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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
TOTAL CONTROL PRODUCTS, INC.
(NAME OF SUBJECT COMPANY)
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TOTAL CONTROL PRODUCTS, INC.
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, NO PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
89149V106
(CUSIP NUMBER OF CLASS OF SECURITIES)
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NICHOLAS T. GIHL
CHIEF EXECUTIVE OFFICER
TOTAL CONTROL PRODUCTS, INC.
2001 NORTH JANICE AVENUE
MELROSE PARK, ILLINOIS 60160
(708) 345-5500
(708) 345-5670 (FAX)
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF
THE PERSON FILING STATEMENT)
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WITH A COPY TO
MARK S. ALBERT, ESQ.
D'ANCONA & PFLAUM
30 NORTH LA SALLE STREET
CHICAGO, ILLINOIS 60602
(312) 580-2000
(312) 580-0923 (FAX)
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Total Control Products, Inc., an Illinois
corporation (the "Company"). The address of the principal executive offices of
the Company is 2001 North Janice Avenue, Melrose Park, Illinois 60160. The
title of the class of equity securities to which this Schedule 14D-9 relates
is the shares of common stock, no par value, of the Company (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER
This Schedule 14D-9 relates to a tender offer by Orion Merger Corp., an
Illinois corporation (the "Merger Subsidiary" or "Offeror"), a wholly owned
subsidiary of GE Fanuc Automation North America, Inc., a Delaware corporation
("Parent" or "GE Fanuc"), and an indirect majority owned subsidiary of General
Electric Company, a New York corporation ("General Electric"). Merger
Subsidiary disclosed in a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") dated November 30, 1998 its intention to purchase all
outstanding Shares at a price of $11.00 per Share, net to the seller in cash,
without interest thereon upon the terms and subject to the conditions set
forth in the Offer to Purchase dated November 30, 1998 (the "Offer to
Purchase") and the related Letter of Transmittal (which together constitute
the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of November 22, 1998 (the "Merger Agreement") among GE Fanuc, Merger
Subsidiary and the Company. The Merger Agreement provides that, among other
things, as soon as practicable after the consummation of the Offer and
satisfaction or, if permissible, waiver of the conditions to the Merger,
Merger Subsidiary shall be merged with and into the Company (the "Merger"),
the separate corporate existence of Merger Subsidiary shall cease, and the
Company shall continue as the surviving corporation (the "Surviving
Corporation"). A copy of the Merger Agreement is filed as Exhibit 1 to this
Schedule 14D-9 and is incorporated herein by reference.
According to the Offer to Purchase, the principal executive offices of GE
Fanuc and Merger Subsidiary are located at Route 29 North and Route 606,
Charlottesville, Virginia 22911.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
Schedule 14D-9, is set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements or understandings between
the Company and its executive officers, directors and affiliates are described
on pages 7-8, 11 and 16-19 of the Company's Proxy Statement dated July 15,
1998 for its 1998 Annual Meeting of Shareholders (the "1998 Proxy Statement").
Pages 7-8, 11 and 16-19 of the 1998 Proxy Statement are filed as Exhibit 2 to
this Schedule 14D-9 and are incorporated herein by reference.
Except as described below or incorporated herein, to the knowledge of the
Company, as of the date hereof, there exists no material contract, agreement,
arrangement or understanding and no actual or potential conflict of interest
between the Company or its affiliates and (i) the Company, its executive
officers, directors or affiliates or (ii) Merger Subsidiary or its executive
officers, directors or affiliates.
The following summary of certain provisions of the Merger Agreement,
shareholder agreements dated November 22, 1998 among Parent, Offeror and
certain shareholders of the Company (the "Shareholder Agreements"), a stock
option agreement dated November 22, 1998 between the Company and Parent (the
"Option Agreements") and certain employment agreements between the Company and
certain of its officers, copies of which are filed as exhibits to this
Schedule 14D-9, is qualified in its entirety by reference to the text of such
agreements.
The Merger Agreement
The Offer. The Offeror commenced the Offer in accordance with the terms of
the Merger Agreement. Each of the Company, Parent and the Offeror have agreed
to use its reasonable best efforts to take, or cause to be taken, all actions
necessary to comply promptly with all legal requirements that may be imposed
on itself with respect to the Offer and the Merger and shall promptly
cooperate with and furnish information to each other in
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connection with any such requirements imposed upon any of them in connection
with the Offer and the Merger. Each of the Company, Parent and the Offeror
shall, and shall cause its subsidiaries to, use its reasonable best efforts to
take all reasonable actions necessary to obtain (and shall cooperate with each
other in obtaining) any consent, authorization, order or approval of, or any
exemption by, any governmental entity or other public or private third party
required to be obtained or made by Parent, the Offeror or the Company or any
of their subsidiaries in connection with the Offer and the Merger or the
taking of any action contemplated thereby or by the Merger Agreement, except
that no party need waive any substantial rights or agree to any substantial
limitation on its operations or to dispose of any assets.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the Illinois
Business Corporation Act of 1983, as amended (the "IBCA"), the Offeror shall
be merged with and into the Company at the effective time of the Merger (the
"Effective Time"). Following the Merger, the separate corporate existence of
the Offeror shall cease and the Company shall continue as the Surviving
Corporation and shall succeed to and assume all the rights and obligations of
the Offeror and the Company in accordance with the IBCA. At the Effective
Time, the Charter and the By-laws of the Company shall be the Charter and By-
Laws of the Surviving Corporation, and the directors of the Offeror shall
become the directors of the Surviving Corporation and the officers of the
Company shall become the officers of the Surviving Corporation.
Conversion of Securities. As of the Effective Time, by virtue of the Merger
and without any action on the part of the Offeror, the Company or the holders
of any securities of the Offeror or the Company, each Share (other than Shares
owned by the Company, any subsidiary of the Company, Parent, the Offeror, any
other subsidiary of Parent or by shareholders, if any, who are entitled to and
who properly exercise dissenter's rights under the IBCA) shall be converted
into the right to receive from the Surviving Corporation, in cash, without
interest, $11.00 (or any higher price that may be paid for each Share pursuant
to the Offer) (the "Offer Price"). Each share of stock of the Offeror issued
and outstanding immediately prior to the Effective Time shall, at the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any shares of stock of the Offeror, be converted into and become
one fully paid and nonassessable share of common stock, no par value, of the
Surviving Corporation.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Offeror. The
representations and warranties of the Company relate, among other things, to
its organization, good standing and corporate power; capital structure;
authority to
enter into the Merger Agreement and the Option Agreement and to consummate the
transactions contemplated thereby; required consents and approvals and no
violations; filings made by the Company with the United States Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), and the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (including financial statements included in the
documents filed by the Company under these acts); information supplied by the
Company; the absence of certain events since March 31, 1998; permits and
compliance with laws; tax matters; actions and proceedings; certain
agreements; benefit plans and employees and employment practices; compliance
with worker safety laws; liabilities; products; certain labor matters;
intellectual property matters and Year 2000 compliance; title to assets; state
takeover statutes; required votes; accounts receivable; inventories;
environmental matters; suppliers and customers; insurance; accuracy of certain
information; transactions with affiliates; and brokers.
The Offeror and Parent have also made customary representations and
warranties to the Company. Representations and warranties of the Offeror and
Parent relate, among other things, to: their organization and authority to
enter into the Merger Agreement, the Option Agreement and the Shareholder
Agreements and to consummate the transactions contemplated thereby; required
consents and approvals and no violations; information supplied; operations of
the Offeror; brokers; and ownership of Shares.
Covenants Relating to the Conduct of Business. During the period from the
date of the Merger Agreement to the Effective Time, the Company has agreed as
to itself and its subsidiaries that, except as otherwise expressly
contemplated or permitted by the Merger Agreement or except to the extent
Parent shall otherwise consent in
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writing (such consent, in the case of clauses (f), (g), (i), (j), (n), (o) and
(p) below, not to be unreasonably withheld or delayed):
(a) the Company shall, and shall cause each of its subsidiaries to, in
all material respects, carry on its business in the ordinary course of its
business as currently conducted and, to the extent consistent therewith,
use reasonable best efforts to preserve intact its current business
organizations, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and
others having business dealings with it;
(b) the Company shall not, and shall not permit any of its subsidiaries
to, (i) other than dividends paid by wholly-owned subsidiaries, declare,
set aside or pay any dividends on, or make any other actual, constructive
or deemed distributions in respect of, any of its capital stock, or
otherwise make any payments to its shareholders in their capacity as such,
(ii) other than in the case of any subsidiary, split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(c) the Company shall not, and shall not permit any of its subsidiaries
to, issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options (including options under the Company stock option plans) to acquire
any such shares, voting securities, equity equivalent or convertible
securities, other than (i) the issuance of Shares upon the exercise of
Company stock options outstanding on the date of the Merger Agreement in
accordance with their current terms, (ii) the issuance of Shares in
exchange for shares of Class C Exchangeable Common Stock (the "Class C
Taylor Shares") of Taylor Industrial Software, Inc., a corporation
organized under the laws of Alberta and a majority owned subsidiary of the
Company ("Taylor"), (iii) the issuance of Shares upon exercise of the
warrant dated October 5, 1997 issued to Kurt Priester (the "Priester
Warrant"), (iv) the issuance of Shares pursuant to the Option Agreement,
(v) the issuance of Shares in satisfaction of certain contingent payment
obligations, and (vi) the issuance of shares under the Company's 1996
Employee Discount Stock Purchase Plan (the "Stock Purchase Plan") for the
purchase period ending November 30, 1998;
(d) the Company shall not, and shall not permit any of its subsidiaries
to, amend its charter or by-laws;
(e) the Company shall not, and shall not permit any of its subsidiaries
to, acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, limited liability company,
partnership, association or other business organization or division
thereof;
(f) the Company shall not, and shall not permit any of its subsidiaries
to, sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than sales of inventory that
are in the ordinary course of business consistent with past practice and
sales of assets having an aggregate fair market value of up to $100,000;
(g) except as otherwise disclosed by the Company to Parent on the date of
the Merger Agreement, the Company shall not, and shall not permit any of
its subsidiaries to, incur any indebtedness for borrowed money, guarantee
any such indebtedness or make any loans, advances or capital contributions
to, or other investments in, any other person, other than (i) in the
ordinary course of business consistent with past practices and, in the case
of indebtedness and guarantees, in an amount not to exceed $500,000 and
(ii) indebtedness, loans, advances, capital contributions and investments
between the Company and any of its subsidiaries or between any of such
subsidiaries, in each case in the ordinary course of business consistent
with past practices;
(h) the Company shall not, and shall not permit any of its subsidiaries
to, alter (through merger, liquidation, reorganization, restructuring or in
any other fashion) the corporate structure or ownership of the Company or
any subsidiary;
(i) except as otherwise disclosed by the Company to Parent on the date of
the Merger Agreement, the Company shall not, and shall not permit any of
its subsidiaries to, enter into or adopt any, or amend any
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existing, severance plan, agreement or arrangement or enter into or amend
any Company Plan (as defined in the Merger Agreement) or employment or
consulting agreement;
(j) except as otherwise disclosed by the Company to Parent on the date of
the Merger Agreement, the Company shall not, and shall not permit any of
its subsidiaries to, increase the compensation payable or to become payable
to its directors, officers or employees (except for increases in the
ordinary course of business consistent with past practice in salaries or
wages of employees of the Company or any of its subsidiaries who are not
officers of the Company or any of its subsidiaries) or grant any severance
or termination pay to, or enter into any employment or severance agreement
with, any director or officer of the Company or any of its subsidiaries, or
establish, adopt, enter into, or, except as may be required to comply with
applicable law, amend in any material respect or take action to enhance in
any material respect or accelerate any rights or benefits under, any labor,
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer or employee;
(k) the Company shall not, and shall not permit any of its subsidiaries
to, knowingly violate or knowingly fail to perform any obligation or duty
imposed upon it or any subsidiary by any applicable material federal, state
or local law, rule, regulation, guideline or ordinance;
(l) the Company shall not, and shall not permit any of its subsidiaries
to, make any change to accounting policies or procedures (other than
actions required to be taken by generally accepted accounting principles);
(m) the Company shall not, and shall not permit any of its subsidiaries
to, prepare or file any tax return inconsistent with past practice or, on
any such tax return, take any position, make any election, or adopt any
method that is inconsistent with positions taken, elections made or methods
used in preparing or filing similar tax returns in prior periods;
(n) the Company shall not, and shall not permit any of its subsidiaries
to, settle or compromise any federal, state, local or foreign income tax
dispute in excess of $100,000 or make any tax election;
(o) the Company shall not, and shall not permit any of its subsidiaries
to, settle or compromise any claims or litigation in excess of $100,000 or
commence any litigation or proceedings;
(p) the Company shall not, and shall not permit any of its subsidiaries
to, enter into or amend any agreement or contract (i) having a remaining
term in excess of 12 months or (ii) which involves or is expected to
involve future payments of $500,000 or more during the term thereof; or
purchase any real
property, or make or agree to make any new capital expenditure or
expenditures (other than the purchase of real property) which in the
aggregate are in excess of $500,000;
(q) the Company shall not, and shall not permit any of its subsidiaries
to, pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction of any such claims, liabilities
or obligations, in the ordinary course of business consistent with past
practice or in accordance with their terms; and
(r) the Company shall not, and shall not permit any of its subsidiaries
to, authorize, recommend, propose or announce an intention to do any of the
foregoing, or enter into any contract, agreement, commitment or arrangement
to do any of the foregoing.
Certain Covenants Relating to the Business. Pursuant to the Merger
Agreement, the Company has agreed to take certain actions relating to
outstanding business relationships and stock rights. Prior to the acceptance
for payment of any Shares by the Offeror pursuant to the Offer, the Company
and Parent will enter into the agreements relating to certain product
distribution agreements contemplated by the letter agreement dated November
21, 1998 among the Company, Parent and Digital Electronics Corporation, a
corporation organized under the laws of Japan ("DEC") and (ii) prior to the
Effective Time, the Company will purchase the shares of common stock of Taylor
owned by DEC as contemplated by such letter agreement. Prior to the acceptance
for payment of any Shares by the Offeror pursuant to the Offer, the Company
will (i) obtain the consent of the
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holders of the Priester Warrant so that after the Company's obtaining such
consent the holders thereof will have no right to purchase Shares, (ii) obtain
the consent of the other parties to certain contingent payment agreements so
that after the Company's obtaining such consent the other parties to such
agreements will have no right to receive Shares as payment of any contingent
amounts thereunder; and (iii) be the holder of all of the issued and
outstanding capital stock of Taylor other than the common stock of Taylor
owned by DEC, and there shall be no options, warrants, calls, rights or
agreements to which the Company or Taylor is a party, or by which any of them
is bound obligating the Company or Taylor to issue, sell, or cause to be
issued, delivered or sold, additional shares of capital stock of Taylor or to
grant, extend or enter into any such option, warrant, call, right or
agreement.
No Solicitation. The Company shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any officer, director or
employee of or any financial advisor, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, (i) solicit,
initiate or encourage the submission of, any Takeover Proposal (as defined
below), (ii) enter into any agreement with respect to or approve or recommend
any Takeover Proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to the
Company or any subsidiary in connection with, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal; provided,
however, that prior to the acceptance for payment of Shares pursuant to the
Offer, if the Board of Directors of the Company reasonably determines that a
Takeover Proposal constitutes a Superior Proposal (as defined below), then, to
the extent required by the fiduciary obligations of the Board of Directors of
the Company, as determined in good faith by a majority thereof after
consultation with independent counsel, the Company and its representatives
may, in response to an unsolicited request therefor, and subject to compliance
with the Merger Agreement, furnish information with respect to the Company and
its subsidiaries to any person pursuant to a customary confidentiality
statement (as determined by the Company's independent counsel) and participate
in discussions or negotiations with such person. For purposes of the Merger
Agreement, "Takeover Proposal" means any proposal for a merger or other
business combination involving the Company or any of its subsidiaries or any
proposal or offer to acquire in any manner, directly or indirectly, an equity
interest in, any voting securities of, or a substantial portion of the assets
of the Company or any of its subsidiaries, other than the transactions
contemplated by the Merger Agreement and the Option Agreement, and "Superior
Proposal" means a bona fide proposal made by a third party to acquire the
Company pursuant to a tender or exchange offer, a merger, a sale of all or
substantially all its assets or otherwise on terms which a majority of the
disinterested members of the Board of Directors of the Company determines, at
a duly constituted meeting of the Board of Directors or by unanimous written
consent, in its reasonable good faith judgment to be more favorable to the
Company's shareholders than the Merger (after consultation with the Company's
independent
financial advisor) and for which financing, to the extent required, is then
committed or which, in the reasonable good faith judgment of a majority of
such disinterested members, as expressed in a resolution adopted at a duly
constituted meeting of such members (after consultation with the Company's
independent financial advisor), is reasonably capable of being obtained by
such third party.
The Merger Agreement provides further that, the Company must advise Parent
orally and in writing of (i) any Takeover Proposal or any inquiry with respect
to or which could lead to any Takeover Proposal received by any officer or
director of the Company or, to the knowledge of the Company, any financial
advisor, attorney or other advisor or representative of the Company, (ii) the
material terms of such Takeover Proposal (including a copy of any written
proposal), and (iii) the identity of the person making any such Takeover
Proposal or inquiry no later than 24 hours following receipt of such Takeover
Proposal or inquiry. If the Company intends to furnish any person with any
information with respect to any Takeover Proposal, the Company is required to
advise Parent orally and in writing of such intention not less than 24 hours
in advance of providing such information. The Company is further required to
keep Parent fully informed of the status and details of any such Takeover
Proposal or inquiry.
Third Party Standstill Agreements. During the period from the date of the
Merger Agreement through the Effective Time, the Company has agreed not to
terminate, amend, modify or waive any provision of any standstill agreement to
which the Company or any of its subsidiaries is a party (other than any
involving Parent). The
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Company has also agreed to enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreements, including, but not
limited to, obtaining injunctions to prevent any breaches of such agreements
and to enforce specifically the terms and provisions thereof in any court of
the United States or any state thereof having jurisdiction.
Stock Based Compensation. Prior to the purchase of Shares pursuant to the
Offer, the Board of Directors of the Company (or, if appropriate, any
committee thereof) shall adopt appropriate resolutions and take all other
actions necessary or appropriate to (i) cause each option to purchase Shares
that was outstanding as of the date of the Merger Agreement to vest and to be
exercisable immediately prior to the purchase of Shares pursuant to the Offer
and (ii) cause each option to purchase Shares that is outstanding upon the
purchase of Shares pursuant to the Offer to be cancelled as of the purchase of
Shares pursuant to the Offer. In consideration of such cancellation, each
holder of an option to purchase Shares will be entitled to receive from the
Company an amount equal to (A) the product of (1) the number of Shares subject
to such option and (2) the excess, if any, of the Offer Price over the
exercise price per share for the purchase of Shares subject to such option,
minus (B) all applicable federal, state and local taxes required to be
withheld in respect of such payment. The amounts payable pursuant to the
Merger Agreement will be paid as soon as reasonably practicable following the
acceptance for payment by the Offeror pursuant to the Offer. The amount
payable to any option holder will be reduced to the extent necessary to
prevent such payment, together with any other amounts payable to such option
holder by the Company, from constituting a "parachute payment," within the
meaning of section 280G of the Internal Revenue Code of 1986, as amended (the
"Code").
Pursuant to the Merger Agreement, the Company will take all actions
necessary to ensure that the Purchase Period (as defined in the Stock Purchase
Plan) applicable to the options outstanding under the Stock Purchase Plan is
shortened so as to have an Exercise Date (as defined in the Stock Purchase
Plan) that occurs before the acceptance for payment by the Offeror of Shares
pursuant to the Offer; no new Purchase Period shall begin from and after the
date of the Merger Agreement and no holder of an option to purchase Shares
under the Stock Purchase Plan is permitted to increase his or her rate of
payroll deduction under the Stock Purchase Plan from and after the date of the
Merger Agreement.
The Company has also agreed to take all actions necessary to provide that,
effective as of acceptance for payment by the Offeror of Shares pursuant to
the Offer, each of the Company's stock option plans and any similar plan or
agreement of the Company will be terminated, any rights under any other plan,
program, agreement or arrangement to the issuance or grant of any other
interest in respect of the capital stock of the Company or any of its
subsidiaries will be terminated, and no holder of an option to purchase Shares
will have any right to receive any shares of capital stock of the Company or,
if applicable, the Surviving Corporation, upon exercise of any stock option.
Indemnification. Pursuant to the Merger Agreement, Parent and the Offeror
agreed that from and after the Effective Time, Parent will cause the Surviving
Corporation to indemnify and hold harmless all past and present officers and
directors of the Company and of its subsidiaries to the same extent and in the
same manner such persons are indemnified as of the date of the Merger
Agreement by the Company pursuant to the IBCA, the Charter or the Company's
By-laws for acts or omissions occurring at or prior to the Effective Time.
Parent has also agreed to cause the Surviving Corporation to provide, for a
period of not less than three years from the Effective Time, the Company's
current directors and officers an insurance and indemnification policy that
provides coverage for events occurring prior to the Effective Time that is
substantially similar to the Company's existing policy or, if substantially
equivalent insurance coverage is unavailable, the best available coverage;
provided, however, that the Surviving Corporation will not be required to pay
an annual premium for the director's and officer's insurance in excess of the
last annual premium paid prior to the date of the Merger Agreement but in such
case will purchase as much coverage as possible for such amount.
Effective at the Effective Time, Parent will guarantee the obligations of
the Surviving Corporation under the immediately preceding two paragraphs.
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Board Representation. The Merger Agreement provides that promptly after such
time as the Offeror acquires Shares which represent at least two-thirds of the
Shares that are outstanding, as determined on a fully diluted basis (the
"Minimum Condition"), the Offeror will be entitled to designate at its option
up to that number of directors of the Company's Board of Directors, subject to
compliance with Section 14(f) of the Exchange Act, as will make the percentage
of the Company's directors designated by the Offeror equal to the percentage
of the aggregate voting power of the Shares held by Parent or any of its
subsidiaries and the Company shall, at such time cause the Offeror's designees
to be so elected by its existing Board of Directors. However, in the event
that the Offeror's designees are elected to the Board of Directors of the
Company, until the Effective Time, such Board of Directors shall have at least
three directors who are directors on the date of the Merger Agreement and who
are not officers of the Company (the "Independent Directors"). If the number
of Independent Directors shall be reduced below three for any reason
whatsoever, the remaining Independent Directors shall designate a person or
persons to fill such vacancy each of whom shall be deemed to be an Independent
Director for purposes of the Merger Agreement or, if no Independent Directors
then remain, the other directors of the Company as of the date of the Merger
Agreement shall designate three persons to fill such vacancies who shall not
be officers or affiliates of the Company or any of its subsidiaries, or
officers or affiliates of Parent or any of its subsidiaries, and such persons
shall be deemed to be Independent Directors for purposes of the Merger
Agreement. In connection with the foregoing, the Company will promptly, at the
option of Parent, either increase the size of the Company's Board of Directors
and/or obtain the resignation of such number of its current directors as is
necessary to enable the Offeror's designees to be elected or appointed to the
Company's Board of Directors as provided above.
Conditions Precedent. The respective obligations of each party to effect the
Merger shall be subject to the satisfaction (or waiver by each party) prior to
the Effective Time of the following conditions: (i) if required by applicable
law, the shareholders of the Company shall have approved the Merger Agreement;
(ii) no court or other Governmental Entity (as defined in the Merger
Agreement) having jurisdiction over the Company or Parent or any of their
respective subsidiaries shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is then in
effect and has the effect of making the merger illegal; and (iii) the Offeror
shall have previously accepted for payment and paid for Shares pursuant to the
Offer.
The obligations of Parent and the Offeror to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
additional conditions: (i) the Company shall have performed in all material
respects each of its agreements contained in the Merger Agreement required to
be performed on or prior to the Effective Time, and the representations and
warranties of the Company contained in the Merger Agreement shall be true and
correct on and as of the Effective Time as if made on and as of such date,
except where the failure to be so true and correct would not have a Material
Adverse Effect (as defined in the Merger Agreement) on the Company, and Parent
shall have received a certificate signed on behalf of the Company by its Chief
Executive
Officer and its Chief Financial Officer to such effect, (ii) the Company shall
have obtained the consent or approval of each person or Governmental Entity
whose consent or approval shall be required in connection with the
transactions contemplated by the Merger Agreement under any loan or credit
agreement, note, mortgage, indenture, lease or other agreement or instrument,
except as to which the failure to obtain such consents and approvals would
not, in the reasonable opinion of Parent, individually or in the aggregate,
have a Material Adverse Effect on the Company or Parent or upon the
consummation of the transactions contemplated in the Merger Agreement, the
Option Agreement or the Shareholder Agreements, (iii) in obtaining any
approval or consent required to consummate any of the transactions
contemplated herein, in the Option Agreement or the Shareholder Agreements, no
Governmental Entity shall have imposed or shall have sought to impose any
condition, penalty or requirement which, in the reasonable opinion of Parent,
individually or in aggregate would have a Material Adverse Effect on the
Company or Parent, and (iv) since the date of the Merger Agreement, there
shall have been no Material Adverse Change (as defined in the Merger
Agreement) with respect to the Company, and Parent shall have received a
certificate signed on behalf of the Company by its Chief Executive Officer and
Chief Financial Officer to such effect.
Termination. The Merger Agreement provides that it may be terminated at any
time prior to the Effective Time, whether before or after the approval of the
terms of the Merger Agreement by the shareholders of the
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Company: (a) by mutual written consent of Parent and the Company; (b) by
either Parent or the Company: (i) if (x) as a result of the failure of any of
the conditions to the Offer as set forth in this Schedule 14D-9 (see "Certain
Conditions to the Offeror's Obligations") shall have terminated or expired in
accordance with its terms without the Offeror having accepted for payment any
Shares pursuant to the Offer or (y) the Offeror shall not have accepted for
payment any Shares pursuant to the Offer prior to March 31, 1999 (provided
that the right to terminate the Merger Agreement pursuant to this clause
(b)(i) shall not be available to any party whose failure to perform any of its
obligations under the Merger Agreement results in the failure of any such
condition to the Offer or if the failure of such condition results from facts
or circumstances that constitute a breach of any representation or warranty
under the Merger Agreement by such party) or (ii) if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the acceptance for
payment of, or payment for, Shares pursuant to the Offer and such order,
decree or ruling or other action shall have become final and nonappealable;
(c) by Parent or the Offeror prior to the purchase of Shares pursuant to the
Offer in the event of a breach by the Company of any representation, warranty,
covenant or other agreement contained in the Merger Agreement which (i) would
give rise to the failure of condition (e) or (f) described below in "Certain
Conditions to the Offeror's Obligations" and (ii) cannot be or has not been
cured within 30 days after the giving of written notice to the Company; (d) by
Parent or the Offeror if either Parent or the Offeror is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph
(d) described below in "Certain Conditions to the Offeror's Obligations"; (e)
by the Company if the Board of Directors of the Company reasonably determines
that a Takeover Proposal constitutes a Superior Proposal and a majority of the
Board of Directors of the Company determines in its reasonable good faith
judgment, after consultation with outside counsel, that failing to terminate
the Merger Agreement would constitute a breach of its fiduciary duties under
applicable law; provided, that it has complied with the notice and other
provisions of the Merger Agreement and it complies with requirements of the
Merger Agreement relating to payment of Expenses and the Termination Fee (each
as defined below under "Fees and Expenses"); and provided further that the
Company may not terminate the Merger Agreement pursuant to this clause (e)
unless and until 72 hours have elapsed following the delivery to Parent of a
written notice of such determination by the Board of Directors of the Company;
(f) by the Company, if (i) any of the representations or warranties of Parent
or the Offeror set forth in the Merger Agreement that are qualified as to
materiality shall not be true and correct in any respect or any such
representations or warranties that are not so qualified shall not be true and
correct in any material respect or (ii) Parent or the Offeror shall have
failed to perform in any material respect any material obligation or to comply
in any material respect with any material agreement or covenant of Parent or
the Offeror to be performed or complied with by it under the Merger Agreement
and such untruth, incorrectness or failure cannot be or has not been cured
within 30 days after the giving of written notice to Parent or the Offeror, as
applicable; or (g) by the Company, if the Offer has not been timely commenced.
In the event of a termination of the Merger Agreement by either the Company or
Parent, the Merger Agreement shall become void (except for certain specified
provisions, including those pertaining to the payment of certain expenses and
fees and except
for certain confidentiality obligations of the parties) and there shall be no
liability or obligation on the part of Parent, the Offeror or the Company or
their respective officers or directors, other than for liability for any
willful breach of a representation or warranty contained in the Merger
Agreement or the breach of any covenant contained in the Merger Agreement.
Fees and Expenses. Except as provided in the Merger Agreement, whether or
not the Merger is consummated, all costs and expenses incurred in connection
with the Offer, the Merger and the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such costs and
expenses.
The Merger Agreement provides that the Company will pay, or cause to be
paid, in same day funds to Parent the following amounts under the
circumstances and at the times set forth as follows: (i) if Parent or the
Offeror terminates the Merger Agreement in accordance with the provisions
described in clause (d) under "Termination" above, the Company shall pay the
Expenses of Parent and a $4 million termination fee (the "Termination Fee")
upon demand; (ii) if the Company terminates the Merger Agreement in accordance
with the provision described in clause (e) under "Termination" above, the
Company shall pay the Termination Fee within one business day following such
termination and the Expenses of Parent upon demand; and (iii) if Parent or the
Offeror terminates
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the Merger Agreement under clause (c) under "Termination" above and, at the
time of such termination, a Takeover Proposal shall have been made (other than
a Takeover Proposal made prior to the date of the Merger Agreement), the
Company shall pay the Expenses of Parent, upon demand; in addition, if
concurrently therewith or within 12 months after such termination, (A) the
Company shall enter into a merger agreement, acquisition agreement or similar
agreement (including a letter of intent) with respect to a Takeover Proposal
or a Takeover Proposal is consummated, involving any party (1) with whom the
Company had any discussions with respect to a Takeover Proposal, (2) to whom
the Company furnished information with respect to or with a view to a Takeover
Proposal or (3) who had submitted a proposal or expressed any interest
publicly in a Takeover Proposal, in the case of each of clauses (1), (2) and
(3), prior to such termination, or (B) the Company enters into a merger
agreement, acquisition agreement or similar agreement (including a letter of
intent) with respect to a Superior Proposal, or a Superior Proposal is
consummated, then, in the case of either (A) or (B) above, the Company shall
pay the Termination Fee upon the earlier of the execution of such agreement or
upon consummation of such Takeover Proposal or Superior Proposal. The Merger
Agreement provides that Parent will pay, or cause to be paid, in same day
funds to the Company, the Expenses of the Company if the Company terminates
the Merger Agreement in accordance with the provisions described in clause (f)
or (g) under "Termination" above.
For purposes of the Merger Agreement, "Expenses" means with respect to
Parent or the Company, as the case may be, documented out-of-pocket fees and
expenses incurred or paid by or on behalf of Parent or the Company, as the
case may be, in connection with the Offer, the Merger or the consummation of
any of the transactions contemplated by the Merger Agreement, including all
fees and expenses of law firms, commercial banks, investment banking firms,
accountants, experts and consultants to Parent or the Company, as the case may
be; provided that the Expenses of Parent or the Company shall not exceed $1
million.
Pursuant to the Merger Agreement, the aggregate amount of the Termination
Fee and Expenses payable to Parent shall be reduced to an amount not less than
zero by subtracting from the aggregate amount otherwise payable to Parent the
amount realized or anticipated to be realizable (based on the facts as they
exist on the date such aggregate amount shall become due) by Parent under the
Option Agreement; provided, that if such aggregate amount shall be so reduced
by an amount realizable by Parent and thereafter the Option Agreement shall
terminate without receipt by Parent of such amount, then, to the extent Parent
is entitled to receive such aggregate amount, an additional payment shall be
made to Parent in such amount promptly following such termination.
The Shareholder Agreements
Pursuant to the Shareholder Agreements, each of the following shareholders
of the Company: Nicholas Gihl, A.B. Siemer, Julius Sparacino, Merle Taylor and
Neil Taylor (the "Tendering Shareholders") has agreed that, (a) such Tendering
Shareholder shall vote the Shares held by such Tendering Shareholder in favor
of the Merger and the Merger Agreement; (b) such Tendering Shareholder shall
vote his Shares against (i) any other merger agreement or merger,
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the Company
or any other Takeover Proposal or (ii) any amendment of the Company's charter
or by-laws or other proposal or transaction involving the Company or any of
its subsidiaries, which amendment or other proposal or transaction would in
any manner impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement; (c) such Tendering Shareholder shall not (i) sell, transfer,
pledge, assign or otherwise dispose of, or enter into any contract, option or
other arrangement (including any profit sharing arrangement) with respect to
the sale, transfer, pledge, assignment or other disposition of, their Shares
to any person other than the Offeror or the Offeror's designee or (ii) enter
into any voting arrangement, whether by proxy, voting agreement or otherwise,
in connection, directly or indirectly, with any Takeover Proposal; (d) such
Tendering Shareholder shall not, and shall not permit any investment banker,
attorney or other adviser or representative of such Tendering Shareholder to,
(i) directly or indirectly solicit, initiate or encourage the submission of,
any Takeover Proposal or (ii) directly or indirectly participate in any
discussions or negotiations regarding, or furnish to any
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person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Takeover Proposal; and (e) so long as the Merger
Agreement has not been terminated, the Tendering Shareholder shall tender
pursuant to the Offer and not withdraw the Shares owned by such Tendering
Shareholders. In addition, those Tendering Shareholders who hold Class C Taylor
Shares have agreed to take such action as shall be necessary to request
retraction of such Shares and tender the Shares received upon such retraction.
The Shareholder Agreements terminate upon the earlier of (i) the Effective
Time and (ii) the termination of the Merger Agreement in accordance with its
terms; provided, however, that the Shareholder Agreements will not terminate
until 120 days after termination pursuant to clause (ii) immediately above if
(A) the Merger Agreement is terminated by Parent or the Offeror pursuant to
clause (d) of "Termination" above, (B) the Merger Agreement is terminated by
the Company pursuant to clause (e) under "Termination" above or (C) unless the
Company has terminated the Merger Agreement pursuant to clause (f) or clause
(g) under "Termination" above, prior to the termination, a Takeover Proposal
shall have been commenced or the Company shall have entered into an agreement
with respect to, approved or recommended or taken any action to facilitate, a
Takeover Proposal (the "Shareholder Agreement Termination Date").
Option Agreement
Pursuant to the Option Agreement, the Company has granted Parent an
irrevocable option (the "Option") to purchase from time to time up to 1,598,530
authorized and unissued Shares, or such other number of Shares as equals 19.9%
of the Company's issued and outstanding Shares at the time of the exercise of
the Option (the "Company Option Shares") at a price of $11.00 per share, which
may be exercised in whole or from time to time in part, at any time after the
date of the Option Agreement and prior to the termination of the Option. Parent
may exercise the Option if neither Parent nor the Offeror shall have breached
any of its material obligations under the Merger Agreement and no preliminary
or permanent injunction or other order issued by any federal or state court of
competent jurisdiction in the United States invalidating the grant or
prohibiting the exercise of the Option shall be in effect and if one or more of
the following events shall have occurred on or after the date of the Option
Agreement: (i) any person, corporation, partnership, limited liability company
or other entity or group (such person, corporation, partnership, limited
liability company or other entity or group being referred to hereinafter,
singularly or collectively, as a "Person"), acquires or becomes the beneficial
owner of 20% or more of the outstanding Shares (other than a person who, as of
the date hereof, is the beneficial owner of 20% or more of the outstanding
Shares (a "20% Holder")); (ii) any 20% Holder increases his beneficial
ownership of Shares by more than 1%; (iii) any group (other than a group which
includes or may reasonably be deemed to include Parent or any of its
affiliates) is formed which beneficially owns 20% or more of the outstanding
Shares; (iv) any Person (other than Parent or its affiliates) shall have
commenced a tender or exchange offer for 20% or more of the then outstanding
Shares or publicly proposed any bona fide merger, consolidation or acquisition
of all or substantially all the assets of the Company, or other similar
business combination involving the Company; (v) the Company enters into, or
announces that it proposes to enter into, an agreement, including, without
limitation, an agreement in principle, providing for a merger or other business
combination involving the Company or a "significant subsidiary" (as defined in
Rule 1.02(v) of Regulation S-X as promulgated by the Commission) of the Company
or the acquisition of a substantial interest in, or a substantial portion of
the assets, business or operations of, the Company or a significant subsidiary
(other than the transactions contemplated by the Merger Agreement); (vi) any
Person (other than Parent or its affiliates) is granted any option or right,
conditional or otherwise, to acquire or otherwise become the beneficial owner
of Shares which, together with all Shares beneficially owned by such Person,
results or would result in such Person being the beneficial owner of 20% or
more of the outstanding Shares; or (vii) there is a public announcement with
respect to a plan or intention by the Company, other than Parent or its
affiliates, to effect any of the foregoing transactions. For purposes of the
Option Agreement, the terms "group" and "beneficial owner" are defined by
reference to Section 13(d) of the Exchange Act.
Parent's obligation to purchase the Company Option Shares following the
exercise of the Option, and the Company's obligation to deliver the Company
Option Shares, are subject to the conditions that (i) no preliminary
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or permanent injunction or other order issued by any federal or state court of
competent jurisdiction in the United States prohibiting the delivery of the
Company Option Shares shall be in effect, (ii) the purchase of the Company
Option Shares will not violate Rule 10b-13 promulgated under the Exchange Act;
and (iii) all applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), shall have expired or
been terminated.
Prior to the termination of the Option in accordance with the Option
Agreement, if a Put Event (as defined below) has occurred, Parent shall have
the right, upon three business days' prior written notice to the Company, to
require the Company to purchase the Option from Parent (the "Put Right") at a
cash purchase price (the "Put Price") equal to the product determined by
multiplying (i) the number of Company Option Shares as to which the Option has
not yet been exercised by (ii) the Spread (as defined below). As used in the
Option Agreement, the term "Put Event" means the occurrence on or after the
date hereof of any of the following: (i) any Person (other than Parent or its
affiliates) acquires or becomes the beneficial owner of 50% or more of the
outstanding Shares or (ii) the Company consummates a merger or other business
combination involving the Company or a significant subsidiary of the Company
or the acquisition of a substantial interest in, or a substantial portion of
the assets, business or operations of, the Company or a significant subsidiary
(other than the transactions contemplated by the Merger Agreement) and the
term "Spread" means the excess, if any, of (i) the greater of (x) the highest
price (in cash or fair market value of securities or other property) per Share
paid or to be paid within 12 months preceding the date of exercise of the Put
Right for any Shares beneficially owned by any Person who shall have acquired
or become the beneficial owner of 20% or more of the outstanding Shares after
the date of the Option Agreement or (y) the average of the last reported sales
prices quoted on Nasdaq of the Shares during the five trading days immediately
preceding the written notice of exercise of the Put Right over (ii) $11.00.
At any time after the termination of the Option and for a period of 90 days
thereafter, the Company shall have the right, upon three business days' prior
written notice, to repurchase from Parent (the "Repurchase Right"), all (but
not less than all) of the Company Option Shares acquired by Parent pursuant to
the Option Agreement and with respect to which Parent then has beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) at a price per
share equal to the greater of (i) the average of the last reported sales price
quoted on the Nasdaq National Market of Shares during the five trading days
immediately preceding the written notice of exercise of the Repurchase Right
and (ii) the Exercise Price, plus interest at a rate per annum equal to the
costs of funds to Parent at the time of exercise of the Repurchase Right.
In addition, the Option Agreement provides that Parent will have certain
registration rights with respect to any Company Option Shares purchased by
Parent pursuant to the Option Agreement.
Employment Agreements
Concurrently with execution of the Merger Agreement, the Company entered
into an Employment Agreement with Mr. Nicholas Gihl, the President and Chief
Executive Officer of the Company, and Mr. Peter Nicholson, the Chief Financial
Officer of the Company. Such Employment Agreements shall be effective upon the
purchase of the Shares pursuant to the Offer. Mr. Gihl's Employment Agreement
has a term of three years and automatically renews for successive one year
periods unless otherwise terminated. Pursuant to his
Employment Agreement, Mr. Gihl's initial annual salary is $260,000 and his
minimum bonus is $40,000, to be increased based on achieving Company
performance objectives. In addition, Mr. Gihl will receive 5,000 shares of
restricted stock of General Electric (subject to the approval of the General
Electric Board of Directors). The restriction lapse date for 2,500 of such
shares will be the last day for the initial employment term and for the
remaining 2,500 shares will be the last day of the fifth year of Mr. Gihl's
employment by the Company.
Mr. Nicholson's Employment Agreement has a term of two years and
automatically renews for successive one year periods unless otherwise
terminated. Pursuant to his Employment Agreement, Mr. Nicholson's initial
annual salary is $175,000 and his minimum bonus is $50,000. In addition, if
Mr. Nicholson remains employed by the Company for his initial employment term,
he will receive a bonus of $85,000.
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Pursuant to their Employment Agreements, in the event that Mr. Gihl or Mr.
Nicholson is terminated for a reason other than cause or terminates his
employment for good reason, as set forth in the applicable Employment
Agreement, he will receive a payment from the Company in one lump sum of an
amount equal to twenty-four times the greater of his monthly salary as of the
date of termination or his highest monthly salary during the prior twelve
month period, plus two times the bonus paid to him for the fiscal year
immediately prior to the date of such termination. In addition, the Company
will continue his medical insurance benefits for a period of twelve months or
until he is eligible for medical coverage under a plan of a successive
employer and will reimburse him for any excise taxes payable under the "excess
parachute payment" provisions of the Code.
Certain Conditions to the Offeror's Obligations
Notwithstanding any other term of the Offer or the Merger Agreement, the
Offeror shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to the Offeror's obligation to pay for or
return tendered Shares after the termination or withdrawal of the Offer), to
pay for any Shares tendered pursuant to the Offer unless (i) there shall have
been validly tendered and not withdrawn prior to the expiration of the Offer a
number of Shares equal to the Minimum Condition and (ii) any waiting period
under the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall have expired or been terminated, and any other applicable filing or
approval requirement of any nation or region applicable to the purchase of
Shares pursuant to the Offer shall have been satisfied, prior to the
expiration date of the Offer (the "HSR Condition"). Furthermore,
notwithstanding any other term of the Offer or this Agreement, the Offeror
shall not be required to accept for payment or, subject as aforesaid, to pay
for any Shares not theretofore accepted for payment or paid for, and may
terminate the Offer if, at any time on or after the date of the Merger
Agreement and before the acceptance of such Shares for payment or the payment
therefor, any of the following conditions exists (other than as a result of
any action or inaction of Parent or any of its subsidiaries that constitutes a
breach of the Merger Agreement):
(a) there shall be threatened or pending by any Governmental Entity any
suit, action or proceeding (i) challenging the acquisition by Parent or the
Offeror of any Shares under the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of any
of the other transactions contemplated by the Merger Agreement or the
Shareholder Agreements (including the voting provisions thereunder), or
seeking to obtain from the Company, Parent or the Offeror any damages that
would have a Material Adverse Effect on the Company, (ii) seeking to
prohibit or materially limit the ownership or operation by the Company,
Parent or any of their respective subsidiaries of a material portion of the
business or assets of the Company and its subsidiaries, taken as a whole,
or Parent and its subsidiaries, taken as a whole, or to compel the Company
or Parent to dispose of or hold separate any material portion of the
business or assets of the Company and its subsidiaries, taken as a whole,
or Parent and its subsidiaries, taken as a whole, as a result of the Offer
or any of the other transactions contemplated by the Merger Agreement or
the Shareholder Agreements, (iii) seeking to impose material limitations on
the ability of Parent or the Offeror to acquire or hold, or exercise full
rights of ownership of, any Shares to be accepted for payment pursuant to
the Offer, including the right to vote such Shares on all matters properly
presented to the shareholders of the Company, (iv) seeking to prohibit
Parent or any of its subsidiaries from effectively controlling in any
material respect any material portion of the business or operations of the
Company or its subsidiaries or (v) which otherwise is reasonably likely to
have a Material Adverse Effect on the Company; or there shall be pending by
any other person any suit, action or proceeding which is reasonably likely
to have a Material Adverse Effect on the Company;
(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any Governmental Entity any
statute, rule, regulation, judgment, order or injunction, other than the
application to the Offer or the Merger of applicable waiting periods under
the HSR Act, that is reasonably likely to result, directly or indirectly,
in any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above;
(c) there shall have occurred any Material Adverse Change (as defined in
the Merger Agreement) with respect to the Company;
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(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the
Offeror its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any Takeover Proposal or (ii)
the Board of Directors of the Company or any committee thereof shall have
resolved to take any of the foregoing actions;
(e) any of the representations and warranties of the Company set forth in
the Merger Agreement (other than certain representations and warranties
relating to corporate authority and capital structure) shall not be true
and correct, in each case at the date of the Merger Agreement and at the
scheduled or extended expiration of the Offer, except where the failure of
such representations, individually or in the aggregate, to be so true and
correct would not have a Material Adverse Effect on the Company, and any of
the representations and warranties of the Company excluded from the
foregoing shall not be true and correct in any material respect in each
case at the date of the Merger Agreement and at the scheduled or extended
expiration of the Offer;
(f) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or covenant of the Company to be performed or complied with by it
under the Merger Agreement;
(g) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on a
national securities exchange in the United States (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index), (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States or
(iii) any limitation (whether or not mandatory) by any Governmental Entity
on the extension of credit by banks or other lending institutions which, in
the reasonable judgment of Parent, makes it inadvisable to proceed with the
Offer or the Merger;
(h) the Shareholder Agreements shall not be in full force and effect or
any Shareholder (as defined therein) that is a party thereto shall be in
material breach thereof or have indicated such Shareholder's intention not
to perform such Shareholder's obligations thereunder; or
(i) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and the Offeror
and may, subject to the terms of the Merger Agreement, be waived by Parent and
the Offeror in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or the Offeror at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts and circumstances and each
such right shall be deemed an ongoing right that may be asserted at any time
and from time to time.
Appraisal Rights of Dissenting Shareholders. Holders of Shares do not have
dissenters' rights as a result of the Offer. However, any shareholder of the
Company who does not tender his or her Shares, who does not vote in favor of
the Merger Agreement and who gives written notice prior to the vote by the
shareholders of the Company to approve the Merger Agreement may demand
dissenters' appraisal rights pursuant to Sections 11.65 and 11.70 of the IBCA.
Copies of these sections are attached as Annex II hereto. Dissenting
shareholders may elect to receive payment in cash in an amount equal to the
estimated "fair value" of their Shares, which will be the value of the Shares
immediately before the consummation of the Merger excluding any appreciation or
depreciation in anticipation of the Merger, unless such exclusion would be
inequitable. The following is a summary of the procedural steps which must be
taken to ensure that a dissenting shareholder's appraisal rights are
recognized.
A SHAREHOLDER DESIRING TO PERFECT HIS OR HER RIGHT TO PAYMENT FOR HIS OR HER
SHARES MUST MAIL OR DELIVER TO THE COMPANY (ATTENTION: PETER A. NICHOLSON,
CHIEF FINANCIAL OFFICER, TOTAL CONTROL PRODUCTS, INC., 2001 NORTH JANICE
AVENUE, MELROSE PARK, ILLINOIS 60160), A WRITTEN DEMAND FOR PAYMENT OF HIS OR
HER SHARES BEFORE THE VOTE ON THE MERGER AGREEMENT IS TAKEN, AND
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SUCH SHAREHOLDER MUST NOT VOTE IN FAVOR OF THE MERGER AGREEMENT. THE DELIVERY
OF A PROXY WITH INSTRUCTIONS TO VOTE THE SHARES REPRESENTED THEREBY AGAINST
APPROVAL OF THE MERGER AGREEMENT WILL NOT, BY ITSELF, SATISFY THE REQUIREMENT
OF A WRITTEN DEMAND.
Only a holder of record is entitled to request dissenters' appraisal rights
and payment for the Shares registered in his or her name. A record owner of
Shares may assert dissenters' appraisal rights as to fewer than all of the
Shares recorded in such person's name only if such person dissents with respect
to all Shares beneficially owned by any one person and notifies the Company in
writing of the name and address of each person on whose behalf the record owner
asserts dissenters' appraisal rights. The rights of a partial dissenter are
determined as if the Shares as to which dissent is made and the other Shares
held by such holder of record are recorded in the names of different
shareholders of the Company. A beneficial owner of Shares who is not the record
owner may assert dissenters' appraisal rights as to Shares held on such
person's behalf only if the beneficial owner submits to the Company the record
owner's written consent to the dissent before or at the same time the
beneficial owner asserts dissenters' appraisal rights.
A demand must reasonably inform the Company of the identity of the holder of
record of the Shares covered by the demand and that such holder of record
demands payment for such Shares. The demand should be executed by or for the
shareholder of record, fully and correctly, as such shareholder's name appears
on his or her Company stock certificate(s).
A Company shareholder who makes written demand for payment retains all other
rights as a shareholder until those rights are canceled or modified at the
Effective Time by the consummation of the Merger. Within ten days after the
Effective Time, GE Fanuc shall send each dissenting shareholder who has
delivered a written demand for payment, a statement setting forth the opinion
of GE Fanuc as to the estimated fair value of the Shares, the Company's fiscal
1997-1998 financial statements, the Company's latest available interim
financial statements, and a commitment to pay for the Shares held by the
dissenting shareholder the estimated fair value thereof upon transmittal to GE
Fanuc of the Company stock certificate or certificates.
Upon consummation of the Merger, and given demand for payment by a dissenting
shareholder, GE Fanuc shall, upon receipt of the applicable stock certificates,
pay the amount GE Fanuc estimates to be the fair value of the Shares, plus
accrued interest, if any. An explanation of how the interest was calculated
will be provided by GE Fanuc to the dissenting shareholder at the time that GE
Fanuc pays the amount it estimates to be the fair value of the Shares.
If the dissenting Company shareholder does not agree with the opinion of GE
Fanuc as to the estimated fair value of the Shares, or the amount of interest
due, he or she shall, within thirty days from the delivery of GE Fanuc's
statement of value, notify GE Fanuc in writing of such shareholder's
determination of the estimated fair value and interest due relating to the
Shares, and demand payment of the difference.
If within sixty days after delivery of such written notification by a
dissenting shareholder, GE Fanuc and the dissenting shareholder are unable to
agree as to the value of the Shares, GE Fanuc shall either pay the difference
in value demanded by the shareholder, with interest, or file a petition in the
Circuit Court of Cook County, Illinois requesting a determination of the fair
value of the Shares and the interest due. All shareholders who have perfected
their dissenters' appraisal rights and who have not settled with GE Fanuc will
be made parties to this proceeding. The cost of the proceedings may be assessed
against one or more parties to the proceedings as the court may consider
equitable. Failure of GE Fanuc to commence an action shall not limit or affect
the right of the dissenting shareholder to otherwise commence an action as
permitted by law.
The foregoing is only a summary of the provisions of the IBCA and is
qualified in its entirety by reference to the text of Sections 11.65 and 11.70
of the IBCA which are set forth in Annex II hereto and incorporated by
reference herein. ANY SHAREHOLDER OF THE COMPANY WHO DESIRES TO EXERCISE HIS OR
HER DISSENTERS' APPRAISAL RIGHTS SHOULD CAREFULLY REVIEW ANNEX II AND IS
14
<PAGE>
ADVISED TO CONSULT A LEGAL ADVISOR BEFORE ELECTING OR ATTEMPTING TO EXERCISE
SUCH RIGHTS.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
RECOMMENDATION OF THE BOARD OF DIRECTORS.
At a special meeting held on November 22, 1998, the Board of Directors of
the Company (the "Board") approved the Merger Agreement and the transactions
contemplated thereby and determined that the Merger and the Offer, are fair
to, and in the best interests of, the Company and its shareholders, as further
described below. THE BOARD UNANIMOUSLY RECOMMENDS THAT HOLDERS OF SHARES
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. Copies of a
letter to the Company's shareholders and a press release communicating such
approval and recommendation are filed as Exhibits 3 and 4, respectively, to
this Schedule 14D-9 and are incorporated herein by reference.
BACKGROUND OF THE MERGER AND THE OFFER
From time to time following the Company's initial public offering in March,
1997, the Company has discussed potential business combinations with various
third parties.
In early September, 1998, Nicholas Gihl, Chairman of the Board, President
and Chief Executive Officer of the Company, requested that John Ricketson of
Michael Blitzer & Associates, Inc. contact representatives of GE Fanuc with
the intention of exploring strategic alliances beyond an input-output dual
licensing agreement that GE Fanuc and the Company entered into in August,
1998. Mr. Ricketson spoke with John Kroon, the Vice President--Corporate
Planning and Development of GE Fanuc, and both agreed that the parties should
meet to discuss strategic alternatives.
In mid-September, 1998, the Company and GE Fanuc exchanged mutual non-
disclosure agreements for the purpose of furthering discussions. On October 14
and 15, 1998, Mr. Gihl and Peter A. Nicholson, Senior Vice President and Chief
Financial Officer of the Company, met at the Charlottesville, Virginia
headquarters of GE Fanuc with Joseph Hogan, President and Chief Executive
Officer of GE Fanuc, Mr. Kroon and other representatives of GE Fanuc regarding
a potential merger of the companies. During these meetings, Mr. Hogan
indicated that GE Fanuc might have an interest in acquiring the Company.
On October 16, 1998, the Company informally retained Adams, Harkness & Hill,
Inc. to provide financial advice with respect to the potential transaction
with GE Fanuc. At a meeting of the Board on October 28, 1998, Adams, Harkness
& Hill, Inc. made a presentation on the steps necessary to consider any
possible offer by GE Fanuc, as well as a detailed analysis of pricing
considerations and the Board voted to formally retain Adams, Harkness & Hill,
Inc. as its financial advisor. At this meeting, Mr. Gihl informed the Board
that GE Fanuc made a preliminary expression of interest regarding a potential
purchase of the Company.
On November 9, 1998, GE Fanuc delivered a non-binding indication of interest
(the "Indication") to the Company, together with a draft letter of intent. The
Indication was not an offer and outlined many significant conditions to the
consummation of any transaction between GE Fanuc and the Company. The
Indication stated that based on publicly available information, GE Fanuc
indicated a valuation for the Company of $11.00 per share. Among other things,
the Indication proposed that GE Fanuc: (i) begin business, legal and
accounting due diligence, and (ii) begin to negotiate a mutually satisfactory
definitive merger agreement with the Company.
On November 10, 1998, the Board held a special meeting by conference
telephone to discuss the negotiations with GE Fanuc. At the meeting, Mr. Gihl
described his conversations with representatives of GE Fanuc and informed the
Board that GE Fanuc was willing to pay $11 per share for each of the Company's
outstanding Shares, based upon certain assumptions relating to outstanding
shares and indebtedness. This
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meeting was also attended by representatives of Adams, Harkness & Hill, Inc.,
and the Company's legal advisors. At the conclusion of the meeting, the Board
(i) approved the engagement letter between the Company and Adams, Harkness &
Hill, Inc. as the Company's financial advisor in connection with any potential
transaction, and (ii) instructed Mr. Gihl to continue discussions with GE
Fanuc. The Board also authorized Adams, Harkness & Hill, Inc. to continue to
make inquiries of certain third parties to determine if they had any interest
in exploring a potential business combination with the Company.
On November 13, 1998, the Board held a special meeting by conference
telephone to discuss the status of negotiations with GE Fanuc and to authorize
the Company to enter into a nonsolicitation agreement with GE Fanuc. Later
that same day, GE Fanuc and the Company agreed upon a form of nonsolicitation
agreement whereby the Company agreed not to actively solicit offers relating
to a sale of its business until December 4, 1998. At this time, the parties
agreed to dispense with negotiations of a letter of intent and direct their
efforts to the preparation of a mutually satisfactory merger agreement.
Following execution of the nonsolicitation agreement, the Company ceased, and
directed its representatives to cease, all communications with third parties
regarding a potential strategic alliance.
After the execution of the nonsolicitation agreement, on November 16, 1998,
GE Fanuc's representatives began an extensive business and legal due diligence
review of the Company, which included reviewing non-public information. Such
investigation continued until November 21, 1998.
On Tuesday, November 17, 1998, GE Fanuc's counsel delivered to the Company
and its representatives an initial draft of the Merger Agreement, Stock Option
Agreement and form of Shareholder Agreement. The next day, the Board held a
special meeting by conference telephone to discuss the status of negotiations
with GE Fanuc. Commencing on November 18, 1998, the Company's legal and
financial advisors met with GE Fanuc representatives and legal advisors to
discuss various issues involving the Merger Agreement and related documents.
Negotiations between the parties continued until November 22, 1998.
On November 20 and November 21, 1998, the Board held special meetings by
conference telephone. At these meetings, the Company's management reviewed the
status of the negotiations of the Merger Agreement and related documentation.
The Board, the Company's management and the Company's advisors also discussed
the proposed transaction. On the evening of November 21, 1998, the Company was
presented with forms of employment agreements for each of Messrs. Gihl and
Nicholson that GE Fanuc was requiring be signed at the time of execution of
the Merger Agreement and to be effective with the consummation of the Offer.
In the afternoon of November 22, 1998, after completion of the negotiations
over the proposed Merger Agreement and related documentation, the Board held a
special meeting by conference telephone to review, with the advice and
assistance of the Company's financial and legal advisors, the proposed Merger
Agreement and the transaction contemplated thereby, including the Offer and
the Merger, and the terms of the employment agreements with Mr. Gihl and Mr.
Nicholson. At the meeting, Mr. Gihl described the outcome to the Board of the
final negotiations with GE Fanuc with respect to the substantive terms of the
proposed Merger Agreement. Adams, Harkness & Hill, Inc. delivered its written
opinion to the Board to the effect that, as of such date and based upon and
subject to certain matters stated in such opinion, the cash consideration of
$11.00 per Share to be received by holders of Shares in the Offer and the
Merger was fair, from a financial point of view, to such holders. Following a
number of questions from, and discussions among, the directors, the Company's
Board of Directors (i) approved the Merger Agreement and the transactions
contemplated thereby and authorized the execution and delivery thereof, (ii)
determined that the Offer and the Merger are fair to, and in the best
interests of, the Company and its shareholders, and (iii) recommended that the
Company's shareholders accept the Offer and tender their Shares to Merger
Subsidiary. On November 22, 1998, the Board of Directors of GE Fanuc and of
the Offeror also approved the Merger Agreement and the transaction
contemplated thereby.
GE Fanuc, Merger Subsidiary, the Company and certain shareholders and
employees of the Company, as applicable, executed the Merger Agreement, the
Option Agreement, the Shareholder Agreements and the
16
<PAGE>
Employment Agreements on November 22, 1998. On November 23, 1998, prior to the
opening of trading, the Company announced the transaction and shortly
thereafter, GE Fanuc separately announced the transaction. On November 30,
1998, Merger Subsidiary commenced the Offer.
REASONS FOR THE RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS
In light of the Board's review of the Company's competitive and financial
position, recent operating results and prospects, the Board determined that the
Offer and the Merger are fair to, and in the best interests of, the Company and
its shareholders. In making such recommendation and in approving the Merger
Agreement and the transactions contemplated thereby, the Board considered a
number of factors, including, but not limited to, the following:
(i) the terms and conditions of the Merger Agreement;
(ii) the views expressed by management of the Company (at the Board
meetings on November 21, 1998 and November 22, 1998 and at several previous
Board meetings) regarding the financial condition, results of operations,
business and prospects of the Company, including the prospects of the
Company if the Company were to remain independent;
(iii) the recent trading price of the Shares and that the $11.00 per
Share to be paid in the Offer and as consideration in the Merger represents
a premium of approximately 15.8% over the $9.50 closing sale price for the
Shares on the Nasdaq National Market on November 20, 1998, the last trading
day prior to the public announcement of the execution of the Merger
Agreement, and a premium of approximately 26.8% to the most recent 30 day
trading average of $8.677 for the Shares on the Nasdaq National Market;
(iv) the views expressed by management and the Board's conclusion that it
was not likely that any other party would consider a transaction that was
more favorable to the Company and its shareholders;
(v) the financial presentation of Adams, Harkness & Hill, Inc. at the
November 22, 1998 Board meeting and the written opinion of Adams, Harkness
& Hill, Inc. delivered to the Board at the November 22, 1998 Board meeting
to the effect that, as of such date and based upon and subject to certain
matters stated in such opinion, the cash consideration of $11.00 per Share
to be received by holders of Shares in the Offer and the Merger was fair,
from a financial point of view, to such holders. The full text of the
opinion of Adams, Harkness & Hill, Inc., which sets forth the assumptions
made, the matters considered and the limitations on the review undertaken
by Adams, Harkness & Hill, Inc., is attached hereto as Annex I to this
Schedule 14D-9 and is incorporated herein by reference. SHAREHOLDERS ARE
URGED TO READ THE OPINION OF ADAMS, HARKNESS & HILL, INC. CAREFULLY AND IN
ITS ENTIRETY;
(vi) the Merger Agreement permits the Board, in the exercise of its
fiduciary duties, to furnish nonpublic information and data, and enter into
discussions and negotiations, in connection with an unsolicited acquisition
proposal and recommend an unsolicited acquisition proposal to the Company's
shareholders;
(vii) the Merger Agreement permits the Board, in the exercise of its
fiduciary duties, to terminate the Merger Agreement in favor of an
alternative acquisition proposal; upon such termination, the Company shall
pay GE Fanuc a fee of up to $4,000,000 (representing approximately 4% of
the total value of the consideration to be paid in the Offer and the
Merger) less the amount realized or realizable by GE Fanuc under the Stock
Option Agreement. The Board did not view this payment obligation as
unreasonably precluding any third party from proposing an alternative
transaction and concluded that entering into the Merger Agreement given the
available strategic alternatives was in the best interests of the Company;
and
(viii) the transactions contemplated by the Merger Agreement provided for
an all cash payment to shareholders, with no financing condition.
The Board did not assign relative weights to the above factors or determine
that any factor was of particular importance. Rather, the Board viewed its
position and recommendations as being based on the totality of the information
presented to and considered by it.
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<PAGE>
The Board recognized that, while the consummation of the Offer gives the
Company's shareholders the opportunity to realize a significant premium over
the price at which the Shares were traded prior to the public announcement of
the Offer, tendering in the Offer would eliminate the opportunity for such
shareholders to participate in the future growth and profits of the Company.
The Board also recognized that there can be no assurance as to the level of
growth or profits to be attained by the Surviving Corporation in the future.
It is expected that, if the Shares are not purchased by GE Fanuc in
accordance with the terms of the Offer or if the Merger is not consummated, the
Company's current management, under the general direction of the Board, will
continue to manage the Company as an ongoing business.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company has retained Adams, Harkness & Hill, Inc. as its financial
advisor in connection with the Offer and the Merger (the "Financial Advisor").
Pursuant to the terms of the Financial Advisor's engagement, the Company paid
Adams, Harkness & Hill, Inc. (i) $25,000 upon the execution of an engagement
letter to be deducted from the "success fee" discussed below, and (ii) $350,000
upon the delivery of its written opinion regarding the fairness of the Merger.
In addition, in the event the Offer is consummated, the Company shall pay to
Adams, Harkness & Hill, Inc. a "success fee" of 1.0% of the aggregate
consideration paid to the Company and its shareholders in connection with the
Offer and the Merger. The Company also has agreed to reimburse the Financial
Advisor for reasonable travel and other out-of-pocket expenses, including
reasonable legal fees and expenses, and to indemnify the Financial Advisor and
certain related parties against certain liabilities, including liabilities
under the federal securities laws, arising out of the Financial Advisor's
engagement.
On October 5 1998, the Company retained Michael Blitzer and Associates, Inc.
as a financial consultant to assist the Company with respect to certain
business transactions. Pursuant to the terms of this engagement, upon the
consummation of the Merger, the Company will pay Michael Blitzer and
Associates, Inc. an amount equal to (i) $300,000, plus (ii) 0.5% of the amount
over which the aggregate consideration paid in the Offer and the Merger exceeds
$20 million. The Company also has agreed to reimburse Michael Blitzer and
Associates, Inc. for reasonable travel and other out-of-pocket expenses, and to
indemnify Michael Blitzer and Associates, Inc. against certain liabilities
arising out of a breach by the Company of any written agreement entered into by
the Company in connection with Michael Blitzer and Associates, Inc.'s
engagement, except in the case of gross negligence or willful misconduct of
Michael Blitzer and Associates, Inc.
Neither the Company nor any person acting on its behalf has employed,
retained or agreed to compensate any person to make solicitations or
recommendations to the Company's shareholders concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Except as otherwise disclosed in this Schedule 14D-9, during the past 60
days, no transaction in the Shares has been effected by the Company or, to its
knowledge, by any of its directors, executive officers, affiliates or
subsidiaries, except for (i) the issuance of up to 230,000 Shares to KP One,
Inc. (formerly known as Computer Dynamics, Inc.) as contingent consideration
relating to the Company's purchase of Computer Dynamics, Inc. in October of
1997, and (ii) the issuance of 666 Shares in the ordinary course of business
pursuant to the exercise of outstanding employee stock options. On December 1,
1998, additional Shares will be purchased by employees of the Company under the
Stock Purchase Plan consistent with past practices.
(b) To the knowledge of the Company, pursuant to the Offer, all directors and
executive officers of the Company presently intend to tender all Shares owned
by them except for those Shares, if any, (i) held by such persons which, if
tendered, could cause such persons to incur liability under Section 16(b) of
the Securities Exchange Act of 1934, or (ii) with respect to which any such
person acts in a fiduciary or representative capacity or is subject to the
instructions of a third party.
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ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as otherwise disclosed in this Schedule 14D-9, the Company is not
engaged in any negotiation in response to the Offer which relates to or would
result in (i) an extraordinary transaction, such as a merger or reorganization,
involving the Company; (ii) a purchase, sale or transfer of material amount of
assets by the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as described in Item 3 or 4 above, there are no transactions,
Board resolutions, agreements in principle or signed contracts in response to
the Offer that relate to or would result in one or more of the events referred
to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The information contained in all of the Exhibits referred to in Item 9 below
is incorporated by reference and made a part hereof.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO.
----------
<C> <S>
Exhibit 1 Agreement and Plan of Merger dated as of November 22, 1998
among Parent, Merger Subsidiary and the Company.
Exhibit 2 Pages 7-8, 11 and 16-18 of the Company's Proxy Statement dated
July 15, 1998.
Exhibit 3 Letter to Shareholders of the Company dated November 30, 1998.*
Exhibit 4 Press release issued by the Company dated November 23, 1998.
Exhibit 5 Opinion of Adams, Harkness & Hill, Inc. dated November 22, 1998
(included as Annex I to this Schedule 14D-9).*
Exhibit 6 Stock Option Agreement, dated as of November 22, 1998, by and
among Parent, Merger Subsidiary and the Company.
Exhibit 7 Employment Agreement between Nicholas T. Gihl and the Company
dated as of November 22, 1998.
Exhibit 8 Employment Agreement between Peter A. Nicholson and the Company
dated as of November 22, 1998.
Exhibit 9 Shareholder Agreement among Nicholas T. Gihl, Parent, Merger
Subsidiary and the Company dated as of November 22, 1998.
Exhibit 10 Shareholder Agreement among A.B. Siemer, Parent, Merger
Subsidiary and the Company dated as of November 22, 1998.
Exhibit 11 Shareholder Agreement among Julius Sparacino, Parent, Merger
Subsidiary and the Company dated as of November 22, 1998.
Exhibit 12 Shareholder Agreement among Neil Taylor, Merle Taylor, Parent,
Merger Subsidiary and the Company dated as of November 22,
1998.
Exhibit 13 Sections 11.65 and 11.70 of the Illinois Business Corporation
Act of 1983, as amended (included as Annex II to this Schedule
14D-9).*
</TABLE>
- --------
*Included with Schedule 14D-9 mailed to the shareholders of the Company.
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SIGNATURE
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.
/s/ Peter A. Nicholson
Senior Vice President, Chief
Financial Officer,
Treasurer and Secretary
20
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ANNEX I
OPINION OF ADAMS, HARKNESS & HILL, INC.
November 22, 1998
Board of Directors
Total Control Products, Inc.
2001 North Janice Avenue
Melrose Park, IL 60160
Attention: Nicholas T. Gihl--Chairman of the Board, President and
Chief Executive Officer
Members of the Board:
You have requested our opinion (the "Fairness Opinion") as to the fairness,
from a financial point of view, to the holders of common stock, no par value
(the "Common Stock"), of Total Control Products, Inc. (the "Company") of the
consideration proposed to be received by such stockholders pursuant to an
Agreement and Plan of Merger (the "Merger Agreement"), to be entered into in
substantially the form of the draft Merger Agreement dated November 22, 1998,
among the Company, GE Fanuc Automation North America, Inc. (the "Parent") and
Orion Merger Corp., a wholly owned subsidiary of the Parent (the "Sub"). The
draft Merger Agreement provides that the Sub will commence a tender offer (the
"Offer") for any and all outstanding shares of Common Stock at a price of
$11.00 per share net to the seller in cash. Assuming the Sub acquires at least
two-thirds of the Common Stock in the Offer and the Company satisfies certain
other conditions as set forth in the Merger Agreement, a merger of the Sub
with and into the Company (the "Merger") will occur and stockholders of the
Company who do not tender their shares in the Offer will receive $11.00 per
share net to the seller in cash in the Merger. We refer to the Offer and the
Merger together as the "Transaction."
Adams, Harkness & Hill, Inc., as part of its investment banking activities,
is continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. We have acted as financial
advisor to the Board of Directors of the Company in connection with the
proposed Transaction and will receive fees for our services, including a fee
payable upon rendering this opinion and a fee payable upon the closing of the
Transaction. We have in the past provided investment banking and financial
advisory services to the Company for which we have received various fees. We
also serve as a market maker for the Common Stock, and, in the ordinary course
of our business, may trade in the Common Stock for our own account and for the
accounts of customers. Accordingly, we may at any time hold a long or short
position in the Common Stock.
We are expressing no opinion as to what the value of the Common Stock will
be when purchased in the Offer or when converted in the Merger or the prices
at which the Common Stock will actually trade at any time. Our Fairness
Opinion as expressed herein is limited to the fairness, from a financial point
of view, as of the date hereof, of the consideration to be received by the
holders of the Common Stock pursuant to the Merger Agreement and does not
address the Company's underlying business decision to engage in the
Transaction.
In developing our Fairness Opinion, we have, among other things: (i)
reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the three fiscal years ended March 31, 1998, and the Company's
Form 10-Q and the related unaudited financial information for the six month
period ended September 30, 1998; (ii) analyzed certain financial statements
and other financial and operating data concerning the Company, including
forecasts, prepared by securities analysts which we discussed with members of
the senior management of the Company; (iii) conducted due diligence
discussions with members of senior management of the Company and Parent; (iv)
reviewed the historical market prices and trading activity for the Common
Stock
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<PAGE>
and compared them with those of certain publicly traded companies we deemed to
be relevant and comparable to the Company; (v) compared the results of
operations of the Company with those of certain companies we deemed to be
relevant and comparable to the Company; (vi) compared the financial terms of
the Transaction with the financial terms of certain other mergers and
acquisitions we deemed to be relevant and comparable to the Transaction; (vii)
participated in certain discussions among representatives of the Company and
Parent and their financial and legal advisors; (viii) reviewed a draft of the
Merger Agreement dated November 22, 1998; and (ix) reviewed such other
financial studies and analyses and performed such other investigations and
took into account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions as of the date
hereof.
In connection with our review and arriving at our Fairness Opinion, we have
not independently verified any information received from the Company, have
relied on such information, and have assumed that all such information is
complete and accurate in all material respects. With respect to any forecasts
reviewed relating to the prospects of the Company, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of securities analysts as to the future financial
performance of the Company. We were not provided with any forecasts prepared
by the management of the Company and, accordingly, our Fairness Opinion does
not take into account any such internal forecasts. Our Fairness Opinion is
rendered on the basis of securities market conditions prevailing as of the
date hereof and on the conditions and prospects, financial and otherwise, of
the Company as known to us on the date hereof. We have not conducted, nor have
we received copies of, any independent valuation or appraisal of any of the
assets of the Company. In addition, we have assumed, with your consent, that
any material liabilities (contingent or otherwise, known or unknown) of the
Company are as set forth in the consolidated financial statements of the
Company.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its
entirety in any filing made by the Company with the Securities and Exchange
Commission with respect to the transactions contemplated by the Merger
Agreement.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration to be received by the holders of Common Stock
pursuant to the Merger Agreement is fair, from a financial point of view, to
such holders.
Sincerely,
Adams, Harkness & Hill, Inc.
/s/ T. L. Stebbins
By: _________________________________
Theodore L. Stebbins
Managing Director
I-2
<PAGE>
ANNEX II
DISSENTERS' APPRAISAL RIGHTS UNDER SECTIONS 11.65
AND 11.70 OF THE ILLINOIS BUSINESS CORPORATION
ACT OF 1983, AS AMENDED
SECTION 11.65. RIGHT TO DISSENT
Section 11.65. Right to Dissent. (a) A shareholder of a corporation is
entitled to dissent from, and obtain payment for his or her shares in the
event of any of the following corporate actions:
(1) consummation of a plan of merger or consolidation or a plan of share
exchange to which the corporation is a party if (i) shareholder
authorization is required for the merger or consolidation or the share
exchange by Section 11.20 or the articles of incorporation or (ii) the
corporation is a subsidiary that is merged with its parent or another
subsidiary under Section 11.30;
(2) consummation of a sale, lease or exchange of all, or substantially
all, of the property and assets of the corporation other than in the usual
and regular course of business;
(3) an amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) alters or abolishes a preferential right of such shares;
(ii) alters or abolishes a right in respect of redemption, including
a provision respecting a sinking fund for the redemption or repurchase,
of such shares;
(iii) in the case of a corporation incorporated prior to January 1,
1982, limits or eliminates cumulative voting rights with respect to
such shares; or
(4) any other corporate action taken pursuant to a shareholder vote if
the articles of incorporation, by-laws, or a resolution of the board of
directors provide that shareholders are entitled to dissent and obtain
payment for their shares in accordance with the procedures set forth in
Section 11.70 or as may be otherwise provided in the articles, by-laws or
resolution.
(b) A shareholder entitled to dissent and obtain payment for his or her
shares under this Section may not challenge the corporate action creating his
or her entitlement unless the action is fraudulent with respect to the
shareholder or the corporation or constitutes a breach of a fiduciary duty
owed to the shareholder.
(c) A record owner of shares may assert dissenters' rights as to fewer than
all the shares recorded in such person's name only if such person dissents
with respect to all shares beneficially owned by any one person and notifies
the corporation in writing of the name and address of each person on whose
behalf the record owner asserts dissenters' rights. The rights of a partial
dissenter are determined as if the shares as to which dissent is made and the
other shares were recorded in the names of different shareholders. A
beneficial owner of shares who is not the record owner may assert dissenters'
rights as to shares held on such person's behalf only if the beneficial owner
submits to the corporation the record owner's written consent to the dissent
before or at the same time the beneficial owner asserts dissenters' rights.
SECTION 11.70. PROCEDURE TO DISSENT
Section 11.70. Procedure to Dissent. (a) If the corporate action giving rise
to the right to dissent is to be approved at a meeting of shareholders, the
notice of meeting shall inform the shareholders of their right to dissent and
the procedure to dissent. If, prior to the meeting, the corporation furnishes
to the shareholders material information with respect to the transaction that
will objectively enable a shareholder to vote on the transaction and to
determine whether or not to exercise dissenters' rights, a shareholder may
assert dissenters' rights only if the shareholder delivers to the corporation
before the vote is taken a written demand for payment for his or her shares if
the proposed action is consummated, and the shareholder does not vote in favor
of the proposed action.
II-1
<PAGE>
(b) If the corporate action giving rise to the right to dissent is not to be
approved at a meeting of shareholders, the notice to shareholders describing
the action taken under Section 11.30 or Section 7.10 shall inform the
shareholders of their right to dissent and the procedure to dissent. If, prior
to or concurrently with the notice, the corporation furnishes to the
shareholders material information with respect to the transaction that will
objectively enable a shareholder to determine whether or not to exercise
dissenters' rights, a shareholder may assert dissenter's rights only if he or
she delivers to the corporation 30 days from the date of mailing the notice a
written demand for payment for his or her shares.
(c) Within 10 days after the date on which the corporate action giving rise
to the right to dissent is effective or 30 days after the shareholder delivers
to the corporation the written demand for payment, whichever is later, the
corporation shall send each shareholder who has delivered a written demand for
payment a statement setting forth the opinion of the corporation as to the
estimated fair value of the shares, the corporation's latest balance sheet as
of the end of a fiscal year ending not earlier than 16 months before the
delivery of the statement, together with the statement of income for that year
and the latest available interim financial statements, and either a commitment
to pay for the shares of the dissenting shareholder at the estimated fair
value thereof upon transmittal to the corporation of the certificate or
certificates, or other evidence of ownership, with respect to the shares, or
instructions to the dissenting shareholder to sell his or her shares within 10
days after delivery of the corporation's statement to the shareholder. The
corporation may instruct the shareholder to sell only if there is a public
market for the shares at which the shares may be readily sold. If the
shareholder does not sell within that 10 day period after being so instructed
by the corporation, for purposes of this Section the shareholder shall be
deemed to have sold his or her shares at the average closing price of the
shares, if listed on a national exchange, or the average of the bid and asked
price with respect to the shares quoted by a principal market maker, if not
listed on a national exchange, during that 10 day period.
(d) A shareholder who makes written demand for payment under this Section
retains all other rights of a shareholder until those rights are canceled or
modified by the consummation of the proposed corporate action. Upon
consummation of that action, the corporation shall pay to each dissenter who
transmits to the corporation the certificate or other evidence of ownership of
the shares the amount the corporation estimates to be the fair value of the
shares, plus accrued interest, accompanied by a written explanation of how the
interest was calculated.
(e) If the shareholder does not agree with the opinion of the corporation as
to the estimated fair value of the shares or the amount of interest due, the
shareholder, within 30 days from the delivery of the corporation's statement
of value, shall notify the corporation in writing of the shareholder's
estimated fair value and amount of the interest due and demand payment for the
difference between the shareholder's estimate of fair value and interest due
and the amount of the payment by the corporation or the proceeds of sale by
the shareholder, whichever is applicable because of the procedure for which
the corporation opted pursuant to subsection (c).
(f) If, within 60 days from delivery to the corporation of the shareholder
notification of estimate of fair value of the shares and interest due, the
corporation and the dissenting shareholder have not agreed in writing upon the
fair value of the shares and interest due, the corporation shall either pay
the difference in value demanded by the shareholder, with interest, or file a
petition in the circuit court of the county in which either the registered
office or the principal office of the corporation is located, requesting the
court to determine the fair value of the shares and interest due. The
corporation shall make all dissenters, whether or not residents of this State,
whose demands remain unsettled parties to the proceeding as an action against
their shares and all parties shall be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by publication
as provided by law. Failure of the corporation to commence an action pursuant
to this Section shall not limit or affect the right of the dissenting
shareholders to otherwise commence an action as permitted by law.
(g) The jurisdiction of the court in which the proceeding is commenced under
subsection (f) by a corporation is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the power
described in the order appointing them, or in any amendment to it.
II-2
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(h) Each dissenter made a party to the proceeding is entitled to judgment
for the amount, if any, by which the court finds that the fair value of his or
her shares, plus interest, exceeds the amount paid by the corporation or the
proceeds of sale by the shareholder, whichever amount is applicable.
(i) The court, in a proceeding commenced under subsection (f), shall
determine all costs of the proceeding, including the reasonable compensation
and expenses of the appraisers, if any, appointed by the court under
subsection (g), but shall exclude the fees and expenses of counsel and experts
for the respective parties. If the fair value of the shares as determined by
the court materially exceeds the amount which the corporation estimated to be
the fair value of the shares or if no estimate was made in accordance with
subsection (c), then all or any part of the costs may be assessed against the
corporation. If the amount which any dissenter estimated to be the fair value
of the shares materially exceeds the fair value of the shares as determined by
the court, then all or any part of the costs may be assessed against that
dissenter. The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable, as
follows:
(1) Against the corporation and in favor of any or all dissenters if the
court finds that the corporation did not substantially comply with the
requirements of subsections (a), (b), (c), (d), or (f).
(2) Against either the corporation or a dissenter and in favor of any
other party if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this Section.
If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated and that the fees
for those services should not be assessed against the corporation, the court
may award to that counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who are benefited. Except as otherwise provided in
this Section, the practice, procedure, judgment and costs shall be governed by
the Code of Civil Procedure.
(j) As used in this Section:
(1) "Fair value", with respect to a dissenter's shares, means the value
of the shares immediately before the consummation of the corporate action
to which the dissenter objects excluding any appreciation or depreciation
in anticipation of the corporate action, unless exclusion would be
inequitable.
(2) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances.
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EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of November 22, 1998 (this
"Agreement"), among GE Fanuc Automation North America, Inc., a Delaware
corporation ("Parent"), Orion Merger Corp., an Illinois corporation and a
wholly-owned subsidiary of Parent ("Sub"), and Total Control Products, Inc., an
Illinois corporation (the "Company") (Sub and the Company being hereinafter
collectively referred to as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent on the terms and subject
to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause Sub
to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase any and all issued and
outstanding shares of Common Stock, no par value, of the Company (the "Company
Common Stock"; the shares of Company Common Stock being hereinafter referred to
as the "Shares") at a purchase price of $11.00 per share (the "Offer Price"),
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in this Agreement; and the Board of Directors of the
Company has adopted resolutions approving the Offer and the Merger (as defined
below) and recommending that holders of Shares accept the Offer and that the
Company's shareholders approve this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved and declared advisable the merger of Sub and the Company (the
"Merger"), upon the terms and subject to the conditions set forth herein,
whereby each issued and outstanding Share not owned directly or indirectly by
Parent or the Company will be converted into the right to receive the price per
share paid in the Offer and the respective Boards of Directors of Sub and the
Company have approved and adopted this Agreement; and
WHEREAS, in order to induce Parent and Sub to enter into this Agreement,
concurrently herewith (i) Parent and the Company are entering into the Stock
Option Agreement dated as of the date hereof (the "Stock Option Agreement") in
the form of the attached Exhibit A and (ii) Parent and certain of the
shareholders of the Company are entering into Shareholder Agreements dated as of
the date hereof (the "Shareholder Agreements") in the forms of the attached
Exhibit B.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
<PAGE>
ARTICLE I
THE OFFER
Section 1.1. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than November 30,
1998, Sub shall, and Parent shall cause Sub to, commence, within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended (together with
the rules and regulations promulgated thereunder, the "Exchange Act"), the
Offer. The obligation of Sub to, and of Parent to cause Sub to, commence the
Offer and accept for payment, and pay for, any Shares tendered pursuant to the
Offer shall be subject only to the conditions set forth in the attached Exhibit
C (the "Offer Conditions") (any of which may be waived in whole or in part by
Sub in its sole discretion, except that Sub shall not waive the Minimum
Condition (as defined in Exhibit C) without the consent of the Company) and
subject to the rights of Parent or Sub to terminate this Agreement as provided
in Section 8.1. Sub expressly reserves the right to modify the terms of the
Offer, except that, without the consent of the Company, Sub shall not (i) reduce
the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii)
impose any other conditions to the Offer other than the Offer Conditions or
modify the Offer Conditions (other than to waive any Offer Conditions to the
extent permitted by this Agreement), (iv) except as provided in the next
sentence, extend the Offer, (v) change the form of consideration payable in the
Offer or (vi) amend any other term of the Offer in any manner adverse to the
holders of Shares. Notwithstanding the foregoing, Sub may, without the consent
of the Company, (i) extend the Offer, if at the scheduled or extended expiration
date of the Offer any of the Offer Conditions shall not be satisfied or waived,
until such time as such conditions are satisfied or waived, (ii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer and (iii) if all Offer Conditions are satisfied
or waived but the number of Shares tendered is at least equal to 75%, but less
than 90%, of the then outstanding number of Shares, extend the Offer for any
reason on one or more occasions for an aggregate period of not more than 15
business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence, in each case subject to the
right of Parent, Sub or the Company to terminate this Agreement pursuant to the
terms hereof. Parent and Sub agree that if at any scheduled expiration date of
the Offer, the Minimum Condition, the HSR Condition (as defined in Exhibit C) or
either of the conditions set forth in paragraphs (e) or (f) of Exhibit C shall
not have been satisfied, but at such scheduled expiration date all the
conditions set forth in paragraphs (a), (b), (c), (d) and (g) shall then be
satisfied, at the request of the Company (confirmed in writing), Sub shall
extend the Offer from time to time, subject to the right of Parent, Sub or the
Company to terminate this Agreement pursuant to the terms hereof. Subject to
the terms and conditions of the Offer and this Agreement, Sub shall, and Parent
shall cause Sub to, accept for payment, and pay for, all Shares validly tendered
and not withdrawn pursuant to the Offer that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer as soon as practicable after the
expiration of the Offer, and in any event in compliance with the obligations
respecting prompt payment pursuant to Rule 14e-1(c) under the Exchange Act.
(b) On the date of commencement of the Offer, Parent and Sub shall file
with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1")
with respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal and summary
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advertisement (such Schedule 14D-1 and the documents included therein pursuant
to which the Offer will be made, together with any supplements or amendments
thereto, the "Offer Documents"), and Parent and Sub shall cause to be
disseminated the Offer Documents to holders of Shares as and to the extent
required by applicable Federal securities laws. Parent, Sub and the Company each
agrees promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and Parent and Sub further agree to take all
steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the
SEC and the other Offer Documents as so corrected to be disseminated to holders
of Shares, in each case as and to the extent required by applicable Federal
securities laws. The Company and its counsel shall be given reasonable
opportunity to review and comment upon the Offer Documents prior to their filing
with the SEC or dissemination to the shareholders of the Company. Parent and Sub
agree to provide the Company and its counsel any comments Parent, Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments and to cooperate with the
Company and its counsel in responding to any such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely basis
the funds necessary to accept for payment, and pay for, any Shares that Sub
becomes obligated to accept for payment, and pay for, pursuant to the Offer.
Section 1.2. Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that the Board of Directors of
the Company, at a meeting duly called and held, at which all directors were
present, duly and unanimously adopted resolutions approving and adopting this
Agreement, approving the Offer, the Merger and the Stock Option Agreement,
taking all action necessary to render the provisions of Sections 7.85 and 11.75
of the IBCA inapplicable to the Offer, the Merger, the Stock Option Agreement
and the Shareholder Agreements, determining that the terms of the Offer and the
Merger are fair to, and in the best interests of, the Company's shareholders and
recommending that holders of Shares accept the Offer and that the Company's
shareholders approve this Agreement and the Merger; provided that such
recommendation and approval may be withdrawn, modified or amended to the extent
the Board of Directors of the Company determines in good faith, after
consultation with independent counsel, that such action is required in the
exercise of such Board's fiduciary duties under applicable law. The Company
represents and warrants that its Board of Directors has received the opinion of
Adams, Harkness & Hill, Inc. that, as of the date of this Agreement and subject
to the matters set forth in such opinion, the proposed consideration to be
received by holders of Shares pursuant to the Offer and the Merger is fair to
such holders from a financial point of view, and a complete and correct signed
copy of such opinion has been delivered by the Company to Parent.
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-
9 with respect to the Offer (such Schedule 14D-9, as amended from time to time,
the "Schedule 14D-9") containing the recommendation described in paragraph (a)
(subject to the right to withdraw, modify or amend such recommendation as and to
the extent provided in Section 1.2(a)), and the Company shall cause to be
disseminated the Schedule 14D-9 to holders of Shares as and to the extent
required by applicable Federal securities laws. Each of the Company, Parent and
Sub agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that
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such information shall have become false or misleading in any material respect,
and the Company further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented to be filed with the SEC and disseminated to holders of Shares, in
each case as and to the extent required by applicable Federal securities laws.
Parent and its counsel shall be given reasonable opportunity to review and
comment upon the Schedule 14D-9 prior to its filing with the SEC or
dissemination to shareholders of the Company. The Company agrees to provide
Parent and its counsel any comments the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments and to cooperate with Parent, Sub and their counsel in
responding to any such comments.
(c) In connection with the Offer and the Merger, the Company shall direct
its transfer agent or agents to furnish Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of shareholders, security position
listings and computer files and all other information in the Company's
possession or control, to the extent reasonably available to the Company,
regarding the beneficial owners of Shares and any securities convertible into
Shares, and shall furnish to Sub such information and assistance (including
updated lists of shareholders, security position listings and computer files) as
Parent may reasonably request in communicating the Offer to the Company's
shareholders. Subject to the requirements of applicable law, and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Sub and their agents
shall hold in confidence the information contained in any such labels, listings
and files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will, upon request, deliver,
and will use their best efforts to cause their agents to deliver, to the Company
all copies of such information then in their possession or control.
(d) The Company shall cause Taylor Industrial Software, Inc., an Alberta
corporation ("Taylor"), to transmit to each holder of shares of Class C
Exchangeable Common Stock, no par value, of Taylor ("Class C Taylor Shares"),
contemporaneously with the transmission of the Offer Documents to the holders of
Shares: (i) the Offer Documents; (ii) a letter, in form reasonably satisfactory
to Parent, stating that holders of Class C Taylor Shares who wish to participate
in the Offer must request retraction of such Class C Taylor Shares for shares of
Company Common Stock pursuant to Schedule I to Article 3 of the Articles of
Incorporation, as amended, of Taylor; and (iii) a form of retraction request,
which retraction request shall provide that a holder of Class C Taylor Shares
requests retraction thereof on the date Sub first accepts for payment pursuant
to the Offer and agrees that contemporaneously therewith the shares of Company
Common Stock received upon such retraction shall be deemed validly tendered
pursuant to the Offer. The Company shall cause Taylor to retract such Class C
Taylor Shares in accordance with such retraction request (and the Company
represents and warrants that such retraction can be effected in compliance with
the Business Corporations Act (Alberta)) and the Company shall cause to be
issued (for tender as so requested) such number of shares of Company Common
Stock as is necessary to satisfy the retraction under the Articles of
Incorporation, as amended, of Taylor and the related Support Agreement dated
September 26, 1996 between the Company and Taylor (the "Taylor Support
Agreement"). In addition, the Company shall cause (x) Taylor to transmit to the
holders of Class C Taylor Shares a
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recommendation of the Company and Taylor that such holders retract such shares
and tender the shares of Company Common Stock received on such retraction
pursuant to the Offer and (y) Taylor to furnish Sub promptly with the names and
addresses of the record holders of Class C Taylor Shares as of a recent date and
of those persons becoming record holders subsequent to such date and to furnish
to Sub such information and assistance as Parent or Sub may reasonably request
in communicating the documentation referred to in the first sentence of this
Section 1.2(d) to the holders of Class C Taylor Shares. The Company and Parent
agree that it is their intention that the foregoing transaction with respect to
Class C Taylor Shares be treated as an exchange of Company Common Stock for the
Class C Taylor Shares, rather than as a redemption of the Class C Taylor Shares
by Taylor and agree to modify the procedures described in this Section 1.2(d) as
and to the extent necessary to accomplish such intent.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the Business Corporation Act of 1983 of the State
of Illinois, as amended (the "IBCA"), Sub shall be merged with and into the
Company at the Effective Time (as hereinafter defined). Following the Merger,
the separate corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of Sub in accordance with
the IBCA. Notwithstanding anything to the contrary herein, at the election of
Parent, any direct wholly-owned Subsidiary (as hereinafter defined) of Parent
may be substituted for Sub as a constituent corporation in the Merger. In such
event, the parties agree to execute an appropriate amendment to this Agreement,
in form and substance reasonably satisfactory to Parent and the Company, in
order to reflect such substitution.
Section 2.2 Effective Time. The Merger shall become effective when
articles of merger (the "Articles of Merger"), executed in accordance with the
relevant provisions of the IBCA, are filed with the Secretary of State of the
State of Illinois. When used in this Agreement, the term "Effective Time" shall
mean the date and time at which the Articles of Merger are accepted for record.
The filing of the Articles of Merger shall be made on the date of the Closing
(as defined in Section 2.9).
Section 2.3 Effects of the Merger. The Merger shall have the effects set
forth in Section 11.50 of the IBCA.
Section 2.4 Charter and Bylaws; Directors and Officers. (a) At the
Effective Time, the Restated and Amended Articles of Incorporation, as amended,
of the Company (the "Company Charter") shall be the Articles of Incorporation of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law. At the Effective Time, the Amended and Restated
Bylaws of the Company, as in effect immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by the Company Charter.
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(b) The directors of Sub at the Effective Time of the Merger shall be the
directors of the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified,
as the case may be. The officers of the Company at the Effective Time of the
Merger shall be the officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
Section 2.5 Conversion of Securities. As of the Effective Time, by
virtue of the Merger and without any action on the part of Sub, the Company or
the holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, par value $.01
per share, of Sub shall be converted into one validly issued, fully paid
and nonassessable Common Share of the Surviving Corporation.
(b) All Shares that are held in the treasury of the Company or by any
wholly-owned Subsidiary of the Company and any Shares owned by Parent or by
any wholly-owned Subsidiary of Parent shall be canceled and no capital
stock of Parent or other consideration shall be delivered in exchange
therefor.
(c) Each Share issued and outstanding immediately prior to the
Effective Time (other than shares to be canceled in accordance with Section
2.5(b) and other than Dissenting Shares (as defined in Section 2.5(d))
shall be converted into the right to receive from the Surviving Corporation
in cash, without interest, the per share price paid in the Offer (the
"Merger Consideration"). All such Shares, when so converted, shall no
longer be outstanding and shall automatically be canceled and retired and
each holder of a certificate representing any such shares shall cease to
have any rights with respect thereto, except the right to receive the
Merger Consideration.
(d) Shares of Dissenting Shareholders. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding Shares held by a
person (a "Dissenting Shareholder") who objects to the Merger and complies
with all of the provisions of the IBCA concerning the right of holders of
Shares to dissent from the Merger and obtain payment for their Shares
("Dissenting Shares") shall not be converted as described in Section
2.5(c), but shall be converted into the right to receive such consideration
as may be determined to be due to such Dissenting Shareholder pursuant to
the IBCA. If, after the Effective Time, such Dissenting Shareholder
withdraws his demand for payment or fails to perfect or otherwise loses his
right of payment, in any case pursuant to the IBCA, the Shares of such
Dissenting Shareholder shall be deemed to be converted as of the Effective
Time into the right to receive the Merger Consideration. The Company shall
give Parent (i) prompt notice of any demands for payment received by the
Company and (ii) the opportunity to participate in and direct all
negotiations and proceedings with respect to any such demands. The Company
shall not, without the prior written consent of Parent, make any payment
with respect to, or settle, offer to settle or otherwise negotiate, any
such demands.
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Section 2.6. Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall designate a bank or trust company (or such other
person or persons as shall be reasonably acceptable to Parent and the Company)
to act as paying agent in the Merger (the "Paying Agent"), and at the Effective
Time, Parent shall make available, or cause the Surviving Corporation to make
available, to the Paying Agent cash in the amount necessary for the payment of
the Merger Consideration upon surrender of certificates representing Shares as
part of the Merger pursuant to Section 2.5. Any and all interest earned on
funds made available to the Paying Agent pursuant to this Agreement shall be
paid over to Parent.
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Paying Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the amount of cash into which the Shares theretofore
represented by such Certificate shall have been converted pursuant to Section
2.5, and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.6, each Certificate (other than Certificates
representing Dissenting Shares) shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Shares theretofore represented by such
Certificate shall have been converted pursuant to Section 2.5. No interest will
be paid or will accrue on the cash payable upon the surrender of any
Certificate. Parent or the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement
such amounts as Parent or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the Code (as hereinafter
defined) or under any provisions of state, local or foreign tax law. To the
extent that amounts are so withheld by Parent or the Paying Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the person in respect of which such deduction or withholding was made by the
Parent or the Paying Agent.
(c) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article II shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
Shares theretofore represented by such Certificates. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective
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Time, Certificates are presented to the Surviving Corporation or the Paying
Agent for any reason, they shall be canceled and exchanged as provided in this
Article II.
(d) Termination of Payment Fund. Any portion of the funds made
available to the Paying Agent to pay the Merger Consideration which remains
undistributed to the holders of Shares for six months after the Effective Time
shall be delivered to Parent, upon demand, and any holders of Shares who have
not theretofore complied with this Article II and the instructions set forth in
the letter of transmittal mailed to such holders after the Effective Time shall
thereafter look only to Parent for payment of the Merger Consideration to which
they are entitled.
(e) No Liability. None of Parent, Sub, the Company or the Paying Agent
shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to seven years after
the Effective Time (or immediately prior to such earlier date on which any
payment pursuant to this Article II would otherwise escheat to or become the
property of any Governmental Entity (as hereinafter defined), the cash payment
in respect of such Certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interests of any person previously entitled thereto.
(f) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent or
the Paying Agent, the posting by such person of a bond, in such reasonable
amount as Parent or the Paying Agent may direct as indemnity against any claim
that may be made against them with respect to such Certificate, the Paying Agent
will pay in exchange for such lost, stolen or destroyed Certificate the amount
of cash to which the holders thereof are entitled pursuant to Section 2.5.
Section 2.7 Merger Without Meeting of Shareholders. Notwithstanding the
foregoing, if Sub, or any other direct or indirect subsidiary of Parent, shall
acquire at least 90 percent of the outstanding Shares, the parties hereto agree
to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after expiration of the Offer without a meeting
of shareholders of the Company, in accordance with Section 11.30 of the IBCA.
Section 2.8 Further Assurances. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either of the Constituent Corporations, all such deeds, bills of sale,
assignments and assurances and to do, in the name and on behalf of either
Constituent Corporation, all such other acts and things as may be necessary,
desirable or proper to vest, perfect or confirm the Surviving Corporation's
right, title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such Constituent Corporation and otherwise
to carry out the purposes of this Agreement.
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Section 2.9 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") and all actions specified in this Agreement to occur
at the Closing shall take place at the offices of Sidley & Austin, One First
National Plaza, Chicago, Illinois 60603, at 10:00 a.m., local time, no later
than the second business day following the day on which the last of the
conditions set forth in Article VII shall have been fulfilled or waived (if
permissible) or at such other time and place as Parent and the Company shall
agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
------------------------------------------------
Parent and Sub represent and warrant to the Company as follows:
Section 3.1. Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted.
Section 3.2. Authority. On or prior to the date of this Agreement, the
Boards of Directors of Parent and Sub have declared the Offer and the Merger
advisable and the Board of Directors of Sub has approved and adopted this
Agreement in accordance with the IBCA. Each of Parent and Sub has all requisite
corporate power and authority to execute and deliver this Agreement and the
Shareholder Agreements, Parent has all requisite corporate power and authority
to enter into the Stock Option Agreement, and each of Parent and Sub has all
requisite corporate power and authority to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Parent and Sub of this Agreement and the Shareholder Agreements, the execution
and delivery by Parent of the Stock Option Agreement, and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action (including Board action) on the part of Parent
and Sub subject, in the case of this Agreement, to the filing of the Articles of
Merger as required by the IBCA. This Agreement and the Shareholder Agreements
have been duly executed and delivered by Parent and Sub, and the Stock Option
Agreement has been duly executed and delivered by Parent, and (assuming the
valid authorization, execution and delivery of this Agreement and the Stock
Option Agreement by the Company, the valid authorization, execution and delivery
of the Shareholder Agreements by the shareholders who are parties thereto and
the validity and binding effect hereof and thereof on the Company and such
shareholders) this Agreement and the Shareholders Agreements constitute the
valid and binding obligation of each of Parent and Sub enforceable against them
in accordance with its terms and the Stock Option Agreement constitutes the
valid and binding obligation of Parent enforceable against Parent in accordance
with its terms.
Section 3.3. Consents and Approvals; No Violations. Assuming that all
consents, approvals, authorizations and other actions described in this Section
3.3 have been obtained and all filings and obligations described in this Section
3.3 have been made, and the execution and delivery of this Agreement, the Stock
Option Agreement and the Shareholder Agreements do not, and the consummation of
the transactions contemplated hereby and thereby and compliance with the
provisions hereof and thereof will not, result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give to others a
right of termination,
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cancellation or acceleration of any obligation or result in the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of Parent
or any of its Subsidiaries under, any provision of (i) the Certificate of
Incorporation or the By-Laws of Parent, each as amended to date, (ii) any
provision of the comparable charter or organization documents of any of Parent's
Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent or any of its Subsidiaries or (iv) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or any of its Subsidiaries or any of their respective properties or assets,
other than, in the case of clauses (ii), (iii) or (iv), any such violations,
defaults, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent, materially impair the ability of Parent or Sub to perform their
respective obligations hereunder or under the Stock Option Agreement or the
Shareholder Agreements or prevent the consummation of any of the transactions
contemplated hereby or thereby. No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state), foreign
or supranational court, commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is required by or with respect
to Parent or any of its Subsidiaries in connection with the execution and
delivery of this Agreement, the Stock Option Agreement or the Shareholder
Agreements by Parent or Sub or is necessary for the consummation of the Offer,
the Merger and the other transactions contemplated by this Agreement, the Stock
Option Agreement or the Shareholder Agreements, except for (i) in connection, or
in compliance, with the provisions of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the Exchange Act, (ii)
the filing of the Articles of Merger with the Secretary of State of the State of
Illinois and appropriate documents with the relevant authorities of other states
in which the Company or any of its Subsidiaries is qualified to do business,
(iii) such filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Offer, the Merger or by the transactions
contemplated by this Agreement, the Stock Option Agreement or the Shareholder
Agreements, (iv) such filings, authorizations, orders and approvals as may be
required by state takeover laws (the "State Takeover Approvals"), (v) applicable
requirements, if any, of state securities or "blue sky" laws ("Blue Sky Laws"),
(vi) as may be required under foreign laws and (vii) such other consents,
orders, authorizations, registrations, declarations and filings the failure of
which to be obtained or made would not, individually or in the aggregate, have a
Material Adverse Effect on Parent, materially impair the ability of Parent or
Sub to perform its obligations hereunder or under the Stock Option Agreement or
the Shareholder Agreements or prevent the consummation of any of the
transactions contemplated hereby or thereby.
Section 3.4. Information Supplied. None of the information supplied or
to be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information Statement") or
(iv) the proxy statement (together with any amendments or supplements thereto,
the "Proxy Statement") relating to any required approval of this Agreement by
the holders of at least two-thirds of the Shares entitled to vote on the Merger
(the "Company Shareholder Approval"), will (a) in the case of the Offer
Documents, the Schedule 14D-9 and the
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Information Statement, at the respective times the Offer Documents, the Schedule
14D-9 and the Information Statement are filed with the SEC or first published,
sent or given to the Company's shareholders, or (b) in the case of the Proxy
Statement, at the time the Proxy Statement is first mailed to the Company's
shareholders or at the time of the Shareholder Meeting (as defined in Section
6.1), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Offer Documents will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by Parent or Sub
with respect to statements made or incorporated by reference therein based on
information supplied by the Company specifically for inclusion or incorporation
by reference therein.
Section 3.5. Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
Section 3.6. Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent or Sub.
Section 3.7. Ownership of Shares. As of the date hereof, neither Parent,
its Subsidiaries nor any of its Affiliates is an "Interested Shareholder" as
defined in Section 7.85 of the IBCA.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows (provided
that disclosure of any fact or item in any section of the letter dated the date
hereof and delivered on the date hereof by the Company to Parent, which relates
to this Agreement and is designated therein as the Company Letter (the "Company
Letter"), shall be deemed to be disclosed with respect to every other section
but only if the level of particularity or manner of disclosure of the fact or
item expressly disclosed in one section of the Company Letter permits a
reasonable person to find such disclosure relevant to another section):
Section 4.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate (in the
case of a Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company and each of its Subsidiaries are duly qualified to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned or held under lease or the nature of their activities
makes such qualification necessary,
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except where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 4.2 Capital Structure. As of the date hereof, the authorized
capital stock of the Company consists of 22,500,000 Shares and 1,000,000 shares
of Preferred Stock, no par value ("Company Preferred Stock"). At the close of
business on November 20, 1998:
(i) 8,032,818 Shares were issued and outstanding, all of which were
validly issued, fully paid and nonassessable and free of preemptive rights;
(ii) No Shares of Company Preferred Stock were issued and outstanding;
(iii) No Shares were held in the treasury of the Company or by
Subsidiaries of the Company;
(iv) 737,112 Shares were reserved for issuance upon the exchange of
the Class C Taylor Shares pursuant to the Articles of Incorporation of
Taylor, as amended, and the Taylor Support Agreement, 737,112 of which were
issued and outstanding as of such date;
(v) 1,386,806 Shares were reserved for issuance in the aggregate upon
the exercise of outstanding stock options issued under the Company's 1996
Employee Stock Option Plan, as amended, the Company's 1996 Non-Employee
Director Stock Option Plan or the Company's 1993 Employee Stock Option
Plan, as amended, (collectively, the "Company Stock Option Plans");
(vi) 250,000 Shares were reserved for issuance in the aggregate
pursuant to the Company's Employee Discount Stock Purchase Plan, as amended
(the "Company Stock Purchase Plan"); and
(vii) 100,000 Shares were reserved for issuance upon the exercise of
the Warrant dated October 5, 1997 issued to Kurt Priester (the "Priester
Warrant").
Section 4.2 of the Company Letter contains a correct and complete list as
of the date of this Agreement of each outstanding option to purchase shares of
Company Common Stock issued under the Company Stock Option Plans (collectively,
the "Company Stock Options"), including the holder, date of grant, exercise
price and number of shares of Company Common Stock subject thereto and whether
the option is vested and exercisable. Except for the Class C Taylor Shares
Exchange Agreement, the Company Stock Options and the Company Stock Option
Plans, the Company Stock Purchase Plan and the Priester Warrant and the
contingent payment obligations arising under the Asset Purchase Agreement dated
December 31, 1997 pursuant to which the Company acquired substantially all of
the assets of SensorPulse Corp. and the Asset Purchase Agreement dated as of
October 5, 1997 pursuant to which the Company purchased substantially all of the
assets of Computer Dynamics Services, Inc. (collectively, the "Contingent
Payment Agreements"), there are no options, warrants, calls, rights or
agreements to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued,
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delivered or sold, additional shares of capital stock of the Company or any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right or agreement. Except
as set forth in Section 4.2 of the Company Letter, there are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any shares of Company Common Stock or any capital stock of
or any equity interests in any Subsidiary. Each outstanding share of capital
stock of each Subsidiary of the Company that is a corporation is duly
authorized, validly issued, fully paid and nonassessable and, except as set
forth in Section 4.2 of the Company Letter, each such share is owned by the
Company or another Subsidiary of the Company, free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on voting rights, charges and other encumbrances of any nature
whatsoever. The Company does not have any outstanding bonds, debentures, notes
or other obligations the holders of which have the right to vote (or convertible
into or exercisable for securities having the right to vote) with the
shareholders of the Company on any matter. Exhibit 21 to the Company's Annual
Report on Form 10-K for the year ended March 31, 1998, as filed with the SEC
(the "Company Annual Report"), is a true, accurate and correct statement in all
material respects of all of the information required to be set forth therein by
the regulations of the SEC.
Section 4.3 Authority. On or prior to the date of this Agreement, the
Board of Directors of the Company has unanimously approved the Offer and
declared the Merger advisable and fair to and in the best interest of the
Company and its shareholders, approved and adopted this Agreement and the
transactions contemplated hereby in accordance with the IBCA, resolved to
recommend the acceptance of the Offer by the Company's shareholders and directed
that this Agreement be submitted to the Company's shareholders for approval.
The Company has all requisite corporate power and authority to enter into this
Agreement and the Stock Option Agreement, to consummate the transactions
contemplated by the Stock Option Agreement and, subject to approval by the
shareholders of the Company of this Agreement, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the Stock
Option Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action (including Board action) on the part of the Company,
subject, in the case of this Agreement, to (x) approval and adoption of this
Agreement by the shareholders of the Company and (y) the filing of the Articles
of Merger as required by the IBCA. This Agreement and the Stock Option
Agreement have been duly executed and delivered by the Company and (assuming the
valid authorization, execution and delivery of this Agreement by Parent and Sub
and the Stock Option Agreement by Parent and the validity and binding effect of
this Agreement on Parent and Sub and the Stock Option Agreement on Parent)
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms. The issuance of up to 1,598,530 Shares
pursuant to the Stock Option Agreement has been duly authorized by the Company's
Board of Directors.
Section 4.4 Consents and Approvals; No Violation. Assuming that all
consents, approvals, authorizations and other actions described in this Section
4.4 have been obtained and all filings and obligations described in this Section
4.4 have been made, the execution and delivery of this Agreement and the Stock
Option Agreement do not, and the consummation of
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the transactions contemplated hereby and thereby and compliance with the
provisions hereof and thereof will not, result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give to others a
right of termination, cancellation or acceleration of any obligation or result
in the loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Company or any of its Subsidiaries under, any provision of (i) the Company
Charter or the Amended and Restated Bylaws of the Company, (ii) any provision of
the comparable charter or organization documents of any of the Company's
Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its Subsidiaries or (iv) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of its Subsidiaries or any of their respective properties
or assets, other than, in the case of clauses (ii), (iii) or (iv), any such
violations, defaults, rights, liens, security interests, charges or encumbrances
that, individually or in the aggregate, would not have a Material Adverse Effect
on the Company, materially impair the ability of the Company to perform its
obligations hereunder or under the Stock Option Agreement or prevent the
consummation of any of the transactions contemplated hereby or thereby. No
filing or registration with, or authorization, consent or approval of, any
Governmental Entity is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement or
the Stock Option Agreement by the Company or is necessary for the consummation
of the Offer, the Merger and the other transactions contemplated by this
Agreement or the Stock Option Agreement, except for (i) in connection, or in
compliance, with the provisions of the HSR Act and the Exchange Act, (ii) the
filing of the Articles of Merger with the Secretary of State of the State of
Illinois and appropriate documents with the relevant authorities of other states
in which the Company or any of its Subsidiaries is qualified to do business,
(iii) such filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Offer, the Merger or by the transactions
contemplated by this Agreement or the Stock Option Agreement, (iv) such filings,
authorizations, orders and approvals as may be required to obtain the State
Takeover Approvals, (v) applicable requirements, if any, of Blue Sky Laws or the
Nasdaq National Market, (vi) as may be required under foreign laws and (vii)
such other consents, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not, individually or
in the aggregate, have a Material Adverse Effect on the Company, materially
impair the ability of the Company to perform its obligations hereunder or under
the Stock Option Agreement or prevent the consummation of any of the
transactions contemplated hereby or thereby.
Section 4.5 SEC Documents and Other Reports. The Company has filed all
required documents (including proxy statements) with the SEC since March 14,
1997 (the "Company SEC Documents"). As of their respective dates, the Company
SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and, at the respective times they were filed, none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted 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 consolidated financial statements (including, in each
case, any notes thereto) of the Company included in the Company SEC Documents
complied as to form in all material respects
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with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with United States
generally accepted accounting principles (except, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto) and fairly presented in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as at the
respective dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the Company SEC Documents
or as required by generally accepted accounting principles, the Company has not,
since March 14, 1997, made any change in the accounting practices or policies
applied in the preparation of financial statements.
Section 4.6 Information Supplied. None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement, will (a) in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's shareholders, or (b) in the case of the Proxy Statement, at the time
the Proxy Statement is first mailed to the Company's shareholders or at the time
of the Shareholder Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Schedule 14D-9, the Information Statement
and the Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference therein.
Section 4.7 Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Documents filed with the SEC prior to the date of this Agreement
or as set forth in the Company Letter, since March 31, 1998, (A) the Company and
its Subsidiaries have not incurred any liability or obligation (indirect, direct
or contingent) that would result in a Material Adverse Effect on the Company, or
entered into any material oral or written agreement or other transaction that is
not in the ordinary course of business or that would result in a Material
Adverse Effect on the Company, (B) the Company and its Subsidiaries have not
sustained any loss or interference with their business or properties from fire,
flood, windstorm, accident or other calamity (whether or not covered by
insurance) that has had a Material Adverse Effect on the Company, (C) there has
been no change in the capital stock of the Company except for the issuance of
shares of the Company Common Stock pursuant to Company Stock Options or the
Company Stock Purchase Plan and no dividend or distribution of any kind
declared, paid or made by the Company on any class of its stock, (D) there has
not been (v) any adoption of a new Company Plan (as hereinafter defined), (w)
any amendment to a Company Plan materially increasing benefits thereunder, (x)
any granting by the Company or any of its Subsidiaries to any executive officer
or other key employee of the Company or any of its Subsidiaries of any increase
in compensation, except in the ordinary course of business consistent with prior
practice
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or as was required under employment agreements in effect as of the date of the
most recent audited financial statements included in the Company Annual Report,
(y) any granting by the Company or any of its Subsidiaries to any such executive
officer or other key employee of any increase in severance or termination
agreements in effect as of the date of the most recent audited financial
statements included in the Company Annual Report or (z) any entry by the Company
or any of its Subsidiaries into any employment, severance or termination
agreement with any such executive officer or other key employee, (E) there has
not been any material changes in the amount or terms of the indebtedness of the
Company and its Subsidiaries from that described in the Company SEC Documents
filed prior to the date hereof and (F) there has been no event causing a
Material Adverse Effect on the Company.
Section 4.8 Permits and Compliance. Each of the Company and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
of its Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where the
failure to have any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and no suspension or
cancellation of any of the Company Permits is pending or, to the Knowledge of
the Company (as hereinafter defined), threatened, except where the suspension or
cancellation of any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. Neither the Company
nor any of its Subsidiaries is in violation of (A) its charter, by-laws or other
organizational documents, (B) any law, ordinance, administrative or governmental
rule or regulation, or (C) any order, decree or judgment of any Governmental
Entity having jurisdiction over the Company or any of its Subsidiaries, except,
in the case of clauses (A), (B) and (C), for any violations that, individually
or in the aggregate, would not have a Material Adverse Effect on the Company.
Except as disclosed in the Company SEC Documents filed prior to the date of this
Agreement, there are no contracts or agreements of the Company or its
Subsidiaries having terms or conditions which would have a Material Adverse
Effect on the Company or having covenants not to compete that materially impair
the ability of the Company to conduct its business as currently conducted or
purport to bind any shareholder or any Affiliated Person of any shareholder of
the Company after the Effective Time. Except as set forth in the Company SEC
Documents filed prior to the date of this Agreement, no event of default or
event that, but for the giving of notice or the lapse of time or both, would
constitute an event of default exists or, upon the consummation by the Company
of the transactions contemplated by this Agreement or the Stock Option
Agreement, will exist under any indenture, mortgage, loan agreement, note or
other agreement or instrument for borrowed money, any guarantee of any agreement
or instrument for borrowed money or any lease, contractual license or other
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any such Subsidiary is bound or to which any of
the properties, assets or operations of the Company or any such Subsidiary is
subject, other than any defaults that, individually or in the aggregate, would
not have a Material Adverse Effect on the Company. "Knowledge of the Company"
means the actual knowledge of Nicholas T. Gihl, Peter A. Nicholson, Kevin
O'Connor, Frank Wood and James Potach.
Section 4.9 Tax Matters. Except as otherwise set forth in Section 4.9 of
the Company Letter, (i) the Company and each of its Subsidiaries have filed all
federal, and all material state,
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local, foreign and provincial, Tax Returns (as hereinafter defined) required to
have been filed, and such Tax Returns are correct and complete, except to the
extent that any failure to so file or any failure to be correct and complete
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company; (ii) all Taxes (as hereinafter defined)
shown to be due on such Tax Returns have been timely paid or extensions for
payment have been properly obtained, or such Taxes are being timely and properly
contested; (iii) the Company and each of its Subsidiaries have complied with all
rules and regulations relating to the withholding of Taxes and the remittance of
withheld Taxes, except to the extent that any failure to comply with such rules
and regulations would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company; (iv) neither the
Company nor any of its Subsidiaries has waived any statute of limitations in
respect of its Taxes; (v) any Tax Returns required to have been filed by or with
respect to the Company and each of its Subsidiaries relating to federal and
state income Taxes have been examined by the Internal Revenue Service ("IRS") or
the appropriate foreign or state taxing authority or the period for assessment
of the Taxes in respect of which such Tax Returns were required to be filed has
expired; (vi) no issues that have been raised by the relevant taxing authority
in connection with the examination of Tax Returns required to have been filed by
or with respect to the Company and each of its Subsidiaries are currently
pending; (vii) all deficiencies asserted or assessments made as a result of any
examination of such Tax Returns by any taxing authority have been paid in full;
and (viii) no withholding is required under Section 1445 of the Code in
connection with the Merger. For purposes of this Agreement: (i) "Taxes" means
any federal, state, local, foreign or provincial income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or added minimum, ad valorem, value-added, transfer or
excise tax, or other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Entity, and (ii) "Tax Return" means any
return, report or similar statement (including the attached schedules) required
to be filed with respect to any Tax, including any information return, claim for
refund, amended return or declaration of estimated Tax.
Section 4.10 Actions and Proceedings. There are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental Entity against or
involving the Company or any of its Subsidiaries, or against or involving any of
the present or former directors, officers, employees, consultants, agents or
shareholders of the Company or any of its Subsidiaries with respect to the
Company or any of its Subsidiaries, any of the properties, assets or business of
the Company or any of its Subsidiaries or any Company Plan that, individually or
in the aggregate, would have a Material Adverse Effect on the Company or
materially impair the ability of the Company to perform its obligations
hereunder or under the Stock Option Agreement. There are no actions, suits or
claims or legal, administrative or arbitrative proceedings or investigations
(including claims for workers' compensation) pending or, to the Knowledge of the
Company, threatened against or involving the Company or any of its Subsidiaries
or any of its or their present or former directors, officers, employees,
consultants, agents or shareholders with respect to the Company or any of its
Subsidiaries, or any of the properties, assets or business of the Company or any
of its Subsidiaries or any Company Plan that, individually or in the aggregate,
would have a Material Adverse Effect on the Company or materially impair the
ability of the Company to perform its obligations hereunder or under the Stock
Option Agreement. There are no actions, suits, labor disputes or other
litigation, legal or administrative proceedings or
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governmental investigations pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any of
its or their present or former officers, directors, employees, consultants,
agents or shareholders with respect to the Company or its Subsidiaries, or any
of the properties, assets or business of the Company or any of its Subsidiaries
relating to the transactions contemplated by this Agreement and the Stock Option
Agreement.
Section 4.11 Certain Agreements. Except as set forth in Section 4.11 of
the Company Letter, neither the Company nor any of its Subsidiaries is a party
to any oral or written agreement or plan, including any employment agreement,
severance agreement, stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan (collectively, the "Compensation
Agreements"), pension plan (as defined in Section 3(2) of ERISA) or welfare plan
(as defined in Section 3(1) of ERISA) any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
Stock Option Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement or the Stock Option Agreement. No holder of any option to purchase
Shares, or Shares granted in connection with the performance of services for the
Company or its Subsidiaries, is or will be entitled to receive cash from the
Company or any Subsidiary in lieu of or in exchange for such option or shares as
a result of the transactions contemplated by this Agreement or the Stock Option
Agreement. Section 4.11 of the Company Letter sets forth (i) for each officer,
director or employee who is a party to, or will receive benefits under, any
Compensation Agreement as a result of the transactions contemplated herein, the
total amount that each such person may receive, or is eligible to receive,
assuming that the transactions contemplated by this Agreement are consummated on
the date hereof, and (ii) the total amount of indebtedness owed to the Company
or its Subsidiaries from each officer, director or employee of the Company and
its Subsidiaries.
Section 4.12 ERISA. (a) Each material Company Plan is listed in Section
4.12(a) of the Company Letter. With respect to each Company Plan listed
therein, the Company has made available to Parent a true and correct copy of (i)
the three most recent annual reports (Form 5500) filed with the IRS if
applicable, (ii) each such Company Plan that has been reduced to writing and all
amendments thereto, (iii) each trust agreement, insurance contract or
administration agreement relating to each such Company Plan, (iv) a written
summary of each unwritten Company Plan, (v) the most recent summary plan
description or other written explanation of each Company Plan provided to
participants, (vi) the most recent determination letter and request therefore,
if any, issued by the IRS with respect to any Company Plan intended to be
qualified under section 401(a) of the Code, (vii) any request for a
determination currently pending before the IRS and (viii) all correspondence
with the IRS, the Department of Labor, the SEC or Pension Benefit Guaranty
Corporation relating to any outstanding controversy. Except as would not have a
Material Adverse Effect on the Company, each Company Plan complies in all
respects with the Employee Retirement Income Security Act of 1974, as amended,
the Code and all other applicable statutes and governmental rules and
regulations. Neither the Company nor any ERISA Affiliate currently maintains,
contributes to or has any liability or, at any time during the past six years
has maintained or contributed to any pension plan which is subject to section
412 of the Code or section 302 of the Employee Retirement Income Security Act of
1974, as amended (ERISA) or Title IV of ERISA. Neither the Company nor any
ERISA
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Affiliate currently maintains, contributes to or has any liability or, at any
time during the past six years has maintained or contributed to any Company
Multiemployer Plan.
(b) Except as listed in Section 4.12(b) of the Company Letter, with respect
to the Company Plans, no event has occurred and, to the Knowledge of the
Company, there exists no condition or set of circumstances in connection with
which the Company or any Subsidiary or ERISA Affiliate or Company Plan fiduciary
could be subject to any liability under the terms of such Company Plans, ERISA,
the Code or any other applicable law which would have a Material Adverse Effect
on the Company. All Company Plans that are intended to be qualified under
Section 401(a) of the Code have been determined by the IRS to be so qualified,
or a timely application for such determination is now pending and the Company is
not aware of any reason why any such Company Plan is not so qualified in
operation. Except as disclosed in Section 4.12(b) of the Company Letter,
neither the Company nor any of its Subsidiaries or ERISA Affiliates has any
liability or obligation under any welfare plan to provide benefits after
termination of employment to any employee or dependent other than as required by
Section 4980B of the Code.
(c) As used herein, (i) "Company Plan" means a "pension plan" (as defined
in Section 3(2) of ERISA (other than a Company Multiemployer Plan)), a "welfare
plan" (as defined in Section 3(1) of ERISA), or any other written or oral bonus,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, restricted stock, stock
appreciation right, holiday pay, vacation, severance, medical, dental, vision,
disability, death benefit, sick leave, fringe benefit, personnel policy,
insurance or other plan, arrangement or understanding, in each case established
or maintained by the Company or any of its Subsidiaries or ERISA Affiliates or
as to which the Company or any of its Subsidiaries or ERISA Affiliates has
contributed or otherwise may have any liability, (ii) "Company Multiemployer
Plan" means a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
to which the Company or any of its Subsidiaries or ERISA Affiliates is or has
been obligated to contribute or otherwise may have any liability, and (iii)
"ERISA Affiliate" means any trade or business (whether or not incorporated)
which would be considered a single employer with the Company pursuant to Section
414(b), (c), (m) or (o) of the Code and the regulations promulgated under those
sections or pursuant to Section 4001(b) of ERISA and the regulations promulgated
thereunder.
(d) Section 4.12(d) of the Company Letter contains a list of all (i)
severance and employment agreements with employees of the Company and each
Subsidiary, (ii) severance programs and policies of the Company and each
Subsidiary with or relating to its employees and (iii) plans, programs,
agreements and other arrangements of the Company and each Subsidiary with or
relating to its employees containing change of control or similar provisions.
(e) Except as set forth in Section 4.12(e) of the Company Letter, neither
the Company nor any of its Subsidiaries is a party to any agreement, contract or
arrangement that could result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
(f) Except as set forth in Section 4.12(f) of the Company Letter, with
respect to each Company Plan not subject to United States law (a "Company
Foreign Benefit Plan"), except as
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would not have a Material Adverse Effect on the Company, (i) the fair market
value of the assets of each funded Company Foreign Benefit Plan, the liability
of each insurer for any Company Foreign Benefit Plan funded through insurance or
the reserve shown on the Company's consolidated financial statements for any
unfunded Company Foreign Benefit Plan, together with any accrued contributions,
is sufficient to procure or provide for the benefit obligations, as of the
Effective Time, with respect to all current and former participants in such plan
according reasonable, country specific actuarial assumptions and valuations and
no transaction contemplated by this Agreement shall cause such assets or
insurance obligations or book reserve to be less than such benefit obligations;
and (ii) each Company Foreign Benefit Plan required to be registered has been
registered and has been maintained in good standing with the appropriate
regulatory authorities.
Section 4.13 Compliance with Worker Safety Laws. The properties, assets
and operations of the Company and its Subsidiaries are in compliance with all
applicable federal, state, local and foreign laws, rules and regulations,
orders, decrees, judgments, permits and licenses relating to public and worker
health and safety (collectively, "Worker Safety Laws"), except for any
violations that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. With respect to such properties, assets and
operations currently owned, leased or operated by the Company or any of its
Subsidiaries, and with respect to any properties, assets or operations
previously owned, leased or operated by the Company or any of its Subsidiaries,
to the Knowledge of the Company, during any time such properties, assets and
operations were owned, leased or operated by the Company or any of its
Subsidiaries, there are no past or present events, conditions, circumstances,
activities, practices, incidents, actions or plans of the Company or any of its
Subsidiaries that may interfere with or prevent compliance or continued
compliance with applicable Worker Safety Laws, other than any such interference
or prevention as would not, individually or in the aggregate with any such other
interference or prevention, have a Material Adverse Effect on the Company.
Section 4.14 Liabilities; Products. (a) Except as fully reflected or
reserved against in the financial statements included in the Company SEC
Documents filed prior to the date hereof, or disclosed in the footnotes thereto,
since March 31, 1998 the Company and its Subsidiaries have incurred no
liabilities (including Tax liabilities) or obligations of any nature, absolute
or contingent, other than liabilities or obligations that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or that would be required by Generally Accepted Accounting Principles ("GAAP")
to be reflected or reserved in the financial statements of the Company or in the
footnotes thereto, prepared in accordance with GAAP consistent with past
practices, other than in the ordinary course of business and consistent with
past practices. As of the date hereof, the indebtedness for borrowed money of
the Company and its Subsidiaries does not exceed $22 million.
(b) Except as set forth in Section 4.14(b) of the Company Letter, since
March 31, 1998, to the Knowledge of the Company, neither the Company nor any
Subsidiary has received a material claim for or based upon breach of product
warranty (other than warranty service and repair claims in the ordinary course
of business not material in amount or significance), strict liability in tort,
negligent manufacture of product, negligent provision of services or any other
allegation of liability resulting in product recalls, arising from the
materials, design, testing, manufacture, packaging, labeling (including
instructions for use), or sale of its products or from
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the provision of services; and, to the Knowledge of the Company, there is no
basis for any such claim which, if asserted, would likely have a Material
Adverse Effect on the Company. No product sold or delivered or service rendered
by the Company or any Subsidiary is subject to any guaranty, warranty or other
indemnity beyond the applicable standard terms and conditions of sale for
products delivered and services rendered by the Company or any Subsidiary,
copies of which have previously been delivered to Parent.
(c) The Company has provided to Parent a schedule of material products in
development and planned introductions, a copy of which is attached to the
Company Letter. The Company has no reason to believe that the goals set forth
therein will not be achieved in all material respects, except for such
deviations as would not have a Material Adverse Effect on the Company. The
product and service engineering, development, manufacturing and quality control
processes which have been and are being followed by the Company are reasonably
designed to produce products and services which are consistent in all material
respects with the claims made about them in the Company's sales brochures and
other statements made about them by or on behalf of the Company.
Section 4.15 Labor Matters. Except as set forth in Section 4.15 of the
Company Letter, neither the Company nor any of its Subsidiaries is a party to
any collective bargaining agreement or labor contract with any union. Neither
the Company nor any of its Subsidiaries has engaged in any unfair labor practice
with respect to any persons employed by or otherwise performing services
primarily for the Company or any of its Subsidiaries (the "Company Business
Personnel"), and there is no unfair labor practice complaint or grievance
against the Company or any of its Subsidiaries by any person pursuant to the
National Labor Relations Act or any comparable state or foreign law pending or
threatened in writing with respect to the Company Business Personnel, except
where such unfair labor practice, complaint or grievance would not have a
Material Adverse Effect on the Company. There is no labor strike, dispute,
slowdown or stoppage pending or, to the Knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries which may interfere
with the respective business activities of the Company or any of its
Subsidiaries, except where such dispute, strike or work stoppage would not have
a Material Adverse Effect on the Company.
Section 4.16 Intellectual Property; Year 2000. "Company Intellectual
Property" means all trademarks, trademark registrations, trademark rights and
renewals thereof, trade names, trade name rights, patents, patent rights, patent
applications, industrial models, inventions, invention disclosures, designs,
utility models, inventor rights, software, computer programs, computer systems,
modules and related data and materials, copyrights, copyright registrations and
renewals thereof, servicemarks, servicemark registrations and renewals thereof,
servicemark rights, trade secrets, applications for trademark and servicemark
registrations, know-how, confidential information and other proprietary rights,
and any data and information of any nature or form used or held for use in
connection with the businesses of the Company and/or the Subsidiaries as
currently conducted or as currently contemplated by the Company, together with
all applications currently pending or in process for any of the foregoing.
Except as disclosed in the Company SEC Documents filed with the SEC prior to the
date hereof, the Company and the Subsidiaries own, or possess adequate licenses
or other valid rights to use (including the right to sublicense to customers,
suppliers or others as needed), all of the Company Intellectual Property that is
necessary, appropriate or desirable for the conduct or contemplated conduct of
the Company's or
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Subsidiaries' businesses, except where the failure to own, license or have a
right to use such Company Intellectual Property would not, individually or in
the aggregate, have a Material Adverse Effect on the Company. Section 4.16 of
the Company Letter lists each material license or other material agreement
pursuant to which the Company or any Subsidiary has the right to use Company
Intellectual Property utilized in connection with any product of, or service
provided by, the Company and the Subsidiaries, the cancellation or expiration of
which would have a Material Adverse Effect on the Company (the "Company
Licenses"). There are no pending, or, to the Knowledge of the Company,
threatened interferences, re-examinations, oppositions or cancellation
proceedings involving any patents or patent rights, trademarks or trademark
rights, or applications therefor, of the Company or any Subsidiary, except such
as would not, individually or in the aggregate, have a Material Adverse Effect
on the Company. There is no breach or violation by the Company or by any
Subsidiary under, and, to the Knowledge of the Company, there is no breach or
violation by any other party to, any Company License that is reasonably likely
to give rise to any termination or any loss of rights thereunder. To the
Knowledge of the Company, there has been no unauthorized disclosure or use of
confidential information, trade secret rights, processes and formulas, research
and development results and other know-how of the Company or any Subsidiary,
except where such disclosure or use of such information would not, individually
or in the aggregate, have a Material Adverse Effect on the Company. To the
Knowledge of the Company, the conduct of the business of the Company and the
Subsidiaries as currently conducted or contemplated does not infringe upon or
conflict with, in any way, any license, trademark, trademark right, trade name,
trade name right, patent, patent right, industrial model, invention, service
mark, service mark right, copyright, trade secret or any other intellectual
property rights of any third party that, individually or in the aggregate, would
have a Material Adverse Effect on the Company. Except as disclosed in the
Company SEC Documents filed with the SEC prior to the date hereof, to the
Knowledge of the Company, there are no infringements of, or conflicts with, any
Company Intellectual Property which, individually or in the aggregate, would
have a Material Adverse Effect on the Company. Except as set forth in Section
4.16 of the Company Letter, neither the Company nor any Subsidiary has licensed
or otherwise permitted the use by any third party of any proprietary information
or Company Intellectual Property on terms or in a manner which, individually or
in the aggregate, would have a Material Adverse Effect on the Company. Except as
set forth in Section 4.16 of the Company Letter, the current and previously sold
products of the Company and its Subsidiaries and software, operations, systems
and processes (including, to the Knowledge of the Company, software, operations,
systems and processes obtained from third parties) used in the conduct of the
business of the Company and its Subsidiaries, are Year 2000 Compliant, except
where the failure to be Year 2000 Compliant would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and the Company has
delivered to Parent true and correct copies of any consultant or other third-
party reports prepared on behalf of the Company with respect to such compliance.
For purposes of this Agreement, "Year 2000 Compliant" means the ability to
process (including calculate, compare, sequence, display or store), transmit or
receive data or data/time data from, into and between the twentieth and twenty-
first centuries, and the years 1999 and 2000, and leap year calculations without
error or malfunction.
Section 4.17 Title to and Sufficiency of Assets. (a) As of the date
hereof, the Company and the Subsidiaries own, and as of the Effective Time the
Company and the Subsidiaries will
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own, good and marketable title to all of their assets (excluding, for purposes
of this sentence, assets held under leases), free and clear of any and all
mortgages, liens, encumbrances, charges, claims, restrictions, pledges, security
interests or impositions (collectively, "Liens"), except as set forth in the
Company SEC Documents filed with the SEC prior to the date hereof or Section
4.17 of the Company Letter and except where the failure to own such title would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. Such assets, together with all assets held by the Company and the
Subsidiaries under leases, include all tangible and intangible personal
property, contracts and rights necessary or required for the operation of the
businesses of the Company as presently conducted, except for such assets the
failure to have would, individually or in the aggregate, have a Material Adverse
Effect.
(b) Neither the Company nor any of its Subsidiaries owns any Real Estate.
All Real Estate assets held by the Company and the Subsidiaries under leases are
adequate for the operation of the businesses of the Company as presently
conducted, except for such assets the failure to have would, individually or in
the aggregate, have a Material Adverse Effect. The leases to all Real Estate
occupied by the Company and the Subsidiaries which are material to the operation
of the businesses of the Company are in full force and effect and no event has
occurred which with the passage of time, the giving of notice, or both, would
constitute a default or event of default by the Company or any Subsidiary or, to
the Knowledge of the Company, any other person who is a party signatory thereto,
other than such defaults or events of default which, individually or in the
aggregate, would not have a Material Adverse Effect on the Company. For
purposes of this Agreement, "Real Estate" means, with respect to the Company or
any Subsidiary, as applicable, all of the fee or leasehold ownership right,
title and interest of such person, in and to all real estate and improvement
owned or leased by any such person and which is used by any such person in
connection with the operation of its business.
Section 4.18 State Takeover Statutes. The Board of Directors of the
Company has, to the extent such statutes are applicable, taken all action so to
render the provisions of Sections 7.85 and 11.75 of the IBCA inapplicable to the
Offer, the Merger, the Stock Option Agreement and the Shareholder Agreements and
the consummation of the transactions contemplated by this Agreement, the Stock
Option Agreement and the Shareholder Agreements. As of the date hereof, no
other state takeover statute or similar charter or bylaw provisions are
applicable to the Offer, the Merger, this Agreement, the Stock Option Agreement,
the Shareholder Agreements and the transactions contemplated hereby and thereby.
Section 4.19 Required Vote of Company Shareholders. The affirmative vote
of the holders of at least two-thirds of Shares entitled to vote is required to
adopt this Agreement. No other vote of the security holders of the Company is
required by law, the Company Charter or the Amended and Restated Bylaws of the
Company or otherwise in order for the Company to consummate the Merger and the
transactions contemplated hereby and in the Stock Option Agreement.
Section 4.20 Accounts Receivable. All of the accounts and notes
receivable of the Company and its Subsidiaries set forth on the books and
records of the Company (net of the applicable reserves reflected on the books
and records of the Company and in the financial statements included in the
Company SEC Documents) (i) represent sales actually made or transactions
actually effected in the ordinary course of business for goods or services
delivered
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or rendered to unaffiliated customers in bona fide arm's length transactions,
(ii) constitute valid claims, and (iii) are good and collectible at the
aggregate recorded amounts thereof (net of such reserves) without right of
recourse, defense, deduction, return of goods, counterclaim, or offset and have
been or will be collected in the ordinary course of business and consistent with
past experience, except where the failure to collect such receivables in such
manner would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
Section 4.21 Inventories. Except as set forth in Section 4.21 of the
Company Letter, all inventories of the Company and its Subsidiaries consist of
items of merchantable quality and quantity usable or salable in the ordinary
course of business, are salable at prevailing market prices that are not less
than the book value amounts thereof or the price customarily charged by the
Company or the applicable Subsidiary therefor, conform to the specifications
established therefor, and have been manufactured in accordance with applicable
regulatory requirements, except to the extent that the failure of such
inventories so to consist, be saleable, conform, or be manufactured would not
have a Material Adverse Effect on the Company. Except as set forth in Section
4.21 of the Company Letter, the quantities of all inventories, materials, and
supplies of the Company and each Subsidiary (net of the obsolescence reserves
therefor shown in the financial statements included in the Company SEC Documents
and determined in the ordinary course of business consistent with past practice)
are not obsolete, damaged, slow-moving, defective, or excessive, and are
reasonable and balanced in the circumstances of the Company and its
Subsidiaries, except to the extent that the failure of such inventories to be in
such conditions would not have a Material Adverse Effect on the Company.
Section 4.22 Environmental Matters.
(a) For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Hazardous Substances" means (A) petroleum and
petroleum products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, and (B) any other
chemicals, materials or substances regulated as toxic or hazardous or as a
pollutant, contaminant or waste or for which liability or standards of care are
imposed under any applicable Environmental Law; (ii) "Environmental Law" means
any law, past, present or future and as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, or common law, relating to pollution or
protection of the environment, health or safety or natural resources, including
those relating to the use, handling, transportation, treatment, storage,
disposal, release or discharge of Hazardous Substances; and (iii) "Environmental
Permit" means any permit, approval, identification number, license or other
authorization required under any applicable Environmental Law.
(b) Except as disclosed in Section 4.22 of the Company Letter, the Company
and the Subsidiaries are and have been in compliance with all applicable
Environmental Laws, have obtained all Environmental Permits and are in
compliance with their requirements, and have resolved all past non-compliance
with Environmental Laws and Environmental Permits without any pending, on-going
or future obligation, cost or liability, except in each case for the notices set
forth in Section 4.22 of the Company Letter or where such non-compliance would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
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(c) Except as disclosed in Section 4.22 of the Company Letter, neither the
Company nor any of the Subsidiaries has (i) placed, held, located, released,
transported or disposed of any Hazardous Substances on, under, from or at any of
the Company's or any of the Subsidiaries' properties or any other properties,
nor caused any facts or conditions that could give rise to an environmental
claim, other than in a manner that would not, in all such cases taken
individually or in the aggregate, result in a Material Adverse Effect on the
Company, (ii) any Knowledge or reason to know of the presence of any Hazardous
Substances on, under, emanating from, or at any of the Company's or any of the
Subsidiaries' properties or any other property but arising from the Company's or
any of the Subsidiaries' current or former properties or operations, other than
in a manner that would not result in a Material Adverse Effect on the Company,
or (iii) any Knowledge or reason to know, nor has it received any written notice
since January 1, 1993 (A) of any violation of or liability under any
Environmental Laws, (B) of the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity or any third party
in connection with any such violation or liability, (C) requiring the
investigation of, response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of the Subsidiaries' current or former
properties or operations or any other properties, (D) alleging noncompliance by
the Company or any of the Subsidiaries with the terms of any Environmental
Permit in any manner reasonably likely to require material expenditures or to
result in material liability or (E) demanding payment for response to or
remediation of Hazardous Substances at or arising from any of the Company's or
any of the Subsidiaries' current or former properties or operations or any other
properties, except in each case for the notices set forth in Section 4.22 of the
Company Letter.
(d) Except as disclosed in Section 4.22 of the Company Letter, no
Environmental Law imposes any obligation upon the Company or any of the
Subsidiaries arising out of or as a condition to any transaction contemplated by
this Agreement, including any requirement to modify or to transfer any permit or
license, any requirement to file any notice or other submission with any
Governmental Entity, the placement of any notice, acknowledgment or covenant in
any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree.
(e) The Company and the Subsidiaries has provided or made available to
Parent copies of any Environmental assessment or audit report or other similar
studies or analyses currently in the possession of or available to the Company
or any of the Subsidiaries relating to any real property currently or formerly
owned, leased or occupied by the Company or any of the Subsidiaries.
Section 4.23 Suppliers, Customers and Employees. Except as set forth in
Section 4.23 of the Company Letter, neither the Company nor any Subsidiary has
received any notice that (a) Digital Electronics Corporation ("DEC") or any
other significant supplier will not sell raw materials, supplies, merchandise
and other goods to the Company or any Subsidiary at any time after the Effective
Time on terms and conditions substantially similar to those used in its current
sales to the Company and the Subsidiaries, except where the failure to sell
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company, (b) any significant customer intends to terminate or limit or alter
its business relationship with the Company or any Subsidiary where such
termination, limitation or alteration would have a Material Adverse Effect on
the Company, or (c) any Person included in the definition of
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Knowledge or Bernie Anger intends to terminate or has terminated his or their
employment with the Company or any Subsidiary.
Section 4.24 Insurance. The Company and its Subsidiaries carry or are
entitled to the benefits of insurance as the Company believes are in such
character and amount at least equivalent to that carried by persons engaged in
similar businesses and subject to the same or similar perils or hazards, except
for any such failures to maintain insurance policies that, individually or in
the aggregate, would not have a Material Adverse Effect on the Company. The
Company and each Subsidiary have made any and all payments required to maintain
such policies in full force and effect, except where the failure to make such
payment would not have a Material Adverse Effect on the Company.
Section 4.25 Accuracy of Information. Neither this Agreement nor any of
the documents listed in or attached to Section 4.25 of the Company Letter,
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein not misleading.
Section 4.26 Transactions with Affiliates. (a) For purposes of this
Section 4.26, the term "Affiliated Person" means (i) any holder of 5% or more of
the Company Common Stock, (ii) any director or officer of the Company or any
Subsidiary, (iii) any person, firm or corporation that directly or indirectly
controls, is controlled by, or is under common control with, any of the Company
or any Subsidiary or (iv) any member of the immediate family or any of such
persons.
(b) Except as set forth in Section 4.26 of the Company Letter or in the
Company SEC Reports filed with the SEC prior to the date hereof, since March 31,
1998, the Company and the Subsidiaries have not, in the ordinary course of
business or otherwise, (i) purchased, leased or otherwise acquired any material
property or assets or obtained any material services from, (ii) sold, leased or
otherwise disposed of any material property or assets or provided any material
services to (except with respect to remuneration for services rendered in the
ordinary course of business as director, officer or employee of the Company or
any Subsidiary), (iii) entered into or modified in any manner any contract with,
or (iv) borrowed any money from, or made or forgiven any loan or other advance
(other than expenses or similar advances made in the ordinary course of
business) to, any Affiliated Person.
(c) Except as set forth in Section 4.26 of the Company Letter or in the
Company SEC Reports filed with the SEC prior to the date hereof, (i) the
contracts of the Company and the Subsidiaries do not include any material
obligation or commitment between the Company or any Subsidiary and any
Affiliated Person, (ii) the assets of the Company or any Subsidiary do not
include any receivable or other obligation or commitment from an Affiliated
Person to the Company or any Subsidiary and (iii) the liabilities of the Company
and the Subsidiaries do not include any payable or other obligation or
commitment from the Company or any Subsidiary to any Affiliated Person.
(d) To the Knowledge of the Company and except as set forth in Section 4.26
of the Company Letter or in the Company SEC Reports filed with the SEC prior to
the date hereof, no Affiliated Person of any of the Company or any Subsidiary is
a party to any contract with any
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customer or supplier of the Company or any Subsidiary that affects in any
material manner the business, financial condition or results of operation of the
Company or any Subsidiary.
Section 4.27. Brokers. No broker, investment banker or other person,
other than Adams, Harkness & Hill, Inc. or Michael Blitzer & Associates, Inc.,
the fees and expenses of which will be paid by the Company (as reflected in an
agreement between Adams, Harkness & Hill, Inc. or Michael Blitzer & Associates,
Inc., and the Company, copies of which are attached to Section 4.27 of the
Company Letter), is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
and by the Stock Option Agreement based upon arrangements made by or on behalf
of the Company.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
Section 5.1 Conduct of Business by the Company Pending the Merger.
Except as expressly permitted by clauses (i) through (xvii) of this Section 5.1,
during the period from the date of this Agreement through the Effective Time,
the Company shall, and shall cause each of its Subsidiaries to, in all material
respects carry on its business in the ordinary course of its business as
currently conducted and, to the extent consistent therewith, use reasonable best
efforts to preserve intact its current business organizations, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it. Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement or as set forth in the Company Letter
(with specific reference to the applicable subsection below), the Company shall
not, and shall not permit any of its Subsidiaries to, without the prior written
consent of Parent (provided that with respect to clauses (v), (vi), (viii),
(ix), (xiii), (xiv) and (xv) below, such consent shall not be unreasonably
withheld or delayed):
(i) (A) other than dividends paid by wholly-owned Subsidiaries,
declare, set aside or pay any dividends on, or make any other actual,
constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to its shareholders in their capacity
as such, (B) other than in the case of any Subsidiary, split, combine or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (C) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options (including options under the Company Stock Option Plans) to acquire
any such shares, voting securities, equity equivalent or convertible
securities, other than (A) the issuance of shares of Company Common Stock
upon the exercise of Company Stock Options outstanding on the date of this
Agreement in accordance with their current terms, (B) the issuance of
shares of Company Common Stock contemplated by Section 1.2(d), (C) the
issuance of shares of Company Common
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Stock upon exercise of the Priester Warrant, (D) the issuance of shares of
Company Common Stock pursuant to the Stock Option Agreement and (E) as set
forth in Section 5.1(ii) of the Company Letter;
(iii) amend its charter or by-laws;
(iv) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of or equity in, or by
any other manner, any business or any corporation, limited liability
company, partnership, association or other business organization or
division thereof;
(v) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than sales of inventory that
are in the ordinary course of business consistent with past practice and
sales of assets having an aggregate fair market value of up to $100,000;
(vi) incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
other investments in, any other person, other than (A) in the ordinary
course of business consistent with past practices and, in the case of
indebtedness and guarantees, in an amount not to exceed $500,000 and (B)
indebtedness, loans, advances, capital contributions and investments
between the Company and any of its Subsidiaries or between any of such
Subsidiaries, in each case in the ordinary course of business consistent
with past practices;
(vii) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or ownership
of the Company or any Subsidiary;
(viii) except as provided in Section 5.1(viii) of the Company Letter
and Section 6.5 hereof, enter into or adopt any, or amend any existing,
severance plan, agreement or arrangement or enter into or amend any Company
Plan or employment or consulting agreement;
(ix) except as provided in Section 5.1(ix) of the Company Letter and
Section 6.5 hereof, increase the compensation payable or to become payable
to its directors, officers or employees (except for increases in the
ordinary course of business consistent with past practice in salaries or
wages of employees of the Company or any of its Subsidiaries who are not
officers of the Company or any of its Subsidiaries) or grant any severance
or termination pay to, or enter into any employment or severance agreement
with, any director or officer of the Company or any of its Subsidiaries, or
establish, adopt, enter into, or, except as may be required to comply with
applicable law, amend in any material respect or take action to enhance in
any material respect or accelerate any rights or benefits under, any labor,
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer or employee;
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(x) knowingly violate or knowingly fail to perform any obligation or
duty imposed upon it or any Subsidiary by any applicable material federal,
state or local law, rule, regulation, guideline or ordinance;
(xi) make any change to accounting policies or procedures (other than
actions required to be taken by generally accepted accounting principles);
(xii) prepare or file any Tax Return inconsistent with past practice
or, on any such Tax Return, take any position, make any election, or adopt
any method that is inconsistent with positions taken, elections made or
methods used in preparing or filing similar Tax Returns in prior periods;
(xiii) settle or compromise any federal, state, local or foreign
income tax dispute in excess of $100,000 or make any tax election;
(xiv) settle or compromise any claims or litigation in excess of
$100,000 or commence any litigation or proceedings;
(xv) enter into or amend any agreement or contract (i) having a
remaining term in excess of 12 months or (ii) which involves or is expected
to involve future payments of $500,000 or more during the term thereof; or
purchase any real property, or make or agree to make any new capital
expenditure or expenditures (other than the purchase of real property)
which in the aggregate are in excess of $500,000;
(xvi) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of any such
claims, liabilities or obligations, in the ordinary course of business
consistent with past practice or in accordance with their terms; or
(xvii) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 5.2 No Solicitation. (a) The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any officer,
director or employee of or any financial advisor, attorney or other advisor or
representative of, the Company or any of its Subsidiaries to, (i) solicit,
initiate or encourage the submission of, any Takeover Proposal (as hereafter
defined), (ii) enter into any agreement with respect to or approve or recommend
any Takeover Proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to the Company
or any Subsidiary in connection with, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal; provided, however, that nothing
contained in this Section 5.2(a) shall prohibit the Company or its directors
from (i) complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a tender or exchange offer or (ii) referring a third party to this
Section 5.2(a) or making a copy of this Section 5.2(a) available to any third
party; and provided, further, that prior to the acceptance for payment of Shares
pursuant to the Offer, if the Board of Directors of the Company reasonably
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determines that a Takeover Proposal constitutes a Superior Proposal (as defined
below), then, to the extent required by the fiduciary obligations of the Board
of Directors of the Company, as determined in good faith by a majority thereof
after consultation with independent counsel (who may be the Company's regularly
engaged independent counsel), the Company and its representatives may, in
response to an unsolicited request therefor, and subject to compliance with
Section 5.2(b), furnish information with respect to the Company and its
Subsidiaries to any person pursuant to a customary confidentiality statement (as
determined by the Company's independent counsel) and participate in discussions
or negotiations with such person. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any officer or director of the Company or any of its Subsidiaries or
any financial advisor, attorney or other advisor or representative of the
Company or any of its Subsidiaries, whether or not such person is purporting to
act on behalf of the Company or any of its Subsidiaries or otherwise, shall be
deemed to be a breach of this Section 5.2(a) by the Company. For purposes of
this Agreement, "Takeover Proposal" means any proposal for a merger or other
business combination involving the Company or any of its Subsidiaries or any
proposal or offer to acquire in any manner, directly or indirectly, an equity
interest in, any voting securities of, or a substantial portion of the assets of
the Company or any of its Subsidiaries, other than the transactions contemplated
by this Agreement and the Stock Option Agreement, and "Superior Proposal" means
a bona fide proposal made by a third party to acquire the Company pursuant to a
tender or exchange offer, a merger, a sale of all or substantially all its
assets or otherwise on terms which a majority of the disinterested members of
the Board of Directors of the Company determines, at a duly constituted meeting
of the Board of Directors or by unanimous written consent, in its reasonable
good faith judgment to be more favorable to the Company's shareholders than the
Merger (after consultation with the Company's independent financial advisor) and
for which financing, to the extent required, is then committed or which, in the
reasonable good faith judgment of a majority of such disinterested members, as
expressed in a resolution adopted at a duly constituted meeting of such members
(after consultation with the Company's independent financial advisor), is
reasonably capable of being obtained by such third party.
(b) The Company shall advise Parent orally and in writing of (i) any
Takeover Proposal or any inquiry with respect to or which could lead to any
Takeover Proposal received by any officer or director of the Company or, to the
Knowledge of the Company, any financial advisor, attorney or other advisor or
representative of the Company, (ii) the material terms of such Takeover Proposal
(including a copy of any written proposal), and (iii) the identity of the person
making any such Takeover Proposal or inquiry no later than 24 hours following
receipt of such Takeover Proposal or inquiry. If the Company intends to furnish
any Person with any information with respect to any Takeover Proposal in
accordance with Section 5.2(a), the Company shall advise Parent orally and in
writing of such intention not less than 24 hours in advance of providing such
information. The Company will keep Parent fully informed of the status and
details of any such Takeover Proposal or inquiry.
Section 5.3 Third Party Standstill Agreements. During the period from the
date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any standstill agreement to
which the Company or any of its Subsidiaries is a party (other than any
involving Parent). During such period, the Company agrees to enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreements,
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including, but not limited to, obtaining injunctions to prevent any breaches of
such agreements and to enforce specifically the terms and provisions thereof in
any court of the United States or any state thereof having jurisdiction.
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
Section 6.1 Shareholder Meeting. (a) If the Company Shareholder
Approval is required by law, the Company will duly call, give notice of, convene
and hold a meeting of shareholders (the "Shareholder Meeting") for the purpose
of considering the approval of this Agreement and at such meeting call for a
vote and cause proxies to be voted in respect of the approval and adoption of
this Agreement. The Shareholder Meeting shall be held as soon as practicable
following the purchase of Shares pursuant to the Offer, and the Company will,
through its Board of Directors, recommend to its shareholders the approval of
this Agreement, and shall not withdraw or modify such recommendation. The record
date for the Shareholder Meeting shall be a date subsequent to the date Parent
or Sub becomes a record holder of Company Common Stock pursuant to the Offer.
(b) If the Company Shareholder Approval is required by law, the Company
shall, at Parent's request, as soon as practicable following the expiration of
the Offer, prepare and file a preliminary Proxy Statement with the SEC and shall
use its reasonable best efforts to respond to any comments of the SEC or its
staff and to cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable after responding to all such comments to
the satisfaction of the staff. The Company shall notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Shareholder Meeting there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its shareholders such
an amendment or supplement. The Company shall not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects. Parent
shall cooperate with the Company in the preparation of the Proxy Statement or
any amendment or supplement thereto.
(c) Parent agrees to cause all Shares purchased pursuant to the Offer and
all other Shares owned by Parent or any subsidiary of Parent to be voted in
favor of approval of the Merger.
Section 6.2 Access to Information. Subject to currently existing
contractual and legal restrictions applicable to the Company or any of its
Subsidiaries, the Company shall, and shall cause each of its Subsidiaries to,
afford to the accountants, counsel, financial advisors and other representatives
of Parent reasonable access to, and permit them to make such inspections as they
may reasonably require of, during the period from the date of this Agreement
through the Effective Time, all of their respective properties, books,
contracts, commitments and records (including engineering records and Tax
Returns and the work papers of independent accountants, if available and subject
to the consent of such independent accountants) and, during such period,
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the Company shall, and shall cause each of its Subsidiaries to (i) furnish
promptly to Parent a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements of
federal or state securities laws, (ii) furnish promptly to Parent all other
information concerning its business, properties and personnel as Parent may
reasonably request and (iii) promptly make available to Parent all personnel of
the Company and its Subsidiaries knowledgeable about matters relevant to such
inspections. No investigation pursuant to this Section 6.2 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto. All information obtained by
Parent pursuant to this Section 6.2 shall be kept confidential in accordance
with the Confidentiality Agreement dated September 24, 1998 between Parent and
the Company (the "Confidentiality Agreement").
Section 6.3. Directors. Promptly after such time as Sub purchases Shares
pursuant to the Offer which represent at least the Minimum Condition, Sub shall
be entitled, to the fullest extent permitted by law, to designate at its option
up to that number of directors, rounded to the nearest whole number, of the
Company's Board of Directors, subject to compliance with Section 14(f) of the
Exchange Act, as will make the percentage of the Company's directors designated
by Sub equal to the percentage of the aggregate voting power of the shares of
Common Stock held by Parent or any of its Subsidiaries; provided, however, that
in the event that Sub's designees are elected to the Board of Directors of the
Company, until the Effective Time such Board of Directors shall have at least
three directors who are directors on the date of this Agreement and who are not
officers of the Company (the "Independent Directors"); and provided further
that, in such event, if the number of Independent Directors shall be reduced
below three for any reason whatsoever, the remaining Independent Directors or
Director shall designate a person or persons to fill such vacancy or vacancies,
each of whom shall be deemed to be an Independent Director for purposes of this
Agreement or, if no Independent Directors then remain, the other directors shall
designate three persons to fill such vacancies who shall not be officers or
affiliates of the Company or any of its subsidiaries, or officers or affiliates
of Parent or any of its subsidiaries, and such persons shall be deemed to be
Independent Directors for purposes of this Agreement. Following the election or
appointment of Sub's designees pursuant to this Section 6.3 and prior to the
Effective Time, any amendment, or waiver of any term or condition, of this
Agreement or the Company Charter or the Amended and Restated By-Laws of the
Company, any termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Sub or waiver or assertion of any of the Company's rights hereunder, and any
other consent or action by the Board of Directors of the Company with respect to
this Agreement, will require the concurrence of a majority of the Independent
Directors and no other action by the Company, including any action by and any
other director of the Company, shall be required for purposes of this Agreement.
To the fullest extent permitted by applicable law, the Company shall take all
action requested by Parent that is reasonably necessary to effect any such
election, including mailing to its shareholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Sub shall have provided to
the Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). In connection with the
foregoing, the Company will promptly, at the option of Parent, to the fullest
extent permitted by law, either increase the size of the Company's Board of
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Directors and/or obtain the resignation of such number of its current directors
as is necessary to enable Sub's designees to be elected or appointed to the
Company's Board of Directors as provided above.
Section 6.4 Fees and Expenses. (a) Except as provided in this Section
6.4, whether or not the Merger is consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby,
including the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such costs and expenses.
(b) The Company shall pay, or cause to be paid, in same day funds to Parent
the following amounts under the circumstances and at the times set forth as
follows:
(i) if Parent or Sub terminates this Agreement under Section 8.1(d),
the Company shall pay the Expenses (as defined below) of Parent and the
Termination Fee (as defined below) upon demand;
(ii) if the Company terminates this Agreement under Section 8.1(e),
the Company shall pay the Termination Fee within one business day following
such termination and the Expenses of Parent upon demand;
(iii) if Parent or Sub terminates this Agreement under Section 8.1(c)
and at the time of any such termination, a Takeover Proposal shall have
been made (other than a Takeover Proposal made prior to the date hereof),
(x) the Company shall pay the Expenses of Parent upon demand, and (y) if
concurrently therewith or within twelve months thereafter, (A) the Company
enters into a merger agreement, acquisition agreement or similar agreement
(including a letter of intent) with respect to a Takeover Proposal, or a
Takeover Proposal is consummated, involving any party (1) with whom the
Company had any discussions with respect to a Takeover Proposal, (2) to
whom the Company furnished information with respect to or with a view to a
Takeover Proposal or (3) who had submitted a proposal or expressed any
interest publicly in a Takeover Proposal, in the case of each of clauses
(1), (2) and (3), prior to such termination, or (B) the Company enters into
a merger agreement, acquisition agreement or similar agreement (including a
letter of intent) with respect to a Superior Proposal, or a Superior
Proposal is consummated, then, in the case of either (A) or (B) above, the
Company shall pay the Termination Fee upon the earlier of the execution of
such agreement or upon consummation of such Takeover Proposal or Superior
Proposal.
(c) Parent shall pay, or cause to be paid, in same day funds to the
Company, the Expenses of the Company if the Company terminates this Agreement
under Section 8.1(f) or Section 8.1(g).
(d) "Expenses" means with respect to Parent or the Company, as the case may
be, documented out-of-pocket fees and expenses incurred or paid by or on behalf
of Parent or the Company, as the case may be, in connection with the Offer, the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including all fees and expenses of law firms, commercial banks,
investment banking firms, accountants, experts and consultants to
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Parent or the Company, as the case may be; provided that the Expenses of Parent
payable by the Company under this Section 6.4 shall not exceed $1 million and
the Expenses of the Company payable by Parent under this Section 6.4 shall not
exceed $1 million; and "Termination Fee" means $4 million; provided, however,
that the aggregate amount of the Termination Fee and Expenses payable to Parent
shall be reduced to an amount not less than zero by subtracting from the
aggregate amount otherwise payable to Parent the amount realized or anticipated
to be realizable (based on the facts as they exist on the date such aggregate
amount shall become due) by Parent under the Stock Option Agreement; provided
further that if such aggregate amount shall be so reduced by an amount
realizable by Parent and thereafter the Stock Option Agreement shall terminate
without receipt by Parent of such amount, then, to the extent Parent is entitled
to receive such aggregate amount, an additional payment shall be made to Parent
in such amount promptly following such termination.
Section 6.5. Stock Options. (a) Prior to the consummation of the Offer,
the Board of Directors of the Company (or, if appropriate, any committee
thereof) shall adopt appropriate resolutions and take all other actions
necessary or appropriate to (i) cause each Company Stock Option that is
outstanding as of the date hereof to vest and to be exercisable immediately
prior to the consummation of the Offer and (ii) cause each Company Stock Option
that is outstanding upon the consummation of the Offer to be cancelled as of the
consummation of the Offer, in consideration for which the holder thereof (an
"Option Holder") shall be entitled to receive from the Company an amount equal
to (A) the product of (1) the number of shares of Company Common Stock subject
to such Option and (2) the excess, if any, of the Offer Price over the exercise
price per share for the purchase of the Company Common Stock subject to such
Option, minus (B) all applicable federal, state and local Taxes required to be
withheld in respect of such payment. The amounts payable pursuant to clause
(ii) of the first sentence of this Section 6.5 shall be paid as soon as
reasonably practicable following the acceptance for payment by Sub pursuant to
the Offer. The amount payable to any Option Holder pursuant to clause (ii) of
the first sentence of this Section 6.5 shall be reduced to the extent necessary
to prevent such payment, together with any other amounts payable to such Option
Holder by the Company, from constituting a "parachute payment," within the
meaning of section 280G of the Code. The surrender of an Option in exchange for
the consideration contemplated by clause (ii) of the first sentence of this
Section 6.5 shall be deemed a release of any and all rights the Option Holder
had or may have had in respect thereof.
(b) The Company shall take all actions necessary to ensure that: (i) the
Purchase Period (as defined in the Company Stock Purchase Plan) applicable to
the options outstanding under the Company Stock Purchase Plan (each, a "Purchase
Plan Option") is shortened so as to have an Exercise Date (as defined in the
Company Stock Purchase Plan) that occurs before the acceptance for payment by
Sub of Shares pursuant to the Offer; (ii) no new Purchase Period shall begin
from and after the date hereof; and (iii) no holder of a Purchase Plan Option is
permitted to increase his or her rate of payroll deduction under the Company
Stock Purchase Plan from and after the date hereof.
(c) The Company shall take all actions necessary to provide that,
effective as of acceptance for payment by Sub of Shares pursuant to the Offer,
(i) each of the Company Stock Option Plans and any similar plan or agreement of
the Company shall be terminated, (ii) any rights under any other plan, program,
agreement or arrangement to the issuance or grant of any
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other interest in respect of the capital stock of the Company or any of its
Subsidiaries shall be terminated, and (iii) no Option Holder will have any right
to receive any shares of capital stock of the Company or, if applicable, the
Surviving Corporation, upon exercise of any Company Stock Option.
(d) The Company represents and warrants that it has the power and
authority under the terms of the Company Stock Purchase Plan and each of the
applicable Company Stock Option Plans to comply with this Section 6.5 without
the consent of any Option Holder.
Section 6.6 Reasonable Best Efforts. (a) Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer, the Merger and
the other transactions contemplated by this Agreement, including: (i) the
obtaining of all necessary actions or non-actions, waivers, consents and
approvals from all Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental Entity
(including those in connection with the HSR Act and State Takeover Approvals),
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement, the Stock Option
Agreement or the consummation of the transactions contemplated hereby and
thereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed, and (iv)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by this Agreement. No party to this Agreement
shall consent to any voluntary delay of the consummation of the Offer, the
Merger at the behest of any Governmental Entity without the consent of the other
parties to this Agreement, which consent shall not be unreasonably withheld.
(b) Each party shall use all reasonable best efforts to not take any
action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.
(c) Notwithstanding anything to the contrary contained in this Agreement,
in connection with any filing or submission required or action to be taken by
either Parent or the Company to effect the Offer, the Merger and to consummate
the other transactions contemplated hereby, the Company shall not, without
Parent's prior written consent, commit to any divestiture transaction, and
neither Parent nor any of its Affiliates shall be required to divest or hold
separate or otherwise take or commit to take any action that limits its freedom
of action with respect to, or its ability to retain, the Company or any of the
businesses, product lines or assets of Parent or any of its Subsidiaries or that
otherwise would have a Material Adverse Effect on Parent.
Section 6.7 Public Announcements. Parent and the Company will not issue
any press release with respect to the transactions contemplated by this
Agreement or otherwise issue any written public statements with respect to such
transactions without prior consultation with the
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other party, except as may be required by applicable law or by obligations
pursuant to any listing agreement with any national securities exchange.
Section 6.8 DEC Letter; Termination of Stock Rights. (a) Prior to the
acceptance for payment of any Shares by Sub pursuant to the Offer, the Company
and Parent will enter into the agreements contemplated by the letter agreement
dated November 21, 1998 among the Company, Parent and DEC, and prior to the
Effective Time, the Company will purchase the shares of common stock of Taylor
owned by DEC as contemplated by such letter agreement.
(b) Prior to the acceptance for payment of any Shares by Sub pursuant to
the Offer, the Company will obtain the consent, in form and substance reasonably
satisfactory to Parent, of the holders of the Priester Warrant so that after the
Company's obtaining such consent the holders thereof will have no right to
purchase shares of Company Common Stock.
(c) Prior to the acceptance for payment of any Shares by Sub pursuant to
the Offer, the Company will obtain the consent, in form and substance reasonably
satisfactory to Parent, of the other parties to the Contingent Payment
Agreements so that after the Company's obtaining such consent the other parties
to such agreements will have no right to receive shares of Company Common Stock
as payment of any contingent amounts thereunder.
(d) Upon the acceptance for payment of Shares pursuant to the Offer, the
Company will be the holder of all of the issued and outstanding capital stock of
Taylor other than the Common Stock of Taylor owned by DEC and there shall be no
options, warrants, calls, rights or agreements to which the Company or Taylor is
a party, or by which any of them is bound obligating the Company or Taylor to
issue, sell, or cause to be issued, delivered or sold, additional shares of
capital stock of Taylor or to grant, extend or enter into any such option,
warrant, call, right or agreement.
Section 6.9 State Takeover Laws. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby or in
the Stock Option Agreement or the Shareholder Agreements, Parent and the Company
and their respective Boards of Directors shall use their reasonable best efforts
to grant such approvals and take such actions as are necessary so that the
transactions contemplated hereby and thereby may be consummated as promptly as
practicable on the terms contemplated hereby and thereby and otherwise act to
minimize the effects of any such statute or regulation on the transactions
contemplated hereby and thereby.
Section 6.10 Indemnification; Directors and Officers Insurance. (a) From
and after the Effective Time, Parent shall cause the Surviving Corporation to
indemnify and hold harmless all past and present officers and directors of the
Company and of its Subsidiaries to the same extent and in the same manner such
persons are indemnified as of the date of this Agreement by the Company pursuant
to the IBCA, the Company Charter or the Company's Amended and Restated Bylaws
for acts or omissions occurring at or prior to the Effective Time.
(b) Parent shall cause the Surviving Corporation to provide, for an
aggregate period of not less than three years from the Effective Time, the
Company's current directors and officers
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an insurance and indemnification policy that provides coverage for events
occurring prior to the Effective Time (the "D&O Insurance") that is
substantially similar to the Company's existing policy or, if substantially
equivalent insurance coverage is unavailable, the best available coverage;
provided, however, that the Surviving Corporation shall not be required to pay
an annual premium for the D&O Insurance in excess of the last annual premiums
paid prior to the date hereof but in such case shall purchase as much coverage
as possible for such amount.
(c) Parent hereby agrees that, effective at the Effective Time, Parent
will guarantee the obligations of the Surviving Corporation under Section
6.10(a) and (b).
Section 6.11 Notification of Certain Matters. Parent shall use its
reasonable best efforts to give prompt notice to the Company, and the Company
shall use its reasonable best efforts to give prompt notice to Parent, of: (i)
the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which it is aware and which would be reasonably likely to cause
(x) any representation or warranty contained in this Agreement and made by it to
be untrue or inaccurate in any material respect or (y) any covenant, condition
or agreement contained in this Agreement and made by it not to be complied with
or satisfied in all material respects, (ii) any failure of Parent or the
Company, as the case may be, to comply in a timely manner with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder or (iii) any change or event which would be reasonably likely to have
a Material Adverse Effect on the Company; provided, however, that the delivery
of any notice pursuant to this Section 6.11 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
ARTICLE VII
CONDITIONS PRECEDENT TO THE MERGER
----------------------------------
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Shareholder Approval. If required by applicable law, the Company
Shareholder Approval shall have been obtained.
(b) Purchase of Shares. Sub shall have previously accepted for payment
and paid for Shares pursuant to the Offer.
(c) No Order. No court or other Governmental Entity having jurisdiction
over the Company or Parent, or any of their respective Subsidiaries, shall have
enacted, issued, promulgated, enforced or entered any law, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
the Merger illegal.
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Section 7.2 Conditions to Obligations of Parent and Sub to Effect the
Merger. The obligations of Parent and Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) Performance of Obligations; Representations and Warranties. The
Company shall have performed in all material respects each of its agreements
contained in this Agreement required to be performed on or prior to the
Effective Time, and the representations and warranties of the Company contained
in this Agreement shall be true and correct on and as of the Effective Time as
if made on and as of such date, except where the failure to be so true and
correct would not have a Material Adverse Effect on the Company, and Parent
shall have received a certificate signed on behalf of the Company by its Chief
Executive Officer and its Chief Financial Officer to such effect.
(b) Consents. (i) The Company shall have obtained the consent or approval
of each person or Governmental Entity whose consent or approval shall be
required in connection with the transactions contemplated hereby under any loan
or credit agreement, note, mortgage, indenture, lease or other agreement or
instrument, except as to which the failure to obtain such consents and approvals
would not, in the reasonable opinion of Parent, individually or in the
aggregate, have a Material Adverse Effect on the Company or Parent or upon the
consummation of the transactions contemplated in this Agreement, the Stock
Option Agreement or the Shareholder Agreements.
(ii) In obtaining any approval or consent required to consummate any of
the transactions contemplated herein, in the Stock Option Agreement or the
Shareholder Agreements, no Governmental Entity shall have imposed or shall have
sought to impose any condition, penalty or requirement which, in the reasonable
opinion of Parent, individually or in aggregate would have a Material Adverse
Effect on the Company or Parent.
(c) Material Adverse Change. Since the date of this Agreement, there
shall have been no Material Adverse Change with respect to the Company. Parent
shall have received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to such effect.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 8.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this Agreement
by the shareholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in accordance
with its terms without Sub having
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accepted for payment any Shares pursuant to the Offer or (y) Sub shall
not have accepted for payment any Shares pursuant to the Offer prior
to March 31, 1999; provided, however, that the right to terminate this
Agreement pursuant to this Section 8.1(b)(i) shall not be available to
any party whose failure to perform any of its obligations under this
Agreement results in the failure of any such condition or if the
failure of such condition results from facts or circumstances that
constitute a breach of any representation or warranty under this
Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, Shares pursuant to the Offer and such order, decree or
ruling or other action shall have become final and nonappealable;
(c) by Parent or Sub prior to the purchase of Shares pursuant to the
Offer in the event of a breach by the Company of any representation,
warranty, covenant or other agreement contained in this Agreement which (i)
would give rise to the failure of a condition set forth in paragraph (e) or
(f) of Exhibit C and (ii) cannot be or has not been cured within 30 days
after the giving of written notice to the Company;
(d) by Parent or Sub if either Parent or Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph
(d) of Exhibit C to this Agreement;
(e) by the Company if the Board of Directors of the Company
reasonably determines that a Takeover Proposal constitutes a Superior
Proposal and a majority of the members of the Board of Directors
determines, in its reasonable good faith judgment, after consultation with
independent counsel, that failing to terminate this Agreement would
constitute a breach of such Board's fiduciary duties under applicable law,
provided that the Company has complied with all provisions of Section 5.2,
including the notice provisions therein, and that it has complied with the
requirements of Section 6.4(b) relating to the payment (including the
timing of any payment) of the Expenses and the Termination Fee to the
extent required by Section 6.4(b); and provided further that the Company
may not terminate this Agreement pursuant to this Section 8.1(e) unless and
until 72 hours have elapsed following delivery to Parent of a written
notice of such determination by the Board of Directors of the Company;
(f) by the Company, if (i) any of the representations or warranties
of Parent or Sub set forth in this Agreement that are qualified as to
materiality shall not be true and correct in any respect or any such
representations or warranties that are not so qualified shall not be true
and correct in any material respect, or (ii) Parent or Sub shall have
failed to perform in any material respect any material obligation or to
comply in any material respect with any material agreement or covenant of
Parent or Sub to be performed or complied with by it under this Agreement
and such untruth, incorrectness or failure cannot be or has not been cured
within 30 days after the giving of written notice to Parent or Sub, as
applicable; or
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(g) by the Company, if the Offer has not been timely commenced in
accordance with Section 1.1.
The right of any party hereto to terminate this Agreement pursuant to this
Section 8.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
Section 8.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company, as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent, Sub or their respective officers or
directors (except for the last sentence of Section 6.2 and the entirety of
Section 6.4, which shall survive the termination); provided, however, that
nothing contained in this Section 8.2 shall relieve any party hereto from any
liability for any willful breach of a representation or warranty contained in
this Agreement or the breach of any covenant contained in this Agreement.
Section 8.3 Amendment. Subject to Section 6.3, this Agreement may be
amended by the parties hereto, by or pursuant to action taken by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the shareholders of the
Company, but, after any such approval, no amendment shall be made which by law
requires further approval by such shareholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 8.4 Waiver. At any time prior to the Effective Time, subject to
Section 6.3, the parties hereto may (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
GENERAL PROVISIONS
------------------
Section 9.1 Non-Survival of Representations and Warranties. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate at the Effective Time.
Section 9.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered personally, one day after
being delivered to an overnight courier or when telecopied (with a confirmatory
copy sent by overnight courier) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
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(a) if to Parent or Sub, to:
GE Fanuc Automation North America, Inc.
P.O. Box 8106
Charlottesville, Virginia 22911
Attention: President and CEO
Facsimile No.: 804-978-5320
for overnight courier deliveries, to:
GE Fanuc Automation North America, Inc.
Route 29 North and Route 606
Charlottesville, Virginia 22911
Attention: Senior Vice President and General Counsel
with copies to:
GE Fanuc Automation North America, Inc.
P.O. Box 8106
Charlottesville, Virginia 22911
Attention: Senior Vice President and General Counsel
Facsimile No.: 804-978-5320
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole
Dennis V. Osimitz
Facsimile No.: 312-853-7036
(b) if to the Company, to:
Total Control Products, Inc.
200 N. Janice Avenue
Melrose Park, Illinois 60160
Attention: Nicholas Gihl
Facsimile No.: 708-345-6792
with a copy to:
D'Ancona & Pflaum
30 North LaSalle Street
Suite 2900
Chicago, IL 60602
Attention: Mark Albert
Facsimile No.: 312-580-0923
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Section 9.3 Interpretation. (a) When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
(b) "Subsidiary" means any corporation, partnership, limited liability
company, joint venture or other legal entity of which Parent or the Company, as
the case may be (either alone or through or together with any other Subsidiary),
owns, directly or indirectly, 50% or more of the stock or other equity interests
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation, partnership,
limited liability company, joint venture or other legal entity.
(c) "Material Adverse Change" or "Material Adverse Effect" means, when
used with respect to the Company or Parent, as the case may be, any change or
effect that is or could reasonably be expected (as far as can be foreseen at the
time) to be materially adverse to the business, operations, assets, liabilities,
employee relationships, customer or supplier relationships, earnings or results
of operations, or the business prospects and condition (financial or otherwise),
of the Company and its Subsidiaries, taken as a whole (other than such changes
or effects as are described in Section 9.3(c) of the Company Letter), or Parent
and its Subsidiaries, taken as a whole, as the case may be.
Section 9.4 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, except for the Stock Option Agreement and as provided in the last
sentence of Section 6.2, constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof. This Agreement, except for the
provisions of Section 6.10, is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 9.6 Governing Law. Except to the extent that the laws of the
State of Illinois are mandatorily applicable to the Merger, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
Section 9.7 Assignment. Subject to Section 2.1, neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties.
Section 9.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not
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affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated by this
Agreement may be consummated as originally contemplated to the fullest extent
possible.
Section 9.9 Enforcement of this Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific wording or were
otherwise breached. It is accordingly agreed that the parties hereto shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof (but any such
proceeding shall be brought exclusively in the U.S. District Court for the
Northern District of Illinois), such remedy being in addition to any other
remedy to which any party is entitled at law or in equity. Each party hereto
waives any right to a trial by jury in connection with any such action, suit or
proceeding and waives any objection based on forum non conveniens or any other
objection to venue thereof.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized all as of
the date first written above.
GE FANUC AUTOMATION NORTH AMERICA, INC.
By: /s/ Joe Hogan
Joe Hogan, President
ORION MERGER CORP.
By: /s/ Joe Hogan
Joe Hogan, President
TOTAL CONTROL PRODUCTS, INC.
By: /s/ Nic Gihl
Nic Gihl, President
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EXHIBIT C
---------
Conditions of the Offer
-----------------------
Notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered Shares after the termination
or withdrawal of the Offer), to pay for any Shares tendered pursuant to the
Offer unless (i) there shall have been validly tendered and not withdrawn prior
to the expiration of the Offer such number of Shares that would constitute at
least two-thirds of the Shares that in the aggregate are outstanding determined
on a fully diluted basis (assuming the exercise of all options to purchase
Company Common Stock, and the conversion or exchange of all securities
convertible or exchangeable into, Shares outstanding upon the expiration of the
Offer) ("Minimum Condition") and (ii) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated, and any other applicable filing or approval requirement of any
nation or region applicable to the purchase of Shares pursuant to the Offer
shall have been satisfied, prior to the expiration date of the Offer (the "HSR
Condition"). Furthermore, notwithstanding any other term of the Offer or this
Agreement, Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any Shares not theretofore accepted for payment or paid
for, and may terminate the Offer if, at any time on or after the date of this
Agreement and before the acceptance of such Shares for payment or the payment
therefor, any of the following conditions exists (other than as a result of any
action or inaction of Parent or any of its subsidiaries that constitutes a
breach of this Agreement):
(a) there shall be threatened or pending by any Governmental Entity
any suit, action or proceeding (i) challenging the acquisition by Parent or
Sub of any Shares under the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of any
of the other transactions contemplated by this Agreement or the Shareholder
Agreements (including the voting provisions thereunder), or seeking to
obtain from the Company, Parent or Sub any damages that would have a
Material Adverse Effect on the Company, (ii) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any
of their respective subsidiaries of a material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or Parent and
its subsidiaries, taken as a whole, or to compel the Company or Parent to
dispose of or hold separate any material portion of the business or assets
of the Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, as a result of the Offer or any of the
other transactions contemplated by this Agreement or the Shareholder
Agreements, (iii) seeking to impose material limitations on the ability of
Parent or Sub to acquire or hold, or exercise full rights of ownership of,
any Shares to be accepted for payment pursuant to the Offer, including the
right to vote such Shares on all matters properly presented to the
shareholders of the Company, (iv) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect any
material portion of the business or operations of the Company or its
subsidiaries or (v) which otherwise is reasonably likely to have a Material
Adverse Effect on the Company; or there shall be pending by any other
person any suit, action or proceeding which is reasonably likely to have a
Material Adverse Effect on the Company.
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(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any Governmental Entity any
statute, rule, regulation, judgment, order or injunction, other than the
application to the Offer or the Merger of applicable waiting periods under
the HSR Act, that is reasonably likely to result, directly or indirectly,
in any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above;
(c) there shall have occurred any Material Adverse Change with respect
to the Company;
(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or Sub its
approval or recommendation of the Offer, the Merger or this Agreement, or
approved or recommended any Takeover Proposal or (ii) the Board of
Directors of the Company or any committee thereof shall have resolved to
take any of the foregoing actions;
(e) any of the representations and warranties of the Company set forth
in this Agreement (other than Sections 4.2, 4.3, 4.18 and 4.19) shall not
be true and correct, in each case at the date of this Agreement and at the
scheduled or extended expiration of the Offer, except where the failure of
such representations, individually or in the aggregate, to be so true and
correct would not have a Material Adverse Effect on the Company, and any of
the representations and warranties of the Company set forth in Sections
4.2, 4.3, 4.18 and 4.19 shall not be true and correct in any material
respect in each case at the date of this Agreement and at the scheduled or
extended expiration of the Offer;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or covenant of the Company to be performed or complied
with by it under this Agreement;
(g) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on a
national securities exchange in the United States (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index), (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States or
(iii) any limitation (whether or not mandatory) by any Governmental Entity
on the extension of credit by banks or other lending institutions which, in
the reasonable judgment of Parent, makes it inadvisable to proceed with the
Offer or the Merger;
(h) the Shareholder Agreements shall not be in full force and effect
or any Shareholder (as defined therein) that is a party thereto shall be in
material breach thereof or have indicated such Shareholder's intention not
to perform such Shareholder's obligations thereunder; or
(i) this Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Parent and Sub and
may, subject to the terms of this Agreement, be waived by Parent and Sub in
whole or in part at any time and from time to time in their sole discretion.
The failure by Parent or Sub at any time to exercise
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any of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time. Terms used but not defined herein shall have the
meanings assigned to such terms in the Agreement to which this Exhibit C is a
part.
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EXHIBIT 2
BOARD AND COMMITTEE MEETINGS
The Board of Directors has established an Audit Committee, a Compensation
Committee and an Executive Committee.
The Board of Directors of the Company held nine meetings during the fiscal
year ended March 31, 1998, and each director attended at least 75% of all
meetings of the Board of Directors and applicable Committee meetings.
The functions of the Audit Committee are to recommend annually to the Board of
Directors the appointment of the independent public accountants of the Company,
to discuss and review the scope and the fees of the prospective annual audit and
to review the results thereof with the Company's independent public accountants,
to review and approve non-audit services of the independent public accountants,
to review compliance with existing major accounting and financial policies of
the Company, to review the adequacy of the financial organization of the Company
and to review management's procedures and policies relative to the adequacy of
the Company's internal accounting controls. Messrs. Kramer and Siemer serve on
the Audit Committee. During the fiscal year ended March 31, 1998, the Audit
Committee met three times for the purposes of (i) reviewing the arrangements and
scope of the Company's annual audit; (ii) discussing matters of concern to the
Committee with regard to the Company's financial statements or other results of
the audit; and (iii) reviewing the Company's internal accounting procedures and
controls and the activities and recommendations of the Company's independent
public accountants.
The functions of the Compensation Committee are to review and approve annual
salaries and bonuses for all executive officers, to review, approve and
recommend to the Board of Directors the terms and conditions of all employee
benefit plans or changes thereto and to administer the Company's various stock
plans. Messrs. Hurd and Kramer serve on the Compensation Committee. The
Compensation Committee met four times during the fiscal year ended March 31,
1998.
The Executive Committee is empowered to act with all authority granted to the
Board of Directors between board meetings, except with respect to those matters
required by Illinois law or by the Company's Bylaws to be subject to the power
and authority of the Board of Directors as a whole. Messrs. Gihl, Siemer and
Sparacino are the current members of the Executive Committee. During the fiscal
year ended March 31, 1998, the Executive Committee did not meet.
EMPLOYMENT AGREEMENTS
The Company entered into written employment agreements with Mr. Gihl on
December 19, 1996, with Mr. Nicholson effective June 1, 1996, with Mr. Taylor as
of September 19, 1996 , with Mr. Wood effective February 9, 1996, with Mr.
Priester effective October 5, 1997 and with Mr. Roach effective January 1, 1998.
The employment agreement for Mr. Wood provides for an initial term of one year,
while the initial term under Mr. Gihl's employment agreement is approximately 54
weeks, the initial employment term for both Mr. Taylor and Mr. Priester is three
years, the initial term for Mr. Roach is four years and Mr. Nicholson's initial
employment term under his employment agreement is nineteen months. After the
expiration of the initial term, the employment agreements automatically renew
for successive one year periods unless either party delivers written notice of
its desire to terminate the agreement at least 90 days prior to the expiration
of the term. The base salaries for Messrs. Gihl, Nicholson, Taylor, Priester and
Wood under their respective employment agreements is $200,000, $125,000,
$125,000, $125,000, and $125,000, respectively. The base salary for Mr. Roach
under his employment agreement is $90,000 for calendar year 1998, $100,000 for
calendar year 1999, $110,000 for calendar year 2000 and $125,000 for calendar
year 2001.
Each of the employment agreements contains a noncompetition covenant whereby
the employee agrees that for a period lasting from the date of the agreement to
one year after the termination of his employment with the Company (Mr. Taylor's
extends for two years from the date of termination), he will not engage in any
business that competes with the Company anywhere in the United States (and
Canada in
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the case of Mr. Taylor). In addition, each employee has agreed to be bound by
the terms of a confidentiality provision requiring the employee to hold the
Company's confidential information in the strictest confidence for the longest
period permitted by law. Under the terms of these agreements, the employee's
employment with the Company may be terminated prior to the expiration of the
term for "cause," as defined in the agreements. In the event of termination for
cause or if the employee voluntarily terminates his employment, the Company's
obligations under the agreement cease and the employee forfeits all his rights
to receive any compensation or benefits, except for salary and benefits for
services already performed as of the date of termination. In addition, if the
Company terminates an employee's employment under certain circumstances the
Company must pay the employee designated severance amounts. In particular, in
the event the Company terminates Mr. Gihl's employment for any reason other than
death, disability or cause, including the decision not to renew the term of his
employment agreement, Mr. Gihl will be entitled to receive in one lump sum
payment an amount equal to two years compensation, based upon his highest
monthly salary during the twelve months immediately preceding the termination,
plus two times the bonus paid Mr. Gihl for the most recent fiscal year. In
addition, all of Mr. Gihl's unvested stock options shall vest and become
immediately exerciseable and the Company shall continue his medical insurance
benefits for a period of two years. Under the terms of Mr. Taylor's employment
agreement, if Mr. Taylor's employment is terminated by the Company for any
reason other than death, disability or cause, Mr. Taylor shall be entitled to
receive his salary for the longer of the remainder of the employment term, or
twelve months from the date of termination. In the event the Company terminates
Mr. Wood's employment for any reason other than death, disability or cause,
including the decision not to renew the term of his employment agreement, the
Company shall pay Mr. Wood his base salary for a period of one year following
such termination and will continue his medical insurance benefits during such
period to the extent Mr. Wood is not entitled to receive similar benefits from a
subsequent employer. If the Company terminates Mr. Nicholson's employment for
any reason other than cause, death, disability or within one year after certain
circumstances defined as a "change of control," but including upon the decision
of the Company not to renew the term of Mr. Nicholson's employment, the Company
shall pay Mr. Nicholson in one lump sum an amount equal to six times the greater
of his monthly salary as of the date of termination or his highest monthly
salary during the prior twelve month period and continue Mr. Nicholson's medical
insurance benefits during such six month period to the extent Mr. Nicholson is
not entitled to receive similar benefits from a subsequent employer. Finally, if
the Company terminates Mr. Priester's or Mr. Roach's employment pursuant to the
terms of his respective employment agreement for any reason other than death,
disability or cause, then the Company will pay such officer all unpaid salary
through the remainder of his employment term in accordance with the Company's
practices for salaried employees. In addition to the payment of the amounts set
forth above, if the Company terminates Mr. Nicholson's employment within one
year after a change of control (other than for cause) or Mr. Nicholson
terminates his employment for good reason (as defined in such agreement), the
Company is obligated to pay Mr. Nicholson in one lump sum an additional amount
equal to $25,000. In the case of Messrs. Gihl and Nicholson, the employee may
also become entitled to severance under other designated circumstances involving
his decision to terminate his employment with the Company. Effective June 1,
1998, Mr. Nicholson's employment agreement was amended, subject to Compensation
Committee approval, whereby if Mr. Nicholson terminates his employment for good
reason or the Company terminates Mr. Nicholson's employment within one year
after a change of control, the Company shall pay Mr. Nicholson in one lump sum
an amount equal to the sum of twelve times the greater of his monthly salary as
of the date of termination or his highest monthly salary during the prior twelve
months, plus $50,000. In the event Mr. Nicholson's employment is terminated
without cause, the Company shall pay Mr. Nicholson in one lump sum an amount
equal to the sum of twelve times the greater of his monthly salary as of the
date of termination or his highest monthly salary during the prior twelve
months.
Under the terms of these agreements, the employees are entitled to bonus
amounts based upon the Company meeting certain financial targets. Mr. Gihl's
agreement provides for a minimum bonus of $5,000 per quarter and Mr. Wood's
agreement provides for a minimum bonus of $4,000 per quarter. Mr. Priester is
entitled to a bonus of $75,000 if CDI achieves certain financial targets.
-8-
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
The following table provides certain specified information concerning the
grant of options under the 1996 Plan during fiscal 1998 to the Named Executive
Officers.
<TABLE>
<CAPTION>
Number % of Total
Securities Options Granted
Underlying to Employees in Grant Date
Name Options Granted Fiscal Year Exercise Price Expiration Value
---- --------------- --------------- -------------- ---------- -----
<S> <C> <C> <C> <C> <C>
Nicholas T. Gihl -- 0% -- -- --
Peter A. Nicholson 5,000 2% $ 8.00 5/8/07 $ 8.00
Kevin O'Connor 5,000 2% 8.00 5/8/07 8.00
Frank Wood 5,000 2% 8.00 5/8/07 8.00
James Potach 10,000 4% 10.00 2/2/08 10.00
</TABLE>
Option Exercises and Fiscal Year-End Values
The following stock table provides certain specified information concerning
fiscal year option exercises and unexercised options at March 31, 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options At March 31,
Option at March 31, 1998(#) 1998($)
Shares(#) --------------------------- -------
Acquired on Value($)
Exercise Realized
-------- --------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Nicholas T. Gihl -- -- 16,666 33,334 $ 41,665 $ 83,335
Peter A. Nicholson -- -- 10,000 25,000 71,700 155,900
Frank Wood -- -- 52,800 5,000 448,800 12,500
Kevin O'Connor -- -- 99,594 5,000 963,074 12,500
James Potach -- -- 5,666 15,334 32,845 27,675
</TABLE>
-11-
<PAGE>
PROPOSAL NO. 5
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Arthur Andersen LLP,
independent certified public accountants, to serve as auditors for the Company
for the fiscal year ending March 31, 1999. Arthur Andersen LLP has acted as the
Company's independent auditor since 1992. It is expected that a member of Arthur
Andersen LLP will be present at the Meeting with the opportunity to make a
statement if so desired and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ITS SELECTION OF
ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31,
1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Taylor Transaction
In September 1996, the Company completed a series of transactions resulting in
its holding 61.0% of the Class A Shares of Taylor. In the first step of this
transaction, the Company acquired all of the voting stock of Taylor in exchange
for aggregate consideration of $7.4 million, the right to receive contingent
consideration as described below and 767,112 Taylor Exchangeable Shares. Of the
$7.4 million, $2.2 million was in the form of a promissory note from Taylor to
Neil R. Taylor, the former majority shareholder of Taylor, which was repaid in
full with a portion of the proceeds of the Company's initial public offering,
and the remainder was paid in cash at the closing. The 767,112 Taylor
Exchangeable Shares are convertible into 767,112 shares of Common Stock of the
Company at any time at the election of the holders of such shares.
Mr. Taylor and the former shareholders of Taylor also hold certain
registration rights with respect to their shares of Common Stock issuable upon
conversion of their Taylor Exchangeable Shares.
Under the Taylor Transaction, the former shareholders of Taylor are also
entitled to receive certain contingent consideration pursuant to an earn-out
formula. Under such formula, Taylor paid the former shareholders an aggregate
amount of approximately $1.1 related to the year ended September 30, 1997. For
the period between October 1, 1997 and September 30, 1998, if Net Revenues
exceed $8.0 million, Taylor will pay to the former shareholders an aggregate
amount equal to $1.0 million, and to the extent that Net Revenues during such
period exceed $10.6 million, the Company will pay to the former shareholders an
aggregate amount, not to exceed $3.0 million, equal to 50.0% of such excess. The
Company has guaranteed the payment of all amounts of contingent consideration by
Taylor to the former shareholders of Taylor.
Digital Electronics originally loaned the Company an aggregate of $5.0 million
in order to consummate the Taylor Transaction. Immediately thereafter, $4.0
million of the loan was converted into 3,900 Taylor Class A Shares, representing
39.0% of the aggregate amount of such shares. The remaining $1.0 million of
indebtedness was repaid in full with a portion of the proceeds from the
Company's initial public offering.
-16-
<PAGE>
Pursuant to an arrangement with Digital Electronics, the Company agreed that
to the extent Taylor is required to make any payment of contingent consideration
to the former shareholders of Taylor, the Company will transfer funds to Taylor
in an amount equal to such contingent consideration. To the extent the Company
funds a portion of a contingent payout, the Company is permitted to cause Taylor
to issue additional Taylor Class A Shares to the Company in order to increase
the Company's ownership interest in the outstanding Taylor Class Shares by the
following percentage: 2.0% multiplied by a fraction, the numerator of which is
the entire contingent consideration payable to the shareholders and the
denominator of which is $4.0 million. If the entire amount of contingent
consideration is paid to the former Taylor shareholders, Digital Electronics'
ownership interest in Taylor will be decreased to 36.5% and the Company's
interest will be increased to 63.5%.
In connection with the payment of contingent consideration for the period
ended September 30, 1997, the Company's ownership interest in Taylor increased
from 61.0 to 61.5% and Digital Electronics ownership percentage decreased from
39.0% to 38.5%
Tess Transaction
On September 25, 1997, the Company's majority-owned subsidiary, Taylor
Industrial Software, Inc. completed the sale of its TESS software product line
operation (which had previously been classified as "asset held for sale") to an
entity principally owned by Mr. Taylor.
Mr. Taylor, the former principal shareholder of Taylor, is a member of the
Company's board of directors. The sale price was approximately $4 million.
In connection with this transaction, the Company loaned Mr. Taylor $2 million
(U.S.) pursuant to a promissory note (the "Taylor Note") dated September 25,
1997. The Taylor Note bears interest at 8% per annum and is payable in five
equal annual installments beginning on September 25, 1999 and ending on
September 25, 2003. The Taylor Note is secured by 250,000 Taylor Exchangeable
Shares currently held by Mr. Taylor
CDI Transaction
On October 5, 1997, the Company acquired substantially all of the assets of
Computer Dynamics, Inc. ("CDI"), a South Carolina corporation, and certain other
related entities pursuant to the terms of an Asset Purchase Agreement (the
"Agreement") dated October 5, 1997 (the "CDI Transaction"). The consideration
paid by the Company in connection with the Transaction, which was accounted for
as a purchase, consisted of approximately $12.3 million in cash, 932,039 shares
of common stock of the Company and a warrant (the "Warrant") to purchase 100,000
shares of common stock of the Company. The Warrant is immediately exercisable at
a price of $12.875 per share and shall remain outstanding for a period of ten
years.
Additionally, subject to certain adjustments, for five years after the
closing, the Company shall pay CDI an annual payment ranging from $0 to $3.0
million for each year in which the year over year earnings of the acquired
company exceed 110% to 125% of the base earnings for each period (each and "Earn
Out Period"). Each such payment shall be made 50% in cash and 50% in common
stock of the Company; provided however, that not more than 347,961 shares may be
issued in connection with the payment of such consideration, and once such
number of shares have been issued, all remaining payments shall be made in cash.
Each of the shares of Common Stock shall be valued based on their then fair
market value at the end of each Earn Out Period.
Furthermore, the Company entered into a Registration Rights Agreement with CDI
and its former majority shareholder, Mr. Kurt Priester, pursuant to which the
portion of the shares of common stock of the Company issued to Mr. Priester and
CDI in connection with the Transaction or issued pursuant to the Warrant are
subject to certain piggy-back registration rights.
-17-
<PAGE>
In addition, in connection with the consummation of the Transaction, the
Company entered into an employment agreement with Kurt Priester whereby Mr.
Priester serves as the President of a wholly-owned subsidiary of the Company.
SensorPulse Transaction
On December 31, 1997, a wholly-owned subsidiary of the Company acquired
substantially all of the assets of SensorPulse Corp., a designer and developer
of industrial signal conditioning products and networked input/output (I/O)
devices located in South Easton, Massachusetts, a Massachusetts corporation
("SensorPulse"), pursuant to the terms of an Asset Purchase Agreement among
SensorPulse, Kevin Roach, Charles Harlfinger, and the Company. Subject to
certain adjustments, the consideration paid by the Company consisted of 41,667
shares of Common Stock, approximately $1.25 million in cash and a four year earn
out based upon income growth in the business conducted by SensorPulse prior to
the closing. Mr. Roach is employed as President of SensorPulse Corp., a wholly-
owned subsidiary of the Company.
Other Related Party Transactions
The Company is party to a lease agreement, dated March 26, 1992, as amended in
December, 1996, with J&N Partnership, an Illinois general partnership owned by
Messrs. Sparacino and Gihl and Mr. Sparacino's sons and daughter (Mr. Gihl's
spouse), pursuant to which the Company leases its principal 39,000 square foot
office and manufacturing facility located in Melrose Park, Illinois. Annual rent
under the lease is $144,000 plus property taxes, insurance and utilities, and
the lease terminates in April 2002. The Company has also agreed pursuant to the
terms of the lease agreement to pay all expenses relating to occupancy and
maintenance of the leased premises.
The Company is party to a lease agreement, dated October 5, 1997, with Pelham
Capital LLC, a limited liability corporation controlled by Kurt Priester, an
officer/shareholder of the Company, pursuant to which the Company leases a
97,000 square foot manufacturing facility for its industrial computer
workstation products located in Greenville, South Carolina. Annual rent under
the lease is approximately $400,000, plus property taxes, insurance and
utilities, and the lease terminates in September 2002. The Company currently
subleases 32,000 square feet of this facility to a third party for approximately
$100,000 annually through February 28, 2001. The company has the right to
request the sublessee to vacate the space upon 60 days notice.
At March 31, 1998, Mr. Gihl, an executive officer and significant shareholder
of the Company, was indebted to the Company in the amount of $203,327 pursuant
to two promissory notes bearing interest at a rate per annum equal to 1.0% above
the prime rate, maturing on December 16, 1998. Interest is being accrued
quarterly under these notes, and all amounts outstanding under these notes are
secured by a pledge of Mr. Gihl's shares of Common Stock.
The Company purchases all of the flat panel display screens that are the
principal hardware component incorporated in its graphics-based operator
interfere product line from Digital Electronics, which owns 380,001 shares of
Common Stock, representing 5.0% of the outstanding Common Stock, and owns 38.5%
of the Taylor Class A Shares. Keizo Wada, the President and Chairman of Digital
Electronics, owns 18,000 shares of the Common Stock of the Company. Hardware
purchases by the Company from Digital Electronics totaled $8.8 million, $10.2
million and $14.6 million for fiscal 1996, 1997 and 1998, respectively. Mr. Gihl
is a member of the Board of Directors of Digital Electronics since June of 1996.
Digital Electronics is permitted to have a representative present at all
regularly scheduled quarterly board meetings of the Company. Such representative
does not vote, and receives $2,500 for each board meeting attended plus
reimbursement for all out-of-pocket costs and expenses. The Company has
nominated this representative of Digital Electronics for election to the
Company's Board of Directors for fiscal 1999.
In November 1996, Taylor entered into a two-year consulting agreement with
Digital Electronics whereby Digital Electronics has agreed to provide certain
product development and marketing consulting
-18-
<PAGE>
services to Taylor in exchange for compensation of $200,000 per year. This
agreement terminates in October 1998.
On September 12, 1997, the Company entered into an Original Equipment
Manufacturer's Purchase Agreement (the "OEM Agreement"), dated as of April 1,
1997, with Digital Electronics, Moritani America, Inc. and Inde Electronics,
Inc. The Agreement modifies the terms of the Original Equipment Manufacturer's
Purchase Agreement among the same parties dated January 1, 1991. Pursuant to the
OEM Agreement, Digital Electronics, the Company's principal hardware supplier,
agreed to supply to the Company certain computer hardware products for market
and sale on an exclusive basis in North and South America. The Agreement extends
the arrangement between the Company and Digital Electronics until January 31,
2005. Effective April 1, 1997, the Company and Digital Electronics also entered
into an agreement regarding the April 1, 1997, The Company and Digital
Electronics also entered into an agreement regarding the operation and conduct
of Taylor's business.
In March 1997, the Company acquired 10,000 shares of the outstanding common
stock of Digital Electronics (1,000 of which the transaction to acquire the
shares closed on April 1, 1998), or 0.17% of the outstanding common stock. Mr.
Gihl individually owns 10,000 shares of Digital Electronics' common stock, or
0.17% of the outstanding common shares. The Company has accounted for this
investment using the cost method of accounting and included in the Company's
consolidated balance sheet as of March 31, 1998 is an investment of Digital
Stock of approximately $250,000.
In November 1995, the Company purchased a 40% interest in ProFace, a joint
venture among the Company, Digital Electronics and Moritani America, Inc.
("Moritani America"). Moritani America (which, together with its parent,
Moritani & Co., owns an aggregate of 291,501 shares of the Company's Common
Stock) acts as the import broker of Digital Electronics' products on behalf of
the Company. ProFace, an industrial automation products distributor located in
the Netherlands, distributes the Company's and Digital Electronics' products in
Europe. This investment is accounted for by the Company under the equity method.
ProFace did not have significant operations during fiscal 1996. For fiscal 1997
and 1998, respectively, the Company's share of net earnings of the joint venture
was $79,425 and $97,489.
Neil Taylor, a director of the Company, together with his wife, received a
$2.2 million note (which was repaid with a portion of the proceeds of the
initial public offering), $3.7 million in cash, 575,334 Taylor Exchangeable
Shares and the right to receive certain contingent consideration in connection
with the Taylor Transaction. Prior to the Taylor Transaction, Neil Taylor and
his wife loaned Taylor an aggregate of $230,000. This loan was repaid in full
during fiscal 1998.
The Company's Board of Directors has adopted a policy that any future
transactions between the Company and its officers, directors, affiliates or
controlling shareholders will be on terms which are considered to be no less
favorable to the Company than those obtainable in arm's length transactions with
unaffiliated third parties and must be approved by a majority of the
disinterested directors.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended for inclusion in the proxy statement to be
mailed to all shareholders entitled to vote at the next annual meeting of
shareholders of the Company must be received at the Company's principal
executive offices not later than March 31, 1999. In order to curtail controversy
as to the date on which a proposal was received by the Company, it is suggested
that proponents submit their proposals by Certified Mail Return Receipt
Requested.
-19-
<PAGE>
EXHIBIT 3
TOTAL CONTROL PRODUCTS, INC.
2001 NORTH JANICE AVENUE
MELROSE PARK, ILLINOIS 60160
(708) 345-5500
November 30, 1998
Dear Shareholders:
I am pleased to inform you that Total Control Products, Inc. (the "Company")
has entered into an Agreement and Plan of Merger dated as of November 22, 1998
(the "Merger Agreement") with GE Fanuc Automation North America, Inc., a
Delaware corporation ("GE Fanuc"), and Orion Merger Corp., an Illinois
corporation and the wholly-owned subsidiary of GE Fanuc ("Merger Subsidiary"),
pursuant to which Merger Subsidiary has today commenced a cash tender offer
(the "Offer") to purchase all of the outstanding shares of common stock, no
par value ("Shares"), of the Company at a purchase price of $11.00 per Share,
net to the seller in cash. The Merger Agreement provides for the making of the
Offer which, if consummated and certain conditions are satisfied, will be
followed by a merger of Merger Subsidiary with and into the Company (the
"Merger"), with the Company surviving as a wholly-owned subsidiary of GE
Fanuc.
In the Merger, Shares (other than Shares owned by GE Fanuc, Merger
Subsidiary or the Company or Shares held by shareholders who properly exercise
dissenters' rights under Illinois law) will be converted into the right to
receive an amount in cash equal to the price per Share paid pursuant to the
Offer, without interest thereon.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE
OFFER AND THE MERGER AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY. YOUR BOARD OF
DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors each gave
consideration to the factors described in the attached Schedule 14D-9 that is
being filed today with the Securities and Exchange Commission, including,
among other things, the opinion of Adams Harkness & Hill, Inc., the Board of
Director's financial advisors, that, subject to the various assumptions and
limitations set forth therein, as of the date of such opinion, the $11.00 cash
price to be received by the holders of Shares in the Offer and the Merger
pursuant to the Merger Agreement is fair to such holders from a financial
point of view.
In addition to the attached Schedule 14D-9, enclosed is the Offer to
Purchase dated November 30, 1998, together with related materials, including a
Letter of Transmittal, to be used for tendering your Shares pursuant to the
Offer. These documents state the terms and conditions of the Offer and the
Merger, provide detailed information about the transactions and include
instructions as to how to tender your Shares. We urge you to read these
documents carefully in making your decision with respect to tendering your
Shares pursuant to the Offer.
Very truly yours,
/s/ Nicholas T. Gihl
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
Exhibit 4
GE Fanuc Automation Agrees to Acquire Total Control Products, Inc.,
Expands Open Systems Solutions
MELROSE PARK, Ill., Nov. 23 /PRNewswire/ -- Total Control Products, Inc.
(Nasdaq: TCPS - news) today announced it has signed definitive agreements to
sell 100% of its shares at $11 per share to GE Fanuc Automation, Inc. Total
Control Products, founded in 1983, designs, develops and markets leading edge
open control and display products for the industrial automation market. The
acquisition adds a new dimension to GE Fanuc's open control initiative and
strengthens its CIMPLICITY display product offering, enhancing the companies
position in Open Controls and Operator Interface.
"At GE Fanuc, our mission is to improve our customers' productivity with the
best industrial automation technology, reliability, and services worldwide. This
acquisition significantly strengthens our ability to meet this commitment. Total
Control Products' portfolio of Open Control and Operator Interface products will
greatly expand the systems we offer for the factory floor. Our customers will
now have a complete selection of products and services that range from
traditional PLC and Input/Output systems to Windows based NT/CE Control
Systems," said Joe Hogan, President and CEO of GE Fanuc Automation.
Nic Gihl, President and Chief Executive Officer of Total Control Products said,
"As Total Control joins with GE Fanuc, we are extremely excited about our
prospects for continued success. The future is even brighter for both our
customers and our employees. The Open Systems supplied by Total Control together
with GE Fanuc's expertise in Industrial Automation will revolutionize the
factory floor."
The transaction will take the form of a tender offer by a subsidiary of GE Fanuc
for all outstanding shares at $11 in cash net per share, followed by a cash
merger for the remaining shares at the same price. The tender offer is subject
to customary terms and conditions, including at least two-thirds of the
outstanding shares on a fully diluted basis being tendered. The tender offer is
expected to commence no later than November 30, 1998.
In connection with the transaction, holders of approximately half of the
outstanding shares of Total Control Products have agreed to tender their shares
pursuant to the offer. Additionally, Total Control Products has granted GE Fanuc
Automation the option to purchase 19.9% of its common stock at $11 per share
under certain circumstances.
Total Control Products' board has unanimously approved the transaction and has
received a fairness opinion from Adams, Harkness and Hill, Inc.
GE Fanuc Automation, Inc. is a global supplier of industrial controls systems
with headquarters in Charlottesville, Va., and is a joint venture between GE and
FANUC, Ltd. Japan. GE Fanuc is part of GE Industrial Systems, a global
manufacturer of products and systems used to distribute, protect, control and
operate electrical equipment for commercial, utility and industrial
applications.
<PAGE>
Total Control offers a broad range of products, which are used to define,
monitor and maintain the operation, sequencing and safety of industrial
equipment and machinery on the factory floor. These products range from
input/output devices to graphic operator interfaces to open connect hardware and
software for factory-wide control systems.
For further information contact Peter Nicholson, Chief Financial Officer at
Total Control Products, Inc., 2001 N. Janice Ave., Melrose Park, Illinois,
60160, 708-345-5500 or Jennifer Rivkin, Manager Marketing Communications, GE
Fanuc, 804-978-6080
Note: Statements and projections concerning the future financial condition,
results of operations and business of Total Control Products, Inc. and
subsidiaries are "forward-looking" statements which are inherently uncertain.
Actual performance and results are subject to many risk factors, including
changing market conditions, the timing of new product introductions by the
Company, its competitors or third parties, the loss of any significant
distributors, currency fluctuations, disruption in the supply of components for
the Company's products, and other factors discussed in the Company's March 11,
1997 prospectus for its initial public offering.
CIMPLICITY is a registered trademark of GE Fanuc Automation, Inc.
<PAGE>
Exhibit 5
ADAMS, HARKNESS & HILL, INC.
November 22, 1998
Board of Directors
Total Control Products, Inc.
2001 North Janice Avenue
Melrose Park, IL 60160
Attention: Nicholas T. Gihl - Chairman of the Board, President and
Chief Executive Officer
Members of the Board:
You have requested our opinion (the "Fairness Opinion") as to the fairness, from
a financial point of view, to the holders of common stock, no par value (the
"Common Stock"), of Total Control Products, Inc. (the "Company") of the
consideration proposed to be received by such stockholders pursuant to an
Agreement and Plan of Merger (the "Merger Agreement"), to be entered into in
substantially the form of the draft Merger Agreement dated November 22, 1998,
among the Company, GE Fanuc Automation North America, Inc. (the "Parent") and
Orion Merger Corp., a wholly owned subsidiary of the Parent (the "Sub"). The
draft Merger Agreement provides that the Sub will commence a tender offer (the
"Offer") for any and all outstanding shares of Common Stock at a price of $11.00
per share net to the seller in cash. Assuming the Sub acquires at least two-
thirds of the Common Stock in the Offer and the Company satisfies certain other
conditions as set forth in the Merger Agreement, a merger of the Sub with and
into the Company (the "Merger") will occur and stockholders of the Company who
do not tender their shares in the Offer will receive $11.00 per share net to the
seller in cash in the Merger. We refer to the Offer and the Merger together as
the "Transaction."
Adams, Harkness & Hill, Inc., as part of its investment banking activities, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. We have acted as financial advisor
to the Board of Directors of the Company in connection with the proposed
Transaction and will receive fees for our services, including a fee payable upon
rendering this opinion and a fee payable upon the closing of the Transaction.
We have in the past provided investment banking and financial advisory services
to the Company for which we have received various fees. We also serve as a
market maker for the Common Stock, and, in the ordinary course of our business,
may trade in the Common Stock for our own account and for the accounts of
customers. Accordingly, we may at any time hold a long or short position in the
Common Stock.
We are expressing no opinion as to what the value of the Common Stock will be
when purchased in the Offer or when converted in the Merger or the prices at
which the Common Stock will actually trade at any time. Our Fairness Opinion as
expressed herein is limited to the fairness, from a financial point of view, as
of the date hereof, of the consideration to be received by the holders of the
Common Stock pursuant to the Merger Agreement and does not address the Company's
underlying business decision to engage in the Transaction.
In developing our Fairness Opinion, we have, among other things: (i) reviewed
the Company's Annual Reports, Forms 10-K and related financial information for
the three fiscal years ended March 31, 1998, and the Company's Form 10-Q and the
related unaudited financial information for the six month period ended September
30, 1998; (ii) analyzed certain financial statements and other financial and
operating data concerning the Company, including forecasts, prepared by
securities analysts which we discussed with members of the senior management of
the Company; (iii) conducted due diligence discussions with members of senior
management of the Company and
<PAGE>
Parent; (iv) reviewed the historical market prices and trading activity for the
Common Stock and compared them with those of certain publicly traded companies
we deemed to be relevant and comparable to the Company; (v) compared the results
of operations of the Company with those of certain companies we deemed to be
relevant and comparable to the Company; (vi) compared the financial terms of the
Transaction with the financial terms of certain other mergers and acquisitions
we deemed to be relevant and comparable to the Transaction; (vii) participated
in certain discussions among representatives of the Company and Parent and their
financial and legal advisors; (viii) reviewed a draft of the Merger Agreement
dated November 22, 1998; and (ix) reviewed such other financial studies and
analyses and performed such other investigations and took into account such
other matters as we deemed necessary, including our assessment of general
economic, market and monetary conditions as of the date hereof.
In connection with our review and arriving at our Fairness Opinion, we have not
independently verified any information received from the Company, have relied on
such information, and have assumed that all such information is complete and
accurate in all material respects. With respect to any forecasts reviewed
relating to the prospects of the Company, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of securities analysts as to the future financial performance of
the Company. We were not provided with any forecasts prepared by the management
of the Company and, accordingly, our Fairness Opinion does not take into account
any such internal forecasts. Our Fairness Opinion is rendered on the basis of
securities market conditions prevailing as of the date hereof and on the
conditions and prospects, financial and otherwise, of the Company as known to us
on the date hereof. We have not conducted, nor have we received copies of, any
independent valuation or appraisal of any of the assets of the Company. In
addition, we have assumed, with your consent, that any material liabilities
(contingent or otherwise, known or unknown) of the Company are as set forth in
the consolidated financial statements of the Company.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in any filing made by the Company with the Securities and Exchange Commission
with respect to the transactions contemplated by the Merger Agreement.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the consideration to be received by the holders of Common Stock pursuant
to the Merger Agreement is fair, from a financial point of view, to such
holders.
Sincerely,
ADAMS, HARKNESS & HILL, INC.
By: /s/ T. L. Stebbins
Theodore L. Stebbins
Managing Director
<PAGE>
Exhibit 6
STOCK OPTION AGREEMENT
----------------------
STOCK OPTION AGREEMENT, dated as of November 22, 1998 (the "Agreement"),
between GE Fanuc Automation North America, Inc., a Delaware corporation
("Parent"), and Total Control Products, Inc., an Illinois corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution and delivery of this Agreement,
Parent, Orion Merger Corp., a newly formed Illinois corporation and a wholly
owned subsidiary of Parent ("Sub"), and the Company are entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides for the merger of Sub with and into the Company;
WHEREAS, as a condition to Parent's willingness to enter into the Merger
Agreement, Parent has requested that the Company grant to Parent an option to
purchase up to 1,598,530 authorized and unissued shares of Company Common Stock,
upon the terms and subject to the conditions hereof; and
WHEREAS, in order to induce Parent to enter into the Merger Agreement, the
Company has agreed to grant Parent the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. The Option; Exercise; Adjustments. The Company hereby grants to Parent
an irrevocable option (the "Option") to purchase from time to time up to
1,598,530 authorized and unissued Common Shares, no par value, of the Company
(the "Company Common Stock"), upon the terms and subject to the conditions set
forth herein (the "Optioned Shares"). Subject to the conditions set forth in
Section 2, the Option may be exercised by Parent in whole or from time to time
in part, at any time after the date hereof and prior to the termination of the
Option in accordance with Section 19. In the event Parent wishes to exercise
the Option, after the satisfaction of the conditions set forth in Section 2
Parent shall send a written notice to the Company (the "Stock Exercise Notice")
specifying the total number of Optioned Shares it wishes to purchase and a date
(not later than 10 business days and not earlier than two business days from the
date such notice is given) for the closing of such purchase (the "Closing
Date"). Parent may revoke an exercise of the Option at any time prior to the
Closing Date by written notice to the Company. In the event of any change in
the number of issued and outstanding shares of Company Common Stock by reason of
any stock dividend, stock split, split-up, recapitalization, merger or other
change in the corporate or capital structure of the Company, the number of
Optioned Shares subject to the Option and the Exercise Price (as hereinafter
defined) per Optioned Share shall be appropriately adjusted. In the event that
any additional shares of Company Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the preceding sentence
or pursuant to this Agreement), the number of
<PAGE>
Optioned Shares subject to the Option shall be adjusted so that, after such
issuance, it equals (but does not exceed) 19.9% of the number of shares of
Company Common Stock then issued and outstanding and 19.9% of the voting power
of shares of capital stock of the Company then issued and outstanding, after
reduction, to the extent necessary to comply with the exception to the
shareholder approval requirements of the Nasdaq National Market ("NASDAQ"), for
any shares issued pursuant to the Option.
2. Conditions to Exercise of Option and Delivery of Optioned Shares. (a)
Parent's right to exercise the Option is subject to the following conditions:
(i) Neither Parent nor Sub shall have breached any of its material
obligations under the Merger Agreement;
(ii) No preliminary or permanent injunction or other order issued by
any federal or state court of competent jurisdiction in the United
States invalidating the grant or prohibiting the exercise of the
Option shall be in effect; and
(iii) One or more of the following events shall have occurred on or
after the date hereof: (A) any person, corporation, partnership,
limited liability company or other entity or group (such person,
corporation, partnership, limited liability company or other entity or
group being referred to hereinafter, singularly or collectively, as a
"Person"), acquires or becomes the beneficial owner of 20% or more of
the outstanding shares of Company Common Stock (other than a person
who, as of the date hereof, is the beneficial owner of 20% or more of
the outstanding shares of Company Common Stock (a "20% Holder")); (B)
any 20% Holder increases his beneficial ownership of Company Common
Stock by more than 1%; (C) any group (other than a group which
includes or may reasonably be deemed to include Parent or any of its
affiliates) is formed which beneficially owns 20% or more of the
outstanding shares of Company Common Stock; (D) any Person (other than
Parent or its affiliates) shall have commenced a tender or exchange
offer for 20% or more of the then outstanding shares of Company Common
Stock or publicly proposed any bona fide merger, consolidation or
acquisition of all or substantially all the assets of the Company, or
other similar business combination involving the Company; (E) the
Company enters into, or announces that it proposes to enter into, an
agreement, including, without limitation, an agreement in principle,
providing for a merger or other business combination involving the
Company or a "significant subsidiary" (as defined in Rule 1.02(v) of
Regulation S-X as promulgated by the Securities and Exchange
Commission (the "SEC")) of the Company or the acquisition of a
substantial interest in, or a substantial portion of the assets,
business or operations of, the Company or a significant subsidiary
(other than the transactions contemplated by the Merger Agreement);
(F) any Person (other than Parent or its affiliates) is granted any
option or right, conditional or otherwise, to acquire or otherwise
become the beneficial owner of shares of Company Common Stock which,
together with all shares of Company Common Stock beneficially owned by
such Person, results or would result in such Person being the
beneficial owner of 20% or more of the outstanding shares of Company
Common Stock; or (G) there is a
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public announcement with respect to a plan or intention by the
Company, other than Parent or its affiliates, to effect any of the
foregoing transactions. For purposes of this subparagraph (iii), the
terms "group" and "beneficial owner" shall be defined by reference to
Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder.
(b) Parent's obligation to purchase the Optioned Shares following the
exercise of the Option, and the Company's obligation to deliver the Optioned
Shares, are subject to the conditions that:
(i) No preliminary or permanent injunction or other order issued by
any federal or state court of competent jurisdiction in the United
States prohibiting the delivery of the Optioned Shares shall be in
effect;
(ii) The purchase of the Optioned Shares will not violate Rule 10b-13
promulgated under the Exchange Act; and
(iii) All applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall
have expired or been terminated.
3. Exercise Price for Optioned Shares. At any Closing Date, the Company
will deliver to Parent a certificate or certificates representing the Optioned
Shares in the denominations designated by Parent in its Stock Exercise Notice
and Parent will purchase the Optioned Shares from the Company at a price per
Optioned Share equal to $11.00 (the "Exercise Price"), payable in cash. Payment
made by Parent to the Company pursuant to this Agreement shall be made by wire
transfer of federal funds to a bank designated by the Company or a check payable
in immediately available funds. After payment of the Exercise Price for the
Optioned Shares covered by the Stock Exercise Notice, the Option shall be deemed
exercised to the extent of the Optioned Shares specified in the Stock Exercise
Notice as of the date such Stock Exercise Notice is given to the Company.
4. Representations and Warranties of the Company. The Company represents
and warrants to Parent that (a) the execution and delivery of this Agreement by
the Company and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Company and this Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms; (b) the Company has taken all
necessary corporate action to authorize and reserve the Optioned Shares for
issuance upon exercise of the Option, and the Optioned Shares, when issued and
delivered by the Company to Parent upon exercise of the Option, will be duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights; (c) except as otherwise required by the HSR Act, except for routine
filings and subject to Section 7, the execution and delivery of this Agreement
by the Company and the consummation by it of the transactions contemplated
hereby do not require the consent, approval or authorization of, or filing with,
any person or public authority and will not violate or conflict with the
Company's Amended and Restated Articles of
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Incorporation, as amended, or Amended and Restated Bylaws, or result in the
acceleration or termination of, or constitute a default under, any indenture,
license, approval, agreement, understanding or other instrument, or any statute,
rule, regulation, judgment, order or other restriction binding upon or
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets; (d) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois and has
all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby; and (e) the
Board of Directors of the Company has, to the extent such statutes are
applicable, taken all action so that prior to the execution hereof, the Board of
Directors has approved the Merger and the execution of this Agreement and the
consummation of the transaction contemplated hereby so that the higher vote
requirement for certain business combinations set forth in Section 7.85 of the
Business Corporation Law of the State of Illinois, as amended (the "IBCA"), and
the restrictions on certain business combinations set forth in Section 11.75 of
the IBCA will not apply with respect thereto or as a result thereof.
5. Representations and Warranties of Parent. Parent represents and
warrants to the Company that (a) the execution and delivery of this Agreement by
Parent and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Parent and
this Agreement has been duly executed and delivered by Parent and constitutes a
valid and binding agreement of Parent; and (b) Parent is acquiring the Option
and, if and when it exercises the Option, will be acquiring the Optioned Shares
issuable upon the exercise thereof, for its own account and not with a view to
distribution or resale in any manner which would be in violation of the
Securities Act of 1933, as amended (the "Securities Act"), and will not sell or
otherwise dispose of the Optioned Shares except pursuant to an effective
registration statement under the Securities Act or a valid exemption from
registration under the Securities Act.
6. The Closing. Any closing hereunder shall take place on the Closing
Date specified by Parent in its Stock Exercise Notice pursuant to Section 1 at
10:00 A.M., local time, or the first business day thereafter on which all of the
conditions in Section 2 are met, at the principal executive office of the
Company, or at such other time and place as the parties hereto may agree.
7. Filings Related to Optioned Shares. The Company will make such filings
with the SEC as are required by the Exchange Act, and will use its best efforts
to effect all necessary filings by the Company under the HSR Act and to have the
Optioned Shares approved for quotation on NASDAQ.
8. Registration Rights. (a) If the Company effects any registration or
registrations of shares of Company Common Stock under the Securities Act for its
own account or for any other stockholder of the Company at any time after the
exercise of the Option (other than a registration on Form S-4, Form S-8 or any
successor forms), it will allow Parent to participate in such registration or
registrations with respect to any or all of the Optioned Shares acquired upon
the exercise of the Option; provided, however, that any request of Parent
pursuant to this Section 8(a) shall be with respect to at least 100,000 Optioned
Shares and provided, further, that if the managing underwriters in such offering
advise the Company that, in their written opinion, the number of Optioned Shares
requested by Parent to be included in such registration exceeds the number of
shares of Company Common Stock which can be sold in such offering, the Company
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<PAGE>
may exclude from such registration all or a portion, as may be appropriate, of
the Optioned Shares requested for inclusion by Parent.
(b) At any time after the exercise of the Option, upon the request of
Parent, the Company will as promptly as practicable file and use its best
efforts to cause to be declared effective a registration statement under the
Securities Act (and applicable Blue Sky statutes) with respect to any or all of
the Optioned Shares acquired upon the exercise of the Option; provided, however,
that any request of Parent pursuant to this Section 8(b) shall be with respect
to at least 100,000 Optioned Shares and provided, further, that the Company
shall not be required to have declared effective more than two registration
statements hereunder and shall be entitled to delay the effectiveness of each
such registration statement, for a period not to exceed 90 days in the
aggregate, if the commencement of such offering would, in the reasonable good
faith judgment of the Board of Directors of the Company, require premature
disclosure of any material corporate development or otherwise materially
interfere with or materially adversely affect any pending or proposed offering
of securities of the Company. In connection with any such registration
requested by Parent, the costs of such registration shall be borne by the
Company, and the Company and Parent each shall provide the other and any
underwriters with customary indemnification and contribution agreements.
9. Optional Put; Optional Repurchase. (a) Prior to the termination of the
Option in accordance with Section 19, if a Put Event has occurred, Parent shall
have the right, upon three business days' prior written notice to the Company,
to require the Company to purchase the Option from Parent (the "Put Right") at a
cash purchase price (the "Put Price") equal to the product determined by
multiplying (A) the number of Optioned Shares as to which the Option has not yet
been exercised by (B) the Spread (as defined below). As used herein, "Put
Event" means the occurrence on or after the date hereof of any of the following:
(i) any Person (other than Parent or its affiliates) acquires or becomes the
beneficial owner of 50% or more of the outstanding shares of Company Common
Stock or (ii) the Company consummates a merger or other business combination
involving the Company or a "significant subsidiary" (as defined in Rule 1.02(v)
of Regulation S-X as promulgated by the SEC) of the Company or the acquisition
of a substantial interest in, or a substantial portion of the assets, business
or operations of, the Company or a significant subsidiary (other than the
transactions contemplated by the Merger Agreement). As used herein, the term
"Spread" shall mean the excess, if any, of (i) the greater of (x) the highest
price (in cash or fair market value of securities or other property) per share
of Company Common Stock paid or to be paid within 12 months preceding the date
of exercise of the Put Right for any shares of Company Common Stock beneficially
owned by any Person who shall have acquired or become the beneficial owner of
20% or more of the outstanding shares of Company Common Stock after the date
hereof or (y) the average of the last reported sales prices quoted on NASDAQ of
the Company Common Stock during the five trading days immediately preceding the
written notice of exercise of the Put Right over (ii) the Exercise Price.
(b) At any time after the termination of the Option granted hereunder
pursuant to Section 19 and for a period of 90 days thereafter, the Company shall
have the right, upon three business days' prior written notice, to repurchase
from Parent (the "Repurchase Right"), all (but not less than all) of the
Optioned Shares acquired by the Company hereby and with respect to which the
Company then has beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) at a price per share equal to the greater of (i) the average of
the last reported sales price quoted on
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<PAGE>
NASDAQ of the Company Common Stock during the five trading days immediately
preceding the written notice of exercise of the Repurchase Right and (ii) the
Exercise Price, plus interest at a rate per annum equal to the costs of funds to
Parent at the time of exercise of the Repurchase Right.
10. Expenses. Each party hereto shall pay its own expenses incurred in
connection with this Agreement, except as otherwise provided in Section 8 or as
specified in the Merger Agreement.
11. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state thereof having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity. Each party hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the Northern District of Illinois in any action, suit or proceeding
arising in connection with this Agreement, and agrees that any such action, suit
or proceeding shall be brought only in such courts (and waives any objection
based on forum non conveniens or any other objection to venue therein). Each
party hereto waives any right to a trial by jury in connection with any such
action, suit or proceeding.
12. Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended or if sent by
telex or telecopier (and also confirmed in writing) to the person at the address
set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
(a) if to Parent, to:
GE Fanuc Automation North America, Inc.
P.O. Box 8106
Charlottesville, Virginia 22911
Attention: President and CEO
Facsimile No.: 804-978-5320
for overnight courier deliveries, to:
GE Fanuc Automation North America, Inc.
Route 29 North and Route 606
Charlottesville, Virginia 22911
Attention: Senior Vice President and General Counsel
with copies to:
GE Fanuc Automation North America, Inc.
P.O. Box 8106
Charlottesville, Virginia 22911
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<PAGE>
Attention: Senior Vice President and General Counsel
Facsimile No.: 804-978-5320
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole
Dennis V. Osimitz
Facsimile No.: 312-853-7036
(b) if to the Company, to:
Total Control Products, Inc.
200 N. Janice Avenue
Melrose Park, Illinois
Attention: Nicholas Gihl
Facsimile No.: 708-345-6792
with a copy to:
D'Ancona & Pflaum
30 North LaSalle Street
Suite 2900
Chicago, Illinois 60602
Attention: Mark Albert
Facsimile No.: 312-580-0923
13. Parties in Interest. This Agreement shall inure to the benefit of and
be binding upon the parties named herein and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
upon any Person other than Parent or the Company, or their permitted successors
or assigns, any rights or remedies under or by reason of this Agreement.
14. Entire Agreement; Amendments. This Agreement, together with the
Merger Agreement and the other documents referred to therein, contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
15 Assignment. No party to this Agreement may assign any of its rights or
delegate any of its obligations under this Agreement (whether by operation of
law or otherwise) without the prior written consent of the other party hereto,
except that Parent may, without a written consent, assign its rights and
delegate its obligations hereunder in whole or in part to one or more of its
direct or indirect wholly owned subsidiaries.
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<PAGE>
16. Headings. The section headings herein are for convenience only and
shall not affect the construction of this Agreement.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
18. Governing Law. Except to the extent that the laws of the State of
Illinois are mandatorily applicable to the Merger, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
19. Termination. This Agreement and the Option shall terminate upon the
earlier of (i) the Effective Time and (ii) the termination of the Merger
Agreement in accordance with its terms; provided, however, the Option shall not
terminate until 120 days after a termination pursuant to clause (ii) immediately
above if (A) the Merger Agreement is terminated by Parent or Sub pursuant to
Section 8.1(d) thereof, (B) the Merger Agreement is terminated by the Company
pursuant to Section 8.1(e) thereof or (C) unless the Company has terminated the
Merger Agreement pursuant to Section 8.1(f) or Section 8.1(g) thereof, prior to
the termination, a Takeover Proposal (as defined in the Merger Agreement) shall
have been commenced or the Company shall have entered into an agreement with
respect to, approved or recommended or taken any action to facilitate, a
Takeover Proposal; provided, further, that this Agreement shall not terminate
with respect to the Repurchase Right set forth in Section 9(b) until 90 days
after the termination of the Option pursuant to the foregoing proviso.
Notwithstanding the foregoing, the provisions of Section 8 shall survive the
termination of this Agreement until such time as Parent or any of its affiliates
ceases to beneficially own at least 100,000 of the Optioned Shares.
20. Capitalized Terms. Capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth in the Merger Agreement.
21. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order that
the transactions contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
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IN WITNESS WHEREOF, Parent and the Company have caused this Agreement to be
duly executed and delivered on the day and year first above written.
GE FANUC AUTOMATION NORTH
AMERICA, INC.
By: /s/ Joe Hogan
Joe Hogan, President
TOTAL CONTROL PRODUCTS, INC.
By: /s/ Nic Gihl
Nic Gihl, President
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Exhibit 7
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into as of November 22, 1998
by and between Nicholas Gihl (the "Executive") and Total Control Products, Inc.,
an Illinois corporation (the "Company").
R E C I T A L S:
A. Concurrently herewith, GE Fanuc Automation North America, Inc.
("GE Fanuc"), Orion Merger Corp. and the Company are entering into an Agreement
and Plan of Merger (the "Merger Agreement"), pursuant to which Orion Merger
Corp. will be commencing a tender offer (the "Offer") for the common stock of
the Company and, following the consummation of such Offer, merging (the
"Merger") with and into the Company, whereupon the Company will become a wholly-
owned subsidiary of GE Fanuc.
B. The Executive is the beneficial owner of certain shares of common
stock of the Company and intends to tender such shares to Orion Merger Corp.
pursuant to the Tender Offer.
C. The Company and the Executive have entered into an Employment
Agreement, dated as of December 19, 1996 (the "Prior Agreement") pursuant to
which the Executive is employed as an executive officer of the Company.
D. Commencing upon the consummation of the Offer, the Company
desires to continue the employment of the Executive as an executive officer of
the Company and the Executive agrees to be so bound, all on the terms and
subject to the conditions set forth herein, and the Company and the Executive
desire to terminate the Prior Agreement.
E. The Company desires to bind the Executive to certain restrictive
covenants and the Executive agrees to be so bound, all on the terms and subject
to the conditions set forth herein.
A G R E E M E N T:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
1. EFFECT OF AGREEMENT; TERMINATION OF PRIOR AGREEMENT. This
Agreement shall become effective upon the consummation of the Offer and shall
terminate and be of no further force or effect if the Merger Agreement shall be
terminated prior to the consummation of the Offer. Upon consummation of the
Offer, the Prior Agreement shall terminate and shall be of no further force or
effect whatsoever.
2. TERM. Subject to the terms and conditions set forth herein and
unless sooner terminated as hereinafter provided, the Company shall employ the
Executive and the Executive agrees to serve as an employee of the Company during
the period beginning at the consummation of the Offer and ending on the third
anniversary thereof (the "Employment Term"). After the expiration of the
Employment Term, the Executive's employment hereunder shall automatically renew
for successive one-year periods (each, a "Renewal Term") unless either party
hereto delivers written notice to the other party hereto, at least ninety (90)
days prior to the expiration of the Employment Term or any Renewal Term thereof,
as the case may be, of his or its desire to terminate the Executive's employment
with the Company. The Employment Term and any Renewal Term thereof are
collectively referred to herein as the "Term."
3. EMPLOYMENT DUTIES. During the Term, the Executive shall serve as
the President & CEO of the Company. The Executive shall faithfully, diligently
and competently perform such duties and responsibilities as are commensurate
with his position and such other duties as are commensurate with his position
that may from time to time be assigned to him by the Board of Directors of the
Company (the "Board").
4. COMPENSATION. As compensation for the services to be performed
and the duties and responsibilities to be assumed by the Executive during the
Term, the Company shall pay to the Executive the following compensation:
(a) A salary (the "Salary") in an amount equal to $260,000 per annum. The
Company shall review the Salary annually during the Term and any increases in
Salary shall be made at the sole discretion of the Company. The Salary shall be
payable to the Executive in accordance with the Company's ordinary payment
practices for salaried employees.
(b) The Executive shall be entitled to participate in the Company's
executive bonus plan (a "Bonus") on the same terms as the participation of other
executives of the Company; provided, however, that, during the Employment Term,
the Executive shall earn a Bonus of not less than $40,000 per year, but shall be
eligible to earn a larger Bonus based on achieving Company performance
objectives. In no event shall any Bonus be
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paid to the Executive for any calendar year of the Company unless the Executive
is employed throughout the entire calendar year by the Company or any of its
Affiliates (as defined below). The Bonus shall be determined from the Company's
internal accounting records, which shall be finally approved by the Board of
Directors of the Company (the "Board") or any compensation committee thereof.
The Bonus awarded to the Executive in respect of any particular calendar year
shall be paid at the same time as bonuses are paid to other executives of the
Company.
(c) The Executive shall receive a grant of 5,000 restricted shares of stock
of General Electric Company (subject to the approval of the General Electric
Company Board of Directors). The restriction lapse date for 2,500 of such
shares shall be the last day of the Employment Term and for the remaining 2,500
shares shall be the last day of the fifth year of the Term. Such shares shall
be granted subject to the terms of the GE 1990 Long Term Incentive Plan.
As used herein, an "Affiliate" shall mean and include any person or
entity which controls a party, which such party controls or which is under
common control with such party. "Control" means the power, direct or indirect,
to direct or cause the direction of the management and policies of a person or
entity through voting securities, contract or otherwise.
5. VACATIONS. The Executive shall be entitled to reasonable
vacations in accordance with the Company's policies applicable to its senior
executives generally, but in no event less than three weeks annually, which
shall be taken at such time or times as shall be mutually determined by the
Company and the Executive.
6. BENEFITS.
(a) During the Term, the Executive shall be entitled to participate in such
employee benefit plans and programs as are maintained by the Company, to the
extent that his position, service, compensation, age, health and other
qualifications make him eligible to participate. The Company does not promise
the adoption or continuance of any particular plan or program during the Term,
and the Executive's (and his eligible dependents') participation in any such
plan or program shall be subject to the provisions, rules, regulations and laws
applicable thereto.
(b) During the Term, the Executive shall be entitled to such other fringe
benefits as are provided to employees of the Company with comparable positions,
service and compensation as the Executive.
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7. REIMBURSEMENT OF EXPENSES. During the Term, the Executive shall
be entitled to prompt reimbursement for ordinary, necessary and reasonable out-
of-pocket trade or business expenses which the Executive incurs in connection
with performing his duties under this Agreement. The reimbursement of all such
expenses shall be made upon presentation of evidence reasonably satisfactory to
the Company of the amounts and nature of such expenses and shall be subject to
the reasonable approval of the Board.
8. RESTRICTIVE COVENANTS. The Executive acknowledges and agrees that
(a) through his continuing services to the Company, he will learn valuable trade
secrets and other proprietary information relating to the Company's business;
(b) the Executive's services to the Company are unique in nature; (c) the
Company's business is national in scope; and (d) the Company would be
irreparably damaged if the Executive were to provide services to any person or
entity in violation of the restrictions contained in this Agreement.
Accordingly, as an inducement to the Company to enter into this Agreement, the
Executive agrees that during the Term and for two years thereafter (such period
being referred to herein as the "Restricted Period"), the Executive shall not,
directly or indirectly, either for himself or for any other person or entity,
without the prior written consent of the Board of Directors of GE Fanuc:
(a) anywhere in the United States, engage or participate in, or assist,
advise or be connected with (including as an employee, owner, partner,
shareholder, officer, director, advisor, consultant, agent or (without
limitation by the specific enumeration of the foregoing) otherwise), or permit
his name to be used by or render services for, any person or entity engaged in,
or making plans to engage in, a business that competes with the business
conducted by, or proposed to be conducted by, GE Fanuc or any of its
subsidiaries (a "Competing Business");
(b) take any action which might divert from GE Fanuc or any of its
subsidiaries any opportunity (each, an "Opportunity") which would be within the
scope of the business then conducted by GE Fanuc or any of its subsidiaries and
shall offer each Opportunity to GE Fanuc, which GE Fanuc may, in its sole
discretion, decide to pursue or not;
(c) solicit, attempt to solicit, aid in the solicitation of or accept any
orders from any person or entity who is or has been a customer of GE Fanuc or
any of its subsidiaries, at any time during the period beginning one year prior
to the date of termination of his employment through the Restrictive Period, to
purchase products or services from any person or entity which products or
services could have been supplied or performed, as the case may be, by GE Fanuc
or any of its subsidiaries (other than from GE Fanuc or any of its
subsidiaries);
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(d) solicit, attempt to solicit or aid in the solicitation of any person or
entity who is or has been a customer, supplier, licensor, licensee or person or
entity having any other business relationship with GE Fanuc or any of its
subsidiaries, at any time during the period beginning one year prior to the date
of termination of his employment through the Restrictive Period, to cease doing
business with or alter its business relationship with GE Fanuc or any of its
subsidiaries; or
(e) solicit or hire any person or entity who is a director, officer or
employee of GE Fanuc or any of its subsidiaries to perform services for any
person or entity other than GE Fanuc or any of its subsidiaries or to terminate
his or her employment with GE Fanuc or any of its subsidiaries.
9. DISCLOSURE OF CONFIDENTIAL INFORMATION. The Executive recognizes
that he will occupy a position of trust and confidence with the Company as to
Confidential Information (as herein defined) pertaining to the Company and its
Affiliates. As an inducement for the Company to enter into this Agreement, the
Executive therefore agrees that:
(a) for the longest period permitted by law from the date of this
Agreement, the Executive shall hold in the strictest confidence and shall not,
other than as required by law, without the prior written consent of the Board of
Directors of GE Fanuc, use for his own benefit or that of any third party or
disclose to any person, firm or corporation (except the Company, an Affiliate of
the Company or employees of the Company and its Affiliates) any Confidential
Information. For purposes of this Agreement, "Confidential Information" shall
mean any (i) trade secret or other confidential or secret information of the
Company or of any of its Affiliates or (ii) other technical, business,
proprietary or financial information of the Company or any of its Affiliates not
available to the public generally or to the competitors of the Company or any of
its Affiliates.
(b) The Executive (and if deceased, the Executive's personal
representative) shall promptly following a request therefor from GE Fanuc return
to the Company, without retaining copies, all tangible items which are or which
contain Confidential Information. The Executive shall also surrender all
computer print-outs, laboratory books, floppy disks and other such media for
storing software and information, work papers, files, client lists, telephone
and/or address books, rolodex cards, internal memoranda, appointment books,
calendars, keys and other tangible things entrusted to the Executive by the
Company or any of its Affiliates or authored in whole or in part by the
Executive within the scope of his duties to the Company even if such things do
not contain Confidential Information; and
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(c) at the request of GE Fanuc made at any time or from time to time
hereafter, the Executive (and if deceased, the Executive's personal
representative) shall make, execute and deliver all applications, papers,
assignments, conveyances, instruments or other documents and shall perform or
cause to be performed such other lawful acts as GE Fanuc may reasonably deem
necessary or desirable to implement any of the provisions of this Agreement, and
shall give testimony and cooperate with the Company, its Affiliates or their
respective representatives in any controversy or legal proceedings involving the
Company, its Affiliates or their respective representatives with respect to any
Confidential Information, the reasonable expenses of such testimony and
cooperation to be paid by the Company.
10. INVENTIONS. The Executive acknowledges that in his capacity as
an executive officer of the Company, he will be involved in (i) the conception
of making of improvements, discoveries, inventions or the like (whether
patentable or unpatentable and whether or not reduced to practice), (ii) the
authorship of copyrightable works and (iii) the development of trade secrets
relating to the Company or any of its Affiliates. The Executive acknowledges
that all such intellectual property developed in connection with his employment
with the Company is the exclusive property of the Company. The Executive hereby
waives any rights he may have in or to such intellectual property, and the
Executive hereby assigns to the Company all right, title and interest in and to
such intellectual property. At the request of GE Fanuc and at no expense to the
Executive, the Executive shall execute and deliver all such papers, including,
without limitation, any assignment documents, and shall provide such cooperation
as may be necessary or desirable, or as GE Fanuc may reasonably request, in
order to enable the Company to secure and exercise its rights to such
intellectual property.
11. SPECIFIC PERFORMANCE. The Executive agrees that any violation by
him of Sections 8, 9, or 10 of this Agreement would be highly injurious to the
Company and its Affiliates and would cause irreparable harm to the Company and
its Affiliates. By reason of the foregoing, the Executive consents and agrees
that if he violates any provision of Sections 8, 9 or 10 of this Agreement, the
Company and its Affiliates shall be entitled, in addition to other rights and
remedies that they may have, to apply to any court of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce, or
prevent any continuing violation of, the provisions of such section. In the
event the Executive breaches a covenant contained in this Agreement, the
Restricted Period applicable to the Executive with respect to such breached
covenant shall be extended for the period of such breach. The Executive also
recognizes that the territorial, time and scope limitations set forth in
Sections 8 and 9 are reasonable and are properly required for the protection of
the Company and its Affiliates and in the event that any such territorial, time
or scope limitation is deemed to be unreasonable by a court of competent
jurisdiction, the Company and the Executive agree,
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and the Executive submits, to the reduction of any or all of said territory,
time or scope limitations to such an area, period or scope as said court shall
deem reasonable under the circumstances. The Executive represents, warrants and
acknowledges that he has available to him sufficient other means of support so
that observance of the covenants contained in Sections 8, 9 and 10 shall not
deprive him of his ability to earn a livelihood or support his dependents.
12. TERMINATION FOR CAUSE. During the Term, the Executive's
employment with the Company may be terminated by the Board "for cause," which
shall include (a) the Executive's conviction for, or plea of nolo contendere to,
a felony or a crime involving moral turpitude; (b) the Executive's commission of
an act involving personal dishonesty or fraud involving personal profit in
connection with the Executive's employment with the Company; (c) the Executive's
commission of an act involving willful misconduct or gross negligence on the
part of the Executive in the conduct of his duties hereunder; (d) the
Executive's breach of any material provision of this Agreement where such breach
continues for a period of twenty (20) days after the Executive's receipt of
written notice of such breach from the Company; or (e) willful violation of the
Parent's integrity policies as set forth in the booklet "The Spirit and Letter,"
a copy of which has been provided to the Employee. In the event of termination
under this Section 12, the Company's obligations under this Agreement shall
cease and the Executive shall forfeit all his rights to receive any compensation
or benefits under this Agreement, except that the Executive shall be entitled to
his Salary and benefits for services already performed as of the date of
termination of the Executive's employment hereunder.
13. GOOD REASON. The Executive shall be entitled to terminate his
employment hereunder at any time for Good Reason. For the purposes of this
Agreement, the Executive shall have "Good Reason" to terminate his employment
hereunder (i) upon a significant demotion or material adverse change in his
duties and responsibilities; (ii) upon a reduction in Salary, Bonus or in fringe
benefits provided to him of 10% or more; (iii) upon a material breach by the
Company of its agreements and covenants set forth herein; (iv) upon a
requirement to relocate, except for office relocations that would not increase
the Executive's one-way commute distance by more than fifty (50) miles from the
most recent principal residence selected by the Executive prior to notice of
relocation; or (v) if General Electric Company no longer controls the Company,
directly or indirectly, or all or substantially all of the assets of the Company
are purchased by any person who is not controlled directly or indirectly by
General Electric Company.
14. DEATH OR DISABILITY.
(a) This Agreement shall terminate upon the Executive's death.
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(b) If the Executive becomes permanently disabled (determined as provided
below) during the Term, his employment with the Company shall terminate as of
the date such permanent disability is determined. The Executive shall be
considered to be permanently disabled for purposes of this Agreement if he is
unable by reason of accident or illness (including mental illness) to perform
the material duties of his regular position with the Company and is (i) not
expected to recover from his disability within a period of six (6) months from
the commencement of the disability; or (ii) not expected to be able to perform
his material duties of his regular position with the Company for a period of six
(6) months in any consecutive twelve (12) month period as a result of the same
disability. If at any time the Executive claims or is claimed to be permanently
disabled, a physician acceptable to both the Executive, or his personal
representative, and the Company (which acceptances shall not be unreasonably
withheld) shall be retained by the Company and shall examine the Executive. The
Executive shall cooperate fully with the physician. If the physician determines
that the Executive is permanently disabled, the physician shall deliver to the
Company a certificate certifying both that the Executive is permanently disabled
and the date upon which the condition of permanent disability commenced. The
determination of the physician shall be conclusive.
(c) The Executive's right to his compensation and benefits under this
Agreement shall cease upon his death or disability, except that the Executive
(or his estate or heirs) shall be entitled to his Salary and a pro rata portion
of his Bonus and benefits for services already performed as of the date of his
death or disability.
15. EFFECT OF TERMINATION.
(a) If the Company terminates the Executive's employment hereunder for any
reason (including, without limitation, the Company's failure to renew the term
of this Agreement at the end of the Employment Term or any Renewal Term thereof,
as applicable) other than for cause, death or disability during the Term or the
Executive terminates this Agreement for Good Reason during the Term, provided
the Executive (or the Executive's executor or other legal representative in the
case of the Executive's death or Disability) executes the Release (as defined in
Section (f) below), (i) the Company shall pay the Executive in one lump sum an
amount equal to (A) twenty-four times the greater of (I) his monthly Salary as
of the date of termination or (II) his highest monthly Salary during the prior
twelve month period; plus (B) two times the bonus paid to the Executive for the
fiscal year immediately prior to the date of such termination under the bonus
plan of the Company and (ii) the Company shall continue the Executive's medical
insurance benefits for a period equal to twelve months or until the Executive is
eligible for medical coverage under a plan of a successive employer.
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(b) If the Executive terminates his employment with the Company for any
reason whatsoever other than for Good Reason, the Company's obligations under
this Agreement shall cease and the Executive shall forfeit all his rights to
receive any compensation or benefits under this Agreement, except that the
Executive shall be entitled to his Salary and benefits for services already
performed as of the date of termination of this Agreement.
(c) Any amounts payable to the Executive pursuant to this Section 15 shall
be paid in full in a lump sum not more than sixty (60) days following the date
of termination of the Executive's employment hereunder.
(d) The Executive shall not be required to mitigate the amount of any
payment contemplated by this Section 15 (whether by seeking new employment or in
any other manner), nor shall any such payment be reduced by any earnings that
the Executive may receive from any other source.
(e) The transfer of the Executive's employment from the Company to an
Affiliate of the Company and the assumption of this Agreement by such Affiliate
shall not constitute a termination of employment for purposes of this Section
15.
(f) Notwithstanding anything to the contrary contained in this Agreement,
no amount shall be payable to the Executive (or the Executive's executor or
other legal representative in the case of the Executive's death or Disability)
pursuant to this Section 15 unless and until the Executive (or the Executive's
executor or other legal representative in the case of the Executive's death or
Disability) executes a general release in the form of Exhibit A attached hereto
(the "Release").
16. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) If it shall be determined that any payment or distribution by the
Company or its affiliated companies to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 4) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code, or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Tax Reimbursement Payment") in an amount equal
to the Excise Tax imposed upon the Payments. The Company will pay the Tax
Reimbursement Payment to the Executive not less than five days prior to the date
on which the Executive must pay such excise tax.
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(b) Subject to the provisions of Section 4(c), all determinations required
to be made under this Section 4, including whether and when a Tax Reimbursement
Payment is required and the amount of such Tax Reimbursement Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
the Company's public accounting firm (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion that failure to report the
Excise Tax on the Executive's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that Tax
Reimbursement Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 4(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Tax Reimbursement Payment. Such notification shall be given as
soon as practicable but no later than 10 business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without
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limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in order effectively to
contest such claim, and
(4) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 4(c), the Executive becomes entitled to receive, and
receives, any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 4(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 4(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Tax Reimbursement Payment required to be
paid.
17. MISCELLANEOUS.
(a) All notices required or permitted to be given hereunder shall be in
writing and shall be deemed given (i) when delivered in person at the time of
such delivery or by telecopy with receipt of transmission indicating the date
and time (provided, however, that notice delivered by telecopy shall only be
effective if such notice is also delivered by hand or deposited in the United
States mail, postage prepaid, registered or certified mail, on or before two (2)
business days after its delivery by telecopy), (ii) when received if given by a
nationally recognized overnight courier service or (iii) two (2) business days
after being deposited in the United States mail, postage prepaid, registered or
certified mail, addressed as follows:
if to the Executive:
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Nicholas Gihl
433 Hillside
Elmhurst, Illinois 60126
Fax: (630) 617-5327
with a copy to:
D=Ancona & Pflaum
30 N. LaSalle Street
Suite 2900
Chicago, Illinois 60602
Attention: Mark Albert
Fax: (312) 580-0932
if to the Company:
Total Control Products, Inc.
2001 N. Janice Avenue
Melrose Park, Illinois 60160
Attn: Chief Financial Officer
Fax: (708) 345-5670
with a copy to:
GE Fanuc Automation North America, Inc.
P.O. Box 198
Charlottesville, VA 22906
Attn: General Counsel
Fax: (804) 978-6200
and/or to such other address or addresses as may be designated by notice given
in accordance with the provisions hereof.
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and permitted assigns. As
to the Executive, this Agreement is a personal service contract and shall not be
assignable by the Executive, but all obligations and agreements of the Executive
hereunder shall be binding upon and enforceable against the Executive and the
Executive's personal representatives, heirs, legatees and devisees.
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(c) The parties adopt the Recitals to this Agreement and agree and affirm
that construction of this Agreement shall be guided thereby; this Agreement
contains all of the agreements between the parties with respect to the subject
matter hereof; and this Agreement supersedes all other agreements, oral or
written, between the parties hereto with respect to the subject matter hereof.
(d) No change or modification of this Agreement shall be valid unless the
same shall be in writing and signed by all of the parties hereto. No waiver of
any provisions of this Agreement shall be valid unless in writing and signed by
the waiving party. No waiver of any of the provisions of this Agreement shall
be deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver, unless so provided
in the waiver.
(e) If any provisions of this Agreement (or portions thereof) shall, for
any reason, by invalid or unenforceable, such provisions (or portions thereof)
shall be ineffective only to the extent of such invalidity or unenforceability,
and the remaining provisions of this Agreement (or portions thereof) shall
nevertheless be valid, enforceable and of full force and effect.
(f) The section or paragraph headings or titles herein are for convenience
of reference only and shall not be deemed a part of this Agreement.
(g) This Agreement may be executed in multiple counterparts, each of which
shall be deemed to be an original and all of which taken together shall
constitute a single instrument.
(h) Notwithstanding anything to the contrary contained herein, the
Executive's rights and obligations under Sections 8, 9, 10, 11 and 15 shall
survive the expiration or termination of this Agreement (other than a
termination pursuant to Section 1).
(i) This Agreement shall be governed and controlled as to validity,
enforcement, interpretation, construction, effect and in all other respects by
the laws of the State of Illinois applicable to contracts made in that State
(other than any conflict of laws rule which might result in the application of
the laws of any other jurisdiction).
(j) The Executive hereby expressly submits and consents in advance to the
jurisdiction of the federal and state courts of the State of Illinois for all
purposes in connection with any action or proceeding arising out of or relating
to this Agreement.
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(k) The Company shall require any successor (whether direct or indirect and
either by purchase, lease, merger, consolidation, liquidation or otherwise) to
all or substantially all of the Company's business and/or assets, by an
agreement in substance and form satisfactory to the Executive, to assume this
Agreement and to agree expressly to perform this Agreement in the same manner
and to the same extent as the Company would be required to perform it in the
absence of a succession. Regardless of such assumption, the Company shall
remain liable for performance of this Agreement if the successor corporation
fails to perform this Agreement.
(l) All costs, including any legal fees and other expenses incurred
(including all such fees and expenses incurred by the Executive in contesting or
disputing any termination under this Agreement or in seeking to obtain or
enforce any of his rights or benefits under this Agreement), shall be paid by
the Company. All costs, including legal fees and other expenses incurred in
defending or asserting the validity and enforceability of this Agreement against
challenge by any person in any forum shall be paid by the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
/s/ Nicholas Gihl
NICHOLAS GIHL
TOTAL CONTROL PRODUCTS, INC.
By: /s/ Peter Nicholson
Peter Nicholson, Chief Financial Officer
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EXHIBIT A
Date of Notification:_________________
GENERAL RELEASE
This is a General Release (this "Release") executed by _______________
(the "Executive") pursuant to Section 15 of the Employment Agreement dated as of
__________, 1998 (the "Employment Agreement") between Total Control Products,
Inc., an Illinois corporation (the "Company"), and the Executive.
WHEREAS, the employment of the Executive will be terminated by the
Company;
WHEREAS, the Company and the Executive intend that the terms and
conditions of the Employment Agreement and this Release shall govern all issues
related to the Executive's employment and termination of employment by the
Company;
WHEREAS, the Executive has had at least 45 days to consider the form
of this Release;
WHEREAS, the Company advised the Executive in writing to consult with
a lawyer before signing this Release;
WHEREAS, the Executive has represented and hereby reaffirms that the
Executive has disclosed to the Company any information in the Executive's
possession concerning any conduct involving the Company, __________, a ________
corporation (the "Parent"), or their affiliates that the Executive has any
reason to believe involves any false claims to the United States or is or may be
unlawful or violates the policies of the Company or the Parent in any respect;
WHEREAS, the Executive acknowledges that the consideration to be
provided to the Executive under the Employment Agreement is sufficient to
support this Release;
WHEREAS, the Executive represents that the Executive has not filed any
charges, claims or lawsuits against the Company or the Parent involving any
aspect of the Executive's employment which have not been terminated as of the
date of this Release; and
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WHEREAS, the Executive understands that the Company regards the
representations by the Executive as material and that the Company is relying on
these representations in paying amounts to the Executive pursuant to the
Employment Agreement.
THE EXECUTIVE THEREFORE AGREES AS FOLLOWS:
1. The Executive's employment with the Company shall terminate on
_______________ (the "Termination Date").
2. The Executive shall receive the termination payments set forth in
Section 15 of the Employment Agreement.
3. The Employee Innovation and Proprietary Information Agreement with
the Company remains in effect in accordance with its terms.
4. The Executive, on behalf of the Executive and anyone claiming
through the Executive, including the Executive's heirs, assigns and agents,
releases and discharges the Company, the Parent and their respective directors,
officers, employees, subsidiaries, affiliates and agents, and the predecessors,
successors and assigns of any of them (the "Released Parties"), from each and
every claim, action or right of any sort, in law or in equity, known or unknown,
asserted or unasserted, foreseen or unforeseen, arising on or before the
Effective Date (as set forth in Section 11 hereof).
(a) This Release includes, but is not limited to: any claim of
discrimination on the basis of race, sex, religion, marital status, sexual
orientation, national origin, handicap or disability, age, veteran status,
special disabled veteran status or citizenship status; any other claim based on
a statutory prohibition or common law doctrine; any claim arising out of or
related to the Executive's employment with the Company, the terms and conditions
thereof or the termination or cessation thereof; any express or implied
employment contract, any other express or implied contract affecting terms and
conditions of the Executive's employment or the termination or cessation
thereof, or a covenant of good faith and fair dealing; any tort claims and any
personal gain with respect to any claim arising under the qui tam provisions of
the False Claims Act, 31 U.S.C. 3730.
(b) The Executive represents that the Executive understands this
Release, that rights and claims under the Age Discrimination in Employment Act
of 1967, as amended, the Civil Rights Act of 1964, as amended, the Civil Rights
Act of 1991, the
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Civil Rights Act of 1866, the Older Workers' Benefit Protection Act, the Family
and Medical Leave Act, the Americans With Disabilities Act, the Employee
Retirement Income Security Act of 1974 and the Wisconsin Fair Employment Act are
among the rights and claims against the Released Parties the Executive is
releasing, and that the Executive understands that the Executive is not
releasing any rights or claims arising after the Effective Date.
(c) The Executive further agrees never to sue the Released Parties or
cause the Released Parties to be sued regarding any matter within the scope of
this Release. If the Executive violates this Release by suing any of the
Released Parties or causing any of the Released Parties to be sued, the
Executive agrees to pay all costs and expenses of defending against the suit
incurred by the Released Parties, including reasonable attorneys fees.
(d) The Executive expressly represents and warrants that the Executive
is the sole owner of the actual or alleged claims, demands, rights, causes of
action and other matters that are released herein, that the same have not been
transferred or assigned or caused to be transferred or assigned to any other
person, firm, corporation or other entity, and that the Executive has the full
right and power to grant, execute and deliver this Release.
5. The Executive acknowledges that the Executive is bound by the
provisions of Section 4 of the Employment Agreement.
6. The Executive understands that any and all Company covenants
which relate to Company obligations to the Executive after the Termination Date,
including but not limited to the payments set forth in Section 3 of the
Employment Agreement, are contingent on the Executive's satisfaction of the
Executive's obligations under this Release.
7. The Executive agrees that, for the period commencing on the
Termination Date and ending on the second anniversary of the Termination Date,
the Executive will be reasonably available to the Company and the Parent to
respond to requests by the Company or the Parent for information pertaining to
or relating to the Company, the Parent and their affiliates, subsidiaries,
agents, officers, directors or employees which may be within the knowledge of
the Executive. The Executive will cooperate fully with the Company in
connection with any and all existing or future litigation or investigations
brought by or against the Company, the Parent or any of their affiliates,
agents, officers, directors or employees, whether administrative, civil or
criminal in nature, in which and to the extent the Company deems the Executive's
cooperation necessary. The Executive understands that the Company will
reimburse the
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Executive for reasonable out-of pocket expenses incurred as a result of such
cooperation. Nothing herein shall prevent the Executive from communicating with
or participating in any government investigation. The Executive will act in good
faith to furnish the information and cooperation required by this Section 7 and
the Company will act in good faith so that the requirement to furnish such
information and cooperation does not create a hardship for the Executive.
8. The Executive agrees, subject to any obligations the Executive may
have under applicable law, that the Executive will not make or cause to be made
any statements that disparage, are inimical to, or damage the reputation of the
Company, the Parent or any of their affiliates, subsidiaries, agents, officers,
directors or employees. In the event such a communication is made to anyone,
including but not limited to the media, public interest groups and publishing
companies, it will be considered a material breach of the terms of the
Employment Agreement and this Release and the Executive will be required to
reimburse the Company for any and all payments made under the terms of the
Employment Agreement and all commitments to make additional payments to the
Executive will be null and void.
9. The Company is not obligated to offer employment to the Executive
(or to accept services or the performance of work from the Executive directly or
indirectly) now or in the future.
10. The Executive may revoke this Release in writing within seven
days of signing it. This Release will not take effect until the Effective Date.
If the Executive revokes this Release, all of its provisions and the provisions
of Section 3 of the Employment Agreement shall be void and unenforceable.
11. The Termination Date of the Executive's employment will be
__________. The Effective Date shall be the day after the end of the revocation
period described in Section 10 hereof.
12. The Executive shall keep strictly confidential all the terms and
conditions, including amounts, in the Employment Agreement and this Release and
shall not disclose them to any person other than the Executive's spouse, the
Executive's legal or financial advisor or United States governmental officials
who seek such information in the course of their official duties, unless
compelled by law to do so. If a person not a party to the Employment Agreement
requests or demands, by subpoena or otherwise, that the Executive disclose or
produce the Employment Agreement or this Release or any terms or conditions
thereof, the Executive shall immediately notify the Company and
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shall give the Company an opportunity to respond to such notice before taking
any action or making any decision in connection with such request or subpoena.
13. The Employment Agreement and this Release constitute the entire
understanding between the parties. The Executive has not relied on any oral
statements that are not included in the Employment Agreement or this Release.
14. This Release shall be construed, interpreted and applied in
accordance with the law of the State of [Illinois] (other than conflict of laws
principles).
EXECUTIVE
___________________________________
Date: _____________________________
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Exhibit 8
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into as of November 22, 1998
by and between Peter Nicholson (the "Executive") and Total Control Products,
Inc., an Illinois corporation (the "Company").
R E C I T A L S:
A. Concurrently herewith, GE Fanuc Automation North America, Inc. ("GE
Fanuc"), Orion Merger Corp. and the Company are entering into an Agreement and
Plan of Merger (the "Merger Agreement"), pursuant to which Orion Merger Corp.
will be commencing a tender offer (the "Offer") for the common stock of the
Company and, following the consummation of such Offer, merging (the "Merger")
with and into the Company, whereupon the Company will become a wholly-owned
subsidiary of GE Fanuc.
B. The Executive is the beneficial owner of certain shares of common
stock of the Company and intends to tender such shares to Orion Merger Corp.
pursuant to the Offer.
C. The Company and the Executive have entered into an Employment
Agreement, dated as of December 31,1997 (the "Prior Agreement") pursuant to
which the Executive is employed as an executive officer of the Company.
D. Commencing upon consummation of the Offer, the Company desires to
continue the employment of the Executive as an executive officer of the Company
and the Executive agrees to be so bound, all on the terms and subject to the
conditions set forth herein, and the Company and the Executive desire to
terminate the Prior Agreement.
E. The Company desires to bind the Executive to certain restrictive
covenants and the Executive agrees to be so bound, all on the terms and subject
to the conditions set forth herein.
A G R E E M E N T:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
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1. EFFECT OF AGREEMENT; TERMINATION OF PRIOR AGREEMENT. This Agreement
shall become effective upon the consummation of the Offer and shall terminate
and be of no further force or effect if the Merger Agreement shall be terminated
prior to the consummation of the Offer. Upon consummation of the Offer, the
Prior Agreement shall terminate and shall be of no further force or effect
whatsoever.
2. TERM. Subject to the terms and conditions set forth herein and unless
sooner terminated as hereinafter provided, the Company shall employ the
Executive and the Executive agrees to serve as an employee of the Company during
the period beginning at the consummation of the Offer and ending on the second
anniversary thereof (the "Employment Term"). After the expiration of the
Employment Term, the Executive's employment hereunder shall automatically renew
for successive one-year periods (each, a "Renewal Term") unless either party
hereto delivers written notice to the other party hereto, at least ninety (90)
days prior to the expiration of the Employment Term or any Renewal Term thereof,
as the case may be, of his or its desire to terminate the Executive's employment
with the Company. The Employment Term and any Renewal Term thereof are
collectively referred to herein as the "Term."
3. EMPLOYMENT DUTIES. During the Term, the Executive shall serve as the
Senior Vice President & CFO of the Company. The Executive shall faithfully,
diligently and competently perform such duties and as are commensurate with his
position and such other duties as are commensurate with his position that may
from time to time be assigned to him by the President & CEO of the Company.
4. COMPENSATION. As compensation for the services to be performed and
the duties and responsibilities to be assumed by the Executive during the Term,
the Company shall pay to the Executive the following compensation:
(a) A salary (the "Salary") in an amount equal to $175,000 per annum. The
Company shall review the Salary annually during the Term and any increases in
Salary shall be made at the sole discretion of the Company. The Salary shall be
payable to the Executive in accordance with the Company's ordinary payment
practices for salaried employees.
(b) The Executive shall be entitled to participate in the Company's
executive bonus plan (a "Bonus") on the same terms as the participation of other
executives of the Company; provided, however, that, during the Employment Term,
the Executive shall receive an annual Bonus of not less than $50,000. In no
event shall any Bonus be
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paid to the Executive for any calendar year of the Company unless the Executive
is employed throughout the entire calendar year by the Company or any of its
Affiliates (as defined below). The Bonus shall be determined from the Company's
internal accounting records, which shall be finally approved by the Board of
Directors of the Company (the "Board") or any compensation committee thereof.
The Bonus awarded to the Executive in respect of any particular calendar year
shall be paid at the same time as bonuses are paid to other executives of the
Company.
(c) If the Executive remains employed by the Company for the entire
Employment Term he shall be entitled to a bonus in the amount of $85,000 at the
end of such Employment Term.
As used herein, an "Affiliate" shall mean and include any person or
entity which controls a party, which such party controls or which is under
common control with such party. "Control" means the power, direct or indirect,
to direct or cause the direction of the management and policies of a person or
entity through voting securities, contract or otherwise.
5. VACATIONS. The Executive shall be entitled to reasonable vacation in
accordance with the Company's policies applicable to its senior executives
generally, but in no event less than three weeks annually, which shall be taken
at such time or times as shall be mutually determined by the Company and the
Executive.
6. BENEFITS.
(a) During the Term, the Executive shall be entitled to participate in such
employee benefit plans and programs as are maintained by the Company, to the
extent that his position, service, compensation, age, health and other
qualifications make him eligible to participate. The Company does not promise
the adoption or continuance of any particular plan or program during the Term,
and the Executive's (and his eligible dependents') participation in any such
plan or program shall be subject to the provisions, rules, regulations and laws
applicable thereto.
(b) During the Term, the Executive shall be entitled to such other fringe
benefits as are provided to employees of the Company with comparable positions,
service and compensation as the Executive.
7. REIMBURSEMENT OF EXPENSES. During the Term, the Executive shall be
entitled to prompt reimbursement for ordinary, necessary and reasonable out-of-
pocket trade or business expenses which the Executive incurs in connection with
performing his duties
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under this Agreement. The reimbursement of all such expenses shall be made upon
presentation of evidence reasonably satisfactory to the Company of the amounts
and nature of such expenses and shall be subject to the reasonable approval of
the Board.
8. RESTRICTIVE COVENANTS. The Executive acknowledges and agrees that (a)
through his continuing services to the Company, he will learn valuable trade
secrets and other proprietary information relating to the Company's business;
(b) the Executive's services to the Company are unique in nature; (c) the
Company's business is national in scope; and (d) the Company would be
irreparably damaged if the Executive were to provide services to any person or
entity in violation of the restrictions contained in this Agreement.
Accordingly, as an inducement to the Company to enter into this Agreement, the
Executive agrees that during the Term and for two years thereafter (such period
being referred to herein as the "Restricted Period"), the Executive shall not,
directly or indirectly, either for himself or for any other person or entity,
without the prior written consent of the Board of Directors of GE Fanuc:
(a) anywhere in the United States, engage or participate in, or assist,
advise or be connected with (including as an employee, owner, partner,
shareholder, officer, director, advisor, consultant, agent or (without
limitation by the specific enumeration of the foregoing) otherwise), or permit
his name to be used by or render services for, any person or entity engaged in,
or making plans to engage in, a business that competes with the business
conducted by, or proposed to be conducted by, GE Fanuc or any of its
subsidiaries (a "Competing Business");
(b) take any action which might divert from GE Fanuc or any of its
subsidiaries any opportunity (each, an "Opportunity") which would be within the
scope of the business then conducted by GE Fanuc or any of its subsidiaries and
shall offer each Opportunity to GE Fanuc, which GE Fanuc may, in its sole
discretion, decide to pursue or not;
(c) solicit, attempt to solicit, aid in the solicitation of or accept any
orders from any person or entity who is or has been a customer of GE Fanuc or
any of its subsidiaries, at any time during the period beginning one year prior
to the date of termination of his employment through the Restrictive Period, to
purchase products or services from any person or entity which products or
services could have been supplied or performed, as the case may be, by GE Fanuc
or any of its subsidiaries (other than from GE Fanuc or any of its
subsidiaries);
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(d) solicit, attempt to solicit or aid in the solicitation of any person or
entity who is or has been a customer, supplier, licensor, licensee or person or
entity having any other business relationship with GE Fanuc or any of its
subsidiaries, at any time during the period beginning one year prior to the date
of termination of his employment through the Restrictive Period, to cease doing
business with or alter its business relationship with GE Fanuc or any of its
subsidiaries; or
(e) solicit or hire any person or entity who is a director, officer or
employee of GE Fanuc or any of its subsidiaries to perform services for any
person or entity other than GE Fanuc or any of its subsidiaries or to terminate
his or her employment with GE Fanuc or any of its subsidiaries.
9. DISCLOSURE OF CONFIDENTIAL INFORMATION. The Executive recognizes that
he will occupy a position of trust and confidence with the Company as to
Confidential Information (as herein defined) pertaining to the Company and its
Affiliates. As an inducement for the Company to enter into this Agreement, the
Executive therefore agrees that:
(a) for the longest period permitted by law from the date of this
Agreement, the Executive shall hold in the strictest confidence and shall not,
other than as required by law, without the prior written consent of the Board of
Directors of GE Fanuc, use for his own benefit or that of any third party or
disclose to any person, firm or corporation (except the Company, an Affiliate of
the Company or employees of the Company and its Affiliates) any Confidential
Information. For purposes of this Agreement, "Confidential Information" shall
mean any (i) trade secret or other confidential or secret information of the
Company or of any of its Affiliates or (ii) other technical, business,
proprietary or financial information of the Company or any of its Affiliates not
available to the public generally or to the competitors of the Company or any of
its Affiliates.
(b) The Executive (and, if deceased, the Executive's personal
representative) shall promptly following a request therefor from GE Fanuc return
to the Company, without retaining copies, all tangible items which are or which
contain Confidential Information. The Executive shall also surrender all
computer print-outs, laboratory books, floppy disks and other such media for
storing software and information, work papers, files, client lists, telephone
and/or address books, rolodex cards, internal memoranda, appointment books,
calendars, keys and other tangible things entrusted to the Executive by the
Company or any of its Affiliates or authored in whole or in part by the
Executive within
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the scope of his duties to the Company even if such things do not contain
Confidential Information; and
(c) at the request of GE Fanuc made at any time or from time to time
hereafter, the Executive (and, if deceased, the Executive's personal
representative) shall make, execute and deliver all applications, papers,
assignments, conveyances, instruments or other documents and shall perform or
cause to be performed such other lawful acts as GE Fanuc may reasonably deem
necessary or desirable to implement any of the provisions of this Agreement, and
shall give testimony and cooperate with the Company, its Affiliates or their
respective representatives in any controversy or legal proceedings involving the
Company, its Affiliates or their respective representatives with respect to any
Confidential Information, the reasonable expenses of such testimony and
cooperation to be paid by the Company.
10. INVENTIONS. The Executive acknowledges that in his capacity as an
executive officer of the Company, he will be involved in (i) the conception of
making of improvements, discoveries, inventions or the like (whether patentable
or unpatentable and whether or not reduced to practice), (ii) the authorship of
copyrightable works and (iii) the development of trade secrets relating to the
Company or any of its Affiliates. The Executive acknowledges that all such
intellectual property developed in connection with his employment with the
Company is the exclusive property of the Company. The Executive hereby waives
any rights he may have in or to such intellectual property, and the Executive
hereby assigns to the Company all right, title and interest in and to such
intellectual property. At the request of GE Fanuc and at no expense to the
Executive, the Executive shall execute and deliver all such papers, including,
without limitation, any assignment documents, and shall provide such cooperation
as may be necessary or desirable, or as GE Fanuc may reasonably request, in
order to enable the Company to secure and exercise its rights to such
intellectual property.
11. SPECIFIC PERFORMANCE. The Executive agrees that any violation by him
of Sections 8, 9, or 10 of this Agreement would be highly injurious to the
Company and its Affiliates and would cause irreparable harm to the Company and
its Affiliates. By reason of the foregoing, the Executive consents and agrees
that if he violates any provision of Sections 8, 9 or 10 of this Agreement, the
Company and its Affiliates shall be entitled, in addition to other rights and
remedies that they may have, to apply to any court of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce, or
prevent any continuing violation of, the provisions of such section. In the
event the Executive breaches a covenant contained in this Agreement, the
Restricted Period applicable to the Executive with respect
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to such breached covenant shall be extended for the period of such breach. The
Executive also recognizes that the territorial, time and scope limitations set
forth in Sections 8 and 9 are reasonable and are properly required for the
protection of the Company and its Affiliates and in the event that any such
territorial, time or scope limitation is deemed to be unreasonable by a court of
competent jurisdiction, the Company and the Executive agree, and the Executive
submits, to the reduction of any or all of said territory, time or scope
limitations to such an area, period or scope as said court shall deem reasonable
under the circumstances. The Executive represents, warrants and acknowledges
that he has available to him sufficient other means of support so that
observance of the covenants contained in Sections 8, 9 and 10 shall not deprive
him of his ability to earn a livelihood or support his dependents.
12. TERMINATION FOR CAUSE. During the Term, the Executive's employment
with the Company may be terminated by the Board "for cause," which shall include
(a) the Executive's conviction for, or plea of nolo contendere to, a felony or a
crime involving moral turpitude; (b) the Executive's commission of an act
involving personal dishonesty or fraud involving personal profit in connection
with the Executive's employment with the Company; (c) the Executive's commission
of an act involving willful misconduct or gross negligence on the part of the
Executive in the conduct of his duties hereunder; (d) the Executive's breach of
any material provision of this Agreement where such breach continues for a
period of twenty (20) days after the Executive's receipt of written notice of
such breach from the Company; or (e) willful violation of the Parent's integrity
policies as set forth in the booklet "The Spirit and Letter," a copy of which
has been provided to the Employee. In the event of termination under this
Section 12, the Company's obligations under this Agreement shall cease and the
Executive shall forfeit all his rights to receive any compensation or benefits
under this Agreement, except that the Executive shall be entitled to his Salary
and benefits for services already performed as of the date of termination of the
Executive's employment hereunder.
13. GOOD REASON. The Executive shall be entitled to terminate his
employment hereunder at any time for Good Reason. For the purposes of this
Agreement, the Executive shall have "Good Reason" to terminate his employment
hereunder (i) upon a significant demotion or material adverse change in his
duties and responsibilities; (ii) upon a reduction in Salary, Bonus or in fringe
benefits provided to him of 10% or more; (iii) upon a material breach by the
Company of its agreements and covenants set forth herein; (iv) upon a
requirement to relocate, except for office relocations that would not increase
the Executive's one-way commute distance by more than fifty (50) miles from the
most recent principal residence selected by the Executive prior to notice of
relocation;
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or (v) if General Electric Company no longer controls the Company, directly or
indirectly, or all or substantially all of the assets of the Company are
purchased by any person who is not controlled directly or indirectly by General
Electric Company.
14. DEATH OR DISABILITY.
(a) This Agreement shall terminate upon the Executive's death.
(b) If the Executive becomes permanently disabled (determined as provided
below) during the Term, his employment with the Company shall terminate as of
the date such permanent disability is determined. The Executive shall be
considered to be permanently disabled for purposes of this Agreement if he is
unable by reason of accident or illness (including mental illness) to perform
the material duties of his regular position with the Company and is (i) not
expected to recover from his disability within a period of six (6) months from
the commencement of the disability; or (ii) not expected to be able to perform
his material duties of his regular position with the Company for a period of six
(6) months in any consecutive twelve (12) month period as a result of the same
disability. If at any time the Executive claims or is claimed to be permanently
disabled, a physician acceptable to both the Executive, or his personal
representative, and the Company (which acceptances shall not be unreasonably
withheld) shall be retained by the Company and shall examine the Executive. The
Executive shall cooperate fully with the physician. If the physician determines
that the Executive is permanently disabled, the physician shall deliver to the
Company a certificate certifying both that the Executive is permanently disabled
and the date upon which the condition of permanent disability commenced. The
determination of the physician shall be conclusive.
(c) The Executive's right to his compensation and benefits under this
Agreement shall cease upon his death or disability, except that the Executive
(or his estate or heirs) shall be entitled to his Salary and a pro rata portion
of his Bonus and benefits for services already performed as of the date of his
death or disability.
15. EFFECT OF TERMINATION.
(a) If the Company terminates the Executive's employment hereunder for any
reason (including, without limitation, the Company's failure to renew the term
of this Agreement at the end of the Employment Term or any Renewal Term thereof,
as applicable), other than for cause, death or disability during the Term or the
Executive terminates this Agreement for Good Reason during the Term, provided
that the Executive (or the Executive's executor or other legal representative in
the case of
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the Executive's death or Disability) executes the Release (as defined in Section
(f) below), (i) the Company shall pay the Executive in one lump sum an amount
equal to (A) twenty-four times the greater of (I) his monthly Salary as of the
date of termination or (II) his highest monthly Salary during the prior twelve
month period; plus (B) two times the bonus paid to the Executive for the fiscal
year immediately prior to the date of such termination under the bonus plan of
the Company and (ii) the Company shall continue the Executive's medical
insurance benefits for a period equal to twelve months or until the Executive is
eligible for medical coverage under a plan of a successive employer.
(b) If the Executive terminates his employment with the Company for any
reason whatsoever other than for Good Reason, the Company's obligations under
this Agreement shall cease and the Executive shall forfeit all his rights to
receive any compensation or benefits under this Agreement, except that the
Executive shall be entitled to his Salary and benefits for services already
performed as of the date of termination of this Agreement.
(c) Any amounts payable to the Executive pursuant to this Section 15 shall
be paid in full in a lump sum not more than sixty (60) days following the date
of termination of the Executive's employment hereunder.
(d) The Executive shall not be required to mitigate the amount of any
payment contemplated by this Section 15 (whether by seeking new employment or in
any other manner), nor shall any such payment be reduced by any earnings that
the Executive may receive from any other source.
(e) The transfer of the Executive's employment from the Company to an
Affiliate of the Company and the assumption of this Agreement by such Affiliate
shall not constitute a termination of employment for purposes of this Section
15.
(f) Notwithstanding anything to the contrary contained in this Agreement,
no amount shall be payable to the Executive (or the Executive's executor or
other legal representative in the case of the Executive's death or Disability)
pursuant to this Section 15 unless and until the Executive (or the Executive's
executor or other legal representative in the case of the Executive's death or
Disability) executes a general release in the form of Exhibit A attached hereto
(the "Release").
16. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
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(a) If it shall be determined that any payment or distribution by the
Company or its affiliated companies to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 4) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code, or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Tax Reimbursement Payment") in an amount equal
to the Excise Tax imposed upon the Payments. The Company will pay the Tax
Reimbursement Payment for the Executive not less than five days prior to the
date on which the Executive must pay such excise tax.
(b) Subject to the provisions of Section 4(c), all determinations required
to be made under this Section 4, including whether and when a Tax Reimbursement
Payment is required and the amount of such Tax Reimbursement Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
the Company's public accounting firm (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion that failure to report the
Excise Tax on the Executive's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that Tax
Reimbursement Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 4(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Tax Reimbursement Payment. Such notification shall be given as
soon as practicable but no later than 10 business days after the Executive is
informed in writing of such claim
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and shall apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid. The Executive shall not pay such claim prior
to the expiration of the 30-day period following the date on which the Executive
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:
(1) give the Company any information reasonably requested by the Company
relating to such claim,
(2) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in order effectively to
contest such claim, and
(4) permit the Company to participate in any proceedings relating to such
claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 4(c), the Executive becomes entitled to receive, and
receives, any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 4(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 4(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Tax Reimbursement Payment required to be
paid.
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17. MISCELLANEOUS.
(a) All notices required or permitted to be given hereunder shall be in
writing and shall be deemed given (i) when delivered in person at the time of
such delivery or by telecopy with receipt of transmission indicating the date
and time (provided, however, that notice delivered by telecopy shall only be
effective if such notice is also delivered by hand or deposited in the United
States mail, postage prepaid, registered or certified mail, on or before two (2)
business days after its delivery by telecopy), (ii) when received if given by a
nationally recognized overnight courier service or (iii) two (2) business days
after being deposited in the United States mail, postage prepaid, registered or
certified mail, addressed as follows:
if to the Executive:
Peter Nicholson
16800 S. Lee Street
Orland Park, Illinois 60462
with a copy to:
D'Ancona & Pflaum
30 N. LaSalle Street
Suite 2900
Chicago, Illinois 60602
Attention: Mark Albert
Fax: (312) 580-0932
if to the Company:
Total Control Products, Inc.
2001 Janice Avenue
Melrose Park, Illinois 60160
Attn: President
Fax: (708) 345-5670
with a copy to:
GE Fanuc Automation North America, Inc.
P.O. Box 8106
Charlottesville, VA 22906
Attn: General Counsel
Fax: (804) 978-5320
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and/or to such other address or addresses as may be designated by notice given
in accordance with the provisions hereof.
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and permitted assigns. As
to the Executive, this Agreement is a personal service contract and shall not be
assignable by the Executive, but all obligations and agreements of the Executive
hereunder shall be binding upon and enforceable against the Executive and the
Executive's personal representatives, heirs, legatees and devisees.
(c) The parties adopt the Recitals to this Agreement and agree and affirm
that construction of this Agreement shall be guided thereby; this Agreement
contains all of the agreements between the parties with respect to the subject
matter hereof; and this Agreement supersedes all other agreements, oral or
written, between the parties hereto with respect to the subject matter hereof.
(d) No change or modification of this Agreement shall be valid unless the
same shall be in writing and signed by all of the parties hereto. No waiver of
any provisions of this Agreement shall be valid unless in writing and signed by
the waiving party. No waiver of any of the provisions of this Agreement shall
be deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver, unless so provided
in the waiver.
(e) If any provisions of this Agreement (or portions thereof) shall, for
any reason, by invalid or unenforceable, such provisions (or portions thereof)
shall be ineffective only to the extent of such invalidity or unenforceability,
and the remaining provisions of this Agreement (or portions thereof) shall
nevertheless be valid, enforceable and of full force and effect.
(f) The section or paragraph headings or titles herein are for convenience
of reference only and shall not be deemed a part of this Agreement.
(g) This Agreement may be executed in multiple counterparts, each of which
shall be deemed to be an original and all of which taken together shall
constitute a single instrument.
(h) Notwithstanding anything to the contrary contained herein, the
Executive's rights and obligations under Sections 8, 9, 10, 11 and 15 shall
survive the expiration or termination of this Agreement (other than a
termination pursuant to Section 1).
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(i) This Agreement shall be governed and controlled as to validity,
enforcement, interpretation, construction, effect and in all other respects by
the laws of the State of Illinois applicable to contracts made in that State
(other than any conflict of laws rule which might result in the application of
the laws of any other jurisdiction).
(j) The Executive hereby expressly submits and consents in advance to the
jurisdiction of the federal and state courts of the State of Illinois for all
purposes in connection with any action or proceeding arising out of or relating
to this Agreement.
(k) The Company shall require any successor (whether direct or indirect and
either by purchase, lease, merger, consolidation, liquidation or otherwise) to
all or substantially all of the Company's business and/or assets, by an
agreement in substance and form satisfactory to the Executive, to assume this
Agreement and to agree expressly to perform this Agreement in the same manner
and to the same extent as the Company would be required to perform it in the
absence of a succession. Regardless of such assumption, the Company shall
remain liable for performance of this Agreement if the successor corporation
fails to perform this Agreement.
(l) All costs, including any legal fees and other expenses incurred
(including all such fees and expenses incurred by the Executive in contesting or
disputing any termination under this Agreement or in seeking to obtain or
enforce any of his rights or benefits under this Agreement), shall be paid by
the Company. All costs, including legal fees and other expenses incurred in
defending or asserting the validity and enforceability of this Agreement against
challenge by any person in any forum shall be paid by the Company.
14
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
/s/ Peter A. Nicholson
PETER NICHOLSON
TOTAL CONTROL PRODUCTS, INC.
By: /s/ Nic Gihl
Nic Gihl, President
15
<PAGE>
EXHIBIT A
Date of Notification:_________________
GENERAL RELEASE
This is a General Release (this "Release") executed by Peter Nicholson
(the "Executive") pursuant to Section 15 of the Employment Agreement dated as of
__________, 1998 (the "Employment Agreement") between [Orion], an Illinois
corporation (the "Company"), and the Executive.
WHEREAS, the employment of the Executive will be terminated by the
Company;
WHEREAS, the Company and the Executive intend that the terms and
conditions of the Employment Agreement and this Release shall govern all issues
related to the Executive's employment and termination of employment by the
Company;
WHEREAS, the Executive has had at least 45 days to consider the form
of this Release;
WHEREAS, the Company advised the Executive in writing to consult with
a lawyer before signing this Release;
WHEREAS, the Executive has represented and hereby reaffirms that the
Executive has disclosed to the Company any information in the Executive's
possession concerning any conduct involving the Company, __________, a ________
corporation (the "Parent"), or their affiliates that the Executive has any
reason to believe involves any false claims to the United States or is or may be
unlawful or violates the policies of the Company or the Parent in any respect;
WHEREAS, the Executive acknowledges that the consideration to be
provided to the Executive under the Employment Agreement is sufficient to
support this Release;
WHEREAS, the Executive represents that the Executive has not filed any
charges, claims or lawsuits against the Company or the Parent involving any
aspect of the Executive's employment which have not been terminated as of the
date of this Release; and
WHEREAS, the Executive understands that the Company regards the
representations by the Executive as material and that the
16
<PAGE>
Company is relying on these representations in paying amounts to the Executive
pursuant to the Employment Agreement.
THE EXECUTIVE THEREFORE AGREES AS FOLLOWS:
1. The Executive's employment with the Company shall terminate on
_______________ (the "Termination Date").
2. The Executive shall receive the termination payments set forth in
Section 15 of the Employment Agreement.
3. The Employee Innovation and Proprietary Information Agreement
with the Company remains in effect in accordance with its terms.
4. The Executive, on behalf of the Executive and anyone claiming
through the Executive, including the Executive's heirs, assigns and agents,
releases and discharges the Company, the Parent and their respective directors,
officers, employees, subsidiaries, affiliates and agents, and the predecessors,
successors and assigns of any of them (the "Released Parties"), from each and
every claim, action or right of any sort, in law or in equity, known or unknown,
asserted or unasserted, foreseen or unforeseen, arising on or before the
Effective Date (as set forth in Section 11 hereof).
(a) This Release includes, but is not limited to: any claim of
discrimination on the basis of race, sex, religion, marital status, sexual
orientation, national origin, handicap or disability, age, veteran status,
special disabled veteran status or citizenship status; any other claim based on
a statutory prohibition or common law doctrine; any claim arising out of or
related to the Executive's employment with the Company, the terms and conditions
thereof or the termination or cessation thereof; any express or implied
employment contract, any other express or implied contract affecting terms and
conditions of the Executive's employment or the termination or cessation
thereof, or a covenant of good faith and fair dealing; any tort claims and any
personal gain with respect to any claim arising under the qui tam provisions of
the False Claims Act, 31 U.S.C. 3730.
(b) The Executive represents that the Executive understands this
Release, that rights and claims under the Age Discrimination in Employment Act
of 1967, as amended, the Civil Rights Act of 1964, as amended, the Civil Rights
Act of 1991, the Civil Rights Act of 1866, the Older Workers' Benefit Protection
Act, the Family and Medical Leave Act, the Americans With Disabilities Act, the
Employee Retirement Income Security Act of 1974 and the Wisconsin Fair
17
<PAGE>
Employment Act are among the rights and claims against the Released Parties the
Executive is releasing, and that the Executive understands that the Executive is
not releasing any rights or claims arising after the Effective Date.
(c) The Executive further agrees never to sue the Released Parties or
cause the Released Parties to be sued regarding any matter within the scope of
this Release. If the Executive violates this Release by suing any of the
Released Parties or causing any of the Released Parties to be sued, the
Executive agrees to pay all costs and expenses of defending against the suit
incurred by the Released Parties, including reasonable attorneys' fees.
(d) The Executive expressly represents and warrants that the Executive
is the sole owner of the actual or alleged claims, demands, rights, causes of
action and other matters that are released herein, that the same have not been
transferred or assigned or caused to be transferred or assigned to any other
person, firm, corporation or other entity, and that the Executive has the full
right and power to grant, execute and deliver this Release.
5. The Executive acknowledges that the Executive is bound by the
provisions of Section 4 of the Employment Agreement.
6. The Executive understands that any and all Company covenants
which relate to Company obligations to the Executive after the Termination Date,
including but not limited to the payments set forth in Section 3 of the
Employment Agreement, are contingent on the Executive's satisfaction of the
Executive's obligations under this Release.
7. The Executive agrees that, for the period commencing on the
Termination Date and ending on the second anniversary of the Termination Date,
the Executive will be reasonably available to the Company and the Parent to
respond to requests by the Company or the Parent for information pertaining to
or relating to the Company, the Parent and their affiliates, subsidiaries,
agents, officers, directors or employees which may be within the knowledge of
the Executive. The Executive will cooperate fully with the Company in
connection with any and all existing or future litigation or investigations
brought by or against the Company, the Parent or any of their affiliates,
agents, officers, directors or employees, whether administrative, civil or
criminal in nature, in which and to the extent the Company deems the Executive's
cooperation necessary. The Executive understands that the Company will
reimburse the Executive for reasonable out-of pocket expenses incurred as a
result of such cooperation. Nothing herein shall prevent
18
<PAGE>
the Executive from communicating with or participating in any government
investigation. The Executive will act in good faith to furnish the information
and cooperation required by this Section 7 and the Company will act in good
faith so that the requirement to furnish such information and cooperation does
not create a hardship for the Executive.
8. The Executive agrees, subject to any obligations the Executive
may have under applicable law, that the Executive will not make or cause to be
made any statements that disparage, are inimical to, or damage the reputation of
the Company, the Parent or any of their affiliates, subsidiaries, agents,
officers, directors or employees. In the event such a communication is made to
anyone, including but not limited to the media, public interest groups and
publishing companies, it will be considered a material breach of the terms of
the Employment Agreement and this Release and the Executive will be required to
reimburse the Company for any and all payments made under the terms of the
Employment Agreement and all commitments to make additional payments to the
Executive will be null and void.
9. The Company is not obligated to offer employment to the Executive
(or to accept services or the performance of work from the Executive directly or
indirectly) now or in the future.
10. The Executive may revoke this Release in writing within seven
days of signing it. This Release will not take effect until the Effective Date.
If the Executive revokes this Release, all of its provisions and the provisions
of Section 3 of the Employment Agreement shall be void and unenforceable.
11. The Termination Date of the Executive's employment will be
__________. The Effective Date shall be the day after the end of the revocation
period described in Section 10 hereof.
12. The Executive shall keep strictly confidential all the terms and
conditions, including amounts, in the Employment Agreement and this Release and
shall not disclose them to any person other than the Executive's spouse, the
Executive's legal or financial advisor or United States governmental officials
who seek such information in the course of their official duties, unless
compelled by law to do so. If a person not a party to the Employment Agreement
requests or demands, by subpoena or otherwise, that the Executive disclose or
produce the Employment Agreement or this Release or any terms or conditions
thereof, the Executive shall immediately notify the Company and shall give the
Company an opportunity to respond to such notice before taking
19
<PAGE>
any action or making any decision in connection with such request or subpoena.
13. The Employment Agreement and this Release constitute the entire
understanding between the parties. The Executive has not relied on any oral
statements that are not included in the Employment Agreement or this Release.
14. This Release shall be construed, interpreted and applied in
accordance with the law of the State of [Illinois] (other than conflict of laws
principles).
EXECUTIVE
___________________________________
Date: _____________________________
20
<PAGE>
Exhibit 9
SHAREHOLDER AGREEMENT
---------------------
SHAREHOLDER AGREEMENT (this "Agreement"), dated as of November 22, 1998,
among GE Fanuc Automation North America, Inc., a Delaware corporation
("Parent"), Orion Merger Corp., an Illinois corporation and a wholly owned
subsidiary of Parent ("Sub"), and the undersigned shareholder (the
"Shareholder") of Total Control Products, Inc., an Illinois corporation (the
"Company").*
WHEREAS, Parent, Sub and the Company, propose to enter into an Agreement
and Plan of Merger dated as of even date herewith (as the same may be amended or
supplemented, the "Merger Agreement") to provide for the making of a cash tender
offer (as such offer may be amended from time to time, the "Offer") by Sub for
any and all Common Shares, no par value, of the Company (the "Common Stock") at
the Offer Price (as defined in the Merger Agreement) and the merger of the
Company and Sub (the "Merger");
WHEREAS, the Shareholder legally and/or beneficially owns that number of
shares of Common Stock appearing on the signature page hereof (such shares, as
they may be adjusted by any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company (each, an "Adjustment Event")
being referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Shareholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Shareholder. The Shareholder
hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Shareholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Shareholder and constitutes a valid and binding obligation
of the Shareholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Shareholder or to the Shareholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and
- ---------------------
*Form to be signed by Gihl, Sparacino and Siemer.
<PAGE>
informational filings with the SEC, no consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic, foreign or supranational, is required by or with
respect to the Shareholder in connection with the execution and delivery of
this Agreement or the consummation by the Shareholder of the transactions
contemplated hereby.
(b) The Shares. The Shareholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Shareholder owns no shares of Common
Stock other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
(a) Authority. Parent and Sub hereby represent and warrant to the
Shareholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. Covenants of the Shareholder. The Shareholder agrees as follows:
(a) At any meeting of shareholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Shareholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have
been amended to adversely affect the Shareholder.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Shareholder's vote, consent or other approval is sought, the Shareholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Takeover Proposal or (ii) any amendment of the
Company's articles of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
2
<PAGE>
(c) The Shareholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Shareholder shall not, nor shall the Shareholder permit any
investment banker, attorney or other adviser or representative of the
Shareholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Shareholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Further Assurances. The Shareholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as Parent
or Sub may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns and, in the case of the Shareholder, the heirs, executors and
administrators of the Shareholder.
6. Termination. Except as provided otherwise herein, this Agreement shall
terminate upon the earlier of (i) the Effective Time (as defined in the Merger
Agreement) and (ii) the termination of the Merger Agreement in accordance with
its terms; provided, however, that this Agreement will not terminate until 120
days after termination pursuant to clause (ii) immediately above if (A) the
Merger Agreement is terminated by Parent or Sub pursuant to Section 8.1(d)
thereof, (B) the Merger Agreement is terminated by the Company pursuant to
Section 8.1(e) thereof or (C) unless the Company has terminated the Merger
Agreement pursuant to Section 8.1(f) or Section 8.1(g) thereof, prior to the
termination, a Takeover Proposal (as defined in the Merger Agreement) shall have
been commenced or the Company shall have entered into an agreement with respect
to, approved or recommended or taken any action to facilitate, a Takeover
Proposal.
7. General Provisions.
3
<PAGE>
(a) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Northern District
of Illinois in any action, suit or proceeding arising in connection with
this Agreement, and agrees that any such action, suit or proceeding shall
be brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to:
GE Fanuc Automation North America, Inc.
Route 29 and Route 606
Charlotttesville, Virginia 22911
Attention: President and CEO
Facsimile No.: 804-978-5320
for overnight courier deliveries, to:
GE Fanuc Automation North America, Inc.
Route 29 North and Route 606
Charlottesville, Virginia 22911
Attention: Senior Vice President and General Counsel
with copies to:
GE Fanuc Automation North America, Inc.
P.O. Box 8106
Charlottesville, Virginia 22911
Attention: Senior Vice President and General Counsel
Facsimile No.: 804-978-5320
and
4
<PAGE>
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole
Dennis V. Osimitz
Facsimile No.: 312-853-7036
(ii) if to the Shareholder, to:
Nicholas Gihl
433 Hillside
Elmhurst, Illinois 60126
Facsimile No.: 630-617-5327
with a copy to:
D'Ancona & Pflaum
30 North LaSalle - Suite 2900
Chicago, Illinois
Attention: Mark Albert
Facsimile No.: 312-580-0923
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied,
is intended to confer upon any Person other than Parent, Sub or the
Shareholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
(h) Governing Law. Except to the extent that the laws of the State
of Illinois are mandatorily applicable to the Merger, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
5
<PAGE>
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. No Limitations on Actions of the Shareholder as a Director.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
6
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Shareholder has caused this
Agreement to be signed by its officer thereunto duly authorized and the
Shareholder has signed this Agreement, all as of the date first written above.
GE FANUC AUTOMATION NORTH
AMERICA, INC.
By: /s/ Joe Hogan
Joe Hogan, President
ORION MERGER CORP.
By: /s/ Donald A. Foss
Donald A. Foss, Vice President
SHAREHOLDER
/s/ Nicholas T. Gihl
Nicholas T. Gihl
Number of shares of Common Stock owned by the
Shareholder on the date hereof:
675,000
7
<PAGE>
Exhibit 10
SHAREHOLDER AGREEMENT
---------------------
SHAREHOLDER AGREEMENT (this "Agreement"), dated as of November 22, 1998,
among GE Fanuc Automation North America, Inc., a Delaware corporation
("Parent"), Orion Merger Corp., an Illinois corporation and a wholly owned
subsidiary of Parent ("Sub"), and the undersigned shareholder (the
"Shareholder") of Total Control Products, Inc., an Illinois corporation (the
"Company").*
WHEREAS, Parent, Sub and the Company, propose to enter into an Agreement
and Plan of Merger dated as of even date herewith (as the same may be amended or
supplemented, the "Merger Agreement") to provide for the making of a cash tender
offer (as such offer may be amended from time to time, the "Offer") by Sub for
any and all Common Shares, no par value, of the Company (the "Common Stock") at
the Offer Price (as defined in the Merger Agreement) and the merger of the
Company and Sub (the "Merger");
WHEREAS, the Shareholder legally and/or beneficially owns that number of
shares of Common Stock appearing on the signature page hereof (such shares, as
they may be adjusted by any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company (each, an "Adjustment Event")
being referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Shareholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Shareholder. The Shareholder
hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Shareholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Shareholder and constitutes a valid and binding obligation
of the Shareholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Shareholder or to the Shareholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and
- ---------------------
*Form to be signed by Gihl, Sparacino and Siemer.
<PAGE>
informational filings with the SEC, no consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic, foreign or supranational, is required by or with
respect to the Shareholder in connection with the execution and delivery of
this Agreement or the consummation by the Shareholder of the transactions
contemplated hereby.
(b) The Shares. The Shareholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Shareholder owns no shares of Common
Stock other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
(a) Authority. Parent and Sub hereby represent and warrant to the
Shareholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. Covenants of the Shareholder. The Shareholder agrees as follows:
(a) At any meeting of shareholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Shareholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have
been amended to adversely affect the Shareholder.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Shareholder's vote, consent or other approval is sought, the Shareholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Takeover Proposal or (ii) any amendment of the
Company's articles of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
2
<PAGE>
(c) The Shareholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Shareholder shall not, nor shall the Shareholder permit any
investment banker, attorney or other adviser or representative of the
Shareholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Shareholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Further Assurances. The Shareholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as Parent
or Sub may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns and, in the case of the Shareholder, the heirs, executors and
administrators of the Shareholder.
6. Termination. Except as provided otherwise herein, this Agreement shall
terminate upon the earlier of (i) the Effective Time (as defined in the Merger
Agreement) and (ii) the termination of the Merger Agreement in accordance with
its terms; provided, however, that this Agreement will not terminate until 120
days after termination pursuant to clause (ii) immediately above if (A) the
Merger Agreement is terminated by Parent or Sub pursuant to Section 8.1(d)
thereof, (B) the Merger Agreement is terminated by the Company pursuant to
Section 8.1(e) thereof or (C) unless the Company has terminated the Merger
Agreement pursuant to Section 8.1(f) or Section 8.1(g) thereof, prior to the
termination, a Takeover Proposal (as defined in the Merger Agreement) shall have
been commenced or the Company shall have entered into an agreement with respect
to, approved or recommended or taken any action to facilitate, a Takeover
Proposal.
7. General Provisions.
3
<PAGE>
(a) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Northern District
of Illinois in any action, suit or proceeding arising in connection with
this Agreement, and agrees that any such action, suit or proceeding shall
be brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to:
GE Fanuc Automation North America, Inc.
Route 29 and Route 606
Charlotttesville, Virginia 22911
Attention: President and CEO
Facsimile No.: 804-978-5320
for overnight courier deliveries, to:
GE Fanuc Automation North America, Inc.
Route 29 North and Route 606
Charlottesville, Virginia 22911
Attention: Senior Vice President and General Counsel
with copies to:
GE Fanuc Automation North America, Inc.
P.O. Box 8106
Charlottesville, Virginia 22911
Attention: Senior Vice President and General Counsel
Facsimile No.: 804-978-5320
and
4
<PAGE>
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole
Dennis V. Osimitz
Facsimile No.: 312-853-7036
(ii) if to the Shareholder, to:
A.B. Siemer
Two Botton Ley Crescent
New Albany, Ohio 43054-8909
Facsimile No.: 614-888-3779
with a copy to:
D'Ancona & Pflaum
30 North LaSalle - Suite 2900
Chicago, Illinois
Attention: Mark Albert
Facsimile No.: 312-580-0923
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied,
is intended to confer upon any Person other than Parent, Sub or the
Shareholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
(h) Governing Law. Except to the extent that the laws of the State
of Illinois are mandatorily applicable to the Merger, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
5
<PAGE>
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. No Limitations on Actions of the Shareholder as a Director.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
6
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Shareholder has caused this
Agreement to be signed by its officer thereunto duly authorized and the
Shareholder has signed this Agreement, all as of the date first written above.
GE FANUC AUTOMATION NORTH
AMERICA, INC.
By: /s/ Joe Hogan
Joe Hogan, President
ORION MERGER CORP.
By: /s/ Donald A. Foss
Donald A. Foss, Vice President
SHAREHOLDER
/s/ A.B. Siemer
A.B. Siemer
Number of shares of Common Stock owned by the
Shareholder on the date hereof:
1.158,652
7
<PAGE>
Exhibit 11
SHAREHOLDER AGREEMENT
---------------------
SHAREHOLDER AGREEMENT (this "Agreement"), dated as of November 22, 1998,
among GE Fanuc Automation North America, Inc., a Delaware corporation
("Parent"), Orion Merger Corp., an Illinois corporation and a wholly owned
subsidiary of Parent ("Sub"), and the undersigned shareholder (the
"Shareholder") of Total Control Products, Inc., an Illinois corporation (the
"Company").*
WHEREAS, Parent, Sub and the Company, propose to enter into an Agreement
and Plan of Merger dated as of even date herewith (as the same may be amended or
supplemented, the "Merger Agreement") to provide for the making of a cash tender
offer (as such offer may be amended from time to time, the "Offer") by Sub for
any and all Common Shares, no par value, of the Company (the "Common Stock") at
the Offer Price (as defined in the Merger Agreement) and the merger of the
Company and Sub (the "Merger");
WHEREAS, the Shareholder legally and/or beneficially owns that number of
shares of Common Stock appearing on the signature page hereof (such shares, as
they may be adjusted by any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company (each, an "Adjustment Event")
being referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Shareholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Shareholder. The Shareholder
hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Shareholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Shareholder and constitutes a valid and binding obligation
of the Shareholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Shareholder or to the Shareholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and
- -------------------
*Form to be signed by Gihl, Sparacino and Siemer.
<PAGE>
informational filings with the SEC, no consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic, foreign or supranational, is required by or with
respect to the Shareholder in connection with the execution and delivery of
this Agreement or the consummation by the Shareholder of the transactions
contemplated hereby.
(b) The Shares. The Shareholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Shareholder owns no shares of Common
Stock other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
(a) Authority. Parent and Sub hereby represent and warrant to the
Shareholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. Covenants of the Shareholder. The Shareholder agrees as follows:
(a) At any meeting of shareholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Shareholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have
been amended to adversely affect the Shareholder.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Shareholder's vote, consent or other approval is sought, the Shareholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Takeover Proposal or (ii) any amendment of the
Company's articles of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
2
<PAGE>
(c) The Shareholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Shareholder shall not, nor shall the Shareholder permit any
investment banker, attorney or other adviser or representative of the
Shareholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Shareholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. Further Assurances. The Shareholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as Parent
or Sub may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns and, in the case of the Shareholder, the heirs, executors and
administrators of the Shareholder.
6. Termination. Except as provided otherwise herein, this Agreement shall
terminate upon the earlier of (i) the Effective Time (as defined in the Merger
Agreement) and (ii) the termination of the Merger Agreement in accordance with
its terms; provided, however, that this Agreement will not terminate until 120
days after termination pursuant to clause (ii) immediately above if (A) the
Merger Agreement is terminated by Parent or Sub pursuant to Section 8.1(d)
thereof, (B) the Merger Agreement is terminated by the Company pursuant to
Section 8.1(e) thereof or (C) unless the Company has terminated the Merger
Agreement pursuant to Section 8.1(f) or Section 8.1(g) thereof, prior to the
termination, a Takeover Proposal (as defined in the Merger Agreement) shall have
been commenced or the Company shall have entered into an agreement with respect
to, approved or recommended or taken any action to facilitate, a Takeover
Proposal.
7. General Provisions.
3
<PAGE>
(a) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Northern District
of Illinois in any action, suit or proceeding arising in connection with
this Agreement, and agrees that any such action, suit or proceeding shall
be brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to:
GE Fanuc Automation North America, Inc.
Route 29 and Route 606
Charlotttesville, Virginia 22911
Attention: President and CEO
Facsimile No.: 804-978-5320
for overnight courier deliveries, to:
GE Fanuc Automation North America, Inc.
Route 29 North and Route 606
Charlottesville, Virginia 22911
Attention: Senior Vice President and General Counsel
with copies to:
GE Fanuc Automation North America, Inc.
P.O. Box 8106
Charlottesville, Virginia 22911
Attention: Senior Vice President and General Counsel
Facsimile No.: 804-978-5320
and
4
<PAGE>
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole
Dennis V. Osimitz
Facsimile No.: 312-853-7036
(ii) if to the Shareholder, to:
Julius Sparacino
670 Ocean Road
Vero Beach, Florida 32963
Facsimile No.: 561-234-2877
with a copy to:
D'Ancona & Pflaum
30 North LaSalle - Suite 2900
Chicago, Illinois
Attention: Mark Albert
Facsimile No.: 312-580-0923
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied,
is intended to confer upon any Person other than Parent, Sub or the
Shareholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
(h) Governing Law. Except to the extent that the laws of the State
of Illinois are mandatorily applicable to the Merger, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
5
<PAGE>
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. No Limitations on Actions of the Shareholder as a Director.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
6
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Shareholder has caused this
Agreement to be signed by its officer thereunto duly authorized and the
Shareholder has signed this Agreement, all as of the date first written above.
GE FANUC AUTOMATION NORTH
AMERICA, INC.
By: /s/ Joe Hogan
Joe Hogan, President
ORION MERGER CORP.
By: /s/ Donald A. Foss
Donald A. Foss, Vice President
SHAREHOLDER
/s/ Julius J. Sparacino
Julius J. Sparacino
Number of shares of Common Stock owned by the
Shareholder on the date hereof:
1,728,721
7
<PAGE>
Exhibit 12
SHAREHOLDER AGREEMENT
---------------------
SHAREHOLDER AGREEMENT (this "Agreement"), dated as of November 22, 1998,
among GE Fanuc Automation North America, Inc., a Delaware corporation
("Parent"), Orion Merger Corp., an Illinois corporation and a wholly owned
subsidiary of Parent ("Sub"), and the undersigned shareholders (collectively,
the "Shareholder") of Total Control Products, Inc., an Illinois corporation (the
"Company").
WHEREAS, Parent, Sub and the Company, propose to enter into an Agreement
and Plan of Merger dated as of even date herewith (as the same may be amended or
supplemented, the "Merger Agreement") to provide for the making of a cash tender
offer (as such offer may be amended from time to time, the "Offer") by Sub for
any and all Common Shares, no par value, of the Company (the "Common Stock") at
the Offer Price (as defined in the Merger Agreement) and the merger of the
Company and Sub (the "Merger");
WHEREAS, the Shareholder legally and/or beneficially owns that number of
shares of Common Stock and shares of Class C Exchangeable Common Stock, no par
value ("Class C Shares"), of Taylor Industrial Software, Inc. ("Taylor")
appearing on the signature page hereof (such shares, as they may be adjusted by
any stock dividend, stock split, recapitalization, combination or exchange of
shares, merger, consolidation, reorganization or other change or transaction of
or by the Company or Taylor, as the case may be (each, an "Adjustment Event"),
collectively, being referred to herein as the "Subject Shares");
WHEREAS, the Shareholder has the right to request retraction of the Class C
Shares and receive shares of Common Stock as payment of the retraction price;
and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Shareholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Shareholder. The Shareholder
hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Shareholder has all requisite power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Shareholder and constitutes a valid and binding obligation
of the Shareholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit,
<PAGE>
concession, franchise, license, judgment, order, notice, decree, statute,
law, ordinance, rule or regulation applicable to the Shareholder or to the
Shareholder's property or assets. Except for the expiration or termination
of the waiting period under the HSR Act and informational filings with the
SEC, no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission
or other governmental authority or instrumentality, domestic, foreign or
supranational, is required by or with respect to the Shareholder in
connection with the execution and delivery of this Agreement or the
consummation by the Shareholder of the transactions contemplated hereby.
(b) The Shares. The Shareholder has good and marketable title to the
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Shareholder owns no shares of Common
Stock or Class C Shares other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
(a) Authority. Parent and Sub hereby represent and warrant to the
Shareholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. Covenants of the Shareholder. The Shareholder agrees as follows:
(a) At any meeting of shareholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Shareholder
shall vote (or cause to be voted) the Subject Shares having a right to vote
with respect thereto in favor of the Merger, the approval of the Merger
Agreement and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement, provided that the terms
of the Merger Agreement shall not have been amended to adversely affect the
Shareholder.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Shareholder's vote, consent or other approval is sought, the Shareholder
shall vote (or cause to be voted) the Subject Shares having a right to vote
with respect thereto against (i) any merger agreement or merger (other than
the Merger Agreement and the Merger), consolidation, combination, sale of
substantial assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by the Company or any other Takeover
Proposal or (ii) any amendment of the Company's articles of incorporation
or by-laws or other proposal or transaction involving the Company or any of
its subsidiaries, which amendment or other proposal or transaction would in
any manner impede, frustrate, prevent or nullify the Merger, the
2
<PAGE>
Merger Agreement or any of the other transactions contemplated by the
Merger Agreement.
(c) The Shareholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Shareholder shall not, nor shall the Shareholder permit any
investment banker, attorney or other adviser or representative of the
Shareholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Shareholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares and, in connection therewith, shall, with respect to the
Class C Shares, take such action as shall be necessary to request
retraction of such shares and tender of the shares of Common Stock received
upon such retraction pursuant to the Offer.
4. Further Assurances. The Shareholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as Parent
or Sub may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns and, in the case of the Shareholder, the heirs, executors and
administrators of the Shareholder.
6. Termination. Except as provided otherwise herein, this Agreement shall
terminate upon the earlier of (i) the Effective Time (as defined in the Merger
Agreement) and (ii) the termination of the Merger Agreement in accordance with
its terms; provided, however, that this Agreement will not terminate until 120
days after termination pursuant to clause (ii) immediately above if (A) the
Merger Agreement is terminated by Parent or Sub pursuant to Section 8.1(d)
thereof, (B) the Merger Agreement is terminated by the Company pursuant to
Section 8.1(e) thereof or (C) unless the Company has terminated the Merger
Agreement pursuant to Section 8.1(f) or Section 8.1(g) thereof, prior to the
termination, a Takeover Proposal (as defined in the Merger Agreement) shall have
been commenced or the Company shall have entered into
3
<PAGE>
an agreement with respect to, approved or recommended or taken any action to
facilitate, a Takeover Proposal.
7. General Provisions.
(a) Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Northern District
of Illinois in any action, suit or proceeding arising in connection with
this Agreement, and agrees that any such action, suit or proceeding shall
be brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to:
GE Fanuc Automation North America, Inc.
Route 29 and Route 606
Charlotttesville, Virginia 22911
Attention: President and CEO
Facsimile No.: 804-978-5320
for overnight courier deliveries, to:
GE Fanuc Automation North America, Inc.
Route 29 North and Route 606
Charlottesville, Virginia 22911
Attention: Senior Vice President and General Counsel
with copies to:
GE Fanuc Automation North America, Inc.
4
<PAGE>
P.O. Box 8106
Charlottesville, Virginia 22911
Attention: Senior Vice President and General Counsel
Facsimile No.: 804-978-5320
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole
Dennis V. Osimitz
Facsimile No.: 312-853-7036
(ii) if to the Shareholder, to:
Neil Taylor
Merle Taylor
7711-139 Street
Edmonton, Alberta, Canada T5R OE9
Facsimile No.: 403-481-9859
with a copy to:
D'Ancona & Pflaum
30 N. LaSalle St., Suite 2900
Chicago, Illinois 60602
Attention: Mark Albert
Facsimile No.: (312) 850-0923
(d) Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied,
is intended to confer upon any Person other than Parent, Sub or the
Shareholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
(e) Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
5
<PAGE>
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
(h) Governing Law. Except to the extent that the laws of the State
of Illinois are mandatorily applicable to the Merger, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. No Limitations on Actions of the Shareholder as a Director.
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
6
<PAGE>
IN WITNESS WHEREOF, each of Parent, Sub and the Shareholder has caused this
Agreement to be signed by its officer thereunto duly authorized and the
Shareholder has signed this Agreement, all as of the date first written above.
GE FANUC AUTOMATION NORTH
AMERICA, INC.
By: /s/ Joe Hogan
Joe Hogan, President
ORION MERGER CORP.
By: /s/ Joe Hogan
Joe Hogan, President
SHAREHOLDER
/s/ Neil Taylor
Neil Taylor
/s/ Merle Taylor
Merle Taylor
Number of Class C Shares owned by
the Shareholder on the date hereof:
Neil Taylor: 513,966
Merle Taylor: 61,368
Options to purchase Common Stock held by the
Shareholder on the date hereof:
Neil Taylor: 13,666
7
<PAGE>
November 25, 1998 (4:09PM)
8
<PAGE>
Exhibit 13
DISSENTERS' APPRAISAL RIGHTS UNDER SECTIONS 11.65
AND 11.70 OF THE ILLINOIS BUSINESS CORPORATION
ACT OF 1983, AS AMENDED
SECTION 11.65. RIGHT TO DISSENT
Section 11.65. Right to Dissent. (a) A shareholder of a corporation is
entitled to dissent from, and obtain payment for his or her shares in the event
of any of the following corporate actions:
(1) consummation of a plan of merger or consolidation or a plan of share
exchange to which the corporation is a party if (i) shareholder authorization is
required for the merger or consolidation or the share exchange by Section 11.20
or the articles of incorporation or (ii) the corporation is a subsidiary that is
merged with its parent or another subsidiary under Section 11.30;
(2) consummation of a sale, lease or exchange of all, or substantially all,
of the property and assets of the corporation other than in the usual and
regular course of business;
(3) an amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) alters or abolishes a preferential right of such shares;
(ii) alters or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of such
shares;
(iii) in the case of a corporation incorporated prior to January 1, 1982,
limits or eliminates cumulative voting rights with respect to such shares; or
(4) any other corporate action taken pursuant to a shareholder vote if the
articles of incorporation, by-laws, or a resolution of the board of directors
provide that shareholders are entitled to dissent and obtain payment for their
shares in accordance with the procedures set forth in Section 11.70 or as may be
otherwise provided in the articles, by-laws or resolution.
(b) A shareholder entitled to dissent and obtain payment for his or her
shares under this Section may not challenge the corporate action creating his or
her entitlement unless the action is fraudulent with respect to the shareholder
or the corporation or constitutes a breach of a fiduciary duty owed to the
shareholder.
(c) A record owner of shares may assert dissenters' rights as to fewer than
all the shares recorded in such person's name only if such person dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
the record owner asserts dissenters' rights. The rights of a partial dissenter
are determined as if the shares as to which dissent is made and the other shares
were recorded in the names of different shareholders. A beneficial owner of
shares who is not the
<PAGE>
record owner may assert dissenters' rights as to shares held on such person's
behalf only if the beneficial owner submits to the corporation the record
owner's written consent to the dissent before or at the same time the beneficial
owner asserts dissenters' rights.
SECTION 11.70. PROCEDURE TO DISSENT
Section 11.70. Procedure to Dissent. (a) If the corporate action giving rise
to the right to dissent is to be approved at a meeting of shareholders, the
notice of meeting shall inform the shareholders of their right to dissent and
the procedure to dissent. If, prior to the meeting, the corporation furnishes to
the shareholders material information with respect to the transaction that will
objectively enable a shareholder to vote on the transaction and to determine
whether or not to exercise dissenters' rights, a shareholder may assert
dissenters' rights only if the shareholder delivers to the corporation before
the vote is taken a written demand for payment for his or her shares if the
proposed action is consummated, and the shareholder does not vote in favor of
the proposed action.
(b) If the corporate action giving rise to the right to dissent is not to be
approved at a meeting of shareholders, the notice to shareholders describing the
action taken under Section 11.30 or Section 7.10 shall inform the shareholders
of their right to dissent and the procedure to dissent. If, prior to or
concurrently with the notice, the corporation furnishes to the shareholders
material information with respect to the transaction that will objectively
enable a shareholder to determine whether or not to exercise dissenters' rights,
a shareholder may assert dissenter's rights only if he or she delivers to the
corporation 30 days from the date of mailing the notice a written demand for
payment for his or her shares.
(c) Within 10 days after the date on which the corporate action giving rise
to the right to dissent is effective or 30 days after the shareholder delivers
to the corporation the written demand for payment, whichever is later, the
corporation shall send each shareholder who has delivered a written demand for
payment a statement setting forth the opinion of the corporation as to the
estimated fair value of the shares, the corporation's latest balance sheet as of
the end of a fiscal year ending not earlier than 16 months before the delivery
of the statement, together with the statement of income for that year and the
latest available interim financial statements, and either a commitment to pay
for the shares of the dissenting shareholder at the estimated fair value thereof
upon transmittal to the corporation of the certificate or certificates, or other
evidence of ownership, with respect to the shares, or instructions to the
dissenting shareholder to sell his or her shares within 10 days after delivery
of the corporation's statement to the shareholder. The corporation may instruct
the shareholder to sell only if there is a public market for the shares at which
the shares may be readily sold. If the shareholder does not sell within that 10
day period after being so instructed by the corporation, for purposes of this
Section the shareholder shall be deemed to have sold his or her shares at the
average closing price of the shares, if listed on a national exchange, or the
average of the bid and asked price with respect to the shares quoted by a
principal market maker, if not listed on a national exchange, during that 10 day
period.
(d) A shareholder who makes written demand for payment under this Section
retains all other rights of a shareholder until those rights are canceled or
modified by the consummation of the proposed corporate action. Upon consummation
of that action, the corporation shall pay to each dissenter who transmits to the
corporation the certificate or other evidence of ownership of the shares the
amount the corporation estimates to be the fair value of the shares, plus
accrued interest, accompanied by a written explanation of how the interest was
calculated.
<PAGE>
(e) If the shareholder does not agree with the opinion of the corporation as
to the estimated fair value of the shares or the amount of interest due, the
shareholder, within 30 days from the delivery of the corporation's statement of
value, shall notify the corporation in writing of the shareholder's estimated
fair value and amount of the interest due and demand payment for the difference
between the shareholder's estimate of fair value and interest due and the amount
of the payment by the corporation or the proceeds of sale by the shareholder,
whichever is applicable because of the procedure for which the corporation opted
pursuant to subsection (c).
(f) If, within 60 days from delivery to the corporation of the shareholder
notification of estimate of fair value of the shares and interest due, the
corporation and the dissenting shareholder have not agreed in writing upon the
fair value of the shares and interest due, the corporation shall either pay the
difference in value demanded by the shareholder, with interest, or file a
petition in the circuit court of the county in which either the registered
office or the principal office of the corporation is located, requesting the
court to determine the fair value of the shares and interest due. The
corporation shall make all dissenters, whether or not residents of this State,
whose demands remain unsettled parties to the proceeding as an action against
their shares and all parties shall be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by publication as
provided by law. Failure of the corporation to commence an action pursuant to
this Section shall not limit or affect the right of the dissenting shareholders
to otherwise commence an action as permitted by law.
(g) The jurisdiction of the court in which the proceeding is commenced under
subsection (f) by a corporation is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend decision on
the question of fair value. The appraisers have the power described in the order
appointing them, or in any amendment to it.
(h) Each dissenter made a party to the proceeding is entitled to judgment for
the amount, if any, by which the court finds that the fair value of his or her
shares, plus interest, exceeds the amount paid by the corporation or the
proceeds of sale by the shareholder, whichever amount is applicable.
(i) The court, in a proceeding commenced under subsection (f), shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of the appraisers, if any, appointed by the court under subsection (g),
but shall exclude the fees and expenses of counsel and experts for the
respective parties. If the fair value of the shares as determined by the court
materially exceeds the amount which the corporation estimated to be the fair
value of the shares or if no estimate was made in accordance with subsection
(c), then all or any part of the costs may be assessed against the corporation.
If the amount which any dissenter estimated to be the fair value of the shares
materially exceeds the fair value of the shares as determined by the court, then
all or any part of the costs may be assessed against that dissenter. The court
may also assess the fees and expenses of counsel and experts for the respective
parties, in amounts the court finds equitable, as follows:
(1) Against the corporation and in favor of any or all dissenters if the
court finds that the corporation did not substantially comply with the
requirements of subsections (a), (b), (c), (d), or (f).
(2) Against either the corporation or a dissenter and in favor of any other
party if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this Section.
<PAGE>
If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated and that the fees for
those services should not be assessed against the corporation, the court may
award to that counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who are benefited. Except as otherwise provided in this Section,
the practice, procedure, judgment and costs shall be governed by the Code of
Civil Procedure.
(j) As used in this Section:
(1) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the consummation of the corporate action to which
the dissenter objects excluding any appreciation or depreciation in anticipation
of the corporate action, unless exclusion would be inequitable.
(2) "Interest" means interest from the effective date of the corporate action
until the date of payment, at the average rate currently paid by the corporation
on its principal bank loans or, if none, at a rate that is fair and equitable
under all the circumstances.
