UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
REUNION INDUSTRIES, INC.
(formerly Reunion Resources Company)
----------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
----------------------------------------------------
(Title of Class of Securities)
761312-10-7
(formerly 761314-10-3)
----------------------------------------------------
(CUSIP Number)
BRIAN D. BEGLIN, ESQ.
RICHARDS & O'NEIL, LLP
885 THIRD AVENUE
NEW YORK, NEW YORK
10022
(212) 207-1200
----------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
MARCH 30, 1999
----------------------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
- ----------
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 18 Pages
<PAGE>
SCHEDULE 13D
CUSIP No. 761312-10-7 Page 2 of 18 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
CHATWINS GROUP, INC.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,450,000
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 1,525,000
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,525,000
- --------------------------------------------------------------------------------
12 CHECK THIS BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 761312-10-7 Page 3 of 18 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
CHARLES E. BRADLEY, SR.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
None
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON None
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,118,066
- --------------------------------------------------------------------------------
12 CHECK THIS BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 761312-10-7 Page 4 of 18 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
STANWICH PARTNERS, INC.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
None
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON None
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,525,000
- --------------------------------------------------------------------------------
12 CHECK THIS BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 761312-10-7 Page 5 of 18 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
JOHN G. POOLE
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
None
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON None
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,429,989
- --------------------------------------------------------------------------------
12 CHECK THIS BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 761312-10-7 Page 6 of 18 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
CHARLES E. BRADLEY, SR. FAMILY LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
None
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON None
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,032,424
- --------------------------------------------------------------------------------
12 CHECK THIS BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 761312-10-7 Page 7 of 18 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
JOHN GRIER POOLE FAMILY LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
None
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON None
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,294,331
- --------------------------------------------------------------------------------
12 CHECK THIS BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.8
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 761312-10-7 Page 8 of 18 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
KIMBALL J. BRADLEY
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
None
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
OWNED BY --------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON None
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,728,937
- --------------------------------------------------------------------------------
12 CHECK THIS BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
REUNION INDUSTRIES, INC. SCHEDULE 13D
AMENDMENT NO. 2
This Amendment No. 2 ("Amendment No. 2") amends a Statement on
Schedule 13D (the "Schedule 13D"), dated as of June 28, 1995 and filed by
Chatwins Group, Inc., a Delaware corporation ("Chatwins"), as amended by an
Amendment No. 1, dated as of June 25, 1998 ("Amendment No. 1"). This Amendment
No. 2 amends Items 2, 3, 4, 5, 6 and 7 of the Schedule 13D. Item 1 is not
amended hereby. Capitalized terms used in this Amendment No. 2 not otherwise
defined herein shall have the meanings ascribed to such terms in the Schedule
13D and Amendment No. 1.
Item 2. Identity and Background.
Item 2 of the Schedule 13D is hereby amended by adding the following at the end
thereof:
6. Kimball J. Bradley
Kimball J. Bradley ("Mr. K.J. Bradley") is a Senior Vice President
of Chatwins. Mr. K.J. Bradley's business address is c/o Chatwins Group, Inc.,
300 Weyman Plaza, Suite 340, Pittsburgh, Pennsylvania, 15236. Mr. K.J. Bradley
is a citizen of the United States.
During the last five years Mr. K.J. Bradley has not been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
and has not been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
7. John Grier Poole Family Limited Partnership
The John Grier Poole Family Limited Partnership (the "Poole FLP") is
a Connecticut limited partnership. The principal activities of the Poole FLP
are to manage and invest the assets held by the partnership. The business
address of the Poole FLP is One Stamford Landing, 62 Southfield Avenue,
Stamford, Connecticut 06902. Mr. Poole is the sole general partner of the Poole
FLP.
During the last five years, neither the Poole FLP nor Mr. Poole as
its general partner have been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) and have not been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Page 9 of 18 Pages
<PAGE>
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 of the Schedule 13D is hereby amended and restated as
follows:
On March 30, 1999 the Company's Board of Directors unanimously
approved the Merger Agreement, dated as of March 30, 1999 (the "Merger
Agreement"), between the Company and Chatwins, pursuant to which, among other
things, Chatwins will be merged with and into the Company, with the Company
being the surviving corporation (the "Merger"). The Merger Agreement is
incorporated by reference as Exhibit 2 to this Statement.
At the effective time of the Merger, each share of common stock of
Chatwins theretofore issued and outstanding and held by the stockholders of
Chatwins shall be automatically converted into the right to receive a number of
shares of Common Stock determined in the manner set forth in the Merger
Agreement, plus cash in lieu of any fractional share interests. The aggregate
number of shares of the Company's common stock that will be issued to Chatwins
stockholders in connection with the Merger will be 8,500,000 shares plus up to
an additional 500,000 shares if certain business units achieve specified
performance goals in 1999. The 1,450,000 shares of the Common Stock and the
warrant to purchase 75,000 additional shares of Common Stock that are currently
held of record by Chatwins will be retired at the effective time of the Merger.
The Company's Certificate of Incorporation and By-Laws will be the
certificate of incorporation and by-laws of the combined company following the
Merger. The Company's Board of Directors at the effective time of the Merger
will consist of the persons serving on the Company's Board of Directors
immediately prior to the Merger and will be increased by two additional
directors to be designated by Chatwins. It is currently anticipated that Mr.
Joseph Lawyer, President, Chief Executive Officer and a director of Chatwins,
and Mr. K.J. Bradley, Senior Vice President of Chatwins, will be the persons
designated by Chatwins to serve on the Company's Board of Directors. The
Company's executive officers at the effective time of the Merger will consist of
those persons named on Schedule 2.3 to the Merger Agreement, a copy of which is
attached hereto as Exhibit 3.
The Merger will be consummated on the earliest practicable date
after all of the conditions thereto have been waived or satisfied, including the
approval by the Company's stockholders. The Company and Chatwins have designated
June 29, 1999 as the Closing Date in the Merger Agreement, although there can be
no assurances that the Merger will be consummated by that time.
On April 1, 1999 the Company filed a Registration Statement on Form
S-4 with the Securities and Exchange Commission relating to the issuance of
shares of Common Stock in connection with the Merger and the solicitation of
votes by the stockholders of the Company with respect to the Merger. This
registration statement has not yet become effective.
Page 10 of 18 Pages
<PAGE>
The Board of Directors of the Company has approved the Merger
Agreement and will recommend that the stockholders of the Company approve the
Merger Agreement and has tentatively scheduled a meeting of the stockholders of
the Company on June 8, 1999 to vote thereon. The affirmative vote of the holders
of at least a majority of the shares of Common Stock entitled to vote thereon
will be required for such approval. The Board of Directors of Chatwins has
unanimously approved the Merger Agreement and the stockholders holding a
majority of the outstanding stock of Chatwins have approved the Merger
Agreement.
Item 4. Purpose of the Transaction.
Item 4 of the Schedule 13D is hereby amended and restated as follows:
The information set forth in Item 3 is incorporated herein by
reference.
Item 5. Interest in Securities of the Issuer.
Item 5 of the Schedule 13D is hereby amended and restated as follows:
(a) Chatwins is currently the record holder of 1,525,000 shares of
Common Stock (which includes a warrant to purchase 75,000 shares of the Common
Stock), or approximately 38.4% of the 3,900,065 shares of Common Stock
outstanding on the date hereof (the "Current Outstanding Common Stock") plus
75,000 shares represented by the warrant.
The Bradley FLP, Mr. Bradley, Stanwich and Mr. Poole is each
currently deemed the beneficial owner of the same 1,525,000 shares of Common
Stock, or approximately 38.4% of the Current Outstanding Common Stock plus the
75,000 shares represented by the warrant that are held by Chatwins. The Bradley
FLP, Mr. Bradley, Stanwich, Mr. Poole and the Poole FLP all expressly disclaim
beneficial ownership of these shares.
Upon the effectiveness of the Merger, all 1,450,000 shares of Common
Stock and the warrant to purchase 75,000 shares of Common Stock held by Chatwins
will be retired.
As of the date hereof, the Bradley FLP has the right to acquire in
the Merger as a result of its ownership of shares of common stock of Chatwins,
subject to the terms and conditions of the Merger Agreement, 4,032,424 shares of
Common Stock upon the effectiveness of the Merger. Accordingly, the Bradley FLP
may be deemed to own, in the aggregate, 4,032,424 shares of Common Stock, or
approximately 36.8% of the 10,950,000 shares of the Common Stock of the Company
estimated to be outstanding as of the effectiveness of the Merger (the "Merger
Outstanding Common Stock").
Mr. Bradley is the general partner of the Bradley FLP and manages
the business and affairs of the Bradley FLP. Therefore, Mr. Bradley may be
deemed to beneficially own the same 4,032,424 shares of Common Stock to be held
by the Bradley FLP upon the effectiveness of the Merger. As of the date hereof,
Mr. Bradley individually has the right to acquire in the
Page 11 of 18 Pages
<PAGE>
Merger as a result of his ownership of shares of common stock of Chatwins,
subject to the terms and conditions of the Merger Agreement, 58,042 shares of
Common Stock upon the effectiveness of the Merger. In addition, Mr. Bradley is
deemed to beneficially own 27,600 shares of Common Stock of the Company by
virtue of options to purchase 27,600 shares of Common Stock that are exercisable
within 60 days. Accordingly, Mr. Bradley may be deemed to own, in the aggregate,
4,118,066 shares of Common Stock, or approximately 37.9% of the Merger
Outstanding Common Stock plus 27,600 shares represented by Mr. Bradley's
options.
Upon the effectiveness of the Merger, Mr. K.J. Bradley will be the
person designated by the Bradley FLP to vote the shares held by the Bradley FLP
and, therefore, may be deemed to beneficially own the same 4,032,424 shares of
the Common Stock that will be held by the Bradley FLP upon the effectiveness of
the Merger. As of the date hereof, Mr. K.J. Bradley individually has the right
to acquire in the Merger as a result of his ownership of shares of common stock
of Chatwins, subject to the terms and conditions of the Merger Agreement,
696,513 shares of Common Stock upon the effectiveness of the Merger.
Accordingly, Mr. K.J. Bradley may be deemed to own, in the aggregate, 4,728,937
shares of Common Stock, or approximately 43.2% of the Merger Outstanding Common
Stock.
As of the date hereof, the Poole FLP has the right to acquire in the
Merger as a result of its ownership of shares of common stock of Chatwins,
subject to the terms and conditions of the Merger Agreement, 1,294,331 shares of
Common Stock upon the effectiveness of the Merger. Accordingly, the Poole FLP
may be deemed to own, in the aggregate, 1,294,331 shares of Common Stock, or
approximately 11.8% of the Merger Outstanding Common Stock.
Mr. Poole is the general partner of the Poole FLP and manages the
business and affairs of the Poole FLP. Therefore, Mr. Poole may be deemed to
beneficially own the same 1,294,331 shares of Common Stock that will be held by
the Poole FLP upon the effectiveness of the Merger. As of the date hereof, the
Donald W. Poole, Jr. Credit Shelter Trust FBO Donald W. Poole, III (the "Poole
Trust I") has the right to acquire in the Merger as a result of its ownership of
the shares of common stock of Chatwins, subject to the terms and conditions of
the Merger Agreement, 60,329 shares of Common Stock upon effectiveness of the
Merger. As of the date hereof, the Donald W. Poole, Jr. Credit Shelter Trust FBO
Benjamin B. Poole, (the "Poole Trust II") has the right to acquire in the Merger
as a result of its ownership of shares of common stock of Chatwins, upon the
effectiveness of the Merger, 60,329 shares of Common Stock upon effectiveness of
the Merger. As the trustee of the Poole Trust I and the Poole Trust II, Mr.
Poole may be deemed to beneficially own 120,658 shares of Common Stock that will
be held by the Poole Trust I and the Poole Trust II upon the effectiveness of
the Merger. In addition, Mr. Poole is deemed to beneficially own 15,000 shares
of Common Stock by virtue of options to purchase 15,000 shares of Common Stock
that are exercisable within 60 days. Accordingly, Mr. Poole may be deemed to
own, in the aggregate, 1,429,989 shares of Common Stock, or approximately 13% of
the Merger Outstanding Common Stock plus 15,000 shares of Common Stock
represented by Mr. Poole's options.
Page 12 of 18 Pages
<PAGE>
(b) Chatwins has sole power to vote or direct the vote and sole
power to dispose or direct the disposition of 1,450,000 shares of Common Stock
held by Chatwins. Chatwins does not have the power to vote the 75,000 shares of
Common Stock it beneficially owns by virtue of the warrant to purchase 75,000
shares of Common Stock but does have the power to dispose of the same 75,000
shares.
As of the date hereof, the Bradley FLP, Mr. Bradley, Stanwich, Mr.
K.J. Bradley, the Poole FLP and Mr. Poole do not have the power to vote or the
power to dispose of the shares of Common Stock that each beneficially owns.
(c) None
(d) None
(e) Not Applicable
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer.
Item 6 of the Schedule 13D is hereby amended by adding the following at the
beginning thereof:
The information set forth in Item 3 is hereby incorporated by
reference.
Item 7. Material to be Filed as Exhibits
Item 7 is hereby amended by adding the following at the beginning thereof:
1. Joint Filing Agreement among Chatwins, Stanwich, the Bradley FLP, Mr.
Bradley, Mr. K.J. Bradley, the Poole FLP and Mr. Poole.
2. Merger Agreement, dated March 30, 1999, between the Company and Chatwins.
3. Schedule 2.3 to Merger Agreement.
[The remainder of the page purposely left blank]
Page 13 of 18 Pages
<PAGE>
Signatures
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this Statement is true, complete and
correct.
Dated: April 13, 1999
CHATWINS GROUP, INC.
By: /s/ Russell S. Carolus
-----------------------------------
Russell S. Carolus
Vice President
STANWICH PARTNERS, INC.
By: /s/ John G. Poole
-----------------------------------
Name: John G. Poole
Title:
CHARLES E. BRADLEY, SR. FAMILY LIMITED
PARTNERSHIP
By: /s/ Charles E. Bradley, Sr.
-----------------------------------
Charles E. Bradley, Sr.
General Partner
/s/ Charles E. Bradley, Sr.
-----------------------------------
Charles E. Bradley, Sr.
JOHN GRIER FAMILY LIMITED PARTNERSHIP
By: /s/ John G. Poole
-----------------------------------
John G. Poole
General Partner
/s/ John G. Poole
-----------------------------------
John G. Poole
Page 14 of 18 Pages
<PAGE>
/s/ Kimball J. Bradley
-----------------------------------
Kimball J. Bradley
Page 15 of 18 Pages
<PAGE>
EXHIBIT 1
JOINT FILING AGREEMENT
This will confirm the agreement by and among all the undersigned
that the Schedule 13D filed on or about this date (the "Schedule 13D") with
respect to the beneficial ownership by the undersigned of shares of common
stock, par value $.01 per share, of Reunion Industries, Inc., a Delaware
corporation, is being, and any and all amendments thereto may be, filed on
behalf of each of the undersigned.
The undersigned hereby constitute and appoint Charles E. Bradley,
Sr. their true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for them and in their names, places and steads,
in any and all capacities, to sign any and all amendments to the Schedule 13D,
and to file the same and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they might or could do in person, hereby ratifying and
confirming said attorney-in-fact and agent, or his substitute, may lawfully do
or cause to be done, or have done or caused to be done prior to this date, by
virtue hereof.
This Agreement may be executed in two or more counterparts, each of
which will be deemed an original, but all of which together shall constitute one
and the same instrument.
Dated: April 13, 1999
Page 16 of 18 Pages
<PAGE>
CHATWINS GROUP, INC.
By: /s/ Russell S. Carolus
-----------------------------------
Russell S. Carolus
Vice President
STANWICH PARTNERS, INC.
By: /s/ John G. Poole
-----------------------------------
Name: John G. Poole
Title:
CHARLES E. BRADLEY, SR. FAMILY LIMITED
PARTNERSHIP
By: /s/ Charles E. Bradley, Sr.
-----------------------------------
Charles E. Bradley, Sr.
General Partner
/s/ Charles E. Bradley, Sr.
-----------------------------------
Charles E. Bradley, Sr.
JOHN GRIER FAMILY LIMITED PARTNERSHIP
By: /s/ John G. Poole
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John G. Poole
General Partner
/s/ John G. Poole
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John G. Poole
Page 17 of 18 Pages
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/s/ Kimball J. Bradley
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Kimball J. Bradley
Page 18 of 18 Pages
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EXHIBIT 2
MERGER AGREEMENT
MERGER AGREEMENT, dated as of March 30, 1999, by and between Reunion
Industries, Inc., a Delaware corporation ("Reunion"), and Chatwins Group, Inc. a
Delaware corporation ("Chatwins").
W I T N E S S E T H:
WHEREAS, Reunion desires to acquire Chatwins, and Chatwins desires
that Reunion acquire Chatwins, all on the terms and conditions set forth in this
Agreement;
WHEREAS, it is the intention of the parties that the Merger (as
defined below) shall: (i) be accounted for by the "purchase method" under
generally accepted accounting principles ("GAAP"); (ii) qualify as a tax free
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code"), and that this Agreement shall qualify as a "plan of
reorganization" within the meaning of Section 368 of the Code; and (iii) qualify
as a tax free exchange of stock under Section 354 of the Code;
WHEREAS, the Boards of Directors of Chatwins and Reunion have
approved and adopted this Agreement and have authorized the execution hereof;
and
WHEREAS, the shareholders of Chatwins and the shareholders of
Reunion shall vote for or against the adoption of this Agreement at meetings
thereof to be called as promptly as possible following the execution of this
Agreement (or by written consent).
NOW, THEREFORE, in consideration of the mutual benefits to be
derived from this Agreement and the representations, warranties, conditions and
promises hereinafter contained, the parties to this Agreement hereby agree as
follows:
ARTICLE I
THE MERGER
1.1. The Merger.
(a) At the Effective Time (as defined in Section 1.1(b)), Chatwins
shall be merged with and into Reunion (the "Merger"), in accordance with the
General Corporation Law of the State of Delaware (the "Delaware GCL"), whereupon
the separate existence of Chatwins shall cease and Reunion shall be the
surviving corporation.
(b) As soon as practicable after satisfaction or waiver of all
conditions to the Merger, Chatwins and Reunion will file a certificate of merger
(which shall be in form and substance reasonably satisfactory to the parties
hereto) with the Secretary of State of the State of Delaware (the "Secretary of
State") in accordance with Section 251(c) of the Delaware GCL and make all other
filings or recordings required by the Delaware GCL in connection with the
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Merger. The Merger shall become effective on such date as the certificate of
merger is duly filed with the Secretary of State or at such later date as is
specified in the certificate of merger (the "Effective Time").
(c) From and after the Effective Time, Reunion shall possess all the
rights, privileges, powers and franchises and be subject to all of the
restrictions, disabilities, liabilities and duties of Chatwins as provided in
the Delaware GCL.
1.2. Conversion of Shares. By virtue of the Merger and without any
action on the part of Reunion or Chatwins:
(a) The aggregate number of shares of the common stock of Chatwins,
par value $.01 per share, issued and outstanding immediately prior to the
Effective Time (the "Chatwins Common Stock") shall be automatically converted
into the right to receive the following consideration in the manner and at the
time described below:
(i) at the Effective Time, 8,500,000 fully-paid and
nonassessable shares of common stock of Reunion, par value $.01 per share
("Reunion Common Stock"); and
(ii) up to 500,000 shares of Reunion Common Stock (the
"Additional Shares") to be issued within 30 days after the filing by Reunion of
its Annual Report on Form 10-K for the year ending December 31, 1999 (the
"Filing Date") as follows:
(x) 200,000 shares of Reunion Common Stock if EBITDA (as
defined in clause (z) below) earned by the Chatwins Divisions (as
defined in clause (z) below) during the year ending December 31,
1999 ("1999 EBITDA") is at least $27,911,000; plus
(y) . 3 shares of Reunion Common Stock for each dollar of 1999
EBITDA in excess of $27,911,000 up to and including $28,911,001.
(z) For purposes of this Agreement, "EBITDA" shall mean the
earnings before interest, taxes, depreciation and amortization of
the Chatwins Divisions, determined in accordance with GAAP applied
on a consistent basis, without, however, any allocations related to
headquarters overhead or expense, as audited by
PriceWaterhouseCoopers, LLP, and the "Chatwins Divisions" shall mean
the operating divisions of Chatwins known as "CPI", "Klemp",
"Alliance", "Hanna", "Steelcraft" and "Auto-Lok", the Kingway
material handling business of Stanwich Acquisition Corp. ("SAC"),
which will be merged into Reunion and operated within the Auto-Lok
division and the Naptech business of NPS Acquisition Corp. ("NPS"),
which will be merged into Reunion and operated within the CPI
division.
(iii) the Reunion Common Stock to be issued in accordance with
this Section 1.2(a) shall be allocated among the holders of the Chatwins Common
Stock pro rata based upon their percentage ownership of the Chatwins Common
Stock at the Effective Time.
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(b) (i) The aggregate number of shares of Class D, Series A
Preferred Stock of Chatwins, par value $.01 per share (the "Series A
Preferred"), Class D, Series B Preferred Stock of Chatwins, par value $.01 per
share, (the "Series B Preferred"), and Class D, Series C Preferred Stock of
Chatwins, par value $.01 per share (the "Series C Preferred"), issued and
outstanding immediately prior to the Effective Time shall be automatically
converted into the right to receive preferred stock of Reunion (the "Series A
Reunion Preferred") with an initial redemption value (the "Initial Redemption
Value") equal to the aggregate redemption price of such Chatwins preferred stock
on the Closing Date (as defined in Section 1.4) determined as provided in
Chatwins's Restated Certificate of Incorporation. The Series A Reunion Preferred
will be redeemable when no shares of Series B Preferred Stock of Reunion (the
"Series B Reunion Preferred") to be issued in connection with the merger of SAC
into Reunion are outstanding at any time at the option of Reunion at a
redemption value (the "Total Redemption Value") equal to the Initial Redemption
Value plus all accrued but unpaid preferred dividends. The Series A Reunion
Preferred will accrue a cumulative dividend equal to 10% of the Initial
Redemption Value per annum, which will accrue from the Effective Time (the
"Series A Preferred Dividend"). The Series A Preferred Dividend will be junior
in right of payment to dividends on the Series B Reunion Preferred, will be
payable as and when the Board of Directors of Reunion determines and will be
senior in right of payment to dividends on shares of Reunion Common Stock. The
Series A Reunion Preferred will not be voting, except as required by law, and
will not have any right of conversion into the Reunion Common Stock or any other
securities of Reunion. Upon a liquidation of Reunion, the holders of the Series
A Reunion Preferred will be entitled to be paid, out of the assets of Reunion
available for payment to the holders of Reunion's capital stock, an amount equal
to the Total Redemption Value on the date of payment. In the event of a
liquidation of Reunion no payments will be made and no assets will be
distributed to the holders of the Reunion Common Stock or any other class of
capital stock of Reunion, including the Series B Reunion Preferred, until the
holders of the Series A Reunion Preferred shall have been paid the Total
Redemption Value. The Series A Reunion Preferred will have such other
preferences, privileges, restrictions and rights as are determined by the Board
of Directors of Reunion prior to the Effective Time.
(ii) The Series A Reunion Preferred shall be allocated among
the holders of the Series A Preferred, Series B Preferred and Series C Preferred
in accordance with such holders' applicable Redemption Percentages at the
Effective Time. For these purposes, a particular holder's "Redemption
Percentage" shall mean the fraction (expressed as a percentage) obtained by
dividing (y) the aggregate Initial Redemption Value of the Series A Preferred,
Series B Preferred and Series C Preferred held by such holder immediately prior
to the Effective Time by (z) the aggregate Initial Redemption Value of the
shares of Series A Preferred, Series B Preferred and Series C Preferred issued
and outstanding immediately prior to the Effective Time.
(c) All shares of Chatwins Common Stock, Series A Preferred, Series
B Preferred and Series C Preferred (collectively, the "Chatwins Capital Stock")
shall automatically be cancelled and retired and shall cease to exist and each
holder of a certificate representing any such Chatwins Capital Stock (a
"Certificate") shall cease to have any rights with respect thereto, except the
right to receive consideration (the "Merger Consideration") consisting of the
number of shares of Reunion Common Stock or Series A Reunion Preferred specified
herein, together with any cash in lieu of fractional shares of Reunion Common
Stock to
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be paid pursuant to Section 1.3(c), upon the surrender of such Certificate in
accordance with Section 1.3(a), without interest.
(d) All shares of Chatwins Capital Stock held by Chatwins as
treasury shares shall be cancelled and retired and shall cease to exist and no
shares of Reunion Common Stock or Series A Reunion Preferred shall be issuable
in respect thereof.
(e) Chatwins agrees that the 1,450,000 shares of Reunion Common
Stock and the warrant to purchase an additional 75,000 shares of Reunion Common
Stock owned by Chatwins as of the date hereof shall be retired by Reunion, and
Chatwins shall thereupon cease to have any rights with respect thereto,
including any right of exchange in connection with the Merger.
1.3. Surrender of Certificates; Payment of Merger Consideration.
(a) Surrender of Certificates. At or after the Closing (as defined
in Section 1.4), upon presentation by the holder thereof, duly endorsed, each
Certificate shall be cancelled and exchanged and, simultaneously with such
cancellation and exchange, (i) in respect of Chatwins Common Stock a new
certificate shall be issued representing the number of shares of Reunion Common
Stock into which the Chatwins Common Stock formerly held by such shareholder
shall have been converted in the Merger in accordance with Section 1.2 (a)(i)
hereof, together with a check payable to such shareholder representing any
payment of cash in lieu of fractional shares determined in accordance with
Section 1.3(c) hereof and (ii) in respect of Series A Preferred, Series B
Preferred and Series C Preferred, a new certificate shall be issued representing
the number of shares of Series A Reunion Preferred determined in accordance with
the applicable Redemption Percentages. Within 30 days following the Filing Date,
a certificate shall be issued representing Additional Shares, if any, into which
the Chatwins Common Stock formerly held by such shareholder shall have been
converted in the Merger in accordance with Section 1.2(a)(ii) hereof, together
with a check payable to such shareholder representing any payment of cash in
lieu of fractional shares determined in accordance with Section 1.3(c) hereof.
All of the shares of Reunion Common Stock and Series A Reunion Preferred issued
in the Merger shall be duly authorized, validly issued, fully paid and
nonassessable and, at the time of issuance, shall be free and clear of all
liens, claims, encumbrances, security interests and rights of redemption
(together, "Liens").
(b) No Further Ownership Rights in Chatwins Capital Stock. The
Merger Consideration issued upon the surrender for exchange of Certificates in
accordance with the terms of this Agreement (including any cash paid pursuant to
Section 1.3(c)) shall be deemed to have been issued (or paid, as the case may
be) in full satisfaction of all rights pertaining to the Chatwins Capital Stock
represented thereby. From and after the Closing, the stock transfer books of
Chatwins shall be closed and there shall be no further registration of transfers
on the stock transfer books of Chatwins or Reunion of the Chatwins Capital Stock
which was outstanding immediately prior to the Effective Time. If, after the
Closing, Certificates are presented to Reunion for any reason, they shall be
cancelled and exchanged as provided in this Agreement.
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(c) No Fractional Shares. No certificate or scrip representing
fractional shares of Reunion Common Stock will be issued in the Merger upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a stockholder of
Reunion. In lieu of any such fractional shares, each holder of Chatwins Common
Stock, who would otherwise have been entitled to a fraction of a share of
Reunion Common Stock in exchange for Certificates pursuant to this Agreement
shall receive from Reunion a cash payment in lieu of such fractional share equal
to the product of the market price of Reunion Common Stock at the close of
business on the Closing Date and the fractional share interest to which such
holder would otherwise be entitled.
1.4. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Buchanan Ingersoll
Professional Corporation, One Oxford Centre, 301 Grant Street, 20th Floor,
Pittsburgh, Pennsylvania 15219 at 10:00 a.m. on June 29, 1999, or at such other
place or time as the parties may mutually agree (the "Closing Date").
1.5. Further Assurances. At the Closing and thereafter, each party
hereto will execute such further documents and instruments and take such further
actions as may reasonably be requested by one or more of the others to
consummate the Merger, to vest Reunion with full title to all assets,
properties, rights, approvals, immunities and franchises of Chatwins and to
effect the other purposes of this Agreement.
ARTICLE II
THE SURVIVING CORPORATION
2.1. Certificate of Incorporation. The Certificate of Incorporation
of Reunion in effect at the Effective Time shall be the Certificate of
Incorporation of the surviving corporation until amended in accordance with
applicable law.
2.2. By-Laws. The By-laws of Reunion in effect at the Effective Time
shall be the By-laws of the surviving corporation until amended in accordance
with applicable law.
2.3. Officers. The persons listed on Schedule 2.3 shall serve in the
offices shown opposite their names on Schedule 2.3 at the Effective Time and
shall continue in the same offices on behalf of the surviving corporation until
their resignation or removal in accordance with the By-laws.
2.4. Directors. The Directors of Reunion serving on the Reunion
Board of Directors at the Effective Time shall continue to serve as members of
the Board of Directors of the surviving corporation until their resignation or
until their successors are duly elected and qualified. In addition, at the first
meeting of the Board of Directors occurring after the Effective Time, the total
number of persons serving on the Board of Directors shall be increased by two
and two additional persons nominated by Chatwins shall be appointed by the Board
of Directors of Reunion to fill the vacancies, effective at such meeting of the
Board, thereby created.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CHATWINS
Chatwins hereby represents and warrants to Reunion on the date
hereof and as of the Effective Time as follows (it being understood that for
purposes of this Section 3, Chatwins shall include each of its subsidiaries):
3.1. Chatwins' Organization and Good Standing. Chatwins is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate power and authority to own,
lease and operate its properties and to carry on its business as now conducted.
Chatwins is duly qualified to do business and in good standing in each
jurisdiction where the character of property owned or leased by it or the nature
of its activities makes such qualification necessary except for those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, have a Chatwins Material Adverse Effect. As used herein, a
"Chatwins Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise), business, assets or results of operations of
Chatwins or on the ability of Chatwins to consummate the transactions
contemplated by this Agreement.
3.2. Power and Authority; Execution and Delivery. Chatwins has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement. Except for shareholder approval as required by
the Delaware GCL, the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly approved
and authorized by all requisite corporate action of Chatwins. Except for such
shareholder approval and the filing of a certificate of merger in accordance
with Section 1.1(b), no further corporate actions or approvals on the part of
Chatwins are required under applicable law for the consummation of the Merger.
This Agreement has been duly executed and delivered by Chatwins and, subject
only to the approval of its shareholders in accordance with the Delaware GCL,
constitutes the legal, valid and binding obligation of Chatwins, enforceable
against it in accordance with its terms except to the extent that enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors' rights generally and subject to general principles
of equity (regardless of whether enforcement is sought in a court of law or
equity).
3.3. Capitalization and Voting Rights.
(a) The authorized capital of Chatwins consists entirely of the
following, the rights, privileges and preferences of which are as stated in the
Certificate of Incorporation of Chatwins:
(i) 3,000 shares of Series A Preferred, of which 2,249 shares
are issued and outstanding as of the date hereof;
(ii) 800 shares of Series B Preferred, of which 800 shares are
issued and outstanding as of the date hereof;
(iii) 2,500 shares of Series C Preferred, of which 1,510
shares are issued and outstanding as of the date hereof; and
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(iv) 400,000 shares of Chatwins Common Stock, of which
289,677.4 shares are issued and outstanding and 41,109 shares are held by
Chatwins as treasury shares.
(b) Except as set forth on Schedule 3.3, Chatwins has no outstanding
subscriptions, options, warrants, calls or other agreements or commitments by
which Chatwins is bound in respect of the capital stock of Chatwins, whether
issued or unissued, and no outstanding rights or securities convertible into or
exchangeable for any such capital stock, and Chatwins is not a party or subject
to any agreement or understanding, and to Chatwins's knowledge, there is no
agreement or understanding between any persons and/or entities, which affects or
relates to the voting or giving of written consents with respect to any security
of Chatwins. All shares of Class A, B, C and E Preferred Stock authorized to be
issued by the Certificate of Incorporation of Chatwins have been retired, and no
shares thereof or rights with respect thereto are outstanding.
3.4. Subsidiaries. Except as set forth in Schedule 3.4, Chatwins
does not own or control, directly or indirectly, any interest in any other
corporation, association or other business entity.
3.5. Valid Issuance of Preferred and Common Stock. Except as set
forth on Schedule 3.5, the outstanding shares of Chatwins Capital Stock are duly
and validly authorized and issued, fully paid and nonassessable.
3.6. Reports and Financial Statements. Chatwins has previously
furnished to Reunion a true and complete copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 1998 (the "Chatwins 10-K") substantially
in the form to be filed with the Securities and Exchange Commission ("SEC") and
Current Reports on Form 8-K as filed with the SEC since December 31, 1998.
Chatwins will provide Reunion with a true and complete copy of each Quarterly
Report on Form 10-Q promptly after filing such report with the SEC. As of their
respective dates, the Chatwins 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K referred to above did not, and will not, when filed, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements included in the Chatwins 10-K have
been prepared in accordance with GAAP applied on a consistent basis (except as
may be indicated therein or in the notes thereto) and fairly present the
consolidated financial position of Chatwins and its subsidiaries as of December
31, 1998 and the consolidated results of operations and changes in cash flow of
Chatwins and its subsidiaries for the period then ended.
3.7. Changes. Except as set forth on Schedule 3.7 or in the Chatwins
10-K, since December 31, 1998, there has not been:
(a) any adverse change in the assets, condition (financial or
otherwise), affairs, business, operations, properties, or liabilities of
Chatwins from that reflected in the balance sheet as at December 31, 1998,
referred to in Section 3.6 above, except for changes in the ordinary course of
business which do not constitute, either individually or in the aggregate, a
Chatwins Material Adverse Effect;
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(b) any material change in the liabilities or obligations of
Chatwins, contingent or otherwise, whether due or to become due, whether by way
of guaranty, endorsement, indemnity, warranty or otherwise, except for the
incurrence of current liabilities in the ordinary course of business, none of
which has had a Chatwins Material Adverse Effect;
(c) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, operations or
business of Chatwins;
(d) any waiver by Chatwins of a valuable right or of a material debt
owed to it;
(e) any loans made by Chatwins other than advances of expenses made
in the ordinary course of business;
(f) any declaration or payment of any dividend or other distribution
of the assets of Chatwins or any direct or indirect redemption, purchase or
acquisition of any securities of Chatwins;
(g) any incurrence of indebtedness for money borrowed or any other
liabilities individually in excess of $50,000 or, in the case of indebtedness
and/or liabilities individually less than $50,000, in excess of $100,000 in the
aggregate;
(h) any sale, exchange or other disposition of any of Chatwins's
assets, other than in the ordinary course of business;
(i) to the best of Chatwins's knowledge, any other event or
condition of any character which could reasonably be expected to result in a
Chatwins Material Adverse Effect;
(j) any increase in compensation of any of its existing officers, or
the rate of pay of its employees as a group, except as part of regular
compensation increases in the ordinary course of business;
(k) any resignation or termination of employment of any officer or
key employee of Chatwins; or
(l) any agreements to do or enter into any of the foregoing.
3.8. Governmental Approvals and Filings. Except as set forth in
Schedule 3.8 and for the filing of a certificate of merger in accordance with
the Delaware GCL, no approval, authorization, consent, license, clearance or
order of, declaration or notification to, or filing, registration or compliance
with, any governmental or regulatory authority, is required in order to permit
Chatwins to enter into this Agreement or to consummate the transactions
contemplated herein.
3.9. Litigation. Except as set forth in the Chatwins 10-K, (i) there
is no action, suit, proceeding or investigation pending or, to Chatwins's
knowledge, currently threatened in writing against Chatwins or its property,
assets or business which might reasonably be expected to result, either
individually or in the aggregate, in a Chatwins Material Adverse Effect,
<PAGE>
including without limitation, actions pending or threatened involving the prior
employment of any of Chatwins's employees, their use in connection with
Chatwins's business of any information or techniques allegedly proprietary to
any of their former employers, or their obligations under any agreements with
prior employers; and (ii) Chatwins is not a party or subject to the provisions
of any order, writ, injunction, award, judgment or decree of any court,
arbitration panel or government agency or instrumentality.
3.10. Patents and Trademarks. Chatwins has sufficient title and
ownership of all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, proprietary rights and processes necessary for its
business as now conducted and without any conflict with or infringement of the
rights of others which could reasonably be expected to result in a Chatwins
Material Adverse Effect. Schedule 3.10 contains a complete list of patents and
patent applications owned by Chatwins. Except as set forth in Schedule 3.10,
there are no outstanding options, licenses or agreements of any kind relating to
the foregoing, nor is Chatwins bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes owned by any other person or entity. Chatwins has not
received any communications or claims alleging that Chatwins has violated or, by
conducting its business as currently conducted, would violate any of the
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights and processes of any other person or
entity. Chatwins is not aware that any of its employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court of
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interests of Chatwins or that would conflict with
Chatwins's business as proposed to be conducted. Neither the execution and
delivery of this Agreement nor the carrying on of Chatwins's business by the
employees of Chatwins will, to Chatwins's knowledge, conflict with or result in
a breach of the terms, conditions or provisions of or constitute a default under
any contract, covenant or instrument under which any of such employees is now
obligated.
3.11. No Conflict. Except as set forth on Schedule 3.11, neither the
execution, delivery and performance of this Agreement by Chatwins, nor the
consummation by Chatwins of the transactions contemplated hereby will (i)
conflict with, or result in a breach of any of the terms, conditions or
provisions of the Certificate of Incorporation or By-laws of Chatwins, (ii)
conflict with, result in a breach or violation of, give rise to a default under
or result in the acceleration of performance under any mortgage, lease,
agreement, note, bond, indenture, guarantee or any statute, regulation,
ordinance, writ, injunction, order, judgment or decree to which Chatwins may be
subject, which conflict, breach, default, violation or acceleration could
reasonably be expected to have a Chatwins Material Adverse Effect, or (iii) give
rise to an imposition of any Lien of any nature whatsoever upon any of the
assets of Chatwins.
3.12. Agreements.
(a) Except as set forth in Schedule 3.12, there are no agreements,
understandings or transactions between Chatwins and any of its officers or
directors or any affiliate thereof.
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(b) Except as set forth in Schedule 3.12, there are no agreements,
understanding or transactions to which Chatwins is a party or by which it is
bound which (i) involve obligations (contingent or otherwise) of, or payments
to, Chatwins in excess of $500,000 other than in the ordinary course of
business, (ii) are material to the conduct and operations of Chatwins's business
or properties (including, without limitation, the license of any patent,
copyright, trade secret or other proprietary rights to or from Chatwins), (iii)
restrict or adversely affect the development, manufacture or distribution of
Chatwins's products or services, (iv) involve any written employment or
consulting arrangement between Chatwins and any person, or (v) involve any
material oral employment or consulting arrangement between Chatwins and any
person.
3.13. Title to Property and Assets. Except as set forth on Schedule
3.13, Chatwins has good title to its property and assets free and clear of all
Liens, except such Liens which do not materially impair Chatwins's ownership or
use of such property or assets. With respect to the property and assets it
leases, Chatwins is in substantial compliance with such leases and, to its
knowledge, holds a valid leasehold interest free of any Liens. All of Chatwins's
properties and assets are, in all material respects, in good operating
condition, subject to normal wear and tear.
3.14. Labor Agreements and Actions; Employee Benefits. Except as set
forth on Schedule 3.14, Chatwins is not bound by or subject to (and none of its
assets or properties is bound by or subject to) any written or oral, express or
implied, contract, commitment or arrangement with any labor union, and within
the last two (2) years no labor union has requested or, to the knowledge of
Chatwins, has sought to represent any of the employees, representatives, or
agents of Chatwins; there is no strike or other labor dispute involving Chatwins
pending or, to the knowledge of Chatwins, threatened, which could reasonably be
expected to have a Chatwins Material Adverse Effect, nor is Chatwins aware of
any labor organization activity involving its employees. Except as noted in
Schedule 3.14 hereto, Chatwins does not have any employee benefit plans
presently in force with respect to profit-sharing or pensions.
3.15. Tax Matters. Chatwins (i) has timely filed all tax returns
that are required to have been filed by it with all appropriate governmental
agencies (and all such returns are true and correct and fairly reflect in all
material respects its operations for tax purposes); and (ii) has timely paid all
taxes owed or assessed against it (other than taxes the validity of which are
being contested in good faith by appropriate proceedings). The assessment of any
additional taxes for periods for which returns have been filed is not expected
to exceed the reserves therefor reflected in the Chatwins's publicly-filed
financial statements and, to Chatwins's knowledge, there are no material
unresolved questions or claims concerning Chatwins's tax liability. Chatwins
1995 federal corporate income tax return was audited by the Internal Revenue
Service and all additional tax and interest assessed as a result of such audit
has been paid and all required state tax filings as a result thereof have been
made. Except as provided in the preceding sentence, Chatwins's federal income
tax returns have not been reviewed or audited by any taxing authority. There is
no pending dispute with any taxing authority relating to any of said returns
which, if determined adversely to Chatwins, would result in the assertion by any
taxing authority of any valid material tax deficiency.
<PAGE>
3.16. Minute Books. The minute books of Chatwins contain a complete
and accurate record of all meetings of directors and stockholders since the date
of incorporation and all actions by written consent.
3.17. Purchase Method. To the best knowledge of Chatwins, neither
Chatwins nor any of its affiliates has taken or agreed to take any action
inconsistent with Reunion's accounting for the Merger under the "purchase
method".
3.18. Disclosure. Neither this Agreement nor any document or
information furnished to Reunion by Chatwins pursuant to this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements of Chatwins contained herein or therein not
misleading.
3.19. S-4 Registration Statement. At the time the Registration
Statement (as defined in Section 9.8) becomes effective and at the Effective
Time, the Registration Statement and the Proxy Statement/Prospectus included
therein, to the extent that material is prepared or furnished by Chatwins for
inclusion therein, and the Chatwins SEC filings incorporated by reference
therein, will not contain any statement which, at the time and in light of the
circumstances under which it is made, is false or misleading with respect to any
material fact, or shall omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading, or
necessary to correct any statement which has become false or misleading with
respect to the transactions contemplated hereby and will comply in all material
respects with the requirements of the Securities Act of 1933 (the "Securities
Act") and the rules and regulations thereunder (provided that no representation
or warranty is made with respect to the information not prepared or furnished by
Chatwins specifically for use therein or not contained in Chatwins SEC filings
incorporated by reference therein).
3.20. Broker's or Finder's Fees. Except as set forth in Schedule
3.20, neither Chatwins nor any of its affiliates has authorized any person to
act as broker, finder, banker, consultant, intermediary or in any other similar
capacity which would entitle such person to any investment banking, brokerage,
finder's or similar fee from Chatwins in connection with the transactions
contemplated by this Agreement.
3.21. Permits, Licenses, Authorizations; Compliance with Laws.
Chatwins has all licenses, franchises, certificates of occupancy, permits and
other governmental authorizations which are material and necessary to conduct
its business, and Chatwins is not in violation in any material respect of any
such license, franchise, certificate of occupancy, permit or other governmental
authorization, or any statute, law, ordinance, rule regulation, judgment, order
or decree applicable to it or any of its properties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF REUNION
Reunion represents and warrants to Chatwins as of the date hereof
and as at the Effective Time as follows (it being understood that for purposes
of this Section 4, Reunion shall include each of its subsidiaries):
<PAGE>
4.1. Organization and Good Standing. Reunion is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. Reunion is
duly qualified to do business and in good standing in each jurisdiction where
the character of property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
Reunion Material Adverse Effect. As used herein, the term "Reunion Material
Adverse Effect" means a material adverse effect on the condition (financial or
otherwise), business, assets or results of operations of Reunion and its
subsidiaries, taken as a whole, or on the ability of Reunion to consummate the
transactions contemplated by this Agreement.
4.2. Power and Authority; Execution and Delivery. Reunion has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement. Except for shareholder approval as required by
the Delaware GCL, the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly approved
and authorized by all requisite corporate action of Reunion. Except for such
shareholder approval and the filing of a certificate of merger in accordance
with Section 1.1(b), no further corporate actions or approvals on the part of
Reunion are required under applicable law for the consummation of the Merger.
This Agreement has been duly executed and delivered by Reunion and, subject only
to the approval of its shareholders in accordance with the Delaware GCL,
constitutes the legal, valid and binding obligation of Reunion, enforceable
against Reunion in accordance with its terms except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally and subject to
general principles of equity (regardless of whether enforcement is sought in a
court of law or equity).
4.3. Governmental Approvals and Filings. Except as set forth in
Schedule 4.3, and for the filing of a certificate of merger in accordance with
the Delaware GCL, no approval, authorization, consent, license, clearance or
order of, declaration or notification to, or filing, registration or compliance
with, any governmental or regulatory authority, is required in order to permit
Reunion to enter into this Agreement or to consummate the transactions
contemplated herein.
4.4. No Conflict. Except as set forth in Schedule 4.4, neither the
execution, delivery and performance of this Agreement by Reunion, nor the
consummation by Reunion of the transactions contemplated hereby will (i)
conflict with, or result in a breach of any of the terms, conditions or
provisions of the Certificate of Incorporation or By-laws of Reunion, (ii)
conflict with, result in a breach or violation of, give rise to a default under
or result in the acceleration of performance under any mortgage, lease,
agreement, note, bond, indenture, guarantees or any statute, regulation,
ordinance, writ, injunction, order, judgment or decree to which Reunion may be
subject, which conflict, breach, default, violation or acceleration would have a
Reunion Material Adverse Effect, or (iii) give rise to an imposition of any
Lien, charge, security interest or encumbrance of any nature whatsoever upon any
of the assets of Reunion.
4.5. Merger Consideration. When issued, the shares of Reunion Common
Stock and Series A Reunion Preferred to be issued in the Merger will be duly
authorized, validly
<PAGE>
issued, fully-paid and nonassessable and free and clear of all Liens and
preemptive rights. The certificates or instruments representing such shares will
be in due and proper form.
4.6. Reports and Financial Statements. Reunion has previously
furnished to Chatwins a true and complete copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 1998 (the "Reunion 10-K") substantially
in the form to be filed with the SEC and Current Reports on Form 8-K as filed
with the SEC since December 31, 1998. Reunion will provide Chatwins with a true
and complete copy of each Quarterly Report on Form 10-Q promptly after filing
such report with the SEC. As of their respective dates, the Reunion 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K referred to
above, did not, and will not, when filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements included in the Reunion 10-K have been prepared in accordance with
GAAP applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and fairly present the consolidated financial position of Reunion
and its subsidiaries as of December 31, 1998 and the consolidated results of
operations and changes in cash flow of Reunion and its subsidiaries for the
period then ended.
4.7. Absence of Material Adverse Change. Except as set forth on
Schedule 4.7 or the Renuion 10-K, since December 31, 1998 there has not been any
Reunion Material Adverse Effect.
4.8. Capitalization of Reunion. Reunion's authorized capital stock
consists of (i) 20,000,000 shares of Reunion Common Stock of which 3,900,065 are
outstanding on the date hereof, and (ii) 10,000,000 shares of preferred stock,
par value $.01 per share, none of which are outstanding on the date hereof. All
of the issued and outstanding shares of capital stock of Reunion are duly
authorized and validly issued, fully-paid and nonassessable.
4.9. Certificates of Incorporation and By-laws.
(a) Reunion has delivered to Chatwins copies of its Certificate of
Incorporation and all amendments thereto, which copies are complete and correct.
Reunion is not in default under, or in violation of, any provisions of its
Certificate of Incorporation. Reunion's Certificate of Incorporation has not
been amended since December 31, 1998 and, except as contemplated by this
Agreement or in connection with the Acquisitions (as defined in Section 6.2(c)),
no action has been taken for the purpose of effecting any amendment thereto.
(b) Reunion has delivered to Chatwins copies of its By-laws and all
amendments thereto, which copies are complete and correct. Reunion is not in
default under, or in violation of, any provision of its By-laws. Reunion's
By-laws have not been amended since the date of certification thereof and no
action has been taken for the purpose of effecting any amendment thereto.
4.10. Legal Proceedings. Except as set forth in the Reunion 10-K,
(i) there are no suits, actions, claims, proceedings (including, without
limitation, arbitration or administrative proceedings) or investigations pending
or to the knowledge of Reunion threatened in writing
<PAGE>
against Reunion or its property, assets or business which could reasonably be
expected, individually or in the aggregate, to have a Reunion Material Adverse
Effect; and (ii) Reunion is not a party or subject to the provisions of any
judgment, order, injunction, decree or award of any court, arbitration panel or
government agency or instrumentality.
4.11. Purchase Method. To the best knowledge of Reunion, neither
Reunion nor any of its affiliates has taken or agreed to take any
action inconsistent with the accounting treatment of the Merger under the
"purchase
method".
4.12. Disclosure. Neither this Agreement nor any document or
information furnished to Chatwins by Reunion pursuant to this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements of Reunion contained herein or therein not
misleading.
4.13. S-4 Registration Statement. At the time the Registration
Statement becomes effective and at the Effective Time, the Registration
Statement and the Proxy Statement/Prospectus included therein and the Reunion
SEC filings incorporated by reference therein, will not contain any statement
which, at the time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or shall omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading, or necessary to correct any statement
which has become false or misleading with respect to the transactions
contemplated hereby and will comply in all material respects with the
requirements of the Securities Act and the rules and regulations thereunder
(provided that no representation or warranty is made with respect to the
information prepared or furnished by Chatwins to Reunion specifically for use
therein or contained in Chatwins SEC filings incorporated by reference therein).
4.14. Broker's or Finder's Fees. Except for Legg Mason Wood Walker,
Inc. and Robert Gray, neither Reunion nor any of its affiliates has authorized
any person to act as broker, finder, banker, consultant, intermediary or in any
other similar capacity which would entitle such person to any investment
banking, brokerage, finder's or similar fee from Reunion in connection with the
transactions contemplated by this Agreement.
4.15. Permits, Licenses, Authorizations; Compliance with Laws.
Reunion has all licenses, franchises, certificates of occupancy, permits and
other governmental authorizations which are material and necessary to conduct
its business, and Reunion is not in violation in any material respect of any
such license, franchise, certificate of occupancy, permit or other governmental
authorization, or any statute, law, ordinance, rule regulation, judgment, order
or decree applicable to it or any of its properties.
ARTICLE V
COVENANTS OF CHATWINS
Chatwins covenants and agrees that:
<PAGE>
5.1. Regular Course of Business. Except as otherwise consented to in
writing by Reunion, prior to the Closing Chatwins will carry on its businesses
only in the ordinary course and substantially in accordance with past practices,
and Chatwins will use commercially reasonable efforts to preserve its present
business organization intact and keep available the services of its present
executive officers.
5.2. Restricted Activities and Transactions. Except as otherwise
consented to in writing by Reunion or contemplated by this Agreement or as
resulting from the consummation of the transactions contemplated by this
Agreement, prior to the Closing Chatwins will not:
(a) amend its Certificate of Incorporation or By-laws;
(b) except in the ordinary course of business and substantially in
accordance with past practices, (i) borrow or agree to borrow any funds or
mortgage or pledge any of its assets, tangible or intangible, (ii) voluntarily
incur, assume or become subject to, whether directly or by way of guarantee or
otherwise, any material obligation or liability (absolute or contingent), (iii)
cancel or agree to cancel any material debts or claims, or (iv) lease, sell,
transfer or encumber, agree to lease, sell, transfer or encumber, or grant or
agree to grant any preferential rights to lease or acquire, any of its assets,
property or rights;
(c) except as set forth on the Schedules hereto, (i) grant any
increase in compensation or benefits, or (ii) make, pay or accrue any bonuses,
pension, profit sharing or similar payment to any director, officer or employee
of Chatwins other than payment of 1998 performance bonuses accrued as of
December 31, 1998;
(d) acquire control or ownership of any other corporation,
association, joint venture, partnership, business trust or other business
entity, or acquire control or ownership of all or a substantial portion of the
assets of any of the foregoing, or merge, consolidate or otherwise combine with
any other corporation or enter into any agreement providing for any of the
foregoing;
(e) except as set forth on the Schedules hereto or in the ordinary
course of business consistent with past practice, hire any additional
professional personnel or make any change in the responsibilities or office of
any officer of Chatwins;
(f) except as set forth on the Schedules hereto or in the ordinary
course of business consistent with past practice, enter into any material
contract or agreement or materially modify any existing material agreement;
(g) declare, set aside, make or pay any dividend or other
distribution with respect to its capital stock, or retire or redeem any of such
capital stock, or take any action which would have an effect equivalent to any
of the foregoing; or
(h) agree or commit to do any of the foregoing.
<PAGE>
5.3. Approval of Shareholders.
(a) Chatwins shall through its Board of Directors duly call, give
notice of, convene and hold a meeting of its shareholders (or solicit the
written consent thereof) for the purpose of voting on (i) the adoption and
approval of this Agreement and (ii) the waiver of all rights available to such
shareholders to demand appraisal of their shares of Chatwins Common Stock under
the Delaware GCL, as soon as reasonably practicable after the date hereof.
(b) Chatwins will provide its shareholders with, or give its
shareholders access to, all material information about the transactions
contemplated by this Agreement. The written information provided to the Chatwins
shareholders will be, when so provided, true and accurate in all material
respects, and such information will not, when so provided, contain any untrue
statement of a material fact or omit to state a material fact with respect to
such written information. Copies of all written information delivered or to be
delivered to the shareholders shall be offered for review and approval to
Reunion prior to its delivery to the Chatwins shareholders.
5.4. Consents, Approvals and Filings. Chatwins will use its best
efforts to obtain on or before the Closing all necessary approvals,
authorizations, registrations, consents, licenses, clearances or orders of
governmental and regulatory authorities referred to in Section 3.8.
5.5. Access to Books, Records and Other Information. Chatwins will
afford to Reunion and its accountants, attorneys and agents such information as
Reunion may reasonably request (including such copies of documents as Reunion
may reasonably request) and reasonable access to the books and records of
Chatwins.
ARTICLE VI
COVENANTS OF REUNION
Reunion covenants and agrees that:
6.1. Regular Course of Business. Except as otherwise consented to in
writing by Chatwins, prior to the Closing, Reunion will carry on its businesses
only in the ordinary course and substantially in accordance with past practices,
and will use commercially reasonable efforts to preserve its present business
organization intact and keep available the services of its present executive
officers.
6.2. Restricted Activities and Transactions. Except as otherwise
consented to in writing by Chatwins or contemplated by this Agreement or as
resulting from the consummation of the transactions contemplated by this
Agreement, prior to the Closing Reunion will not:
(a) amend its Certificate of Incorporation or By-laws except in
connection with the Acquisitions (as defined in Section 6.2(c));
<PAGE>
(b) except in the ordinary course of business and substantially in
accordance with past practices, (i) borrow or agree to borrow any funds or
mortgage or pledge any of its assets, tangible or intangible, (ii) voluntarily
incur, assume or become subject to, whether directly or by way of guarantee or
otherwise, any material obligation or liability (absolute or contingent), (iii)
cancel or agree to cancel any material debts or claims, or (iv) lease, sell,
transfer or encumber, agree to lease, sell, transfer or encumber, or grant or
agree to grant any preferential rights to lease or acquire, any of its assets,
property or rights;
(c) acquire control or ownership of any other corporation,
association, joint venture, partnership, business trust or other business
entity, or acquire control or ownership of all or a substantial portion of the
assets of any of the foregoing, or merge, consolidate or otherwise combine with
any other corporation or enter into any agreement providing for any of the
foregoing; provided that Reunion, or one of its subsidiaries, may enter into a
merger or other acquisition agreement with each of SAC and NPS (collectively,
the "Acquisitions").
(d) issue or sell any shares of its capital stock or other equity
interests or issue or award any options, warrants or other rights with respect
to its capital stock or other equity interests, except in connection with the
Acquisitions; or
(e) agree or commit to do any of the foregoing.
6.3. Approval of Shareholders.
(a) Reunion shall through its Board of Directors duly call, give
notice of, convene and hold a meeting of its shareholders for the purpose of
voting on the adoption and approval of this Agreement as soon as reasonably
practicable after the date hereof.
(b) Reunion will provide its shareholders with, or give its
shareholders access to, all material information about the transactions
contemplated by this Agreement. The written information provided to the Reunion
shareholders will be, when so provided, true and accurate in all material
respects, and such information will not, when so provided, contain any untrue
statement of a material fact or omit to state a material fact with respect to
such written information.
6.4. Consents, Approvals and Filings. Reunion will use its best
efforts to obtain on or before the Closing all necessary approvals,
authorizations, registrations, consents, licenses, clearances or orders of
governmental and regulatory authorities referred to in Section 4.3.
6.5. Access to Books, Records and Other Information. Reunion will
afford to Chatwins and its accountants, attorneys and agents such information as
Chatwins may reasonably request (including such copies of documents as Chatwins
may reasonably request) and reasonable access to its books and records.
<PAGE>
ARTICLE VII
MUTUAL COVENANTS
7.1. Payment of Expenses. Except for the fees, costs and expenses
charged in connection with any refinancing of Reunion to be consummated in
connection with the Merger, which shall be paid one-half by Reunion and one-half
by Chatwins, and except as otherwise specifically provided elsewhere herein,
each party to this Agreement shall be responsible for its own costs and expenses
incurred in connection with the transactions contemplated by this Agreement, and
in particular, Reunion shall be responsible for the fees and expenses of Legg
Mason Wood Walker, Incorporated. All expenses incurred in connection with the
Registration Statement shall be borne by Reunion.
7.2. Public Announcements. Reunion and Chatwins shall to the maximum
extent feasible advise and confer with each other prior to the issuance of any
reports, public statements or releases pertaining to this Agreement or any
transaction contemplated hereby.
7.3. Public Disclosure. None of the information supplied by Reunion
and Chatwins for inclusion or incorporation by reference in the Registration
Statement (as defined below) at the time the Registration Statement is filed
with the SEC and the time such document becomes effective under the Securities
Act, will contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
7.4. Refinancing. Reunion and Chatwins shall, and shall cause their
respective affiliates, agents and employees to, cooperate and expend all efforts
reasonably necessary to consummate on the Closing Date the currently
contemplated refinancing of the outstanding indebtedness of Reunion and Chatwins
through lenders reasonably acceptable to Chatwins and Reunion, and any
refinancing in lieu or supplemental thereof.
7.5. No Shop. From the date hereof until the Effective Time, except
in connection with the Acquisitions, and as otherwise required to comply with
applicable law, Reunion and Chatwins shall not and shall not permit any officer,
director or other agent of Reunion or Chatwins, directly or indirectly, to take
any action to seek, initiate, negotiate or encourage or enter into or
participate in any discussions regarding, any offer from any third party to
acquire any shares of capital stock or other equity interest of such third
party, or to sell to such third party any shares of capital stock or other
equity interest of Reunion or Chatwins, to merge or consolidate with Reunion or
Chatwins, or to otherwise acquire any significant portion of the assets of
Reunion or Chatwins or to acquire any significant portion of the assets of such
third party.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF REUNION
The obligation of Reunion to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, on or prior
to the Closing, of the following conditions:
<PAGE>
8.1. Representations and Warranties True at the Closing. The
representations and warranties of Chatwins contained in this Agreement shall be
true and correct in all material respects, except to the extent such
representations were made as of a specific date other than the date hereof.
8.2. Performance of Covenants. Chatwins shall have performed in all
material respects all covenants required to be performed by it under this
Agreement prior to the Closing.
8.3. Opinion of Counsel. Chatwins shall have delivered to Reunion an
opinion, dated the Closing Date and addressed to Reunion, of Richards & O'Neil,
LLP in form and substance reasonably satisfactory to Reunion and its counsel.
8.4. Shareholder Approvals. This Agreement shall have been adopted
by the requisite vote of the shareholders of Reunion and of Chatwins under the
Delaware GCL; and holders of no more than 5% of Chatwins Common Stock shall have
exercised their rights of appraisal under the Delaware GCL, provided that the
Board of Directors of Reunion may elect to proceed with the Merger in the event
that more than 5% of holders of Chatwins Common Stock exercise such rights of
appraisal.
8.5. Other Approvals and Consents. All required approvals and
authorizations of governmental and regulatory authorities, including those
listed on Schedule 3.8 and Schedule 4.3, shall have been obtained.
8.6. No Governmental or Other Proceeding. No order of any court or
administrative agency of competent jurisdiction shall be in effect which
restrains or prohibits any transaction contemplated hereby or which would limit
or otherwise affect in any material respect the Merger.
8.7. No Material Adverse Change. There shall not have been since the
date hereof any occurrence which could reasonably be expected to have a Chatwins
Material Adverse Effect.
8.8. Certificate of Chatwins. Chatwins shall have furnished Reunion
with a Certificate of Chatwins signed by its principal executive officer to the
effect that the representations and warranties of Chatwins contained in this
Agreement are true and correct in all material respects at and as of the Closing
Date as though such representations and warranties were made on such date
(except as to representations and warranties which are expressly limited to a
state of facts existing at a time prior to the Closing Date) and that Chatwins
has performed or complied in all material respects with all terms, covenants and
provisions of this Agreement required to be performed or complied with by it
prior to or at the Closing.
8.9. Certificate of Merger. Chatwins shall have executed and
delivered to Reunion the certificate of merger to be filed with the Secretary of
State in connection with the Merger.
8.10. Fairness Opinion. Reunion's Board of Directors shall have
received the opinion of Legg Mason Wood Walker, Inc., in a form reasonably
satisfactory to the Board, that
<PAGE>
the consideration to be paid for Chatwins pursuant to this Agreement is fair to
Reunion and its stockholders, other than Chatwins, from a financial point of
view.
8.11. Refinancing; Chatwins Warrants. Reunion shall have an
enforceable agreement or agreements with one or more lenders, to consummate
and/or continue one or more credit facilities, the proceeds of which will be
sufficient to redeem the $50,000,000 principal amount Senior Notes of Chatwins
due 2003 (the "Senior Notes") and to provide adequate working capital resources
to Reunion after giving effect to the Merger, and all conditions precedent to
the amendment and/or funding of such credit facilities shall have been satisfied
other than the consummation of the Merger. Chatwins shall have issued the
requisite "bring along notice" to its warrantholders and all Chatwins warrants
shall have been exercised or terminated.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF CHATWINS
The obligations of Chatwins to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, on or prior
to the Closing, of the following conditions:
9.1. Representations and Warranties True at the Closing Date. The
representations and warranties of Reunion contained in this Agreement shall be
true and correct in all material respects, except for
representations and
warranties which were made as of a specified date other than the date hereof.
9.2. Performance of Covenants. Reunion shall have performed in all
material respects all covenants required to be performed by it under this
Agreement prior to the Closing.
9.3. Opinion of Counsel. Reunion shall have delivered to Chatwins an
opinion, dated the Closing Date and addressed to Chatwins, of Buchanan Ingersoll
Professional Corporation, in form and substance reasonably satisfactory to
Chatwins and its counsel.
9.4. Shareholder Approvals. This Agreement shall have been adopted
by the requisite vote of the shareholders of Reunion and of Chatwins under the
Delaware GCL and holders of no more than 5% of Chatwins Common Stock shall have
exercised their rights of appraisal under the Delaware GCL; provided that the
Board of Directors of Chatwins may elect to proceed with the Merger in the event
that more than 5% of holders of Chatwins Common Stock exercise such rights of
appraisal.
9.5. Other Approvals and Consents. All required approvals and
authorizations of governmental and regulatory authorities, including those
listed on Schedule 3.8 and Schedule 4.3, shall have been obtained.
9.6. No Governmental or Other Proceeding. No order of any court or
administrative agency of competent jurisdiction shall be in effect which
restrains or prohibits any transaction contemplated hereby or which would limit
or otherwise affect in any material respect the Merger.
<PAGE>
9.7. Certificate of Reunion. Reunion shall have furnished Chatwins
with a Certificate of Reunion signed by its respective President or any Vice
President to the effect that, except for changes thereto agreed to in writing by
Chatwins, the representations and warranties of Reunion contained in this
Agreement are true and correct in all material respects at and as of the Closing
Date as though such representations and warranties were made on such date
(except as to representations and warranties which are expressly limited to a
state of facts existing at a time prior to the Closing) and that Reunion has
performed or complied in all material respects with all terms, covenants and
provisions of this Agreement required to be performed or complied with by it
prior to or at the Closing.
9.8. Registration. Reunion shall have filed with the SEC the
Registration Statement and the Registration Statement shall be effective in
accordance with Section 8(a) of the Securities Act of 1933, as amended (the
"Securities Act"). For the purposes of this Agreement, "Registration Statement"
shall mean the registration statement on Form S-4 of Reunion covering the shares
of Reunion Common Stock to be issued to the Chatwins's shareholders upon
conversion of the Chatwins Common Stock in connection with the Merger, including
a proxy statement/prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement. Reunion shall have
complied in all material respects with all "Blue Sky" obligations applicable to
the transactions contemplated by this Agreement and by the Registration
Statement.
9.9. Listing. Reunion shall have taken such actions as are necessary
to cause the shares registered by the Registration Statement to be listed on the
Pacific Exchange and the NASDAQ Small-Cap Market.
9.10. Certificate of Merger. Reunion shall have executed and
delivered to Chatwins the certificate of merger to be filed with the Secretary
of State in connection with the Merger.
9.11. No Material Adverse Change. There shall not have been since
the date hereof any occurrence which could reasonably be expected to have a
Reunion Material Adverse Effect.
9.12. Refinancing. Reunion shall have an enforceable agreement or
agreements with one or more lenders, to consummate and/or continue one or more
credit facilities, the proceeds of which will be sufficient, to redeem the
Senior Notes and to provide adequate working capital resources to Reunion after
giving effect to the Merger, and all conditions precedent to the amendment
and/or funding of such credit facilities shall have been satisfied other than
the consummation of the Merger.
9.13. Reunion Preferred. The Board of Directors of Reunion shall
have approved and Reunion shall have filed with the Secretary of the State and
delivered to Chatwins a Certificate of Designations with respect to the Series A
Reunion Preferred having the terms described in Section 1.2(b) hereof.
<PAGE>
ARTICLE X
TERMINATION
10.1. Termination. This Agreement may be terminated (i) by the
mutual consent of Reunion and Chatwins; (ii) by Reunion or Chatwins at any time
after 120 days after the date hereof if for any reason the Merger shall not by
such date have been consummated and such failure to consummate the Merger is not
caused by a breach of this Agreement by the terminating party; (iii) by Reunion
if there has been a misrepresentation or breach on the part of Chatwins in the
representations, warranties and covenants of Chatwins set forth herein which, if
curable, has not been cured within 10 days of notice thereof by Reunion and
which breach, if not cured, would cause a failure of the conditions set forth in
Section 8.1 or 8.2; (iv) by Chatwins if there has been a misrepresentation or
breach on the part of Reunion in the representations, warranties and covenants
of Reunion set forth herein which, if curable, has not been cured within 10 days
of notice thereof by Chatwins and which breach, if not cured, would cause a
failure of the conditions set forth in Section 9.1 or 9.2; and (v) by Reunion or
Chatwins if any court or administrative agency of competent jurisdiction shall
have issued an order which restrains or prohibits any transaction contemplated
hereby or which would limit or otherwise affect in any material respect the
Merger and such order shall have become final and nonappealable.
10.2. Effect of Termination. If this Agreement is validly terminated
by Reunion or Chatwins pursuant to Section 10.1, this Agreement will forthwith
become null and void and there will be no liability or obligation on the part of
Reunion or Chatwins (or any of their respective subsidiaries, representatives or
affiliates), except (i) that the provisions of Sections 7.1 and 7.2 will
continue to apply following any such termination and (ii) that nothing contained
herein shall relieve any party hereto from liability for breach of its
representations, warranties, covenants or agreements contained in this
Agreement.
10.3. Termination After Shareholder Vote. At any time prior to the
Effective Time this Agreement may be terminated by the Board of Directors of
Reunion or Chatwins pursuant to Section 10.1 hereof notwithstanding the prior
approval of this Agreement and the Merger by their respective stockholders.
ARTICLE XI
INDEMNIFICATION
11.1. Indemnification.
(a) Reunion shall indemnify and hold harmless Chatwins, each of its
directors and officers, and each person or entity, if any, who controls Chatwins
within the meaning of the Securities Act against all losses, claims, damages or
liabilities, joint or several, to which Chatwins or any such director, officer
or controlling person may become subject (i) which arise out of or are caused by
any breach by Reunion of any representation or warranty of Reunion contained in
this Agreement or any related agreement, (ii) which arise out of or are caused
by any breach or other failure to perform any covenant, agreement or other
obligation of Reunion
<PAGE>
contained in this Agreement or any related agreement, or (iii) under the
Securities Act insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and Reunion shall reimburse Chatwins or
any such director, officer or controlling person for any reasonable legal or
other expenses in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Reunion shall not be
required to indemnify and hold harmless or reimburse Chatwins to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission in any document made in reliance upon and in conformity with written
information furnished to Reunion by or on behalf of Chatwins for use in the
preparation of such documents.
(b) Chatwins shall indemnify and hold harmless Reunion, each of its
directors and officers, and each person or entity, if any, who controls Reunion
within the meaning of the Securities Act, against all losses, claims, damages or
liabilities to which Reunion or any such director or officer or controlling
person may become subject (i) which arise out of or are caused by any breach by
Chatwins of any representation or warranty of Chatwins contained in this
Agreement or any related agreement, (ii) which arise out of or are caused by any
breach or other failure to perform any covenant, agreement or other obligation
of Chatwins contained in this Agreement or any related agreement, or (iii) under
the Securities Act insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case only to the extent that such
untrue statement or alleged untrue statement or omission was made in reliance
upon and in conformity with written information furnished to Reunion by or on
behalf of Chatwins; and Chatwins shall reimburse Reunion for any reasonable
legal or other expenses reasonably incurred by Reunion or any such director or
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action.
(c) Promptly after receipt by a party who is, under paragraphs (a)
or (b) of this Section 11.1 an indemnified party, of notice of the commencement
of any action with respect to which indemnification may be sought under this
Section 11.1, such indemnified party shall notify the indemnifying party. Such
notice shall be a condition precedent to any liability of the indemnifying party
for indemnification contained in this Section 11.1; provided, however, that the
rights of the indemnified party to indemnification or compensation hereunder
will only be affected by its failure to give prompt notice to the indemnifying
party of the commencement of such action if and to the extent that such failure
prejudices the indemnifying party in the defense of such action. In case any
such action is being brought against any indemnified party and it notifies an
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to assume and control the defense of the action at its expense and if
the indemnifying party gives notice to such indemnified party of its election to
assume and control the defense, the indemnifying party will not be liable to
such indemnified party for any legal expenses subsequently incurred by the
indemnified party in connection with the defense or investigation of
<PAGE>
the action, so long as and to the extent that the indemnifying party continues
to diligently defend the indemnified party.
(d) No action for indemnity under this Article XI may be brought or
maintained by either party after the Effective Time.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Notices, Etc. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given, when delivered in person, telegraphed, or when mailed by certified
or registered mail, postage prepaid, or when given by telex or facsimile
transmission (promptly confirmed in writing), as follows:
(a) If to Chatwins:
Chatwins Group, Inc.
300 Weyman Plaza, Suite 340
Pittsburgh, Pennsylvania 15236
Telephone: 412-885-5501
Facsimile: 412-885-5512
Attention: President
with copies to:
Richards & O'Neil, LLP
885 Third Avenue
New York, New York 10022-4873
Telephone: 212-207-1200
Facsimile: 212-750-9022
Attention: Brian D. Beglin, Esq.
(b) If to Reunion:
Reunion Industries, Inc.
One Stamford Landing, 62 Southfield Avenue
Stamford, Connecticut 06902
Telephone: 203-324-8858
Facsimile: 203-967-3923
Attention: President
with copies to:
Buchanan Ingersoll Professional Corporation
One Oxford Centre
301 Grant Street, 20th Floor
<PAGE>
Pittsburgh, PA 15219
Telephone: (412) 562-8800
Facsimile (412) 562-1041
Attention: Herbert B. Conner, Esq.
or such other person as the person entitled to notice shall designate in
writing, such writing to be delivered to the other parties hereto in the manner
provided in this Section 12.1.
12.2. Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate delivered
pursuant hereto shall not survive the Closing Date and the consummation of any
or all of the transactions contemplated hereby.
12.3. Entire Agreement; Amendment. This Agreement (including the
various Schedules hereto) sets forth the entire agreement and understanding of
the parties in respect of the transactions contemplated hereby and supersedes
all prior agreements, arrangements and understandings relating to the subject
matter hereof. This Agreement may be amended or modified only by a written
instrument executed by Reunion and Chatwins. The Boards of Directors of Chatwins
and Reunion may amend this Merger Agreement at any time prior to the time that
this Merger Agreement (or a certificate in lieu thereof) filed with the
Secretary of State becomes effective in accordance with Section 103 of the
Delaware GCL, provided that an amendment made subsequent to the adoption of this
Merger Agreement by the stockholders of Chatwins or Reunion may not (1) alter or
change the amount or kind of shares, securities, cash, property and/or rights to
be received in exchange for or on conversion of all or any of the shares of any
class or series thereof, (2) alter or change any term of the certificate of
incorporation of Reunion to be effected by the Merger, or (3) alter or change
any of the terms and conditions of this Merger Agreement if such alteration or
change would adversely affect the holders of any class or series of capital
stock of Reunion or Chatwins.
12.4. Individual Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (i) such provision will be
fully severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid and unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the legal, invalid or unenforceable
provision, and (iv) there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
12.5. General. This Agreement: (i) shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without giving effect to the choice of law principles thereof; (ii) shall inure
to the benefit of the parties hereto and their heirs, personal representatives,
successors and permitted assigns, nothing in this Agreement, expressed or
implied, being intended to confer upon any other person any rights or remedies
hereunder; (iii) may not be assigned by a party without the prior written
consent of the other parties; and (iv) may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The Section, Schedule and
other
<PAGE>
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first above written.
REUNION INDUSTRIES, INC.
By: /s/ Richard L. Evans
----------------------------
Richard L. Evans
Executive Vice President
CHATWINS GROUP, INC.
By: /s/ Charles E. Bradley, Sr.
----------------------------
Charles E. Bradley, Sr.
Chairman
<PAGE>
EXHIBIT 3
SCHEDULE 2.3
OFFICERS OF REUNION AS OF THE EFFECTIVE TIME
Charles E. Bradley, Sr. Chief Executive Officer
Joseph C. Lawyer President and Chief Operating Officer
Richard L. Evans Executive Vice President of
Administration and Secretary
Kimball J. Bradley Executive Vice President of Operations
John M. Froehlich Executive Vice President of Finance
