf of Buyer.
"Expenses", as used in this Section, shall include all
reasonable out-of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants (which shall not
include fees and expenses of officers or Directors of Buyer
and/or affiliates thereof) and commitment fees and other
financing fees and expenses) incurred by Buyer, Merger
Subsidiary or the Company or on behalf of any such party in
connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the
Financing, the preparation, printing, filing and mailing of the
Company Proxy Statement and Schedule 13E-3, the solicitation of
the stockholder approvals and all other matters related to the
consummation of the transactions contemplated herein.
SECTION 10.05. Successors and Assigns. The provisions
of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
assigns, provided that no party may assign, delegate or
otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except
that Buyer may transfer or assign, in whole or from time to time
in part, to one or more of its affiliates, its rights under this
Agreement, but any such transfer or assignment will not relieve
Buyer of its obligations under this Agreement or prejudice the
rights of stockholders to receive the Merger Consideration for
Shares properly surrendered in accordance with Section 1.04.
This Agreement shall not be construed so as to confer any right
or benefit upon any person other than the parties to this
Agreement, and their respective successors and assigns.
SECTION 10.06. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the
State of Delaware.
SECTION 10.07. Counterparts; Effectiveness. This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by all of the
other parties hereto.
SECTION 10.08. Actions of the Company Approved or
Taken by the Acquiring Group. (a) The parties hereto hereby
agree that any action or inaction of the Company approved or
taken or omitted to be taken by the Acquiring Group or any
member thereof (including Hugh H. Williamson, III) that is not
concurred in by the Special Committee and that might otherwise
be a breach of this Agreement shall not be a breach of this
Agreement and that Buyer and Merger Subsidiary waive any and all
claims and causes of action arising out of or otherwise related
to any such action or inaction.
(b) Buyer and Merger Subsidiary waive any and all
claims and causes of action (i) against the Company or the
Special Committee or its members (collectively, the "Section
10.08(b) Parties") arising out of or otherwise related to any of
the Section 10.08(b) Parties' actions pursuant to Section 5.04
hereof (including, without limitation, that any such action
would constitute a breach of Sections 5.02 or 7.01 hereof) and
(ii) against any of the Section 10.08(b) Parties and/or any
third parties for tortious or intentional interference with
contract or with prospective economic advantage by virtue of any
of the Section 10.08(b) Parties' or such third parties' actions
hereunder (including, without limitation, actions taken pursuant
to Section 5.04 hereof) or the termination of this Agreement by
the Company in accordance with the terms hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
KETEMA, INC.
By /s/ Hugh H. Williamson, III
Title: President and CEO
KTM HOLDINGS CORP.
By /s/ Michael G. Fisch
Title: Executive Vice President
KTM ACQUISITION CORP.
By /s/ Michael G. Fisch
Title: Executive Vice President
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE OF MERGER
_______________________
CERTIFICATE OF MERGER
OF
KTM ACQUISITION CORP.
INTO
KETEMA, INC.
_______________________
Pursuant to Section 251 of the
General Corporation Law of the State of Delaware
_______________________
KETEMA, INC., a Delaware corporation, hereby certifies
as follows:
FIRST: The names of the constituent corporations are
"KTM ACQUISITION CORP." and "KETEMA, INC.". Each constituent
corporation is incorporated under the laws of the State of
Delaware.
SECOND: An Agreement and Plan of Merger dated as of
June 21, 1994 has been approved, adopted, certified, executed
and
acknowledged by each of the constituent corporations in
accordance with Section 251(c) of the General Corporation Law of
the State of Delaware.
THIRD: The name of the surviving corporation (the
"Surviving Corporation") is Ketema, Inc.
FOURTH: The Certificate of Incorporation of Ketema,
Inc. as in effect at the date of the merger shall be the
Certificate of Incorporation of the Surviving Corporation.
FIFTH: An executed copy of the Agreement and Plan of
Merger is on file at the principal place of business of the
Surviving Corporation, 501 South Cherry Street, Suite 600,
Denver, Colorado 80222, and a copy of the Agreement will be
furnished by the Surviving Corporation, on request and without
cost, to any stockholder of either of the constituent
corporations.
IN WITNESS WHEREOF, Ketema, Inc. has caused this
Certificate of Merger to be executed in its corporate name by
its
President and attested by its Secretary this ____ day of
_______,
1994.
KETEMA, INC.
By ___________________________
Hugh H. Williamson, III
President
Attest:
By _________________________
Secretary
<PAGE>
EXHIBIT B
____________, 1994
Ketema, Inc.
501 South Cherry Street
Suite 600
Denver, Colorado 80222
Dear Sirs:
The undersigned is or may become a beneficial owner of
shares of common stock, $1.00 par value per share ("Common
Stock"), or voting preferred stock, $1.00 par value per share
("Preferred Stock"), of Ketema, Inc., a Delaware corporation
(the
"Company"). The undersigned has been advised that the Company
has entered into an Agreement and Plan of Merger dated as of
June
21, 1994 with KTM Holdings Corp., a Delaware corporation
("Holdings"), and KTM Acquisition Corp., a Delaware corporation
("Acquisition Corp."), pursuant to which Acquisition Corp. would
be merged into the Company and the Company would thereby become
a
wholly-owned subsidiary of Holdings. Such Agreement and Plan of
Merger, as it may hereafter be amended in accordance with its
terms, is referred to herein as the "Merger Agreement."
The undersigned hereby agrees that in any vote of the
Company's stockholders with respect to the Merger Agreement and
the transactions thereby contemplated (whether at a meeting or
otherwise), the undersigned will vote, or cause to be voted, all
shares of Common Stock and Preferred Stock, if any, then
outstanding and beneficially owned by the undersigned in favor
of
the approval and adoption of the Merger Agreement and the
transactions thereby contemplated.
This letter shall in no way be construed to preclude
the
undersigned from (i) converting any convertible securities of
the
Company beneficially owned by the undersigned into, or
exercising
any option or right to acquire, shares of Common Stock or
Preferred Stock or (ii) otherwise acquiring shares of Common
Stock or Preferred Stock after the date hereof. Any such shares
of Common Stock or Preferred Stock so acquired shall become
subject to the terms of this letter.
The undersigned acknowledges that in the event of any
breach by the undersigned of the obligations set forth in this
letter, the Company will not have an adequate remedy at law or
in
damages. Accordingly, in the event of any such breach, the
undersigned consents to the issuance of an injunction or award
of
specific performance or the enforcement of other equitable
remedies against the undersigned in any action to compel
performance of the terms hereof.
The provisions of this letter shall terminate, and the
undersigned shall cease to be bound hereby, concurrently with
any
termination of the Merger Agreement in accordance with its
terms.
In the event that the undersigned is a director of the
Company, it is understood that the provisions of this letter
relate solely to the undersigned as a stockholder of the Company
and shall not in any way be construed to require the undersigned
to take or refrain from taking any action in the undersigned's
capacity as a director of the Company.
Please indicate your acceptance of this letter by
signing below.
Very truly yours,
__________________________
Accepted and Agreed:
KETEMA, INC.
By:________________________
Name:
Title:
