Tender-Offer Statement — Third-Party Tender Offer — Schedule 14D-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D1 Schedule 14D-1 and Schedule 13D 9 49K
2: EX-99.A.1 Offer to Purchase 40 227K
3: EX-99.A.2 Letter of Transmittal 12 58K
4: EX-99.A.3 Notice of Guaranteed Delivery 2 17K
5: EX-99.A.4 Broker Dealer Letter 3 19K
6: EX-99.A.5 Letter to Clients 3 17K
7: EX-99.A.6 Guidelines for Certification of Taxpayer Id 5± 19K
8: EX-99.A.7 Summary Announcement 3 21K
9: EX-99.A.8 Press Release-4/30/97 2 12K
10: EX-99.A.9 Press Release-5/2/97 1 9K
11: EX-99.C.1 Agreement and Plan of Merger 51 197K
12: EX-99.C.2 Agreement Dated as of April 29, 1997 1 8K
13: EX-99.C.3 Form of Stockholder Agreements for Individuals 13 39K
14: EX-99.C.4 Confidentiality Agreement 4 27K
15: EX-99.C.5 Letter Agreement 1 10K
16: EX-99.G Gkn Plc Report & Accounts 1996 95 334K
EXHIBIT(C)(1)
Conformed Copy
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AGREEMENT AND PLAN OF MERGER
among
GKN POWDER METALLURGY HOLDINGS, INC.,
GKN POWDER METALLURGY, INC.
and
SINTER METALS, INC.
Dated as of April 29, 1997
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TABLE OF CONTENTS
Page
ARTICLE 1 ................................................................... 1
1. The Offer ............................................................ 1
1.1. The Offer ................................................... 1
1.2. Actions by Purchaser and Merger Sub ......................... 3
1.3. Actions by the Company ...................................... 3
1.4. Directors ................................................... 5
ARTICLE 2 ................................................................... 6
2. The Merger ........................................................... 6
2.1. The Merger .................................................. 6
2.2. The Closing ................................................. 6
2.3. Effective Time .............................................. 7
ARTICLE 3 ................................................................... 7
3. Certificate of Incorporation and Bylaws of the Surviving
Corporation. ..................................................... 7
3.1. Certificate of Incorporation ................................ 7
3.2. Bylaws ...................................................... 7
ARTICLE 4 ................................................................... 7
4. Directors and Officers of the Surviving Corporation. ................. 7
4.1. Directors ................................................... 7
4.2. Officers .................................................... 7
ARTICLE 5 ................................................................... 8
5. Effect of the Merger on Securities of Merger Sub and the
Company. ......................................................... 8
5.1. Merger Sub Stock. ........................................... 8
5.2. Company Securities. ......................................... 8
5.3. Exchange of Certificates Representing Common Stock. ......... 9
5.4. Adjustment of Merger Consideration .......................... 11
5.5. Dissenting Company Stockholders ............................. 11
5.6. Merger Without Meeting of Stockholders ...................... 11
ARTICLE 6 ................................................................... 11
6. Representations and Warranties of Company. ........................... 11
6.1. Existence; Good Standing; Corporate Authority. .............. 11
6.2. Authorization, Validity and Effect of Agreements ............ 12
6.3. Compliance with Laws ........................................ 13
6.4. Capitalization .............................................. 13
6.5. Subsidiaries ................................................ 14
6.6. No Violation ................................................ 14
6.7. Company Reports; Offer Documents ........................... 15
6.8. Litigation ................................................. 16
6.9. Absence of Certain Changes ................................. 17
6.10. Taxes ..................................................... 18
6.11. Employee Benefit Plans .................................... 18
6.12. Labor and Employment Matters .............................. 20
6.13. Brokers ................................................... 20
6.14. Licenses and Permits ...................................... 20
6.15. Environmental Compliance and Disclosure ................... 20
6.16. Title to Assets ........................................... 21
6.17. Material Contracts ........................................ 22
6.17. Required Vote of Company Stockholders ..................... 22
6.19. Intellectual Property Rights .............................. 22
6.20. Insurance Policies ........................................ 23
ARTICLE 7 .................................................................. 23
7. Representations and Warranties of Purchaser and Merger Sub. ......... 23
7.1. Existence; Good Standing; Corporate Authority .............. 23
7.2. Authorization, Validity and Effect of Agreements ........... 23
7.3. Offer Documents ............................................ 24
7.4. No Violation ............................................... 24
7.5. Financing .................................................. 25
ARTICLE 8 .................................................................. 25
8. Covenants. .......................................................... 25
8.1. No Solicitation ............................................ 25
8.2. Interim Operations ......................................... 26
8.3. Company Stockholder Approval; Proxy Statement .............. 28
8.4. Filings; Other Action ...................................... 30
8.5. Access to Information ...................................... 31
8.6. Publicity .................................................. 31
8.7. Further Action ............................................. 31
8.8. Insurance; Indemnity. ...................................... 31
8.9. Restructuring of Merger .................................... 33
8.10. Employee Benefit Plans .................................... 33
8.11. Credit Agreement .......................................... 34
8.12. Conversion of Class B Common Stock ........................ 34
8.13. Real Property Transfer Taxes .............................. 34
8.14. Annual Meeting of Stockholders ............................ 34
ARTICLE 9 .................................................................. 35
9. Conditions. ......................................................... 35
9.1. Conditions to Each Party's Obligation to Effect the
Merger ................................................ 35
(ii)
9.2. Conditions to Obligation of Purchaser and Merger Sub
to Effect the Merger .................................. 35
ARTICLE 10 ................................................................. 35
10. Termination; Amendment; Waiver. .................................... 35
10.1. Termination ............................................... 35
10.2. Effect of Termination ..................................... 37
10.3. Amendment ................................................. 37
10.4. Extension; Waiver ......................................... 37
ARTICLE 11 ................................................................. 38
11. General Provisions. ................................................ 38
11.1. Nonsurvival of Representations and Warranties ............. 38
11.2. Notices ................................................... 38
11.3. Assignment; Binding Effect ................................ 38
11.4. Entire Agreement .......................................... 39
11.5. Fees and Expenses ......................................... 39
11.6. Governing Law ............................................. 40
11.7. Headings .................................................. 41
11.8. Interpretation ............................................ 41
11.9. Investigations ............................................ 41
11.10. Severability ............................................. 41
11.11. Enforcement of Agreement ................................. 41
11.12. Counterparts ............................................. 42
11.13. Obligation of Purchaser .................................. 42
EXHIBITS
EXHIBIT A Conditions of the Offer
EXHIBIT B Notice and Certificate
(iii)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
April 29, 1997, among GKN Powder Metallurgy Holdings, Inc., a Delaware
corporation ("Purchaser"), GKN Powder Metallurgy, Inc., a Delaware corporation
and a wholly owned subsidiary of Purchaser ("Merger Sub"), and Sinter Metals,
Inc., a Delaware corporation (the "Company").
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company
each have determined that it is in the best interests of their respective
companies and stockholders for Purchaser to acquire the Company upon the terms
and subject to the conditions set forth herein;
WHEREAS, the parties hereto desire to make certain
representations, warranties, covenants and agreements in connection herewith;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Purchaser and Merger Sub are entering into agreements with certain
stockholders of the Company pursuant to which such stockholders shall agree to
take certain actions to support the transactions contemplated by this Agreement
(the "Stockholder Agreements"); and
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE OFFER
1.1 The Offer.
(a) Subject to the provisions of this Agreement and this
Agreement not having been terminated in accordance with Article 10 hereof, as
promptly as practicable but in any event within five business days after the
date hereof, Merger Sub shall commence, within the meaning of Rule 14d-2 under
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), an offer to purchase all of the
outstanding shares of Class A Common Stock, par value $.001 per share ("Class A
Common Stock"), and Class B Common Stock, par value $.001 per share ("Class B
Common Stock," and, together with the Class A Common Stock, the "Common Stock"),
of the Company at a price of $37.00 per share of Common Stock, net to the seller
in cash (the "Offer"). The obligation of Merger Sub to commence the Offer and
accept for payment, and pay for, any shares of
Common Stock tendered pursuant to the Offer shall be subject to the conditions
set forth in Exhibit A hereto and to the terms and conditions of this Agreement.
Subject to the provisions of this Agreement, the Offer shall expire 20 business
days after the date of its commencement, unless this Agreement is terminated in
accordance with Article 10, in which case the Offer (whether or not previously
extended in accordance with the terms hereof) shall expire on such date of
termination.
(b) Merger Sub expressly reserves the right to modify the
terms of the Offer and to waive any condition of the Offer, except that, without
the prior written consent of the Company, Merger Sub shall not (i) waive the
Minimum Condition (as defined in Exhibit A), (ii) reduce the number of shares of
Common Stock subject to the Offer, (iii) reduce the price per share of Common
Stock to be paid pursuant to the Offer, (iv) extend the Offer, if all of the
Offer conditions are satisfied or waived, (v) change the form of consideration
payable in the Offer, (vi) amend or modify any term or condition of the Offer
(including the conditions set forth on Exhibit A) in any manner adverse to the
holders of Common Stock or (vii) impose additional conditions to the Offer other
than such conditions required by applicable Law (as hereinafter defined).
Notwithstanding anything herein to the contrary, Merger Sub may, in its sole
discretion without the consent of the Company, extend the Offer at any time and
from time to time (i) if at the then scheduled expiration date of the Offer any
of the conditions to Merger Sub's obligation to accept for payment and pay for
shares of Common Stock shall not have been satisfied or waived, (ii) for any
period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "SEC") or its staff applicable to the
Offer, (iii) for any period required by applicable Law and (iv) if all Offer
conditions are satisfied or waived but the number of shares of Common Stock
tendered is less than 90% of the then outstanding number of shares of Common
Stock, for an aggregate period of not more than 20 business days (for all such
extensions under this clause (iv)) beyond the latest expiration date that would
be permitted under clause (i), (ii) or (iii) of this sentence. So long as this
Agreement is in effect and the conditions to the Offer have not been satisfied
or waived, at the request of the Company, Merger Sub shall extend the Offer for
an aggregate period of not more than 5 business days (for all such extensions)
beyond the originally scheduled expiration date of the Offer. Such period of 5
business days shall include any grace period contemplated by clause (d)(ii) of
Exhibit A that extends beyond the otherwise scheduled expiration date of the
Offer. Subject to the terms and conditions of the Offer and this Agreement,
Merger Sub shall accept for payment and pay for, in accordance with the terms of
the Offer, all shares of Common Stock validly tendered and not withdrawn
pursuant to the Offer as soon as practicable after the expiration of the Offer.
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1.2. Actions by Purchaser and Merger Sub.
(a) As soon as reasonably practicable following execution of
this Agreement, but in no event later than five business days from the date
hereof, Purchaser and Merger Sub shall file with the SEC a Tender Offer
Statement on Schedule 14D-1 with respect to the Offer, which shall contain an
offer to purchase and a related letter of transmittal and any other ancillary
documents pursuant to which the Offer shall be made (such Schedule 14D-1 and the
documents therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "Offer Documents"). The Company and its
counsel shall be given a reasonable opportunity to review and comment upon the
Offer Documents prior to the filing thereof with the SEC. The Offer Documents
shall comply as to form in all material respects with the requirements of the
Exchange Act, and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, the Offer Documents
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 therein, in the light of the circumstances under which they were
made, not misleading, except that no representation is made by Purchaser or
Merger Sub with respect to information supplied by the Company for inclusion in
the Offer Documents. Each of Purchaser, Merger Sub and the Company agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and each of Purchaser, Merger Sub and the
Company further agrees to 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
shares of Common Stock, in each case as and to the extent required by applicable
federal securities laws. Purchaser and Merger Sub agree to provide the Company
and its counsel in writing with any comments Purchaser, Merger Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after receipt of such comments.
(b) Purchaser shall provide or cause to be provided to Merger
Sub all of the funds necessary to purchase any shares of Common Stock that
Merger Sub becomes obligated to purchase pursuant to the Offer.
1.3. Actions by the Company.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that the Board of Directors of the Company (the
"Board of Directors" or the "Board") at a meeting duly called and held has duly
adopted resolutions (i) approving this Agreement, the Offer and the Merger (as
hereinafter defined), determining that the Merger is advisable and that the
terms of the Offer and Merger are fair to, and in the best interests of, the
Company's stockholders and recommending that the Company's stockholders accept
the Offer and approve the Merger and this Agreement, and (ii) taking all action
necessary to render Section 203 of the Delaware General Corporation Law (the
"DGCL") and Article X of the Company's
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Certificate of Incorporation inapplicable to the Offer, the Merger, this
Agreement and any of the transactions contemplated hereby and the Stockholder
Agreements and any of the transactions contemplated thereby. The Company further
represents and warrants that the Board of Directors has received the written
opinion of Morgan Stanley & Co. (the "Financial Advisor") that the proposed
consideration to be received by the holders of shares of Common Stock pursuant
to the Offer and the Merger is fair to such holders from a financial point of
view (the "Fairness Opinion"). The Company hereby consents to the inclusion in
the Offer Documents of the recommendation of the Board of Directors described in
the first sentence of this Section 1.3(a). The Company hereby represents and
warrants that it has been authorized by the Financial Advisor to permit the
inclusion of the Fairness Opinion and references thereto, subject to prior
review and consent by the Financial Advisor (such consent not to be unreasonably
withheld) in the Offer Documents, the Schedule 14D-9 (as hereinafter defined)
and the Proxy Statement (as hereinafter defined). The Company has been advised
by each of its directors and executive officers that each such person intends to
tender all shares of Common Stock owned by such person pursuant to the Offer,
except to the extent of any restrictions created by Section 16(b) of the
Exchange Act. If the Company's Board of Directors determines that its fiduciary
duties require it to withdraw, modify or amend its recommendations described
above, such withdrawal, amendment or modification shall not constitute a breach
of this Agreement but shall have the effects specified herein.
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendations described in
the first sentence of Section 1.3(a) (subject to the last sentence of Section
1.3(a)) and shall mail the Schedule 14D-9 to the stockholders of the Company. To
the extent practicable, the Company shall cooperate with Purchaser in mailing or
otherwise disseminating the Schedule 14D-9 with the appropriate Offer Documents
to the Company's stockholders. Purchaser and its counsel shall be given a
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
the filing thereof with the SEC. The Schedule 14D-9 shall comply as to form in
all material respects with the requirements of the Exchange Act and, on the date
filed with the SEC and on the date first published, sent or given to the
Company's stockholders, 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 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 information supplied by
Purchaser or Merger Sub for inclusion in the Schedule 14D-9. Each of the
Company, Purchaser and Merger Sub agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or 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 the
holders of shares of Common Stock, in each case as and to the extent required by
4
applicable federal securities laws. The Company agrees to provide Purchaser and
Merger Sub and their counsel in writing with any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Merger Sub with mailing labels containing the names
and addresses of the record holders of Common Stock as of a recent date and of
those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control regarding
the beneficial owners of Common Stock, and shall furnish to Merger Sub such
information and assistance (including updated lists of stockholders, security
position listings and computer files) as Merger Sub may reasonably request in
communicating the Offer to the Company's stockholders. Subject to the
requirements of law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the Offer
and the Merger, Purchaser and Merger Sub and each of their affiliates and
associates shall hold in confidence the information contained in any of such
labels, lists and files, shall use such information only in connection with the
Offer and the Merger, and, if this Agreement is terminated, shall promptly
deliver to the Company all copies of such information then in their possession
or under their control.
(d) Subject to the terms and conditions of this Agreement, if there
shall occur a change in law or in a binding judicial interpretation of existing
law which would, in the absence of action by the Company or the Board, prevent
the Merger Sub, were it to acquire a specified percentage of the shares of
Common Stock then outstanding, from approving and adopting this Agreement by its
affirmative vote as the holder of a majority of shares of Common Stock and
without the affirmative vote of any other stockholder, the Company will use its
best efforts to promptly take or cause such action to be taken.
1.4. Directors.
(a) Promptly upon the purchase of shares of Common Stock pursuant to
the Offer, Purchaser shall be entitled to designate such number of directors,
rounded up to the next whole number, as will give Purchaser representation on
the Board of Directors equal to the product of (i) the number of directors on
the Board of Directors and (ii) the percentage that the number of shares of
Common Stock purchased by Merger Sub or Purchaser or any affiliate thereof bears
to the aggregate number of shares of Common Stock outstanding (the
"Percentage"), and the Company shall, upon request by Purchaser, promptly
increase the size of the Board of Directors and/or exercise its best efforts to
secure the resignations of such number of directors as is necessary to enable
Purchaser's designees to be elected to the Board of Directors and shall cause
Purchaser's designees to be so elected. At the request of Purchaser, the Company
will use its reasonable best efforts to cause such individuals designated by
5
Purchaser to constitute the same Percentage of (i) each committee of the Board,
(ii) the board of directors of each Subsidiary (as hereinafter defined) and
(iii) the committees of each such board of directors. The Company's obligations
to appoint designees to the Board of Directors shall be subject to Section 14(f)
of the Exchange Act. The Company shall take, at its expense, all action
necessary to effect any such election, and shall include in the Schedule 14D-9
the information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. Purchaser will supply to the Company in writing and be
solely responsible for any information with respect to itself and its nominees,
directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding the foregoing, the parties hereto shall use their respective
reasonable best efforts to ensure that at least two of the members of the Board
of Directors shall at all times prior to the Effective Time (as hereinafter
defined) be Continuing Directors (as hereinafter defined).
(b) Following the election or appointment of Purchaser's designees
pursuant to this Section 1.4 and prior to the Effective Time, the approval of a
majority of the directors of the Company then in office who are not designated
by Purchaser (the "Continuing Directors") shall be required to authorize (and
such authorization shall constitute the authorization of the Board of Directors
and no other action on the part of the Company, including any action by any
other director of the Company, shall be required to authorize) any termination
of this Agreement by the Company, any amendment of this Agreement requiring
action by the Board of Directors, any extension of time for the performance of
any of the obligations or other acts of Purchaser or Merger Sub, and any waiver
of compliance with any of the agreements or conditions contained herein for the
benefit of the Company.
ARTICLE 2
THE MERGER
2.1. The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 2.3), Merger Sub shall be merged
with and into the Company in accordance with this Agreement and the applicable
provisions of the DGCL, and the separate corporate existence of Merger Sub shall
thereupon cease (the "Merger"). The Company shall be the surviving corporation
in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"). The Merger shall have the effects specified in the DGCL.
2.2. The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at the
offices of Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New
York, New York, at 10:00 a.m., local time, as soon as practicable following the
satisfaction (or waiver if permissible) of the conditions set forth in Article
9. The date on which the Closing occurs is hereinafter referred to as the
"Closing Date."
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2.3. Effective Time. If all the conditions to the Merger set forth in
Article 9 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 10, the parties
hereto shall cause a Certificate of Merger meeting the requirements of Section
251 of the DGCL to be properly executed and filed in accordance with such
Section on the Closing Date. The Merger shall become effective at the time of
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with the DGCL or at such later time which the parties
hereto shall have agreed upon and designated in such filing as the effective
time of the Merger (the "Effective Time").
ARTICLE 3
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
3.1. Certificate of Incorporation. The Certificate of Incorporation of
Merger Sub in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until duly amended in
accordance with applicable law and the terms thereof.
3.2. Bylaws. The Bylaws of Merger Sub in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law, the terms thereof and the Surviving
Corporation's Certificate of Incorporation.
ARTICLE 4
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
4.1. Directors. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable law and the Surviving Corporation's Certificate of
Incorporation and Bylaws.
4.2. Officers. The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable law and the Surviving Corporation's Certificate of
Incorporation and Bylaws.
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ARTICLE 5
EFFECT OF THE MERGER ON SECURITIES
OF MERGER SUB AND THE COMPANY
5.1. Merger Sub Stock. At the Effective Time, each share of common
stock, $.01 par value per share, of Merger Sub outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one validly issued,
fully paid and non-assessable share of common stock, $.01 par value per share,
of the Surviving Corporation.
5.2. Company Securities.
(a) At the Effective Time, each share of Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares of Common
Stock owned by Purchaser or Merger Sub or held by the Company, all of which
shall be cancelled, and other than shares of Dissenting Common Stock (as
hereinafter defined)) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into the right to receive the per
share consideration paid upon consummation of the Offer, without interest (the
"Merger Consideration").
(b) As a result of the Merger and without any action on the part of the
holder thereof, at the Effective Time, all shares of Common Stock shall cease to
be outstanding and shall be cancelled and retired and shall cease to exist, and
each holder of shares of Common Stock (other than Merger Sub, Purchaser and the
Company) shall thereafter cease to have any rights with respect to such shares
of Common Stock, except the right to receive, without interest, the Merger
Consideration in accordance with Section 5.3 upon the surrender of a certificate
or certificates (a "Certificate") representing such shares of Common Stock.
(c) Each share of Common Stock issued and held in the Company's
treasury at the Effective Time shall, by virtue of the Merger, cease to be
outstanding and shall be cancelled and retired without payment of any
consideration therefor.
(d) All outstanding stock options (individually, an "Option" and,
collectively, the "Options") heretofore granted under any stock option program
or arrangement of the Company (collectively, the "Stock Option Plans") that are
outstanding immediately prior to the acceptance for payment of shares of Common
Stock pursuant to the Offer shall be acquired by the Company at the Effective
Time for a cash payment by the Company of an amount equal to (i) the excess, if
any, of (A) the Merger Consideration over (B) the exercise price per share of
Common Stock subject to such Option, multiplied by (ii) the number of shares of
Common Stock for which such Option shall not theretofore have been exercised.
The Company represents and warrants that no consents of the holders of Options
are necessary to effectuate the foregoing cash-out. Either prior to or as soon
as practicable following the
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consummation of the Offer, the Board of Directors (or if appropriate, any
committee administering the Stock Option Plans) shall adopt such resolution or
take other such actions as are required to cause any Option that is not
exercisable as of the date hereof, to become exercisable at the Effective Time.
All amounts payable pursuant to this Section 5.2(d) shall be subject to any
required withholding of taxes and shall be paid without interest. In addition,
any amounts payable pursuant to this Section 5.2(d) to any current or former
director, officer or employee who has a loan outstanding from the Company shall
be reduced by the principal amount and interest due with respect to such loan as
of the Effective Time. The balance of any such loan still outstanding, if any,
after giving effect to the foregoing, shall remain due and payable in accordance
with the terms of such loan as in effect on the date hereof. The Stock Option
Plans shall terminate as of the Effective Time, and the provisions in any other
Company Benefit Plans (as defined in Section 6.11) providing for the issuance,
transfer or grant of any capital stock of the Company or any interest in respect
of any capital stock of the Company shall be deleted as of the Effective Time,
and the Company shall ensure that following the Effective Time, no holder of an
Option or any participant in any Stock Option Plan or other Company Benefit Plan
shall have any right thereunder to acquire any capital stock of the Company or
of the Surviving Corporation. As of the date hereof, no Options have been issued
pursuant to the Company's 1997 Stock Option Plan for Non-Employee Directors (the
"Non-Employee Directors Plan") and the Company hereby agrees that no Options
shall be issued pursuant to such plan prior to the Effective Time. The Company
represents and warrants that each director of the Company otherwise entitled to
receive Options pursuant to the Non-Employee Directors Plan has waived in
writing his or her right to receive such Options.
5.3. Exchange of Certificates Representing Common Stock.
(a) Prior to the Effective Time, Purchaser shall appoint a commercial
bank or trust company having net capital of not less than $20 million, or such
other party reasonably satisfactory to the Company, to act as paying agent
hereunder for payment of the Merger Consideration upon surrender of Certificates
(the "Paying Agent"). Purchaser shall cause the Surviving Corporation to provide
the Paying Agent with cash in amounts necessary to pay for all the shares of
Common Stock pursuant to Section 5.2(a) and, in connection with the Options,
pursuant to Section 5.2(d), as and when such amounts are needed by the Paying
Agent. Such amounts shall hereinafter be referred to as the "Exchange Fund."
(b) Promptly after the Effective Time, Purchaser shall cause the
Paying Agent to mail to each holder of record of shares of Common Stock (i) a
letter of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to such Certificates shall pass, only upon delivery of
the Certificates to the Paying Agent and which letter shall be in such form and
have such other provisions as Purchaser may reasonably specify and (ii)
instructions for effecting the surrender of such Certificates in exchange for
the Merger Consideration. Upon surrender of a Certificate to the Paying Agent
together with such letter of transmittal, duly executed and
9
completed in accordance with the instructions thereto, and such other documents
as may reasonably be required by the Paying Agent, the holder of such
Certificate shall promptly receive in exchange therefor the amount of cash into
which shares of Common Stock theretofore represented by such Certificate shall
have been converted pursuant to Section 5.2, and the shares represented by the
Certificate so surrendered shall forthwith be cancelled. No interest will be
paid or will accrue on the cash payable upon surrender of any Certificate. In
the event of a transfer of ownership of Common Stock which is not registered in
the transfer records of the Company, payment may be made with respect to such
Common Stock to such a transferee if the Certificate representing such shares of
Common Stock is presented to the Paying Agent, accompanied by all documents
reasonably required to evidence and effect such transfer and to evidence that
any applicable stock transfer taxes have been paid.
(c) At or after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
cancelled and exchanged as provided in this Article 5.
(d) Any portion of the Exchange Fund (including the proceeds of any
interest and other income received by the Paying Agent in respect of all such
funds) that remains unclaimed by the former stockholders of the Company six
months after the Effective Time shall be delivered to the Surviving Corporation.
Any former stockholders of the Company who have not theretofore complied with
this Article 5 shall thereafter look only to the Surviving Corporation for
payment of any Merger Consideration that may be payable in respect of each share
of Common Stock such stockholder holds as determined pursuant to this Agreement,
without any interest thereon.
(e) None of Purchaser, the Company, the Surviving Corporation, the
Paying Agent or any other person shall be liable to any former holder of shares
of Common Stock for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
(f) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by the Surviving Corporation,
the posting by such person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Paying Agent will issue in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration payable in
respect thereof pursuant to this Agreement.
(g) Except as otherwise provided herein, Purchaser shall pay all
charges and expenses, including those of the Paying Agent, in connection with
the exchange of the Merger Consideration for Certificates.
10
5.4. Adjustment of Merger Consideration. If, subsequent to the date of
this Agreement but prior to the Effective Time, the outstanding shares of Common
Stock shall have been changed into a different number of shares or a different
class as a result of a stock split, reverse stock split, stock dividend,
subdivision, reclassification, split, combination, exchange, recapitalization or
other similar transaction, the Merger Consideration shall be appropriately
adjusted.
5.5. Dissenting Company Stockholders. Notwithstanding any provision of
this Agreement to the contrary, if required by the DGCL but only to the extent
required thereby, shares of Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by holders of such
shares of Common Stock who have properly exercised appraisal rights with respect
thereto in accordance with Section 262 of the DGCL (the "Dissenting Common
Stock") will not be exchangeable for the right to receive the Merger
Consideration, and holders of such shares of Dissenting Common Stock will be
entitled to receive payment of the appraised value of such shares of Common
Stock in accordance with the provisions of such Section 262 unless and until
such holders fail to perfect or effectively withdraw or lose their rights to
appraisal and payment under the DGCL. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses such right, such
shares of Common Stock will thereupon be treated as if they had been converted
into and to have become exchangeable for, at the Effective Time, the right to
receive the Merger Consideration, without any interest thereon. The Company will
give Purchaser prompt notice of any demands received by the Company for
appraisals of shares of Common Stock. The Company shall not, except with the
prior written consent of Purchaser, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands.
5.6. Merger Without Meeting of Stockholders. Notwithstanding the
foregoing, if Merger Sub, or any other direct or indirect subsidiary of
Purchaser, shall acquire at least 90 percent of the outstanding shares of Common
Stock, the parties hereto shall take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after the expiration
of the Offer without a meeting of stockholders of the Company, in accordance
with Section 253 of the DGCL.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding sections of the disclosure
letter, dated the date hereof, delivered by the Company to Purchaser (the
"Disclosure Letter"), the Company hereby represents and warrants to Purchaser
and Merger Sub as follows:
6.1. Existence; Good Standing; Corporate Authority. Each of the Company and
its Subsidiaries (as defined in Section 11.8) is (i) a corporation duly
incorporated,
11
validly existing and in good standing under the laws of its jurisdiction of
incorporation and (ii) is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other state of the
United States or the laws of any foreign jurisdiction, if applicable, in which
the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary, except where the
failure to be so qualified or to be in good standing, individually or in the
aggregate, would not have a material adverse effect on the business, results of
operations or financial condition of the Company and its Subsidiaries, taken as
a whole, or the ability of the Company and its Subsidiaries to conduct their
business after the Closing consistent with the manner currently conducted (a
"Material Adverse Effect"); provided, however, that a Material Adverse Effect
shall not include any material adverse effect resulting from work stoppages in
the U.S. auto industry or any material adverse effect arising from any
threatened or actual termination or modification of the business relationships
of the Company or any of its Subsidiaries with any of their customers or
suppliers that commences after the public announcement of the transactions
contemplated hereby. To the knowledge of the Company, as of the date hereof
there is no such change in relations with any such customers or suppliers
pending or threatened. Each of the Company and its Subsidiaries has all
requisite corporate power and authority to own, operate and lease its properties
and carry on its business as now conducted. The Company has heretofore delivered
to Purchaser true and correct copies of the Certificate of Incorporation and
Bylaws of the Company and each of its Subsidiaries as currently in effect.
6.2. Authorization, Validity and Effect of Agreements. The Company has
the requisite corporate power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby or executed in
connection herewith (the "Ancillary Documents") and subject, if required with
respect to the consummation of the Merger, to the approval of holders of at
least a majority of the outstanding shares of Class A Common Stock, to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Ancillary Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
have been duly and validly authorized by the Board of Directors, and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement and the Ancillary Documents or to consummate the transactions
contemplated hereby and thereby (other than the approval of this Agreement by
the holders of a majority of the shares of Common Stock if required by
applicable law). This Agreement has been, and any Ancillary Document at the time
of execution will have been, duly and validly executed and delivered by the
Company, and (assuming this Agreement and such Ancillary Documents each
constitutes a valid and binding obligation of Purchaser and Merger Sub)
constitutes and will constitute the valid and binding obligations of the
Company, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
12
6.3. Compliance with Laws. Except as set forth in the Disclosure
Letter, neither the Company nor any of its Subsidiaries is in violation of any
foreign, federal, state or local law, statute, ordinance, rule, regulation,
order, judgment, ruling or decree ("Laws") of any foreign, federal, state or
local judicial, legislative, executive, administrative or regulatory body or
authority or any court, arbitration, board or tribunal ("Governmental Entity")
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets, except for violations which, individually or in the
aggregate, would not have a Material Adverse Effect.
6.4. Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of Class A Common Stock, 5,000,000 shares of Class
B Common Stock and 5,000,000 shares of preferred stock, $.001 par value
("Preferred Stock"). As of April 28, 1997, (a) 7,548,416 shares of Class A
Common Stock were issued and outstanding, (b) 2,543,381 shares of Class B Common
Stock were issued and outstanding, (c) no shares of Preferred Stock were issued
and outstanding, (d) Options to purchase an aggregate of 330,300 shares of
Common Stock were outstanding, 474,505 shares of Common Stock were reserved for
issuance upon the exercise of such outstanding Options, 144,205 shares of Common
Stock were reserved for future grants under the Stock Option Plans and no stock
appreciation rights or limited stock appreciation rights were outstanding other
than those attached to such Options, (e) 33,400 shares of Class A Common Stock
were held by the Company in its treasury, and (f) no shares of capital stock of
the Company were held by the Company's Subsidiaries. The Company has no
outstanding bonds, debentures, notes or other obligations entitling the holders
thereof to vote (or which are convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company on any matter.
Since April 28, 1997, the Company (i) has not issued any shares of Common Stock
other than upon the exercise of Options, (ii) has granted no Options to purchase
shares of Common Stock under the Stock Option Plans and (iii) has not split,
combined, converted or reclassified any of its shares of capital stock. All
issued and outstanding shares of Common Stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. Except as set
forth in this Section 6.4 or in the Disclosure Letter, there are no other shares
of capital stock or voting securities of the Company, and no existing options,
warrants, calls, subscriptions, convertible securities, or other rights,
agreements or commitments which obligate the Company or any of its Subsidiaries
to issue, transfer or sell any shares of capital stock of, or equity interests
in, the Company or any of its Subsidiaries. Except as set forth in the
Disclosure Letter, there are no outstanding obligations of the Company or any
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company and there are no performance awards outstanding under the
Stock Option Plan or any other outstanding stock-related awards. After the
Effective Time, the Surviving Corporation will have no obligation to issue,
transfer or sell any shares of capital stock of the Company or the Surviving
Corporation pursuant to any Company Benefit Plan (as defined in Section 6.11).
Except as set forth in the Disclosure Letter, there are no voting trusts or
other agreements or understandings to which the Company
13
or any of its Subsidiaries or any of the Company's directors or officers is a
party with respect to the voting of capital stock of the Company or any of its
Subsidiaries.
6.5. Subsidiaries. Except as set forth in the Disclosure Letter, (i)
the Company owns, directly or indirectly through a Subsidiary, all of the
outstanding shares of capital stock (or other ownership interests having by
their terms ordinary voting power to elect directors or others performing
similar functions with respect to such Subsidiary) of each of the Company's
Subsidiaries, and (ii) each of the outstanding shares of capital stock (or other
ownership interests having by their terms ordinary voting power to elect
directors or others performing similar functions with respect to such
Subsidiary) of each of the Company's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable, and is owned, directly or indirectly, by
the Company free and clear of all liens, pledges, security interests, claims or
other encumbrances ("Encumbrances"). The Disclosure Letter sets forth for each
Subsidiary of the Company: (i) its name and jurisdiction of incorporation or
organization; (ii) its authorized capital stock or share capital; (iii) the
number of issued and outstanding shares of capital stock or share capital; and
(iv) the holder or holders of such shares. Except for interests in the Company's
Subsidiaries or as set forth in the Disclosure Letter, neither the Company nor
any of its Subsidiaries owns directly or indirectly any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture,
business, trust or other entity.
6.6. No Violation. Except as set forth in the Disclosure Letter,
neither the execution and delivery by the Company of this Agreement or any of
the Ancillary Documents nor the consummation by the Company of the transactions
contemplated hereby or thereby will: (i) violate, conflict with or result in a
breach of any provisions of the Certificate of Incorporation or Bylaws of the
Company; (ii) violate, conflict with, result in a breach of any provision of,
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, result in the termination or in a right of
termination of, accelerate the performance required by or benefit obtainable
under, result in the triggering of any payment, penalty or other obligations
pursuant to, result in the creation of any Encumbrance upon any of the
properties of the Company or its Subsidiaries under, or result in there being
declared void, voidable, or without further binding effect, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust
or any license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which the Company or any of its
Subsidiaries is a party, or by which the Company or any of its Subsidiaries or
any of their respective properties is bound (each, a "Contract" and,
collectively, "Contracts"), except for any such breach, default or right with
respect to which requisite waivers or consents have been obtained or any of the
foregoing matters which individually or in the aggregate would not have a
Material Adverse Effect; (iii) require any consent, approval or authorization
of, license, permit or waiver by, or declaration, filing or registration
(collectively, "Consents") with, any Governmental Entity, including any such
Consent under the Laws of any foreign jurisdiction, other than (x) the filings
provided for in Section 2.3 and the filings required under the Exchange Act and
the Securities Act of
14
1933, as amended (the "Securities Act"), and (y) the filing required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), the filing
required under the Exon-Florio Amendment to the Defense Production Act of 1950
("Exon-Florio Amendment"), and any Consents required or permitted to be obtained
pursuant to the Laws of any foreign jurisdiction relating to antitrust matters
or competition ("Foreign Antitrust Laws") (collectively, "Other Antitrust
Filings and Consents," and, together with the other filings described in clauses
(x) and (y) above, "Regulatory Filings"), except for those Consents the failure
of which to obtain or make individually or in the aggregate would not have a
Material Adverse Effect or prevent or delay the consummation of the transactions
contemplated hereby; or (iv) violate any Laws applicable to the Company, any of
its Subsidiaries or any of their respective assets, except for violations which
individually or in the aggregate would not have a Material Adverse Effect or
adversely affect the ability of the Company to consummate the transactions
contemplated hereby.
6.7. Company Reports; Offer Documents.
(a) The Company has delivered or otherwise made available to
Purchaser each registration statement, report, proxy statement or information
statement (as defined under the Exchange Act) prepared by it since October 1,
1994, each in the form (including exhibits and any amendments thereto) filed
with the SEC (collectively, the "Company Reports"). As of their respective
dates, the Company Reports (i) complied as to form in all material respects with
the applicable requirements of the Securities Act, the Exchange Act, and the
rules and regulations thereunder and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each of the
consolidated balance sheets of the Company, Krebsoge Sinterholding GmbH
("Krebsoge") and Powder Metal Holding, Inc. ("Powder Metal") included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents the consolidated financial position of the
Company and its Subsidiaries, Krebsoge and its Subsidiaries, and Powder Metal
and its Subsidiaries, respectively, as of its respective date, and each of the
consolidated statements of income, retained earnings and cash flows of the
Company, Krebsoge and Powder Metal, respectively, included in or incorporated by
reference into the Company Reports (including any related notes and schedules)
fairly presents the results of operations, retained earnings or cash flows, as
the case may be, of the Company and its Subsidiaries, Krebsoge and its
Subsidiaries, and Powder Metal and its Subsidiaries, respectively, for the
periods set forth therein, in the case of the Company and Powder Metal, in
accordance with United States generally accepted accounting principles, and, in
the case of Krebsoge, in accordance with German generally accepted accounting
principles, in each case consistently applied during the periods involved,
except as may be noted therein. The unaudited pro forma condensed consolidated
statement of operations for the year ended December 31, 1996, included in the
Company Reports, is based on assumptions that provide a reasonable basis for
presenting the significant effects directly attributable to the transactions
reflected therein, the related pro forma adjustments give appropriate effect to
such assumptions and the pro forma
15
column reflects the proper application of such adjustments to the respective
historical financial statement amounts. Except as set forth in the Disclosure
Letter, neither the Company nor any of its Subsidiaries has any liabilities or
obligations, contingent or otherwise, except (i) liabilities and obligations in
the respective amounts reflected or reserved against in the Company's
consolidated balance sheet as of December 31, 1996, Krebsoge's consolidated
balance sheet as of December 19, 1996 and Powder Metal's consolidated balance
sheet as of November 22, 1996, in each case included in the Company Reports
(collectively, the "1996 Balance Sheet") or (ii) liabilities and obligations
incurred in the ordinary course of business by each such company since the
respective balance sheet date which individually or in the aggregate would not
have a Material Adverse Effect.
(b) None of the Schedule 14D-9, the information statement, if any,
filed by the Company in connection with the Offer pursuant to Rule 14f-1 under
the Exchange Act (the "Information Statement"), any schedule required to be
filed by the Company with the SEC or any amendment or supplement thereto, at the
respective times such documents are filed with the SEC or first published, sent
or given to the Company's stockholders, will contain any untrue statement of a
material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading except that no
representation is made by the Company with respect to information supplied by
Purchaser or Merger Sub specifically for inclusion in the Schedule 14D-9 or
Information Statement or any amendment or supplement. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in the Offer Documents will, at the date of filing with the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time prior to the Effective Time the Company shall obtain
knowledge of any facts with respect to itself, any of its officers and directors
or any of its Subsidiaries that would require the supplement or amendment to any
of the foregoing documents in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or to comply
with applicable Laws, such amendment or supplement shall be promptly filed with
the SEC and, as required by Law, disseminated to the stockholders of the
Company, and in the event Purchaser shall advise the Company as to its obtaining
knowledge of any facts that would make it necessary to supplement or amend any
of the foregoing documents, the Company shall promptly amend or supplement such
document as required and distribute the same to its stockholders.
6.8. Litigation. Except as set forth in the Disclosure Letter, (i)
there are no claims, actions, suits, proceedings, arbitrations, investigations
or audits (collectively, "Litigation") by a Governmental Entity pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries, at law or in equity, other than those in the ordinary course of
business which individually or in the aggregate
16
would not have a Material Adverse Effect, (ii) there are no claims, actions,
suits, proceedings or arbitrations by a third party other than a Governmental
Entity pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, at law or at equity other than those in the
ordinary course of business which individually or in the aggregate would not
have a Material Adverse Effect, and (iii) there are no claims, actions, suits,
proceedings or arbitrations pending by the Company against a third party at law
or in equity and the Company does not currently intend to initiate any such
matters against a third party. Except as set forth in the Disclosure Letter, no
Governmental Entity has indicated an intention to conduct any audit,
investigation or other review with respect to the Company or any of its
Subsidiaries which investigation or review, if adversely determined,
individually or in the aggregate would have a Material Adverse Effect. Except as
set forth in the Disclosure Letter, since January 1, 1995, there has not been
any product recall or post-sale warning by the Company or any of its
Subsidiaries or any of their customers concerning any products manufactured,
shipped, sold, marketed, distributed, processed or merchandised by the Company
or any of its Subsidiaries.
6.9. Absence of Certain Changes. Except as set forth in the
Disclosure Letter, since December 31, 1996, the Company and its Subsidiaries
have conducted their business only in the ordinary course of such business
consistent with past practices, and there has not been (i) any events or states
of fact which individually or in the aggregate would have a Material Adverse
Effect; (ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock; (iii) any repurchase, redemption
or any other acquisition by the Company or its Subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership interests in,
the Company or its Subsidiaries; (iv) any material change in accounting
principles, practices or methods; (v) any entry into any employment agreement
with, or any increase in the rate or terms (including, without limitation, any
acceleration of the right to receive payment) of compensation payable or to
become payable by the Company or any of its Subsidiaries to, their respective
directors, officers or employees, except for increases occurring in the ordinary
course of business in accordance with their customary practices which do not
exceed $500,000, in the aggregate, annually and employment agreements entered
into in the ordinary course of business which do not provide for annual
compensation which exceeds $100,000, in the aggregate; (vi) any increase in the
rate or terms (including, without limitation, any acceleration of the right to
receive payment) of any bonus, insurance, pension or other employee benefit plan
or arrangement covering any such directors, officers or employees, except
increases occurring in the ordinary course of business in accordance with its
customary practices which do not exceed $1,000,000 in the aggregate; (vii) any
entry into any Contract or transaction by the Company or any Subsidiary or
modification of any existing Contract which is material to the Company and its
Subsidiaries taken as a whole whether or not in the ordinary course of business;
(viii) any revaluation by the Company or any of its Subsidiaries of any of their
respective assets, including, without limitation, write-downs of inventory or
write-offs of accounts receivable other than in the ordinary course of business
consistent with past practices; or (ix) any action by the
17
Company which if taken after the date hereof would constitute a breach of
clauses (viii), (xii), (xiii), (xiv), (xvii), (xix), (xxii) or (xxiii) of
Section 8.2(b) hereof. The Company does not know of any events or states of
facts with respect to the Krebsoge Joint Ventures (as defined in Section 11.8)
which individually or in the aggregate would have a Material Adverse Effect.
6.10. Taxes. Except as set forth in the Disclosure Letter, the
Company and each of its Subsidiaries have timely filed all material Tax Returns
required to be filed by any of them. All such Tax Returns are true, correct and
complete, except for such instances which individually or in the aggregate would
not have a Material Adverse Effect. All Taxes of the Company and its
Subsidiaries which are (i) shown as due on such Returns, (ii) otherwise due and
payable or (iii) claimed or asserted by any taxing authority to be due, have
been paid, except for those Taxes being contested in good faith and for which
adequate reserves have been established in the financial statements included in
the Company Reports in accordance with generally accepted accounting principles.
The Company does not know of any proposed or threatened Tax claims or
assessments which, if upheld, would individually or in the aggregate have a
Material Adverse Effect. Except as set forth in the Disclosure Letter, the
Company and each Subsidiary have withheld and paid over to the relevant taxing
authority all Taxes required to have been withheld and paid in connection with
payments to employees, independent contractors, creditors, stockholders or other
third parties, except for such Taxes which individually or in the aggregate
would not have a Material Adverse Effect. For purposes of this Agreement, (a)
"Tax" (and, with correlative meaning, "Taxes") means any federal, state, local
or foreign income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, premium, withholding, alternative or added
minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, imposed by any Governmental Entity, and
(b) "Tax Return" means any return, report or similar statement required to be
filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
6.11. Employee Benefit Plans. All material employee benefit plans
covering employees of the Company or any of its Subsidiaries (the "Company
Benefit Plans") and all employee agreements providing compensation, severance or
other benefits to any current or former executive employee of the Company or any
of its Subsidiaries are set forth in the Disclosure Letter. To the extent
applicable, the Company Benefit Plans comply with the requirements of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the
Internal Revenue Code of 1986, as amended (the "Code"), and any other applicable
Law, except for such noncompliance which individually or in the aggregate would
not have a Material Adverse Effect. Except as set forth on the Disclosure
Letter, each Company Benefit Plan intended to be qualified under Section 401(a)
of the Code has received a determination letter and continues to satisfy the
requirements for such qualification (other than such noncompliance which can be
corrected without material liability to the
18
Company). With respect to each benefit plan maintained or contributed to by the
Company, any of its Subsidiaries or any ERISA Affiliate (as hereinafter defined)
of the Company which is covered by Title IV of ERISA or Section 412 of the Code
(i) there is no accumulated funding deficiency relating to the plan, (ii) no
reportable event (within the meaning of Section 4043 of ERISA) has occurred that
presents a material risk of liability to the Company arising under Tittle IV of
ERISA and (iii) the Company Reports fairly reflect the funded status of such
plans (including the book reserves relating thereto) and nothing has occurred
since December 31, 1996 with respect to such funded status that would have a
Material Adverse Effect. No Company Benefit Plan nor the Company nor any
Subsidiary has incurred any liability or penalty under Section 4975 of the Code
or Section 502(i) of ERISA or has engaged in any transaction that is reasonably
likely to result in any such liability or penalty, in each case that would have
a Material Adverse Effect. There is no pending or, to the knowledge of the
Company, anticipated Litigation against or otherwise involving any of the
Company Benefit Plans and no Litigation (excluding claims for benefits incurred
in the ordinary course of Company Benefit Plan activities) has been brought
against or with respect to any such Company Benefit Plan, except for any of the
foregoing which individually or in the aggregate would not have a Material
Adverse Effect. All contributions required to be made as of the date hereof to
the Company Benefit Plans have been made or provided for, except for any such
contribution that, if not made or provided for, would not have a Material
Adverse Effect. Except as described in the Company Reports or as required by
Law, neither the Company nor any of its Subsidiaries maintains or contributes to
any plan or arrangement which provides or has any material liability to provide
life insurance or medical or other employee welfare benefits to any employee or
former employee upon his retirement or termination of employment, and neither
the Company nor any of its Subsidiaries has ever represented, promised or
contracted (whether in oral or written form) to any employee or former employee
that such benefits would be provided. Except as set forth in the Disclosure
Letter, the execution of, and performance of the transactions contemplated in,
this Agreement will not (either alone or upon the occurrence of any additional
or subsequent events) constitute an event under any benefit plan, policy,
arrangement or agreement or any trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee. Except as set forth in the Disclosure
Letter no payment or benefit which will or may be made by the Company, any of
its Subsidiaries, any ERISA Affiliate or Purchaser or Merger Sub with respect to
any employee will constitute an "excess parachute payment" within the meaning of
Section 280G(b)(1) of the Code.
For purposes of this Agreement, "ERISA Affiliate" means any business
or entity which is a member of the same "controlled group of corporations,"
under "common control" or an "affiliated service group" with an entity within
the meanings of Section 414(b), (c) or (m) of the Code, or required to be
aggregated with the entity under Section 414(o) of the Code, or is under "common
control" with the entity, within
19
the meaning of Section 4001(a)(14) of ERISA, or any regulations promulgated or
proposed under any of the foregoing Sections.
6.12. Labor and Employment Matters. Except as set forth in the
Disclosure Letter, neither the Company nor any of its Subsidiaries is a party
to, or bound by, any collective bargaining agreement or other Contract or
understanding with a labor union or labor organization, and, except for such
matters which individually or in the aggregate would not have a Material Adverse
Effect, there is no (i) unfair labor practice, labor dispute (other than routine
individual grievances) or labor arbitration proceeding pending or, to the
knowledge of the Company, threatened against the Company or its Subsidiaries,
(ii) to the knowledge of the Company, activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of its
Subsidiaries, or (iii) lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to such employees.
6.13. Brokers. The Company has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of Purchaser or the Company to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby, except that the Company has retained Morgan Stanley & Co. Incorporated
as the Financial Advisor, the arrangements with which have been disclosed in
writing to Purchaser prior to the date hereof.
6.14. Licenses and Permits. Except as set forth in the Disclosure
Letter, the Company and its Subsidiaries have all necessary licenses, permits,
certificates, approvals and authorizations (collectively, "Permits") required to
lawfully conduct their respective businesses as presently conducted, except for
those Permits the lack of which individually or in the aggregate would not have
a Material Adverse Effect, and (a) no Permit is subject to revocation or
forfeiture by virtue of any existing circumstances, (b) there is no Litigation
pending or, to the knowledge of the Company, threatened to modify or revoke any
Permit, and (c) no Permit is subject to any outstanding order, decree, judgment,
stipulation or investigation that would be likely to affect such Permit, where
the effect of the foregoing individually or in the aggregate would have a
Material Adverse Effect.
6.15. Environmental Compliance and Disclosure. (a) To the knowledge
of the Company, except as set forth in the Disclosure Letter or except for any
matters which individually or in the aggregate would not have a Material Adverse
Effect, (i) the Company and each of its Subsidiaries is in full compliance with
all applicable Laws in effect on or prior to the date hereof relating to
Environmental Matters (as defined below), (ii) the Company and each of its
Subsidiaries has obtained, and is in full compliance with, all Permits required
by applicable Laws for the use, storage, treatment, transportation, release,
emission and disposal of raw materials, by-products, wastes and other substances
used or produced by or otherwise relating to the
20
operations of any of them, (iii) there are no underground storage tanks on or
under any property owned or leased by the Company or any of its Subsidiaries,
(iv) there are no polychlorinated biphenyls, asbestos or asbestos-containing
materials present at any property owned or leased by the Company or any of its
Subsidiaries and (v) there are no past or present events, conditions, activities
or practices that would prevent compliance or continued compliance by the
Company and each of its Subsidiaries with any Law or give rise to any
Environmental Liability (as defined below). The Company has provided Purchaser
with true and correct copies of all environmental reports relating to the
Company or any of its Subsidiaries or any of their assets.
(b) As used in this Agreement, the term "Environmental Matters"
means any matter arising out of or relating to pollution or protection of the
environment or human safety or health, including matters relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes including petroleum and its
fractions, radiation, gases, biohazards and all toxic substances and agents of
whatever type or nature into ambient air, surface water, ground water, or land,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
chemicals or toxic substances and or hazardous substances or wastes including
petroleum and its fractions, radiation, gases, biohazards and all toxic
substances and agents of whatever type or nature. "Environmental Liability"
shall mean any liability or obligation arising under any Law, including common
law or contractual indemnity obligations, that results from, or is based upon or
related to, the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release, or
threatened release into the environment, of any pollutant, contaminant, chemical
or toxic or hazardous substance or waste.
6.16. Title to Assets. Except as set forth in the 1996 Balance
Sheet, the Company and each of its Subsidiaries has good title to all of its
real and personal properties and assets reflected on the 1996 Balance Sheet and
material to its business (other than assets disposed of since December 31, 1996
in the ordinary course of business consistent with past practice) or acquired
since December 31, 1996, in each case free and clear of all Encumbrances except
for (i) Encumbrances which secure indebtedness which is properly reflected in
the 1996 Balance Sheet; (ii) liens for Taxes accrued but not yet payable; (iii)
liens arising as a matter of law in the ordinary course of business with respect
to obligations incurred after the date of the 1996 Balance Sheet, provided that
the obligations secured by such liens are not delinquent; and (iv) such
imperfections of title and Encumbrances, if any, as individually or in the
aggregate would not have a Material Adverse Effect. Except as set forth in the
Disclosure Letter, the Company and each of its Subsidiaries either own, or have
valid leasehold interests in, all properties and assets used by them in the
conduct of their business except where the absence of such ownership or
leasehold interest would not individually or in the aggregate have a Material
Adverse Effect.
21
6.17. Material Contracts. The Disclosure Letter sets forth a list of
all (i) Contracts for borrowed money or guarantees thereof, (ii) Contracts to
acquire or dispose of any businesses or any material assets, (iii) Contracts
involving any swap or option transaction relating to commodities, interest
rates, foreign exchange, or currency or other similar transactions customarily
known as a derivative ("Derivatives"); (iv) Contracts containing an agreement by
the Company or any Subsidiary restricting its ability to engage in any line of
business or other activity; (v) Contracts entered into by the Company, any of
its Subsidiaries or their respective predecessors since December 1, 1991
involving the purchase, sale or other acquisition or disposition by such parties
of one or more business units, divisions or entities (including former
Subsidiaries) with respect to which the Company's or any of its Subsidiary's
surviving liability (including indemnities), or other obligations (including
deferred payment and earn-out obligations), could reasonably be expected to
exceed $1,000,000, or which require funds to be held in trust or escrow for the
benefit of a third party; (vi) Contracts involving the investment, including by
way of capital contribution, loan or advance, by the Company or any of its
Subsidiaries of more than $3,000,000 in any other person, firm or entity; (vii)
Contracts to purchase powder metals or atmospheres that are material to the
Company and its Subsidiaries and (viii) other Contracts which involve the
payment or receipt of $5,000,000 or more per year. All Contracts to which the
Company or any of its Subsidiaries is a party or by which any of their
respective assets is bound are valid and binding, in full force and effect and
enforceable against the Company or any of its Subsidiaries, as the case may be,
and, to the knowledge of the Company, the other parties thereto in accordance
with their respective terms, subject to applicable bankruptcy, insolvency or
other similar laws relating to creditors' rights and general principles of
equity, except where the failure to be so valid and binding, in full force and
effect or enforceable would not individually or in the aggregate have a Material
Adverse Effect. There is not under any such Contract, any existing default, or
event, which after notice or lapse of time, or both, would constitute a default,
by the Company or any of its Subsidiaries, or to the Company's knowledge, any
other party, other than any such defaults or event which, individually or in the
aggregate, would not have a Material Adverse Effect.
6.18. Required Vote of Company Stockholders. Unless the Merger may
be consummated in accordance with Section 253 of the DGCL, the only vote of the
stockholders of the Company required to adopt this Agreement and approve the
Merger is the affirmative vote of the holders of a majority of the outstanding
shares of Class A Common Stock.
6.19. Intellectual Property Rights. Except as disclosed in the
Disclosure Letter, (i) the Company and its Subsidiaries each owns or has the
right to use pursuant to license, sublicense, agreement or permission all of its
Intellectual Property (as defined below) except where the absence of any
thereof, individually or in the aggregate, would not have a Material Adverse
Effect, and (ii) to the knowledge of the Company, neither the Company nor any of
its Subsidiaries has interfered with, infringed upon or misappropriated any
Intellectual Property rights of third parties which
22
interference, infringement or misappropriation individually or in the aggregate
would have a Material Adverse Effect. "Intellectual Property" means all patents,
patent applications, know how, trademarks, service marks, logos, trade names and
corporate names, copyrights, computer software, management information systems
and other intellectual property and proprietary rights.
6.20. Insurance Policies. The Company and each of its Subsidiaries
maintain in force insurance policies and bonds in such amounts and against such
liabilities and hazards as are consistent with industry practice. A complete
list of all material insurance policies is set forth in the Disclosure Letter.
Except as set forth in the Disclosure Letter, neither the Company nor any of its
Subsidiaries is now liable, nor will any of them become liable, for any
retroactive premium adjustment not reflected in the 1996 Balance Sheet or
otherwise provided for as set forth in such Schedule. All policies are valid and
enforceable and in full force and effect, all premiums owing in respect thereof
have been timely paid, and neither the Company nor any of its Subsidiaries has
received any notice of any premium increase or cancellation with respect to any
of its insurance policies or bonds. Except as set forth in the Disclosure
Letter, and except for any matters which individually or in the aggregate would
not have a Material Adverse Effect, there are no claims pending as to which the
insurer has denied liability or is reserving its rights, and all claims have
been timely and properly filed. Within the last three years, neither the Company
nor any of its Subsidiaries has been refused any insurance coverage sought or
applied for, and the Company has no reason to believe that their existing
insurance coverage cannot be renewed as and when the same shall expire, upon
terms and conditions standard in the market at the time renewal is sought.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Purchaser and Merger Sub hereby represent and warrant to the Company
as follows:
7.1. Existence; Good Standing; Corporate Authority. Each of
Purchaser and Merger Sub is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation and has
all requisite corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted, except where the failure
to have such power and authority individually or in the aggregate would not
materially adversely affect the ability of Purchaser or Merger Sub to consummate
the transactions contemplated by this Agreement.
7.2. Authorization, Validity and Effect of Agreements. Each of
Purchaser and Merger Sub has the requisite corporate power and authority to
execute and deliver this Agreement and the Ancillary Documents and to consummate
the
23
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Ancillary Documents and the consummation by Purchaser and
Merger Sub of the transactions contemplated hereby and thereby have been duly
and validly authorized by the respective Boards of Directors of Purchaser and
Merger Sub and by Purchaser as the sole stockholder of Merger Sub and no other
corporate proceedings on the part of Purchaser or Merger Sub are necessary to
authorize this Agreement and the Ancillary Documents or to consummate the
transactions contemplated hereby and thereby. This Agreement has been, and any
Ancillary Documents at the time of execution will have been, duly and validly
executed and delivered by Purchaser and Merger Sub, and (assuming this Agreement
and such Ancillary Documents each constitutes a valid and binding obligation of
the Company) constitutes and will constitute the valid and binding obligations
of each of Purchaser and Merger Sub, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
7.3. Offer Documents. None of the Offer Documents, any schedule
required to be filed by Purchaser or Merger Sub with the SEC or any amendment or
supplement will contain, on the date of filing with the SEC, any untrue
statement of a material fact or will omit to state any material fact required to
be stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they are made, not misleading, except
that no representation is made by Purchaser or Merger Sub with respect to
information supplied by the Company specifically for inclusion in the Offer
Documents, any schedule required to be filed with the SEC or any amendment or
supplement. None of the information supplied by Purchaser or Merger Sub in
writing specifically for inclusion or incorporation by reference in the Schedule
14D-9 will, at the date of filing with the SEC, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time prior
to the Effective Time either Purchaser or Merger Sub shall obtain knowledge of
any facts with respect to itself, any of its officers and directors or any of
its Subsidiaries that would require the supplement or amendment to any of the
foregoing documents in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or to comply with
applicable Laws, such amendment or supplement shall be promptly filed with the
SEC and, as required by Law, disseminated to the stockholders of the Company,
and in the event the Company shall advise Purchaser or Merger Sub as to its
obtaining knowledge of any facts that would make it necessary to supplement or
amend any of the foregoing documents, Purchaser or Merger Sub shall promptly
amend or supplement such document as required and distribute the same to the
stockholders of the Company.
7.4. No Violation. Neither the execution and delivery of this
Agreement or any of the Ancillary Documents by Purchaser and Merger Sub nor the
consummation by them of the transactions contemplated hereby or thereby will
24
(i) violate, conflict with or result in any breach of any provision of the
respective Certificates of Incorporation or By-Laws of Purchaser or Merger Sub;
(ii) violate, conflict with, result in a breach of any provision of, constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination or in a right of
termination of, accelerate the performance required by or benefit obtainable
under, result in the triggering of any payment or other obligations pursuant to,
result in the creation of any Encumbrance upon any of the properties of
Purchaser or Merger Sub under, or result in there being declared void, voidable,
or without further binding effect, any Contract to which Purchaser or Merger Sub
is a party, or by which Purchaser or Merger Sub or any of their respective
properties is bound, except for any such breach, default or right with respect
to which requisite waivers or consents have been obtained or any of the
foregoing matters which individually or in the aggregate would not have a
material adverse effect on the ability of Purchaser or Merger Sub to consummate
the transactions contemplated hereby; (iii) other than the Regulatory Filings,
require any Consent of any Governmental Entity, the lack of which individually
or in the aggregate would have a material adverse effect on the ability of
Purchaser or Merger Sub to consummate the transactions contemplated hereby; or
(iv) violate any Laws applicable to Purchaser or the Merger Sub or any of their
respective assets, except for violations which individually or in the aggregate
would not have a material adverse effect on the ability of Purchaser or Merger
Sub to consummate the transactions contemplated hereby;
7.5. Financing. On the date hereof, Purchaser has access to funds
sufficient to consummate the Offer and the Merger on the terms contemplated
hereby. At the consummation of the Offer and at the Effective Time, Purchaser
will have, and will cause Merger Sub to have, funds available to it sufficient
to consummate the Offer and the Merger on the terms contemplated hereby.
ARTICLE 8
COVENANTS
8.1. No Solicitation. Neither the Company nor any of its
Subsidiaries, nor any of their respective officers, directors, employees,
agents, affiliates or representatives (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of its
Subsidiaries) shall, directly or indirectly, solicit, initiate or participate
in, or knowingly encourage, in any way, any discussions or negotiations with, or
provide any information to, or afford any access to the properties, books or
records of the Company or any of its Subsidiaries to, or otherwise assist,
facilitate or knowingly encourage, any corporation, partnership, person or other
entity or group (other than Purchaser or any affiliate or associate of
Purchaser) with respect to any tender offer, merger, consolidation, business
combination, liquidation, reorganization, sale of significant assets, sale of
shares of capital stock or similar transactions involving the Company or any
Subsidiary or any division of any thereof (an "Alternative Proposal"), and shall
immediately cease and cause to be
25
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing; provided, however,
that nothing contained in this Section 8.1 shall prohibit the Company or its
Board of Directors from (i) complying with Rule 14d-9 or Rule 14e-2(a)
promulgated under the Exchange Act with regard to an Alternative Proposal or
(ii) prior to the acceptance for payment of shares of Common Stock by Merger Sub
pursuant to the Offer, providing information (pursuant to a confidentiality
agreement in reasonably customary form) to, or engaging in any negotiations or
discussions with, any person or entity who has made an unsolicited bona fide
Alternative Proposal which the Board of Directors in good faith determines,
after consultation with Jones, Day, Reavis & Pogue ("Outside Counsel"), that it
is required to consider in the exercise of its fiduciary duties to the Company's
stockholders imposed by law. The Company shall promptly notify Purchaser in
writing if any such information is requested from the Company, if any such
negotiations or discussions are sought to be initiated with the Company or if
any party makes an Alternative Proposal, including the identity of the person or
group requesting such information, proposing to engage in such negotiations or
discussions or making such Alternative Proposal, the material terms and
conditions of any Alternative Proposal and any subsequent developments with
respect thereto. The terms of any confidentiality agreement entered into between
the Company and a third party permitted by this Section 8.1 shall not be more
favorable to, or less restrictive on, such third party as the terms applicable
to GKN plc set forth in the letter agreement, dated as of April 28, 1997,
between the Company and GKN plc (the "Confidentiality Agreement") relating to
the confidential treatment of Information (as defined therein).
8.2. Interim Operations.
(a) From the date of this Agreement to the Effective Time, unless
Purchaser has consented in writing thereto, the Company shall, and shall cause
each of its Subsidiaries to, (i) conduct its operations according to its usual,
regular and ordinary course of business consistent with past practice; (ii) use
its reasonable best efforts to preserve intact their business organizations,
maintain in effect all existing qualifications, licenses, permits, approvals and
other authorizations referred to in Sections 6.1 and 6.14, keep available the
services of their officers and employees and maintain satisfactory relationships
with those persons having business relationships with them; (iii) promptly upon
the discovery thereof notify Purchaser of the existence of any breach of any
representation or warranty contained herein (or, in the case of any
representation or warranty that makes no reference to Material Adverse Effect,
any breach of such representation or warranty in any material respect) or the
occurrence of any event that would cause any representation or warranty
contained herein no longer to be true and correct (or, in the case of any
representation or warranty that makes no reference to Material Adverse Effect,
to no longer be true and correct in any material respect); and (iv) promptly
deliver to Purchaser true and correct copies of any report, statement or
schedule filed with the SEC subsequent to the date of this Agreement, any
internal monthly reports prepared for or delivered to the Board of Directors
after the
26
date hereof and monthly financial statements for the Company and its
Subsidiaries for and as of each month end subsequent to the date of this
Agreement.
(b) From and after the date of this Agreement to the Effective Time,
unless Purchaser has consented in writing thereto, the Company shall not, and
shall not permit any of its Subsidiaries to, (i) amend its Certificate of
Incorporation or Bylaws or comparable governing instruments; (ii) issue, sell,
pledge or register for issuance or sale any shares of its capital stock or other
ownership interest in the Company (other than issuances of Common Stock in
respect of any exercise of Options outstanding on the date hereof and disclosed
in the Disclosure Letter) or any of the Subsidiaries, or any securities
convertible into or exchangeable for any such shares or ownership interest, or
any rights, warrants or options to acquire or with respect to any such shares of
capital stock, ownership interest, or convertible or exchangeable securities; or
accelerate any right to convert or exchange or acquire any securities of the
Company or any of its Subsidiaries for any such shares or ownership interest;
(iii) effect any stock split or conversion of any of its capital stock or
otherwise change its capitalization as it exists on the date hereof, other than
as set forth in this Agreement or contemplated by a Stockholder Agreement; (iv)
grant, confer or award any option, warrant, convertible security or other right
to acquire any shares of its capital stock or take any action, other than as set
forth in this Agreement, to cause to be exercisable any otherwise unexercisable
option under any existing stock option plan; (v) declare, set aside or pay any
dividend or make any other distribution or payment with respect to any shares of
its capital stock or other ownership interests (other than such payments by a
wholly-owned Subsidiary); (vi) directly or indirectly redeem, purchase or
otherwise acquire any shares of its capital stock or capital stock of any of its
Subsidiaries; (vii) sell, lease or otherwise dispose of any of its assets
(including capital stock of Subsidiaries), except in the ordinary course of
business, none of which dispositions individually or in the aggregate will be
material; (viii) settle or compromise any pending or threatened Litigation,
other than settlements which involve solely the payment of money (without
admission of liability) not to exceed $250,000 in any one case; (ix) acquire by
merger, purchase or any other manner, any business or entity or otherwise
acquire any assets that are material, individually or in the aggregate, to the
Company and its Subsidiaries taken as a whole, except for purchases of
inventory, supplies or capital equipment in the ordinary course of business
consistent with past practice; (x) incur or assume any long-term or short-term
debt, except for working capital purposes in the ordinary course of business
under the Company's existing credit agreement set forth in the Disclosure
Letter; (xi) assume, guarantee or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person except wholly owned Subsidiaries of the Company; (xii) make or forgive
any loans, advances or capital contributions to, or investments in, any other
person; (xiii) make any Tax election or settle any Tax liability; (xiv) waive or
amend any term or condition of any confidentiality or "standstill" agreement to
which the Company is a party; (xv) grant any stock related or performance
awards; (xvi) enter into any new employment, severance, consulting or salary
continuation agreements with any newly hired employees other than in the
ordinary course of business or enter into any of the foregoing with any
27
existing officers, directors or employees or grant any increases in compensation
or benefits to employees other than increases in the ordinary course of
business; (xvii) adopt or amend in any material respect or terminate any
employee benefit plan or arrangement; (xviii) amend in any material respect or
terminate any employment agreement or severance agreement entered into between
the Company and certain of its officers and employees within the five business
days immediately prior to the date hereof or waive any right of the Company
thereunder; (xix) make any material changes in the type or amount of their
insurance coverage or permit any insurance policy naming the Company or any
Subsidiary as a beneficiary or a loss payee to be cancelled or terminated other
than in the ordinary course of business; (xx) make any capital expenditures in
the aggregate for the Company and its Subsidiaries in excess of the amounts
reflected in the analyst's report for the Company prepared by Morgan Stanley &
Co., Incorporated, dated April 10, 1997, a true and complete copy of which has
previously been delivered to Purchaser, or otherwise acquire assets not in the
ordinary course of business; (xxi) except as may be required by law or generally
acceptable accounting principles and with prior written notice to Purchaser,
change any material accounting principles or practices used by the Company or
its Subsidiaries; (xxii) enter into any Contracts for Derivatives, except for
spot, option and forward Contracts entered into in the ordinary course of
business consistent with the past practice of the Company and with the Company's
policies regarding Derivatives as previously disclosed to Purchaser; (xxiii)
waive, relinquish, release or terminate any right or claim, including any such
right or claim under any material Contract or permit any rights of material
value to use any Intellectual Property to lapse or be forfeited, in each case,
except in the ordinary course of business consistent with the past practice of
the Company; (xxiv) take any action to cause the Common Stock to be delisted
from the New York Stock Exchange prior to the completion of the Offer or the
Merger; or (xxv) agree in writing or otherwise to take any of the foregoing
actions.
8.3. Company Stockholder Approval; Proxy Statement.
(a) If approval or action in respect of the Merger by the
stockholders of the Company is required by applicable law, the Company, through
its Board of Directors, shall (i) call a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of voting upon the Merger, (ii) hold the
Stockholders Meeting as soon as practicable following the purchase of shares of
Common Stock pursuant to the Offer, and (iii) subject to the fiduciary duties of
the Board of Directors under applicable law as advised by Outside Counsel,
recommend to its stockholders the approval of the Merger. The Company's
obligations pursuant to clauses (i) and (ii) of the preceding sentence shall not
be affected by the withdrawal or modification by the Board of Directors of its
recommendation of the Merger in accordance with clause (iii) of the preceding
sentence. The record date for the Stockholders Meeting shall be a date
subsequent to the date Purchaser or Merger Sub becomes a record holder of Common
Stock purchased pursuant to the Offer.
28
(b) If required by applicable law, the Company will, as soon as
practicable following the expiration of the Offer, prepare and file a
preliminary Proxy Statement (such proxy statement, and any amendments or
supplements thereto, the "Proxy Statement") or, if applicable, an Information
Statement with the SEC with respect to the Stockholders Meeting and will use its
best efforts to respond to any comments of the SEC or its staff and to cause the
Proxy Statement to be cleared by the SEC. The Company will notify Purchaser of
the receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Purchaser with copies of all
correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. The Company shall give Purchaser and its counsel the
opportunity to review the Proxy Statement prior to its being filed with the SEC
and shall give Purchaser and its counsel the opportunity to review all
amendments and supplements to the Proxy Statement and all responses to requests
for additional information and replies to comments prior to their being filed
with, or sent to, the SEC. Each of the Company and Purchaser agrees to use its
best efforts, after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the SEC. As promptly as
practicable after the Proxy Statement has been cleared by the SEC, the Company
shall mail the Proxy Statement to the stockholders of the Company. If at any
time prior to the approval of this Agreement by the Company's stockholders there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company will prepare and mail to its stockholders such
an amendment or supplement.
(c) The Company represents and warrants that the Proxy Statement
will comply as to form in all material respects with the Exchange Act and, at
the respective times filed with the SEC and distributed to stockholders of the
Company, 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 therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representation or warranty as to any information included in the Proxy Statement
which was provided by Purchaser or Merger Sub. Purchaser represents and warrants
that none of the information supplied by Purchaser or Merger Sub for inclusion
in the Proxy Statement will, at the respective times filed with the SEC and
distributed to stockholders of the Company, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The Company shall use its reasonable best efforts to obtain the
necessary approvals by its stockholders of the Merger, this Agreement and the
transactions contemplated hereby.
29
(e) Purchaser agrees, subject to applicable law, to cause all shares
of Common Stock purchased by Merger Sub pursuant to the Offer and all other
shares of Common Stock owned by Purchaser, Merger Sub or any other subsidiary or
affiliate of Purchaser to be voted in favor of the approval of the Merger.
8.4. Filings; Other Action.
Subject to the terms and conditions herein provided, the Company,
Purchaser and Merger Sub shall: (a) promptly make their respective filings and
thereafter make any other required submissions under the HSR Act and the
Exon-Florio Amendment with respect to the Offer and, if applicable, the Merger;
(b) cooperate and consult with one another in (i) determining which Regulatory
Filings are required or, in the case of Other Antitrust Filings and Consents,
permitted to be made prior to the Effective Time with, and which Consents are
required or, in the case of Other Antitrust Filings and Consents, permitted to
be obtained prior to the Effective Time from Governmental Entities or other
third parties in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and all Consents
required to transfer to the Company any Permits or registrations held on behalf
of the Company or any of its Subsidiaries by or in the name of distributors,
brokers or sales agents; (ii) preparing all Regulatory Filings and all other
filings, submissions and presentations required or prudent to obtain all
Consents, including by providing to the other parties drafts of such material
reasonably in advance of the anticipated filing or submission dates; and (iii)
timely making all such Regulatory Filings and timely seeking all such Consents
and (c) use their reasonable best efforts to take, or cause to be taken, all
other action and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions contemplated by
this Agreement. Each of Purchaser and the Company shall use its reasonable best
efforts to contest any proceeding seeking a preliminary injunction or other
legal impediment to, and to resolve any objections as may be asserted by any
Governmental Entity with respect to, the Offer and/or the Merger under the HSR
Act or Foreign Antitrust Laws, provided that the foregoing shall not require
Purchaser to take any action that could directly or indirectly (x) impose
limitations on the ability of Purchaser or Merger Sub (or any of their
affiliates or Subsidiaries) effectively to acquire, operate or hold, or require
Purchaser, Merger Sub or the Company or any of their respective affiliates or
Subsidiaries to dispose of or hold separate, any portion of their respective
assets or business (y) restrict any future business activity by Purchaser,
Merger Sub, the Company or any of their affiliates or Subsidiaries or (z)
otherwise adversely affect Purchaser, Merger Sub, the Company or any of their
respective affiliates or Subsidiaries. If, at any time after the Effective Time,
any further action is necessary or desirable to carry out the purpose of this
Agreement, the proper officers and directors of Purchaser and the Surviving
Corporation shall take all such necessary action.
30
8.5. Access to Information.
(a) From the date of this Agreement to the Closing Date, the Company
shall, and shall cause its Subsidiaries to, during normal business hours and
upon reasonable advance notice (i) give Purchaser and its authorized
representatives reasonable access to all books, records, personnel, offices and
other facilities and properties of the Company and its Subsidiaries and their
accountants and accountants' work papers, (ii) permit Purchaser to make such
copies and inspections thereof as Purchaser may reasonably request and (iii)
furnish Purchaser with such financial and operating data and other information
with respect to the business and properties of the Company and its Subsidiaries
as Purchaser may from time to time reasonably request; provided, however, that
no investigation or information furnished pursuant to this Section 8.5 shall
affect any representations or warranties made by the Company herein or the
conditions to the obligations of Purchaser to consummate the transactions
contemplated hereby. Purchaser shall limit the number of persons provided with
access to the Company's properties or personnel in order to minimize disruption
to the Company and not to interfere unreasonably with the Company's operations.
Representatives of the Company may accompany Purchaser's representatives on any
tours of the Company's facilities provided to Purchaser or its representatives
pursuant to this Section 8.5. Such tours shall be made during normal business
hours and upon reasonable advance notice.
(b) All such information and access shall be subject to the
provisions of the Confidentiality Agreement.
8.6. Publicity. The initial U.S. press release relating to this
Agreement shall be a joint press release and thereafter the Company and
Purchaser shall consult with each other before issuing any such press release or
otherwise making public statements with respect to the transactions contemplated
hereby and in making any filings with any Governmental Entity or with any U.S.
securities exchange or the London Stock Exchange with respect thereto.
8.7. Further Action. Each party hereto shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, perform such further acts
and execute such documents as may be reasonably required to effect the Merger.
8.8. Insurance; Indemnity.
(a) Purchaser will cause the Surviving Corporation to purchase a
three-year pre-paid noncancellable directors and officers insurance policy
covering the current and all former directors and officers of the Company with
respect to acts or failures to act prior to the Effective Time, in a single
aggregate amount over the three-year period immediately following the Closing
Date equal to the policy limit for the Company's current directors and officers
insurance policy (the "Current Policy"). If such
31
insurance is not obtainable at an annual cost per covered year not in excess of
the annual premium paid by the Company for the Current Policy (the "Cap") times
1.5, then Purchaser will cause the Surviving Corporation to purchase policies
providing at least the same coverage as the Current Policy and containing terms
and conditions no less advantageous to the current and former directors and
officers of the Company than the Current Policy with respect to acts or failures
to act prior to the Effective Time; provided, however, that Purchaser and the
Surviving Corporation shall not be required to obtain policies providing such
coverage except to the extent that such coverage can be provided at an annual
cost of no greater than the Cap; and, if equivalent coverage cannot be obtained,
or can be obtained only by paying an annual premium in excess of the Cap,
Purchaser or the Surviving Corporation shall only be required to obtain as much
coverage as can be obtained by paying an annual premium equal to the Cap.
(b) Purchaser shall cause the Surviving Corporation to keep in
effect in its By-Laws provisions for a period of not less than six years from
the Effective Time (or, in the case of matters occurring prior to the Effective
Time which have not been resolved prior to the sixth anniversary of the
Effective Time, until such matters are finally resolved) which provide for
exculpation of director and officer liability and indemnification (and
advancement of expenses related thereto) of the past and present officers and
directors of the Company to the fullest extent permitted by the DGCL which
provisions shall not be amended except as required by applicable law or except
to make changes permitted by law that would enhance the rights of past or
present officers and directors to indemnification or advancement of expenses.
(c) From and after the Effective Time, Purchaser shall indemnify and
hold harmless, to the fullest extent permitted under applicable law, each person
who is, or has been at any time prior to the date hereof or who becomes prior to
the Effective Time, an officer or director of the Company or any Subsidiary
against all losses, claims, damages, liabilities, costs or expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in settlement
(collectively, "Losses ") in connection with any Litigation arising before or
after the Effective Time out of or pertaining to acts or omissions, or alleged
acts or omissions, by them in their capacities as such, which acts or omissions
occurred prior to the Effective Time. Without limiting the foregoing, the
Purchaser shall periodically advance expenses as incurred with respect to the
foregoing to the fullest extent permitted under applicable law provided that the
person to whom the expenses are advanced provides an undertaking to repay such
advance if it is ultimately determined that such person is not entitled to
indemnification.
(d) If the Merger shall have been consummated, the Surviving
Corporation shall, to the fullest extent permitted under applicable law,
indemnify and hold harmless Purchaser and any person or entity who was a
stockholder, officer, director or affiliate of Purchaser prior to the Effective
Time against any Losses in connection with any Litigation arising out of or
pertaining to any of the transactions contemplated by this Agreement or the
Ancillary Documents.
32
(e) If, after the Effective Time, Purchaser or Surviving
Corporation of any of their respective successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii)
transfers all or substantially all of its properties and assets to any person,
then, in each such case, proper provisions shall be made so that successors and
assigns of Purchaser or Surviving Corporation, as the case may be, shall assume
all of the obligations set forth in this Section 8.8. The provisions of this
Section 8.8 are intended for the benefit of and shall be enforceable by each
person who is now or has been at any time prior to the date of this Agreement,
or who becomes prior to the Effective Time, an officer or director of the
Company or any of its Subsidiaries.
(f) If any Litigation described in paragraph (c) or (d) of this
Section 8.8 (each, an "Action") arises or occurs, the Surviving Corporation
shall control the defense of such Action with counsel selected by the Surviving
Corporation, which counsel shall be reasonably acceptable to the party seeking
indemnification pursuant to paragraph (c) or (d) of this Section 8.8 (each, an
"Indemnified Party"), provided that the Indemnified Party shall be permitted to
participate in the defense of such Action through counsel selected by the
Indemnified Party, which counsel shall be reasonably acceptable to the Surviving
Corporation, at the Indemnified Party's expense. Notwithstanding the foregoing,
if there is any conflict between the Surviving Corporation and any Indemnified
Party or there are additional defenses available to any Indemnified Party, such
Indemnified Party shall be permitted to participate in the defense of such
Action with counsel selected by the Indemnified Party, which counsel shall be
reasonably acceptable to the Surviving Corporation, at the Surviving
Corporation's expense; provided, however, that the Surviving Corporation shall
not be obligated to pay the reasonable fees and expenses of more than one
counsel for all Indemnified Parties in any single Action except to the extent
that, in the opinion of counsel for the Indemnified Parties, two or more of such
Indemnified Parties have conflicting interests in the outcome of such Action.
The Surviving Corporation shall not be liable for any settlement effected
without its written consent, which consent shall not unreasonably be withheld.
8.9. Restructuring of Merger. Upon the mutual agreement of
Purchaser and the Company, the Merger shall be restructured in the form of a
forward subsidiary merger of the Company into Merger Sub, with Merger Sub being
the surviving corporation, or as a merger of the Company into Purchaser, with
Purchaser being the surviving corporation. In such event, this Agreement shall
be deemed appropriately modified to reflect such form of merger.
8.10. Employee Benefit Plans. From and after the Effective Time, the
Surviving Corporation and its respective subsidiaries will honor, in accordance
with their terms, all existing employment and severance agreements between the
Company or any of its Subsidiaries and any officer, director, or employee of the
Company or any of its Subsidiaries to the extent the same shall have been
previously disclosed to Purchaser in the Disclosure Letter and all benefits or
other amounts earned or accrued
33
to the extent vested or which become vested in the ordinary course, through the
Effective Time under all employee benefit plans of the Company and any of its
Subsidiaries, in each case to the extent the same have been previously disclosed
to Purchaser in the Disclosure Letter and are in effect on the date hereof.
8.11. Credit Agreement. The Company shall use its reasonable best
efforts to obtain waivers, approvals or consents from the Lenders party to the
Amended and Restated Credit Agreement, dated as of April 23, 1997, among the
Company, certain of the Company's Subsidiaries, the Lenders named therein, NBD
Bank and Salomon Brothers Inc. (the "Credit Agreement") necessary so that the
consummation of any of the transactions contemplated by this Agreement shall not
result in an event of default or otherwise permit termination of the Credit
Agreement or the acceleration of the Company's obligations thereunder, without
payment of any fee by or cost to the Company except as agreed to in advance in
writing by Purchaser. Purchaser and Merger Sub hereby agree that any failure by
the Company to obtain such waivers, approvals or consents shall not constitute a
breach of covenant by the Company for any purpose under this Agreement and that
the Company will have no liability to Purchaser or Merger Sub as a result of any
such failure. The Company agrees to keep Purchaser informed with respect to the
status of negotiations with the Lenders regarding such waivers or consents. The
Company hereby represents and warrants that the Company's obligations under the
Credit Agreement may be prepaid and the Credit Agreement terminated by the
Company without any prepayment fees or penalties, other than customary LIBOR
breakage costs.
8.12. Conversion of Shares of Class B Common Stock. Upon delivery by
Merger Sub to the Company of certificates representing shares of Class B Common
Stock and a notice and certificate in substantially the form attached as Exhibit
B hereto or such other form which otherwise complies with the requirements of
the Company's Certificate of Incorporation, the Company shall immediately effect
the conversion of such shares into shares of Class A Common Stock and issue a
certificate representing such shares of Class A Common Stock to Merger Sub. The
Company hereby represents and warrants that upon such conversion, Merger Sub
shall have the same rights with respect to shares of Class A Common Stock issued
to it upon such conversion, including, without limitation, voting rights, as
those of holders of shares of Class A Common Stock on the date hereof.
8.13 Real Property Transfer Taxes. Any liability for real property
transfer taxes, real property gains taxes or similar taxes imposed with respect
to the property of the Company by any state, local or foreign taxing authority
with respect to the Offer and the Merger shall be paid or caused to be paid by
Purchaser.
8.14 Annual Meeting of Stockholders. The Company shall postpone the
holding of its Annual Meeting of Stockholders (the "Company Annual Meeting")
indefinitely pending consummation of the Merger unless the Company is otherwise
34
required to hold the Company Annual Meeting by applicable Law or the rules and
regulations of the NYSE.
ARTICLE 9
CONDITIONS
9.1. 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 or waiver, where permissible, prior to the Effective Time, of
the following conditions:
(a) If approval of this Agreement and the Merger by the holders of
Common Stock is required by applicable law, this Agreement and the Merger shall
have been approved by the requisite vote of such holders.
(b) There shall not have been issued any injunction or issued or
enacted any Law which prohibits or has the effect of prohibiting the
consummation of the Merger or makes such consummation illegal.
9.2. Conditions to Obligation of Purchaser and Merger Sub to
Effect the Merger. The obligations of Purchaser and Merger Sub to effect the
Merger shall be further subject to the satisfaction or waiver on or prior to the
Effective Time of the condition that Merger Sub shall have accepted for payment
and paid for shares of Common Stock tendered pursuant to the Offer; provided
that the right to assert this condition 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 such condition.
ARTICLE 10
TERMINATION; AMENDMENT; WAIVER
10.1. Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the stockholders of the Company, but prior to the Effective Time:
(a) by mutual written consent of the Board of Directors of the
Company (subject to Section 1.4(b)) and Purchaser;
(b) by the Company, if Merger Sub shall have failed to commence
the Offer within five business days after the date of this Agreement;
(c) by the Company, if Purchaser or Merger Sub materially breaches
any of their respective representations or warranties or covenants contained in
this
35
Agreement and, with respect to any such breach that can be remedied, the breach
is not remedied within five business days after the Company has furnished
Purchaser or Merger Sub with written notice of such failure;
(d) by Purchaser or the Company:
(i) if the Effective Time shall not have occurred on or
before October 31, 1997 (provided that the right to terminate this
Agreement pursuant to this clause (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 the Effective Time to
occur on or before such date);
(ii) if there shall be any statute, law, rule or regulation
that makes consummation of the Offer or the Merger illegal or
prohibited or if any court of competent jurisdiction or other
Governmental Entity shall have issued an order, judgment, decree or
ruling, or taken any other action restraining, enjoining or otherwise
prohibiting the Offer or the Merger and such order, judgment, decree,
ruling or other action shall have become final and non-appealable; or
(iii) if the Offer terminates or expires on account of the
failure of any condition specified in Exhibit A without Merger Sub
having purchased any shares of Common Stock thereunder (provided that
the right to terminate this Agreement pursuant to this clause (iii)
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 any such condition); or
(e) by the Company, at any time prior to the acceptance for
payment of shares of Common Stock by Merger Sub pursuant to the Offer, if there
is an Alternative Proposal which the Board of Directors in good faith determines
represents a superior transaction for the stockholders of the Company as
compared to the Offer and the Merger, and the Board of Directors determines,
after consultation with Outside Counsel and the Financial Advisor, that it is
required by its fiduciary duties to the Company's stockholders imposed by law to
terminate this Agreement; provided, however, that the right to terminate this
Agreement pursuant to this Section 10.1(e) shall not be available (i) if the
Company has breached in any material respect its obligations under Section 8.1,
or (ii) if, prior to or concurrently with any purported termination pursuant to
this Section 10.1(e), the Company shall not have paid the fees and expenses
contemplated by Section 11.5, or (iii) if the Company has not provided Purchaser
and Merger Sub with at least three business days' prior written notice of its
36
intent to so terminate this Agreement together with a summary of the material
terms and conditions of the Alternative Proposal; and
(f) by Purchaser, if the Board of Directors shall have failed to
recommend, or shall have withdrawn, modified or amended in any manner adverse to
Purchaser or Merger Sub, its approval or recommendation of the Offer or the
Merger, or shall have recommended acceptance of any Alternative Proposal, or
shall have resolved to do any of the foregoing.
10.2. Effect of Termination. If this Agreement is terminated and the
Merger is abandoned pursuant to Section 10.1 hereof, this Agreement, except for
the provisions of Sections 1.3(c), 8.5(b), 8.6 and Article 11, shall terminate,
without any liability on the part of any party or its directors, officers or
stockholders. Nothing herein shall relieve any party to this Agreement of
liability for breach of this Agreement or prejudice the ability of the
non-breaching party to seek damages from any other party for any breach of this
Agreement, including, without limitation, attorneys' fees and the right to
pursue any remedy at law or in equity.
10.3. Amendment. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the Board of
Directors of the Company (subject to Section 1.4) and Purchaser at any time
before or after adoption of this Agreement by the stockholders of the Company
but, after any such stockholder approval, no amendment shall be made which
decreases the Merger Consideration or which adversely affects the rights of the
Company's stockholders hereunder without the approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of all of the parties.
10.4. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken by or on behalf of the Board of Directors of
the Company (subject to Section 1.4) and Purchaser, may (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party or (iii)
waive compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any 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.
37
ARTICLE 11
GENERAL PROVISIONS
11.1. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
11.2. Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with proof of
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
If to Purchaser or Merger Sub: If to the Company:
GKN Powder Metallurgy Holdings, Inc. Sinter Metals, Inc.
3300 University Drive Terminal Tower
Auburn Hills, Michigan 48326 50 Public Square, Suite 3200
Facsimile: (800) 377-1200 Cleveland, Ohio 44113
Attention: David J. Turner Facsimile: (216) 344-7631
Attention: Joseph W. Carreras
With a copy to: With a copy to:
Fried, Frank, Harris, Jones, Day, Reavis & Pogue
Shriver & Jacobson North Point, 901 Lakeside Avenue
One New York Plaza Cleveland, Ohio 44114
New York, New York 10004 Facsimile: (216) 579-0212
Facsimile: (212) 859-4000 Attention: Christopher M. Kelly, Esq.
Attention: Jean E. Hanson, Esq.
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
11.3. Assignment; Binding Effect. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, that either Purchaser
or Merger Sub (or both) may assign its rights hereunder (including, without
limitation, the right to make the Offer and/or to purchase shares of Common
Stock in the Offer) to a wholly owned subsidiary but nothing shall relieve the
assignor from its obligations hereunder. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit
38
of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except for
the provisions of Section 8.8, nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
11.4. Entire Agreement. This Agreement, the Confidentiality
Agreement, the Disclosure Letter, the Exhibits, the Ancillary Documents and any
other documents delivered by the parties in connection herewith constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto.
11.5. Fees and Expenses.
(a) Except as provided in Section 11.5(b), whether or not the
Offer or the Merger is consummated, all costs and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses.
(b)(1) To compensate Purchaser and its affiliates for entering into
this Agreement and taking action to consummate the transactions hereunder and
incurring the costs and expenses related thereto and other losses and expenses,
including the forgoing by Purchaser of other opportunities, the Company and
Purchaser agree that the Company shall pay to Purchaser, an aggregate amount
equal to $12,000,000 (the "Commitment Amount") if this Agreement is terminated
(i) by the Company pursuant to Section 10.1(e); (ii) by Purchaser (x) pursuant
to Section 10.1(f) (unless the event described therein occurs solely as a result
of Purchaser's willful breach in any material respect of its representations,
warranties, covenants or agreements set forth in this Agreement) or (y) pursuant
to Section 10.1(d)(iii) because of the failure of the condition set forth in
paragraph (d) of Exhibit A as a result of the Company's willful breach of its
representations or warranties set forth in this Agreement; or (iii) pursuant to
Section 10.1(d)(iii) at a time when the Minimum Condition shall not have been
satisfied and (x) prior to the time this Agreement is terminated, an Alternative
Proposal shall have been publicly announced by a party other than Purchaser or
shall have been publicly known and (y) within nine months after the termination
of this Agreement, such party or any affiliate thereof either alone or as part
of a "group" (as defined in the Exchange Act) acquires a majority of the
outstanding shares of Common Stock (a "Stock Acquisition").
The Commitment Amount shall be payable (x) at the time of
termination if such amount becomes payable pursuant to clause (i) above, (y) on
the next business day following termination if such Amount becomes payable
pursuant to clause (ii) above, and (z) on the next business day following the
occurrence of a Stock Acquisition, if such amount becomes payable pursuant to
clause (iii) above.
39
(2) (i) The Company shall reimburse Purchaser and its affiliates
for the reasonable out-of-pocket expenses of Purchaser and its affiliates, not
to exceed $4,000,000 in the aggregate, incurred in connection with or arising
out of the Offer, the Merger, this Agreement and the Ancillary Documents and the
transactions contemplated hereby (including, without limitation, amounts paid or
payable to banks and investment bankers, fees and expenses of counsel,
accountants and consultants, and printing expenses), regardless of when those
expenses are incurred, (i) if this Agreement is terminated and Purchaser is
entitled to the Commitment Amount pursuant to Section 11.5(b)(1) or (ii) if this
Agreement is terminated by Purchaser pursuant to Section 10.1(d)(iii) because of
the failure of the condition set forth in paragraph (d) of Exhibit A under
circumstances where Purchaser is not entitled to the Commitment Amount.
(ii) Purchaser shall reimburse the Company and its affiliates
for the reasonable out-of-pocket expenses of the Company and its affiliates, not
to exceed $4,000,000 in the aggregate, incurred in connection with or arising
out of the Offer, the Merger, this Agreement and the Ancillary Documents and the
transactions contemplated hereby (including, without limitation, amounts paid or
payable to banks and investment bankers, fees and expenses of counsel,
accountants and consultants, and printing expenses), regardless of when those
expenses are incurred, if Purchaser terminates this Agreement pursuant to
Section 10.1(d)(iii) because of the failure of the condition set forth in
paragraph (g) of Exhibit A and such termination constitutes a willful breach of
Purchaser's obligations pursuant to this Agreement.
(3) Each of Purchaser and the Company acknowledges that the
agreements contained in this Section 11.5(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
the other party would not enter into this Agreement. Accordingly, if either
Purchaser or the Company fails to promptly pay any amounts owing pursuant to
this Section 11.5(b) when due, such party shall in addition thereto pay to the
other party and its affiliates all costs and expenses (including fees and
disbursements of counsel) incurred in collecting such amounts, together with
interest on such amounts (or any unpaid portion thereof) from the date such
payment was required to be made until the date such payment is received by such
party at the prime rate of Chemical Bank as in effect from time to time during
such period.
11.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its rules of conflict of laws. Each of the Company, Purchaser and Merger Sub
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United States of
America located in the State of Delaware (the "Delaware Courts") for any
litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any litigation relating thereto
except in such courts), waives any objection to the laying of venue of any such
litigation in the Delaware Courts and agrees not to plead or claim
40
in any Delaware Court that such litigation brought therein has been brought in
an inconvenient forum.
11.7. Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
11.8. Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and partnerships
and vice versa. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, the words "Subsidiary," "affiliate" and
"associate" shall have the meanings ascribed thereto in Rule 12b-2 under the
Exchange Act; provided, however, that each of PEAK Werkstoff GmbH, Krebsoge
Feida Danyang Filters, Krebsoge Excel (Filters) PVT. Ltd., Sintered Metals
Components, (Pty) Ltd., and Sinter Metals Foreign Sales Corporation
(collectively, the "Krebsoge Joint Ventures") (i) shall, if a consolidated
subsidiary of the Company or Krebsoge for purposes of financial statements
prepared in accordance with United States or German generally accepted
accounting principles as the case may be, be deemed a "Subsidiary" for purposes
of references to financial statements in this Agreement and (ii) shall not
otherwise be deemed a Subsidiary for purposes of this Agreement.
11.9. Investigations. No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement.
11.10. Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
11.11. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any Delaware Court, this
being in addition to any other remedy to which they are entitled at law or in
equity. The prevailing party in any judicial action
41
shall be entitled to receive from the other party reimbursement for the
prevailing party's reasonable attorney's fees and disbursements, and court
costs.
11.12. Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all, of the parties
hereto.
11.13. Obligation of Purchaser. Whenever this Agreement requires
Merger Sub to take any action, such requirement shall be deemed to include an
undertaking on the part of Purchaser to cause Merger Sub to take such action.
42
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
SINTER METALS, INC.
By: /s/ Joseph W. Carreras
-----------------------------------
Name: Joseph W. Carreras
Title: Chairman and Chief Executive Officer
GKN POWDER METALLURGY HOLDINGS, INC.
By: /s/ David Turner
-----------------------------------
Name: David Turner
Title: President
GKN POWDER METALLURGY, INC.
By: /s/ R.A. Ogilvie Smals
-----------------------------------
Name: R.A. Ogilvie Smals
Title: Vice President
GKN plc hereby unconditionally guarantees the obligations of
Purchaser and Merger Sub hereunder.
GKN PLC
By: /s/ David Turner
--------------------------------------------
Name: David Turner
--------------------------------------
Title: Finance Director
--------------------------------------
43
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Agreement and
Plan of Merger (the "Merger Agreement"), Merger Sub shall not be required to
accept for payment or pay for, subject to any applicable rules and regulations
of the SEC, including Rule 14e-1(c) of the Exchange Act, any shares of Common
Stock not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such shares of Common Stock unless (i) there shall have
been validly tendered and not withdrawn prior to the expiration of the Offer
that number of shares of Common Stock which would represent at least a majority
of the outstanding shares of Common Stock on a fully diluted basis
(collectively, the "Minimum Condition") and (ii) any waiting period under the
HSR Act applicable to the purchase of shares of Common Stock pursuant to the
Offer shall have expired or been terminated. Furthermore, notwithstanding any
other term of the Offer or the Merger Agreement, Merger Sub shall not be
required to accept for payment or, subject as aforesaid, to pay for any shares
of Common Stock not theretofore accepted for payment or paid for, and may
terminate or amend the Offer if at any time on or after the date of the Merger
Agreement and prior to the expiration of the Offer, any of the following
conditions exist or shall occur and remain in effect:
(a) a court of competent jurisdiction or other United States
Governmental Entity shall have issued an order, judgment, decree or
ruling on the merits in connection with an action, suit or proceeding
brought by any United States Governmental Entity (i) which challenges
or seeks to restrict the acquisition by Purchaser or Merger Sub (or any
of their affiliates or Subsidiaries) of shares of Common Stock pursuant
to the Offer or seeks to restrain or prohibit the consummation of the
Offer or the Merger, or obtain damages in connection therewith (ii)
which seeks to make the purchase of or payment for some or all of the
shares of Common Stock pursuant to the Offer or the Merger illegal;
(iii) which seeks to impose material limitations on the ability of
Purchaser, Merger Sub, the Surviving Corporation or any of their
respective affiliates or Subsidiaries effectively to acquire, operate
or hold, or to require Purchaser, Merger Sub or the Surviving
Corporation or any of their respective affiliates or Subsidiaries to
dispose of or hold separate, any material portion of their assets or
business or the Company's assets or business or (iv) which seeks to
impose material limitations on the ability of Purchaser, Merger Sub or
their affiliates or Subsidiaries to exercise full rights of ownership
of the shares of Common Stock purchased by it, including, without
limitation, the right to vote the shares purchased by it on all matters
properly presented to the stockholders of the Company; or
A-1
(b) there shall have been promulgated, enacted, entered,
enforced or deemed applicable to the Offer or the Merger, by any
Governmental Entity, any Law or there shall have been issued any
injunction resulting in any of the consequences referred to in
subsection (a) above; or
(c) the Merger Agreement shall have been terminated in
accordance with its terms; or
(d) (i) the representations and warranties made by the Company
in the Merger Agreement (without giving effect to any materiality
limitations contained therein) shall not be true and correct as of the
date of consummation of the Offer as though made on and as of that date
(other than representations and warranties made as of a specified date)
except for any breach or breaches which, in the aggregate, would not
have a Material Adverse Effect or (ii) the Company shall have breached
or failed to comply in any material respect with any of its obligations
under this Agreement and, with respect to any such failure that can be
remedied, the failure is not remedied within five business days after
Purchaser has furnished the Company with written notice of such
failure; or
(e) any person (other than Purchaser, Merger Sub or one or
more of their affiliates or Subsidiaries) shall have entered into an
agreement in principle or definitive agreement with the Company with
respect to a tender or exchange offer for any shares of Common Stock,
or a merger, consolidation or other business combination with or
involving the Company; or
(f) the Board of Directors shall have modified or amended its
recommendation of the Offer or the Merger in any manner adverse to
Purchaser or Merger Sub or shall have withdrawn its recommendation of
the Offer or the Merger or shall have recommended acceptance of any
Alternative Proposal or shall have resolved to do so; or
(g) since the date of the Merger Agreement, any change shall
have occurred which, individually or in the aggregate, has had, or
would have, a Material Adverse Effect; or
(h) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in securities on any national
securities exchange or in the over the counter market in the United
States, or in the London Stock Exchange for a period in excess of ten
consecutive trading hours, (ii) a declaration of any banking moratorium
by any United Kingdom or United States federal or state authorities or
any suspension of payments in respect of banks, by any such authorities
or (iii) a commencement of a war, armed hostilities or any other
international or national calamity directly or indirectly involving the
United States, the United Kingdom or Germany, other than any war, armed
hostilities or other international calamity involving the former
Yugoslavia, which is
A-2
reasonably expected to have a Material Adverse Effect or to materially
adversely affect Purchaser or Merger Sub's ability to complete the
Offer or the Merger.
The foregoing conditions are for the sole benefit of Purchaser and
Merger Sub and may be asserted by Purchaser or Merger Sub regardless of the
circumstances (including any action or inaction by Purchaser or the Company)
giving rise to any such condition and, except for the Minimum Condition, may be
waived by Purchaser or Merger Sub, in whole or in part, at any time and from
time to time, in the sole discretion of Purchaser. The failure by Purchaser or
Merger Sub at any time to exercise any of the foregoing rights will not be
deemed a waiver of any right, the waiver of such right with respect to any
particular facts or circumstances shall not be deemed a waiver with respect to
any other facts or circumstances, and each right will be deemed an ongoing right
which may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions,
all tendered shares of Common Stock not theretofore accepted for payment shall
forthwith be returned by the depositary to the tendering stockholders.
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EXHIBIT B
NOTICE AND CERTIFICATE
GKN Powder Metallurgy, Inc. ("GKN"), as the holder of [ ]
shares of Class B Common Stock, par value $.001 per share, of Sinter Metals,
Inc. (the "Company"), desires to convert all of such shares into such number of
shares of Class A Common Stock as provided for in the Company's Certificate of
Incorporation. GKN hereby states, for the benefit of the Company and its
stockholders, that such conversion will not violate, or cause the violation of,
any regulatory provision applicable to a small business investment company. The
shares of Class A Common Stock to be issued to GKN pursuant to this Notice and
Certificate shall be issued in a single certificate in the name of GKN as the
holder thereof.
Dated as of GKN POWDER METALLURGY, INC.
___________________, 1997
By: _________________________________
Name: _________________________
Title: _________________________
B-1
Dates Referenced Herein and Documents Incorporated by Reference
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