<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
TRION, INC.
(NAME OF SUBJECT COMPANY)
TI ACQUISITION CORP.
FEDDERS CORPORATION
(BIDDERS)
COMMON STOCK, PAR VALUE $0.50 PER SHARE
(TITLE OF CLASS OF SECURITIES)
896726 10 6
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
ROBERT N. EDWARDS, ESQ.
FEDDERS CORPORATION
WESTGATE CORPORATE CENTER
505 MARTINSVILLE ROAD
LIBERTY CORNER, N.J. 07938-0013
TELEPHONE: (908) 604-8686
FACSIMILE: (908) 604-8576
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
MARK C. SMITH, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NY 10022
TELEPHONE: (212) 735-3000
FACSIMILE: (212) 735-2000
------------------------
CALCULATION OF FILING FEE
<TABLE>
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Transaction Valuation* $41,556,740 Amount of Filing Fee $8,553.11
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</TABLE>
* Estimated for purposes of calculating the amount of the filing fee only. The
filing fee calculation assumes the purchase of 7,552,771 shares of common
stock, $0.50 par value per share (the "Shares"), of Trion, Inc. at a price of
$5.50 per Share in cash, without interest. The filing fee calculation is
based on the 7,161,247 Shares outstanding as of July 15, 1999 and assumes the
issuance prior to the consummation of the Offer (as defined herein) of
391,524 Shares upon the exercise of outstanding options. The amount of the
filing fee calculated in accordance with Regulation 240.0-11 of the
Securities Exchange Act of 1934, as amended, equals 1/50th of one percent of
the value of the transaction.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11 (a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: Not applicable.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
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<PAGE> 2
14D-1
CUSIP NO. 896726 10 6
<TABLE>
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1. NAMES OF REPORTING PERSONS
S.S. or I.R.S. Identification Nos. of Above Persons
TI Acquisition Corp. 52-2180720
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
AF
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) or 2(f)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Pennsylvania
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
none
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES
[ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
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10. TYPE OF REPORTING PERSON
CO
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</TABLE>
2
<PAGE> 3
14D-1
CUSIP NO. 896726 10 6
<TABLE>
<S> <C> <C>
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1. NAMES OF REPORTING PERSONS
S.S. or I.R.S. Identification Nos. of Above Persons
Fedders Corporation 22-2572390
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS AF
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) or 2(f)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
none
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES
[ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
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10. TYPE OF REPORTING PERSON
CO
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</TABLE>
3
<PAGE> 4
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by TI Acquisition Corp., a Pennsylvania corporation ("Purchaser") and
an indirect wholly owned subsidiary of Fedders Corporation, a Delaware
corporation ("Parent"), to purchase all of the outstanding shares of common
stock, par value $0.50 per share (the "Shares"), of Trion, Inc., a Pennsylvania
corporation (the "Company"), at $5.50 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated July 15, 1999 (the "Offer to Purchase"), a copy of
which is attached hereto as Exhibit (a)(1), and in the related Letter of
Transmittal, a copy of which is attached hereto as Exhibit (a)(2) (which, as
amended or supplemented from time to time, together constitute the "Offer").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Trion, Inc. and the address of its
principal executive offices is P.O. Box 760, 101 McNeill Road, Sanford, North
Carolina, 27331-0760. The telephone number of the Company at such location is
(919) 775-2201.
(b) The information set forth in the "INTRODUCTION" of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in "Price Range of the Shares; Dividends" of
the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by Purchaser and Parent. The
information set forth in the "INTRODUCTION" and "Certain Information Concerning
Parent and Purchaser" of the Offer to Purchase is incorporated herein by
reference. The name, business address, present principal occupation or
employment, the material occupations, positions, offices or employments for the
past five years and citizenship of each director and executive officer of Parent
and Purchaser and the name, principal business and address of any corporation or
other organization in which such occupations, positions, offices and employments
are or were carried on are set forth in Schedule I to the Offer to Purchase and
incorporated herein by reference.
(e)-(f) During the last five years neither Purchaser nor Parent nor, to the
best knowledge of Purchaser and Parent, any of the persons listed in Schedule I
to the Offer to Purchase (i) have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
as a result of which any such person was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I to the Offer to Purchase have entered
into any transaction with the Company, or any of the Company's affiliates which
are corporations, since the commencement of the Company's third full fiscal year
preceding the date of this Statement, the aggregate amount of which was equal to
or greater than one percent of the consolidated revenues of the Company for (i)
the fiscal year in which such transaction occurred or (ii) the portion of the
current fiscal year which has occurred if the transaction occurred in such year.
(a)(2) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons listed in Schedule I of the Offer to Purchase have entered into any
transaction since the commencement of the Company's third full fiscal year
preceding the date of this Statement with the executive officers, directors or
affiliates of the Company which are not corporations, in which the aggregate
amount involved in such transaction or in a series of similar transactions,
4
<PAGE> 5
including all periodic installments in the case of any lease or other agreement
providing for periodic payments or installments, exceeded $40,000.
(b) The information set forth in the "INTRODUCTION," "Certain Information
Concerning Parent and Purchaser," "Background of the Offer; Purpose of the Offer
and the Merger; the Merger Agreement and Certain Other Agreements" and "Plans
for the Company; Other Matters" of the Offer to Purchase is incorporated herein
by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in the "INTRODUCTION" and "Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a)-(e) The information set forth in the "INTRODUCTION," "Background of the
Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain
Other Agreements" and "Plans for the Company; Other Matters" of the Offer to
Purchase is incorporated herein by reference.
(f)-(g) The information set forth in the "INTRODUCTION" and "Effect of the
Offer on the Market for the Shares; Stock Listing; Exchange Act Registration;
Margin Regulations" of the Offer to Purchase is incorporated herein by
reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the "INTRODUCTION," "Certain
Information Concerning Parent and Purchaser" and "Background of the Offer;
Purpose of the Offer and the Merger; the Merger Agreement and Certain Other
Agreements" of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "INTRODUCTION," "Source and Amount of
Funds," "Background of the Offer; Purpose of the Offer and the Merger; the
Merger Agreement and Certain Other Agreements," "Plans for the Company; Other
Matters" and "Fees and Expenses" of the Offer to Purchase is incorporated herein
by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Fees and Expenses" of the Offer to Purchase
is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Purchaser or Parent, or to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I of the Offer to Purchase, and the
Company, or any of its executive officers, directors, controlling persons or
subsidiaries.
(b)-(c) The information set forth in the "INTRODUCTION," "Conditions to the
Offer" and "Certain Legal Matters" of the Offer to Purchase is incorporated
herein by reference.
5
<PAGE> 6
(d) The information set forth in "Effect of the Offer on the Market for the
Shares; Stock Listing; Exchange Act Registration; Margin Regulations" and
"Certain Legal Matters" of the Offer to Purchase is incorporated herein by
reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
<TABLE>
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(a)(1) -- Offer to Purchase dated July 15, 1999.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Notice of Guaranteed Delivery.
(a)(4) -- Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) -- Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) -- Press Release of Parent and the Company dated July 13, 1999.
(a)(8) -- Press Release of Parent dated July 15, 1999.
(a)(9) -- Summary Advertisement.
(b) -- None.
(c)(1) -- Agreement and Plan of Merger, dated as of July 12, 1999, by
and among Parent, Purchaser and the Company.
(c)(2) -- Stock Option Agreement, dated as of July 12, 1999, by and
between Parent and the Company.
(c)(3) -- Shareholder Agreements, dated as of July 12, 1999 by and
between Director Shareholders, Parent and Purchaser.
(c)(4) -- Confidentiality Agreement, dated as of February 25, 1999, by
and between Parent and the Company.
(c)(5) -- Employment Agreement between Parent and Steven L. Schneider
dated July 12, 1999.
(c)(6) -- Employment Agreement between the Company and Calvin J.
Monsma dated July 12, 1999.
(d) -- None.
(e) -- Not applicable.
(f) -- None.
</TABLE>
6
<PAGE> 7
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: July 15, 1999
TI ACQUISITION CORP.
BY:
/s/ ROBERT L. LAURENT, JR.
------------------------------------
Name: Robert L. Laurent, Jr.
Title: Executive Vice President
FEDDERS CORPORATION
BY:
/s/ ROBERT L. LAURENT, JR.
------------------------------------
Name: Robert L. Laurent, Jr.
Title: Executive Vice President
7
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
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<S> <C> <C> <C>
(a)(1) -- Offer to Purchase, dated July 15, 1999.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Notice of Guaranteed Delivery.
(a)(4) -- Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) -- Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) -- Press Release of Parent and the Company dated July 13, 1999.
(a)(8) -- Press Release of Parent dated July 15, 1999.
(a)(9) -- Summary Advertisement.
(b) -- None
(c)(1) -- Agreement and Plan of Merger, dated as of July 12, 1999, by
and among Parent, Purchaser and the Company.
(c)(2) -- Company Option Agreement, dated as of July 12, 1999, by and
between Parent and the Company.
(c)(3) -- Shareholder Agreements, dated as of July 12, 1999 by and
between Director Shareholders, Parent and Purchaser.
(c)(4) -- Confidentiality Agreement, dated as of February 25, 1999, by
and between Parent and the Company.
(c)(5) -- Employment Agreement between Parent and Steven L. Schneider
dated July 12, 1999.
(c)(6) -- Employment Agreement between the Company and Calvin J.
Monsma dated July 12, 1999.
(d) -- None.
(e) -- Not Applicable.
(f) -- None.
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
TRION, INC.
AT
$5.50 NET PER SHARE
BY
TI ACQUISITION CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FEDDERS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, AUGUST 11, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF JULY 12, 1999, BY AND AMONG FEDDERS CORPORATION ("PARENT"), TI ACQUISITION
CORP. ("PURCHASER") AND TRION, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF
THE COMPANY BY A UNANIMOUS VOTE OF THOSE PRESENT AT THE MEETING APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER
AND THE MERGER (EACH AS DEFINED HEREIN), AND DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S SHAREHOLDERS AND
RECOMMENDS THAT THE SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT
NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR
PURCHASER (IF ANY), REPRESENTS AT LEAST EIGHTY PERCENT (80%) OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR
PAYMENT. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS
OFFER TO PURCHASE. SEE SECTION 14.
------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares (as defined herein) should either (i) complete and sign the enclosed
Letter of Transmittal (or a facsimile thereof) in accordance with the
Instructions in the Letter of Transmittal, have such shareholder's signature
thereon guaranteed (if required by Instruction 1 to the Letter of Transmittal),
mail or deliver the Letter of Transmittal (or a facsimile thereof) and any other
required documents to the Depositary (as defined herein) and either deliver the
certificates for such Shares to the Depositary or tender such Shares pursuant to
the procedure for book-entry transfer set forth in Section 3 of this Offer to
Purchase or (ii) request such shareholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such shareholder.
Any shareholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee to tender such Shares.
Any shareholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedures for book-entry transfer on a timely basis, or who cannot deliver
all required documents to the Depositary prior to the expiration of the Offer,
may tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be directed to the Information Agent or to the
Dealer Manager at their respective addresses and telephone numbers set forth on
the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and the
other tender offer materials may also be obtained from brokers, dealers,
commercial banks or trust companies.
------------------------
The Dealer Manager for the Offer is:
TM Capital Corp. Logo
July 15, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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INTRODUCTION................................................ 1
THE OFFER................................................... 4
1. Terms of the Offer................................... 4
2. Acceptance for Payment and Payment................... 5
3. Procedures for Tendering Shares...................... 6
4. Withdrawal Rights.................................... 8
5. Certain U.S. Federal Income Tax Consequences......... 9
6. Price Range of the Shares; Dividends................. 10
7. Effect of the Offer on the Market for the Shares;
Stock Listing; Exchange Act Registration; Margin
Regulations.......................................... 10
8. Certain Information Concerning the Company........... 11
9. Certain Information Concerning Parent and
Purchaser.............................................. 13
10. Sources and Amount of Funds.......................... 14
11. Background of the Offer; Purpose of the Offer and the
Merger; the Merger Agreement and Certain Other
Agreements........................................... 14
12. Plans for the Company; Other Matters................. 28
13. Dividends and Distributions.......................... 30
14. Conditions to the Offer.............................. 30
15. Certain Legal Matters................................ 32
16. Fees and Expenses.................................... 35
17. Miscellaneous........................................ 36
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER...................................... I-1
ANNEX A
Text of Subchapter 25E of the Pennsylvania Business
Corporation Law........................................... A-1
</TABLE>
i
<PAGE> 3
To the Holders of Common Stock of
Trion, Inc.:
INTRODUCTION
TI Acquisition Corp., a Pennsylvania corporation ("Purchaser") and an
indirect wholly owned subsidiary of Fedders Corporation, a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $0.50 per share (the "Shares"), of Trion, Inc., a Pennsylvania
corporation (the "Company"), at a price of $5.50 per Share, net to the seller in
cash, without interest (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, collectively
constitute the "Offer").
Tendering shareholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase
of Shares by Purchaser pursuant to the Offer. Shareholders who hold their Shares
through a bank or broker should check with such institution as to whether they
charge any service fees. Purchaser will pay all fees and expenses of TM Capital
Corp. ("TM Capital"), which is acting as the Dealer Manager (in such capacity,
the "Dealer Manager"), American Stock Transfer and Trust Company which is acting
as the Depositary (in such capacity, the "Depositary") and D.F. King & Co., Inc.
("DF King"), which is acting as Information Agent (in such capacity, the
"Information Agent"), incurred in connection with the Offer and in accordance
with the terms of the agreements entered into between Purchaser and/or Parent
and each such person. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD OF DIRECTORS") BY
A UNANIMOUS VOTE OF THOSE PRESENT AT THE MEETING APPROVED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY'S SHAREHOLDERS AND RECOMMENDS THAT THE SHAREHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Harris Williams & Co. ("Harris Williams"), financial advisor to the
Company, has delivered to the Company Board of Directors its opinion, dated as
of July 12, 1999 (the "Financial Advisor Opinion"), to the effect that, as of
such date and based upon and subject to certain assumptions and matters stated
therein, the consideration to be received by the holders of Shares (other than
Parent and its affiliates if at all) in the Offer and the Merger was fair, from
a financial point of view, to such holders. A copy of the Financial Advisor
Opinion is attached as an exhibit to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), which has been filed by the
Company with the Securities and Exchange Commission (the "Commission") in
connection with the Offer and which is being mailed to holders of Shares
herewith. Holders of Shares are urged to, and should, read the Financial Advisor
Opinion carefully.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR PURCHASER (IF
ANY), REPRESENTS AT LEAST 80% OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS
ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT (THE "MINIMUM CONDITION"). THE OFFER
IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE
SECTION 14. As used in this Offer to Purchase, "fully diluted basis" takes into
account the exercise of all outstanding options and other rights and securities
exercisable into Shares. The Company has represented and warranted to Parent and
Purchaser that, as of July 12, 1999, there were 7,161,247 Shares issued and
outstanding and 391,524 Shares were issuable pursuant to the exercise of
outstanding options (the "Company Options"). The Merger Agreement provides,
among other things, that the Company will not, without the prior written consent
of Parent, change the authorized or issued capital stock of the Company or any
subsidiary of the Company, grant any stock option or right to purchase shares of
capital stock of the Company or any subsidiary of the Company, or issue any
security
<PAGE> 4
convertible into such capital stock. See Section 11. Based on the foregoing and
assuming the issuance of 391,524 Shares issuable upon the exercise of
outstanding Options, Purchaser believes that the Minimum Condition will be
satisfied if 6,042,217 Shares are validly tendered and not withdrawn prior to
the Expiration Date.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 12, 1999 (the "Merger Agreement"), by and among Parent, Purchaser and
the Company. Pursuant to the Merger Agreement and the Pennsylvania Business
Corporation Law, as amended (the "PBCL"), as soon as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions to the consummation of the Merger, including the purchase of Shares
pursuant to the Offer (sometimes referred to herein as the "consummation" of the
Offer) and the approval and adoption by the shareholders of the Company of (i)
an amendment to section 6 of the Company's articles of incorporation (the
"Articles Amendment") which amendment will delete the requirement in the
Company's articles of incorporation that a merger of the Company with an
existing shareholder or its affiliates receive the approval of a majority of the
shares not held by such shareholder and its affiliates, and (ii) the Merger
Agreement (if required by applicable law), Purchaser will be merged with and
into the Company (the "Merger") and the Company will be the surviving
corporation in the Merger (the "Surviving Corporation"). At the effective time
of the Merger (the "Effective Time"), each Share then outstanding, other than
Shares held by (i) the Company or any of its subsidiaries, (ii) Parent or any of
its subsidiaries including Purchaser, and (iii) shareholders who properly
perfect their dissenters' rights under the PBCL, will be converted into the
right to receive $5.50 in cash or any higher price per Share paid in the Offer
(the "Merger Consideration"), without interest. The Merger Agreement is more
fully described in Section 11.
The Company has entered into a Stock Option Agreement, dated as of July 12,
1999 (the "Company Option Agreement"), with Parent and Purchaser pursuant to
which the Company has granted to Parent an irrevocable option (the "Stock
Option") to purchase up to the number of fully paid and nonassessable Shares
equal to 19.9% of the Shares issued and outstanding immediately prior to the
grant of the Stock Option, at a purchase price of $5.50 per Share, exercisable
upon the occurrence of certain events. The Company Option Agreement is described
more fully in Section 11 below.
Parent and Purchaser have entered into Shareholder Agreements dated as of
July 12, 1999 (the "Shareholder Agreements"), with the directors of the Company
(the "Director Shareholders"), pursuant to which each of such Director
Shareholders has agreed, among other things, (1) to tender to Purchaser pursuant
to the Offer at $5.50 per share, all Shares beneficially owned by such Director
Shareholder (719,764 Shares in the aggregate) which will result in the Parent
and its affiliates beneficially owning 10.1% of the outstanding Shares, (2) to
grant to Parent an option exercisable under certain circumstances to purchase
the Shares beneficially owned by such Director Shareholder, and (3) to vote all
Shares beneficially owned by such Director Shareholder in favor of the Merger
Agreement and against all other acquisition proposals. See Section 11 below.
The Merger Agreement provides that, upon the purchase by Purchaser of at
least a majority of the Shares pursuant to the Offer and from time to time
thereafter, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board of Directors so that
the percentage of Parent's nominees on the Company Board of Directors equals the
percentage of outstanding Shares beneficially owned by Parent and its
affiliates. The Company will, at such time, upon the request of Purchaser
promptly use its best efforts to take all action necessary to cause such persons
designated by Parent to be elected to the Company Board of Directors, if
necessary, by increasing the size of the Company Board of Directors or securing
resignations of its incumbent directors or both.
Under Section 1924 of the PBCL, if a corporation owns at least 80% of the
outstanding shares of each class of another corporation, the corporation owning
such stock can effect a "short-form" merger with that corporation without any
action or vote on the part of the other shareholders of such other corporation
(a "short-form merger") if its board of directors adopts the merger. If the
Minimum Condition is satisfied and Purchaser purchases at least 80% of the
outstanding Shares, then under the PBCL, the Merger could be approved without
any action or vote on the part of Company's other shareholders. However, section
6 of the
2
<PAGE> 5
Company's articles of incorporation provides that a merger or consolidation of
the Company with any person (or any affiliate of such person) that owns any
shares of any class of equity security of the Company requires the approval of a
majority of the voting securities of the Company not owned by such person and
its affiliates. The Company's articles of incorporation provides that section 6
thereof may be amended by the affirmative vote of 80% of the voting securities
of the Company entitled to vote thereon at a meeting called for that purpose. If
the Minimum Condition is satisfied and Purchaser purchases at least 80% of the
outstanding Shares, Purchaser will be able to effect the Articles Amendment and
delete section 6 from the Company's articles of incorporation without any action
or vote on the part of the other shareholders of the Company. Following the
approval of the Articles Amendment, Purchaser will be able to effect a
short-form merger without any further action or vote on the part of the other
shareholders of the Company. Parent presently intends to effect a short-form
merger if permitted to do so under the PBCL. The Merger Agreement is more fully
described in Section 11.
Although under the terms of the Merger Agreement, Parent and Purchaser may
waive the Minimum Condition, they do not currently intend to do so and Parent
and Purchaser may terminate the Merger Agreement if the Minimum Condition is not
satisfied. In addition, the Merger Agreement provides that Purchaser may extend
the Offer if the Shares tendered and not withdrawn pursuant to the Offer are
less than 80% of the outstanding Shares. Even if Parent and Purchaser waive the
Minimum Condition and they do not own 80% of the outstanding Shares, following
consummation of the Offer, Parent and Purchaser could seek to purchase
additional shares in the open market or otherwise in order to reach the 80%
threshold required to approve the Articles Amendment and employ a short-form
merger under the PBCL. The per share consideration paid for any Shares so
acquired may be greater or less than that paid in the Offer. See Section 12.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
3
<PAGE> 6
THE OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date, and not withdrawn in accordance with
Section 4. The term "Expiration Date" shall mean 12:00 Midnight, New York City
time, on Wednesday, August 11, 1999, unless and until Purchaser, in accordance
with the terms of the Merger Agreement, shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by Purchaser,
shall expire. In the Merger Agreement, Parent and Purchaser have agreed that if
all conditions to Purchaser's obligation to accept for payment and pay for
Shares pursuant to the Offer are not satisfied on the scheduled Expiration Date,
Purchaser may, in its sole discretion, extend the Offer.
The Offer is conditioned upon the satisfaction of the Minimum Condition,
the expiration or termination of all waiting periods imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the other conditions set forth in Section 14. If such conditions are
not satisfied prior to the Expiration Date, Purchaser reserves the right,
subject to the terms of the Merger Agreement and subject to complying with
applicable rules and regulations of the Commission, to (i) decline to purchase
any Shares tendered in the Offer and terminate the Offer and return all tendered
Shares to the tendering shareholders, (ii) waive any or all conditions to the
Offer and, to the extent permitted by applicable law, purchase all Shares
validly tendered, (iii) extend the Offer and, subject to the right of
shareholders to withdraw Shares until the Expiration Date, retain all Shares
which have been tendered during the period or periods for which the Offer is
extended or (iv) amend the Offer.
The Merger Agreement requires Purchaser to accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer if all
conditions to the Offer are satisfied on the Expiration Date. However, if,
immediately prior to the scheduled Expiration Date, all conditions to the Offer
are not satisfied, Purchaser may, at its own discretion, extend the Offer.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, the announcement in the
case of an extension to be issued no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date in
accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act. Without limiting the obligation of Purchaser under such Rules or
the manner in which Purchaser may choose to make any public announcement,
Purchaser currently intends to make announcements by issuing a press release to
the Dow Jones News Service.
If Purchaser extends the Offer, or if Purchaser (whether before or after
its acceptance for payment of Shares) is delayed in its purchase of, or payment
for, Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may retain tendered Shares on behalf of Purchaser, and such Shares may not be
withdrawn except to the extent tendering shareholders are entitled to withdrawal
rights as described in Section 4. However, the ability of Purchaser to delay the
payment for Shares which Purchaser has accepted for payment is limited by Rule
14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by, or on behalf of,
holders of securities promptly after the termination or withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. In a public
release, the Commission has stated its view that an offer must
4
<PAGE> 7
remain open for a minimum period of time following a material change in the
terms of the Offer and that waiver of a material condition, such as the Minimum
Condition, is a material change in the terms of the Offer. The release states
that an offer should remain open for a minimum of five (5) business days from
the date a material change is first published, or sent or given to security
holders and that, if material changes are made with respect to information not
materially less significant than the offer price and the number of shares being
sought, a minimum of 10 business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment. If, prior to the Expiration Date, Purchaser increases the
consideration offered to holders of Shares pursuant to the Offer, such increased
consideration will be paid to all holders whose Shares are purchased in the
Offer whether or not such Shares were tendered prior to such increase.
The Company has provided Purchaser with the Company's shareholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, dealers,
banks and similar persons whose names, or the names of whose nominees, appear on
the shareholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for, as soon as
practicable after the Expiration Date, all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 4.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering shareholders. In all cases, payment for Shares
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates for such Shares (or a timely Book
Entry Confirmation (as defined below) with respect thereto), (ii) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message (as defined below) and (iii) any other documents required by the
Letter of Transmittal. Accordingly, payment may be made to tendering
shareholders at different times if delivery of the Shares and other required
documents occur at different times. The per share consideration paid to any
holder of Shares pursuant to the Offer will be the highest per share
consideration paid to any other holder of such Shares pursuant to the Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY
PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
The Purchaser expressly reserves the right, in its sole discretion, to
delay acceptance for payment of, or payment for, Shares in order to comply in
whole or in part with any applicable law. If Purchaser is delayed in its
acceptance for payment of, or payment for, Shares or is unable to accept for
payment or pay for Shares pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer (including such rights as are
set forth in Sections 1 and 14) (but subject to compliance with Rule 14e-1(c)
under the Exchange Act), the Depositary may, nevertheless, on behalf of
Purchaser, retain tendered Shares, and such Shares may not be withdrawn except
to the extent tendering shareholders are entitled to exercise, and duly
exercise, withdrawal rights as described in Section 4.
5
<PAGE> 8
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering shareholder, or such other person as
the tendering shareholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility (as defined below)
pursuant to the procedures set forth in Section 3, such Shares will be credited
to such account maintained at the Book-Entry Transfer Facility as the tendering
shareholder shall specify in the Letter of Transmittal, as promptly as
practicable following the expiration, termination or withdrawal of the Offer. If
no such instructions are given with respect to Shares delivered by book-entry
transfer, any such Shares not tendered or not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated in the
Letter of Transmittal as the account from which such Shares were delivered.
Purchaser reserves the right to transfer or assign, in whole or, from time
to time, in part, to one or more of its affiliates, the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering shareholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees or, in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase prior to the Expiration Date and
either certificates evidencing tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered to the
Depositary pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation must be received by the Depositary, in each case
prior to the Expiration Date, or (ii) the tendering shareholder must comply with
the guaranteed delivery procedures described below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
Book-Entry Transfer Facility's system may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with such Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering shareholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation."
DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
6
<PAGE> 9
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all other
cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If
the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such shareholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents, are received by the Depositary within
three trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the Nasdaq National Market
(the "Nasdaq National Market"), operated by the National Association of
Securities Dealers, Inc. (the "NASD"), is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary, transmitted by telegram or mailed to the Depositary and must include
a guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering shareholder and
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering shareholder will
irrevocably appoint designees of Purchaser as such shareholder's
attorneys-in-fact and proxies in the manner set forth in the Letter of
Transmittal, each with full
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<PAGE> 10
power of substitution, to the full extent of such shareholder's rights with
respect to the Shares tendered by such shareholder and accepted for payment by
Purchaser and with respect to any and all non-cash dividends, distributions,
rights, other Shares or other securities issued or issuable in respect of such
Shares on or after July 12, 1999 (collectively, "Distributions"). All such
proxies will be considered coupled with an interest in the tendered Shares. Such
appointment will be effective if, as and when, and only to the extent that,
Purchaser accepts for payment Shares tendered by such shareholder as provided
herein. All such powers of attorney and proxies will be irrevocable and will be
deemed granted in consideration of the acceptance for payment by Purchaser of
Shares tendered in accordance with the terms of the Offer. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
shareholder with respect to such Shares (and any and all Distributions) will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such shareholder (and, if
given, will not be deemed effective). The designees of Parent will thereby be
empowered to exercise all voting and other rights with respect to such Shares
(and any and all Distributions), including, without limitation, in respect of
any annual or special meeting of the Company's shareholders (and any adjournment
or postponement thereof), actions by written consent in lieu of any such meeting
or otherwise, as each such attorney-in-fact and proxy or his substitute shall in
his sole discretion deem proper. Purchaser reserves the right to require that,
in order for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares, Purchaser must be able to exercise full
voting, consent and other rights with respect to such Shares (and any and all
Distributions), including voting at any meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser, in its sole discretion, which
determination will be final and binding. Purchaser reserves the absolute right
to reject any or all tenders of any Shares determined by it not to be in proper
form or the acceptance for payment of which, or payment for which, may, in the
opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the
absolute right, in its sole discretion, subject to the provisions of the Merger
Agreement, to waive any defect or irregularity in any tender of Shares of any
particular shareholder, whether or not similar defects or irregularities are
waived in the case of other shareholders. No tender of Shares will be deemed to
have been validly made until all defects or irregularities relating thereto have
been cured or waived. None of Purchaser, Parent, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Subject to the terms of the
Merger Agreement, Purchaser's interpretation of the terms and conditions of the
Offer in this regard (including the Letter of Transmittal and the instructions
thereto) will be final and binding.
Backup Withholding. Under the "backup withholding" provisions of federal
income tax law, unless a tendering registered holder, or its assignee (in either
case, the "Payee"), satisfies the conditions described in Instruction 10 of the
Letter of Transmittal or is otherwise exempt, the cash payable as a result of
the Offer may be subject to backup withholding tax at a rate of 31% of the gross
proceeds. To prevent backup withholding, each Payee should complete and sign the
Substitute Form W-9 provided in the Letter of Transmittal. See Instruction 10 to
the Letter of Transmittal.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4 or as provided by applicable
law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior to
the Expiration Date and, unless theretofore accepted for payment and paid for by
Purchaser pursuant to the Offer, may also be withdrawn at any time after
September 12, 1999.
To be effective, a written or telegraphic notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase. Any such notice of withdrawal must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holder of the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been
8
<PAGE> 11
tendered by an Eligible Institution, the signatures on the notice of withdrawal
must be guaranteed by an Eligible Institution. If Shares have been delivered
pursuant to the procedures for book-entry transfer as set forth in Section 3,
any notice of withdrawal must also specify the name and number of the account at
the Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give any such notification.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of certain U.S. federal income tax
consequences of the Offer and the Merger relevant to a beneficial holder of
Shares whose Shares are tendered and accepted for payment pursuant to the Offer
or whose Shares are converted to cash in the Merger (a "Holder"). The discussion
is based on the Internal Revenue Code of 1986, as amended (the "Code"),
regulations issued thereunder, judicial decisions and administrative rulings,
all of which are subject to change, possibly with retroactive effect. The
following does not address the U.S. federal income tax consequences to all
categories of Holders that may be subject to special rules (e.g., holders who
acquired their Shares pursuant to the exercise of employee stock options or
other compensation arrangements with the Company, holders who perfect their
appraisal rights under the PBCL, foreign holders, insurance companies,
tax-exempt organizations, dealers in securities and persons who have acquired
the Shares as part of a straddle, hedge, conversion transaction or other
integrated investment), nor does it address the federal income tax consequences
to persons who do not hold the Shares as "capital assets" within the meaning of
Section 1221 of the Code (generally, property held for investment). Holders
should consult their own tax advisors regarding the U.S. federal, state, local
and foreign income and other tax consequences of the Offer and the Merger.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and may also be a
taxable transaction under applicable state, local and foreign income and other
tax laws. In general, a Holder who sells Shares pursuant to the Offer or
receives cash in exchange for Shares pursuant to the Merger will recognize gain
or loss for federal income tax purposes equal to the difference, if any, between
the amount of cash received and the Holder's adjusted tax basis in the Shares
sold pursuant to the Offer or surrendered for cash pursuant to the Merger. Gain
or loss will be determined separately for each block of Shares (i.e., Shares
acquired at the same cost in a single transaction) tendered pursuant to the
Offer or surrendered for cash pursuant to the Merger. Such gain or loss will be
long-term capital gain or loss if the Holder has held the Shares for more than
one (1) year at the time of the consummation of the Offer or the Merger. Capital
gains recognized by an individual investor (or an estate or certain trusts) upon
a disposition of a Share that has been held for more than one year generally
will be subject to a maximum tax rate of 20% or, in the case of a Share that has
been held for one year or less, will be subject to tax at ordinary income rates.
Certain limitations apply to the use of capital losses.
9
<PAGE> 12
6. PRICE RANGE OF THE SHARES; DIVIDENDS.
The Shares are traded through the Nasdaq National Market under the symbol
"TRON". The following table sets forth, for each of the fiscal quarters
indicated, the high and low reported sales price per Share on the Nasdaq
National Market.
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
Fiscal Year Ended December 31, 1997
First Quarter ended March 31, 1997........................ $6.25 $3.88
Second Quarter ended June 30, 1997........................ 5.38 3.50
Third Quarter ended September 30, 1997.................... 5.50 3.94
Fourth Quarter ended December 31, 1997.................... 5.88 4.13
Fiscal Year Ended December 31, 1998
First Quarter ended March 31, 1998........................ $6.88 $4.56
Second Quarter ended June 30, 1998........................ 6.88 5.00
Third Quarter ended September 30, 1998.................... 6.88 3.25
Fourth Quarter ended December 31, 1998.................... 4.88 2.50
Fiscal Year Ending December 31, 1999
First Quarter ended March 31, 1999........................ $4.63 $2.75
Second Quarter ended June 30, 1999........................ 4.94 3.38
Third Quarter through July 14, 1999....................... 5.38 4.50
</TABLE>
On July 12, 1999, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the last reported closing
sales price of the Shares on the Nasdaq National Market was $4.81 per Share. On
July 14, 1999, the last full trading day prior to the commencement of the Offer,
the last reported sales price of the Shares on the Nasdaq National Market was
$5.31 per Share. Shareholders are urged to obtain a current market quotation for
the Shares.
The Company issued a $0.02 cash dividend each quarter from February 1997
through May 1998. In addition, under the terms of the Merger Agreement, the
Company is not permitted to declare or pay dividends with respect to the Shares
without the prior written consent of Parent; Parent does not intend to consent
to any such declaration or payment.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which, depending upon the number of
Shares so purchased, could adversely affect the liquidity and market value of
the remaining Shares held by shareholders. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for, or marketability of,
the Shares or whether it would cause future market prices to be greater or less
than the Offer Price.
Nasdaq Quotation. Depending upon the number of Shares purchased pursuant
to the Offer, the Shares may no longer meet the requirements of the NASD for
continued inclusion on the Nasdaq National Market, which requires that an issuer
have at least 500,000 publicly held shares, held by at least 300 round lot
shareholders, with a market value of at least $1,000,000, have at least two
market makers, have a minimum bid price of $1 and have either (A) net tangible
assets of at least $2,000,000; (B) a market capitalization of at least
$35,000,000; or (C) net income of $500,000 in the most recently completed fiscal
year or in two of the last three most recently completed fiscal years. If the
Nasdaq National Market was to cease to publish quotations for the Shares, it is
possible that the Shares would continue to trade in the over-the-counter market
and that price or other quotations would be reported by other sources. The
extent of the public market for such Shares and the availability of such
quotations would depend, however, upon such factors as the number of
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<PAGE> 13
shareholders and/or the aggregate market value of such securities remaining at
such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act as described below, and other factors. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for, or marketability of,
the Shares or whether it would cause future market prices to be greater or
lesser than the Offer Price.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its shareholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement pursuant to Section 14(a) in connection with
shareholders' meetings and the related requirement of furnishing an annual
report to shareholders and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
may be impaired or eliminated.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding stock exchange listing
and market quotations, it is possible that, following the Offer, the Shares
would no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers. In addition, if registration of the
Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
Parent currently intends to seek delisting of the Shares from the Nasdaq
National Market and the termination of the registration of the Shares under the
Exchange Act as soon after the completion of the Offer as the requirements for
such delisting and termination are met. If the Nasdaq National Market listing
and the Exchange Act registration of the Shares are not terminated prior to the
Merger, then the Shares will be delisted from the Nasdaq National Market and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected Financial
Information," has been furnished by the Company or has been taken from or based
upon publicly available documents and records on file with the Commission and
other public sources. None of Parent, Purchaser or the Dealer Manager assumes
responsibility for the accuracy or completeness of the information concerning
the Company contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Parent, Purchaser or the Dealer Manager.
The Company is engaged in the design, manufacture, distribution and sale of
equipment to improve indoor air quality. The Company sells its products for use
in residences, commercial facilities, industrial facilities, hospitals,
restaurants, general manufacturing, ships and submarines. The Company uses a
range of technologies to collect airborne contaminants, including high
efficiency particulate arrestance and ultra low particulate arrestance
filtration technologies, electrostatic precipitators and media filtration to
eliminate airborne pollutants and micron size contaminants.
Selected Financial Information. Set forth below is certain consolidated
financial information with respect to the Company, excerpted or derived from the
Company's Annual Reports on Form 10-K for the
11
<PAGE> 14
fiscal years ended December 31, 1998 and its Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999, each as filed with the Commission pursuant to
the Exchange Act.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following summary
is qualified in its entirety by reference to such reports and other documents
and all of the financial information (including any related notes) contained
therein. Such reports, documents and financial information may be inspected and
copies may be obtained from the Commission in the manner set forth below.
TRION, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED
(UNAUDITED) FISCAL YEARS ENDED
--------------------- ------------------------------------------
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997 1996
--------- --------- ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.................................. $14,857 $15,981 $57,214 $65,150 $62,401
Income (loss) before income taxes.......... 646 417 (2,178) 2,713 1,614
Net income (loss).......................... 435 271 (1,196) 2,051 1,112
Earnings (loss) per share:
Basic.................................... 0.06 0.04 (0.17) 0.29 0.16
Diluted.................................. 0.06 0.04 (0.17) 0.29 0.16
BALANCE SHEET DATA:
Total assets............................... $37,887 $39,201 $39,201 $42,192 $40,796
Total liabilities.......................... 16,019 17,660 17,660 19,325 19,754
Total Shareholders' equity................. 21,868 21,541 21,541 22,867 21,042
</TABLE>
Other Financial Information. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent with certain information about the Company and its
financial performance which is not publicly available. The information provided
included financial projections for the Company as an independent company (i.e.,
without regard to the impact to the Company of a transaction with Parent), which
information is summarized as set forth below:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------
DECEMBER 31, 1999
-----------------
(IN THOUSANDS,
EXCEPT PER SHARE
DATA)
<S> <C>
Net sales................................................... $61,080
Operating income............................................ 3,907
Net income.................................................. 1,747
Earnings per share.......................................... 0.24
</TABLE>
- ---------------
The foregoing information was prepared by the Company solely for internal
use and not for publication or with a view to complying with the published
guidelines of the Commission regarding projections or with the guidelines
established by the American Institute of Certified Public Accountants and are
included in this Offer to Purchase only because they were furnished to Parent.
The foregoing information is "forward-looking" and inherently subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company, including industry performance, general business and
economic conditions, changing competition, adverse changes in applicable laws,
regulations or rules governing environmental, tax or accounting matters and
other matters. Although the Company has informed Parent and Purchaser that it
believes the assumptions used in preparing this information were reasonable when
made, such assumptions are inherently subject to significant uncertainties and
contingencies which are impossible to predict and beyond the
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<PAGE> 15
Company's control. One cannot predict whether the assumptions made in preparing
the foregoing information will be accurate, and accordingly, there can be no
assurance, and no representation or warranty is made, that actual results will
not vary materially from those described above. The inclusion of this
information should not be regarded as an indication that Parent, Purchaser, the
Company or anyone who received this information considered it a reliable
prediction of future events, and this information should not be relied on as
such. None of Parent, Purchaser, the Dealer Manager, or the Company assumes any
responsibility for the validity, reasonableness, accuracy or completeness of the
projections, and the Company has made no representation to Parent or Purchaser
regarding the financial information described above. The projections have not
been adjusted to reflect the effects of the Merger.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's shareholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a website on
the internet at http://www.sec.gov that contains reports, proxy statements and
other information relating to the Company which have been filed via the
Commission's EDGAR System.
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
Parent and Purchaser. Parent is a Delaware corporation and is a publicly
traded company. Fedders North America, Inc., a wholly owned subsidiary of
Parent, manufactures and sells air conditioners and dehumidifiers, principally
for use in the U.S. residential market. The Company's products are marketed
under the FEDDERS, EMERSON QUIET KOOL and AIRTEMP brand names primarily to
national and regional retail chains, home improvement centers and buying groups,
as well as distributors and, under private label, to retailers and other
original equipment manufacturers, including other room air conditioner
manufacturers. Through Fedders International, Parent is investing much of its
planning and resources to penetrate the much larger and rapidly growing
international market for room air conditioners.
Purchaser is a newly incorporated Pennsylvania corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. All of the outstanding
capital stock of Purchaser is owned indirectly by Parent. Until immediately
prior to the time Purchaser purchases Shares pursuant to the Offer, it is not
anticipated that Purchaser will have any significant assets or liabilities or
engage in any significant activities other than those incident to its formation
and capitalization and the transactions contemplated by the Offer and the
Merger.
The principal offices of Parent and Purchaser are located at 505
Martinsville Road, Liberty Corner, New Jersey 07938-0813. The telephone number
of Parent and Purchaser at such location is (908) 604-8686.
For certain information concerning the executive officers and directors of
Parent and Purchaser, see Schedule I.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent
or, to the best knowledge of Purchaser or Parent, any of the persons listed on
Schedule I, or any associate or majority owned subsidiary of any of the
foregoing, beneficially owns or has a right to acquire any Shares, and none of
Purchaser, Parent or, to the best of knowledge of Purchaser or Parent, any of
the persons or entities referred to above, or any of the respective executive
officers, directors or subsidiaries of any of the foregoing, has effected any
transaction in the Shares during the past sixty (60) days.
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<PAGE> 16
Except as set forth in this Offer to Purchase, none of Purchaser or Parent
has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company, including, but not limited
to, any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any securities of the Company, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against loss
or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent,
any of their respective affiliates, or, to the best knowledge of Purchaser or
Parent, any of the persons listed on Schedule I, has had, since January 1, 1996
any business relationships or transactions with the Company or any of its
executive officers, directors or affiliates that would be required to be
reported under the rules of the Commission. Except as set forth in this Offer to
Purchase, since January 1, 1996 there have been no contacts, negotiations or
transactions between Purchaser, Parent, any of their respective affiliates or,
to the best knowledge of Purchaser or Parent, any of the persons listed on
Schedule I, and the Company or its affiliates concerning a merger, consolidation
or acquisition, tender offer or other acquisition of securities, election of
directors or a sale or other transfer of a material amount of assets.
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning Parent's directors and officers, their
remuneration, options granted to them, the principal holders of Parent's
securities and any material interests of such persons in transactions with
Parent is required to be disclosed in proxy statements distributed to Parent's
stockholders and filed with the Commission. Purchaser is a privately-held
company and is generally not subject to the informational filing requirements of
the Exchange Act, and is generally not required to file reports, proxy
statements and other information with the Commission relating to its businesses,
financial condition and other matters. Pursuant to Rule 14d-3 under the Exchange
Act, Parent and Purchaser have filed with the Commission the Schedule 14D-1,
together with exhibits, including this Offer to Purchase and the Merger
Agreement, which provides certain additional information with respect to the
Offer. The Schedule 14D-1 and any amendments thereto, including exhibits, should
be available for inspection and copies should be obtainable at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of such information should also be obtainable (i) by mail,
upon payment of the Commission's customary charges, by writing to the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission located at Seven World Trade
Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, IL 60661 and (ii) by accessing the Commission's
website on the internet at http://www.sec.gov.
10. SOURCES AND AMOUNT OF FUNDS.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by Purchaser to consummate the Offer and the Merger,
including the fees and expenses of the Offer and the Merger, is estimated to be
approximately $48 million. Purchaser will obtain all such funds from Parent in
the form of capital contributions and/or loans. Parent will provide such funds
through available cash on hand.
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER
AGREEMENT AND CERTAIN OTHER AGREEMENTS.
Contacts with the Company; Background of the Offer.
One of Parent's strategic objectives has been the acquisition of domestic
non-room air conditioner businesses that are counter-seasonal or non-seasonal to
the room air conditioner business.
On August 14, 1998, the Company entered into a merger agreement with McLeod
Russel Holdings PLC ("McLeod Russel") providing for the acquisition of all of
the outstanding stock of the Company at a price of $7.27 per share. On October
15, 1998, the Company and McLeod Russel announced that they had mutually
terminated the merger agreement. On November 4, 1998, the Company announced that
the Company Board of Directors had determined not to pursue a sale of the
Company pending year-end results but that the
14
<PAGE> 17
Company Board of Directors would consider unsolicited expressions of interest it
might receive from third parties.
On November 10, 1998, Sal Giordano, Jr., Vice Chairman and Chief Executive
Officer of Parent, sent a letter to Steven L. Schneider, President and Chief
Executive Officer of the Company, indicating Parent's possible interest in
acquiring the Company. The Company's financial advisor, Harris Williams
communicated to Parent that the Company was reviewing its alternatives and would
respond in due course.
On February 3, 1999, the Company announced its results for the 1998 fiscal
year. Also on that day, Mr. Giordano, Jr. sent another letter to Mr. Schneider
and the Company Board of Directors, reiterating Parent's interest in acquiring
the Company. On February 25, 1999, Parent and the Company signed the
Confidentiality Agreement (as hereinafter defined) and on March 4, 1999, Parent
retained TM Capital as its financial advisor in connection with the proposed
acquisition of the Company.
On March 17, 1999, the Company Board of Directors announced it had decided
to pursue strategic alternatives, including the possible sale of the Company.
The Company also announced that it had retained Harris Williams as its financial
advisor.
On March 29, 1999, Harris Williams provided Parent with a descriptive
memorandum regarding the Company and requested expressions of interest by April
13, 1999. On April 13, 1999, Parent provided a preliminary expression of
interest in acquiring the Company for a cash price in the range of $5.50 per
share.
On May 5, 1999, Mr. Giordano, Jr. and Mr. Robert L. Laurent, Jr., Executive
Vice President, Acquisitions and Alliances of Parent and representatives of TM
Capital met with Mr. Schneider, Mr. Calvin Monsma and other members of
management of the Company and representatives of Harris Williams at the
Company's Sanford, North Carolina facility. The parties discussed the Company's
business, Parent's and the Company's common strategies and various synergistic
opportunities between the two companies.
On May 12, 1999, Harris Williams requested that Parent submit a proposal
for the acquisition of the Company by June 2, 1999.
On May 19, 1999, members of Parent's management and the Company's
management visited the Company's Envirco subsidiary in Albuquerque, New Mexico.
On May 24 and May 25, 1999, members of Parent's senior management and
representatives of TM Capital conducted a due diligence review of certain
information regarding the Company in a data room at the offices of the Company's
counsel in Raleigh, North Carolina. From May 24, 1999 through July 8, 1999,
members of Parent's management and its representatives continued to conduct a
due diligence review of information regarding the Company.
In a letter dated June 2, 1999 from Mr. Robert L. Laurent, Jr. of Parent to
the Company, Parent indicated to the Company that it was prepared to consider
the acquisition of 100% of the common stock of the Company at a price of $5.50
in cash per share, subject to the satisfactory completion of Parent's due
diligence and the negotiation of definitive documentation. On June 8, 1999,
Harris Williams contacted Parent and TM Capital to request an increase in the
price proposed by Parent. On June 9, 1999, Parent indicated to Harris Williams
that it might be prepared to offer $5.65 per share, subject to the satisfactory
completion of its due diligence and the negotiation of definitive documentation.
On June 11, 1999, Mr. Giordano, Jr. met with Mr. Schneider for further
discussions about a potential transaction.
From June 9 through July 8, 1999, members of senior management of Parent,
its financial and legal advisors and senior members of the Company's management
and its financial and legal advisors conducted negotiations regarding the terms
of a proposed tender offer and merger and members of Parent's management and its
representatives conducted further due diligence.
On July 8, 1999, after completion of Parent's due diligence, TM Capital
notified Harris Williams orally and on July 9, 1999 Mr. Giordano, Jr. delivered
a letter to the Company Board of Directors, in each case communicating Parent's
offer to purchase all of the outstanding shares of common stock of the Company
at a
15
<PAGE> 18
purchase price of $5.50 in cash upon the terms and conditions set forth in the
Merger Agreement previously negotiated by the parties and their respective
counsel. Also on July 9, 1999, representatives of Parent and representatives of
the Company discussed via telephone the results of Parent's due diligence
investigation and Parent's rationale for its proposed $5.50 per share price.
On July 12, 1999, Harris Williams called TM Capital to inform Parent that
the Company Board of Directors (by a unanimous vote of those directors present)
accepted Parent's proposal, authorized the execution of the Merger Agreement and
the Company Option Agreement and agreed to recommend that the Company's
shareholders accept the Offer and tender their shares pursuant thereto. The
Merger Agreement, the Company Option Agreement and the Shareholder Agreements
were all executed on July 12, 1999 and Parent and the Company issued a joint
press release announcing the Offer and the execution of the Merger Agreement.
On July 15, 1999, pursuant to the terms of the Merger Agreement, Parent and
Purchaser commenced the Offer.
Purpose of the Offer and the Merger. The purpose of the Offer and the
Merger is to enable Parent to acquire control of, and the entire equity interest
in, the Company. Upon consummation of the Merger, the Company will become an
indirect wholly owned subsidiary of Parent. The Offer is being made pursuant to
the Merger Agreement and is intended to increase the likelihood that the Merger
will be effected. The purpose of the Merger is to acquire all of the outstanding
Shares not purchased pursuant to the Offer.
Merger Agreement
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement, which is incorporated herein by reference and a copy of
which has been filed with the Commission as an exhibit to the Schedule 14D-1.
The Merger Agreement may be examined, and copies obtained, as set forth in
Sections 8 and 9 of this Offer to Purchase.
The Offer. The Merger Agreement provides for the making of the Offer as
provided in this Offer to Purchase.
The Company Board of Directors. The Merger Agreement provides that Parent
shall be entitled to designate a number of directors, rounded up to the next
whole number, of the Company Board of Directors equal to the product of the
total number of directors on the Company Board of Directors (giving effect to
the directors designated by Parent) multiplied by a fraction of which the
numerator shall be the number of Shares which Parent and its subsidiaries
(including Purchaser) beneficially own at that time, and the denominator shall
be the total number of Shares then outstanding. The Directors so designated by
Parent shall take office immediately after (i) the purchase of and payment for
any Shares by Parent or any of its subsidiaries as a result of which Parent and
its subsidiaries owns beneficially at least a majority of then outstanding
Shares and (ii) compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, whichever shall occur later. In furtherance thereof, the
Company shall, upon request of Parent, use its best efforts promptly either to
increase the size of the Company Board of Directors or to secure the
resignations of such number of its incumbent directors, or both, as is necessary
to enable such designees of Parent to be so elected or appointed to the Company
Board of Directors, and the Company shall take all actions available to the
Company to cause such designees of Parent to be so elected or appointed. At such
time, the Company shall, if requested by Parent, also take all action necessary
to cause persons designated by Parent to constitute the same percentage (rounded
up to the next whole number) as is on the Company Board of Directors of (i) each
committee of the Company Board of Directors, (ii) each board of directors (or
similar body) of each of the Company's subsidiaries and (iii) each committee (or
similar body) of each such board.
The Merger Agreement provides that the Company will promptly take, at its
expense, all actions required pursuant to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder in order to fulfill its obligations under the
prior paragraph, including mailing to shareholders the information required by
such Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees
to be elected or appointed to the
16
<PAGE> 19
Company Board of Directors immediately after the purchase of and payment for any
Shares by Parent or any of its subsidiaries as a result of which Parent and its
subsidiaries own beneficially at least a majority of then outstanding Shares.
Parent or Purchaser will supply the Company all information with respect to
either of them and their nominees, officers, directors and affiliates required
to be disclosed by Section 14(f) and Rule 14f-1. The provisions of the Merger
Agreement related to these Commission filings are in addition to and shall not
limit any rights which Purchaser, Parent or any of their Affiliates may have as
a holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise. The term "Affiliate" has the meaning as set
forth in Rule 12b-2 of the Exchange Act.
The Merger Agreement provides that in the event that Parent's designees are
elected or appointed to the Company Board of Directors, until the Effective
Time, the Company Board of Directors shall have at least two directors who were
directors as of the date of the Merger Agreement and who are not employees of
the Company ("Independent Directors"), provided that, in such event, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, the remaining Independent Director shall be entitled to designate
persons to fill such vacancies who shall be deemed to be Independent Directors
or, if no Independent Director then remains, the other directors shall designate
two persons to fill such vacancies who shall not be shareholders, affiliates or
associates of Parent or Purchaser, and such persons shall be deemed to be
Independent Directors. In the event that Parent's designees constitute a
majority of the directors on the Company Board of Directors, the affirmative
vote of a majority of the Independent Directors shall be required after the
acceptance for payment of Shares pursuant to the Offer and prior to the
Effective Time, to (a) amend or terminate the Merger Agreement by the Company,
(b) exercise or waive any of the Company's rights, benefits or remedies
hereunder if such exercise or waiver materially and adversely affects holders of
Shares other than Parent or Purchaser, or (c) take any other action under or in
connection with the Merger Agreement if such action materially and adversely
affects holders of Shares other than Parent or Purchaser; provided, that if
there shall be no such directors, such actions may be effected by unanimous vote
of the entire Company Board of Directors.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof and in accordance with the PBCL, Purchaser will be
merged with and into the Company and the separate corporate existence of
Purchaser will thereupon cease, and the Company will be the surviving
corporation in the Merger. At the Effective Time of the Merger, each Share then
outstanding, other than Shares held by (i) the Company, (ii) Parent or any of
its wholly owned subsidiaries including Purchaser, and (iii) shareholders who
properly perfect their dissenters' rights under the PBCL, will be converted into
the right to receive $5.50 in cash or any higher price per Share paid in the
Offer, without interest.
Options. The Merger Agreement provides that immediately prior to the
Effective Time, each holder of a Company Option will be entitled to receive from
the Company, and shall receive, except as discussed below, in settlement of each
Company Option an option to purchase shares of Parent's Class A Stock (a "Parent
Option"). All Company Options shall terminate as of the Effective Time. Parent
shall grant, as of the Effective Time, to the holder of any Company Option, a
Parent Option. With respect to such Parent Options (i) the number of shares of
Parent Class A Stock subject to such Parent Option will be determined by
multiplying the number of shares constituting the Company Option by the Option
Exchange Ratio (as defined below), rounding any fractional share up to the
nearest whole share, and (ii) the exercise price per share of such Parent Option
will be determined by dividing the exercise price per share applicable to the
Company Option by the Option Exchange Ratio, and rounding the exercise price
thus determined up to the nearest whole cent. Except as provided above, the
converted or substituted Parent Options shall be subject to the same terms and
conditions (including, without limitation, expiration date, vesting and exercise
provisions) as were applicable to the Company Options immediately prior to the
Effective Time; provided, however, that (i) all Company Options shall vest and
become fully exercisable immediately prior to the Effective Time and (ii) any
Company Option that qualifies as an incentive stock option (an "ISO") under
Section 422 of the Code, shall, to the extent permitted by applicable law, be
adjusted so that the resulting Parent Option qualifies as an ISO. The term
"Option Exchange Ratio" means (x) the Offer Price divided by (y) the average of
the closing prices of Parent Class A Stock on the New York Stock Exchange during
the ten trading days preceding the fifth trading day prior to the date of the
closing of Merger (the "Closing Date"). Each holder of
17
<PAGE> 20
a Company Option that does not qualify as an ISO shall also have the right
(which right shall be exercised at least 5 days prior to the Closing Date by
written notice to Company) to elect, in lieu of the right to acquire a Parent
Option, to convert, at the Effective Time, all or a portion of his or her
Company Options which have not been exercised and which have not expired prior
to the Effective Time into the right to receive an amount equal to the product
of (i) the excess, if any, of the Offer Price (excluding any interest,
regardless of when paid) over the exercise price per Share of such Company
Option and (ii) the number of shares constituting such Company Option less any
applicable withholding taxes.
The Merger Agreement provides that, except as may be otherwise agreed to by
Parent and the Company, all stock option plans established by the Company or any
of its subsidiaries shall terminate as of the Effective Time and the provisions
in any other plan, program or arrangement providing for the issuance or grant of
any other interest in respect of the capital stock of Company or any its
subsidiaries shall be deleted, terminated and of no further force or effect as
of the Effective Time. If and to the extent necessary or required by the terms
of the plans governing Company Options or pursuant to the terms of any Company
Option granted thereunder, prior to the Effective Time, the Company shall (i)
obtain the consent of each holder of outstanding Company Options and (ii) amend
the terms of the applicable plan under which the Company Option was granted, in
each case as is necessary to give effect to the foregoing treatment of such
Company Options.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate organization, good standing, authority
to enter into the Merger Agreement and the Company Option Agreement, shareholder
vote required to approve the Merger, capitalization and ownership of Shares,
subsidiaries, filings with the Commission and financial statements, books and
records, owned and leased real property, encumbrances, condition of assets,
accounts receivable, inventory, no undisclosed liabilities, taxes, no material
adverse change, employee benefits, compliance with all legal requirements,
governmental authorizations, legal proceedings, orders, absence of certain
changes and events, applicable contracts, no defaults, insurance, environmental
matters, employees, labor relations, compliance, intellectual property assets,
certain payments, relationship with related persons, brokers or finders, receipt
of the financial advisor opinion, Year 2000, products liability, recalls and
information in tender offer documents and proxy statement.
In the Merger Agreement, each of Parent and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things, corporate organization, authority to enter into the Merger Agreement and
the Company Option Agreement, no pending legal or governmental proceeding,
brokers or finders, and information in tender offer documents and proxy
statement.
Operation of the Business. The Merger Agreement provides that after the
date of the Merger Agreement and prior to the Effective Time, and except (i) as
set forth in a schedule to the Merger Agreement or (ii) as agreed to in writing
by Parent, the Company will:
(a) conduct the business of the Company and its subsidiaries only in
the ordinary course of business (including managing the working capital of
the Company and its subsidiaries in accordance with past practice and
custom);
(b) use its best efforts to preserve intact the current business
organization of the Company and its subsidiaries, keep available the
services of the current officers, employees and agents of the Company and
its subsidiaries and maintain the relations and good will with suppliers,
customers, landlords, creditors, employees, agents and others having
business relationships with the Company and its subsidiaries;
(c) inform Parent concerning operational matters of the Company or any
of its subsidiaries of a material nature; and
(d) otherwise report periodically to Parent concerning the status of
the business, operations and finances of the Company and its subsidiaries.
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<PAGE> 21
Negative Covenants. The Merger Agreement provides that after the date of
the Merger Agreement and prior to the Effective Time and except as expressly
contemplated by the Merger Agreement or in a schedule thereto or as agreed to in
writing by Parent:
(a) the Company will not take any action or fail to take any action as
a result of which certain specified changes or events occur or are
reasonably likely to occur;
(b) neither the Company nor its subsidiaries will permit any insurance
policy naming it as a beneficiary or a loss payable payee to be cancelled
or terminated without notice to Parent, except policies providing coverage
for losses not in excess of $50,000;
(c) neither the Company nor any of its subsidiaries will enter into
any contract or transaction relating to the purchase of assets other than
in the ordinary course of business consistent with prior practices;
(d) neither the Company nor any of its subsidiaries will pay,
repurchase, discharge or satisfy any of its claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice, of claims,
liabilities or obligations reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its consolidated subsidiaries;
(e) neither the Company nor any of its subsidiaries will adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or
any of its subsidiaries (other than the Merger);
(f) neither the Company nor any of its subsidiaries will (i) change
any of the accounting methods used by it unless required by GAAP or (ii)
make any election relating to taxes, change any election relating to taxes
already made, adopt any accounting method relating to taxes, change any
accounting method relating to taxes unless required by GAAP, enter into any
closing agreement relating to taxes, settle any claim or assessment
relating to taxes or consent to any claim or assessment relating to taxes
or any waiver of the statute of limitations for any such claim or
assessment;
(g) neither the Company nor any of its subsidiaries will take, or
agree to commit to take, any action that would or is reasonably likely to
result in any of the conditions to the Offer or to the Merger not being
satisfied, or would make any representation or warranty of the Company
contained herein inaccurate in any respect at, or as of any time prior to,
the Effective Time, or that would materially impair the ability of the
Company, Parent, Purchaser or the holders of Shares to consummate the Offer
or the Merger in accordance with the terms of the Merger Agreement or
materially delay such consummation; and
(h) neither the Company nor any of its subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing,
or to authorize, recommend, propose or announce an intention to do any of
the foregoing.
Shareholders' Meetings. Following the acceptance for payment and purchase
of Shares by Purchaser pursuant to the Offer, the Company shall take all action
necessary in accordance with the PBCL, the Company's articles of incorporation
and by-laws (the "By-laws") and the Exchange Act to effect the Articles
Amendment. The Articles Amendment requires the approval of at least 80% of the
voting securities of the Company entitled to vote thereon at a meeting called
for that purpose. If the Minimum Condition is satisfied and Purchaser purchases
at least 80% of the outstanding Shares, Purchaser will be able to effect the
Articles Amendment and delete section 6 from the Company's articles of
incorporation without any action or vote on the part of the other shareholders
of the Company. The Merger Agreement provides that in order to effect the
Articles Amendment, the Company will, in accordance with applicable law, (i)
duly call, give notice of, convene and hold a special meeting of its
shareholders as promptly as practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the approval of the Articles Amendment; (ii)
if required, prepare and file with the Commission a preliminary proxy or
information statement relating to the Articles Amendment and use its best
efforts to obtain and furnish the information required to be included by the
Commission in such proxy
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<PAGE> 22
statement and, after consultation with Parent, respond promptly to any comments
made by the Commission with respect to such proxy statement and cause a
definitive proxy or information statement, including any amendment or supplement
thereto to be mailed to the Company's shareholders; (iii) include in the proxy
statement the recommendation of the Company Board of Directors that shareholders
of the Company vote in favor of the approval of the Articles Amendment; and (iv)
use its best efforts to solicit proxies in favor of the Articles Amendment from
holders of Shares and take all other action necessary or, in the reasonable
opinion of Parent, advisable to secure any vote or consent of shareholders
required by the PBCL, the Company's articles of incorporation and the By-laws to
effect the Articles Amendment. Following approval of the Articles Amendment and
if the Minimum Condition has been satisfied and Purchaser purchases at least 80%
of the outstanding Shares, then at the election of the Purchaser, a short-form
merger could be effected without any action or vote on the part of the other
shareholders of the Company.
In the event that Purchaser does not acquire 80% of the outstanding Shares,
then a shareholder vote will be required to approve the Merger. Pursuant to the
Merger Agreement, if required by applicable law in order to consummate the
Merger, the Company will (i) duly call, give notice of, convene and hold a
special meeting of its shareholders as promptly as practicable following the
acceptance for payment and purchase of Shares by Purchaser pursuant to the Offer
for the purpose of considering and taking action upon the approval of the Merger
and the adoption of the Merger Agreement; (ii) prepare and file with the
Commission a preliminary proxy or information statement relating to the Merger
and the Merger Agreement and use its best efforts to obtain and furnish the
information required to be included by the Commission in the proxy statement
and, after consultation with Parent, to respond promptly to any comments made by
the Commission with respect to the preliminary proxy or information statement
and cause a definitive proxy or information statement, including any amendment
or supplement thereto to be mailed to its shareholders, provided that no
amendment or supplement to such proxy or information statement will be made by
the Company without consultation with Parent and its counsel; (iii) include in
the proxy statement the recommendation of the Company Board of Directors that
shareholders of the Company vote in favor of the approval of the Merger and the
adoption of the Merger Agreement; and (iv) use its best efforts to solicit from
holders of Shares proxies in favor of the Merger and take all other action
necessary or, in the reasonable opinion of Parent, advisable to secure any vote
or consent of shareholders required by the PBCL, the Company's articles of
incorporation and the By-laws to effect the Merger.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that it will not (and the Company will cause the representatives of the Company,
each of its subsidiaries and each affiliate of the Company, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any Person or group (other
than Parent, any of its affiliates or representatives) concerning any proposal
or offer to acquire all or a substantial part of the business or properties of
the Company or any of its subsidiaries or any capital stock of the Company or
any of its subsidiaries, whether by merger, tender offer, exchange offer, sale
of assets or similar transactions involving the Company or any subsidiary,
division or operating or principal business unit of the Company (such proposal
or offer hereinafter referred to as an "Acquisition Proposal"). However, nothing
shall prohibit the Company or the Company Board of Directors from (i) taking and
disclosing to the Company's shareholders a position with respect to a tender or
exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act, or (ii) making such disclosure to the Company's
shareholders as, in the good faith judgment of the Company Board of Directors,
after receiving advice from outside counsel, is required under applicable law,
provided that the Company may not, except as detailed below, withdraw or modify,
or propose to withdraw or modify, its position with respect to the Offer or the
Merger or approve or recommend, or propose to approve or recommend any
Acquisition Proposal, or enter into any agreement with respect to any
Acquisition Proposal. Upon execution of the Merger Agreement, the Company will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
Notwithstanding the foregoing, prior to the time of acceptance of Shares for
payment pursuant to the Offer, the Company may furnish information concerning
its business, properties or assets to any corporation, partnership, person or
other entity or group pursuant to appropriate confidentiality agreements, and
may negotiate and participate in discussions and negotiations with such entity
or group concerning an Acquisition Proposal if: (x) such entity or group has
submitted a Superior Proposal (as defined below); and
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<PAGE> 23
(y) in the opinion of the Company Board of Directors such action is required to
discharge the Company Board of Director's fiduciary duties to the Company's
shareholders under applicable law, determined only after receipt of a written
opinion from independent legal counsel to the Company that the failure to
provide such information or access or to engage in such discussions or
negotiations would cause the Company Board of Directors to violate its fiduciary
duties to the Company's shareholders under applicable law. The term "Superior
Proposal" means an unsolicited bona fide proposal by a Person (as defined in the
Merger Agreement) to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, all of the Shares then outstanding or all
or substantially all of the assets of the Company or to acquire, directly or
indirectly, the Company by merger or consolidation, and otherwise on terms which
the Company Board of Directors determines in good faith to be more favorable to
the Company's shareholders than the Offer and the Merger (based on the advice of
the Company's independent financial advisor that the value of the consideration
provided for in such proposal is superior to the value of the consideration
provided for in the Offer and the Merger), which is not subject to the receipt
of any necessary financing, and which, in the good faith reasonable judgment of
the Company Board of Directors, is reasonably likely to be consummated.
The Company has further agreed to immediately notify Parent of the
existence of any proposal, discussion, negotiation or inquiry received by the
Company, and the Company will immediately communicate to Parent the terms of any
proposal, discussion, negotiation or inquiry which it may receive (and will
immediately provide to Parent copies of any written materials received by the
Company in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry or engaging in
such discussion or negotiation. The Company will promptly provide to Parent any
non-public information concerning the Company provided to any other party which
was not previously provided to Parent. The Company will keep Parent informed of
the status and details of any such Acquisition Proposal and of any amendments or
proposed amendments to any Acquisition Proposal and will promptly (but in no
case later than 24 hours) notify Parent of any determination by the Company
Board of Directors that a Superior Proposal has been made.
Pursuant to the Merger Agreement, except as set forth below, neither the
Company Board of Directors nor any committee thereof will (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by such Board of Directors or any such
committee of the Offer, the Merger Agreement or the Merger, (ii) approve or
recommend or propose to approve or recommend, any Acquisition Proposal or (iii)
enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, prior to the time of acceptance for payment of
Shares pursuant to the Offer, the Company Board of Directors may withdraw or
modify its approval or recommendation of the Offer, the Merger Agreement or the
Merger, approve or recommend a Superior Proposal, or enter into an agreement
with respect to a Superior Proposal, in each case at any time after the fifth
business day following Parent's receipt of written notice from the Company
advising Parent that the Company Board of Directors has received a Superior
Proposal which it intends to accept, specifying the material terms and
conditions of such Superior Proposal, identifying the person making such
Superior Proposal, but only if the Company will have caused its financial and
legal advisors to negotiate with Parent to make such adjustments in the terms
and conditions of the Merger Agreement as would enable the Company to proceed
with the transactions contemplated herein on such adjusted terms.
Insurance and Indemnification. For three (3) years after the Effective
Time, Parent and Purchaser will maintain officers' and directors' liability
insurance covering the persons who are presently covered by the Company's
officers' and directors' liability insurance policies with respect to actions
and omissions occurring prior to the Effective Time, on terms which are not
materially less favorable than the terms of such current insurance in effect for
the Company on the date hereof provided, however, that in no event will Parent
or the surviving corporation in the Merger be required to expend in excess of
120% of the annual premium currently paid by the Company for such coverage; and
provided further, that, if the premium for such coverage exceeds such amount,
Parent or the surviving corporation in the Merger shall purchase a policy with
the greatest coverage available for such 120% of the aggregate annual premiums
paid by the Company in 1999.
For three (3) years after the Effective Time, Parent and Purchaser will
maintain the rights to indemnification of officers and directors provided for in
the By-laws as in effect on the date hereof,
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<PAGE> 24
with respect to indemnification for acts and omissions occurring prior to the
Effective Time, including without limitation, the transactions contemplated by
the Merger Agreement.
Conditions to the Merger. The respective obligation of each party to
effect the Merger will be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any and all of which may be
waived in whole or in part by the Company, Parent or Purchaser, as the case may
be, to the extent permitted by applicable law: (i) the Merger Agreement shall
have been approved and adopted by the requisite vote of the holders of Shares,
if required by applicable law, in order to consummate the Merger; (ii) no
statute, rule or regulation shall have been enacted or promulgated by any
Governmental Body (as defined below) which prohibits the consummation of the
Merger; and there shall be no order or injunction of a court of competent
jurisdiction in effect precluding consummation of the Merger; (iii) Parent,
Purchaser or their affiliates shall have purchased Shares pursuant to the Offer;
and (iv) the applicable waiting period under the HSR Act shall have expired or
been terminated. "Governmental Body" shall mean any: (a) nation, state, county,
city, town, village, district or other jurisdiction of any nature; (b) federal,
state, local, municipal, commonwealth, possession, foreign or other government;
(c) governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official or entity and any court or
other tribunal); or (d) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
The obligations of Parent and Purchaser to consummate the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
the Parent and Purchaser, to the extent permitted by applicable law: (i) all
actions required by the Company with respect to the Company stock option plans,
including obtaining the consent of each holder of a Company Option and amending
the terms of the plans have been taken; (ii) all of the representations and
warranties of the Company shall be true in all material respects on the date of
the Merger Agreement and as of the Effective Time; (iii) the Company shall have
complied in all material respects with its obligations under the terms of the
Merger Agreement; and (iv) the Articles Amendment shall have been approved by
the holders of the requisite number of shares required by the PBCL and the
Company's articles of incorporation.
Termination. The Merger Agreement, and any related transactions may be
terminated or abandoned at any time prior to the Effective Time, whether before
or after shareholder approval:
(a) By the mutual written consent of Parent and the Company; provided,
however, that if Parent shall have a majority of the directors pursuant to
the applicable provisions of the Merger Agreement, such consent of the
Company may only be given if approved by the Independent Directors or if
there are no Independent Directors, then by a unanimous vote of the entire
Company Board of Directors.
(b) By either of Parent or the Company: (i) if (x) the Offer shall
have expired without any Shares being purchased pursuant thereto or (y)
Purchaser shall not have accepted for payment any Shares pursuant to the
Offer by December 31, 1999; provided, however, that the right to terminate
the Merger Agreement under this clause (b) (i) shall not be available to
any party whose failure to fulfill any obligation under the Merger
Agreement has been the cause of, or resulted in, the failure of Purchaser
to purchase the Shares pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Body shall have issued an order, decree or ruling
or taken any other action (which order, decree, ruling or other action the
parties hereto shall use their reasonable efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the acceptance for
payment of, or payment for, Shares pursuant to the Offer or the Merger and
such order, decree, ruling or other action shall have become final and
non-appealable.
(c) By the Company: (i) if Parent, Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to five (5)
business days following the date of the initial public announcement of the
Offer; provided, that the Company may not terminate the Merger Agreement
pursuant to this clause (c) (i) if the Company is at such time in material
breach of its obligations under the Merger Agreement; (ii) in connection
with entering into a definitive agreement in accordance with the applicable
provisions of the Merger Agreement, provided that the Company has complied
with all provisions thereof, as described above under "No Solicitation" and
that the Company makes simultaneous payment to Parent of the Termination
Fee (as defined and discussed below); or (iii) if Parent or
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<PAGE> 25
Purchaser shall have terminated the Offer or the Offer expires without
Parent or Purchaser, as the case may be, purchasing any Shares pursuant
thereto; provided that the Company may not terminate the Merger Agreement
under this clause (c)(iii) if the Company is in material breach of the
Merger Agreement or the Company Option Agreement.
(d) By Parent: (i) if, due to an occurrence, not involving a breach by
Parent or Purchaser of their obligations under the Merger Agreement, which
makes it impossible to satisfy any of the conditions set forth in Section
14 below, Parent, Purchaser, or any of their affiliates shall have failed
to commence the Offer on or prior to the fifth business day following the
date of the initial public announcement of the Offer; (ii) (A) if, prior to
the purchase of Shares by Purchaser pursuant to the Offer, the Company
Board of Directors shall have withdrawn, modified or changed in a manner
adverse to Parent or Purchaser its approval or recommendation of the Offer,
the Merger Agreement or the Merger or shall have recommended an Acquisition
Proposal or (B) there shall have been a material breach under any provision
of the Merger Agreement summarized under "No Solicitation" above, including
but not limited to the Company having executed an agreement in principle or
definitive agreement relating to an Acquisition Proposal or similar
business combination with a person or entity other than Parent, Purchaser
or their affiliates; (iii) if prior to the purchase of Shares pursuant to
the Offer, the Company shall have breached any representation, warranty,
covenant or other agreement contained in the Merger Agreement which would
give rise to the failure of a condition set forth in Section 14 below; (iv)
any Person or "group" (as defined in Section 13(d)(3) of the Exchange Act),
other than Parent, Purchaser or their affiliates or any group of which any
of them is a member, shall have acquired beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
15% or more of the Shares or any such Person or group shall have announced
its intention to acquire 15% or more of the Shares and the Company Board of
Directors has failed to recommend against acceptance of such announcement
(including by taking no position with respect to such announcement); (v) if
the Company receives an Acquisition Proposal from any Person (other than
Parent or Purchaser), and the Company Board of Directors takes a neutral
position or makes no recommendation with respect to such Acquisition
Proposal after a reasonable amount of time (and in no event more than five
(5) business days following such receipt) has elapsed for the Company Board
of Directors to review and make a recommendation with respect to such
Acquisition Proposal; or (vi) if Parent or Purchaser shall have terminated
the Offer in accordance with the terms of the Merger Agreement without
Parent or Purchaser purchasing any Shares thereunder, provided that Parent
or Purchaser is not in material breach of the Merger Agreement.
Termination Fee; Expenses. Pursuant to the Merger Agreement, if (x) the
Company enters into an agreement which accepts or implements a Superior
Proposal; (y) the Company terminates or abandons the Merger Agreement, the
Offer, the Merger and the transactions contemplated thereby (the
"Transactions"), in connection with a termination of the Merger Agreement
pursuant to clause (c)(ii) under the heading "Termination" above; or (z) Parent
terminates or abandons the Transactions pursuant to clauses (d)(ii), (iv) or (v)
under the heading "Termination" above, then the Company will pay to Parent an
amount equal to $2 million (the "Termination Fee"). The Termination Fee will be
paid in same day funds concurrently with the execution of an agreement referred
to in clause (x) above or any termination or abandonment referred to in clauses
(y) or (z) above, whichever occurs first. If the Merger Agreement is terminated
by Parent pursuant to clause (d)(iii) under the heading "Termination" above and
at the time of such termination, (i) the Company has not paid the Termination
Fee, and (ii)Parent is not in material breach of the Merger Agreement, then the
Company will pay to Parent, at the time of termination, an amount equal to
Parent's actual and reasonably documented out-of-pocket fees and expenses
incurred by Parent and Purchaser in connection with the Transactions including,
without limitation, the fees and expenses payable to all banks, investment
banking firms, and other financial institutions and Persons and their respective
agents and counsel incurred in connection with acting as Parent's or Purchaser's
financial advisor with respect to, or arranging or committing to provide or
providing any financing for, the transactions (the "Expenses"). In addition, if
(a) the Merger Agreement is terminated by Parent pursuant to clauses (d)(i),
(iii) or (vi) under the heading "Termination" above and prior thereto there
shall have been publicly announced another Acquisition Proposal, (b) the Merger
Agreement is terminated by the Company pursuant to clause (c)(iii) under the
heading "Termination" above and prior thereto there shall have been publicly
announced another Acquisition
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<PAGE> 26
Proposal or (c) either the Company or Parent terminates or abandons the
Transactions pursuant to clause (b)(i) under the heading "Termination" above and
prior thereto there shall have been publicly announced another Acquisition
Proposal, and, in each such case, at the time of such termination (i) the
Company has not paid the Termination Fee, and (ii) Parent is not in material
breach of the Merger Agreement and within 12 months after such termination the
Company shall enter into an agreement with respect to an Acquisition Proposal,
then concurrently with the consummation of the transactions contemplated by such
agreement the Company will pay an amount equal to the difference between the
Termination Fee and the Expenses, previously paid (if any).
Company Option Agreement
The following is a summary of certain provisions of the Company Option
Agreement. This summary is not a complete description of the terms and
conditions of the Company Option Agreement and is qualified in its entirety by
reference to the full text of the Company Option Agreement, which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Company Option Agreement may
be examined, and copies obtained, in the manner set forth in Sections 8 and 9 of
this Offer to Purchase.
Grant of Option. The Company Option Agreement provides for the grant by
the Company to Parent of an irrevocable option (the "Stock Option") to purchase
up to 19.9% of the number of Shares (the "Option Shares") issued at the time of
the grant of the Stock Option, at a price of $5.50 per Share (the "Exercise
Price"), payable in cash in accordance with the terms of the Company Option
Agreement.
Exercise of Option. The Company Option Agreement provides that the Stock
Option may be exercised by Parent, in whole or in part, at any time or from time
to time after the Merger Agreement becomes terminable pursuant to a Triggering
Event (as defined below). For the purposes of the Company Option Agreement,
"Triggering Event" means any termination of the Merger Agreement which entitles
Parent to the Termination Fee under the Merger Agreement.
Cash Payment. If, at any time during the period commencing on the
occurrence of a Triggering Event and ending on the termination of the Stock
Option in accordance with the provisions of the Company Option Agreement, Parent
sends to the Company a notice indicating Parent's election to exercise its right
(the "Cash-Out Right") described in this paragraph, then the Company shall pay
to Parent, in exchange for the cancellation of the Stock Option with respect to
such number of Option Shares as Parent specifies an amount in cash equal to the
amount by which (A) the highest of (i) the price per share of the Shares at
which a tender offer or exchange offer therefor has been made, (ii) the highest
price per share of the Shares to be paid by any third party pursuant to an
agreement with the Company, (iii) the highest closing price per Share within the
six-month period immediately preceding the date Parent sent to the Company its
notice to exercise its right and (iv) in the event of a sale of all or a
substantial portion of the Company's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of the
Company divided by the number of Shares outstanding at the time of such sale,
exceeds (B) the Exercise Price, multiplied by the number of shares for which the
Stock Option is then exercised.
If the aggregate amount received by Parent from (i) the Termination Fee and
Expenses pursuant to the applicable provisions of Merger Agreement, (ii) amounts
from the sale or other disposition of the Option Shares, and (iii) amounts paid
pursuant to the Company Option Agreement as described in the above paragraph,
are in excess of the sum of (A) $2,000,000 plus (B) the aggregate amounts paid
by Parent to purchase any Option Shares, then Parent, at its sole election,
shall either (1) reduce the number of Option Shares, (2) deliver to the Company
for cancellation Option Shares previously purchased by Parent, (3) pay cash to
the Company or (4) any combination thereof, so that the amount received by
Parent pursuant to clauses (i), (ii) and (iii) above shall not exceed the sum of
the amounts in clauses (A) and (B) above after taking into account the foregoing
actions.
Termination of Option. The Company Option Agreement provides that the
Stock Option will terminate upon the earlier of: (i) the purchase of Shares
pursuant to the Offer; (ii) twelve months after the date on which a Triggering
Event occurs; or (iii) the termination of the Merger Agreement in accordance
with its terms prior to the occurrence of a Triggering Event, unless, in the
case of clauses (ii) and (iii), Parent could
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<PAGE> 27
be entitled to receive the Termination Fee following such time of termination
upon the occurrence of certain events, in which case the Stock Option will not
terminate until the later of (x) twelve months following the time such fees
become payable and (y) the expiration of the period in which Parent has such
right to receive the Termination Fee.
Registration Rights. The Company Option Agreement provides that Parent,
within three years, may, by written notice to the Company, request that the
Company register under the Securities Act all or any part of the Shares
beneficially owned by Parent in order to permit the sale or other disposition of
such securities pursuant to (a) a shelf registration or (b) a bona fide, firm
commitment underwritten public offering.
Adjustment upon Changes in Capitalization. The Company Option Agreement
provides that in the event of any change in the Shares by reason of stock
dividends, stock splits, reverse stock splits, mergers (other than the Merger),
recapitalizations, combinations, exchange of shares or similar transaction, the
type and number of shares or securities subject to the Stock Option, and the
Exercise Price per share, will be adjusted appropriately and proper provision
will be made so that Parent will receive upon exercise of the Stock Option the
number and class of shares or other securities or property that Parent would
have received with respect to the Shares if the Stock Option had been exercised
immediately prior to such event or the record date therefor, as applicable.
The Shareholder Agreements
Concurrently with the execution and delivery of the Merger Agreement, each
of the Director Shareholders entered into a Shareholder Agreement pursuant to
which each Director Shareholder has agreed to tender in the Offer all Shares
beneficially owned by such Director Shareholder (719,764 Shares in the
aggregate) which will result in the Parent and its affiliates beneficially
owning 10.1% of the outstanding Shares.
Each Shareholder Agreement provides that, within five business days of the
commencement of the Offer, each Director Shareholder will tender to the
Depositary all of the Shares required to be tendered pursuant to the applicable
Shareholder Agreement. Subject to applicable law, a Director Shareholder may not
withdraw any Shares so tendered by him; provided, however, that a Director
Shareholder may decline to tender his Shares, or may withdraw Shares tendered by
him, if the Purchaser amends the Offer to (a) reduce the Offer Price to less
than $5.50 per Share in cash; (b) reduce the number of Shares subject to the
Offer; (c) change the form of consideration payable for Shares pursuant to the
Offer; or (d) amend or modify any term or condition of the Offer in a manner
adverse to the shareholders of the Company.
Under the Shareholder Agreements, each Director Shareholder grants to
Parent an option to purchase the Shares beneficially owned by such Director
Shareholder at a purchase price per Share of $5.50 or such higher price as may
be offered in the Offer. Provided all waiting periods under the HSR Act and the
rules and regulations thereunder applicable to the purchase of Shares pursuant
an option shall have expired or been terminated and there shall otherwise be no
legal restriction on the exercise of an option, an option may be exercised by
Parent in whole or in part at any time prior to the date 60 days after the
Expiration Date or termination of the Offer if (a) the Director Shareholder who
granted such option fails to comply with any of his obligations under his
Shareholder Agreement or withdraws a tender of its Shares in violation of the
provisions of his Shareholder Agreement or (b) the Offer is not consummated
because of the failure to satisfy any of the conditions to the Offer described
in Section 14 (other than as a result of any action or inaction on the part of
the Parent or the Purchaser which constitutes a breach of the Merger Agreement).
Under the Shareholder Agreements the Purchaser may allow the Offer to
expire without accepting for payment or paying for any Shares, on the terms set
forth in the Offer, and may allow the option to expire without exercising the
option and purchasing all or any Shares pursuant to such exercise. If all Shares
validly tendered and not withdrawn are not accepted for payment and paid for in
accordance with the terms of the Offer or pursuant to the exercise of the
option, they shall be returned to the applicable Director Shareholders whereupon
they shall continue to be held by such Director Shareholder subject to the terms
of the applicable Shareholder Agreement.
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Each of the Director Shareholders have agreed in the Shareholder Agreements
(a) to revoke any and all previous proxies granted by such Director Shareholders
with respect to the Shares beneficially owned by such Director Shareholders and,
for so long as the Merger Agreement remains in effect; (b) to vote the number of
Shares beneficially owned by such Director Shareholder, in favor of the Articles
Amendment, the Merger Agreement, the Merger and the transactions contemplated
thereby, and (c) to oppose and vote such number of Shares against any
Acquisition Proposal. The Director Shareholders have further agreed not to
solicit, initiate or knowingly encourage any Acquisition Proposal.
Each Shareholder Agreement will expire and be of no further force or effect
if (a) the conditions to the Purchaser's obligations to accept for payment and
pay for Shares pursuant to the Offer shall have been satisfied and the Purchaser
fails to promptly accept for payment and promptly pay for all Shares validly
tendered and not withdrawn pursuant to the Offer or (b) the Purchaser amends the
Offer to (i) reduce the Offer Price to less than $5.50 per Share in cash; (ii)
reduce the number of Shares subject to the Offer; (iii) change the form of
consideration payable for Shares pursuant to the Offer; or (iv) amend or modify
any term or condition of the Offer in a manner adverse to the shareholders of
the Company. Each Shareholder Agreement will also terminate upon the earlier of
(i) the close of business on March 1, 2000 or (ii) the Effective Time.
In the case of the Shareholder Agreement of Mr. Grant R. Meyers, the
parties thereto have acknowledged that a portion of the Shares subject to such
agreement are pledged to various persons and Mr. Meyer's obligations under his
Shareholder Agreement are subject to any applicable restrictions in the pledge
agreements with such persons.
Confidentiality Agreement
The following is a summary of certain provisions of the Confidentiality
Agreement entered into on February 25, 1999 by Parent and the Company (the
"Confidentiality Agreement"). This summary is not a complete description of the
terms and conditions of the Confidentiality Agreement and is qualified in its
entirety by reference to the full text of the Confidentiality Agreement, which
is incorporated by reference and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Confidentiality Agreement
may be examined, and copies obtained, as set forth in Sections 8 and 9 of this
Offer to Purchase.
Pursuant to the terms of the Confidentiality Agreement, the Company and
Parent agreed to provide, among other things, for the confidential treatment of
their discussions regarding a possible business combination and the exchange of
certain confidential information concerning the Company. Parent further agreed
that, without the prior written consent of the Company, Parent would not hire
any employee of the Company for a period of two years beginning as of February
25, 1999.
Employment Agreements
The following is a summary of certain provisions of the employment
agreements entered into on July 12, 1999 between Parent and Steven L. Schneider
(the "Schneider Agreement") and the Company and Calvin J. Monsma (the "Monsma
Agreement" and together with the Schneider Agreement, the "Employment
Agreements"). This summary is not a complete description of the terms and
conditions of the Employment Agreements and is qualified in its entirety by
reference to the full text of the Employment Agreements, which are incorporated
by reference and copies of which have been filed with the Commission as exhibits
to the Schedule 14D-1. The Employment Agreements may be examined, and copies
obtained, as set forth in Sections 8 and 9 of this Offer to Purchase.
As a condition to Parent's entering into the Merger Agreement, on July 12,
1999, Parent and the Company entered into the Employment Agreements.
Schneider Agreement. The Schneider Agreement replaces and supercedes
Schneider's existing employment agreement with the Company, including the change
of control provisions thereof. The effectiveness of the Schneider Agreement is
conditioned upon the consummation of the Offer. Pursuant to the Schneider
Agreement, Schneider will serve as a Senior Vice President of Parent and as
Chairman and Chief Executive
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Officer of Parent's Indoor Air Quality unit until August 31, 2002. The Schneider
Agreement will be automatically extended for an additional year as of August 31,
2002 and on each anniversary thereof unless either party gives written notice of
termination at least 180 days prior to any such date.
The Agreement provides for a base salary of $214,000 per year (the
"Schneider Base Salary"), subject to review and adjustment by the Board of
Directors of Parent or the compensation committee of Parent. Schneider's
compensation will also include an annual discretionary incentive bonus equal to
50% of the Schneider Base Salary based on the performance of the Indoor Air
Quality unit and certain individual performance targets established by the chief
executive officer of Parent. In addition, Schneider will receive as incentive
compensation an amount equal to 1/4% of the total purchase price of
acquisitions of businesses included in the Indoor Air Quality unit.
Pursuant to the Schneider Agreement, at the Effective Time, Schneider will
be granted options to purchase 100,000 shares of the Class A Stock of Parent at
an exercise price equal to the closing price of the Class A Stock on such date.
The Schneider Agreement provides that one third of the options will vest each
year on the anniversary date of the Schneider Agreement.
In the event of Schneider's death, disability or resignation or discharge
by Parent other than a termination without "cause" (as defined in the Schneider
Agreement) or resignation with "good reason" (as defined in the Schneider
Agreement), Parent will pay Schneider: (i) all accrued obligations including the
Schneider Base Salary through the date of termination, and (ii) all accrued
benefits under Parent's retirement, incentive or other benefit plans. In the
event of a termination without cause or resignation with good reason, (i) Parent
will pay Schneider all accrued obligations including the Schneider Base Salary
through the date of termination; (ii) Parent will pay Schneider a lump sum equal
to the balance of the Schneider Base Salary and any incentive compensation then
in effect for the remainder of the term of the Schneider Agreement; (iii) an
amount equal to the maximum contributions that could have been made by Parent on
Schneider's behalf to all defined contribution plans of Parent on the same basis
as in effect on the date of termination of the Schneider Agreement for the
remainder of the term of the Schneider Agreement shall be paid to the trustees
of such plan(s); however, in the event any such plan(s) will not allow such
payment, Parent will pay to Schneider a lump sum in cash equal to the total
amount not accepted by such plan(s); (iv) Schneider shall be entitled to receive
all benefits accrued by him under the retirement, incentive or other benefit
plans in which Schneider was participating; (v) Parent will pay all premiums
under COBRA for Schneider and his dependents if they elect coverage and (vi) in
the event Schneider is so terminated or resigns during the initial three year
term of the Schneider Agreement, any unvested Parent stock options granted
Schneider pursuant to the Schneider Agreement shall vest immediately and
Schneider shall have 30 days to exercise such options.
Monsma Agreement. The Monsma Agreement replaces and supercedes Monsma's
existing change of control agreement with the Company. The effectiveness of the
Monsma Agreement is conditioned upon the consummation of the Offer. Pursuant to
the Monsma Agreement, Monsma will serve as a Vice President and Chief Financial
Officer of the Company until August 31, 2002. The Monsma Agreement will be
automatically extended for an additional year as of August 31, 2002 and on each
anniversary thereof unless either party gives written notice of termination at
least 90 days prior to any such date.
The Agreement provides for a base salary of $113,400 per year (the "Monsma
Base Salary"), subject to review and adjustment by the Company. Monsma's
compensation will also include an annual discretionary bonus equal to 35% of the
Monsma Base Salary which will be based on the performance of the Company and
certain individual performance targets established by the chief executive
officer of Parent's Indoor Air Quality unit. In addition, Monsma will receive as
incentive compensation an amount equal to 1/8% of the total purchase price of
acquisitions of businesses by the Company.
Pursuant to the Monsma Agreement, at the Effective Time, Monsma will be
granted options to purchase 25,000 shares of the Class A Stock of Parent at an
exercise price equal to the closing price of the Class A Stock on such date. The
Monsma Agreement provides that one third of the options will vest each year on
the anniversary date of the Monsma Agreement.
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In the event of Monsma's death, disability or resignation or discharge by
the Company other than a termination without "cause" (as defined in the Monsma
Agreement) or resignation with good reason (as defined in the Monsma Agreement),
the Company will pay Monsma: (i) all accrued obligations including the Monsma
Base Salary through the date of termination, and (ii) all accrued benefits under
the Company's retirement, incentive or other benefit plans. In the event of a
termination without cause or resignation with good reason, (i) the Company will
pay Monsma all accrued obligations including the Monsma Base Salary through the
date of termination; (ii) the Company will pay Monsma a lump sum equal to the
balance of the Monsma Base Salary and any incentive compensation then in effect
for the remainder of the term of the Monsma Agreement; (iii) an amount equal to
the maximum contributions that could have been made by the Company on Monsma's
behalf to all defined contribution plans of the Company on the same basis as in
effect on of the date of termination of the Monsma Agreement for the remainder
of the term of the Monsma Agreement shall be paid to the trustees of such
plan(s); however, in the event any such plan(s) will not allow such payment, the
Company will pay to Monsma a lump sum in cash equal to the total amount not
acceptable by such plan(s); (iv) Monsma shall be entitled to receive all
benefits accrued by him under the retirement, incentive or other benefit plans
in which Monsma was participating; (v) the Company will pay all premiums under
COBRA for Monsma and his dependents if they elect coverage and (vi) in the event
Monsma is so terminated or resigns during the initial three year term of the
Monsma Agreement, any unvested Parent stock options granted Monsma pursuant to
the Monsma Agreement shall vest immediately and Monsma shall have 30 days to
exercise such options.
12. PLANS FOR THE COMPANY; OTHER MATTERS.
Plans for the Company
If, as and to the extent that Purchaser acquires control of the Company,
Parent and Purchaser intend to conduct a detailed review of the Company and its
assets, corporate structure, capitalization, operations, properties, policies,
management and personnel and to consider and determine what, if any, changes
would be desirable in light of the circumstances which then exist. Such changes
could include, among other things, changes in the Company's business, corporate
structure, articles of incorporation, By-laws, capitalization, management or
dividend policy.
Following consummation of the Merger, Parent currently intends to effect a
merger (the "Reincorporation Merger") of the Company with a subsidiary of Parent
that is incorporated in the State of Delaware as a result of which the Company
will be incorporated in the State of Delaware.
The Merger Agreement provides that, upon the purchase of and payment for
any Shares by Parent or any of its subsidiaries pursuant to the Offer, Parent
shall be entitled to designate such number of directors, rounded up to the next
whole number, on the Company Board of Directors to the product of the total
number of directors on such Company Board of Directors (giving effect to the
directors designated by Parent pursuant to this sentence) multiplied by an
amount of which the numerator is the number of Shares which Parent and its
subsidiaries own and the denominator is the total number of Shares outstanding.
See Section 11. Assuming the Minimum Condition is satisfied and Purchaser
purchases Shares pursuant to the Offer, Parent intends to promptly exercise such
rights by causing the Company to elect to the Company Board of Directors Messrs.
Sal Giordano, Jr., Robert Laurent, Jr., Michael Giordano, Kent Hanson, Steven
Schneider and Calvin Monsma. Information with respect to such directors is
contained in Schedule I hereto and in the Information Statement required by Rule
14f-1 under the Exchange Act included as Annex I to the Schedule 14D-9. The
Merger Agreement provides that the directors of Purchaser and the officers of
the Company at the Effective Time of the Merger will, from and after the
Effective Time, be the directors and officers, respectively, of the Surviving
Corporation.
Purchaser or an affiliate of Purchaser may, following the consummation or
termination of the Offer, seek to acquire additional Shares through open market
purchases, privately negotiated transactions, a tender offer or exchange offer
or otherwise, upon such terms and at such prices as it shall determine, which
may be more or less than the price to be paid pursuant to the Offer. Purchaser
and its affiliates also reserve the right to dispose of any or all Shares
acquired by them, subject to the terms of the Merger Agreement.
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Except as disclosed in this Offer to Purchase, and except for the
Reincorporation Merger and as may be effected in connection with the integration
of operations referred to above, neither Parent nor Purchaser has any present
plans or proposals that would result in an extraordinary corporate transaction,
such as a merger, reorganization, liquidation, relocation of operations, or sale
or transfer of a material amount of assets, involving the Company or any of its
subsidiaries, or any material changes in the Company's capitalization, corporate
structure, business or composition of its management or the Company Board of
Directors.
Appraisal Rights. Notwithstanding anything in the Merger Agreement to the
contrary, any issued and outstanding Shares held by persons who object to the
Merger and comply with all the provisions of the PBCL concerning the right of
holders of Shares to dissent from the Merger and require appraisal of their
Shares ("Dissenting Shareholder") will not be converted into the right to
receive the Offer Price, without interest, pursuant to the Merger Agreement, but
will be converted into the right to receive such consideration as may be
determined to be due to such Dissenting Shareholder pursuant to the PBCL;
provided, however, that the Shares outstanding immediately prior to the
Effective Time and held by a Dissenting Shareholder who will, after the
Effective Time, withdraw his demand for appraisal or lose his right of
appraisal, in either case pursuant to the PBCL, will be deemed to be converted
as of the Effective Time into the right to receive the Offer Price, payable to
the holder thereof, without interest. The Company will give Parent (i) prompt
notice of any written demands for appraisal of the Shares received by the
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to any such demands. The Company will not, without the prior written
consent of Parent, voluntarily settle or compromise any such demands.
In addition to the appraisal rights discussed above, shareholders also have
certain rights ("Subchapter 25E Rights") under Subchapter 25E of the PBCL
("Subchapter 25E") which will become applicable prior to the Effective Time in
the event that the Purchaser (or a group of related persons, or any other person
or group of related persons) were to acquire Shares representing at least 20% of
the voting power of the Company, in connection with the Offer or otherwise (a
"Control Transaction"). In such event, shareholders of the Company would have
the right to demand "fair value" of such shareholders' Shares and to be paid
such fair value upon compliance with the requirements of Subchapter 25E. Under
Subchapter 25E, "fair value" may not be less than the highest price per share
paid by the controlling person or group at any time during the 90-day period
ending on and including the date of the Control Transaction, plus an increment,
if any, representing any value, including, without limitation, any proportion of
value payable for acquisition of control of the Company, that may not be
reflected in such price. Purchaser believes that the Offer Price represents fair
value of the Shares within the meaning of Subchapter 25E. Subchapter 25E Rights
would attach immediately upon consummation of a Control Transaction and require
that any shareholder seeking such appraisal must make a demand for fair value
within a reasonable time after the notice to shareholders that a Control
Transaction has occurred is given by the controlling person or group in
accordance with Subchapter 25E, which time period may be specified in such
notice, as well as comply with the other procedures of Subchapter 25E.
Subchapter 25E Rights are available only with respect to shares of a registered
corporation held by a shareholder after the occurrence of a Control Transaction;
accordingly, Subchapter 25E Rights would not be available with respect to any
Shares tendered in the Offer and accepted for payment. The foregoing summary of
rights under Subchapter 25E is qualified in its entirety by reference to the
full text of Subchapter 25E, which is attached hereto as Annex A.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING SHAREHOLDERS UNDER THE
PBCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY SHAREHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE
UNDER THE PBCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE PBCL.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer in which
Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes, however, that Rule 13e-3 will not be applicable to the Merger because
it is anticipated that the Merger would be effected within one year following
consummation of the Offer and in the Merger shareholders would receive the same
price per Share as paid in
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the Offer. If Rule 13e-3 were applicable to the Merger, it would require, among
other things, that certain financial information concerning the Company, and
certain information relating to the fairness of the proposed transaction and the
consideration offered to minority shareholders in such a transaction, be filed
with the Commission and disclosed to minority shareholders prior to consummation
of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Merger Agreement provides that from the date of the
execution of the Merger Agreement until the Effective Time, without the prior
written consent of Parent, the Company will not: (a) change the authorized or
issued capital stock of the Company or any subsidiary of the Company; (b) grant
any stock option or right to purchase shares of capital stock of the Company or
any subsidiary of the Company; (c) issue any security convertible into such
capital stock; (d) grant any registration rights with respect to such capital
stock; (e) purchase, redeem, retire or otherwise acquire any shares of any such
capital stock (nor shall any subsidiary of the Company do so); or (f) declare or
pay any dividend or other distribution or payment in respect of shares of any
such capital stock.
14. CONDITIONS TO THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) Purchaser's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions of the Merger Agreement),
Purchaser 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 Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and may delay the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any tendered Shares, and may terminate or
amend the Offer as to any Shares not then paid for, if (i) any applicable
waiting period under the HSR Act has not expired or terminated, (ii) the Minimum
Condition has not been satisfied, or (iii) at any time on or after the date of
the Merger Agreement and before the Expiration Date, any of the following events
shall occur or shall be determined by Purchaser to have occurred:
(a)(i) there shall be threatened, instituted or pending any suit,
action or proceeding by any Governmental Body or (ii) there shall be
instituted or pending any suit, action or proceeding before any court which
in the good faith judgement of Parent and Purchaser is likely to result in
any change or effect (or any development that, insofar as can reasonably be
foreseen, is likely to result in any change or effect) that is materially
adverse to the business, properties, assets, prospects, financial condition
or results of operations of the Company and its subsidiaries taken as a
whole or the ability of the Company to consummate the Merger Agreement, the
Company Option Agreement, the Offer, the acquisition of shares pursuant to
the Offer, the Shareholder Agreements, the Company Option Agreement and the
Merger (a "Material Adverse Effect" or "Material Adverse Change"), in each
case of (i) or (ii), (A) seeking to prohibit or impose any limitations on
Parent's or Purchaser's ownership or operation (or that of any of their
respective subsidiaries or Affiliates) of all or a material portion of
their or the Company's businesses or assets, or to compel Parent or
Purchaser or their respective subsidiaries and Affiliates to dispose of or
hold separate any material portion of the business or assets of the Company
or Parent and their respective subsidiaries, in each case taken as a whole,
(B) challenging the acquisition by Parent or Purchaser of any Shares under
the Offer or pursuant to the Company Option Agreement or the Shareholder
Agreements seeking to restrain, prohibit or delay the making or
consummation of the Offer or the Merger or the performance of any of the
other transactions contemplated by the Merger Agreement, the Company Option
Agreement or the Shareholder Agreements, or seeking to obtain from the
Company, Parent or Purchaser any damages that are material in relation to
the Company and its subsidiaries taken as a whole, (C) seeking to impose
material limitations on the ability of Parent or Purchaser, or rendering
Parent or Purchaser unable, to accept for payment, pay for or purchase some
or all of the Shares pursuant to the Offer and the Merger, (D) seeking to
impose limitations on the ability of Purchaser or Parent effectively to
exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's
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shareholders, (E) seeking to restrict any future business activity by
Parent or Purchaser, including, without limitation, requiring the prior
consent of any person or entity (including any Governmental Body) to future
transactions by Parent or Purchaser, or (F) which otherwise is reasonably
likely to have a Material Adverse Effect on the Company or, as a result of
the Transactions, Parent and its subsidiaries; or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Governmental Body, 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 (A) through (F) of paragraph (a) above; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the NYSE or on the Nasdaq
(excluding (A) suspensions or limitations resulting solely from physical
damage or interference with such exchanges not related to market conditions
and (B) limitations on price fluctuations in effect on the date of the
Merger Agreement), or (ii) a declaration of a banking moratorium by federal
or state authorities or any suspension of payments in respect of banks in
the United States (whether or not mandatory) imposed by federal or state
authorities on the extension of credit by lending institutions in the
United States; or
(d) there shall have occurred any Material Adverse Change (or any
development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any Material Adverse Change); or
(e) the Company Board of Directors or any committee thereof (i) shall
have withdrawn, modified or changed in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, the Merger Agreement
or the Merger, (ii) shall have recommended the approval or acceptance of an
Acquisition Proposal from, or similar business combination with, a person
or entity other than Parent, Purchaser or their Affiliates, (iii) shall
have executed an agreement in principle or definitive agreement relating to
an Acquisition Proposal from, or similar business combination with, a
person or entity other than Parent, Purchaser or their Affiliates or (iv)
upon request of Purchaser, shall fail to reaffirm its approval or
recommendation of the Offer, the Merger Agreement, or the Merger; or
(f) the Company shall have breached or failed to perform any of its
agreements under the Company Option Agreement or breached any of its
representations and warranties in such agreement or such agreement shall
not be valid, binding and enforceable, except for such breaches or failures
or failures to be valid, binding and enforceable that do not materially and
adversely affect the benefits expected to be received by Parent and
Purchaser under the Merger Agreement or the Company Option Agreement; or
(g) any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any
group of which any of them is a member, shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of 15% or more of the Shares or any such Person or group
shall have announced its intention to acquire 15% or more of the Shares and
the Company Board of Directors has failed to recommend against acceptance
of such announcement (including by taking no position with respect to such
announcement); or
(h) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each
case as of the date of the Merger Agreement and as of the scheduled
expiration of the Offer; or
(i) the Company shall have breached or failed to perform or to comply
with any obligation, agreement or covenant of the Company to be performed
or complied with by it under the Merger Agreement; except, in each case
where the failure to perform or comply with such obligations, agreements or
covenants, does not, individually or in the aggregate, have a Material
Adverse Effect on the Company or a Material Adverse Effect on the ability
of the Company to consummate the Offer or the Merger; or
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(j) all consents necessary to the consummation of the Offer or the
Merger including, without limitation, consents from parties to loans,
contracts, leases or other agreements and consents from governmental
agencies, whether federal, state or local shall not have been obtained,
other than consents the failure to obtain which would not have a Material
Adverse Effect; or
(k) the Employment Agreements shall not be in full force and effect
and either Schneider or Monsma shall have denied or disaffirmed his
obligation under his respective Employment Agreement; and
(l) the Merger Agreement shall have been terminated in accordance with
its terms;
which in the reasonable good faith judgment of Parent or Purchaser, in any such
case, and regardless of the circumstances (including any action or inaction by
Parent or Purchaser) giving rise to such condition makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payment for
Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser,
may be waived by Parent or Purchaser, in whole or in part, at any time and from
time to time in the sole discretion of Parent or Purchaser. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS.
General. Except as described in this Section 15, based on information
provided by the Company, neither the Company, Purchaser nor Parent is aware of
any license or regulatory permit that appears to be material to the business of
the Company and its subsidiaries, taken as a whole, that might be adversely
affected by the acquisition of Shares by Parent or Purchaser pursuant to the
Offer, the Merger or otherwise or any approval or other action by any
governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required prior to the acquisition of Shares by Purchaser
pursuant to the Offer, the Merger or otherwise. Should any such approval or
other action be required, Purchaser and Parent presently contemplate that such
approval or other action will be sought, except as described below under "State
Takeover Laws." While, except as otherwise described in this Offer to Purchase,
Purchaser does not presently intend to delay the acceptance for payment of, or
payment for, Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of, or other substantial
conditions complied with, in the event that such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action. If certain types of adverse action are taken with respect to the
matters discussed below, Purchaser could decline to accept for payment, or pay
for, any Shares tendered. See Section 14 for certain conditions to the Offer,
including conditions with respect to governmental actions.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquirer from voting on the affairs of a target corporation without prior
approval of the remaining shareholders, provided that such laws were applicable
only under certain conditions.
The Pennsylvania Takeover Disclosure Law ("PTDL") purports to regulate
certain attempts to acquire a corporation which (1) is organized under the laws
of Pennsylvania or (2) has its principal place of business and substantial
assets located in Pennsylvania. In Crane Co. v. Lam, 509 F. Supp. 782 (E.D. Pa.
1981), the
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<PAGE> 35
United States District Court for the Eastern District of Pennsylvania
preliminarily enjoined, on grounds arising under the United States Constitution,
enforcement of at least the portion of the PTDL involving the pre-offer waiting
period thereunder. Section 8(a) of the PTDL provides an exemption for any offer
to purchase securities as to which the board of directors of the target company
recommends acceptance to its shareholders, if at the time such recommendation is
first communicated to shareholders the offeror files with the Pennsylvania
Securities Commission ("PSC") a copy of the Schedule 14D-1 and certain other
information and materials, including an undertaking to notify security holders
of the target company that a notice has been filed with the PSC which contains
substantial additional information about the offering and which is available for
inspection at the PSC's principal office during business hours. The Company
Board of Directors by the unanimous vote of those present at the meeting has
approved the transactions contemplated by the Merger Agreement and recommended
acceptance of the Offer and the Merger to the Company's shareholders. While
reserving and not waiving its right to challenge the validity of the PTDL or its
applicability to the Offer, Purchaser is making a Section 8(a) filing with the
PSC in order to qualify for the exemption from the PTDL. Pursuant to Section 10
of the PTDL, Purchaser will submit the appropriate $100 notice filing fee along
with the Section 8(a) filing. Additional information about the Offer has been
filed with the PSC pursuant to the PTDL and is available for inspection at the
of the PSC office at Eastgate Office Building, 1010 North 7th Street,
Harrisburg, PA 17102-1410, during business hours.
Chapter 25 of the PBCL contains other provisions relating generally to
takeovers and acquisitions of certain publicly owned Pennsylvania corporations
such as the Company that have a class or series of shares entitled to vote
generally in the election of directors of the Corporation registered under the
Exchange Act (a "registered corporation"). The following discussion is a general
and highly abbreviated summary of certain features of such chapter, is not
intended to be complete or to completely address potentially applicable
exceptions or exemptions, and is qualified in its entirety by reference to
Chapter 25 of the PBCL.
In addition to other provisions not applicable to the Offer or the Merger,
Subchapter 25D of the PBCL includes provisions requiring approval of a merger of
a registered corporation with an "interested shareholder" in which the
"interested shareholder" is treated differently from other shareholders, by the
affirmative vote of the shareholders entitled to cast at least a majority of the
votes that all shareholders other than the interested shareholder are entitled
to cast with respect to the transaction without counting the votes of the
interested shareholder. This disinterested shareholder approval requirement is
not applicable to a transaction (i) approved by a majority of disinterested
directors, (ii) in which the consideration to be received by shareholders is not
less than the highest amount paid by the interested shareholder in acquiring his
shares, or (iii) effected without submitting the merger to a vote of
shareholders as permitted in Section 1924(b)(1)(ii) of the PBCL. Purchaser
currently believes that the disinterested shareholder approval requirement of
Subchapter 25D will not be applicable to the contemplated Merger because of
prior approval of the disinterested members of the Company Board of Directors.
Shareholders will also have certain rights under Subchapter 25E of the PBCL
which will become applicable prior to the Effective Time in the event of a
Control Transaction. In such event, shareholders of the Company would have the
right to demand "fair value" of such shareholders' Shares and to be paid such
fair value upon compliance with the requirements of Subchapter 25E. Under
Subchapter 25E, "fair value" may not be less than the highest price per share
paid by the controlling person or group at any time during the 90-day period
ending on and including the date of the Control Transaction, plus an increment,
if any, representing any value, including, without limitation, any proportion of
value payable for acquisition of control of the Company, that may not be
reflected in such price. Purchaser believes that the Offer Price represents fair
value of the Shares within the meaning of Subchapter 25E. Subchapter 25E Rights
would attach immediately upon consummation of a Control Transaction and require
that any shareholder seeking such appraisal must make a demand for fair value
within a reasonable time after the notice to shareholders that a Control
Transaction has occurred is given by the controlling person or group in
accordance with Subchapter 25E, which time period may be specified in such
notice, as well as comply with the other procedures of Subchapter 25E.
Subchapter 25E Rights are available only with respect to shares of a registered
corporation held by a shareholder after the occurrence of a Control Transaction;
accordingly, Subchapter 25E Rights would not be available with respect to any
Shares tendered in the Offer and accepted for payment. The foregoing summary of
rights under
33
<PAGE> 36
Subchapter 25E is qualified in its entirety by reference to the full text of
Subchapter 25E, which is attached hereto as Annex A.
Subchapter 25F of the PBCL prohibits under certain circumstances certain
"business combinations," including mergers and sales or pledges of significant
assets, of a registered corporation with an "interested shareholder" for a
period of five years. Subchapter 25F exempts, among other things, business
combinations approved by the board of directors prior to a shareholder becoming
an interested shareholder and transactions with interested shareholders who
beneficially owned shares with at least 15% of the total voting power of a
corporation on March 23, 1988 and remain so. The Company has represented to the
Purchaser that Subchapter 25F is not applicable to the contemplated Merger.
Subchapter 25G of the PBCL, relating to "control-share acquisitions,"
prevents under certain circumstances the owner of a control-share block of
shares of a registered corporation from voting such shares unless a majority of
both the "disinterested" shares and all voting shares approve such voting
rights. Failure to obtain such approval may result in a forced sale by the
control-share owner of the control-share block to the corporation at a possible
loss. The Company has opted out of Subchapter 25G in the By-laws and has
represented to the Purchaser that Subchapter 25G is not applicable to the
transactions contemplated by the Merger Agreement.
Subchapter 25H of the PBCL, relating to disgorgement by certain controlling
shareholders of a registered corporation following attempts to acquire control,
provides that under certain circumstances any profit realized by a controlling
person from the disposition of shares of the corporation to any person
(including to the corporation under Subchapter 25G or otherwise) will be
recoverable by the corporation. The Company has opted out of Subchapter 25H in
the By-laws and has represented to the Purchaser that Subchapter 25H is not
applicable to the transactions contemplated by the Merger Agreement.
Subchapter 25I of the PBCL entitles "eligible employees" of a registered
corporation to a lump sum payment of severance compensation under certain
circumstances if the employee is terminated, other than for willful misconduct,
within 90 days before voting rights lost as a result of a control-share
acquisition are restored by a vote of disinterested shareholders. Subchapter 25J
of the PBCL provides protection against termination or impairment under certain
circumstances of "covered labor contracts" of a registered corporation as a
result of a "business combination transaction" if the business operation to
which the covered labor contract relates was owned by the registered corporation
at the time voting rights are restored by shareholder vote after a control-share
acquisition. The Company has represented to Purchaser that Subchapters 25I and
25J are not applicable to the transactions contemplated by the Merger Agreement.
Section 2504 of the PBCL provides that the applicability of Chapter 25 of
the PBCL to a registered corporation having a class or series of shares entitled
to vote generally in the election of directors registered under the Exchange Act
or otherwise satisfying the definition of a registered corporation under Section
2502(l) of the PBCL shall terminate immediately upon the termination of the
status of the corporation as a registered corporation. Purchaser intends to seek
to cause the Company to terminate the registration of the Shares under the
Exchange Act as soon after consummation of the Offer as the requirements for
termination of the registration of the Shares are met.
Except for the filing pursuant to Section 8(a) of the PTDL described above,
neither Purchaser nor Parent has currently complied with any state takeover
statute or regulation; however Purchaser intends to comply with Subchapter 25E
of the PBCL to the extent it is applicable upon consummation of the Offer.
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer or the Merger and nothing in this
Offer to Purchase or any action taken in connection with the Offer or the Merger
is intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer or the
Merger, Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and Purchaser might be
unable to accept for payment or pay for Shares tendered pursuant to the Offer,
or be delayed in consummating the Offer or the Merger. In such case, Purchaser
may not be obligated to accept for payment or pay for any Shares tendered
pursuant to the Offer.
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<PAGE> 37
Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "DOJ") and the Federal Trade Commission (the "FTC")
and certain waiting period requirements have been satisfied.
The waiting period under the HSR Act with respect to the Offer will expire
at 11:59 p.m., New York City time, on the fifteenth day after the date Parent's
form was filed unless early termination of the waiting period is granted.
However, the DOJ or the FTC may extend the waiting period by requesting
additional information or documentary material from Parent or the Company. If
such a request is made, such waiting period will expire at 11:59 p.m., New York
City time, on the tenth day after substantial compliance by Parent with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the DOJ or the FTC raises
substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. The Purchaser
will not accept for payment Shares tendered pursuant to the Offer unless and
until the waiting period requirements imposed by the HSR Act with respect to the
Offer have been satisfied. See Section 14.
The FTC and the DOJ frequently scrutinize the legality under the Antitrust
Laws of transactions such as Purchaser's acquisition of Shares pursuant to the
Offer and the Merger. At any time before or after Purchaser's acquisition of
Shares, the DOJ or the FTC could take such action under the Antitrust Laws as it
deems necessary or desirable in the public interest, including seeking to enjoin
the acquisition of Shares pursuant to the Offer or otherwise seeking divestiture
of Shares acquired by Purchaser or divestiture of substantial assets of Parent
or its subsidiaries. Private parties, as well as state governments, may also
bring legal action under the Antitrust Laws under certain circumstances. Based
upon an examination of information provided by the Company relating to the
businesses in which Parent and the Company are engaged, Parent and Purchaser
believe that the acquisition of Shares by Purchaser will not violate the
Antitrust Laws. Nevertheless, there can be no assurance that a challenge to the
Offer or other acquisition of Shares by Purchaser on antitrust grounds will not
be made or, if such a challenge is made, of the result. See Section 14 for
certain conditions to the Offer, including conditions with respect to litigation
and certain government actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade.
16. FEES AND EXPENSES.
TM Capital is serving as Dealer Manager in connection with the Offer and
has provided certain financial advisory services to Purchaser and Parent in
connection with the Offer and the Merger pursuant to an engagement letter, dated
March 3, 1999 (the "Engagement Letter") and a Dealer Manager Agreement, dated
July 15, 1999 (the "Dealer Manager Agreement"). Pursuant to the Engagement
Letter, Parent has agreed to pay a fee of approximately $525,000 for a tender
offer or merger between Parent and the Company be consummated, $100,000 of which
is payable upon the initiation of the Offer. Parent has also agreed to reimburse
TM Capital for its reasonable out-of-pocket expenses, including the legal fees
incurred in connection with its engagement; however, such expenses shall not
exceed $10,000 without prior notification of Parent. Parent has agreed to
indemnify TM Capital and certain related persons against certain liabilities and
expenses, including certain liabilities under the federal securities laws.
Purchaser and Parent have retained DF King to serve as the Information
Agent and American Stock Transfer and Trust Company to serve as the Depositary
in connection with the Offer. The Information Agent
35
<PAGE> 38
may contact holders of Shares by personal interview, mail, telephone, telex,
telegraph and other methods of electronic communication and may request brokers,
dealers, commercial banks, trust companies and other nominees to forward the
Offer materials to beneficial holders. The Information Agent and the Depositary
will each receive reasonable and customary compensation for their services, be
reimbursed for certain reasonable out-of-pocket expenses and be indemnified
against certain liabilities in connection with their services, including certain
liabilities and expenses under the federal securities laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees
or commissions to any broker or dealer or other person or entity in connection
with the solicitation of tenders of Shares pursuant to the Offer. Brokers,
dealers, banks and trust companies will be reimbursed by Purchaser for customary
mailing and handling expenses incurred by them in forwarding the Offer materials
to their customers.
17. MISCELLANEOUS.
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of the Shares pursuant thereto, Purchaser
shall make a good faith effort to comply with such statute or seek to have such
statute declared inapplicable to the Offer. If, after such good faith effort,
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) holders of Shares in such
state. In any jurisdiction the securities, blue sky or other laws of which
require the Offer to be made by a licenced broker or dealer, the Offer is being
made on behalf of the Purchaser by the Dealer Manager or one or more registered
brokers or dealers licenced under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the Commission the Schedule 14D-9 pursuant
to Rule 14d-9 under the Exchange Act, setting forth its recommendation with
respect to the Offer and the reasons for its recommendation and furnishing
certain additional related information. Such Schedules and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable in the same manner set forth in Sections 8 and 9 of this
Offer to Purchase (except that such material will not be available at the
regional offices of the Commission).
TI Acquisition Corp.
July 15, 1999
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SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Parent. Unless otherwise indicated, each such
person is a citizen of the United States of America and the business address of
each such person is c/o Fedders Corporation, 505 Martinsville Road, Liberty
Corner, NJ 07983. Unless otherwise indicated, each occupation set forth opposite
an individual's name refers to employment with Parent. Unless otherwise
indicated, each such person has held his or her present occupation as set forth
below, or has been an executive officer at Parent for the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
SALVATORE GIORDANO Mr. Giordano has been Chairman of the Board of Parent
Director since 1945 since 1945.
SAL GIORDANO, JR. Mr. Giordano, Jr. has been Vice Chairman, President and
Director since 1965 Chief Executive Officer of Parent since 1988.
WILLIAM J. BRENNAN Mr. Brennan has been a director of Parent from 1980 to
Director since 1980 1987. He was reelected as a director in 1989. Mr. Brennan
is Chairman of Parent's Finance Committee and a member of
the Audit and Compensation Committees. Mr. Brennan is also
a director of CSM Environmental Systems, Inc.
DAVID C. CHANG Dr. Chang has been a director of Parent since 1998. Dr.
Director since 1998 Chang has been President of the Polytechnic University for
the last four years. Prior to that, Dr. Chang was Dean of
the College of Engineering and Applied Sciences at Arizona
State University. Dr. Chang is a member of the Finance and
Nominating Committees.
JOSEPH GIORDANO Mr. Giordano has been a director of Parent since 1961. Mr.
Director since 1961 Giordano was a Senior Vice President of Parent until his
retirement on August 31, 1992, and President of NYCOR,
Inc. until its merger into Parent on August 13, 1996. Mr.
Giordano is a member of the Executive and Finance
Committees.
C.A. KEEN Mr. Keen has been a director of Parent since 1996. Mr.
Director since 1996 Keen was a Vice President of Parent for more than 20 years
until his retirement in August 1992, with responsibilities
in a number of areas during that time, including
marketing, treasury and international sales and sourcing.
He was also a director of NYCOR, Inc. until its merger
into Parent on August 13, 1996.
HOWARD S. MODLIN Mr. Modlin is a member of the law firm of Weisman, Cellar,
Director since 1977 Spett & Modlin, P.C., which renders legal services to
Parent from time to time. Mr. Modlin is also a director of
General DataComm Industries, Inc. and Trans-Lux
Corporation. Mr. Modlin is Chairman of the Compensation
Committee and a member of the Executive and Audit
Committees.
</TABLE>
I-1
<PAGE> 40
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
CLARENCE R. MOLL Dr. Moll is President Emeritus of Widener University. Dr.
Director since 1967 Moll has been a director of Parent since 1967. Dr. Moll is
also a director of Ironworkers' Savings Bank. Dr. Moll is
Chairman of the Audit Committee.
S.A. MUSCARNERA Mr. Muscarnera has been a director of Parent since 1982.
Director since 1982 Mr. Muscarnera was Senior Vice President and Secretary of
Parent until his retirement on August 31, 1996. Mr.
Muscarnera served in various capacities with Parent for
over 39 years, including human resources and legal. Mr.
Muscarnera is a member of the Audit and Finance
Committees.
ANTHONY E. PULEO Mr. Puleo has been a director of Parent since 1994. Mr.
Director since 1994 Puleo's principal occupation for the past two and one half
years has been as President of Puleo Tree Co., an importer
of Christmas items and garden furniture. Prior to that,
Mr. Puleo was President of Boulderwood Corporation. Mr.
Puleo is a member of the Compensation and Nominating
Committees.
ROBERT L. LAURENT, JR. Mr. Laurent, Jr. has been Executive Vice President,
Acquisitions and Alliances of Parent since January 1999.
Prior to that he had been Executive Vice President,
Finance and Administration and Chief Financial Officer of
Parent since 1993. Mr. Laurent joined Parent in 1980 and
has served as internal auditor, plant controller,
corporate controller and Vice President, Finance.
MICHAEL GIORDANO Mr. Giordano has been Vice President and Chief Financial
Officer of Fedders North America, Inc. and Parent since
July 1, 1999. Mr. Giordano also served as Senior Vice
President of Fedders International, Inc. from 1998 until
being elected to his current position. Mr. Giordano joined
the Fedders organization in 1990 and has held various
positions with Parent and certain subsidiaries including:
Assistant Director of Sourcing, Sales Manager, Director of
Sales and Marketing, Vice President of Sales and Managing
Director of the Singapore office of Fedders International,
Inc.
MICHAEL B. ETTER Mr. Etter has been Chairman and Chief Executive Officer of
the air conditioning unit of Parent since May 1, 1999. Mr.
Etter is also a Senior Vice President of Parent. Mr. Etter
rejoined Fedders North America, Inc. in 1977 after a brief
break in service and has served in various capacities with
Fedders North America, Inc. including: Vice President,
Purchasing; Vice President, Materials Management; and Vice
President, Materials Management/Global Purchasing. He
served as Vice President of Global Purchasing for Parent
from December 1997 until May 1999.
KENT E. HANSEN Mr. Hansen was elected Senior Vice President and Secretary
of Parent in August 1996. Previously he was Vice
President, Finance, General Counsel and Chief Financial
Officer of NYCOR, Inc. Prior thereto, he was Vice
President and General Counsel of Parent from 1989 to 1992.
</TABLE>
I-2
<PAGE> 41
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
GERALD C. SENION Mr. Senion has been Group Vice President of Parent and
Chief Operating Officer of Fedders North America since
July 1997. He was elected to the position of President of
Fedders North America in September 1998. Prior to joining
Parent, Mr. Senion was employed by Frigidaire Corporation
for approximately 20 years, most recently as Group Vice
President of the Frigidaire Home Products Company, Home
Comfort Division and the Electrolux Global Home Comfort
Products Division.
GARY J. NAHAI Mr. Nahai was elected Vice President of Parent and
President of Fedders International, Inc. in April 1993.
Prior thereto he held various sales and marketing
positions with Parent for more than 20 years.
GORDON NEWMAN Mr. Newman was elected Vice President of Parent and
President of Rotorex Companies, Inc. in January 1997. He
joined Parent in 1991 as Vice President, Corporate
Quality. Prior thereto Mr. Newman was Corporate Director
of Quality for Welbilt Corporation.
SAL GIORDANO III Mr. Sal Giordano III was elected Vice President of Parent
in August 1996. He has been President of Melcor since 1995
and was Vice President of Business Planning and
Development of NYCOR, Inc. from 1992 to August, 1996.
ROBERT N. EDWARDS Mr. Edwards joined Parent in 1992 as Senior Counsel. He
was promoted to General Counsel of Parent in 1994 and Vice
President in 1995. Prior to joining Parent, Mr. Edwards
was Vice President, General Counsel and Secretary of
Information Science, Incorporated, a manufacturer of
computer software.
THOMAS A. KROLL Mr. Kroll was elected Controller of Parent in April 1995.
Previously he was Controller of Fedders North America
since 1992. Prior thereto he was Controller of Emerson
Quiet Kool.
NANCY DIGIOVANNI Ms. DiGiovanni was elected Treasurer of Parent in October
1998. Previously she was Assistant Treasurer of Parent
since 1989. Prior thereto she held various cash management
positions with Parent.
</TABLE>
I-3
<PAGE> 42
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Purchaser. Unless otherwise indicated, each
such person is a citizen of the United States of America and the business
address of each such person is c/o TI Acquisition Corp., 505 Martinsville Road,
Liberty Corner, NJ 07983. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to employment with Parent. Unless otherwise
indicated, each such person has held his present occupation as set forth below,
or has been an executive officer at Parent, or the organization indicated, for
the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
SAL GIORDANO, JR. Chief Executive Officer of Purchaser. See Part I of this
Schedule.
ROBERT L. LAURENT, JR. Executive Vice President of Purchaser. See Part I of this
Schedule.
MICHAEL GIORDANO Vice President of Purchaser. See Part I of this Schedule.
KENT E. HANSEN Treasurer and Secretary of Purchaser. See Part I of this
Schedule.
ROBERT N. EDWARDS Assistant Secretary of Purchaser. See Part I of this
Schedule.
</TABLE>
I-4
<PAGE> 43
ANNEX A
PENNSYLVANIA BUSINESS CORPORATION LAW OF 1988
CHAPTER 25
SUBCHAPTER E. CONTROL TRANSACTIONS
2541 APPLICATION AND EFFECT OF SUBCHAPTER. -- (a) General rule. -- Except
as otherwise provided in this section, this subchapter shall apply to a
registered corporation unless: (1) the registered corporation is one described
in section 2502(1)(ii) or (2) (relating to registered corporation status):
(2)the bylaws, by amendment adopted either: (i) by March 23, 1984; or (ii) on or
after March 23, 1988, and on or before June 21, 1988; and, in either event, not
subsequently rescinded by an article amendment, explicitly provide that this
subchapter shall not be applicable to the corporation in the case of a
corporation which on June 21, 1988, did not have outstanding one or more classes
or series of preference shares entitled, upon the occurrence of a default in the
payment of dividends or another similar contingency, to elect a majority of the
members of the board of directors (a bylaw adopted on or before June 21, 1988,
by a corporation excluded from the scope of this paragraph by the restriction of
this paragraph relating to certain outstanding preference shares shall be
ineffective unless ratified under paragraph (3)); (3) the bylaws of which
explicitly provide that this subchapter shall not be applicable to the
corporation by amendment ratified by the board of directors on or after December
19, 1990, and on or before March 19, 1991, in the case of a corporation: (i)
which on June 21, 1988, had outstanding one or more classes or series of
preference shares entitled, upon the occurrence of a default in the payment of
dividends or another similar contingency, to elect a majority of the members of
the board of directors; and (ii) the bylaws of which on that date contained a
provision described in paragraph (2); or (4) the articles explicitly provide
that this subchapter shall not be applicable to the corporation by a provision
included in the original articles, by an article amendment adopted prior to the
date of the control transaction and prior to or on March 23, 1988, pursuant to
the procedures then applicable to the corporation, or by an article amendment
adopted prior to the date of the control transaction and subsequent to March 23,
1988, pursuant to both: (i) the procedures then applicable to the corporation;
and (ii) unless such proposed amendment has been approved by the board of
directors of the corporation, in which event this subparagraph shall not be
applicable, the affirmative vote of the shareholders entitled to cast at least
80% of the votes which all shareholders are entitled to cast thereon. A
reference in the articles or bylaws to former section 910 (relating to right of
shareholders to receive payment for shares following a control transaction) of
the act of May 5, 1933 (P.L. 364, No. 106), known as the Business Corporation
Law of 1933, shall be a reference to this subchapter for the purposes of this
section. See section 101(c) (relating to references to prior statutes).
(b) Inadvertent transactions. -- This subchapter shall not apply to any
person or group that inadvertently becomes a controlling person or group if that
controlling person or group, as soon as practicable, divests itself of a
sufficient amount of its voting shares so that it is no longer a controlling
person or group.
(c) Certain subsidiaries. -- This subchapter shall not apply to any
corporation that on December 23, 1983, was a subsidiary of any other
corporation.
2542 DEFINITIONS. -- The following words and phrases when used in this
subchapter shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Control transaction." The acquisition by a person or group of the
status of a controlling person or group.
"Controlling person or group." A controlling person or group as
defined in section 2543 (relating to controlling person or group).
"Fair value." A value not less than the highest price paid per share
by the controlling person or group at any time during the 90-day period
ending on and including the date of the control transaction plus an
increment representing any value, including, without limitation, any
proportion of any value payable for acquisition of control of the
corporation, that may not be reflected in such price.
A-1
<PAGE> 44
"Partial payment amount." The amount per share specified in section
2545 (c)(2) (relating to contents of notice).
"Subsidiary." Any corporation as to which any other corporation has
or has the right to acquire, directly or indirectly, through the exercise
of all warrants, options and rights and the conversion of all convertible
securities, whether issued or granted by the subsidiary or otherwise,
voting power over voting shares of the subsidiary that would entitle the
holders thereof to cast in excess of 50% of the votes that all shareholders
would be entitled to cast in the election of directors of such subsidiary,
except that a subsidiary will not be deemed to cease being a subsidiary as
long as such corporation remains a controlling person or group within the
meaning of this subchapter.
"Voting shares." The term shall have the meaning specified in section
2552 (relating to definitions).
2543 CONTROLLING PERSON OR GROUP. -- (a) General rule. -- For the purpose
of this subchapter, a "controlling person or group" means a person who has, or a
group of persons acting in concert that has, voting power over voting shares of
the registered corporation that would entitle the holders thereof to cast at
least 20% of the votes that all shareholders would be entitled to cast in an
election of directors of the corporation.
(b) Exceptions generally. -- Notwithstanding subsection (a): (1) A person
or group which would otherwise be a controlling person or group within the
meaning of this section shall not be deemed a controlling person or group
unless, subsequent to the later of March 23, 1988, or the date this subchapter
becomes applicable to a corporation by bylaw or article amendment or otherwise,
that person or group increases the percentage of outstanding voting shares of
the corporation over which it has voting power to in excess of the percentage of
outstanding voting shares of the corporation over which that person or group had
voting power on such later date, and to at least the amount specified in
subsection (a), as the result of forming or enlarging a group or acquiring, by
purchase, voting power over voting shares of the corporation. (2) No person or
group shall be deemed to be a controlling person or group at any particular time
if voting power over any of the following voting shares is required to be
counted at such time in order to meet the 20% minimum: (i) Shares which have
been held continuously by a natural person since January 1, 1983, and which are
held by such natural person at such time. (ii) Shares which are held at such
time by any natural person or trust, estate, foundation or other similar entity
to the extent the shares were acquired solely by gift, inheritance, bequest,
devise or other testamentary distribution or series of these transactions,
directly or indirectly, from a natural person who had acquired the shares prior
to January 1, 1983. (iii) Shares which were acquired pursuant to a stock split,
stock dividend, reclassification or similar recapitalization with respect to
shares described under this paragraph that have been held continuously since
their issuance by the corporation by the natural person or entity that acquired
them from the corporation or that were acquired, directly or indirectly, from
such natural person or entity, solely pursuant to a transaction or series of
transactions described in subparagraph (ii), and that are held at such time by a
natural person or entity described in subparagraph (ii). (iv) Control shares as
defined in section 2562 (relating to definitions) which have not yet been
accorded voting rights pursuant to section 2564(a) (relating to voting rights of
shares acquired in a control-share acquisition). (v) Shares, the voting rights
of which are attributable to a person under subsection (d) if: (A) the person
acquired the option or conversion right directly from or made the contract,
arrangement or understanding or has the relationship directly with the
corporation; and (B) the person does not at the particular time own or otherwise
effectively possess the voting rights of the shares. (vi) Shares acquired
directly from the corporation or an affiliate or associate, as defined in
section 2552 (relating to definitions), of the corporation by a person engaged
in business as an underwriter of securities who acquires the shares through his
participation in good faith in a firm commitment underwriting registered under
the Securities Act of 1933. (3) In determining whether a person or group is or
would be a controlling person or group at any particular time, there shall be
disregarded voting power arising from a contingent right of the holders of one
or more classes or series of preference shares to elect one or more members of
the board of directors upon or during the continuation of a default in the
payment of dividends on such shares or another similar contingency.
(c) Certain record holders. -- A person shall not be a controlling person
under subsection (a) if the person holds voting power, in good faith and not for
the purpose of circumventing this subchapter, as an agent,
A-2
<PAGE> 45
bank, broker, nominee or trustee for one or more beneficial owners who do not
individually or, if they are a group acting in concert, as a group have the
voting power specified in subsection (a), or who are not deemed a controlling
person or group under subsection (b).
(d) Existence of voting power. -- For the purposes of this subchapter, a
person has voting power over a voting share if the person has or shares,
directly or indirectly, through any option, contract, arrangement,
understanding, conversion right or relationship, or by acting jointly or in
concert or otherwise, the power to vote, or to direct the voting of, the voting
share.
2544 RIGHT OF SHAREHOLDERS TO RECEIVE PAYMENT FOR SHARES. -- Any holder of
voting shares of a registered corporation that becomes the subject of a control
transaction who shall object to the transaction shall be entitled to the rights
and remedies provided in this subchapter.
2545 NOTICE TO SHAREHOLDERS. -- (a) General rule. -- Prompt notice that a
control transaction has occurred shall be given by the controlling person or
group to: (1) Each shareholder of record of the registered corporation holding
voting shares. (2) To the court, accompanied by a petition to the court praying
that the fair value of the voting shares of the corporation be determined
pursuant to section 2547 (relating to valuation procedures) if the court should
receive pursuant to section 2547 certificates from shareholders of the
corporation or an equivalent request for transfer of uncertificated securities.
(b) Obligations of the corporation. -- If the controlling person or group
so requests, the corporation shall, at the option of the corporation and at the
expense of the person or group, either furnish a list of all such shareholders
to the person or group or mail the notice to all such shareholders.
(c) Contents of notice. -- The notice shall state that: (1) All
shareholders are entitled to demand that they be paid the fair value of their
shares. (2) The minimum value the shareholder can receive under this subchapter
is the highest price paid per share by the controlling person or group within
the 90-day period ending on and including the date of the control transaction,
and stating that value. (3) If the shareholder believes the fair value of his
shares is higher, that this subchapter provides an appraisal procedure for
determining the fair value of such shares, specifying the name of the court and
its address and the caption of the petition referenced in subsection (a)(2), and
stating that the information is provided for the possible use by the shareholder
in electing to proceed with a court-appointed appraiser under section 2547.
There shall be included in, or enclosed with, the notice a copy of this
subchapter.
(d) Optional procedure. -- The controlling person or group may, at its
option, supply with the notice referenced in subsection (c) a form for the
shareholder to demand payment of the partial payment amount directly from the
controlling person or group without utilizing the court-appointed appraiser
procedure of section 2547, requiring the shareholder to state the number and
class or series, if any, of the shares owned by him, and stating where the
payment demand must be sent and the procedures to be followed.
2546 SHAREHOLDER DEMAND FOR FAIR VALUE. -- (a) General rule. -- After the
occurrence of the control transaction, any holder of voting shares of the
registered corporation may, prior to or within a reasonable time after the
notice required by section 2545 (relating to notice to shareholders) is given,
which time period may be specified in the notice, make written demand on the
controlling person or group for payment of the amount provided in subsection (c)
with respect to the voting shares of the corporation held by the shareholder,
and the controlling person or group shall be required to pay that amount to the
shareholder pursuant to the procedures specified in section 2547 (relating to
valuation procedures).
(b) Contents of demand. -- The demand of the shareholder shall state the
number and class or series, if any, of the shares owned by him with respect to
which the demand is made.
(c) Measure of value. -- A shareholder making written demand under this
section shall be entitled to receive cash for each of his shares in an amount
equal to the fair value of each voting share as of the date on which the control
transaction occurs, taking into account all relevant factors, including an
increment representing a proportion of any value payable for acquisition of
control of the corporation.
(d) Purchases independent of subchapter. -- The provisions of this
subchapter shall not preclude a controlling person or group subject to this
subchapter from offering, whether in the notice required by section
A-3
<PAGE> 46
2545 or otherwise, to purchase voting shares of the corporation at a price other
than that provided in subsection (c), and the provisions of this subchapter
shall not preclude any shareholder from agreeing to sell his voting shares at
that or any other price to any person.
2547 VALUATION PROCEDURES. -- (a) General rule. -- If, within 45 days (or
such other time period, if any, as required by applicable law) after the date of
the notice required by section 2545 (relating to notice to shareholders), or, if
such notice was not provided prior to the date of the written demand by the
shareholder under section 2546 (relating to shareholder demand for fair value),
then within 45 days (or such other time period, if any, required by applicable
law) of the date of such written demand, the controlling person or group and the
shareholder are unable to agree on the fair value of the shares or on a binding
procedure to determine the fair value of the shares, then each shareholder who
is unable to agree on both the fair value and on such a procedure with the
controlling person or group and who so desires to obtain the rights and remedies
provided in this subchapter shall, no later than 30 days after the expiration of
the applicable 45-day or other period, surrender to the court certificates
representing any of the shares that are certificated shares, duly endorsed for
transfer to the controlling person or group, or cause any uncertificated shares
to be transferred to the court as escrow agent under subsection (c) with a
notice stating that the certificates or uncertificated shares are being
surrendered or transferred, as the case may be, in connection with the petition
referenced in section 2545 or, if no petition has theretofore been filed, the
shareholder may file a petition within the 30-day period in the court praying
that the fair value (as defined in this subchapter) of the shares be determined.
(b) Effect of failure to give notice and surrender certificates. -- Any
shareholder who does not so give notice and surrender any certificates or cause
uncertificated shares to be transferred within such time period shall have no
further right to receive, with respect to shares the certificates of which were
not so surrendered or the uncertificated shares which were not so transferred
under this section, payment under this subchapter from the controlling person or
group with respect to the control transaction giving rise to the rights of the
shareholder under this subchapter.
(c) Escrow and notice. -- The court shall hold the certificates surrendered
and the uncertificated shares transferred to it in escrow for, and shall
promptly, following the expiration of the time period during which the
certificates may be surrendered and the uncertificated shares transferred,
provide a notice to the controlling person or group of the number of shares so
surrendered or transferred.
(d) Partial payment for shares. -- The controlling person or group shall
then make a partial payment for the shares so surrendered or transferred to the
court, within ten business days of receipt of the notice from the court, at a
per-share price equal to the partial payment amount. The court shall then make
payment as soon as practicable, but in any event within ten business days, to
the shareholders who so surrender or transfer their shares to the court of the
appropriate per-share amount received from the controlling person or group.
(e) Appointment of appraiser. -- Upon receipt of any share certificate
surrendered or uncertificated share transferred under this section, the court
shall, as soon as practicable but in any event within 30 days, appoint an
appraiser with experience in appraising share values of companies of like nature
to the registered corporation to determine the fair value of the shares.
(f) Appraisal procedure. -- The appraiser so appointed by the court shall,
as soon as reasonably practicable, determine the fair value of the shares
subject to its appraisal and the appropriate market rate of interest on the
amount then owed by the controlling person or group to the holders of the
shares. The determination of any appraiser so appointed by the court shall be
final and binding on both the controlling person or group and all shareholders
who so surrendered their share certificates or transferred their shares to the
court, except that the determination of the appraiser shall be subject to review
to the extent and within the time provided or prescribed by law in the case of
other appointed judicial officers. See 42 Pa.C.S. Sections 5105(a)(3) (relating
to right to appellate review) and 5571(b) (relating to appeals generally).
(g) Supplemental payment. -- Any amount owed, together with interest, as
determined pursuant to the appraisal procedures of this section shall be payable
by the controlling person or group after it is so determined and upon and
concurrently with the delivery or transfer to the controlling person or group by
the court (which shall make delivery of the certificate or certificates
surrendered or the uncertificated shares transferred to it to
A-4
<PAGE> 47
the controlling person or group as soon as practicable but in any event within
ten business days after the final determination of the amount owed) of the
certificate or certificates representing shares surrendered or the
uncertificated shares transferred to the court, and the court shall then make
payment, as soon as practicable but in any event within ten business days after
receipt of payment from the controlling person or group, to the shareholders who
so surrendered or transferred their shares to the court of the appropriate
per-share amount received from the controlling person or group.
(h) Voting and dividend rights during appraisal proceedings. --
Shareholders who surrender their shares to the court pursuant to this section
shall retain the right to vote their shares and receive dividends or other
distributions thereon until the court receives payment in full for each of the
shares so surrendered or transferred of the partial payment amount (and,
thereafter, the controlling person or group shall be entitled to vote such
shares and receive dividends or other distributions thereon). The fair value (as
determined by the appraiser) of any dividends or other distributions so received
by the shareholders shall be subtracted from any amount owing to such
shareholders under this section.
(i) Powers of the court. -- The court may appoint such agents, including
the transfer agent of the corporation, or any other institution, to hold the
share certificates so surrendered and the shares surrendered or transferred
under this section, to effect any necessary change in record ownership of the
shares after the payment by the controlling person or group to the court of the
amount specified in subsection (h), to receive and disburse dividends or other
distributions, to provide notices to shareholders and to take such other actions
as the court determines are appropriate to effect the purposes of this
subchapter.
(j) Costs and expenses. -- The costs and expenses of any appraiser or other
agents appointed by the court shall be assessed against the controlling person
or group. The costs and expenses of any other procedure to determine fair value
shall be paid as agreed to by the parties agreeing to the procedure.
(k) Jurisdiction exclusive. -- The jurisdiction of the court under this
subchapter is plenary and exclusive and the controlling person or group and all
shareholders who so surrendered or transferred their shares to the court shall
be made a party to the proceeding as in an action against their shares.
(l) Duty of corporation. -- The corporation shall comply with requests for
information, which may be submitted pursuant to procedures maintaining the
confidentiality of the information, made by the court or the appraiser selected
by the court. If any of the shares of the corporation are not represented by
certificates, the transfer, escrow or retransfer of those shares contemplated by
this section shall be registered by the corporation, which shall give the
written notice required by section 1528(f) (relating to uncertificated shares)
to the transferring shareholder, the court and the controlling shareholder or
group, as appropriate in the circumstances.
(m) Payment under optional procedure. -- Any amount agreed upon between the
parties or determined pursuant to the procedure agreed upon between the parties
shall be payable by the controlling person or group after it is agreed upon or
determined and upon and concurrently with the delivery of any certificate or
certificates representing such shares or the transfer of any uncertificated
shares to the controlling person or group by the shareholder.
(n) Title to shares. -- Upon full payment by the controlling person or
group of the amount owed to the shareholder or to the court, as appropriate, the
shareholder shall cease to have any interest in the shares.
2548 COORDINATION WITH CONTROL TRANSACTION. -- (a) General rule. -- A
person or group that proposes to engage in a control transaction may comply with
the requirements of this subchapter in connection with the control transaction,
and the effectiveness of the rights afforded in this subchapter to shareholders
may be conditioned upon the consummation of the control transaction.
(b) Notice. -- The person or group shall give prompt written notice of the
satisfaction of any such condition to each shareholder who has made demand as
provided in this subchapter.
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<PAGE> 48
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each shareholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at the applicable address set forth below:
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER AND TRUST COMPANY
Attention: Reorganization Department
718-921-8200
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Hand or Overnight Courier:
40 Wall Street 40 Wall Street 40 Wall Street
46th Floor 46th Floor 46th Floor
New York, New York 10005 New York, New York 10005 New York, New York 10005
</TABLE>
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent at the
address and telephone number set forth below. Shareholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll-Free: 1-800-769-6414
The Dealer Manager for the Offer is:
TM CAPITAL CORP
One Battery Park Plaza, 35th Floor
New York, New York 10004
(212) 809-1360
(Call Collect)
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
TRION, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JULY 15, 1999
OF
TI ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FEDDERS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, AUGUST 11, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER AND TRUST COMPANY
Attention: Reorganization Department
718-921-8200
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Courier:
40 Wall Street 40 Wall Street 40 Wall Street
46th Floor 46th Floor 46th Floor
New York, New York 10005 New York, New York 10005 New York, New York 10005
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by shareholders of Trion, Inc., if
certificates for Shares (as such term is defined below) are to be forwarded
herewith or, unless an Agent's Message (as defined in Instruction 2 below) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at a Book-Entry Transfer Facility (as
defined in and pursuant to the procedures set forth in Section 3 of the Offer to
Purchase). Shareholders who deliver Shares by book-entry transfer are referred
to herein as "Book-Entry Shareholders" and other shareholders who deliver shares
are referred to herein as "Certificate Shareholders."
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation (as
defined in Section 3 of the Offer to Purchase) with respect to, their Shares and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
Account Number
Transaction Code Number
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s)
Window Ticket Number (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution which Guaranteed Delivery
If delivered by Book-Entry Transfer, check box: [ ]
Account Number
Transaction Code Number
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED BY NUMBER
CERTIFICATE SHARE OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Total Shares
- ------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Shareholders.
(2) Unless otherwise indicated, it will be assumed that all Shares represented by Share certificates delivered to the
Depositary are being tendered hereby. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN
THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to TI Acquisition Corp., a Pennsylvania
corporation ("Purchaser") and an indirect wholly owned subsidiary of Fedders
Corporation, a Delaware corporation ("Parent"), the above-described shares of
common stock, par value $0.50 per share (the "Shares"), of Trion, Inc., a
Pennsylvania corporation (the "Company"), pursuant to Purchaser's offer to
purchase all of the outstanding Shares at a price of $5.50 per Share, net to the
seller in cash, without interest thereon (the "Offer Price") upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated July 15,
1999, and in this Letter of Transmittal (which, together with any amendments or
supplements thereto or hereto, collectively constitute the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or assign,
in whole at any time, or in part from time to time, to one or more of its
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering shareholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer. Receipt of the Offer is hereby
acknowledged.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 12, 1999 (the "Merger Agreement"), by and among Parent, Purchaser and
the Company.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other Shares
or other securities issued or issuable in respect thereof on or after July 12,
1999 (collectively, "Distributions")) and irrevocably constitutes and appoints
the Depositary the true and lawful Agent and attorney-in-fact of the undersigned
with respect to such Shares (and all Distributions), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver certificates for such Shares (and any
and all Distributions), or transfer ownership of such Shares (and any and all
Distributions) on the account books maintained by the Book-Entry Transfer
Facility, together, in any such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of Purchaser, (ii) present such
Shares (and any and all Distributions) for transfer on the books of the Company,
and (iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares (and any and all Distributions), all in accordance with
the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Sal Giordano, Jr., Robert L. Laurent, Jr., Michael Giordano, Kent E.
Hansen and Robert N. Edwards in their respective capacities as officers of
Purchaser, and any individual who shall thereafter succeed to any such office of
Purchaser, and each of them, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote at any annual or
special meeting of the Company's shareholders or any adjournment or postponement
thereof or otherwise in such manner as each such attorney-in-fact and proxy or
his substitute shall in his sole discretion deem proper with respect to, to
execute any written consent concerning any matter as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, and to otherwise act as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, all of the
Shares (and any and all Distributions) tendered hereby and accepted for payment
by Purchaser. This appointment will be effective if and when, and only to the
extent that, Purchaser accepts such Shares for payment pursuant to the Offer.
This power of attorney and proxy are irrevocable and are granted in
consideration of the acceptance for payment of such Shares in accordance with
the terms of the Offer. Such acceptance for payment shall, without further
action, revoke any prior powers of attorney and proxies granted by the
undersigned at any time with respect to such Shares (and any and all
Distributions), and no subsequent powers of attorney, proxies, consents or
revocations may be given by the undersigned with respect thereto (and, if given,
will not be deemed effective). Purchaser reserves the right to require that, in
order for Shares or other securities to be deemed validly tendered, immediately
upon Purchaser's acceptance for payment of such Shares, Purchaser must be able
to exercise full voting,
3
<PAGE> 4
consent and other rights with respect to such Shares (and any and all
Distributions), including voting at any meeting of the Company's shareholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that the undersigned owns the Shares
tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that the
tender of the tendered Shares complies with Rule 14e-4 under the Exchange Act,
and that when the same are accepted for payment by Purchaser, Purchaser will
acquire good, marketable and unencumbered title thereto and to all
Distributions, free and clear of all liens, restrictions, charges and
encumbrances and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby and all
Distributions. In addition, the undersigned shall remit and transfer promptly to
the Depositary for the account of Purchaser all Distributions in respect of the
Shares tendered hereby, accompanied by appropriate documentation of transfer,
and, pending such remittance and transfer or appropriate assurance thereof,
Purchaser shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares tendered
hereby or deduct from such purchase price, the amount or value of such
Distribution as determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer (and if
the Offer is extended or amended, the terms or conditions of any such extension
or amendment). Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the terms of the Merger Agreement, the price
to be paid to the undersigned will be the amended price notwithstanding the fact
that a different price is stated in this Letter of Transmittal. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
Purchaser may not be required to accept for payment any of the Shares tendered
hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return any
certificates for Shares not tendered or accepted for payment in the name(s) of
the registered holder(s) appearing above under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price of all Shares purchased and/or
return any certificates for Shares not tendered or not accepted for payment (and
any accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing above under "Description of Shares Tendered." In the event
that the boxes entitled "Special Payment Instructions" and "Special Delivery
Instructions" are both completed, please issue the check for the purchase price
of all Shares purchased and/or return any certificates evidencing Shares not
tendered or not accepted for payment (and any accompanying documents, as
appropriate) in the name(s) of, and deliver such check and/or return any such
certificates (and any accompanying documents, as appropriate) to, the person(s)
so indicated. Unless otherwise indicated herein in the box entitled "Special
Payment Instructions," please credit any Shares tendered herewith by book-entry
transfer that are not accepted for payment by crediting the account at the
Book-Entry Transfer Facility designated above. The undersigned recognizes that
Purchaser has no obligation, pursuant to the "Special Payment Instructions," to
transfer any Shares from the name of the registered holder thereof if Purchaser
does not accept for payment any of the Shares so tendered.
4
<PAGE> 5
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES:
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
accepted for payment is to be issued in name of someone other than the
undersigned, if certificates for Shares not tendered or not accepted for
payment are to be issued in the name of someone other than the undersigned
or if Shares tendered hereby and delivered by book-entry transfer that are
not accepted for payment are to be returned by credit to an account
maintained at the Book-Entry Transfer Facility other than the account
indicated above.
Issue check and/or Share certificate(s) to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
Credit Shares delivered by book-entry transfer and not purchased to the
Book-Entry Transfer Facility account.
------------------------------------------------------------
(ACCOUNT NUMBER)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment is to be sent to someone other than the undersigned
or to the undersigned at an address other than that shown under
"Description of Shares Tendered."
Mail check and/or Share certificates to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
------------------------------------------------------------
5
<PAGE> 6
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:
- --------------------------- , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s) ------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm
--------------------------------------------------------------------
Capacity (full title)
------------------------------------------------------------
(SEE INSTRUCTION 5)
Address-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
---------------------------------------------------
Taxpayer Identification or Social Security Number
--------------------------------
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
----------------------------------------------------------------
Name(s) ------------------------------------------------------------------------
(PLEASE PRINT)
Title---------------------------------------------------------------------------
Name of Firm
---------------------------------------------------------------------
Address-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-----------------------------------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on this
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by shareholders of
the Company either if Share certificates are to be forwarded herewith or, unless
an Agent's Message is utilized, if delivery of Shares is to be made by
book-entry transfer pursuant to the procedures set forth herein and in Section 3
of the Offer to Purchase. For a stockholder validly to tender Shares pursuant to
the Offer, either (a) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees or an Agent's Message (in connection with book-entry transfer) and
any other required documents, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date and either (i)
certificates for tendered Shares must be received by the Depositary at one of
such addresses prior to the Expiration Date or (ii) Shares must be delivered
pursuant to the procedures for book-entry transfer set forth herein and in
Section 3 of the Offer to Purchase and a Book-Entry Confirmation must be
received by the Depositary prior to the Expiration Date or (b) the tendering
stockholder must comply with the guaranteed delivery procedures set forth herein
and in Section 3 of the Offer to Purchase.
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-entry
transfer procedures on a timely basis may tender their Shares by properly
completing and duly executing the Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth herein and in Section 3 of the Offer to
Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer (or
a Book-Entry Confirmation with respect to all tendered Shares), together with a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents must
be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the Nasdaq National Market is open for business.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY
7
<PAGE> 8
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering shareholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to shareholders who tender by
book-entry transfer). If fewer than all the Shares evidenced by any Share
certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares that are to be tendered in the box entitled "Number of
Shares Tendered." In any such case, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificates will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date or the
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of the authority of such person so to act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares not
tendered or not accepted for payment are to be issued in the name of a person
other than the registered holder(s). Signatures on any such Share certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such other person) payable
on account of the transfer to such other person will be deducted from the
purchase price of such Shares purchased unless evidence satisfactory to
Purchaser of the payment of such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS; WIRE TRANSFERS. If a check
for the purchase price of any Shares accepted for payment is to be issued in the
name of, and/or Share certificates for Shares not accepted for payment or not
tendered are to be issued in the name of and/or returned to, a person other than
the signer of this Letter of Transmittal or
8
<PAGE> 9
if a check is to be sent, and/or such certificates are to be returned, to a
person other than the signer of this Letter of Transmittal, or to an address
other than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. Any stockholder(s) delivering Shares by book-entry transfer
may request that Shares not purchased be credited to such account maintained at
a Book-Entry Transfer Facility as such stockholder(s) may designate in the box
entitled "Special Payment Instructions." If no such instructions are given, any
such Shares not purchased will be returned by crediting the account at the
Book-Entry Transfer Facility designated above as the account from which such
Shares were delivered.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address and phone number set forth
below, or from brokers, dealers, commercial banks or trust companies.
9. WAIVER OF CONDITIONS. Subject to the Merger Agreement, Purchaser
reserves the absolute right in its sole discretion to waive, at any time or from
time to time, any of the specified conditions of the Offer, in whole or in part,
in the case of any Shares tendered.
10. BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a shareholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such shareholder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 in this Letter of Transmittal and certify, under penalties
of perjury, that such TIN is correct and that such shareholder is not subject to
backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund can be obtained by the shareholder upon filing an income tax
return.
The shareholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
shareholder if a TIN is provided to the Depositary within 60 days.
Certain shareholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign shareholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The shareholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY
9
<PAGE> 10
PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED SHARES MUST BE
RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT TO THE
PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION DATE,
OR THE TENDERING SHAREHOLDER MUST COMPLY WITH THE PROCEDURES FOR GUARANTEED
DELIVERY.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
shareholder's correct TIN on Substitute Form W-9 below. If such shareholder is
an individual, the TIN is his social security number. If a tendering shareholder
is subject to backup withholding, such shareholder must cross out item (2) of
the Certification box on the Substitute Form W-9. If the Depositary is not
provided with the correct TIN, the shareholder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made to
such shareholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding.
Certain shareholders (including, among others, all corporations, and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that shareholder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. Exempt shareholders, other than
foreign individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form contained herein certifying that the TIN provided on
Substitute Form W-9 is correct (or that such shareholder is awaiting a TIN).
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
If the tendering shareholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, such stockholder
should write "Applied For" in the space provided for in the TIN in Part 1, and
sign and date the Substitute Form W-9. If "Applied For" is written in Part I and
the Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% on all payments of the purchase price until a TIN is provided to
the Depositary.
10
<PAGE> 11
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PAYER'S NAME:
- ---------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- PLEASE PROVIDE YOUR TIN IN THE BOX AT -------------------------------
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW Social Security Number
DEPARTMENT OF THE TREASURY (If awaiting TIN write
INTERNAL REVENUE SERVICE "Applied For")
OR
-------------------------------
Employer Identification Number
(If awaiting TIN write
"Applied For")
------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
PAYER'S REQUEST FOR TAXPAYER PART 2 -- CERTIFICATE -- Under penalties of perjury, I certify that:
IDENTIFICATION NUMBER ("TIN") (1) The number shown on this form is my correct Taxpayer Identification Number (or I
am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
---------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because of
under-reporting interest or dividends on your tax returns. However, if after being
notified by the IRS that you are subject to backup withholding, you receive another
notification from the IRS that you are no longer subject to backup withholding, do not
cross out such item (2). (Also see instructions in the enclosed Guidelines).
SIGNATURE ------------------------------------------------------ DATE -----------,1999
---------------------------------------------------------------------------------------
PART 3 -- Awaiting TIN [ ]
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number to the Depositary by the
time of payment, 31% of all reportable payments made to me thereafter will be
withheld, but that such amounts will be refunded to me if I then provide a
certified Taxpayer Identification Number to the Depositary within sixty (60)
days.
Signature
- -------------------------------------------- Date ------------------------, 1999
11
<PAGE> 12
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth below:
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT: (212) 269-5550
ALL OTHERS CALL TOLL FREE: 1-800-769-6414
The Dealer Manager for the Offer is:
[TM Capital Corp. Logo]
ONE BATTERY PARK PLAZA, 35(TH) FLOOR
NEW YORK, NEW YORK 10004
(212) 809-1360
12
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
TRION, INC.
TO
TI ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FEDDERS CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
representing shares of Common Stock, par value $0.50 per share (the "Shares"),
of Trion, Inc., a Pennsylvania corporation, are not immediately available, if
the procedure for book-entry transfer cannot be completed prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or if time
will not permit all required documents to reach the Depositary prior to the
Expiration Date. Such form may be delivered by hand or mailed to the Depositary.
See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER AND TRUST COMPANY
Attention: Reorganization Department
718-921-8200
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Courier:
40 Wall Street 40 Wall Street 40 Wall Street
46th Floor 46th Floor 46th Floor
New York, New York 10005 New York, New York 10005 New York, New York 10005
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to TI Acquisition Corp., a Pennsylvania
corporation ("Purchaser") and an indirect wholly owned subsidiary of Fedders
Corporation, a Delaware corporation, upon the terms and subject to the
conditions set forth in Purchaser's Offer to Purchase dated July 15, 1999 and
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, constitute the "Offer"), receipt of which is hereby
acknowledged, the number of shares set forth below of common stock, par value
$0.50 per share (the "Shares"), of Trion, Inc., a Pennsylvania corporation,
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
------------------------------------------------------
Number of Shares:
---------------------------------
Certificate Nos. (if available):
------------------------------------------------------
------------------------------------------------------
Check box if Shares will be tendered by book-entry transfer:
Account Number:
----------------------------------
Dated:
--------------------------------------- , 1999
- ------------------------------------------------------
------------------------------------------------------
Name(s) of Record Holder(s):
------------------------------------------------------
------------------------------------------------------
PLEASE PRINT
Address(es):
---------------------------------------
------------------------------------------------------
------------------------------------------------------
ZIP CODE
Area Code and Tel. No.:
------------------------------------------------------
------------------------------------------------------
Signature(s):
---------------------------------------
------------------------------------------------------
- ------------------------------------------------------
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature
Guarantee Program or the Stock Exchange Medallion Program, guarantees to
deliver to the Depositary either certificates representing the Shares
tendered hereby, in proper form for transfer, or confirmation of
book-entry transfer of such Shares into the Depositary's accounts at The
Depository Trust Company, in each case with delivery of a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees, or an Agent's Message, and any
other documents required by the Letter of Transmittal, within three
trading days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate
the guarantee to the Depositary and must deliver the Letter of Transmittal
and certificates for Shares to the Depositary within the time period shown
herein. Failure to do so could result in a financial loss to such Eligible
Institution.
<TABLE>
<S> <C>
Name of Firm: ---------------------------------- ---------------------------------------------------
AUTHORIZED SIGNATURE
Address: ----------------------------------------- Name: -------------------------------------------
PLEASE PRINT
--------------------------------------------------- Title --------------------------------------------
ZIP CODE
Area Code and Tel. No.: ----------------------- Dated: ------------------------------------ , 1999
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
TRION, INC.
AT
$5.50 NET PER SHARE
BY
TI ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FEDDERS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, AUGUST 11, 1999, UNLESS THE OFFER IS EXTENDED.
July 15, 1999
To: Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been appointed by TI Acquisition Corp., a Pennsylvania corporation
("Purchaser") and an indirect wholly owned subsidiary of Fedders Corporation, a
Delaware corporation ("Parent"), to act as Dealer Manager in connection with
Purchaser's offer to purchase all outstanding shares of common stock, par value
$0.50 per share (the "Shares"), of Trion, Inc., a Pennsylvania corporation (the
"Company"), at $5.50 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated July 15, 1999
(the "Offer to Purchase") and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, constitute the "Offer")
enclosed herewith. Please furnish copies of the enclosed materials to those of
your clients for whose accounts you hold Shares registered in your name or in
the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the Offer
to Purchase) that number of Shares which, when added to the Shares beneficially
owned by Parent or Purchaser (if any), represents at least eighty percent (80%)
of the Shares outstanding on a fully diluted basis on the date Shares are
accepted for payment. The Offer is also subject to the other conditions in the
Offer to Purchase. See Section 14 of the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated July 15, 1999;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be
delivered to the Depositary, or if the procedures for book-entry transfer
cannot be completed, by the Expiration Date (as defined in the Offer to
Purchase);
4. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. A letter to stockholders of the Company from Steven L. Schneider,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 dated July 15,
1999, which has been filed by the Company with the Securities and Exchange
Commission;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to American Stock Transfer and Trust
Company (the "Depositary").
<PAGE> 2
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for Shares which are
validly tendered prior to the Expiration Date and not theretofore properly
withdrawn when, as and if Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. Payment for Shares purchased pursuant to the Offer will in all cases be
made only after timely receipt by the Depositary of (i) certificates for such
Shares, or timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, pursuant to the procedures
described in Section 3 of the Offer to Purchase, (ii) a properly completed and
duly executed Letter of Transmittal (or a properly completed and manually signed
facsimile thereof) or an Agent's Message (as defined in the Offer to Purchase)
in connection with a book-entry transfer and (iii) all other documents required
by the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent as described in the Offer to Purchase) for soliciting tenders of Shares
pursuant to the Offer. Purchaser will, however, upon request, reimburse brokers,
dealers, commercial banks and trust companies for customary mailing and handling
costs incurred by them in forwarding the enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, AUGUST 11, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares, and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and in
the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
TM CAPITAL CORP.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE INFORMATION AGENT, THE
DEPOSITARY, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
TRION, INC.
AT
$5.50 NET PER SHARE
BY
TI ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FEDDERS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, AUGUST 11, 1999, UNLESS THE OFFER IS EXTENDED.
July 15, 1999
To: Our Clients:
Enclosed for your consideration are the Offer to Purchase dated July 15,
1999 and the related Letter of Transmittal (which, together with any amendments
or supplements thereto, collectively constitute the "Offer") in connection with
the offer by TI Acquisition Corp., a Pennsylvania corporation ("Purchaser") and
an indirect wholly owned subsidiary of Fedders Corporation, a Delaware
corporation ("Parent"), to purchase for cash all outstanding shares of common
stock, par value $0.50 per share (the "Shares"), of Trion, Inc., a Pennsylvania
corporation (the "Company"). We are the holder of record of Shares held for your
account. A tender of such Shares can be made only by us as the holder of record
and pursuant to your instructions. The enclosed Letter of Transmittal is
furnished to you for your information only and cannot be used by you to tender
Shares held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is invited to the following:
1. The offer price is $5.50 per Share, net to you in cash without
interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company by a unanimous vote of those
present at the meeting approved the Merger Agreement (as defined in the
Offer to Purchase) and the transactions contemplated thereby, including the
Offer and the Merger (each as defined in the Offer to Purchase), and
determined that the Offer and the Merger are fair to, and in the best
interest of, the Company's shareholders and recommends that the
shareholders accept the Offer and tender their Shares pursuant to the
Offer.
4. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Wednesday, August 11, 1999, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, among other
things, there being validly tendered and not withdrawn prior to the
Expiration Date (as defined in the Offer to Purchase) that number of Shares
which, when added to the Shares beneficially owned by Parent or Purchaser
(if any), represents at least eighty percent (80%) of the Shares
outstanding on a fully diluted basis on the date Shares are accepted for
payment. The Offer is also subject to the other conditions in the Offer to
Purchase. See Section 14 of the Offer to Purchase.
6. Any stock transfer taxes applicable to the sale of Shares to
Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Except as disclosed in the Offer to Purchase, Purchaser is not aware of any
state in which the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. In any jurisdiction in
which the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares will
be tendered unless otherwise specified on the reverse side of this letter. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf prior to the expiration of the Offer.
<PAGE> 2
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
TRION, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated July 15, 1999 and the related Letter of Transmittal in
connection with the Offer by TI Acquisition Corp., a Pennsylvania corporation
and an indirect wholly owned subsidiary of Fedders Corporation, a Delaware
corporation, to purchase all outstanding shares of common stock, par value $0.50
per share (the "Shares"), of Trion, Inc., a Pennsylvania corporation.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares to be Tendered:*
- -------------------------------------
Shares
Dated:
- --------------------------------- , 1999----------------------------------------
----------------------------------------
SIGNATURE(S)
----------------------------------------
PRINT NAME(S)
----------------------------------------
----------------------------------------
ADDRESS(ES)
----------------------------------------
AREA CODE AND TELEPHONE NUMBER
----------------------------------------
TAX ID OR SOCIAL SECURITY NUMBER
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen, i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(2)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(2)
4. Custodian account of a minor The minor(3)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(4)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
8. Sole proprietorship account The owner(5)
9. A valid trust, estate, or pension The legal entity
trust (do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title)(1)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the legal trust, estate, or pension trust.
(2) List first and circle the name of the person whose number you furnish.
(3) Circle the minor's name and furnish the minor's social security number.
(4) Circle the ward, minor's or incompetent person's name and furnish such
person's social security number.
(5) Show the name of the owner.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a TIN or you don't know your number, obtain Internal Revenue
Service Form SS-5, Application for Social Security Number Card or Form SS-4,
Application for Employer Identification Number at your local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under Section 501(A) or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A state, the District of Columbia, a possession of the United States or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under Section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
Exempt payees described above should file Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend, interest
or other payments to give taxpayer identification numbers to payers who must
report the payments to the IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to
properly include any portion of an includible payment for interest, dividends,
or patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
FEDDERS TO ACQUIRE TRION, INC.
Liberty Corner, NJ and Sanford, NC - July 13, 1999 - Fedders Corporation (NYSE:
FJA & FJC), a global air conditioning company, and Trion, Inc. (NASDAQ: TRON), a
world leader in the indoor air quality industry, jointly announced today that
they entered into a definitive agreement providing for Fedders' acquisition of
Trion at a price of $5.50 per share in cash for all outstanding shares of
Trion's common stock. The Agreement has been approved by the Boards of Directors
of both Trion and Fedders. Under the Agreement, a newly-formed wholly-owned
subsidiary of Fedders will commence a cash tender offer to purchase all of the
outstanding shares of Trion for $5.50 per share. Trion has approximately 7.2
million shares of common stock outstanding.
The tender offer will commence as soon as practicable, but not later than July
19, 1999, and is expected to close in August 1999. The tender offer is
conditioned upon the tender of 80.0% of the shares of Trion common stock
outstanding on a fully diluted basis, certain regulatory filings and other
customary conditions. The Agreement also provides for the merger of a
wholly-owned subsidiary of Fedders into Trion following the tender offer.
Following the merger Trion will continue its business as a wholly-owned
subsidiary of Fedders.
Each of Trion's directors, who collectively own 10.1% of Trion's outstanding
common stock, has entered into a definitive agreement with Fedders pursuant to
which each director has agreed, among other things, to tender his shares
pursuant to the cash tender offer and to grant to Fedders an option to purchase
such shares at a purchase price of $5.50 per share, exercisable upon the
occurrence of certain events.
In addition, Trion and Fedders have entered into a stock option agreement
pursuant to which Trion has granted to Fedders an irrevocable option to purchase
up to 19.9% of Trion's outstanding common stock at a purchase price of $5.50 per
share, exercisable upon the occurrence of certain events.
Trion manufactures and sells a broad line of high-performance products that
improve indoor air quality in cleanrooms, industrial/commercial and residential
environments. Their extensive line of products includes electronic air cleaners,
HEPA & ULPA filters, humidifiers and dust collectors. Trion's sales were $57.2
million in 1998.
The indoor air quality industry is estimated to exceed $3.0 billion. Consistent,
long-term industry growth is expected. As governments tighten regulations
regarding levels of emissions released into the workplace and environment, and
as air pollution continues
<PAGE> 2
to be a significant health issue, the global demand for indoor air quality
products is expected to increase.
Commenting on the acquisition, Fedders Chief Executive Officer, Sal Giordano,
Jr., said "Fedders' acquisition of Trion is strategically important to the
growth of both companies. Trion's line of indoor air quality products is
complementary to Fedders' existing product line of air conditioners and
dehumidifiers. Many of the products, including air cleaners and humidifiers, are
counter-seasonal to air conditioner and dehumidifier sales. Trion's presence in
England will strengthen Fedders' position in Europe, while Fedders' presence in
Asia, where it has its international headquarters in Singapore and a
manufacturing facility in Ningbo, China, will enable Trion to grow there."
Steven L. Schneider, President and Chief Executive Officer of Trion, said "The
Trion team is looking forward to becoming an important part of Fedders. We
expect Fedders' extensive experience with Big Box retailers to help grow our
household air cleaner business and we anticipate deriving significant benefits
from their global sourcing capabilities for all of our products."
TM Capital Corp. served as financial advisor to Fedders Corporation in
connection with this transaction and Harris Williams & Co. served as financial
advisor to Trion, Inc.
###
This news release includes forward-looking statements that are covered under the
"Safe-Harbor" clause of the Private Securities Litigation Reform Act of 1995.
Such statements are based upon current expectations and assumptions. Actual
results may differ materially from those currently anticipated as a result of
known and unknown risks and uncertainties including, but not limited to, weather
and economic, political, market and industry conditions. Such factors are
described in Fedders' and Trion's SEC filings, including their most recently
filed annual reports on Form 10-K. In particular, statements in this news
release pertaining to Fedders' acquisition of Trion, growth of the indoor air
quality industry, Fedders' position in Europe strengthening as a result of
Trion's presence in England, Trion's growing in Asia as a result of Fedders'
presence in Asia, growing Trion's air cleaner business and Trion deriving
significant benefits from Fedders' global sourcing capabilities constitute
forward-looking statements. The companies disclaim any obligation to update any
forward-looking statements to incorporate developments after this news release.
Visit the Fedders investor information website at www.FEDDERS.com to access
additional information on Fedders including annual reports, SEC filings and
special reports.
Contacts: Fedders - Judy Katz (908) 604-8686
Trion - Calvin Monsma (919) 775-2201
2
<PAGE> 1
FEDDERS CORPORATION ANNOUNCES COMMENCEMENT OF
TENDER OFFER FOR TRION, INC.
Liberty Corner, NJ - July 15, 1999 - Fedders Corporation (NYSE: FJA &
FJC), a global air conditioning company, announced today that TI Acquisition
Corp., an indirect wholly owned subsidiary, has commenced a cash tender offer to
purchase all of the outstanding shares of Trion, Inc. (NASDAQ: TRON) at a price
of $5.50 per share.
The offer is being made pursuant to the previously announced merger
agreement among Fedders Corporation, TI Acquisition Corp. and Trion, Inc. The
offer is conditioned upon the tender of at least 80.0% of the shares of Trion
common stock outstanding on a fully diluted basis, certain regulatory filings
and other customary conditions. The offer and withdrawal rights are scheduled to
expire at 12:00 mid night, New York City time, on Wednesday, August 11, 1999,
unless the offer is extended. TM Capital Corp. is acting as the Dealer Manager
and D.F. King & Co., Inc. is acting as the Information Agent in connection with
the offer.
Trion, a world leader in the indoor air quality industry, manufactures and
sells a broad line of high-performance products that improve indoor air quality
in cleanrooms, industrial/commercial and residential environments. Their
extensive line of products includes electronic air cleaners, HEPA & ULPA
filters, humidifiers and dust collectors.
Visit the Fedders investor information website at www.FEDDERS.com to
access additional information on Fedders including annual reports, SEC filings
and special reports.
This press release is neither an offer to purchase nor a solicitation of
an offer to sell securities. The tender offer is made only through the Offer to
Purchase and the related Letter of Transmittal which is being mailed to
stockholders today. Additional copies can be obtained by contacting the Dealer
Manager at (212) 809-1360 (call collect) or the Information Agent at (800)
769-1414.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated July
15, 1999, and the related Letter of Transmittal, and is being made to all
holders of Shares. The Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction or any administrative or judicial action pursuant thereto.
In any jurisdiction where securities, blue sky or other laws require the Offer
to be made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of TI Acquisition Corp. by TM Capital Corp. or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
of
Trion, Inc.
at
$5.50 Net Per Share
by
TI Acquisition Corp.
an indirect wholly owned subsidiary of
Fedders Corporation
TI Acquisition Corp., a Pennsylvania corporation ("Purchaser") and an indirect
wholly owned subsidiary of Fedders Corporation, a Delaware corporation
("Parent"), is offering to purchase all of the outstanding shares of Common
Stock, par value $.50 per share (the "Shares"), of Trion, Inc., a Pennsylvania
corporation (the "Company"), at a price of $5.50 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 July 15, 1999 (the "Offer to Purchase") and
in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, AUGUST 11, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there being validly tendered
and not withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase) that number of Shares which, when added to the Shares beneficially
owned by Parent or Purchaser (if any), represents at least 80% of the Shares
outstanding (on a fully diluted basis) on the date Shares are accepted for
payment. The Offer is also subject to the other conditions set forth in the
Offer to Purchase. See Section 14 of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of
July 12, 1999 (the "Merger Agreement"), by and among Parent, Purchaser and the
Company. The Merger Agreement provides that, as soon as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions contained in the Merger Agreement, and in accordance with the
Pennsylvania Business Corporation Law (the "PBCL"), Purchaser will be merged
with and into the Company (the "Merger"). Following the consummation of the
Merger, the Company will continue as the surviving corporation and will be an
indirect wholly owned subsidiary of Parent. At the effective time of the Merger
(the "Effective Time"), each Share then outstanding (other than Shares held by
the Company or any of its subsidiaries, Parent or any of its subsidiaries,
including Purchaser, and other than Shares held by shareholders, if any, who
properly perfect their dissenters' rights under the PBCL) will be converted into
the right to receive $5.50 in cash (or such higher price paid pursuant to the
Offer) without interest thereon.
In connection with the execution of the Merger Agreement, Parent and the Company
have entered into a Stock Option Agreement, dated as of July 12, 1999, pursuant
to which the Company has granted to Parent an irrevocable option to purchase,
upon the occurrence of certain conditions, up to the number of Shares equal to
19.9% of the Shares outstanding on the date thereof.
Parent and Purchaser have entered into Shareholder Agreements dated as of July
12, 1999, with the directors of the Company (the "Director Shareholders"),
pursuant to which each of such Director Shareholders has agreed, among other
things, (1) to tender to Purchaser pursuant to the Offer at $5.50 per share, all
Shares beneficially owned by such Director Shareholder (719,764 Shares in the
aggregate)
<PAGE> 2
which will result in the Parent and its affiliates beneficially owning 10.1% of
the outstanding Shares; (2) to grant to Parent an option exercisable under
certain circumstances to purchase the Shares beneficially owned by such Director
Shareholder and (3) to vote all Shares beneficially owned by such Director
Shareholder in favor of the Merger Agreement and against all other acquisition
proposals.
The Board of Directors of the Company by a unanimous vote of those present at
the meeting approved the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and determined that the Offer and
the Merger are fair to, and in the best interests of, the Company's Shareholders
and recommendS that its Shareholders accept the Offer and tender their Shares
pursuant to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary (as defined in the Offer to Purchase) of its acceptance for payment
of such Shares. Upon the terms and subject to the conditions of the Offer,
payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payment from
Purchaser and transmitting payment to tendering shareholders. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for such Shares (or a
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase)), (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase), and (iii) any other documents required by the Letter of Transmittal.
The per Share consideration paid to any shareholder pursuant to the Offer will
be the highest per Share consideration paid to any other shareholder pursuant to
the Offer. Under no circumstances will interest be paid on the purchase price to
be paid by Purchaser for such Shares, regardless of any extension of the Offer
or any delay in making such payment.
The term "Expiration Date" shall mean 12:00 Midnight New York City time, on
Wednesday, August 11, 1999, unless and until Purchaser (in accordance with the
terms of the Merger Agreement), shall have extended the period of time during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by Purchaser, shall
expire. Subject to the applicable rules and regulations of the Securities and
Exchange Commission and to applicable law, Purchaser expressly reserves the
right in its sole discretion (subject to the terms of the Merger Agreement), at
any time and from time to time, to extend for any reason the period of time
during which the Offer is open, including the occurrence of any of the events
specified in Section 14 of the Offer to Purchase, by giving oral or written
notice of such extension to the Depositary. Any such extension will be followed
by a public announcement thereof by no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. During
any such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering shareholder to
withdraw such shareholder's Shares. Without limiting the manner in which
Purchaser may choose to make any public announcement, Purchaser will have no
obligation to publish, advertise or otherwise communicate any such announcement
other than by issuing a press release to the Dow Jones News Service or otherwise
as may be required by applicable law.
Except as otherwise provided below, tenders of Shares made pursuant to the Offer
are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date and, unless theretofore accepted for payment
pursuant to the Offer, may also be withdrawn at any time after September 12,
1999, or such later time as may apply if the Offer is extended. For a withdrawal
to be effective, a written or telegraphic notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth in the Offer to
Purchase. Any such notice of withdrawal must specify the name of the person
having tendered the Shares to be withdrawn, the number of Shares to be withdrawn
and the name of the registered holder of the Shares to be withdrawn, if
different from the name of the person who tendered the Shares. If certificates
evidencing such Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered for the account of an
Eligible Institution (as defined in the Offer to Purchase), the
<PAGE> 3
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been delivered pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase, any notice
of withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals
of tenders of Shares may not be rescinded, and any Shares properly withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will he final and binding.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-6
under the Securities Exchange Act of 1934, as amended, is contained in the Offer
to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with the Company's shareholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
relevant documents will be mailed to record holders of Shares whose names appear
on the shareholder list and will be furnished to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the Company's shareholder lists, or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain important
information that should be read carefully before any decision is made with
respect to the Offer.
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer documents may be directed
to the Information Agent or the Dealer Manager (each as defined in the Offer to
Purchase), at their respective addresses and telephone numbers set forth below,
and copies will be furnished promptly at Purchaser's expense. Neither Parent nor
Purchaser will pay any fees or commissions to any broker or dealer or other
person other than the Dealer Manager and the Information Agent for soliciting
tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll-Free: 1-800-769-6414
The Dealer Manager for the Offer is:
TM Capital Corp.
One Battery Park Plaza, 35th Floor
New York, New York 10004
(212) 809-1360
(Call Collect)
July 15, 1999
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FEDDERS CORPORATION
TI ACQUISITION CORP.
AND
TRION, INC.
DATED AS OF
JULY 12, 1999
<PAGE> 2
Table of Contents
<TABLE>
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Page
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ARTICLE I
DEFINITIONS AND INTERPRETATION.......................................................Page 2
Section 1.1 Definitions...............................................Page 2
ARTICLE II
THE OFFER AND MERGER.................................................................Page 13
Section 2.1 The Offer.................................................Page 13
Section 2.2 Company Actions...........................................Page 14
Section 2.3 Directors.................................................Page 16
Section 2.4 The Merger................................................Page 18
Section 2.5 Effective Time............................................Page 18
Section 2.6 Closing...................................................Page 18
Section 2.7 Directors and Officers of the Surviving Corporation.......Page 19
Section 2.8 Subsequent Actions........................................Page 19
Section 2.9 Shareholders' Meetings....................................Page 19
Section 2.10 Merger Without Meeting of Shareholders....................Page 21
ARTICLE III
CONVERSION OF SECURITIES.............................................................Page 22
Section 3.1 Conversion of Capital Stock...............................Page 22
Section 3.2 Exchange of Certificates..................................Page 22
Section 3.3 Dissenting Shares.........................................Page 24
Section 3.4 Company Stock Option Plans................................Page 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................Page 26
Section 4.1 Organization and Good Standing............................Page 26
Section 4.2 Authority; Board Approvals; No Conflict...................Page 26
Section 4.3 Vote Required.............................................Page 29
</TABLE>
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<TABLE>
<S> <C>
Section 4.4 Capitalization and Ownership of Shares....................Page 29
Section 4.5 Subsidiaries and Investments..............................Page 30
Section 4.6 SEC Reports and Financial Statements......................Page 31
Section 4.7 Books and Records.........................................Page 32
Section 4.8 Title to Properties; Leases; Encumbrances.................Page 32
Section 4.9 Condition and Sufficiency of Assets.......................Page 33
Section 4.10 Accounts Receivable.......................................Page 34
Section 4.11 Inventory.................................................Page 34
Section 4.12 No Undisclosed Liabilities................................Page 34
Section 4.13 Taxes.....................................................Page 34
Section 4.14 No Material Adverse Change................................Page 35
Section 4.15 Employee Benefits.........................................Page 35
Section 4.16 Compliance with Legal Requirements; Governmental
Authorizations.......................................................................Page 37
Section 4.17 Legal Proceedings; Orders.................................Page 39
Section 4.18 Absence of Certain Changes and Events.....................Page 40
Section 4.19 Applicable Contracts; No Defaults.........................Page 42
Section 4.20 Insurance.................................................Page 45
Section 4.21 Environmental Matters.....................................Page 47
Section 4.22 Employees.................................................Page 48
Section 4.23 Labor Relations; Compliance...............................Page 49
Section 4.24 Intellectual Property Assets..............................Page 50
Section 4.25 Certain Payments..........................................Page 50
Section 4.26 Relationship with Related Persons.........................Page 51
Section 4.27 Brokers or Finders........................................Page 51
Section 4.28 Opinion of Financial Advisor..............................Page 51
Section 4.29 Year 2000.................................................Page 51
Section 4.30 Products Liability; Recalls...............................Page 53
Section 4.31 Information in Schedule 14D-9.............................Page 53
Section 4.32 Information in Proxy Statement. ..............................Page 54
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND PURCHASER.................................................................Page 54
Section 5.1 Organization and Valid Existence..........................Page 54
Section 5.2 Authority; No Conflict....................................Page 55
Section 5.3 Certain Proceedings.......................................Page 56
Section 5.4 Brokers or Finders........................................Page 56
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 5.5 Information in Offer Document. ..........................Page 56
Section 5.6 Information in Proxy Statement. ..........................Page 56
ARTICLE VI
COVENANTS............................................................................Page 57
Section 6.1 Access and Investigation..................................Page 57
Section 6.2 Operation of the Businesses of the Company................Page 57
Section 6.3 Negative Covenant. .......................................Page 58
Section 6.4 Reasonable Efforts........................................Page 59
Section 6.5 Notification; Updating of Schedules.......................Page 60
Section 6.6 No Solicitation of Competing Transaction..................Page 61
Section 6.7 Publicity.................................................Page 63
Section 6.8 Employee Arrangements.....................................Page 63
Section 6.9 Officers' and Directors' Insurance; Indemnification.......Page 64
Section 6.10 Takeover Statutes.........................................Page 64
Section 6.11 Form S-8..................................................Page 65
ARTICLE VII
CONDITIONS...........................................................................Page 65
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger....................................................Page 65
Section 7.2 Conditions to Parent's and Purchaser's Obligations to
Effect the Merger.........................................Page 66
ARTICLE VIII
TERMINATION..........................................................................Page 66
Section 8.1 Termination...............................................Page 66
Section 8.2 Effect of Termination.....................................Page 68
Section 8.3 Interpretation............................................Page 69
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE IX
MISCELLANEOUS........................................................................Page 70
Section 9.1 Fees and Expenses.........................................Page 70
Section 9.2 Amendment and Modification................................Page 71
Section 9.3 Nonsurvival of Representations and Warranties.............Page 71
Section 9.4 Notices...................................................Page 72
Section 9.5 Counterparts..............................................Page 73
Section 9.6 Entire Agreement; No Third Party Beneficiaries............Page 73
Section 9.7 Severability..............................................Page 73
Section 9.8 Governing Law.............................................Page 73
Section 9.9 Enforcement...............................................Page 74
Section 9.10 Time of Essence...........................................Page 74
Section 9.11 Extension; Waiver.........................................Page 74
Section 9.12 Assignment................................................Page 74
Annex A Certain Conditions of the Offer..............................................A-1
Annex B Articles of Incorporation of TI Acquisition Corp.............................B-1
</TABLE>
iv
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 12, 1999, by
and among Fedders Corporation ("Parent"), a Delaware corporation, TI Acquisition
Corp. ("Purchaser"), a Pennsylvania corporation and an indirect wholly owned
subsidiary of Parent and Trion, Inc. ("Company"), a Pennsylvania corporation.
WHEREAS, the Board of Directors of each of Parent, Purchaser
and the Company has approved, and deems it advisable and in the best interests
of its respective shareholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company, Parent and Purchaser desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer (as hereinafter defined) and the Merger (as hereinafter defined);
WHEREAS, as a condition and inducement to Parent's and
Purchaser's entering into this Agreement and incurring the obligations set forth
herein, each of the Director Shareholders (as hereinafter defined), concurrently
herewith, is entering into a Shareholder Agreement dated as of the date hereof,
with Parent and Purchaser, pursuant to which the Director Shareholders are
agreeing, among other things, to tender the Shares (as hereinafter defined) held
by them in the Offer and to grant Parent an option to purchase such Shares and
to make certain agreements with respect to the voting of such Shares, all upon
the terms and subject to the conditions set forth in the Shareholder Agreements
(as hereinafter defined);
WHEREAS, as a condition and inducement to Parent's and
Purchaser's entering into this Agreement and incurring the obligations set forth
herein, (i) Calvin J. Monsma ("Monsma"), concurrently herewith, is entering into
an amended and restated employment agreement dated as of the date hereof with
the Company (the "Monsma Employment Agreement"); and (ii) Steven L. Schneider
("Schneider" and, together with Monsma, the "Employees"), concurrently herewith,
is entering into an amended and restated employment agreement dated as of the
date hereof with Parent (the "Schneider Employment Agreement" and, together with
the Monsma Employment Agreement, the "Employment Agreements");
WHEREAS, as a condition and inducement to Parent's and
Purchaser's entering into this Agreement and incurring the obligations set forth
herein, the
Page 1
<PAGE> 7
Company, concurrently herewith, is entering into a stock option agreement, dated
as of the date hereof (the "Stock Option Agreement"), with Parent pursuant to
which the Company has granted Parent an option to purchase up to 19.9% of the
issued and outstanding Shares as of the date hereof, upon the terms and subject
to the conditions, set forth in the Stock Option Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context clearly requires
otherwise:
"Acquisition Proposal" shall mean any proposal or offer to
acquire all or a substantial part of the business or properties of the Company
or any Company Subsidiary or any capital stock of the Company or any Company
Subsidiary, whether by merger, tender offer, exchange offer, sale of assets or
similar transactions involving the Company or any Subsidiary, division or
operating or principal business unit of the Company.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of
the
Exchange Act.
"Agreement" or "this Agreement" shall mean this Agreement and
Plan of Merger, together with the Exhibits and Appendices hereto and the
Schedules.
"Applicable Contract" shall mean any contract (a) under which
the Company or any Subsidiary has or may acquire any rights to receive no less
than $75,000 in any twelve (12) month period following the date of this
Agreement, or (b) under which the Company or any Subsidiary has or may become
subject to any obligation or liability to pay to any other party to such
Contract no less than $75,000 in any twelve (12) month period following the date
of this Agreement.
"Articles" shall have the meaning as set forth in Section 2.9.
Page 2
<PAGE> 8
"Articles Amendment" shall mean the proposal to amend the
Articles of Incorporation of the Company to delete section 6 thereof.
"Articles Amendment Proxy Statement" shall have the meaning
set forth in Section 2.9 hereof.
"Best Efforts" shall mean the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to ensure that
such result is achieved as expeditiously as possible.
"Board Fraction" shall mean a fraction, the numerator of which
shall be the number of Shares which Parent and its Subsidiaries beneficially own
at the time of calculation of the Board Fraction, and the denominator of which
shall be the total number of Shares then outstanding.
"By-laws" shall have the meaning as set forth in Section 2.9.
"Cash Amount" shall have the meaning as set forth in 3.4(d).
"Certificate" shall mean a certificate which immediately prior
to the Effective Time represented Shares which were converted pursuant to
Section 3.1 into the right to receive the Merger Consideration.
"Closing" shall mean the closing referred to in Section 2.6.
"Closing Date" shall mean the date on which the Closing
occurs.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Company" shall mean Trion, Inc., a Pennsylvania corporation.
"Company Board of Directors" shall mean the board of directors
of the Company.
"Company Option" shall mean an option to purchase Shares which
has been granted by the Company and which is outstanding at the Effective Time.
"Company SEC Documents" shall mean each form, report,
schedule, statement and other document required to be filed by the Company since
June 1, 1996
Page 3
<PAGE> 9
under the Exchange Act or the Securities Act, including any amendment to such
document, whether or not such amendment is required to be so filed.
"Company Subsidiary" shall mean each Person which is a
Subsidiary of the Company.
"Computer Programs" shall mean:
(i) any and all computer software programs, including all
source and object code,
(ii) databases and compilations, including any and all
data and collections of data, whether machine
readable or otherwise,
(iii) billing, reporting, engineering and other management
information systems,
(iv) all descriptions, flow-charts and other work product
used to design, plan, organize and develop any of the
foregoing,
(v) all content contained on any Internet site(s), and
(vi) all documentation, including user manuals and
training materials, relating to any of the foregoing.
"Confidentiality Agreement" shall mean a letter agreement
dated February 25, 1999 between the Company and Parent.
"Consent" shall mean any approval, consent, ratification,
waiver, filing with, registration or other authorization (including any
Governmental Authorization).
"Contract" shall mean any written agreement, contract,
obligation, promise or undertaking that is legally binding.
"Defect" shall mean a defect, whether in design, manufacture,
processing, or otherwise, including, without limitation, any dangerous
propensity associated with any reasonably foreseeable use of a Product, or the
failure to warn of the existence of any defect, or dangerous propensity.
Page 4
<PAGE> 10
"Director Shareholder" shall mean Hugh E. Carr, Joseph W.
Deering, Seddon Goode, Jr., James E. Heins, F. Trent Hill, Grant R. Meyers,
Steven L. Schneider and Samuel J. Wornom III.
"Dissenting Shares" shall mean any Shares as to which the
holder thereof has demanded appraisal with respect to the Merger in accordance
with the PBCL and as of the Effective Time has neither effectively withdrawn nor
lost his right to such appraisal.
"Effective Time" shall mean the date on which the articles of
merger referred to in Section 2.5 is duly filed with the Secretary of State of
the Commonwealth of Pennsylvania or such other time as is agreed upon by the
parties and specified in such articles of merger.
"Employee" shall have the meaning set forth in the
introduction hereof.
"Employment Agreements" shall have the meaning as set forth in
the introduction hereto.
"Encumbrance" shall mean any mortgage, charge, claim,
community property interest, condition, equitable interest, lien, option,
pledge, security interest, right of first refusal or restriction of any kind,
including any restriction on use, voting, transfer, receipt of income or
exercise of any other attribute of ownership.
"Environmental Laws" shall have the meaning set forth in
Section 4.21(a) hereof.
"Expenses" shall have the meaning as set forth in Section 9.1.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Financial Statements" shall mean the financial statements of
the Company included in the Company SEC Documents.
Page 5
<PAGE> 11
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authorization" shall mean any written approval,
consent, license, permit, waiver or other authorization issued, granted, given
or otherwise made available by or under the authority of any Governmental Body
or pursuant to any Legal Requirement.
"Governmental Body" shall mean any:
(a) nation, state, county, city, town, village, district or
other jurisdiction of any nature;
(b) federal, state, local, municipal, commonwealth,
possession, foreign or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official or
entity and any court or other tribunal);
(d) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power of any nature.
"Hazardous Material" shall mean and includes petroleum
(including, without limitation, gasoline, crude oil, fuel oil, diesel oil,
lubricating oil, sludge, oil refuse, oil mixed with wastes and any other
petroleum-related product), flammable explosives, radioactive materials, any
substance defined or designated (a) as a "hazardous substance" under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C. Section 9601), as amended from time to time, and any regulations
promulgated thereunder or (b) as a "hazardous waste" under the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901), as amended from
time to time, and any regulations promulgated thereunder, and (c) any other
waste, pollutant or contaminant.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Improvements" shall have the meaning set forth in Section
4.8.
Page 6
<PAGE> 12
"Independent Directors" shall mean directors of the Company
who are directors on the date hereof, but who are not employees of the Company.
"Intellectual Property Assets" is defined in Section 4.24(a)
hereof.
"Interim Financial Statements" shall mean the unaudited
interim consolidated balance sheet of the Company as of March 31, 1999 and the
related unaudited statements of income, changes in Stockholder's equity and cash
flow for the three month period then ended, including in each case the notes
thereto.
"Key Employee" shall mean any employee of the Company or any
Subsidiary to whom the Company or any Subsidiary has agreed to pay or expects to
pay an annual salary (including commission payments) of not less than $75,000.
"Knowledge" shall mean, with respect to a particular fact or
other matter, that the directors, officers or employees having responsibility
for the subject matter at issue of such Person are actually aware of such fact
or other matter.
"Legal Requirement" shall mean any federal, state or local
statute, ordinance, regulation, administrative order or principle of common law.
"Material Adverse Change" or "Material Adverse Effect" shall
mean any change or effect (or any development that, insofar as can reasonably be
foreseen, is likely to result in any change or effect) that is materially
adverse to the business, properties, assets, prospects, financial condition or
results of operations of the Company and its Subsidiaries taken as a whole or
the ability of the Company to consummate the Transactions.
"Merger" shall mean the merger of Purchaser into the Company
referred to in Section 2.4.
"Merger Consideration" shall mean an amount of cash equal to
the Offer Price, which amount shall not include interest, regardless of when
paid.
"Minimum Condition" shall mean the condition that, pursuant to
the Offer, there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer, not less than that number of Shares which, together
with the Shares owned by Parent and Purchaser on the date hereof, constitutes at
least 80% of the Shares outstanding on a fully diluted basis (after giving
effect to the conversion or exercise of
Page 7
<PAGE> 13
all outstanding options, warrants and other rights and securities exercisable or
convertible into Shares, whether or not exercised or converted at the time of
determination).
"Nasdaq" shall mean the Nasdaq Stock Market Inc.
"Notices" shall have the meaning set forth in Section 4.30
hereof.
"NYSE" shall mean the New York Stock Exchange.
"Occurrence" shall mean any accident, happening or event which
is caused or allegedly caused by any alleged hazard or alleged defect in
manufacture, design, materials or workmanship including, without limitation, any
alleged failure to warn or any breach of express or implied warranties or
representations with respect to, or any such accident, happening or event
otherwise involving, a product (including any parts or components) which results
or is alleged to have resulted in injury or death to any person or damage to or
destruction of property, or other consequential damages, at any time.
"Offer" shall mean the cash tender offer to be made by
Purchaser pursuant to Section 2.1 to acquire any and all shares of the issued
and outstanding common stock, $0.50 par value, of the Company at the Offer
Price.
"Offer Documents" shall mean the Offer to Purchase and a form
of letter of transmittal and summary advertisement filed as exhibits to the
Schedule 14D-1, together with any amendments and supplements thereto.
"Offer Price" shall mean $5.50 per Share net to the seller in
cash, or such increased amount, if any, as Purchaser may offer to pay as
contemplated by Section 2.1(a).
"Offer to Purchase" shall mean the offer to purchase included
in the Schedule 14D-1 filed with the SEC pursuant to Section 2.1(b).
"Option Exchange Ratio" shall mean (x) the Offer Price divided
by (y) the average of the closing prices of Parent Common Stock on the NYSE
during the ten trading days preceding the fifth trading day prior to the Closing
Date.
Page 8
<PAGE> 14
"Order" shall mean any award, decision, injunction, judgment,
order, ruling, subpoena or verdict entered, issued, made or rendered by any
court, administrative agency or other Governmental Body or by any arbitrator.
"Organizational Documents" shall mean (a) the articles or
certificate of incorporation and the bylaws or code of regulations of a
corporation; (b) the partnership agreement and any statement of partnership of a
general partnership; (c) the limited partnership agreement and the certificate
of limited partnership of a limited partnership; (d) any charter or similar
document adopted or filed in connection with the creation, formation or
organization of a Person; (e) the articles of organization and the operating
agreement of a limited liability company; and (f) any amendment to any of the
foregoing.
"Parent" shall mean Fedders Corporation, a Delaware
corporation.
"Parent Option" shall mean an option to purchase shares of
Parent Common Stock.
"Parent Common Stock" shall mean shares of Class A Stock, par
value $1.00 per share, of Parent.
"Paying Agent" shall mean the bank or trust company designated
by Parent to act as agent for the holders of the Shares pursuant to Section
3.2(a).
"PBCL" shall mean the Pennsylvania Business Corporation Law.
"Person" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union or
other entity or Govern mental Body.
"Plan" shall mean a plan, program, agreement, arrangement or
program required to be included in the Schedule pursuant to Section 4.16(a).
"Proceeding" shall mean any action, arbitration, audit,
hearing, investigation, demand, litigation or suit (whether civil, criminal,
administrative, investigative or informal) commenced, brought, conducted or
heard by or before, or otherwise involving, any Governmental Body or arbitrator.
Page 9
<PAGE> 15
"Product" shall mean any product designed, manufactured,
shipped, sold, marketed, distributed and/or otherwise introduced into the stream
of commerce by or on behalf of the Company or any of its past or present
Subsidiaries.
"Proprietary Rights Agreement" shall have the meaning set
forth in Section 4.22 hereof.
"Proxy Statement" shall mean the proxy statement to be filed
by the Company with the SEC pursuant to Section 2.9(d)(ii), together with all
amendments and supplements thereto and including the exhibits thereto.
"Purchaser Common Stock" shall mean common stock, par value
$1.00 per share, of Purchaser.
"Purchaser" shall mean TI Acquisition Corp., a Pennsylvania
corporation which is an indirect wholly owned subsidiary of Parent.
"Real Property" shall have the meaning set forth in Section
4.8 hereof.
"Recalls" shall have the meaning set forth in Section 4.30
hereof.
"Related Person" shall mean (i) with respect to a particular
individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer,
partner, executor or trustee (or in a similar capacity); and
(ii) with respect to a specified Person other than an individual:
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(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, partner,
manager, executor or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person
serves as a general partner, manager or a trustee (or in a similar
capacity); and
(f) any Related Person of any individual described in clause
(b) or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 10% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 10% of the outstanding equity securities or
equity interests in a Person.
"Representative" shall mean, with respect to a particular
Person, any director, officer, partner, manager, employee, agent, consultant,
advisor or other representative of such Person, including legal counsel,
accountants and financial advisors.
"Schedule" shall mean the schedule of this date herewith
prepared and signed by the Company and delivered to Purchaser simultaneously
with the execution hereof.
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"Schedule 14D-l" shall mean the Schedule 14D-1 filed by
Purchaser with the SEC pursuant to Section 2.1(b), together with all amendments
and supplements thereto and including the exhibits thereto.
"Schedule 14D-9" shall mean the Solicitation/Recommendation
Statement on Schedule 14D-9 filed by the Company with the SEC pursuant to
Section 2.2(b), together with all amendments and supplements thereto and
including the exhibits thereto.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall have the meaning set forth in Section
4.4.
"Shares" shall mean shares of common stock, par value $0.50,
issued by the Company.
"Shareholder Agreements" shall mean the agreements, dated as
of the date hereof, among a Director Shareholder, Parent and Purchaser, pursuant
to which each Director Shareholder has agreed, among other things, to tender the
Shares held by such Director Shareholder in the Offer and to grant Parent an
option to purchase such Shares and to make certain agreements with respect to
the voting of such Shares upon the terms and subject to the conditions set forth
therein.
"Stock Option Agreement" shall have the meaning set forth in
the introduction hereto.
"Subsidiary" shall mean, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (a) at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries or (b) such party or any other Subsidiary of such party is a
general partner (excluding any such partnership where such party or any
Subsidiary of such party does not have a majority of the voting interest in such
partnership).
"Subsidiary Board of Directors" shall mean the board of
directors of a Subsidiary.
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"Superior Proposal" shall mean an unsolicited bona fide
proposal by a Person to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, all of the Shares then outstanding or all
or substantially all of the assets of the Company or to acquire, directly or
indirectly, the Company by merger or consolidation, and otherwise on terms which
the Company Board of Directors determines in good faith to be more favorable to
the Company's shareholders than the Offer and the Merger (based on the advice of
the Company's independent financial advisor that the value of the consideration
provided for in such proposal is superior to the value of the consideration
provided for in the Offer and the Merger), which is not subject to the receipt
of any necessary financing, and which, in the good faith reasonable judgment of
the Company Board of Directors, is reasonably likely to be consummated.
"Surviving Corporation" shall mean the successor or surviving
corporation in the Merger.
"Tax" or "Taxes" shall mean all taxes, charges, fees, duties,
levies, penalties or other assessments imposed by any federal, state, local or
foreign govern mental authority, including, but not limited to, income, gross
receipts, excise, property, sales, gain, use, license, custom duty,
unemployment, capital stock, transfer, franchise, payroll, withholding, social
security, minimum estimated, and other taxes, and shall include interest,
penalties or additions attributable thereto; and
"Tax Return" shall mean any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Termination Fee" shall mean the sum of $2,000,000 in U.S.
currency.
"Title IV Plan" shall mean a Plan that is subject to Section
302 or Title IV of ERISA or Section 412 of the Code.
"Transactions" shall have the meaning set forth in Section 2.2
hereof
ARTICLE II
THE OFFER AND MERGER
Section 2.1 The Offer.
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(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 and none of the events set forth in
Annex A shall have occurred and be existing, as promptly as practicable (but in
no event later than five (5) business days after the public announcement of the
execution of this Agreement), Purchaser shall commence (within the meaning of
Rule 14d-2 promulgated under the Exchange Act) a cash tender offer to acquire
any and all Shares at the Offer Price. Subject to the Minimum Condition and
subject to the other conditions set forth in Annex A hereto, Purchaser shall use
reasonable efforts to consummate the Offer in accordance with its terms and to
accept for payment and pay for Shares tendered pursuant to the Offer as soon as
Purchaser is legally permitted to do so under applicable law. The Offer shall be
made by means of the Offer to Purchase and shall be subject to the Minimum
Condition and the other conditions set forth in Annex A hereto and shall
reflect, as appropriate, the other terms set forth in this Agreement. If on the
initial scheduled expiration date of the Offer, which shall be 20 business days
after the date the Offer is commenced, all conditions to the Offer will not have
been satisfied or waived, Purchaser may, from time to time, in its sole
discretion, extend the expiration date. In addition, Purchaser may increase the
amount it offers to pay per Share in the Offer, and the Offer may be extended to
the extent required by law in connection with such increase, in each case
without the consent of the Company.
(b) As soon as practicable on the date the Offer is commenced,
Parent and Purchaser shall file with the SEC a tender offer statement on
Schedule 14D-1 with respect to the Offer. The Schedule 14D-1 will include, as
exhibits, the Offer to Purchase and a form of letter of transmittal and summary
advertisement.
(c) Parent and Purchaser will take all steps necessary to
cause the Offer Documents to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. Parent and Purchaser, on the one hand, and the Company,
on the other hand, will promptly correct any information provided by it for use
in the Offer Documents if and to the extent that it shall have become false or
misleading in any material respect, and Purchaser will take all steps necessary
to cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws.
Section 2.2 Company Actions.
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(a) The Company hereby approves of and consents to the Offer
and represents that the Company Board of Directors, at a meeting duly called and
held, has by the unanimous vote of all directors present (i) determined that
each of the Agreement, the Stock Option Agreement, the Offer and the Merger are
fair to and in the best interests of the shareholders of the Company, (ii)
approved this Agreement, the Stock Option Agreement, the Offer, the acquisition
of Shares pursuant to the Offer, the Shareholder Agreements, the Stock Option
Agreement and the Merger (collectively, the "Transactions"), (iii) approved the
Articles Amendment, directed that the Articles Amendment be submitted to a vote
of the shareholders and resolved to recommend that the shareholders of the
Company approve the Articles Amendment, (iv) received the opinion of Harris
Williams & Co., financial advisor to the Company, to the effect that the Offer
Price to be received by holders of Shares pursuant to the Offer and the Merger
Consideration pursuant to the Merger is fair to the shareholders of the Company
from a financial point of view, (v) resolved to recommend that the shareholders
of the Company accept the Offer, tender their Shares thereunder to Purchaser and
approve and adopt this Agreement, the Articles Amendment and the Merger, (vi)
determined to waive any rights the Company may have under any agreement or
otherwise to object to the transfer to Purchaser in the Offer of all Shares held
by the Director Shareholders pursuant to the Shareholder Agreements, (vii)
consented to the transfer to Purchaser of all such Shares, (viii) duly
authorized the Transactions prior to Parent or Purchaser becoming an "interested
shareholder" as defined in Section 2553 of the PBCL and (ix) approved the
Transactions in such manner as to avoid the application of Subchapter F of
Chapter 25 of the PBCL. The Company has taken all necessary corporate action so
that no "business combination," "fair price," "control share acquisition" or
"moratorium" statute or other similar statute or regulation of any state "blue
sky" or securities law statute (including, without limitation, the provisions of
Section 2538 and Subchapters F, G, H, I and J of Chapter 25 of the PBCL (each, a
"Takeover Statute"), but excluding the provisions of Subchapter D of Chapter 15
of the PBCL and Subchapter E of Chapter 25 of the PBCL or any applicable
anti-takeover provision in the Articles (except for Section 6 thereof) or
By-laws is applicable to the Company or the Transactions. None of the aforesaid
actions by the Company Board of Directors has been amended, rescinded or
modified. As soon as practicable on the date the Offer is commenced, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9, which shall contain the recommendation referred to in Section 4.2(b). At
the time the Offer Documents are first mailed to the shareholders of the
Company, the Company shall mail or cause to be mailed to the shareholders of the
Company such Schedule 14D-9 together with such Offer Documents. The Company
further agrees to take all steps necessary to cause the Schedule 14D-9 to be
disseminated to holders of the Shares, as and to the extent required by
applicable federal securities laws. Each of the
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Company, on the one hand, and Parent and Purchaser, on the other hand, agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that it shall have become false and misleading in any
material respect and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Parent and its counsel shall be
given the opportunity to review the Schedule 14D-9 before it is filed with the
SEC. In addition, the Company agrees to provide Parent, Purchaser and their
counsel with any comments, whether written or oral, that the Company or its
counsel may receive from time to time from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments or other
communications.
(b) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to Purchaser mailing labels, security position
listings and any available listing, or computer file containing the names and
addresses of all recordholders of the Shares as of a recent date, and shall
furnish Purchaser with such additional information (including, but not limited
to, lists of holders of the Shares, updated, and their addresses, mailing labels
and lists of security positions) and assistance as Purchaser or its agents may
reasonably request in communicating the Offer to the record and beneficial
holders of the Shares. Except for such steps as are necessary to disseminate the
Offer Documents, Parent and Purchaser shall hold in confidence the information
contained in any of such labels and lists and the additional information
referred to in the preceding sentence, will use such information only in
connection with the Offer, and, if this Agreement is terminated, will upon
request of the Company deliver or cause to be delivered to the Company all
copies of such information then in its possession or the possession of its
agents or representatives.
Section 2.3 Directors.
(a) Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, of the Company as is equal to
the product of the total number of directors on such Company Board of Directors
(giving effect to the directors designated by Parent pursuant to this sentence)
multiplied by the Board Fraction. The Directors so designated by Parent shall
take office immediately after (i) the purchase of and payment for any Shares by
Parent or any of its Subsidiaries as a result of which Parent and its
Subsidiaries owns beneficially at least a majority of then outstanding Shares
and (ii) compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, whichever shall occur later. In furtherance thereof, the
Company shall, upon request of the Parent, use its best efforts promptly either
to
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increase the size of its Board of Directors or to secure the resignations of
such number of its incumbent directors, or both, as is necessary to enable such
designees of Parent to be so elected or appointed to the Company Board of
Directors, and the Company shall take all actions available to the Company to
cause such designees of Parent to be so elected or appointed at such time. At
such time, the Company shall, if requested by Parent, also take all action
necessary to cause persons designated by Parent to constitute the same Board
Fraction of (i) each committee of the Company Board of Directors, (ii) each
board of directors (or similar body) of each Company Subsidiary and (iii) each
committee (or similar body) of each such board.
(b) The Company shall promptly take, at its expense, all
actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-l
promulgated thereunder in order to fulfill its obligations under Section 2.3(a),
including mailing to shareholders the information required by such Section 14(f)
and Rule 14f-1 as is necessary to enable Parent's designees to be elected or
appointed to the Company Board of Directors immediately after the purchase of
and payment for any Shares by Parent or any of its Subsidiaries as a result of
which Parent and its Subsidiaries owns beneficially at least a majority of then
outstanding Shares. Parent or Purchaser will supply the Company all information
with respect to either of them and their nominees, officers, directors and
Affiliates required to be disclosed by such Section 14(f) and Rule 14f-1. The
provisions of this Section 2.3 are in addition to and shall not limit any rights
which Purchaser, Parent or any of their Affiliates may have as a holder or
beneficial owner of Shares as a matter of law with respect to the election of
directors or otherwise.
(c) In the event that Parent's designees are elected or
appointed to the Company Board of Directors, until the Effective Time, the
Company Board of Directors shall have at least two directors who are Independent
Directors, provided that, in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, any remaining Independent
Directors (or Independent Director, if there be only one remaining) shall be
entitled to designate persons to fill such vacancies who shall be deemed to be
Independent Directors for purposes of this Agreement or, if no Independent
Director then remains, the other directors shall designate two persons to fill
such vacancies who shall not be shareholders, Affiliates or associates of Parent
or Purchaser, and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees constitute a majority of the
directors on the Company Board of Directors, the affirmative vote of a majority
of the Independent Directors shall be required after the acceptance for payment
of Shares pursuant to the Offer and prior to the Effective Time, to (a) amend or
terminate this Agreement by the Company, (b)
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exercise or waive any of the Company's rights, benefits or remedies hereunder if
such exercise or waiver materially and adversely affects holders of Shares other
than Parent or Purchaser, or (c) take any other action under or in connection
with this Agreement if such action materially and adversely affects holders of
Shares other than Parent or Purchaser; provided, that if there shall be no such
directors, such actions may be effected by unanimous vote of the entire Company
Board of Directors.
Section 2.4 The Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time, the Company and Purchaser shall
consummate a merger pursuant to which (a) Purchaser shall be merged with and
into the Company and the separate corporate existence of Purchaser shall
thereupon cease, (b) the Company shall be the successor or surviving corporation
in the Merger and shall continue to be governed by the laws of the Commonwealth
of Pennsylvania, and (c) the separate corporate existence of the Company with
all its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except as set forth in this Section 2.4. Pursuant to
the Merger, (x) the articles of incorporation of the Company shall be amended in
its entirety to read as set forth in Annex B, and, as so amended, shall be the
articles of incorporation of the Surviving Corporation until thereafter amended
as provided by law and such articles of incorporation, and (y) the by-laws of
Purchaser, as in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Corporation until thereafter amended as provided by
law, by such articles of incorporation or by such by-laws. The Merger shall have
the effects specified in the PBCL.
Section 2.5 Effective Time. Parent, Purchaser and the Company
will cause the articles of merger to be executed and filed on the Closing Date
(or on such other date as Parent and the Company may agree) with the Secretary
of the Common wealth of Pennsylvania as provided in the PBCL. The Merger shall
become effective on the date and at the time when such articles of merger is
duly filed with the Secretary of State of the Commonwealth of Pennsylvania or
such other time as is agreed upon by the parties and specified in such articles
of merger.
Section 2.6 Closing. The closing of the Merger shall take
place at 10:00 a.m. on a date to be agreed upon by the parties, and if such date
is not agreed upon by the parties, the Closing shall occur on the second
business day after satisfaction or waiver of all of the conditions set forth in
Article VI, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York.
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Section 2.7 Directors and Officers of the Surviving
Corporation. The directors of Purchaser and the officers of the Company at the
Effective Time shall, from and after the Effective Time, be the directors and
officers, respectively, of the Surviving Corporation until their successors
shall have been duly elected or appointed or qualified or until their earlier
death, resignation or removal in accordance with the articles of incorporation
and the by-laws of the Surviving Corporation. If, at the Effective Time, a
vacancy shall exist on the Company Board of Directors or in any office of the
Surviving Corporation, such vacancy may thereafter be filled in the manner
provided by law.
Section 2.8 Subsequent Actions. If at any time after the
Effective Time, the Surviving Corporation will consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable 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, properties or assets of either of the Company or Purchaser acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or Purchaser, all such
deeds, bills of sale, instruments of conveyance, assignments and assurances and
to take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
Section 2.9 Shareholders' Meetings.
(a) Following the acceptance for payment and purchase of
Shares by Purchaser pursuant to the Offer, the Company shall take all action
necessary in accordance with the PBCL, the Company's articles of incorporation
(the "Articles") and by-laws (the "By-laws") and the Exchange Act to effect the
Articles Amendment. The Articles Amendment shall require the approval of at
least 80% of the voting securities of the Company entitled to vote thereon. In
order to effect the Articles Amendment, the Company, acting through the Company
Board of Directors shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its shareholders as promptly as practicable
following the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer for the
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purpose of considering and taking action upon the approval of the
Articles Amendment;
(ii) if required, prepare and file with the SEC a
preliminary proxy or information statement relating to the Articles
Amendment and use its Best Efforts to obtain and furnish the
information required to be included by the SEC in such proxy statement
and, after consultation with Parent, to respond promptly to any
comments made by the SEC with respect to such proxy statement and cause
a definitive proxy or information statement (the "Articles Amendment
Proxy Statement"), including any amendment or supplement thereto to be
mailed to its shareholders;
(iii) include in the Articles Amendment Proxy
Statement the recommendation of the Company Board of Directors that
shareholders of the Company vote in favor of the approval of the
Articles Amendment; and
(iv) use its Best Efforts to solicit proxies in favor
of the Articles Amendment from holders of Shares and shall take all
other action necessary or, in the reasonable opinion of Parent,
advisable to secure any vote or consent of shareholders required by the
PBCL, the Articles and the By-laws to effect the Articles Amendment.
(b) Parent will provide the Company with the information
concerning Parent and Purchaser required to be included in the Articles
Amendment Proxy Statement.
(c) Parent shall vote, or cause to be voted, in favor of the
approval of the Articles Amendment all Shares owned by Parent, Purchaser or any
of Parent's other Subsidiaries.
(d) If required by applicable law in order to consummate the
Merger, the Company, acting through the Company Board of Directors, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its shareholders as promptly as practicable
following the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer for the purpose of considering and
taking action upon the approval of the Merger and the adoption of this
Agreement;
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(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this
Agreement and use its best efforts to obtain and furnish the
information required to be included by the SEC in the Proxy Statement
(as hereinafter defined) and, after consultation with Parent, to
respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive proxy
or information statement, including any amendment or supplement thereto
to be mailed to its shareholders, provided that no amendment or
supplement to such Proxy or information statement will be made by the
Company without consultation with Parent and its counsel;
(iii) include in the Proxy Statement the
recommendation of the Company Board of Directors that shareholders of
the Company vote in favor of the approval of the Merger and the
adoption of this Agreement; and
(iv) use its best efforts to solicit from holders of
Shares proxies in favor of the Merger and shall take all other action
necessary or, in the reasonable opinion of Parent, advisable to secure
any vote or consent of shareholders required by the PBCL, the Articles
and the By-laws to effect the Merger.
(e) Parent will provide the Company with the information
concerning Parent and Purchaser required to be included in the Proxy Statement.
(f) Parent shall vote, or cause to be voted, in favor of the
approval of the Merger and the approval and adoption of this Agreement:
(i) all shares of capital stock of Purchaser, and
(ii) all Shares owned by Parent, Purchaser or any of
Parent's other Subsidiaries.
Section 2.10 Merger Without Meeting of Shareholders.
Notwithstanding Section 2.9, in the event that Parent, Purchaser and any other
Subsidiaries of Parent shall acquire at least 80% of the outstanding Shares,
pursuant to the Offer or otherwise, sufficient to enable Purchaser or the
Company to cause the Merger to become effective without a meeting of
shareholders of the Company, the parties hereto shall, at the request of Parent
and subject to Article VII, take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
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without a meeting of shareholders of the Company, in accordance with Section
1924 of the PBCL.
ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any further action on the part of the
holders of any Shares or holders of Purchaser Common Stock:
(a) Purchaser Common Stock. Each issued and outstanding share
of Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each Share owned by the Company as treasury stock and each Share owned by
Parent, Purchaser or any other wholly owned Subsidiary of Parent (other than
shares in trust accounts, managed accounts, custodial accounts and the like that
are beneficially owned by third parties) shall be cancelled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Shares. Each issued and outstanding Share
(other than Shares to be cancelled in accordance with Section 3.1(b) and other
than any Dissenting Shares) shall be converted into the right to receive the
Merger Consideration, payable to the holder thereof, without interest, upon
surrender of the certificate formerly representing such Share in the manner
provided in Section 3.2. From and after the Effective Time, all such converted
Shares shall no longer be outstanding and shall be deemed to be cancelled and
retired and shall cease to exist, and each holder of a certificate representing
any such Shares shall cease to have any rights with respect to such shares
except the right to receive the Merger Consideration therefor, without interest,
upon the surrender of such certificate in accordance with Section 3.2.
Section 3.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank, trust company
or other Person, reasonably acceptable to the Company, to act as agent for the
holders of the Shares in connection with the Merger to receive in trust the
funds to which holders
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of the Shares shall become entitled pursuant to Section 3.1(c). At the Effective
Time, Parent or Purchaser shall deposit, or cause to be deposited, with the
Exchange Agent for the benefit of holders of Shares the aggregate consideration
to which such holders shall be entitled at the Effective Time pursuant to
Section 3.1(c). Such funds shall be invested as directed by Parent or the
Surviving Corporation pending payment thereof by the Paying Agent to holders of
the Shares. Earnings from such investments shall be the sole and exclusive
property of Purchaser and the Surviving Corporation, and no part of such
earnings shall accrue to the benefit of holders of Shares.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Paying Agent to mail to each
holder of record of a Certificate or 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 such form and have such other provisions not
inconsistent with this Agreement as Parent may specify) and (ii) instructions
for use in effecting the surrender of Certificates in exchange for payment of
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, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each Share formerly represented by such Certificate, and the
Certificate so surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 3.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 3.2.
(c) Transfer Books; No Further Ownership Rights in the Shares.
At the Effective Time, the stock transfer books of the Company shall be closed,
and thereafter there shall be no further registration of transfers of the Shares
on the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time
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shall cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law.
(d) Termination of Fund; No Liability. At any time following
six (6) months after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds (including any
earnings received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look only to the Surviving
Corporation (subject to abandoned property, escheat or other similar laws) and
only as general creditors thereof with respect to the Merger Consideration
payable upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
Section 3.3 Dissenting Shares.
Notwithstanding anything in this Agreement to the contrary,
Shares that are issued and outstanding immediately prior to the Effective Time
and that are held by Shareholders who (i) have not voted such shares in favor of
the Merger and (ii) have delivered timely a written demand for appraisal of such
shares in the manner provided in Chapter 15 of the PBCL shall not be cancelled
and converted into the right to receive the Merger Consideration, unless and
until such Shareholder shall have failed to perfect, or effectively shall have
withdrawn or lost, such Shareholder's right to appraisal and payment under the
PBCL, but rather, such Shareholders shall be entitled to payment of the fair
value of their shares determined and payable in accordance with the provisions
of Chapter 15, Subchapter D of the PBCL. If such Shareholder shall have so
failed to perfect, or effectively shall have withdrawn or lost such right, the
Shares owned by such Shareholder shall thereupon be deemed to have been canceled
and converted as described in Section 3.1 at the Effective Time, and each Share
owned by such Shareholder shall represent solely the right to receive the Merger
Consideration, without interest. From and after the Effective Time, no
Shareholder who has demanded appraisal rights as provided in Chapter 15,
Subchapter D of the PBCL shall be entitled to vote his or her Shares for any
purpose or to receive payment of dividends or other distributions with respect
to such shares (except payment of dividends or other distribution payable to
Shareholders of record at a date which is prior to the Effective Time). The
Company shall give Parent prompt notice of all written demands received
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by it for appraisal of Shares and shall not settle or compromise any such demand
without the prior written consent of Parent.
Section 3.4 Company Stock Option Plans.
(a) Immediately prior to the Effective Time, each holder of a
Company Option will be entitled to receive from the Company, and shall receive,
except as provided in Section 3.4(d) hereof, in settlement of each Company
Option a Parent Option. All Company Options shall terminate as of the Effective
Time. Parent shall grant, as of the Effective Time, to the holder of any Company
Option, a Parent Option. With respect to such Parent Options (i) the number of
shares of Parent Common Stock subject to such Parent Option will be determined
by multiplying the number of Shares constituting the Company Option by the
Option Exchange Ratio, rounding any fractional share up to the nearest whole
share, and (ii) the exercise price per share of such Parent Option will be
determined by dividing the exercise price per share applicable to the Company
Option by the Option Exchange Ratio, and rounding the exercise price thus
determined up to the nearest whole cent. Except as provided above, the converted
or substituted Parent Options shall be subject to the same terms and conditions
(including, without limitation, expiration date, vesting and exercise
provisions) as were applicable to the Company Option immediately prior to the
Effective Time; provided, however, that (i) all Company Options shall vest and
become fully exercisable immediately prior to the Effective Time and (ii) any
Company Option that qualifies as an incentive stock option under Code Section
422 (an "ISO") shall, to the extent permitted by applicable Legal Requirements,
be adjusted as provided in Code Section 424(a) so that the resulting Parent
Option qualifies as an ISO.
(b) Except as may be otherwise agreed to by Parent and the
Company, all stock option plans established by the Company or any of its
Subsidiaries shall terminate as of the Effective Time and the provisions in any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of the Company or any Company
Subsidiary shall be deleted, terminated and of no further force or effect as of
the Effective Time.
(c) If and to the extent necessary or required by the terms of
the plans governing Company Options or pursuant to the terms of any Company
Option granted thereunder, prior to the Effective Time, the Company shall (i)
obtain the consent of each holder of outstanding Company Options and (ii) amend
the terms of the applicable Option Plan, in each case as is necessary to give
effect to the foregoing treatment of such Company Options.
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(d) Without limiting the foregoing, each holder of a Company
Option shall have the right (which right shall be exercised at least 5 days
prior to the Closing Date by written notice to the Company) to elect, in lieu of
the provisions of Section 3.4(a), to convert, at the Effective Time, all or a
portion of his or her Company Options which have not been exercised and which
have not expired prior to the Effective Time into the right to receive the Cash
Amount (the "Cash Election Right"). The Cash Amount shall be equal to the
product of (i) the excess, if any, of the Merger Consideration over the
exercise price per Share of such Company Option and (ii) the number of shares
constituting such Company Option, less any applicable withholding taxes.
Notwithstanding the foregoing, the Cash Election Right shall not be offered to
any holder of a Company Option that qualifies as an ISO.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser as
follows:
Section 4.1 Organization and Good Standing.
(a) Each of the Company and its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation with full corporate power and authority to conduct
its business as it is now being conducted, to own, lease or use the properties
and assets that it purports to own. lease, or use, to execute and deliver this
Agreement and the other agreements contemplated hereby to which the Company or
any Company Subsidiary is a party and to perform all of its obligations
hereunder and thereunder and under the Applicable Contracts. Each of the Company
and its Subsidiaries is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction in which either the
ownership, the lease or the use of properties owned, leased or used by it or the
nature of activities conducted by it require such qualification.
(b) The Company has delivered to Parent true and correct
copies of the Organizational Documents of the Company and its Subsidiaries, as
currently in effect.
Section 4.2 Authority; Board Approvals; No Conflict
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(a) The Company has the requisite corporate power and
authority to enter into this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated by the Stock Option Agreement and,
subject to approval of this Agreement by the holders of a majority of the
outstanding Shares, to consummate the Merger contemplated by this Agreement. The
execution, delivery and performance of this Agreement, the Stock Option
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of the Company, including the approval of the
Merger by the Company Board of Directors, subject to the approval of the
shareholders of the Company with respect to the Merger to the extent required by
applicable law. This Agreement and the Stock Option Agreement have been duly
executed and delivered by the Company and constitute the legal, valid and
binding obligation of the Company, enforceable against it in accordance with
their terms. Upon the execution and delivery by the Company of the other
agreements contemplated hereby to which it is a party, such other agreements
will constitute the legal, valid and binding obligations of the Company
enforceable against it in accordance with their respective terms.
(b) The Company Board of Directors, at a meeting duly called
and held, has by the unanimous vote of all directors present (i) determined that
each of the Agreement, the Stock Option Agreement, the Offer and the Merger are
fair to and in the best interests of the shareholders of the Company, (ii)
approved the Transactions, (iii) approved the Articles Amendment, directed that
the Articles Amendment be submitted to a vote of the shareholders and resolved
to recommend that the shareholders of the Company approve the Articles
Amendment, (iv) received the opinion of Harris Williams & Co., financial advisor
to the Company, to the effect that the Offer Price to be received by holders of
Shares pursuant to the Offer and the Merger Consideration pursuant to the Merger
is fair to the shareholders of the Company from a financial point of view, (v)
resolved to recommend that the shareholders of the Company accept the Offer,
tender their Shares thereunder to Purchaser and approve and adopt this
Agreement, the Articles Amendment and the Merger, (vi) determined to waive any
rights the Company may have under any agreement or otherwise to object to the
transfer to Purchaser in the Offer of all Shares held by the Director
Shareholders pursuant to the Shareholder Agreements, (vii) consented to the
transfer to Purchaser of all such Shares, (viii) duly authorized the
Transactions prior to Parent or Purchaser becoming an "interested shareholder"
as defined in Section 2553 of the PBCL and (ix) approved the Transactions in
such manner as to avoid the application of Subchapter F of Chapter 25 of the
PBCL. The Company has taken all necessary corporate action so that no "business
combina-
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tion," "fair price," "control share acquisition" or "moratorium" statute or
other similar statute or regulation of any state "blue sky" or securities law
statute (including, without limitation, the provisions of Section 2538 and
Subchapters F, G, H, I and J of Chapter 25 of the PBCL (each, a "Takeover
Statute"), but excluding the provisions of Subchapter D of Chapter 15 of the
PBCL and Subchapter E of Chapter 25 of the PBCL or any applicable anti-takeover
provision in the Articles (except for Section 6 thereof) or Bylaws is applicable
to the Company or the Transactions. None of the aforesaid actions by the Company
Board of Directors has been amended, rescinded or modified.
(c) Except as set forth in Schedule 4.2(c), neither the
execution and delivery of this Agreement or the other agreements contemplated
hereby nor the consummation or performance of any of the Transactions or other
transactions contemplated by such agreements will, directly or indirectly (with
or without notice or lapse of time):
(i) contravene, conflict with or result in a
violation of (A) any provision of the Organizational Documents of the
Company or any Company Subsidiary, or (B) any resolution adopted by the
board of directors or the shareholders of the Company or any Company
Subsidiary;
(ii) contravene, conflict with or result in a
violation of, or give any Governmental Body or other Person the right
to challenge any of the Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which
the Company or any Company Subsidiary or the shareholders of the
Company, or any of the assets owned or used by any of them, may be
subject;
(iii) contravene, conflict with or result in a
violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate or modify, any Governmental Authorization that is held by the
Company or any Company Subsidiary or that otherwise relates to the
business of, or any of the assets owned or used by, the Company or any
Company Subsidiary;
(iv) cause Parent, Purchaser or the Company or any
Company Subsidiary to become subject to, or to become liable for the
payment of, any Tax;
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(v) contravene, conflict with or result in a
violation or breach of any provision of, or give any Person the right
to declare a default or exercise any remedy under (with or without
notice or lapse of time, or both), or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any Applicable
Contract; or
(vi) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or used by
the Company or any Company Subsidiary, except for Encumbrances that are
imposed or created as a result of the performance by Parent and/or
Purchaser of their respective obligations under this Agreement or the
Stock Option Agreement.
(d) Except as set forth in Schedule 4.2(d), the Company is not
and will not be required to give any notice to or obtain any Consent from any
Person in connection with the execution and delivery of this Agreement, the
Stock Option Agreement, or the consummation or performance of any of the
Transactions.
Section 4.3 Vote Required. Except as set forth in Schedule
4.3, the affirmative vote of the holders of a majority of the outstanding Shares
is the only vote of the holders of any class or series of the Company's capital
stock necessary to approve the Merger. No vote of any class or series of the
Company's capital stock is necessary to approve any of the Transactions other
than the Merger and the Articles Amendment.
Section 4.4 Capitalization and Ownership of Shares. The
authorized capital stock of the Company consists of 20,000,000 shares of common
stock, $0.50 par value per share. As of the date hereof, (i) 7,161,247 shares of
common stock were issued and outstanding, all of which are duly authorized,
validly issued, fully paid and nonassessable, (ii) zero (0) shares of common
stock were held in the treasury of the Company or by Company Subsidiaries, (iii)
3,000 shares of common stock were reserved for issuance under the 1995
Non-Employee Director Stock Plan, (iv) 222,524 shares of common stock were
reserved for issuance pursuant to stock options granted and outstanding under
the Company 1985 Stock Incentive Plan and the Company 1995 Stock Incentive Plan
(the "Stock Option Plans") and (v) 169,000 shares of common stock were reserved
for issuance pursuant to options granted under agreements entered into other
than pursuant to the Stock Option Plans. All shares of common stock subject to
issuance as specified above are accounted for in Schedule 4.4 and, all
outstanding shares of capital stock of the Company are, and all shares which may
be issued upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be, when so issued, duly authorized,
validly issued, fully paid and
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nonassessable. Other than as set forth in the second sentence hereof or in
Schedule 4.4, there are no outstanding Contracts, subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or other commitments
or rights of any type relating to the issuance, sale, repurchase or transfer by
the Company of any securities of the Company, nor are there outstanding or
reserved for issuance, shares of capital stock or other voting securities of the
Company or any securities which are convertible into or exchangeable for any
shares of capital stock of the Company, and neither the Company nor any of its
Subsidiaries has any obligation of any kind to sell or issue any additional
securities or to pay for, repurchase or otherwise acquire any securities of the
Company. There are no voting trusts or other agreements or understandings to
which the Company or any Company Subsidiary is a party with respect to the
voting of the capital stock of the Company or any of the Company Subsidiaries.
The Company has no agreement, arrangement or understandings to register any
securities of the Company or any of its Subsidiaries under the United States
Securities Act of 1933, as amended (the "Securities Act"), or under any state
securities law and has not granted registration rights to any person or entity
(other than agreements, arrangements or understandings with respect to
registration rights that are no longer in effect as of the date of this
Agreement).
Section 4.5 Subsidiaries and Investments.
(a) Except as set forth in Schedule 4.5(a), neither the
Company nor any Company Subsidiary owns, directly or indirectly, any capital
stock of or other equity interest in, or in a control position (alone or in
combination with others) with respect to, any Person; and neither the Company
nor any Company Subsidiary has any Contract to acquire by any means, directly or
indirectly, any equity securities or other securities or similar interest of any
Person or any direct or indirect equity or other ownership interest in any
business. Schedule 4.5(a) sets forth a true and complete list of (i) the name
and jurisdiction of incorporation of each Company Subsidiary, (ii) the
jurisdictions in which each Company Subsidiary is duly qualified or licensed to
do business as a foreign corporation, (iii) the authorized capital stock of each
Company Subsidiary, (iv) the number of shares of each class of capital stock
outstanding of each Company Subsidiary, (v) the number of shares of each class
and percentage of outstanding voting stock of each Company Subsidiary owned by
the Company, and (vi) the names, addresses and titles of the directors and
officers of each Company Subsidiary. Except as set forth in Schedule 4.5(a), no
capital stock or any other security (including any debt security) of any Company
Subsidiary is held by any person other than the Company. All of the issued and
outstanding shares of capital stock of each Company Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable. None of the
issued and outstanding shares of capital stock of the
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Company Subsidiaries or other securities of the Company Subsidiaries was issued
in violation of any preemptive rights or any provision of any Company
Subsidiary's articles of incorporation or the Securities Act or any other Legal
Requirement.
(b) No Company Subsidiary has any outstanding securities
convertible into or evidencing the right to purchase or subscribe for any shares
of capital stock of such Company Subsidiary, and no Company Subsidiary has any
outstanding or authorized subscriptions, options, warrants, calls, rights,
commitments or other agreements of any character relating to, or obligating such
Company Subsidiary to issue any shares of, its capital stock or any securities
convertible into or evidencing the right to purchase or subscribe for any shares
of such stock. There are no Contracts, commitments, understandings or
arrangements relating to the issuance, sale or transfer of any shares of capital
stock of any Company Subsidiary or other securities of the Company or the
acquisition by any Company Subsidiary of any of its securities.
(c) Except as set forth in Schedule 4.5(c), the Company is not
subject to any obligation or requirement to provide funds to, or make any
investment in (whether in the form of a loan, capital contribution or otherwise)
any Person.
Section 4.6 SEC Reports and Financial Statements. The Company
has filed with the SEC, and has heretofore made available to Parent, true and
complete copies of, the Company SEC Documents. As of their respective dates or,
if amended, as of the date of the last such amendment filed prior to the date
hereof, the Company SEC Documents, including, without limitation, any financial
statements or schedules included therein (a) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading and (b)
complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder. None of the Company Subsidiaries is
required to file any forms, reports or other documents with the SEC. The
Financial Statements have been prepared from, and are in accordance with, the
books and records of the Company and its consolidated Subsidiaries, comply in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of unaudited consolidated
quarterly financial statements, as permitted by the instructions to Form 10Q
promulgated pursuant to the Exchange Act) applied on a consistent basis during
the period involved (except as may be stated in the notes thereto) and fairly
present the consolidated financial position and the consolidated results of
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operations and cash flows (and changes in financial position, if any) of the
Company and its consolidated Subsidiaries as of the times and for the periods
referred to therein. No financial statements of any other Person are required by
GAAP to be included in the financial statements of the Company and its
Subsidiaries.
Section 4.7 Books and Records. The books of account, minute
books, stock record books and other records of the Company and its Subsidiaries,
all of which have been made available to Parent, are substantially complete and
correct and have been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal controls. Except as
set forth in Schedule 4.7, the minute books of the Company and its Subsidiaries
contain accurate and substantially complete records of all meetings held of, and
corporate action taken by, the shareholders, the Company Board of Directors and
standing committees of the Company Board of Directors and Company Subsidiary
Board of Directors, and no meeting of any such shareholders of the Company,
Company Board of Directors or committee has been held for which minutes have not
been prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Company and its
Subsidiaries.
Section 4.8 Title to Properties; Leases; Encumbrances.
(a) Schedule 4.8 contains a complete and accurate list of all
real property owned or leased by the Company and its Subsidiaries (the "Real
Property") and all leaseholds and other interests therein owned by the Company
and its Subsidiaries. Except as set forth in Schedule 4.8, the buildings,
structures and improvements included within the Real Property (collectively, the
"Improvements") comply with (or, if not in compliance, are not required to be in
compliance unless a building permit or similar Governmental Authorization is
sought) all applicable restrictions, building ordinances and zoning ordinances
and all regulations of the applicable health and fire departments, and no
alteration, repair, improvement or other work has been performed in respect to
such Improvements within the last 120 days, other than in the ordinary course of
business. Except as set forth in Schedule 4.8, the Real Property and its
continued use, occupancy and operation as currently used, occupied and operated
does not constitute a nonconforming use under any law, code, ordinance, rule,
regulation or order affecting the Real Property, and the continued existence,
use, occupancy and operation of each Improvement, and the right and ability to
repair such Improvement in the event of casualty, is not dependent on any
special permit, exception, approval or variance except, in each case where such
nonconforming use or dependency could not have a Material
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Adverse Effect on the Company. There is no condemnation proceeding pending or
threatened with respect to any of the Real Property.
(b) Each of the Company and its Subsidiaries owns and has good
and marketable title to all the properties and assets (whether real, personal or
mixed and whether tangible or intangible) that it purports to own located in the
facilities owned or operated by it or reflected as owned in the books and
records of the Company and its Subsidiaries, including all of the properties and
assets reflected in the Financial Statements (except for assets held under
capitalized leases and equipment leased pursuant to industrial development bond
financing disclosed or not required to be disclosed in Schedule 4.8 and personal
property sold since the date of the Financial Statements, as the case may be, in
the ordinary course of business), and all of the properties and assets purchased
or otherwise acquired by the Company and its Subsidiaries since the date of the
most recent audited Financial Statements (except for personal property acquired
and sold since the date of the most recent audited Financial Statements in the
ordinary course of business), which subsequently purchased or acquired
properties and assets (other than inventory and short-term investments) are
listed in Schedule 4.8.
(c) Except as set forth on Schedule 4.8, all properties and
assets reflected in the Financial Statements are free and clear of all
Encumbrances except (a) security interests shown in the Financial Statements as
securing specified liabilities or obligations, with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, (b) security interests incurred in connection with the purchase
of property or assets after the date of the Interim Financial Statements (such
security interests being limited to the property or assets so acquired), with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (c) liens for current taxes and
assessments not yet due and payable, and (d) security interests of record as
recorded in the jurisdictions set forth in Schedule 4.8. Schedule 4.8(c) sets
forth the locations of all of the properties and assets owned by the Company and
its Subsidiaries, and describes the owner of such properties and assets in each
such jurisdiction.
Section 4.9 Condition and Sufficiency of Assets. Except as set
forth in Schedule 4.9, the equipment of the Company and its Subsidiaries is in
good operating condition and repair and is adequate for the uses to which it is
being put, and none of such equipment is in need of maintenance or repairs
except for ordinary routine maintenance and repairs that are not in the
aggregate material in nature or cost. The equipment of the Company and its
Subsidiaries is sufficient for the continued conduct
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of the business of the Company and its Subsidiaries after the Effective Time in
substantially the same manner as conducted prior to the Effective Time.
Section 4.10 Accounts Receivable. Schedule 4.10 contains a
complete and accurate list of all accounts receivable that are reflected in the
Financial Statements or on the accounting records of the Company as of March 31,
1999 (the "Accounts Receivable"), which list sets forth the aging of such
Accounts Receivable. All Accounts Receivable of the Company and its Subsidiaries
as of the Effective Time represent or will represent valid obligations arising
from sales actually made or services actually performed in the ordinary course
of business. Unless paid prior to the Effective Time, the Accounts Receivable
are or will be as of the Effective Time current and collectible net of any
reserves shown in the Financial Statements or on the accounting records of the
Company as of the Effective Time (which reserves will not exceed $400,000 as of
such date), without resort to legal proceedings.
Section 4.11 Inventory. All inventory of the Company and its
Subsidiaries, whether or not reflected in the Financial Statements, consists of
a quality usable and salable in the ordinary course of business, except for
obsolete and slow-moving items and items of below-standard quality, all of which
have been written off or written down to net realizable value in the Financial
Statements in accordance with GAAP or on the accounting records of the Company
and its Subsidiaries as of the Effective Time, as the case may be.
Section 4.12 No Undisclosed Liabilities. Except as set forth
in Schedule 4.12, neither the Company nor any Company Subsidiary has any
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent or otherwise) except for liabilities or
obligations reflected or reserved against by the Company and its Subsidiaries in
the Financial Statements and current liabilities incurred in the ordinary course
of business since the respective dates thereof which would not have a Material
Adverse Effect on the Company.
Section 4.13 Taxes. The Company and its Subsidiaries have
filed or caused to be filed on a timely basis all Tax Returns that are or were
required to be filed by or with respect to them, pursuant to applicable Legal
Requirements. The Company and its Subsidiaries have delivered or made available
to Parent copies of, and Schedule 4.13 contains a complete and accurate list of,
all such Tax Returns filed since January 1, 1996. The Company and its
Subsidiaries have paid, or made provision for the payment of, all Taxes that
have or may have become due pursuant to those Tax Returns or otherwise, or
pursuant to any assessment received by the Company and its
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Subsidiaries, except such Taxes, if any, as are listed in Schedule 4.13 and are
being contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided in the Financial Statements. The
Company shall have no obligation for the payment of any Taxes not yet due and
payable prior to the Effective Time in excess of such Taxes accrued on its books
and records in accordance with GAAP. Neither the Company nor any Company
Subsidiary has received written notice of any claim made by an authority in a
jurisdiction where neither the Company nor any Company Subsidiary files Tax
Returns that the Company or any Company Subsidiary is or may be subject to
taxation by that jurisdiction.
Section 4.14 No Material Adverse Change. Since December 31,
1998 there has not been any Material Adverse Change or Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has taken any of the actions
prohibited by Section 6.2 or otherwise acted in such a way as to impair, prevent
or impede the consummation of the Transactions.
Section 4.15 Employee Benefits.
(a) Schedule 4.15(a) sets forth a complete and correct list of
each "employee benefit plan", as such term is defined in section 3(3) of ERISA,
and each written bonus, incentive or deferred compensation, severance,
termination, retention, change of control, stock option or other equity-based,
performance or other employee or retiree benefit or compensation plan, program,
arrangement, agreement, policy or understanding that provides or may provide
benefits or compensation in respect of any employee or independent contractor or
under which any employee or independent contractor is or may become eligible to
participate or derive a benefit and that is or has been maintained or
established by the Company or its Subsidiaries or any other trade or business,
whether or not incorporated, which, together with the Company or its
Subsidiaries, is treated as a single employer under section 414 of the Code
(such other trades and businesses hereinafter referred to as the "Plan Related
Persons"), or to which the Company or any Plan Related Person contributes or is
or has been obligated or required to contribute or with respect to which the
Company may have any liability (collectively, the "Plans"). With respect to each
such Plan, the Company has provided Parent with complete and correct copies of,
(i) such Plan, if written, or a description of such Plan if not written, and
(ii) to the extent applicable to such Plan, all trust agreements, insurance
contracts or other funding arrangements, the two most recent actuarial and trust
reports, the two most recent Forms 5500 required to have been filed with the IRS
and all schedules thereto, the most recent IRS determination letter, all current
summary plan descriptions, any actuarial study of any post-employment life or
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medical benefits provided under any such Plan, if any, statements or other
communications regarding withdrawal or other multi-employer plan liabilities,
if any, and all amendments and modifications to any such document. Except as set
forth on Schedule 4.15(a), the Company has not communicated to any Employee or
any independent contractor any intention or commitment to modify any Plan or to
establish or implement any other employee, retiree or independent contractor
benefit or compensation plan or arrangement. Except as set forth on Schedule
4.15(a), neither the Company, nor any of its Subsidiaries, has any unwritten
Plans.
(b) Each Plan intended to be qualified under section 401(a) of
the Code, and the trust (if any) forming a part thereof, has received a
favorable determination letter from the IRS as to its qualification under the
Code and to the effect that each such trust is exempt from taxation under
section 501(a) of the Code, and nothing has occurred since the date of such
determination letter that could reasonably be expected to adversely affect such
qualification or tax-exempt status.
(c) (i) Neither the Company nor any Related Person has
incurred (either directly or indirectly, including as a result of an
indemnification obligation) any material liability under or pursuant to
Title I or IV of ERISA or the penalty, excise Tax or joint and several
liability provisions of the Code relating to employee benefit plans.
All material contributions and premiums required to have been paid by
the Company and each Related Person to any employee benefit plan
(within the meaning of Section 3(3) of ERISA) (including each Plan)
under the terms of any such plan or its related trust, insurance
contract or other funding arrangement, or pursuant to any Legal
Requirement have been paid within the time prescribed by any such plan,
agreement or Legal Requirement.
(ii) Each of the Plans has been operated and
administered in all material respects in compliance with its terms, all
Legal Requirements except for any failures so to comply that,
individually and in the aggregate, could not reasonably be expected to
result in a material liability or obligation on the part of the Company
or, following the Closing, Parent or any of its affiliates. There are
no pending or, to the Knowledge of the Company, threatened claims by or
on behalf of any of the Plans, by any employee or independent
contractor or otherwise involving any such Plan or the assets of any
Plan (other than routine claims for benefits).
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(iii) No Plan is a "multi-employer plan" within the
meaning of section 4001(a)(3) or section 3(37) of ERISA. No Plan is a
"multiple employer plan" within the meaning of section 4064 of ERISA.
(iv) With respect to each Title IV Plan, the present
value of accrued benefits under such plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial
report prepared by such plan's actuary with respect to such plan did
not exceed, as of its latest valuation date, then current value of the
assets of such plan allocable to such accrued benefits.
(v) No Title IV Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether
or not waived, as of the last day of the most recent fiscal year of
each Title IV Plan ended prior to the Closing Date. All contributions
required to be made with respect to any Plan on or prior to the Closing
Date have been timely made.
(d) Except as set forth on Schedule 4.15(d), no payment
required to be made to any employee associated with the Company or its
Subsidiaries as a result of the Merger under any contract or otherwise will, if
made, constitute an "excess parachute payment" within the meaning of Section
280G of the Code.
(e) Neither the Company nor any of its Subsidiaries is a party
to any Contract, agreement or other arrangement which could result in the
payment of amounts that could be nondeductible by reason of Section 162(m) of
the Code.
Section 4.16 Compliance with Legal Requirements; Governmental
Authorizations.
(a) Except as set forth in Schedule 4.16(a):
(i) each of the Company and its Subsidiaries is, and
at all times since December 31, 1998 has been, in full compliance with
each Legal Requirement that is or was applicable to it or to the
conduct or operation of its business or the ownership or use of any of
its assets;
(ii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) (A) may constitute or
result in a violation by the Company or any Company Subsidiary of, or a
failure on the part of the
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Company or any Company Subsidiary to comply with, any Legal
Requirement, or (B) may give rise to any obligation on the part of the
Company or any Company Subsidiary or Parent to undertake, or to bear
all or any portion of the cost of, any remedial action of any nature;
and
(iii) neither the Company nor any Subsidiary has
received, at any time since December 31, 1998, any written notice or to
the Knowledge of the Company any oral communication from any
Governmental Body or any other Person regarding (A) any actual,
alleged, possible or potential violation of, or failure to comply with,
any Legal Requirement, or (B) any actual, alleged, possible or
potential obligation on the part of the Company or any Company
Subsidiary to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature.
(b) Schedule 4.16(b) contains a complete and accurate list of
each Governmental Authorization that is held by the Company and its Subsidiaries
or that otherwise relates to the business of, or to any of the assets owned or
used by, the Company and its Subsidiaries. Each Governmental Authorization
listed or required to be listed in Schedule 4.16(b) is valid and in full force
and effect. Except as set forth in Schedule 4.16(b):
(i) each of the Company and its Subsidiaries is, and
at all times since December 31, 1998 has been, in full compliance with
all of the terms and requirements of each Governmental Authorization
identified or required to be identified in Schedule 4.16(b);
(ii) no event has occurred or circumstance exists
that may (with or without notice or lapse of time) (A) constitute or
result directly or indirectly in a violation of or a failure to comply
with any term or requirement of any Governmental Authorization listed
or required to be listed in Schedule 4.16(b), or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental Authorization
listed or required to be listed in Schedule 4.16(b);
(iii) neither the Company nor any Subsidiary has
received, at any time since December 31, 1998, any written notice or to
the Knowledge of the Company any other communication from any
Governmental Body or any other Person regarding (A) any actual,
alleged, possible or potential violation of or failure to comply with
any term or requirement of any Governmental
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Authorization, or (B) any actual, proposed, possible or potential
revocation, withdrawal, suspension, cancellation, termination of or
modification to any Governmental Authorization; and
(iv) since December 31, 1998, all applications
required to have been filed for the renewal of the Governmental
Authorizations listed or required to be listed in Schedule 4.16(b) have
been duly filed on a timely basis with the appropriate Governmental
Bodies, and all other filings required to have been made with respect
to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Schedule 4.16(b) collectively
constitute all of the Governmental Authorizations necessary to permit the
Company and its Subsidiaries to lawfully conduct and operate their respective
businesses in the manner they currently conduct and operate such businesses and
to permit the Company and its Subsidiaries to own and use their respective
assets in the manner in which they currently own and use such assets.
Section 4.17 Legal Proceedings; Orders.
(a) Except as set forth in Schedule 4.17(a) there is no
pending Proceeding:
(i) that has been commenced by or against the Company
or any Company Subsidiary or that otherwise relates to or may affect
the business of, or any of the assets owned or used by, the Company or
any Company Subsidiary; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any
of the Transactions.
To the Knowledge of the Company, (1) no such Proceeding has been
threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. The
Company has delivered to Parent copies of all pleadings, correspondence and
other documents relating to each Proceeding listed in Schedule 4.17(a). The
Proceedings listed in Schedule 4.17(a) will not have a Material Adverse Effect
on the Company.
(b) Except as set forth in Schedule 4.17(b):
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(i) there is no Order to which the Company or any
Company Subsidiary, or any of the assets owned or used by the Company
or any Company Subsidiary, is subject;
(ii) none of the shareholders of the Company is
subject to any Order that relates to the business of, or any of the
assets owned or used by, the Company or any Company Subsidiary; and
(iii) no officer, director, or to the Knowledge of
the Company, no agent or employee of the Company or any Company
Subsidiary is subject to any Order that prohibits such officer,
director, agent or employee from engaging in or continuing any conduct,
activity or practice relating to its business.
(c) Except as set forth in Schedule 4.17(c):
(i) each of the Company and its Subsidiaries is, and
at all times since December 31, 1998 has been, in full compliance with
all of the terms and requirements of each Order to which it, or any of
the assets owned or used by it, is or has been subject;
(ii) no event has occurred or circumstance exists
that may constitute or result in (with or without notice or lapse of
time) a violation of or failure to comply with any term or requirement
of any Order to which the Company or any Company Subsidiary, or any of
the assets owned or used by the Company or any Company Subsidiary, is
subject; and
(iii) neither the Company nor any Company Subsidiary
has received, at any time since December 31, 1998, any notice or other
communication (whether oral or written) from any Governmental Body or
any other Person regarding any actual, alleged, possible or potential
violation of, or failure to comply with, any term or requirement of any
Order to which the Company or any Company Subsidiary, or any of the
assets owned or used by the Company or any Company Subsidiary, is or
has been subject.
Section 4.18 Absence of Certain Changes and Events. Except as
set forth in Schedule 4.18, and except as otherwise consented to by Parent and
Purchaser and confirmed to the Company in writing, since December 31, 1998, the
Company has conducted its businesses only in the ordinary course of business and
there has not been any:
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(a) change in the authorized or issued capital stock of the
Company or any Company Subsidiary; grant of any stock option or right to
purchase shares of capital stock of the Company or any Company Subsidiary;
issuance of any security convertible into such capital stock; grant of any
registration rights with respect to such capital stock; purchase, redemption,
retirement or other acquisition by the Company or any Company Subsidiary of any
shares of any such capital stock; or declaration or payment of any dividend or
other distribution or payment in respect of shares of any such capital stock;
(b) amendment to the Organizational Documents of the Company
or any Company Subsidiary;
(c) increase by the Company or any Company Subsidiary of any
bonuses, salaries or other compensation to any shareholder, director, officer or
employee or entry into any employment, severance or similar Contract with any
director, officer, or employee;
(d) except in the ordinary course of business, adoption of, or
increase in the payments to or benefits under, any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement or other employee
benefit plan for or with any employees of the Company or any Company Subsidiary;
(e) damage to or destruction or loss of any asset or property
of the Company or any Company Subsidiary materially and adversely affecting the
properties, assets, business, or financial condition of the Company or any
Company Subsidiary, taken as a whole;
(f) entry into, termination of or receipt of notice of
termination of (i) any license, joint venture, credit or similar agreement, (ii)
any distributorship, dealer or sales representative or similar agreement that
was responsible for more than $1,000,000 of sales in the fiscal year ended
December 31, 1998, or (iii) any Contract or transaction involving a total
remaining commitment by or to the Company or any Company Subsidiary in excess of
$100,000;
(g) except in the ordinary course of business, sale, lease or
other disposition of any asset or property of the Company or any Company
Subsidiary or Encumbrance on any material asset or property of the Company or
any Company
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Subsidiary, including the sale, lease or other disposition of any of the
Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a
value to the Company or any Company Subsidiary in excess of $50,000;
(i) change in the accounting methods used by the Company or
any Company Subsidiary;
(j) incurrence, assumption or guarantee of the indebtedness of
the Company or any Company Subsidiary;
(k) issuance or sale of any shares of capital stock of the
Company or any Company Subsidiary, or making of any other changes in the capital
structure of the Company or any Company Subsidiary;
(l) writing-off as uncollectible of any notes or accounts
receivable, except writeoffs in the ordinary course of business charged to
applicable reserves, none of which individually or in the aggregate is material;
writing-off, writing-up or writing-down of any other material asset of the
Company or any Company Subsidiary; or altering of its customary time periods for
collection of accounts receivable or payments of accounts payable;
(m) making of any loan, advance or capital contributions to or
investment in any Person;
(n) terminating or closing of any material facility, business
or operation of the Company or any Company Subsidiary; or
(o) agreement, whether oral or written, by the Company or any
Company Subsidiary to do any of the foregoing.
Section 4.19 Applicable Contracts; No Defaults.
(a) Schedule 4.19(a) contains a complete and accurate list,
and the Company has delivered to Parent complete copies, of:
(i) each Applicable Contract;
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(ii) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement and other
Applicable Contract affecting the ownership of, leasing of, title to,
use of or any leasehold or other interest in, any real or personal
property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments per item of less than $100,000 for any twelve (12) month
period following the date of this Agreement);
(iii) each licensing agreement or other Applicable
Contract with respect to patents, trademark, copyrights or other
intellectual property, including agreements with current or former
employees, consultants or contractors regarding the appropriation or
the non-disclosure of any of the Intellectual Property Assets;
(iv) each joint venture or partnership agreement and
each other Applicable Contract (however named) involving a sharing of
profits, losses, costs or liabilities by the Company or any Company
Subsidiary with any other Person;
(v) each power of attorney that is currently
effective and outstanding; and
(vi) each amendment, supplement and modification
(whether oral or written) in respect of any of the foregoing.
Schedule 4.19(a) sets forth the date and parties to the Applicable
Contracts, copies of which have been previously delivered to Parent or
Purchaser.
(b) Except as set forth in Schedule 4.19(b):
(i) none of the shareholders of the Company (and no
Related Person of any of the shareholders of the Company) has or may
acquire any rights under, or may become subject to any obligation or
liability under, any Applicable Contract that relates to the business
of, or any of the assets owned or used by, the Company or any Company
Subsidiary; and
(ii) neither the Company nor any Company Subsidiary
nor any officer, director, agent, employee, consultant or contractor of
the Company or any Company Subsidiary is bound by any Applicable
Contract that purports
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to limit the ability of the Company or any Company Subsidiary or any
such officer, director, agent, employee, consultant or contractor to
engage in or continue any conduct, activity or practice relating to the
business of the Company or any Company Subsidiary.
(c) Except as set forth in Schedule 4.19(c), each Applicable
Contract identified or required to be identified in Schedule 4.19(a) is in full
force and effect and is valid and enforceable in accordance with its terms.
(d) Except as set forth in Schedule 4.19(d):
(i) each of the Company and its Subsidiaries is, and
at all times since December 31, 1998 has been, in substantial
compliance with all applicable terms and requirements of each
Applicable Contract under which the Company and any Company Subsidiary
has or had any obligation or liability or by which the Company and any
Company Subsidiary or any of the assets owned or used by the Company
and any Company Subsidiary is or was bound;
(ii) to the Knowledge of the Company, each other
Person that has or had any obligation or liability under any Applicable
Contract under which the Company or any Company Subsidiary has or had
any rights is, and at all times since December 31, 1998 has been, in
full compliance with all applicable terms and requirements of such
Applicable Contract;
(iii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene, conflict
with or result in a violation or breach of, or give the Company or any
Company Subsidiary or other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance
of, or to cancel, terminate or modify, any Applicable Contract; and
(iv) neither the Company nor any Company Subsidiary
has given to or received from any other Person, at any time since
December 31, 1998, any written notice or other communication regarding
any actual, alleged, possible or potential violation or breach of or
default under, any Applicable Contract.
(e) Except as set forth in Schedule 4.19(e), there are no
renegotiations of, attempts to renegotiate or outstanding rights to renegotiate,
or rights to reclaim or
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have repaid, any material amounts paid or payable to the Company or any Company
Subsidiary under current or completed Applicable Contracts with any Person and
no such Person has made written demand for such renegotiation.
(f) The Applicable Contracts relating to the provision of
products or services by the Company and its Subsidiaries have been entered into
in the ordinary course of business.
Section 4.20 Insurance.
(a) The Company has delivered to Parent:
(i) true and complete copies of all policies of
insurance to which the Company or any Company Subsidiary is a party or
under which the Company or any Company Subsidiary, or any director of
the Company or any Company Subsidiary, is or has been covered at any
time since December 31, 1998;
(ii) true and complete copies of all pending
applications for policies of insurance; and
(iii) since December 31, 1998, any statement by the
auditor of the financial statements of the Company and its Subsidiaries
with regard to the adequacy of such entity's coverage or of the
reserves for claims.
(b) Schedule 4.20(b) describes:
(i) any self-insurance arrangement by or affecting
the Company or any Company Subsidiary, including any reserves
established thereunder;
(ii) any contract or arrangement, other than a policy
of insurance, for the transfer or sharing of any risk by the Company or
any Company Subsidiary; and
(iii) all obligations of the Company or any Company
Subsidiary to third parties with respect to insurance (including such
obligations under leases and service agreements) and identifies the
policy under which such coverage is provided.
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(c) Schedule 4.20(c) sets forth, by year, for the current
policy year and each of the two preceding policy years:
(i) a summary of the loss experience under each
policy of insurance, to the extent available from the insurance
company;
(ii) a statement describing each claim under any
general liability or workers' compensation insurance policy for an
amount in excess of $50,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer,
type of insurance and period of coverage; and
(C) the amount and a brief description of
the claim; and
(iii) a statement describing the loss experience for
all claims that were self-insured, including the number and aggregate
cost of such claims (or similar statement prepared on behalf of the
Company or any Subsidiary by its third party administrator).
(d) Except as set forth in Schedule 4.20(d):
(i) all policies to which the Company or any Company
Subsidiary is a party or that provide coverage to the Company or any
Company Subsidiary or any director or officer of the Company or any
Company Subsidiary:
(A) are valid, outstanding and enforceable;
(B) are to the Knowledge of the Company
issued by an insurer that is financially sound and reputable;
(C) will continue in full force and effect
following the consummation of the Transactions; and
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(D) do not provide for any retrospective
premium adjustment or other experience-based liability on the
part of the Company; and
(ii) with respect to current insurance policies,
neither the Company nor any Company Subsidiary has received (A) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other
indication that any insurance policy is no longer in full force or
effect or will not be renewed or that the issuer of any policy is not
willing or able to perform its obligations thereunder;
(iii) each of the Company and its Subsidiaries has
paid all premiums due and has otherwise performed all of its
obligations under each policy to which the Company or any Company
Subsidiary is a party or that provides coverage to the Company or any
Company Subsidiary or any director thereof, and
(iv) each of the Company and its Subsidiaries has
given notice to the applicable insurer of all claims that may be
insured thereby.
Section 4.21 Environmental Matters.
(a) Except as set forth in Schedule 4.21(a), (i) each of the
Company and its Subsidiaries is, and at all times has been, in full compliance
with all applicable federal, state and local laws and regulations, orders, and
ordinances relating to the protection of human health or the environment
("Environmental Laws"); (ii) none of the Company or any Company Subsidiary, or
any shareholder of the Company, has received any notice or communication
(written or oral), whether from a Governmental Body, citizens group, employee or
otherwise, that alleges that the Company or any Company Subsidiary is not or may
not be in such full compliance; and (iii) to the Knowledge of the Company, there
are no circumstances, incidents, conditions or events that may prevent or
interfere with such full compliance in the future. Each of the Company and its
Subsidiaries has all necessary Governmental Authorizations or other
authorizations to comply with such Environmental Laws, and all such Governmental
Authorizations and other authorizations are identified in Schedule 4.21(a).
Except as identified in Schedule 4.21(a), the Company has provided to Parent all
assessments, reports, data, results of investigations or audits, and other
information that is in the possession of or reasonably available to the Company
regarding environmental matters pertaining to or the environmental condition of
the business of the Company and its Subsidiaries, or the
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compliance (or noncompliance) by the Company or any Company Subsidiary with any
Environmental Laws.
(b) Except as set forth in Schedule 4.21(b), there are no past
or present actions, activities, circumstances, conditions, events or incidents
that could form the basis of any Proceeding, Order or third party claim against
the Company or any Company Subsidiary based on any Environmental Law or common
law.
(c) Except as set forth in Schedule 4.21(c), there has been no
release or threatened release of any Hazardous Materials (except in compliance
with all Environmental Laws) at or from any properties or assets now or
previously owned or operated by the Company or any Company Subsidiary or at any
other locations where any Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used or processed from or by the
Company or any Company Subsidiary.
Section 4.22 Employees.
(a) Schedule 4.22(a) contains a complete and accurate list of
the following information for each Key Employee or director of the Company and
its Subsidiaries, including each Key Employee on leave of absence or layoff
status: (i) employer, name and job title; (ii) current compensation (including
commissions and bonuses, if any) paid or payable and any change in compensation
since the Interim Financial Statements; (iii) vacation and sick leave accrued,
(iv) service credited for purposes of vesting and eligibility to participate
under the following plans of the Company or any Company Subsidiary: pension,
retirement, profit-sharing, thrift-savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including investment credit
or payroll stock ownership), severance pay, insurance, medical, welfare or
vacation plan, other Pension Plan or Welfare Plan or any other employee benefit
plan or any Plan for the benefit of directors; and (v) contracts or other
agreements to which such Key Employee or director is a party, including but not
limited to any employment, confidentiality, noncompetition, consulting or
proprietary rights agreement.
(b) No Key Employee or director of the Company or any Company
Subsidiary is a party to, or is otherwise bound by, any contract, agreement or
arrangement, including any employment, confidentiality, noncompetition or
proprietary rights agreement, between such employee or director and any other
Person ("Proprietary Rights Agreement") that in any way materially adversely
affects or will affect (i) the performance of such person's duties as an
employee or director of the Company or any
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Company Subsidiary, or (ii) the ability of the Company or any Company Subsidiary
to conduct its business, including any Proprietary Rights Agreement with the
Company, its Subsidiaries, or the shareholders of the Company by any such
employee or director. Except as set forth in Schedule 4.22(b) to the Knowledge
of the Company, no director, officer or other Key Employee of the Company or any
Company Subsidiary has communicated his intention to, or the Knowledge of the
Company or any Company Subsidiary intends to terminate his employment with the
Company or any Company Subsidiary.
(c) Schedule 4.22(c) contains a complete and accurate list of
the following information for each retired employee of the Company and its
Subsidiaries or their dependents receiving benefits or scheduled to receive
benefits in the future: name, pension benefit, pension option election, retiree
medical insurance coverage, retiree life insurance coverage, and other benefits.
Section 4.23 Labor Relations; Compliance. Schedule 4.23
contains a complete and accurate list of all collective bargaining or other
labor contracts to which the Company or any Subsidiary is, or at any time since
December 31, 1998 has been, a party. Since December 31, 1998, there has not
been, and there is not currently, pending or existing, and there is not and has
not been threatened, (a) any strike, slowdown, picketing, work stoppage or
employee grievance pending; (b) any Proceeding against or affecting the Company
or any Company Subsidiary relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge, claim, action or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission, the
United States Department of Labor or any comparable Governmental Body, any
organizational activity or any other labor or employment dispute against or
affecting the Company or any Company Subsidiary or their premises; (c) any
application for certification of a collective bargaining agent; or (d) any
organizational activity by its employees. To the Knowledge of the Company, no
event has occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lockout of any employees by
the Company or any Company Subsidiary, and no such action is contemplated by the
Company or any Company Subsidiary. The Company and its Subsidiaries have
complied in all material respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
employee leave, hours, benefits, collective bargaining, the payment of social
security and similar taxes, occupational safety and health and plant closings.
Neither the Company nor any Company Subsidiary is liable for the payment of any
compensation, damages,
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taxes, fines, penalties or other amounts, however designated, for failure to
comply with any of the foregoing Legal Requirements.
Section 4.24 Intellectual Property Assets.
(a) Schedule 4.24(a) identifies all patents, trademarks,
copyrights, service marks and trade names of the Company and its Subsidiaries,
and all pending applications for any of the foregoing, and all permits, grants
and licenses (the "Intellectual Property Assets") owned by or running to or from
the Company or any Company Subsidiary or used in the conduct of their
operations. Except as set forth on Schedule 4.24(a), there are no Intellectual
Property Assets necessary in order to operate the business of the Company and
its Subsidiaries as currently conducted or being developed. The Company and its
Subsidiaries own all right, title and interest to their Intellectual Property
Assets, and each Intellectual Property Asset owned or used by the Company and
its Subsidiaries immediately prior to the Effective Time will be owned or
available for use by the Company and its Subsidiaries on identical terms and
conditions immediately subsequent to the Effective Time.
(b) Each of the Company and its Subsidiaries owns or has the
right to use without charge all necessary or desirable Intellectual Property
Assets, trade secrets, know-how, processes, designs and other technology or
information utilized in its business as currently conducted or being developed,
and to the Knowledge of the Company, such use by the Company and its
Subsidiaries does not infringe upon, misappropriate, isolate or otherwise come
into conflict with any patent, trademark, copyright, service mark, trade name or
any other intellectual property rights of any other Person. Except as set forth
on Schedule 4.24(a), none of the Company or the shareholders of the Company has
ever received any charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation.
Section 4.25 Certain Payments. Since December 31, 1998, none
of the Company, any Company Subsidiary, or any director, officer, agent or
employee of the Company or any Subsidiary, or the shareholders of the Company or
any other Person associated with or acting for or on behalf of the Company or
any Company Subsidiary, has directly or indirectly (a) made any contribution,
gift, bribe, rebate, payoff, influence payment, kickback or other payment to any
Person, private or public, regardless of form, whether in money, property or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special concessions or
for special concessions already obtained, for or in respect of the Company or
any Company Subsidiary, or (iv) in violation of any Legal Requirement; or (b)
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established or maintained any fund or asset that has not been recorded in the
books and records of the Company or any Company Subsidiary.
Section 4.26 Relationship with Related Persons. Except as set
forth in Schedule 4.26, none of the shareholders or any Related Person of the
shareholders of the Company or the Company or any Company Subsidiary has, or has
had, any interest in any property (whether real, personal or mixed and whether
tangible or intangible), used in or pertaining to the business of the Company or
any Company Subsidiary. None of the shareholders of the Company or any Related
Person of the shareholders of the Company or the Company or any Company
Subsidiary owns, or has owned (of record or as a beneficial owner), an equity
interest or any other financial or profit interest in, a Person that has (i) had
business dealings or a material financial interest in any transaction with the
Company or any Company Subsidiary, or (ii) engaged in competition with the
Company or any Company Subsidiary with respect to any line of the products or
services of the Company or any Company Subsidiary in any market currently served
by the Company or any Company Subsidiary. Except as set forth in Schedule 4.26,
none of the shareholders of the Company or any Related Person of any of the
shareholders of the Company or the Company is a party to any Contract with, or
has any claim or right against, the Company or any Company Subsidiary.
Section 4.27 Brokers or Finders. Except as set forth in
Schedule 4.27, none of the Company or any Company Subsidiary, or any of the
shareholders of the Company, or any of their respective agents has incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement. The Company has delivered to Parent true and correct copies of any
written Contracts, and summarized the terms of any oral agreements, with all of
such parties set forth on Schedule 4.27.
Section 4.28 Opinion of Financial Advisor. The Company has
received the opinion of Harris Williams & Co., to the effect that, as of the
date of this Agreement, the consideration to be received in the Offer and the
Merger by the Company's shareholders is fair to the Company's shareholders from
a financial point of view, and a complete and correct signed copy of such
opinion has been, or promptly upon receipt thereof will be, delivered to Parent.
The Company has been authorized by Harris Williams & Co. to permit the inclusion
of such opinion in its entirety in the Offer Documents and the Schedule 14D-9
and the Proxy Statement.
Section 4.29 Year 2000.
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Except as set forth on Schedule 4.29:
(a) all of the Computer Programs, computer firmware, computer
hardware (whether general or special purpose) and other similar or related items
of automated, computerized and/or software system(s) that are material to the
Company or by any of its Subsidiaries in the conduct of their respective
businesses will not malfunction, will not cease to function, will not generate
incorrect data, and will not provide incorrect results when processing,
providing, and/or receiving (i) date-related data into and between the twentieth
and twenty-first centuries and (ii) date-related data in connection with any
valid date in the twentieth and twenty-first centuries, except in each case for
failures that individually or in the aggregate, have not resulted and could not
reasonably be expected to result in a Material Adverse Effect on the Company or
its Subsidiaries;
(b) all of the products and services sold, licensed, rendered
or otherwise provided by the Company or by any of its Subsidiaries in the
conduct of their respective businesses will not malfunction, will not cease to
function, will not generate incorrect data and will not produce incorrect
results when processing, providing and/or receiving (i) date-related data into
and between the twentieth and twenty-first centuries and (ii) date-related data
in connection with any valid date in the twentieth and twenty-first centuries,
except in each case for failures that individually or in the aggregate, have not
resulted and could not reasonably be expected to result in a Material Adverse
Effect on the Company or its Subsidiaries; and neither the Company nor any of
its Subsidiaries is or shall be subject to claims or liabilities arising from
their failure to do so;
(c) neither the Company nor any of its Subsidiaries has made
other representations or warranties regarding the ability of any product or
service sold, licensed, rendered or otherwise provided by the Company or by any
of its Subsidiaries in the conduct of their respective businesses to operate
without malfunction, to operate without ceasing to function, to generate correct
data and to produce correct results when processing, providing and/or receiving
(i) date-related data into and between the twentieth and twenty-first centuries
and (ii) date-related data in connection with any valid date in the twentieth
and twenty-first centuries; and
(d) to the Knowledge of the Company and its Subsidiaries,
there is no supplier or any third party with whom the Company or its
Subsidiaries has a material business relationship, that has Computer Programs,
computer firmware, computer hardware (whether general or special purpose) and
other similar or related items of
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automated, computerized and/or software system(s), the operation of which
relates in a material way to the products or services provided by the Company or
its Subsidiaries or which are received from the third party, that will
malfunction, will cease to function, will generate incorrect data or will
produce incorrect results when processing, providing and/or receiving (i)
date-related data into and between the twentieth and twenty-first centuries and
(ii) date-related data in connection with any valid date in the twentieth and
twenty-first centuries, except in each case for failures that individually or in
the aggregate, have not resulted and could not reasonably be expected to result
in a Material Adverse Effect on the Company or its Subsidiaries.
Section 4.30 Products Liability; Recalls. (a) Except as set
forth in Schedule 4.30, (i) there is no notice, demand, claim, action, suit,
inquiry, hearing, proceeding, notice of violation or investigation of a civil,
criminal or administrative nature (collectively, "Notices") pending or
threatened before any Governmental Body in which a Product is alleged to have a
Defect or relating to or resulting from any alleged failure to warn or from any
alleged breach of express or implied warranties or representations; (ii) to the
Knowledge of the Company, no valid basis exists for any such demand, claim,
action, suit, inquiry, hearing, proceeding, notice of violation or
investigation; (iii) no demand, claim, action, suit, inquiry, hearing,
proceeding, notice of violation or investigation referred to in clause (i) or
(ii) of this Section 4.30 would, if adversely determined, have, individually or
in the aggregate, a Material Adverse Effect on the Company; (iv) to the
Knowledge of the Company, there has not been any Occurrence; (v) there has not
been any recall, rework, retrofit or post-sale warning (collectively, "Recalls")
of any Product, or any investigation or consideration of or decision made by any
person or entity concerning whether to undertake or not to undertake any Recalls
and the Company has received no Notices from any Governmental Body or any other
person with respect to the foregoing; and (vi) to the Knowledge of the Company,
there are no material Defects in design, manufacturing, materials, or
workmanship, including, without limitation, any failure to warn, or any breach
of express or implied warranties or representations, which involve any Product.
(b) Schedule 4.30 sets forth all Notices received by the
Company or its Subsidiaries since November 1, 1995 and the amount of the
reserves provided therefor.
Section 4.31 Information in Schedule 14D-9. The information
supplied by the Company expressly for inclusion in the Offer Documents and the
Schedule 14D-9 will not 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 made therein, in the light of the circumstances under
which they were made, not misleading. The
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Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published or sent or given to the Company's shareholders, shall
not 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 made therein, in the light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company with
respect to statements made therein based on information furnished by Parent or
Purchaser for inclusion in the Schedule 14D-9.
Section 4.32 Information in Proxy Statement. Each of the Proxy
Statement and the Articles Amendment Proxy Statement, if any, will not, at the
respective dates each is mailed to Company shareholders and at the respective
times of the meetings of Company shareholders to be held in connection with the
Merger or the Articles Amendment, as the case may be, 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 made therein, in the
light of the circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to statements made
therein based on information furnished by Parent or Purchaser for inclusion in
the Proxy Statement or the Articles Amendment Proxy Statement, as the case may
be. Each of the Proxy Statement and the Articles Amendment Proxy Statement will
comply in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND PURCHASER
Each of Parent and Purchaser represents and warrants to the Company as
follows:
Section 5.1 Organization and Valid Existence. Each of Parent
and Purchaser is a corporation duly organized and validly existing under the
laws of its state of incorporation with full corporate power and authority to
execute and deliver this Agreement and the other agreements contemplated hereby
to which Parent and Purchaser is a party and to perform all of its obligations
hereunder and thereunder. At the Effective Time, Purchaser will be a corporation
duly organized and validly existing under the laws of Delaware.
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Section 5.2 Authority; No Conflict.
(a) The execution and delivery of this Agreement, the Stock
Option Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action in
respect thereof on the part of Parent and Purchaser, including approval of the
Merger by the respective Board of Directors of each of Parent and Purchaser.
This Agreement and the Stock Option Agreement have been duly executed and
delivered by Parent and Purchaser and constitute the legal, valid and binding
obligations of Parent and Purchaser, enforceable against them in accordance with
their terms. Upon execution and delivery by Parent and Purchaser of the other
agreements contemplated hereby to which it is or they are a party, such other
agreements will constitute the legal, valid and binding obligations of Parent
and Purchaser, as the case may be, enforceable against them in accordance with
their respective terms.
(b) Neither the execution and delivery of this Agreement, the
Stock Option Agreement or the other agreements contemplated hereby nor the
consummation or performance of any of the Transactions or other transactions
contemplated by such agreements will, directly or indirectly (with or without
notice or lapse of time):
(i) contravene, conflict with or result in a
violation of (A) any provision of the Organizational Documents of
Parent or Purchaser, or (B) any resolution adopted by the board of
directors or the shareholders of Parent or Purchaser;
(ii) contravene, conflict with or result in a
violation of, or give any Governmental Body or other Person the right
to challenge any of the Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which
Parent or Purchaser, or any of the assets owned or used by any of them,
may be subject;
(iii) contravene, conflict with or result in a
violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate or modify, any Governmental Authorization that is held by
Parent or Purchaser or that otherwise relates to the business of, or
any of the assets owned or used by, Parent or Purchaser.
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(c) Except as set forth in Schedule 5.2(c), or as may be
required under the applicable requirements of the Securities Act, the Exchange
Act, the HSR Act, any applicable state securities or "blue sky" laws and the
PBCL, Parent and Purchaser are not and will not be required to obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement, the Stock Option Agreement or the consummation or performance of any
of the Transactions.
(d) Except as set forth in Schedule 5.2(d), no Proceeding has
been commenced by or against Parent or Purchaser that relates to or may affect
the business of, or any of the assets owned or used by Parent or Purchaser.
Section 5.3 Certain Proceedings. There is no pending
Proceeding that has been commenced against Parent or Purchaser and that
challenges, or may have the effect of preventing, delaying, making illegal or
otherwise interfering with, any of the Transactions. To the Knowledge of Parent
and Purchaser, no such Proceeding has been threatened.
Section 5.4 Brokers or Finders. Except as set forth on
Schedule 5.4, Parent, Purchaser and their officers and agents, have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
Section 5.5 Information in Offer Document. The Offer Documents
will comply as to form in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published or sent or given to the Company's shareholders, shall
not 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 made therein, in the light of the circumstances under which they were
made, not misleading, except that no representation is made by Parent or
Purchaser with respect to information furnished by the Company expressly for
inclusion in the Offer Documents.
Section 5.6 Information in Proxy Statement. None of the
information furnished by Parent or Purchaser expressly for inclusion in the
Proxy Statement will, at the date mailed to shareholders, 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 made therein, in the
light of the circumstances under which they are made, not misleading.
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ARTICLE VI
COVENANTS
Section 6.1 Access and Investigation. Between the date of this
Agreement and the Effective Time, the Company will, and will cause its
Representatives to, (a) afford Parent, Purchaser and their respective
Representatives reasonable access to the personnel, properties, operations,
contracts, books and records and other documents and data of the Company and its
Subsidiaries; (b) furnish Parent, Purchaser and their respective Representatives
with copies of all such contracts, books and records and other existing
documents and data as they may reasonably request; (c) furnish Parent, Purchaser
and their respective Representatives with a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of the federal securities laws and (d)
furnish Parent, Purchaser and their respective Representatives with such
additional financial, operating and other data and information as they may
reasonably request. Access shall include the right to conduct such environmental
studies as Parent, in its reasonable discretion, shall deem appropriate.
Section 6.2 Operation of the Businesses of the Company. Except
as set forth in Schedule 6.2 or as agreed to in writing by Parent, between the
date of this Agreement and the Effective Time, the Company will:
(a) conduct the business of the Company and its Subsidiaries
only in the ordinary course of business (including managing the working capital
of the Company and its Subsidiaries in accordance with past practice and
custom);
(b) use its Best Efforts to preserve intact the current
business organization of the Company and its Subsidiaries, keep available the
services of the current officers, employees and agents of the Company and its
Subsidiaries and maintain the relations and good will with suppliers, customers,
landlords, creditors, employees, agents and others having business relationships
with the Company and its Subsidiaries;
(c) inform Parent concerning operational matters of the
Company or any Subsidiary of a material nature; and
(d) otherwise report periodically to Parent concerning the
status of the business, operations and finances of the Company and its
Subsidiaries.
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Section 6.3 Negative Covenant. Between the date of this
Agreement and the Effective Time, and except (i) as expressly contemplated by
this Agreement, (ii) as set forth on Schedule 6.3, or (iii) as agreed in writing
by Parent:
(a) the Company will not take any action or fail to take any
action as a result of which any of the changes or events listed in Section 4.18
hereof (as modified by Schedule 4.18) occurs or is reasonably likely to occur;
(b) neither the Company nor any Company Subsidiary shall
permit any insurance policy naming it as a beneficiary or a loss payable payee
to be cancelled or terminated without notice to Parent, except policies
providing coverage for losses not in excess of $ 50,000;
(c) neither the Company nor any of its Subsidiaries shall
enter into any contract or transaction relating to the purchase of assets other
than in the ordinary course of business consistent with prior practices;
(d) neither the Company nor any Company Subsidiary shall pay,
repurchase, discharge or satisfy any of its claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
Subsidiaries;
(e) neither the Company nor any of its Subsidiaries will adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any
Company Subsidiary (other than the Merger);
(f) neither the Company nor any Company Subsidiary will (i)
change any of the accounting methods used by it unless required by GAAP or (ii)
make any election relating to Taxes, change any election relating to Taxes
already made, adopt any accounting method relating to Taxes, change any
accounting method relating to Taxes unless required by GAAP, enter into any
closing agreement relating to Taxes, settle any claim or assessment relating to
Taxes or consent to any claim or assessment relating to Taxes or any waiver of
the statute of limitations for any such claim or assessment;
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(g) neither the Company nor any of its Subsidiaries will take,
or agree to commit to take, any action that would or is reasonably likely to
result in any of the conditions to the Offer set forth in Annex A or any of the
conditions to the Merger set forth in Article VII not being satisfied, or would
make any representation or warranty of the Company contained herein inaccurate
in any respect at, or as of any time prior to, the Effective Time, or that would
materially impair the ability of the Company, Parent, Purchaser or the holders
of Shares to consummate the Offer or the Merger in accordance with the terms
hereof or materially delay such consummation; and
(h) neither the Company nor any of its Subsidiaries will enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.
Section 6.4 Reasonable Efforts.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, including without limitation Section 6.5 hereto, each of the
parties agrees to use all reasonable 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 and
the Merger, and the other Transactions, including (i) the preparation and filing
with the SEC of the Offer Documents, the Schedule 14D-9, the information
required to be distributed to the shareholders of the Company pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder as is
necessary to enable Parent's designees to be elected to the Company Board or
Directors pursuant to Section 2.3 hereof, the preliminary Proxy Statement and
the Proxy Statement and all necessary amendments or supplements thereto; (ii)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from any Governmental Body and the making of all necessary
registrations and filings (including filings with any Governmental Body, if
any) 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 Body, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iv) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of any of the Transactions, including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Body
vacated or reversed, and (v) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of this Agreement. Notwithstanding the foregoing, or any other covenant
herein contained, in connection with the receipt of any necessary
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approvals under the HSR Act, neither the Company nor any of its Subsidiaries
shall be entitled to divest or hold separate or otherwise take or commit to take
any action that limits Parent's or Purchaser's freedom of action with respect
to, or their ability to retain, the Company or any of its Subsidiaries or any
material portions thereof or any of the businesses, product lines, properties or
assets of the Company or any of its Subsidiaries, without Parent's prior written
consent.
(b) Prior to the Closing, each party shall promptly consult
with the other parties hereto with respect to, provide any necessary information
with respect to, and provide the other parties (or their respective counsel)
with copies of, all filings made by such party with any Governmental Body or any
other information supplied by such party to a Governmental Body in connection
with this Agreement, the Merger and the other Transactions. Each party hereto
shall promptly inform the other of any communication from any Governmental Body
regarding any of the Transactions. If any party hereto or Affiliate thereof
receives a request for additional information or documentary material from any
such Governmental Body with respect to any of the Transactions, then such party
shall endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other parties, an appropriate
response in compliance with such request. To the extent that transfers,
amendments or modifications of permits (including environmental permits) are
required as a result of the execution of this Agreement or consummation of any
of the Transactions, the Company shall use its best efforts to effect such
transfers, amendments or modifications.
(c) The Company and Parent shall file as soon as practicable
notifications under the HSR Act and respond as promptly as practicable to any
inquiries received from the Federal Trade Commission and the Antitrust Division
of the Department of Justice for additional information or documentation and
respond as promptly as practicable to all inquiries and requests received from
any State Attorney General or other Governmental Body in connection with
antitrust matters. Concurrently with the filing of notifications under the HSR
Act or as soon thereafter as practicable, the Company and Parent shall each
request early termination of the HSR Act waiting period. Notwithstanding the
foregoing, nothing in this Agreement shall be deemed to require Parent or
Purchaser to commence any litigation against any entity in order to facilitate
the consummation of any of the Transactions or to defend against any litigation
brought by any Governmental Body seeking to prevent the consummation of any of
the Transactions.
Section 6.5 Notification; Updating of Schedules.
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(a) Between the date of this Agreement and the Effective Time,
the Company will promptly notify Parent and Purchaser in writing if any of the
Company's representations or warranties contained in this Agreement becoming
untrue or inaccurate in any material respect (including receiving knowledge of
any fact, event or circumstance which may cause any representation qualified as
to Knowledge to be or become untrue or inaccurate in any material respect);
provided, however, that no such notification shall affect the representations
and warranties of the parties or the conditions to the obligations of the
parties under this Agreement.
(b) Between the date of this Agreement and the Effective Time,
the Company will promptly notify Parent and Purchaser of the failure by the
Company to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by them under this
Agreement; provided, however, that no such notification shall affect the
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
(c) Between the date of this Agreement and the Effective Time,
the Company shall keep up to date all of the Schedules, and shall notify Parent
and Purchaser of any changes or additions or events which may, after the lapse
of time, cause any material change or addition in any of such Schedules, whether
or not such material changes or additions relate to matters that are permitted
under this Agreement; provided, however, that no such updates shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
Section 6.6 No Solicitation of Competing Transaction.
(a) Neither the Company nor any Company Subsidiary or
Affiliate of the Company shall (and the Company shall cause the Representatives
of the Company, each Company Subsidiary and each Affiliate of the Company, not
to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any Person or
group (other than Parent, any of its Affiliates or representatives) concerning
any Acquisition Proposal, except that nothing contained in this Section 6.6 or
any other provision hereof shall prohibit the Company or the Company Board of
Directors from (i) taking and disclosing to the Company's shareholders a
position with respect to a tender or exchange offer by a third party pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such
disclosure to the Company's shareholders as, in the good faith judgment of the
Company Board of Directors, after receiving advice from outside counsel, is
required
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under applicable law, provided that the Company may not, except as permitted by
Section 6.6(b), withdraw or modify, or propose to withdraw or modify, its
position with respect to the Offer or the Merger or approve or recommend, or
propose to approve or recommend any Acquisition Proposal, or enter into any
agreement with respect to any Acquisition Proposal. Upon execution of this
Agreement, the Company will immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Notwithstanding the foregoing, prior to the time of
acceptance of Shares for payment pursuant to the Offer, the Company may furnish
information concerning its business, properties or assets to any corporation,
partnership, person or other entity or group pursuant to appropriate
confidentiality agreements, and may negotiate and participate in discussions and
negotiations with such entity or group concerning an Acquisition Proposal if:
(x) such entity or group has submitted a Superior
Proposal; and
(y) in the opinion of the Company Board of Directors
such action is required to discharge the Company Board of Director's
fiduciary duties to the Company's shareholders under applicable law,
determined only after receipt of a written opinion from independent
legal counsel to the Company that the failure to provide such
information or access or to engage in such discussions or negotiations
would cause the Company Board of Directors to violate its fiduciary
duties to the Company's shareholders under applicable law.
The Company will immediately notify Parent of the existence of any proposal,
discussion, negotiation or inquiry received by the Company, and the Company will
immediately communicate to Parent the terms of any proposal, discussion,
negotiation or inquiry which it may receive (and will immediately provide to
Parent copies of any written materials received by the Company in connection
with such proposal, discussion, negotiation or inquiry) and the identity of the
party making such proposal or inquiry or engaging in such discussion or
negotiation. The Company will promptly provide to Parent any non-public
information concerning the Company provided to any other party which was not
previously provided to Parent. The Company will keep Parent informed of the
status and details of any such Acquisition Proposal and of any amendments or
proposed amendments to any Acquisition Proposal and will promptly (but in no
case later than 24 hours) notify Parent of any determination by the Company
Board of Directors that a Superior Proposal has been made.
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(b) Except as set forth below in this subsection (b), neither
the Company Board of Directors nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by such Board of Directors or any such
committee of the Offer, this Agreement or the Merger, (ii) approve or recommend
or propose to approve or recommend, any Acquisition Proposal or (iii) enter into
any agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, prior to the time of acceptance for payment of Shares pursuant to the
Offer, the Company Board of Directors may withdraw or modify its approval or
recommendation of the Offer, this Agreement or the Merger, approve or recommend
a Superior Proposal, or enter into an agreement with respect to a Superior
Proposal, in each case at any time after the fifth business day following
Parent's receipt of written notice from the Company advising Parent that the
Company Board of Directors has received a Superior Proposal which it intends to
accept, specifying the material terms and conditions of such Superior Proposal,
identifying the person making such Superior Proposal, but only if the Company
shall have caused its financial and legal advisors to negotiate with Parent to
make such adjustments in the terms and conditions of this Agreement as would
enable the Company to proceed with the transactions contemplated herein on such
adjusted terms.
Section 6.7 Publicity. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Parent nor any of their respective Affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Merger, this Agreement or the other Transactions without prior
consultation with the other party, except as may be required by law or by any
listing agreement with a national securities exchange or trading market.
Section 6.8 Employee Arrangements
(a) Parent and Purchaser hereby acknowledge and agree that the
employment agreements and severance agreements set forth on Schedule 6.9(a)
constitute binding obligations of the Company and Parent and Purchaser will
honor such agreements after the Effective Time in accordance with their terms as
in effect on the date hereof.
(b) For a period of one (1) year following the Effective Time,
Parent and Purchaser shall continue to maintain employee benefit plans, programs
and policies for the employees of the Company which, in the aggregate, provide
benefits that are
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substantially comparable to those provided to such employees under the plans,
programs and policies maintained for such employees by the Company as of the
date hereof; provided, however, that the aggregate cost per employee of
maintaining such benefits does not increase by more than five percent (5%)
during such period.
Section 6.9 Officers' and Directors' Insurance;
Indemnification.
(a) For three (3) years after the Effective Time, Parent and
Purchaser shall maintain officers' and directors' liability insurance covering
the persons who are presently covered by the Company's officers' and directors'
liability insurance policies (copies of which have been delivered to Parent)
with respect to actions and omissions occurring prior to the Effective Time, on
terms which are not materially less favorable than the terms of such current
insurance in effect for the Company on the date hereof provided, however, that
in no event shall Parent or the Surviving Corporation be required to expend in
excess of 120% of the annual premium currently paid by the Company for such
coverage; and provided further, that, if the premium for such coverage exceeds
such amount, Parent or the Surviving Corporation shall purchase a policy with
the greatest coverage available for such 120% of the aggregate annual premiums
paid by the Company in 1999 (which the Company represents will be approximately
$47,000 on an annualized basis for 1999).
(b) For three (3) years after the Effective Time, Parent and
Purchaser shall maintain the rights to indemnification of officers and directors
provided for in the Company's bylaws as in effect on the date hereof, with
respect to indemnification for acts and omissions occurring prior to the
Effective Time, including without limitation, the transactions contemplated by
this Agreement.
Section 6.10 Takeover Statutes.
If any "business combination," "fair price," "control share
acquisition" or "moratorium" statute or other similar statute or regulation or
any state "blue sky" or securities law statute shall become applicable to the
transactions contemplated hereby, the Company and the Company Board of Directors
shall, to the extent consistent with applicable law, grant such approvals and
take such actions as are reasonably necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to minimize the effects of such statute or
regulations on the transactions contemplated hereby; provided, that this Section
6.10 shall not require the Company to seek to amend its Articles of
Incorporation to opt out of Subchapter E of Chapter 25 of the PBCL.
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Section 6.11 Form S-8. As soon as practicable following the
Effective Time, Parent shall file with the SEC a registration statement on an
appropriate form or a post-effective amendment to a previously filed
registration statement under the Securities Act, with respect to the shares of
Parent Common Stock issuable in respect of Company Options.
Section 6.12 Assistance. The Company agrees to provide, and
will cause its Subsidiaries and its and their respective officers, employees,
counsel and accountants to provide, to Parent and any of its Subsidiaries all
reasonable necessary cooperation in connection with the arrangement of any
financing to be consummated including without limitation any of the following,
the execution and delivery of any requested certificates, documents (including
without limitation any "comfort" letters from auditors and opinions of counsel)
or financial information as may be reasonably requested by Parent or any of its
Subsidiaries in connection with the financing. Parent agrees to reimburse the
Company for its reasonable out-of-pocket costs incurred in connection with such
cooperation.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or Purchaser, as the case may be, to the extent permitted by
applicable law:
(a) Shareholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the holders of the Shares, if
required by applicable law, in order to consummate the Merger;
(b) Statutes; Court Orders. No statute, rule or regulation
shall have been enacted or promulgated by any Governmental Body which prohibits
the consummation of the Merger; and there shall be no order or injunction of a
court of competent jurisdiction in effect precluding consummation of the Merger;
(c) Purchase of Shares in Offer. Parent, Purchaser or their
Affiliates shall have purchased Shares pursuant to the Offer; and
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(d) HSR Approval. The applicable waiting period under the HSR
Act shall have expired or been terminated.
Section 7.2 Conditions to Parent's and Purchaser's Obligations
to Effect the Merger. The obligations of Parent and Purchaser to consummate the
Merger shall be subject to the satisfaction on or prior to the Closing Date of
each of the following conditions, any and all of which may be waived in whole or
in part by the Parent and Purchaser, to the extent permitted by applicable law.
(a) Compliance with Obligations. All actions contemplated by
Section 3.4 shall have been taken;
(b) Representations and Warranties. The representations and
warranties of the Company set forth in Article IV shall be true in all material
respects on the date of this Agreement and as of the Effective Time;
(c) Covenants. The Company shall have complied in all material
respects with its obligations under the terms of this Agreement; and
(d) Articles Amendment. The Articles Amendment shall have been
approved by the holders of the requisite number of shares required by the PBCL
and the Articles.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. The Transactions may be terminated or
abandoned at any time prior to the Effective Time, whether before or after
shareholder approval thereof:
(a) Subject to Section 2.3(c), by the mutual written consent
of Parent and the Company;
(b) By either of the Company or Parent:
(i) if (x) the Offer shall have expired without any
Shares being purchased pursuant thereto or (y) Purchaser shall not have
accepted for payment any Shares pursuant to the Offer by December 31,
1999; provided,
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however, that the right to terminate this Agreement under this Section
8.1(b)(i) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted
in, the failure of Purchaser to purchase the Shares pursuant to the
Offer on or prior to such date; or
(ii) if any Governmental Body shall have issued an
order, decree or ruling or taken any other action (which order, decree,
ruling or other action the parties hereto shall use their reasonable
efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree, ruling or
other action shall have become final and non-appealable.
(c) By the Company:
(i) if Parent, Purchaser or any of their Affiliates
shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the
Offer; provided, that the Company may not terminate this Agreement
pursuant to this Section 8.1(c)(i) if the Company is at such time in
material breach of its obligations under this Agreement;
(ii) in connection with entering into a definitive
agreement as permitted by Section 6.6(b), provided the Company has
complied with all provisions thereof, including the notice provisions
therein, and that the Company makes simultaneous payment to Parent of
funds as required by Section 9.1(b);
(iii) if Parent or Purchaser shall have terminated
the Offer or the Offer expires without Parent or Purchaser, as the case
may be, purchasing any Shares pursuant thereto; provided that the
Company may not terminate this Agreement pursuant to this Section
8.1(c)(ii) if the Company is in material breach of this Agreement or
the Stock Option Agreement.
(d) By Parent:
(i) if, due to an occurrence, not involving a breach
by Parent or Purchaser of their obligations hereunder, which makes it
impossible to satisfy any of the conditions set forth in Annex A
hereto, Parent, Purchaser, or any of their Affiliates shall have failed
to commence the Offer on or prior to the fifth business day following
the date of the initial public announcement of the Offer;
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(ii) (A) if, prior to the purchase of Shares by
Purchaser pursuant to the Offer, the Company Board of Directors shall
have withdrawn, modified or changed in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, this Agreement
or the Merger or shall have recommended an Acquisition Proposal or (B)
there shall have been a material breach of Section 6.6, including but
not limited to the Company having executed an agreement in principle or
definitive agreement relating to an Acquisition Proposal or similar
business combination with a person or entity other than Parent,
Purchaser or their Affiliates;
(iii) if prior to the purchase of Shares pursuant to
the Offer, the Company shall have breached any representation,
warranty, covenant or other agreement contained in this Agreement which
would give rise to the failure of a condition set forth in Annex A
hereto;
(iv) any Person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent, Purchaser or their
affiliates or any group of which any of them is a member, shall have
acquired beneficial ownership (as determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of 15% or more of the Shares or any
such Person or group shall have announced its intention to acquire 15%
or more of the Shares and the Company Board of Directors has failed to
recommend against acceptance of such announcement (including by taking
no position with respect to such announcement);
(v) if the Company receives an Acquisition Proposal
from any Person (other than Parent or Purchaser), and the Company Board
of Directors takes a neutral position or makes no recommendation with
respect to such Acquisition Proposal after a reasonable amount of time
(and in no event more than five business days following such receipt)
has elapsed for the Company's Board of Directors to review and make a
recommendation with respect to such Acquisition Proposal; or
(vi) if Parent or Purchaser shall have terminated the
Offer in accordance with the terms of this Agreement without Parent or
Purchaser purchasing any Shares thereunder; provided that Parent or
Purchaser is not in material breach of this Agreement.
Section 8.2 Effect of Termination. In the event of the
termination or abandonment of the Transactions by any party hereto pursuant to
the terms of this
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Agreement, written notice thereof shall forthwith be given to the other party or
parties specifying the clause of Section 8.1 hereof pursuant to which such
termination or abandonment of the Transactions is made, and there shall be no
liability hereunder on the part of the Parent or the Company except (A) for
fraud or for breach of this Agreement prior to such termination or abandonment
of the Transactions and (B) as set forth in Section 9.1.
Section 8.3 Interpretation.
(a) When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of this Agreement
unless otherwise clearly indicated to the contrary.
(b) Whenever the words "include", "includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation."
(c) The words "hereof", "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified.
(d) The plural of any defined term shall have a meaning
correlative to such defined term, and words denoting any gender shall include
all genders. Where a word or phrase is defined herein, each of its other
grammatical forms shall have a corresponding meaning.
(e) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
(g) The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties, and no
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presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses.
(a) Except as specifically provided to the contrary in this
Agreement, including Section 9.1(b), (c) or (d), whether or not the Transactions
are consummated, all costs and expenses incurred in connection with this
Agreement and the consummation of the Transactions shall be paid by the party
incurring such expenses.
(b) If
(i) the Company shall enter into an agreement which
accepts or implements a Superior Proposal;
(ii) the Company shall terminate or abandon the
Transactions pursuant to Section 8.1(c)(ii); or
(iii) Parent shall terminate or abandon the
Transactions pursuant to Section 8.1(d)(ii), (iv) or (v);
then the Company shall pay to Parent an amount equal to the Termination Fee.
(c) If this Agreement is terminated by Parent pursuant to
Section 8.1(d)(iii) and at the time of such termination, (i) the Company has not
paid the Termination Fee to Parent pursuant to any other provision of this
Agreement and (ii) Parent is not in material breach of this Agreement, then the
Company shall pay to Parent, at the time of termination, an amount equal to
Parent's actual and reasonably documented out-of-pocket fees and expenses
incurred by Parent and Purchaser in connection with the Offer, the Merger, this
Agreement and the consummation of the Transactions including, without
limitation, the fees and expenses payable to all banks, investment banking
firms, and other financial institutions and Persons and their respective agents
and counsel incurred in connection with acting as Parent's or Purchaser's
financial advisor with respect to, or arranging or committing to provide or
providing any financing for, the Transactions (the "Expenses").
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(d) In addition, if
(i) this Agreement is terminated by Parent pursuant
to Section 8.1(d)(i), (iii) or (vi) and prior thereto there shall been
publicly announced another Acquisition Proposal;
(ii) this Agreement is terminated by the Company
pursuant to Section 8.1(c)(iii) and prior thereto there shall have been
publicly announced another Acquisition Proposal; or
(iii) either the Company or Parent terminates or
abandons the Transactions pursuant to 8.1(b)(i) and prior thereto there
shall have been publicly announced another Acquisition Proposal
and, in each such case, at the time of such termination, (i) the Company has not
paid the Termination Fee to Parent pursuant to any other provision of this
Agreement and (ii) Parent is not in material breach of this Agreement and within
12 months after such termination the Company shall enter into an agreement with
respect to an Acquisition Proposal, then concurrently with the consummation of
the transactions contemplated by such agreement, the Company shall pay an amount
equal to the difference between the Termination Fee and the Expenses, previously
paid (if any). The Termination Fee shall be paid in same day funds concurrently
with the execution of an agreement referred to in subsection (b)(i) above or any
termination or abandonment referred to in subsections (b)(ii) or (b)(iii) above,
whichever shall first occur.
Section 9.2 Amendment and Modification. Subject to applicable
law and Section 2.3, this Agreement may be amended, modified and supplemented in
any and all respects, whether before or after any vote of the shareholders of
the Company contemplated hereby, by written agreement of the parties hereto, by
action taken by their respective Boards of Directors (which in the case of the
Company shall include approvals as contemplated in Section 2.3(c)), at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the shareholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration.
Section 9.3 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
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The foregoing sentence shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
Section 9.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Purchaser, to:
Fedders Corporation
Westgate Corporate Center
505 Martinsville Road
Liberty Corner, NJ 07938-0813
Attention: General Counsel
Telephone No.: (908) 604-8686
Telecopy No.: (908) 604-8576
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Mark C. Smith
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000
and
if to the Company, to:
Trion, Inc.
101 McNeil Road
Sanford, NC 27331-0760
Attention: President
Telephone No.: (919) 775-2201
Facsimile No.: (919) 774-8536
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with a copy to:
Smith Helms Mulliss & Moore, L.L.P.
201 North Tryon Street
Charlotte, North Carolina 28202
Attention: John B. Yorke
Telephone No.: (704) 343-2000
Facsimile No.: (704) 334-8467
Section 9.5 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 9.6 Entire Agreement; No Third Party Beneficiaries.
This Agreement, the Stock Option Agreement, the Shareholder Agreements, and the
Confidentiality Agreement (including the documents and the instruments referred
to herein and therein): (a) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof, and (b) except as
provided in Sections 3.4 and 6.9 are not intended to confer upon any person
other than the parties hereto and thereto any rights or remedies hereunder.
Section 9.7 Severability. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 9.8 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
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Section 9.9 Enforcement. The parties 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 of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the Transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the Transactions
contemplated by this Agreement in any court other than a Federal or state court
sitting in the State of Delaware.
Section 9.10 Time of Essence. Each of the parties hereto
hereby agrees that, with regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
Section 9.11 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 9.2, waive compliance by the
other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
Section 9.12 Assignment. Neither this Agreement not 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 content of the other parties, except that Purchaser 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
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to the benefit of and be enforceable by the parties and their respective
successors and assigns.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
FEDDERS CORPORATION
By /s/ Robert L. Laurent
__________________________________
Name: Robert L. Laurent
Title: Executive Vice President
TI ACQUISITION CORP.
By /s/ Robert L. Laurent
__________________________________
Name: Robert L. Laurent
Title: Executive Vice President
TRION, INC.
By /s/ Steven L. Scheider
_________________________________
Name: Steven L. Scheider
Title: President and
Chief Executive Officer
<PAGE> 82
Annex A
Certain Conditions of the Offer. Notwithstanding any other
provisions of the Offer, and in addition to (and not in limitation of)
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Agreement), Purchaser 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 Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may terminate or amend the Offer as to any Shares
not then paid for, if (i) any applicable waiting period under the HSR Act has
not expired or terminated, (ii) the Minimum Condition has not been satisfied, or
(iii) at any time on or after the date of the Agreement and prior to the
expiration of the Offer, any of the following events shall occur or shall be
determined by Purchaser to have occurred:
(a) (i) there shall be threatened, instituted or
pending any suit, action or proceeding by any Governmental Body or (ii) there
shall be instituted or pending any suit, action or proceeding before any court
which in the good faith judgement of Parent and Purchaser is likely to result in
a Material Adverse Effect, in each cases of (i) or (ii), (A) seeking to prohibit
or impose any limitations on Parent's or Purchaser's ownership or operation (or
that of any of their respective Subsidiaries or Affiliates) of all or a material
portion of their or the Company's businesses or assets, or to compel Parent or
Purchaser or their respective Subsidiaries and Affiliates to dispose of or hold
separate any material portion of the business or assets of the Company or Parent
and their respective Subsidiaries, in each case taken as a whole, (B)
challenging the acquisition by Parent or Purchaser of any Shares under the Offer
or pursuant to the Stock Option Agreement or the Shareholders Agreement, seeking
to restrain, prohibit or delay the making or consummation of the Offer or the
Merger or the performance of any of the other transactions contemplated by this
Agreement, the Stock Option Agreement or the Shareholders Agreement, or seeking
to obtain from the Company, Parent or Purchaser any damages that are material in
relation to the Company and its Subsidiaries taken as a whole, (C) seeking to
impose material limitations on the ability of Parent or Purchaser, or rendering
Parent or Purchaser unable, to accept for payment, pay for or purchase some or
all of the Shares pursuant to the Offer and the Merger, (D) seeking to impose
limitations on the ability of Purchaser or Parent effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to the
Company's shareholders, (E) seeking to restrict any future business activity by
Parent or Purchaser, including,
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without limitation, requiring the prior consent of any person or entity
(including any Governmental Body) to future transactions by Parent or Purchaser,
or (F) which otherwise is reasonably likely to have a Material Adverse Affect on
the Company or, as a result of the Transactions, Parent and its Subsidiaries; or
(b) there shall be any statute, rule, regulation,
judgment, order or injunction enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger, or any other action shall be taken by any
Governmental Body, 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 (A) through (F) of paragraph (a) above; or
(c) there shall have occurred (i) any general
suspension of trading in, or limitation on prices for, securities on the NYSE or
on the Nasdaq (excluding (A) suspensions or limitations resulting solely from
physical damage or interference with such exchanges not related to market
conditions and (B) limitations on price fluctuations in effect on the date of
this Agreement), or (ii) a declaration of a banking moratorium by federal or
state authorities or any suspension of payments in respect of banks in the
United States (whether or not mandatory) imposed by federal or state authorities
on the extension of credit by lending institutions in the United States; or
(d) there shall have occurred any Material Adverse
Change (or any development that, insofar as reasonably can be foreseen, is
reasonably likely to result in any Material Adverse Change); or
(e) the Company Board of Directors or any committee
thereof (i) shall have withdrawn, modified or changed in a manner adverse to
Parent or Purchaser its approval or recommendation of the Offer, this Agreement
or the Merger, (ii) shall have recommended the approval or acceptance of an
Acquisition Proposal from, or similar business combination with, a person or
entity other than Parent, Purchaser or their Affiliates, (iii) shall have
executed an agreement in principle or definitive agreement relating to an
Acquisition Proposal from, or similar business combination with, a person or
entity other than Parent, Purchaser or their Affiliates or (iv) upon request of
Purchaser, shall fail to reaffirm its approval or recommendation of the Offer,
the Merger Agreement, or the Merger; or
(f) the Company shall have breached or failed to
perform any of its agreements under the Stock Option Agreement or breached any
of its representa-
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<PAGE> 84
tions and warranties in such agreement or such agreement shall not be valid,
binding and enforceable, except for such breaches or failures or failures to be
valid, binding and enforceable that do not materially and adversely affect the
benefits expected to be received by Parent and Purchaser under the Merger
Agreement or the Stock Option Agreement; or
(g) any Person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent, Purchaser or their affiliates
or any group of which any of them is a member, shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of 15% or more of the Shares or any such Person or group shall have
announced its intention to acquire 15% or more of the Shares and the Company
Board of Directors has failed to recommend against acceptance of such
announcement (including by taking no position with respect to such
announcement); or
(h) any of the representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality shall
not be true and correct and any such representations and warranties that are not
so qualified shall not be true and correct in any material respect, in each case
as of the date of this Agreement and as of the scheduled expiration of the
Offer; or
(i) the Company shall have breached or failed to
perform or to comply with any obligation, agreement or covenant of the Company
to be performed or complied with by it under this Agreement; except, in each
case where the failure to perform or comply with such obligations, agreements or
covenants, do not, individually or in the aggregate, have a Material Adverse
Effect on the Company or a Material Adverse Effect on the ability to consummate
the Offer or the Merger; or
(j) all consents necessary to the consummation of the
Tender Offer or the Merger including, without limitation, consents from parties
to loans, contracts, leases or other agreements and consents from governmental
agencies, whether federal, state or local shall not have been obtained, other
than consents the failure to obtain which would not have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole; or
(k) the Employment Agreements shall not be in full
force and effect and either Employee shall have denied or disaffirmed his
obligation under his respective Employment Agreement; and
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(l) this Agreement shall have been terminated in
accordance with its terms;
which in the reasonable good faith judgment of Parent or Purchaser, in any such
case, and regardless of the circumstances (including any action or inaction by
Parent or Purchaser) giving rise to such condition makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payment for
Shares.
The foregoing conditions are for the sole benefit of Parent
and Purchaser, may be waived by Parent or Purchaser, in whole or in part, at any
time and from time to time in the sole discretion of Parent or Purchaser. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
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<PAGE> 86
ANNEX B
Microfilm Number _________ Filed with the Department of State on ___________
Entry Number _____________ _________________________________________________
Secretary of the Commonwealth
ARTICLES OF INCORPORATION-FOR PROFIT
DSCB:15-1306/2102/2303/2702/2903/7102a (Rev 90)
Indicate type of domestic corporation (check one):
<TABLE>
<S> <C>
X Business-stock (15 Pa. C.S.Section 1306) Management (15 Pa. C.S.Section 2702)
- --- ---
Business-nonstock (15 Pa. C.S.Section 2102) Professional (15 Pa. C.S.Section 2903)
- --- ---
Business-statutory close (15 Pa. C.S.Section 2303) Cooperative (15 Pa. C.S. Section 7102A)
- --- ---
</TABLE>
In compliance with the requirements of the applicable provisions of 15
Pa. C.S. (relating to corporations and unincorporated associations) the
undersigned, desiring to incorporate a corporation for profit hereby state(s)
that:
1. The name of the corporation is Trion, Inc.
2. The (a) address of the corporation's initial registered office in this
Commonwealth or (b) name of its commercial registered office provider
and the county of venue is:
(a) One Commerce Sq., 417 Walnut St., Harrisburg, PA 17101 Dauphin
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Number and Street City State Zip County
(b) c/o: CT Corporation System
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Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which the
corporation is located for venue and official publication purposes.
3. The corporation is incorporated under the provision of the Business
Corporation Law of 1988.
4. The aggregate number of shares authorized is: 1,000 (other provisions,
if any, attach 8 1/2 x 11 sheet)
5. The name and address, including street and number, if any, of each
incorporator is:
Name Address
Lynn Buckley One Rodney Square, Wilmington, DE 19801
-------------- ----------------------------------------
-------------- ----------------------------------------
6. The specific effective date, if any, is
------------------------------
month day year hour, if any
7. Any additional provisions of the articles, if any, attach an 8 1/2 x 11
sheet.
B-1
<PAGE> 87
8. Statutory close corporations only: Neither the corporation nor any
shareholder shall make an offering of any of its shares of any class
that would constitute a "public offering" within the meaning of the
Securities Act of 1933 (15 U.S.C. Section 77a et seq.).
9. Cooperative corporations only: (Complete and strike out inapplicable
term) The common bond of membership among its members/shareholders is
---------------------------------------------------------------------
IN TESTIMONY WHEREOF, the incorporator(s) has (have) signed these Articles of
Incorporation this day of July, 1999.
----
- ---------------------------------- ----------------------------------------
(Signature) (Signature)
B-2
<PAGE> 1
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 12, 1999 (the "Agreement"),
between Trion, Inc., a Pennsylvania corporation ("Issuer"), and Fedders
Corporation, a Delaware corporation ("Grantee").
WHEREAS, Issuer and Grantee have entered into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), providing for,
among other things, upon the terms and subject to the conditions thereof, the
merger of TI Acquisition Corp., an indirect wholly owned subsidiary of the
Grantee, with and into Issuer (the "Merger"); and
WHEREAS, as a condition and inducement to Grantee's willingness to
enter into the Merger Agreement, Grantee has requested that Issuer agree, and
Issuer has agreed, to grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Grantee agree as follows:
Capitalized terms used but not defined herein have the meanings set
forth in the Merger Agreement.
1. Grant of Option. (a) Upon the terms and subject to the conditions
set forth herein, Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase up to 1,425,088 shares (the "Option Shares")
of Issuer's common stock, par value $0.50 per share ("Issuer Common Stock"), at
a price of $5.50 per share (the "Purchase Price"), subject to adjustment as set
forth herein.
(b) In the event that any additional shares of Issuer Common
Stock are either (i) issued or otherwise become outstanding after the date of
this Agreement (other than pursuant to this Agreement) or (ii) redeemed,
repurchased, retired or otherwise cease to be outstanding after the date of the
Agreement, the number of Option Shares shall be increased or deceased, as
appropriate, so that, after such events, the number of Option Shares equals
19.9% of the number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option. Nothing contained in this Section 1(b) or elsewhere in this
Agreement
<PAGE> 2
shall be deemed to authorize Issuer or Grantee to breach any provision of the
Merger Agreement.
2. Exercise of Option. (a) Grantee may exercise the Option, with
respect to any or all of the Option Shares at any time and from time to time,
subject to the provisions of Section 2(c), after the Merger Agreement becomes
terminable under circumstances which entitle Grantee to receive the Termination
Fee under Section 9.1 of the Merger Agreement (a "Triggering Event") except that
(i) subject to the last sentence of this Section 2(a), the Option will terminate
and be of no further force and effect upon the earliest to occur of (A) the
purchase of shares of Issuer Common Stock pursuant to the Offer, (B) twelve
months after the date on which a Triggering Event occurs and (C) termination of
the Merger Agreement in accordance with its terms prior to the occurrence of a
Triggering Event, unless, in the case of clauses (B) and (C), the Grantee could
be entitled to receive the Termination Fee following such time or termination
upon the occurrence of certain events, in which case the Option will not
terminate until the later of (x) twelve months following the time such fees
become payable and (y) the expiration of the period in which the Grantee has
such right to receive the Termination Fee and (ii) any purchase of Option Shares
upon exercise of the Option will be subject to compliance with the HSR Act and
the obtaining or making of any consents, approvals, orders, notifications or
authorizations, the failure of which to have obtained or made would have the
effect of making the issuance of Option Shares illegal (the "Regulatory
Approvals") and no preliminary or permanent injunction or other order by any
court of competent jurisdiction prohibiting or otherwise restraining such
issuance shall be in effect. Notwithstanding the termination of the Option,
Grantee will be entitled to purchase the Option Shares if it has exercised the
Option in accordance with the terms hereof prior to the termination of the
Option.
(b) In the event that Grantee wishes to exercise the Option, it will
send to Issuer a written notice (an "Exercise Notice"; the date of which being
herein referred to as the "Notice Date") to that effect specifying (i) the
number of Option Shares, if any, Grantee wishes to purchase pursuant to this
Section 2(b), (ii) the number of Option Shares, if any, with respect to which
Grantee wishes to exercise its Cash-Out Right (as defined herein) pursuant to
Section 6(c), (iii) the denominations of the certificate or certificates
evidencing the Option Shares which Grantee wishes to purchase pursuant to this
Section 2(b) and (iv) a date not earlier than three business days nor later than
60 business days from the Notice Date for the closing (an "Option Closing") of
such purchase (an "Option Closing Date"). Any Option Closing will be at an
agreed location and time in New York, New York on the applicable Option Closing
Date or at such later date as may be necessary so as to comply with clause (ii)
of Section 2(a).
2
<PAGE> 3
(c) Notwithstanding anything to the contrary contained herein, any
exercise of the Option and purchase of Option Shares shall be subject to
compliance with applicable laws and regulations, which may prohibit the purchase
of all the Option Shares specified in the Exercise Notice without first
obtaining or making certain Regulatory Approvals. In such event, if the Option
is otherwise exercisable and Grantee wishes to exercise the Option, the Option
may be exercised in accordance with Section 2(b) and Grantee shall acquire the
maximum number of Option Shares specified in the Exercise Notice that Grantee is
then permitted to acquire under the applicable laws and regulations, and if
Grantee thereafter obtains the Regulatory Approvals to acquire the remaining
balance of the Option Shares specified in the Exercise Notice, then Grantee
shall be entitled to acquire such remaining balance. Issuer agrees to use its
reasonable best efforts to assist Grantee in seeking the Regulatory Approvals.
In the event (i) Grantee receives official notice that a Regulatory
Approval required for the purchase of any Option Shares will not be issued or
granted or (ii) such Regulatory Approval has not been issued or granted within
six months of the date of the Exercise Notice, Grantee shall have the right to
exercise its Cash-Out Right (as defined herein) pursuant to Section 6(c) with
respect to the Option Shares for which such Regulatory Approval will not be
issued or granted or has not been issued or granted.
(d) If the aggregate amounts received by Grantee from (i) the
Termination Fee and Expenses pursuant to Section 9.1 of the Merger Agreement,
(ii) amounts from the sale or other disposition of the Option Shares, and (iii)
amounts paid pursuant to Section 6(c) hereof, exceeds the sum of (A) $2,000,000
plus (B) the aggregate amounts paid by Grantee to purchase any Option Shares
(the sum of the amounts in Section 2(d)(A) and 2(d)(B) being hereinafter
referred to as the "Maximum Profit"), then Grantee, at its sole election, shall
either (1) reduce the number of Option Shares, (2) deliver to the Issuer for
cancellation Option Shares previously purchased by Grantee (valued, for the
purposes of this Section 2(d) at the average closing sale price per share of
Issuer Common Stock (or if there is no sale on such date then the average
between the closing bid and ask prices on any such day) as reported as reported
on the Nasdaq National Market (or, if not listed on the Nasdaq National Market,
as reported on any other national securities exchange or national securities
quotation system on which the Issuer Common Stock is listed or quoted, as
reported in The Wall Street Journal (Northeast edition), or, if not reported
thereby, any other authoritative source) for the twenty consecutive trading days
preceding the day on which the amount received by Grantee pursuant to clauses
(d)(i), (ii) and (iii) above exceeds the Maximum Profit), (3) pay cash to the
Issuer or (4) any combination thereof, so that the amount received by Grantee
pursuant to clauses (d)(i), (ii) and (iii) above shall not exceed the Maximum
Profit after
3
<PAGE> 4
taking into account the foregoing actions. Notwithstanding any other provision
of this Agreement, nothing in this Agreement shall affect the ability of Grantee
to receive nor relieve Issuer's obligation to pay a fee pursuant to Section 9.1
of the Merger Agreement.
3. Payment and Delivery of Certificates. (a) At any Option Closing,
Grantee will pay to Issuer in same day funds by wire transfer to a bank account
designated in writing by Issuer an amount equal to the Purchase Price multiplied
by the number of Option Shares to be purchased at such Option Closing.
(b) At any Option Closing, simultaneously with the delivery of same day
funds as provided in Section 3(a), Issuer will deliver to Grantee a certificate
or certificates representing the Option Shares to be purchased at such Option
Closing, which Option Shares will be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever. If at the time of issuance of
Option Shares pursuant to an exercise of the Option hereunder, Issuer shall have
issued any securities similar to rights under a shareholder rights plan, then
each Option Share issued pursuant to such exercise will also represent such a
corresponding right with terms substantially the same as and at least as
favorable to Grantee as are provided under any Issuer shareholder rights
agreement or any similar agreement then in effect.
(c) Certificates for the Option Shares delivered at an Option Closing
will have typed or printed thereon a restrictive legend which will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IF SO REGISTERED
OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
It is understood and agreed that the above legend will be removed by delivery of
substitute certificate(s) without such reference if such Option Shares have been
sold in compliance with the registration and prospectus delivery requirements of
the Securities Act, such Option Shares have been sold in reliance on and in
accordance with Rule 144 under the Securities Act or Grantee has delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel in
form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act.
4
<PAGE> 5
4. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Corporate Authorization. Issuer has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Issuer, and no other
corporate proceedings on the part of Issuer are necessary to authorize
this Agreement and the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Issuer,
and assuming this Agreement constitutes a valid and binding agreement
of Grantee, this Agreement constitutes a valid and binding agreement of
Issuer, enforceable against Issuer in accordance with its terms (except
insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, or by principles governing the
availability of equitable remedies).
(b) Authorized Stock. Issuer has taken all necessary corporate
and other action to authorize and reserve and, subject to the
expiration or termination of any required waiting period under the HSR
Act, to permit it to issue, and, at all times from the date hereof
until the obligation to deliver Option Shares upon the exercise of the
Option terminates, shall have reserved for issuance, upon exercise of
the Option, shares of Issuer Common Stock necessary for Grantee to
exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve (and shall at all times maintain, free
from pre-emptive rights, sufficient authorized and reserved shares) for
issuance all additional shares of Issuer Common Stock or other
securities which may be issued pursuant to Section 6 upon exercise of
the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer
Common Stock or other securities which may be issuable upon exercise of
the Option or any other securities which may be issued pursuant to
Section 6, upon issuance pursuant hereto, will be duly and validly
issued, fully paid and nonassessable, and will be delivered free and
clear of all liens, claims, charges and encumbrances of any kind or
nature whatsoever, including without limitation any preemptive rights
of any stockholder of Issuer.
5. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
5
<PAGE> 6
(a) Corporate Authorization. Grantee has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Grantee, and no other
corporate proceedings on the part of Grantee are necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Grantee, and
assuming this Agreement constitutes a valid and binding agreement of
Issuer, this Agreement constitutes a valid and binding agreement of
Grantee, enforceable against Grantee in accordance with its terms
(except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
(b) Purchase Not For Distribution. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be,
and the Option is not being, acquired by Grantee with a view to the
public distribution thereof. Neither the Option nor any of the Option
Shares will be offered, sold, pledged or otherwise transferred except
in compliance with, or pursuant to an exemption from, the registration
requirements of the Securities Act.
6. Adjustment upon Changes in Capitalization, Etc. (a) In the event of
any changes in Issuer Common Stock by reason of a stock dividend, stock split,
reverse stock split, merger, recapitalization, combination, exchange of shares,
or similar transaction, the type and number of shares or securities subject to
the Option, and the Purchase Price therefor, will be adjusted appropriately, and
proper provision will be made in the agreements governing such transaction, so
that Grantee will receive upon exercise of the Option the number and class of
shares or other securities or property that Grantee would have received with
respect to Issuer Common Stock if the Option had been exercised immediately
prior to such event or the record date therefor, as applicable.
(b) Without limiting the parties' relative rights and obligations under
the Merger Agreement, in the event that the Issuer enters into an agreement (i)
to consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and Issuer will not be the continuing or surviving corporation in
such consolidation or merger, (ii) to permit any person, other than Grantee or
one of its subsidiaries, to merge into Issuer and Issuer will be the continuing
or surviving corporation, but in connection with such merger, the shares of
Issuer Common Stock outstanding immediately prior to the consummation of such
merger will be changed into or exchanged for stock or other
6
<PAGE> 7
securities of Issuer or any other person or cash or any other property, or the
shares of Issuer Common Stock outstanding immediately prior to the consummation
of such merger will, after such merger represent less than 50% of the
outstanding voting securities of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction will make proper provision so that the
Option will, upon the consummation of any such transaction and upon the terms
and condition set forth herein, be converted into, or exchanged for, an option
with identical terms appropriately adjusted to acquire the number and class of
shares or other securities or property that Grantee would have received in
respect of Issuer Common Stock if the Option had been exercised immediately
prior to such consolidation, merger, sale, or transfer, or the record date
therefor, as applicable and make any other necessary adjustments.
(c) If, at any time during the period commencing on the occurrence of a
Triggering Event and ending on the termination of the Option in accordance with
Section 2, Grantee sends to Issuer an Exercise Notice indicating Grantee's
election to exercise its right (the "Cash-Out-Right") pursuant to this Section
6(c), then Issuer shall pay to Grantee, on the Option Closing Date, in exchange
for the cancellation of the Option with respect to such number of Option Shares
as Grantee specifies in the Exercise Notice, an amount in cash (the "Cash-Out
Price") equal to the amount by which (A) the highest of (i) the price per share
of Issuer Common Stock at which a tender offer or exchange offer therefor has
been made, (ii) the highest price per share of Issuer Common Stock to be paid by
any third-party pursuant to an agreement with the Issuer, (iii) the highest
closing price within the six month period immediately preceding the Notice Date
per share of Issuer Common Stock as reported on the Nasdaq National Market (or,
if not listed on the Nasdaq National Market, as reported on any other national
securities exchange or national securities quotation system on which the Issuer
Common Stock is listed or quoted, as reported in The Wall Street Journal
(Northeast edition), or, if not reported thereby, any other authoritative
source) and (iv) in the event of a sale of all or a substantial portion of
Issuer's assets, the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Grantee, and
reasonably acceptable to the Issuer, divided by the number of shares of Issuer
Common Stock outstanding at the time of such sale exceeds (B) the Purchase
Price, multiplied by the number of shares for which this Option is then
exercised. In determining the Cash-Out Price, the value of consideration other
than cash shall be determined by a nationally recognized investment banking firm
selected by the Grantee and reasonably acceptable to the Issuer. Grantee will
cooperate with the valuation work
7
<PAGE> 8
of any investment banking firm selected pursuant to this Section 6(c).
Notwithstanding the termination of the Option, Grantee will be entitled to
exercise its rights under this Section 6(c) if it has exercised such rights in
accordance with the terms hereof prior to the termination of the Option.
7. Registration Rights.
(a) At any time and from time to time within three years of the
date hereof, Grantee may by written notice (a "Registration Notice") to Issuer
request Issuer to register under the Securities Act all or part of any Issuer
Common Stock beneficially owned by Grantee (collectively, the "Registrable
Securities") in order to permit the sale or other disposition of such securities
pursuant to, at the option of Grantee, (i) a shelf registration or (ii) a bona
fide, firm commitment underwritten public offering in which Grantee shall have
the right, including with respect to any takedown off the shelf, to select the
managing underwriter, which shall be reasonably acceptable to the Issuer, and
shall effect as wide a distribution of such Registrable Securities as is
reasonably practicable and shall use reasonable efforts to prevent any person or
group from purchasing through such offering shares representing more than 3% of
the shares of Issuer Common Stock then outstanding on a fully-diluted basis.
(b) Issuer shall use reasonable best efforts to effect, as
promptly as practicable, the registration under the Securities Act of the
Registrable Securities requested to be registered in the Registration Notice and
to keep such registration statement current; provided, however, that (i) Grantee
shall not be entitled to more than an aggregate of two effective registration
statements hereunder and (ii) Issuer will not be required to file any such
registration statement during any period of time (not to exceed 40 days after a
Registration Notice in the case of clause (A) below or 90 days after a
Registration Notice in the case of clauses (B) and (C) below) when (A) Issuer is
in possession of material non-public information which it reasonably believes
would be detrimental to be disclosed at such time and, based upon the advice of
outside securities counsel to Issuer, such information would have to be
disclosed if a registration statement were filed at that time; (B) Issuer would
be required under the Securities Act to include audited financial statements for
any period in such registration statement and such financial statements are not
yet available for inclusion in such registration statement; or (C) Issuer
determines, in its reasonable judgment, that such registration would interfere
with any financing, acquisition or other material transaction involving Issuer;
provided that the filing of such registration statement may not be delayed more
than an aggregate of 90 days after the Registration Notice. If the consummation
of the sale of any Registrable Securities pursuant to a registration hereunder
does not occur within 90 days
8
<PAGE> 9
after the filing with the SEC of the initial registration statement therefor,
the provisions of this Section shall again be applicable to any proposed
registration, it being understood that Grantee shall not be entitled to more
than an aggregate of two effective registration statements hereunder. Issuer
will use reasonable best efforts to cause each such registration statement to
become effective, to obtain all consents or waivers of other parties which are
required therefor, and to keep such registration statement effective for such
period not in excess of 180 calendar days from the day such registration
statement first becomes effective as may be reasonably necessary to effect such
sale or other disposition. Issuer shall use reasonable best efforts to cause any
Registrable Securities registered pursuant to this Section to be qualified for
sale under the securities or blue sky laws of such jurisdictions as Grantee may
reasonably request and shall continue such registration or qualification in
effect in such jurisdictions; provided, however, that Issuer shall not be
required to qualify to do business in, or consent to general service of process
in, any jurisdiction.
(c) If Issuer effects a registration under the Securities Act of
Issuer Common Stock for its own account or for any other stockholders of Issuer
(other than on Form S-4 or Form S-8, or any successor form), it will allow
Grantee the right to participate in such registration, and such participation
will not affect the obligation of Issuer to effect demand registration
statements for Grantee under this Section 7, except that, if the managing
underwriters of such offering advise Issuer in writing that in their opinion the
number of shares of Issuer Common Stock requested to be included in such
registration exceeds the number which can be sold in such offering, Issuer will
include that portion of the shares requested to be included therein equal to the
product obtained by multiplying (i) the number of shares which the underwriter
has informed the Issuer can be included in the offering and (ii) the percentage
obtained by dividing (x) the total number of shares of Issuer Common Stock held
by Grantee and (y) the total number of shares of Issuer outstanding.
(d) The registration rights set forth in this Section are subject
to the condition that Grantee shall provide Issuer with such information with
respect to Grantee Registrable Securities, the plan for distribution thereof,
and such other information with respect to Grantee as, in the reasonable
judgment of counsel for Issuer, is necessary to enable Issuer to include in a
registration statement all material facts required to be disclosed with respect
to a registration hereunder.
(e) A registration effected under this Section shall be effected
at Issuer's expense, except for underwriting discounts and commissions and the
fees and expenses of Grantee's counsel, and Issuer shall provide to the
underwriters such documentation
9
<PAGE> 10
(including certificates, opinions of counsel and "comfort" letters from
auditors) as are customary in connection with underwritten public offerings and
as such underwriters may reasonably require. In connection with any
registration, Grantee and Issuer agree to enter into an underwriting agreement
reasonably acceptable to each such party, in form and substance customary for
transactions of this type.
(f) In connection with a registration effected under this Section
7, Issuer shall indemnify and hold harmless Grantee, its affiliates and
controlling persons and their respective officers, directors, agents and
representatives from and against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, all out-of-pocket
expenses, investigation expenses, expenses incurred with respect to any
judgement and fees and disbursements of counsel and accountants) arising out of
or based upon any statements contained in, or omissions or alleged omissions
from, each registration statement (and related prospectus) filed pursuant to
this Section 7; provided, however, that Issuer shall not be liable in any such
case to any such persons to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement contained in, or omission or alleged
omission from, such registration statement or prospectus in reliance upon, and
in conformity with, written information furnished to Issuer specifically for use
in the preparation thereof by Grantee.
(g) In connection with a registration effected under this Section
7, Grantee shall indemnify and hold harmless Issuer, its affiliates and
controlling persons and their respective officers, directors, agents and
representatives from and against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, all out-of-pocket
expenses, investigation expenses, expenses incurred with respect to any
judgement and fees and disbursements of counsel and accountants) arising out of
or based upon any statements contained in, or omissions or alleged omissions
from, each registration statement (and related prospectus) filed pursuant to
this Section 7 that arises out of or is based upon an untrue statement contained
in, or omission or alleged omission from, such registration statement or
prospectus in reliance upon, and in conformity with, written information
furnished to Issuer specifically for use in the preparation thereof by Grantee.
8. Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on the Nasdaq (or any other
national securities exchange or national securities quotation system), Issuer,
upon the request of Grantee, will promptly file an application to list the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the Nasdaq (and any such other
10
<PAGE> 11
national securities exchange or national securities quotation system) and will
use reasonable efforts to obtain approval of such listing as promptly as
practicable.
9. Miscellaneous. (a) Expenses. Except as otherwise provided in the
Merger Agreement, each of the parties hereto will pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(b) Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to waive
any provision of this Agreement, or to extend the time for performance, will be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise will not constitute a waiver of such rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This Agreement and
the Merger Agreement (i) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement, and (ii) are not intended
to confer upon any person other than the parties any rights or remedies in
respect of this Agreement.
(e) Counterparts. This Agreement may be executed in two or more counter
parts, all of which shall be considered one and the same agreement and shall
become effective when two or more counterparts have been signed by each of the
parties and delivered to the other parties.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
principles of conflicts or choice of law thereof or of any other jurisdiction.
(g) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt, and shall be given to the
parties at the following addresses or telecopy numbers (or at such other address
or telecopy number for a party as shall be specified by like notice):
11
<PAGE> 12
If to Grantee, to:
Fedders Corporation
505 Martinsville Road
Liberty Corner, NJ 07938
Attention: General Counsel
Telecopy: (908) 604-8576
Telephone: (908) 604-8686
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Mark C. Smith, Esq.
Telecopy: (212) 735-2000
If to Issuer, to:
Trion, Inc.
101 McNeil Road
Sanford, NC 27331-0760
Attention: President
Telecopy: (919) 774-8536
with a copy to:
Smith Helms Mulliss & Moore, L.L.P.
201 North Tryon Street
Charlotte, North Carolina 28202
Attention: John B. Yorke
Telecopy.: (704) 334-8467
Telephone: (704) 343-2000
(h) Assignment. Except as set forth herein, neither this Agreement, the
Option nor any of the rights, interests, or obligations under this Agreement may
be assigned, transferred or delegated, in whole or in part, by operation of law
or otherwise, by Issuer without the prior written consent of Grantee. Any
assignment, transfer or delegation in violation of the preceding sentence will
be void. Subject to the first and second
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sentences of this Section 9(h), this Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee will execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Enforcement. The parties 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 of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the Transactions, (ii) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (iii) agrees that it will not bring any action relating to this
Agreement or any of the Transactions in any court other than a Federal or state
court sitting in the State of Delaware.
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<PAGE> 14
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first written above.
TRION, INC.
By: /s/ Steven L. Schneider
---------------------------
Name: Steven L. Schneider
Title: President & Chief Executive Officer
FEDDERS CORPORATION
By: /s/ Robert L. Laurent, Jr.
---------------------------
Name: Robert L. Laurent, Jr.
Title: Executive Vice President
<PAGE> 1
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of July 12, 1999 (this "Agreement"),
among Fedders Corporation, a Delaware corporation (the "Parent"), TI Acquisition
Corp., a Pennsylvania corporation and an indirect wholly owned subsidiary of the
Parent ("Purchaser"), and Hugh E. Carr (the "Stockholder").
WHEREAS, concurrently with the execution and delivery of this Agreement
the Parent, Purchaser and Trion, Inc., a Pennsylvania corporation (the
"Company"), have entered into an Agreement and Plan of Merger dated as of the
date hereof (such Agreement and Plan of Merger, as amended from time to time,
the "Merger Agreement"), which provides, among other things, that Purchaser
shall make the Offer (as defined in the Merger Agreement) to purchase at a price
of $5.50 per share, net to the sellers in cash, all of the issued and
outstanding shares of the Company's Common Stock, par value $0.50 per share (the
"Company Common Stock"), and shall merge with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the Merger
Agreement (any term used herein without definition shall have the definition
ascribed thereto in the Merger Agreement);
WHEREAS, the Stockholder owns beneficially and of record shares of
Company Common Stock (such shares of Company Common Stock being collectively
referred to herein as the "Stockholder Shares"); and
WHEREAS, as a condition to the willingness of the Parent and Purchaser
to enter into the Merger Agreement, and as an inducement to them to do so, the
Stockholder has agreed for the benefit of the Parent and Purchaser to tender the
Stockholder Shares and any other shares of Company Common Stock at any time
during the term of this Agreement held by the Stockholder, pursuant to the
Offer, to vote all the Stockholder Shares and any other shares of Company Common
Stock owned by the Stockholder in favor of the Merger, and to grant to Parent an
option to acquire all Stockholder Shares and all other shares of Company Common
Stock owned by the Stockholder under certain circumstances, all on the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
ARTICLE I
Tender Offer and Option
SECTION 1.1. Tender of Shares. (a) Within five business days of the
commencement by Purchaser of the Offer, the Stockholder shall tender to the
Depository designated in the Offer to Purchase (the "Offer to Purchase")
distributed by Purchaser in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder Shares and any other shares of
Company Common
<PAGE> 2
Stock held by the Stockholder (whether or not currently held by the Stockholder;
the Stockholder Shares, together with any shares acquired by the Stockholder in
any capacity after the date hereof and prior to the termination of this
Agreement whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution or otherwise (the "Shares")), complying with
the terms of the Offer to Purchase, (ii) the certificates representing the
Shares, and (iii) all other documents or instruments required to be delivered
pursuant to the terms of the Offer to Purchase.
(b) The Stockholder shall not, subject to applicable law, withdraw the
tender effected in accordance with Section 1.1(a); provided, however, that the
Stockholder may decline to tender, or may withdraw, any and all Shares owned by
the Stockholder if the Purchaser amends the Offer to (w) reduce the Offer Price
to less than $5.50 in cash, net to the stockholders, (x) reduce the number of
shares of Company Common Stock subject to the Offer, (y) change the form of
consideration payable in the Offer or (z) amend or modify any term or condition
of the Offer in a manner adverse to the stockholders of the Company (other than
insignificant changes or amendments or other than to waive any condition). The
Stockholder shall give Purchaser at least two business days' prior notice of any
withdrawal of Shares owned by the Stockholder pursuant to the immediately
preceding proviso.
SECTION 1.2. Option. (a) The Stockholder hereby irrevocably grants
Parent an option (the "Option"), exercisable only upon the events and subject to
the conditions set forth herein, to purchase any or all of the Shares at a
purchase price per share equal to $5.50 (or such higher per share price as may
be offered by Purchaser in the Offer).
(b) Subject to the conditions set forth in Section 1.3 and the
termination provisions of Section 6.7, Parent may exercise the Option in whole
or in part at any time prior to the date 60 days after the expiration or
termination of the Offer (such sixtieth day being herein called the "Option
Expiration Date") if (x) the Stockholder fails to comply with any of its
obligations under this Agreement or withdraws the tender of the Shares except
under the circumstances set forth in the proviso to Section 1.1(b) (but the
Option shall not limit any other right or remedy available to the Parent or
Purchaser against the Stockholder for breach of this Agreement) or (y) the Offer
is not consummated because of the failure to satisfy any of the conditions to
the Offer set forth in Annex A to the Merger Agreement (other than as a result
of any action or inaction of the Parent or Purchaser which constitutes a breach
of the Merger Agreement).
Upon the occurrence of any of such circumstances, Purchaser
shall be entitled to exercise the Option and (subject to Section 1.3) Parent
shall be entitled to purchase the Shares and the Stockholder shall sell the
Shares to Parent. Parent shall exercise the Option by delivering written notice
thereof to the Stockholder (the "Notice"), specifying the number of Shares to be
purchased and the date, time and place for the closing of such purchase which
date shall not be less than three business days nor more than five business days
from the date the Stockholder receives the Notice and in no event shall such
date be later than the Option Expiration Date. The closing of the purchase of
Shares pursuant to this Section 1.2 (the "Closing") shall take place on the
date, at the time and at
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<PAGE> 3
the place specified in such notice; provided, that if at such date any of the
conditions specified in Section 1.3 shall not have been satisfied (or waived),
Parent may postpone the Closing until a date within five business days after
such conditions are satisfied (but not later than the Option Expiration Date).
(c) At the Closing, the Stockholder will deliver to Parent (in
accordance with Parent's instructions) the certificates representing the Shares
owned by the Stockholder and being purchased pursuant to Section 1.2(c), duly
endorsed or accompanied by stock powers duly executed in blank. At such Closing,
Parent shall deliver to the Stockholder, by bank wire transfer of immediately
available funds, an amount equal to the number of Shares being purchased from
the Stockholder as specified in the Notice multiplied by $5.50 (or such higher
per share price as may be offered by Parent in the Offer).
SECTION 1.3. Conditions to Option. The obligation of Parent to purchase
the Shares at the Closing is subject to the following conditions:
(a) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated
thereunder (the "HSR Act") applicable to such purchase shall have
expired or been terminated; and
(b) there shall be no preliminary or permanent injunction or
other order, decree or ruling issued by any Governmental Body, nor any
statute, rule, regulation or order promulgated or enacted by any
Governmental Body prohibiting, or otherwise restraining, such purchase.
SECTION 1.4. No Purchase. Purchaser and Parent may allow the Offer to
expire without accepting for payment or paying for any Shares, on the terms and
conditions set forth in the Offer to Purchase, and may allow the Option to
expire without exercising the Option and purchasing all or any Shares pursuant
to such exercise. If all Shares validly tendered and not withdrawn are not
accepted for payment and paid for in accordance with the terms of the Offer to
Purchase or pursuant to the exercise of the Option, they shall be returned to
the Stockholder, whereupon they shall continue to be held by the Stockholder
subject to the terms and conditions of this Agreement.
ARTICLE II
Consent and Voting
The Stockholder hereby revokes any and all previous proxies granted
with respect to the Shares owned by the Stockholder. By entering into this
Agreement, the Stockholder hereby consents to the Merger Agreement and the
transactions contemplated thereby, including the Merger. So long as the Merger
Agreement is in effect, the Stockholder hereby agrees (i) to vote all Shares now
or hereafter owned by such Stockholder or execute a consent or proxy and not
revoke any proxy, vote
3
<PAGE> 4
or consent, in favor of the Articles Amendment, the Merger Agreement, the Merger
and the transactions contemplated thereby, and (ii) to oppose any Acquisition
Proposal and to vote all Shares now or hereafter owned by such Stockholder, or
execute a consent or proxy, against any Acquisition Proposal.
ARTICLE III
Representations, Warranties and Covenants
of the Stockholder
The Stockholder represents, warrants and covenants to the Purchaser
that:
SECTION 3.1. (a) Ownership. As of the date hereof the Stockholder is
the sole, true, lawful and beneficial owner of 197,263 Shares and that there are
no restrictions on voting rights or rights of disposition pertaining to such
Shares. The Stockholder will convey good and valid title to the Shares owned by
the Stockholder and being acquired pursuant to the Offer, the Merger or the
exercise of the Option, as the case may be, free and clear of any and all liens,
restrictions, security interests or any encumbrances whatsoever (collectively,
"Liens"). None of the Shares owned by the Stockholder is subject to any voting
trust or other agreement, arrangement or restriction with respect to the voting
of such Shares.
(b) Transfer of the Shares. (i) Until this Agreement is
terminated, the Stockholder shall not directly or indirectly offer to sell, sell
short, transfer (including gift), assign, pledge or otherwise dispose of or
transfer (each, a "Transfer") any interest in or encumber with any Lien any of
the Shares, (ii) enter into any contract, option, put, call, "collar" or other
agreement or understanding with respect to any Transfer of any or all of the
Shares or any interest therein; (iii) grant any proxy, power-of-attorney or
other authorization or consent in or with respect to the Shares; (iv) deposit
the Shares into a voting trust or enter into a voting agreement or arrangement
with respect to the Shares; or (v) take any other action with respect to the
Shares that would in any way restrict, limit or interfere with the performance
of its obligations hereunder.
(c) The Stockholder agrees to place the following legend on
any and all certificates evidencing the Shares:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THAT SHAREHOLDER
AGREEMENT, DATED AS OF JULY 12, 1999, BY AND AMONG PARENT, PURCHASER
AND STOCKHOLDER. ANY TRANSFER OF SUCH SHARES OF COMMON STOCK IN
VIOLATION OF THE TERMS OF SUCH AGREEMENT SHALL BE NULL AND VOID AND OF
NO EFFECT WHATSOEVER.
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<PAGE> 5
SECTION 3.2. Authority and Non-Contravention. The execution, delivery
and performance by the Stockholder of this Agreement and the consummation of the
transactions contemplated hereby (i) are within the Stockholder's power and
authority, have been duly authorized by all necessary action (including any
consultation, approval or other action by or with any other person), (ii)
require no action by or in respect of, or filing with, any Governmental Body
(except as may be required under the HSR Act and under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act")), and (iii) do not and will not contravene or constitute a
default under, or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Stockholder or to a loss of any
benefit of the Stockholder under, any provision of applicable law or regulation
or any agreement, judgment, injunction, order, decree, or other instrument
binding on the Stockholder or result in the imposition of any Lien on any assets
of the Stockholder. If the Stockholder is married and the Shares constitute
community property or otherwise are owned or held in a manner that requires
spousal or other approval for this Agreement to be legal, valid and binding,
this Agreement has been duly consented to and delivered by the Stockholder's
spouse or the person giving such approval, enforceable against such spouse or
person in accordance with its terms.
SECTION 3.3. Binding Effect. This Agreement has been duly executed and
delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
SECTION 3.4. Total Shares. The Stockholder Shares owned by the
Stockholder are the only shares of Company Common Stock beneficially owned as of
the date hereof by the Stockholder and the Stockholder has no option to purchase
or right to subscribe for or otherwise acquire any securities of the Company and
has no other interest in or voting rights with respect to any other securities
of the Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from Purchaser or the Company in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Stockholder, except as otherwise disclosed in the Merger Agreement.
ARTICLE IV
Representations and Warranties
of the Parent and Purchaser
The Parent and Purchaser represent and warrant to the Stockholder:
SECTION 4.1. Corporate Power and Authority; Noncontravention. The
Parent and Purchaser have all requisite corporate power and authority to enter
into this Agreement and to
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<PAGE> 6
perform their obligations hereunder. The execution, delivery and performance by
the Parent and Purchaser of this Agreement and the consummation by the Parent
and Purchaser of the transactions contemplated hereby (i) have been duly
authorized by all necessary corporate action on the part of the Parent and
Purchaser, (ii) require no action by or in respect of, or filing with, any
Governmental Body (except as may be required under the HSR Act and under the
Exchange Act), or (iii) do not and will not contravene or constitute a default
under, the certificate of incorporation or by-laws of Parent or Purchaser or any
provision of applicable law or regulation or any, judgment, injunction, order,
decree, material agreement or other material instrument binding on the Parent or
Purchaser.
SECTION 4.2. Binding Effect. This Agreement has been duly executed and
delivered by the Parent and Purchaser and is a valid and binding agreement of
the Parent and Purchaser, enforceable against each of them in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
SECTION 4.3. Acquisition for Purchaser's Account. Any Shares to be
acquired upon consummation of the Offer, or upon exercise of the Option will be
acquired by Parent for its own account and not with a view to the public
distribution thereof and will not be transferred except in compliance with the
Securities Act and the rules and regulations promulgated thereunder.
ARTICLE V
Additional Agreements
SECTION 5.1. Agreements of Stockholder. The Stockholder hereby
covenants and agrees that:
(a) No Solicitation. The Stockholder shall not directly or
indirectly (i) solicit, initiate or knowingly encourage (or authorize
any person to solicit, initiate or encourage) any Acquisition Proposal,
or (ii) participate in any discussion or negotiations regarding, or
furnish to any other person any information with respect to, or
otherwise knowingly cooperate in any way with, or participate in,
facilitate or encourage any effort or attempt by any other person to do
or seek the foregoing. The Stockholder shall promptly advise the
Purchaser of the terms of any communications it or any of its
affiliates may receive relating to any Acquisition Proposal (including,
without limitation, the identify of the party making any such
Acquisition Proposal).
(b) Adjustment upon Changes in Capitalization or Merger. In
the event of any change in the Company's capital stock by reason of
stock dividends, stock splits, mergers, consolidations,
recapitalization, combinations, conversions, exchanges of shares,
extraordinary or liquidating dividends, or other changes in the
corporate or capital structure of the Company which would have the
effect of diluting or changing Parent and Purchaser's rights hereunder,
the number and kind of shares or securities subject to this Agreement
and
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<PAGE> 7
the price set forth herein at which Shares may be purchased from the
Stockholder pursuant to the Offer or the exercise of the Option shall
be appropriately and equitably adjusted so that Parent and Purchaser
shall receive pursuant to the Offer or the exercise of the Option the
number and class of shares or other securities or property that Parent
or Purchaser, as the case may be, would have received in respect of the
Shares purchasable pursuant to the Offer or the exercise of the Option
if such purchase had occurred immediately prior to such event.
ARTICLE VI
Miscellaneous
SECTION 6.1. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 6.2. Further Assurances. The Parent, Purchaser and the
Stockholder will execute and deliver or cause to be executed and delivered all
further documents and instruments and use its reasonable best efforts to secure
such consents and take all such further action as may be reasonably necessary in
order to consummate the transactions contemplated hereby and by the Merger
Agreement.
SECTION 6.3. Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 6.4. Specific Performance. The parties acknowledge and agree
that performance of their respective obligations hereunder will confer a unique
benefit on the other and that a failure of performance will not be compensable
by money damages. The parties therefore agree that this Shareholder Agreement
shall be specifically enforceable and that specific enforcement and injunctive
relief shall be available to the Parent, Purchaser or the Stockholder for any
breach by the other party or parties of any agreement, covenant or
representation hereunder.
SECTION 6.5. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares pursuant
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<PAGE> 8
to Section 1.2 hereof. None of the representations and warranties contained in
this Agreement shall survive the acceptance for payment and payment for the
Shares pursuant to the Offer.
SECTION 6.7. Amendments; Termination. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. Notwithstanding
anything herein to the contrary, this Agreement shall expire and be of no
further force or effect if (i) the conditions to the Purchaser's obligations to
accept for payment and pay for Shares pursuant to the Offer shall have been
satisfied and the Purchaser breaches any obligation of Purchaser under the
Merger Agreement to accept for payment and promptly pay for all Shares validly
tendered and not withdrawn pursuant to the Offer upon expiration of the Offer or
(ii) Purchaser amends the Offer to (w) reduce the Offer Price to less than $5.50
in cash, net to the sellers, (x) reduce the number of shares of Company Common
Stock subject to the Offer, (y) change the form of consideration payable in the
Offer or (z) amend or modify any term or condition of the Offer in a manner
adverse to the stockholders of the Company (other than insignificant changes or
amendments or other than to waive any condition). This Agreement will also
terminate upon the earlier of (i) the close of business on March 1, 2000, or
(ii) the Effective Time.
SECTION 6.8. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that Purchaser may assign
its rights and obligations to another wholly-owned subsidiary of the Parent
which is the assignee of Purchaser's rights under the Merger Agreement; and
provided further that except as set forth in the prior clause, a party may not
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto and any purported
assignment, delegation or transfer without such consent shall be null and void.
SECTION 6.9. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to the
principles of conflicts of laws thereof.
SECTION 6.10. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effects as if the signatures thereto and thereof were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
SECTION 6.11. Stockholder Capacity. The Stockholder signs solely in its
capacity as the record holder and beneficial owner of the Shares and nothing
herein shall limit or affect any actions taken by the Stockholder in his or her
capacity as an officer, director, partner, employee or affiliate of the Company
and no such actions shall be deemed a breach of this Agreement.
SECTION 6.12. 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
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<PAGE> 9
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby 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 be consummated as originally contemplated to the fullest extent
possible. To the extent that any provision of this Agreement and the Merger
Agreement conflict, the provisions of the Merger Agreement shall control.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FEDDERS CORPORATION
By: /s/ Robert L. Laurent, Jr.
--------------------------------
Name: Robert L. Laurent, Jr.
--------------------------------
Title: Executive Vice President
--------------------------------
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07938
Attn: General Counsel
TI ACQUISITION CORP.
By: /s/ Robert L. Laurent, Jr.
--------------------------------
Name: Robert L. Laurent, Jr.
--------------------------------
Title: Executive Vice President
--------------------------------
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07983-0813
Attn: General Counsel
/s/ Hugh E. Carr (SEAL)
--------------------------------
Hugh E. Carr
Address for Notices:
1508 Von Cannon Circle
Sanford, NC 27330
<PAGE> 11
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of July 12, 1999 (this "Agreement"),
among Fedders Corporation, a Delaware corporation (the "Parent"), TI Acquisition
Corp., a Pennsylvania corporation and an indirect wholly owned subsidiary of the
Parent ("Purchaser"), and Joseph W.
Deering (the "Stockholder").
WHEREAS, concurrently with the execution and delivery of this Agreement
the Parent, Purchaser and Trion, Inc., a Pennsylvania corporation (the
"Company"), have entered into an Agreement and Plan of Merger dated as of the
date hereof (such Agreement and Plan of Merger, as amended from time to time,
the "Merger Agreement"), which provides, among other things, that Purchaser
shall make the Offer (as defined in the Merger Agreement) to purchase at a price
of $5.50 per share, net to the sellers in cash, all of the issued and
outstanding shares of the Company's Common Stock, par value $0.50 per share (the
"Company Common Stock"), and shall merge with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the Merger
Agreement (any term used herein without definition shall have the definition
ascribed thereto in the Merger Agreement);
WHEREAS, the Stockholder owns beneficially and of record shares of
Company Common Stock (such shares of Company Common Stock being collectively
referred to herein as the "Stockholder Shares"); and
WHEREAS, as a condition to the willingness of the Parent and Purchaser
to enter into the Merger Agreement, and as an inducement to them to do so, the
Stockholder has agreed for the benefit of the Parent and Purchaser to tender the
Stockholder Shares and any other shares of Company Common Stock at any time
during the term of this Agreement held by the Stockholder, pursuant to the
Offer, to vote all the Stockholder Shares and any other shares of Company Common
Stock owned by the Stockholder in favor of the Merger, and to grant to Parent an
option to acquire all Stockholder Shares and all other shares of Company Common
Stock owned by the Stockholder under certain circumstances, all on the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
<PAGE> 12
ARTICLE I
Tender Offer and Option
SECTION 1.1. Tender of Shares. (a) Within five business days of the
commencement by Purchaser of the Offer, the Stockholder shall tender to the
Depository designated in the Offer to Purchase (the "Offer to Purchase")
distributed by Purchaser in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder Shares and any other shares of
Company Common Stock held by the Stockholder (whether or not currently held by
the Stockholder; the Stockholder Shares, together with any shares acquired by
the Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise (the "Shares")),
complying with the terms of the Offer to Purchase, (ii) the certificates
representing the Shares, and (iii) all other documents or instruments required
to be delivered pursuant to the terms of the Offer to Purchase.
(b) The Stockholder shall not, subject to applicable law, withdraw the
tender effected in accordance with Section 1.1(a); provided, however, that the
Stockholder may decline to tender, or may withdraw, any and all Shares owned by
the Stockholder if the Purchaser amends the Offer to (w) reduce the Offer Price
to less than $5.50 in cash, net to the stockholders, (x) reduce the number of
shares of Company Common Stock subject to the Offer, (y) change the form of
consideration payable in the Offer or (z) amend or modify any term or condition
of the Offer in a manner adverse to the stockholders of the Company (other than
insignificant changes or amendments or other than to waive any condition). The
Stockholder shall give Purchaser at least two business days' prior notice of any
withdrawal of Shares owned by the Stockholder pursuant to the immediately
preceding proviso.
SECTION 1.2. Option. (a) The Stockholder hereby irrevocably grants
Parent an option (the "Option"), exercisable only upon the events and subject to
the conditions set forth herein, to purchase any or all of the Shares at a
purchase price per share equal to $5.50 (or such higher per share price as may
be offered by Purchaser in the Offer).
(b) Subject to the conditions set forth in Section 1.3 and the
termination provisions of Section 6.7, Parent may exercise the Option in whole
or in part at any time prior to the date 60 days after the expiration or
termination of the Offer (such sixtieth day being herein called the "Option
Expiration Date") if (x) the Stockholder fails to comply with any of its
obligations under this Agreement or withdraws the tender of the Shares except
under the circumstances set forth in the proviso to Section 1.1(b) (but the
Option shall not limit any other right or remedy available to the Parent or
Purchaser against the Stockholder for breach of this Agreement) or (y) the Offer
is not consummated because of the failure to satisfy any of the conditions to
the Offer set forth in Annex A to the Merger Agreement (other than as a result
of any action or inaction of the Parent or Purchaser which constitutes a breach
of the Merger Agreement).
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<PAGE> 13
Upon the occurrence of any of such circumstances, Purchaser
shall be entitled to exercise the Option and (subject to Section 1.3) Parent
shall be entitled to purchase the Shares and the Stockholder shall sell the
Shares to Parent. Parent shall exercise the Option by delivering written notice
thereof to the Stockholder (the "Notice"), specifying the number of Shares to be
purchased and the date, time and place for the closing of such purchase which
date shall not be less than three business days nor more than five business days
from the date the Stockholder receives the Notice and in no event shall such
date be later than the Option Expiration Date. The closing of the purchase of
Shares pursuant to this Section 1.2 (the "Closing") shall take place on the
date, at the time and at the place specified in such notice; provided, that if
at such date any of the conditions specified in Section 1.3 shall not have been
satisfied (or waived), Parent may postpone the Closing until a date within five
business days after such conditions are satisfied (but not later than the Option
Expiration Date).
(c) At the Closing, the Stockholder will deliver to Parent (in
accordance with Parent's instructions) the certificates representing the Shares
owned by the Stockholder and being purchased pursuant to Section 1.2(c), duly
endorsed or accompanied by stock powers duly executed in blank. At such Closing,
Parent shall deliver to the Stockholder, by bank wire transfer of immediately
available funds, an amount equal to the number of Shares being purchased from
the Stockholder as specified in the Notice multiplied by $5.50 (or such higher
per share price as may be offered by Parent in the Offer).
SECTION 1.3. Conditions to Option. The obligation of Parent to purchase
the Shares at the Closing is subject to the following conditions:
(a) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated
thereunder (the "HSR Act") applicable to such purchase shall have
expired or been terminated; and
(b) there shall be no preliminary or permanent injunction or
other order, decree or ruling issued by any Governmental Body, nor any
statute, rule, regulation or order promulgated or enacted by any
Governmental Body prohibiting, or otherwise restraining, such purchase.
SECTION 1.4. No Purchase. Purchaser and Parent may allow the Offer to
expire without accepting for payment or paying for any Shares, on the terms and
conditions set forth in the Offer to Purchase, and may allow the Option to
expire without exercising the Option and purchasing all or any Shares pursuant
to such exercise. If all Shares validly tendered and not withdrawn are not
accepted for payment and paid for in accordance with the terms of the Offer to
Purchase or pursuant to the exercise of the Option, they shall be returned to
the Stockholder, whereupon they shall continue to be held by the Stockholder
subject to the terms and conditions of this Agreement.
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<PAGE> 14
ARTICLE II
Consent and Voting
The Stockholder hereby revokes any and all previous proxies granted
with respect to the Shares owned by the Stockholder. By entering into this
Agreement, the Stockholder hereby consents to the Merger Agreement and the
transactions contemplated thereby, including the Merger. So long as the Merger
Agreement is in effect, the Stockholder hereby agrees (i) to vote all Shares now
or hereafter owned by such Stockholder or execute a consent or proxy and not
revoke any proxy, vote or consent, in favor of the Articles Amendment, the
Merger Agreement, the Merger and the transactions contemplated thereby, and (ii)
to oppose any Acquisition Proposal and to vote all Shares now or hereafter owned
by such Stockholder, or execute a consent or proxy, against any Acquisition
Proposal.
ARTICLE III
Representations, Warranties and Covenants
of the Stockholder
The Stockholder represents, warrants and covenants to the Purchaser
that:
SECTION 3.1. (a) Ownership. As of the date hereof the Stockholder is
the sole, true, lawful and beneficial owner of 13,584Shares and that there are
no restrictions on voting rights or rights of disposition pertaining to such
Shares. The Stockholder will convey good and valid title to the Shares owned by
the Stockholder and being acquired pursuant to the Offer, the Merger or the
exercise of the Option, as the case may be, free and clear of any and all liens,
restrictions, security interests or any encumbrances whatsoever (collectively,
"Liens"). None of the Shares owned by the Stockholder is subject to any voting
trust or other agreement, arrangement or restriction with respect to the voting
of such Shares.
(b) Transfer of the Shares. (i) Until this Agreement is
terminated, the Stockholder shall not directly or indirectly offer to sell, sell
short, transfer (including gift), assign, pledge or otherwise dispose of or
transfer (each, a "Transfer") any interest in or encumber with any Lien any of
the Shares, (ii) enter into any contract, option, put, call, "collar" or other
agreement or understanding with respect to any Transfer of any or all of the
Shares or any interest therein; (iii) grant any proxy, power-of-attorney or
other authorization or consent in or with respect to the Shares; (iv) deposit
the Shares into a voting trust or enter into a voting agreement or arrangement
with respect to the Shares; or (v) take any other action with respect to the
Shares that would in any way restrict, limit or interfere with the performance
of its obligations hereunder.
(c) The Stockholder agrees to place the following legend on
any and all certificates evidencing the Shares:
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<PAGE> 15
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THAT
SHAREHOLDER AGREEMENT, DATED AS OF JULY 12, 1999, BY AND AMONG
PARENT, PURCHASER AND STOCKHOLDER. ANY TRANSFER OF SUCH SHARES
OF COMMON STOCK IN VIOLATION OF THE TERMS OF SUCH AGREEMENT
SHALL BE NULL AND VOID AND OF NO EFFECT WHATSOEVER.
SECTION 3.2. Authority and Non-Contravention. The execution, delivery
and performance by the Stockholder of this Agreement and the consummation of the
transactions contemplated hereby (i) are within the Stockholder's power and
authority, have been duly authorized by all necessary action (including any
consultation, approval or other action by or with any other person), (ii)
require no action by or in respect of, or filing with, any Governmental Body
(except as may be required under the HSR Act and under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act")), and (iii) do not and will not contravene or constitute a
default under, or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Stockholder or to a loss of any
benefit of the Stockholder under, any provision of applicable law or regulation
or any agreement, judgment, injunction, order, decree, or other instrument
binding on the Stockholder or result in the imposition of any Lien on any assets
of the Stockholder. If the Stockholder is married and the Shares constitute
community property or otherwise are owned or held in a manner that requires
spousal or other approval for this Agreement to be legal, valid and binding,
this Agreement has been duly consented to and delivered by the Stockholder's
spouse or the person giving such approval, enforceable against such spouse or
person in accordance with its terms.
SECTION 3.3. Binding Effect. This Agreement has been duly executed and
delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
SECTION 3.4. Total Shares. The Stockholder Shares owned by the
Stockholder are the only shares of Company Common Stock beneficially owned as of
the date hereof by the Stockholder and the Stockholder has no option to purchase
or right to subscribe for or otherwise acquire any securities of the Company and
has no other interest in or voting rights with respect to any other securities
of the Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from Purchaser or the Company in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Stockholder, except as otherwise disclosed in the Merger Agreement.
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<PAGE> 16
ARTICLE IV
Representations and Warranties
of the Parent and Purchaser
The Parent and Purchaser represent and warrant to the Stockholder:
SECTION 4.1. Corporate Power and Authority; Noncontravention. The
Parent and Purchaser have all requisite corporate power and authority to enter
into this Agreement and to perform their obligations hereunder. The execution,
delivery and performance by the Parent and Purchaser of this Agreement and the
consummation by the Parent and Purchaser of the transactions contemplated hereby
(i) have been duly authorized by all necessary corporate action on the part of
the Parent and Purchaser, (ii) require no action by or in respect of, or filing
with, any Governmental Body (except as may be required under the HSR Act and
under the Exchange Act), or (iii) do not and will not contravene or constitute a
default under, the certificate of incorporation or by-laws of Parent or
Purchaser or any provision of applicable law or regulation or any, judgment,
injunction, order, decree, material agreement or other material instrument
binding on the Parent or Purchaser.
SECTION 4.2. Binding Effect. This Agreement has been duly executed and
delivered by the Parent and Purchaser and is a valid and binding agreement of
the Parent and Purchaser, enforceable against each of them in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
SECTION 4.3. Acquisition for Purchaser's Account. Any Shares to be
acquired upon consummation of the Offer, or upon exercise of the Option will be
acquired by Parent for its own account and not with a view to the public
distribution thereof and will not be transferred except in compliance with the
Securities Act and the rules and regulations promulgated thereunder.
ARTICLE V
Additional Agreements
SECTION 5.1. Agreements of Stockholder. The Stockholder hereby
covenants and agrees that:
(a) No Solicitation. The Stockholder shall not directly or
indirectly (i) solicit, initiate or knowingly encourage (or authorize
any person to solicit, initiate or encourage) any Acquisition Proposal,
or (ii) participate in any discussion or negotiations regarding, or
furnish to any other person any information with respect to, or
otherwise knowingly cooperate in any way with, or participate in,
facilitate or encourage any effort or attempt by any other person to do
or seek the foregoing. The Stockholder shall promptly advise the
Purchaser of the terms of any communications it or any of its
affiliates may receive relating
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<PAGE> 17
to any Acquisition Proposal (including, without limitation, the
identify of the party making any such Acquisition Proposal).
(b) Adjustment upon Changes in Capitalization or Merger. In
the event of any change in the Company's capital stock by reason of
stock dividends, stock splits, mergers, consolidations,
recapitalization, combinations, conversions, exchanges of shares,
extraordinary or liquidating dividends, or other changes in the
corporate or capital structure of the Company which would have the
effect of diluting or changing Parent and Purchaser's rights hereunder,
the number and kind of shares or securities subject to this Agreement
and the price set forth herein at which Shares may be purchased from
the Stockholder pursuant to the Offer or the exercise of the Option
shall be appropriately and equitably adjusted so that Parent and
Purchaser shall receive pursuant to the Offer or the exercise of the
Option the number and class of shares or other securities or property
that Parent or Purchaser, as the case may be, would have received in
respect of the Shares purchasable pursuant to the Offer or the exercise
of the Option if such purchase had occurred immediately prior to such
event.
ARTICLE VI
Miscellaneous
SECTION 6.1. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 6.2. Further Assurances. The Parent, Purchaser and the
Stockholder will execute and deliver or cause to be executed and delivered all
further documents and instruments and use its reasonable best efforts to secure
such consents and take all such further action as may be reasonably necessary in
order to consummate the transactions contemplated hereby and by the Merger
Agreement.
SECTION 6.3. Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 6.4. Specific Performance. The parties acknowledge and agree
that performance of their respective obligations hereunder will confer a unique
benefit on the other and that a failure of performance will not be compensable
by money damages. The parties therefore agree that this Shareholder Agreement
shall be specifically enforceable and that specific enforcement
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<PAGE> 18
and injunctive relief shall be available to the Parent, Purchaser or the
Stockholder for any breach by the other party or parties of any agreement,
covenant or representation hereunder.
SECTION 6.5. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares pursuant to Section 1.2 hereof. None of
the representations and warranties contained in this Agreement shall survive the
acceptance for payment and payment for the Shares pursuant to the Offer.
SECTION 6.7. Amendments; Termination. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. Notwithstanding
anything herein to the contrary, this Agreement shall expire and be of no
further force or effect if (i) the conditions to the Purchaser's obligations to
accept for payment and pay for Shares pursuant to the Offer shall have been
satisfied and the Purchaser breaches any obligation of Purchaser under the
Merger Agreement to accept for payment and promptly pay for all Shares validly
tendered and not withdrawn pursuant to the Offer upon expiration of the Offer or
(ii) Purchaser amends the Offer to (w) reduce the Offer Price to less than $5.50
in cash, net to the sellers, (x) reduce the number of shares of Company Common
Stock subject to the Offer, (y) change the form of consideration payable in the
Offer or (z) amend or modify any term or condition of the Offer in a manner
adverse to the stockholders of the Company (other than insignificant changes or
amendments or other than to waive any condition). This Agreement will also
terminate upon the earlier of (i) the close of business on March 1, 2000, or
(ii) the Effective Time.
SECTION 6.8. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that Purchaser may assign
its rights and obligations to another wholly-owned subsidiary of the Parent
which is the assignee of Purchaser's rights under the Merger Agreement; and
provided further that except as set forth in the prior clause, a party may not
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto and any purported
assignment, delegation or transfer without such consent shall be null and void.
SECTION 6.9. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to the
principles of conflicts of laws thereof.
SECTION 6.10. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effects as if the signatures
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<PAGE> 19
thereto and thereof were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received counterparts hereof signed
by all of the other parties hereto.
SECTION 6.11. Stockholder Capacity. The Stockholder signs solely in its
capacity as the record holder and beneficial owner of the Shares and nothing
herein shall limit or affect any actions taken by the Stockholder in his or her
capacity as an officer, director, partner, employee or affiliate of the Company
and no such actions shall be deemed a breach of this Agreement.
SECTION 6.12. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby 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 be consummated as originally contemplated to the
fullest extent possible. To the extent that any provision of this Agreement and
the Merger Agreement conflict, the provisions of the Merger Agreement shall
control.
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<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FEDDERS CORPORATION
By: /s/ Robert L. Laurent, Jr.
--------------------------------
Name: Robert L. Laurent, Jr.
--------------------------------
Title: Executive Vice President
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07938
Attn: General Counsel
TI ACQUISITION CORP.
By: /s/ Robert L. Laurent, Jr.
--------------------------------
Name: Robert L. Laurent, Jr.
--------------------------------
Title: Executive Vice President
--------------------------------
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07983-0813
Attn: General Counsel
/s/ Joseph W. Deering (SEAL)
---------------------------------
Joseph W. Deering
Address for Notices:
1100 Ridgeway Road
Dayton, OH 45419-3031
<PAGE> 21
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of July 12, 1999 (this "Agreement"),
among Fedders Corporation, a Delaware corporation (the "Parent"), TI Acquisition
Corp., a Pennsylvania corporation and an indirect wholly owned subsidiary of the
Parent ("Purchaser"), and Seddon Goode, Jr. (the "Stockholder").
WHEREAS, concurrently with the execution and delivery of this Agreement
the Parent, Purchaser and Trion, Inc., a Pennsylvania corporation (the
"Company"), have entered into an Agreement and Plan of Merger dated as of the
date hereof (such Agreement and Plan of Merger, as amended from time to time,
the "Merger Agreement"), which provides, among other things, that Purchaser
shall make the Offer (as defined in the Merger Agreement) to purchase at a price
of $5.50 per share, net to the sellers in cash, all of the issued and
outstanding shares of the Company's Common Stock, par value $0.50 per share (the
"Company Common Stock"), and shall merge with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the Merger
Agreement (any term used herein without definition shall have the definition
ascribed thereto in the Merger Agreement);
WHEREAS, the Stockholder owns beneficially and of record shares of
Company Common Stock (such shares of Company Common Stock being collectively
referred to herein as the "Stockholder Shares"); and
WHEREAS, as a condition to the willingness of the Parent and Purchaser
to enter into the Merger Agreement, and as an inducement to them to do so, the
Stockholder has agreed for the benefit of the Parent and Purchaser to tender the
Stockholder Shares and any other shares of Company Common Stock at any time
during the term of this Agreement held by the Stockholder, pursuant to the
Offer, to vote all the Stockholder Shares and any other shares of Company Common
Stock owned by the Stockholder in favor of the Merger, and to grant to Parent an
option to acquire all Stockholder Shares and all other shares of Company Common
Stock owned by the Stockholder under certain circumstances, all on the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
<PAGE> 22
ARTICLE I
Tender Offer and Option
SECTION 1.1. Tender of Shares. (a) Within five business days of the
commencement by Purchaser of the Offer, the Stockholder shall tender to the
Depository designated in the Offer to Purchase (the "Offer to Purchase")
distributed by Purchaser in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder Shares and any other shares of
Company Common Stock held by the Stockholder (whether or not currently held by
the Stockholder; the Stockholder Shares, together with any shares acquired by
the Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise (the "Shares")),
complying with the terms of the Offer to Purchase, (ii) the certificates
representing the Shares, and (iii) all other documents or instruments required
to be delivered pursuant to the terms of the Offer to Purchase.
(b) The Stockholder shall not, subject to applicable law, withdraw the
tender effected in accordance with Section 1.1(a); provided, however, that the
Stockholder may decline to tender, or may withdraw, any and all Shares owned by
the Stockholder if the Purchaser amends the Offer to (w) reduce the Offer Price
to less than $5.50 in cash, net to the stockholders, (x) reduce the number of
shares of Company Common Stock subject to the Offer, (y) change the form of
consideration payable in the Offer or (z) amend or modify any term or condition
of the Offer in a manner adverse to the stockholders of the Company (other than
insignificant changes or amendments or other than to waive any condition). The
Stockholder shall give Purchaser at least two business days' prior notice of any
withdrawal of Shares owned by the Stockholder pursuant to the immediately
preceding proviso.
SECTION 1.2. Option. (a) The Stockholder hereby irrevocably grants
Parent an option (the "Option"), exercisable only upon the events and subject to
the conditions set forth herein, to purchase any or all of the Shares at a
purchase price per share equal to $5.50 (or such higher per share price as may
be offered by Purchaser in the Offer).
(b) Subject to the conditions set forth in Section 1.3 and the
termination provisions of Section 6.7, Parent may exercise the Option in whole
or in part at any time prior to the date 60 days after the expiration or
termination of the Offer (such sixtieth day being herein called the "Option
Expiration Date") if (x) the Stockholder fails to comply with any of its
obligations under this Agreement or withdraws the tender of the Shares except
under the circumstances set forth in the proviso to Section 1.1(b) (but the
Option shall not limit any other right or remedy available to the Parent or
Purchaser against the Stockholder for breach of this Agreement) or (y) the Offer
is not consummated because of the failure to satisfy any of the conditions to
the Offer set forth in Annex A to the Merger Agreement (other than as a result
of any action or inaction of the Parent or Purchaser which constitutes a breach
of the Merger Agreement).
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<PAGE> 23
Upon the occurrence of any of such circumstances, Purchaser
shall be entitled to exercise the Option and (subject to Section 1.3) Parent
shall be entitled to purchase the Shares and the Stockholder shall sell the
Shares to Parent. Parent shall exercise the Option by delivering written notice
thereof to the Stockholder (the "Notice"), specifying the number of Shares to be
purchased and the date, time and place for the closing of such purchase which
date shall not be less than three business days nor more than five business days
from the date the Stockholder receives the Notice and in no event shall such
date be later than the Option Expiration Date. The closing of the purchase of
Shares pursuant to this Section 1.2 (the "Closing") shall take place on the
date, at the time and at the place specified in such notice; provided, that if
at such date any of the conditions specified in Section 1.3 shall not have been
satisfied (or waived), Parent may postpone the Closing until a date within five
business days after such conditions are satisfied (but not later than the Option
Expiration Date).
(c) At the Closing, the Stockholder will deliver to Parent (in
accordance with Parent's instructions) the certificates representing the Shares
owned by the Stockholder and being purchased pursuant to Section 1.2(c), duly
endorsed or accompanied by stock powers duly executed in blank. At such Closing,
Parent shall deliver to the Stockholder, by bank wire transfer of immediately
available funds, an amount equal to the number of Shares being purchased from
the Stockholder as specified in the Notice multiplied by $5.50 (or such higher
per share price as may be offered by Parent in the Offer).
SECTION 1.3. Conditions to Option. The obligation of Parent to purchase
the Shares at the Closing is subject to the following conditions:
(a) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated
thereunder (the "HSR Act") applicable to such purchase shall have
expired or been terminated; and
(b) there shall be no preliminary or permanent injunction or
other order, decree or ruling issued by any Governmental Body, nor any
statute, rule, regulation or order promulgated or enacted by any
Governmental Body prohibiting, or otherwise restraining, such purchase.
SECTION 1.4. No Purchase. Purchaser and Parent may allow the Offer to
expire without accepting for payment or paying for any Shares, on the terms and
conditions set forth in the Offer to Purchase, and may allow the Option to
expire without exercising the Option and purchasing all or any Shares pursuant
to such exercise. If all Shares validly tendered and not withdrawn are not
accepted for payment and paid for in accordance with the terms of the Offer to
Purchase or pursuant to the exercise of the Option, they shall be returned to
the Stockholder, whereupon they shall continue to be held by the Stockholder
subject to the terms and conditions of this Agreement.
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<PAGE> 24
ARTICLE II
Consent and Voting
The Stockholder hereby revokes any and all previous proxies granted
with respect to the Shares owned by the Stockholder. By entering into this
Agreement, the Stockholder hereby consents to the Merger Agreement and the
transactions contemplated thereby, including the Merger. So long as the Merger
Agreement is in effect, the Stockholder hereby agrees (i) to vote all Shares now
or hereafter owned by such Stockholder or execute a consent or proxy and not
revoke any proxy, vote or consent, in favor of the Articles Amendment, the
Merger Agreement, the Merger and the transactions contemplated thereby, and (ii)
to oppose any Acquisition Proposal and to vote all Shares now or hereafter owned
by such Stockholder, or execute a consent or proxy, against any Acquisition
Proposal.
ARTICLE III
Representations, Warranties and Covenants
of the Stockholder
The Stockholder represents, warrants and covenants to the Purchaser
that:
SECTION 3.1. (a) Ownership. As of the date hereof the Stockholder is
the sole, true, lawful and beneficial owner of 82,858 Shares and that there are
no restrictions on voting rights or rights of disposition pertaining to such
Shares. The Stockholder will convey good and valid title to the Shares owned by
the Stockholder and being acquired pursuant to the Offer, the Merger or the
exercise of the Option, as the case may be, free and clear of any and all liens,
restrictions, security interests or any encumbrances whatsoever (collectively,
"Liens"). None of the Shares owned by the Stockholder is subject to any voting
trust or other agreement, arrangement or restriction with respect to the voting
of such Shares.
(b) Transfer of the Shares. (i) Until this Agreement is
terminated, the Stockholder shall not directly or indirectly offer to sell, sell
short, transfer (including gift), assign, pledge or otherwise dispose of or
transfer (each, a "Transfer") any interest in or encumber with any Lien any of
the Shares, (ii) enter into any contract, option, put, call, "collar" or other
agreement or understanding with respect to any Transfer of any or all of the
Shares or any interest therein; (iii) grant any proxy, power-of-attorney or
other authorization or consent in or with respect to the Shares; (iv) deposit
the Shares into a voting trust or enter into a voting agreement or arrangement
with respect to the Shares; or (v) take any other action with respect to the
Shares that would in any way restrict, limit or interfere with the performance
of its obligations hereunder.
(c) The Stockholder agrees to place the following legend on
any and all certificates evidencing the Shares:
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<PAGE> 25
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THAT
SHAREHOLDER AGREEMENT, DATED AS OF JULY 12, 1999, BY AND AMONG
PARENT, PURCHASER AND STOCKHOLDER. ANY TRANSFER OF SUCH SHARES
OF COMMON STOCK IN VIOLATION OF THE TERMS OF SUCH AGREEMENT
SHALL BE NULL AND VOID AND OF NO EFFECT WHATSOEVER.
SECTION 3.2. Authority and Non-Contravention. The execution, delivery
and performance by the Stockholder of this Agreement and the consummation of the
transactions contemplated hereby (i) are within the Stockholder's power and
authority, have been duly authorized by all necessary action (including any
consultation, approval or other action by or with any other person), (ii)
require no action by or in respect of, or filing with, any Governmental Body
(except as may be required under the HSR Act and under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act")), and (iii) do not and will not contravene or constitute a
default under, or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Stockholder or to a loss of any
benefit of the Stockholder under, any provision of applicable law or regulation
or any agreement, judgment, injunction, order, decree, or other instrument
binding on the Stockholder or result in the imposition of any Lien on any assets
of the Stockholder. If the Stockholder is married and the Shares constitute
community property or otherwise are owned or held in a manner that requires
spousal or other approval for this Agreement to be legal, valid and binding,
this Agreement has been duly consented to and delivered by the Stockholder's
spouse or the person giving such approval, enforceable against such spouse or
person in accordance with its terms.
SECTION 3.3. Binding Effect. This Agreement has been duly executed and
delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
SECTION 3.4. Total Shares. The Stockholder Shares owned by the
Stockholder are the only shares of Company Common Stock beneficially owned as of
the date hereof by the Stockholder and the Stockholder has no option to purchase
or right to subscribe for or otherwise acquire any securities of the Company and
has no other interest in or voting rights with respect to any other securities
of the Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from Purchaser or the Company in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Stockholder, except as otherwise disclosed in the Merger Agreement.
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<PAGE> 26
ARTICLE IV
Representations and Warranties
of the Parent and Purchaser
The Parent and Purchaser represent and warrant to the Stockholder:
SECTION 4.1. Corporate Power and Authority; Noncontravention. The
Parent and Purchaser have all requisite corporate power and authority to enter
into this Agreement and to perform their obligations hereunder. The execution,
delivery and performance by the Parent and Purchaser of this Agreement and the
consummation by the Parent and Purchaser of the transactions contemplated hereby
(i) have been duly authorized by all necessary corporate action on the part of
the Parent and Purchaser, (ii) require no action by or in respect of, or filing
with, any Governmental Body (except as may be required under the HSR Act and
under the Exchange Act), or (iii) do not and will not contravene or constitute a
default under, the certificate of incorporation or by-laws of Parent or
Purchaser or any provision of applicable law or regulation or any, judgment,
injunction, order, decree, material agreement or other material instrument
binding on the Parent or Purchaser.
SECTION 4.2. Binding Effect. This Agreement has been duly executed and
delivered by the Parent and Purchaser and is a valid and binding agreement of
the Parent and Purchaser, enforceable against each of them in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
SECTION 4.3. Acquisition for Purchaser's Account. Any Shares to be
acquired upon consummation of the Offer, or upon exercise of the Option will be
acquired by Parent for its own account and not with a view to the public
distribution thereof and will not be transferred except in compliance with the
Securities Act and the rules and regulations promulgated thereunder.
ARTICLE V
Additional Agreements
SECTION 5.1. Agreements of Stockholder. The Stockholder hereby
covenants and agrees that:
(a) No Solicitation. The Stockholder shall not directly or
indirectly (i) solicit, initiate or knowingly encourage (or authorize
any person to solicit, initiate or encourage) any Acquisition Proposal,
or (ii) participate in any discussion or negotiations regarding, or
furnish to any other person any information with respect to, or
otherwise knowingly cooperate in any way with, or participate in,
facilitate or encourage any effort or attempt by any other person to do
or seek the foregoing. The Stockholder shall promptly advise the
Purchaser of the terms of any communications it or any of its
affiliates may receive relating
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<PAGE> 27
to any Acquisition Proposal (including, without limitation, the
identify of the party making any such Acquisition Proposal).
(b) Adjustment upon Changes in Capitalization or Merger. In
the event of any change in the Company's capital stock by reason of
stock dividends, stock splits, mergers, consolidations,
recapitalization, combinations, conversions, exchanges of shares,
extraordinary or liquidating dividends, or other changes in the
corporate or capital structure of the Company which would have the
effect of diluting or changing Parent and Purchaser's rights hereunder,
the number and kind of shares or securities subject to this Agreement
and the price set forth herein at which Shares may be purchased from
the Stockholder pursuant to the Offer or the exercise of the Option
shall be appropriately and equitably adjusted so that Parent and
Purchaser shall receive pursuant to the Offer or the exercise of the
Option the number and class of shares or other securities or property
that Parent or Purchaser, as the case may be, would have received in
respect of the Shares purchasable pursuant to the Offer or the exercise
of the Option if such purchase had occurred immediately prior to such
event.
ARTICLE VI
Miscellaneous
SECTION 6.1. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 6.2. Further Assurances. The Parent, Purchaser and the
Stockholder will execute and deliver or cause to be executed and delivered all
further documents and instruments and use its reasonable best efforts to secure
such consents and take all such further action as may be reasonably necessary in
order to consummate the transactions contemplated hereby and by the Merger
Agreement.
SECTION 6.3. Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 6.4. Specific Performance. The parties acknowledge and agree
that performance of their respective obligations hereunder will confer a unique
benefit on the other and that a failure of performance will not be compensable
by money damages. The parties therefore agree that this Shareholder Agreement
shall be specifically enforceable and that specific enforcement
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<PAGE> 28
and injunctive relief shall be available to the Parent, Purchaser or the
Stockholder for any breach by the other party or parties of any agreement,
covenant or representation hereunder.
SECTION 6.5. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares pursuant to Section 1.2 hereof. None of
the representations and warranties contained in this Agreement shall survive the
acceptance for payment and payment for the Shares pursuant to the Offer.
SECTION 6.7. Amendments; Termination. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. Notwithstanding
anything herein to the contrary, this Agreement shall expire and be of no
further force or effect if (i) the conditions to the Purchaser's obligations to
accept for payment and pay for Shares pursuant to the Offer shall have been
satisfied and the Purchaser breaches any obligation of Purchaser under the
Merger Agreement to accept for payment and promptly pay for all Shares validly
tendered and not withdrawn pursuant to the Offer upon expiration of the Offer or
(ii) Purchaser amends the Offer to (w) reduce the Offer Price to less than $5.50
in cash, net to the sellers, (x) reduce the number of shares of Company Common
Stock subject to the Offer, (y) change the form of consideration payable in the
Offer or (z) amend or modify any term or condition of the Offer in a manner
adverse to the stockholders of the Company (other than insignificant changes or
amendments or other than to waive any condition). This Agreement will also
terminate upon the earlier of (i) the close of business on March 1, 2000, or
(ii) the Effective Time.
SECTION 6.8. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that Purchaser may assign
its rights and obligations to another wholly-owned subsidiary of the Parent
which is the assignee of Purchaser's rights under the Merger Agreement; and
provided further that except as set forth in the prior clause, a party may not
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto and any purported
assignment, delegation or transfer without such consent shall be null and void.
SECTION 6.9. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to the
principles of conflicts of laws thereof.
SECTION 6.10. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effects as if the signatures
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<PAGE> 29
thereto and thereof were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received counterparts hereof signed
by all of the other parties hereto.
SECTION 6.11. Stockholder Capacity. The Stockholder signs solely in its
capacity as the record holder and beneficial owner of the Shares and nothing
herein shall limit or affect any actions taken by the Stockholder in his or her
capacity as an officer, director, partner, employee or affiliate of the Company
and no such actions shall be deemed a breach of this Agreement.
SECTION 6.12. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby 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 be consummated as originally contemplated to the
fullest extent possible. To the extent that any provision of this Agreement and
the Merger Agreement conflict, the provisions of the Merger Agreement shall
control.
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<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FEDDERS CORPORATION
By: /s/ Robert L. Laurent, Jr.
--------------------------------
Name: Robert L. Laurent, Jr.
--------------------------------
Title: Executive Vice President
--------------------------------
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07938
Attn: General Counsel
TI ACQUISITION CORP.
By: /s/ Robert L. Laurent, Jr.
--------------------------------
Name: Robert L. Laurent, Jr.
--------------------------------
Title: Executive Vice President
--------------------------------
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07983-0813
Attn: General Counsel
/s/ Seddon Goode, Jr. (SEAL)
--------------------------------
Seddon Goode, Jr.
Address for Notices:
University Research Park
Suite 1980
Two First Union Center
Charlotte, NC 28282
<PAGE> 31
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of July 12, 1999 (this "Agreement"),
among Fedders Corporation, a Delaware corporation (the "Parent"), TI Acquisition
Corp., a Pennsylvania corporation and an indirect wholly owned subsidiary of the
Parent ("Purchaser"), and James E.
Heins (the "Stockholder").
WHEREAS, concurrently with the execution and delivery of this Agreement
the Parent, Purchaser and Trion, Inc., a Pennsylvania corporation (the
"Company"), have entered into an Agreement and Plan of Merger dated as of the
date hereof (such Agreement and Plan of Merger, as amended from time to time,
the "Merger Agreement"), which provides, among other things, that Purchaser
shall make the Offer (as defined in the Merger Agreement) to purchase at a price
of $5.50 per share, net to the sellers in cash, all of the issued and
outstanding shares of the Company's Common Stock, par value $0.50 per share (the
"Company Common Stock"), and shall merge with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the Merger
Agreement (any term used herein without definition shall have the definition
ascribed thereto in the Merger Agreement);
WHEREAS, the Stockholder owns beneficially and of record shares of
Company Common Stock (such shares of Company Common Stock being collectively
referred to herein as the "Stockholder Shares"); and
WHEREAS, as a condition to the willingness of the Parent and Purchaser
to enter into the Merger Agreement, and as an inducement to them to do so, the
Stockholder has agreed for the benefit of the Parent and Purchaser to tender the
Stockholder Shares and any other shares of Company Common Stock at any time
during the term of this Agreement held by the Stockholder, pursuant to the
Offer, to vote all the Stockholder Shares and any other shares of Company Common
Stock owned by the Stockholder in favor of the Merger, and to grant to Parent an
option to acquire all Stockholder Shares and all other shares of Company Common
Stock owned by the Stockholder under certain circumstances, all on the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
<PAGE> 32
ARTICLE I
Tender Offer and Option
SECTION 1.1. Tender of Shares. (a) Within five business days of the
commencement by Purchaser of the Offer, the Stockholder shall tender to the
Depository designated in the Offer to Purchase (the "Offer to Purchase")
distributed by Purchaser in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder Shares and any other shares of
Company Common Stock held by the Stockholder (whether or not currently held by
the Stockholder; the Stockholder Shares, together with any shares acquired by
the Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise (the "Shares")),
complying with the terms of the Offer to Purchase, (ii) the certificates
representing the Shares, and (iii) all other documents or instruments required
to be delivered pursuant to the terms of the Offer to Purchase.
(b) The Stockholder shall not, subject to applicable law, withdraw the
tender effected in accordance with Section 1.1(a); provided, however, that the
Stockholder may decline to tender, or may withdraw, any and all Shares owned by
the Stockholder if the Purchaser amends the Offer to (w) reduce the Offer Price
to less than $5.50 in cash, net to the stockholders, (x) reduce the number of
shares of Company Common Stock subject to the Offer, (y) change the form of
consideration payable in the Offer or (z) amend or modify any term or condition
of the Offer in a manner adverse to the stockholders of the Company (other than
insignificant changes or amendments or other than to waive any condition). The
Stockholder shall give Purchaser at least two business days' prior notice of any
withdrawal of Shares owned by the Stockholder pursuant to the immediately
preceding proviso.
SECTION 1.2. Option. (a) The Stockholder hereby irrevocably grants
Parent an option (the "Option"), exercisable only upon the events and subject to
the conditions set forth herein, to purchase any or all of the Shares at a
purchase price per share equal to $5.50 (or such higher per share price as may
be offered by Purchaser in the Offer).
(b) Subject to the conditions set forth in Section 1.3 and the
termination provisions of Section 6.7, Parent may exercise the Option in whole
or in part at any time prior to the date 60 days after the expiration or
termination of the Offer (such sixtieth day being herein called the "Option
Expiration Date") if (x) the Stockholder fails to comply with any of its
obligations under this Agreement or withdraws the tender of the Shares except
under the circumstances set forth in the proviso to Section 1.1(b) (but the
Option shall not limit any other right or remedy available to the Parent or
Purchaser against the Stockholder for breach of this Agreement) or (y) the Offer
is not consummated because of the failure to satisfy any of the conditions to
the Offer set forth in Annex A to the Merger Agreement (other than as a result
of any action or inaction of the Parent or Purchaser which constitutes a breach
of the Merger Agreement).
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<PAGE> 33
Upon the occurrence of any of such circumstances, Purchaser
shall be entitled to exercise the Option and (subject to Section 1.3) Parent
shall be entitled to purchase the Shares and the Stockholder shall sell the
Shares to Parent. Parent shall exercise the Option by delivering written notice
thereof to the Stockholder (the "Notice"), specifying the number of Shares to be
purchased and the date, time and place for the closing of such purchase which
date shall not be less than three business days nor more than five business days
from the date the Stockholder receives the Notice and in no event shall such
date be later than the Option Expiration Date. The closing of the purchase of
Shares pursuant to this Section 1.2 (the "Closing") shall take place on the
date, at the time and at the place specified in such notice; provided, that if
at such date any of the conditions specified in Section 1.3 shall not have been
satisfied (or waived), Parent may postpone the Closing until a date within five
business days after such conditions are satisfied (but not later than the Option
Expiration Date).
(c) At the Closing, the Stockholder will deliver to Parent (in
accordance with Parent's instructions) the certificates representing the Shares
owned by the Stockholder and being purchased pursuant to Section 1.2(c), duly
endorsed or accompanied by stock powers duly executed in blank. At such Closing,
Parent shall deliver to the Stockholder, by bank wire transfer of immediately
available funds, an amount equal to the number of Shares being purchased from
the Stockholder as specified in the Notice multiplied by $5.50 (or such higher
per share price as may be offered by Parent in the Offer).
SECTION 1.3. Conditions to Option. The obligation of Parent to purchase
the Shares at the Closing is subject to the following conditions:
(a) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated
thereunder (the "HSR Act") applicable to such purchase shall have
expired or been terminated; and
(b) there shall be no preliminary or permanent injunction or
other order, decree or ruling issued by any Governmental Body, nor any
statute, rule, regulation or order promulgated or enacted by any
Governmental Body prohibiting, or otherwise restraining, such purchase.
SECTION 1.4. No Purchase. Purchaser and Parent may allow the Offer to
expire without accepting for payment or paying for any Shares, on the terms and
conditions set forth in the Offer to Purchase, and may allow the Option to
expire without exercising the Option and purchasing all or any Shares pursuant
to such exercise. If all Shares validly tendered and not withdrawn are not
accepted for payment and paid for in accordance with the terms of the Offer to
Purchase or pursuant to the exercise of the Option, they shall be returned to
the Stockholder, whereupon they shall continue to be held by the Stockholder
subject to the terms and conditions of this Agreement.
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<PAGE> 34
ARTICLE II
Consent and Voting
The Stockholder hereby revokes any and all previous proxies granted
with respect to the Shares owned by the Stockholder. By entering into this
Agreement, the Stockholder hereby consents to the Merger Agreement and the
transactions contemplated thereby, including the Merger. So long as the Merger
Agreement is in effect, the Stockholder hereby agrees (i) to vote all Shares now
or hereafter owned by such Stockholder or execute a consent or proxy and not
revoke any proxy, vote or consent, in favor of the Articles Amendment, the
Merger Agreement, the Merger and the transactions contemplated thereby, and (ii)
to oppose any Acquisition Proposal and to vote all Shares now or hereafter owned
by such Stockholder, or execute a consent or proxy, against any Acquisition
Proposal.
ARTICLE III
Representations, Warranties and Covenants
of the Stockholder
The Stockholder represents, warrants and covenants to the Purchaser
that:
SECTION 3.1. (a) Ownership. As of the date hereof the Stockholder is
the sole, true, lawful and beneficial owner of 10,682 Shares and that there are
no restrictions on voting rights or rights of disposition pertaining to such
Shares. The Stockholder will convey good and valid title to the Shares owned by
the Stockholder and being acquired pursuant to the Offer, the Merger or the
exercise of the Option, as the case may be, free and clear of any and all liens,
restrictions, security interests or any encumbrances whatsoever (collectively,
"Liens"). None of the Shares owned by the Stockholder is subject to any voting
trust or other agreement, arrangement or restriction with respect to the voting
of such Shares.
(b) Transfer of the Shares. (i) Until this Agreement is
terminated, the Stockholder shall not directly or indirectly offer to sell, sell
short, transfer (including gift), assign, pledge or otherwise dispose of or
transfer (each, a "Transfer") any interest in or encumber with any Lien any of
the Shares, (ii) enter into any contract, option, put, call, "collar" or other
agreement or understanding with respect to any Transfer of any or all of the
Shares or any interest therein; (iii) grant any proxy, power-of-attorney or
other authorization or consent in or with respect to the Shares; (iv) deposit
the Shares into a voting trust or enter into a voting agreement or arrangement
with respect to the Shares; or (v) take any other action with respect to the
Shares that would in any way restrict, limit or interfere with the performance
of its obligations hereunder.
(c) The Stockholder agrees to place the following legend
on any and all certificates evidencing the Shares:
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<PAGE> 35
THE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER PURSUANT TO THAT
SHAREHOLDER AGREEMENT, DATED AS OF JULY
12, 1999, BY AND AMONG PARENT, PURCHASER
AND STOCKHOLDER. ANY TRANSFER OF SUCH
SHARES OF COMMON STOCK IN VIOLATION OF THE
TERMS OF SUCH AGREEMENT SHALL BE NULL AND
VOID AND OF NO EFFECT WHATSOEVER.
SECTION 3.2. Authority and Non-Contravention. The execution, delivery
and performance by the Stockholder of this Agreement and the consummation of the
transactions contemplated hereby (i) are within the Stockholder's power and
authority, have been duly authorized by all necessary action (including any
consultation, approval or other action by or with any other person), (ii)
require no action by or in respect of, or filing with, any Governmental Body
(except as may be required under the HSR Act and under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act")), and (iii) do not and will not contravene or constitute a
default under, or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Stockholder or to a loss of any
benefit of the Stockholder under, any provision of applicable law or regulation
or any agreement, judgment, injunction, order, decree, or other instrument
binding on the Stockholder or result in the imposition of any Lien on any assets
of the Stockholder. If the Stockholder is married and the Shares constitute
community property or otherwise are owned or held in a manner that requires
spousal or other approval for this Agreement to be legal, valid and binding,
this Agreement has been duly consented to and delivered by the Stockholder's
spouse or the person giving such approval, enforceable against such spouse or
person in accordance with its terms.
SECTION 3.3. Binding Effect. This Agreement has been duly executed and
delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
SECTION 3.4. Total Shares. The Stockholder Shares owned by the
Stockholder are the only shares of Company Common Stock beneficially owned as of
the date hereof by the Stockholder and the Stockholder has no option to purchase
or right to subscribe for or otherwise acquire any securities of the Company and
has no other interest in or voting rights with respect to any other securities
of the Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from Purchaser or the Company in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Stockholder, except as otherwise disclosed in the Merger Agreement.
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<PAGE> 36
ARTICLE IV
Representations and Warranties
of the Parent and Purchaser
The Parent and Purchaser represent and warrant to the Stockholder:
SECTION 4.1. Corporate Power and Authority; Noncontravention. The
Parent and Purchaser have all requisite corporate power and authority to enter
into this Agreement and to perform their obligations hereunder. The execution,
delivery and performance by the Parent and Purchaser of this Agreement and the
consummation by the Parent and Purchaser of the transactions contemplated hereby
(i) have been duly authorized by all necessary corporate action on the part of
the Parent and Purchaser, (ii) require no action by or in respect of, or filing
with, any Governmental Body (except as may be required under the HSR Act and
under the Exchange Act), or (iii) do not and will not contravene or constitute a
default under, the certificate of incorporation or by-laws of Parent or
Purchaser or any provision of applicable law or regulation or any, judgment,
injunction, order, decree, material agreement or other material instrument
binding on the Parent or Purchaser.
SECTION 4.2. Binding Effect. This Agreement has been duly executed and
delivered by the Parent and Purchaser and is a valid and binding agreement of
the Parent and Purchaser, enforceable against each of them in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
SECTION 4.3. Acquisition for Purchaser's Account. Any Shares to be
acquired upon consummation of the Offer, or upon exercise of the Option will be
acquired by Parent for its own account and not with a view to the public
distribution thereof and will not be transferred except in compliance with the
Securities Act and the rules and regulations promulgated thereunder.
ARTICLE V
Additional Agreements
SECTION 5.1. Agreements of Stockholder. The Stockholder hereby
covenants and agrees that:
(a) No Solicitation. The Stockholder shall not directly or
indirectly (i) solicit, initiate or knowingly encourage (or authorize
any person to solicit, initiate or encourage) any Acquisition Proposal,
or (ii) participate in any discussion or negotiations regarding, or
furnish to any other person any information with respect to, or
otherwise knowingly cooperate in any way with, or participate in,
facilitate or encourage any effort or attempt by any other person to do
or seek the foregoing. The Stockholder shall promptly advise the
Purchaser of the terms of any communications it or any of its
affiliates may receive relating
6
<PAGE> 37
to any Acquisition Proposal (including, without limitation, the
identify of the party making any such Acquisition Proposal).
(b) Adjustment upon Changes in Capitalization or Merger. In
the event of any change in the Company's capital stock by reason of
stock dividends, stock splits, mergers, consolidations,
recapitalization, combinations, conversions, exchanges of shares,
extraordinary or liquidating dividends, or other changes in the
corporate or capital structure of the Company which would have the
effect of diluting or changing Parent and Purchaser's rights hereunder,
the number and kind of shares or securities subject to this Agreement
and the price set forth herein at which Shares may be purchased from
the Stockholder pursuant to the Offer or the exercise of the Option
shall be appropriately and equitably adjusted so that Parent and
Purchaser shall receive pursuant to the Offer or the exercise of the
Option the number and class of shares or other securities or property
that Parent or Purchaser, as the case may be, would have received in
respect of the Shares purchasable pursuant to the Offer or the exercise
of the Option if such purchase had occurred immediately prior to such
event.
ARTICLE VI
Miscellaneous
SECTION 6.1. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 6.2. Further Assurances. The Parent, Purchaser and the
Stockholder will execute and deliver or cause to be executed and delivered all
further documents and instruments and use its reasonable best efforts to secure
such consents and take all such further action as may be reasonably necessary in
order to consummate the transactions contemplated hereby and by the Merger
Agreement.
SECTION 6.3. Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 6.4. Specific Performance. The parties acknowledge and agree
that performance of their respective obligations hereunder will confer a unique
benefit on the other and that a failure of performance will not be compensable
by money damages. The parties therefore agree that this Shareholder Agreement
shall be specifically enforceable and that specific enforcement
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<PAGE> 38
and injunctive relief shall be available to the Parent, Purchaser or the
Stockholder for any breach by the other party or parties of any agreement,
covenant or representation hereunder.
SECTION 6.5. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares pursuant to Section 1.2 hereof. None of
the representations and warranties contained in this Agreement shall survive the
acceptance for payment and payment for the Shares pursuant to the Offer.
SECTION 6.7. Amendments; Termination. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. Notwithstanding
anything herein to the contrary, this Agreement shall expire and be of no
further force or effect if (i) the conditions to the Purchaser's obligations to
accept for payment and pay for Shares pursuant to the Offer shall have been
satisfied and the Purchaser breaches any obligation of Purchaser under the
Merger Agreement to accept for payment and promptly pay for all Shares validly
tendered and not withdrawn pursuant to the Offer upon expiration of the Offer or
(ii) Purchaser amends the Offer to (w) reduce the Offer Price to less than $5.50
in cash, net to the sellers, (x) reduce the number of shares of Company Common
Stock subject to the Offer, (y) change the form of consideration payable in the
Offer or (z) amend or modify any term or condition of the Offer in a manner
adverse to the stockholders of the Company (other than insignificant changes or
amendments or other than to waive any condition). This Agreement will also
terminate upon the earlier of (i) the close of business on March 1, 2000, or
(ii) the Effective Time.
SECTION 6.8. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that Purchaser may assign
its rights and obligations to another wholly-owned subsidiary of the Parent
which is the assignee of Purchaser's rights under the Merger Agreement; and
provided further that except as set forth in the prior clause, a party may not
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto and any purported
assignment, delegation or transfer without such consent shall be null and void.
SECTION 6.9. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to the
principles of conflicts of laws thereof.
SECTION 6.10. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effects as if the signatures
8
<PAGE> 39
thereto and thereof were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received counterparts hereof signed
by all of the other parties hereto.
SECTION 6.11. Stockholder Capacity. The Stockholder signs solely in its
capacity as the record holder and beneficial owner of the Shares and nothing
herein shall limit or affect any actions taken by the Stockholder in his or her
capacity as an officer, director, partner, employee or affiliate of the Company
and no such actions shall be deemed a breach of this Agreement.
SECTION 6.12. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby 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 be consummated as originally contemplated to the
fullest extent possible. To the extent that any provision of this Agreement and
the Merger Agreement conflict, the provisions of the Merger Agreement shall
control.
9
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FEDDERS CORPORATION
By: /s/ Robert L. Laurent, Jr.
-----------------------------
Name: Robert L. Laurent, Jr.
-----------------------------
Title: Executive Vice President
-----------------------------
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07938
Attn: General Counsel
TI ACQUISITION CORP.
By: /s/ Robert L. Laurent, Jr.
-----------------------------
Name: Robert L. Laurent, Jr.
-----------------------------
Title: Executive Vice President
-----------------------------
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07983-0813
Attn: General Counsel
/s/ James E. Heins (SEAL)
-------------------------------------------------
James E. Heins
Address for Notices:
1600 Morganton Road, L-13
Pinehurst, NC 28374
<PAGE> 41
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of July 12, 1999 (this "Agreement"),
among Fedders Corporation, a Delaware corporation (the "Parent"), TI Acquisition
Corp., a Pennsylvania corporation and an indirect wholly owned subsidiary of the
Parent ("Purchaser"), and F. Trent Hill, Jr. (the "Stockholder").
WHEREAS, concurrently with the execution and delivery of this Agreement
the Parent, Purchaser and Trion, Inc., a Pennsylvania corporation (the
"Company"), have entered into an Agreement and Plan of Merger dated as of the
date hereof (such Agreement and Plan of Merger, as amended from time to time,
the "Merger Agreement"), which provides, among other things, that Purchaser
shall make the Offer (as defined in the Merger Agreement) to purchase at a price
of $5.50 per share, net to the sellers in cash, all of the issued and
outstanding shares of the Company's Common Stock, par value $0.50 per share (the
"Company Common Stock"), and shall merge with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the Merger
Agreement (any term used herein without definition shall have the definition
ascribed thereto in the Merger Agreement);
WHEREAS, the Stockholder owns beneficially and of record shares of
Company Common Stock (such shares of Company Common Stock being collectively
referred to herein as the "Stockholder Shares"); and
WHEREAS, as a condition to the willingness of the Parent and Purchaser
to enter into the Merger Agreement, and as an inducement to them to do so, the
Stockholder has agreed for the benefit of the Parent and Purchaser to tender the
Stockholder Shares and any other shares of Company Common Stock at any time
during the term of this Agreement held by the Stockholder, pursuant to the
Offer, to vote all the Stockholder Shares and any other shares of Company Common
Stock owned by the Stockholder in favor of the Merger, and to grant to Parent an
option to acquire all Stockholder Shares and all other shares of Company Common
Stock owned by the Stockholder under certain circumstances, all on the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
<PAGE> 42
ARTICLE I
Tender Offer and Option
SECTION 1.1. Tender of Shares. (a) Within five business days of the
commencement by Purchaser of the Offer, the Stockholder shall tender to the
Depository designated in the Offer to Purchase (the "Offer to Purchase")
distributed by Purchaser in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder Shares and any other shares of
Company Common Stock held by the Stockholder (whether or not currently held by
the Stockholder; the Stockholder Shares, together with any shares acquired by
the Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise (the "Shares")),
complying with the terms of the Offer to Purchase, (ii) the certificates
representing the Shares, and (iii) all other documents or instruments required
to be delivered pursuant to the terms of the Offer to Purchase.
(b) The Stockholder shall not, subject to applicable law, withdraw the
tender effected in accordance with Section 1.1(a); provided, however, that the
Stockholder may decline to tender, or may withdraw, any and all Shares owned by
the Stockholder if the Purchaser amends the Offer to (w) reduce the Offer Price
to less than $5.50 in cash, net to the stockholders, (x) reduce the number of
shares of Company Common Stock subject to the Offer, (y) change the form of
consideration payable in the Offer or (z) amend or modify any term or condition
of the Offer in a manner adverse to the stockholders of the Company (other than
insignificant changes or amendments or other than to waive any condition). The
Stockholder shall give Purchaser at least two business days' prior notice of any
withdrawal of Shares owned by the Stockholder pursuant to the immediately
preceding proviso.
SECTION 1.2. Option. (a) The Stockholder hereby irrevocably grants
Parent an option (the "Option"), exercisable only upon the events and subject to
the conditions set forth herein, to purchase any or all of the Shares at a
purchase price per share equal to $5.50 (or such higher per share price as may
be offered by Purchaser in the Offer).
(b) Subject to the conditions set forth in Section 1.3 and the
termination provisions of Section 6.7, Parent may exercise the Option in whole
or in part at any time prior to the date 60 days after the expiration or
termination of the Offer (such sixtieth day being herein called the "Option
Expiration Date") if (x) the Stockholder fails to comply with any of its
obligations under this Agreement or withdraws the tender of the Shares except
under the circumstances set forth in the proviso to Section 1.1(b) (but the
Option shall not limit any other right or remedy available to the Parent or
Purchaser against the Stockholder for breach of this Agreement) or (y) the Offer
is not consummated because of the failure to satisfy any of the conditions to
the Offer set forth in Annex A to the Merger Agreement (other than as a result
of any action or inaction of the Parent or Purchaser which constitutes a breach
of the Merger Agreement).
2
<PAGE> 43
Upon the occurrence of any of such circumstances, Purchaser
shall be entitled to exercise the Option and (subject to Section 1.3) Parent
shall be entitled to purchase the Shares and the Stockholder shall sell the
Shares to Parent. Parent shall exercise the Option by delivering written notice
thereof to the Stockholder (the "Notice"), specifying the number of Shares to be
purchased and the date, time and place for the closing of such purchase which
date shall not be less than three business days nor more than five business days
from the date the Stockholder receives the Notice and in no event shall such
date be later than the Option Expiration Date. The closing of the purchase of
Shares pursuant to this Section 1.2 (the "Closing") shall take place on the
date, at the time and at the place specified in such notice; provided, that if
at such date any of the conditions specified in Section 1.3 shall not have been
satisfied (or waived), Parent may postpone the Closing until a date within five
business days after such conditions are satisfied (but not later than the Option
Expiration Date).
(c) At the Closing, the Stockholder will deliver to Parent (in
accordance with Parent's instructions) the certificates representing the Shares
owned by the Stockholder and being purchased pursuant to Section 1.2(c), duly
endorsed or accompanied by stock powers duly executed in blank. At such Closing,
Parent shall deliver to the Stockholder, by bank wire transfer of immediately
available funds, an amount equal to the number of Shares being purchased from
the Stockholder as specified in the Notice multiplied by $5.50 (or such higher
per share price as may be offered by Parent in the Offer).
SECTION 1.3. Conditions to Option. The obligation of Parent to purchase
the Shares at the Closing is subject to the following conditions:
(a) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated
thereunder (the "HSR Act") applicable to such purchase shall have
expired or been terminated; and
(b) there shall be no preliminary or permanent injunction or
other order, decree or ruling issued by any Governmental Body, nor any
statute, rule, regulation or order promulgated or enacted by any
Governmental Body prohibiting, or otherwise restraining, such purchase.
SECTION 1.4. No Purchase. Purchaser and Parent may allow the Offer to
expire without accepting for payment or paying for any Shares, on the terms and
conditions set forth in the Offer to Purchase, and may allow the Option to
expire without exercising the Option and purchasing all or any Shares pursuant
to such exercise. If all Shares validly tendered and not withdrawn are not
accepted for payment and paid for in accordance with the terms of the Offer to
Purchase or pursuant to the exercise of the Option, they shall be returned to
the Stockholder, whereupon they shall continue to be held by the Stockholder
subject to the terms and conditions of this Agreement.
3
<PAGE> 44
ARTICLE II
Consent and Voting
The Stockholder hereby revokes any and all previous proxies granted
with respect to the Shares owned by the Stockholder. By entering into this
Agreement, the Stockholder hereby consents to the Merger Agreement and the
transactions contemplated thereby, including the Merger. So long as the Merger
Agreement is in effect, the Stockholder hereby agrees (i) to vote all Shares now
or hereafter owned by such Stockholder or execute a consent or proxy and not
revoke any proxy, vote or consent, in favor of the Articles Amendment, the
Merger Agreement, the Merger and the transactions contemplated thereby, and (ii)
to oppose any Acquisition Proposal and to vote all Shares now or hereafter owned
by such Stockholder, or execute a consent or proxy, against any Acquisition
Proposal.
ARTICLE III
Representations, Warranties and Covenants
of the Stockholder
The Stockholder represents, warrants and covenants to the Purchaser
that:
SECTION 3.1. (a) Ownership. As of the date hereof the Stockholder is
the sole, true, lawful and beneficial owner of 24,263 Shares and that there are
no restrictions on voting rights or rights of disposition pertaining to such
Shares. The Stockholder will convey good and valid title to the Shares owned by
the Stockholder and being acquired pursuant to the Offer, the Merger or the
exercise of the Option, as the case may be, free and clear of any and all liens,
restrictions, security interests or any encumbrances whatsoever (collectively,
"Liens"). None of the Shares owned by the Stockholder is subject to any voting
trust or other agreement, arrangement or restriction with respect to the voting
of such Shares.
(b) Transfer of the Shares. (i) Until this Agreement is
terminated, the Stockholder shall not directly or indirectly offer to sell, sell
short, transfer (including gift), assign, pledge or otherwise dispose of or
transfer (each, a "Transfer") any interest in or encumber with any Lien any of
the Shares, (ii) enter into any contract, option, put, call, "collar" or other
agreement or understanding with respect to any Transfer of any or all of the
Shares or any interest therein; (iii) grant any proxy, power-of-attorney or
other authorization or consent in or with respect to the Shares; (iv) deposit
the Shares into a voting trust or enter into a voting agreement or arrangement
with respect to the Shares; or (v) take any other action with respect to the
Shares that would in any way restrict, limit or interfere with the performance
of its obligations hereunder.
(c) The Stockholder agrees to place the following legend
on any and all certificates evidencing the Shares:
4
<PAGE> 45
THE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER PURSUANT TO THAT
SHAREHOLDER AGREEMENT, DATED AS OF JULY
12, 1999, BY AND AMONG PARENT, PURCHASER
AND STOCKHOLDER. ANY TRANSFER OF SUCH
SHARES OF COMMON STOCK IN VIOLATION OF THE
TERMS OF SUCH AGREEMENT SHALL BE NULL AND
VOID AND OF NO EFFECT WHATSOEVER.
SECTION 3.2. Authority and Non-Contravention. The execution, delivery
and performance by the Stockholder of this Agreement and the consummation of the
transactions contemplated hereby (i) are within the Stockholder's power and
authority, have been duly authorized by all necessary action (including any
consultation, approval or other action by or with any other person), (ii)
require no action by or in respect of, or filing with, any Governmental Body
(except as may be required under the HSR Act and under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act")), and (iii) do not and will not contravene or constitute a
default under, or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Stockholder or to a loss of any
benefit of the Stockholder under, any provision of applicable law or regulation
or any agreement, judgment, injunction, order, decree, or other instrument
binding on the Stockholder or result in the imposition of any Lien on any assets
of the Stockholder. If the Stockholder is married and the Shares constitute
community property or otherwise are owned or held in a manner that requires
spousal or other approval for this Agreement to be legal, valid and binding,
this Agreement has been duly consented to and delivered by the Stockholder's
spouse or the person giving such approval, enforceable against such spouse or
person in accordance with its terms.
SECTION 3.3. Binding Effect. This Agreement has been duly executed and
delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
SECTION 3.4. Total Shares. The Stockholder Shares owned by the
Stockholder are the only shares of Company Common Stock beneficially owned as of
the date hereof by the Stockholder and the Stockholder has no option to purchase
or right to subscribe for or otherwise acquire any securities of the Company and
has no other interest in or voting rights with respect to any other securities
of the Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from Purchaser or the Company in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Stockholder, except as otherwise disclosed in the Merger Agreement.
5
<PAGE> 46
ARTICLE IV
Representations and Warranties
of the Parent and Purchaser
The Parent and Purchaser represent and warrant to the Stockholder:
SECTION 4.1. Corporate Power and Authority; Noncontravention. The
Parent and Purchaser have all requisite corporate power and authority to enter
into this Agreement and to perform their obligations hereunder. The execution,
delivery and performance by the Parent and Purchaser of this Agreement and the
consummation by the Parent and Purchaser of the transactions contemplated hereby
(i) have been duly authorized by all necessary corporate action on the part of
the Parent and Purchaser, (ii) require no action by or in respect of, or filing
with, any Governmental Body (except as may be required under the HSR Act and
under the Exchange Act), or (iii) do not and will not contravene or constitute a
default under, the certificate of incorporation or by-laws of Parent or
Purchaser or any provision of applicable law or regulation or any, judgment,
injunction, order, decree, material agreement or other material instrument
binding on the Parent or Purchaser.
SECTION 4.2. Binding Effect. This Agreement has been duly executed and
delivered by the Parent and Purchaser and is a valid and binding agreement of
the Parent and Purchaser, enforceable against each of them in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
SECTION 4.3. Acquisition for Purchaser's Account. Any Shares to be
acquired upon consummation of the Offer, or upon exercise of the Option will be
acquired by Parent for its own account and not with a view to the public
distribution thereof and will not be transferred except in compliance with the
Securities Act and the rules and regulations promulgated thereunder.
ARTICLE V
Additional Agreements
SECTION 5.1. Agreements of Stockholder. The Stockholder hereby
covenants and agrees that:
(a) No Solicitation. The Stockholder shall not directly or
indirectly (i) solicit, initiate or knowingly encourage (or authorize
any person to solicit, initiate or encourage) any Acquisition Proposal,
or (ii) participate in any discussion or negotiations regarding, or
furnish to any other person any information with respect to, or
otherwise knowingly cooperate in any way with, or participate in,
facilitate or encourage any effort or attempt by any other person to do
or seek the foregoing. The Stockholder shall promptly advise the
Purchaser of the terms of any communications it or any of its
affiliates may receive relating
6
<PAGE> 47
to any Acquisition Proposal (including, without limitation, the
identify of the party making any such Acquisition Proposal).
(b) Adjustment upon Changes in Capitalization or Merger. In
the event of any change in the Company's capital stock by reason of
stock dividends, stock splits, mergers, consolidations,
recapitalization, combinations, conversions, exchanges of shares,
extraordinary or liquidating dividends, or other changes in the
corporate or capital structure of the Company which would have the
effect of diluting or changing Parent and Purchaser's rights hereunder,
the number and kind of shares or securities subject to this Agreement
and the price set forth herein at which Shares may be purchased from
the Stockholder pursuant to the Offer or the exercise of the Option
shall be appropriately and equitably adjusted so that Parent and
Purchaser shall receive pursuant to the Offer or the exercise of the
Option the number and class of shares or other securities or property
that Parent or Purchaser, as the case may be, would have received in
respect of the Shares purchasable pursuant to the Offer or the exercise
of the Option if such purchase had occurred immediately prior to such
event.
ARTICLE VI
Miscellaneous
SECTION 6.1. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 6.2. Further Assurances. The Parent, Purchaser and the
Stockholder will execute and deliver or cause to be executed and delivered all
further documents and instruments and use its reasonable best efforts to secure
such consents and take all such further action as may be reasonably necessary in
order to consummate the transactions contemplated hereby and by the Merger
Agreement.
SECTION 6.3. Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 6.4. Specific Performance. The parties acknowledge and agree
that performance of their respective obligations hereunder will confer a unique
benefit on the other and that a failure of performance will not be compensable
by money damages. The parties therefore agree that this Shareholder Agreement
shall be specifically enforceable and that specific enforcement
7
<PAGE> 48
and injunctive relief shall be available to the Parent, Purchaser or the
Stockholder for any breach by the other party or parties of any agreement,
covenant or representation hereunder.
SECTION 6.5. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares pursuant to Section 1.2 hereof. None of
the representations and warranties contained in this Agreement shall survive the
acceptance for payment and payment for the Shares pursuant to the Offer.
SECTION 6.7. Amendments; Termination. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. Notwithstanding
anything herein to the contrary, this Agreement shall expire and be of no
further force or effect if (i) the conditions to the Purchaser's obligations to
accept for payment and pay for Shares pursuant to the Offer shall have been
satisfied and the Purchaser breaches any obligation of Purchaser under the
Merger Agreement to accept for payment and promptly pay for all Shares validly
tendered and not withdrawn pursuant to the Offer upon expiration of the Offer or
(ii) Purchaser amends the Offer to (w) reduce the Offer Price to less than $5.50
in cash, net to the sellers, (x) reduce the number of shares of Company Common
Stock subject to the Offer, (y) change the form of consideration payable in the
Offer or (z) amend or modify any term or condition of the Offer in a manner
adverse to the stockholders of the Company (other than insignificant changes or
amendments or other than to waive any condition). This Agreement will also
terminate upon the earlier of (i) the close of business on March 1, 2000, or
(ii) the Effective Time.
SECTION 6.8. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that Purchaser may assign
its rights and obligations to another wholly-owned subsidiary of the Parent
which is the assignee of Purchaser's rights under the Merger Agreement; and
provided further that except as set forth in the prior clause, a party may not
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto and any purported
assignment, delegation or transfer without such consent shall be null and void.
SECTION 6.9. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to the
principles of conflicts of laws thereof.
SECTION 6.10. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effects as if the signatures
8
<PAGE> 49
thereto and thereof were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received counterparts hereof signed
by all of the other parties hereto.
SECTION 6.11. Stockholder Capacity. The Stockholder signs solely in its
capacity as the record holder and beneficial owner of the Shares and nothing
herein shall limit or affect any actions taken by the Stockholder in his or her
capacity as an officer, director, partner, employee or affiliate of the Company
and no such actions shall be deemed a breach of this Agreement.
SECTION 6.12. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby 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 be consummated as originally contemplated to the
fullest extent possible. To the extent that any provision of this Agreement and
the Merger Agreement conflict, the provisions of the Merger Agreement shall
control.
9
<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FEDDERS CORPORATION
By: /s/ Robert L. Laurent, Jr.
-----------------------------------
Name: Robert L. Laurent, Jr.
-----------------------------------
Title: Executive Vice President
-----------------------------------
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07938
Attn: General Counsel
TI ACQUISITION CORP.
By: /s/ Robert L. Laurent, Jr.
-----------------------------------
Name: Robert L. Laurent, Jr.
-----------------------------------
Title: Executive Vice President
-----------------------------------
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07983-0813
Attn: General Counsel
/s/ F. Trent Hill, Jr. (SEAL)
-----------------------------------------------
F. Trent Hill, Jr.
Address for Notices:
One North Second Street
P. O. Box 160
Hartsville, SC 29550
<PAGE> 51
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of July 12, 1999 (this "Agreement"),
among Fedders Corporation, a Delaware corporation (the "Parent"), TI Acquisition
Corp., a Pennsylvania corporation and an indirect wholly owned subsidiary of the
Parent ("Purchaser"), and Grant R.
Meyers (the "Stockholder").
WHEREAS, concurrently with the execution and delivery of this Agreement
the Parent, Purchaser and Trion, Inc., a Pennsylvania corporation (the
"Company"), have entered into an Agreement and Plan of Merger dated as of the
date hereof (such Agreement and Plan of Merger, as amended from time to time,
the "Merger Agreement"), which provides, among other things, that Purchaser
shall make the Offer (as defined in the Merger Agreement) to purchase at a price
of $5.50 per share, net to the sellers in cash, all of the issued and
outstanding shares of the Company's Common Stock, par value $0.50 per share (the
"Company Common Stock"), and shall merge with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the Merger
Agreement (any term used herein without definition shall have the definition
ascribed thereto in the Merger Agreement);
WHEREAS, the Stockholder owns beneficially and of record shares of
Company Common Stock (such shares of Company Common Stock being collectively
referred to herein as the "Stockholder Shares"); and
WHEREAS, as a condition to the willingness of the Parent and Purchaser
to enter into the Merger Agreement, and as an inducement to them to do so, the
Stockholder has agreed for the benefit of the Parent and Purchaser to tender the
Stockholder Shares and any other shares of Company Common Stock at any time
during the term of this Agreement held by the Stockholder, pursuant to the
Offer, to vote all the Stockholder Shares and any other shares of Company Common
Stock owned by the Stockholder in favor of the Merger, and to grant to Parent an
option to acquire all Stockholder Shares and all other shares of Company Common
Stock owned by the Stockholder under certain circumstances, all on the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
<PAGE> 52
ARTICLE I
Tender Offer and Option
SECTION 1.1. Tender of Shares. (a) Within five business days of the
commencement by Purchaser of the Offer, the Stockholder shall tender to the
Depository designated in the Offer to Purchase (the "Offer to Purchase")
distributed by Purchaser in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder Shares and any other shares of
Company Common Stock held by the Stockholder (whether or not currently held by
the Stockholder; the Stockholder Shares, together with any shares acquired by
the Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise (the "Shares")),
complying with the terms of the Offer to Purchase, (ii) the certificates
representing the Shares, and (iii) all other documents or instruments required
to be delivered pursuant to the terms of the Offer to Purchase.
(b) The Stockholder shall not, subject to applicable law, withdraw the
tender effected in accordance with Section 1.1(a); provided, however, that the
Stockholder may decline to tender, or may withdraw, any and all Shares owned by
the Stockholder if the Purchaser amends the Offer to (w) reduce the Offer Price
to less than $5.50 in cash, net to the stockholders, (x) reduce the number of
shares of Company Common Stock subject to the Offer, (y) change the form of
consideration payable in the Offer or (z) amend or modify any term or condition
of the Offer in a manner adverse to the stockholders of the Company (other than
insignificant changes or amendments or other than to waive any condition). The
Stockholder shall give Purchaser at least two business days' prior notice of any
withdrawal of Shares owned by the Stockholder pursuant to the immediately
preceding proviso.
SECTION 1.2. Option. (a) The Stockholder hereby irrevocably grants
Parent an option (the "Option"), exercisable only upon the events and subject to
the conditions set forth herein, to purchase any or all of the Shares at a
purchase price per share equal to $5.50 (or such higher per share price as may
be offered by Purchaser in the Offer).
(b) Subject to the conditions set forth in Section 1.3 and the
termination provisions of Section 6.7, Parent may exercise the Option in whole
or in part at any time prior to the date 60 days after the expiration or
termination of the Offer (such sixtieth day being herein called the "Option
Expiration Date") if (x) the Stockholder fails to comply with any of its
obligations under this Agreement or withdraws the tender of the Shares except
under the circumstances set forth in the proviso to Section 1.1(b) (but the
Option shall not limit any other right or remedy available to the Parent or
Purchaser against the Stockholder for breach of this Agreement) or (y) the Offer
is not consummated because of the failure to satisfy any of the conditions to
the Offer set forth in Annex A to the Merger Agreement (other than as a result
of any action or inaction of the Parent or Purchaser which constitutes a breach
of the Merger Agreement).
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Upon the occurrence of any of such circumstances, Purchaser
shall be entitled to exercise the Option and (subject to Section 1.3) Parent
shall be entitled to purchase the Shares and the Stockholder shall sell the
Shares to Parent. Parent shall exercise the Option by delivering written notice
thereof to the Stockholder (the "Notice"), specifying the number of Shares to be
purchased and the date, time and place for the closing of such purchase which
date shall not be less than three business days nor more than five business days
from the date the Stockholder receives the Notice and in no event shall such
date be later than the Option Expiration Date. The closing of the purchase of
Shares pursuant to this Section 1.2 (the "Closing") shall take place on the
date, at the time and at the place specified in such notice; provided, that if
at such date any of the conditions specified in Section 1.3 shall not have been
satisfied (or waived), Parent may postpone the Closing until a date within five
business days after such conditions are satisfied (but not later than the Option
Expiration Date).
(c) At the Closing, the Stockholder will deliver to Parent (in
accordance with Parent's instructions) the certificates representing the Shares
owned by the Stockholder and being purchased pursuant to Section 1.2(c), duly
endorsed or accompanied by stock powers duly executed in blank. At such Closing,
Parent shall deliver to the Stockholder, by bank wire transfer of immediately
available funds, an amount equal to the number of Shares being purchased from
the Stockholder as specified in the Notice multiplied by $5.50 (or such higher
per share price as may be offered by Parent in the Offer).
SECTION 1.3. Conditions to Option. The obligation of Parent to purchase
the Shares at the Closing is subject to the following conditions:
(a) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated
thereunder (the "HSR Act") applicable to such purchase shall have
expired or been terminated; and
(b) there shall be no preliminary or permanent injunction or
other order, decree or ruling issued by any Governmental Body, nor any
statute, rule, regulation or order promulgated or enacted by any
Governmental Body prohibiting, or otherwise restraining, such purchase.
SECTION 1.4. No Purchase. Purchaser and Parent may allow the Offer to
expire without accepting for payment or paying for any Shares, on the terms and
conditions set forth in the Offer to Purchase, and may allow the Option to
expire without exercising the Option and purchasing all or any Shares pursuant
to such exercise. If all Shares validly tendered and not withdrawn are not
accepted for payment and paid for in accordance with the terms of the Offer to
Purchase or pursuant to the exercise of the Option, they shall be returned to
the Stockholder, whereupon they shall continue to be held by the Stockholder
subject to the terms and conditions of this Agreement.
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ARTICLE II
Consent and Voting
The Stockholder hereby revokes any and all previous proxies granted
with respect to the Shares owned by the Stockholder. By entering into this
Agreement, the Stockholder hereby consents to the Merger Agreement and the
transactions contemplated thereby, including the Merger. So long as the Merger
Agreement is in effect, the Stockholder hereby agrees (i) to vote all Shares now
or hereafter owned by such Stockholder or execute a consent or proxy and not
revoke any proxy, vote or consent, in favor of the Articles Amendment, the
Merger Agreement, the Merger and the transactions contemplated thereby, and (ii)
to oppose any Acquisition Proposal and to vote all Shares now or hereafter owned
by such Stockholder, or execute a consent or proxy, against any Acquisition
Proposal.
ARTICLE III
Representations, Warranties and Covenants
of the Stockholder
The Stockholder represents, warrants and covenants to the Purchaser
that:
SECTION 3.1. (a) Ownership. As of the date hereof the Stockholder is
the sole, true, lawful and beneficial owner of 218,989 Shares and that there are
no restrictions on voting rights or rights of disposition pertaining to such
Shares. The Stockholder will convey good and valid title to the Shares owned by
the Stockholder and being acquired pursuant to the Offer, the Merger or the
exercise of the Option, as the case may be, free and clear of any and all liens,
restrictions, security interests or any encumbrances whatsoever (collectively,
"Liens"). None of the Shares owned by the Stockholder is subject to any voting
trust or other agreement, arrangement or restriction with respect to the voting
of such Shares.
(b) Transfer of the Shares. (i) Until this Agreement is
terminated, the Stockholder shall not directly or indirectly offer to sell, sell
short, transfer (including gift), assign, pledge or otherwise dispose of or
transfer (each, a "Transfer") any interest in or encumber with any Lien any of
the Shares, (ii) enter into any contract, option, put, call, "collar" or other
agreement or understanding with respect to any Transfer of any or all of the
Shares or any interest therein; (iii) grant any proxy, power-of-attorney or
other authorization or consent in or with respect to the Shares; (iv) deposit
the Shares into a voting trust or enter into a voting agreement or arrangement
with respect to the Shares; or (v) take any other action with respect to the
Shares that would in any way restrict, limit or interfere with the performance
of its obligations hereunder.
(c) The Stockholder agrees to place the following legend
on any and all certificates evidencing the Shares:
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THE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER PURSUANT TO THAT
SHAREHOLDER AGREEMENT, DATED AS OF JULY
12, 1999, BY AND AMONG PARENT, PURCHASER
AND STOCKHOLDER. ANY TRANSFER OF SUCH
SHARES OF COMMON STOCK IN VIOLATION OF THE
TERMS OF SUCH AGREEMENT SHALL BE NULL AND
VOID AND OF NO EFFECT WHATSOEVER.
SECTION 3.2. Authority and Non-Contravention. The execution, delivery
and performance by the Stockholder of this Agreement and the consummation of the
transactions contemplated hereby (i) are within the Stockholder's power and
authority, have been duly authorized by all necessary action (including any
consultation, approval or other action by or with any other person), (ii)
require no action by or in respect of, or filing with, any Governmental Body
(except as may be required under the HSR Act and under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act")), and (iii) do not and will not contravene or constitute a
default under, or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Stockholder or to a loss of any
benefit of the Stockholder under, any provision of applicable law or regulation
or any agreement, judgment, injunction, order, decree, or other instrument
binding on the Stockholder or result in the imposition of any Lien on any assets
of the Stockholder. If the Stockholder is married and the Shares constitute
community property or otherwise are owned or held in a manner that requires
spousal or other approval for this Agreement to be legal, valid and binding,
this Agreement has been duly consented to and delivered by the Stockholder's
spouse or the person giving such approval, enforceable against such spouse or
person in accordance with its terms.
SECTION 3.3. Binding Effect. This Agreement has been duly executed and
delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
SECTION 3.4. Total Shares. The Stockholder Shares owned by the
Stockholder are the only shares of Company Common Stock beneficially owned as of
the date hereof by the Stockholder and the Stockholder has no option to purchase
or right to subscribe for or otherwise acquire any securities of the Company and
has no other interest in or voting rights with respect to any other securities
of the Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from Purchaser or the Company in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Stockholder, except as otherwise disclosed in the Merger Agreement.
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ARTICLE IV
Representations and Warranties
of the Parent and Purchaser
The Parent and Purchaser represent and warrant to the Stockholder:
SECTION 4.1. Corporate Power and Authority; Noncontravention. The
Parent and Purchaser have all requisite corporate power and authority to enter
into this Agreement and to perform their obligations hereunder. The execution,
delivery and performance by the Parent and Purchaser of this Agreement and the
consummation by the Parent and Purchaser of the transactions contemplated hereby
(i) have been duly authorized by all necessary corporate action on the part of
the Parent and Purchaser, (ii) require no action by or in respect of, or filing
with, any Governmental Body (except as may be required under the HSR Act and
under the Exchange Act), or (iii) do not and will not contravene or constitute a
default under, the certificate of incorporation or by-laws of Parent or
Purchaser or any provision of applicable law or regulation or any, judgment,
injunction, order, decree, material agreement or other material instrument
binding on the Parent or Purchaser.
SECTION 4.2. Binding Effect. This Agreement has been duly executed and
delivered by the Parent and Purchaser and is a valid and binding agreement of
the Parent and Purchaser, enforceable against each of them in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
SECTION 4.3. Acquisition for Purchaser's Account. Any Shares to be
acquired upon consummation of the Offer, or upon exercise of the Option will be
acquired by Parent for its own account and not with a view to the public
distribution thereof and will not be transferred except in compliance with the
Securities Act and the rules and regulations promulgated thereunder.
ARTICLE V
Additional Agreements
SECTION 5.1. Agreements of Stockholder. The Stockholder hereby
covenants and agrees that:
(a) No Solicitation. The Stockholder shall not directly or
indirectly (i) solicit, initiate or knowingly encourage (or authorize
any person to solicit, initiate or encourage) any Acquisition Proposal,
or (ii) participate in any discussion or negotiations regarding, or
furnish to any other person any information with respect to, or
otherwise knowingly cooperate in any way with, or participate in,
facilitate or encourage any effort or attempt by any other person to do
or seek the foregoing. The Stockholder shall promptly advise the
Purchaser of the terms of any communications it or any of its
affiliates may receive relating
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to any Acquisition Proposal (including, without limitation, the
identify of the party making any such Acquisition Proposal).
(b) Adjustment upon Changes in Capitalization or Merger. In
the event of any change in the Company's capital stock by reason of
stock dividends, stock splits, mergers, consolidations,
recapitalization, combinations, conversions, exchanges of shares,
extraordinary or liquidating dividends, or other changes in the
corporate or capital structure of the Company which would have the
effect of diluting or changing Parent and Purchaser's rights hereunder,
the number and kind of shares or securities subject to this Agreement
and the price set forth herein at which Shares may be purchased from
the Stockholder pursuant to the Offer or the exercise of the Option
shall be appropriately and equitably adjusted so that Parent and
Purchaser shall receive pursuant to the Offer or the exercise of the
Option the number and class of shares or other securities or property
that Parent or Purchaser, as the case may be, would have received in
respect of the Shares purchasable pursuant to the Offer or the exercise
of the Option if such purchase had occurred immediately prior to such
event.
ARTICLE VI
Miscellaneous
SECTION 6.1. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 6.2. Further Assurances. The Parent, Purchaser and the
Stockholder will execute and deliver or cause to be executed and delivered all
further documents and instruments and use its reasonable best efforts to secure
such consents and take all such further action as may be reasonably necessary in
order to consummate the transactions contemplated hereby and by the Merger
Agreement.
SECTION 6.3. Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 6.4. Specific Performance. The parties acknowledge and agree
that performance of their respective obligations hereunder will confer a unique
benefit on the other and that a failure of performance will not be compensable
by money damages. The parties therefore agree that this Shareholder Agreement
shall be specifically enforceable and that specific enforcement
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<PAGE> 58
and injunctive relief shall be available to the Parent, Purchaser or the
Stockholder for any breach by the other party or parties of any agreement,
covenant or representation hereunder.
SECTION 6.5. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares pursuant to Section 1.2 hereof. None of
the representations and warranties contained in this Agreement shall survive the
acceptance for payment and payment for the Shares pursuant to the Offer.
SECTION 6.7. Amendments; Termination. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. Notwithstanding
anything herein to the contrary, this Agreement shall expire and be of no
further force or effect if (i) the conditions to the Purchaser's obligations to
accept for payment and pay for Shares pursuant to the Offer shall have been
satisfied and the Purchaser breaches any obligation of Purchaser under the
Merger Agreement to accept for payment and promptly pay for all Shares validly
tendered and not withdrawn pursuant to the Offer upon expiration of the Offer or
(ii) Purchaser amends the Offer to (w) reduce the Offer Price to less than $5.50
in cash, net to the sellers, (x) reduce the number of shares of Company Common
Stock subject to the Offer, (y) change the form of consideration payable in the
Offer or (z) amend or modify any term or condition of the Offer in a manner
adverse to the stockholders of the Company (other than insignificant changes or
amendments or other than to waive any condition). This Agreement will also
terminate upon the earlier of (i) the close of business on March 1, 2000, or
(ii) the Effective Time.
SECTION 6.8. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that Purchaser may assign
its rights and obligations to another wholly-owned subsidiary of the Parent
which is the assignee of Purchaser's rights under the Merger Agreement; and
provided further that except as set forth in the prior clause, a party may not
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto and any purported
assignment, delegation or transfer without such consent shall be null and void.
SECTION 6.9. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to the
principles of conflicts of laws thereof.
SECTION 6.10. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effects as if the signatures
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<PAGE> 59
thereto and thereof were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received counterparts hereof signed
by all of the other parties hereto.
SECTION 6.11. Stockholder Capacity. The Stockholder signs solely in its
capacity as the record holder and beneficial owner of the Shares and nothing
herein shall limit or affect any actions taken by the Stockholder in his or her
capacity as an officer, director, partner, employee or affiliate of the Company
and no such actions shall be deemed a breach of this Agreement.
SECTION 6.12. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby 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 be consummated as originally contemplated to the
fullest extent possible. To the extent that any provision of this Agreement and
the Merger Agreement conflict, the provisions of the Merger Agreement shall
control.
SECTION 6.13. Pledged Shares. Notwithstanding anything to the contrary
herein, in the event this Agreement conflicts with any agreement or
understanding governing any of the 185,292 Shares pledged to Wachovia Bank,
N.A., String & Strongfellow or Hugh E. Carr (the "Pledge Agreements"), the
Pledge Agreements shall control.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FEDDERS CORPORATION
By: /s/ Robert L. Laurent, Jr.
-----------------------------------
Name: Robert L. Laurent, Jr.
-----------------------------------
Title: Executive Vice President
-----------------------------------
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07938
Attn: General Counsel
TI ACQUISITION CORP.
By: /s/ Robert L. Laurent, Jr.
-----------------------------------
Name: Robert L. Laurent, Jr.
-----------------------------------
Title: Executive Vice President
-----------------------------------
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07983-0813
Attn: General Counsel
/s/ Grant R. Meyers (SEAL)
-----------------------------------------------
Grant R. Meyers
Address for Notices:
105970 Overseas Highway
Key Largo, FL 33037
<PAGE> 61
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of July 12, 1999 (this "Agreement"),
among Fedders Corporation, a Delaware corporation (the "Parent"), TI Acquisition
Corp., a Pennsylvania corporation and an indirect wholly owned subsidiary of the
Parent ("Purchaser"), and Steven L. Schneider (the "Stockholder").
WHEREAS, concurrently with the execution and delivery of this Agreement
the Parent, Purchaser and Trion, Inc., a Pennsylvania corporation (the
"Company"), have entered into an Agreement and Plan of Merger dated as of the
date hereof (such Agreement and Plan of Merger, as amended from time to time,
the "Merger Agreement"), which provides, among other things, that Purchaser
shall make the Offer (as defined in the Merger Agreement) to purchase at a price
of $5.50 per share, net to the sellers in cash, all of the issued and
outstanding shares of the Company's Common Stock, par value $0.50 per share (the
"Company Common Stock"), and shall merge with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the Merger
Agreement (any term used herein without definition shall have the definition
ascribed thereto in the Merger Agreement);
WHEREAS, the Stockholder owns beneficially and of record shares of
Company Common Stock (such shares of Company Common Stock being collectively
referred to herein as the "Stockholder Shares"); and
WHEREAS, as a condition to the willingness of the Parent and Purchaser
to enter into the Merger Agreement, and as an inducement to them to do so, the
Stockholder has agreed for the benefit of the Parent and Purchaser to tender the
Stockholder Shares and any other shares of Company Common Stock at any time
during the term of this Agreement held by the Stockholder, pursuant to the
Offer, to vote all the Stockholder Shares and any other shares of Company Common
Stock owned by the Stockholder in favor of the Merger, and to grant to Parent an
option to acquire all Stockholder Shares and all other shares of Company Common
Stock owned by the Stockholder under certain circumstances, all on the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
<PAGE> 62
ARTICLE I
Tender Offer and Option
SECTION 1.1. Tender of Shares. (a) Within five business days of the
commencement by Purchaser of the Offer, the Stockholder shall tender to the
Depository designated in the Offer to Purchase (the "Offer to Purchase")
distributed by Purchaser in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder Shares and any other shares of
Company Common Stock held by the Stockholder (whether or not currently held by
the Stockholder; the Stockholder Shares, together with any shares acquired by
the Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise (the "Shares")),
complying with the terms of the Offer to Purchase, (ii) the certificates
representing the Shares, and (iii) all other documents or instruments required
to be delivered pursuant to the terms of the Offer to Purchase.
(b) The Stockholder shall not, subject to applicable law, withdraw the
tender effected in accordance with Section 1.1(a); provided, however, that the
Stockholder may decline to tender, or may withdraw, any and all Shares owned by
the Stockholder if the Purchaser amends the Offer to (w) reduce the Offer Price
to less than $5.50 in cash, net to the stockholders, (x) reduce the number of
shares of Company Common Stock subject to the Offer, (y) change the form of
consideration payable in the Offer or (z) amend or modify any term or condition
of the Offer in a manner adverse to the stockholders of the Company (other than
insignificant changes or amendments or other than to waive any condition). The
Stockholder shall give Purchaser at least two business days' prior notice of any
withdrawal of Shares owned by the Stockholder pursuant to the immediately
preceding proviso.
SECTION 1.2. Option. (a) The Stockholder hereby irrevocably grants
Parent an option (the "Option"), exercisable only upon the events and subject to
the conditions set forth herein, to purchase any or all of the Shares at a
purchase price per share equal to $5.50 (or such higher per share price as may
be offered by Purchaser in the Offer).
(b) Subject to the conditions set forth in Section 1.3 and the
termination provisions of Section 6.7, Parent may exercise the Option in whole
or in part at any time prior to the date 60 days after the expiration or
termination of the Offer (such sixtieth day being herein called the "Option
Expiration Date") if (x) the Stockholder fails to comply with any of its
obligations under this Agreement or withdraws the tender of the Shares except
under the circumstances set forth in the proviso to Section 1.1(b) (but the
Option shall not limit any other right or remedy available to the Parent or
Purchaser against the Stockholder for breach of this Agreement) or (y) the Offer
is not consummated because of the failure to satisfy any of the conditions to
the Offer set forth in Annex A to the Merger Agreement (other than as a result
of any action or inaction of the Parent or Purchaser which constitutes a breach
of the Merger Agreement).
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Upon the occurrence of any of such circumstances, Purchaser shall be
entitled to exercise the Option and (subject to Section 1.3) Parent shall be
entitled to purchase the Shares and the Stockholder shall sell the Shares to
Parent. Parent shall exercise the Option by delivering written notice thereof to
the Stockholder (the "Notice"), specifying the number of Shares to be purchased
and the date, time and place for the closing of such purchase which date shall
not be less than three business days nor more than five business days from the
date the Stockholder receives the Notice and in no event shall such date be
later than the Option Expiration Date. The closing of the purchase of Shares
pursuant to this Section 1.2 (the "Closing") shall take place on the date, at
the time and at the place specified in such notice; provided, that if at such
date any of the conditions specified in Section 1.3 shall not have been
satisfied (or waived), Parent may postpone the Closing until a date within five
business days after such conditions are satisfied (but not later than the Option
Expiration Date).
(c) At the Closing, the Stockholder will deliver to Parent (in
accordance with Parent's instructions) the certificates representing the Shares
owned by the Stockholder and being purchased pursuant to Section 1.2(c), duly
endorsed or accompanied by stock powers duly executed in blank. At such Closing,
Parent shall deliver to the Stockholder, by bank wire transfer of immediately
available funds, an amount equal to the number of Shares being purchased from
the Stockholder as specified in the Notice multiplied by $5.50 (or such higher
per share price as may be offered by Parent in the Offer).
SECTION 1.3. Conditions to Option. The obligation of Parent to purchase
the Shares at the Closing is subject to the following conditions:
(a) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated
thereunder (the "HSR Act") applicable to such purchase shall have
expired or been terminated; and
(b) there shall be no preliminary or permanent injunction or
other order, decree or ruling issued by any Governmental Body, nor any
statute, rule, regulation or order promulgated or enacted by any
Governmental Body prohibiting, or otherwise restraining, such purchase.
SECTION 1.4. No Purchase. Purchaser and Parent may allow the Offer to
expire without accepting for payment or paying for any Shares, on the terms and
conditions set forth in the Offer to Purchase, and may allow the Option to
expire without exercising the Option and purchasing all or any Shares pursuant
to such exercise. If all Shares validly tendered and not withdrawn are not
accepted for payment and paid for in accordance with the terms of the Offer to
Purchase or pursuant to the exercise of the Option, they shall be returned to
the Stockholder, whereupon they shall continue to be held by the Stockholder
subject to the terms and conditions of this Agreement.
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ARTICLE II
Consent and Voting
The Stockholder hereby revokes any and all previous proxies granted
with respect to the Shares owned by the Stockholder. By entering into this
Agreement, the Stockholder hereby consents to the Merger Agreement and the
transactions contemplated thereby, including the Merger. So long as the Merger
Agreement is in effect, the Stockholder hereby agrees (i) to vote all Shares now
or hereafter owned by such Stockholder or execute a consent or proxy and not
revoke any proxy, vote or consent, in favor of the Articles Amendment, the
Merger Agreement, the Merger and the transactions contemplated thereby, and (ii)
to oppose any Acquisition Proposal and to vote all Shares now or hereafter owned
by such Stockholder, or execute a consent or proxy, against any Acquisition
Proposal.
ARTICLE III
Representations, Warranties and Covenants
of the Stockholder
The Stockholder represents, warrants and covenants to the Purchaser
that:
SECTION 3.1. (a) Ownership. As of the date hereof the Stockholder is
the sole, true, lawful and beneficial owner of 103,000 Shares and that there are
no restrictions on voting rights or rights of disposition pertaining to such
Shares. The Stockholder will convey good and valid title to the Shares owned by
the Stockholder and being acquired pursuant to the Offer, the Merger or the
exercise of the Option, as the case may be, free and clear of any and all liens,
restrictions, security interests or any encumbrances whatsoever (collectively,
"Liens"). None of the Shares owned by the Stockholder is subject to any voting
trust or other agreement, arrangement or restriction with respect to the voting
of such Shares.
(b) Transfer of the Shares. (i) Until this Agreement is
terminated, the Stockholder shall not directly or indirectly offer to sell, sell
short, transfer (including gift), assign, pledge or otherwise dispose of or
transfer (each, a "Transfer") any interest in or encumber with any Lien any of
the Shares, (ii) enter into any contract, option, put, call, "collar" or other
agreement or understanding with respect to any Transfer of any or all of the
Shares or any interest therein; (iii) grant any proxy, power-of-attorney or
other authorization or consent in or with respect to the Shares; (iv) deposit
the Shares into a voting trust or enter into a voting agreement or arrangement
with respect to the Shares; or (v) take any other action with respect to the
Shares that would in any way restrict, limit or interfere with the performance
of its obligations hereunder.
(c) The Stockholder agrees to place the following legend
on any and all certificates evidencing the Shares:
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THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THAT
SHAREHOLDER AGREEMENT, DATED AS OF JULY 12, 1999, BY AND AMONG
PARENT, PURCHASER AND STOCKHOLDER. ANY TRANSFER OF SUCH SHARES
OF COMMON STOCK IN VIOLATION OF THE TERMS OF SUCH AGREEMENT
SHALL BE NULL AND VOID AND OF NO EFFECT WHATSOEVER.
SECTION 3.2. Authority and Non-Contravention. The execution, delivery
and performance by the Stockholder of this Agreement and the consummation of the
transactions contemplated hereby (i) are within the Stockholder's power and
authority, have been duly authorized by all necessary action (including any
consultation, approval or other action by or with any other person), (ii)
require no action by or in respect of, or filing with, any Governmental Body
(except as may be required under the HSR Act and under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act")), and (iii) do not and will not contravene or constitute a
default under, or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Stockholder or to a loss of any
benefit of the Stockholder under, any provision of applicable law or regulation
or any agreement, judgment, injunction, order, decree, or other instrument
binding on the Stockholder or result in the imposition of any Lien on any assets
of the Stockholder. If the Stockholder is married and the Shares constitute
community property or otherwise are owned or held in a manner that requires
spousal or other approval for this Agreement to be legal, valid and binding,
this Agreement has been duly consented to and delivered by the Stockholder's
spouse or the person giving such approval, enforceable against such spouse or
person in accordance with its terms.
SECTION 3.3. Binding Effect. This Agreement has been duly executed and
delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
SECTION 3.4. Total Shares. The Stockholder Shares owned by the
Stockholder are the only shares of Company Common Stock beneficially owned as of
the date hereof by the Stockholder and the Stockholder has no option to purchase
or right to subscribe for or otherwise acquire any securities of the Company and
has no other interest in or voting rights with respect to any other securities
of the Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from Purchaser or the Company in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Stockholder, except as otherwise disclosed in the Merger Agreement.
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ARTICLE IV
Representations and Warranties
of the Parent and Purchaser
The Parent and Purchaser represent and warrant to the Stockholder:
SECTION 4.1. Corporate Power and Authority; Noncontravention. The
Parent and Purchaser have all requisite corporate power and authority to enter
into this Agreement and to perform their obligations hereunder. SectionSection
SECTION 4.2. Binding Effect. This Agreement has been duly executed and
delivered by the Parent and Purchaser and is a valid and binding agreement of
the Parent and Purchaser, enforceable against each of them in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
SECTION 4.3. Acquisition for Purchaser's Account. Any Shares to be
acquired upon consummation of the Offer, or upon exercise of the Option will be
acquired by Parent for its own account and not with a view to the public
distribution thereof and will not be transferred except in compliance with the
Securities Act and the rules and regulations promulgated thereunder.
ARTICLE V
Additional Agreements
SECTION 5.1. Agreements of Stockholder. The Stockholder hereby
covenants and agrees that:
(a) No Solicitation. The Stockholder shall not directly or
indirectly (i) solicit, initiate or knowingly encourage (or authorize
any person to solicit, initiate or encourage) any Acquisition Proposal,
or (ii) participate in any discussion or negotiations regarding, or
furnish to any other person any information with respect to, or
otherwise knowingly cooperate in any way with, or participate in,
facilitate or encourage any effort or attempt by any other person to do
or seek the foregoing. The Stockholder shall promptly advise the
Purchaser of the terms of any communications it or any of its
affiliates may receive relating to any Acquisition Proposal (including,
without limitation, the identify of the party making any such
Acquisition Proposal).
(b) Adjustment upon Changes in Capitalization or Merger. In
the event of any change in the Company's capital stock by reason of
stock dividends, stock splits, mergers, consolidations,
recapitalization, combinations, conversions, exchanges of shares,
extraordinary or liquidating dividends, or other changes in the
corporate or capital structure
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<PAGE> 67
of the Company which would have the effect of diluting or changing
Parent and Purchaser's rights hereunder, the number and kind of shares
or securities subject to this Agreement and the price set forth herein
at which Shares may be purchased from the Stockholder pursuant to the
Offer or the exercise of the Option shall be appropriately and
equitably adjusted so that Parent and Purchaser shall receive pursuant
to the Offer or the exercise of the Option the number and class of
shares or other securities or property that Parent or Purchaser, as the
case may be, would have received in respect of the Shares purchasable
pursuant to the Offer or the exercise of the Option if such purchase
had occurred immediately prior to such event.
ARTICLE VI
Miscellaneous
SECTION 6.1. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 6.2. Further Assurances. The Parent, Purchaser and the
Stockholder will execute and deliver or cause to be executed and delivered all
further documents and instruments and use its reasonable best efforts to secure
such consents and take all such further action as may be reasonably necessary in
order to consummate the transactions contemplated hereby and by the Merger
Agreement.
SECTION 6.3. Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 6.4. Specific Performance. The parties acknowledge and agree
that performance of their respective obligations hereunder will confer a unique
benefit on the other and that a failure of performance will not be compensable
by money damages. The parties therefore agree that this Shareholder Agreement
shall be specifically enforceable and that specific enforcement and injunctive
relief shall be available to the Parent, Purchaser or the Stockholder for any
breach by the other party or parties of any agreement, covenant or
representation hereunder.
SECTION 6.5. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
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SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares pursuant to Section 1.2 hereof. None of
the representations and warranties contained in this Agreement shall survive the
acceptance for payment and payment for the Shares pursuant to the Offer.
SECTION 6.7. Amendments; Termination. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. Notwithstanding
anything herein to the contrary, this Agreement shall expire and be of no
further force or effect if (i) the conditions to the Purchaser's obligations to
accept for payment and pay for Shares pursuant to the Offer shall have been
satisfied and the Purchaser breaches any obligation of Purchaser under the
Merger Agreement to accept for payment and promptly pay for all Shares validly
tendered and not withdrawn pursuant to the Offer upon expiration of the Offer or
(ii) Purchaser amends the Offer to (w) reduce the Offer Price to less than $5.50
in cash, net to the sellers, (x) reduce the number of shares of Company Common
Stock subject to the Offer, (y) change the form of consideration payable in the
Offer or (z) amend or modify any term or condition of the Offer in a manner
adverse to the stockholders of the Company (other than insignificant changes or
amendments or other than to waive any condition). This Agreement will also
terminate upon the earlier of (i) the close of business on March 1, 2000, or
(ii) the Effective Time.
SECTION 6.8. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that Purchaser may assign
its rights and obligations to another wholly-owned subsidiary of the Parent
which is the assignee of Purchaser's rights under the Merger Agreement; and
provided further that except as set forth in the prior clause, a party may not
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto and any purported
assignment, delegation or transfer without such consent shall be null and void.
SECTION 6.9. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to the
principles of conflicts of laws thereof.
SECTION 6.10. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effects as if the signatures thereto and thereof were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
SECTION 6.11. Stockholder Capacity. The Stockholder signs solely in its
capacity as the record holder and beneficial owner of the Shares and nothing
herein shall limit or affect any actions taken by the Stockholder in his or her
capacity as an officer, director, partner, employee or affiliate of the Company
and no such actions shall be deemed a breach of this Agreement.
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SECTION 6.12. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby 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 be consummated as originally contemplated to the
fullest extent possible. To the extent that any provision of this Agreement and
the Merger Agreement conflict, the provisions of the Merger Agreement shall
control.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FEDDERS CORPORATION
By: /s/ Robert L. Laurent, Jr.
----------------------------
Name: Robert L. Laurent, Jr.
Title: Executive Vice President
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07938
Attn: General Counsel
TI ACQUISITION CORP.
By: /s/ Robert L. Laurent, Jr.
----------------------------
Name: Robert L. Laurent, Jr.
Title: Executive Vice President
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07983-0813
Attn: General Counsel
/s/ Steven L. Schneider (SEAL)
-------------------------------------
Steven L. Schneider
Address for Notices:
101 McNeill Road
Sanford, NC 27330
<PAGE> 71
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of July 12, 1999 (this "Agreement"),
among Fedders Corporation, a Delaware corporation (the "Parent"), TI Acquisition
Corp., a Pennsylvania corporation and an indirect wholly owned subsidiary of the
Parent ("Purchaser"), and Samuel J. Wornom III (the "Stockholder").
WHEREAS, concurrently with the execution and delivery of this Agreement
the Parent, Purchaser and Trion, Inc., a Pennsylvania corporation (the
"Company"), have entered into an Agreement and Plan of Merger dated as of the
date hereof (such Agreement and Plan of Merger, as amended from time to time,
the "Merger Agreement"), which provides, among other things, that Purchaser
shall make the Offer (as defined in the Merger Agreement) to purchase at a price
of $5.50 per share, net to the sellers in cash, all of the issued and
outstanding shares of the Company's Common Stock, par value $0.50 per share (the
"Company Common Stock"), and shall merge with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the Merger
Agreement (any term used herein without definition shall have the definition
ascribed thereto in the Merger Agreement);
WHEREAS, the Stockholder owns beneficially and of record shares of
Company Common Stock (such shares of Company Common Stock being collectively
referred to herein as the "Stockholder Shares"); and
WHEREAS, as a condition to the willingness of the Parent and Purchaser
to enter into the Merger Agreement, and as an inducement to them to do so, the
Stockholder has agreed for the benefit of the Parent and Purchaser to tender the
Stockholder Shares and any other shares of Company Common Stock at any time
during the term of this Agreement held by the Stockholder, pursuant to the
Offer, to vote all the Stockholder Shares and any other shares of Company Common
Stock owned by the Stockholder in favor of the Merger, and to grant to Parent an
option to acquire all Stockholder Shares and all other shares of Company Common
Stock owned by the Stockholder under certain circumstances, all on the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
<PAGE> 72
ARTICLE I
Tender Offer and Option
SECTION 1.1. Tender of Shares. (a) Within five business days of the
commencement by Purchaser of the Offer, the Stockholder shall tender to the
Depository designated in the Offer to Purchase (the "Offer to Purchase")
distributed by Purchaser in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder Shares and any other shares of
Company Common Stock held by the Stockholder (whether or not currently held by
the Stockholder; the Stockholder Shares, together with any shares acquired by
the Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise (the "Shares")),
complying with the terms of the Offer to Purchase, (ii) the certificates
representing the Shares, and (iii) all other documents or instruments required
to be delivered pursuant to the terms of the Offer to Purchase.
(b) The Stockholder shall not, subject to applicable law, withdraw the
tender effected in accordance with Section 1.1(a); provided, however, that the
Stockholder may decline to tender, or may withdraw, any and all Shares owned by
the Stockholder if the Purchaser amends the Offer to (w) reduce the Offer Price
to less than $5.50 in cash, net to the stockholders, (x) reduce the number of
shares of Company Common Stock subject to the Offer, (y) change the form of
consideration payable in the Offer or (z) amend or modify any term or condition
of the Offer in a manner adverse to the stockholders of the Company (other than
insignificant changes or amendments or other than to waive any condition). The
Stockholder shall give Purchaser at least two business days' prior notice of any
withdrawal of Shares owned by the Stockholder pursuant to the immediately
preceding proviso.
SECTION 1.2. Option. (a) The Stockholder hereby irrevocably grants
Parent an option (the "Option"), exercisable only upon the events and subject to
the conditions set forth herein, to purchase any or all of the Shares at a
purchase price per share equal to $5.50 (or such higher per share price as may
be offered by Purchaser in the Offer).
(b) Subject to the conditions set forth in Section 1.3 and the
termination provisions of Section 6.7, Parent may exercise the Option in whole
or in part at any time prior to the date 60 days after the expiration or
termination of the Offer (such sixtieth day being herein called the "Option
Expiration Date") if (x) the Stockholder fails to comply with any of its
obligations under this Agreement or withdraws the tender of the Shares except
under the circumstances set forth in the proviso to Section 1.1(b) (but the
Option shall not limit any other right or remedy available to the Parent or
Purchaser against the Stockholder for breach of this Agreement) or (y) the Offer
is not consummated because of the failure to satisfy any of the conditions to
the Offer set forth in Annex A to the Merger Agreement (other than as a result
of any action or inaction of the Parent or Purchaser which constitutes a breach
of the Merger Agreement).
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Upon the occurrence of any of such circumstances, Purchaser shall be
entitled to exercise the Option and (subject to Section 1.3) Parent shall be
entitled to purchase the Shares and the Stockholder shall sell the Shares to
Parent. Parent shall exercise the Option by delivering written notice thereof to
the Stockholder (the "Notice"), specifying the number of Shares to be purchased
and the date, time and place for the closing of such purchase which date shall
not be less than three business days nor more than five business days from the
date the Stockholder receives the Notice and in no event shall such date be
later than the Option Expiration Date. The closing of the purchase of Shares
pursuant to this Section 1.2 (the "Closing") shall take place on the date, at
the time and at the place specified in such notice; provided, that if at such
date any of the conditions specified in Section 1.3 shall not have been
satisfied (or waived), Parent may postpone the Closing until a date within five
business days after such conditions are satisfied (but not later than the Option
Expiration Date).
(c) At the Closing, the Stockholder will deliver to Parent (in
accordance with Parent's instructions) the certificates representing the Shares
owned by the Stockholder and being purchased pursuant to Section 1.2(c), duly
endorsed or accompanied by stock powers duly executed in blank. At such Closing,
Parent shall deliver to the Stockholder, by bank wire transfer of immediately
available funds, an amount equal to the number of Shares being purchased from
the Stockholder as specified in the Notice multiplied by $5.50 (or such higher
per share price as may be offered by Parent in the Offer).
SECTION 1.3. Conditions to Option. The obligation of Parent to purchase
the Shares at the Closing is subject to the following conditions:
(a) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated
thereunder (the "HSR Act") applicable to such purchase shall have
expired or been terminated; and
(b) there shall be no preliminary or permanent injunction or
other order, decree or ruling issued by any Governmental Body, nor any
statute, rule, regulation or order promulgated or enacted by any
Governmental Body prohibiting, or otherwise restraining, such purchase.
SECTION 1.4. No Purchase. Purchaser and Parent may allow the Offer to
expire without accepting for payment or paying for any Shares, on the terms and
conditions set forth in the Offer to Purchase, and may allow the Option to
expire without exercising the Option and purchasing all or any Shares pursuant
to such exercise. If all Shares validly tendered and not withdrawn are not
accepted for payment and paid for in accordance with the terms of the Offer to
Purchase or pursuant to the exercise of the Option, they shall be returned to
the Stockholder, whereupon they shall continue to be held by the Stockholder
subject to the terms and conditions of this Agreement.
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ARTICLE II
Consent and Voting
The Stockholder hereby revokes any and all previous proxies granted
with respect to the Shares owned by the Stockholder. By entering into this
Agreement, the Stockholder hereby consents to the Merger Agreement and the
transactions contemplated thereby, including the Merger. So long as the Merger
Agreement is in effect, the Stockholder hereby agrees (i) to vote all Shares now
or hereafter owned by such Stockholder or execute a consent or proxy and not
revoke any proxy, vote or consent, in favor of the Articles Amendment, the
Merger Agreement, the Merger and the transactions contemplated thereby, and (ii)
to oppose any Acquisition Proposal and to vote all Shares now or hereafter owned
by such Stockholder, or execute a consent or proxy, against any Acquisition
Proposal.
ARTICLE III
Representations, Warranties and Covenants
of the Stockholder
The Stockholder represents, warrants and covenants to the Purchaser
that:
SECTION 3.1. (a) Ownership. As of the date hereof the Stockholder is
the sole, true, lawful and beneficial owner of 69,125 Shares and that there are
no restrictions on voting rights or rights of disposition pertaining to such
Shares. The Stockholder will convey good and valid title to the Shares owned by
the Stockholder and being acquired pursuant to the Offer, the Merger or the
exercise of the Option, as the case may be, free and clear of any and all liens,
restrictions, security interests or any encumbrances whatsoever (collectively,
"Liens"). None of the Shares owned by the Stockholder is subject to any voting
trust or other agreement, arrangement or restriction with respect to the voting
of such Shares.
(b) Transfer of the Shares. (i) Until this Agreement is
terminated, the Stockholder shall not directly or indirectly offer to sell, sell
short, transfer (including gift), assign, pledge or otherwise dispose of or
transfer (each, a "Transfer") any interest in or encumber with any Lien any of
the Shares, (ii) enter into any contract, option, put, call, "collar" or other
agreement or understanding with respect to any Transfer of any or all of the
Shares or any interest therein; (iii) grant any proxy, power-of-attorney or
other authorization or consent in or with respect to the Shares; (iv) deposit
the Shares into a voting trust or enter into a voting agreement or arrangement
with respect to the Shares; or (v) take any other action with respect to the
Shares that would in any way restrict, limit or interfere with the performance
of its obligations hereunder.
(c) The Stockholder agrees to place the following legend
on any and all certificates evidencing the Shares:
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<PAGE> 75
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THAT
SHAREHOLDER AGREEMENT, DATED AS OF JULY 12, 1999, BY AND AMONG
PARENT, PURCHASER AND STOCKHOLDER. ANY TRANSFER OF SUCH SHARES
OF COMMON STOCK IN VIOLATION OF THE TERMS OF SUCH AGREEMENT
SHALL BE NULL AND VOID AND OF NO EFFECT WHATSOEVER.
SECTION 3.2. Authority and Non-Contravention. The execution, delivery
and performance by the Stockholder of this Agreement and the consummation of the
transactions contemplated hereby (i) are within the Stockholder's power and
authority, have been duly authorized by all necessary action (including any
consultation, approval or other action by or with any other person), (ii)
require no action by or in respect of, or filing with, any Governmental Body
(except as may be required under the HSR Act and under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act")), and (iii) do not and will not contravene or constitute a
default under, or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Stockholder or to a loss of any
benefit of the Stockholder under, any provision of applicable law or regulation
or any agreement, judgment, injunction, order, decree, or other instrument
binding on the Stockholder or result in the imposition of any Lien on any assets
of the Stockholder. If the Stockholder is married and the Shares constitute
community property or otherwise are owned or held in a manner that requires
spousal or other approval for this Agreement to be legal, valid and binding,
this Agreement has been duly consented to and delivered by the Stockholder's
spouse or the person giving such approval, enforceable against such spouse or
person in accordance with its terms.
SECTION 3.3. Binding Effect. This Agreement has been duly executed and
delivered by the Stockholder and is the valid and binding agreement of the
Stockholder, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
SECTION 3.4. Total Shares. The Stockholder Shares owned by the
Stockholder are the only shares of Company Common Stock beneficially owned as of
the date hereof by the Stockholder and the Stockholder has no option to purchase
or right to subscribe for or otherwise acquire any securities of the Company and
has no other interest in or voting rights with respect to any other securities
of the Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or finder is
entitled to a commission or fee from Purchaser or the Company in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Stockholder, except as otherwise disclosed in the Merger Agreement.
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<PAGE> 76
ARTICLE IV
Representations and Warranties
of the Parent and Purchaser
The Parent and Purchaser represent and warrant to the Stockholder:
SECTION 4.1. Corporate Power and Authority; Noncontravention. The
Parent and Purchaser have all requisite corporate power and authority to enter
into this Agreement and to perform their obligations hereunder. The execution,
delivery and performance by the Parent and Purchaser of this Agreement and the
consummation by the Parent and Purchaser of the transactions contemplated hereby
(i) have been duly authorized by all necessary corporate action on the part of
the Parent and Purchaser, (ii) require no action by or in respect of, or filing
with, any Governmental Body (except as may be required under the HSR Act and
under the Exchange Act), or (iii) do not and will not contravene or constitute a
default under, the certificate of incorporation or by-laws of Parent or
Purchaser or any provision of applicable law or regulation or any, judgment,
injunction, order, decree, material agreement or other material instrument
binding on the Parent or Purchaser.
SECTION 4.2. Binding Effect. This Agreement has been duly executed and
delivered by the Parent and Purchaser and is a valid and binding agreement of
the Parent and Purchaser, enforceable against each of them in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
SECTION 4.3. Acquisition for Purchaser's Account. Any Shares to be
acquired upon consummation of the Offer, or upon exercise of the Option will be
acquired by Parent for its own account and not with a view to the public
distribution thereof and will not be transferred except in compliance with the
Securities Act and the rules and regulations promulgated thereunder.
ARTICLE V
Additional Agreements
SECTION 5.1. Agreements of Stockholder. The Stockholder hereby
covenants and agrees that:
(a) No Solicitation. The Stockholder shall not directly or
indirectly (i) solicit, initiate or knowingly encourage (or authorize
any person to solicit, initiate or encourage) any Acquisition Proposal,
or (ii) participate in any discussion or negotiations regarding, or
furnish to any other person any information with respect to, or
otherwise knowingly cooperate in any way with, or participate in,
facilitate or encourage any effort or attempt by any other person to do
or seek the foregoing. The Stockholder shall promptly advise the
Purchaser of the terms of any communications it or any of its
affiliates may receive relating
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<PAGE> 77
to any Acquisition Proposal (including, without limitation, the
identify of the party making any such Acquisition Proposal).
(b) Adjustment upon Changes in Capitalization or Merger. In
the event of any change in the Company's capital stock by reason of
stock dividends, stock splits, mergers, consolidations,
recapitalization, combinations, conversions, exchanges of shares,
extraordinary or liquidating dividends, or other changes in the
corporate or capital structure of the Company which would have the
effect of diluting or changing Parent and Purchaser's rights hereunder,
the number and kind of shares or securities subject to this Agreement
and the price set forth herein at which Shares may be purchased from
the Stockholder pursuant to the Offer or the exercise of the Option
shall be appropriately and equitably adjusted so that Parent and
Purchaser shall receive pursuant to the Offer or the exercise of the
Option the number and class of shares or other securities or property
that Parent or Purchaser, as the case may be, would have received in
respect of the Shares purchasable pursuant to the Offer or the exercise
of the Option if such purchase had occurred immediately prior to such
event.
ARTICLE VI
Miscellaneous
SECTION 6.1. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 6.2. Further Assurances. The Parent, Purchaser and the
Stockholder will execute and deliver or cause to be executed and delivered all
further documents and instruments and use its reasonable best efforts to secure
such consents and take all such further action as may be reasonably necessary in
order to consummate the transactions contemplated hereby and by the Merger
Agreement.
SECTION 6.3. Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 6.4. Specific Performance. The parties acknowledge and agree
that performance of their respective obligations hereunder will confer a unique
benefit on the other and that a failure of performance will not be compensable
by money damages. The parties therefore agree that this Shareholder Agreement
shall be specifically enforceable and that specific enforcement
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<PAGE> 78
and injunctive relief shall be available to the Parent, Purchaser or the
Stockholder for any breach by the other party or parties of any agreement,
covenant or representation hereunder.
SECTION 6.5. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares pursuant to Section 1.2 hereof. None of
the representations and warranties contained in this Agreement shall survive the
acceptance for payment and payment for the Shares pursuant to the Offer.
SECTION 6.7. Amendments; Termination. This Agreement may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. Notwithstanding
anything herein to the contrary, this Agreement shall expire and be of no
further force or effect if (i) the conditions to the Purchaser's obligations to
accept for payment and pay for Shares pursuant to the Offer shall have been
satisfied and the Purchaser breaches any obligation of Purchaser under the
Merger Agreement to accept for payment and promptly pay for all Shares validly
tendered and not withdrawn pursuant to the Offer upon expiration of the Offer or
(ii) Purchaser amends the Offer to (w) reduce the Offer Price to less than $5.50
in cash, net to the sellers, (x) reduce the number of shares of Company Common
Stock subject to the Offer, (y) change the form of consideration payable in the
Offer or (z) amend or modify any term or condition of the Offer in a manner
adverse to the stockholders of the Company (other than insignificant changes or
amendments or other than to waive any condition). This Agreement will also
terminate upon the earlier of (i) the close of business on March 1, 2000, or
(ii) the Effective Time.
SECTION 6.8. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that Purchaser may assign
its rights and obligations to another wholly-owned subsidiary of the Parent
which is the assignee of Purchaser's rights under the Merger Agreement; and
provided further that except as set forth in the prior clause, a party may not
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto and any purported
assignment, delegation or transfer without such consent shall be null and void.
SECTION 6.9. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to the
principles of conflicts of laws thereof.
SECTION 6.10. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effects as if the signatures
8
<PAGE> 79
thereto and thereof were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received counterparts hereof signed
by all of the other parties hereto.
SECTION 6.11. Stockholder Capacity. The Stockholder signs solely in its
capacity as the record holder and beneficial owner of the Shares and nothing
herein shall limit or affect any actions taken by the Stockholder in his or her
capacity as an officer, director, partner, employee or affiliate of the Company
and no such actions shall be deemed a breach of this Agreement.
SECTION 6.12. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby 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 be consummated as originally contemplated to the
fullest extent possible. To the extent that any provision of this Agreement and
the Merger Agreement conflict, the provisions of the Merger Agreement shall
control.
9
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FEDDERS CORPORATION
By: /s/ Robert L. Laurent, Jr.
------------------------------
Name: Robert L. Laurent, Jr.
Title: Executive Vice President
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07938
Attn: General Counsel
TI ACQUISITION CORP.
By: /s/ Robert L. Laurent, Jr.
------------------------------
Name: Robert L. Laurent, Jr.
Title: Executive Vice President
Address for Notices:
505 Martinsville Road
Liberty Corner, NJ 07983-0813
Attn: General Counsel
/s/ Samuel J. Wornom III (SEAL)
---------------------------------------
Samuel J. Wornom III
Address for Notices:
111 Imperial Drive
Sanford, NC 27330
<PAGE> 1
February 25, 1999
Trion, Inc.
101 McNeill Road
Sanford, North Carolina 27331
Attention: Mr. Steven L. Schneider, President
RE: PROPOSED ACQUISITION OF TRION, INC. ("TRION")
Dear Mr. Schneider:
Fedders Corporation ("Fedders") is evaluating the potential acquisition
of Trion (the "Transaction"). In connection therewith, Fedders may request from
Trion certain information which is non-public, confidential or proprietary in
nature. Pursuant to such requests, Trion or others acting on its behalf, may
furnish to Fedders, either orally, in writing, or by inspection, certain
information, materials, and documents regarding Trion and its business, assets,
financial condition, operations, and prospects (collectively, the "Evaluation
Material").
As a condition to Fedders being furnished with the Evaluation Material,
Fedders agrees as follows:
1. All Evaluation Material furnished to Fedders by Trion, or on its
behalf, will be deemed confidential and will be kept in strict
confidence under appropriate safeguards. In this regard, without the
prior written consent of Trion, Fedders and its Representatives (as
defined below) will not, directly or indirectly, (i) disclose or reveal
any Evaluation Material to anyone except to a limited group of its
Representatives who are actively and directly participating in the
evaluation of the Transaction, and each of whom shall (a) be informed
of the confidential nature of the Evaluation Material and (b) be
provided with a copy of this letter agreement; or (ii) use the
Evaluation Material for any purpose other than in connection with the
Transaction. In any event, Fedders will be responsible for any actions
by its Representatives which are not in accordance with the provisions
hereof. In addition, unless specifically consented to in writing by
Trion, Fedders is specifically prohibited from contacting the suppliers
and customers of Trion regarding the business of Trion or the
possibility of pursuing a transaction with Trion regardless of whether
or not the identity of such customers has been disclosed to Fedders as
part of the Evaluation Material.
2. The term "Evaluation Material" as used herein does not include any
information which (i) is generally available to the public or to
industry employees (other than
<PAGE> 2
employees of Trion) other than as a result of a disclosure by Fedders,
its Representatives or anyone to whom Fedders or any of its
Representatives directly or indirectly transmit any Evaluation
Material, (ii) becomes known or available to Fedders on a
non-confidential basis from a source (other than Trion or one of its
Representatives) who is not prohibited from transmitting the
information to Fedders or its Representatives by any contractual,
legal, fiduciary or other obligation, or (iii) was known or available
to Fedders prior to the date hereof on a non-confidential basis from a
source (other than Trion or one of its Representatives) directly or
indirectly who is not prohibited from transmitting the information to
Fedders or its Representatives by any contractual, legal, fiduciary or
other obligation.
3. In the event that Fedders, its Representatives or anyone to whom
Fedders or its Representatives supply the Evaluation Material receives
a request to disclose all or part of the Evaluation Material (by oral
questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand, any information or formal
investigation by any government or governmental agency or authority or
otherwise) Fedders agrees (i) to immediately notify Trion of the
existence, terms and circumstances surrounding such a request, (ii) to
consult with Trion on the advisability of taking legally available
steps to resist or narrow such request and (iii) if disclosure of such
information is required, to furnish only that portion of the Evaluation
Material which, in the written opinion of Fedders's counsel, Fedders is
legally compelled to disclose, and to cooperate with any action by
Trion to obtain an appropriate protective order or other reliable
assurance that confidential treatment will be accorded to such portion
of the disclosed Evaluation Material which Trion so designates.
4. Neither Trion nor its Representatives shall be deemed to make or
have made any representation or warranty, express or implied, as to the
accuracy or completeness of any Evaluation Material furnished by or on
behalf of Trion or its Representatives to Fedders or its
Representatives; provided, however, that Trion and its Representatives
shall endeavor to provide accurate and timely information hereunder.
Neither Trion nor its Representatives shall have any liability to
Fedders or its Representatives resulting from the provision of the
Evaluation Material to Fedders or its Representatives or the use
thereof by Fedders or its Representatives.
5. If Fedders or Trion shall at any time decide not to proceed with the
transaction, or upon request from Trion, Fedders (a) shall deliver to
Trion all written or tangible material delivered to Fedders by Trion or
its Representatives which contains Evaluation Material (including all
copies thereof), and (b) shall destroy all summaries, analyses,
extracts or other reproductions in whole or in part of such tangible
material, and all documents, memoranda, notes and writings containing
or based on Evaluation Material and prepared by Fedders or its
Representatives (excluding only (i) documents, memoranda, notes and
writings prepared by and in possession of Representatives providing
legal, tax, accounting, environmental compliance or other professional
advice to Fedders (collectively, "Advisor Representatives") and (ii)
Evaluation Material used by such Advisor Representatives in connection
with providing advice with respect to the
<PAGE> 3
Transaction and remaining in their possession).
6. Fedders acknowledges and agrees that in the event of any
breach of this letter agreement, Trion may be irreparably and
immediately harmed. Without prejudice to any other rights or remedies
otherwise available to Trion, Trion shall be entitled to equitable
relief by way of injunction to prevent breaches of this letter
agreement and to compel specific performance of the provisions of this
letter agreement, without need for proof of actual damages and Fedders
agrees not to oppose such relief. Fedders agrees to waive, and to cause
its Representatives, other than its Advisor Representatives, to waive,
any requirement for the securing or posting of any bond in connection
with such remedy. Fedders also agrees to reimburse Trion for all
reasonable costs and expenses, including reasonable attorney's fees,
incurred by it in successfully enforcing Fedders or its
Representatives' obligations hereunder, provided the court has found
Fedders or its Representatives in violation of this letter agreement
and has issued a permanent injunction. No failure or delay by Trion in
exercising any rights, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof or the
exercise of any right, power or privilege hereunder.
7. Fedders hereby irrevocably and unconditionally submits to the
jurisdiction of the courts of the State of North Carolina and the
United States District Court for the Western District of North Carolina
for purposes of any suit, action or other proceeding arising out of
this letter agreement, or of the Transaction contemplated hereby, which
is brought by or against Trion and agrees that service of any process,
summons, notice or document by U.S. registered mail to Fedders's
address shall be effective service of process for any action, suit or
proceeding brought against Fedders in any such court. Fedders hereby
irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this letter
agreement or of the Transaction contemplated hereby, which is brought
by or against Trion, in the courts of the State of North Carolina or in
the United States District Court for the Western District of North
Carolina and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an
inconvenient forum.
8. Fedders agrees that, if the Transaction is not consummated,
for a period of two years from the date hereof, it will not solicit for
hire any person who was employed by Trion during the period of
Fedders's investigation of Trion and with whom Fedders had contact
during such period with regard to the Transaction, without the prior
written consent of Trion.
9. For purposes of this letter agreement, the following terms
shall have the meanings set forth below:
(a) "affiliates" shall have the meanings set forth in Rule
12b-2 under the Securities Exchange Act of 1934 (the "Exchange
Act");
<PAGE> 4
(b) "Trion" shall mean Trion, Inc. and its subsidiaries,
divisions and affiliates;
(c) "person" shall be broadly interpreted to include, without
limitation, any corporation, company, group, partnership,
limited liability company or individual; and
(d) "Representatives" with respect to any person, shall mean
all directors, officers, employees, agents or advisors or any
similar person.
10. This letter agreement may be modified or waived only by a
separate writing by the parties hereto which expressly modifies or
waives this letter agreement.
11. This letter agreement shall be governed by, and construed in
accordance with, the laws of the State of North Carolina, without
regard to the principles of conflict of laws thereof. This letter
agreement shall inure to the benefit of Trion and any successor in
interest to Trion, as well as of any person that may acquire, after the
date hereof, any subsidiary or division of, or all or substantially all
of the business and assets of, Trion or any Trion corporation. The
letter agreement may be executed in counterparts, each of which shall
be deemed to be an original, all of which shall constitute the same
agreement.
Please acknowledge your agreement to the terms and provisions contained
herein by executing this letter agreement below.
Very truly yours,
FEDDERS CORPORATION
By:
Sal Giordano, Jr.,
President and Chief Executive Officer
Acknowledged and Agreed to as of
the date first written above:
TRION, INC.
By:
Steven L. Schneider,
President
<PAGE> 1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is made and entered into as of
the 12th day of July, 1999 by and between FEDDERS CORPORATION (the "Company"), a
Delaware corporation with principal executive offices in Liberty Corner, New
Jersey and STEVEN L. SCHNEIDER, an individual residing in Sanford, North
Carolina (the "Executive");
RECITALS
The Executive has been employed by Trion, Inc. ("Trion") as
its President and Chief Executive Officer since May 24, 1993, originally under
an Employment Agreement dated March 31, 1993 and subsequently under an Amended
and Restated Employment Agreement dated July 28, 1995 and a Second Amended and
Restated Employment Agreement dated as of May 20, 1998 (collectively, the
"Original Employment Agreement").
Pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") among the Company, TI Acquisition Corp. (the "Purchaser) and Trion,
of even date herewith, the Company has agreed to acquire the capital stock of
Trion and Trion will become a subsidiary of the Company.
The Company desires to continue the Executive's employment and
the Executive desires to serve as an executive of the Company under the terms
and conditions provided in this Agreement.
This Agreement replaces and supersedes the Original Employment
Agreement in its entirety including the change of control provisions contained
therein.
The execution and delivery of this Agreement have been duly
authorized by the Company's Board of Directors (the "Board").
NOW, THEREFORE, the Company and the Executive, each intending
to be legally bound, hereby mutually covenant and agree as follows:
1. Termination of Original Employment Agreement; Term.
(a) This Agreement replaces and supersedes all of the
provisions of the Original Employment Agreement, including the change
of control provisions contained therein. The Original Employment
Agreement is hereby terminated in all respects and neither Trion nor
the Company shall have any obligations to the Executive under the
Original Employment Agreement.
(b) The term of the Executive's employment shall commence on
the date hereof and continue until August 31, 2002, subject to the
earlier expiration of such term as provided in Paragraph 5. The term of
this Agreement will be extended automatically
<PAGE> 2
for one (1) year as of August 31, 2002 and each annual anniversary date
thereof unless, no later than one hundred and eighty (180) days prior
to any such date, either the Company or the Executive gives written
notice to the other, in accordance with Paragraph 11 hereof, that the
terms of this Agreement shall not be so extended.
2. Duties. During the period of employment as provided in Paragraph 1
hereof, the Executive shall serve as Senior Vice President of the Company and
Chairman and Chief Executive Officer of Indoor Air Quality, the unit of the
Company that includes Trion and perform all duties consistent with such
positions at the direction of the Chief Executive Officer of the Company and the
Board. The Executive shall devote his entire time during reasonable business
hours (reasonable sick leave and vacations excepted) and best efforts to fulfill
faithfully, responsibly and satisfactorily his duties hereunder. The Executive
shall also be an Officer of Trion.
3. Base Salary. For services performed by the Executive for the Company
pursuant to this Agreement during the period of employment as provided in
Paragraph 1 hereof, the Company shall pay the Executive a base salary of at
least $214,000 per year (the "Base Salary"), subject to review and adjustment by
the Board and payable in accordance with the Company's regular practices. The
Board will review the Executive's performance on an annual basis and may
increase his total compensation, including but not limited to, Base Salary,
Incentive Compensation (as defined below) and/or other compensation and
benefits, at its discretion.
4. Other Benefits. In addition to the Base Salary to be paid to the
Executive pursuant to Paragraph 3 hereof, any compensation which may be paid to
the Executive under any additional compensation or incentive plan of the Company
or which may be otherwise authorized from time to time by the Board shall be in
addition to the Base Salary to which the Executive shall be entitled under this
Agreement. In addition to any other compensation, the Executive shall be
entitled to the following:
(a) Participation in Plans. The Executive shall be eligible
for participation in all incentive compensation plans, bonuses or
programs as may be in effect from time to time at the Company offered
to other executives with the Company who have similar responsibilities
and for which he is otherwise qualified to participate in (collectively
referred to as "Incentive Compensation"). To the extent he is otherwise
qualified to do so, the Executive shall also participate in the various
retirement, benefit and other plans maintained in force by the Company
from time to time. The Executive's Incentive Compensation shall be
based, in part, upon the Trion 1999 Management Incentive Plan which
provides as follows: (i) an annual Target Incentive of 50% of the
Executive's Base Salary (the "Target Incentive"), (ii) 80% of the
Target Incentive will be based upon the performance of Indoor Air
Quality and 20% of the Target Incentive will be based upon the
individual performance of the Executive measured against individual
performance targets established by the Chief Executive Officer of the
Company and (iii) the performance of Indoor Air Quality will be based
40% on net sales and 60% on operating income. Acquisitions made by the
Indoor Air Quality Unit are not included in the
2
<PAGE> 3
calculation. To the extent he is otherwise qualified to do so, the
Executive shall, also participate in the various retirement benefit and
other plans maintained in force by the Company from time to time.
(b) Additional Incentive Compensation. In addition to the
Incentive Compensation provided for above, the Executive shall be
entitled to receive additional incentive compensation payments in an
amount equal to 1/4% of the total purchase price of acquisitions of
businesses included in the Indoor Air Quality Unit of the Company. The
"total purchase price" is defined as the purchase price for the equity
or assets of such acquisition plus debt assumed in the acquisition
minus the cash on hand of the business acquired on the date of closing
of the acquisition. These payments will be earned by the Executive upon
the successful closing of the acquisition and will be payable to the
Executive in accordance with the Company's policy for paying such
bonuses regardless of whether the Executive is employed by the Company
at the time of such payment.
(c) Fringe Benefits. The Executive shall be entitled to such
prerequisites of office, fringe benefits and other similar benefits as
are in effect and offered by the Company to executives with similar
responsibilities from time to time during the term hereof.
(d) Expense Reimbursement. The Company shall reimburse the
Executive, upon proper accounting, for reasonable business expenses and
disbursements incurred by him in the course of the performance of his
duties under this Agreement and in accordance with the Company's
policies, as are in effect from time to time.
(e) Vacation. The Executive shall be entitled to three (3)
weeks of vacation during each year of this Agreement, or such greater
period as the Board shall approve, without reduction in salary or other
benefits.
(f) Automobile. The Executive shall be provided an automobile
in accordance with the Company's policies.
(g) Stock Options. The Executive will be granted options to
purchase 100,000 shares of Fedders Class A Stock at a price equal to
the closing price of such stock on the New York Stock Exchange on the
date of the Merger in accordance with the Stock Option Agreement, a
copy of which is attached at Tab A of this Agreement. One-third of such
options to vest each year on the anniversary date of this Agreement. In
addition, the Executive shall also have the right to convert his
options to purchase Trion's stock into options to purchase Class A
Stock of the Company upon the terms provided in the Merger Agreement in
accordance with the Stock Option Agreement.
(h) Medical Insurance. The Executive shall have the option to
participate in the medial insurance plans maintained by either the
Company or Trion.
3
<PAGE> 4
(i) Vesting. The Executive shall receive credit for years of
service with Trion for purposes of participation and vesting in any
pension, welfare or other similar benefit plans maintained by the
Company.
5. Termination. Unless earlier terminated in accordance with the
following provisions of this Paragraph 5, the Company shall continue to employ
the Executive and the Executive shall remain employed by the Company during the
entire term of this Agreement as set forth in Paragraph 1. Certain capitalized
terms used in this Paragraph 5 and Paragraph 6 hereof are defined in Paragraph
5(e) below.
(a) Death or Disability. Except to the extent otherwise
expressly stated herein, this Agreement shall terminate immediately as
of the Date of Termination in the event of the Executive's death or in
the event that the Executive becomes disabled. The Executive will be
deemed to be disabled upon the earlier of: (i) the end of a six (6)
consecutive month period during which, by reason of physical or mental
injury or disease, the Executive has been unable to perform
substantially the Executive's usual and customary duties under this
Agreement with or without a reasonable accommodation and (ii) the date
that the Company determines, on the basis of such evidence as it may
reasonably deem sufficient, that the Executive will, by reason of
physical or mental injury or disease, be unable to perform
substantially the Executive's usual and customary duties under this
Agreement for a period of at least six (6) consecutive months with or
without a reasonable accommodation. The Company shall promptly give the
Executive written notice of any such determination of the Executive's
disability and of its decision to terminate the Executive's employment
by reason thereof. In the event of disability, until the Date of
Termination the Base Salary payable to the Executive under Paragraph 3
hereof shall be reduced dollar-for-dollar by the amount of disability
benefits, if any, paid to the Executive in accordance with any
disability policy or program of the Company.
(b) Discharge for Cause. The Company may terminate the
Executive from his employment hereunder for cause. Any Discharge for
Cause of the Executive by the Company shall be communicated in writing
to the Executive in accordance with Paragraph 11 of this Agreement and
shall specify the basis for the discharge.
(c) Discharge Without Cause. The Company may terminate the
Executive from his employment hereunder upon ninety (90) days advanced
notice of Discharge Without Cause. The notice shall be communicated in
writing to the Executive in accordance with Paragraph 11 of this
Agreement.
(d) Resignation With Good Reason. The Executive may terminate
his employment with the Company upon ninety (90) days advance notice of
his Resignation With Good Reason. The notice shall be communicated in
writing to the Company in accordance with Paragraph 11 of this
Agreement.
4
<PAGE> 5
(e) Definitions. For purposes of this Paragraph 5 and
Paragraph 6 hereof, the following capitalized terms shall have the
meanings set forth below:
(i) "Accrued Obligations" shall mean, as of the Date
of Termination, the sum of: (A) the Executive's Base Salary
under Paragraph 3 through the Date of Termination to the
extent not theretofore paid; (B) the amount of any Incentive
Compensation, bonuses, deferred compensation and other cash
compensation earned by the Executive as of the Date of
Termination to the extent not theretofore paid; (C) severance
pay in accordance with the Company's then existing severance
policy for executives with similar responsibilities; and (D)
any vacation pay, expense reimbursements and other cash
entitlements earned by the Executive as of the Date of
Termination to the extent not theretofore paid.
(ii) "Discharge for Cause" shall mean any termination
by the Company resulting from the conviction of the Executive
of (or a plea of no contest with respect to) a felony or
misdemeanor involving moral turpitude or a determination by
the Company that the Executive has engaged in serious
misconduct (such as dishonesty, insubordination, willful
failure to perform a material or significant portion of his
duties or other act or omission materially detrimental to the
business or reputation of the Company or materially damaging
to the relationships of the Company with its customers,
suppliers or employees). However, prior to a final
determination by the Company that the Executive has engaged in
serious misconduct, the Company will provide notice to the
Executive of the basis for its belief that the Executive has
engaged in serious misconduct and will allow the Executive an
opportunity to rebut any and all claims of serious misconduct.
The notice shall be communicated in writing to the Executive
in accordance with Paragraph 11 of this Agreement.
(iii) "Date of Termination" shall mean: (A) in the
event of a Discharge for Cause or resignation (other than for
good reason), the date the Executive (in the case of Discharge
for Cause) or the Company (in the case of resignation other
than for good reason) receives written notice of such
discharge or resignation of employment or any later date
specified therein or agreed to by the parties (which date
shall be not more than fifteen (15) days after the giving of
such notice); (B) in the event of the Executive's death, the
date of the Executive's death; (C) in the event of termination
of the Executive's employment by reason of Disability pursuant
to Paragraph 5(a), the date the Executive receives written
notice of such termination by the Company; and (D) in the
event of Discharge Without Cause or Resignation With Good
Reason, the ninety first (91st) day after the Executive (in
the case of Discharge Without Cause) or the Company (in the
case of Resignation With Good Reason) receives written notice
of such discharge or resignation of employment or any later
date agreed to by the parties.
5
<PAGE> 6
(iv) Resignation With Good Reason shall mean any
termination by the Executive of his employment with the
Company within one (1) year after the occurrence of any of the
following:
(A) A substantial reduction in the Base
Salary, the benefits or perquisites provided to the
Executive under this Agreement;
(B) A relocation of the Executive's
principal place of business to a location which is
more than 50 miles from its current location;
(C) The assignment to the Executive of any
duties inconsistent in any respect with the
Executive's current position and duties with the
Company as modified by Paragraph 2 hereof (including
status, offices, titles and reporting requirements),
or any action by the Company which results in
diminution in such position, or the Executive's
authority, duties or responsibilities, but excluding
for this purpose any isolated, insubstantial and
inadvertent action not taken in bad faith and which
is remedied by the Company, promptly after receipt of
written notice thereof given by the Executive in
accordance with this Agreement; or
(D) Any material breach of this Agreement by
the Company.
(v) "Discharge Without Cause" shall mean a
termination by the Company of the Executive from his
employment that is not a Discharge for Cause.
6. Obligations of the Company Upon Termination.
(a) Death, Disability, Resignation (Other than a Resignation
With Good Reason) or Discharge For Cause. If the Executive's employment
with the Company terminates because of death, disability, resignation
(other than a Resignation With Good Reason) or a Discharge For Cause:
(i) the Company shall pay to the Executive all
Accrued Obligations in a lump sum in cash within thirty (30)
days after the Date of Termination; and
(ii) the Executive shall be entitled to receive all
benefits earned by him as of the Date of Termination under the
Company's retirement, incentive, or other benefit plans in
which the Executive was participating as of the Date of
Termination, including accrued benefits payable by reason of
the Executive's death or disability, if applicable (but only
to the extent not previously paid or distributed to the
Executive) in such manner and at such time as are provided
under the terms of such plans and arrangements; and
6
<PAGE> 7
(iii) except as otherwise provided in Paragraph 15
hereof, all other obligations of the Company hereunder shall
cease forthwith.
(b) Termination Without Cause or Resignation With Good Reason.
In the event of a Termination Without Cause (other than in the case of
disability) or a Resignation With Good Reason:
(i) the Company shall pay all Accrued Obligations to
the Executive in a lump sum in cash within thirty (30) days
after the Date of Termination; and
(ii) the Company shall pay to the Executive an amount
equal to the balance of Base Salary for the remainder of the
Agreement and any Incentive Compensation then in effect for
each year remaining during the term of this Agreement. Said
amount shall be paid to the Executive in a lump sum in cash
within thirty (30) days after the Date of Termination; and
(iii) an amount equal to the sum of the maximum
contributions that could have been made by the Company on the
Executive's behalf to all defined contribution plans of the
Company on the same basis as in effect on the Date of
Termination for the remainder of the Agreement shall be paid
to the trustees of such plan(s) within thirty (30) days after
the Date of Termination, however, in the event any such
plan(s) will not allow such payment(s) the Company shall pay
to the Executive in lump sum in cash within thirty (30) days
after the Date of Termination the total amount not accepted by
any such plan(s); and
(iv) the Executive shall be entitled to receive all
benefits accrued by him as of the Date of Termination under
the Company's retirement, incentive or other benefit plans in
which the Executive was participating as of the Date of
Termination (but only to the extent not previously paid or
distributed to the Executive) in such manner and at such time
as are provided under the terms of such plans; and
(v) the Company agrees that in the event the
Executive and/or his dependents elect to continue health
coverage under COBRA and remain eligible for COBRA coverage
continuation, the Company will pay all premium costs for such
coverage continuation for the Executive and/or his dependants
to the full extent and duration allowed by COBRA.
(vi) the Company agrees that in the event the
Executive is so terminated or resigns during the initial three
(3) year term of this Agreement, any stock options granted to
the Executive pursuant to Paragraph 4(g) hereof which at that
point have not fully vested, shall vest immediately and the
Executive shall have thirty (30) days from the Date of
Termination (as defined above) to exercise such options.
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(vii) except as otherwise provided in Paragraph 15
hereof, all other obligations of the Company hereunder shall
cease forthwith.
(c) Limitation on Payments. Notwithstanding the foregoing or
any other provision of this Agreement to the contrary, if tax counsel
selected by the Company and acceptable to the Executive determines that
any portion of any payment under this Agreement would constitute an
"excess parachute payment," then the payments to be made to the
Executive under this Agreement shall be reduced (but not below zero)
such that the value of the aggregate payments that the Executive is
entitled to receive under this Agreement and any other agreement or
plan or program of the Company shall be one dollar ($1) less than the
maximum amount of payments which the Executive may receive without
becoming subject to the tax imposed by Section 4999 of the Internal
Revenue Code; provided, however, that the foregoing limitation shall
not apply in the event that such tax counsel determines that the
benefits to the Executive under this Agreement on an after-tax basis
(i.e., after federal, state and local income and excise taxes) if such
limitation is not applied would exceed the after-tax benefits to the
Executive if such limitation is applied.
7. Indemnification. The Company shall defend and hold the Executive
harmless to the fullest extent permitted by applicable law in connection with
any claim, action, suit, investigation or proceeding arising out of or relating
to performance by the Executive of services for, or action of the Executive as
an officer or employee of the Company, or of any other person or enterprise for
which the Executive serves or acts in such capacity at the request of the
Company. Expenses Incurred by the Executive in defending a claim, action, suit
or investigation or criminal proceeding shall be paid by the Company in advance
of the final disposition thereof upon the receipt by the Company of an
undertaking by or on behalf of the Executive to repay said amount if it shall
ultimately be determined that the Executive is not entitled to be indemnified
hereunder. The foregoing shall be in addition to any indemnification rights the
Executive may have by law, contract, charter, by-law or otherwise.
8. Confidential Information. The Executive will not, during or after
the term of this Agreement, disclose to any firm or person any information,
except as otherwise required by law, including but not limited to information
about the Company, its affiliates and its customers, that is treated as
confidential by the Company or an affiliate, to which the Executive has gained
or gains access by reason of his position as an employee of the Company or of an
affiliate of the Company. Except as otherwise required by law, the Company will
not, without the Executive's written consent, disclose to any person any
personal or confidential information about the Executive.
9. Right to Injunctive Relief. The Executive acknowledges that the
Company will suffer irreparable injury, not readily susceptible of valuation in
monetary damages, if the Executive breaches any of his obligations under
Paragraph 8 above. Accordingly, the Executive agrees that the Company will be
entitled to seek injunctive relief against any breach or
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prospective breach by the Executive of the Executive's obligations under
Paragraph 8 in any Federal or State court of competent jurisdiction sitting in
the State of New Jersey. The Executive hereby submits to the jurisdiction of
such courts for the purposes of any actions or proceedings instituted by the
Company to obtain such injunctive relief, and agrees that process may be served
on the Executive by registered mail, addressed to the last address of the
Executive known to the Company, or in any manner authorized by law.
10. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(a) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(b) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
11. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class
certified mail, return receipt requested, postage prepaid, addressed as follows:
(a) to the Company, to:
Fedders Corporation
505 Martinsville Road
Liberty Corner, NJ 07938
Attn.: Corporate Secretary
(b) to the Executive, to:
Steven L. Schneider
1706 Wilkins Drive
Sanford, North Carolina 27330
Addresses may be changed by written notice sent to the other party at the last
recorded address of that party.
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<PAGE> 10
12. Execution in Counterparts. This Agreement may be executed by the
parties hereto in two or more counterparts, each of which shall be deemed to be
an original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
13. Unconditional Obligations; Dispute Resolution.
(a) The Company's obligation to make the payments provided for
under this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any set-off, counterclaim, recoupment, defense
or other claim, right or action which the Company may have against the
Executive or others.
(b) Any controversy or claim arising out of or relating to
this Agreement or the breach thereof (including the arbitrability of
any controversy or claim), shall be settled by arbitration in
accordance with the internal laws of the State of New Jersey by three
arbitrators, one of whom shall be appointed by the Board, one by the
Executive and the third of whom shall be appointed by the first two
arbitrators. If the first two arbitrators cannot agree on the
appointment of a third arbitrator, then the third arbitrator shall be
appointed by the American Arbitration Association. The arbitration
shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of
arbitrators which shall be as provided in this Paragraph 13. The cost
of any arbitration proceeding hereunder shall be borne equally by the
Company and the Executive. The award of the arbitrators shall be
binding upon the parties. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
14. Governing Law. Any disputes with regard to this Agreement shall be
governed by, construed and enforced in accordance with the laws of the State of
New Jersey, without regard to conflict of law principles.
15. Survival. The provisions of this Paragraph 15 and Paragraphs 6
through 10, 13, 14, 16, and 17 shall survive the termination of this Agreement
to the extent necessary to effectuate the respective purposes of such
provisions.
16. Severability. If any provisions of this Agreement shall be adjudged
by any court of competent jurisdiction to be invalid or unenforceable for any
reason, such judgment shall not affect, impair or invalidate the remainder of
this Agreement.
17. Miscellaneous. This Agreement, and any Stock Option Agreements
between the parties hereto, embody the entire understanding of the parties
hereto, and supersede all other oral or written agreements or understandings
between them regarding the subject matter hereof. No change, alteration or
modification hereof may be made except in a writing, signed by each of the
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<PAGE> 11
parties hereto. The headings in this Agreement are for convenience of reference
only and shall not be construed as part of this Agreement or to limit or
otherwise affect the meaning hereof.
18. Condition Precedent. The execution and effectiveness of this
Agreement is subject to successful completion of the tender offer described in
Merger Agreement.
19. Proration. The parties acknowledge that the Company's fiscal year
ends on August 31 and that Trion's fiscal year has previously ended on December
31. The parties agree to equitably prorate the amount due under the Trion, Inc.
1999 Management Incentive Plan as of August 31, 1999 in order that a new
incentive compensation plan using the criteria described in Paragraph 4(a) will
be established to cover the fiscal year ending August 31, 2000.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
ATTEST: FEDDERS CORPORATION
By: /s/ Kent E. Hansen
- ------------------------------------ ----------------------
Title: Senior Vice President
WITNESS EXECUTIVE
/s/ Calvin J. Monsma /s/ Steven L. Schneider
- ------------------------------------ ----------------------------------
11
<PAGE> 1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 12th day of July, 1999 by and between TRION, INC. (the "Company"), a
Pennsylvania corporation with principal executive offices in Sanford, North
Carolina, and CALVIN J. MONSMA, an individual residing in Sanford, North
Carolina (the "Executive");
RECITALS
Pursuant to an Agreement and Plan of Merger (the "Merger Agreement")
among the Company, TI Acquisition Corp. (the "Purchaser") and Fedders
Corporation ("Fedders"), of even date herewith, Fedders has agreed to acquire
the capital stock of the Company.
The Executive has been employed by the Company as its Vice President
and Chief Financial Officer.
The Company and Fedders desire to continue such employment and the
Executive desires to continue to serve in the aforesaid capacity under the terms
and conditions provided in this Agreement.
This Agreement replaces and supersedes that certain Change in Control
Agreement between the Executive and the Company.
The execution and delivery of this Agreement has been duly authorized
by the Company's Board of Directors (the "Board").
NOW, THEREFORE, the Company and the Executive, each intending to be
legally bound, hereby mutually covenant and agree as follows:
1. Termination of Change in Control Agreement; Term.
(a) This Agreement replaces and supersedes that certain Change
in Control Agreement dated as of May 19, 1998 between the Company and
the Executive and, upon execution hereof, such agreement shall be
terminated and of no further force or effect.
(b) The term of the Executive's employment shall commence on
the date hereof and continue until August 31, 2002, subject to the
earlier expiration of such term as provided in Paragraph 5. The term of
this Agreement will be extended automatically for one (1) year as of
August 31, 2002 and each annual anniversary date thereof unless, no
later than ninety (90) days prior to any such date, either the Company
or the Executive gives written notice to the other, in accordance with
Paragraph 11 hereof, that the terms of this Agreement shall not be so
extended.
<PAGE> 2
2. Duties. During the period of employment as provided in Paragraph 1
hereof, the Executive shall serve as Vice President and Chief Financial Officer
of the Company and perform all duties consistent with such position at the
direction of the Chairman and Chief Executive Officer of the Indoor Air Quality
unit of Fedders. The Executive's duties shall include, but not be limited to,
duties similar to those performed by the Executive for the Company prior to the
Company's merger with Fedders, and will include an increased emphasis on merger
and acquisition-related work. The Executive shall devote his entire time during
reasonable business hours (reasonable sick leave and vacations excepted) and
best efforts to fulfill faithfully, responsibly and satisfactorily his duties
hereunder.
3. Base Salary. For services performed by the Executive for the Company
pursuant to this Agreement during the period of employment as provided in
Paragraph 1 hereof, the Company shall pay the Executive a base salary of at
least $113,400 per year (the "Base Salary"), subject to review and adjustment by
the Company and payable in accordance with the Company's regular practices. The
Base Salary may be reviewed from time to time by the Company and may be
increased at the Company's discretion.
4. Other Benefits. In addition to the Base Salary to be paid to the
Executive pursuant to Paragraph 3 hereof, any compensation which may be paid to
the Executive under any additional compensation or incentive plan of the Company
or which may be otherwise authorized from time to time by the Company shall be
in addition to the Base Salary to which the Executive shall be entitled under
this Agreement. In addition to any other compensation, the Executive shall be
entitled to the following:
(a) Participation in Plans. The Executive shall be eligible
for participation in all incentive compensation plans, bonuses or
programs as may be in effect from time to time at the Company offered
to other executives with the Company who have similar responsibilities
and for which he is otherwise qualified to participate in (collectively
referred to as "Incentive Compensation") including, but not limited to,
the Trion 1999 Management Incentive Plan, which provides as follows:
(i) an annual Target Incentive of 35% of the Executive's Base Salary
(the "Target Incentive"), (ii) 80% of the Target Incentive will be
based upon the performance of the Company and 20% of the Target
Incentive will be based upon the individual performance of the
Executive measured against individual performance targets established
by the Chairman and Chief Executive Officer of Indoor Air Quality, and
(iii) the performance of the Company will be based 40% on net sales and
60% on operating income. Acquisitions made by the Company are not
included in the calculation. To the extent he is otherwise qualified to
do so, the Executive shall, also participate in the various retirement
benefit and other plans maintained in force by the Company from time to
time.
(b) Additional Incentive Compensation. In addition to the
Incentive Compensation provided for above, the Executive shall be
entitled to receive additional incentive compensation payments in an
amount equal to 1/8% of the total purchase price
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<PAGE> 3
of acquisitions by the Company. The "total purchase price" is defined
as the purchase price for the equity or assets of such acquisition plus
debt assumed in the acquisition minus the cash on hand of the business
acquired on the date of closing of the acquisition. These payments will
be earned by the Executive upon the successful closing of the
acquisition and will be payable to the Executive in accordance with the
Company's policy for paying such bonuses regardless of whether the
Executive is employed by the Company at the time of such payment.
(c) Fringe Benefits. The Executive shall be entitled to such
perquisites of office, fringe benefits and other similar benefits as
are in effect and offered by the Company to executives with similar
duties and responsibilities from time to time during the term of this
Agreement.
(d) Expense Reimbursement. The Company shall reimburse the
Executive, upon proper accounting, for reasonable business expenses and
disbursements incurred by him in the course of the performance of his
duties under this Agreement and in accordance with the Company's
policies, as are in effect from time to time.
(e) Vacation. The Executive shall be entitled to three (3)
weeks of vacation during each year of this Agreement, or such greater
period as the Company shall approve, without reduction in salary or
other benefits.
(f) Stock Options. The Executive will be granted options to
purchase 25,000 shares of Fedders Class A Stock at a price equal to the
closing price of such stock on the New York Stock Exchange on the date
of the Merger in accordance with the Stock Option Agreement, a copy of
which is attached at Tab A of this Agreement. One-third of such options
to vest each year on the anniversary date of this Agreement. In
addition, the Executive shall also have the right to convert his
options to purchase the Company's stock into options to purchase Class
A Stock of Fedders upon the terms provided in the Merger Agreement in
accordance with the Stock Option Agreement.
5. Termination. Unless earlier terminated in accordance with the
following provisions of this Paragraph 5, the Company shall continue to employ
the Executive and the Executive shall remain employed by the Company during the
entire term of this Agreement as set forth in Paragraph 1. Certain capitalized
terms used in this Paragraph 5 and Paragraph 6 hereof are defined in Paragraph
5(e) below.
(a) Death or Disability. Except to the extent otherwise
expressly stated herein, this Agreement shall terminate immediately as
of the Date of Termination in the event of the Executive's death or in
the event that the Executive becomes disabled. The Executive will be
deemed to be disabled upon the earlier of: (i) the end of a six (6)
consecutive month period during which, by reason of physical or mental
injury or disease, the Executive has been unable to perform
substantially the Executive's usual and customary duties under this
Agreement with or without a reasonable accommodation and
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(ii) the date that the Company determines, on the basis of such
evidence as it may reasonably deem sufficient, that the Executive will,
by reason of physical or mental injury or disease, be unable to perform
substantially the Executive's usual and customary duties under this
Agreement for a period of at least six (6) consecutive months with or
without a reasonable accommodation. The Company shall promptly give the
Executive written notice of any such determination of the Executive's
disability and of its decision to terminate the Executive's employment
by reason thereof. In the event of disability, until the Date of
Termination the Base Salary payable to the Executive under Paragraph 3
hereof shall be reduced dollar-for-dollar by the amount of disability
benefits, if any, paid to the Executive in accordance with any
disability policy or program of the Company.
(b) Discharge for Cause. The Company may terminate the
Executive from his employment hereunder for cause. Any Discharge for
Cause of the Executive by the Company shall be communicated in writing
to the Executive in accordance with Paragraph 11 of this Agreement and
shall specify the basis for the discharge.
(c) Discharge Without Cause. The Company may terminate the
Executive from his employment hereunder upon ninety (90) days advanced
notice of Discharge Without Cause. The notice shall be communicated in
writing to the Executive in accordance with Paragraph 11 of this
Agreement.
(d) Resignation With Good Reason. The Executive may terminate
his employment with the Company upon ninety (90) days advance notice of
his Resignation With Good Reason. The notice shall be communicated in
writing to the Company in accordance with Paragraph 11 of this
Agreement.
(e) Definitions. For purposes of this Paragraph 5 and
Paragraph 6 hereof, the following capitalized terms shall have the
meanings set forth below:
(i) "Accrued Obligations" shall mean, as of the Date
of Termination, the sum of: (A) the Executive's Base Salary
under Paragraph 3 through the Date of Termination to the
extent not theretofore paid; (B) the amount of any Incentive
Compensation, including the Target Incentive (paid on a pro
rata basis through the date of termination), bonuses, deferred
compensation and other cash compensation earned by the
Executive as of the Date of Termination to the extent not
theretofore paid; (C) severance pay in accordance with the
Company's then existing severance policy for executives with
similar responsibilities; and (D) any vacation pay, expense
reimbursements and other cash entitlements earned by the
Executive as of the Date of Termination to the extent not
theretofore paid.
(ii) "Discharge for Cause" shall mean any termination
by the Company resulting from the conviction of the Executive
of (or a plea of no contest with respect to) a felony or
misdemeanor involving moral turpitude or a determination by
the Company that the Executive has engaged in serious
misconduct (such as
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<PAGE> 5
dishonesty, insubordination, willful failure to perform a
material or significant portion of his duties or other act or
omission materially detrimental to the business or reputation
of the Company or Fedders or materially damaging to the
relationships of the Company or Fedders with its customers,
suppliers or employees). However, prior to a final
determination by the Company that the Executive has engaged in
serious misconduct, the Company will provide notice to the
Executive of the basis for its belief that the Executive has
engaged in serious misconduct and will allow the Executive an
opportunity to rebut any and all claims of serious misconduct.
The notice shall be communicated in writing to the Executive
in accordance with Paragraph 11 of this Agreement.
(iii) "Date of Termination" shall mean: (A) in the
event of a Discharge for Cause or resignation (other than for
good reason), the date the Executive (in the case of Discharge
for Cause) or the Company (in the case of resignation other
than for good reason) receives written notice of such
discharge or resignation of employment or any later date
specified therein or agreed to by the parties (which date
shall be not more than fifteen (15) days after the giving of
such notice); (B) in the event of the Executive's death, the
date of the Executive's death; (C) in the event of termination
of the Executive's employment by reason of Disability pursuant
to Paragraph 5(a), the date the Executive receives written
notice of such termination by the Company; and (D) in the
event of Discharge Without Cause or Resignation With Good
Reason, the ninety first (91st) day after the Executive (in
the case of Discharge Without Cause) or the Company (in the
case of Resignation With Good Reason) receives written notice
of such discharge or resignation of employment or any later
date agreed to by the parties.
(iv) Resignation With Good Reason shall mean any
termination by the Executive of his employment with the
Company within one (1) year after the occurrence of any of the
following:
(A) A reduction in the Base Salary, the
benefits or perquisites provided to the Executive
under this Agreement;
(B) A relocation of the Executive's
principal place of business to a location which is
more than 50 miles from its current location;
(C) The assignment to the Executive of any
duties inconsistent in any respect with the
Executive's current position and duties with the
Company as modified by Paragraph 2 hereof (including
status, offices, titles and reporting requirements),
or any action by the Company which results in
diminution in such position, or the Executive's
authority, duties or responsibilities, but excluding
for this purpose any isolated, insubstantial and
inadvertent action not taken in bad faith and which
is
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remedied by the Company, promptly after receipt of
written notice thereof given by the Executive in
accordance with this Agreement; or
(D) Any material breach of this Agreement by
the Company.
(v) "Discharge Without Cause" shall mean a
termination by the Company of the Executive from his
employment that is not a Discharge for Cause.
6. Obligations of the Company Upon Termination.
(a) Death, Disability, Resignation (Other than a Resignation
With Good Reason) or Discharge For Cause. If the Executive's employment
with the Company terminates because of death, disability, resignation
(other than a Resignation With Good Reason) or a Discharge For Cause:
(i) the Company shall pay to the Executive all
Accrued Obligations in a lump sum in cash within thirty (30)
days after the Date of Termination; and
(ii) the Executive shall be entitled to receive all
benefits earned by him as of the Date of Termination under the
Company's retirement, incentive, or other benefit plans in
which the Executive was participating as of the Date of
Termination, including accrued benefits payable by reason of
the Executive's death or disability, if applicable (but only
to the extent not previously paid or distributed to the
Executive) in such manner and at such time as are provided
under the terms of such plans and arrangements; and
(iii) except as otherwise provided in Paragraph 15
hereof, all other obligations of the Company hereunder shall
cease forthwith.
(b) Termination Without Cause or Resignation With Good Reason.
In the event of a Termination Without Cause (other than in the case of
disability) or a Resignation With Good Reason:
(i) the Company shall pay all Accrued Obligations to
the Executive in a lump sum in cash within thirty (30) days
after the Date of Termination; and
(ii) the Company shall pay to the Executive an amount
equal to the balance of Base Salary for the remainder of the
Agreement and any Incentive Compensation including the Target
Incentive then in effect for the year in which such
termination occurs and each year remaining during the term of
this Agreement. Said amount shall be paid to the Executive in
a lump sum in cash within thirty (30) days after the Date of
Termination; and
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(iii) an amount equal to the sum of the maximum
contributions that could have been made by the Company on the
Executive's behalf to all defined contribution plans of the
Company on the same basis as in effect on the Date of
Termination for the remainder of the Agreement shall be paid
to the trustees of such plan(s) within thirty (30) days after
the Date of Termination, however, in the event any such
plan(s) will not allow such payment(s) the Company shall pay
to the Executive in lump sum in cash within thirty (30) days
after the Date of Termination the total amount not accepted by
any such plan(s); and
(iv) the Executive shall be entitled to receive all
benefits accrued by him as of the Date of Termination under
the Company's retirement, incentive or other benefit plans in
which the Executive was participating as of the Date of
Termination (but only to the extent not previously paid or
distributed to the Executive) in such manner and at such time
as are provided under the terms of such plans; and
(v) the Company agrees that in the event the
Executive and/or his dependents elect to continue health
coverage under COBRA and remain eligible for COBRA coverage
continuation, the Company will pay all premium costs for such
coverage continuation for the Executive and/or his dependants
to the full extent and duration allowed by COBRA.
(vi) the Company agrees that in the event the
Executive is so terminated or resigns during the initial three
(3) year term of this Agreement, any stock options granted to
the Executive pursuant to Paragraph 4(g) hereof which at that
point have not fully vested, shall vest immediately and the
Executive shall have thirty (30) days from the Date of
Termination (as defined above) to exercise such options.
(vii) except as otherwise provided in Paragraph 15
hereof, all other obligations of the Company hereunder shall
cease forthwith.
(c) Limitation on Payments. Notwithstanding the foregoing or
any other provision of this Agreement to the contrary, if tax counsel
selected by the Company and acceptable to the Executive determines that
any portion of any payment under this Agreement would constitute an
"excess parachute payment," then the payments to be made to the
Executive under this Agreement shall be reduced (but not below zero)
such that the value of the aggregate payments that the Executive is
entitled to receive under this Agreement and any other agreement or
plan or program of the Company shall be one dollar ($1) less than the
maximum amount of payments which the Executive may receive without
becoming subject to the tax imposed by Section 4999 of the Internal
Revenue Code; provided, however, that the foregoing limitation shall
not apply in the event that such tax counsel determines that the
benefits to the Executive under this Agreement on an
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<PAGE> 8
after-tax basis (i.e., after federal, state and local income and excise
taxes) if such limitation is not applied would exceed the after-tax
benefits to the Executive if such limitation is applied.
7. Indemnification. The Company shall defend and hold the Executive
harmless to the fullest extent permitted by applicable law in connection with
any claim, action, suit, investigation or proceeding arising out of or relating
to performance by the Executive of services for, or action of the Executive as
an officer or employee of the Company, or of any other person or enterprise for
which the Executive serves or acts in such capacity at the request of the
Company. Expenses incurred by the Executive in defending a claim, action, suit
or investigation or criminal proceeding shall be paid by the Company in advance
of the final disposition thereof upon the receipt by the Company of an
undertaking by or on behalf of the Executive to repay said amount if it shall
ultimately be determined that the Executive is not entitled to be indemnified
hereunder. The foregoing shall be in addition to any indemnification rights the
Executive may have by law, contract, charter, by-law or otherwise.
8. Confidential Information. The Executive will not, during or after
the term of this Agreement, disclose to any firm or person any information,
except as otherwise required by law, including but not limited to information
about the Company, its affiliates and its customers, that is treated as
confidential by the Company or an affiliate, to which the Executive has gained
or gains access by reason of his position as an employee of the Company or of an
affiliate of the Company. Except as otherwise required by law, the Company will
not, without the Executive's written consent, disclose to any person any
personal or confidential information about the Executive.
9. Right to Injunctive Relief. The Executive acknowledges that the
Company will suffer irreparable injury, not readily susceptible of valuation in
monetary damages, if the Executive breaches any of his obligations under
Paragraph 8 above. Accordingly, the Executive agrees that the Company will be
entitled to seek injunctive relief against any breach or prospective breach by
the Executive of the Executive's obligations under Paragraph 8 in any Federal or
State court of competent jurisdiction sitting in the State of New Jersey. The
Executive hereby submits to the jurisdiction of such courts for the purposes of
any actions or proceedings instituted by the Company to obtain such injunctive
relief, and agrees that process may be served on the Executive by registered
mail, addressed to the last address of the Executive known to the Company, or in
any manner authorized by law.
10. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
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(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
11. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class
certified mail, return receipt requested, postage prepaid, addressed as follows:
(a) to the Company or the Board, to:
Trion Inc.
C/o Fedders Corporation
505 Martinsville Road
Liberty Corner, New Jersey 07938
Attn.: Corporate Secretary
(b) to the Executive, to:
Calvin J. Monsma
1717 Windmill Drive
Sanford, North Carolina 27330
Addresses may be changed by written notice sent to the other party at the last
recorded address of that party.
12. Execution in Counterparts. This Agreement may be executed by the
parties hereto in two or more counterparts, each of which shall be deemed to be
an original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
13. Unconditional Obligations; Dispute Resolution.
(a) The Company's obligation to make the payments provided for
under this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any set-off, counterclaim, recoupment, defense
or other claim, right or action which the Company may have against the
Executive or others.
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(b) Any controversy or claim arising out of or relating to
this Agreement or the breach thereof (including the arbitrability of
any controversy or claim), shall be settled by arbitration in
accordance with the internal laws of the State of New Jersey by three
arbitrators, one of whom shall be appointed by the Company, one by the
Executive and the third of whom shall be appointed by the first two
arbitrators. If the first two arbitrators cannot agree on the
appointment of a third arbitrator, then the third arbitrator shall be
appointed by the American Arbitration Association. The arbitration
shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of
arbitrators which shall be as provided in this Paragraph 13. The cost
of any arbitration proceeding hereunder shall be borne equally by the
Company and the Executive. The award of the arbitrators shall be
binding upon the parties. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
14. Governing Law. Any disputes with regard to this Agreement shall be
governed by, construed and enforced in accordance with the laws of the State of
New Jersey, without regard to conflict of law principles.
15. Survival. The provisions of this Paragraph 15 and Paragraphs 6
through 10, 13, 14, 16, and 17 shall survive the termination of this Agreement
to the extent necessary to effectuate the respective purposes of such
provisions.
16. Severability. If any provision of this Agreement shall be adjudged
by any court of competent jurisdiction to be invalid or unenforceable for any
reason, such judgment shall not affect, impair or invalidate the remainder of
this Agreement.
17. Miscellaneous. This Agreement, and any Stock Option Agreements
between the parties hereto, embody the entire understanding of the parties
hereto, and supersede all other oral or written agreements or understandings
between them regarding the subject matter hereof. No change, alteration or
modification hereof may be made except in a writing, signed by each of the
parties hereto. The headings in this Agreement are for convenience of reference
only and shall not be construed as part of this Agreement or to limit or
otherwise affect the meaning hereof.
18. Condition Precedent. The execution and effectiveness of this
Agreement is subject to successful completion of the tender offer described in
Merger Agreement.
19. Proration. The parties acknowledge that Fedders' fiscal year ends
on August 31 and that the Company's fiscal year has previously ended on December
31. The parties agree to equitably prorate the amount due under the Trion, Inc.
1999 Management Incentive Plan as of August 31, 1999 in order that a new
incentive compensation plan using the criteria described in Paragraph 4(a) will
be established to cover the fiscal year ending August 31, 2000.
(Signatures appear on following page.)
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
ATTEST: TRION, INC.
By: /s/ Steven L. Schneider
Title: President & Chief Executive Officer
WITNESS: EXECUTIVE
/s/ John B. Yorke /s/ Calvin J. Monsma
