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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 28, 1996
AMTROL Inc.
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(Exact name of registrant as specified in its charter)
Rhode Island 0-20328 05-0246955
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(State or other jurisdiction (Commission File (I.R.S.Employer
of incorporation) Number) Identification No.)
1400 Division Road, West Warwick, Rhode Island 02893
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(Address of principal executive offices) (Zip Code)
(401) 884-6300
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(Registrant's telephone number, including area code)
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Item 1. Changes in Control of Registrant.
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(b) On August 28, 1996, AMTROL Inc. ("Amtrol") entered into a Merger
Agreement (the "Merger Agreement") with A.I. Holdings, Inc. ("Holdings"), a
corporation organized by and affiliated with the Cypress Group LLC ("Cypress")
and A.I. Acquisition, Inc. ("Acquisition"), a wholly-owned subsidiary of
Holdings. The Merger Agreement provides that, at the "Effective Time" (as
defined in the Merger Agreement), Acquisition shall be merged with and into
Amtrol (the "Merger"). Acquisition will then cease to exist and Amtrol will
continue as the surviving corporation, as a wholly-owned subsidiary of Holdings.
By virtue of the Merger, each share of Amtrol common stock outstanding
immediately prior to the Effective Time shall be converted into the right to
receive $28.25.
The Merger Agreement also provides for cancellation of each outstanding
Amtrol stock option on the date of the Effective Time immediately prior to the
Effective Time, upon the surviving corporation making payment at the rate of
$28.25 per outstanding option, less the applicable per share exercise price, to
each option holder. Based on the total number of shares of Amtrol common stock
and options outstanding, aggregate funds required for payment to the respective
holders will be approximately $218.9 million.
The Chester H. Kirk Trust and directors Kenneth L. Kirk, David Beretta and
Hanns H. Winkhaus, who collectively own approximately 37.8% of the outstanding
Amtrol common stock, have entered into a Voting Agreement with Amtrol pursuant
to which they have each agreed to vote all of their shares as recommended by the
Amtrol Board of Directors with respect to the Merger Agreement and any Competing
Transaction (as defined in the Merger Agreement). The Voting Agreement expires
on the earlier of the Effective Time of the Merger or February 28, 1997.
The Merger is subject to various conditions customary to transactions of
this type, including the approvals of the shareholders of Amtrol and filings
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Subject to these
matters, it is anticipated that the Merger will be consummated in November 1996.
Item 7. Exhibits
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(c) Merger Agreement dated as of August 28, 1996, among AMTROL Inc.,
A.I. Holdings, Inc. and A.I. Acquisition, Inc., together with Exhibits thereto
(including the Voting Agreement dated as of August 28, 1996, among AMTROL Inc.,
The Chester H. Kirk Trust, Kenneth L. Kirk, David Beretta and Hanns H.
Winkhaus).
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SIGNATURES
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Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMTROL Inc.
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(Registrant)
Date: September 3, 1996 By: /s/ Edward J. Cooney
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Edward J. Cooney
Chief Financial Officer
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EXHIBIT 7(C) to Form 8-K
MERGER AGREEMENT
BETWEEN
AMTROL INC.,
A.I. HOLDINGS, INC.
AND
A.I. ACQUISITION, INC.
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MERGER AGREEMENT
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MERGER AGREEMENT dated as of August 28, 1996 (the "AGREEMENT"), among A.I.
Holdings, Inc., a Delaware corporation ("PARENT"), A.I. Acquisition, Inc., a
Rhode Island corporation ("PARENT SUB"), and a wholly owned subsidiary of
Parent, and AMTROL Inc., a Rhode Island corporation (the "COMPANY").
WHEREAS, Parent Sub, upon the terms and subject to the conditions of this
Agreement and in accordance with the Business Corporation Act of the State of
Rhode Island ("RHODE ISLAND LAW"), will merge with and into the Company (the
"MERGER"); and
WHEREAS, the Board of Directors of the Company has (i) determined that the
Merger is fair to, and in the best interests of, the holders of Common Stock (as
hereinafter defined) and (ii) approved this Agreement and the transactions
contemplated hereby and recommended approval of this Agreement by the
stockholders of the Company; and
WHEREAS, the Board of Directors of Parent has determined that the Merger
is in the best interests of Parent and its stockholders and has approved this
Agreement and the transactions contemplated hereby;
WHEREAS, Parent and Parent Sub are unwilling to enter into this Agreement
unless, contemporaneously with the execution and delivery of this Agreement,
certain beneficial and record stockholders of the Company enter into the Voting
Agreement in the form of Exhibit A hereto (the "VOTING AGREEMENT") providing for
certain actions relating to the transactions contemplated by this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
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SECTION 1.01. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Rhode Island Law, at the
Effective Time (as hereinafter defined), Parent Sub shall be merged with and
into the Company. As a result of the Merger, the separate corporate existence of
Parent Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the "SURVIVING CORPORATION"). The name of the
Surviving Corporation shall be Amtrol Inc.
SECTION 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 hereto shall cause the Merger to be consummated by filing a
articles of merger (the "ARTICLES OF MERGER") with the Secretary of State of the
State of Rhode Island, in such form as required by, and executed in accordance
with the relevant provisions of, Rhode Island Law (the date and time of the
filing of the Articles of Merger or the time specified therein being the
"EFFECTIVE TIME").
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SECTION 1.03. EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Rhode Island
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, except as otherwise provided herein, all the property,
rights, privileges, powers and franchises of Parent Sub and the Company shall
vest in the Surviving Corporation, and all debts, liabilities and duties of
Parent Sub and the Company shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.04. ARTICLES OF INCORPORATION; BY-LAWS. At the Effective Time,
the Articles of Incorporation and By-Laws of Parent Sub, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
and By-Laws, respectively, of the Surviving Corporation.
SECTION 1.05. DIRECTORS AND OFFICERS. The directors of Parent 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
Parent 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.
SECTION 1.06. CLOSING. (a) The closing (the "CLOSING") of the Merger will
take place at the offices of Simpson, Thacher & Bartlett, 425 Lexington Avenue,
New York, NY 10017 at 10:00 a.m., local time, on a date to be mutually agreed
upon by Parent and the Company, which date shall be no later than the fifth
business day following the date upon which the last to occur of the conditions
set forth in Article VII is fulfilled or duly waived provided that, unless
Parent shall have otherwise agreed in writing, such date shall not be prior to
November 15, 1996, and, provided further, that if the Company Stockholders'
Meeting (as hereinafter defined) is held after November 10, 1996, then, unless
Parent shall have otherwise agreed in writing, such date shall not be prior to
December 15, 1996.
(b) Subject to the satisfaction or waiver of each of the conditions
set forth in Article VII, at the Closing, (i) the closing certificates and other
documents required by Article VII shall be delivered, and (ii) the appropriate
officers of the Company shall execute and acknowledge the Articles of Merger.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
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SECTION 2.01. CONVERSION OF SECURITIES. At the Effective Time, by virtue
of the Merger and without any action on the part of Parent, Parent Sub, the
Company or the holders of any of the following securities:
(a) Subject to the other provisions of this Section 2.01, each
share of Common Stock, par value $.01 per share ("COMMON STOCK"), issued and
outstanding immediately prior to the Effective Time (excluding any shares
described in Section 2.01(b)) shall be converted into the right to receive
$28.25 in cash, without interest (the "PER SHARE AMOUNT"). All such shares of
Common Stock shall cease to be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each certificate previously evidencing
any such shares shall thereafter represent only the right to receive the Per
Share Amount as described below. The holders of certificates previously
evidencing such shares of Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares of
Common Stock,
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except as otherwise provided herein or by law. Each such certificate previously
evidencing shares of Common Stock shall be exchanged for the Per Share Amount
multiplied by the number of shares previously evidenced by the canceled
certificate upon the surrender of such certificate in accordance with the
provisions of Section 2.02, without interest;
(b) Each share of Common Stock held in the treasury of the Company
and each share of Common Stock owned by any direct or indirect subsidiary of the
Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment shall be made with
respect thereto; and
(c) Each share of common stock, par value $.01 per share, of Parent
Sub ("PARENT SUB COMMON STOCK") issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one duly and validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation.
SECTION 2.02. PAYMENT. (a) PAYING AGENT. As of the Effective Time, Parent
shall deposit, or shall cause to be deposited, with a bank theretofore
designated by Parent (the "PAYING AGENT"), for the benefit of the holders of
shares of Common Stock, for payment in accordance with this Article II, through
the Paying Agent, cash in an amount equal to the Per Share Amount multiplied by
the number of shares of Common Stock outstanding immediately prior to the
Effective Time, (such cash being hereinafter referred to as the "PAYMENT FUND").
The Paying Agent shall, pursuant to irrevocable instructions, deliver the cash
contemplated to be paid pursuant to Section 2.01(a) out of the Payment Fund. The
Payment Fund shall not be used for any other purpose.
(b) PAYMENT PROCEDURES. Promptly after the Effective Time, the
Paying Agent shall mail to each record holder, as of the Effective Time, of an
outstanding certificate that immediately prior to the Effective Time evidenced
outstanding shares of Common Stock (the "CERTIFICATES") a form letter of
transmittal and instructions for use in effecting the surrender of the
Certificates for payment therefor. Upon surrender to the Paying Agent of a
Certificate, together with such letter of transmittal duly executed, and any
other required documents, the holder of such Certificate shall be entitled to
receive in exchange therefor the consideration set forth in Section 2.01(a) (the
"MERGER CONSIDERATION"), and such Certificate shall forthwith be canceled. No
interest will be paid or accrued on the cash payable upon the surrender of the
Certificates. Until surrendered in accordance with the provisions of this
Section 2.02, each Certificate shall represent for all purposes only the right
to receive the consideration set forth in Section 2.01(a), without any interest
thereon.
(c) NO FURTHER RIGHTS IN COMMON STOCK. All cash paid upon
conversion of the shares of Common Stock in accordance with the terms of this
Article II, shall be deemed to have been paid in full satisfaction of all rights
pertaining to such shares of Common Stock.
(d) TERMINATION OF PAYMENT FUND. Any portion of the Payment Fund
that remains undistributed to the holders of Common Stock for 180 days after the
Effective Time shall be delivered to the Surviving Corporation, upon demand, and
any holders of Common Stock that have not theretofore complied with this Article
II shall thereafter look only to the Surviving Corporation and only as general
creditors thereof for payment of their claim for cash to which they are
entitled.
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(e) NO LIABILITY. Neither Parent nor the Surviving Corporation shall
be liable to any holder of shares of Common Stock for any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) INVESTMENT OF PAYMENT FUND. The Paying Agent shall invest the
Payment Fund, as directed by the Surviving Corporation, on a daily basis. The
Paying Agent shall invest funds in the Payment Fund only in Permitted
Investments (as herein defined). Any interest or other income earned on the
investment of funds in the Payment Fund shall be for the account of and payable
to the Surviving Corporation. The Surviving Corporation shall replace any monies
lost through any investment made pursuant to this Section 2.02(f). For purposes
of this Section 2.02(f), "PERMITTED INVESTMENTS" shall mean (i) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (ii) certificates of deposit,
eurodollar time deposits and bankers' acceptances with maturities not exceeding
six months and overnight bank deposits with any commercial bank, depository
institution or trust company incorporated or doing business under the laws of
the United States of America, any state thereof or the District of Columbia,
provided that such commercial bank, depository institution or trust company has,
at the time of the investment, (A) capital and surplus in excess of $250 million
and (b) outstanding short-term debt securities which are rated at least A-1 by
Standard & Poor's Rating Group Division of McGraw Hill Incorporated or at least
P-1 by Moody's Investor Services, Inc., or carry an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments, (iii) repurchase obligations with a
term of not more than 30 days for underlying securities of the types described
in clauses (i) and (ii) above entered into with any financial institution
meeting the qualifications specified in clause (ii) above, (iv) commercial paper
having a rating in the highest rating categories from Standard & Poor's Rating
Group Division of McGraw Hill Incorporated or Moody's Investor Services, Inc. or
carry an equivalent rating by a nationally recognized rating agency if both of
the two named rating agencies cease publishing ratings of investments and in
each case maturing within six months after the date of acquisition and (v) money
market mutual or similar funds having assets in excess of $250 million.
SECTION 2.03. OPTIONS. The Company shall take all action necessary to (i)
terminate the Company's 1992 Stock Incentive Plan, as amended to the date of
this Agreement (the "1992 STOCK PLAN") and the Non-Employee Director
Compensation Plan (the "DIRECTOR PLAN"), effective as of the day of the
Effective Time immediately prior to the Effective Time, (ii) provide that each
outstanding stock option to purchase shares of Common Stock granted under the
1992 Stock Plan and the Director Plan (an "OPTION") shall become fully vested,
whether or not previously vested, immediately prior to the Effective Time and
(iii) provide that, with respect to any such Option that is outstanding
immediately prior to the Effective Time, such Option shall be canceled as of the
day of the Effective Time immediately prior to the Effective Time and the holder
shall be entitled to receive from the Surviving Corporation, immediately after
the Effective Time, an amount in cash in cancellation of such Option equal to
the excess, if any, of the Per Share Amount over the per share exercise price of
such Option, multiplied by the number of shares of Common Stock to which the
Option remains unexercised. Any such payment shall be subject to all applicable
Federal, state and local tax withholding requirements.
SECTION 2.04. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Common Stock thereafter on the records of
the Company. On or after the Effective Time, any certificates for shares of
Common Stock presented to the Paying Agent, the Surviving Corporation or Parent
for any reason shall be converted into the Merger Consideration.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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Except as set forth in the disclosure schedule (as qualified by the
introduction thereto) delivered by the Company to Parent concurrent with the
execution of this Agreement (the "COMPANY DISCLOSURE SCHEDULE"), the Company
hereby represents and warrants to Parent and Parent Sub that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) The
Company and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
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, other than where the
failure to be so duly qualified and in good standing would not have a Company
Material Adverse Effect (as hereinafter defined). The term "COMPANY MATERIAL
ADVERSE EFFECT" as used in this Agreement means any change or effect that,
individually or when taken together with all other such changes or effects,
would be materially adverse to the financial condition, business, operations,
earnings or prospects of the Company and its subsidiaries, taken as a whole.
(b) Section 3.01 of the Company Disclosure Schedule sets forth, a
complete and correct list of all the Company's directly or indirectly owned
subsidiaries, together with (i) the jurisdiction of incorporation of each
subsidiary and the percentage of each subsidiary's outstanding capital stock
owned by each holder of such stock, and (ii) as of the date of this Agreement,
indication of whether each such subsidiary is a "Significant Subsidiary" (as
hereinafter defined).
SECTION 3.02. ARTICLES OF INCORPORATION AND BY-LAWS. The Company has
heretofore furnished to Parent complete and accurate copies of the Articles of
Incorporation and the By-Laws, in each case as amended or restated to the date
of this Agreement, of the Company and each of its subsidiaries.
SECTION 3.03. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of (i) 15,000,000 shares of Common Stock; and (ii) 5,000,000
shares of Preferred Stock, $.01 par value. As of the date of this Agreement, (i)
7,444,220 shares of Common Stock (none of which is subject to any preemptive
rights whether created by statute, the Company's Articles of Incorporation or
By-Laws or any agreement to which the Company is a party or is bound or
otherwise) and no shares of Preferred Stock are issued and outstanding, (ii)
214,200 shares of Common Stock are held in the treasury of the Company; (iii)
679,223 shares of Common Stock are reserved for issuance pursuant to outstanding
Options granted pursuant to the 1992 Stock Plan and the Director Plan, (iv) no
shares of Common Stock are issued and outstanding as "Restricted Shares" under
the 1992 Stock Plan, and (v) no "Limited Rights" are issued and outstanding
under the 1992 Stock Plan. Each of the outstanding shares of capital stock of
the Company and each of its subsidiaries is duly authorized and validly issued,
fully paid and nonassessable, and such shares owned by the Company or another
subsidiary of the Company are owned free and clear of all liens, claims,
encumbrances, security interests or other charges
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("ENCUMBRANCES"). None of the shares of Common Stock are subject to any rights
to dissent or rights of appraisal.
(b) Except (i) as set forth above in the second sentence of Section
3.03(a) or (ii) as a result of the exercise of Options outstanding as of the
date of this Agreement, there are outstanding (a) no shares of capital stock or
voting securities of the Company, (b) no securities of the Company or any of its
subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of the Company or any of its subsidiaries, and (c) except as
set forth in Section 3.03 of the Company Disclosure Schedule, no options,
warrants or other rights (including registration rights), agreements,
arrangements or commitments of any character to which the Company or any of its
subsidiaries is a party relating to the issued or unissued capital stock or
voting securities of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to grant, issue or sell any shares of the
capital stock or voting securities of the Company or any of its subsidiaries, by
sale or otherwise. There are no obligations, contingent or otherwise, of the
Company or any of its subsidiaries to (i) repurchase, redeem or otherwise
reacquire any shares of Common Stock or the capital stock of any subsidiary of
the Company; or (ii) (other than advances to subsidiaries in the ordinary course
of business or in accordance with the 1996 Capital Plan) provide material funds
to, or make any material investment in (in the form of a loan, capital
contribution or otherwise), or (except as set forth in Section 3.03 of the
Company Disclosure Schedule) provide any guarantee with respect to the
obligations of, any subsidiary of the Company or any other person. None of the
Company or any of its subsidiaries directly or indirectly owns, or has agreed to
purchase or otherwise acquire, the capital stock of, or any interest convertible
into or exchangeable or exercisable for, the capital stock of any corporation,
partnership, joint venture or other business association or entity. Except for
any agreements, arrangements or commitments between the Company and any of its
subsidiaries or between such subsidiaries and bonus plans set forth on the
Company Disclosure Schedule, there are no material agreements, arrangements or
commitments of any character (contingent or otherwise) pursuant to which any
person is or may be entitled to receive any payment based on the revenues or
earnings, or calculated in accordance therewith, of the Company or any of its
subsidiaries. There are no voting trusts, proxies or other material agreements
or understandings to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound with respect to the
voting of any shares of capital stock of the Company or any of its subsidiaries.
As of the date hereof, the only arrangement providing for indebtedness of the
Company or any of its subsidiaries for borrowed money is the Amended and
Restated Loan Agreement, dated as of March 26, 1996, between Fleet National Bank
and the Company. As of the date hereof, the Company and its subsidiaries have no
outstanding indebtedness, and, at the Effective Time, the Company and its
subsidiaries will have no outstanding indebtedness and will have terminated such
loan agreement. Section 3.03(b) of the Company Disclosure Schedule sets forth
the record and, to the best knowledge of the Company, beneficial ownership of
Common Stock with respect to the signatories to the Voting Agreement.
(c) The Company has made available to Parent complete and accurate
copies of the 1992 Stock Plan and the Director Plan and the forms of agreements
related to Options awarded pursuant to the 1992 Stock Plan and the Director
Plan, including all amendments thereto.
SECTION 3.04. AUTHORITY. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby to be
consummated by the Company. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate
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action and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been validly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Parent and Parent Sub, constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
the availability of equitable remedies.
SECTION 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) conflict with or
violate the Articles of Incorporation or By-Laws of the Company or any of its
subsidiaries, (ii) conflict with or violate any Federal, state, local or foreign
law, statute, ordinance, rule, regulation, permit, order, judgment or decree
(collectively, "LAWS") applicable to the Company or any of its subsidiaries or
by which any of their respective properties is bound, or (iii) 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 (other than option agreements and
borrowings disclosed in Section 3.8(h) of the Company Disclosure Schedule) or
cancellation of, or require payment under, or result in the creation of any
Encumbrance on any of the properties or assets of the Company or any of its
subsidiaries pursuant to, or trigger any right of first refusal under, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective properties is bound, except, in the case of clauses (ii)
and (iii), for any thereof that would not have a Company Material Adverse
Effect. The Board of Directors of the Company has taken all actions necessary
under Rhode Island Law, including approving the transactions contemplated by
this Agreement, to ensure that Section 7-5.2-4 of the Rhode Island Business
Combination Act does not, or will not, apply to the transactions contemplated by
this Agreement. To the best of the Company's knowledge, no other state takeover
statute or similar statute or regulation applies or purports to apply to the
Merger, this Agreement, the Voting Agreement or any of the transactions
contemplated by this Agreement or the Voting Agreement.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require the
Company to obtain any consent, approval, authorization or permit of, or to make
any filing with or notification to, any governmental or regulatory authority,
domestic or foreign ("GOVERNMENTAL ENTITY"), except (i) the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), and the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"); (ii) the filing
and recordation of the Articles of Merger as required by Rhode Island Law; and
(iii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent the Company
from performing its obligations under this Agreement and would not have a
Company Material Adverse Effect.
SECTION 3.06. REPORTS; FINANCIAL STATEMENTS. (a) Since December 31, 1995,
(i) the Company has filed all forms, reports, statements, schedules and other
documents required to be filed with (A) the Securities and Exchange Commission
(the "SEC"), including, without limitation, (I) all Annual Reports on Form 10-K,
(II) all Quarterly Reports on Form 10-Q, (III) all Current Reports on Form 8-K,
(IV) all other forms, reports, statements, schedules and other documents
required to be filed, and (V) all amendments and supplements to all such forms,
reports, statements, schedules and other documents (collectively, the "COMPANY
SEC REPORTS"); and (B) any other applicable state securities authorities, and
(ii) the Company and its respective
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subsidiaries have filed all forms, reports, statements, schedules and other
documents required to be filed with any other applicable Federal or state
regulatory authorities, except where the failure to file any such forms,
reports, statements, schedules or other documents would not have a Company
Material Adverse Effect (all such forms, reports, statements, schedules and
other documents in clauses (i) and (ii) of this Section 3.06(a) being referred
to herein, collectively, as the "COMPANY REPORTS"). The Company Reports,
including all Company Reports filed after the date hereof and prior to the
Effective Time, (i) were or will be prepared in all material respects in
accordance with the requirements of applicable Law (including, with respect to
the Company SEC Reports, the Securities Act of 1933, as amended (the "SECURITIES
ACT"), the Exchange Act, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Reports), and (ii) did not at the time they were
filed, or will not at the time they are filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that, to the extent that the foregoing relates to facts or omissions regarding
persons other than the Company and its affiliates, such representation and
warranty is being made to the Company's knowledge.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports filed
prior to the Effective Time (i) have been or will be prepared in accordance with
the published rules and regulations of the SEC and generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
(A) to the extent required by changes in generally accepted accounting
principles and (B) with respect to Company SEC Reports filed prior to the date
hereof, as may be indicated in the notes thereto) and (ii) fairly present or
will fairly present the consolidated financial position of the Company and its
subsidiaries, as the case may be, as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated,
except that (x) any unaudited interim financial statements were or will be
subject to normal and recurring year-end adjustments and (y) any pro forma
financial information contained in such consolidated financial statements is not
necessarily indicative of the consolidated financial position of the Company and
its subsidiaries, as the case may be, as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated.
SECTION 3.07. UNDISCLOSED LIABILITIES. None of the Company or any of its
subsidiaries has any liability or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that is required to be reflected on the
financial statements (or the notes thereto) of the Company in accordance with
generally accepted accounting principles, other than liabilities which would not
have a Company Material Adverse Effect or liabilities (a) reflected or reserved
against in the consolidated balance sheets included in the Company's Form 10-Q
for the quarter ended March 31, 1996, and Form l0-K for the year ended December
31, 1995 (the "BALANCE SHEETS") (or in the notes thereto), (b) with respect to
matters disclosed in the Company Disclosure Schedule (consistent with the
qualifications set forth in the introduction thereto), (c) under this Agreement
or any agreement entered into in connection herewith, or in accordance with
Section 5.02 hereof, (d) with respect to matters addressed in Sections 3.12,
3.16 and 3.18 (which shall be governed solely by the terms of such Sections),
and (e) incurred or arising in the ordinary course of business of the Company or
such subsidiary since March 31, 1996, which would not have a Company Material
Adverse Effect.
SECTION 3.08. MATERIAL CONTRACTS. Section 3.08 of the Company Disclosure
Schedule sets forth a complete and accurate list, as of the date of this
Agreement, of all (a) written employment, severance, termination, consulting (to
the extent any thereof involve annual payments of at least $25,000 or are not
terminable on less than 366 days' notice without material
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penalty) and retirement agreements to which the Company or any of its
subsidiaries is a party, (b) written collective bargaining agreements to which
the Company or any of its subsidiaries is a party, (c) written agreements that
require aggregate future payments by or to the Company or any of its
subsidiaries of more than $100,000 that are not terminable by the Company or any
of its subsidiaries on less than 90 days' notice without material penalty (other
than purchase orders entered into in the ordinary course of business), (d)
written agreements containing covenants limiting the freedom of the Company or
any of its subsidiaries to compete with any person or the freedom of any other
person to compete with the Company or any of its subsidiaries in any line of
business or in any area or territory, (e) license agreements involving annual
payments or receipts in excess of $250,000, (f) indentures, mortgages and notes
or other debt instruments evidencing indebtedness (other than purchase money
indebtedness), (g) material agreements of the Company or any of its subsidiaries
with any shareholder, officer or director of the Company, (h) agreements of the
Company involving payments in excess of $100,000 containing any provisions with
respect to a "change in control" of the Company, (i) agreements under which the
Company or any of its subsidiaries has advanced or loaned any amount in excess
of $25,000 to any of its directors, officers or employees (all of which amounts
the Company will have caused to be repaid prior to the Effective Time) and (j)
leases involving annual payments in excess of $50,000 (collectively, the
"MATERIAL CONTRACTS"). Except as would not have a Company Material Adverse
Effect, (a) the Company and its subsidiaries are not in default under any of the
Material Contracts, and (b) to the Company's knowledge, the other parties
thereto are not in default and the Material Contracts are valid and binding
obligations of the other parties thereto, in accordance with their terms.
SECTION 3.09. PERMITS. Each of the Company and its subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
(collectively, the "COMPANY PERMITS"), that are necessary to own, lease and
operate the properties of the Company and its subsidiaries and to carry on their
business as they or it are or is owned, leased, operated or carried on as of the
date of this Agreement, except, in each case, where the failure to possess such
Company Permits would not have a Company Material Adverse Effect. The Company
Permits are in full force and effect and there is no action, proceeding or
investigation pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits, except, in each case,
where the failure to possess, or the suspension or cancellation of, such Company
Permits would not have a Company Material Adverse Effect.
SECTION 3.10. PROPERTIES. Except as set forth in Section 3.10 of the
Company Disclosure Schedule, each of the Company and its subsidiaries has good,
valid and, in the case of real property, marketable fee simple, title to, or a
valid leasehold interest in, all the material assets and properties that are
reflected on the Balance Sheets (except for assets and properties sold, consumed
or otherwise disposed of by them in the ordinary course of business consistent
with past practice since the dates thereof), and such assets and properties are
free and clear of all Encumbrances, except for (a) liens for taxes and
assessments not yet due and payable or for taxes the validity of which is being
contested in good faith, (b) Encumbrances to secure indebtedness reflected on
the Balance Sheets or indebtedness (including purchase money indebtedness)
incurred in the ordinary course of business and consistent with past practice
after the date thereof, (c) mechanic's, materialmen's and similar Encumbrances
that have arisen in the ordinary course of business and (d) minor imperfections
of title and Encumbrances the existence of which would not have a Company
Material Adverse Effect. All the material buildings, structures, equipment and
other tangible assets of the Company and its subsidiaries (whether owned or
leased) are in normal operating condition (normal wear and tear excepted) and
are fit for use in the ordinary course of business as such business of the
Company is being conducted as of the date of this Agreement.
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SECTION 3.11. INTELLECTUAL PROPERTY. Section 3.11 of the Company
Disclosure Schedule sets forth a complete and accurate list and a brief
description of all patents, patent applications, trademarks, trade names,
service marks and other intellectual property (the "INTELLECTUAL PROPERTY")
owned, used or licensed by or to the Company and pertaining to the business of
the Company as it is being conducted as of the date of this Agreement, which is
all the Intellectual Property necessary to conduct the business of the Company
as it is being conducted as of the date of this Agreement, except for
Intellectual Property, the lack of which would not have a Company Material
Adverse Effect. Except as would not have a Company Material Adverse Effect, to
the Company's knowledge, (i) there are no infringements on any such Intellectual
Property and (ii) the rights of the Company in or to such Intellectual Property
do not conflict with or infringe on the rights of any other person, and the
Company has not received any claim or notice from any person to such effect.
SECTION 3.12. TAXES. (a) Except for such matters as would not have a
Company Material Adverse Effect, (i) the Company and its subsidiaries have
timely filed or will timely file all returns and reports required to be filed
prior to the Effective Time by them with any taxing authority with respect to
Taxes (as hereinafter defined) for any period ending on or before the Effective
Time, (ii) all Taxes that are due prior to the Effective Time have been paid or
will be paid, and adequate reserves have been established in accordance with
GAAP and consistent with past practice for Taxes that are not due prior to the
Effective Time, (iii) as of the date of this Agreement, no deficiency for any
material amount of Tax has been asserted or assessed by a taxing authority
against the Company or its subsidiaries, (iv) there are no liens with respect to
Taxes on or pending against the Company, its subsidiaries or any of their
properties other than liens for Taxes not yet due, (v) no issue has been raised
in any examination, investigation, audit, suit, action claim or proceeding
relating to Taxes which, by application of similar principles to any past or
present period, would result in a material deficiency for Taxes, (vi) no taxing
authority has proposed any adjustment pursuant to Section 481 of the Code, (vii)
no consent under Section 341(f) of the Internal Revenue Code of 1986, as amended
(the "CODE"), has been filed with respect to the Company or any of its
subsidiaries, (viii) neither the Company nor any of its subsidiaries is a party
to any arrangement to which section 280G of the Code applies, (ix) neither the
Company nor any of its subsidiaries was a member of a group which joined in the
filing of a consolidated, combined or unitary Tax Return, other than a group
consisting only of the Company and its subsidiaries, (x) neither the Company nor
any of its subsidiaries is a party to an agreement that obligates it to make any
payment computed by reference to the Taxes, taxable income or taxable loss of
any other person, and (xi) Amtrol Export Sales, Inc. has met all the
requirements for eligibility and made a valid election to be treated as a
foreign sales corporation within the meaning of Section 992 of the Code. As of
the date of this Agreement, there are no pending or, to the best of the
Company's knowledge, threatened tax audits, investigations or claims for or
relating to any liability in respect to Taxes, except as would not have a
Company Material Adverse Effect.
(b) Parent acknowledges that the representations and warranties
contained in this Section 3.12 are the only representations and warranties being
made by the Company with respect to the subject matter of this Section 3.12, no
other representation or warranty by the Company contained in this Agreement
shall apply to any such matters and no other representation or warranty, express
or implied, is being made with respect thereto by the Company.
SECTION 3.13. COMPLIANCE. None of the Company or any of its subsidiaries
is in default or violation of (a) any Law applicable to the Company or any of
its subsidiaries or by which any of their respective properties is bound, (b)
any of the Company Permits, or (c) any note, bond, mortgage, indenture,
contract, agreement, lease, license, franchise or other instrument or
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obligation to which the Company or any of its subsidiaries is a party or by
which any of them or any of their respective properties are bound or affected,
except for any such defaults or violations that would not have a Company
Material Adverse Effect. None of the Company or any of its subsidiaries has
received from any Governmental Entity any written notification with respect to
possible defaults or violations of Laws by the Company or any of its
subsidiaries or revocation or modification of any Company Permit, except, in
each case, for written notices relating to possible defaults or violations or
revocation or modification that would not have a Company Material Adverse Effect
or have been resolved.
SECTION 3.14. CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, or as
specifically contemplated by this Agreement or as set forth on the Company
Disclosure Schedule (consistent with the qualifications set forth in the
introduction thereto), or as would not have a Company Material Adverse Effect,
since December 31, 1995, the Company and its subsidiaries have conducted their
respective businesses only in the ordinary course and in a manner consistent
with past practice and there has not been: (a) any damage, destruction or loss
(not covered by insurance) with respect to any assets of the Company or any of
its subsidiaries or any other change, event or occurrence; (b) any change by the
Company or its subsidiaries in their accounting methods, principles or
practices; (c) except for dividends by a subsidiary of the Company to the
Company or another subsidiary of the Company or repurchases of shares of Common
Stock from terminated employees pursuant to the 1992 Stock Plan, any
declaration, setting aside or payment of any dividends or distributions in
respect of shares of Common Stock or the shares of stock of any subsidiary of
the Company or any redemption, repurchase or other reacquisition of any of the
Company's equity securities or any of the equity securities of any subsidiary of
the Company; (d) any increase in the benefits under, or the establishment or
amendment of, any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including, without limitation, the
granting of stock options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee benefit plan, or any
increase in the compensation payable or to become payable to directors, officers
or employees of the Company or its subsidiaries, except for (i) increases in
base salaries or wages payable or to become payable in the ordinary course of
business and consistent with past practice, or (ii) the automatic grant of
Options to directors under the Director Plan; (e) a Company Material Adverse
Effect; or (f) any revaluation by the Company or any of its subsidiaries of any
material assets, including but not limited to, writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business.
SECTION 3.15. LITIGATION. There is no claim, action, suit, litigation,
proceeding, arbitration or, to the knowledge of the Company, investigation of
any kind, at law or in equity (including actions or proceedings seeking
injunctive relief), pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries or any properties or rights of
the Company or any of its subsidiaries (except for claims, actions, suits,
litigations, proceedings, arbitrations or investigations that would not have a
Company Material Adverse Effect). Neither the Company nor any of its
subsidiaries is 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, or any judgment,
order, writ, injunction, decree or award of any Governmental Entity or
arbitrator, including, without limitation, cease-and-desist or other orders,
except as disclosed in the Company SEC Reports filed prior to the date of this
Agreement and except for matters that would not have a Company Material Adverse
Effect.
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SECTION 3.16. EMPLOYEE BENEFIT PLANS; LABOR MATTERS. (a) Section 3.16(a)
of the Company Disclosure Schedule sets forth a complete and accurate list of
each employee benefit plan, program, arrangement and contract (including,
without limitation, any "EMPLOYEE BENEFIT PLAN", as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
employment agreements, personnel policies or fringe benefit plans, policies,
programs and arrangements, stock bonus, deferred compensation, pension,
severance, bonus, vacation, travel, incentive, and health, disability and other
welfare plans), maintained or contributed to by the Company or any of its
subsidiaries, or with respect to which the Company or any of its subsidiaries
could incur liability under Section 4069, 4212(c) or 4204 of ERISA, whether oral
or written, under which any employee or former employee of, or consultant to,
the Company has any present or future right to benefits or under which the
Company has any present or future liability (the "COMPANY BENEFIT PLANS").
(b) None of the Company or any of its subsidiaries contributes to,
has any material obligation to contribute to or otherwise has any material
liability or potential material liability with respect to (i) any "multiemployer
plan" (as such term is defined in Section 3(37) of ERISA), (ii) any plan of the
type described in Section 4063 and 4064 of ERISA or (iii) any plan that provides
health, life insurance, accident or other "welfare-type" benefits to current or
future retirees or current or future former employees, their spouses or
dependents, other than in accordance with Section 4980B of the Code, or
applicable state benefit continuation law. None of the Company or any of its
subsidiaries has any liability or, to the knowledge of the Company, potential
liability with respect to any employee benefit plan subject to Title IV of ERISA
or Section 412 of the Code that is currently or was formerly maintained by any
other current or former member of the controlled group of corporations, trades
or businesses (within the meaning of Sections 414(b), (c), (m) and (o) of the
Code) of which the Company or any of its subsidiaries is or was a member that
would have a Company Material Adverse Effect.
(c) Each Company Benefit Plan has been maintained, funded and
administered in compliance in all material respects with its terms and
applicable Law, including, without limitation, ERISA and the Code. For each
Company Benefit Plan with respect to which a Form 5500 has been filed, no
material change has occurred with respect to matters covered by the most recent
Form 5500 since the date thereof. No Company Benefit Plan provides for an
increase in benefits on or after the Effective Time and each Company Benefit
Plan may be amended or terminated without obligation or liability (other than
those obligation and liabilities for which specific assets have been set aside
in a trust or other funding vehicle or reserved for on the Balance Sheets). None
of the Company or any of its subsidiaries has engaged in any prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of the
Code) with respect to any Company Benefit Plan that has resulted or could
reasonably be expected to result in any material liability to the Company or any
of its subsidiaries. No Company Benefit Plan that is subject to the funding
requirements of Section 412 of the Code or Section 302 of ERISA has incurred any
"accumulated funding deficiency" as such term is defined in such sections of
ERISA and the Code, whether or not waived. No material liability to the Pension
Benefit Guaranty Corporation ("PBGC") (except for payment of premiums in the
ordinary course) has been or is reasonably expected to be incurred with respect
to any Company Benefit Plan that is subject to Title IV of ERISA; no reportable
event (as such term is defined in Section 4043 of ERISA) has occurred with
respect to any such Company Benefit Plan; and the PBGC has not commenced or
threatened the termination of any such Company Benefit Plan. None of the assets
of the Company or any of its subsidiaries is the subject of any lien arising
under Section 302(f) of ERISA or Section 412(n) of the Code; and none of the
Company or any of its subsidiaries has been required to post any security
pursuant to Section 307 of ERISA or Section 401(a)(29) of the Code.
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(d) Each Company Benefit Plan that is intended to be qualified
under Section 401(a) of the Code, and each trust (if any) forming a part
thereof, has received a favorable determination letter from the Internal Revenue
Service as to the qualification under the Code of such Company Benefit Plan and
the tax-exempt status of such related trust, and, to the knowledge of the
Company, nothing has occurred, whether by action or failure to act, which would
cause the loss of such qualification.
(e) With respect to each Company Benefit Plan that is subject to
the funding requirements of Section 412 of the Code and Section 302 of ERISA,
all material required contributions for all periods ending prior to or as of the
Effective Time (including periods from the first day of the then-current plan
year to the Effective Time) have been or will be made or properly accrued.
(f) With respect to each Company Benefit Plan, the Company has made
available to Parent, complete and accurate copies, to the extent applicable, of
(i) all documents embodying or governing such Company Benefit Plan and any
funding medium for the Company Benefit Plan, (ii) the two most recent annual
reports (Form 5500 series) filed with the Internal Revenue Service (with
attachments), (iii) the two most recent actuarial reports, (iv) the two most
recent financial statements, (v) the most recent IRS determination or approval
letter with respect to such Company Benefit Plan under Section 401(a) or
501(c)(9) of the Code (and pending requests or applications for determinations
or approvals) and (vi) any summary plan description for any Company Benefit
Plans.
(g) The Company and each of its subsidiaries are in compliance with
all applicable Laws relating to the employment of personnel and labor, except
where a failure to be in compliance would not have a Company Material Adverse
Effect.
(h) Except for such exceptions as do not have a Material Adverse
Effect, or as disclosed in Section 3.16(h) of the Company Disclosure Schedule,
(i) there are no controversies pending or, to the knowledge of the Company,
threatened between the Company or any of its subsidiaries and any of their
respective employees and the Company will promptly notify Parent in writing of
any pending or threatened material claims arising between the date hereof and
the Effective Time; (ii) none of the Company or any of its subsidiaries is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any of its subsidiaries, nor,
to the knowledge of the Company, are there any activities or proceedings of any
labor union to organize any such employees; (iii) there are no grievances
outstanding against the Company or any of its subsidiaries under any such
agreement or contract nor, to the Company's knowledge, is there any reasonable
basis for such grievance; (iv) there are no unfair labor practice complaints
pending against the Company or any of its subsidiaries before the National Labor
Relations Board or any current union representation questions involving
employees of the Company or any of its subsidiaries; (v) neither the Company nor
any of its subsidiaries is a party to, or otherwise bound by, any consent decree
with, or citation by, any Governmental Entity relating to employees or
employment practices; (vi) the Company has paid in full to all employees of the
Company and its subsidiaries all wages, salaries, commissions, bonuses, benefits
and other compensation due to such employees or otherwise arising under any
policy, practice, agreement, plan, program, statute or other law; (vii) the
Company and its subsidiaries have not received any request for certification of
bargaining units or any other request for collective bargaining units or any
other request for collective bargaining and is not subject to any other union
organizing activities; and (viii) since December 31, 1993, there has not been
any "plant closing" or "mass layoff" (in each case, as defined in WARN), strike,
slowdown, work
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stoppage or lockout, or, to the knowledge of the Company, threat thereof, by or
with respect to any employees of the Company or any of its subsidiaries.
(i) Parent acknowledges that the representations and warranties
contained in this Section 3.16 are the only representations and warranties being
made by the Company with respect to the subject matter of this Section 3.16, no
other representation or warranty by the Company contained in this Agreement
shall apply to any such matters and no other representation or warranty, express
or implied, is being made with respect thereto by the Company.
SECTION 3.17. INSURANCE. All material insurance policies (the "INSURANCE
POLICIES") with respect to the property, assets, operations and business of the
Company and its subsidiaries are in full force and effect. There are no pending
material claims against the Insurance Policies by the Company or any of its
subsidiaries as to which the insurers have denied material liability.
SECTION 3.18. ENVIRONMENTAL MATTERS. (a) Except as would not have a
Company Material Adverse Effect or as disclosed in Section 3.18 of the Company
Disclosure Schedule, (i) the Company is in compliance with all applicable
Federal, state, local and foreign laws and regulations relating to pollution and
the discharge of materials into the environment ("ENVIRONMENTAL LAWS"), (ii) the
Company holds all the permits, licenses and approvals of governmental
authorities and agencies necessary for the current use, occupancy or operation
of its assets and business under Environmental Laws ("ENVIRONMENTAL PERMITS"),
and (iii) the Company is in compliance with all its Environmental Permits, and
(iv) to the knowledge of the Company, there are no conditions that are
reasonably expected to give rise to liability of the Company under any
Environmental Law.
(b) Except as disclosed in Section 3.18 of the Company Disclosure
Schedule, the Company has not received any written request for information, or
been notified that it is a potentially responsible party, under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), or any similar state, local or foreign law with respect to
any real property owned or leased by it.
(c) Except as disclosed in Section 3.18 of the Company Disclosure
Schedule, the Company has not entered into or agreed to any consent decree or
order and is not subject to any judgment, decree or judicial order relating to
compliance with or the cleanup of regulated substances under any applicable
Environmental Law.
(d) Except as disclosed in Section 3.18 of the Company Disclosure
Schedule, none of the real property owned or leased by the Company is listed or,
to the knowledge of the Company, proposed for listing on the "National
Priorities List" under CERCLA, or on the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the United States
Environmental Protection Agency, as updated through the date of this Agreement,
or any similar state list of sites requiring investigation or cleanup.
(e) Parent acknowledges that the representations and warranties
contained in this Section 3.18 are the only representations and warranties being
made by the Company with respect to the subject matter of this Section 3.18, no
other representation or warranty by the Company contained in this Agreement
shall apply to any such matters and no other representation or warranty, express
or implied, is being made with respect thereto by the Company.
SECTION 3.19. BROKERS AND FEES. Other than Smith Barney Inc. and HSBC
Securities, Inc., no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or
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commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The Company has
previously delivered to Parent true and complete copies of the engagement
letters, and any other written or oral agreements with Smith Barney Inc. and
HSBC Securities, Inc. The aggregate amount of fees (exclusive of any fees or
expenses incurred by the Company in connection with the Financing as defined in
Section 4.07 hereof) payable by the Company with respect to the transactions
contemplated hereby does not exceed $4.5 million.
SECTION 3.20 REQUIRED COMPANY VOTE. The affirmative vote of the holders of
75% of the outstanding shares of Common Stock entitled to vote thereon (not
including shares deemed beneficially owned by a Related Person (as such term is
defined in Section D of Article Sixth of the Company's Articles of
Incorporation)) is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement and the Merger. The
Board of Directors of the Company (at a meeting duly called and held) has
unanimously (i) approved this Agreement and the Voting Agreement, (ii)
determined that the transactions contemplated hereby and thereby are fair to and
in the best interests of the Company's stockholders, (iii) resolved to recommend
this Agreement, the Merger and the other transactions contemplated hereby to
such stockholders for approval and (iv) directed that this Agreement be
submitted to the Company's stockholders. The Company hereby agrees to the
inclusion in the Proxy Statement of the recommendations of the Company's Board
of Directors described in this Section 3.20.
SECTION 3.21. OPINION OF FINANCIAL ADVISOR. The Board of Directors of the
Company has received the opinion of Smith Barney Inc., dated the date of this
Agreement, to the effect that, as of such date, the Per Share Amount to be
received in the Merger by the holders of the Common Stock is fair, from a
financial point of view, to such holders.
SECTION 3.22. AFFILIATE TRANSACTIONS. Except as disclosed in the Company
Disclosure Schedule (consistent with the qualifications set forth in the
introduction thereto), there are no contracts, agreements or arrangements
between the Company or any of its subsidiaries, on the one hand, and any
affiliate of the Company, on the other hand.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PARENT SUB
-------------------------------------------------------
Except as set forth in the disclosure schedule (as qualified by the
introduction thereto) delivered by Parent and Parent Sub to the Company
concurrent with the execution of this Agreement (the "PARENT DISCLOSURE
SCHEDULE"), Parent and Parent Sub hereby jointly and severally represent and
warrant to the Company that:
SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Parent
and Parent Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and 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. The term "PARENT
MATERIAL ADVERSE EFFECT" as used in this Agreement means any change or effect
that, individually or when taken together with all such other changes or
effects, would be materially adverse to the financial condition, business,
operations, earnings or prospects of Parent and its subsidiaries, taken as a
whole.
SECTION 4.02. CERTIFICATE OF INCORPORATION AND BY-LAWS. Parent has
heretofore furnished to the Company a complete and accurate copy of the
Certificate or Articles of
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Incorporation and the By-Laws, as amended or restated to the date of this
Agreement, of each of Parent and Parent Sub.
SECTION 4.03. AUTHORITY. (a) Parent has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby to be
consummated by Parent. The execution and delivery of this Agreement and the
consummation by Parent of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Parent are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been validly executed
and delivered by Parent and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Parent, enforceable against Parent in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
the availability of equitable remedies.
(b) Parent Sub has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby to be consummated by Parent Sub.
The execution and delivery of this Agreement by Parent Sub and the consummation
by Parent Sub of the transactions contemplated hereby have been duly authorized
by all necessary corporate action and no other corporate proceedings on the part
of Parent Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been validly executed and
delivered by Parent Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Parent Sub, enforceable against Parent Sub in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
the availability of equitable remedies. Parent, as the sole stockholder of
Parent Sub, has duly approved and adopted this Agreement in accordance with
applicable Law.
SECTION 4.04. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by Parent and Parent Sub do not, and
the performance of this Agreement by Parent and Parent Sub will not, (i)
conflict with or violate the Certificate or Articles of Incorporation or By-Laws
of Parent, Parent Sub or any of Parent's subsidiaries, (ii) conflict with or
violate any Laws applicable to Parent, Parent Sub or any of Parent's
subsidiaries or by which any of their respective properties is bound, or (iii)
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 require
payment under, or result in the creation of any Encumbrance on any of the
properties or assets of Parent, Parent Sub or any of Parent's subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent,
Parent Sub or any of Parent's subsidiaries is a party or by which Parent, Parent
Sub or any of Parent's subsidiaries or any of their respective properties is
bound, except, in the cases of clauses (i) and (ii), for any thereof that would
not have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and
Parent Sub do not, and the performance of this Agreement by Parent and Parent
Sub will not, require Parent or Parent Sub to obtain any consent, approval,
authorization or permit of, or to make any filing with or notification to, any
Governmental Entity, except (i) for applicable requirements, if any, of state
blue sky or takeover laws, the Exchange Act and the HSR Act and the filing and
recordation of the Articles of Merger as required by Rhode Island Law and
filings in connection with the financing of the Merger and (ii) where the
failure to obtain such consents, approvals,
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authorizations or permits, or to make such filings or notifications, would not
prevent Parent or Parent Sub from performing its obligations under this
Agreement and would not have a Parent Material Adverse Effect.
SECTION 4.05. OWNERSHIP OF PARENT SUB; NO PRIOR ACTIVITIES. Parent Sub was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement. As of the date of this Agreement and the Effective Time, except
for obligations or liabilities incurred in connection with its incorporation or
organization or the transactions contemplated by this Agreement or the financing
thereof and except for this Agreement and any other agreements or arrangements
contemplated by this Agreement or related to the financing of the transactions
contemplated hereby, Parent Sub has not and will not have incurred, directly or
indirectly, through any subsidiary, any obligations or liabilities or engaged in
any business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
SECTION 4.06. VOTE REQUIRED. No vote of the holders of any class or series
of capital stock of Parent is necessary to approve any of the transactions
contemplated hereby. The affirmative vote of the holders of a majority of the
outstanding shares of common stock of Parent Sub is the only vote of the holders
of any class or series of Parent Sub capital stock necessary to approve any of
the transactions contemplated hereby.
SECTION 4.07. FINANCING. (a) Parent or Parent Sub has received and
furnished copies to the Company of commitment letters (the "COMMITMENT LETTER"),
copies of which are included in Section 4.07 of the Parent Disclosure Schedule,
to provide to Parent (or to Parent Sub or another subsidiary of Parent), subject
to the terms and conditions thereof, the amount of the financing set forth in
the Commitment Letter. The commitments are referred to herein as the "FINANCING
COMMITMENT", and the financing to be provided thereunder is referred to herein
as the "FINANCING". The aggregate proceeds of the Financing (along with cash
held by Parent and its subsidiaries and cash held by or available to the Company
and its subsidiaries) will be in an amount sufficient to (i) consummate the
Merger (and make all the payments contemplated by Article II, (ii) pay all
related fees and expenses, and (iii) provide adequate working capital for the
operation of the Company as of the Effective Time.
(b) Parent acknowledges that the financing structure to be employed
by Parent and Parent Sub in connection with the Financing for the transactions
contemplated hereby has been and will continue to be devised by Parent and that
the Company makes no representation or warranty with respect to such financing
structure. As of the date of this Agreement, Parent knows of no facts or
circumstance that are reasonably likely to result in any of the conditions set
forth in the Financing Commitment (or reasonably likely to be set forth in the
definitive documentation therefor) not being satisfied.
SECTION 4.8. BROKERS. No unaffiliated 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 Parent or Parent Sub.
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ARTICLE V
COVENANTS
---------
SECTION 5.01. AFFIRMATIVE COVENANTS OF THE COMPANY. The Company hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Parent,
the Company will and will cause its subsidiaries to (a) operate its business in
the usual and ordinary course consistent with past practices; (b) use its
reasonable efforts to preserve substantially intact its business organization,
maintain its rights and franchises, retain the services of its respective
officers and key employees and maintain its relationships with its respective
significant customers and suppliers; (c) use its reasonable efforts to maintain
and keep its properties and assets in as good repair and condition as at
present, ordinary wear and tear excepted; and (d) use its reasonable efforts to
keep in full force and effect insurance comparable in amount and scope of
coverage to that currently maintained; PROVIDED, HOWEVER, that in the event the
Company deems it necessary to take certain actions that would otherwise be
proscribed by clauses (a)-(d) of this Section 5.01, the Company shall consult
with Parent and Parent shall consider in good faith the Company's request to
take such action and not unreasonably withhold, condition or delay its consent
for such action.
SECTION 5.02. NEGATIVE COVENANTS OF THE COMPANY. Except as expressly
contemplated by this Agreement and except as set forth in Section 5.02 of the
Company Disclosure Schedule, or otherwise consented to in writing by Parent,
from the date hereof until the Effective Time, the Company will not do, and will
not permit any of its subsidiaries to do, any of the following:
(a) (i) increase the periodic compensation or fringe benefit of any
director or officer or employee of the Company or any of its subsidiaries,
except for increases in salary, wages or bonuses payable or to become payable
non-officer employees in the ordinary course of business and consistent with
past practice; (ii) grant any severance or termination pay (other than pursuant
to existing severance arrangements or policies as in effect on the date of this
Agreement and disclosed in Section 5.02(a) of the Company Disclosure Schedule
and "stay" bonuses, to be coordinated with Parent, which do not exceed $200,000
in the aggregate) to, or enter into or amend any employment, consulting or
severance agreement or arrangement with, any director, officer or employee of
the Company or any of its subsidiaries involving an annual payment of more than
$60,000 and not terminable on less than 90 days' notice without penalty (other
than employment, severance or similar agreements entered into with the consent
of Parent, which consent shall not be unreasonably withheld, conditioned or
delayed); or (iii) adopt or amend any employee benefit plan or arrangement,
except as may be required by applicable Law or pursuant to any collective
bargaining agreement between the Company or any of its subsidiaries and their
respective employees;
(b) declare or pay any dividend on, or make any other distribution
in respect of, outstanding shares of capital stock of the Company (other than
regular quarterly dividends not to exceed $.05 per share consistent with past
practice);
(c) (i) redeem, repurchase or otherwise reacquire any shares of its
or any of its subsidiaries' capital stock or any securities or obligations
convertible into or exchangeable for any shares of its or its subsidiaries'
capital stock (other than any such acquisition directly from any wholly owned
subsidiary of the Company in exchange for capital contributions or loans to such
subsidiary, (except in connection with the exercise of outstanding Options
referred to in Section 3.03 in accordance with their terms); (ii) effect any
liquidation, dissolution, merger, consolidation, restructuring, reorganization
or recapitalization of the Company; or (iii) split, combine or
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reclassify any of the Company's capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of, or in
substitution for, shares of its capital stock;
(d) (i) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale (including the grant of any
Encumbrances) of, any shares of any class of its or its subsidiaries' capital
stock (including shares held in treasury), 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 up to 679,223
shares of Common Stock upon the exercise of Options outstanding as of the date
hereof) or (ii) 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;
(e) 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 in the
ordinary course of business and consistent with past practice) in the case of
asset purchases which are material, individually or in the aggregate, to the
Company and its subsidiaries, taken as a whole, or make or commit to make any
capital expenditures other than capital expenditures in the ordinary course of
business consistent with past practice and with the Company's 1996 Capital Plan;
(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 of its assets or any assets of any of its subsidiaries
except for the grant of purchase money security interests and sales in the
ordinary course of business and consistent with past practice or required by
binding agreements set forth in the Company Disclosure Schedule;
(g) propose or adopt any amendments to its Articles of
Incorporation or its By-Laws (other than an amendment to the Company's Articles
of Incorporation to delete Section D of Article Sixth thereof or to amend such
Section D so as to be inapplicable to the approval of this Agreement or the
Merger by the Company's stockholders);
(h) (A) change any of its methods of accounting in effect at March
31, 1996, 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 (except where
the amount of such settlements or controversies, individually or in the
aggregate, does not exceed $500,000), 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 the case of clause (A) or clause (B), as may be
required by Law or generally accepted accounting principles;
(i) incur any obligation for borrowed money other than purchase
money indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except in the ordinary course of business under existing
loan agreements or prepay, before the scheduled maturity thereof, any of its
long-term debt, or guarantee any obligation or indebtedness of another person
(other than a wholly-owned subsidiary of the Company), enter into any "keep
well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect on any
of the foregoing;
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(j) settle or compromise any litigation (whether or not commenced
prior to the date of this Agreement) other than settlements or compromises of
litigation arising in the ordinary course of business where the amount paid
(after giving effect to insurance proceeds actually received) in settlement or
compromise does not exceed $50,000, provided that the aggregate amount paid in
connection with the settlement or compromise of all such litigation matters
shall not exceed $250,000;
(k) pay, discharge or satisfy any claims liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), except for
the payment, discharge or satisfaction, (x) of liabilities or obligations in the
ordinary course of business consistent with past practice or in accordance with
their terms as in effect on the date hereof or (y) claims settled or compromised
to the extent permitted by Section 5.02(j), or waive, release, grant, or
transfer any rights of material value or modify or change in any material
respect any Material Contract, other than in the ordinary course of business
consistent with past practice;
(l) effectuate a "plant closing" or "mass layoff", as those terms
are defined in the Worker Adjustment and Retraining Notification Act of 1988
("WARN"), affecting in whole or in part any site of employment, facility,
operating unit or employee of the Company or any subsidiary, without notifying
Parent in advance and without complying with the notice requirements and other
provisions of WARN;
(m) agree in writing or otherwise to do any of the foregoing; or
(n) initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Competing Transaction (as hereinafter defined), or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the officers, directors or employees
of the Company or any of its subsidiaries or any representative retained by the
Company or any of the Company's subsidiaries to take any such action, and the
Company shall promptly notify Parent of all relevant terms of any such inquiries
and proposals received by the Company or any of its subsidiaries, or by any such
officer, director or representative, relating to any of such matters and if such
inquiry or proposal is in writing, the Company shall deliver or cause to be
delivered to Parent a copy of such inquiry or proposal (which need not disclose
the identity of the person making such inquiry or proposal); PROVIDED, HOWEVER,
nothing contained in this subsection (n) shall prohibit the Board of Directors
of the Company from (i) furnishing information to, or entering into discussions
or negotiations with, any person or entity that makes an unsolicited bona fide
proposal to acquire the Company pursuant to a merger, consolidation, share
exchange, business combination or other similar transaction, if, and only to the
extent that, (A) the Board of Directors of the Company, after consultation with
independent legal counsel, determines in good faith that such action is required
for the Board of Directors of the Company to comply with its fiduciary duties to
stockholders imposed by Rhode Island Law, (B) prior to furnishing such
information to, or entering into discussions or negotiations with, such person
or entity, the Company provides prior written notice (including the terms and
conditions of any proposal) to Parent to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or entity, (C) prior to furnishing such information to such person or entity,
the Company receives from such person or entity an executed confidentiality
agreement with terms no less favorable to the Company than those contained in
the Confidentiality Agreement (as hereinafter defined), and (D) the Company
keeps Parent informed, on a current basis, of the status of any such discussions
or negotiations; or (ii) complying with Rule 14e-2 promulgated under the
Exchange Act with regard to a Competing
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Transaction. For purposes of this Agreement, "COMPETING TRANSACTION" shall mean
any of the following involving the Company or any of its subsidiaries: (a) any
merger, consolidation, share exchange, business combination, recapitalization,
reorganization, liquidation, dissolution or other similar transaction (other
than the transactions contemplated by this Agreement); (b) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 25% or more of the
assets of the Company and its subsidiaries, taken as a whole, in a single
transaction or series of transactions; (c) any tender offer or exchange offer
for 25% or more of the outstanding shares of capital stock of the Company; (d)
any person shall have acquired, after the date hereof, beneficial ownership or
the right to acquire beneficial ownership of, or any "GROUP" (as such term is
defined under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) shall have been formed that beneficially owns or has the
right to acquire beneficial ownership of, 25% or more of the then outstanding
shares of capital stock of the Company; or (e) any public announcement of a
proposal, plan or intention to do any of the foregoing. The Company will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Without limiting the generality of the foregoing, it is
understood that any violation of the restrictions set forth in the first
sentence of this paragraph (n) by any officer, director, employee, counsel,
representative, auditor, financial or other advisor or other agent of the
Company or any subsidiary acting on behalf of the Company shall be deemed to be
a breach of this paragraph (n) by the Company.
SECTION 5.03. ACCESS AND INFORMATION. Subject to confidentiality
agreements to which the Company or any of its subsidiaries is a party, the
Company shall, and shall cause its subsidiaries to (i) afford to Parent and its
officers, directors, employees, accountants, consultants, legal counsel, agents,
lenders (including representatives of any lenders) and other representatives
(collectively, the "PARENT REPRESENTATIVES") full access at reasonable times
upon reasonable prior notice to the officers, employees, agents, advisors,
properties, offices and other facilities of the Company and its subsidiaries and
to the books and records thereof and (ii) furnish promptly to Parent and the
Parent Representatives such information concerning the business, properties,
contracts, records and personnel of the Company and its subsidiaries (including,
without limitation, financial, operating and other data and information) as may
be reasonably requested, from time to time, by Parent.
SECTION 5.04. CONFIDENTIALITY. The parties hereto will comply or will
cause their respective affiliates to comply with all their respective
obligations under the Confidentiality Agreement between the Company and Parent
(the "CONFIDENTIALITY AGREEMENT"). The Company agrees to not use, and to keep
confidential, any information provided to it by Parent or its subsidiaries (and
cause its employees, lenders and advisors to do the same) to the same extent and
under the same covenants as provided in the Confidentiality Agreement with
respect to Parent's treatment of the Company's confidential information.
SECTION 5.05. CERTAIN OBLIGATIONS. Parent will cause the Surviving
Corporation and its subsidiaries to honor in accordance with their terms all
employment, severance, termination, consulting and retirement agreements and
other compensation arrangements disclosed in Section 5.05 of the Company
Disclosure Schedule between the Company and any current or former director,
officer or employee thereof, and to cause the Surviving Corporation to
discharge, at the Effective Time, any obligations arising thereunder by reason
of the Merger.
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ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
SECTION 6.01. STOCKHOLDER APPROVAL. The Company shall, promptly after the
date of this Agreement and in consultation with Parent, take all action
necessary in accordance with Rhode Island Law and its Articles of Incorporation
and By-Laws to convene a meeting of the Company's stockholders (the "COMPANY
STOCKHOLDERS MEETING"), to approve this Agreement and the Merger. The Company
shall use its reasonable best efforts to solicit from stockholders of the
Company proxies in favor of the approval of this Agreement and the Merger
(including, without limitation, hiring a proxy solicitor).
SECTION 6.02. PROXY STATEMENT. As promptly as practicable after the
execution of this Agreement, the Company shall prepare and file with the SEC a
proxy statement in connection with the matters to be considered at the Company
Stockholders Meeting (the "COMPANY PROXY STATEMENT"). The Company shall use its
reasonable best efforts to cause the Company Proxy Statement to be "cleared" by
the SEC for mailing to the stockholders of the Company as promptly as
practicable and shall mail the Company Proxy Statement to its stockholders as
promptly as practicable thereafter. Parent shall furnish all information
concerning it and the holders of its capital stock as the Company may reasonably
request in connection with such actions. The Company Proxy Statement shall
include the recommendation of the Company's Board of Directors in favor of
approval of this Agreement and the Merger and the opinion referred to in Section
3.21.
(b) The information supplied by Parent in writing specifically for
inclusion in the Company Proxy Statement shall not, at the date the Company
Proxy Statement (or any supplement thereto) is first mailed to stockholders, and
at the time of the Company Stockholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. If at any time prior to
the Company Stockholders Meeting any event or circumstance relating to Parent or
any of its affiliates, or its or their respective officers or directors, should
be discovered by Parent that should be set forth in a supplement to the Company
Proxy Statement, Parent shall promptly inform the Company.
(c) All information contained in the Company Proxy Statement (other
than information provided by Parent for inclusion therein) shall not, at the
date the Company Proxy Statement (or any supplement thereto) is first mailed to
stockholders, and at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading. If at
any time prior to the Company Stockholders Meeting any event or circumstance
relating to the Company or any of its affiliates, or to its or their respective
officers or directors, should be discovered by the Company that should be set
forth in a supplement to the Company Proxy Statement, the Company shall promptly
inform Parent. 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 and the rules and regulations thereunder. All filings with the
SEC and any amendment thereto, and all mailings to the Company's stockholders in
connection with the Merger, including the Proxy Statement, shall be subject to
the prior review and comment of Parent and, in the case of information regarding
the Parent and the Financing, the prior review,
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comment, and approval of Parent, which shall not be unreasonably withheld or
delayed. Parent agrees to review and comment on all such materials promptly.
SECTION 6.03. OTHER APPROPRIATE ACTION; CONSENTS; FILINGS. (a) The Company
and Parent shall each use their 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, (ii) obtain
any consents or approvals with respect to the Merger the absence of which would
result in a Company Material Adverse Effect (it being understood that obtaining
any thereof that are referred to in Section 7.01(a) shall be a condition to
Parent's obligation to consummate the Merger), make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement
and the Merger required under (A) the Exchange Act and the rules and regulations
thereunder, and any other applicable federal or state securities laws, (B) the
HSR Act, and (C) any other applicable Law; PROVIDED that Parent and the Company
shall cooperate with each other in connection with the foregoing, including
providing copies of all such documents filed in connection with such filings to
the nonfiling party and its advisors prior to filing and, if requested, to
accept all reasonable additions, deletions or changes suggested in connection
therewith. The Company and Parent shall furnish 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
Company Proxy Statement) in connection with the transactions contemplated by
this Agreement.
(b) Each of the Company and Parent agree to cooperate and use their
reasonable best efforts to contest and resist any action, including legislative,
administrative or judicial action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) (an "ORDER") that is in effect and that restricts,
prevents or prohibits the consummation of the Merger or any other transactions
contemplated by this Agreement, including, without limitation, by pursuing any
necessary administrative or judicial appeal or legislative action.
(c) The Company agrees to provide, and will cause its subsidiaries
and its and their respective officers and employees to provide, upon reasonable
advance notice, all reasonable cooperation in connection with the arrangement of
any financing to be consummated contemporaneous with or at or after the
Effective Time in respect of the transactions contemplated by this Agreement,
including without limitation, the preparation of offering memoranda, private
placement memoranda or other similar documents, participation in meetings, due
diligence sessions and road shows (consistent with such individuals'
responsibilities for the ongoing operations of the Company), the execution and
delivery, with effectiveness conditioned upon consummation of the Merger, of any
pledge and security documents, other definitive financing documents, or other
requested certificates, or documents as reasonably may be requested by Parent.
In addition, in connection with the obtaining of any such financing, the Company
agrees to request opinions of the Company's legal counsel and "comfort letters"
of the Company's accountants reasonably required in connection with such
Financing and at the request of Parent, to call for prepayment or redemption, or
to prepay, redeem and/or renegotiate, as the case may be, any then existing
indebtedness of the Company; provided that no such prepayment or redemption
shall themselves actually be made unless contemporaneously with or after the
Effective Time.
(d) At the written request of Parent, the Company agrees to obtain
Phase I Environmental Site Assessments prepared by GaiaTech Inc. (the
"CONSULTANTS") for the properties owned by the Company which are listed in
Section 6.03 of the Company Disclosure Schedule (the
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"ENVIRONMENTAL REPORTS"), to provide, within 45 days of such request, copies of
any Environmental Reports to Parent and any of the Parent's and Parent's Sub's
lenders and to legal counsel for such lenders, together with a letter from the
Consultants which authorizes such lender to rely upon such Environmental Reports
as if the same had been prepared for such lender, and to authorize the
Consultants to respond to inquiries from such lender (including representatives
of such lender) and discuss with them the nature of the Consultants' findings
both during the Consultants' investigation of the properties and preparation of
the Environmental Reports and following delivery of the final Environmental
Reports, provided that such lenders advise legal counsel of the Company of any
such inquiries or discussions and invites such legal counsel to participate in
any such discussions.
SECTION 6.04. PUBLIC ANNOUNCEMENTS. Unless otherwise required by
applicable Law or stock exchange or NASDAQ requirements, Parent and the Company
shall consult with each other before issuing, and provide each other the
opportunity to review and comment upon, 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 prior to such consultation. The
parties agree that the initial press release or releases to be issued with
respect to the transactions contemplated by this Agreement shall be mutually
agreed upon prior to the issuance thereof.
SECTION 6.05. INDEMNIFICATION. (a) The Articles of Incorporation and
By-Laws of the Surviving Corporation shall contain the provisions with respect
to indemnification set forth in the Articles of Incorporation and By-Laws of the
Company on the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of six years after the Effective
Time in any manner that would adversely affect the rights thereunder of persons
who at any time prior to the Effective Time were identified as prospective
indemnitees under the Articles of Incorporation or By-laws of the Company in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by Law; provided that, nothing
in this Agreement shall prohibit the Surviving Corporation from reincorporating
in another jurisdiction (by way of merger or otherwise) so long as its articles
of incorporation and by-laws provide for indemnification of equal or greater
scope.
The Surviving Corporation will not permit the provisions with respect to
indemnification set forth in the Articles of Incorporation and By-laws of any of
the Company's subsidiaries on the date of this Agreement to be amended, repealed
or otherwise modified for a period of six years after the Effective Time in any
manner that would adversely affect the rights thereunder of persons who at any
time prior to the Effective Time were identified as prospective indemnitees
under any such Articles of Incorporation or By-laws in respect of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement), unless such
modification is required by Law.
(b) The Company represents and warrants that, as of the date of this
Agreement, there is no claim, action, proceeding or investigation (a "CLAIM")
pending or, or to its knowledge, threatened which could cause any prospective
indemnitees referred to in Section 6.05(a) ("INDEMNIFIED PARTIES") to be
indemnified pursuant to the Articles of Incorporation or Bylaws of the Company
(or the Surviving Corporation) or its subsidiaries.
(c) 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
the Company's regularly engaged independent legal counsel as of the date of this
Agreement, or other independent legal counsel satisfactory to them provided
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that such other counsel shall be reasonably acceptable to the Surviving
Corporation, (ii) the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received and (iii) the Surviving Corporation will use its
reasonable efforts to assist in the defense of any such matter, provided that
the Surviving Corporation shall not be liable for any settlement of any Claim
effected without its prior written consent, which consent shall not be
unreasonably withheld. Any Indemnified Party wishing to claim indemnification
under this Section 6.05, upon learning of any such Claim, shall notify the
Surviving Corporation (although the failure so to notify the Surviving
Corporation shall not relieve the Surviving Corporation from any liability which
the Surviving Corporation may have under this Section 6.05, except to the extent
such failure prejudices the Surviving Corporation), and shall deliver to the
Surviving Corporation the undertaking contemplated by Section 7.1-1.1-4.1(f) of
Rhode Island Law. The Indemnified Parties as a group may retain one law firm to
represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more of such Indemnified Parties, in
which event, an additional counsel as may be required may be retained by such
Indemnified Parties.
(d) The Surviving Corporation shall maintain in effect for not less
than five years after the Effective Time (except to the extent not generally
available in the market) the current policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by the Company
with respect to matters occurring prior to the Effective Time; PROVIDED,
HOWEVER, that (i) the Surviving Corporation may substitute therefor policies of
substantially the same coverage containing terms and conditions that are
substantially the same for the Indemnified Parties to the extent reasonably
available, (ii) the Surviving Corporation shall not be required to pay an annual
premium for such insurance in excess of 200% of the last annual premium paid
prior to the date of this Agreement, but in such case shall purchase as much
coverage as possible for such amount and (iii) such policy may in the sole
discretion of the Surviving Corporation be one or more "tail" policies for all
or any portion of the full five year period. The amount of the last annual
premium for such policies is set forth in Section 6.05 of the Company Disclosure
Schedule.
(e) This Section 6.05 is intended to be for the benefit of, and
shall be enforceable by, the Indemnified Parties referred to herein, their heirs
and personal representatives and shall be binding on Parent and Parent Sub and
the Surviving Corporation and their respective successors and assigns.
SECTION 6.06. OBLIGATIONS OF PARENT SUB. Parent shall take all action
necessary to cause Parent Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
SECTION 6.07. INVESTIGATION. Parent acknowledges and agrees that it (a)
has made its own inquiry and investigation into, and based thereon has formed an
independent judgment concerning, the Company, (b) has been furnished with or
given adequate access to such information about the Company as it has requested,
and (c) it will not assert any claim against any of the Company's officers,
directors, employees, agents, stockholders, affiliates, advisors or other
representatives, or hold any of such persons liable, for any inaccuracies,
misstatements or omissions with respect to information furnished by the Company
or such persons concerning the Company. Parent acknowledges and agrees that none
of the Company's stockholders, officers, directors, employees, agents,
affiliates, advisors or other representatives have made, or are making, any
representations or warranties with respect to the Company, this Agreement, or
any of the transactions contemplated hereby.
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SECTION 6.08. VOTING AGREEMENT. The Company agrees not to take any action,
and shall direct its directors, officers, employees, agents and representatives
(including its legal counsel) not to take any action which would permit or
facilitate a transfer of record ownership of shares of Common Stock held by the
stockholder parties to the Voting Agreement in violation of the provisions
thereof.
ARTICLE VII
CLOSING CONDITIONS
------------------
SECTION 7.01. CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS
AGREEMENT. The respective obligations of each party to effect the Merger 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) ANTITRUST. The applicable waiting period under the HSR Act
shall have expired or been terminated.
(b) LITIGATION, ETC. No Governmental Entity or Federal or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) that
then remains in effect and that has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
(c) STOCKHOLDER APPROVAL. The holders of a majority of the
outstanding shares of Common Stock shall have approved this Agreement in
accordance with Rhode Island Law and the rules and regulations of NASDAQ, and
either (i) the holders of at least 75% of the outstanding shares of Common Stock
entitled to vote thereon (not including shares deemed beneficially owned by a
Related Person (as such term is defined in Section D of Article Sixth of the
Company's Articles of Incorporation)) shall have authorized or approved the
transaction contemplated by this Agreement in accordance with Section D of
Article Sixth of the Company's Articles of Incorporation or (ii) the holders of
at least 75% of the outstanding shares of Common Stock entitled to vote thereon
shall have approved an amendment to the Company's Articles of Incorporation
which makes Section D of Article Sixth thereof inapplicable to the approval by
the Company's stockholders of this Agreement and the Merger and subsequent to
the filing of such amendment to the Articles of Incorporation, the holders of a
majority of the outstanding shares of Common Stock shall have approved this
Agreement in accordance with Rhode Island Law.
SECTION 7.02. ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT. The
obligation of Parent to effect the Merger is also subject to the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company contained in this Agreement (i) in the case of any
thereof that are expressly qualified by any materiality qualification, shall be
true and correct, subject to such materiality qualification, and (ii) in the
case of all other representations and warranties, shall be true and correct in
all material respects, in each case as of the Effective Time as though made on
and as of the Effective Time, and except that those representations and
warranties that address matters only as of a particular date shall remain true
and correct, subject to such materiality
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qualifications or in all material respects, as the case may be, as of such date.
Parent shall have received a certificate of the Chief Financial Officer of the
Company to such 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. Parent shall have received a certificate of the Chief Financial
Officer of the Company to that effect.
(c) CONSENTS AND APPROVALS. All consents, approvals and
authorizations, the failure to obtain which, individually or in the aggregate,
could reasonably be expected to have a Company Material Adverse Effect, and all
consents, approvals and authorizations.
(d) NO MATERIAL ADVERSE CHANGE IN MARKETS. There shall not have
occurred (i) a decline of at least 20% in the Dow Jones Average of Industrial
Stocks measured from the date of this Agreement to the last reported date
immediately preceding the day of the Effective Time, or (ii) an increase of at
least 200 basis points in the yield-to-maturity of the 10 year U.S. Treasury
Security based on Treasury Market Data provided by Cantor Fitzgerald, measured
from the date of this Agreement to the last date immediately preceding the day
of the Effective Time.
(e) LEGAL OPINION. Parent shall have received an unqualified
opinion of Hinckley, Allen & Snyder, counsel to the Company, dated as of the
Closing, that the Agreement and the Merger have been duly and validly approved
by the stockholders of the Company in accordance with Rhode Island Law and the
Company's Articles of Incorporation.
SECTION 7.03. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is also subject to the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Parent and Parent Sub contained in this Agreement (i) in the case
of any thereof that are expressly qualified by any materiality qualification,
shall be true and correct, subject to such materiality qualification, and (ii)
in the case of all other representations and warranties, shall be true and
correct in all material respects, in each case as of the Effective Time as
though made on and as of the Effective Time, and except that those
representations and warranties that address matters only as of a particular date
shall remain true and correct, subject to such materiality qualifications or in
all material respects, as the case may be, as of such date. The Company shall
have received a certificate of the Chief Financial Officer of Parent to such
effect.
(b) AGREEMENTS AND COVENANTS. Parent 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. The Company shall have received a certificate of the Chief
Financial Officer of Parent to that effect.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
SECTION 8.01. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time:
(a) by mutual consent of Parent and the Company;
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(b) by Parent, upon a material breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have become
untrue in any material respect, in either case such that the conditions set
forth in Section 7.02(a) or Section 7.02(b) would not be satisfied (a
"TERMINATING COMPANY BREACH"), PROVIDED that, if such Terminating Company Breach
is not willful and is curable by the Company through the exercise of its
reasonable efforts and for so long as the Company continues to exercise such
reasonable efforts, Parent may not terminate this Agreement under this Section
8.01(b), until the Company has been given 30 days to cure such breach after
receipt of notice thereof;
(c) by the Company, upon a material breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have become
untrue in any material respect, in either case such that the conditions set
forth in Section 7.03(a) or Section 7.03(b) would not be satisfied (a
"TERMINATING PARENT BREACH"), PROVIDED that, if such Terminating Parent Breach
is not willful and is curable by Parent through the exercise of its reasonable
efforts and for so long as Parent continues to exercise such reasonable efforts,
the Company may not terminate this Agreement under this Section 8.01(c), until
Parent has been given 30 days to cure such breach after receipt of notice
thereof;
(d) by either Parent or the Company, if there shall be any Order
that is final and nonappealable preventing the consummation of the Merger,
except if the party relying on such Order has not complied with its obligations
under Section 6.03;
(e) by Parent or the Company, if the Merger shall not have been
consummated before February 28, 1997, except if the party seeking to terminate
the Agreement shall be in breach hereof;
(f) by Parent or the Company, if the approval of this Agreement and
the Merger by the stockholders of the Company shall fail to receive the
requisite vote by the stockholders of the Company at the Company Stockholders
Meeting;
(g) by Parent, if (i) the Board of Directors of the Company
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Parent or Parent Sub or shall have resolved to do
any of the foregoing or (ii) the Company fails to include such recommendation in
the Company Proxy Statement, or (iii) the Board of Directors of the Company
shall have recommended to the stockholders of the Company any Competing
Transaction or resolved to do so;
(h) by Parent, if (i) the Company shall have exercised a right
specified in the first proviso to subsection 5.02(n) with respect to any
Competing Transaction and shall, directly or through agents or representatives,
continue discussions with any third party concerning such Competing Transaction
for more than 20 business days after the date of receipt of such Competing
Transaction; or (ii) (1) a Competing Transaction that is publicly disclosed
shall have been commenced, publicly proposed or communicated to the Company
which contains a proposal as to price (without regard to the specificity of such
price proposal) as to which the Company is legally required to respond under
Rule 14e-2 promulgated under the Exchange Act and (2) the Company shall not have
rejected such proposal within 20 business days of its receipt or the date its
existence first becomes publicly disclosed, if sooner; or
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29
(i) by the Company, if the Board of Directors of the Company shall
have recommended to the stockholders of the Company any Competing Transaction or
resolved to do so pursuant to Section 5.02(n); PROVIDED that any termination of
this Agreement by the Company pursuant to this Section 8.01(i) shall not be
effective until the close of business on the second full business day after
notice thereof to Parent.
The right of any party hereto to terminate this Agreement pursuant to this
Section 8.01 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
SECTION 8.02. EFFECT OF TERMINATION. Except as provided in Section 8.05 or
Section 9.01, in the event of the termination of this Agreement pursuant to
Section 8.01, this Agreement shall forthwith become void, there shall be no
liability on the part of Parent, Parent Sub or the Company or any of their
respective officers or directors to the other and all rights and obligations of
any party hereto shall cease, except that nothing herein shall relieve any party
for any breach of this Agreement.
SECTION 8.03. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.04. WAIVER. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
SECTION 8.05. EXPENSES. (a) Except as otherwise expressly provided
herein, all expenses incurred by the parties hereto shall be borne solely by
the party that has incurred such expenses.
(b) If this Agreement shall have been terminated pursuant to
Section 8.01(g), 8.01(h) or 8.01(i) and not later than the date which is twelve
(12) months after such termination a Competing Transaction shall have been
consummated, the Company shall pay Parent (or its designee) within one business
day of the later of the consummation of such a Competing Transaction or such
termination, a fee of $6.5 million in cash in same day funds.
(c) (i) If this Agreement shall have been terminated pursuant to
Section 8.01(f) and (ii) either of the following shall have occurred prior to
the Company Stockholders Meeting held to approve the Merger: (A) any Person
(including the Company or any of its subsidiaries or affiliates) or "group" (as
referred to in Section 13(d)(3) of the Exchange Act) other than Parent or any of
its affiliates (collectively, "ACQUIRING PERSONS") shall have become the
beneficial owner of more than 20% of the outstanding shares of Common Stock
(other than with respect to Persons beneficially owning more than 20% as of the
date hereof, in which case, if such Person acquires beneficial ownership of any
additional shares comprising an aggregate of more than 1% of the outstanding
shares of Common Stock); or (B) any Acquiring Person (other than Parent or any
of its affiliates) shall have made, or proposed, communicated or disclosed in a
manner which is or
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otherwise becomes public (including being known by stockholders of the Company
owning of record or beneficially in the aggregate 5% or more of the outstanding
shares of Common Stock) a bona fide intention to make a proposal for a Competing
Transaction or shall make such a proposal, AND (iii) not later than the date
which is 12 months after the date this Agreement is terminated, any Acquiring
Person (whether or not such Acquiring Person is the same Acquiring Person
referred to in clause (ii)) has consummated any Competing Transaction in which
the Transaction Value (as hereinafter defined) of such Competing Transaction
(the "AGGREGATE COMPETING CONSIDERATION") is greater than the aggregate amount
of the Merger Consideration payable hereunder to holders of the Common Stock
(the "AGGREGATE MERGER CONSIDERATION"), then the Company shall within one
business day after the later of the date of such termination or an event
specified in clause (iii) shall have occurred (and, if applicable, within one
business day after the date or dates of any Contingent Payments), pay Parent (or
its designee) a fee in cash equal to the lesser of (x) the amount by which the
Aggregate Competing Consideration exceeds the Aggregate Merger Consideration or
(y) $6.5 million, which amount shall be payable in same day funds. For the
purposes of this Section 8.05(c), "TRANSACTION VALUE" shall mean (i) in the case
of the sale, exchange or purchase of the Company's equity securities, the total
consideration paid for such securities (including amounts paid to holders of
options, warrants and convertible securities), and (ii) in the case of a sale or
disposition by the Company of assets, the total consideration paid for such
assets, plus the net value of any current assets not sold by the Company.
Transaction Value shall include amounts paid in cash, notes, securities or other
property. If the consideration in connection with the Competing Transaction may
be increased by payments related to future events ("CONTINGENT PAYMENTS"), the
portion of the fee due to Parent relating to such Contingent Payments will be
calculated and payable if and when such Contingent Payments are made. For
purposes of computing any fees payable to Parent hereunder, non-cash
consideration shall be valued as follows: (x) publicly traded securities shall
be valued at the average of their closing prices (as reported in the Eastern
Edition of THE WALL STREET JOURNAL) for the five trading days prior to the
closing of the Competing Transaction and (y) any other non-cash consideration
shall be valued at the fair market value thereof as determined in good faith by
the Company and its financial advisor. Only one fee in the maximum aggregate of
$6.5 million shall be payable pursuant to this Section 8.05.
(d) In addition to the other provisions of this Section 8.05, in the
event a fee is or becomes payable pursuant to Section 8.05(b) or (c) hereof, the
Company agrees promptly, but in no event later than two business days following
written notice thereof, together with related bills or receipts, to reimburse
Parent (or its designee) and its affiliates for all reasonable out-of-pocket
costs, fees and disbursements of counsel and the expenses of litigation,
incurred in connection with collecting such fee, as a result of any breach by
the Company of its obligations under this Section 8.05.
A. (e) Notwithstanding any other provision hereof, in the event the
Company obtains the Environmental Reports referred to in Section 6.03(d) and
this Agreement is terminated for any reason, Parent agrees promptly, but in no
even later than two business days following written notice thereof, together
with related bills or receipts, to reimburse the Company for the fees and
expenses of the Consultants incurred by the Company in connection with the
preparation of the Environmental Reports.
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ARTICLE IX
GENERAL PROVISIONS
------------------
SECTION 9.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) Except as set forth in Section 9.01(b), the representations, warranties and
agreements of each party hereto shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any other party
hereto, any person controlling any such party or any of their officers or
directors, whether prior to or after the execution of this Agreement.
(b) The representations, warranties and agreements in this Agreement
(and in any certificate delivered in connection with the Closing) shall
terminate at the Effective Time or upon the termination of this Agreement
pursuant to Article VIII, except that the agreements set forth in Articles I and
II and Sections 5.05, 6.05, 6.06 and 6.07 shall survive the Effective Time and
those set forth in Sections 5.04, 6.07, 8.02, 8.05 and Article IX hereof shall
survive termination.
SECTION 9.02. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, 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 sent by electronic transmission to the telecopier number
specified below:
(a) If to Parent or Parent Sub:
c/o The Cypress Group L.L.C.
65 East 55th Street, 9th Floor
New York, NY 10022
Attn: David P. Spalding
Telecopier: (212) 705-0199
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: David Sorkin, Esq.
Telecopier: (212) 455-2502
(b) If to the Company:
AMTROL Inc.
1400 Division Road
West Warwick, RI 02893
Attention: Stephen J. Carlotti
Vice Chairman
Telecopier: (401) 884-7816
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with copies to:
Hinckley, Allen & Snyder
1500 Fleet Center
Providence, RI 02903
Attention: Margaret D. Farrell, Esq.
Telecopier: (401) 277-9600
SECTION 9.03. CERTAIN DEFINITIONS. For purposes of this Agreement,
the term:
(a) "AFFILIATE" means 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;
(b) "BUSINESS DAY" means any day other than a day on which banks in
the City of New York are authorized or obligated to be closed;
(c) "CONTROL" (including the terms "CONTROLLED", "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;
(d) "KNOWLEDGE" or "KNOWN" means, with respect to any matter in
question, if an executive officer of the Company or Parent, as the case may be,
has actual knowledge of such matter;
(e) "PERSON" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Exchange Act);
(f) "SIGNIFICANT SUBSIDIARY" or "SIGNIFICANT SUBSIDIARIES" means any
subsidiary of the Company that would constitute a Significant Subsidiary of such
party within the meaning of Rule 1-02 of Regulation S-X of the SEC;
(g) "SUBSIDIARY" or "SUBSIDIARIES" of the Company, Parent, the
Surviving Corporation or any other person, means any corporation, partnership,
joint venture or other legal entity of which the Company, Parent, the Surviving
Corporation or such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, 50% or more
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity; and
(h) "TAX" or "TAXES" shall mean any and all taxes, charges, fees,
levies, payable to any federal, state, local or foreign taxing authority or
agency, including, without limitation, (i) income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, AD VALOREM, value added,
sales, use, real or personal property, payroll, withholding, employment, social
security, workers compensation, unemployment compensation, utility, severance,
excise, stamp, and transfer and gains taxes, (ii) customs duties, imposts,
charges, levies or other similar assessments of any kind, and (iii) interest,
penalties and additions to tax imposed with respect thereto.
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SECTION 9.04. 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.
SECTION 9.05. SEVERABILITY. If any term or other provision of this
Agreement is 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 hereto
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 the transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 9.06. ENTIRE AGREEMENT. This Agreement (together with the Exhibits
hereto), and the Confidentiality Agreement constitute the entire agreement of
the parties and supersede all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof.
SECTION 9.07. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 9.08. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied (other than the provisions of Sections 6.05 and
6.07), 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.
SECTION 9.09. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 9.10. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
Rhode Island, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law, and each party hereto hereby submits
to the exclusive jurisdiction of the Rhode Island courts sitting in chancery for
the resolution of all disputes under this Agreement.
SECTION 9.11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, Parent, Parent Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
A.I. HOLDINGS, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
A.I. ACQUISITION, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
AMTROL Inc.
By:_________________________________
Name:_______________________________
Title:______________________________
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EXHIBIT A TO MERGER AGREEMENT
VOTING AGREEMENT
This Agreement dated as of August 28, 1996 is by and between Amtrol Inc.
(the "Company"), a Rhode Island corporation, and the other parties signatory
hereto (each a "Stockholder").
RECITALS
The Company's Board of Directors (the "Board") determined in 1995 that it
was in the best interest of the Company and its stockholders to explore
strategic options, including a possible sale of the Company.
To assist in this process, the Company retained investment bankers and
other advisors and conducted an extensive and lengthy process of soliciting and
evaluating proposals from numerous parties. This process has now resulted in the
Company obtaining from a small number of qualified bidders (the "Bidders")
specific proposals to acquire the Company, copies of which have been provided by
the Company to the Stockholders.
Following further negotiations, the Company expects to enter into a
definitive agreement (the "Merger Agreement") with the Bidder determined by the
Board, in the exercise of the fiduciary duty of the Board to the Company's
stockholders, following consultation with the Board's financial and other
advisors, to have made the proposal which is in the best interest of the Company
and its stockholders.
In response to requests from Bidders, the Company has requested the
Stockholders to enter into this Agreement. The Company has informed the
Stockholders that, without this Agreement, one or more of such Bidders will
refuse to enter into a Merger Agreement. In this regard, the Company believes
that the existence of this Agreement will increase the consideration which all
stockholders of the Company will receive under the Merger Agreement.
The Stockholders have considered the Company's request in light of the
process engaged in by the Company to date in seeking such proposals, the
Company's belief that by entering into this Agreement the Stockholders may
increase both the willingness of the Bidders to proceed and the amount of
consideration ultimately to be paid, and, in particular, where applicable, such
Stockholder's own fiduciary obligations, and are willing to agree with the
Company as follows. Each Stockholder acknowledges that such Stockholder is
entering into this Agreement in part for the benefit of the Bidder with whom the
Company reaches a Merger Agreement.
AGREEMENT
The parties therefore agree as follows:
1. STOCKHOLDER REPRESENTATIONS. Each Stockholder (severally and not
jointly) represents and warrants to the Company as follows:
a. Stockholder is the record holder of the number of shares of
the Company's Common Stock set forth opposite Stockholder's
name on Exhibit A
<PAGE> 37
attached hereto (the Existing Shares", and together with any
shares of the Company's Common Stock acquired by Stockholder
after the date hereof and prior to the termination hereof,
whether upon exercise of options, conversion of convertible
securities, purchase, exchange or otherwise, the "Shares").
b. On the date hereof, the Existing Shares constitute all of
the shares of the Company's Common Stock owned of record by
Stockholder.
c. Stockholder has sole voting power with respect to the matters
set forth in Section 2 hereof with respect to all of such
Stockholder's Existing Shares and sole power to dispose of all
such Existing Shares.
d. Stockholder has the legal capacity, power and authority to
enter into and perform all of Stockholder's obligations
under this Agreement. The execution, delivery and
performance of this Agreement by Stockholder will not
violate any other agreement to which Stockholder is a party
or by which Stockholder is bound. In the case of any
Stockholder which is a trust, there is no beneficiary of
such trust and no holder of any voting trust certificate or
similar instrument in such trust whose consent is required
for the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
2. AGREEMENT TO VOTE. Each Stockholder agrees to vote all of such
Stockholder's Existing Shares and any other Shares which Stockholder has the
power to vote in regard to any and all of the following matters as
recommended by the Board:
a. The Merger Agreement itself and all transactions
contemplated thereby; and
b. Any Competing Transaction (as such term is defined in the form
of Merger Agreement) or other action which is intended to or
could reasonably be expected to have a material effect on the
transactions contemplated by the Merger Agreement;
PROVIDED, HOWEVER, that no Stockholder shall be obligated to vote in favor of
any proposal that would modify the provisions of Section D of Article Sixth of
the Company's Articles of Incorporation except to the extent necessary to make
such provisions inapplicable to the approval by the Company's stockholders of
the Merger Agreement (as approved by such Stockholder pursuant to Section 6
hereof) and the Merger as defined therein. No Stockholder shall enter into any
agreement or understanding with any person or entity to vote or give
instructions in any manner inconsistent with the provisions of this section.
3. NO SOLICITATION. No Stockholder shall, directly or indirectly
(including through advisors or other intermediaries), solicit (including by way
of furnishing information) or respond to any inquiry or proposal by any person
or entity with respect to the Company that constitutes or could reasonably be
expected to lead to a Competing Transaction. If any Stockholder receives any
such inquiry or proposal, then such Stockholder shall promptly inform the
Company of the terms and conditions, if any, of such inquiry or proposal and the
identity of the person making it. Each Stockholder will immediately cease and
cause to be terminated all existing activities, discussions or negotiations (if
any) with any party conducted heretofore with respect to any of the
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<PAGE> 38
foregoing.
4. RESTRICTION ON TRANSFER. No Stockholder shall, directly or
indirectly:
a. Except pursuant to the terms of this Agreement, offer for
sale, sell, transfer, tender, pledge, encumber, assign or
otherwise dispose of, enforce or permit the execution of
the provisions of any redemption agreement with the Company
or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for
sale, transfer, tender, pledge, encumbrance, assignment or
other disposition of, any or all of such Stockholder's
Shares or any interest therein, except pursuant to any such
transfer in which the transferee becomes a signatory to
this Agreement and any Shares transferred to such
transferee continue to be bound by the provisions hereof
(without limiting the generality of the foregoing, no
Stockholder shall (i) exercise any right which such
Stockholder may have to demand or request that the Company
file a Registration Statement under the Securities Act of
1933 covering the sale of any Shares or (ii) if such
Stockholder is a trust, take any action to terminate, close
or liquidate such trust unless all Shares affected by such
action remain subject in all respects to the terms of this
Agreement);
b. Grant any proxies (except for any proxy solicited by the
Board) or powers of attorney, deposit any Shares into a
voting trust or enter into a voting agreement with respect
to any Shares; or
c. Take any action which would make any representation or
warranty of such Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling such
Stockholder from performing such Stockholder's obligations
under this Agreement.
Notwithstanding any other provision of this section, the Trustees of The Chester
H. Kirk 1984 Trust Agreement shall be permitted to pledge its Shares as
collateral for any loan from a bona fide financial institution which such
Trustees may deem necessary or desirable in connection with the payment of (i)
any and all state or federal estate taxes occasioned by the death of Chester H.
Kirk, (ii) pecuniary legacies under the Last Will and Testament of Chester H.
Kirk or (iii) pecuniary distributions under the Chester H. Kirk 1984 Trust
Agreement, the amount of such loan not to exceed $10 million prior to January
31, 1997 or $20 million thereafter, and the terms of such loan to provide that
the Trust may continue to vote all pledged Shares so long as the Trust is not in
default under the loan documents.
5. TERMINATION. This Agreement shall terminate on the earliest to
occur of the following:
a. The failure by the Company to reach a definitive Merger
Agreement with one of the Bidders on or before September
15, 1996;
b. The Effective Time of any such Merger Agreement (as defined
therein); or
c. February 28, 1997.
6. CONDITION TO STOCKHOLDERS' OBLIGATIONS. The obligations of each
Stockholder
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<PAGE> 39
hereunder are conditioned on such Stockholder's written approval, prior to
execution and delivery by the Company, of the final form of Merger Agreement and
the consideration payable thereunder, it being understood and agreed that, among
other provisions, such Agreement will contain appropriate "fiduciary-out"
provisions in favor of the Board.
7. MISCELLANEOUS.
a. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings (if
any), both written and oral, between the parties with respect
to the subject matter hereof, and shall not be assigned by
operation of law or otherwise.
b. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto, provided
that the Company may add to the list of Stockholders any
stockholder of the Company who agrees to be bound by the
terms of this Agreement without the agreement of any other
party hereto, and thereafter such added stockholder shall
be treated as a "Stockholder" for all purposes of this
Agreement.
c. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly received if so
given) by hand delivery, telegram, telex or telecopy, or by
mail (registered or certified, postage pre-paid, return
receipt requested) or by any courier service, such as
Federal Express providing proof of delivery. All
communications hereunder shall be delivered to the
respective parties at the following addresses:
AMTROL, INC.
1400 Division Road
West Warwick, Rhode Island 02893
with a copy to:
HINCKLEY, ALLEN & SNYDER
c/o Margaret Farrell, Esq.
1500 Fleet Center
Providence, Rhode Island 02903
THE CHESTER H. KIRK 1984 TRUST AGREEMENT
c/o Heidi Kirk
275 Stony Lane
North Kingstown, Rhode Island 02852
with copies to:
FLEET NATIONAL BANK
c/o Terence J. Breiding, Senior Vice President
Manager Estate and Trust Services
Mail Stop RI MO 124
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<PAGE> 40
100 Westminster Street
Providence, Rhode Island 02903-2305
and
ROPES & GRAY
c/o Martin Hall, Esq.
One International Place
Boston, Massachusetts 02110
DAVID BERETTA
11 Walcot Avenue
Jamestown, Rhode Island 02835
KENNETH L. KIRK
1400 Division Road
West Warwick, Rhode Island 02893
DR. HANNS H. WINKHAUS
Sybelstrasse 24B
40239 Dusseldorf
Germany
or to such other address as the person to whom notice is given
may have previously furnished to the others in writing in the
manner set forth above.
d. This Agreement shall be governed by and construed in
accordance with the laws of the State of Rhode Island,
regardless of the laws which might otherwise govern under the
applicable conflicts of laws principles thereof.
e. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of
which shall constitute one and the same Agreement.
f. The descriptive headings used herein are inserted for
convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this
Agreement.
g. In the event of a stock dividend or distribution, or any
change in the Company's Common Stock by reason of a stock
dividend, split-up, recapitalization, combination, exchange of
shares or the like, the term "Shares" shall be deemed to refer
to and include the Shares as well as all such stock dividends
and distributions in any Shares or for which any or all of the
Shares may be changed or exchanged.
h. The obligations of each Stockholder hereunder are several
and not joint and no Stockholder shall have any liability
hereunder to the Company for the failure of any other
Stockholder to perform his or its obligations hereunder.
While, for the sake of convenience, this Agreement has been
entered into by more than one Stockholder, this Agreement
shall be treated for all purposes as a separate agreement
between each Stockholder and the
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<PAGE> 41
Company and not as an agreement among the Stockholders, and
no Stockholder shall have any rights hereunder to cause any
other Stockholder to take any action required hereunder.
i. Each Stockholder acknowledges that each Stockholder is
entering into this Agreement for the benefit of the Bidder
with whom the Company reaches a Merger Agreement and that such
Bidder shall be a third party beneficiary for purposes of
monetary damages with respect to any breach hereof by such
Stockholder.
IN WITNESS WHEREOF, the Company and each Stockholder have caused this
Agreement to be duly executed as of the day and year first set forth above.
AMTROL INC.
By:
-----------------------------
Name:
Title:
THE CHESTER H. KIRK 1984 TRUST
AGREEMENT
By:
-----------------------------
Name:
Title: Co-Trustee
By:
-----------------------------
Name:
Title: Co-Trustee
By: Fleet National Bank
Title: Co-Trustee
By:
-------------------------
Name:
Title:
--------------------------------
Kenneth L. Kirk
--------------------------------
David L. Beretta
--------------------------------
Hanns H. Winkhaus
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<PAGE> 42
EXHIBIT A TO VOTING AGREEMENT
<TABLE>
STOCKHOLDERS
------------
<CAPTION>
Number of Shares of Which the
Name Stockholder is the Record Holder
---- --------------------------------
<S> <C>
The Chester H. Kirk 1984 Trust Agreement 2,220,804
Kenneth L. Kirk 424,075
David Beretta 68,046
Hanns H. Winkhaus 99,950
</TABLE>
