UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the registrant
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Filed by a party other than the registrant
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Check the appropriate box:
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Preliminary proxy statement.
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Confidential, for use of the Commission only (as permitted by Rule 14A-
6(e)(2)
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Definitive proxy statement.
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Definitive additional materials.
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Soliciting material pursuant to §240.14a-12
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Thermadyne Holdings Corporation
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies.
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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SPECIAL
MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 2, 2010
November 1,
2010
DEAR
STOCKHOLDERS:
You are cordially invited to attend a special meeting of
stockholders of Thermadyne Holdings Corporation, a Delaware
corporation, to be held at 10:00 a.m., Eastern time, on
December 2, 2010 at the Hilton New York, 1335 Avenue
of the Americas, New York, NY 10019, U.S.A.
At the special meeting, you will be asked to consider and vote
upon a proposal to adopt an Agreement and Plan of Merger, dated
as of October 5, 2010 (the merger agreement),
that we entered into with Razor Holdco Inc.
(Parent) and Razor Merger Sub Inc., its wholly-owned
subsidiary (Merger Subsidiary). If the merger
agreement is adopted and the merger is consummated, each share
of our common stock (other than shares held by us or owned by
Parent or any of its subsidiaries, or by stockholders who
properly exercise their appraisal rights under Delaware law for
such shares) will be cancelled and converted automatically into
the right to receive $15.00 in cash, without interest. Pursuant
to the terms of the merger agreement, Merger Subsidiary will be
merged with and into us, and we will continue as the surviving
corporation. All of the outstanding shares of Merger Subsidiary
will be converted into equity interests in the surviving
corporation. As a result of the merger, we will be privately
owned and controlled by Irving Place Capital, a private equity
firm. A copy of the merger agreement is included as
Annex A
to the accompanying proxy statement.
On October 5, 2010, our board of directors, after
considering the factors described herein, unanimously determined
that the merger agreement and the merger are advisable, fair to
and in the best interests of us and our stockholders, and
approved the merger agreement and the merger. In arriving at
their recommendation of the merger agreement, our board of
directors carefully considered a number of factors which are
described in the accompanying proxy statement and consulted with
its financial and legal advisors.
Our board of directors
unanimously recommends that you vote FOR the
approval of the proposal to adopt the merger agreement
.
When you consider the recommendation of our board of directors
to adopt the merger agreement, you should be aware that some of
our directors and executive officers have interests in the
merger that may be different from, or in addition to, the
interests of our stockholders generally.
Regardless of the number of shares you own, your vote is very
important.
The merger cannot be completed unless the merger
agreement is adopted by the affirmative vote of a majority of
the outstanding shares of our common stock.
If you fail to
vote on the approval of the proposal to adopt the merger
agreement, the effect will be the same as a vote
AGAINST adoption of the merger agreement for
purposes of calculating whether a majority of the outstanding
shares have voted to adopt the merger agreement.
If you do
not vote in favor of the adoption of the merger agreement and
you fulfill the procedural requirements that are summarized in
the accompanying proxy statement, Delaware law entitles you to a
judicial appraisal of the fair value of your shares.
Please do not send your Company common stock certificates to
us at this time. If the merger is completed, you will be sent
instructions regarding surrender of your certificates.
Once you have read the accompanying proxy statement, please vote
on the proposals submitted to stockholders at the special
meeting, whether or not you plan to attend the meeting, by
signing, dating and mailing the enclosed proxy card or by voting
your shares by telephone or Internet using the instructions on
your proxy card. If you have
any questions or need assistance voting your shares, please call
MacKenzie Partners, Inc.
, which is assisting us in the
solicitation of proxies,
toll-free at 1-800-322-2885
.
If you receive more than one proxy card because you own shares
that are registered differently, please vote all of your shares
shown on all of your proxy cards. If your shares are held in
street name by your broker, your broker will be
unable to vote your shares without instructions from you. You
should instruct your broker to vote your shares, following the
procedures provided by your broker.
Failure to instruct your
broker to vote your shares will have the same effect as voting
AGAINST the approval of the proposal to adopt the
merger agreement
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If you are a stockholder of record, voting by proxy will not
prevent you from voting your shares in person in the manner
described in the accompanying proxy statement if you
subsequently choose to attend the special meeting.
On behalf of our board of directors, thank you for your
cooperation and support.
Sincerely,
Paul D. Melnuk
Chairman of the Board of Directors
The accompanying proxy statement is dated November 1, 2010,
and it and the proxy card are first being mailed to stockholders
on or about November 2, 2010.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER, OR
PASSED UPON THE FAIRNESS OR MERITS OF THE MERGER AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER OR
THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THE
ENCLOSED PROXY STATEMENT. ANY CONTRARY REPRESENTATION IS A
CRIMINAL OFFENSE.
THERMADYNE
HOLDINGS CORPORATION
16052 SWINGLEY RIDGE ROAD,
SUITE 300
ST. LOUIS, MISSOURI 63017
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
TO BE HELD DECEMBER 2,
2010
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Time and Date
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10:00 a.m. Eastern time on December 2, 2010
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Place
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The Hilton New York, 1335 Avenue of the Americas, New York,
NY 10019.
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Items of Business
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At the meeting, the stockholders will be asked to:
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(1) consider and vote upon a proposal to adopt the
Agreement and Plan of Merger, dated as of October 5, 2010,
as it may be amended from time to time, which we refer to as the
merger agreement, by and among the Company, Razor
Holdco Inc., which we refer to as Parent, and Razor
Merger Sub Inc., a wholly owned subsidiary of Parent, which we
refer to as Merger Subsidiary. A copy of the merger
agreement is attached as
Annex A
to the accompanying
proxy statement;
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(2) approve the adjournment of the special meeting to a
later date, if necessary or appropriate, to solicit additional
proxies if there are insufficient votes at the time of the
special meeting to approve the foregoing proposal; and
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(3) transact such other business as may properly come
before the special meeting or any adjournment or postponement of
the special meeting.
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Record Date
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Only holders of shares of our common stock, par value $0.01 per
share, of record at the close of business on October 29,
2010 are entitled to notice of, and to vote at this meeting or
at any adjournments or postponements thereof that may take
place. All stockholders of record are cordially invited to
attend the special meeting in person.
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Proxy Voting
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Your vote is very important, regardless of the number of
shares of Company common stock you own.
The merger cannot be
completed unless the merger agreement is adopted by the
affirmative vote of the holders of a majority of the outstanding
shares of Company common stock entitled to vote thereon. Even if
you plan to attend the special meeting in person, we request
that you complete, sign, date and return, as promptly as
possible, the enclosed proxy card in the accompanying prepaid
reply envelope or submit your proxy by telephone or the Internet
prior to the special meeting to ensure that your shares of
Company common stock will be represented at the special meeting
if you are unable to attend. If you fail to return your proxy
card or fail to submit your proxy by phone or the Internet, your
shares of Company common stock will not be counted for purposes
of determining whether a quorum is present at the special
meeting and will have the same effect as a vote
AGAINST
the proposal to adopt the merger
agreement.
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If you are a stockholder of record, voting in person at the
special meeting will revoke any proxy previously submitted. If
you hold your shares of Company common stock through a bank,
brokerage firm or other nominee, you should follow the
procedures provided by your bank, brokerage firm or other
nominee in order to vote.
You should not send in your
certificates representing shares of Company common stock until
you receive written instructions to do so.
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Recommendation
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The board of directors of the Company has unanimously determined
that the merger is fair to, and in the best interests of, the
Company and its stockholders and has unanimously approved and
declared advisable the merger agreement and the merger and the
other transactions contemplated by the merger agreement. The
board of directors of the Company made its determination after
consultation with its legal and financial advisors and
consideration of a number of factors.
The board of directors
of the Company unanimously recommends that you vote
FOR the proposal to adopt the merger agreement and
FOR the proposal to adjourn the special meeting to a
later date, if necessary or appropriate, to solicit additional
proxies if there are insufficient votes at the time of the
special meeting to approve the proposal to adopt the merger
agreement.
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When you consider the recommendation of our board of directors,
you should be aware that some of our directors and executive
officers have interests in the merger that may be different
from, or in addition to, the interests of our stockholders
generally.
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Attendance
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Only stockholders of record or their duly authorized proxies
have the right to attend the special meeting. To gain
admittance, you must present valid photo identification, such as
a drivers license or passport. If your shares of Company
common stock are held through a bank, brokerage firm or other
nominee, please bring to the special meeting a copy of your
brokerage statement evidencing your beneficial ownership of
Company common stock and valid photo identification. If you are
the representative of a corporate or institutional stockholder,
you must present valid photo identification along with proof
that you are the representative of such stockholder. Please note
that cameras, recording devices and other electronic devices
will not be permitted at the special meeting.
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Appraisal
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Stockholders of the Company who do not vote in favor of the
proposal to adopt the merger agreement will have the right to
seek appraisal of the fair value of their shares of Company
common stock if they deliver a demand for appraisal before the
vote is taken on the merger agreement and comply with all the
requirements of Delaware law, which are summarized and
reproduced in their entirety in
Annex B
to the
accompanying proxy statement.
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We urge you to read the entire proxy statement carefully.
Whether or not you plan to attend the special meeting, please
vote by promptly completing the enclosed proxy card and then
signing, dating and returning it in the postage-paid (if mailed
in the United States) envelope provided so that your shares may
be represented at the special meeting. Alternatively, you may
vote your shares of stock through the Internet or by telephone,
as indicated on the proxy card. Prior to the vote, you may
revoke your proxy in the manner described in the proxy
statement.
Your failure to vote will have the same effect as
a vote AGAINST the adoption of the merger
agreement.
By order of the board of directors,
Nick H. Varsam
Vice President, General Counsel and
Corporate Secretary
St. Louis, Missouri
November 1, 2010
TABLE OF
CONTENTS
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1
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10
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15
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17
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30
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33
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40
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43
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43
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84
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84
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A-1
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B-1
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C-1
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D-1
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ii
This proxy statement and a proxy card are first being mailed on
or about November 2, 2010 to stockholders who owned shares
of Company common stock as of the close of business on
October 29, 2010.
SUMMARY
TERM SHEET
The following summary highlights selected information
contained in this proxy statement. These sections may not
contain all of the information that might be important in your
consideration of the proposed merger. We encourage you to read
carefully this proxy statement in its entirety, including the
annexes and the documents referred to in this proxy statement,
before voting. See Where You Can Find More
Information beginning on page 84. Each item in this
summary includes a page reference directing you to a more
complete description of that topic.
Parties
to the Merger (Page 17)
In the proxy statement, the terms Thermadyne, the
Company, we, our,
ours, and us refer to Thermadyne
Holdings Corporation and its subsidiaries. We are a leading
global designer and manufacturer of gas and arc cutting and
welding products, including equipment, accessories and
consumables. Our products are used by manufacturing,
construction, fabrication and foundry operations to cut, join
and reinforce steel, aluminum and other metals. Our shares are
currently quoted on The Nasdaq Capital Market, and as of
October 29, 2010, we had an equity market capitalization of
approximately $204.4 million (based on a closing sale price
of $15.08 and 13,556,813 shares outstanding).
Razor Holdco Inc., which we refer to as Parent,
is a Delaware corporation that was formed by Irving Place
Capital, which we sometimes refer to as IPC or Irving Place,
solely for the purpose of entering into the merger agreement and
completing the transactions contemplated by the merger agreement
and related financing transactions. IPC is a private equity firm
focused on making equity investments in middle-market companies
in the form of buyouts, recapitalizations and growth capital
investments. Since its formation in 1997, IPC has been an
investor in more than 50 companies and has raised over
$4.0 billion of equity capital, including its current
$2.7 billion institutional fund. Following consummation of
the merger, Parent will own all of our outstanding common stock
and we will be a direct wholly-owned subsidiary of Parent.
Razor Merger Sub Inc., which we refer to as Merger
Subsidiary, is a Delaware corporation that was formed
solely for the purpose of entering into the merger agreement and
completing the transactions contemplated by the merger agreement
and the related financing transactions. Upon completion of the
merger, Merger Subsidiary will cease to exist.
The
Special Meeting (Page 18)
Time, Date, Place and Purpose of the Special Meeting (Page
18).
The special meeting will be held on
December 2, 2010 starting at 10:00 a.m. Eastern time,
at the Hilton New York, 1335 Avenue of the Americas,
New York, NY 10019.
At the special meeting, holders of our common stock, par value
$.01 per share, which we refer to as Company common
stock, will be asked
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to approve the proposal to adopt the merger agreement,
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to approve the proposal to adjourn the special meeting to a
later date, if necessary or appropriate, for the purpose of
soliciting additional proxies if there are insufficient votes at
the time of the special meeting to approve the proposal to adopt
the merger agreement, and
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to transact such other business as may properly come before the
special meeting or any adjournment or postponement of the
special meeting.
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Record Date and Quorum (Page 18).
Only
stockholders who hold shares of our common stock at the close of
business on October 29, 2010, the record date for the
special meeting, will be entitled to vote at the special
meeting. Each share of our common stock outstanding on the
record date will be entitled to one vote on each matter
submitted to stockholders for approval at the special meeting.
As of the record date, there were 13,556,813 shares of our
common stock outstanding. A majority of the shares of Company
common stock outstanding at the close of business
1
on the record date and entitled to vote, present in person or
represented by proxy, at the special meeting constitutes a
quorum for the purposes of the special meeting.
Vote Required (Page 19).
Approval of the
proposal to adopt the merger agreement requires the affirmative
vote of at least a majority of the outstanding shares of our
common stock entitled to vote at the special meeting. Approval
of the proposal to adjourn the special meeting requires the
affirmative vote of the majority of the stockholders present, in
person or by proxy, and entitled to vote at the special meeting,
whether or not a quorum is present. As of October 29, 2010,
the record date, the directors and executive officers of the
Company beneficially owned and were entitled to vote, in the
aggregate, 351,987 shares of Company common stock,
representing approximately 2.6% of our outstanding shares on the
record date. Our directors and executive officers have informed
us that they currently intend to vote all of their shares of our
common stock owned as of the record date in favor of the
proposal to adopt the merger agreement and in favor of the
proposal to adjourn the special meeting to a later date, if
necessary or appropriate, for the purpose of soliciting
additional proxies if there are insufficient votes at the time
of the special meeting to approve the proposal to adopt the
merger agreement.
The
Merger and Merger Consideration (Page 43)
The proposed transaction is the acquisition of the Company by
Parent under the terms and subject to the conditions of the
merger agreement. The acquisition will be effected by the merger
of Merger Subsidiary with and into the Company, with the Company
being the surviving corporation as a wholly-owned subsidiary of
Parent. We refer to the proposed merger of Merger Subsidiary
into the Company as the merger. At the effective
time of the merger, each issued and outstanding share of our
common stock, other than shares held by us or owned by Parent or
any of its subsidiaries, or by stockholders who properly
exercise their appraisal rights under Delaware law for such
shares, will be converted into the right to receive $15.00 per
share in cash, without interest and less any applicable
withholding taxes, which refer to in this proxy statement as the
merger consideration. The total merger consideration
that is expected to be paid in the merger is approximately
$214.7 million.
As a result of the merger, the Company will cease to be a
publicly traded company. If the merger is completed, you will
not own any shares of the capital stock of the surviving
corporation.
The merger is targeted to close prior to the end of calendar
year 2010, subject to satisfaction or waiver of the conditions
described under The Merger Agreement
Conditions to the Merger beginning on page 72.
Treatment
of Options and Restricted Shares (Page 43)
At the effective time of the merger, each option to acquire
shares of our common stock that is outstanding immediately prior
to the effective time of the merger, whether vested or unvested,
will vest (if unvested) and will be cancelled as of the
effective time of the merger in exchange for the right to
receive a cash payment equal to the number of shares of our
common stock subject to the option, multiplied by the excess, if
any, by which $15.00 exceeds the exercise price of the option.
As of the effective time, each option for which the exercise
price per share of our common stock equals or exceeds $15.00
will be cancelled and have no further force or effect without
any right to receive any consideration therefor.
At or immediately prior to the effective time, each outstanding
Company restricted share will vest and become free of any
restrictions and, as of the effective time of the merger, will
be cancelled and converted into the right to receive $15.00 per
restricted share, without interest.
Any applicable taxes required to be withheld from such payments
may be deducted and withheld from the consideration otherwise
payable in connection with such options and restricted shares,
as well as from any other consideration payable in connection
with the proposed transaction.
Treatment
of Companys Employee Stock Purchase Plan
(Page 59)
No new offering periods under the Companys Employee Stock
Purchase Plan (the ESPP) will commence after the
date of the merger agreement. Participants in the ESPP will be
entitled to receive the merger consideration for shares of our
common stock purchased through the ESPP prior to the effective
time.
2
Reasons
for the Merger; Recommendations of the Board of Directors
(Page 30)
After careful consideration of various factors described in the
section entitled The Merger Reasons for the
Merger; Recommendations of the Board of Directors, the
board of directors of the Company, which we refer to as the
board of directors, unanimously (i) determined
that the merger is fair to, and in the best interests of, the
Company and our stockholders, (ii) approved and declared
advisable the merger agreement and the merger and the other
transactions contemplated by the merger agreement and
(iii) resolved that the merger agreement be submitted for
consideration by the stockholders of the Company at a special
meeting of stockholders and recommended that our stockholders
vote to adopt the merger agreement.
In considering the recommendation of the board of directors with
respect to the proposal to adopt the merger agreement, you
should be aware that our directors and executive officers have
interests in the merger that are different from, or in addition
to, yours. The board of directors was aware of and considered
these interests, among other matters, in evaluating and
negotiating the merger agreement and the merger, and in
unanimously recommending that the merger agreement be adopted by
the stockholders of the Company. See the section entitled
The Merger Interests of Our Directors and
Executive Officers beginning on page 44.
Opinion
of Our Financial Advisor (Page 33)
In connection with the merger, our financial advisor,
Oppenheimer & Co. Inc., or Oppenheimer,
delivered a written opinion, dated October 5, 2010, to our
board of directors as to the fairness, from a financial point of
view and as of the date of the opinion, of the $15.00 per share
cash consideration to be received by holders of Company common
stock as provided for in the merger agreement. The full text of
Oppenheimers written opinion, which describes the
assumptions made, procedures followed, matters considered and
limitations on the review undertaken, is attached to this proxy
statement as Annex C.
Oppenheimers opinion was
provided to our board of directors in connection with its
evaluation of the merger consideration from a financial point of
view and does not address any terms or other aspects or
implications of the merger. Oppenheimer expressed no view as to,
and its opinion does not address, the underlying business
decision of the Company to proceed with or effect the merger or
the relative merits of the merger as compared to any alternative
business strategies that might exist for the Company or the
effect of any other transaction in which the Company might
engage. Oppenheimers opinion does not constitute a
recommendation to any stockholder as to how such stockholder
should vote or act with respect to any matters relating to the
merger or otherwise
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Voting
Agreement (Page 43)
Investment funds managed by Angelo, Gordon & Co., L.P.
beneficially owning in the aggregate approximately 33% of the
outstanding shares of Company common stock have entered into a
voting agreement with Parent, dated October 5, 2010
(attached as
Annex D
). Pursuant to the terms of the
voting agreement, each such stockholder has agreed to vote its
shares in favor of the merger and the adoption of the merger
agreement and against alternative transaction proposals, subject
to limited exceptions.
Financing
of the Merger (Page 49)
Parent has advised us that the total funds needed to complete
the merger, including the funds to:
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pay our stockholders (and holders of our other equity-based
interests and long-term incentive cash awards) the amounts due
to them under the merger agreement, which, based upon the shares
(and our other equity-based interests) outstanding as of October
29, 2010 would be approximately $214.7 million;
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refinance outstanding indebtedness, which, as of October 29,
2010, was approximately $185.8 million; and
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pay fees and expenses related to the merger and the debt that
will finance the merger,
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will be funded through a combination of:
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equity contributions to be provided or secured as described
below by Irving Place Capital Partners III, L.P. (an investment
fund affiliated with Irving Place Capital) or other parties to
whom it assigns a portion of its commitment;
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the issuance of senior secured notes (or, to the extent those
notes are not issued at or prior to the closing of the merger,
by a senior secured bridge credit facility);
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subject to availability, borrowings under a senior secured
revolving credit facility; and
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cash on hand of the Company.
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Parent has obtained the equity commitment letter and the debt
commitment letters described below, which we refer to
collectively as the commitment letters. The funding
under those commitment letters is subject to certain conditions,
including conditions that do not relate directly to the merger
agreement. We cannot assure you that the amounts committed under
the commitment letters will be sufficient to complete the
merger. Those amounts might be insufficient if, among other
things, one or more of the parties to the commitment letters
fails to fund the committed amounts in breach of such commitment
letters or if the conditions to such commitments are not met.
Although obtaining the proceeds of any financing, including the
financing under the commitment letters, is not a condition to
the completion of the merger, the failure of Parent and Merger
Subsidiary to obtain any portion of the committed financing (or
alternative financing) is likely to result in the failure of the
merger to be completed. In that case, Parent may be obligated to
pay the Company a fee of $25,000,000, or the Parent
fee, as described under The Merger
Agreement Termination Fees and Expenses
beginning on page 74. The obligation of Parent to pay the
Parent fee of $25,000,000 is guaranteed by the guarantor
referred to below.
Equity
Financing (Page 50)
Parent has entered into a letter agreement, which we refer to as
the equity commitment letter, with Irving Place
Capital Partners III, L.P., which we refer to as the
guarantor, dated October 5, 2010, pursuant to
which the guarantor has committed to make or secure capital
contributions to Parent at or prior to the closing of the merger
in an aggregate amount up to $197,700,000. The guarantor may
assign a portion of the equity commitment to co-investors, and
its commitment will be reduced to the extent equity is provided
by such co-investors.
The guarantors obligation to make the equity contribution
contemplated by the equity commitment letter is generally
subject to (i) the satisfaction or waiver of the conditions
to the closing of the merger (except those conditions which by
their nature cannot be satisfied except at the time of closing,
provided that such conditions are actually satisfied or validly
waived at the time of closing), (ii) the funding of the
debt financing and (iii) the substantially concurrent
consummation of the merger in accordance with the terms of the
merger agreement.
Debt
Financing (Page 50)
In connection with the entry into the merger agreement, Parent
received debt commitment letters, dated October 5, 2010
(the debt commitment letters), from
(i) Jefferies Finance LLC and RBC Capital Markets for
bridge loans under a senior secured bridge facility in the
amount of up to $250,000,000 (the bridge financing)
and (ii) GE Antares Capital Corporation for a senior
secured asset-based revolving credit facility providing for
borrowings, subject to availability, in an amount of up to
$60,000,000 (the revolving credit financing).
The facilities contemplated by the debt commitment letters are
subject to a number of closing conditions included in the debt
commitment letters, including, in the case of the bridge
financing, flex provisions, which would allow the
lenders to modify the terms of the bridge financing to the
extent required for a successful syndication thereof, subject to
the specified limitations. The debt commitment letters are
subject to neither a due diligence nor a market out
condition, which would have allowed the lenders not to fund
their commitments if the financial markets are materially
adversely affected. In the merger agreement, Parent and Merger
Subsidiary have agreed to use their reasonable best efforts to
obtain the debt financing on the terms and conditions described
in the debt commitment letters.
Parent has advised us that it is expected that, at the
consummation of the merger, senior secured notes will be issued
and sold in a private placement in lieu of a portion or all of
the bridge financing described above.
Limited
Guarantee (Page 51)
Pursuant to a limited guarantee delivered by the guarantor in
favor of the Company, dated October 5, 2010, the guarantor
has agreed to guarantee the obligation of Parent under the
merger agreement to pay the Parent fee of $25,000,000, if it
becomes due under the terms of the merger agreement.
4
Interests
of Our Directors and Executive Officers (Page 44)
In considering the recommendation of our board of directors, you
should be aware that our directors and executive officers have
interests in the merger that are different from or in addition
to your interests as a stockholder and that may present actual
or potential conflicts of interest. Such interests include:
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the accelerated vesting of all unvested stock options and
restricted shares of Company common stock held by our directors
and executive officers;
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the accelerated vesting and payment of all outstanding unvested
long-term and restricted cash awards issued to our executive
officers pursuant to our long-term incentive award program;
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the payment of severance benefits (pursuant to employment
agreements with certain of our executive officers) in connection
with certain qualifying terminations of employment that may
occur following the merger;
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the payment of retention bonuses to certain executive
officers; and
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the expected ownership of equity interests in Parent or its
affiliates by certain executive officers after the completion of
the merger.
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Our board of directors was aware of these interests and
considered that such interests may be different from or in
addition to the interests of our stockholders generally, among
other matters, in approving the merger agreement and the
transactions contemplated thereby, including the merger, and in
determining to unanimously recommend that our stockholders vote
for adoption of the merger agreement and approval of the merger.
You should consider these and other interests of our directors
and executive officers that are described in this proxy
statement.
Material
United States Federal Income Tax Consequences of the Merger
(Page 53)
The receipt of cash for shares of our common stock pursuant to
the merger by U.S. holders will be a taxable transaction
for U.S. federal income tax purposes (and may also be a
taxable transaction under applicable state, local and foreign
tax laws). In general, for U.S. federal income tax
purposes, a U.S. holder who receives cash for shares of our
common stock will recognize capital gain or loss equal to the
difference between the amount of cash received in exchange for
such shares pursuant to the merger, and the
U.S. holders adjusted tax basis in such shares. See
The Merger Material United States Federal
Income Tax Consequences of the Merger beginning on
page 53 for more information.
We urge you to consult
your tax advisor about the tax consequences of the exchange of
your shares of our common stock for cash pursuant to the merger
in light of your particular circumstances.
Regulatory
Approvals and Notices (Page 52)
Under the terms of the merger agreement, the merger cannot be
completed until the waiting period applicable to the
consummation of the merger under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, or the HSR Act,
has expired or been terminated. Under the HSR Act and the rules
promulgated thereunder by the Federal Trade Commission, or the
FTC, the merger cannot be completed until each of
the Company and Parent files a notification and report form with
the FTC and the Antitrust Division of the Department of Justice
under the HSR Act and the applicable waiting period has expired
or been terminated. Each of the Company and Parent filed such a
notification and report form on October 20, 2010 and
requested early termination of the waiting period. The
applicable waiting period will terminate at 11:59 pm on
November 19, 2010.
Litigation
Relating to the Merger (page 56)
We are aware of the following lawsuit related to the merger:
On October 19, 2010, Robert Israeli, a purported
stockholder of the Company, filed a purported class action
lawsuit in the Circuit Court of St. Louis County, Missouri
against the Company, the Companys directors, and Irving
Place Capital. The complaint alleges, among other things, that
the Companys directors breached their fiduciary duties to
the Companys stockholders, including their duties of
loyalty, good faith and independence, by entering into a merger
agreement which provides for inadequate consideration to
stockholders of the Company, and the Company and Irving Place
Capital aided and abetted the Companys directors
alleged breaches of their fiduciary duties. The plaintiffs seek
injunctive relief preventing the defendants from consummating
the transactions contemplated by the merger agreement, or in the
event the
5
defendants consummate the transactions contemplated by the
merger agreement, rescission of such transactions, and
attorneys fees and expenses. The Company and the other
defendants have not yet responded to the complaint. The Company
believes that this lawsuit is without merit and intends to
defend it.
The
Merger Agreement (Page 57)
Treatment
of Common Stock, Options and Restricted Shares
(Page 58)
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Common Stock.
Each share of Company common
stock outstanding immediately prior to the effective time of the
merger (other than shares held by us or owned by Parent or any
of its subsidiaries, or by stockholders who properly exercise
their appraisal rights under Delaware law for such shares) will
be converted at the effective time of the merger into the right
to receive cash in the amount of $15.00 per share, without
interest and less any applicable withholding taxes.
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Options.
At the effective time of the merger,
each option to acquire shares of our common stock that is
outstanding immediately prior to the effective time of the
merger, whether vested or unvested, will vest (if unvested) and
will be cancelled as of the effective time of the merger in
exchange for the right to receive, as soon as reasonably
practicable after the effective time of the merger (but in any
event, no later than the earliest of (a) three business
days after the effective time of the merger, (b) the end of
the year in which the effective time of the merger occurs, or
(c) the expiration of the original term of such option
outstanding as of the effective time of the merger) a cash
payment equal to the number of shares of our common stock
subject to the option, multiplied by the excess, if any, by
which $15.00 exceeds the exercise price of the option, less any
applicable withholding taxes. Each option for which the exercise
price per share of our common stock equals or exceeds $15.00
will be cancelled and have no further effect with no right to
receive any consideration therefor.
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Restricted Shares.
At or immediately prior to
the effective time, each outstanding Company restricted share
will vest and become free of any restrictions and, as of the
effective time of the merger, will be cancelled and converted
into the right to receive $15.00 per restricted share less any
applicable withholding taxes, without interest.
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No
Solicitations of Competing Proposals
(Page 65)
In the merger agreement, we have agreed that we will not, among
other things:
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solicit, initiate or take any action to knowingly facilitate or
encourage the submission of any Acquisition Proposal (as defined
on page 67) or any proposal that is reasonably likely to lead to
any Acquisition Proposal;
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enter into, continue or participate in any discussions or
negotiations with, furnish any information relating to the
Company or any of its subsidiaries or afford access to the
business, properties, assets, books or records of the Company or
any of its subsidiaries to any third party that to the
Companys knowledge is seeking to make, or has made, an
Acquisition Proposal or any proposal that is reasonably likely
to lead to an Acquisition Proposal;
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make an Adverse Recommendation Change (as defined on page
66); or
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enter into any agreement in principle, letter of intent, term
sheet, merger agreement, acquisition agreement or other similar
instrument that constitutes or relates to an Acquisition
Proposal or enter into any agreement that requires the Company
to abandon, terminate or fail to consummate the transactions
contemplated by the merger agreement or breach its obligations
under the merger agreement.
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Notwithstanding these restrictions, we may enter into
negotiations or discussions with a third party with respect to
an Acquisition Proposal if our board of directors believes it is
a Superior Proposal (as defined on page 67) or may lead to a
Superior Proposal and follows certain procedures set forth in
the merger agreement. In addition, at any time prior to the
adoption and approval of the merger agreement by out
stockholders, subject to certain limitations set forth in the
merger agreement, our board of directors may make an Adverse
Recommendation Change if our board of directors determines in
good faith, after consultation with outside legal counsel, that
failure to take such action would reasonably be expected to be
inconsistent with its fiduciary duties under applicable law.
6
Conditions
to the Merger (Page 72)
The respective obligations of the Company, Parent and Merger
Subsidiary to consummate the merger are subject to the
satisfaction or waiver of certain customary conditions,
including the adoption of the merger agreement by our
stockholders, receipt of required antitrust approvals, the
absence of legal prohibitions on completion of the merger, the
accuracy of the representations and warranties of the parties
and compliance by the parties with their respective obligations
under the merger agreement. The obligation of Parent and Merger
Subsidiary to consummate the merger is also subject to the
Companys fulfillment of the condition that since the date
of the merger agreement, there has not occurred and there is not
continuing any material adverse effect on the Company, as
described under The Merger Agreement
Representations and Warranties beginning on page 60.
Termination
(Page 73)
The Company and Parent may, by mutual written consent, terminate
the merger agreement and abandon the merger at any time prior to
the effective time of the merger, whether before or after the
adoption of the merger agreement by our stockholders.
The merger agreement may also be terminated and the merger
abandoned at any time prior to the effective time of the merger,
whether before of after the adoption of the merger agreement by
our stockholders, as follows:
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by either Parent or the Company, if:
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the merger has not been consummated by April 5, 2011
(however, this right to terminate the merger agreement will not
be available to any party whose breach of the merger agreement
results in the failure of the merger to be consummated by
April 5, 2011);
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our stockholders meeting has been held and completed and our
stockholders have not adopted the merger agreement at such
meeting or any adjournment or postponement of such
meeting; or
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there is a permanent legal prohibition to completing the merger.
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an Adverse Recommendation Change (as defined on page 66) has
occurred;
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the Company has willfully breached in any material respect any
of its obligations under the non-solicitation provisions set
forth in the merger agreement;
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a third party commences a tender offer or exchange offer for
Company common stock that constitutes an Acquisition Proposal
(as defined on page 67) or an Acquisition Proposal is publicly
announced and, within ten business days after the public
announcement of such Acquisition Proposal, the Company fails to
publicly reaffirm the Companys board of director
recommendation for approval of the proposal to adopt the merger
agreement;
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the Company fails to recommend, in a Solicitation/Recommendation
Statement on
Schedule 14D-9,
against any Acquisition Proposal subject to Regulation 14D
under the Exchange Act of 1934 within ten business days after
the commencement of such Acquisition Proposal (including, for
these purposes, by taking no position with respect to the
acceptance by the Companys stockholders of a tender offer
or exchange offer within such period, which shall constitute a
failure to recommend against such offer);
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the Company fails to include the Company board recommendation in
the proxy statement;
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a breach of any representation or warranty or failure to perform
any covenant or agreement on the part of the Company set forth
in the merger agreement has occurred that would cause the
condition to closing relating to the accuracy of the
representations and warranties of the Company or compliance by
the Company with its obligations under the merger agreement not
to be satisfied and such breach or failure is not cured by the
earlier of April 5, 2011 or thirty days following the
Companys receipt of written notice of such breach or
failure, provided that, at the time of the delivery of such
notice, Parent is not in material breach of its obligations
under the merger agreement; or
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a material adverse effect on the Company shall have occurred
since the date of the merger agreement that is not capable of
being cured prior to April 5, 2011.
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at any time prior to the adoption of the merger agreement by our
stockholders, (i) our board of directors authorizes the
Company to enter into an alternative acquisition agreement
concerning an acquisition proposal that the board of directors
determines in good faith (after consultation with a financial
advisor of nationally recognized reputation and outside legal
counsel) constitutes a Superior Proposal (as defined on
page 67), provided that (A) prior to termination, the
Company gives Parent written notice of its intention to
terminate the merger agreement, (B) during a three business
day period following Parents receipt of such notice, the
Company offers to negotiate (and, if accepted, negotiated in
good faith) with Parent in making adjustments to the terms and
conditions of the merger agreement, (C) the board of
directors determines in good faith after such three business day
period that the alternative transaction continues to be a
Superior Proposal and (D) the board of directors shall have
determined in good faith, after consulting with and receiving
the advice of outside counsel, that failure to terminate the
merger agreement would reasonably be expected to be inconsistent
with its fiduciary duty; (ii) concurrently with the
termination of the merger agreement, we enter into a definitive
alternative acquisition agreement with respect to a Superior
Proposal and (iii) prior to, or concurrently with, such
termination, we pay to an affiliate of Parent the termination
fee discussed under The Merger Agreement
Termination Fees and Expenses;
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a breach of any representation or warranty or failure to perform
any covenant or agreement on the part of Parent or Merger
Subsidiary set forth in the merger agreement has occurred that
would cause the condition to closing relating to the accuracy of
the representations and warranties of Parent or Merger
Subsidiary or compliance by Parent or Merger Subsidiary with
their obligations under the merger agreement not to be satisfied
and such breach or failure is not cured by the earlier of
April 5, 2011 or thirty days following Parents
receipt of written notice of such breach or failure, provided
that, at the time of delivery of such written notice, the
Company is not in material breach of its obligations under the
merger agreement; or
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if at least 5 business days have passed since the Company
has notified Parent that it believes the conditions to closing
have been satisfied, all the closing conditions to the merger
agreement (other than those conditions that by their nature are
to be satisfied by actions taken at closing) have been satisfied
or, to the extent permissible, waived by the party entitled to
the benefit of such conditions, and Parent and Merger Subsidiary
fail to consummate the merger within two business days following
the date on which the closing should have occurred.
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Termination
Fees (Page 74)
If the merger agreement is terminated in certain circumstances
described under The Merger Agreement
Termination of the Merger Agreement beginning on
page 73:
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the Company may be obligated to pay to an affiliate of Parent a
termination fee of $6,440,000, plus the documented reasonable
out-of-pocket
fees and expenses incurred by Parent and Merger Subsidiary in
connection with the merger agreement up to an aggregate of
$2,000,000; or
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Parent may be obligated to pay the Company the Parent fee
of $25,000,000. The guarantor has agreed to guarantee the
obligation of Parent to pay the Parent fee of $25,000,000
pursuant to the limited guarantee.
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Market
Price of Company Common Stock (Page 78)
The closing price of Company common stock on The Nasdaq Capital
Market, or Nasdaq, on October 4, 2010, the last
trading day prior to the public announcement of the merger
agreement, was $14.72 per share of Company common stock. On
October 29, 2010, the most recent practicable date before
this proxy statement was mailed to our stockholders, the closing
price for Company common stock on the Nasdaq was $15.08 per
share of Company common stock. You are encouraged to obtain
current market quotations for Company common stock in connection
with voting your shares of Company common stock.
Appraisal
Rights (Page 80)
Stockholders are entitled to appraisal rights under the Delaware
General Corporation Law, or the DGCL, in connection
with the merger, provided that stockholders meet all of the
conditions set forth in Section 262 of the DGCL. This means
that you are entitled to have the fair value of your shares of
Company common stock determined
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by the Delaware Court of Chancery and to receive payment based
on that valuation. The ultimate amount you receive in an
appraisal proceeding may be less than, equal to or more than the
amount you would have received under the merger agreement.
To exercise your appraisal rights, you must:
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submit a written demand for appraisal to the Company before the
vote is taken on the proposal to adopt the merger agreement;
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not submit a proxy or otherwise vote in favor of the
proposal to adopt the merger agreement; and
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continuously hold your Company common stock, from the date
you make the demand for appraisal through the closing of the
merger.
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Your failure to follow exactly the procedures specified under
the DGCL will result in the loss of your appraisal rights. See
Appraisal Rights beginning on page 80 and the
text of the Delaware appraisal rights statute reproduced in its
entirety as
Annex B
to this proxy statement. If you
hold your shares of Company common stock through a bank,
brokerage firm or other nominee and you wish to exercise
appraisal rights, you should consult with your bank, brokerage
firm or other nominee to determine the appropriate procedures
for the making of a demand for appraisal by such bank, brokerage
firm or nominee. In view of the complexity of the DGCL,
stockholders who may wish to pursue appraisal rights should
consult their legal and financial advisors promptly.
Delisting
and Deregistration of Company Common Stock
(Page 83)
If the merger is completed, Company common stock will be
delisted from the Nasdaq and deregistered under the Securities
Exchange Act of 1934, as amended, or the Exchange
Act. As such, we would no longer file periodic reports
with the SEC on account of Company common stock.
9
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following questions and answers are intended to address
some commonly asked questions regarding the merger, merger
agreement and the special meeting. These questions and answers
may not address all of the questions that may be important to
you as one of our stockholders. Please refer to the
Summary Term Sheet and the more detailed information
contained elsewhere in this proxy statement, the annexes to this
proxy statement and the documents referred to in this proxy
statement, which you should read carefully and in their
entirety.
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Q:
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What is the proposed transaction and what effects will it
have on the Company?
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A:
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The proposed transaction is the acquisition of the Company by
Parent pursuant to the merger agreement. If the proposal to
adopt the merger agreement is approved by our stockholders and
the other closing conditions under the merger agreement have
been satisfied or waived, Merger Subsidiary will merge with and
into the Company and we will continue as the surviving
corporation.
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The merger will have the following effects when it is completed:
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Parent will own all of our common stock and we will
be privately owned;
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You will no longer own any shares in us;
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You will no longer have an interest in our future
earnings or growth;
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We will cease to be a publicly traded company and
will no longer be listed or traded on the Nasdaq; and
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We will no longer file annual, quarterly and current
reports with the SEC on account of Company common stock.
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Q:
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What will I receive when the merger occurs?
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A:
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For every share of our common stock owned at the effective time
of the merger, you will have the right to receive $15.00 in
cash, without interest, less any applicable withholding taxes
unless you have properly exercised and not withdrawn your
appraisal rights under the DGCL with respect to such shares. For
example, if you own 100 shares of Company common stock, you
will receive $1,500 in cash in exchange for your shares of
Company common stock, less any applicable withholding taxes. You
will not own any shares of the capital stock in the surviving
corporation.
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Q:
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How does the per share merger consideration compare to the
market price of Company common stock prior to the announcement
of the merger?
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A:
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The per share merger consideration represents a premium of 18%
over the average closing share price of $12.71 during the last
30 trading days ending October 4, 2010, the last trading
day prior to the public announcement of the merger agreement,
and a 25% premium over Thermadynes average closing share
price of $12.05 during the last 90 trading days ending
October 4, 2010.
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Q:
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What happens if the merger is not consummated?
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A:
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If the merger agreement is not approved by our stockholders or
if the merger is not consummated for any other reason, you will
not receive any payment for your shares in connection with the
merger. Instead, we will remain an independent public company
and our common stock will continue to be listed and traded on
the Nasdaq. In addition, if the merger is not consummated, we
expect that, except as otherwise noted in this proxy statement,
management will operate our business in a manner similar to the
manner in which it currently is being operated and that our
stockholders will continue to be subject to the same risks and
opportunities as they currently are.
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Under specified circumstances, the Company may be required to
pay to an affiliate of Parent, or may be entitled to receive
from Parent, a fee with respect to the termination of the merger
agreement, as described under The Merger
Agreement Termination Fees and Expenses
beginning on page 74.
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Q:
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Why am I receiving this proxy statement and proxy card?
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A:
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You are receiving this proxy statement and proxy card or voting
instruction form because you own shares of Company common stock
on the record date. This proxy statement describes matters on
which we urge you to vote and is intended to assist you in
deciding how to vote your shares of Company common stock with
respect to such matters.
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Q:
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What is a proxy?
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A:
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A proxy is your legal designation of another person, referred to
as a proxy, to vote your shares of Company common
stock. The written document describing the matters to be
considered and voted on at the special meeting is called a
proxy statement. The document used to designate a
proxy to vote your shares of Company common stock is called a
proxy card.
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Q:
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Where and when is the special meeting?
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A:
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We will hold a special meeting of our stockholders on
December 2, 2010 at 10:00 a.m. Eastern time, at the Hilton
New York, located at 1335 Avenue of the Americas, New York, NY
10019.
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Q:
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What matters will be voted on at the special meeting?
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A:
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You will be asked to consider and vote on the following
proposals:
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to adopt the merger agreement;
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to adjourn the special meeting to a later date, if
necessary or appropriate, for the purpose of soliciting
additional proxies if there are insufficient votes at the time
of the special meeting to approve the proposal to adopt the
merger agreement; and
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to transact such other business as may properly come
before the special meeting or any adjournment or postponement of
the special meeting.
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Q:
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Who is entitled to vote at the special meeting?
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A:
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All holders of record of Company common stock as of the close of
business on October 29, 2010, the record date for the
special meeting, are entitled to receive notice of, and to vote
at, the special meeting. Each holder of Company common stock is
entitled to cast one vote on each matter properly brought before
the special meeting for each share of Company common stock that
such holder owned as of the record date.
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Q:
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What constitutes a quorum for the special meeting?
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A:
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The presence, in person or by proxy, of stockholders holding at
least a majority of the voting power of our common stock
outstanding as of the close of business on the record date and
entitled to vote will constitute a quorum for the special
meeting.
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Q:
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What happens if I sell my shares of common stock before the
special meeting?
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A:
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The record date for stockholders entitled to vote at the special
meeting is earlier than both the date of the special meeting and
the consummation of the merger. If you transfer your shares of
Company common stock after the record date but before the
special meeting, you will, unless other arrangements are made
(such as provision of a proxy), retain your right to vote at the
special meeting but will transfer the right to receive the per
share merger consideration to the person to whom you transfer
your shares.
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Q:
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May I attend the special meeting?
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A:
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All stockholders of record as of the close of business on
October 29, 2010, the record date for the special meeting,
may attend the special meeting. If your shares are held in
street name by your broker, bank or other nominee,
and you plan to attend the special meeting, you must present
proof of your ownership of our common stock, such as a bank or
brokerage account statement, to be admitted to the meeting. You
also must present at the meeting a proxy issued to you by the
holder of record of your shares.
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Q:
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What vote is required to approve the adoption of the merger
agreement and to approve the adjournment of the special meeting
to a later date, if necessary or appropriate, for the purpose of
soliciting additional proxies if there are insufficient votes at
the time of the special meeting to approve the proposal to adopt
the merger agreement?
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A:
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The merger cannot be completed unless the proposal to adopt the
merger agreement is approved by the affirmative vote of a
majority of the outstanding shares of our common stock. Approval
of the adjournment of the special meeting to a later date, if
necessary or appropriate, for the purpose of soliciting
additional proxies if there are insufficient votes at the time
of the special meeting to approve the proposal to adopt the
merger agreement requires the affirmative vote of the holders of
a majority of the shares of our common stock present, in person
or by proxy, and entitled to vote at the special meeting on that
matter, even if less than a quorum. If you
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fail to vote on the merger agreement, the effect will be the
same as a vote
AGAINST
the adoption of the
merger agreement for purposes of calculating whether a majority
of the outstanding shares have voted to adopt the merger
agreement.
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Q:
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How does our board of directors recommend that I vote on the
proposals?
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A:
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The board of directors unanimously recommends that you vote:
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FOR
the proposal to adopt the
merger agreement; and
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FOR
the proposal to adjourn the
special meeting to a later date, if necessary or appropriate,
for the purpose of soliciting additional proxies if there are
insufficient votes at the time of the special meeting to approve
the proposal to adopt the merger agreement.
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You should read The Merger Reasons for the
Merger; Recommendations of the Board of Directors
beginning on page 30 for a discussion of factors that our
board of directors considered in deciding to recommend the
approval of the proposal to adopt the merger agreement. See also
The Merger Interests of Our Directors and
Executive Officers beginning on page 44.
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Q:
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How do our directors and executive officers intend to
vote?
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A:
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As of the record date, our directors and executive officers held
and are entitled to vote, in the aggregate, 351,987 shares
of our common stock, representing 2.6% of our outstanding
shares, excluding options to purchase shares of our common
stock. Our directors and executive officers have informed us
that they currently intend to vote all of their shares of our
common stock owned as of the record date
FOR
the proposal to adopt the merger agreement and
FOR
the proposal to adjourn the special
meeting to a later date, if necessary or appropriate, for the
purpose of soliciting additional proxies if there are
insufficient votes at the time of the special meeting to approve
the proposal to adopt the merger agreement.
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Q:
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Do any of the Companys directors or officers have
interests in the merger that may differ from or be in addition
to my interests as a stockholder?
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A:
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Yes. In considering the recommendation of the board of directors
with respect to the proposal to adopt the merger agreement, you
should be aware that our directors and executive officers have
interests in the merger that are different from, or in addition
to, the interests of our stockholders generally. The board of
directors was aware of and considered these interests, among
other matters, in evaluating and negotiating the merger
agreement and the merger, and in unanimously recommending that
the merger agreement be adopted by the stockholders of the
Company. See The Merger Interests of Our
Directors and Executive Officers beginning on page 44.
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Q:
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How do I vote?
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A:
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After carefully reading and considering the information
contained in this proxy statement, and whether or not you plan
to attend the special meeting in person, please complete, sign,
date and return your proxy card in the enclosed return envelope
as soon as possible so that your shares will be represented and
voted at the special meeting. In addition, you may deliver your
proxy via telephone or via the Internet in accordance with the
instructions on the enclosed proxy card or the voting
instruction form received from any broker, bank or other nominee
that may hold shares of our common stock on your behalf. If you
sign your proxy and do not indicate how you want to vote, your
shares will be voted
FOR
the adoption of the
merger agreement,
FOR
the adjournment of the
special meeting to a later date, if necessary or appropriate,
for the purpose of soliciting additional proxies if there are
insufficient votes at the time of the special meeting to approve
the proposal to adopt the merger agreement, and in accordance
with the recommendations of our board of directors on any other
matters properly brought before the special meeting for a vote.
Please remember that if you fail to vote on the merger
agreement, the effect will be the same as a vote
AGAINST
the adoption of the merger agreement
for purposes of calculating whether a majority of the
outstanding shares have voted to approve the proposal to adopt
the merger agreement.
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Q:
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If my shares are held in street name by my
broker, banker or other nominee will my broker or banker vote my
shares for me?
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A:
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Your broker, banker or other nominee will not vote your shares
of our common stock without specific instructions from you. You
should instruct your broker, banker or other nominee to vote
your shares of our
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common stock by following the instructions provided to you by
such firm. Failure to instruct your broker to vote your shares
will have the effect of voting
AGAINST
adoption of the merger agreement for purposes of calculating
whether a majority of the outstanding shares have voted to adopt
the merger agreement.
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Q:
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What does it mean if I receive more than one proxy card?
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A:
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This means you own shares of common stock that are registered
under different names. For example, you may own some shares
directly as a stockholder of record and other shares through a
broker or you may own shares through more than one broker. In
these situations, you will receive multiple sets of proxy
materials. You must complete, sign, date and return all of the
proxy cards or follow the instructions for any alternative
voting procedure on each of the proxy cards that you receive in
order to vote all of the shares you own. Each proxy card you
receive comes with its own prepaid return envelope; if you vote
by mail, make sure you return each proxy card in the return
envelope that accompanies that proxy card.
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Q:
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May I change my vote?
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A:
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Yes. You may change your vote at any time before your proxy is
voted at the special meeting. You may do this by
(i) delivering prior to the special meeting a written
notice of revocation addressed to our Secretary at 16052
Swingley Ridge Road, Suite 300, St. Louis, Missouri
63017, (ii) completing and submitting prior to the special
meeting a new proxy card bearing a later date,
(iii) submitting a later-dated proxy using the telephone or
Internet voting procedures on the proxy card prior to the
deadline of 11:59 p.m., Eastern time, on December 1,
2010 or (iv) attending the special meeting and voting in
person. Simply attending the special meeting, without voting in
person, will not revoke your proxy. If your shares are held in
street name and you have instructed a broker to vote
your shares, you must follow directions received from your
broker to change your vote or to vote at the special meeting.
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Q:
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How are votes counted?
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A:
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For the proposal to adopt the merger agreement, you may vote
FOR
,
AGAINST
or
ABSTAIN
. If you abstain or fail to vote, it
will have the same effect as if you voted
AGAINST
the adoption of the merger agreement. Banks, brokerage firms
or other nominees who hold shares in street name for customers
have the authority to vote on routine proposals when
they have not received instructions from beneficial owners.
However, banks, brokerage firms or other nominees are precluded
from exercising their voting discretion with respect to
approving non-routine matters, such as the proposal to adopt the
merger agreement, and, as a result, absent specific instructions
from the beneficial owner of such shares of Company common
stock, banks, brokerage firms or other nominees are not
empowered to vote those shares of Company common stock on
non-routine matters, which we refer to generally as broker
non-votes.
These broker non-votes will be counted for
purposes of determining a quorum but will have the same effect
as a vote AGAINST the proposal to adopt the merger
agreement.
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For the proposal to adjourn the special meeting to a later date,
if necessary or appropriate, for the purpose of soliciting
additional proxies if there are insufficient votes at the time
of the special meeting to approve the proposal to adopt the
merger agreement, you may vote
FOR
,
AGAINST
or
ABSTAIN
.
Abstentions will count for the purpose of determining whether a
quorum is present, but will have the same effect as a vote
AGAINST
the proposal to adjourn the special
meeting. If you fail to submit a proxy or vote in person at the
special meeting, or there are broker non-votes on the issue, as
applicable, the shares of Company common stock not voted, will
not be counted in respect of, and will not have an effect on,
the proposal to adjourn the special meeting.
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If you sign your proxy card without indicating your vote, your
shares will be voted
FOR
the adoption of the
merger agreement and
FOR
the adjournment of
the special meeting to a later date, if necessary or
appropriate, for the purpose of soliciting additional proxies if
there are insufficient votes at the time of the special meeting
to approve the proposal to adopt the merger agreement, and in
accordance with the recommendations of our board of directors on
any other matters properly brought before the special meeting
for a vote.
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Q:
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Should I send in my stock certificates now?
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A:
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No. You will be sent a letter of transmittal promptly after
the completion of the merger, describing how you may exchange
your shares of Company common stock for the per share merger
consideration. If your shares of Company common stock are held
in street name by your bank, brokerage firm or other
nominee, you will
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receive instructions from your bank, brokerage firm or other
nominee as to how to effect the surrender of your street
name shares of Company common stock in exchange for the
per share merger consideration.
PLEASE DO NOT SEND YOUR STOCK
CERTIFICATES IN NOW.
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Q:
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|
I do not know where my stock certificate is. How will I get
my cash?
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A:
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The materials the paying agent will send you after completion of
the merger will include the procedures that you must follow if
you cannot locate your stock certificate. These materials will
include an affidavit that you will need to sign attesting to the
loss of your certificate. You may also be required to provide a
bond to us in order to cover any potential loss.
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Q:
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When do you expect the merger to be completed?
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A:
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We are working toward completing the merger promptly after the
special meeting. Assuming timely satisfaction of necessary
closing conditions, including the approval by our stockholders
of the proposal to adopt the merger agreement, we are targeting
to complete the merger by the end of calendar year 2010;
however, the parties cannot predict the exact timing of the
completion of the merger or whether the merger will be completed
at a later time as agreed to by the parties or at all.
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Q:
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What are the federal income tax consequences of the merger to
stockholders?
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A:
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In general, your exchange of shares of Company common stock for
cash pursuant to the merger will be a taxable transaction for
U.S. federal income tax purposes. See The
Merger Material United States Federal Income Tax
Consequences of the Merger for more information.
We
urge you to consult your tax advisor about the tax consequences
of the exchange of your shares of our common stock for cash
pursuant to the merger in light of your particular
circumstances.
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Q:
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Do stockholders have appraisal rights?
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|
A:
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|
Yes. As a holder of our common stock, you are entitled to
exercise appraisal rights under Delaware law in connection with
the merger if you take certain actions and meet certain
conditions. See The Merger Appraisal Rights of
Stockholders beginning on page 53 and Appraisal
Rights beginning on page 80.
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Q:
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Who will solicit and pay the cost of soliciting proxies?
|
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A:
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This proxy solicitation is being made and paid for by the
Company. In addition, we have retained MacKenzie Partners, Inc.
to assist in the solicitation of proxies for the special
meeting. We will pay MacKenzie Partners, Inc. approximately
$9,000 plus
out-of-pocket
expenses for its assistance. The Company may also reimburse
brokers, banks and other custodians, nominees and fiduciaries
representing beneficial owners of shares of Company common stock
for their expenses in forwarding soliciting materials to
beneficial owners of Company common stock and in obtaining
voting instructions from those owners. Our directors, officers
and employees may also solicit proxies by telephone, by
facsimile, by mail, on the Internet or in person, but they will
not be paid any additional amounts for soliciting proxies.
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Q:
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What should I do now?
|
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A:
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We urge you to read this proxy statement carefully, including
its annexes and the documents referenced under Where You
Can Find More Information beginning on page 84, and
to consider how the transaction affects you as a stockholder.
Then mark, sign, date and promptly mail the enclosed proxy card
in the postage-paid envelope provided. Should you prefer, you
may deliver your proxy via telephone or via the Internet in
accordance with the instructions on the enclosed proxy card or
the voting instruction form received from any broker, bank or
other nominee that may hold shares of our common stock on your
behalf. Please act as soon as possible so that your shares of
Company common stock will be voted at the special meeting.
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Q:
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Who can help answer my questions?
|
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A:
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If you have any questions about the merger, need assistance in
submitting your proxy or voting your shares of Company common
stock or if you need additional copies of this proxy statement
or the enclosed proxy card, you should contact MacKenzie
Partners, Inc., which is acting as the proxy solicitation agent
in connection with the merger, at the following address and
toll-free phone number: 105 Madison Avenue, New York, New
York 10016, toll-free at 1-800-322-2885.
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14
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This proxy statement, and the documents to which we refer you in
this proxy statement, as well as information included in oral
statements or other written instruments made or to be made by
us, contain certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
You can generally identify forward-looking statements by the
appearance in such a statement of words such as
anticipate, believe,
continue, could, estimate,
expect, intend, may,
plan, potential, predict,
project, should, foresee,
likely, future or will and
similar expressions, which appear in a number of places in this
proxy statement (and the documents to which we refer you in this
proxy statement) and include, but are not limited to, all
statements relating directly or indirectly to the timing or
likelihood of completing the merger to which this proxy
statement relates, plans for future growth and other business
development activities as well as capital expenditures,
financing sources and the effects of regulation and competition
and all other statements regarding our intent, plans, beliefs or
expectations or those of our directors or officers. Investors
are cautioned that such forward-looking statements are not
assurances for future performance or events and involve risks
and uncertainties that could cause actual results and
developments to differ materially from those covered in such
forward-looking statements. These risks and uncertainties
include, but are not limited to, the risks detailed in our
filings with the SEC, including our most recent filings on
Forms 10-Q
and
10-K,
facts and matters contained in this document, and the following
factors:
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the current market price of our common stock may reflect a
market assumption that the merger will occur, and a failure to
complete the merger could result in a decline in the market
price of our common stock;
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the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement,
including termination under circumstances that could require us
to pay a termination fee;
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the inability to consummate the merger due to the failure to
obtain stockholder approval for the merger or the failure to
satisfy other conditions to consummate the merger, including
required regulatory approvals;
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the failure of the merger to close for any other reason;
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our remedies against Parent with respect to certain breaches of
the merger agreement may not be adequate to cover our damages;
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the failure to obtain the necessary equity and debt financing
set forth in commitment letters received in connection with the
merger or the failure of that financing to be sufficient to
complete the merger and the transactions contemplated thereby;
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risks that the proposed transaction disrupts current plans and
operations and the potential difficulties in employee retention
as a result of the announced merger;
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the potential inability to respond effectively to competitive
pressures, industry developments and future opportunities due to
restrictions imposed in the merger agreement;
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the effect of the announcement of the merger on our business
relationships, operating results and business generally;
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the amount of the costs, fees, expenses and charges related to
the merger, whether or not the merger is completed;
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the outcome of legal proceedings that have been and may be
initiated against us
and/or
others related to the merger; and
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the impact of a change of control under our debt instruments and
potential limits on our ability to use net operating loss
carryforwards; and
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the matters discussed under The Merger Reasons
for the Merger; Recommendations of the Board of Directors
beginning on page 30.
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Consequently, all of the forward-looking statements we make in
this document are qualified by the information contained herein,
including, but not limited to (a) the information contained
under this heading and (b) the information contained under
the headings Risk Factors and Business
and information in our consolidated financial statements and
notes thereto included in our most recent filings on
Forms 10-Q
and
10-K
(see Where You Can Find More Information beginning
on page 84).
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date
hereof and are not guarantees of performance or results. There
can be no assurance that forward looking statements will prove
to be accurate. Stockholders should also understand that it is
not possible to predict or identify all risk factors and that
neither this list nor the factors identified in our SEC filings
should be considered a complete statement of all potential risks
and uncertainties. We undertake no obligation to publicly update
or release any revisions to these forward-looking statements to
reflect events or circumstances after the date hereof except as
required by law.
16
PARTIES
TO THE MERGER
The
Company
Thermadyne Holdings Corporation
16502 Swingley Ridge Road, Suite 300
St. Louis, Missouri 63017
(636) 728-3000
The Company is a Delaware corporation with its headquarters in
St. Louis, Missouri. We are a leading global designer and
manufacturer of gas and arc cutting and welding products,
including equipment, accessories and consumables. See also
Where You Can Find More Information beginning on
page 84. Company common stock is publicly traded on Nasdaq
under the symbol THMD.
Parent
Razor Holdco Inc.
c/o IPC
Manager III, L.P.
277 Park Avenue, 39th Floor
New York, New York 10172
Parent is a Delaware corporation that was formed by Irving Place
Capital solely for the purpose of entering into the merger
agreement and completing the transactions contemplated by the
merger agreement and related financing transactions. IPC is a
private equity firm focused on making equity investments in
middle-market companies in the form of buyouts,
recapitalizations and growth capital investments. Since its
formation in 1997, IPC has been an investor in more than
50 companies and has raised over $4.0 billion of
equity capital, including its current $2.7 billion
institutional fund. Following consummation of the merger, Parent
will own all of our outstanding common stock and we will be a
direct wholly-owned subsidiary of Parent.
Merger
Subsidiary
Razor Merger Sub Inc.
c/o IPC
Manager III, L.P.
277 Park Avenue, 39th Floor
New York, New York 10172
Merger Subsidiary is a Delaware corporation that was formed by
Parent solely for the purpose of entering into the merger
agreement and completing the transactions contemplated by the
merger agreement and the related financing transactions. Merger
Subsidiary is a wholly-owned subsidiary of Parent and has not
engaged in any business except for activities incidental to its
formation and as contemplated by the merger agreement and the
related financing transactions. Upon completion of the merger,
Merger Subsidiary will cease to exist and the Company will
continue as the surviving corporation.
17
THE
SPECIAL MEETING
Date,
Time and Place
The special meeting will be held at 10:00 a.m., Eastern time, on
December 2, 2010 at the Hilton New York, located at 1335
Avenue of the Americas, New York, NY 10019. We are sending this
proxy statement to you in connection with the solicitation of
proxies for use at the special meeting and any adjournments or
postponements of the special meeting.
Purpose
At the special meeting, stockholders will be asked to:
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consider and vote upon a proposal to adopt the merger agreement;
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approve a proposal to adjourn the special meeting to a later
date, if necessary or appropriate, for the purpose of soliciting
additional proxies if there are insufficient votes at the time
of the special meeting to approve the foregoing
proposal; and
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transact such other business as may properly come before the
special meeting or any adjournment or postponement of the
special meeting.
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Our stockholders must approve the proposal to adopt the merger
agreement in order for the merger to occur. If our stockholders
fail to approve the proposal to adopt the merger agreement, the
merger will not occur. A copy of the merger agreement is
attached as
Annex A
to this proxy statement, which
we encourage you to read carefully in its entirety.
Our Board
Recommendation
The board of directors has unanimously determined that the
merger agreement and the merger are advisable, fair to and in
the best interests of us and our unaffiliated stockholders and
has unanimously approved the merger, the merger agreement and
the transactions contemplated thereby. The board of directors
unanimously recommends that you vote
FOR
adoption of the merger agreement and
FOR
the adjournment of the special meeting to a later date, if
necessary or appropriate, for the purpose of soliciting
additional proxies if there are insufficient votes at the time
of the special meeting to approve the proposal to adopt the
merger agreement.
Record
Date, Outstanding Shares and Quorum
We have fixed the close of business on October 29, 2010 as
the record date for the special meeting, and only holders of
record of Company common stock on the record date will be
entitled to vote at the special meeting or any adjournment or
postponement of the special meeting. You are entitled to receive
notice of, and to vote at, the special meeting if you owned
shares of Company common stock at the close of business on the
record date. On the record date, there were
13,556,813 shares of Company common stock outstanding and
entitled to vote. Each share of Company common stock entitles
its holder to one vote on all matters properly presented at the
special meeting. Votes may be cast at the special meeting in
person or by proxy.
A majority of the shares of Company common stock outstanding at
the close of business on the record date and entitled to vote,
present in person or represented by proxy, at the special
meeting constitutes a quorum for the purposes of the special
meeting. Shares of Company common stock represented at the
special meeting but not voted, including shares of Company
common stock for which a stockholder directs an
abstention from voting, as well as broker non-votes,
will be counted for purposes of establishing a quorum. A quorum
is necessary to transact business at the special meeting. Once a
share of Company common stock is represented at the special
meeting, it will be counted for the purpose of determining a
quorum at the special meeting and at any adjourned special
meeting. However, if a new record date is set for the adjourned
special meeting, then a new quorum will have to be established.
In the event that a quorum is not present at the special
meeting, it is expected that the special meeting will be
adjourned or postponed.
18
Attendance
Only stockholders of record or their duly authorized proxies
have the right to attend the special meeting. To gain
admittance, you must present valid photo identification, such as
a drivers license or passport. If your shares of Company
common stock are held through a bank, brokerage firm or other
nominee, please bring to the special meeting a copy of your
brokerage statement evidencing your beneficial ownership of
Company common stock and valid photo identification. If you are
the representative of a corporate or institutional stockholder,
you must present valid photo identification along with proof
that you are the representative of such stockholder. Please note
that cameras, recording devices and other electronic devices
will not be permitted at the special meeting.
Vote
Required
The merger cannot be completed unless the adoption of the merger
agreement is approved by the affirmative vote of a majority of
the outstanding shares of our common stock. For the proposal to
adopt the merger agreement, you may vote
FOR
,
AGAINST
or
ABSTAIN
.
Abstentions will not be counted as votes cast in favor of the
proposal to adopt the merger agreement, but will count for the
purpose of determining whether a quorum is present.
If you
fail to submit a proxy or to vote in person at the special
meeting, or abstain, it will have the same effect as a vote
AGAINST the proposal to adopt the merger
agreement.
Banks, brokerage firms or other nominees who hold shares in
street name for customers have the authority to vote on
routine proposals when they have not received
instructions from beneficial owners. However, banks, brokerage
firms or other nominees are precluded from exercising their
voting discretion with respect to approving non-routine matters,
such as the proposal to adopt the merger agreement, and, as a
result, absent specific instructions from the beneficial owner
of such shares of Company common stock, banks, brokerage firms
or other nominees are not empowered to vote those shares of
Company common stock on non-routine matters.
These broker
non-votes will be counted for purposes of determining a quorum,
but will have the same effect as a vote AGAINST the
proposal to adopt the merger agreement.
Approval of the adjournment of the meeting to a later date, if
necessary or appropriate, for the purpose of soliciting
additional proxies if there are insufficient votes at the time
of the special meeting to approve the proposal to adopt the
merger agreement requires the affirmative vote of the holders of
a majority of the shares of our common stock present, in person
or by proxy, and entitled to vote at the special meeting on that
matter, even if less than a quorum. For the proposal to adjourn
the special meeting, you may vote
FOR
,
AGAINST
or
ABSTAIN
.
For purposes of this proposal, if your shares of Company common
stock are present at the special meeting but are not voted on
this proposal, or if you have given a proxy and abstained on
this proposal, this will have the same effect as if you voted
AGAINST
the proposal. If you fail to submit a
proxy or vote in person at the special meeting, or there are
broker non-votes on the issue, as applicable, the shares of
Company common stock not voted, will not be counted in respect
of, and will not have an effect on, the proposal to adjourn the
special meeting.
If you are a stockholder of record, in order to vote, you should
simply indicate on your proxy card how you want to vote, and
sign and mail your proxy card in the enclosed return envelope as
soon as possible so that your shares will be represented at the
special meeting. You may also vote your shares by telephone or
Internet using the instructions on your proxy card. If you
receive more than one proxy card, it means that you have
multiple accounts at the transfer agent
and/or
with
brokers, banks or other nominees. Please sign and return all the
proxy cards you have received to ensure that all your shares are
voted.
If you are a beneficial owner, you will receive instructions
from your bank, brokerage firm or other nominee that you must
follow in order to have your shares of Company common stock
voted. Those instructions will identify which of the above
choices are available to you in order to have your shares voted.
Please note that if you are a beneficial owner and wish to vote
in person at the special meeting, you must provide a legal proxy
from your bank, brokerage firm or other nominee.
Please refer to the instructions on your proxy or voting
instruction card to determine the deadlines for voting over the
Internet or by telephone. If you choose to vote by mailing a
proxy card, your proxy card must be filed with our Secretary by
the time the special meeting begins.
Please do not send in
your stock certificates with your
19
proxy card.
When the merger is completed, a separate
letter of transmittal will be mailed to you that will enable you
to receive the per share merger consideration in exchange for
your stock certificates.
If you vote by proxy, regardless of the method you choose to
vote, the individuals named on the enclosed proxy card, and each
of them, with full power of substitution, or your proxies, will
vote your shares of Company common stock in the way that you
indicate. When completing the Internet or telephone processes or
the proxy card, you may specify whether your shares of Company
common stock should be voted for or against or to abstain from
voting on all, some or none of the specific items of business to
come before the special meeting.
If you have any questions or need assistance voting your shares,
please call MacKenzie Partners, Inc., our proxy solicitor,
toll-free at 1-800-322-2885.
It is important that you vote your shares of Company common
stock promptly. Whether or not you plan to attend the special
meeting, please complete, date, sign and return, as promptly as
possible, the enclosed proxy card in the accompanying prepaid
reply envelope, or submit your proxy by telephone or the
internet. Stockholders who attend the special meeting may revoke
their proxies by voting in person.
As of October 29, the record date, our directors and
executive officers beneficially owned and were entitled to vote,
in the aggregate, 351,987 shares of Company common stock
(excluding any shares of Company common stock deliverable upon
exercise or conversion of any options or restricted shares),
representing 2.6% of our outstanding shares on the record date.
Our directors and executive officers have informed us that they
currently intend to vote all of their shares of our common stock
FOR
the proposal to adopt the merger
agreement and
FOR
the proposal to adjourn the
special meeting to a later date, if necessary or appropriate,
for the purpose of soliciting additional proxies if there are
insufficient votes at the time of the special meeting to approve
the proposal to adopt the merger agreement.
Voting of
Proxies
Shares of our common stock represented by duly executed and
unrevoked proxies in the form of the enclosed proxy card
received by the Secretary of the Company will be voted at the
special meeting in accordance with specifications made therein
by the stockholders, unless authority to do so is withheld. If
no specification is made, shares represented by duly executed
and unrevoked proxies in the form of the enclosed proxy card
will be voted
FOR
the proposal to adopt the
merger agreement and
FOR
the proposal to
adjourn the special meeting to a later date, if necessary or
appropriate, for the purpose of soliciting additional proxies if
there are insufficient votes at the time of the special meeting
to approve the proposal to adopt the merger agreement.
If your shares of Company common stock are held in street
name by your bank, brokerage firm or other nominee, you
should instruct your bank, brokerage firm or other nominee on
how to vote your shares of Company common stock using the
instructions provided by your bank, brokerage firm or other
nominee. If you fail to submit a proxy or vote in person at the
special meeting, or abstain, or do not provide your bank,
brokerage firm or other nominee with voting instructions, as
applicable, your shares of Company common stock will not be
voted on the proposal to adopt the merger agreement, which will
have the same effect as a vote
AGAINST
the
proposal to adopt the merger agreement.
The board of directors does not know of any matters other than
those described in the notice of the special meeting that are
expected to come before the special meeting. However, if any
other matters are properly presented at the special meeting for
consideration, the persons named in the proxy card and acting
thereunder generally will have discretion to vote on such
matters in accordance with their best judgment unless authority
is specifically withheld.
Revocation
of Proxies
Any holder of shares of our common stock giving a proxy with
respect to such shares may revoke it at any time prior to its
exercise at the special meeting by sending us a written notice
of such revocation or completing and submitting a new proxy card
bearing a later date to our Secretary at our executive offices,
or attending the special meeting and voting in person. You may
also submit a later-dated proxy using the telephone or Internet
voting procedures on the proxy card so long as you do so before
the deadline of 11:59 p.m., Eastern time, on
December 1,
20
2010. Attendance at the special meeting will not, by itself,
constitute revocation of a proxy. If your shares are held in
street name and you have instructed a broker to vote
your shares, you must follow directions received from your
broker to change your vote or to vote at the special meeting.
Solicitation
of Proxies and Expenses
The Company has engaged MacKenzie Partners, Inc. to assist in
the solicitation of proxies for the special meeting. The Company
estimates that it will pay MacKenzie Partners, Inc. a fee of
approximately $9,000. The Company will reimburse MacKenzie
Partners, Inc. for reasonable
out-of-pocket
expenses and will indemnify MacKenzie Partners, Inc. and its
affiliates against certain claims, liabilities, losses, damages
and expenses. The Company may also reimburse brokers, banks and
other custodians, nominees and fiduciaries representing
beneficial owners of shares of Company common stock for their
expenses in forwarding soliciting materials to beneficial owners
of Company common stock and in obtaining voting instructions
from those owners. Our directors, officers and employees may
also solicit proxies by telephone, by facsimile, by mail, on the
Internet or in person, but they will not be paid any additional
amounts for soliciting proxies.
Adjournment
or Postponement of the Special Meeting
Although it is not currently expected, the special meeting may
be adjourned or postponed, including for the purpose of
soliciting additional proxies, if there are insufficient votes
at the time of the special meeting to approve the proposal to
adopt the merger agreement or if a quorum is not present at the
special meeting. Other than an announcement to be made at the
special meeting of the time, date and place of an adjourned
meeting, an adjournment generally may be made without notice.
Any adjournment or postponement of the special meeting for the
purpose of soliciting additional proxies will allow the
Companys stockholders who have already sent in their
proxies to revoke them at any time prior to their use at the
special meeting as adjourned or postponed.
Questions
and Additional Information
If you have more questions about the merger or how to submit
your proxy, or if you need additional copies of this proxy
statement or the enclosed proxy card or voting instructions,
please call MacKenzie Partners, Inc., our proxy solicitor,
toll-free at 1-800-322-2885.
21
THE
MERGER
This discussion of the merger is qualified in its entirety by
reference to the merger agreement, which is attached to this
proxy statement as
Annex A
. You should read the
entire merger agreement carefully as it is the legal document
that governs the merger.
The merger agreement provides that Merger Subsidiary will merge
with and into the Company. The Company will be the surviving
corporation in the merger and will continue to do business
following the merger. As a result of the merger, the Company
will cease to be a publicly traded company. You will not own any
shares of the capital stock of the surviving corporation.
Background
of the Merger
The board of directors of the Company, or the board of
directors, in the ordinary course of business continually
reviews the Companys business, strategic direction,
performance and prospects in the context of developments in our
industry and the competitive landscape in the markets in which
the Company operates. Our board of directors has from time to
time held discussions on strategic alternatives focused on
exploring ways to enhance stockholder value.
In late 2005 and early 2006, the Company engaged in a marketing
process for one of its product lines. A competitor of the
Company in several of its product lines (Party A)
submitted the highest range of valuation in a non-binding offer.
Following extensive due diligence, Party A substantially lowered
its offer price, and the Company terminated the process.
In June 2007, the Company engaged a financial advisor to explore
possible strategic alternatives. The Companys financial
advisor approached a number of potential financial and strategic
buyers from July 2007 to September 2007, but did not initially
approach any of the Companys competitors due to concerns
regarding the risks of competitive harm. In October 2007,
potential buyers that had been approached by the Companys
financial advisor and expressed interest in acquiring the
Company all withdrew their interest.
In October 2007, Party A approached the Company to engage in
negotiations regarding an acquisition of the Company by Party A.
In late 2007 and early 2008, the Company and Party A engaged in
negotiations regarding the purchase of the Company by Party A
and entered into a confidentiality agreement allowing for the
limited exchange of information between the parties
respective antitrust counsel for the purpose of assessing risk
of review and likelihood of approval by antitrust authorities.
After exchanging and reviewing such information, Party A
expressed serious concern about the potential
U.S. antitrust risk in a potential transaction and made
clear its unwillingness to move forward with any transaction
that was not fully conditional on receiving antitrust approval
on an unconditional basis, and in March 2008, the negotiations
between the Company and Party A terminated.
During the second half of 2009, representatives of the Company
had preliminary discussions with a competitor of the Company
that had expressed interest in acquiring certain businesses of
the Company. During this period, the Company also engaged in
discussions with a private equity firm (Party B)
regarding various potential strategic transactions, including
the acquisition of the Company by Party B and the possibility of
entering into certain strategic combinations between the Company
and certain competitors of the Company.
In March 2010, a financial advisor to Party A contacted
Mr. Paul Melnuk, our Chairman of the board, about the
possibility of Party As acquisition of the Company.
Mr. Melnuk, based on past experiences with Party A, advised
that the Company had concerns about Party As interest and
ability to execute a transaction on terms acceptable to the
Company.
On March 23, 2010, Mr. Melnuk and Company management
met with Party B. The parties re-engaged to discuss the
possibility of pursuing an acquisition of the Company by Party
B. Additionally, management presented certain confidential
information to Party B during and following this meeting.
At a March 31, 2010 special meeting of the board of
directors, Mr. Melnuk reported on Party Bs interest
in pursuing a strategic transaction with the Company. The board
of directors discussed engagement of a financial advisor and
outside counsel and related process considerations.
22
In early April 2010, Party As financial advisor advised
Mr. Melnuk of Party As interest in acquiring the
Company and its willingness to divest one of the overlapping
businesses in the event of any concerns raised by antitrust
authorities.
On April 23, 2010, Party B submitted a written proposal to
acquire the Company for a purchase price of $10.00 per share,
subject to a
45-day
period of exclusivity to allow Party B to perform its due
diligence as contemplated in a draft exclusivity agreement.
At an April 26, 2010 special meeting of the board of
directors, the board of directors considered presentations by
three investment banking firms, including
Oppenheimer & Co., Inc. (Oppenheimer) in
connection with the potential engagement of a financial advisor
by the Company.
The following day, the board of directors held a regular meeting
in conjunction with the 2010 annual stockholders meeting.
Armstrong Teasdale LLP (Armstrong Teasdale), counsel
to the Company, and Bryan Cave LLP (Bryan Cave),
counsel to the board of directors, were also present and
participated in the meeting. The board of directors discussed
the adequacy of Party Bs expression of interest and its
requirement for a
45-day
exclusivity period. The board of directors also discussed the
prospects of the Company on a stand-alone basis. The board of
directors directed Mr. Melnuk to inform Party B that its
proposed price was not compelling, and that the Company was
engaging a financial advisor to assist the board of directors in
evaluating the Companys strategic alternatives.
On May 11, 2010, the Company entered into an engagement
letter with Oppenheimer, as its exclusive financial advisor.
On May 25, 2010, Party B submitted a revised proposal,
which included a price of $11.50 per share and required a
45-day
exclusivity period. Party B also proposed that the Company would
reimburse Party B for expenses of up to $1.5 million it
would incur under certain circumstances in connection with its
investigation of a potential transaction.
On May 25, 2010, Mr. Melnuk called the Chief Executive
Officer of Party A to inform him that the board of directors had
decided to evaluate strategic alternatives. Mr. Melnuk
informed Party A of the importance to the board of directors of
pursuing a transaction that provided a high level of certainty
of completion and that the Company would not accept a proposal
from Party A contingent upon receiving unconditional antitrust
approval.
At a May 25, 2010 special meeting of the board of
directors, Mr. Melnuk reported that Oppenheimer and Company
management were drafting a Confidential Information Memorandum
using information provided by Company management for use in a
potential marketing process. The board of directors reviewed the
updated proposal from Party B. Mr. Melnuk also reported
that in his recent discussions with Party A, Party A indicated a
willingness to accept antitrust risk if the parties were to
re-engage in discussions regarding a transaction, including
divestiture of product lines if necessary. The board of
directors directed Oppenheimer to contact Party B to explore its
proposal and Party As financial advisors to facilitate
next steps with Party A.
On May 28, 2010, Mr. Melnuk contacted the Chief
Executive Officer of Party A to discuss a meeting scheduled for
June 3, 2010. Party A indicated concern about receiving
certain foreign antitrust approval and indicated that Party A
had engaged foreign antitrust counsel to assess potential
antitrust issues in any possible strategic transaction between
Party A and the Company. Mr. Melnuk directed the Company
also to engage foreign antitrust counsel to review a potential
combination in preparation for the meeting.
At a June 1, 2010 special meeting of the board of
directors, Oppenheimer reported on its meetings with Party B and
Party As financial advisors. The board of directors
instructed Oppenheimer to share certain financial and other
information with Party B and other potential buyers. The board
of directors discussed the issues to be addressed at the
June 3, 2010 meeting with Party A, including its position
on potential antitrust issues. The board of directors also
discussed the activities and timing of a marketing process with
respect to a potential sale of the Company.
On June 1, 2010, Mr. Melnuk, Mr. Varsam, general
counsel of the Company, and Armstrong Teasdale had a conference
call with the Companys foreign antitrust counsel,
regarding potential antitrust issues in the context of a
potential transaction with Party A. Armstrong Teasdale also
continued its review of potential U.S. antitrust
considerations.
23
On June 3, 2010, the Company and Party A met together with
their respective advisors. The parties discussed the
Confidential Information Memorandum (a copy of which had been
provided to Party A the previous day), and developments in the
Companys business since the last exchange of information
in 2007. Mr. Melnuk noted that the parties previous
exploration of a possible strategic combination ended with a
disagreement regarding the allocation of antitrust risk and
reiterated that, in light of concerns of the board of directors,
any proposal from Party A should not be contingent on receiving
antitrust approval in any jurisdiction. After discussion, the
parties agreed to have their respective legal counsels share
additional data and update their assessment of the potential
antitrust risks associated with a combination. Party As
CEO agreed to endeavor to provide two separate indications of
interest within the following week, one of which would include a
proposal with respect to the acquisition of the entire Company
and the other which would include a proposal for the acquisition
of the entire Company but exclude certain of the Companys
foreign operations.
At a June 8, 2010 special meeting of the board of
directors, Mr. Melnuk and Oppenheimer reported on the
June 3, 2010 meeting with Party A, and noted their view
that Party A had not prepared any substantive analysis of a
proposed transaction for that meeting. The board of directors
discussed its continuing concerns with Party A based on the
June 3, 2010 meeting and its prior unproductive
interactions with Party A. The board of directors instructed
Oppenheimer to communicate to Party A that it would be
beneficial to Party A to provide the requested indications of
interest along with its position on antitrust considerations
prior to the meeting of the board of directors scheduled to
occur the following week.
The board of directors considered the ongoing discussions with
Party A and Party B, and assessed the interest and willingness
of each party to consummate a transaction on terms acceptable to
the board of directors. Oppenheimer provided its perspective on
proceeding with one or both of the existing proposals and noted
the advantages of continuing to pursue the broader marketing
process that the board of directors had been considering.
Following discussion with Oppenheimer regarding possible
approaches, the board of directors instructed Oppenheimer to
continue pursuing discussions with Party B to seek to improve
the financial terms of its proposal and to further clarify the
parameters of, and possible exceptions to, its exclusivity
request. Bryan Cave provided to the board of directors a review
of the directors fiduciary duties, particularly in context
of the ongoing discussions and actions being taken by the board
of directors. The board of directors also discussed with
Oppenheimer other potential financial and strategic buyers for
the Company, and authorized Oppenheimer to begin contacting
potential buyers. The board of directors also directed
Oppenheimer to continue discussions with Party A on a parallel
path.
Following the June 8, 2010 board of directors meeting,
Oppenheimer began contacting potential buyers in addition to
continuing discussions with Party A and Party B. Of the 55
additional potential buyers contacted between June 8, 2010,
and July 20, 2010, 15 were strategic buyers and 40 were
financial buyers, including Irving Place Capital, which we
sometimes refer to as IPC. Confidentiality
agreements were executed with 33 of those potential buyers,
including IPC, and Oppenheimer delivered a Confidential
Information Memorandum to each of them. Oppenheimer communicated
to the potential buyers that preliminary indications of interest
were due during a timeframe from late June to early July.
At a June 10, 2010 special meeting of the board of
directors, Oppenheimer reported on its contact with potential
financial and strategic buyers. Oppenheimer also discussed its
recent contact with Party As financial advisors regarding
Party As level of interest in a transaction and its
outstanding request that Party A provide an indication of
interest. Oppenheimer also reported it had, per the board of
directors instructions, advised Party B that the Company
would not continue to engage in discussions with Party B without
an updated indication of interest with a price of at least
$12.50 per share and that the Company expected to engage in a
marketing process while Party B was conducting its due
diligence. Party B indicated its offer would remain at $11.50 if
the Company engaged in a marketing process but that it could
increase the price to $12.50 per share if the Company entered
into an exclusivity agreement with Party B.
From June 10 through June 23, 2010, Armstrong Teasdale and
Party As antitrust counsel negotiated a confidentiality
agreement between the parties antitrust counsel to share
information to facilitate antitrust analysis. On June 24,
2010, the confidentiality agreement was executed, and on
June 25, 2010, antitrust counsel for the Company and Party
A exchanged relevant information.
24
At special meetings of the board of directors on June 15,
2010, June 18, 2010 and June 22, 2010, Oppenheimer
reported on the status of the marketing process and
Mr. Melnuk reported on the recent discussions with Party A
regarding potential U.S. and foreign antitrust risk.
At a June 29, 2010 special meeting of the board of
directors, Oppenheimer reported that Party B had withdrawn its
indication of interest and was no longer interested in pursuing
a transaction with the Company. Oppenheimer informed the board
of directors of the details of the three preliminary indications
of interest it had received to date, with indications of value
of between $10.65 and $15.00 per share. The board of directors
discussed the scope and timing of the process and the status of
the active financial and strategic buyers. Mr. Quinn, the
President of the Company, and Armstrong Teasdale provided
information to the board of directors about the process of
gathering and exchanging information with Party A to assess
potential antitrust concerns in the United States and certain
foreign jurisdictions.
At a July 6, 2010 special meeting of the board of
directors, Oppenheimer provided to the board of directors an
update on potential buyers contacted by Oppenheimer, including
three additional parties who had submitted indications of
interest with preliminary value ranges between $12.50 and $13.55
per share. The board of directors discussed the timetable for
management presentations and submissions of final proposals,
and, with input from legal counsel, considered valuation,
execution risk and anticipated timing of a transaction with
potential strategic buyers as compared with financial buyers.
Mr. Melnuk reported on recent communications with Party A,
indicating that the parties were continuing to exchange
information regarding certain foreign markets, and that he
expected Party A to submit the previously requested proposal the
following week.
Throughout early and mid-July, the Companys antitrust
counsel continued to analyze potential foreign antitrust issues
and engaged in discussions with Party As foreign antitrust
counsel.
At a July 13, 2010 special meeting of the board of
directors, Oppenheimer described to the board of directors three
additional indications of interest received from potential
financial buyers, with preliminary value ranges between $10.00
and $14.00 per share, including a preliminary indication of
interest from IPC, with a range of $13.00 to $14.00.
Mr. Melnuk reported that Party A had not submitted a
proposal, but instead had informed him that its foreign counsel
had concluded there was a high likelihood that a proposed
transaction would be reviewed and not approved in certain
foreign jurisdictions, and therefore it was unwilling to accept
certain foreign antitrust risk. Mr. Melnuk also reported
that the Companys foreign antitrust counsel was instructed
to contact Party As foreign antitrust counsel to discuss
the perceived risk in connection with a potential transaction.
From July 15, 2010 through August 11, 2010, management
presentations took place with eight of the nine bidders who had
submitted preliminary indications of interest deemed to be
acceptable. No strategic bidders submitted indications of
interest during such period. On July 23, 2010, each of
those eight bidders was provided access to an online data room.
On July 28, 2010, Party A submitted a data request to
Oppenheimer on certain foreign operations. Party As
financial advisor communicated to Oppenheimer that it was
considering an offer for the Company, excluding certain foreign
operations, and wanted information to be able to value such
operations.
At a July 29, 2010 regular meeting of the board of
directors, Oppenheimer provided a status report on the marketing
process, noting the relative levels of activity of the potential
bidders in the process. Oppenheimer also updated the board of
directors on the data request received from Party A on
July 28, 2010.
On August 4, 2010, after discussions between Company
management and Party A regarding its information request from
July 28, 2010, Company management delivered to Party A
certain information that Company management considered not to be
competitively sensitive.
At an August 10, 2010 special meeting of the board of
directors, Oppenheimer provided an update on the active
discussions that were occurring with the potential bidders.
Oppenheimer and Mr. Melnuk reported that Party A continued
to express its interest in submitting a bid. The board of
directors discussed the next steps of the process, including
distribution of a process letter to potential bidders and the
potential final bid date of September 14, 2010.
On August 18, 2010, Oppenheimer contacted Party As
financial advisors to inquire about the timing of delivery of
the previously discussed indication of interest from Party A.
Oppenheimer explained that, if Party A
25
were still interested in submitting an indication of interest,
it should do so as soon as possible, as other interested bidders
were moving forward in the process.
On August 25, 2010, Party A sent Mr. Melnuk an
indication of interest to acquire all of the Companys
shares for $16.25 per share, subject to due diligence. Party
As proposal provided that it would be willing to divest
any business segment(s) with less than $50 million in net
sales in 2009 in order to facilitate U.S. and certain
foreign antitrust approval, and that if the transaction did not
receive approval from either U.S. or certain foreign
antitrust authorities, Party A could terminate the transaction,
in which event it would reimburse the Company for up to
$2 million in
out-of-pocket
expenses.
At an August 26, 2010 special meeting of the board of
directors, Oppenheimer reviewed the recent conversations with
the potential bidders regarding ongoing due diligence. In
addition, Bryan Cave reviewed and discussed with the board of
directors the terms of the proposed merger agreement to be
provided to the bidders. Oppenheimer also reviewed Party
As proposal. Mr. Melnuk reported that he had spoken
to Party As CEO, who confirmed that Party A would require
the Company to share antitrust risk in connection with a
proposed transaction. The board of directors discussed the terms
of Party As proposal, and its view that it created
significantly more uncertainty compared with other proposals the
Company was considering.
On August 27, 2010, the Company posted to the data room the
proposed form of merger agreement.
On August 27, 2010, at the board of directors
direction, Oppenheimer contacted Party As financial
advisors to discuss Party As indication of interest. Party
As financial advisors indicated that Party A believed that
a transaction structure that excluded certain of the
Companys foreign operations was unattractive from an
operational and tax perspective. Party As financial
advisors also explained that Party As foreign counsel
believed the combination was not likely to receive antitrust
approval in certain jurisdictions and Party A therefore required
a transaction structure conditioned on receipt of antitrust
approval. Oppenheimer informed Party As financial advisor
that Oppenheimer would continue to discuss the indication of
interest with the board of directors. Oppenheimer noted again
that the sale process for the Company was proceeding and final
bids were due September 14, 2010.
On August 29, 2010, Oppenheimer contacted Party As
financial advisors to further discuss Party As indication
of interest. During this discussion, Oppenheimer indicated that
Party As proposal was inadequate in three
areas financial consideration, assumption of
potential anti-trust risk, and compensation for transaction
termination. Nonetheless, Oppenheimer, at the board of
directors direction, gave Party A an opportunity to
continue its due diligence and offered to provide selected
information in the data room so that Party A could submit an
improved bid by the September 14, 2010 deadline. Following
this conversation, Oppenheimer sent a data room index to Party
As financial advisor and requested that they provide a
list of requested priority items in the data room. Party
As financial advisors stated their intention to respond
promptly.
At an August 30, 2010 special meeting of the board of
directors, Oppenheimer informed the board of directors that it
had communicated to Party As financial advisor that the
board of directors was concerned that Party As current
proposal still had significant transaction uncertainty, that
other potential bidders continued to engage in due diligence,
and that the September 14, 2010 bid deadline was
approaching. Mr. Melnuk reported that he had provided the
same message to Party As CEO.
The Companys foreign antitrust counsel presented to the
board of directors the history of its exchange of information
with Party As foreign antitrust counsel, as well as its
analysis of potential foreign antitrust risk. The Companys
foreign antitrust counsel believed that it was highly likely
that a certain foreign jurisdiction would review the potential
anticompetitive effect of the proposed transaction in such
jurisdiction, and possibly require divestiture or enjoin the
transaction. The board of directors discussed the delays,
uncertainties and negative impact on the Companys ongoing
business that would likely arise in connection with such foreign
antitrust review. Armstrong Teasdale described the process of
assessing the potential U.S. antitrust risk, taking into
account Party As willingness, as expressed in its
indication of interest, to divest a business segment(s) of up to
$50 million in annual sales, if necessary. The board of
directors discussed the product segments most likely to receive
attention from the FTC or DOJ and reviewed Armstrong
Teasdales analysis.
The board of directors discussed possible next steps and timing
necessary to complete a transaction for Party A and other
bidders. Bryan Cave advised the directors about their fiduciary
duties in this context and the ability of the
26
board of directors, in the discharge of its fiduciary duties, to
consider the risk of non-consummation of a transaction and the
risk of delay and uncertainty in bids it may receive.
Oppenheimer reviewed the history of the discussions with Party A
over the past three months, including Party As repeated
delays in following through on agreed upon next steps, as well
as Party As unacceptable position on antitrust risk. The
board of directors also discussed potential adverse consequences
to the Company of non-consummation of a transaction.
On September 5, 2010, Oppenheimer contacted Party As
financial advisor to request an update on their activities, as
Oppenheimer still had not received a response to the data room
index that they had provided to Party As financial advisor
on August 29, 2010. Party As financial advisor
informed Oppenheimer that Party A intended to provide a response
that day or the next day. Party As financial advisor
submitted their request list on September 7, 2010, and
Oppenheimer and the Company contacted Party As financial
advisor to discuss the request list. Following this
conversation, on September 7, 2010, the Company provided
Party A with data room access to certain information Party A had
requested.
At a September 7, 2010 special meeting of the board of
directors, Oppenheimer updated the board of directors on its
discussions with Party As financial advisors, and provided
the board of directors an update on the activities of other
potential buyers who were likely to submit proposals by the
September 14, 2010 deadline.
On September 14, 2010, three financial bidders delivered
definitive bids. The other four financial bidders in the process
did not deliver definitive bids, and no strategic bidders
submitted bids. Party C offered $13.00 per share, subject to a
period of approximately three weeks for further due diligence,
and provided financing commitments for approximately
$230 million, which together with equity commitments would
be sufficient to pay the balance of the purchase price and
associated transaction expenses. Party C also provided a revised
draft of the merger agreement. Party D offered $14.00 per share,
subject to a
20-day
period for additional due diligence but did not include a
revised draft of the merger agreement. Party Ds proposal
included financing commitments for approximately
$135 million, but noted a significant portion of its
financing commitment package had been recently withdrawn by a
potential lender. IPC offered $13.75 per share, subject to no
further due diligence, and provided a revised draft of the
merger agreement and included financing commitments in the
amount of approximately $235 million, which together with
equity commitments would be sufficient to pay the balance of the
purchase price and associated transaction expenses. In addition,
IPCs and Party Cs bids contemplated entering into a
voting agreement with Angelo, Gordon & Co., L.P., as
investment manager for certain stockholders of the Company who
beneficially own approximately 33% of the outstanding shares of
Company common stock, to support the merger.
On September 15, 2010, Party A submitted a proposal to the
Company with two alternative structures. One structure contained
an offer of $18.50 per share contingent on obtaining certain
foreign regulatory approval and an alternative structure
proposed $14.00 per share which was not contingent on foreign
approval. Under either alternative, the transaction would be
contingent on receipt of U.S. regulatory approvals,
provided Party A would accept an obligation to divest any
business segment(s) with 2009 sales of less than
$30 million. Under the $18.50 per share alternative, if
U.S. regulatory approval required the divestiture of any
segment with 2009 sales of $30 million or more, the
transaction could be terminated by Party A and Party A would
obligated to reimburse the Company for expenses of up to
$2 million. Under the $14.00 per share alternative, if
U.S. regulatory authorities required the divestiture of any
segment with reported 2009 sales of $30 million or more,
the transaction could be terminated with a termination fee of 3%
of the transaction value payable to the Company. The proposal
was subject to both completion of final due diligence and
negotiation of transaction documents over a
30-day
period following acceptance of the offer. Under either
alternative, Party As proposal required that the parties
jointly approach U.S. and certain foreign antitrust
authorities during its
30-day
due
diligence period to conduct an informal review of
the proposed transaction. Party A did not submit a
mark-up
of
the merger agreement as part of its proposal.
At a September 15, 2010 special meeting of the board of
directors, the board of directors discussed the bids received
from IPC and from Parties A, C and D, and noted that except for
the proposal from IPC, all of the proposals included a request
for additional time to complete due diligence. Oppenheimer noted
that IPCs bid was the closest to execution and therefore
Oppenheimer believed it offered the highest degree of certainty
of completion. The board of directors expressed concern about
providing Party A and others with two to four weeks for
additional due diligence and the potential negative impact the
delay could have on IPCs proposal. The board of directors
also discussed its concern regarding Party As intention to
discuss the transaction with U.S. and foreign regulatory
27
authorities during its due diligence period, and the impact the
results of those discussions could have on Party As
willingness to enter into a definitive agreement. The board of
directors also discussed next steps and Oppenheimers
proposed communications to potential buyers.
Following the receipt of the definitive bids, Oppenheimer
communicated with Party C and Party D to clarify certain aspects
of their bids, including with respect to price, financing, other
terms and remaining due diligence and with Party D, the gap in
its financing commitments.
On September 17, 2010, Oppenheimer communicated to IPC the
need for IPC to improve the financial terms of its proposal. In
response to such request, IPC asked for updated financial
information, which was provided later that day. IPC then had a
call with members of the Companys management to discuss
this updated financial information. Later that day, IPC
delivered an updated bid letter to the board of directors,
increasing its per share offer to $15.00.
On September 20, 2010, Party A submitted a revised proposal
to the Company with a two-tier offer of $18.50 per share if the
transaction was approved by antitrust authorities in all foreign
jurisdictions and $15.00 if divestiture was required in any
foreign jurisdiction. In addition, the revised proposal still
provided that if U.S. regulatory authorities required the
divestiture of any segment(s) with 2009 sales of
$30 million or more, the transaction could be terminated
with a termination fee of 3% of the transaction value payable to
the Company. The proposal was subject to both completion of due
diligence and negotiation of transaction documents over a
30-day
period following acceptance of the offer. Party A did not submit
a revised draft of the merger agreement as part of its revised
proposal.
At a September 21, 2010 special meeting of the board of
directors, Oppenheimer reviewed with the board of directors the
background of the sale process and the terms of the final bids
submitted. Oppenheimer noted that it had contacted a wide range
of both financial and strategic buyers. Oppenheimer also
reviewed valuation ranges of the Company under multiple
valuation methodologies. Oppenheimer also reviewed the implied
equity and enterprise values of each of the bids, as well as
their respective premiums to the Companys current and
historical stock prices.
Oppenheimer described in detail the revised proposal from Party
A. The board of directors again discussed the potential risks
that could occur as a result of a delay in process.
Additionally, the board of directors discussed the possibility
of Party A withdrawing from the process without liability to the
Company if any antitrust authority indicated that a remedy
unacceptable to Party A might be necessary. Mr. Melnuk
added that Party As CEO called him the previous day to
advise that the
30-day
due
diligence requirement was not negotiable.
Oppenheimer also reported to the board of directors on the
updated proposal received on September 17, 2010 from IPC,
which included a purchase price of $15.00 per share. The board
of directors discussed the advantages and disadvantages of the
various proposals, taking into consideration advice and
perspectives of its financial and legal advisors, and the board
of directors concluded that the IPC offer was the most favorable
of the proposals received given its combination of price, terms,
financing and greater certainty of transaction completion. The
board of directors discussed the issues with IPCs markup
of the merger agreement and its financing arrangements, and
Oppenheimer and Bryan Cave were directed to negotiate various
high level issues and an increase to offer price with IPC and
then to present to the board of directors a more detailed report
of remaining issues.
Oppenheimer contacted IPC later that evening and proposed an
increase to the per share offer price of $15.00. Oppenheimer
also addressed various high level issues with IPCs
proposal, primarily involving provisions in its financing
commitments and in its markup of the merger agreement impacting
deal certainty, including whether the Company would have the
right to specific performance to enforce the merger agreement,
the amount of the termination fee payable by IPC under certain
circumstances and whether IPC would have a marketing period for
its financing after stockholder approval of the merger.
Following its discussion with Oppenheimer, IPC raised several
questions regarding the financial information presented to it on
September 17, 2010, and in order to expeditiously address
IPCs questions, IPC, Oppenheimer and the Companys
management met on September 24, 2010 and September 25,
2010 to discuss the updated financial information and related
matters.
On September 24, 2010, each of Oppenheimer and
Mr. Melnuk received a letter from Party A informing them
that Party A was withdrawing its bid to acquire the Company.
28
On September 27, 2010, IPC delivered an updated bid letter
to the board of directors reaffirming its offer price of $15.00
per share and indicating that it was prepared to proceed quickly
to complete the transaction.
At a September 27, 2010 special meeting of the board of
directors, Oppenheimer described the ongoing discussions with
IPC, which led to the updated bid letter received from IPC
earlier that day. Oppenheimer reviewed the status of the open
issues identified in IPCs original bid package, and
updated the board of directors on the ongoing discussions with
representatives of IPC and its advisors regarding those issues,
which included whether the Company would have the right to
specific performance to enforce the merger agreement, the amount
of the termination fee payable by IPC under certain
circumstances and whether IPC would have a marketing period for
its financing after stockholder approval of the merger. The
board of directors also discussed the process and timetable with
respect to completing a transaction with IPC, and authorized
Oppenheimer and Bryan Cave to continue negotiating the terms of
the transaction with IPC and its advisors.
On September 28, 2010, IPCs legal advisors sent to
Bryan Cave an initial draft of a voting agreement, which Bryan
Cave forwarded to representatives of Angelo, Gordon &
Co., L.P.
On September 29, 2010, IPC had an initial meeting with
Martin Quinn, Terry Downes, Terry A. Moody and Steven A. Schumm,
each a member of the Companys management, to begin
discussions regarding post-transaction employment arrangements.
At this meeting, IPC provided each of Messrs. Downes,
Moody, Quinn and Schumm with a draft term sheet and subscription
agreement, which included, among other things, terms for their
post-transaction equity investment in Parent and option awards.
From September 30, 2010 through October 4, 2010, IPC
and its legal advisors and Messrs. Downes, Moody, Quinn and
Schumm and their legal advisors negotiated the subscription
agreement, which included, among other things, amendments to
each of their respective employment agreements.
At a September 30, 2010 special meeting of the board of
directors, Oppenheimer and Bryan Cave updated the board of
directors on the status of IPCs debt financing and the
remaining open issues in merger agreement.
At an October 1, 2010 special meeting of the board of
directors, Oppenheimer and Bryan Cave updated the board of
directors on the discussions with IPC since the board of
directors meeting the day before, and the status of the
remaining open issues.
The Companys financial and legal advisors continued
negotiations with IPC and its advisors to finalize the remaining
open issues in the merger agreement, limited guarantee,
financing documents and other related agreements. In addition,
representatives of IPC and its legal advisors contacted
representatives of Angelo, Gordon & Co., L.P. and its
legal advisors to discuss the terms of the voting agreement.
At an October 4, 2010 special meeting of the board of
directors in the offices of Bryan Cave in New York, Bryan Cave
reviewed and discussed with the board of directors the key terms
of the merger agreement, and the board of directors discussed
the remaining open issues in the merger agreement, debt and
equity commitments and the limited guarantee. Oppenheimer
delivered to the board of directors a review of the sale process
and its financial analysis. As there remained a few important
open issues to negotiate, the board of directors authorized
Oppenheimer and Bryan Cave to proceed to finalize those
remaining issues, and the meeting was adjourned until the
following morning.
The Company and its advisors and IPC and its advisors continued
to negotiate and finalize the transaction documents during the
course of the day and into the morning of October 5, 2010.
On October 5, 2010, the board of directors reconvened its
meeting with its financial and legal advisors and reviewed the
resolution of the remaining open issues. Oppenheimer delivered
its oral opinion to the board of directors (which was
subsequently confirmed in writing), to the effect that, as of
the date of its opinion and based upon and subject to the
various assumptions, qualifications and limitations set forth in
its opinion, the per share merger consideration to be received
in cash by the holders of the Company common stock in the merger
was fair, from a financial point of view, to such holders. After
careful evaluation of the transactions and consideration of the
factors discussed below under The
Merger Reasons for the Merger; Recommendations of
the Board of Directors, the board of directors unanimously
determined that the merger agreement, the merger and the other
29
transactions related to the merger are advisable, fair to and in
the best interests of the Company and the Companys
stockholders.
On October 5, 2010, the Company and Parent entered into the
merger agreement, Parent and investment funds managed by Angelo,
Gordon & Co., L.P. entered into the voting agreement
and Parent entered into subscription agreements with each of
Messrs. Downes, Moody, Quinn and Schumm. Shortly
thereafter, the Company and IPC issued a joint public
announcement regarding the merger.
Reasons
for the Merger; Recommendations of the Board of
Directors
The board of directors, at a meeting held on October 4-5, 2010,
unanimously determined that the merger is fair to, and in the
best interests of, the Company and its stockholders and approved
and declared advisable the merger agreement, the merger and
other transactions contemplated by the merger agreement. The
board of directors resolved that the merger agreement be
submitted for consideration by the stockholders of the Company
at a special meeting of the stockholders, and recommended that
the stockholders of the Company vote to adopt the merger
agreement. The merger agreement was finalized and executed on
behalf of the Company on October 5, 2010. Thereafter, the
Company issued a press release announcing the execution of the
merger agreement.
In evaluating the merger agreement, the merger and the other
transactions contemplated by the merger agreement, the board of
directors consulted with our senior management team, as well as
our outside legal and financial advisors, and considered a
number of factors, including the following material factors (not
in any relative order of importance):
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the fact that the all-cash per share merger consideration will
provide our stockholders with immediate fair value, in cash, for
their shares of Company common stock, while avoiding long-term
business risk, and while also providing such stockholders with
certainty of value for their shares of Company common stock;
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the fact that the per share merger consideration represents a
premium of 18% over the average closing share price of $12.71
during the last 30 trading days ending October 4, 2010, the
last trading day prior to the public announcement of the merger
agreement, and a 25% premium over the Companys average
closing share price of $12.05 during the last 90 trading days
ending October 4, 2010;
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the belief of the board of directors that the merger is more
favorable to the Companys stockholders than the
alternatives to the merger, which belief was formed based on the
review of the board of directors, with the assistance of its
financial advisors, of the strategic alternatives available to
the Company;
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the judgment of the board of directors, after consultation with
management and its advisors, that continuing discussions with
Parent or any of the other bidders, or soliciting interest from
additional third parties, would be unlikely to lead to an
equivalent or better offer and could lead to the loss of the
proposed offer from Parent;
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the understanding of the board of directors of the business,
operations, earnings, financial condition and competitive
position of the Company on both a historical and prospective
basis and prospects and strategic direction of the Company;
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the various background data and analyses thereof reviewed with
the board of directors by the Companys outside financial
and legal advisors and management, as well as the opinion, dated
October 5, 2010, of Oppenheimer & Co. Inc., to
the board of directors as to the fairness, from a financial
point of view and as of the date of its opinion, and based on
and subject to various assumptions and limitations described in
its opinion, of the per share merger consideration to be
received in cash by holders of the Company common stock in the
merger, as more fully described below under the caption
The Merger Opinion of Our Financial
Advisor beginning on page 33;
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the degree of risk and uncertainty associated with various
alternative or other proposals or of proposed or potential
transaction structures, specifically considering factors such as
regulatory approvals and financing commitments;
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the terms and conditions of the proposed merger agreement and
the likelihood that the conditions to the proposed merger will
be satisfied;
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factors relating to continuation as an independent company,
including the extent of the Companys leverage, its
continuing need for financing, uncertainties of the economy in
general and uncertainties of the market for the Companys
products;
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the limited public trading volume and liquidity of the
Companys common stock;
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the likelihood that the merger would be completed based on,
among other things (not in any relative order of importance):
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the reputation and financial resources of the guarantor;
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Parent and the guarantors familiarity with the Company;
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the fact that the merger agreement provides that, in the event
of a failure of the merger to be consummated under certain
circumstances, Parent will pay us a $25,000,000 termination fee,
and the guarantors guarantee of such payment obligation
pursuant to the limited guarantee;
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the receipt of executed commitment letters from Parents
source of debt and equity financing for the merger, and the
terms of the commitment letters and the reputation of the
financing sources which, in the reasonable judgment of the board
of directors, increase the likelihood of such financings being
completed; and
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the belief that the debt commitment letter represents a strong
commitment on the part of the lenders thereto with few
conditions that would permit the lenders to terminate their
commitments;
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the Companys ability, under certain circumstances,
to engage in negotiations or discussions with a third party,
furnish such third party information relating to the Company or
any of its subsidiaries pursuant to a confidentiality agreement
and make an Adverse Recommendation Change (as defined on page
66), as described under The Merger
Agreement No Solicitations of Competing
Proposals beginning on page 65;
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the Companys ability, under certain circumstances, to
terminate the merger agreement in order to enter into an
agreement concerning a Superior Proposal (as defined on page
67), as described under The Merger Agreement
Termination of the Merger Agreement beginning on page 73;
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the availability of appraisal rights under the Delaware General
Corporation Law (the DGCL) to holders of Company
common stock who comply with all of the required procedures
under the DGCL, which allows such holders to seek appraisal of
the fair value of their shares of Company common stock as
determined by the Delaware Court of Chancery;
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the fact that the termination date under the merger agreement
allows for time that is expected to be sufficient to complete
the merger;
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the level of effort that Parent and Merger Subsidiary must use
under the merger agreement to obtain the proceeds of the
financing on the terms and conditions described in the
applicable commitment letters, including using their reasonable
best efforts to enforce their rights under the debt financing
commitments and to cause the lenders and other persons providing
financing to fund the financing on the closing date of the
merger;
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that the board of directors had independent financial
advisors; and
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the willingness of the holders of approximately 33% of the
outstanding Company common stock to support the proposed merger.
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31
The board of directors also considered a variety of potentially
negative factors in its deliberations concerning the merger
agreement and the merger, including the following (not in any
relative order of importance):
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the merger would preclude the Companys stockholders from
having the opportunity to participate in the future performance
of its assets, future potential earnings growth and future
potential appreciation of the value of Company common stock;
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the significant costs involved in connection with entering into
and completing the merger and the substantial time and effort of
management required to complete the merger and related potential
disruptions to the operation of the Companys business;
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the restrictions on the conduct of the Companys business
prior to the completion of the merger which, subject to specific
exceptions, could delay or prevent the Company from undertaking
business opportunities that may arise or any other action it
would otherwise take with respect to the operations of the
Company absent the pending completion of the merger;
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the announcement and pendency of the merger, or failure to
complete the merger, may cause substantial harm to relationships
with the Companys employees, vendors and customers and may
divert management and employee attention away from the
day-to-day
operation of our business;
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the possibility that the $6,440,000 termination fee payable by
the Company upon termination of the merger agreement under
certain circumstances could discourage other potential acquirers
from making a competing bid to acquire the Company;
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the fact that, while the Company expects that the merger will be
consummated, there can be no assurance that all conditions to
the parties obligations to complete the merger agreement
will be satisfied, and, as a result, the merger may not be
consummated;
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the fact that the Company cannot cause Parent to specifically
perform it obligations under the merger agreement, including its
obligations to obtain the required financing to close the
transaction, and that the Companys sole remedy in the
event the merger is not consummated and the termination of the
merger agreement would be limited to receipt of the $25,000,000
termination fee;
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the fact that an all-cash transaction would be taxable to the
Companys stockholders that are U.S. holders for
U.S. federal income tax purposes;
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the risk that the financing contemplated by the debt commitment
letter for the consummation of the merger might not be
obtained; and
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the fact that our directors and executive officers have
interests in the merger that are different from, or in addition
to, our stockholders. See The Merger Interests
of Our Directors and Executive Officers beginning on page
44.
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The foregoing discussion of the information and factors
considered by the board of directors is not intended to be
exhaustive, but includes the material factors considered by the
board of directors. In view of the variety of factors considered
in connection with its evaluation of the merger, the board of
directors did not find it practicable to, and did not, quantify
or otherwise assign relative weights to the specific factors
considered in reaching its determination and recommendation. In
addition, individual directors may have given different weights
to different factors. The board of directors did not undertake
to make any specific determination as to whether any factor, or
any particular aspect of any factor, supported or did not
support its ultimate determination. The board of directors based
its recommendation on the totality of the information presented.
The board of directors unanimously recommends that you vote
FOR the proposal to adopt the merger agreement and
FOR the proposal to adjourn the special meeting, if
necessary or appropriate, to solicit additional proxies.
In considering the recommendation of the board of directors with
respect to the proposal to adopt the merger agreement, you
should be aware that our directors and executive officers have
interests in the merger that are different from, or in addition
to, yours. The board of directors was aware of and considered
these interests, among
32
other matters, in evaluating and negotiating the merger
agreement and the merger, and in recommending that the merger
agreement be adopted by the stockholders of the Company. See the
section entitled The Merger Interests of Our
Directors and Executive Officers beginning on page 44.
Opinion
of Our Financial Advisor
The Company has engaged Oppenheimer as its financial advisor in
connection with the merger. In connection with this engagement,
the Companys board of directors requested that Oppenheimer
evaluate the fairness, from a financial point of view, of the
$15.00 per share cash merger consideration to be received by
holders of Company common stock as provided for in the merger
agreement. On October 4-5, 2010, at a meeting of the
Companys board of directors held to evaluate the merger,
Oppenheimer rendered to the Companys board of directors an
oral opinion, which was confirmed by delivery of a written
opinion dated October 5, 2010, to the effect that, as of
that date and based upon and subject to the matters described in
its opinion, the $15.00 per share cash consideration to be
received in the merger by holders of Company common stock was
fair, from a financial point of view, to such holders.
The full text of Oppenheimers written opinion, dated
October 5, 2010, which describes the assumptions made,
procedures followed, matters considered and limitations on the
review undertaken, is attached to this proxy statement as
Annex C.
Oppenheimers opinion was provided to the
Companys board of directors in connection with its
evaluation of the merger consideration from a financial point of
view and does not address any terms or other aspects or
implications of the merger. Oppenheimer expressed no view as to,
and its opinion does not address, the underlying business
decision of the Company to proceed with or effect the merger or
the relative merits of the merger as compared to any alternative
business strategies that might exist for the Company or the
effect of any other transaction in which the Company might
engage. Oppenheimers opinion does not constitute a
recommendation to any stockholder as to how such stockholder
should vote or act with respect to any matters relating to the
merger or otherwise.
The summary of Oppenheimers
opinion described below is qualified in its entirety by
reference to the full text of its opinion.
In arriving at its opinion, Oppenheimer:
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reviewed the execution version of the merger agreement dated
October 5, 2010;
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reviewed publicly available audited financial statements of the
Company for years ended December 31, 2009,
December 31, 2008 and December 31, 2007 and unaudited
financial statements of the Company for the six-month period
ended June 30, 2010;
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reviewed financial forecasts and estimates relating to the
Company prepared by the Companys management;
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reviewed historical market prices and trading volumes for
Company common stock;
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held discussions with the Companys senior management with
respect to the Companys business, financial condition,
operating results and future prospects;
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held discussions, at the Companys direction, with selected
third parties to solicit indications of interest in the possible
acquisition of the Company;
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reviewed and analyzed certain publicly available financial data
for companies that Oppenheimer deemed relevant;
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reviewed and analyzed certain publicly available financial
information for transactions that Oppenheimer deemed relevant;
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analyzed the estimated present value of the Companys
future cash flows based on financial forecasts and estimates
prepared by the Companys management;
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reviewed the premiums paid, based on publicly available
information, in merger and acquisition transactions Oppenheimer
deemed relevant in evaluating the merger;
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reviewed other public information concerning the Company that
Oppenheimer deemed relevant; and
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performed such other analyses, reviewed such other information
and considered such other factors as Oppenheimer deemed
appropriate.
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In rendering its opinion, Oppenheimer relied upon and assumed,
without independent verification or investigation, the accuracy
and completeness of all of the financial and other information
provided to or discussed with Oppenheimer by the Company and its
employees, representatives and affiliates or otherwise reviewed
by Oppenheimer. The management of the Company provided to
Oppenheimer two alternative sets of financial forecasts and
estimates relating to the Company and prepared by the management
of the Company, identified to Oppenheimer as Base
Case and Growth Case, as described under
The Merger Financial Projections
beginning on page 40. At the direction of the management of
the Company, and with the Companys consent, Oppenheimer
assumed, without independent verification or investigation, that
such forecasts and estimates were reasonably prepared on bases
reflecting the best available information, estimates and
judgments of the management of the Company as to the future
financial condition and operating results of the Company. The
Company informed Oppenheimer of the greater risks and
uncertainties inherent in achieving the results of the Growth
Case forecasts and estimates in the amounts and at the times
contemplated thereby. Oppenheimer also assumed, with the
Companys consent, that the merger would be consummated in
accordance with its terms without waiver, modification or
amendment of any material term, condition or agreement and in
compliance in all material respects with all applicable laws and
other requirements and that, in the course of obtaining the
necessary regulatory or third party approvals, consents and
releases with respect to the merger, no delay, limitation,
restriction or condition would be imposed that would have an
adverse effect on the Company or the merger.
Oppenheimer neither made nor obtained any independent
evaluations or appraisals of the assets or liabilities,
contingent or otherwise, of the Company. Oppenheimer did not
express any opinion as to the underlying valuation, future
performance or long-term viability of the Company or the price
at which shares of Company common stock would trade at any time.
Oppenheimer also expressed no view as to, and its opinion did
not address, the solvency of the Company under any state,
federal or other laws relating to bankruptcy, insolvency or
similar matters. In addition, Oppenheimer expressed no view as
to, and its opinion did not address, any terms or other aspects
or implications of the merger (other than the $15.00 per share
cash merger consideration to the extent expressly specified in
its opinion) or any aspect or implication of any other
agreement, arrangement or understanding entered into in
connection with the merger or otherwise or the fairness of the
amount or nature of, or any other aspect relating to, the
compensation to be received by any individual officers,
directors or employees of any parties to the merger, or any
class of such persons, relative to the merger consideration or
otherwise. In addition, Oppenheimer expressed no view as to, and
its opinion did not address, the Companys underlying
business decision to proceed with or effect the merger nor did
its opinion address the relative merits of the merger as
compared to any alternative business strategies that might exist
for the Company or the effect of any other transaction in which
the Company might engage. Oppenheimers opinion was
necessarily based on the information available to it and general
economic, financial and stock market conditions and
circumstances as they existed and could be evaluated by
Oppenheimer on the date of its opinion. The credit, financial
and stock markets have been experiencing unusual volatility and
Oppenheimer expressed no opinion or view as to the potential
effects, if any, of such volatility on the Company, Parent or
the proposed merger. Although subsequent developments may affect
its opinion, Oppenheimer does not have any obligation to update,
revise or reaffirm its opinion.
Except as described above, the Company imposed no other
instructions or limitations on Oppenheimer with respect to the
investigations made or the procedures followed by it in
rendering its opinion. This summary is not a complete
description of Oppenheimers opinion or the financial
analyses performed and factors considered by Oppenheimer in
connection with its opinion. The preparation of a financial
opinion is a complex analytical process involving various
determinations as to the most appropriate and relevant methods
of financial analysis and the application of those methods to
the particular circumstances and, therefore, a financial opinion
is not readily susceptible to summary description. Oppenheimer
arrived at its ultimate opinion based on the results of all
analyses undertaken by it and assessed as a whole, and did not
draw, in isolation, conclusions from or with regard to any one
factor or method of analysis for purposes of its opinion.
Accordingly, Oppenheimer believes that its analyses and this
summary must be considered as a whole and that selecting
portions of its analyses and factors or focusing on information
presented in tabular format, without considering all analyses
and factors or the narrative description of
34
the analyses, could create a misleading or incomplete view of
the processes underlying Oppenheimers analyses and opinion.
In performing its analyses, Oppenheimer considered industry
performance, general business, economic, market and financial
conditions and other matters existing as of the date of its
opinion, many of which are beyond the Companys control. No
company, business or transaction used in the analyses is
identical to the Company or the merger, and an evaluation of the
results of those analyses is not entirely mathematical. Rather,
the analyses involve complex considerations and judgments
concerning financial and operating characteristics and other
factors that could affect the acquisition, public trading or
other values of the companies, business segments or transactions
analyzed.
The assumptions and estimates contained in Oppenheimers
analyses and the ranges of valuations resulting from any
particular analysis are not necessarily indicative of actual
values or future results, which may be significantly more or
less favorable than those suggested by its analyses. In
addition, analyses relating to the value of businesses or
securities do not purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold.
Accordingly, the assumptions and estimates used in, and the
results derived from, Oppenheimers analyses are inherently
subject to substantial uncertainty.
Oppenheimer was not requested to, and it did not, recommend the
specific consideration payable in the merger. The type and
amount of consideration payable in the merger was determined
through negotiation between the Company and Irving Place
Capital, and the decision to enter into the transaction was
solely that of the Companys board of directors.
Oppenheimers opinion and financial presentation were only
one of many factors considered by the Companys board of
directors in its evaluation of the merger and should not be
viewed as determinative of the views of the Companys board
of directors or management with respect to the merger or the
merger consideration.
The following is a summary of the material financial analyses
reviewed with the Companys board of directors in
connection with Oppenheimers opinion dated October 5,
2010.
The financial analyses summarized below include
information presented in tabular format. In order to fully
understand Oppenheimers financial analyses, the tables
must be read together with the text of each summary. The tables
alone do not constitute a complete description of the financial
analyses. Considering the data in the tables below without
considering the full narrative description of the financial
analyses, including the methodologies and assumptions underlying
the analyses, could create a misleading or incomplete view of
Oppenheimers financial analyses.
Selected
Companies Analysis
Oppenheimer reviewed financial and stock market information of
the Company and the eight selected publicly held companies with
operations in the cutting & welding and industrial
hand tools industry, which is the industry in which the Company
operates, referred to as the Peer Group. Oppenheimer determined
that businesses of two of the selected companies in the Peer
Group were primarily focused on cutting & welding, referred
to as the Focus Group. The following is a list of the selected
companies in the Peer Group and in the Focus Group:
Peer Group:
|
|
|
|
|
Charter International plc
|
|
|
|
Flow International Corporation
|
|
|
|
Hurco Companies Inc.
|
|
|
|
Illinois Tool Works Inc.
|
|
|
|
Kennametal Inc.
|
|
|
|
Lincoln Electric Holdings, Inc.
|
|
|
|
Snap-on Incorporated
|
|
|
|
Stanley Black & Decker, Inc.
|
35
Focus Group:
|
|
|
|
|
Charter International plc
|
|
|
|
Lincoln Electric Holdings Inc.
|
Oppenheimer reviewed, among other things, enterprise values of
the selected companies, calculated as fully diluted market value
based on closing stock prices on October 1, 2010, plus debt
and less cash, as multiples of revenue and as multiples of
earnings before interest, taxes, depreciation and amortization,
but excluding stock-based compensation and non-recurring
charges, referred to as Adjusted EBITDA. The selected
companies revenue and Adjusted EBITDA were measured over
the last twelve months and for estimated calendar years 2010 and
2011. Oppenheimer also reviewed closing stock prices of the
selected companies on October 1, 2010 as multiples of net
income, adjusted for discontinued operations and non-recurring
charges, per fully-diluted share outstanding of the selected
companies, measured over the last twelve months and for
estimated calendar years 2010 and 2011. Financial data for the
selected companies were based on certain publicly available
research analysts estimates, public filings and other
publicly available information.
Oppenheimer then calculated the median of each of the foregoing
multiples derived from the Peer Group and from the Focus Group
over each of the last twelve months and estimated calendar years
2010 and 2011. Oppenheimer then selected the following ranges,
representing plus and minus 15 percent around each
applicable median multiple:
Selected
Multiple Ranges
|
|
|
|
|
|
|
Peer Group
|
|
Focus Group
|
Metric and Time Period
|
|
Multiple Range
|
|
Multiple Range
|
|
Revenue
|
|
|
|
|
Last Twelve Months
|
|
1.05x 1.42x
|
|
0.79x 1.07x
|
2010 Estimate
|
|
1.01x 1.37x
|
|
0.77x 1.04x
|
2011 Estimate
|
|
1.04x 1.40x
|
|
0.71x 0.96x
|
Adjusted EBITDA
|
|
|
|
|
Last Twelve Months
|
|
8.3x 11.3x
|
|
7.2x 9.7x
|
2010 Estimate
|
|
7.6x 10.2x
|
|
6.8x 9.1x
|
2011 Estimate
|
|
6.3x 8.6x
|
|
5.8x 7.8x
|
Adjusted Net Income/EPS
|
|
|
|
|
Last Twelve Months
|
|
19.3x 26.1x
|
|
15.9x 21.6x
|
2010 Estimate
|
|
14.1x 19.1x
|
|
13.2x 17.8x
|
2011 Estimate
|
|
11.2x 15.1x
|
|
10.9x 14.7x
|
36
Oppenheimer then applied the selected ranges to corresponding
data of the Company, to determine the following per share equity
reference ranges:
Per
Share Equity Reference Ranges
|
|
|
|
|
Metric and Time
Period
|
|
Peer Group Range
|
|
Focus Group Range
|
|
Revenue
|
|
|
|
|
Last Twelve Months
|
|
$14.46 $23.92
|
|
$7.56 $14.95
|
2010 Estimate
|
|
$15.09 $24.76
|
|
$8.24 $15.82
|
2011 Estimate (Base Case)
|
|
$16.75 $27.00
|
|
$7.37 $14.72
|
2011 Estimate (Growth Case)
|
|
$18.44 $29.28
|
|
$8.61 $16.30
|
Adjusted EBITDA
|
|
|
|
|
Last Twelve Months
|
|
$16.31 $26.40
|
|
$12.24 $20.97
|
2010 Estimate
|
|
$18.41 $29.24
|
|
$15.09 $24.76
|
2011 Estimate (Base Case)
|
|
$14.33 $23.73
|
|
$12.02 $20.69
|
2011 Estimate (Growth Case)
|
|
$16.14 $26.17
|
|
$13.72 $22.92
|
Adjusted Net Income / EPS
|
|
|
|
|
Last Twelve Months
|
|
$17.45 $23.32
|
|
$14.55 $19.41
|
2010 Estimate
|
|
$16.98 $22.97
|
|
$15.79 $21.36
|
2011 Estimate (Base Case)
|
|
$17.80 $24.09
|
|
$17.29 $23.40
|
2011 Estimate (Growth Case)
|
|
$19.93 $26.97
|
|
$19.36 $26.19
|
Financial data for the Company were based on publicly available
information and the financial forecasts and estimates relating
to the Company prepared by the management of the Company.
Oppenheimer then calculated an implied per share equity
reference range for each of the Peer Group and the Focus Group
equal to the average of each per share reference range for the
applicable group. This analysis indicated the following implied
per share equity reference ranges for the Company, as compared
to the $15.00 per share cash merger consideration:
Implied
Per Share Equity Reference Ranges
|
|
|
Peer Group
|
|
Focus Group
|
|
$16.84 $25.65
|
|
$12.65 $20.12
|
37
Selected
Precedent Transactions Analysis
Oppenheimer reviewed the transaction values of the following 19
transactions involving companies with operations in the general
industrials and machinery industry:
|
|
|
|
|
Announcement
|
|
|
|
|
Date
|
|
Target
|
|
Acquiror
|
|
July 29, 2010
|
|
CRC-Evans Pipeline International, Inc.
|
|
Stanley Black & Decker, Inc.
|
July 19, 2010
|
|
Ames True Temper, Inc.
|
|
Griffon Corporation
|
March 26, 2010
|
|
Thermon Holding Corp.
|
|
Code Hennessy & Simmons, LLC; Thompson Street Capital
Partners
|
November 2, 2009
|
|
The Black & Decker Corporation
|
|
Stanley Works, Inc.
|
April 21, 2008
|
|
Consolidated Precision Products, Inc.
|
|
Arlington Capital Partners
|
November 28, 2007
|
|
Harsco GasServ
|
|
Wind Point Partners
|
May 22, 2007
|
|
Novamerican Steel Inc.
|
|
Symmetry Holdings Inc.
|
March 11, 2007
|
|
Copperfield, LLC
|
|
Coleman Cable, Inc.
|
November 14, 2006*
|
|
AmeriCast Technologies Inc.
|
|
Castle Harlan, Inc.
|
July 18, 2006
|
|
Paladin Brands, LLC
|
|
Dover Resources, Inc.
|
May 15, 2006*
|
|
PennEngineering Motion Technologies
|
|
Ametek, Inc.
|
July 8, 2005
|
|
Facom S.A.
|
|
Stanley Works, Inc.
|
November 18, 2004*
|
|
Key Components, Inc.
|
|
Actuant Corporation
|
September 8, 2004
|
|
Tapco International Corporation
|
|
Headwaters Incorporated
|
July 19, 2004
|
|
Pentair Tool Group, Inc.
|
|
The Black & Decker Corporation
|
June 23, 2004
|
|
Stanadyne Corporation
|
|
Kohlberg & Company, LLC
|
June 14, 2004
|
|
Simplicity Manufacturing, Inc.
|
|
Briggs & Stratton Power Products Group LLC
|
June 11, 2004
|
|
Woods Equipment Company
|
|
Genstar Capital, LLC
|
March 4, 2004
|
|
Prestolite Electric Incorporated
|
|
First Atlantic Capital, Ltd.
|
|
|
|
|
*
|
Adjusted EBITDA information was not publicly available for the
target company in this transaction.
|
Oppenheimer reviewed, among other things, transaction values,
calculated as the purchase prices paid for the target companies
in the selected transactions, plus debt and less cash, as
multiples of such target companies last
12 months revenue and Adjusted EBITDA publicly
available at the time of the announcement of the relevant
transaction; applicable Adjusted EBITDA information was not
publicly available for the target company in three of the
selected transactions and accordingly was not reviewed.
Financial data for the selected transactions were based on
publicly available information at the time of announcement of
the relevant transaction. Oppenheimer then applied the selected
ranges provided below of last 12 months revenue and
Adjusted EBITDA multiples derived from the selected transactions
to the Companys last 12 months (as of June 30,
2010) revenue and Adjusted EBITDA, respectively, to
determine per share equity reference ranges.
Oppenheimer then calculated the median of the foregoing last
twelve months revenue and Adjusted EBITDA multiples.
Oppenheimer then selected the following ranges, representing
plus and minus 15 percent around each applicable median
multiple:
Selected
Multiple Ranges
|
|
|
Metric
|
|
Multiple Range
|
|
Revenue
|
|
0.88x 1.19x
|
Adjusted EBITDA
|
|
6.0x 8.1x
|
Oppenheimer then applied the selected ranges to corresponding
data of the Company, to determine the following per share equity
reference ranges:
Per
Share Equity Reference Ranges
|
|
|
Metric
|
|
Range
|
|
Revenue
|
|
$9.84 $17.87
|
Adjusted EBITDA
|
|
$8.07 $15.61
|
38
Financial data for the Company were based on publicly available
information.
Oppenheimer then calculated an implied per share reference range
equal to the average of the foregoing per share reference
ranges. This analysis indicated the following implied per share
equity reference ranges for the Company, as compared to the
$15.00 per share cash merger consideration:
Average
Implied Per Share
Equity Reference Range
$8.95
$16.74
Discounted
Cash Flow Analysis
Oppenheimer performed a discounted cash flow analysis on the
Company using the Base Case and Growth Case prepared by the
Companys management. Oppenheimer calculated implied net
present value per share of Company common stock as of
June 30, 2010 based on unlevered, after-tax free cash flows
that the Company forecasted to generate during the second half
of fiscal year 2010 through the full fiscal year 2014.
Oppenheimer calculated a range of terminal values for the
Company by applying a range of perpetuity growth rates of 2.3%
to 4.3%, which were based upon the historical world crude steel
production average annual growth rate of 3.3%, to the fiscal
year 2014 estimated unlevered, after-tax estimated free cash
flow. Oppenheimer also calculated a range of estimated present
values for the tax shield from net operating loss
(NOL) carryforwards anticipated by the
Companys management to be utilized by the Company. The
present values of the unlevered, after tax free cash flows,
terminal values and NOL carryforward tax shields were calculated
using discount rates ranging from 14.5% to 16.5%, reflecting
estimates of the Companys weighted average cost of capital
calculated using the capital asset pricing model and assuming
that the Peer Group average capital structure represents the
optimal capital structure.
Oppenheimer then calculated an implied net present value per
share of Company common stock as of June 30, 2010 by adding
together the corresponding estimated net present values of the
unlevered, after tax free cash flows, terminal values and NOL
tax shields. This analysis indicated the following implied per
share equity reference ranges for the Company, the
Companys NOL tax shields, and the total for the Company
and the Companys NOL tax shields, based on the Base Case
and Growth Case, as compared to the $15.00 per share cash merger
consideration:
Implied
Per Share Equity Reference Ranges
|
|
|
|
|
|
|
Base Case
|
|
Growth Case
|
|
Equity Value
|
|
$9.04 $16.58
|
|
$11.67 $20.18
|
NOL Tax Shields
|
|
$2.48 $2.47
|
|
$2.50 $2.54
|
|
|
|
|
|
Total
|
|
$11.53 $19.05
|
|
$14.17 $22.72
|
Other
Factors
Oppenheimer also reviewed, for informational purposes, certain
other factors, including:
|
|
|
|
|
the premiums paid in certain all-cash transactions in the United
States with enterprise values between $300 million and
$500 million announced since January 1, 2004 and
applied to the closing prices of Company common stock one day,
one week and one month prior to October 1, 2010 and the
volume-weighted average prices of Company common stock one
month, three months and one year prior to October 1, 2010 a
selected range of premiums derived from corresponding
pre-announcement periods for such transactions, which indicated
an implied equity reference range for the Company of
approximately $14.38 to $19.10 per share based on the average of
the selected ranges of premiums over the selected six time
periods; and
|
|
|
|
historical trading prices of Company common stock for the
52 week period ended October 1, 2010.
|
39
Miscellaneous
The Company has agreed to pay Oppenheimer for its financial
advisory services in connection with the merger an aggregate fee
of approximately $4.8 million, a portion of which was
payable in connection with Oppenheimers engagement, a
portion of which was payable upon delivery of Oppenheimers
opinion and a significant portion of which is contingent upon
consummation of the merger. The Company also has agreed to
reimburse Oppenheimer for its reasonable expenses, including
reasonable fees and expenses of its legal counsel, and to
indemnify Oppenheimer and related parties against liabilities,
including liabilities under the federal securities laws,
relating to, or arising out of, its engagement. In the ordinary
course of business, Oppenheimer and its affiliates may actively
trade the securities of the Company and its and Irving Place
Capitals respective affiliates for Oppenheimers and
its affiliates own accounts and for the accounts of
customers and, accordingly, may at any time hold a long or short
position in such securities.
The Company selected Oppenheimer to act as its financial advisor
in connection with the merger based on Oppenheimers
reputation and experience and its familiarity with the Company
and its business. Oppenheimer is an internationally recognized
investment banking firm and, as a part of its investment banking
business, is regularly engaged in valuations of businesses and
securities in connection with acquisitions and mergers,
underwritings, secondary distributions of securities, private
placements and valuations for other purposes. The issuance of
Oppenheimers opinion was approved by an authorized
committee of Oppenheimer.
Financial
Projections
We do not as a matter of course publicly disclose long-term
forecasts or internal projections as to future performance,
revenues, earnings or financial condition. However, certain
prospective financial information, which we refer to as the
Management Forecast, was prepared by our management and reviewed
with and discussed among members of the board of directors and
Oppenheimer. Our management provided two alternative sets of the
Management Forecast, to which we refer as the Base
Case and the Growth Case, to Oppenheimer and
the board of directors, as such information is discussed more
fully in The MergerOpinion of Our Financial
Advisor, on page 33. Management made available to Parent
the prospective financial information included in the Growth
Case to facilitate the due diligence review by Parent and its
advisors. Managements key assumptions supporting the Base
Case and Growth Case are discussed below.
We have included the material portions of the Management
Forecast below in order to give our stockholders access to this
information as well. The inclusion of the prospective financial
information below should not be regarded as an indication that
the Company, our management team, the board of directors or
Parent, or any of their respective representatives considered,
or now considers, the Management Forecast to be predictive of
actual future results.
Managements internal financial forecasts, upon which the
prospective financial information set forth below is based, are
subjective in many respects. The prospective financial
information set forth below reflects numerous assumptions with
respect to industry performance, competition, general business,
economic, geo-political, currency, market and financial
conditions, the costs of raw materials and components, and other
matters, all of which are difficult to predict and beyond our
control.
The prospective financial information set forth below also
reflects numerous estimates and assumptions related to our
business that are inherently subject to significant economic,
political and competitive uncertainties, all of which are
difficult to predict and many of which are beyond our control.
As a result, although the prospective financial information set
forth below was prepared in good faith based on assumptions
believed to be reasonable at the time the information was
prepared, there can be no assurance that the assumptions made in
preparing such information will prove accurate or that the
projected results reflected therein will be realized.
The prospective financial information set forth below was not
prepared with a view toward public disclosure. Accordingly, the
prospective financial information set forth below was not
prepared with a view toward complying with the published
guidelines of the SEC regarding projections or the guidelines
established by the American Institute of Certified Public
Accountants for preparation and presentation of prospective
financial information or U.S. generally accepted accounting
principles (GAAP). Some of the projections present
financial metrics that
40
were not prepared in accordance with GAAP. Neither our
independent auditor nor any other independent accountants have
compiled, examined or performed any procedures with respect to
the prospective financial information contained herein, nor have
they expressed any opinion or any other form of assurance on
such information or its achievability, and they assume no
responsibility for, and disclaim any association with, the
prospective financial information.
The prospective financial information set forth below does not
take into account any circumstances or events occurring since
the date such information was prepared or which may occur in the
future, and, in particular, does not take into account any
revised prospects of our business, changes in general business,
geo-political or economic conditions, competition or any other
transaction or event that has occurred since the date on which
such information was prepared or which may occur in the future.
Prospective financial information are forward-looking statements
and are based on estimates and assumptions that are inherently
subject to factors such as industry performance, competition,
general business, economic, regulatory, geo-political, market
and financial conditions, as well as changes to the business,
financial condition or results of operation of the Company,
including the factors described under Cautionary Statement
Regarding Forward-Looking Information beginning on
page 15, and other risk factors as disclosed in our filings
with the SEC that could cause actual results to differ
materially from those shown below. Since the prospective
financial information set forth below covers multiple years,
such information by its nature is subject to greater uncertainty
with each successive year. In addition, the projections do not
take into account any of the transactions contemplated by the
merger agreement, including the merger, which might also cause
actual results to differ materially.
We have made publicly available our actual results for the first
two quarters of the 2010 fiscal year ended March 31, 2010
and June 30, 2010. You should review our Quarterly Reports
on
Form 10-Q
for the quarters ended March 31, 2010 and June 30,
2010, respectively, to obtain this information. See Where
You Can Find More Information beginning on page 84.
You are cautioned not to place undue reliance on the specific
portions of the prospective financial information set forth in
the Management Forecast. No one has made or makes any
representation to any stockholder regarding the information
included in the prospective financial information set forth in
the Management Forecast.
For the foregoing reasons, as well as the bases and assumptions
on which the prospective financial information set forth in the
Management Forecast was compiled, the inclusion of the
prospective financial information in this proxy statement should
not be regarded as an indication that such information will be
predictive of actual future results or events, and it should not
be relied on as such. Except as required by applicable
securities laws, we have not updated nor do we intend to update
or otherwise revise the prospective financial information set
forth below, including, without limitation, to reflect
circumstances existing after the date such information was
prepared or to reflect the occurrence of future events,
including, without limitation, changes in general economic,
geo-political or industry conditions, even in the event that any
or all of the assumptions underlying the prospective financial
information is shown to be in error.
Our management employed the following key assumptions in
preparing the Base Case projections summarized in
the table below:
|
|
|
|
|
Market, or volume, growth from fiscal 2010 to fiscal 2014 was
projected at an annual growth rate of approximately 0.0%.
|
|
|
|
Price growth from fiscal 2010 to fiscal 2014 was projected at an
annual growth rate of approximately 2.0-3.0%.
|
|
|
|
New product initiative, or market share, growth from fiscal 2010
to fiscal 2014 was projected at an annual growth rate of
approximately 1.0-2.0%.
|
|
|
|
Welding and plasma growth from fiscal 2012 to fiscal 2014 was
projected at an annual growth rate of approximately 1.0-2.0%.
|
|
|
|
Gross margins as a percentage of net sales were assumed at
approximately 34.5% in fiscal years 2010 and 2011 and to
increase to approximately 36.0% by fiscal year 2014 through
further cost saving initiatives.
|
41
|
|
|
|
|
SG&A expenses growth from fiscal 2011 to fiscal 2014 was
projected at an annual growth rate of approximately 2.0%.
|
Base
Case
(dollars in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projections
|
|
|
|
FY2010E
|
|
|
FY2011E
|
|
|
FY2012E
|
|
|
FY2013E
|
|
|
FY2014E
|
|
|
Net Sales
|
|
$
|
409.2
|
|
|
$
|
423.7
|
|
|
$
|
456.8
|
|
|
$
|
488.8
|
|
|
$
|
530.3
|
|
Adjusted EBITDA(1)
|
|
$
|
61.3
|
|
|
$
|
63.7
|
|
|
$
|
79.9
|
|
|
$
|
86.6
|
|
|
$
|
96.6
|
|
Adjusted Net Income(2)
|
|
$
|
14.6
|
|
|
$
|
21.6
|
|
|
$
|
34.7
|
|
|
$
|
42.0
|
|
|
$
|
51.5
|
|
Margin and Growth Rate Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Growth
|
|
|
17.7
|
%
|
|
|
3.6
|
%
|
|
|
7.8
|
%
|
|
|
7.0
|
%
|
|
|
8.5
|
%
|
Adjusted EBITDA Margin
|
|
|
15.0
|
%
|
|
|
15.0
|
%
|
|
|
17.5
|
%
|
|
|
17.7
|
%
|
|
|
18.2
|
%
|
|
|
|
(1)
|
|
Adjusted EBITDA means operating profits, excluding stock based
compensation and non-recurring charges, before interest, taxes,
depreciation and amortization.
|
|
(2)
|
|
Adjusted Net Income means net income, excluding discontinued
operations and non-recurring items, tax effected.
|
Our management employed the following key assumptions in
preparing the Growth Case projections summarized in
the table below:
|
|
|
|
|
Market, or volume, growth from fiscal 2010 to fiscal 2014 was
projected at an annual growth rate of approximately 4.0%.
|
|
|
|
Price growth from fiscal 2010 to fiscal 2014 was projected at an
annual growth rate of approximately 2.0-3.0%.
|
|
|
|
New product initiative, or market share, growth from fiscal 2010
to fiscal 2014 was projected at an annual growth rate of
approximately 1.0-2.0%.
|
|
|
|
Welding and plasma growth from fiscal 2011 to fiscal 2014 was
projected at an annual growth rate of approximately 2.0-3.0%.
|
|
|
|
Gross margins as a percentage of net sales were assumed to
improve from approximately 34.5% in fiscal year 2010 to
approximately 36.5% by fiscal year 2014 due to further cost
saving initiatives.
|
|
|
|
SG&A expenses growth from fiscal 2011 to fiscal 2014 was
projected at an annual growth rate of approximately 5.0%.
|
Growth
Case
(dollars in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projections
|
|
|
|
FY2010E
|
|
|
FY2011E
|
|
|
FY2012E
|
|
|
FY2013E
|
|
|
FY2014E
|
|
|
Net Sales
|
|
$
|
409.2
|
|
|
$
|
448.4
|
|
|
$
|
491.7
|
|
|
$
|
545.7
|
|
|
$
|
614.0
|
|
Adjusted EBITDA(1)
|
|
$
|
61.3
|
|
|
$
|
68.0
|
|
|
$
|
88.7
|
|
|
$
|
100.7
|
|
|
$
|
117.1
|
|
Adjusted Net Income(2)
|
|
$
|
14.6
|
|
|
$
|
24.3
|
|
|
$
|
40.6
|
|
|
$
|
55.8
|
|
|
$
|
66.0
|
|
Margin and Growth Rate Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Growth
|
|
|
17.7
|
%
|
|
|
9.6
|
%
|
|
|
9.7
|
%
|
|
|
11.0
|
%
|
|
|
12.5
|
%
|
Adjusted EBITDA Margin
|
|
|
15.0
|
%
|
|
|
15.2
|
%
|
|
|
18.0
|
%
|
|
|
18.5
|
%
|
|
|
19.1
|
%
|
|
|
|
(1)
|
|
Adjusted EBITDA means operating profits, excluding stock based
compensation and non-recurring charges, before interest, taxes,
depreciation and amortization.
|
42
|
|
|
(2)
|
|
Adjusted Net Income means net income, excluding discontinued
operations and non-recurring items, tax effected.
|
Effects
of the Merger
If the merger is consummated, Merger Subsidiary will be merged
with and into the Company, and the Company will continue as the
surviving corporation. Following the consummation of the merger,
all of the Companys issued and outstanding common stock
will be owned by Parent.
Upon consummation of the merger, each share of Company common
stock (and each restricted share of Company common stock)
outstanding immediately prior to the effective time of the
merger (other than shares held by us or owned by Parent or any
of its subsidiaries, or by stockholders who properly exercise
their appraisal rights under Delaware law for such shares) will
be cancelled and converted automatically into the right to
receive $15.00 in cash, without interest and less any applicable
withholding taxes. At the effective time of the merger, each
option to acquire shares of our common stock that is outstanding
immediately prior to the effective time of the merger, whether
vested or unvested, will vest (if unvested) and will be
cancelled as of the effective time of the merger in exchange for
the right to receive a cash payment equal to the number of
shares of our common stock subject to the option, multiplied by
the excess, if any, by which $15.00 exceeds the exercise price
of the option, less any applicable withholding taxes. Each
option for which the exercise price per share of our common
stock equals or exceeds $15.00 will be cancelled and have no
further force or effect without any right to receive any
consideration therefor.
If the merger is consummated, our stockholders will have no
interest in the Companys net book value or net earnings
after the merger.
The Companys common stock is currently registered under
the Exchange Act, and is quoted on the Nasdaq under the symbol
THMD. As a result of the merger, the Company, as the
surviving corporation, will become a privately held corporation.
The Company common stock will be delisted from the Nasdaq and
deregistered under the Exchange Act and cease to be publicly
traded. As a result, after the merger the Company common stock
will cease to be quoted on the Nasdaq, and price quotations with
respect to sales of shares of the Company common stock in the
public market will no longer be available.
At the effective time of the merger, our certificate of
incorporation, as in effect immediately prior to the merger,
will be amended and will become the certificate of incorporation
of the surviving corporation in the form attached to the merger
agreement, until thereafter amended in accordance with its terms
and applicable law. The bylaws of Merger Subsidiary, as in
effect immediately prior to the merger, will become the bylaws
of the surviving corporation until thereafter amended in
accordance with their terms and applicable law. The board of
directors of the surviving corporation will, from and after the
effective time of the merger, consist of the directors of Merger
Subsidiary until their successors have been duly elected or
appointed and qualified or until their earlier death,
resignation or removal in accordance with the certificate of
incorporation and bylaws of the surviving corporation. Except as
determined by Parent or Merger Subsidiary prior to the effective
time of the merger, the officers of the Company will, from and
after the effective time of the merger, be the officers of the
surviving corporation until their successors have been duly
elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the certificate of
incorporation and bylaws of the surviving corporation.
Voting
Agreement
In connection with the execution of the merger agreement,
Angelo, Gordon & Co., L.P., as investment manager for
certain stockholders of the Company (each, an Angelo,
Gordon Stockholder) entered into a voting agreement with
Parent (attached as
Annex D
). Each Angelo, Gordon
Stockholder has agreed to vote shares of Company common stock
(representing approximately 33% of the outstanding shares of
Company common stock as of the record date (the Angelo,
Gordon Shares)) at any meeting of the stockholders of the
Company however called (or any action by written consent in lieu
of a meeting) or any adjournment thereof in favor of the
adoption of the merger agreement, the approval of the
transactions contemplated thereby and approval of any proposal
to adjourn or postpone any meeting of the stockholders to a
later date if there are not sufficient votes for approval of the
proposal to adopt the merger agreement on the date on which such
meeting is held.
43
Each Angelo, Gordon Stockholder also agreed to vote such any
Angelo, Gordon Shares held by such stockholder against the
following actions:
|
|
|
|
|
any Acquisition Proposal (as defined on page 67) or any
other proposal made in opposition to adoption of the merger
agreement, and
|
|
|
|
|
|
any agreement (including any amendment of any agreement),
amendment of our certificate of incorporation or bylaws or other
action, in each case, that is intended or could reasonably be
expected to prevent or materially impede, interfere with, or
delay the consummation of the transactions contemplated by the
merger agreement.
|
Each Angelo, Gordon Stockholder also appointed Parent as his,
her or its proxy and attorney-in-fact (with full power of
substitution) to vote all of such persons shares (at any
meeting of stockholders of the Company however called or any
adjournment thereof), or to execute one or more written consents
in respect of such shares, (i) in favor of the adoption of
the merger agreement, the approval of the transactions
contemplated thereby and approval of any proposal to adjourn or
postpone such meeting to a later date if there are not
sufficient votes for approval of the foregoing on the date on
which such meeting is held and (ii) against the actions
listed in the two bullet points above; provided, however, that
each Angelo, Gordon Stockholders grant of the proxy shall
be effective if, and only if, (a) such Angelo, Gordon
Stockholder has not delivered to the Secretary of the Company at
least ten business days prior to such meeting a duly executed
proxy card previously approved by Parent voting such Angelo,
Gordon Stockholders shares in the manner specified above
or (b) in the event such proxy card has been thereafter
modified or revoked or otherwise fails to provide evidence of
such Angelo, Gordon Stockholders compliance with its
obligations under the voting agreement in form and substance
reasonably acceptable to Parent. The proxy granted is
irrevocable until termination of the voting agreement, as
described below.
Each Angelo, Gordon Stockholder further agreed not to, directly
or indirectly:
|
|
|
|
|
sell, transfer, give, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer,
gift, pledge, encumbrance, assignment or other disposition of,
any of such Angelo, Gordon Stockholders shares (or any
right, title or interest thereto or therein);
|
|
|
|
deposit any of such shares into a voting trust or grant any
proxies or enter into a voting agreement, power of attorney or
voting trust with respect to any of such shares; or
|
|
|
|
agree to take any of the actions referred to in the two bullet
points immediately above.
|
Each Angelo, Gordon Stockholder also agrees to comply with, and
not to take any action prohibited by, the non-solicitation
provisions in the merger agreement. See The Merger
Agreement No Solicitations of Competing
Proposals beginning on page 65.
The voting agreement and the proxy granted by each Angelo,
Gordon Stockholder shall terminate on the first to occur of
(a) the effective time of the merger, (b) termination
of the merger agreement in accordance with its terms,
(c) the effectiveness of any amendment, modification,
supplement to, or waiver under, the merger agreement which
amendment, modification, supplement or waiver would reduce the
amount or change the form of the merger consideration payable in
the merger unless consented to in writing by each Angelo, Gordon
Stockholder, and (d) the mutual written consent of Parent
and each Angelo, Gordon Stockholder.
Interests
of Our Directors and Executive Officers
When considering the unanimous recommendation of the board of
directors that you vote to approve the proposal to adopt the
merger agreement, you should be aware that our directors and
executive officers have interests in the merger that are
different from, or in addition to, those of our stockholders
generally. The board of directors was aware of and considered
these interests, among other matters, in evaluating and
negotiating the merger agreement and the merger, and in
recommending that the merger agreement be adopted by the
stockholders of the Company. For the purposes of all of the
agreements and plans described below, the completion of the
transactions contemplated by the merger agreement will
constitute a change in control.
44
Equity
Compensation Awards
Pursuant to the terms of the Amended and Restated 2004 Stock
Incentive Plan and the 2004 Non-Employee Director Stock Option
Plan and the applicable award agreements thereunder
(collectively, the Stock Plans), upon the
consummation of the merger, all outstanding unvested stock
options will vest and all restrictions on outstanding restricted
stock awards will lapse, including with respect to those stock
options and restricted stock awards held by our directors and
executive officers. In accordance with the merger agreement,
these awards will be subject to the following treatment:
|
|
|
|
|
each option to acquire shares of our common stock that is
outstanding immediately prior to the effective time of the
merger, whether vested or unvested, will vest (if unvested) and
will be cancelled as of the effective time of the merger in
exchange for the right to receive a cash payment equal to the
number of shares of our common stock subject to the option,
multiplied by the excess, if any, by which $15.00 exceeds the
exercise price of the option, less any applicable withholding
taxes;
|
|
|
|
each option for which the exercise price per share of our common
stock equals or exceeds $15.00 will be cancelled and have no
further effect without any right to receive any consideration
therefor; and
|
|
|
|
each share of restricted stock will be treated in the same
manner as other shares of outstanding common stock and will be
cancelled and converted automatically into the right to receive
$15.00 in cash, without interest and less any applicable
withholding taxes.
|
Based on the Companys equity compensation holdings as of
October 29, 2010, and assuming that each of the directors
and executive officers continue to hold such restricted stock
and stock options until the completion of the merger,
(i) the number of outstanding and unexercised options,
vested or unvested (with exercise prices ranging from $4.79 to
$14.88) held by our directors and executive officers (as a
group) that would entitle the holder to receive an amount in
cash in exchange for such options is 654,216 (with such options
having a total
in-the-money
value of approximately $2,480,998, based upon a $15.00 per share
stock price) and (ii) the number of shares of restricted
stock held by the directors and executive officers that would
entitle the holder to a cash payment equal to $15.00 per share
is 187,665 (with such shares of restricted stock having a total
value of approximately $2,814,975, based upon a $15.00 per share
stock price).
The following table reflects the merger consideration to be
provided to each of our directors and executive officers upon
the completion of the merger, based upon each directors
and officers ownership of stock options and restricted
stock as of October 29, 2010, and assuming that each of the
directors and executive officers will hold the same number of
stock options and restricted stock (including the same number of
unvested stock options and restricted stock) at the completion
of the merger:
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested
|
|
|
|
|
|
|
|
|
|
|
|
Total Merger
|
|
|
|
Restricted
|
|
|
Aggregate
|
|
|
Unvested
|
|
|
|
|
|
Consideration
|
|
|
|
Shares That
|
|
|
Merger
|
|
|
Options
|
|
|
Aggregate
|
|
|
to be Received
|
|
|
|
Will
|
|
|
Consideration
|
|
|
That Will
|
|
|
Merger
|
|
|
for Vested and
|
|
|
|
Accelerate
|
|
|
to be Received
|
|
|
Accelerate
|
|
|
Consideration
|
|
|
Unvested
|
|
|
|
Upon a
|
|
|
for Accelerated
|
|
|
Upon a
|
|
|
to be Received
|
|
|
Restricted
|
|
|
|
Change in
|
|
|
Restricted
|
|
|
Change in
|
|
|
for Accelerated
|
|
|
Stock and
|
|
Name
|
|
Control
|
|
|
Shares*
|
|
|
Control
|
|
|
Options*
|
|
|
Options
|
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul D. Melnuk
|
|
|
50,700
|
|
|
$
|
760,500.00
|
|
|
|
96,175
|
|
|
$
|
212,831.00
|
|
|
$
|
1,294,127.00
|
|
J. Joe Adorjan
|
|
|
0
|
|
|
$
|
0.00
|
|
|
|
13,334
|
|
|
$
|
136,140.14
|
|
|
$
|
408,400.00
|
|
Andrew L. Berger
|
|
|
0
|
|
|
$
|
0.00
|
|
|
|
0
|
|
|
$
|
0.00
|
|
|
$
|
30,250.00
|
|
James B. Gamache
|
|
|
0
|
|
|
$
|
0.00
|
|
|
|
0
|
|
|
$
|
0.00
|
|
|
$
|
30,250.00
|
|
Marnie S. Gordon
|
|
|
0
|
|
|
$
|
0.00
|
|
|
|
0
|
|
|
$
|
0.00
|
|
|
$
|
30,250.00
|
|
Christopher P. Hartmann
|
|
|
0
|
|
|
$
|
0.00
|
|
|
|
0
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
Bradley G. Pattelli
|
|
|
0
|
|
|
$
|
0.00
|
|
|
|
0
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin Quinn
|
|
|
44,490
|
|
|
$
|
667,350.00
|
|
|
|
54,807
|
|
|
$
|
283,029.15
|
|
|
$
|
1,035,316.47
|
|
Terry Downes
|
|
|
38,293
|
|
|
$
|
574,395.00
|
|
|
|
36,293
|
|
|
$
|
193,300.34
|
|
|
$
|
847,957.66
|
|
Terry A. Moody
|
|
|
26,256
|
|
|
$
|
393,840.00
|
|
|
|
16,726
|
|
|
$
|
119,645.16
|
|
|
$
|
527,172.48
|
|
Steven A. Schumm
|
|
|
27,926
|
|
|
$
|
418,890.00
|
|
|
|
76,951
|
|
|
$
|
389,672.16
|
|
|
$
|
1,092,249.48
|
|
|
|
|
*
|
|
The value of option awards is equal to (i) the product of
the number of shares of Company common stock subject to the
award and $15.00, minus (ii) the aggregate exercise price
of such options. The value of restricted stock awards is equal
to the product of the number of shares of Company common stock
subject to the award and $15.00.
|
Long-Term
and Restricted Cash Awards
At the effective time, all outstanding unvested long-term and
restricted cash awards issued pursuant to our Long Term
Incentive Award Program, including awards held by our executive
officers, will vest and will be payable in full to holders of
such awards as promptly as practicable following the effective
time (but in no event later than the date of payment in respect
of Company stock options). The outstanding unvested cash awards
held by our executive officers under the Long Term Incentive
Award Program as of October 29, 2010 are as follows: Martin
Quinn $217,233, Terry Downes $182,285,
Terry A. Moody $119,937, and Steven A.
Schumm $120,800. The outstanding unvested cash
awards held by Paul D. Melnuk, a director and our Chairman of
the Board, in the amount of $198,900 will also vest and be
payable in full following the effective time (but in no event
later than the date of payment in respect of Company stock
options).
2010
Cash Bonuses
The amounts payable under the Companys 2010 annual
incentive plan to each employee of the Company or its
subsidiaries, including the executive officers, will be paid at
the time bonuses would otherwise be paid under such plan, with
the estimated bonus pool for 2010 and allocation thereof and the
methodology and procedures for determining such amounts, to be
determined in accordance with the methodology and procedures set
forth in the merger agreement. See The Merger
Agreement Employee Benefit Matters
beginning on page 71.
Director
Deferred Fee Plan
As of the effective time of the merger, Parent will assume each
stock unit in respect of a share of Company common stock issued
under the Companys Non-Employee Directors Deferred
Fee Plan (the Director Deferred Fee Plan) and cash
payments in respect of each such share will be distributable in
accordance with, and in the time and manner set forth under, the
terms of the Director Deferred Fee Plan. The amount of
distributions shall be based on the fair market value of Company
common stock on the date of distribution, which value may be
different
46
depending on whether the merger is consummated. One director,
Mr. Adorjan, pursuant to an election form dated December
2006, elected to receive a lump sum distribution of his account
balance on the earlier to occur of December 31, 2010 and a
change in control. The estimated amount payable to
Mr. Adorjan, assuming a $15.00 value per share, upon a
change in control is $263,098.20. The number of stock units held
by the directors as of October 29, 2010 was as follows:
Joseph Adorjan 17,539.888, Andrew Berger
17,539.888, James Gamache 17,539.888, Marnie Gordon
2,241.101, and Christopher Hartman 2,241.101.
Retention
Bonus
Each of Martin Quinn, Terry Downes, Terry Moody and Steven
Schumm (our executive officers) will be entitled to receive a
retention payment equal to $100,000, respectively, six months
after consummation of the merger so long as such executive
officer does not resign or is not terminated for cause prior to
such date, and subject to the other terms and conditions of each
executive officers retention bonus agreement. Certain
other key employees will be entitled to retention bonus payments
not to exceed $550,000 in the aggregate under the same terms and
conditions.
Employment
Agreements
The employment agreements with Mr. Melnuk (our chairman)
and Messrs. Quinn, Downes, Moody and Schumm (our executive
officers) do not contain specific change in control provisions.
Rather, the employment agreements with each of the executive
officers provide for certain severance payments and benefits to
the officers in the event of certain qualifying terminations of
employment. If the surviving corporation following the merger
does not assume our obligations under the employment agreements,
if it terminates the employment of one of our executive officers
without cause, or if it makes certain changes in an
executive officers compensation or duties that would be
deemed to be a constructive termination under the
terms of the applicable employment agreement, then, subject to
the execution of a release of claims and continued compliance
with certain restrictive covenants, the executive officer would
be entitled to receive certain payments and benefits in
accordance with the terms of the applicable employment
agreement, which payments and benefits generally would include:
|
|
|
|
|
the continued payment of base salary for a specified period of
time following such termination (until August 17, 2011 for
Mr. Melnuk, and for one year following termination for
Messrs. Quinn, Downes, Moody, and Schumm). The current base
salaries of Messrs. Melnuk, Quinn, Downes, Moody and Schumm
are as follows: Mr. Melnuk $360,000;
Mr. Quinn $400,000; Mr. Downes
$340,000; Mr. Moody $315,000; and
Mr. Schumm $335,000;
|
|
|
|
a pro-rated bonus if performance objectives are achieved (the
achievement of which is uncertain and so the exact amount for
each pro-rated bonus cannot be calculated at this time)
for Messrs. Quinn and Downes, in the case of
Mr. Moody, a bonus in an amount equal to the lesser of the
prior years bonus or 50% of his annual base salary, or, in
the case of Mr. Schumm, a bonus in an amount equal to 75% of his
annual base salary; and
|
|
|
|
continuation of certain health and welfare benefits for a
specified period of time following such termination (through
August 17, 2011, in the case of Mr. Melnuk and for one
year following termination in the case of Messrs. Quinn,
Downes, Moody and Schumm).
|
In addition, the employment agreements with Messrs. Melnuk,
Quinn and Downes provide that any payments under their
employment agreements that constitute parachute
payments (as defined in section 280G of the Code) and
that exceed 2.99 times their respective base amounts
(as defined in section 280G of the Code) will be reduced to
2.99 times the applicable base amount. The employment agreement
with Mr. Schumm contains a Code section 280G
gross-up
provision.
Parent and each of Messrs. Quinn, Downes, Moody and Schumm
have agreed that their employment agreements will be amended
effective upon the consummation of the merger, and will
continue, as amended, to govern the employment relationships of
the executive officers with the surviving corporation. A general
summary of the amendments to their employment agreements is set
forth below.
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Mr. Quinns employment agreement will be amended
to:
(i) provide that if the employment
period is not renewed by the employer, Mr. Quinn will be
entitled to continue to receive his current base salary for a
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period of twelve months following the expiration of the
employment period; (ii) delete the provision requiring
that, in the event Mr. Quinn violates any of the
restrictive covenants (
e.g.
, confidentiality,
non-compete, non-solicit, invention assignment, and
non-disparagement provisions) set forth in his employment
agreement, he will forfeit all options and other awards granted
to him under the 2004 Stock Incentive Plan (or any successor
plan) which may have been exercisable following his termination
of employment or expiration of employment; (iii) modify the
definition of cause; (iv) delete the clawback
provision contained in his employment agreement; and
(v) provide that the Company will indemnify him to the
fullest extent that would be permitted by law, in accordance
with the terms set forth in the employment agreement.
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Mr. Downes employment agreement will be amended
to:
(i) provide that if the employment
period is not renewed by the employer, Mr. Downes will be
entitled to continue to receive his current base salary for a
period of twelve months following the expiration of the
employment period; (ii) delete the provision requiring
that, in the event Mr. Downes violates any of the
restrictive covenants (
e.g.
, confidentiality,
non-compete, non-solicit, invention assignment, and
non-disparagement provisions) set forth in his employment
agreement, he will forfeit all options and other awards granted
to him under the 2004 Stock Incentive Plan (or any successor
plan) which may have been exercisable following his termination
of employment or expiration of employment; (iii) modify the
definition of cause; (iv) delete the clawback
provision contained in his employment agreement; and
(v) provide that the Company will indemnify Mr. Downes
to the fullest extent that would be permitted by law, in
accordance with the terms set forth in the employment agreement.
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Mr. Moodys employment agreement will be amended
to:
(i) modify the definition of
cause; and (ii) provide that any payments under
his employment agreement that constitute a parachute payment
that exceed 2.99 times his base amount will be reduced to 2.99
times the base amount.
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Mr. Schumms employment agreement will be amended
to:
modify the definition of cause.
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Arrangements
with the Surviving Corporation
The employees of the Company, including the executive officers,
will be entitled to continue to receive certain benefits from
the surviving corporation. See The Merger
Agreement Employee Benefit Matters
beginning on page 71.
Subscription
Agreements
Following the merger, Messrs. Downes, Moody, Quinn and
Schumm, each of whom we refer to as a Parent
Investor, will beneficially own shares of common stock and
preferred stock of Parent. Pursuant to the terms of a
subscription agreement between Parent and each of the Parent
Investors, following the closing of the merger, Parent will sell
and each Parent Investor will purchase shares of common stock
and preferred stock of Parent equal to the lesser of (a) a
specified dollar threshold and (b) a percentage of the net
after-tax cash proceeds each Parent Investor receives from stock
options and restricted stock grants granted under the
Companys 2004 Stock Incentive Plan or long-term cash
incentive arrangements, in connection with the transactions
contemplated by the merger agreement. Parent and each Parent
Investor will use reasonable efforts so that the subscription
amount due under each subscription agreement will be deducted
from amounts that would otherwise be payable to each Parent
Investor under the Companys 2004 Stock Incentive Plan or
long-term cash incentive arrangements in connection with the
merger and will be transferred directly to Parent;
Mr. Schumm is also permitted under certain circumstances to
rollover his unrestricted shares of Company common stock to
shares of Parent on a tax-free basis.
Each Parent Investor will purchase the common shares and
preferred shares under the subscription agreements in the same
ratio as such stock is purchased by affiliates of IPC and at the
same price per share paid by IPC at or around the closing of the
merger. Following the closing of the merger and as a result of
these purchases, Messrs. Downes, Moody, Quinn and Schumm
are expected to beneficially own approximately 0.2%, 0.1%, 0.2%
and 0.2%, respectively, of the outstanding common stock of
Parent (excluding any stock options that may be granted pursuant
to an equity incentive plan) and approximately 0.2%, 0.1%, 0.2%
and 0.2%, respectively, of the outstanding preferred stock of
Parent.
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In connection with the subscription agreements, Parent has
agreed to adopt the 2010 Equity Incentive Plan and to grant each
Parent Investor options (subject to certain vesting
requirements) to purchase additional shares of Parent common
stock on terms and conditions as further set forth in the
subscription agreements, the 2010 Equity Incentive Plan and the
option awards relating thereto. Additionally, Parent has agreed
to amend the employment agreements as described above under
The Merger Interests of Our Directors and
Executive Officers Employment Agreements.
All equity interests of Parent held by each Parent Investor
after the closing of the merger will be subject to the terms of
a stockholders agreement that contains customary transfer
restrictions, tag-along rights, drag-along rights, registration
rights, preemptive rights and repurchase rights, all of which
are applicable in specified circumstances.
Each subscription agreement will automatically terminate upon a
termination of the merger agreement.
Indemnification
and Insurance
The merger agreement contains provisions relating to the
indemnification of and insurance for the Companys and its
subsidiaries directors and officers. Pursuant to the
merger agreement, Parent has agreed that for six years after the
effective time of the merger, it will cause the Company to
indemnify and hold harmless the Companys and its
subsidiaries present and former directors and officers for
acts or omissions occurring at or prior to the effective time of
the merger to the fullest extent provided under applicable law
or provided under the Companys organizational documents
(in each case, as in effect as of the date of the merger
agreement), subject to any limitation imposed under applicable
law.
Under the merger agreement, Parent will maintain for a period of
six years after the effective time an insurance policy covering
persons who were directors and officers of the Company and its
subsidiaries prior to the merger for the actions taken by such
directors and officers in their capacities as directors and
officers of the Company and its subsidiaries prior to the merger
on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date of the merger
agreement, provided, however, that Parent will not be required
to pay annual premiums in excess of 300% of the amount per annum
the Company paid in its last full fiscal year. Alternatively,
prior to the effectiveness of the merger, at the Companys
request, Parent may purchase a six year prepaid tail
policy providing coverage benefits and terms no less
favorable than the Companys current policy, provided that
Parent will not be required to pay annual premiums in excess of
300% of the amount per annum the Company paid in its last full
fiscal year.
The present and former directors and officers of the Company and
its subsidiaries will have the right to enforce provisions of
the merger agreement relating to their indemnification and are
express third party beneficiaries of the merger agreement solely
for this purpose.
Financing
of the Merger
Parent has advised us that the total funds needed to complete
the merger, including the funds needed to:
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pay our stockholders (and holders of our other equity-based
interests) the amounts due to them under the merger agreement,
which based upon the shares (and our other equity-based
interests) outstanding as of October 29, 2010, would be
approximately $214.7 million;
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refinance outstanding indebtedness, which, as of October 29,
2010, was approximately $185.8 million; and
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pay fees and expenses related to the merger and the debt that
will finance the merger,
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will be funded through a combination of:
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equity contributions to be provided or secured as described
below by Irving Place Capital Partners III, L.P. (an investment
fund affiliated with Irving Place Capital) or other parties to
whom it assigns a portion of its commitment;
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the issuance of senior secured notes (or, to the extent those
notes are not issued at or prior to closing of the merger, by a
senior secured bridge credit facility);
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subject to availability, borrowings under a senior secured
revolving credit facility; and
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cash on hand of the Company.
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Parent has obtained the equity commitment letter and the debt
commitment letters described below. The funding under those
commitment letters is subject to certain conditions, including
conditions that do not relate directly to the merger agreement.
We cannot assure you that the amounts committed under the
commitment letters will be sufficient to complete the merger.
Those amounts might be insufficient if, among other things, one
or more of the parties to the commitment letters fails to fund
the committed amounts in breach of such commitment letters or if
the conditions to such commitments are not met. Although
obtaining the proceeds of any financing, including any financing
under the commitment letters, is not a condition to the
completion of the merger, the failure of Parent and Merger
Subsidiary to obtain any portion of the committed financing (or
alternative financing) is likely to result in the failure of the
merger to be completed. In that case, Parent may be obligated to
pay the Company a fee of $25,000,000, or the Parent
fee, as described under The Merger
Agreement Termination Fees and Expenses
beginning on page 74. That obligation is guaranteed by the
guarantor as described under Limited
Guarantee beginning on page 51.
Equity
Financing
Parent has entered into the equity commitment letter with the
guarantor, dated October 5, 2010, pursuant to which the
guarantor has committed to make or secure capital contributions
to Parent at or prior to the closing of the merger of up to
$197,700,000 in the aggregate to fund the aggregate per share
merger consideration and pay any and all fees and expenses
related thereto. The guarantor may assign a portion of the
equity commitment to co-investors, including any affiliates, as
long as such allocation does not adversely affect or delay the
completion of the debt financing and in such event, the
guarantors commitment under the equity commitment letter
will be reduced (on a
dollar-for-dollar
basis) by the amounts actually contributed to Parent by payment
in cash by such co-investors on or before the closing for
funding of the merger.
The guarantors obligation to make the equity contribution
contemplated by the equity commitment letter is generally
subject to (i) the satisfaction or waiver of the conditions
to the closing of the merger (except those conditions which by
their nature cannot be satisfied except at the time of closing,
provided that such conditions are actually satisfied or validly
waived at the time of closing); (ii) the funding of the
debt financing and (iii) the substantially concurrent
consummation of the merger in accordance with the terms of the
merger agreement.
The obligations of the guarantor to fund its equity commitment
will terminate automatically and immediately upon the earliest
to occur of (i) the effective time of the merger;
(ii) the termination of the merger agreement in accordance
with its terms; and (iii) the commencement by the Company,
any stockholder of the Company or any person acting at the
direction of or on behalf of the Company, any stockholder of the
Company or any of their respective affiliates, agents or
representatives of any lawsuit or action asserting a claim
under, or in respect of, or breach of the merger agreement, the
equity commitment letter or the limited guarantee, or the
transactions contemplated thereby against the guarantor, Parent
or any related persons of the guarantor.
Debt
Financing
In connection with the entry into the merger agreement, Parent
received debt commitment letters, dated October 5, 2010
(the debt commitment letters), from
(i) Jefferies Finance LLC and RBC Capital Markets for
bridge loans under a senior secured bridge facility in the
amount of up to $250,000,000 (the bridge financing)
and (ii) GE Antares Capital Corporation for a senior
secured asset-based revolving credit facility providing for
borrowings, subject to availability, in an amount of up to
$60,000,000 (the revolving credit financing).
The facilities contemplated by the debt commitment letters are
subject to a number of customary closing conditions included in
the debt commitment letters, including, without limitation:
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consummation of the merger in accordance with the terms of the
merger agreement, and the absence of any amendments to the
merger agreement or any waivers or consents thereunder that are
materially adverse to the lenders under the debt financing,
unless consented to by the arrangers of both the debt financing;
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receipt of the proceeds of the equity financing under the equity
commitment letter;
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no more than specified amounts of debt being outstanding;
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there shall not have been any changes, events or occurrences,
that, individually or in the aggregate, have had or are
reasonably likely to have, a material adverse effect (which term
is defined in the same or substantially the same way as in the
merger agreement);
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delivery of certain customary closing documents (including,
among others, a customary solvency certificate), know your
customer and similar information;
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delivery of certain customary Company financial statements,
including pro forma financial statements and information;
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payment of applicable costs, fees and expenses and other
compensation, as contemplated by the debt commitment letters and
fee arrangements and compliance with certain other provisions
thereof; and
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the execution and delivery of an intercreditor agreement among
the lenders.
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The debt commitment letters with respect to the bridge financing
contain flex provisions which would allow the
lenders thereunder to modify the terms of such debt to the
extent required for a successful syndication, subject the
specified limitations. The debt commitment letters are subject
to neither a due diligence nor a market out
condition, which would allow the lenders not to fund their
commitments if the financial markets are materially adversely
affected. There is a risk that the conditions to the debt
financing will not be satisfied and the debt financing may not
be funded when required. As of the date of this proxy statement,
no alternative financing arrangements or alternative financing
plans have been made in the event the debt financing described
in this proxy statement is not available as anticipated.
In the merger agreement, Parent and Merger Subsidiary have
agreed to use their reasonable best efforts to obtain the debt
financing on the terms and conditions described in the debt
commitment letters. Parent and Merger Subsidiary may not amend,
replace or supplement the debt commitment letters if such
amendment, modification or waiver:
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reduces the aggregate amount of the debt financing; or
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imposes new or additional conditions or expands, amends or
modifies any of the conditions to the receipt of the debt
financing in a manner that would reasonably be expected to delay
or prevent the closing of the merger, make the funding of the
debt financing less likely to occur, or adversely impact the
rights of Parent or Merger Subsidiary against the other parties
to the debt commitment letters or the definitive agreements with
respect thereto.
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Parent has advised the Company that it is expected that at the
consummation of the merger, senior secured notes will be issued
and sold in a private placement in lieu of a portion or all of
bridge financing described above. The merger agreement provides
for a marketing period for such notes prior to the closing of
the merger, which is described in more detail under The
Merger Agreement Closing and Effective Time of the
Merger; Marketing Period beginning on page 58.
Limited
Guarantee
Pursuant to a limited guarantee delivered by the guarantor in
favor of the Company, dated October 5, 2010, the guarantor
has agreed to guarantee the observance, performance and
discharge of the obligations of Parent to pay the Parent fee of
$25,000,000, if it becomes due under the terms of the merger
agreement.
The limited guarantee will terminate upon the earlier of:
(a) the effective time of the merger, (b) the
termination of the merger agreement in accordance with its terms
under circumstances set forth in the merger agreement in which
Parent would not be obligated to pay the Parent fee of
$25,000,000, and (c) the payment to the Company by any
combination of Parent
and/or
the
guarantor of the full amount of the guarantors obligations.
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Regulatory
Approvals
The HSR Act and the regulations promulgated thereunder required
the Company and Parent to file premerger notification and report
forms with respect to the merger and related transactions with
the Antitrust Division of the U.S. Department of Justice
and the Federal Trade Commission. The Company filed its required
premerger notification and report form on October 20, 2010,
and Parent filed its required form on October 20, 2010.
Nevertheless, at any time before or after the completion of the
merger, and before or after the expiration of the premerger
waiting period under the HSR Act, the Antitrust Division of the
U.S. Department of Justice or the Federal Trade Commission
or any state could take such action under the antitrust laws as
it deems necessary or desirable in the public interest,
including seeking to enjoin the completion of the merger, to
rescind the merger or to seek divestiture of particular assets.
Private parties also may seek to take legal action under the
antitrust laws under certain circumstances. Although there is no
assurance that they will not do so, we do not expect any
regulatory authority, state or private party to take legal
action under the antitrust laws.
Although we do not expect these regulatory authorities to raise
any significant concerns in connection with their review of the
merger, there is no assurance that we will obtain all required
regulatory approvals, or that those approvals will not include
terms, conditions or restrictions that may have an adverse
effect on the Company or, after the completion of the
transaction, on Parent or the surviving corporation.
The merger may be subject to certain regulatory requirements of
other municipal, state, federal and foreign governmental and
self-regulatory agencies and authorities, including those
relating to the offer and sale of securities. Together with
Parent, we are currently working to evaluate and comply in all
material respects with these requirements, as appropriate, and
do not currently anticipate that they will hinder, delay or
restrict completion of the merger. If any approval or action is
needed, however, we may not be able to obtain it or any of the
other necessary approvals. Even if we could obtain all necessary
approvals, and the merger agreement is approved by our
stockholders, conditions may be placed on the merger that could
cause us to abandon it.
Closing
and Effective Time of Merger
Unless Parent and the Company otherwise agree, the closing of
the merger will take place on the later of (x) the third
business day following the date on which the last of the
conditions to closing of the merger (described under The
Merger Agreement Conditions to the Merger
beginning on page 72) has been satisfied or waived (other
than the conditions that by their nature are to be satisfied at
the closing of the merger, but subject to the satisfaction or,
to the extent permissible, the waiver of those conditions at the
closing of the merger) and (y) the third business day
following the final day of the marketing period (as described
under The Merger Agreement Closing and
Effective Time of the Merger; Marketing Period beginning
on page 58) or an earlier day as may be specified by Parent
on no less than three business days prior notice to the
Company.
Assuming timely satisfaction of the necessary closing
conditions, we are targeting to complete the merger by the end
of calendar year 2010; however, the parties cannot predict the
exact timing of the completion of the merger or whether the
merger will be completed at a later time as agreed to by the
parties or at all. The effective time of the merger will occur
as soon as practicable following the closing of the merger upon
the filing of a certificate of merger with the Secretary of
State of the State of Delaware (or at such later date as we and
Parent may agree and specify in the certificate of merger).
Payment
of Merger Consideration and Surrender of Stock
Certificates
Each record holder of shares of Company common stock (other than
holders of certain excluded shares) will be sent a letter of
transmittal describing how such holder may exchange its shares
of Company common stock for the per share merger consideration
promptly, and in any event within two business days, after the
completion of the merger.
You should not return your stock certificates with the
enclosed proxy card, and you should not forward your stock
certificates to the paying agent without a letter of
transmittal.
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You will not be entitled to receive the per share merger
consideration until you deliver a duly completed and executed
letter of transmittal to the paying agent. If your shares are
certificated, you must also surrender your stock certificate or
certificates to the paying agent. If ownership of your shares is
not registered in the transfer records of the Company, a check
for any cash to be delivered will only be issued if the
applicable letter of transmittal is accompanied by all documents
reasonably required by the Company to evidence and effect such
transfer and to evidence that any applicable stock transfer
taxes have been paid or are not applicable.
Appraisal
Rights of Stockholders
Our stockholders have the right under Delaware law to dissent
from the approval and adoption of the merger agreement, to
exercise appraisal rights and to receive payment in cash of the
judicially determined fair value for their shares, plus
interest, if any, on the amount determined to be the fair value,
in accordance with Delaware law. The fair value of shares of our
common stock, as determined in accordance with Delaware law, may
be more or less than, or equal to, the merger consideration to
be paid to non-dissenting stockholders in the merger. To
preserve their rights, stockholders who wish to exercise
appraisal rights must not vote in favor of the proposal to adopt
the merger agreement and must follow the specific procedures
provided under Delaware law for perfecting appraisal rights.
Dissenting stockholders must precisely follow these specific
procedures to exercise appraisal rights or their appraisal
rights may be lost. These procedures are described in this proxy
statement, and a copy of Section 262 of the Delaware
General Corporation Law (the DGCL), which grants
appraisal rights and governs such procedures, is attached as
Annex B
to this proxy statement. See Appraisal
Rights beginning on page 80.
Accounting
Treatment of the Merger
The merger will be accounted for as a purchase
transaction
for financial accounting purposes.
Material
United States Federal Income Tax Consequences of the
Merger
The following is a summary of certain material U.S. federal
income tax consequences of the merger to holders whose shares of
our common stock are exchanged for cash pursuant to the merger.
This discussion does not describe all of the U.S. federal
income tax consequences that may be relevant to holders in light
of their particular circumstances or to holders subject to
special treatment under the U.S. federal income tax laws
(including, without limitation, insurance companies, dealers in
securities or currencies, traders in securities who elect the
mark-to-market
method of accounting for their securities, U.S. holders (as
defined below) whose functional currency is not the
U.S. dollar, tax-exempt organizations, holders subject to
the U.S. federal alternative minimum tax, financial
institutions, regulated investment companies, mutual funds,
partnerships, S corporations or other pass through
entities, controlled foreign corporations, passive foreign
investment companies, certain expatriates, corporations that
accumulate earnings to avoid U.S. federal income tax,
holders who hold shares of our common stock as part of a hedge,
straddle, constructive sale or conversion transaction, holders
who acquired their shares of our common stock through the
exercise of employee stock options or other compensation
arrangements, or holders who exercise statutory appraisal
rights).
The U.S. federal income tax consequences set forth below
are based upon the Internal Revenue Code of 1986, as amended
(the Code), applicable U.S. Treasury
Regulations, court decisions, and rulings and pronouncements of
the Internal Revenue Service (the IRS) all as in
effect on the date hereof and, all of which are subject to
change, possibly on a retroactive basis. We have not sought any
ruling from the IRS with respect to statements made and
conclusions reached in this discussion, and there can be no
assurance that the IRS will agree with such statements and
conclusions.
As used herein, the term U.S. holder means a
beneficial owner of shares of our common stock, that is, for
U.S. federal income tax purposes:
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an individual who is a citizen or resident of the United States,
including an individual who is a lawful permanent resident of
the United States or meets the substantial presence
test under Section 7701(b) of the Code;
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a corporation, or other entity taxable as a corporation for
U.S. federal income tax purposes, created or organized in
or under the laws of the United States or any political
subdivision thereof;
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a trust if it (1) is subject to the primary supervision of
a court within the United States and one or more
U.S. persons have the authority to control all substantial
decisions of the trust or (2) has a valid election in
effect under applicable U.S. Treasury Regulations to be
treated as a U.S. person; or
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an estate the income of which is subject to U.S. federal
income taxation regardless of its source.
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As used herein, the term
non-U.S. holder
means a beneficial owner of shares of our common stock that is
neither a U.S. holder nor a partnership or an entity
treated as a partnership for U.S. federal income tax
purposes.
If a partnership (including any entity treated as a partnership
for U.S. federal income tax purposes) is a beneficial owner
of shares of our common stock, the tax treatment of a partner in
the partnership generally will depend upon the status of the
partner and the activities of the partnership. A beneficial
owner that is a partnership and partners in such a partnership
should consult their tax advisors about the U.S. federal
income tax consequences of the merger.
This discussion assumes that a holder holds the shares of our
common stock as a capital asset within the meaning of
Section 1221 of the Code (generally, property held for
investment). This summary does not address any tax consequences
under any state, local or foreign laws or U.S. federal laws
other than those pertaining to the U.S. federal income tax
that may apply to holders.
Holders are urged to consult their own tax advisors with
respect to the application of the U.S. federal income tax
laws to their particular situations as well as any tax
consequences arising under the U.S. federal estate or gift
tax rules or under the laws of any state, local or foreign
taxing jurisdiction or under any applicable tax treaty.
U.S.
Holders
Merger
Consideration
The receipt of cash for shares of our common stock pursuant to
the merger by U.S. holders will be a taxable transaction
for U.S. federal income tax purposes (and may also be a
taxable transaction under applicable state, local and foreign
tax laws). In general, for U.S. federal income tax
purposes, a U.S. holder of shares of our common stock will
recognize capital gain or loss equal to the difference between:
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the amount of cash received in exchange for such shares pursuant
to the merger, and
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the U.S. holders adjusted tax basis in such shares.
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If the U.S. holders holding period in the shares of
our common stock surrendered pursuant to the merger is greater
than one year as of the date of the merger, the gain or loss
will be long-term capital gain or loss. The deductibility of a
capital loss is subject to limitations under the Code. If a
U.S. holder acquired different blocks of shares of our
common stock at different times and different prices, such
holder must determine its adjusted tax basis and holding period
separately with respect to each block of shares of our common
stock.
Backup
Withholding and Information Reporting
Generally, U.S. holders will be subject to information
reporting on the cash received in the merger unless such
U.S. holder is a corporation or other exempt recipient. In
addition, unless a U.S. holder is a corporation or other
exempt recipient, backup withholding (currently at a rate of
28%) may apply with respect to the amount of cash received if
the U.S. holder:
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fails to furnish a taxpayer identification number
(TIN) within a reasonable time after a request
therefore;
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furnishes an incorrect TIN;
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is notified by the IRS that it failed to report interest or
dividends properly; or
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fails, under certain circumstances, to provide a certified
statement, signed under penalty of perjury, that the TIN
provided is correct and that such U.S. holder is not
subject to backup withholding.
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Backup withholding is not an additional tax. Any amount withheld
from a payment to a U.S. holder under backup withholding
rules will be allowed as a credit against such holders
U.S. federal income tax liability and may entitle such
holder to a refund, provided that the required information is
furnished to the IRS in a timely manner.
Certain penalties apply for failure to furnish correct
information and for failure to include reportable payments in
income. Each holder should consult with such holders own
tax advisor as to such holders qualification for exemption
from backup withholding and the procedure for obtaining such
exemption.
Non-U.S.
Holders
Merger
Consideration
Non-U.S. holders
generally will not be subject to U.S. federal income tax on
any gain realized on the disposition of shares of our common
stock pursuant to the merger unless:
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the gain is effectively connected with a trade or business of
the
non-U.S. holder
in the United States (and, if required by an applicable income
tax treaty, is attributable to a U.S. permanent
establishment of the
non-U.S. holder);
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the
non-U.S. holder
is an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met; or
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we are or have been a United States real property holding
corporation for U.S. federal income tax purposes and
the
non-U.S. holder
owned more than 5% of the shares of our common stock at any time
during the shorter of the
non-U.S. holders
holding period in such shares and the five years preceding the
merger.
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We believe we are not, have not been and do not anticipate
becoming a United States real property holding
corporation for U.S. federal income tax purposes.
An individual
non-U.S. holder
described in the first bullet point immediately above will be
subject to tax on the net gain derived from the merger as if it
were a U.S. holder. If a
non-U.S. holder
that is a foreign corporation falls under the first bullet point
immediately above, it will be subject to tax on its net gain in
the same manner as if it were a U.S. person (as defined
under the Code) and, in addition, may be subject to the
branch profits tax on its earnings that are
effectively connected with its United States trade or business,
including earnings from the shares of our common stock. The
branch profits tax is 30%, but may be reduced or
eliminated by an applicable income tax treaty. An individual
non-U.S. holder
described in the second bullet point immediately above will be
subject to a flat 30% tax on the gain derived from the merger,
which may be offset by U.S. source capital losses, even
though the individual is not considered a resident of the United
States.
Backup
Withholding and Information Reporting
The payment of the merger proceeds to a
non-U.S. holder
is generally not subject to information reporting if the
beneficial owner certifies the owners
non-U.S. status
under penalties of perjury (i.e., by providing the appropriate
properly executed IRS
Form W-8),
or otherwise establishes an exemption. Backup withholding
(currently at a rate of 28%) is required only on payments that
are subject to the information reporting requirements, discussed
above, and only if other requirements are satisfied. Backup
withholding is not an additional tax. Any amount withheld from a
payment to a
non-U.S. holder
under these rules will be allowed as a credit against such
holders U.S. federal income tax liability and may
entitle such holder to a refund, provided that the required
information is furnished timely to the IRS.
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Litigation
Relating to the Merger
We are aware of the following lawsuit related to the merger:
On October 19, 2010, Robert Israeli, a purported stockholder of
the Company, filed a purported class action lawsuit in the
Circuit Court of St. Louis County, Missouri against the Company,
the Companys directors, and Irving Place Capital. The
complaint alleges, among other things, that the Companys
directors breached their fiduciary duties to the Companys
stockholders, including their duties of loyalty, good faith and
independence, by entering into a merger agreement which provides
for inadequate consideration to stockholders of the Company, and
the Company and Irving Place Capital aided and abetted the
Companys directors alleged breaches of their
fiduciary duties. The plaintiffs seek injunctive relief
preventing the defendants from consummating the transactions
contemplated by the merger agreement, or in the event the
defendants consummate the transactions contemplated by the
merger agreement, rescission of such transactions, and
attorneys fees and expenses. The Company and the other
defendants have not yet responded to the complaint. The Company
believes that this lawsuit is without merit and intends to
defend it.
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THE
MERGER AGREEMENT
The following summary describes the material terms of the
merger agreement and is qualified in its entirety by reference
to the merger agreement, a copy of which is attached to this
proxy statement as
Annex A
and which we incorporate
by reference into this document. This summary does not purport
to be complete and may not contain all of the information about
the merger that is important to you. We encourage you to read
carefully the merger agreement in its entirety because it, and
not this proxy statement, is the legal document that governs the
merger.
Explanatory
Note Regarding the Merger Agreement
The merger agreement is included to provide you with information
regarding its terms. Factual disclosures about the Company
contained in this proxy statement or in the Companys
public reports filed with the SEC may supplement, update or
modify the factual disclosures about the Company contained in
the merger agreement. The representations, warranties and
covenants made in the merger agreement by the Company, Parent
and Merger Subsidiary were qualified and subject to important
limitations agreed to by the Company, Parent and Merger
Subsidiary in connection with negotiating the terms of the
merger agreement. In particular, in your review of the
representations and warranties contained in the merger agreement
and described in this summary, it is important to bear in mind
that the representations and warranties were negotiated with the
principal purposes of establishing the circumstances in which a
party to the merger agreement may have the right not to
consummate the merger if the representations and warranties of
the other parties prove to be untrue due to a change in
circumstance or otherwise, and allocating risk between the
parties to the merger agreement, rather than establishing
matters as facts. The representations and warranties may also be
subject to a contractual standard of materiality different from
those generally applicable to stockholders and reports and
documents filed with the SEC and in some cases may be subject to
limitations agreed upon by the contracting parties, including
being qualified by confidential disclosures exchanged between
the parties in connection with the execution of the merger
agreement. Moreover, information concerning the subject matter
of the representations and warranties, which do not purport to
be accurate as of the date of this proxy statement, may have
changed since the date of the merger agreement and subsequent
developments or new information qualifying a representation or
warranty may have been included in this proxy statement.
Effects
of the Merger; Directors and Officers; Certificate of
Incorporation; Bylaws
Subject to the terms and conditions of the merger agreement, and
in accordance with Delaware law, at the effective time of the
merger, Merger Subsidiary will be merged with and into the
Company and, as a result of the merger, the separate corporate
existence of Merger Subsidiary will cease and the Company will
continue as the surviving corporation and become a wholly-owned
subsidiary of Parent.
The board of directors of the surviving corporation will, from
and after the effective time of the merger, consist of the
directors of Merger Subsidiary until their successors have been
duly elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the certificate
of incorporation and bylaws of the surviving corporation. Except
as determined by Parent or Merger Subsidiary prior to the
effective time of the merger, the officers of the Company
immediately prior to the effective time of the merger will, from
and after the effective time of the merger, be the officers of
the surviving corporation until their successors have been duly
elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the certificate of
incorporation and bylaws of the surviving corporation.
The certificate of incorporation of the surviving corporation
will be in the form of the certificate of incorporation attached
as an annex to the merger agreement, until amended in accordance
with its terms or by applicable law. The bylaws of the surviving
corporation will be the bylaws of Merger Subsidiary in effect
immediately prior to the effective time of the merger until
amended in accordance with its terms or by applicable law.
Following the completion of the merger, the Company common stock
will be delisted from the Nasdaq and deregistered under the
Exchange Act and cease to be publicly traded.
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Closing
and Effective Time of the Merger; Marketing Period
Unless Parent and the Company agree otherwise, the closing of
the merger will take place on the later of (x) the third
business day following the date on which the last of the
conditions to the closing of the merger (described under
The Merger Agreement Conditions to the
Merger) has been satisfied or waived (other than the
conditions that by their nature are to be satisfied at the
closing of the merger, but subject to the satisfaction or, to
the extent permissible, the waiver of those conditions at the
closing of the merger) and (y) the third business day
following the final day of the marketing period (as described
below) or an earlier day during the marketing period as may be
specified by Parent on no less than three business days
prior notice to the Company.
Assuming timely satisfaction of the necessary closing
conditions, we are targeting a closing of the merger prior to
the end of 2010; however, the parties cannot predict the exact
timing of the completion of the merger or whether the merger
will be completed at a later time as agreed to by the parties or
at all. The effective time of the merger will occur as soon as
practicable following the closing of the merger upon the filing
of a certificate of merger with the Secretary of State of the
State of Delaware (or at such later date as the Company and
Parent may agree and specify in the certificate of merger).
The merger agreement provides that the marketing period is the
first period of twelve consecutive business days after
October 5, 2010, throughout which (a) Parent has the
required information described below and (b) the closing
conditions relating to the adoption of the merger agreement by
our stockholders, receipt of required regulatory approvals and
absence of any law or order prohibiting the consummation of the
merger have been satisfied, and nothing has occurred and no
condition exists that would prevent any of the other conditions
to the obligations of Parent and Merger Subsidiary to consummate
the merger from being satisfied if the closing of the merger
were to occur at any time during such twelve business day
period. If the marketing period has not ended on or prior to
December 15, 2010, it will not commence until
January 3, 2011. In addition, the marketing period will not
be deemed to have commenced if (i) before the completion of
the marketing period, the Companys accountants withdraw
their audit opinion with respect to any financial statements, in
which case the marketing period shall not commence until the
time at which a new unqualified audit opinion is issued with
respect to the financial statements for the applicable periods
by the Companys accountants, (ii) the Company shall
have publicly announced any intention to restate any of its
financial information contained in its documents filed with the
SEC since January 1, 2007, in which case the marketing
period shall not be deemed to commence until the time at which
such restatement has been completed and such documents have been
amended or the Company has announced that it has concluded that
no restatement shall be required, or (iii) the Company
shall have failed to file any report with the SEC by the date
required under the Exchange Act containing any financial
information that would be required, if such offering documents
were a filed registration statement, to be contained therein or
incorporated therein by reference, in which case the marketing
period shall not be deemed to commence until the time at which
all such reports have been filed. Further, the marketing period
will end on any earlier date on which the debt financing is
otherwise obtained.
Required information consists of, as of any date,
(i) such financial statements, financial data, audit
reports and other pertinent information regarding the Company
and its subsidiaries of the type required by SEC
Regulation S-X
and SEC
Regulation S-K
under the Securities Act for registered offerings of debt
securities of the type contemplated by the debt financing
commitment, to the extent the same is of the type and form
customarily included, under current market practice, in private
placements under Rule 144A to consummate the offering
(provided that certain information is excluded, such as
subsidiary financial statements, compensation disclosure and
analysis as required by
Regulation S-K
Item 402(b) or other information customarily excluded from
a Rule 144A offering memorandum) and (ii) such other
information as is otherwise necessary in order to receive
customary comfort letters, including negative
assurance comfort letters, from independent auditors with
respect to the information referred to in clause (i) of
this paragraph.
Merger;
Treatment of Company Common Stock
The merger agreement provides that each share of Company common
stock outstanding immediately prior to the effective time of the
merger (other than shares held by us or owned by Parent or any
of its subsidiaries, or by stockholders who properly exercise
their appraisal rights under Delaware law for such shares) will
be converted at the effective time of the merger, by virtue of
the merger, into the right to receive cash in the amount of
$15.00 per
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share, without interest and less any applicable withholding
taxes. Any outstanding shares of Company common stock that are
held by us or owned by Parent or any of its subsidiaries will be
cancelled without any conversion into a right to payment.
Each share of common stock of Merger Subsidiary issued and
outstanding immediately prior to the effective time of the
merger will be converted into and exchanged for one validly
issued, fully paid and nonassessable share of common stock of
the surviving corporation of the merger.
Treatment
of Other Equity Securities
Stock
Options
At the effective time of the merger, each option to acquire
shares of Company common stock that is outstanding immediately
prior to the effective time of the merger, whether vested or
unvested, will vest (if unvested) and will be cancelled as of
the effective time of the merger in exchange for the right to
receive, as soon as reasonably practicable after the effective
time of the merger (but in any event, no later than the earliest
of (a) three business days after the effective time of the
merger, (b) the end of the year in which the effective time
of the merger occurs, or (c) the expiration of the original
term of such option outstanding as of the effective time of the
merger) a cash payment equal to the number of shares of Company
common stock subject to the option, multiplied by the excess, if
any, by which $15.00 exceeds the exercise price of the option,
less any applicable withholding taxes. Each option for which the
exercise price per share of Company common stock equals or
exceeds $15.00 will be cancelled and have no further effect with
no right to receive any consideration therefor.
Employee
Stock Purchase Plan
The merger agreement provides that as soon as practicable
following the date of the merger agreement, the board of
directors or the compensation committee of the board of
directors will adopt resolutions and take any other required
actions to provide that with respect to the Employee Stock
Purchase Plan (ESPP): (a) participants in the
ESPP may not alter their payroll deductions from those in effect
on the date of the merger agreement, (b) no new offering
period will be commenced after the date of the merger agreement,
(c) the ESPP will be terminated effective immediately prior
to the effective time of the merger, and (d) the amount of
the accumulated contributions of each participant under the ESPP
as of immediately prior to the termination date of the ESPP will
be refunded to such participant as promptly as practicable
following the date on which the ESPP is terminated, without
interest.
Company
Restricted Shares
At or immediately prior to the effective time, each outstanding
Company restricted share will vest and become free of any
restrictions and, as of the effective time of the merger, will
be cancelled and converted into the right to receive $15.00 per
restricted share without interest.
Payment
Procedures
At or prior to the effective time of the merger, Parent will
deposit, or cause to be deposited, with the paying agent the
aggregate consideration to be paid to holders of shares of
Company common stock in the merger.
Promptly after the effective time, Parent will send, or will
cause the paying agent to send, to each person who was a record
holder of shares of Company common stock immediately prior to
the effective time of the merger a letter of transmittal and
instructions (which will specify that the delivery will be
effected, and risk of loss and title will pass, only upon proper
delivery of the certificates of Company common stock or transfer
of uncertificated shares to the paying agent) for use in such
payment.
You should not send in your stock certificates until
you receive the letter of transmittal and you must follow all
instructions set forth in the letter of transmittal when
submitting your stock certificates.
You should not return your stock certificates with the
enclosed proxy card, and you should not forward your stock
certificates to the paying agent without a letter of
transmittal.
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After the effective time of the merger, each holder of a
certificate previously representing shares of issued and
outstanding Company common stock will, upon surrender to the
paying agent of a certificate, together with a properly
completed letter of transmittal (or upon receipt by the paying
agent of an agents message in the case of a
book-entry transfer of uncertificated shares), be entitled to
receive the applicable cash payment for each share of Company
common stock represented by such certificate. Until so
surrendered or transferred, as the case may be, each such
certificate or uncertificated share will represent after the
effective time only the right to receive the merger
consideration. You will not be entitled to receive the per share
merger consideration until you deliver a duly completed and
executed letter of transmittal to the paying agent.
If payment is to be made to a person other than the person in
whose name the common stock certificate surrendered (or the
transferred uncertificated share) is registered, it will be a
condition of payment that the certificate so surrendered be
properly endorsed and otherwise in proper form for transfer (or
that an uncertificated share be properly transferred) and that
the person requesting such payment pay to the paying agent any
transfer or other taxes required by reason of the payment to a
person other than the registered holder of the certificate (or
uncertificated share) of the amount due under the merger
agreement, or that such person establish to the satisfaction of
the paying agent that such tax has been paid or is not
applicable.
From and after the effective time of the merger, there will be
no transfers on our stock transfer books of shares of Company
common stock that were outstanding immediately prior to the
effective time of the merger. If, after the effective time of
the merger, a certificate is presented to the surviving
corporation, Parent or the paying agent for any reason, such
certificate will be cancelled and, subject to compliance with
the exchange procedures set forth in the merger agreement,
exchanged for the cash amount to which such person is entitled
pursuant to the merger agreement.
Any portion of the merger consideration made available to the
paying agent unclaimed by our stockholders six months after the
effective time of the merger will be delivered to Parent and any
stockholders who have not properly exchanged their shares of
Company common stock will thereafter look only to Parent for
payment of the merger consideration in the amount due to them
under the merger agreement (without interest).
If you have lost a certificate, or if it has been stolen or
destroyed, then, before you will be entitled to receive the per
share merger consideration, you will have to make an affidavit
of the loss, theft or destruction, and, if required by Parent,
post a bond in a customary amount as indemnity against any claim
that may be made against it or the surviving corporation with
respect to such certificate. These procedures will be described
in the letter of transmittal that you will receive, which you
should read carefully in its entirety.
Representations
and Warranties
The merger agreement contains customary representations and
warranties made by the Company that are subject, in some cases,
to specific exceptions and qualifications contained in the
merger agreement and the matters contained in the disclosure
schedule delivered by the Company in connection with the merger
agreement. These representations and warranties relate to, among
other things:
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corporate existence, good standing and qualification to conduct
business;
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due authorization for the execution and delivery of, and the
valid and binding nature of the merger agreement;
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governmental authorizations necessary to complete the merger;
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absence of any conflict with organizational documents or any
violation of agreements, laws or regulations as a result of the
consummation of the merger;
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disclosure documents relating to the merger agreement;
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finders fees and fees payable to financial advisors in
connection with the merger;
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our capital structure;
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the declaration of advisability of the merger agreement by the
board of directors and the approval of the merger agreement and
the merger by the board of directors;
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our subsidiaries;
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SEC filings since January 1, 2007 and our financial
statements included therein;
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compliance with the Sarbanes-Oxley Act and the listing and
corporate governance requirements of the Nasdaq;
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disclosure controls and procedures and internal controls over
financial reporting;
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the absence of certain changes and actions since June 30,
2010, including any material adverse effect on the Company (as
described below);
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the absence of certain undisclosed liabilities;
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the absence of legal proceedings and government orders;
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compliance with applicable laws and permits;
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our material contracts and the absence of any default under any
material contract;
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tax matters;
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our employees and employee benefit plans;
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intellectual property, real property, information technology and
environmental matters;
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inapplicability of state anti-takeover statutes to the merger
agreement, voting agreement and the merger;
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the receipt of a fairness opinion from Oppenheimer;
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affiliate transactions; and
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insurance matters.
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The merger agreement also contains customary representations and
warranties made by Parent with respect to Parent and Merger
Subsidiary that are subject, in some cases, to specified
exceptions and qualifications contained in the merger agreement.
The representations and warranties of Parent relate to, among
other things:
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corporate existence, good standing and corporate power to
conduct business;
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due authorization for the execution and delivery of, and the
valid and binding nature of the merger agreement;
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governmental authorizations necessary to complete the merger;
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absence of any conflict with organizational documents or any
violation of agreements, laws or regulations as a result of the
consummation of the merger;
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disclosure documents relating to the merger agreement;
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finders fees and fees payable to financial advisors in
connection with the merger;
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payment of fees under the commitment letters;
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solvency of Parent immediately following consummation of the
merger;
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sufficiency of funds;
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validity and enforceability of the commitment letters;
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absence of default under commitment letters;
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absence of contingencies related to the funding of financing
other than as set forth in the equity or debt commitment letters;
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absence of certain litigation;
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the limited guarantee;
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Parent and its affiliates not engaging or participating in any
business competitive to the Company; and
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its independent investigation of the Company.
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Many of the representations and warranties in the merger
agreement are qualified as to materiality or
material adverse effect. For purposes of the merger
agreement, material adverse effect means, with
respect to either the Company or Parent, as the case may be, any
change, effect, development or event that has or would
reasonably be expected to have a material adverse effect on the
financial condition, business, assets or results of operations
of such party and its subsidiaries, taken as a whole, other than
any changes, effects, developments or events resulting from,
arising out of or attributable to:
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the economy or the financial, credit or securities markets in
general (including changes in interest or exchange rates),
except to the extent such changes, effects, developments or
events relating to or arising in connection with such change
disproportionately affect such party and its subsidiaries, taken
as a whole, as compared to other companies operating in the
industries in which such party and its subsidiaries operate;
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the industries in which such party and its subsidiaries operate,
except to the extent such changes, effects, developments or
events relating to or arising in connection with such change
disproportionately affect such party and its subsidiaries, taken
as a whole, as compared to other companies operating in the
industries in which such party and its subsidiaries operate;
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the announcement or pendency of the transactions contemplated by
the merger agreement, the identity of Parent or the performance
or compliance with the terms of the merger agreement (including,
in each case, any loss of customers, suppliers or employees or
disruption in business relationships);
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the failure of such party to meet internal forecasts, budgets or
financial projections or fluctuations in the trading price or
volume of such partys common stock, provided that the
facts or occurrences giving rise or contributing to such failure
or fluctuation may be deemed to be, constitute or be taken into
account when determining the occurrence of a material adverse
effect;
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acts of God, natural disasters, calamities, national or
international political or social conditions, including the
engagement by any country in hostility, or the occurrence of a
military or terrorist attack, except to the extent such changes,
effects, developments or events relating to or arising in
connection with such change disproportionately affect such party
and its subsidiaries, taken as a whole, as compared to other
companies operating in the industries in which such party and
its subsidiaries operate;
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changes in applicable law or United States generally accepted
accounting principles consistently applied (GAAP)
(or any interpretation thereof), except to the extent such
changes, effects, developments or events relating to or arising
in connection with such change disproportionately affect such
party and its subsidiaries, taken as a whole, as compared to
other companies operating in the industries in which such party
and its subsidiaries operate; and
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any limitation on the ability to use the Companys net
operating losses arising between the date of the merger
agreement and the effective time of the merger or as a result of
the merger or the transactions contemplated by the merger.
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The representations and warranties of the parties contained in
the merger agreement will expire at the effective time of the
merger or termination of the merger agreement.
Conduct
of Business Pending the Merger
Interim
Operations of the Company
From the date of the merger agreement until the earlier to occur
of the effective time of the merger and the termination of the
merger agreement, the merger agreement requires that the Company
will, and will cause each of its subsidiaries to, conduct its
business in the ordinary course consistent with past practice
and in compliance with all material applicable laws and all
material governmental authorizations, and use its reasonable
best efforts to:
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preserve intact its present business organization, material
assets, properties, contracts and licenses and maintain in
effect all permits;
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keep available the services of its directors, officers and
employees; and
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maintain satisfactory relationships with its customers, lenders,
suppliers, distributors, lessors, licensors, licensees,
creditors, contractors and others having material business
relationships with it.
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In addition, except as permitted by the merger agreement or by
law or approved in writing by Parent and subject to certain
exceptions set forth in the merger agreement and the matters
contained in the disclosure schedules delivered by the Company
in connection therewith or as required by applicable law, from
the date of the merger agreement until the effective time of the
merger, the Company will not, and will not permit any of its
subsidiaries to, take any of the following actions:
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amend or propose to amend the organizational documents of the
Company or its subsidiaries;
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split, reclassify or combine any shares of capital stock,
declare any dividend or repurchase any shares of capital stock;
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issue, deliver, sell, grant or pledge any shares of our capital
stock or authorize or propose the issuance, delivery, sale,
grant or pledge of any shares of our capital stock or pay or
make commitments to pay amounts based on the price of Company
common stock, other than the issuance of any shares of common
stock upon the exercise of options or accruals or distributions
in connection with the Director Deferred Fee Plan;
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amend or propose to amend the terms of our capital stock;
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form any subsidiary;
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acquire any equity interest, assets or any real property of any
other entity or person, other than acquisitions of raw materials
(including any supplies used in the manufacture, production,
assembling or packaging of the Companys products) or
acquisitions of assets in arms-length transactions in the
ordinary course of business involving payment of consideration
of $2,500,000 or less individually or less than $5,000,000 in
the aggregate;
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merge or consolidate with any other entity or person;
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adopt a plan of complete or partial liquidation, dissolution,
recapitalization, reorganization or restructuring (or
resolutions providing for or authorizing such action) of the
Company or any of its subsidiaries, other than the merger;
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sell, lease, license or otherwise dispose of, or modify, amend,
extend or renew any agreement with respect to, any subsidiary or
any amount of assets, securities or property, other than
pursuant to existing contracts or, the sale of inventory
(including, without limitation, raw materials, work in process
and finished goods) in arms-length transactions in the ordinary
course or sales in arms-length transactions in the ordinary
course involving the receipt of less than $2,500,000
individually or $4,000,000 in the aggregate, and provided that
such sales do not materially impact the ability of the Company
to conduct its business;
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create or incur any lien on any material asset other than
certain permitted liens or any immaterial lien incurred in the
ordinary course of business and which is reasonably necessary to
conduct the Companys business as presently conducted;
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make any loan, advance or investment, subject to certain
exceptions;
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create, incur, assume or otherwise be liable with respect to any
indebtedness for borrowed money or guarantees thereof, other
than any draw downs in the ordinary course of business on the
Companys current revolving credit facility with General
Electric Capital Corporation or under indebtedness or guarantees
existing on the date of the merger agreement;
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redeem, repurchase, prepay, defease or cancel any indebtedness
for borrowed money, other than as required in accordance with
its terms;
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enter into any material contract other than with respect to
contracts for the sale or acquisition of inventory or raw
materials in the ordinary course of business as permitted by the
terms of the merger agreement, or
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terminate, amend, renew or extend in any material respect any
material contract or waive any material right thereunder, other
than in the ordinary course of business on terms consistent with
past practice;
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terminate, suspend, abrogate, abandon, cease to prosecute, fail
to maintain, sell, license, assign, encumber, amend or modify in
any material respect any material permit of the Company,
material intellectual property owned by the Company or other
material assets;
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except as required by law or employee benefit plans in effect on
the date of the merger agreement or in the ordinary course of
business consistent with past practice,
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grant or increase any severance or termination pay to any
present or former director, officer or employee of the Company
or any of its subsidiaries;
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increase benefits payable under any severance or termination pay
policies or employment agreements existing as of the date of the
merger agreement;
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enter into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing
agreement) with any existing directors, officers or employees;
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establish, adopt or amend any collective bargaining or other
benefit plan or arrangement covering any of their respective
directors, officers or employees;
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grant any equity or equity-based awards;
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increase the compensation, bonus or other benefits payable to
any current or former employee, director or officer of the
Company, subject to certain exceptions; or
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loan or advance any money or other property to any present or
former director, officer or employee of the Company or any of
its subsidiaries;
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hire any person for employment with the Company or its
subsidiaries reasonably expected to receive compensation in
excess of $300,000 annually;
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subject to certain exceptions, make, change or revoke any
material tax election; settle or compromise any claim, notice,
audit report or assessment in respect of a material amount of
taxes; amend any income or other material tax return; enter into
any tax allocation agreement, tax sharing agreement or other
agreement relating to any material taxes; surrender or forfeit
any right to claim a material tax refund; consent to any
extension; or consent to any waiver of the statute of
limitations period applicable to any income or other material
tax or tax return;
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make any material change in any method of accounting or
accounting principles or practice used by the Company or any of
the working capital policies applicable to the Company and its
subsidiaries, except for any change required by reason of a
concurrent change in GAAP or
Regulation S-X,
as approved by its independent public accountants;
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settle or offer to settle any litigation, investigation,
arbitration, suit, action, proceeding or other claim, other than
compromises, settlements or agreements that involve only the
payment of monetary damages not in excess of $750,000
individually or $2,000,000 in the aggregate, in any case without
the imposition of equitable relief on, or the admission of
wrongdoing by, the Company or any of its subsidiaries;
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fail to use reasonable best efforts to maintain and keep in full
force and effect existing material insurance policies for the
benefit of the Company and its subsidiaries, subject to certain
exceptions;
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take any action which with the passage of time or giving of
notice or both would result in material default under any
material contract;
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pay or discharge any material claims, liens or liabilities which
are not reserved for or reflected in the Companys balance
sheet or incurred in the ordinary course of business after
June 30, 2010;
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subject to certain exceptions, authorize any capital
expenditures in excess of $1,000,000 individually or $3,000,000
in the aggregate;
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sell, assign, license, sublicense, encumber, impair, abandon,
fail to diligently maintain, transfer or otherwise dispose of
any right, title or interest of the Company or any of its
subsidiaries in any of the Companys material intellectual
property;
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extend, amend, waive, cancel or modify any rights in or to the
Companys material intellectual property;
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fail to diligently prosecute the material patent applications
owned by the Company or any of its subsidiaries;
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divulge, furnish to or make accessible any trade secrets within
the Companys material intellectual property to any third
party who is not subject to an enforceable written
confidentiality agreement;
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subject to certain exceptions, convene any regular or special
meeting (or any adjournment thereof) of the stockholders, other
than the special meeting called for the purpose of voting on the
proposal to adopt the merger agreement;
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enter into, amend, waive or terminate (other than terminations
in accordance with their terms) any contract with any affiliate
of the Company; or
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agree, resolve or commit to do any of the foregoing.
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Stockholders
Meeting
Unless the merger agreement has been validly terminated, we are
required to take all reasonable action necessary to convene a
meeting of our stockholders as promptly as practicable after the
mailing of this proxy statement (but in no event later than
40 days after the mailing) to consider and vote upon the
adoption of the merger agreement. We may postpone or adjourn the
stockholders meeting (i) with the prior written consent of
Parent or (ii) in the event we have provided timely written
notice to Parent and Merger Subsidiary of our intention to
effect a change of recommendation or terminate the merger
agreement in light of a superior proposal or intervening event
and the deadline with respect to such notice has not been
reached. The Company shall adjourn the stockholders meeting
(i) for the absence of a quorum, (ii) to allow
reasonable additional time for the filing and mailing of any
supplemental or amended disclosure which our board of directors
has determined in good faith after consultation with outside
counsel is necessary under applicable law and for such
supplemental or amended disclosure to be disseminated and
reviewed by our stockholders prior to the stockholders meeting
or (iii) if required by law. Any such postponement or
adjournment shall be to the earliest practicable future date.
Subject to the provisions of the merger agreement discussed
below under The Merger Agreement No
Solicitations of Competing Proposals beginning on
page 65, our board of directors will recommend that our
stockholders vote to approve the adoption of the merger
agreement, include such recommendation in this proxy statement
and use its reasonable best efforts to solicit approval of the
adoption of the merger agreement.
Parent has agreed to vote or cause to be voted any shares of
Company common stock beneficially owned by it or its
subsidiaries in favor of the proposal to adopt the merger
agreement. Parent previously executed and delivered, in its
capacity as the sole stockholder of Merger Subsidiary, a written
consent adopting the merger agreement.
No
Solicitations of Competing Proposals
The merger agreement provides that the Company and its
subsidiaries will not, and the Company will not knowingly permit
its and their directors, officers, employees, investment
bankers, attorneys, accountants, consultants and other agents,
advisors or representatives to, directly or indirectly:
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solicit, initiate or take any action to knowingly facilitate or
encourage (including by way of furnishing to any third party any
non-public information) the submission of any Acquisition
Proposal (as defined on page 67) or any proposal that is
reasonably likely to lead to any Acquisition Proposal;
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enter into, continue or participate in any discussions or
negotiations with, furnish any information relating to the
Company or any of it subsidiaries or afford access to the
business, properties, assets, books or records of the Company or
any of its subsidiaries to any third party that to the
Companys knowledge is seeking to make, or has made, an
Acquisition Proposal or any proposal that is reasonably likely
to lead to an Acquisition Proposal;
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withdraw, qualify or modify, in each case, in a manner adverse
to Parent or publicly propose to withdraw, qualify or modify, in
each case, in a manner adverse to Parent the recommendation of
the board of directors, or recommend, adopt or approve or
publicly propose to recommend, adopt or approve an Acquisition
Proposal (any of these, an Adverse Recommendation
Change); or
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enter into any agreement in principle, letter of intent, term
sheet, merger agreement, acquisition agreement or other similar
instrument that constitutes or relates to an Acquisition
Proposal or enter into any agreement that requires the Company
to abandon, terminate or fail to consummate the transactions
contemplated by the merger agreement or breach its obligations
under the merger agreement.
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The Company and its subsidiaries and their representatives will
immediately cease and cause to be terminated any and all
existing activities, discussions or negotiations, if any, with
any third party with respect to any Acquisition Proposal and
will instruct such third party in possession of confidential
information about the Company that was furnished by or on behalf
of the Company to return or destroy all such information. Any
breach of the non-solicitation provisions by any subsidiary or
any representative of the Company shall be deemed to be a breach
by the Company.
However, the board of directors, directly or indirectly, through
advisors, agents or other intermediaries, may, at any time prior
to the adoption of the merger agreement by the Companys
stockholders,
(i) engage in negotiations or discussions with a third
party that, subject to our compliance with the requirements of
the preceding paragraphs, has made after the date of the merger
agreement a Superior Proposal or an unsolicited bona
fide Acquisition Proposal that the board of directors determines
in good faith (after consultation with a financial advisor of
nationally recognized reputation and outside legal counsel) is
reasonably likely to lead to a Superior Proposal, provided that
prior to taking such action, the board of directors determines
in good faith, after consultation with outside legal counsel,
that failure to take such action would reasonably be expected to
be inconsistent with its fiduciary duties under applicable
law; and
(ii) thereafter furnish to such third party information
relating to the Company or any of its subsidiaries pursuant to a
confidentiality agreement in customary form with terms no less
favorable to the Company than those contained in the
confidentiality agreement between the Company and an affiliate
of Parent; provided that (A) the confidentiality agreement
between the Company and the third party will allow the Company
to comply with the provisions of the merger agreement and cannot
include any provision calling for an exclusive right to
negotiate with the Company, (B) the Company will not, and
will not allow its subsidiaries or its or their representatives
to, disclose any commercially sensitive non-public information
of the Company or any of its subsidiaries to the third party
except in a manner consistent with the Companys past
practice of disclosing confidential information, and
(C) all such information (to the extent that it has not
been previously provided or made available to Parent) is
provided or made available to Parent prior to or substantially
concurrently with the time it is provided or made available to
the third party.
In addition, at any time prior to the adoption and approval of
the merger agreement by the Companys stockholders, the
Board may make an Adverse Recommendation Change if the board of
directors determines in good faith, after consultation with the
Companys outside legal counsel, that the failure to take
such action would reasonably be expected to be inconsistent with
its fiduciary duties under applicable law; provided, however,
that (1) if such Adverse Recommendation Change is in
response to an Acquisition Proposal, such Adverse Recommendation
Change can only be made if the board of directors reasonably
determines in good faith (after consultation with a financial
advisor of nationally recognized reputation and outside legal
counsel) that such Acquisition Proposal constitutes a Superior
Proposal and cannot be made until the third business day after
Parent receives written notice from the Company notifying it
that it intends to take such action and specifying the reasons
therefor and (2) if such Adverse Recommendation Change is
not in response to an Acquisition Proposal, it must be in
response to an Intervening Event and cannot be made until the
third business day after Parent receives written notice from the
Company notifying Parent that the Company intends to take such
action and specifying the reasons therefor and unless the
Company during such three business day period offers to
negotiate (and, if accepted, negotiate in good faith) with
Parent in making adjustments to the terms and conditions of the
merger agreement so that an Adverse Recommendation Change is no
longer necessary.
66
In the event of (1) any Acquisition Proposal, any inquiry
or proposal that would reasonably be expected to lead to an
Acquisition Proposal or any request for information relating to
the Company or its subsidiaries or for access to the business,
properties, assets, books or records of the Company or its
subsidiaries by a third party that, to the knowledge of the
Company, may be considering making, or has made, an Acquisition
Proposal or (2) a determination by the Company to provide
information or to engage in discussions or negotiations
concerning an Acquisition Proposal, the Company must promptly
inform Parent (in any event, within 24 hours) of such
Acquisition Proposal, inquiry or request orally and in writing
and will identify the third party and the material terms of the
Acquisition Proposal, if applicable, and will thereafter
promptly keep Parent informed (in any event, within
24 hours) of any material developments affecting the status
and terms of any such Acquisition Proposal, inquiry, proposal or
request.
Acquisition Proposal
means, other than the
transactions contemplated by the merger agreement, any inquiry,
offer or proposal relating to, or any third party indication of
interest in,
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any acquisition or purchase, direct or indirect, in any single
transaction or series of related transactions, of 20% or more of
the outstanding capital stock or other voting securities of the
Company;
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any tender offer or exchange offer that, if consummated, would
result in such third party beneficially owning 20% or more of
the outstanding capital stock or other voting securities of the
Company; or
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a sale of assets equal to 20% or more of the Companys
consolidated assets, a merger, consolidation, share exchange,
business combination, reorganization, recapitalization,
liquidation, dissolution or other similar transaction involving
the Company or any of its subsidiaries whose assets,
individually or in the aggregate, constitute 20% or more of the
consolidated assets of the Company or to which 20% or more of
the Companys revenues or earnings on a consolidated bases
are attributable.
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Superior Proposal
means any bona fide,
unsolicited written Acquisition Proposal for at least a majority
of the outstanding shares of Company common stock or all or
substantially all of the assets of the Company and its
subsidiaries on terms that the board of directors determines in
good faith, after considering the advice of a financial advisor
of nationally recognized reputation and outside counsel and
taking into account all relevant factors, including the terms
and conditions of the Acquisition Proposal (including price, the
identity of the person making the proposal, form of
consideration, closing conditions, any governmental and other
approval requirements, the ability to fully finance the
proposal, the expected timing and likelihood of consummation and
such other aspects of the proposal as the board of directors in
good faith deems relevant), would result in a transaction
(i) that if consummated, is more favorable to the
Companys stockholders from a financial point of view than
the merger or, if applicable, any binding proposal by Parent
capable of being accepted by the Company to amend the terms of
the merger agreement, (ii) that is reasonably capable of
being completed on the terms proposed and (iii) for which
financing, if a cash transaction (whether in whole or in part),
is then fully committed or reasonably determined to be available
by the board of directors.
Intervening Event
means a material event,
material development or material change in circumstances
relating to the Company or its subsidiaries which (i) is
materially favorable to the long-term financial condition or
results of operations of the Company and its subsidiaries, taken
as a whole, (ii) did not result from, arise out of, or be
attributable to (A) changes, effects, developments or
events in the economy or the financial, credit or securities
markets in general (including changes in interest or exchange
rates), (B) the announcement or pendency of the
transactions contemplated by this Agreement or (C) any
changes in applicable law or GAAP (or any interpretation
thereof), (iii) was neither known to the board of directors
nor reasonably foreseeable as of or prior to the date of the
merger agreement and (iv) becomes known to or by the board
of directors prior to the effective time of the merger;
provided, however, that in no event shall an Intervening Event
include (x) the receipt of an Acquisition Proposal or
(y) any event or change relating to Parent.
Access to
Information; Confidentiality
From the date of the merger agreement until the earlier of the
effective time of the merger or the termination of the merger
agreement, subject to certain exceptions described in the merger
agreement, the Company has agreed to, and to cause its
subsidiaries and its and their representatives, auditors and
agents to, upon reasonable notice, give
67
representatives of Parent and Merger Subsidiary reasonable
access during normal business hours to the offices, properties,
books and records of the Company and each of its subsidiaries
and will furnish Parent and Merger Subsidiary with such
financial and operating data and other information as Parent or
Merger Subsidiary may reasonably request and will instruct its
employees, counsel, financial advisors, auditors and
representatives to cooperate with Parent in its investigation.
In addition, Parent and the Company have agreed to remain bound
by the confidentiality agreement executed by the Company and an
affiliate of Parent prior to the execution of the merger
agreement.
Financing
Parent and Merger Subsidiary have agreed to use their reasonable
best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or
advisable to arrange and obtain the debt financing on the terms
and conditions described in the debt commitment letters and will
not permit any amendment, replacement or supplement to be made
to the debt commitment letters, or any waiver thereunder, if
such amendment, modification or waiver (x) reduces the
aggregate amount of the debt financing (including as a result of
fees or original issue discount of the debt financing (unless
the equity financing is increased by a corresponding amount)) or
(y) imposes new or additional conditions or otherwise
amends, modifies or expands any of the conditions to the receipt
of the debt financing in a manner that would reasonably be
expected to:
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delay or prevent the closing of the merger;
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make the funding of the debt financing (or satisfaction of the
conditions thereto) less likely to occur; or
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adversely impact the ability of Parent or Merger Subsidiary, as
applicable, to enforce its rights against the other parties to
the debt commitment letters or the definitive agreements with
respect thereto.
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In addition, Parent and Merger Subsidiary have agreed to use
their reasonable best efforts to:
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subject to the terms of the merger agreement and the debt
financing commitments maintain in effect the debt commitment
letters until consummation of the merger;
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satisfy all conditions and covenants applicable to Parent and
Merger Subsidiary in the debt commitment letters (including by
consummating the financing pursuant to the terms of the equity
financing commitment letter subject to the terms and commitments
thereof) at or prior to the closing of the merger and otherwise
comply with its obligations thereunder;
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enter into definitive agreements with respect to the debt
commitment letters on the terms and conditions (including the
flex provisions) contemplated by the debt commitment letters;
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consummate the financing prior to the closing of the merger on
the terms and subject to the conditions of the debt financing
commitments;
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enforce its rights under the debt commitment letters; and
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cause the lenders and other persons providing financing to fund
the financing necessary to consummate the merger on the closing
date of the merger.
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If any portion of the debt financing becomes unavailable as
contemplated in the debt commitment letters, Parent will use its
reasonable best efforts to arrange and obtain alternative
financing from alternative sources on terms and conditions that
are no less favorable, in the aggregate, to Parent (taking into
account the flex provisions set forth in the debt commitment
letters) than those set forth in the debt commitment letters, in
an amount sufficient to consummate the transactions contemplated
by the merger agreement as promptly as practicable following the
occurrence of such event, but no later than the last business
day of the marketing period.
Parent will keep the Company informed on a reasonably current
basis in reasonable detail of the status of its efforts to
arrange the debt financing.
We have agreed to and to use our reasonable best efforts to
cause our representatives to provide to Parent and Merger
Subsidiary, at Parents expense, such cooperation
reasonably requested by Parent that is necessary, proper or
advisable in connection with Parents debt financing of the
merger, including: (i) providing the required marketing
68
information to Parent, Merger Subsidiary and their financing
sources, (ii) participating in a reasonable number of
meetings with third parties, (iii) assisting Parent and its
financing sources in the preparation of customary offering
memoranda, bank information memoranda, rating agency
presentations, prospectuses, tender offer documents, lender
presentations and similar documents relating to the debt
financing, (iv) obtaining accountants comfort
letters, appraisals, surveys, engineering reports, environmental
and other inspections, title insurance, legal opinions and other
documentation and items relating to the debt financing as
reasonably requested by Parent and customary for similar
financings, (v) providing monthly financial statements,
(vi) providing and executing documents as may be reasonably
requested by Parent and including a customary solvency
certificate and consents of accountants for use of their
reports, (vii) taking reasonable best efforts to permit
prospective lenders to evaluate the Companys assets or
establish or maintain bank and other accounts and blocked
account agreements and lock box arrangements in connection with
the debt financing, (viii) using reasonable best efforts to
assist Parent in obtaining waivers, consents, estoppels and
approvals to the extent necessary, proper or advisable,
(ix) executing and delivering underwriting or purchase
agreements and other matters ancillary to the debt financing and
(x) taking all corporate actions reasonably requested by
Parent that are necessary or customary to permit the
consummation of the debt financing.
Parent and Merger Subsidiary acknowledge and agree that the
obtaining of financing is not a condition to consummation of the
merger, such that if any financing (or any alternative
financing) has not been obtained, Parent and Merger Subsidiary
will continue to be obligated to consummate the transactions
contemplated by the merger agreement, subject to the fulfillment
or waiver of the conditions explained in more detail below in
Conditions to the Merger. If all or a
portion of the debt financing to be obtained through the
issuance of the senior secured notes has not been obtained on or
prior to the closing of the merger, Parent will use its
reasonable best efforts to cause, no later than the closing of
the merger, the senior secured credit facility to be drawn, and
the proceeds thereof to be used to replace such portion of
senior secured notes not issued at the closing of the merger.
Other
Covenants
Indemnification
and Insurance
The merger agreement contains provisions relating to the
indemnification of and insurance for the Companys and its
subsidiaries current and former directors and officers.
Parent has agreed that for six years after the effective time of
the merger, it will cause the Company to indemnify and hold
harmless the Companys and its subsidiaries current
and former directors and officers for acts or omissions
occurring at or prior to the effective time of the merger to the
fullest extent permitted under applicable law or provided under
the Companys organizational documents as in effect as of
the date of the merger agreement, subject to any limitation
imposed under applicable law.
Parent will maintain for a period of six years after the
effective time an insurance policy covering persons who were
directors and officers of the Company and its subsidiaries prior
to the merger for the actions taken by such directors and
officers in their capacities as directors and officers of the
Company and its subsidiaries prior to the merger on terms with
respect to coverage and amount no less favorable than those of
such policy in effect on the date of the merger agreement,
provided, however, that Parent will not be required to pay
annual premiums in excess of 300% of the amount per annum the
Company paid in its last full fiscal year. Alternatively, prior
to the effectiveness of the merger, at the Companys
request, Parent may purchase a six year prepaid tail
policy providing coverage benefits and terms no less
favorable than the Companys current policy, provided that
Parent will not be required to pay annual premiums in excess of
300% of the amount per annum the Company paid in its last full
fiscal year.
Filings;
Other Actions; Notification
The Company and Parent will use their respective reasonable best
efforts to take or cause to be taken all actions and to do or
cause to be done all things reasonably necessary, proper or
advisable under applicable law to consummate the merger and the
other transactions contemplated by the merger agreement as soon
as practicable, including effecting the regulatory filings
described under The Merger Regulatory
Approvals beginning on page 52 and to obtain as
promptly as practicable all consents, registrations, approvals,
permits and authorizations
69
necessary or advisable to be obtained from any third party or
any governmental entity in order to consummate the merger or any
of the other transactions contemplated by the merger agreement.
The Company and Parent have agreed, subject to certain
exceptions and applicable law, to:
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make an appropriate filing under the HSR Act with respect to the
merger and all other filings required under any applicable
non-U.S. antitrust
or competition laws and under any other applicable competition,
merger control, antitrust or similar law that the Company and
Parent deem advisable or appropriate with respect to the merger
as promptly as practicable and in any event within 10 business
days of the date of the merger agreement;
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supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR
Act and use their reasonable best efforts to take all other
actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as
practicable;
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cooperate with one another in connection with the preparation of
this proxy, in determining whether any action by or in respect
of, or filing with, any governmental authority is required or
any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts in connection
with the merger and in taking such actions, furnishing
information required in connection therewith or with the proxy
statement and seeking timely to obtain any such actions,
consents, approvals or waivers;
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promptly notify the other party of any communication it receives
from any governmental authority relating to the merger agreement
and permit the other party to review in advance any proposed
communication to such governmental authority and provide copies
of all correspondence relating thereto. Neither Parent nor the
Company will agree to participate in any meetings with any
governmental authority unless it consults with the other party
in advance and, to the extent permitted by such governmental
authority, gives the other party an opportunity to attend and
participate in such meeting;
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consult with each other prior to issuing any press release,
making any other public statement or scheduling any press
conference or conference call with investors or analysts with
respect to the merger agreement or merger, except as may be
required by applicable law or any listing agreement with or rule
of any national securities exchange;
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cooperate and use reasonable best efforts to take actions
reasonably necessary, proper and advisable to enable de-listing
by the surviving corporation of the Company common stock from
the Nasdaq and deregistration under the Exchange Act; and
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notify the other party of: (i) any notice or other
communication from any governmental authority in connection with
the merger; (ii) any action, suit, claim or proceeding
commenced, or to the knowledge of the parties, threatened
against any party in connection with the merger agreement and
the merger; (iii) any inaccuracy of any representation or
warranty in the merger agreement at any time that could give
rise to a risk of termination as further set forth in The
Merger Agreement Termination of the Merger
Agreement beginning on page 73 and (iv) any
failure of that party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it
under the merger agreement that could reasonably be expected to
give rise to a right of termination as set forth in The
Merger Agreement Termination of the Merger
Agreement beginning on page 73.
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In addition, the Company cannot settle or offer to settle any
stockholder litigation against the Company
and/or
its
directors or executive officers relating to the merger agreement
and the transactions related thereto without Parents prior
written consent (such consent not to be unreasonably withheld,
delayed or conditioned) and the Company is required to use its
reasonable best efforts to keep Parent reasonably informed with
respect to the status of, and any material developments in, any
such litigation.
70
Employee
Benefit Matters
Parent has agreed that during the period commencing at the
effective time of the merger and ending one year later, the
employees of the Company and its subsidiaries as of the
effective time who remain employed by the surviving company
following the effective time generally will be provided with:
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base salary and bonus opportunities which are no less favorable
in the aggregate than the aggregate base salary and bonus
opportunities provided by the Company and its subsidiaries
immediately prior to the effective time of the merger;
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retirement and welfare benefits and perquisites (excluding
defined benefit pension, retiree medical and life insurance, and
equity and equity-based benefits) that are substantially
comparable in the aggregate to the retirement and welfare
benefits and perquisites provided by the Company and its
subsidiaries immediately prior the effective time of the
merger; and
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severance benefits that are substantially comparable in the
aggregate to those set forth in any employment or severance
agreement between the Company and any such current employee or
any severance policy or practice of the Company and our
subsidiaries, as applicable, with respect to our employees as of
the date of the merger agreement.
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Parent will also pay the amounts payable to each employee of the
Company or its subsidiaries under the Companys 2010 annual
incentive plan at the time bonuses would otherwise be paid under
such plan in accordance with the terms of the plan. Prior to the
effective time of the merger, the board of directors will
determine an estimated bonus pool for 2010 and determine the
allocation of that pool based on year to date financial results
and estimates for remaining results of 2010. Following the
closing of the merger, the board of directors of the surviving
corporation shall (using the same method as was used to
determine the estimated bonus pool) determine the final 2010
bonus pool based on audited financial statements, and shall
allocate the pool on a pro rata basis consistent with the
estimated bonus pool.
As of the effective time of the merger, each award under each of
the Companys long-term incentive arrangements (including
any restricted cash awards or similar arrangements) will fully
vest, become free of any restrictions and be payable in full to
each individual as promptly as practicable following the
effective time of the merger (but in no event later than the
date of payment with respect to the Company stock options (See
The Merger Agreement Treatment of Other Equity
Securities Stock Options ).
As of the effective time of the merger, Parent will assume each
stock unit in respect of a share of Company common stock issued
under the Companys Director Deferred Fee Plan and each
such unit will be distributable in accordance with and in the
time and manner set forth under the terms of the Director
Deferred Fee Plan.
With respect to any employee benefit plan in which any employee
of the Company or its subsidiaries who remains an employee of
the surviving corporation following the effective time of the
merger first becomes eligible to participate, on or after the
effective time of the merger, Parent will (i) use
reasonable best efforts to cause its third-party insurance
providers or third-party administrators to waive all
pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to
such employee under plans providing medical benefits, but only
to the extent waived or otherwise met under an analogous Company
plan, and (ii) recognize service of Company employees
accrued prior to the effective time of the merger (to the extent
such service was recognized by the Company and its subsidiaries
under the employee benefit plans in existence prior to the
effective time) for purposes of eligibility to participate and
vesting (but not for purposes of benefit accruals), provided
that no such credit will be given to the extent it would result
in the duplication of benefits for the same period of service.
71
Conditions
to the Merger
Conditions
to Each Partys Obligations
The obligations of Parent and Merger Subsidiary, on the one
hand, and the Company, on the other hand, to consummate the
merger are subject to the satisfaction (or, to the extent
permissible, waiver) of the following mutual conditions:
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approval of the proposal to adopt the merger agreement by the
Companys stockholders in accordance with Delaware law;
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absence of legal prohibitions on completion of the
merger; and
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expiration or termination of the applicable waiting period under
the HSR Act and any other consents, approvals or expirations of
applicable waiting periods required to be obtained under
applicable laws relating to the merger have been obtained,
except when failure to obtain any of these consents or approvals
would not have or be reasonably expected to have a material
adverse effect.
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Conditions
to Parents and Merger Subsidiarys
Obligations
The obligations of Parent and Merger Subsidiary to consummate
the merger are subject to the satisfaction or waiver (to the
extent permissible) of the following additional conditions:
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the Company must have performed in all material respects all of
its obligations under the merger agreement that are required to
be performed by it at or prior to the effective time of the
merger;
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the representations and warranties of the Company relating to
corporate existence and power, corporate authorization, absence
of a material adverse effect on the Company since June 30,
2010, no undisclosed material liabilities, antitakeover
statutes, and finders fees must be true and correct in all
material respects at and as of the date of the merger agreement
and as of the closing date of the merger (or, in the case of
those representations and warranties that are made as of a
particular date or period, as of such date or period);
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the representations and warranties of the Company relating to
its capitalization must be true and correct at and as of the
date of the merger agreement and as of the closing date of the
merger (or, in the case of those representations and warranties
that are made as of a particular date or period, as of such date
or period), except for such inaccuracies that are no greater
than $500,000;
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the other representations and warranties of the Company must be
true and correct (disregarding all qualifications or limitations
as to materially or material adverse
effect) at and as of the date of the merger agreement and
as of the closing date of the merger (or, in the case of those
representations and warranties that are made as of a particular
date or period, as of such date or period), except where the
failure to be so true and correct would not reasonably be
expected to have, individually or in the aggregate, a material
adverse effect on the Company;
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Parent must have received a certificate signed by the chief
executive officer or chief financial officer of the Company
certifying the satisfaction of the conditions described in the
previous four bullets; and
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since the date of the merger agreement, there has not occurred
and there is not continuing any material adverse effect of the
Company.
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Conditions
to the Companys Obligations
The obligations of the Company to consummate the merger are
subject to the satisfaction (or, to the extent permissible,
waiver) of the following additional conditions:
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each of Parent and Merger Subsidiary must have performed in all
material respects all of their obligations under the merger
agreement that are required to be performed by them at or prior
to the effective time of the merger;
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the representations and warranties of Parent must be true and
correct (disregarding all qualifications or limitations as to
materially or material adverse effect)
at and as of the date of the merger agreement and as of the
closing date of the merger (or, in the case of those
representations and warranties that are made as of a particular
date or period, as of such date or period), except where the
failure to be so true and correct would not reasonably be
expected to, individually or in the aggregate, materially delay
or impair the ability of Parent or Merger Subsidiary to
consummate the transactions contemplated by the merger agreement
on a timely basis; and
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the Company must have received a certificate signed by the chief
executive officer or chief financial officer of Parent
certifying the satisfaction of the conditions described in the
previous two bullets.
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Termination
of the Merger Agreement
The Company and Parent may, by mutual written consent, terminate
the merger agreement and abandon the merger at any time prior to
the effective time of the merger, whether before or after the
adoption of the merger agreement by our stockholders.
The merger agreement may also be terminated and the merger
abandoned at any time prior to the effective time of the merger,
whether before or after the adoption of the merger agreement by
our stockholders, as follows:
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by either Parent or the Company, if:
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the merger has not been consummated by April 5, 2011
(however, this right to terminate the merger agreement will not
be available to any party whose breach of the merger agreement
results in the failure of the merger to be consummated by
April 5, 2011);
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our stockholders meeting has been held and completed and our
stockholders have not adopted the merger agreement at such
meeting or any adjournment or postponement of such
meeting; or
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any applicable law either (i) makes consummation of the merger
illegal or otherwise prohibited or (ii) enjoins the Company or
Parent from consummating the merger, which enjoinment will have
become final and nonappealable, provided that the party seeking
to terminate the merger agreement has used all reasonable best
efforts required by the merger agreement to prevent, oppose and
remove the applicable law.
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an Adverse Recommendation Change (as defined on page 66) has
occurred;
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the Company has willfully breached in any material respect any
of its obligations under the non-solicitation provisions set
forth in the merger agreement;
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a third party commences a tender offer or exchange offer for
Company common stock that constitutes an Acquisition Proposal
(as defined on page 67) or an Acquisition Proposal is publicly
announced and, within ten business days after the public
announcement of such Acquisition Proposal, the Company fails to
publicly reaffirm the Companys board of directors
recommendation for approval of the proposal to adopt the merger
agreement;
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the Company fails to recommend, in a Solicitation/Recommendation
Statement on
Schedule 14D-9,
against any Acquisition Proposal subject to Regulation 14D
under the Exchange Act within ten business days after the
commencement of such Acquisition Proposal (including, for these
purposes, by taking no position with respect to the acceptance
by the Companys stockholders of a tender offer or exchange
offer within such period, which shall constitute a failure to
recommend against such offer);
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the Company fails to include the Company board recommendation in
this proxy statement;
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a breach of any representation or warranty or failure to perform
any covenant or agreement on the part of the Company set forth
in the merger agreement has occurred that would cause the
condition to closing relating to the accuracy of the
representations and warranties of the Company or compliance by
the Company with its obligations under the merger agreement not
to be satisfied and such breach or failure is not cured by the
earlier of April 5, 2011 or thirty days following the
Companys receipt of written notice of
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such breach or failure, provided that, at the time of the
delivery of such notice, Parent is not in material breach of its
obligations under the merger agreement; or
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a material adverse effect on the Company shall have occurred
since the date of the merger agreement that is not capable of
being cured prior to April 5, 2011.
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at any time prior to the adoption of the merger agreement by our
stockholders, (i) our board of directors authorizes the
Company to enter into an alternative acquisition agreement
concerning an acquisition proposal that the board of directors
determines in good faith (after consultation with a financial
advisor of nationally recognized reputation and outside legal
counsel) constitutes a Superior Proposal (as defined on page
67), provided that (A) prior to termination, the Company
gives Parent written notice of its intention to terminate the
merger agreement and enter into an agreement concerning the
Superior Proposal, (B) during a three business day period
following Parents receipt of such notice, the Company
offers to negotiate (and, if accepted, negotiate in good faith)
with Parent in making adjustments to the terms and conditions of
the merger agreement, (C) the board of directors determines
in good faith after such three business day period that the
alternative transaction continues to be a Superior Proposal and
(D) the board of directors shall have determined in good
faith, after consulting with and receiving the advice of outside
counsel, that failure to terminate the merger agreement would
reasonably be expected to be inconsistent with its fiduciary
duty; (ii) concurrently with the termination of the merger
agreement, we enter into a definitive alternative acquisition
agreement with respect to a Superior Proposal and
(iii) prior to, or concurrently with, such termination, we
pay to an affiliate of Parent the termination fee discussed
under The Merger Agreement Termination Fees
and Expenses;
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a breach of any representation or warranty or failure to perform
any covenant or agreement on the part of Parent or Merger
Subsidiary set forth in the merger agreement has occurred that
would cause the condition to closing relating to the accuracy of
the representations and warranties of Parent or Merger
Subsidiary or compliance by Parent or Merger Subsidiary with
their obligations under the merger agreement not to be satisfied
and such breach or failure is not cured by the earlier of
April 5, 2011 or thirty days following Parents
receipt of written notice of such breach or failure, provided
that, at the time of delivery of such notice, the Company is not
in material breach of its obligations under the merger
agreement; or
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if at least 5 business days have passed since the Company has
notified Parent that it believes the conditions to closing have
been satisfied, all the closing conditions to the merger
agreement (other than those conditions that by their nature are
to be satisfied by actions taken at closing) have been
satisfied, or to the extent permissible, waived by the party
entitled to the benefit of such conditions, and Parent and
Merger Subsidiary fail to consummate the merger within two
business days following the date on which the closing should
have occurred.
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If the merger agreement is validly terminated, the merger
agreement will become void without any liability on the part of
any party unless such party intentionally and materially
breached the merger agreement. However, the provisions of the
merger agreement relating to confidentiality, termination fees
and expenses, governing law, jurisdiction and waiver of jury
trial will continue in effect notwithstanding termination of the
merger agreement.
Termination
Fees and Expenses
Termination
Fees Payable by the Company
The Company has agreed to pay to an affiliate of Parent the
termination fee of $6,440,000, plus the documented reasonable
out-of-pocket
fees and expenses incurred by Parent and Merger Subsidiary in
connection with the merger agreement up to an aggregate of
$2,000,000, if any of the following payment events occurs:
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the Company terminates the merger agreement at any time prior to
the adoption of the merger agreement by our stockholders if
(i) the Companys board of directors authorizes the
Company to enter into an alternative acquisition agreement
concerning an acquisition proposal that the board of directors
determines in good faith (after consultation with a financial
advisor of nationally recognized reputation and outside legal
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counsel) constitutes a Superior Proposal, provided that
(A) prior to termination, the Company gives Parent written
notice of its intention to terminate the merger agreement,
(B) during a three business day period following
Parents receipt of such notice, the Company offers to
negotiate (and if accepted, negotiated in good faith) with
Parent in making adjustments to the terms and conditions of the
merger agreement, (C) the board of directors determines in
good faith after such three business day period that the
alternative transaction continues to be a Superior Proposal and
(D) the board of directors shall have determined in good
faith, after consulting with and receiving the advice of outside
legal counsel, that failure to terminate the merger agreement
would reasonably be expected to be inconsistent with its
fiduciary duties; and (ii) concurrently with the
termination of the merger agreement, the Company enters into a
definitive alternative acquisition agreement with respect to a
Superior Proposal;
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Parent terminates the merger agreement due to the board of
directors having made an Adverse Recommendation Change;
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Parent terminates the merger agreement due to the Company having
willfully breached in any material respect any of its
obligations under the non-solicitation provisions set forth in
the merger agreement;
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Parent terminates the merger agreement after a third party
commences a tender offer or exchange offer for Company common
stock that constitutes an Acquisition Proposal (as defined on
page 67) or an Acquisition Proposal is publicly announced and,
within ten business days after the public announcement of such
Acquisition Proposal, the Company failed to publicly reaffirm
the Companys board of directors recommendation for
approval of the proposal to adopt the merger agreement;
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Parent terminates the merger agreement after the Company failed
to include the Company board of directors recommendation in the
proxy statement; or
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Parent terminates the merger agreement because the Company has
failed to recommend, in a Solicitation/Recommendation Statement
on
Schedule 14D-9,
against any Acquisition Proposal subject to Regulation 14D
under the Exchange Act within ten business days after the
commencement of such Acquisition Proposal (including, for these
purposes, by taking no position with respect to the acceptance
by the Companys stockholders of a tender offer or exchange
offer within such period, which shall constitute a failure to
recommend against such offer).
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In addition, the Company has agreed to pay to an affiliate of
Parent the termination fee of $6,440,000, plus the documented
reasonable
out-of-pocket
fees and expenses incurred by Parent and Merger Subsidiary in
connection with the merger agreement up to an aggregate of
$2,000,000, if any of the following payment events occurs:
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either Parent or the Company terminates the merger agreement
because the merger has not been consummated by April 5,
2011;
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either Parent or the Company terminates the merger agreement
because the Company stockholders meeting shall have been
convened and a vote to approve the merger agreement shall have
been taken thereat and the approval of the Companys
stockholders shall not have been obtained; or
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Parent terminates the merger agreement because a breach of any
representation or warranty or failure to perform any covenant or
agreement on the part of the Company set forth in the merger
agreement has occurred that would cause the condition to closing
relating to the accuracy of the representations and warranties
of the Company or compliance by the Company with its obligations
under the merger agreement not to be satisfied and is not cured
by the earlier of April 5, 2011 or thirty days following
the Companys receipt of written notice of such breach or
failure, provided that, at the time of delivery of such notice,
Parent is not in material breach of its obligations under the
merger agreement;
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provided, however, that the Company shall only be required to
pay a termination fee if (A) prior to such termination, an
Acquisition Proposal shall have been made to the stockholders of
the Company generally or shall have otherwise been publicly
disclosed or proposed by a third party and (B) within
12 months following the date of such termination the
Company enters into a written agreement in respect of, or
consummates a transaction described in the definition of
Acquisition Proposal (provided that for purposes of
the termination fees section only, all references to 20% in the
definition of Acquisition Proposal on page 67 are
deemed instead to be 50%).
75
Termination
Fees Payable by Parent
Parent has agreed to pay the Parent fee of $25,000,000 if:
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the Company terminates the merger agreement due to a breach of
any representation or warranty or failure to perform any
covenant or agreement on the part of Parent or Merger Subsidiary
set forth in the merger agreement that would cause the condition
to closing relating to the accuracy of the representations and
warranties of Parent or Merger Subsidiary or compliance by
Parent or Merger Subsidiary with their obligations under the
merger agreement not to be satisfied and such condition is not
cured by the earlier of April 5, 2011 or thirty days
following Parents receipt of written notice of such breach
or failure, provided that, at the time of delivery of such
notice, the Company is not in material breach of its obligations
under the merger agreement; or
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the Company terminates the merger agreement because at least 5
business days have passed since the Company has notified Parent
that it believes the conditions to closing have been satisfied,
all the closing conditions to the merger agreement (other than
those conditions that by their nature are to be satisfied by
actions taken at closing) have been satisfied or, to the extent
permissible, waived by the party entitled to the benefit of such
conditions, and Parent and Merger Subsidiary fail to consummate
the merger within two business days following the date on which
the closing should have occurred.
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The guarantor has agreed to guarantee the obligation of Parent
to pay the Parent fee of $25,000,000 pursuant to the limited
guarantee. See The Merger Limited
Guarantee on page 51 for a description of the limited
guarantee.
Expenses
All costs and expenses incurred in connection with the merger
agreement will be paid by the party incurring such cost or
expense, except Parent and the Company shall equally bear the
filing fees of the filings made under applicable antitrust laws.
Remedies
If Parent and Merger Subsidiary fail to effect the closing of
the merger or otherwise breach the merger agreement or fail to
perform their obligations under the merger agreement, then our
sole and exclusive remedy against Parent, Merger Subsidiary, the
guarantor and any of their respective former, current and future
direct or indirect equity holders, controlling persons,
shareholders, directors, officers, employees, agents,
affiliates, members, financing sources, managers, general or
limited partners or assignees for any breach, loss or damage
will be to terminate the merger agreement and receive payment of
the Parent fee of $25,000,000 (including enforcing our rights
under the limited guarantee). Upon payment of such amount, no
person will have any rights or claims against any of Parent,
Merger Subsidiary, the guarantor and any of their respective
former, current and future direct or indirect equity holders,
controlling persons, shareholders, directors, officers,
employees, agents, affiliates, members, financing sources,
managers, general or limited partners or assignees under the
merger agreement, the limited guarantee, the commitment letters
or otherwise and none of Parent, Merger Subsidiary, the
guarantor and any of their respective former, current and future
direct or indirect equity holders, controlling persons,
shareholders, directors, officers, employees, agents,
affiliates, members, financing sources, managers, general or
limited partners or assignees will have any further liability or
obligation relating to or arising out of the merger agreement or
the transactions contemplated by the merger agreement.
If the merger agreement is terminated in circumstances in which
we are required to pay the termination fee payable to an
affiliate of Parent, Parents and Merger Subsidiarys
sole and exclusive remedy, subject to certain rights to
equitable relief, including specific performance, against us for
any breach, loss or damage will be to receive payment of the
termination fee payable by us. Upon payment of such amount, no
person will have any rights or claims against us and our
affiliates and any of their respective former, current and
future direct or indirect equity holders, controlling persons,
shareholders, directors, officers, employees, agents,
affiliates, members, managers, general or limited partners or
assignees under the merger agreement or otherwise and none of us
and our affiliates and any of their respective former, current
and future direct or indirect equity holders, controlling
persons, shareholders, directors, officers, employees, agents,
affiliates, members, managers, general or limited partners or
76
assignees will have any further liability or obligation relating
to or arising out of the merger agreement or the transactions
contemplated by the merger agreement.
Under no circumstances will the Company be entitled to monetary
damages in excess of the amount of the Parent fee of $25,000,000
payable by Parent, or, subject to the possible entitlement to
specific performance, upon payment by the Company of the
termination fee, will Parent or Merger Subsidiary be entitled to
monetary damages in excess of the amount of the termination fee.
Parent and Merger Subsidiary are entitled to an injunction,
specific performance and other equitable relief to prevent
breaches of the merger agreement and to enforce specifically the
terms of the merger agreement in addition to any other remedy to
which they are entitled at law or in equity.
The Company is not entitled to an injunction, specific
performance or other equitable relief to prevent breaches of the
merger agreement or to enforce specifically the terms of the
merger agreement.
Amendments;
Waivers
Any provision of the merger agreement may be amended or waived
before the effective time of the merger if, but only if, the
amendment or waiver is in writing and signed, in the case of an
amendment, by each party to the merger agreement or, in the case
of a waiver, by each party against whom the waiver is to be
effective; provided that, after approval of the adoption of the
merger agreement by the Companys stockholders and without
their further approval, no amendment or waiver that requires
stockholder approval under Delaware law may be made.
PAST
CONTACTS, TRANSACTIONS OR NEGOTIATIONS
Except as described under The Merger
Background of the Merger beginning on page 22 of this
proxy statement, there have not been any negotiations,
transactions or material contacts during the past two years
concerning any merger, consolidation, acquisition, tender offer
or other acquisition of any class of the Companys
securities, election of the Company directors or sale or other
transfer of a material amount of our assets (i) between the
Company or any of its affiliates, on the one hand, and IPC,
Parent, Merger Subsidiary, their respective executive officers,
directors, members or controlling persons, on the other hand,
(ii) between any affiliates of the Company or
(iii) between the Company and its affiliates, on the one
hand, and any person not affiliated with the Company who would
have a direct interest in such matters, on the other hand.
77
MARKET
PRICE OF COMPANY COMMON STOCK
Our common stock, par value $0.01 per share, is listed on The
Nasdaq Capital Market under the symbol THMD. The
following table shows, for the periods indicated, the high and
low sales prices, as the case may be, of a share of common stock
for each quarter during fiscal years 2008 and 2009, and the
first, second, third and fourth (through October 29,
2010) quarters of fiscal 2010, as reported by published
financial sources.
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Sales Prices
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High
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Low
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2008
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First Quarter
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$
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11.50
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$
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7.75
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Second Quarter
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$
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18.20
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$
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8.63
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Third Quarter
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$
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22.74
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$
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14.00
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Fourth Quarter
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$
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17.21
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$
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5.40
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2009
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First Quarter
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$
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8.16
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$
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1.25
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Second Quarter
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$
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4.81
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$
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2.04
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Third Quarter
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$
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6.98
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$
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3.22
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Fourth Quarter
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$
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7.47
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$
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5.88
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2010
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First Quarter
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$
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8.50
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$
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6.76
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Second Quarter
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$
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12.68
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$
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7.25
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Third Quarter
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$
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14.68
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$
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10.33
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Fourth Quarter (through October 29, 2010
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$
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15.26
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$
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13.94
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On October 4, 2010, the last full trading day prior to the
public announcement of the execution of the merger agreement,
the closing sales price of Company common stock was $14.72. On
October 29, 2010, the most recent practicable date before
the printing of this proxy statement, the closing sales price of
Company common stock was $15.08. You are urged to obtain a
current market price quotation for our common stock. Also on
October 29, 2010, there were 13,556,813 shares of our
common stock outstanding. As a result of the merger, our common
stock will be delisted from the Nasdaq.
We have historically not paid any cash dividends on our common
stock, and we do not have any present intention to commence
payment of any cash dividends. Future determination as to the
payment of cash or stock dividends will depend upon our results
of operations, financial condition, capital requirements,
restrictions contained in our credit agreement and in the
indentures, and such other factors as the board of directors
considers appropriate.
78
INFORMATION
ABOUT STOCK OWNERSHIP
The following table sets forth, as of October 29, 2010,
certain information regarding the ownership of common stock
(i) by each person known by us to be the beneficial owner
of more than 5% of the outstanding common stock; (ii) by
each director; (iii) by each named executive officer; and
(iv) by all directors and executive officers as a group.
The Company believes that, unless otherwise noted, each person
shown in the following table has sole voting and sole investment
power with respect to the shares indicated.
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Amount and
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Nature of
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|
|
|
Beneficial
|
|
|
Percent of
|
|
Name of Beneficial Owner
|
|
Ownership
|
|
|
Class (1)
|
|
|
Angelo, Gordon & Co., L.P., 245 Park Avenue, New York,
NY 10167(2)
|
|
|
4,496,555
|
|
|
|
33.2
|
%
|
John P. Pecora 130 Montadale Drive, Princeton, NJ 08540(3)
|
|
|
1,119,622
|
|
|
|
8.3
|
%
|
GAMCO Investors, Inc., One Corporate Center, Rye, NY 10580(4)
|
|
|
997,032
|
|
|
|
7.4
|
%
|
Royce & Associates, LLC, 1414 Avenue of the Americas,
New York, NY 10019(5)
|
|
|
911,959
|
|
|
|
6.7
|
%
|
Paul D. Melnuk(6)
|
|
|
265,961
|
|
|
|
2.0
|
%
|
Steven A. Schumm(6)
|
|
|
110,001
|
|
|
|
*
|
|
Martin Quinn(5)
|
|
|
73,408
|
|
|
|
*
|
|
Terry J. Downes(6)
|
|
|
72,659
|
|
|
|
*
|
|
J. Joe Adorjan(6)
|
|
|
49,166
|
|
|
|
*
|
|
Bradley G. Pattelli
|
|
|
35,000
|
|
|
|
*
|
|
James B. Gamache(6)
|
|
|
33,100
|
|
|
|
*
|
|
Terry Moody(6)
|
|
|
27,622
|
|
|
|
*
|
|
Andrew L. Berger(6)
|
|
|
25,000
|
|
|
|
*
|
|
Marnie S. Gordon(6)
|
|
|
25,000
|
|
|
|
*
|
|
Christopher P. Hartmann
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group
(11 persons)
|
|
|
716,917
|
|
|
|
5.3
|
%
|
|
|
|
*
|
|
Represents less than 1%.
|
|
|
|
(1)
|
|
Based on 13,556,813 shares of common stock outstanding as
of October 29, 2010, and calculated in accordance with
Rule 13d-3
under the Securities Exchange Act of 1934, as amended.
|
|
|
|
(2)
|
|
Information with respect to the shares beneficially owned by
Angelo, Gordon & Co., L.P is based on a
Schedule 13D/A filed with the SEC on October 7, 2010.
|
|
(3)
|
|
Information with respect to the shares beneficially owned by
John P. Pecora is based on a Schedule 13D/A filed with the
SEC on August 26, 2009.
|
|
|
|
(4)
|
|
Information with respect to the shares beneficially owned by
GAMCO Investors, Inc. is based on a Schedule 13D/A filed
with the SEC on October 18, 2010.
|
|
|
|
(5)
|
|
Information with respect to the shares beneficially owned by
Royce & Associates, LLC is based on a
Schedule 13F filed with the SEC on June 30, 2010.
|
|
|
|
(6)
|
|
Includes the following number of shares underlying options
exercisable within 60 days of October 29, 2010:
Mr. Melnuk, 139,800; Mr. Schumm, 61,366;
Mr. Quinn, 26,366; Mr. Downes, 34,366;
Mr. Adorjan, 26,666; Mr. Gamache, 25,000;
Mr. Moody, 1,366; Mr. Berger, 25,000; Ms. Gordon,
25,000; and all directors and executive officers as a group,
364,930.
|
79
APPRAISAL
RIGHTS
If the merger is consummated, dissenting holders of Company
common stock who follow the procedures specified in
Section 262 of the DGCL within the appropriate time periods
will be entitled to have their shares of Company common stock
appraised by the Delaware Court of Chancery, or the Court
of Chancery, and to receive the fair value of
such shares in cash as determined by the Court of Chancery,
together with a fair rate of interest, if any, to be paid on the
amount determined to be the fair value, in lieu of the merger
consideration that such stockholder would otherwise be entitled
to receive pursuant to the merger agreement. The fair value of
Company common stock as determined by the Court of Chancery may
be more or less than, or the same as, the $15.00 per share that
you are otherwise entitled to receive under the terms of the
merger agreement.
This section provides a brief summary of Section 262, which
sets forth the procedures for dissenting from the merger and
demanding and perfecting appraisal rights. Failure to follow the
procedures set forth in Section 262 precisely will result
in the loss of your appraisal rights. This summary is not a
complete statement regarding your appraisal rights and the
procedures that you must follow in order to seek and perfect
appraisal rights under Delaware law and is qualified in its
entirety by reference to the text of Section 262 of the
DGCL, a copy of which is attached to this proxy statement as
Annex B
. The following summary does not constitute
any legal or other advice, nor does it constitute a
recommendation that you exercise your appraisal rights under
Section 262.
IF YOU WISH TO EXERCISE APPRAISAL RIGHTS OR WISH TO PRESERVE
YOUR RIGHT TO DO SO, YOU SHOULD REVIEW ANNEX B CAREFULLY
AND SHOULD CONSULT YOUR LEGAL ADVISOR, AS FAILURE TO TIMELY
COMPLY WITH THE PROCEDURES SET FORTH IN ANNEX B WILL RESULT
IN THE LOSS OF YOUR APPRAISAL RIGHTS.
Under Section 262, where a merger is to be submitted for
approval at a meeting of stockholders, such as the special
meeting, not less than 20 days prior to the meeting a
constituent corporation, such as us, must notify each of its
holders of its stock for whom appraisal rights are available
that such appraisal rights are available and include in each
such notice a copy of Section 262. This proxy statement
constitutes such notice to holders of Company common stock
concerning the availability of appraisal rights under
Section 262.
Stockholders wishing to assert appraisal rights must hold the
shares of Company common stock on the date of making the written
demand for appraisal rights with respect to such shares and must
continuously hold such shares through the effective time of the
merger. Stockholders who desire to exercise appraisal rights
must also satisfy all of the conditions of Section 262. A
written demand for appraisal of shares must be delivered to us
before the vote on the merger occurs. This written demand for
appraisal of shares must be in addition to and separate from a
vote against the proposal to adopt the merger agreement, or an
abstention or failure to vote for the proposal to adopt the
merger agreement. Stockholders electing to exercise their
appraisal rights must not vote FOR the adoption of
the merger agreement. A vote against the adoption of the merger
agreement will not constitute a demand for appraisal within the
meaning of Section 262. A proxy that is submitted and does
not contain voting instructions will, unless revoked, be voted
in favor of the proposal to adopt the merger agreement, and it
will constitute a waiver of the stockholders right of
appraisal and will nullify any previously delivered written
demand for appraisal. Therefore, a stockholder who submits a
proxy and who wishes to exercise appraisal rights must either
submit a proxy containing instructions to vote against the
proposal to adopt the merger agreement or abstain from voting on
the proposal to adopt the merger agreement.
To be effective, a demand for appraisal by a stockholder must be
made by, or in the name of, the record stockholder, fully and
correctly, as the stockholders name appears on the
stockholders stock certificate(s) or in the transfer
agents records, in the case of uncertificated shares. The
demand cannot be made by the beneficial owner if he or she does
not also hold the shares of Company common stock of record. The
beneficial holder must, in such cases, have the registered
owner, such as a bank, brokerage firm or other nominee, submit
the required demand in respect of those shares of Company common
stock.
If you hold your shares of Company common stock
through a bank, brokerage firm or other nominee and you wish to
exercise appraisal rights, you should consult with your bank,
brokerage firm or the other nominee to determine the appropriate
procedures for the making of a demand for appraisal by the
nominee.
80
If shares of Company common stock are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian,
execution of a demand for appraisal should be made in that
capacity. If the shares of Company common stock are owned of
record by more than one person, as in a joint tenancy or tenancy
in common, the demand should be executed by or for all joint
owners. An authorized agent, including an authorized agent for
two or more joint owners, may execute the demand for appraisal
for a stockholder of record; however, the agent must identify
the record owner or owners and expressly disclose the fact that,
in executing the demand, he or she is acting as agent for the
record owner. A record owner, such as a bank, brokerage firm or
other nominee, who holds shares of Company common stock as a
nominee for others, may exercise his or her right of appraisal
with respect to the shares of Company common stock held for one
or more beneficial owners, while not exercising this right for
other beneficial owners. In that case, the written demand should
state the number of shares of Company common stock as to which
appraisal is sought. Where no number of shares of Company common
stock is expressly mentioned, the demand will be presumed to
cover all shares of Company common stock held in the name of the
record owner
All demands for appraisal should be addressed to Thermadyne
Holdings Corporation, 16052 Swingley Ridge Road, Suite 300,
St. Louis, Missouri 63017, Attention: Nick H. Varsam,
Secretary. The demand must reasonably inform us of the identity
of the stockholder as well as the stockholders intention
to demand an appraisal of the fair value of the
shares held by the stockholder. A stockholders failure to
make the written demand prior to the taking of the vote on the
adoption of the merger agreement at the special meeting will
constitute a waiver of appraisal rights.
Within 10 days after the effective time of the merger, we
must provide notice of the effective time of the merger to all
of our stockholders who have complied with Section 262 and
have not voted FOR the adoption of the merger
agreement. At any time within 60 days after the effective
time of the merger, any stockholder who has not commenced an
appraisal proceeding or joined that proceeding as a named party
will have the right to withdraw his, her or its demand for
appraisal and to accept the merger consideration specified in
the merger agreement. After this period, a stockholder may
withdraw his, her or its demand for appraisal and receive
payment for his, her or its shares as provided in the merger
agreement only with the consent of the surviving corporation.
Unless the demand is properly withdrawn by the stockholder
within 60 days after the effective date of the merger, no
appraisal proceeding in the Court of Chancery will be dismissed
as to any stockholder without the approval of the Court of
Chancery, with such approval conditioned upon such terms as the
Court of Chancery deems just. If the surviving corporation does
not approve a request to withdraw a demand for appraisal when
that approval is required, or if the Delaware Court of Chancery
does not approve the dismissal of an appraisal proceeding, the
stockholder will be entitled to receive only the appraised value
determined in any such appraisal proceeding, which value could
be less than, equal to or more than the consideration offered
pursuant to the merger agreement.
Within 120 days after the effective time of the merger (but
not thereafter), either the surviving corporation or any
stockholder who has complied with the requirements of
Section 262 and who is otherwise entitled to appraisal
rights may commence an appraisal proceeding by filing a petition
in the Court of Chancery demanding a determination of the fair
value of the shares of Company common stock owned by
stockholders entitled to appraisal rights. The surviving
corporation has no obligation to file such a petition if demand
for appraisal is made, and holders should not assume that it
will file a petition. If no petition for appraisal is filed with
the Court of Chancery within 120 days after the effective
time of the merger, stockholders rights to appraisal (if
available) will cease. Accordingly, it is the obligation of the
holders of Company common stock to initiate all necessary action
to perfect their appraisal rights in respect of shares of
Company common stock within the time prescribed in
Section 262. Additionally, within 120 days after the
effective time of the merger, any stockholder who has complied
with Section 262 will be entitled, upon written request, to
receive from the surviving corporation a statement listing the
aggregate number of shares not voted in favor of the merger and
with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. The
statement must be mailed within 10 days after a written
request therefor has been received by the surviving corporation.
A person who is the beneficial owner of shares of Company common
stock held either in a voting trust or by a nominee on behalf of
such person may, in such persons own name, file a petition
for appraisal or request from the surviving corporation the
statement described in this paragraph.
Upon the filing of any petition by a stockholder in accordance
with Section 262, service of a copy must be made upon the
surviving corporation. The surviving corporation must, within
20 days after service, file in the office
81
of the Delaware Register in Chancery a duly verified list
containing the names and addresses of all stockholders who have
demanded payment for their shares of Company common stock and
with whom we have not reached agreements as to the value of
their shares. The Court of Chancery may require the stockholders
who have demanded an appraisal for their shares (and who hold
stock represented by certificates) to submit their stock
certificates to the Register in Chancery for notation of the
pendency of the appraisal proceedings and the Court of Chancery
may dismiss the proceedings as to any stockholder that fails to
comply with such direction.
After notice to the stockholders as required by the Court of
Chancery, the Court of Chancery is empowered to conduct a
hearing on the petition to determine those stockholders who have
complied with Section 262 and who have become entitled to
appraisal rights thereunder. After the Court of Chancery
determines the holders of Company common stock entitled to
appraisal, the appraisal proceeding shall be conducted in
accordance with the rules of the Court of Chancery, including
any rules specifically governing appraisal proceedings. Through
such proceeding, the Court of Chancery shall determine the
fair value of shares of Company common stock as of
the effective time of the merger, after taking into account all
relevant factors, exclusive of any element of value arising from
the accomplishment or expectation of the merger, together with a
fair rate of interest, if any, to be paid upon the amount
determined to be the fair value. Unless the Court of Chancery in
its discretion determines otherwise for good cause shown,
interest from the effective date of the merger through the date
of payment of the judgment shall be compounded quarterly and
shall accrue at 5% over the Federal Reserve discount rate
(including any surcharge) as established from time to time
during the period between the effective date of the merger and
the date of payment of the judgment.
Stockholders considering seeking appraisal of their shares
should note that the fair value of their shares determined under
Section 262 could be more, or less than, or equal to, the
consideration they would receive pursuant to the merger
agreement if they did not seek appraisal of their shares of
Company common stock. You should be aware that an investment
banking opinion as to fairness from a financial point of view is
not necessarily an opinion as to fair value under
Section 262. Although we believe that the merger
consideration is fair, no representation is made as to the
outcome of the appraisal of fair value as determined by the
Court of Chancery. Moreover, we do not anticipate offering more
than the per share merger consideration to any stockholder
exercising appraisal rights and reserve the right to assert, in
any appraisal proceeding, that, for purposes of
Section 262, the fair value of a share of
Company common stock is less than the per share merger
consideration. In determining fair value, the Court
of Chancery is required to take into account all relevant
factors. In
Weinberger v. UOP
, Inc., the Delaware
Supreme Court discussed the factors that could be considered in
determining fair value in an appraisal proceeding, stating that
proof of value by any techniques or methods which are
generally considered acceptable in the financial community and
otherwise admissible in court should be considered and
that [f]air price obviously requires consideration of all
relevant factors involving the value of a company. The
Delaware Supreme Court has stated that in making this
determination of fair value the court must consider market
value, asset value, dividends, earnings prospects, the nature of
the enterprise and any other facts which could be ascertained as
of the date of the merger which throw any light on future
prospects of the merged corporation. Section 262 provides
that fair value is to be exclusive of any element of value
arising from the accomplishment or expectation of the
merger. In
Cede & Co. v. Technicolor,
Inc.
, the Delaware Supreme Court stated that such exclusion
is a narrow exclusion [that] does not encompass known
elements of value, but which rather applies only to the
speculative elements of value arising from such accomplishment
or expectation. In
Weinberger
, the Delaware Supreme Court
construed Section 262 to mean that elements of future
value, including the nature of the enterprise, which are known
or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered.
The costs of the appraisal proceeding (which do not include
attorneys fees or the fees and expenses of experts) may be
determined by the Court of Chancery and taxed against the
parties as the Court of Chancery deems equitable under the
circumstances. Upon application of a dissenting stockholder, the
Court of Chancery may order all or a portion of the expenses
incurred by any dissenting stockholder in connection with the
appraisal proceeding, including reasonable attorneys fees
and the fees and expenses of experts, to be charged pro rata
against the value of all shares entitled to appraisal. In the
absence of a contrary determination, each party bears his, her
or its own expenses.
Any stockholder who has demanded appraisal will not, after the
effective time of the merger, be entitled to vote for any
purpose the shares of Company common stock subject to demand or
to receive payment of dividends or
82
other distributions on such shares, except for dividends or
distributions payable to stockholders of record at a date prior
to the effective time of the merger.
Failure by any stockholder to comply fully with the procedures
of Section 262 of the DGCL (as reproduced in
Annex B
to this proxy statement) may result in
termination of such stockholders appraisal rights and the
stockholder will be entitled to receive the $15.00 per share
cash payment (without interest) for his, her or its shares of
Company common stock pursuant to the merger agreement.
THE PROCESS OF DISSENTING REQUIRES STRICT COMPLIANCE WITH
TECHNICAL PREREQUISITES. THOSE INDIVIDUALS OR ENTITIES WISHING
TO DISSENT AND TO EXERCISE THEIR APPRAISAL RIGHTS SHOULD CONSULT
WITH THEIR OWN LEGAL COUNSEL IN CONNECTION WITH COMPLIANCE UNDER
SECTION 262 OF THE DGCL. TO THE EXTENT THERE ARE ANY
INCONSISTENCIES BETWEEN THE FOREGOING SUMMARY AND
SECTION 262 OF THE DGCL, THE DGCL WILL CONTROL.
DELISTING
AND DEREGISTRATION OF COMPANY COMMON STOCK
If the merger is completed, Company common stock will be
delisted from the Nasdaq and deregistered under the Exchange
Act. As such, we would no longer file periodic reports with the
SEC on account of Company common stock.
OTHER
MATTERS
Other
Matters for Action at the Special Meeting
As of the date of this proxy statement, our board of directors
knows of no matters that will be presented for consideration at
the special meeting other than as described in this proxy
statement.
Future
Stockholder Proposals
If we obtain the requisite stockholder vote at the special
meeting and the merger is consummated, we will not have public
stockholders and there will be no public participation in any
future meeting of stockholders.
If the merger is not consummated, we expect to hold a 2011
Annual Meeting of Stockholders. Under SEC rules, a stockholder
who intends to present a proposal, including nomination of a
director, at the annual meeting and who wishes the proposal to
be included in the proxy statement for that meeting must submit
the proposal in writing to our corporate secretary, Nick H.
Varsam, at 16052 Swingley Ridge Road, Suite 300,
St. Louis, Missouri 63017 no later than December 3,
2010. SEC rules set standards for the types of stockholder
proposals allowed and the information that must be provided by
the stockholder making the request.
In addition, pursuant to our bylaws, for business to be properly
brought before the annual meeting by a stockholder, notice in
writing must be delivered or mailed to the Secretary and
received at our principal offices not less than 90 days nor
more than 120 days prior to the first anniversary of the
preceding years annual meeting (no earlier than
December 28, 2010 and no later than January 27, 2011
with respect to the 2011 annual meeting). In the event, however,
that the date of the annual meeting is advanced by more than
30 days or delayed by more than 60 days from such
anniversary date, notice by the stockholder must be received not
earlier than the 120th day prior to such annual meeting and
not later than the close of business on the later of the
90th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of
the annual meeting is first made.
The stockholders notice must set forth as to each matter
the stockholder proposes to bring before the annual meeting
(i) a brief description of the business to be brought
before the annual meeting and the reasons for conducting the
business at the meeting; (ii) the name and address, as they
appear on the Companys books, of the stockholder proposing
the business, and the name and address of the beneficial owner,
if any, on whose behalf the proposal is made; (iii) the
class and number of shares of the Company common stock which are
beneficially owned by the stockholder, and by the beneficial
owner, if any, on whose behalf the proposal is made; and
(iv) any material
83
interest of the stockholder, and of the beneficial owner, if
any, on whose behalf the proposal is made, in such business.
Householding
of Special Meeting Materials
Some banks, brokers and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that only one copy of
this notice and proxy statement may have been sent to multiple
stockholders sharing the same address. We will promptly deliver
a separate copy of these documents to you if you call or write
us at:
Thermadyne Holdings Corporation
16052 Swingley Ridge Road, Suite 300
St. Louis, Missouri 63017
Attn: Nick H. Varsam, Corporate Secretary
Phone:
(636) 728-3084
Facsimile No:
(636) 728-3010
If you want to receive separate copies of our proxy statements
and annual reports to stockholders in the future, as applicable,
or if you are receiving multiple copies and would like to
receive only one copy for your household, you should contact
your bank, broker or other nominee record holder, or you may
contact us at the above address or phone number.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. Our SEC filings are
available to the public from the SECs website site at
http://www.sec.gov,
which contains reports, proxy and information statements and
other information regarding issuers that file electronically
with the SEC. You may also read and copy any document we file at
the SECs Public Reference Room in Washington D.C. located
at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. You may also obtain copies of any
document we file at prescribed rates by writing to the Public
Reference Section of the SEC at that address. Please call the
SEC at
1-800-SEC-0330
for further information on the public reference room.
Information about us, including our SEC filings, is also
available on our website at
http://www.thermadyne.com.
Should you want more information regarding us, please refer to
the annual, quarterly and current reports, as applicable, filed
with the SEC.
The information concerning us contained in this document has
been provided by us and the information concerning Parent and
Merger Subsidiary included in this document has been provided by
Parent.
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A
PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM
WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT
JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED
IN THIS PROXY STATEMENT TO VOTE YOUR SHARES OF COMPANY
COMMON STOCK AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM
WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT
IS DATED NOVEMBER 1, 2010. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF
ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY
STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE
CONTRARY.
84
ANNEX A
EXECUTION
VERSION
AGREEMENT
AND PLAN OF MERGER
dated as of
October 5, 2010
among
RAZOR HOLDCO INC.,
RAZOR MERGER SUB INC.
and
THERMADYNE HOLDINGS CORPORATION
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
ARTICLE 1 Definitions
|
|
|
A-1
|
|
Section 1.01.
|
|
Definitions
|
|
|
A-1
|
|
Section 1.02.
|
|
Other Definitional and Interpretative Provisions
|
|
|
A-7
|
|
|
|
|
|
|
ARTICLE 2 THE MERGER
|
|
|
A-7
|
|
Section 2.01.
|
|
The Merger
|
|
|
A-7
|
|
Section 2.02.
|
|
Conversion of Shares
|
|
|
A-8
|
|
Section 2.03.
|
|
Surrender and Payment
|
|
|
A-8
|
|
Section 2.04.
|
|
Dissenting Shares
|
|
|
A-9
|
|
Section 2.05.
|
|
Stock Options and Other Equity Awards
|
|
|
A-9
|
|
Section 2.06.
|
|
Adjustments
|
|
|
A-10
|
|
Section 2.07.
|
|
Withholding Rights
|
|
|
A-10
|
|
Section 2.08.
|
|
Lost Certificates
|
|
|
A-10
|
|
|
|
|
|
|
ARTICLE 3 The Surviving Corporation
|
|
|
A-10
|
|
Section 3.01.
|
|
Certificate of Incorporation
|
|
|
A-10
|
|
Section 3.02.
|
|
Bylaws
|
|
|
A-10
|
|
Section 3.03.
|
|
Directors and Officers
|
|
|
A-11
|
|
|
|
|
|
|
ARTICLE 4 Representations and Warranties of the Company
|
|
|
A-11
|
|
Section 4.01.
|
|
Corporate Existence and Power
|
|
|
A-11
|
|
Section 4.02.
|
|
Corporate Authorization
|
|
|
A-11
|
|
Section 4.03.
|
|
Governmental Authorization
|
|
|
A-11
|
|
Section 4.04.
|
|
Non-contravention
|
|
|
A-12
|
|
Section 4.05.
|
|
Capitalization
|
|
|
A-12
|
|
Section 4.06.
|
|
Subsidiaries
|
|
|
A-13
|
|
Section 4.07.
|
|
SEC Filings and the Sarbanes-Oxley Act
|
|
|
A-13
|
|
Section 4.08.
|
|
Financial Statements
|
|
|
A-14
|
|
Section 4.09.
|
|
Disclosure Documents
|
|
|
A-15
|
|
Section 4.10.
|
|
Absence of Certain Changes
|
|
|
A-15
|
|
Section 4.11.
|
|
No Undisclosed Material Liabilities
|
|
|
A-15
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Section 4.12.
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Litigation
|
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A-15
|
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Section 4.13.
|
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Compliance with Laws; Permits
|
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|
A-16
|
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Section 4.14.
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|
Material Contracts
|
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|
A-16
|
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Section 4.15.
|
|
Taxes
|
|
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A-17
|
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Section 4.16.
|
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Employees and Employee Benefit Plans
|
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|
A-18
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Section 4.17.
|
|
Intellectual Property
|
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|
A-20
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Section 4.18.
|
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Properties
|
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A-21
|
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Section 4.19.
|
|
Environmental Matters
|
|
|
A-22
|
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Section 4.20.
|
|
Antitakeover Statutes
|
|
|
A-22
|
|
Section 4.21.
|
|
Opinion of Financial Advisor
|
|
|
A-22
|
|
Section 4.22.
|
|
Finders Fees
|
|
|
A-22
|
|
Section 4.23.
|
|
Affiliate Transactions
|
|
|
A-22
|
|
Section 4.24.
|
|
Insurance
|
|
|
A-22
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Section 4.25.
|
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No Other Representations or Warranties
|
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|
A-23
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Page
|
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|
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT
|
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A-23
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Section 5.01.
|
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Corporate Existence and Power
|
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A-23
|
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Section 5.02.
|
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Corporate Authorization
|
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A-23
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Section 5.03.
|
|
Governmental Authorization
|
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A-23
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Section 5.04.
|
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Non-contravention
|
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A-23
|
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Section 5.05.
|
|
Disclosure Documents
|
|
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A-24
|
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Section 5.06.
|
|
Financing
|
|
|
A-24
|
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Section 5.07.
|
|
Finders Fees
|
|
|
A-25
|
|
Section 5.08.
|
|
Litigation
|
|
|
A-25
|
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Section 5.09.
|
|
Investigation by Parent and Merger Subsidiary
|
|
|
A-25
|
|
Section 5.10.
|
|
No Competing Businesses
|
|
|
A-25
|
|
Section 5.11.
|
|
Guarantee
|
|
|
A-25
|
|
|
|
|
|
|
ARTICLE 6 COVENANTS OF THE COMPANY
|
|
|
A-25
|
|
Section 6.01.
|
|
Conduct of the Company
|
|
|
A-25
|
|
Section 6.02.
|
|
Shareholder Meeting; Proxy Material
|
|
|
A-28
|
|
Section 6.03.
|
|
No Solicitation; Other Offers
|
|
|
A-29
|
|
Section 6.04.
|
|
Access to Information; Confidentiality
|
|
|
A-32
|
|
Section 6.05.
|
|
Financing
|
|
|
A-32
|
|
Section 6.06.
|
|
FIRPTA Certificate
|
|
|
A-36
|
|
|
|
|
|
|
ARTICLE 7 COVENANTS OF PARENT
|
|
|
A-36
|
|
Section 7.01.
|
|
Conduct of Parent
|
|
|
A-36
|
|
Section 7.02.
|
|
Obligations of Merger Subsidiary
|
|
|
A-36
|
|
Section 7.03.
|
|
Voting of Shares
|
|
|
A-36
|
|
Section 7.04.
|
|
Director and Officer Liability
|
|
|
A-36
|
|
Section 7.05.
|
|
Employee Matters
|
|
|
A-37
|
|
|
|
|
|
|
ARTICLE 8 COVENANTS OF PARENT AND THE COMPANY
|
|
|
A-39
|
|
Section 8.01.
|
|
Reasonable Best Efforts
|
|
|
A-39
|
|
Section 8.02.
|
|
Certain Filings
|
|
|
A-39
|
|
Section 8.03.
|
|
Public Announcements
|
|
|
A-40
|
|
Section 8.04.
|
|
Stock Exchange De-listing
|
|
|
A-40
|
|
Section 8.05.
|
|
Further Assurances
|
|
|
A-40
|
|
Section 8.06.
|
|
Rule 16b-3
|
|
|
A-40
|
|
Section 8.07.
|
|
Shareholder Litigation
|
|
|
A-40
|
|
Section 8.08.
|
|
Notices of Certain Events
|
|
|
A-40
|
|
|
|
|
|
|
ARTICLE 9 Conditions to the Merger
|
|
|
A-41
|
|
Section 9.01.
|
|
Conditions to the Obligations of Each Party
|
|
|
A-41
|
|
Section 9.02.
|
|
Conditions to the Obligations of Parent and Merger
Subsidiary
|
|
|
A-41
|
|
Section 9.03.
|
|
Conditions to the Obligations of the Company
|
|
|
A-42
|
|
|
|
|
|
|
ARTICLE 10 TERMINATION
|
|
|
A-42
|
|
Section 10.01.
|
|
Termination
|
|
|
A-42
|
|
Section 10.02.
|
|
Effect of Termination
|
|
|
A-44
|
|
A-ii
|
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Page
|
|
|
ARTICLE 11 MISCELLANEOUS
|
|
|
A-44
|
|
Section 11.01.
|
|
Notices
|
|
|
A-44
|
|
Section 11.02.
|
|
Non-Survival of Representations and Warranties
|
|
|
A-45
|
|
Section 11.03.
|
|
Amendments and Waivers
|
|
|
A-45
|
|
Section 11.04.
|
|
Expenses
|
|
|
A-45
|
|
Section 11.05.
|
|
Disclosure Schedule References
|
|
|
A-47
|
|
Section 11.06.
|
|
Binding Effect; Benefit; Assignment
|
|
|
A-47
|
|
Section 11.07.
|
|
Governing Law
|
|
|
A-47
|
|
Section 11.08.
|
|
Jurisdiction
|
|
|
A-47
|
|
Section 11.09.
|
|
WAIVER OF JURY TRIAL
|
|
|
A-48
|
|
Section 11.10.
|
|
Counterparts; Effectiveness
|
|
|
A-48
|
|
Section 11.11.
|
|
Entire Agreement
|
|
|
A-48
|
|
Section 11.12.
|
|
Severability
|
|
|
A-48
|
|
Section 11.13.
|
|
Specific Performance
|
|
|
A-48
|
|
A-iii
AGREEMENT
AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this
Agreement
), dated as of October 5, 2010,
among Razor Holdco Inc., a Delaware corporation
(
Parent
), Razor Merger Sub Inc., a Delaware
corporation and a direct, wholly-owned subsidiary of Parent
(
Merger Subsidiary
), and Thermadyne Holdings
Corporation, a Delaware corporation (the
Company
).
WHEREAS, the parties intend that Merger Subsidiary be merged
with and into the Company, with the Company surviving that
merger upon the terms and subject to the conditions set forth in
this Agreement;
WHEREAS, the Board of Directors of the Company (the
Board of Directors
) has unanimously
(i) determined that this Agreement, the Voting Agreement
and the transactions contemplated hereby and thereby are fair to
and in the best interests of the Companys shareholders,
(ii) approved, adopted and declared advisable this
Agreement and the transactions contemplated hereby, and
(iii) resolved to recommend approval and adoption of this
Agreement by the Companys shareholders;
WHEREAS, the board of directors of Parent as the sole
shareholder of Merger Subsidiary, and the board of directors of
Merger Subsidiary, have adopted and approved this Agreement and
the Merger upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, and as a condition and inducement to
Parents entering into this Agreement, certain shareholders
of the Company have entered into a Voting Agreement with Parent
(the
Voting Agreement
); and
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, and as a condition of the Company entering into
this Agreement, Irving Place Capital Partners III, L.P. (the
Guarantor
) is entering into a limited
guarantee in favor of the Company (the
Guarantee
) pursuant to which the Guarantor is
guaranteeing certain of the obligations of Parent and Merger
Subsidiary under this Agreement as set forth in the Guarantee;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section
1.01.
Definitions.
As
used herein, the following terms have the following meanings:
1933 Act
means the Securities Act of
1933, as amended.
1934 Act
means the Securities Exchange
Act of 1934, as amended.
Acquisition Proposal
means, other than the
transactions contemplated by this Agreement, any inquiry, offer
or proposal (other than an offer or proposal by Merger
Subsidiary or Parent), including any proposal to the
shareholders of the Company from any Third Party, relating to,
(A) any acquisition or purchase, direct or indirect, in any
single transaction or series of related transactions, of 20% or
more of the outstanding capital stock or other voting securities
of the Company, (B) any tender offer or exchange offer
that, if consummated, would result in such Third Party
beneficially owning 20% or more of the outstanding capital stock
or other voting securities of the Company, or (C) a sale of
assets equal to 20% or more of the Companys consolidated
assets, a merger, consolidation, share exchange, business
combination, reorganization, recapitalization, liquidation,
dissolution or other similar transaction involving the Company
or any of its Subsidiaries whose assets, individually or in the
aggregate, constitute 20% or more of the consolidated assets of
the Company or to which 20% or more of the Companys
revenues or earnings on a consolidated bases are attributable.
Affiliate
means, with respect to any Person,
any other Person that, directly or indirectly through one or
more intermediaries, controls, is controlled by, or is under
common control with such Person, and the term
control (including the terms controlled
by and under common control with) means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such
Person, whether through ownership of voting securities, by
contract or otherwise.
Applicable Law
means, with respect to any
Person, any federal, state or local law (statutory, common or
otherwise), constitution, treaty, convention, ordinance, code,
rule, regulation, order, injunction, judgment, decree, ruling or
other similar requirement enacted, adopted, promulgated or
applied by a Governmental Authority that is binding upon or
applicable to such Person, as the same may be amended from time
to time unless expressly specified otherwise herein.
Business Day
means a day, other than
Saturday, Sunday or other day on which commercial banks in New
York, New York are authorized or required by Applicable Law to
close.
Code
means the Internal Revenue Code of 1986,
as amended.
Company Balance Sheet
means the consolidated
balance sheet of the Company and its Subsidiaries as of
June 30, 2010 and the footnotes thereto set forth in the
Company
10-Q.
Company Balance Sheet Date
means
June 30, 2010.
Company Common Stock
means the common stock,
$.01 par value, of the Company.
Company Disclosure Schedule
means the
disclosure schedule dated the date hereof regarding this
Agreement that has been provided by the Company to Parent and
Merger Subsidiary.
Company
10-Q
means the Companys quarterly report on
Form 10-Q
for the fiscal quarter ended June 30, 2010.
Company Intellectual Property
means all
(i) Company Owned Intellectual Property and
(ii) Intellectual Property used by the Company or its
Subsidiaries in the conduct of their respective businesses.
Company Owned Intellectual Property
means all
Intellectual Property owned by the Company or any of its
Subsidiaries and includes all Intellectual Property listed on
Section 4.17 of the Company Disclosure Schedule.
Company Restricted Share
means each
restricted share of Company Common Stock representing a share of
Company Common Stock outstanding as of the Effective Time
granted pursuant to the 2004 Stock Plan or any other equity or
compensation plan or arrangement of the Company.
Compliant
means, with respect to the Required
Information, that such Required Information, taken as a whole,
does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make such
Required Information, in light of the circumstances under which
it was made, not misleading, provided, that Required Information
shall not fail to be compliant as a result of a new development
with respect to the Company and its Subsidiaries occurring after
the commencement of the Marketing Period so long as the Company
shall promptly update such information to make it otherwise
Compliant and provide it to Parent and Parent does not
reasonably determine that it is necessary to commence a new
Marketing Period.
Contract
any legally binding contract,
agreement, obligation, commitment, arrangement, understanding,
instrument, permit, lease, license or use and occupancy
agreement.
Delaware Law
means the Delaware General
Corporation Law, as amended.
Environmental Law
means any Applicable Law
relating to (i) the generation, manufacturing, use,
treatment, transportation, storage, handling or disposal of any
Hazardous Substance or protection of the air, water or land,
(ii) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation, (iii) human
health and safety with respect to exposures to and management of
Hazardous Substances, (iv) occupational health and safety,
or (iv) the environment.
Environmental Permits
means all permits,
licenses, franchises, certificates, approvals and other similar
authorizations of Governmental Authorities required by
Environmental Laws and affecting, or relating to, the business
of the Company or any of its Subsidiaries as conducted as of the
date of this Agreement.
ERISA
means the Employee Retirement Income
Security Act of 1974, as amended.
A-2
ERISA Affiliate
of any entity means any other
entity that, together with such entity, would be treated as a
single employer under Section 414 of the Code.
GAAP
means United States generally accepted
accounting principles consistently applied.
GE Credit Agreement
means that certain Third
Amended and Restated Credit Agreement among Thermadyne
Industries, Inc., Thermal Dynamics Corporation, Tweco Products,
Inc., Victor Equipment Company, C & G Systems, Inc.,
Stoody Company, Protip Corporation, Thermadyne International
Corp., the Credit Parties signatory thereto, General Electric
Capital Corporation, as agent and Lender, and the other Lenders
signatory thereto dated June 29, 2007, as amended by the
First Amendment dated October 7, 2008, and as further
amended by the Second Amendment dated June 15, 2009, and
the Third Amendment dated February 23, 2010, or as may be
amended after the date of this Agreement in accordance with this
Agreement.
Governmental Authority
means any
transnational, domestic or foreign federal, state or local
governmental, regulatory or administrative authority,
department, court, agency, commission or official, including any
political subdivision thereof, or any non-governmental
self-regulatory agency, commission or authority.
Hazardous Substance
means any chemical,
substance, waste or material listed or defined as a
pollutant, contaminant,
toxic, or radioactive,
ignitable, corrosive,
reactive, or hazardous or words of
similar meaning under any Environmental Law, including petroleum
or petroleum distillates, asbestos or asbestos containing
materials and polychlorinated biphenyls.
HSR Act
means the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
Intellectual Property
shall mean
(i) trademarks, service marks, brand names, certification
marks, trade dress, domain names and other indications of
origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or
application; (ii) inventions and discoveries, whether
patentable or not, in any jurisdiction; patents, applications
for patents (including, without limitation, divisions,
continuations, continuations in part and renewal applications),
and any renewals, extensions or reissues thereof, in any
jurisdiction; (iii) trade secrets and confidential
information and rights in any jurisdiction to limit the use or
disclosure thereof by any person (the
Trade
Secrets
); (iv) writings and other tangible works,
whether copyrightable or not, in any jurisdiction, and any and
all copyright rights, whether registered or not; and
registrations or applications for registration of copyrights in
any jurisdiction, and any renewals or extensions thereof; and
(v) moral rights, database rights, design rights,
industrial property rights, publicity rights and privacy rights.
IT Assets
shall mean computers, computer
software, firmware, middleware, servers, workstations, routers,
hubs, switches, data communications lines, and all other
information technology equipment, and all associated
documentation owned by the Company or its Subsidiaries or
licensed or leased by the Company or its Subsidiaries pursuant
to written agreement (excluding any public networks).
knowledge of the Company
means the actual
knowledge, of the Companys executive officers, after due
inquiry.
Lien
means, with respect to any property or
asset, any mortgage, lien, pledge, charge, security interest,
encumbrance or other adverse claim of any kind in respect of
such property or asset. For purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any property or asset
that it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such
property or asset.
Material Adverse Effect
means with respect to
any Person, any change, effect, development or event that has or
would reasonably be expected to have a material adverse effect
on the financial condition, business, assets, or results of
operations of such Person and its Subsidiaries, taken as a
whole;
provided, however
, that no change, effect,
development or event (by itself or when aggregated or taken
together with any and all other changes, effects, developments
or events) resulting from, arising out of, or attributable to
any of the following shall be deemed to be or constitute a
Material Adverse Effect,
and no change,
effect, development or event (by itself or when aggregated or
taken together with any and all other changes, effects,
developments or events)
A-3
resulting from, arising out of, or attributable to, any of the
following shall be taken into account when determining whether a
Material Adverse Effect has occurred or may, would
or could occur: (A) any changes, effects, developments or
events in the economy or the financial, credit or securities
markets in general (including changes in interest or exchange
rates), (B) any changes, effects, developments or events in
the industries in which such Person and its Subsidiaries
operate, (C) any changes, effects, developments or events
resulting from the announcement or pendency of the transactions
contemplated by this Agreement, the identity of Parent or the
performance or compliance with the terms of this Agreement
(including, in each case, any loss of customers, suppliers or
employees or disruption in business relationships) (provided
that is understood this clause (C) shall not apply to the
representations in Section 4.04), (D) any changes,
effects, developments or events resulting from the failure of
such Person to meet internal forecasts, budgets or financial
projections or fluctuations in the trading price or volume of
such Persons common stock (it being understood that the
facts or occurrences giving rise or contributing to such failure
or fluctuation may be deemed to be, constitute or be taken into
account when determining the occurrence of a Material Adverse
Effect), (E) acts of God, natural disasters, calamities,
national or international political or social conditions,
including the engagement by any country in hostility (whether
commenced before, on or after the date hereof, and whether or
not pursuant to the declaration of a national emergency or war),
or the occurrence of a military or terrorist attack,
(F) any changes in Applicable Law or GAAP (or any
interpretation thereof) or (G) any limitation on the
ability to use the Companys net operating losses arising
between the date of this Agreement and the Effective Time or as
a result of the Merger or the transactions contemplated by this
Agreement,
except
to the extent such changes, effects,
developments or events relating to or arising in connection with
the matters described in clauses (A), (B), (E) and
(F) above disproportionately affect such Person and its
Subsidiaries, taken as a whole, as compared to other companies
operating in the industries in which such Person and its
Subsidiaries operate.
Multiemployer Plan
means any
multiemployer plan, as defined in Section 3(37)
of ERISA.
NASDAQ
means the NASDAQ Stock Market LLC
Organizational Documents
means (a) with
respect to any entity that is a corporation, such
corporations certificate or articles of incorporation and
bylaws, (b) with respect to any entity that is a limited
liability company, such limited liability companys
certificate or articles of formation and operating agreement,
and (c) with respect to any other entity, such
entitys organizational or charter documents.
Permitted Liens
shall mean any of the
following: (i) statutory Liens for Taxes, assessments and
governmental charges or levies either not yet due and delinquent
or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been
established in accordance with GAAP; (ii) statutory
mechanics, carriers, workmens, warehousemans,
repairmens, materialmens or other Liens or security
interests that are not yet due; (iii) Liens to secure
obligations to landlords, lessors or renters under leases or
rental agreements or underlying leased property; (iv) Liens
imposed by Applicable Law; (v) pledges or deposits to
secure obligations under workers compensation laws or
similar legislation or to secure public or statutory
obligations; (vi) good faith pledges and deposits to secure
the performance of bids, trade contracts, leases, surety and
appeal bonds, performance bonds and other obligations of a
similar nature, in each case in the ordinary course of business;
(vii) Liens that, individually or in the aggregate, do not,
and would not reasonably be expected to materially detract from
the value or materially interfere with the present use of the
property or asset subject thereto or affected thereby;
(viii) Liens the existence of which are specifically
disclosed in the notes to the consolidated financial statements
of the Company included in the Filed Company SEC Documents; and
(ix) Liens set forth on Section 1.01 of the Company
Disclosure Schedule.
Person
means an individual, corporation,
partnership, limited liability company, association, trust or
other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
Sarbanes-Oxley Act
means the Sarbanes-Oxley
Act of 2002.
SEC
means the Securities and Exchange
Commission.
Subsidiary
means, with respect to any Person,
any entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at
any time directly or indirectly owned by such Person.
A-4
Third Party
means any Person, including as
defined in Section 13(d) of the 1934 Act, other than
Parent or any of its Affiliates.
Treasury Regulations
means the United States
Department of Treasury regulations promulgated under the Code.
WARN Act
means the U.S. Worker
Adjustment and Retraining Notification Act and any state or
local equivalent.
Each of the following terms is defined in the Section set forth
opposite such term:
|
|
|
Term
|
|
Section
|
|
2004 Stock Plan
|
|
Section 4.05(a)
|
Adverse Recommendation Change
|
|
Section 6.03(a)
|
Agreement
|
|
Preamble
|
Board of Directors
|
|
Recitals
|
Certificate
|
|
Section 2.02(a)
|
Certificate of Merger
|
|
Section 2.01(c)
|
Closing
|
|
Section 2.01(b)
|
Closing Date
|
|
Section 2.01(b)
|
Company
|
|
Preamble
|
Company Board Recommendation
|
|
Section 4.02(a)
|
Company Capital Stock
|
|
Section 4.05(a)
|
Company Material Contract
|
|
Section 4.14(b)
|
Company Payment Event
|
|
Section 11.04(b)
|
Company Permits
|
|
Section 4.13(b)
|
Company Preferred Stock
|
|
Section 4.05(a)
|
Company Proxy Statement
|
|
Section 4.09
|
Company Related Party or Company Related Parties
|
|
Section 11.04(f)
|
Company SEC Documents
|
|
Section 4.07(a)
|
Company Securities
|
|
Section 4.05(b)
|
Company Shareholder Approval
|
|
Section 4.02(a)
|
Company Shareholder Meeting
|
|
Section 6.02(b)
|
Company Stock Option
|
|
Section 2.05(a)
|
Company Subsidiary Securities
|
|
Section 4.06(b)
|
Company Termination Fee
|
|
Section 11.04(b)
|
Confidentiality Agreement
|
|
Section 6.04(b)
|
Current Employees
|
|
Section 7.05(a)
|
D&O Insurance
|
|
Section 7.04(d)
|
Debt Financing
|
|
Section 5.06(a)
|
Debt Financing Commitments
|
|
Section 5.06(a)
|
Director Option Agreements
|
|
Section 4.05(a)
|
Director Option Plan
|
|
Section 4.05(a)
|
Dissenting Shares
|
|
Section 2.04
|
Effective Time
|
|
Section 2.01(c)
|
Employee Plans
|
|
Section 4.16(a)
|
End Date
|
|
Section 10.01(b)(i)
|
Equity Commitment Party
|
|
Section 5.06(a)
|
Equity Financing
|
|
Section 5.06(a)
|
A-5
|
|
|
Term
|
|
Section
|
|
Equity Financing Commitment
|
|
Section 5.06(a)
|
ESPP
|
|
Section 2.05(a)
|
Filed Company SEC Documents
|
|
Article 4
|
Financing
|
|
Section 5.06(a)
|
Financing Commitments
|
|
Section 5.06(a)
|
Foreign Plan
|
|
Section 4.16(a)
|
Guarantee
|
|
Recitals
|
Guarantor
|
|
Recitals
|
Improvements
|
|
Section 4.18
|
Indemnified Person
|
|
Section 7.04(a)
|
internal controls
|
|
Section 4.07(h)
|
Intervening Event
|
|
Section 6.03(d)
|
Leased Real Property
|
|
Section 4.18
|
Marketing Period
|
|
Section 6.05(b)
|
Merger
|
|
Section 2.01(a)
|
Merger Consideration
|
|
Section 2.02(a)
|
Merger Subsidiary
|
|
Preamble
|
New Company Plans
|
|
Section 7.05(e)
|
Order
|
|
Section 4.12(a)
|
Owned Real Property
|
|
Section 4.18
|
Parent
|
|
Preamble
|
Parent Payment Event
|
|
Section 11.04(c)
|
Parent Related Party or Parent Related Parties
|
|
Section 11.04(e)
|
Parent Termination Fee
|
|
Section 11.04(c)
|
Paying Agent
|
|
Section 2.03(a)
|
Payment Fund
|
|
Section 2.03(a)
|
PBGC
|
|
Section 4.16(b)
|
Representatives
|
|
Section 6.03(a)
|
Required Governmental Authorizations
|
|
Section 4.03
|
Required Information
|
|
Section 6.05(b)
|
Standstill Agreement
|
|
Section 6.03(d)
|
Stock Plans
|
|
Section 4.05(a)
|
Superior Proposal
|
|
Section 6.03(d)
|
Superior Proposal Notice
|
|
Section 10.01(d)(i)
|
Surviving Corporation
|
|
Section 2.01(a)
|
Tax
|
|
Section 4.15(o)
|
Taxes
|
|
Section 4.15(o)
|
Taxing Authority
|
|
Section 4.15(o)
|
Tax Return
|
|
Section 4.15(p)
|
Title IV Plan
|
|
Section 4.16(b)
|
Uncertificated Share
|
|
Section 2.02(a)
|
Voting Agreement
|
|
Recitals
|
A-6
Section
1.02.
Other
Definitional and Interpretative Provisions.
The
words hereof, herein and
hereunder and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. The captions herein
are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof. References
to Articles, Sections, Exhibits and Schedules are to Articles,
Sections, Exhibits and Schedules of this Agreement unless
otherwise specified. All Exhibits and Schedules annexed hereto
or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein. Any
capitalized terms used in any Exhibit or Schedule but not
otherwise defined therein, shall have the meaning as defined in
this Agreement. Any singular term in this Agreement shall be
deemed to include the plural, and any plural term the singular.
Whenever the words include, includes or
including are used in this Agreement, they shall be
deemed to be followed by the words without
limitation, whether or not they are in fact followed by
those words or words of like import. Writing,
written and comparable terms refer to printing,
typing and other means of reproducing words (including
electronic media) in a visible form. Except as the context may
otherwise require, references to any agreement or contract are
to that agreement or contract as amended, modified or
supplemented from time to time in accordance with the terms
hereof and thereof;
provided
that with respect to any
agreement or contract listed on any schedules hereto, all such
amendments, modifications or supplements must also be listed in
the appropriate schedule. References to any Person include the
successors and permitted assigns of that Person. Any dollar
threshold set further herein shall not be used as a benchmark
for determination of what is material or a
Material Adverse Effect or any phrase of similar
import under the Agreement. References from or through any date
mean, unless otherwise specified, from and including or through
and including, respectively. References to law,
laws or to a particular statute or law shall be
deemed also to include any Applicable Law. The parties agree
that the terms and language of this Agreement were the result of
negotiations between the parties and their respective advisors
and, as a result, there shall be no presumption that any
ambiguities in this Agreement shall be resolved against any
party. Any controversy over construction of this Agreement shall
be decided without regard to events of authorship or negotiation.
ARTICLE 2
The
Merger
Section 2.01.
The
Merger
.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, at the Effective Time, Merger
Subsidiary shall be merged (the
Merger
) with
and into the Company in accordance with Delaware Law, whereupon
the separate existence of Merger Subsidiary shall cease, and the
Company shall be the surviving corporation (the
Surviving Corporation
).
(b) Subject to the provisions of Article 9, the
closing of the Merger (the
Closing
) shall
take place in St. Louis, Missouri at the offices of Bryan
Cave LLP, 211 North Broadway, Suite 3600, St. Louis,
Missouri 63102, as soon as possible, but in any event no later
than three Business Days after the date the conditions set forth
in Article 9 (other than conditions that by their nature
are to be satisfied at the Closing, but subject to the
satisfaction or, to the extent permissible, waiver of those
conditions at the Closing) have been satisfied or, to the extent
permissible, waived by the party or parties entitled to the
benefit of such conditions, or at such other place;
provided
,
however
, that if the Marketing Period
has not ended at the time of the satisfaction or waiver of the
conditions set forth in Article 9 (other than conditions
that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or, to the extent permissible,
waiver of those conditions at the Closing), the Closing shall
occur on the earlier to occur of (i) a date during the
Marketing Period specified by Parent on no less than three
Business Days notice to the Company and (ii) the
third Business Day immediately following the final day of the
Marketing Period (subject in each case to the satisfaction or
waiver of the conditions set forth in Article 9 for the
Closing as of the date determined pursuant to this proviso), or
at such other time or on such other date as Parent and the
Company may mutually agree; (the
Closing
Date
).
(c) Upon the Closing, the Company and Merger
Subsidiary shall cause the Merger to be consummated by filing a
certificate of merger (the
Certificate of
Merger
) with the Secretary of State of the State of
Delaware, in such form as is required by, and executed in
accordance with, the relevant provisions of Delaware Law. The
Merger shall become effective at such time (the
Effective Time
) as the Certificate of Merger
is duly filed with the Secretary of State of the State of
Delaware (or at such later time as permitted by Delaware Law as
Parent and the Company shall agree and shall be specified in the
Certificate of Merger).
A-7
(d) The effects of the Merger shall be as provided in
this Agreement and in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing and subject
thereto, at the Effective Time, the Surviving Corporation shall
possess all the properties, rights, powers, privileges and
franchises and be subject to all of the obligations,
liabilities, restrictions and disabilities of the Company and
Merger Subsidiary, all as provided under Delaware Law.
Section
2.02.
Conversion
of Shares.
At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger
Subsidiary or the holders of any shares of Company Common Stock
or any shares of capital stock of Parent or Merger Subsidiary:
(a) except as otherwise provided in
Section 2.02(b) or Section 2.04, each share of Company
Common Stock and each Company Restricted Share outstanding
immediately prior to the Effective Time shall be converted into
the right to receive $15.00 in cash, without interest (such per
share amount, the
Merger Consideration
). As
of the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each
certificate which immediately prior to the Effective Time
represented any such shares of Company Common Stock (each, a
Certificate
) and each uncertificated share of
Company Common Stock (an
Uncertificated
Share
) which immediately prior to the Effective Time
was registered to a holder on the stock transfer books of the
Company, shall thereafter represent only the right to receive
the Merger Consideration.
(b) each share of Company Common Stock held by the
Company or owned by Parent or any of its Subsidiaries
immediately prior to the Effective Time shall be canceled, and
no payment shall be made with respect thereto; and
(c) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and
non-assessable share of common stock of the Surviving
Corporation with the same rights, powers and privileges as the
shares so converted and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation.
Section
2.03.
Surrender
and Payment.
(a) Prior to the Effective Time, Parent shall appoint
a commercial bank or trust company that is reasonably
satisfactory to the Company (the
Paying
Agent
) for the purpose of paying the Merger
Consideration to the holders of Company Common Stock and shall
enter into a Paying Agent Agreement with the Paying Agent. At or
prior to the Effective Time, Parent shall deposit, or cause
Merger Subsidiary to deposit, with the Paying Agent, for the
benefit (from and after the Effective Time) of the holders of
shares of Company Common Stock, for payment in accordance with
this Section 2.03 through the Paying Agent, cash sufficient
to pay the aggregate Merger Consideration pursuant to
Section 2.02. All cash deposited with the Paying Agent
pursuant to this Section 2.03(a) shall herewith be referred
to as the
Payment Fund
. Promptly after the
Effective Time (and in any event within two Business Days
following the Closing Date), Parent shall send, or shall cause
the Paying Agent to send, to each Person who was, immediately
prior to the Effective Time, a holder of record of shares of
Company Common Stock entitled to receive payment of the Merger
Consideration pursuant to Section 2.02(a) a letter of
transmittal and instructions (which shall specify that the
delivery shall be effected, and risk of loss and title shall
pass, only upon proper delivery of the Certificates or transfer
of the Uncertificated Shares to the Paying Agent) for use in
such payment.
(b) Each holder of shares of Company Common Stock
that have been converted into the right to receive the Merger
Consideration shall be entitled to receive, upon
(i) surrender to the Paying Agent of a Certificate,
together with a properly completed letter of transmittal, or
(ii) receipt of an agents message by the
Paying Agent (or such other evidence, if any, of transfer as the
Paying Agent may reasonably request) in the case of a book-entry
transfer of Uncertificated Shares, the Merger Consideration in
respect of the Company Common Stock represented by a Certificate
or Uncertificated Share. Until so surrendered or transferred, as
the case may be, each such Certificate or Uncertificated Share
shall represent after the Effective Time for all purposes only
the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to
be paid to a Person other than the Person in whose name the
surrendered Certificate or the transferred Uncertificated Share
is registered, it shall be a condition to such
A-8
payment that (i) either such Certificate shall be properly
endorsed or shall otherwise be in proper form for transfer or
such Uncertificated Share shall be properly transferred and
(ii) the Person requesting such payment shall pay to the
Paying Agent any transfer or other taxes required as a result of
such payment to a Person other than the registered holder of
such Certificate or Uncertificated Share or establish to the
satisfaction of the Paying Agent, Parent and the Surviving
Corporation that such tax has been paid or is not payable.
(d) The stock transfer books of the Company shall be
closed immediately upon the Effective Time and there shall be no
further registration of transfers of shares of Company Common
Stock thereafter on the records of the Company. If, after the
Effective Time, Certificates or Uncertificated Shares are
presented to Parent, the Surviving Corporation or the Paying
Agent for any reason, they shall be canceled and converted into
the right to receive only the Merger Consideration to the extent
provided for, and in accordance with the procedures set forth,
in this Article 2.
(e) Any portion of the Merger Consideration made
available to the Paying Agent pursuant to Section 2.03(a)
that remains unclaimed by the holders of shares of Company
Common Stock six months after the Effective Time shall be
delivered to Parent or otherwise on the instruction of Parent,
and any such holder who has not received payment of the Merger
Consideration for such converted shares of Company Common Stock
in accordance with this Section 2.03 prior to that time
shall thereafter look only to Parent for payment of the Merger
Consideration, in respect of such shares without any interest
thereon. Notwithstanding the foregoing, Parent shall not be
liable to any holder of shares of Company Common Stock for any
amounts paid to a public official pursuant to applicable
abandoned property, escheat or similar laws. Any amounts
remaining unclaimed by holders of shares of Company Common Stock
immediately prior to such time when the amounts would otherwise
escheat to or become property of any Governmental Authority
shall become, to the extent permitted by Applicable Law, the
property of Parent free and clear of any claims or interest of
any Person previously entitled thereto.
Section 2.04.
Dissenting
Shares
. Notwithstanding any provision in this
Agreement to the contrary, shares of Company Common Stock
outstanding immediately prior to the Effective Time and held by
a holder who has not voted in favor of the Merger or consented
thereto in writing and who has properly demanded appraisal for
such shares in accordance with Section 262 of Delaware Law
(collectively, the
Dissenting Shares
) shall
not be converted into the right to receive the Merger
Consideration. From and after the Effective Time, a holder of
Dissenting Shares shall not have, and shall not be entitled to
exercise, any of the voting rights or other rights of a holder
of shares of the Surviving Corporation. If, after the Effective
Time, such holder fails to perfect, withdraws or loses the right
to appraisal under Section 262 of Delaware Law, such shares
shall be treated as if they had been converted as of the
Effective Time into the right to receive the Merger
Consideration. The Company shall give Parent prompt notice of
any demands received by the Company for appraisal of shares, and
Parent shall have the right to direct all negotiations and
proceedings with respect to such demands. Except with the prior
written consent of Parent, the Company shall not make any
payment with respect to, or offer to settle or settle, any such
demands.
Section
2.05.
Stock
Options and Other Equity Awards.
(a) At the Effective Time, each outstanding Company
Stock Option under any Stock Plan, including without limitation
the 2004 Stock Plan, the Director Option Plan and the Director
Option Agreements, whether or not then exercisable or vested,
shall become fully vested and be cancelled in exchange for the
right to receive, as soon as reasonably practicable after the
Effective Time (but in any event no later than the earliest of:
(a) three Business Days after the Effective Time,
(b) the end of the year in which the Effective Time occurs,
or (c) the expiration of the original term of such Company
Stock Option outstanding as of the Effective Time), an amount in
cash equal to the product of (A) the total number of shares
of Company Common Stock subject to such Company Stock Option
immediately prior to the Effective Time, multiplied by
(B) the excess, if any, of the Merger Consideration over
the exercise price per share of Company Common Stock under such
Company Stock Option, less any applicable taxes required to be
withheld with respect to such payment. As used herein, the term
Company Stock Option
shall mean any
outstanding option to purchase shares of Company Common Stock
under any Stock Plan other than the Companys Employee
Stock Purchase Plan (the
ESPP
). As of the
Effective Time, each Company Stock Option for which the exercise
price per share of Company Common Stock exceeds the Merger
Consideration shall be canceled and have no further effect, with
no right to receive any consideration therefor. As of the
Effective Time, all other Company Stock Options shall no longer
be outstanding and shall automatically cease to exist and shall
A-9
become only the right to receive the option consideration
described in this Section 2.05(a), and, without limiting
the foregoing, the Board of Directors or the appropriate
committee thereof shall take all reasonable action to effect
such cancellation, subject to any required participant consent.
(b)
Employee Stock Purchase
Plan
.
As soon as practicable following the
date of this Agreement, the board of directors or the
compensation committee of the Board of Directors will adopt such
resolutions and take such other actions as may be required to
provide that with respect to the ESPP: (A) participants in
the ESPP may not alter their payroll deductions from those in
effect on the date of this Agreement (other than to discontinue
their participation in the ESPP), (B) no new offering
period will be commenced after the date of this Agreement (it
being understood that any offering period in effect on the date
hereof may continue in accordance with its terms), (C) the
ESPP shall be terminated effective immediately prior to the
Effective Time, and (D) the amount of the accumulated
contributions of each participant under the ESPP as of
immediately prior to the date on which the ESPP is terminated
shall be refunded to such participant as promptly as practicable
following the date on which the ESPP is terminated (without
interest).
(c) At or immediately prior to the Effective Time,
each outstanding Company Restricted Share shall vest and become
free of such other lapsing restrictions as of the Effective Time
and shall, as of the Effective Time, be canceled and converted
into the right to receive the Merger Consideration in accordance
with Section 2.02(a).
Section
2.06.
Adjustments.
If,
during the period between the date of this Agreement and the
Effective Time, any change in the outstanding shares of Company
Common Stock shall occur, as a result of any reclassification,
recapitalization, stock split (including reverse stock split),
merger, combination, exchange or readjustment of shares,
subdivision or other similar transaction, or any stock dividend
thereon with a record date during such period, the Merger
Consideration and any other amounts payable pursuant to this
Agreement shall be appropriately adjusted to eliminate the
effect of such event on the Merger Consideration or any such
other amounts payable pursuant to this Agreement.
Section
2.07.
Withholding
Rights.
Each of the Paying Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold
from the consideration otherwise payable to any Person pursuant
to this Agreement such amounts as it is required to deduct and
withhold with respect to the making of such payment under any
provision of any Applicable Law, including federal, state, local
or foreign Tax law, and if any such amounts are deducted and
withheld, Parent shall, or shall cause the Surviving Corporation
to, as the case may be, timely pay such amounts to the
appropriate Government Authority. If the Paying Agent, Parent or
the Surviving Corporation, as the case may be, so withholds
amounts, such amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which the Paying Agent,
Parent or the Surviving Corporation, as the case may be, made
such deduction and withholding.
Section
2.08.
Lost
Certificates.
If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if reasonably required by Parent or the
Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as Parent or 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 to be paid in respect of
the shares of Company Common Stock represented by such
Certificate, as contemplated by this Article 2.
ARTICLE 3
The
Surviving Corporation
Section
3.01.
Certificate
of Incorporation.
The certificate of
incorporation of the Company shall be amended in its entirety as
set forth on Annex I and, as amended, shall be the
certificate of incorporation of the Surviving Corporation until
amended in accordance with Applicable Law.
Section
3.02.
Bylaws.
The
bylaws of Merger Subsidiary in effect at the Effective Time
shall be the bylaws of the Surviving Corporation until amended
in accordance with Applicable Law.
A-10
Section 3.03.
Directors
and Officers
.
(a) From and after the Effective Time, until
successors are duly elected or appointed and qualified in
accordance with Applicable Law, (i) the directors of Merger
Subsidiary at the Effective Time shall be the directors of the
Surviving Corporation and (ii) except as determined by
Parent or Merger Subsidiary prior to the Effective Time, the
officers of the Company at the Effective Time shall be the
officers of the Surviving Corporation.
(b) If requested by Parent prior to the Effective
Time, the Company shall use its reasonable best efforts to cause
any of its directors and the directors of each of its
Subsidiaries (or certain of its Subsidiaries as indicated by
Parent) to tender their resignations as directors, effective as
of the Effective Time and to deliver to parent written evidence
of such resignations at or prior to the Effective Time.
ARTICLE 4
Representations
and Warranties of the Company
Except (i) as disclosed in the Company SEC Documents filed
with or furnished to the SEC by the Company and publicly
available prior to the date of this Agreement (without giving
effect to any amendment to any such Company SEC Document filed
on or after the date of this Agreement and excluding any risk
factor disclosure under the heading Risk Factors and
any disclosure of risks included in any forward looking
statements disclaimer,
Filed Company SEC
Documents
), or (ii) as set forth in the Company
Disclosure Schedule, the Company represents and warrants to
Parent and Merger Subsidiary that:
Section 4.01.
Corporate
Existence and Power
. The Company is a corporation
duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has all corporate powers
required to own, lease and operate all of its properties and
assets and to carry on its business as conducted as of the date
hereof. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those
jurisdictions where failure to be so qualified has not had and
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. Prior to
the date of this Agreement, the Company has made available to
Parent true and complete copies of the Organizational Documents
of the Company and each of its Subsidiaries as in effect on the
date of this Agreement. Neither the Company nor any of its
Subsidiaries is in violation of any of the provisions of its
Organizational Documents.
Section 4.02.
Corporate
Authorization
.
(a) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and, subject
only to receipt of the of the affirmative vote of the holders of
a majority of the outstanding shares of Company Common Stock in
connection with the consummation of the Merger (the
Company Shareholder Approval
), to perform its
obligations under this Agreement and to consummate the Merger
and the other transactions contemplated hereby. This Agreement
constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms
(subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws affecting
creditors rights generally and general principles of
equity).
(b) At a meeting duly called and held, the Board of
Directors has unanimously (i) determined that this
Agreement, the Voting Agreement and the transactions
contemplated hereby and thereby are fair to and in the best
interests of the Companys shareholders,
(ii) approved, adopted and declared advisable this
Agreement and the transactions contemplated hereby,
(iii) resolved to recommend approval and adoption of this
Agreement by the Companys shareholders (such
recommendation, the
Company Board
Recommendation
).
Section 4.03.
Governmental
Authorization.
The execution, delivery and
performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated
hereby require no action or consent by or in respect of, or
filing with, any Governmental Authority other than (i) the
filing of the Certificate of Merger with the Secretary of State
of the State of Delaware, (ii) compliance with any
applicable requirements of the HSR Act and under any antitrust,
competition or merger control laws of foreign jurisdictions, if
applicable (the consents, approvals orders, authorizations,
registrations, declarations and filings required under or in
connection
A-11
with any of the foregoing clauses (i) and (ii) above,
the
Required Governmental Authorizations
),
(iii) compliance with any applicable requirements of the
1933 Act, the 1934 Act, and any other applicable
U.S. state or federal securities laws, and (iv) any
actions or filings the absence of which would not be reasonably
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
Section 4.04.
Non-contravention.
The
execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated
hereby do not and will not (i) contravene, conflict with,
or result in any violation or breach of any provision of the
Organizational Documents of the Company or any of its
Subsidiaries, (ii) assuming compliance with the matters
referred to in Section 4.03, contravene, conflict with or
result in a violation or breach of any provision of any
Applicable Law, (iii) assuming compliance with the matters
referred to in Section 4.03, require any consent or other
action by any Person under, constitute a default, or an event
that, with or without notice or lapse of time or both, would
constitute a default, under, or cause or permit the termination,
cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which the Company or
any of its Subsidiaries is entitled under any provision of any
agreement or other instrument binding upon the Company or any of
its Subsidiaries or any license, franchise, permit, certificate,
lease, occupancy agreement, approval or other similar
authorization affecting, or relating in any way to, the assets
or business of the Company and its Subsidiaries or
(iv) result in the creation or imposition of any Lien
(other than Permitted Liens) on any asset of the Company or any
of its Subsidiaries, with such exceptions, in the case of each
of clauses (ii) through (iv), as would not be reasonably
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
Section 4.05.
Capitalization
.
(a) The authorized capital stock of the Company
consists of (i) 25,000,000 shares of Company Common
Stock and (ii) 5,000,000 shares of Preferred Stock,
par value $.01 per share (
Company Preferred
Stock
and together with the Company Common Stock, the
Company Capital Stock
). As of the date
hereof, there were outstanding (i) 13,552,073 shares
of Company Common Stock (not including any Company Restricted
Shares) and (ii) no shares of Company Preferred Stock. As
of the date hereof, there were outstanding (i) 430,050
Company Restricted Shares and (ii) Company Stock Options to
purchase an aggregate of 1,102,539 shares of Company Common
Stock (of which Company Stock Options to purchase an aggregate
of 634,704 shares of Company Common Stock were
exercisable). As of the date hereof, there are
1,102,539 shares of Company Common Stock reserved for
issuance pursuant to outstanding Company Stock Options under the
Companys 2004 Stock Incentive Plan (as amended from time
to time, the
2004 Stock Plan
), the 2004
Non-Employee Director Stock Option Plan (as amended from time to
time, the
Director Option Plan
), and the Non-
Employee Director Stock Option Agreements (as amended from time
to time, the
Director Option Agreements
and,
together with the 2004 Stock Plan, the Director Option Plan, the
Director Option Agreements and the ESPP, the
Stock
Plans
). All outstanding shares of Company Capital
Stock have been, and all shares of Company Capital Stock that
may be issued pursuant to any Stock Plan or other compensation
plan or arrangement will be, when issued in accordance with the
respective terms thereof, duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights. No
Subsidiary of the Company owns, directly or indirectly, any
shares of capital stock of the Company. There are no shares of
Company Capital Stock held in the Companys treasury.
Section 4.05 of the Company Disclosure Schedule contains a
complete and correct list of (i) each outstanding Company
Stock Option, including with respect to each such option, the
holder, date of grant, exercise price, vesting schedule, maximum
term and number of shares of Company Common Stock subject
thereto and (ii) all outstanding Company Restricted Shares,
including with respect to each such share, the holder, date of
grant and vesting schedule.
(b) There are outstanding no bonds, debentures, notes
or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which shareholders of the
Company may vote. Except as set forth in this Section 4.05
and for changes since October 5, 2010 resulting from the
exercise of Company Stock Options outstanding on such date,
there are no issued, reserved for issuance or outstanding
(i) shares of capital stock or other voting securities of
or other ownership interest in the Company, (ii) securities
of the Company convertible into or exchangeable for shares of
capital stock or other voting securities of or other ownership
interest in the Company, (iii) warrants, calls, options or other
rights to acquire from the Company, or other obligations of the
Company to issue, any capital stock, other voting securities or
securities convertible into or exchangeable for capital stock or
other voting securities of or other ownership interest in the
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Company or (iv) restricted shares, stock appreciation
rights, performance units, contingent value rights,
phantom stock or similar securities or rights that
are derivative of, or provide economic benefits based, directly
or indirectly, on the value or price of, any capital stock of,
or other voting securities of or ownership interests in, the
Company (the items in clauses (i) though (iv) being
referred to collectively as the
Company
Securities
). There are no outstanding obligations of
the Company or any of its Subsidiaries (i) requiring the
repurchase, redemption, acquisition or disposition of, or
containing any right of first refusal with respect to,
(ii) restricting the transfer of, (iii) affecting the
voting rights of, (iv) requiring the registration for sale
of or (v) granting any preemptive or antidilutive rights
with respect to, any debt of the Company or any of the Company
Securities. Neither the Company nor any of its Subsidiaries is a
party to any voting agreement with respect to the voting of any
Company Securities.
Section 4.06.
Subsidiaries
.
(a) Each Subsidiary of the Company is a corporation
or other entity duly incorporated or organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation or organization and has all corporate or other
organizational powers, as applicable, required to own, lease and
operate all of its properties and assets and to carry on its
business as conducted as of the date hereof. Each such
Subsidiary of the Company is duly qualified to do business as a
foreign corporation or other entity, as applicable, and is in
good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so
qualified has not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect on the Company. Section 4.06(a) of the Company
Disclosure Schedule lists the name and jurisdiction of
organization of each Subsidiary of the Company.
(b) All of the outstanding capital stock of, or other
voting securities or ownership interests in, each Subsidiary of
the Company, is owned by the Company or other Subsidiary of the
Company, if applicable, directly or indirectly, free and clear
of any Lien and free of any other limitation or restriction
(including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other voting
securities or ownership interests). There are no issued,
reserved for issuance or outstanding (i) securities of the
Company or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock or other voting
securities of or ownership interests in any Subsidiary of the
Company, (ii) warrants, calls, options or other rights to
acquire from the Company or any of its Subsidiaries, or other
obligations of the Company or any of its Subsidiaries to issue,
any capital stock or other voting securities of or ownership
interests in, or any securities convertible into or exchangeable
for any capital stock or other voting securities of or ownership
interests in, any Subsidiary of the Company or
(iii) restricted shares, stock appreciation rights,
performance units, contingent value rights, phantom
stock or similar securities or rights that are derivative of, or
provide economic benefits based, directly or indirectly, on the
value or price of, any capital stock of, or other voting
securities of or ownership interests in, any Subsidiary of the
Company (the items in clauses (i) through (iii) being
referred to collectively as the
Company Subsidiary
Securities
). There are no outstanding obligations of
the Company or any of its Subsidiaries (i) requiring the
repurchase, redemption, acquisition or disposition of, or
containing any right of first refusal with respect to,
(ii) restricting the transfer of, (iii) affecting the
voting rights of, (iv) requiring the registration for sale
of or (v) granting any preemptive or antidilutive rights
with respect to, any debt of any Subsidiary of the Company or
any of the Company Subsidiary Securities. Neither the Company
nor any of its Subsidiaries is a party to any voting agreement
with respect to the voting of any Company Subsidiary Securities.
There are no outstanding obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any
of the Company Subsidiary Securities.
Section 4.07.
SEC
Filings and the Sarbanes-Oxley Act
.
(a) The Company has filed with or furnished to the
SEC all reports, schedules, forms, statements, prospectuses,
registration statements and other documents required to be filed
or furnished by the Company since January 1, 2007
(collectively, together with any exhibits and schedules thereto,
the
Company SEC Documents
).
(b) As of its filing date (or, if amended or
superseded by a filing prior to the date of this Agreement, on
the date of such subsequent filing), each Company SEC Document
complied, in all material respects with the applicable
requirements of the 1933 Act, the 1934 Act and the
Sarbanes-Oxley Act and the rules and regulations promulgated
thereunder, as the case may be.
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(c) As of its respective filing date (or, if amended
or superseded by a filing prior to the date of this Agreement,
on the date of such filing), each Company SEC Document filed
pursuant to the 1934 Act did not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading, which individually or in the aggregate would
reasonably be expected to require an amendment supplement or
corrective filing to such Company SEC Document.
(d) Each Company SEC Document that is a registration
statement, as amended or supplemented, if applicable, filed
pursuant to the 1933 Act, as of the date such registration
statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading, which, individually or in
the aggregate, would reasonably be expected to require an
amendment supplement or corrective filing to such Company SEC
Document.
(e) As of the date hereof, there are no material
outstanding or unresolved comments received from the SEC staff
with respect to the Company SEC Documents. To the knowledge of
the Company, as of the date hereof, none of the Company SEC
Documents is the subject of ongoing SEC review or investigation.
(f) The Company is in compliance in all material
respects with all current listing and corporate governance
requirements of Nasdaq, and is in compliance in all material
respects with all effective provisions of the Sarbanes-Oxley Act
and all regulations of the SEC.
(g) The Company has established and maintains
disclosure controls and procedures (as defined in
Rule 13a-15
under the 1934 Act). Such disclosure controls and
procedures are reasonably designed to ensure that all material
information required to be disclosed by the Company in the
reports it files or submits under the 1934 Act is recorded,
processed, summarized and reported within the time periods
specified in the rules and forms of the SEC and all such
material information is made known to the Companys
principal executive officer and principal financial officer by
others within those entities, particularly during the periods in
which the periodic reports required under the 1934 Act are
being prepared; and, to the knowledge of the Company, such
disclosure controls and procedures are effective in timely
alerting the Companys principal executive officer and its
principal financial officer to material information required to
be included in the Companys periodic reports required
under the 1934 Act and to ensure that information required
to be disclosed by the Company in the reports that it files or
submits under the 1934 Act is recorded, processed,
summarized and reported within the time periods specified in SEC
rules and forms.
(h) The Company and its Subsidiaries have established
and maintained a system of internal control over financial
reporting (as defined in
Rule 13a-15
under the 1934 Act) (
internal controls
),
and the Companys principal executive officer and its
principal financial officer have disclosed, based on their most
recent evaluation of internal controls prior to the date of this
Agreement, to the Companys auditors, the audit committee
of the Board of Directors (x) any significant deficiencies
and material weaknesses in the design or operation of internal
controls which would be reasonably expected to adversely affect
the Companys ability to record, process, summarize and
report financial information and (y) any fraud, whether or
not material, known to management, that involves management or
other employees who have a significant role in internal controls.
(i) None of the Subsidiaries of the Company is
subject to the reporting requirement of Section 13(a) or
15(d) of the 1934 Act.
Section 4.08.
Financial
Statements
.
(a) The audited consolidated financial statements and
unaudited consolidated interim financial statements of the
Company included or incorporated by reference in the Company SEC
Documents fairly present in all material respects, in conformity
with GAAP (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the
periods then ended (subject to normal and recurring year-end
audit adjustments in the case of any unaudited interim financial
statements).
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(b) Neither the Company nor any of its Subsidiaries
is a party to, or has any commitment to become a party to, any
joint venture, off-balance sheet partnership or any similar
Contract (including any Contract relating to any transaction or
relationship between or among the Company and any of its
Subsidiaries, on the one hand, and any unconsolidated Affiliate,
including any structured finance, special purpose or limited
purpose entity or person, on the other hand, or any
off-balance sheet arrangement (as defined in
Item 303(a) of
Regulation S-K
under the 1933 Act)), where the result, purpose or intended
effect of such Contract is to avoid disclosure of any material
transaction involving, or material liabilities of, the Company
or any of its subsidiaries in the Companys consolidated
financial statements or Company SEC Documents.
Section 4.09.
Disclosure
Documents.
The proxy statement of the Company to
be filed with the SEC in connection with the Merger (the
Company Proxy Statement
) and any amendments
or supplements thereto will, when filed, comply as to form in
all material respects with the applicable requirements of the
1934 Act. At the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to shareholders
of the Company, and at the time such shareholders vote on
adoption of this Agreement and at the Effective Time, the
Company Proxy Statement, as supplemented or amended, if
applicable, will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties contained in this
Section 4.09 will not apply to statements or omissions
included in the Company Proxy Statement based upon information
furnished to the Company in writing by Parent or Merger
Subsidiary specifically for use therein.
Section 4.10.
Absence
of Certain Changes.
Since the Company Balance
Sheet Date through the date of this Agreement, except as
expressly contemplated by this Agreement, the business of the
Company and its Subsidiaries has, in all material respects, been
conducted in the ordinary course consistent with past practice,
and (i) there has not been any Material Adverse Effect on
the Company or any event change, occurrence or state of facts
that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company,
(ii) there has not been any action taken by the Company or
any of its Subsidiaries that, if taken during the period from
the date of this Agreement through the Effective Time without
Parents consent, would constitute a material breach of
Section 6.01.
Section 4.11.
No
Undisclosed Material Liabilities.
There are no
liabilities or obligations of any nature of the Company or any
of its Subsidiaries, whether absolute, accrued, contingent or
otherwise, whether due or to become due, and whether or not
required under GAAP to be set forth on a consolidated balance
sheet other than (i) liabilities disclosed and provided for
in the Company Balance Sheet or in the notes thereto
(ii) liabilities incurred since the Company Balance Sheet
Date in the ordinary case of business in connection with the
negotiation, execution, delivery or performance of this
Agreement or consummation of the transactions contemplated
hereby, and (iii) liabilities or obligations that have not
had and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company.
Section 4.12.
Litigation
.
(a) As of the date of this Agreement, there is no
action, suit, investigation or proceeding pending against, or,
to the knowledge of the Company, threatened against the Company
or any of its Subsidiaries or any of their respective properties
or assets before (or, in the case of threatened actions, suits,
investigations or proceedings, would be before) any arbitrator
or Governmental Authority, that has caused or would reasonably
be expected to cause, individually or in the aggregate, a
material liability to the Company, nor is there any judgment,
decree, injunction, settlement, award, rule or order of any
arbitrator or Governmental Authority outstanding against or
imposed upon, or, to the knowledge of the Company, investigation
by any Governmental Authority (each, an
Order
) involving, the Company or any of its
Subsidiaries or any of their respective properties or assets,
that has caused or would reasonably be expected to cause,
individually or in the aggregate, a material liability to the
Company.
(b) Neither the Company nor any of its Subsidiaries
has (i) been held by a Governmental Authority or arbitrator
to be liable as a successor to Deloro Stellite Company or Stoody
Company, (ii) since 1997, paid for pre-1997 liabilities
associated with manganese or fume litigation claims or
(iii) over the past five years had any product recalls or,
to the knowledge of the Company, product defects, except as has
not had or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company.
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Section 4.13.
Compliance
with Laws; Permits
.
(a) The Company and each of its Subsidiaries is, and
since January 1, 2007, has been, in compliance with
Applicable Laws except for failures to comply or violations that
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. Neither the
Company nor any of its Subsidiaries has as of the date of this
Agreement (a) received any written notice from any
Governmental Authority regarding any material violation by the
Company or any of its Subsidiaries of any Applicable Law or
(b) filed with or otherwise provided to any Governmental
Authority any written notice regarding any material violation by
the Company or any of its Subsidiaries of any Applicable Law.
(b) The Company and its Subsidiaries hold all
material governmental licenses, authorizations, permits,
certificates, clearances, commissions, franchises,
registrations, approvals, qualifications, consents, variances,
exemptions, orders and other rights from, and have made all
declarations, notices, and filings with, all applicable
Governmental Authorities necessary for the Company to own, lease
and operate its properties or to carry on its business as
currently conducted (the
Company Permits
).
All such Company Permits are valid, and in full force and effect
and will continue to be so upon consummation of the Merger, and
the Company and each of its Subsidiaries is in compliance with
the terms of the Company Permits, except for failures to comply
or violations that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company and its Subsidiaries, taken as a whole.
Section 4.14.
Material
Contracts
.
(a) Except as disclosed in the Filed Company SEC
Documents, Section 4.14 of the Company Disclosure Schedule
contains a list of each of the following Contracts to which the
Company or any of its Subsidiaries is a party or by which it is
bound as of the date of this Agreement:
(i) each Contract not to compete or otherwise
restricting in any material respect the development,
manufacture, marketing, distribution or sale of any products or
services (including any Contract that requires the Company or
any of its Subsidiaries to work exclusively with any person in
any particular area) or any other similar limitation on the
ability of the Company or any of its Subsidiaries to transact or
compete in any line of business, with any person, in any
geographic area or during any period of time (including any
standstill agreements);
(ii) each material joint venture or similar Contract;
(iii) each indemnification Contract or other Contract
conferring indemnification rights or obligations in excess of
$1,000,000;
(iv) each loan or credit agreement, indenture,
mortgage, note or other Contract evidencing indebtedness in
excess of $1,000,000 for money borrowed by the Company or any of
its Subsidiaries from a third party lender, and each Contract
pursuant to which any such indebtedness for borrowed money is
guaranteed by the Company or any of its Subsidiaries;
(v) each exclusive sales representative or
distribution Contract pursuant to which the Companys
revenues in the preceding 12 months exceeded $1,000,000;
(vi) each Contract concerning or relating to any
Intellectual Property that is material to the business of the
Company and its Subsidiaries, taken as a whole, excluding
Contracts for generally commercially available mass market
software or other technology that is subject to
shrink-wrap or click-through Contracts;
(vii) each Contract entered into after
January 1, 2007 or not yet consummated, that involves the
acquisition, disposition or issuance, directly or indirectly (by
merger or otherwise), of assets (including the purchase, sale or
lease of real property) or capital stock or other equity
interests of another Person or the Company or any of its
Subsidiaries for aggregate consideration under such contract in
excess of $1,000,000 (other than acquisitions or dispositions of
assets in the ordinary course consistent with past practice,
including acquisitions and dispositions of inventory); or
(viii) each Contract (i) under which the Company
paid or received in excess of $1,000,000 in fiscal year 2009
that would be breached or subject to cancellation or termination
due to the transactions contemplated
A-16
hereby, or (ii) individually or in the aggregate with other
Contracts, accelerate payment obligations, performance deadlines
or modify or accelerate any other material obligation due to the
transactions contemplated hereby in excess of $1,000,000 in the
aggregate.
(b) Each material contract (as such term
is defined in Item 601(b)(10) of
Regulation S-K
promulgated by the SEC) to which the Company or any of its
Subsidiaries is a party or by which they are bound as of the
date of this Agreement and each of the Contracts described in
clauses (i) through (viii) of Section 4.14(a)
(each such Contract, a
Company Material
Contract
) is valid and binding on the Company or one
of its Subsidiaries, as applicable, and, to the knowledge of the
Company, each other party thereto, and in full force and effect
in accordance with its terms (except those which are cancelled,
rescinded or terminated after the date of this Agreement in
accordance with their terms and subject to applicable
bankruptcy, insolvency, fraudulent transfers, reorganization,
moratorium and other laws, affecting creditors rights
generally and general principles of equity ), except where the
failure to be in full force and effect has not had and would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company, and no
written notice to terminate, in whole or part, has been served.
To the knowledge of the Company, no other party is in material
default under any Company Material Contract, except where such
default has not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect on the Company. The Company has not received any written
notice of any material default by it or any of its Subsidiaries
under any Company Material Contract from the other party
thereto. The Company has made available to Parent copies of all
Company Material Contracts, including any amendments thereto,
that are true, correct and complete in all material respects.
Section 4.15.
Taxes
.
(a) All income and other material Tax Returns
required by Applicable Law to be filed with any Taxing Authority
by, or on behalf of, the Company or any of its Subsidiaries have
been filed on a timely basis in accordance with all Applicable
Law, and all such Tax Returns are true, correct and complete in
all material respects.
(b) The Company and each of its Subsidiaries has paid
(or caused to be paid) or has withheld and remitted to the
appropriate Taxing Authority all Taxes due and payable, or,
where payment is not yet due, has established in accordance with
GAAP an adequate accrual for all Taxes in excess of $500,000.
(c) There is no claim, audit, action, suit,
proceeding or investigation now in progress or pending or, to
the knowledge of the Company, threatened in writing against or
with respect to the Company or its Subsidiaries in respect of
any Tax which is reasonably likely to exceed $500,000.
(d) Neither the Company nor any of its Subsidiaries
has granted (or is subject to) any waiver or extension that is
currently in effect, of the statute of limitations for the
assessment or payment of any Tax which is reasonably likely to
exceed $500,000 or the filing of any material Tax Return.
(e) During the five year period ending on the date of
this Agreement, neither the Company nor any of its Subsidiaries
was a distributing corporation or a controlled corporation in a
transaction intended to be governed by Section 355 of the
Code.
(f) Neither the Company nor any of its Subsidiaries
is liable for Taxes of any person (other than the Company and
its Subsidiaries) as a result of being (i) a transferee or
successor of such person, (ii) a member of an affiliated,
consolidated, combined or unitary group that includes such
person as a member or (iii) a party to a Tax sharing or Tax
allocation agreement or any other express or implied agreement
to indemnify such person.
(g) Neither the Company nor any of its Subsidiaries
has received from any Taxing Authority any written notice of any
proposed adjustment, deficiency or underpayment, of Taxes in
excess of $500,000 which has not since been satisfied by payment
or withdrawn.
(h) No written claim has been made by any Taxing
Authority in a jurisdiction where the Company or any of its
Subsidiaries does not file Tax Returns that the Company or any
such Subsidiary is or may be subject to taxation by that
jurisdiction.
(i) Neither the Company nor any of its Subsidiaries
has participated in any reportable transaction
within the meaning of
Section 1.6011-4(b)
of the Treasury Regulations.
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(j) There are no Liens (other than Permitted Liens)
for unpaid Taxes on the assets of the Company or any of its
Subsidiaries.
(k) There are no material deferred intercompany
transactions between the Company or any of its Subsidiaries and
there are no material excess loss accounts (within the meaning
of Treasury Regulations
Section 1.1502-19,
with respect to the stock of any of the Subsidiaries).
(l) Neither the Company nor any of its Subsidiaries
(i) will be required to include any material item of income
in, or exclude any material item of deduction, from taxable
income for any taxable period (or portion thereof) ending after
the Closing Date or (ii) is subject to any (x) private
letter ruling of the Internal Revenue Service or comparable
ruling of any other Taxing Authority, (y) closing
agreement, as described in Section 7121 of the Code
(or any similar provision of state, local or foreign income Tax
law) or (z) other agreements or arrangements with any
Taxing Authority and there are no pending requests therefor.
(m) As of the date hereof, the Company, together with
its Subsidiaries, has consolidated net operating loss
carryforwards for federal income tax purposes of no less than
$60 million. As of the date of this Agreement there is no
material limitation on the utilization by the Company or any
Subsidiary of any net operating loss under Code
sections 382, 383 or 384.
(n) Neither the Company nor any of its Subsidiaries
has been or will be a United States real property holding
corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(o)
Taxes
means all taxes,
charges, fees, levies, or other like assessments, including
without limitation, all federal, possession, state, city, county
and
non-U.S. (or
governmental unit, agency, or political subdivision of any of
the foregoing) income, profits, employment (including Social
Security, unemployment insurance and employee income Tax
withholding), franchise, gross receipts, sales, use, transfer,
stamp, occupation, property, capital, severance, premium,
windfall profits, customs, duties, ad valorem, value added and
excise taxes, PBGC premiums and any other Governmental Authority
(a
Taxing Authority
) charges of the same or
similar nature; including any interest, penalty, or addition
thereto, whether disputed or not and including any obligations
to indemnify or otherwise assume or succeed to the Tax liability
of any other Person or as a result of being a member of an
affiliated, consolidated, combined or unitary group. Any one of
the foregoing shall be referred to sometimes as a
Tax
.
(p)
Tax Return
means any report,
return, document, declaration or other information or filing
required to be supplied to any Taxing Authority with respect to
Taxes, including information returns, any documents with respect
to or accompanying payments of estimated Taxes (including any
schedules and attachments thereto, and any amendment thereof),
or with respect to or accompanying requests for the extension of
time in which to file any such report, return, document,
declaration or other information.
Section 4.16.
Employees
and Employee Benefit Plans
.
(a) Section 4.16(a) of the Company Disclosure
Schedule contains a correct and complete list identifying each
employee benefit plan, as defined in
Section 3(3) of ERISA, each employment, change of control,
individual consulting, severance, vacation, or similar Contract,
plan or policy and each other plan or arrangement (written or
oral) providing for compensation, bonuses, profit-sharing, stock
purchase, stock option or other stock related rights or other
forms of incentive or deferred compensation, tax
gross-up,
relocation, employee loan, vacation benefits, insurance
(including any self-insured arrangements), health or medical
benefits, employee assistance program, disability or sick leave
benefits, workers compensation, supplemental unemployment
benefits, severance benefits and postemployment or retirement
benefits (including compensation, pension, health, medical or
life insurance benefits) or other form of benefits, which is
maintained, administered or contributed to or required to be
contributed to by the Company or any ERISA Affiliate of the
Company and covers any current or former employee, director or
individual independent contractor of the Company or any of its
Subsidiaries, or with respect to which the Company or any of its
Subsidiaries has any liability, contingent or otherwise (such
plans are referred to collectively herein as the
Employee Plans
). Section 4.16(a) of the
Company Disclosure Schedules separately identifies each Employee
Plan maintained outside of the United States substantially for
the benefit of current and former directors, employees and
individual independent contractors who are situated outside of
the United States (each, a
Foreign Plan
).
True, correct and complete copies of the Employee Plans (and, if
applicable, any related trust or
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funding agreements or insurance policies) and all amendments
thereto and written interpretations thereof have been furnished
to Parent together with the most recent (i) summary plan
descriptions, (ii) annual report (Form 5500 including,
if applicable, Schedule B thereto) and the most recent
actuarial report, if any, (iii) Internal Revenue Service
determination letter, (iv) tax return
(Form 990) prepared in connection with any such plan
or trust, and (v) written descriptions of all non-written
agreements relating to the Employee Plans, in each case, only if
applicable.
(b) No liability under Title IV or
Section 302 of ERISA has been incurred by the Company or
any ERISA Affiliate of the Company that has not been satisfied
in full, and no condition exists that presents a material risk
to the Company or any ERISA Affiliate of the Company of
incurring any such liability, other than liability for premiums
due the Pension Benefit Guaranty Corporation
(
PBGC
) (which premiums have been paid when
due). No Employee Plan that is subject to Title IV (a
Title IV Plan
) or any trust established
thereunder has failed to satisfy the minimum funding
standards (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as of the
last day of the most recent fiscal year of each Title IV
Plan ended prior to the date hereof.
(c) Neither the Company nor any ERISA Affiliate of
the Company nor any predecessor thereof sponsors, maintains or
contributes to, or has in the past sponsored, maintained or
contributed to, any Employee Plan that is a Multiemployer Plan
or a multiple employer plan (within the meaning of
Section 413(c) of the Code). None of the employees of the
Company or any of its Subsidiaries or ERISA Affiliates
participates in any Multiemployer Plan or any pension or
retirement plan sponsored by any union or similar employee
representative or sponsored by more than one unrelated employer.
(d) Each Employee Plan which is intended to be
qualified under Section 401(a) of the Code has received a
favorable determination letter that it is so qualified, or has
pending or has time remaining in which to file, an application
for such determination from the Internal Revenue Service (and
the Company is not aware of any reason why any such
determination letter should be revoked or not be reissued) and,
to the knowledge of the Company, the trusts maintained
thereunder are exempt from taxation under Section 501(a) of
the Code, and, to the knowledge of the Company, nothing has
occurred with respect to the operation of the Employee Plans
which could cause the loss of such qualification or exemption or
the imposition of any material liability, penalty or tax under
ERISA or the Code. Each Employee Plan has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and
regulations, including ERISA and the Code, which are applicable
to such Employee Plan. Except as has not had and would not
reasonably be expected to be, individually or in the aggregate,
material to the Company and its Subsidiaries, taken as a whole,
there are no pending or, to the knowledge of the Company,
threatened, claims or lawsuits which have been asserted or
instituted against the Employee Plans or the assets of any of
the trusts under such plans (other than routine claims for
benefits), nor does the Company have knowledge of facts which
could form the basis for any such claim or lawsuit. No events
have occurred with respect to any Employee Plan that could
result in payment or assessment by or against the Company of any
excise taxes under Sections 4972, 4975, 4976, 4977, 4979,
4980B, 4980D, 4980E or 5000 of the Code.
(e) Except as would not be materially adverse to the
Company and its Subsidiaries, taken as a whole, with respect to
each Foreign Plan: (i) all employer and employee
contributions to each Foreign Plan required by Applicable Law or
by the terms of such Foreign Plan have been made, or, if
applicable, accrued in accordance with normal accounting
practices: (ii) the fair market value of the assets of each
funded Foreign Plan, the liability of each insurer for any
Foreign Plan funded through insurance or the book reserve
established for any Foreign Plan, together with any accrued
contributions, is sufficient to procure or provide for the
accrued benefit obligations, as of the Closing Date, with
respect to all current or former participants in such plan
according to the actuarial assumptions and valuations most
recently used to determine employer contributions to such
Foreign Plan and no transaction contemplated by this Agreement
shall cause such assets or insurance obligations to be less than
such benefit obligations; and (iii) each Foreign Plan
required to be registered has been registered and has been
maintained in good standing with applicable regulatory
authorities.
(f) Except as otherwise specifically so contemplated
in this Agreement, with respect to each current or former
director, employee or independent contractor of the Company or
any of its Subsidiaries, the consummation of the transactions
contemplated by this Agreement will not, either alone or
together with any other event: (i) entitle any such person
to severance pay, bonus amounts, retirement benefits, job
security benefits or similar benefits,
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(ii) trigger or accelerate the time of payment or funding
(through a grantor trust or otherwise) of any compensation or
benefits payable to any such person, (iii) accelerate the
vesting of any compensation or benefits of any such person
(including any stock options or other equity-based awards, any
incentive compensation or any deferred compensation
entitlement), (iv) increase the amount or value of any
benefit or compensation otherwise payable or required to be
provided to any such person, or (v) trigger any other
material obligation to any such person. There is no Contract or
plan (written or otherwise) covering any current or former
employee or individual independent contractor of the Company or
any of its Subsidiaries that, individually or collectively,
could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G or 162(m)
of the Code. Section 4.16(f) of the Company Disclosure
Schedule lists (i) all the agreements, arrangements and
other instruments which give rise to an obligation to make or
set aside amounts payable to or on behalf of the officers of the
Company and its Subsidiaries as a result of the transactions
contemplated by this Agreement
and/or
any
subsequent employment termination (whether by the Company or the
officer), true and complete copies of which have been provided
to Parent prior to the date of this Agreement and (ii) the
maximum aggregate amounts so payable to each such individual as
a result of the transactions contemplated by this Agreement
and/or
any
subsequent employment termination (whether by the Company or the
officer).
(g) Neither the Company nor any of its Subsidiaries
has any liability in respect of post-retirement health, medical
or life insurance benefits for retired, former or current
employees of the Company or its Subsidiaries except as required
to avoid excise tax under Section 4980B of the Code.
(h) There has been no amendment to, written
interpretation or announcement (whether or not written) by the
Company or any of its Affiliates relating to, or change in
employee participation or coverage under, an Employee Plan which
would increase materially the expense of maintaining such
Employee Plan above the level of the expense incurred in respect
thereof for the fiscal year ended December 31, 2009. No
condition exists that would prevent the Company or, after the
consummation of the transactions contemplated by this Agreement,
Parent, from amending, merging or terminating any Employee Plan
without liability, other than the obligation for ordinary
benefits accrued prior to the termination of such plan.
(i) Each Employee Plan that is a non-qualified
deferred compensation plan within the meaning of
Section 409A of the Code has been maintained and operated
in compliance with Section 409A of the Code and the
applicable guidance issued thereunder except for failures to
comply or violations that would not reasonably be expected to,
individually or in the aggregate, be material to the Company.
(j) Neither the Company nor any of its Subsidiaries
has been a party to or subject to, or is currently negotiating
in connection with entering into, any collective bargaining
agreement or other labor agreement with any union or labor
organization, and there has not been any activity or proceeding
of any labor organization or employee group to organize any such
employees. In addition, (i) there are no unfair labor
practice charges or complaints against Company or any of its
Subsidiaries pending before the National Labor Relations Board;
(ii) there are no labor strikes, lockouts, slowdowns or
stoppages actually pending or threatened against or affecting
the Company or any of its Subsidiaries; (iii) there is no
labor union organizing activity involving any employees of the
Company or any of its Subsidiaries; (iv) there are no
representation claims or petitions pending before the National
Labor Relations Board and there are no questions concerning
representation with respect to the employees of the Company or
its Subsidiaries; and (v) there are no grievance or pending
arbitration proceedings against the Company or any of its
Subsidiaries that arose out of or under any collection
bargaining agreement.
(k) Since the Company Balance Sheet Date, neither the
Company nor any of its Subsidiaries has effectuated (i) a
plant closing (as defined in the WARN Act) affecting
any site of employment or one or more facilities or operating
units within any site of employment or facility of the Company
or any of its Subsidiaries; (ii) a mass layoff
(as defined in the WARN Act); or (iii) such other
transaction, layoff, reduction in force or employment
terminations sufficient in number to trigger application of any
similar state or local law.
Section 4.17.
Intellectual
Property.
Section 4.17 of the Company
Disclosure Schedule contains a list of material registrations
and applications for registration of material Company Owned
Intellectual Property. Except as has not had and would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole, (i) with respect to all
Company Intellectual Property, the Company or one of its
Subsidiaries, as the case may be, owns such Company Intellectual
Property or has valid
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and continuing rights to use or exploit such Company
Intellectual Property as the same is used or exploited by the
Company and its Subsidiaries as of the date of this Agreement
(in each case, free and clear of any Liens except for Liens on
Company Owned Intellectual Property recorded at the United
States Patent and Trademark Office, pursuant to the GE Credit
Agreement, (ii) the Company Intellectual Property includes
all of the Intellectual Property necessary and sufficient to
enable the Company and its Subsidiaries to conduct their
respective businesses in the manner in which such businesses are
currently being conducted in all material respects;
(iii) neither the Company nor any of its Subsidiaries, nor
the conduct of their respective businesses, is infringing,
diluting, misappropriating or otherwise violating, or has in the
six years prior to the date of this Agreement, infringed,
diluted, misappropriated or otherwise violated, the Intellectual
Property rights of any Person, and neither the Company nor any
of its Subsidiaries have received any written notice from any
Person claiming any such infringement, dilution,
misappropriation or other violation; (iv) to the knowledge
of the Company, no Person is infringing, diluting,
misappropriating or otherwise violating, or has infringed,
diluted, misappropriated or otherwise violated, any Company
Owned Intellectual Property, and the Company and its
Subsidiaries have made no written claims alleging that any
Person is infringing, diluting, misappropriating or otherwise
violating, or has infringed, diluted, misappropriated or
otherwise violated, any Company Owned Intellectual Property;
(v) the consummation of the transactions contemplated by
this Agreement will not alter, encumber, impair or extinguish
any material Company Intellectual Property right or impair the
right of Surviving Corporation to use, sell, license or dispose
of any material Company Intellectual Property as such material
Company Intellectual Property is used, sold, licensed or
disposed of by the Company and its Subsidiaries as of the date
of this Agreement; (vi) the Company and its Subsidiaries
have exercised reasonable care to maintain the confidentiality
of all material Trade Secrets that are Company Intellectual
Property and, to the knowledge of the Company, no such Trade
Secrets have been disclosed other than to employees,
representatives and agents of the Company or any of its
Subsidiaries all of whom are bound by written confidentiality
agreements, or to third parties under a written obligation of
confidentiality; (vii) the IT Assets operate and perform in
all material respects in a manner that permits the Company and
its Subsidiaries to conduct their respective businesses as
currently conducted and to the knowledge of the Company, no
person has gained unauthorized access to the IT Assets; and
(viii) the Company and its Subsidiaries have implemented
reasonable backup and disaster recovery technology consistent
with industry practices.
Section 4.18.
Properties.
Except
in any such case as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company: (i) with respect to the real
property owned by the Company or its Subsidiaries (the
Owned Real Property
), the Company or one of
its Subsidiaries, as applicable, has good, marketable
indefeasible fee simple title to the Owned Real Property, free
and clear of any Lien (other than Permitted Liens);
(ii) with respect to the real property leased, subleased or
licensed to or otherwise occupied by the Company or its
Subsidiaries (the
Leased Real Property
), the
lease, sublease, license or occupancy agreement for such
property is valid, and binding on and enforceable by/against the
Company or its Subsidiaries, as applicable (except those which
are cancelled, rescinded or terminated after the date of this
Agreement in accordance with their terms and subject to
applicable bankruptcy, insolvency, fraudulent transfers,
reorganization, moratorium and other laws, affecting
creditors rights generally and general principles of
equity), and to the knowledge of the Company, each other party
thereto, and in full force and effect, and none of the Company
or any of its Subsidiaries is in breach of or default under such
lease, sublease, license or occupancy agreement and no event has
occurred which, with notice, lapse of time or both, would
constitute a breach or default by any of the Company or its
Subsidiaries or permit termination, modification or acceleration
by any third party thereunder; (iii) with respect to any
real property leased, subleased or licensed by the Company or
any of its Subsidiaries to a third party, the lease, sublease,
license or occupancy agreement for such property is valid,
enforceable and binding on the parties thereto (except those
which are cancelled, rescinded or terminated after the date of
this Agreement in accordance with their terms and subject to
applicable bankruptcy, insolvency, fraudulent transfers,
reorganization, moratorium and other laws, affecting
creditors rights generally and general principles of
equity) and in full force and effect and no party thereto is in
breach of or default under such lease, sublease, license or
occupancy agreement and no event has occurred which, with
notice, lapse of time or both would constitute a breach or
default by any party thereto or permit termination or
modification thereof; and (iv) all buildings, structures,
fixtures and improvements included within the Owned Real
Property (the
Improvements
) are in good
repair and operating condition, subject only to ordinary wear
and tear, and are adequate and suitable for the purposes for
which they are presently being used or held for use, and to the
knowledge of the Company, there are no facts or
A-21
conditions affecting any of the Improvements that, in the
aggregate, would reasonably be expected to interfere with the
current use, occupancy or operation thereof. Section 4.18
of the Company Disclosure Schedule contains a true and complete
list of all Owned Real Property or Leased Real Property.
Section 4.19.
Environmental
Matters
.
(a) Except as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company or any Subsidiary: (i) no
notice, notification, demand, request for information, citation,
summons or order has been received, no complaint has been filed,
no penalty has been assessed, and as of the date of this
Agreement, no investigation, action, claim, suit, proceeding or
review (or any basis therefor) is pending or, to the knowledge
of the Company, is threatened by any Governmental Authority or
other Person relating to the Company or any Subsidiary and
relating to or arising out of any Environmental Law;
(ii) the Company and its Subsidiaries are and have been in
compliance with all Environmental Laws and all Environmental
Permits; (iii) to the knowledge of the Company, there are
no currently accrued liabilities of the Company or any of its
Subsidiaries arising under or relating to any violation of any
Environmental Law or any Hazardous Substance; (iv) to the
knowledge of the Company, neither the Company nor any Subsidiary
has assumed, by Contract or otherwise, any liabilities arising
under any Environmental Laws or relating to the release or
threatened release of Hazardous Substances; and (v) to the
knowledge of the Company, there are no Hazardous Substances
present at, on or under any real property currently or formerly
owned, operated or leased by the Company or any Subsidiary, or
any property to which the Company or any Subsidiary arranged for
the disposal or treatment of Hazardous Substances, that could
reasonably be expected to result in the Company or any
Subsidiary incurring liabilities under any Environmental Laws.
(b) To the knowledge of the Company, none of the
following exists at any Owned Real Property or Leased Real
Property: (A) underground storage tanks, or
(B) landfills, surface impoundments or other disposal areas.
(c) The Company has provided to Parent all
environmentally related audits, studies, reports, analyses and
results of investigations that have been performed since
January 1, 2007 with respect to any currently owned, leased
or operated properties of the Company or any Subsidiary and that
are in the possession or reasonable control of the Company or
any Subsidiary.
Section 4.20.
Antitakeover
Statutes.
The Company has taken all action
necessary to exempt or exclude the Merger, this Agreement, the
Voting Agreement and the transactions contemplated hereby and
thereby from Section 203 of Delaware Law and any other
takeover statute, anti-takeover moratorium, fair
price, control share, or similar statute and,
accordingly, no such statute or regulation applies to the
Merger, this Agreement, the Voting Agreement and the
transactions contemplated hereby and thereby.
Section 4.21.
Opinion
of Financial Advisor.
The Company has received
the opinion of Oppenheimer & Co. Inc., financial
advisor to the Company, to the effect that, as of the date of
this Agreement, the Merger Consideration is fair to the
Companys shareholders from a financial point of view. A
copy of such opinion will be provided to Parent promptly
following receipt by the Company for information purposes.
Section 4.22.
Finders
Fees.
Except for Oppenheimer & Co.
Inc., a copy of whose engagement agreement has been provided to
Parent prior to the date of this Agreement, there is no
investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of the
Company or any of its Subsidiaries who might be entitled to any
fee or commission in connection with the transactions
contemplated by this Agreement.
Section 4.23.
Affiliate
Transactions.
No present or former officer or
director of the Company or any of its Subsidiaries or any person
owning 5% or more of the Company Common Stock or any other
Affiliate, and no family member of any such Person, is a party
to any Contract with or binding upon the Company or any of its
Subsidiaries or any of their respective properties or assets or
has any interest in any property owned by the Company or any of
its Subsidiaries or has engaged in any transaction with any of
the foregoing within the twelve months preceding the date of
this Agreement.
Section 4.24.
Insurance.
Except
as would not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect, (a) all material
insurance policies covering the Company and its Subsidiaries
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and their respective assets, properties and operations provide
insurance in such amounts and against such risks as is
sufficient to comply with Applicable Law and all Company
Material Contracts, and (b) all such insurance policies are
in full force and effect. There is no material claim pending
under any of such policies as to which coverage has been
questioned, denied or disputed by the underwrites of such
policies and there has been no threatened termination of, or
material premium increase with respect to, any such policies.
Section 4.25.
No
Other Representations or Warranties.
Except for
the representations and warranties contained in this
Article 4, the Company expressly disclaims any other
representations or warranties of any kind or nature, express or
implied, as to liabilities, operations of the facilities, the
title, condition, value or quality of the Company. No exhibit to
this Agreement, nor any other material or information provided
by or communications made by the Company or any of its
Affiliates, or by any advisor thereof, whether by use of a
data room or in any information memorandum or
otherwise, or by any broker or investment banker, will cause or
create any warranty, express or implied, as to the title,
condition, value or quality of the Company.
ARTICLE 5
Representations
and Warranties of Parent
Parent represents and warrants to the Company that:
Section 5.01.
Corporate
Existence and Power.
Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation and has all corporate powers required to carry on
its business as now conducted. Parent has, prior to the date of
this Agreement, delivered to the Company true and complete
copies of the Organizational Documents of Parent and Merger
Subsidiary as in effect on the date of this Agreement. Since the
date of its incorporation, Merger Subsidiary has not engaged in
any activities other than in connection with or as contemplated
by this Agreement. Neither Parent nor Merger Subsidiary is in
violation of any of the provisions of its Organizational
Documents.
Section 5.02.
Corporate
Authorization.
The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement
and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby are within the corporate powers
of Parent and Merger Subsidiary and have been duly authorized by
all necessary corporate action on the part of Parent and Merger
Subsidiary. This Agreement constitutes a valid and binding
agreement of each of Parent and Merger Subsidiary enforceable
against each of Parent and Merger Subsidiary in accordance with
its terms (subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other laws
affecting creditors rights generally and general
principles of equity).
Section
5.03.
Governmental
Authorization.
The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement
and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby require no action by or in
respect of, or filing with, any Governmental Authority, other
than (i) the Required Governmental Authorizations and
(ii) any actions or filings the absence of which would not
be reasonably expected to, individually or in the aggregate,
materially delay or impair the ability of Parent or Merger
Subsidiary to consummate the transactions contemplated hereby on
a timely basis.
Section
5.04.
Non-contravention.
The
execution, delivery and performance by Parent and Merger
Subsidiary of this Agreement and the consummation by Parent and
Merger Subsidiary of the transactions contemplated hereby do not
and will not (i) contravene, conflict with, or result in
any violation or breach of any provision of the Organizational
Documents of Parent or Merger Subsidiary, (ii) assuming
compliance with the matters referred to in Section 5.03,
contravene, conflict with or result in a violation or breach of
any provision of any Applicable Law, (iii) assuming
compliance with the matters referred to in Section 5.03,
require any consent or other action by any Person under,
constitute a default, or an event that, with or without notice
or lapse of time or both, could become a default, under, or
cause or permit the termination, cancellation, acceleration or
other change of any right or obligation or the loss of any
benefit to which Parent or any of its Subsidiaries is entitled
under any provision of any agreement or other instrument binding
upon Parent or any of its Subsidiaries or any license,
franchise, permit, certificate, approval or other similar
authorization affecting, or relating in any way to, the assets
or business of Parent and its Subsidiaries or (iv) result
in the creation or imposition of any Lien on any asset of Parent
or any of its
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Subsidiaries, except for such contraventions, conflicts and
violations referred to in clause (ii) and for such failures
to obtain any such consent or other action, defaults,
terminations, cancellations, accelerations, changes, losses or
Liens referred to in clauses (iii) and (iv) that would
not be reasonably expected to, individually or in the aggregate,
materially delay or impair the ability of Parent or Merger
Subsidiary to consummate the transactions contemplated hereby on
a timely basis.
Section
5.05.
Disclosure
Documents.
None of the information provided by
Parent for inclusion in the Company Proxy Statement or any
amendment or supplement thereto, at the time the Company Proxy
Statement or any amendment or supplement thereto is first mailed
to shareholders of the Company and at the time the shareholders
vote on adoption of this Agreement, will contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which it was made, not
misleading.
Section
5.06.
Financing
.
(a) Parent has delivered to the Company true,
complete and correct copies of (i) executed commitment
letters, dated as of the date hereof, among Parent, Merger
Subsidiary and certain lender parties (the
Debt
Financing Commitments
), pursuant to which the lender
parties thereto have committed, subject to the terms and
conditions thereof, to provide or cause to be provided the debt
financing set forth therein (including, if applicable, any debt
replacement, amended financing or supplement obtained in
accordance with Section 6.05, the
Debt
Financing
) and (b) an executed equity commitment
letter, dated as of the date hereof, by and between Irving Place
Capital Partners III, L.P. (the
Equity Commitment
Party
), and Parent (the
Equity Financing
Commitment,
and together with the Debt Financing
Commitments, the
Financing Commitments
),
pursuant to which the Equity Commitment Party has committed,
subject to the terms and conditions thereof, to invest an amount
as set forth therein (the
Equity Financing,
and together with the Debt Financing, the
Financing
). As of the date of this Agreement,
the Financing Commitments are in full force and effect and are
legal, valid and binding and enforceable obligations of Parent
and Merger Subsidiary, as the case may be, and to the knowledge
of Parent, each of the other parties thereto. None of the
Financing Commitments has been amended or modified since the
date of this Agreement in any respect, no such amendment or
modification is contemplated by Parent or Merger Subsidiary (or
to the knowledge of Parent and Merger Subsidiary, by the other
parties thereto), and as of the date hereof, the respective
commitments contained in the Financing Commitments have not been
withdrawn or rescinded. Parent has fully paid any and all
commitment fees or other fees in connection with the Financing
Commitments that are payable on or prior to the date hereof.
There are no conditions precedent related to the funding of the
full amount of the Financing, other than as expressly set forth
in the Financing Commitments, and except for the fee letter and
engagement letter dated the date hereof (complete copies of
which have been provided to the Company, with only fee amounts
and economic terms (none of which would adversely effect the
amount or availability of financing) redacted), there are no
side letters or other Contracts relating to the funding or
investing of the Financing, other than as set forth in or
otherwise permitted by the terms of the Financing Commitments
that would permit the lenders under the Debt Financing
Commitments or the Equity Commitment Party to reduce the total
amount of financing or that would materially affect the
availability of the Financing. As of the date hereof, no event
has occurred which, with or without notice, lapse of time or
both, would or would reasonably be expected to constitute a
default or breach on the part of Parent or Merger Subsidiary or,
to the knowledge of Parent, any other party thereto under any of
the Financing Commitments. As of the date hereof, assuming the
accuracy of the representations and warranties of the Company in
this Agreement and the satisfaction of the conditions in
Section 9.01 and Section 9.02, Parent has no reason to
believe that any of the conditions to the Financing contemplated
by the Financing Commitments will not be satisfied. The
aggregate proceeds contemplated by the Financing Commitments
will at the Closing be sufficient to (i) pay the aggregate
Merger Consideration and (ii) pay any and all fees and
expenses required to be paid by Parent, Merger Subsidiary and
the Surviving Corporation in connection with the Merger and the
Financing.
(b) As of the Effective Time, after giving effect to
the consummation of the transactions contemplated by this
Agreement and the payment of all fees, costs and expenses
payable by Parent with respect to the transactions contemplated
hereby and in any loans or financing agreements in connection
herewith, Parent shall be solvent and able to pay its debts as
they come due.
A-24
Section
5.07.
Finders
Fees.
Except for any investment banker, broker,
finder or other intermediary whose fees will be paid solely by
Parent or its Affiliates, there is no investment banker, broker,
finder or other intermediary that has been retained by or is
authorized to act on behalf of Parent who might be entitled to
any fee or commission from the Company or any of its Affiliates
upon consummation of the transactions contemplated by this
Agreement.
Section
5.08.
Litigation.
As of the
date of this Agreement, there is no action, suit, investigation
or proceeding pending or, to the knowledge of Parent,
threatened, against Parent or any of its Subsidiaries before any
Governmental Authority that would be reasonably expected to,
individually or in the aggregate, materially delay or impair the
ability of Parent or Merger Subsidiary to consummate the Merger
on a timely basis, nor is there any Order outstanding against,
or, to the knowledge of Parent, investigation by any
Governmental Authority involving, Parent or any of its
Subsidiaries that would be reasonably expected to, individually
or in the aggregate, materially delay or impair the ability of
Parent or Merger Subsidiary to consummate the transactions
contemplated hereby on a timely basis.
Section
5.09.
Investigation by Parent and Merger
Subsidiary.
Each of Parent and Merger Subsidiary
has conducted its own independent review and analysis of the
businesses, assets, condition, operations and prospects of the
Company and its Subsidiaries and acknowledges that each of
Parent and Merger Subsidiary has been provided access to the
properties, premises and records (including via an electronic
data room) of the Company and its Subsidiaries for this purpose.
In entering into this Agreement, each of Parent and Merger
Subsidiary has relied solely upon its own investigation and
analysis and the representations and warranties of the Company
expressly set forth in Article 4, and each of Parent and
Merger Subsidiary acknowledges that, except for the
representations and warranties of the Company expressly set
forth in Article 4, none of the Company or its Subsidiaries
nor any of their respective representatives makes any
representation or warranty, either express or implied, as to the
accuracy or completeness of any of the information provided or
made available to Parent or Merger Subsidiary or any of their
representatives. Without limiting the generality of the
foregoing, none of the Company or its Subsidiaries nor any of
their respective representatives or any other person has made a
representation or warranty to Parent or Merger Subsidiary with
respect to (a) any projections, estimates or budgets for
the Company or its Subsidiaries or (b) any material,
documents or information relating to the Company or its
Subsidiaries made available to each of Parent or Merger
Subsidiary or their representatives in the electronic data room
or otherwise, except as expressly and specifically covered by a
representation or warranty set forth in Article 4.
Section
5.10.
No
Competing Businesses.
Neither Parent nor any of
its Affiliates beneficially owns any debt or equity securities
(including any securities that may be acquired through the
exchange or exercise of rights, warrants or options) in excess
of five percent (5%) of the outstanding capital stock of any
Person that is (i) engaged in, (ii) preparing to
engage in, or (iii) a substantial supplier to or customer
of, any business involving the manufacture, design, marketing or
selling of gas and arc cutting and welding products, including
equipment, accessories and consumables related thereto, and
neither Parent nor any of its Affiliates are engaged in any such
business.
Section
5.11.
Guarantee.
Concurrently
with the execution of this Agreement, the Guarantor has
delivered to the Company a duly executed Guarantee. The
Guarantee is in full force and effect and is a valid, binding
and enforceable obligation of the Guarantor. No event has
occurred, which, with or without notice, lapse of time or both,
would constitute a default on the part of Guarantor under the
Guarantee.
ARTICLE 6
Covenants
of the Company
The Company agrees that:
Section
6.01.
Conduct of the
Company.
From the date of this Agreement until
the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, conduct its business in the ordinary course
consistent with past practice and in compliance with all
material Applicable Laws and all material governmental
authorizations, and use its reasonable best efforts to preserve
intact its present business organization, material assets,
properties, contracts and licenses, maintain in effect all
Company Permits, keep available the services of its directors,
officers and employees and maintain satisfactory relationships
with its customers, lenders, suppliers,
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distributors, lessors, licensors, licensees, creditors,
contractors and others having material business relationships
with it. Without limiting the generality of the foregoing and to
the fullest extent permitted by Applicable Law, from the date of
this Agreement until the Effective Time, except as set forth in
Section 6.01 of the Company Disclosure Schedule, or with
Parents prior written consent or to the extent permitted
by another Section of this Agreement, the Company shall not, and
shall not permit any of its Subsidiaries to:
(a) amend or propose to amend the Organizational
Documents of the Company or its Subsidiaries (whether by merger,
consolidation or otherwise);
(b) (i) split, combine, redenominate or
reclassify any shares of its capital stock, (ii) declare,
set aside, make or pay any dividend or make any other
distribution (whether in cash, stock, property, any combination
thereof or otherwise) in respect of any shares of its capital
stock or other securities (other than dividends or distributions
by any of its wholly-owned Subsidiaries), or (iii) redeem,
repurchase, cancel or otherwise acquire or offer to redeem,
repurchase, or otherwise acquire, directly or indirectly, any of
its securities or any securities of any of its Subsidiaries,
other than the cancellation of Company Stock Options in
connection with the exercise thereof;
(c) (i) issue, deliver, sell, grant or pledge,
or authorize or propose the issuance, delivery, sale, grant or
pledge of, any shares of any Company Securities or Company
Subsidiary Securities, or pay or make any commitment to pay any
amounts directly or indirectly based (in whole or in part) on
the price or value of Company Securities or Company Subsidiary
Securities, other than the issuance of any shares of the Company
Common Stock upon the exercise of Company Stock Options that are
outstanding on the date of this Agreement in accordance with the
terms of those options on the date of this Agreement or accrual
of Director Stock Units, or distributions of cash in connection
with stock units in respect of shares of Company Common Stock
issued, under the Director Deferred Fee Plan in accordance with
the terms thereof or (ii) amend or propose to amend any
term of any Company Security or any Company Subsidiary Security
(in each case, whether by merger, consolidation or otherwise);
(d) (i) form any subsidiary, (ii) acquire
(including by merger, consolidation, or acquisition of stock or
assets) any equity interest, assets or any real property of any
corporation, partnership, other business organization or any
division thereof from any other Person, other than acquisitions
of (A) raw materials (including, without limitation, any
supplies used in the manufacture, production, assembly or
packaging of the products of the Company or its Subsidiaries) in
arms-length transactions in the ordinary course of business and
(B) assets in arms-length transactions in the ordinary
course of business in each case involving the payment of
consideration of $2,500,000 or less individually (or payments
less than $5,000,000 for all such acquisitions in the
aggregate), (iii) merge or consolidate with any other
Person or (iv) adopt a plan of complete or partial
liquidation, dissolution, recapitalization, reorganization or
restructuring (or resolutions providing for or authorizing such
action) of the Company or any of its Subsidiaries (other than
the Merger);
(e) sell, lease, license, assign, transfer, convey,
terminate or otherwise dispose of, or modify, amend, extend or
renew any agreement with respect to, any Subsidiary or any
amount of assets, securities or property except
(i) pursuant to existing Contracts as of the date hereof,
(ii) inventory (including, without limitation, raw
materials, work in process and finished goods) in arms-length
transactions in the ordinary course of business or (iii) in
arms-length transactions in the ordinary course of business in
each case involving the receipt of consideration of $2,500,000
or less individually (or receipt of consideration of less than
$4,000,000 for all such sales, leases, encumbrances and other
dispositions in the aggregate), provided that such sales,
leases, encumbrances or other dispositions referred to in this
subsection (iii) do not materially impact the ability of
the Company and its Subsidiaries to conduct their business in
the ordinary course;
(f) create or incur any Lien on any material asset
other than Permitted Liens or any immaterial Lien incurred in
the ordinary course of business consistent with past practice
and which is reasonably necessary to conduct the Companys
business as presently conducted;
(g) make any loan, advance or investment either by
purchase of stock or securities, contributions to capital,
property transfers, or purchase of any property or assets of any
Person, other than loans or advances to, or investments in, its
wholly-owned Subsidiaries;
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(h) create, incur, assume, suffer to exist or
otherwise be liable with respect to any indebtedness for
borrowed money or guarantees thereof other than (i) any
draw downs in the ordinary course of business consistent with
past practice on the Companys revolving credit facility
under the GE Credit Agreement or (ii) such indebtedness or
guarantees that exist on the date hereof;
(i) redeem, repurchase, prepay, defease or cancel any
indebtedness for borrowed money, other than as required in
accordance with its terms;
(j) (i) enter into any Contract that would have
been a Company Material Contract were the Company or any of its
Subsidiaries a party or subject thereto on the date of this
Agreement other than with respect to Contracts for the sale or
acquisition of inventory or raw materials in the ordinary course
consistent with past practice and as permitted by
Section 6.01(d) and Section 6.01(e) or
(ii) terminate, amend, renew, or extend in any material
respect any Company Material Contract or waive any material
right thereunder, other than in the ordinary course of business
on terms consistent with past practice (including in terms both
of timing and amounts);
(k) terminate, suspend, abrogate, abandon, cease to
prosecute, fail to maintain, sell, license, assign, encumber,
amend or modify in any material respect any material Company
Permit, material Company Owned Intellectual Property or other
material assets;
(l) except as required by Applicable Laws or existing
Employee Plans or in the ordinary course of business consistent
with past practice, (i) grant or increase any severance or
termination pay to (or amend any existing arrangement with) any
of their respective present or former director, officer or
employee of the Company or any of the Company subsidiaries,
(ii) increase benefits payable under any severance or
termination pay policies or employment agreements existing as of
the date of this Agreement, (iii) enter into any
employment, deferred compensation or other similar agreement (or
any amendment to any such existing agreement) with any of their
respective existing directors, officers or employees,
(iv) establish, adopt or amend (except as required by
Applicable Law) any collective bargaining, bonus,
profit-sharing, thrift, pension, retirement, deferred
compensation, severance, compensation, stock option, restricted
stock or other benefit plan or arrangement covering any of their
respective directors, officers or employees, that would be an
Employee Plan if it were in existence as of the date of this
Agreement, (v) grant any equity or equity-based awards,
(vi) increase the compensation, bonus or other benefits
payable to any current or former employee, director or officer
of the Company (except for (x) increases required pursuant
to any contract or benefit plan of the Company in effect on the
date hereof and (y) increases in salary and bonuses to
non-executive officers in the ordinary course of business and
consistent with past practice), or (vii) loan or advance
any money or other property to any present or former director,
officer or employee of the Company or any of the Company
subsidiaries;
(m) hire any person for employment with the Company
or any of its Subsidiaries reasonably expected to receive
compensation in excess of $300,000 annually;
(n) (i) make, change or revoke any material Tax
election (except for elections made in the ordinary course of
business or consistent with the Companys past practices);
(ii) settle or compromise any claim, notice, audit report
or assessment in respect of a material amount of Taxes;
(iii) amend any income or other material Tax Return,
(iv) enter into any Tax allocation agreement, Tax sharing
agreement, Tax indemnity agreement, pre-filing agreement,
advance pricing agreement, cost sharing agreement or closing
agreement relating to any material Tax, (v) surrender or
forfeit any right to claim a material Tax refund; or consent to
any extension or (vi) consent to any waiver of the statute
of limitations period applicable to any income or other material
Tax or Tax Return;
(o) make any material change in any method of
accounting or accounting principles or practice used by the
Company or any of the working capital policies applicable to the
Company and its Subsidiaries, except for any such change
required by reason of a concurrent change in GAAP or
Regulation S-X
under the 1934 Act, as approved by its independent public
accountants;
(p) compromise, waive, release, assign, settle, or
offer or propose to waive, release, assign or settle, any
litigation, investigation, arbitration, suit, action, proceeding
or other claim (including without limitation any
A-27
suit, action, claim, proceeding or investigation relating to
this Agreement or the transactions contemplated hereby), other
than compromises, settlements or agreements that involve only
the payment of monetary damages not in excess of $750,000
individually or $2,000,000 in the aggregate, in any case without
the imposition of equitable relief on, or the admission of
wrongdoing by, the Company or any of Subsidiary of the Company;
(q) fail to use reasonable best efforts maintain and
keep in full force and effect all existing material insurance
policies for the benefit of the Company and its Subsidiaries,
other than such policies that expire by their terms (in which
event the Company and its Subsidiaries shall renew or replace
such policies) or changes to such policies made in the ordinary
course of business;
(r) take any action which with the passage of time or
giving of notice or both would result in a material default
under any Company Material Contract;
(s) pay or discharge any material claims, Liens or
liabilities which are not reserved for or reflected on the
Company Balance Sheet or incurred in the ordinary course of
business after the Company Balance Sheet Date;
(t) except as set forth in Section 6.01(t) of
the Company Disclosure Schedule, authorize any capital
expenditures in excess of $1,000,000 individually or $3,000,000
in the aggregate;
(u) with respect to Company Intellectual Property,
(A) sell, assign, license, sublicense, encumber, impair,
abandon, fail to diligently maintain, transfer or otherwise
dispose of any right, title or interest of the Company or any of
its Subsidiaries in any of the material Company Intellectual
Property, (B) extend, amend, waive, cancel or modify any
rights in or to material Company Intellectual Property,
(C) fail to diligently prosecute the material patent
applications owned by the Company or any of its Subsidiaries, or
(D) divulge, furnish to or make accessible any Trade
Secrets within the material Company Intellectual Property to any
Third Party who is not subject to an enforceable written
agreement to maintain the confidentiality of such Trade Secrets;
(v) except as may be required by Applicable Law or
the Organizational Documents of the Company, convene any regular
or special meeting (or any adjournment thereof) of the
shareholders other than the Company Shareholder Meeting;
(w) enter into, amend, waive or terminate (other than
terminations in accordance with their terms) any Contract with
any Affiliate of the Company; or
(x) agree, resolve or commit to do any of the
foregoing.
Section
6.02.
Shareholder Meeting; Proxy
Material
.
(a) In connection with the Company Shareholder
Meeting, the Company shall as promptly as practicable following
the date hereof (but in any event, within ten Business Days)
prepare and file the Company Proxy Statement with the SEC. The
Company shall consult with Parent and Merger Subsidiary and
their counsel in the preparation of the Company Proxy Statement.
The Company shall not file the preliminary Company Proxy
Statement, or any amendment or supplement thereto, without
providing Parent a reasonable opportunity to review and comment
thereon. The Company agrees to correct any information in the
Company Proxy Statement which to the knowledge of the Company
shall have become false or misleading in any material respect
and the Company shall promptly file with the SEC an amendment or
supplement setting forth such correction and mail to its
shareholders, to the extent required by law, such amendment or
supplement. The Company shall as soon as reasonably practicable
(i) notify Parent of the receipt of any comments from the
SEC staff with respect to the Company Proxy Statement and any
request by the SEC staff for any amendment to the Company Proxy
Statement or for additional information and (ii) provide
Parent with copies of all correspondence between the Company and
its authorized representatives, on the one hand, and the SEC
staff, on the other hand, with respect to the Company Proxy
Statement. The Company and Parent shall use their respective
reasonable best efforts (with the assistance of the other) to
resolve any SEC staff comments with respect to the preliminary
Company Proxy Statement as promptly as practicable after receipt
thereof and to cause the Company Proxy Statement in definitive
form to be mailed to the holders of shares of Company Common
Stock as promptly as reasonably practicable (but in any event,
A-28
within five Business Days) following the time the Company is
informed that the SEC staff will not review or will have no
further comments with respect to the Company Proxy Statement.
(b) Unless the Agreement has been validly terminated
pursuant to Section 10.01, as soon as practicable following
the date hereof, the Company shall take all reasonable action
necessary for a meeting of the holders of shares of Company
Common Stock (the
Company Shareholder
Meeting
) to be duly called and held as soon as
reasonably practicable after the mailing of the Company Proxy
Statement for the purpose of voting on the approval and adoption
of this Agreement and the Merger, which meeting shall be held no
later than forty calendar days after the mailing of the Company
Proxy Statement. The Company shall consult with Parent and
Merger Subsidiary and their counsel in determining the date of
the Company Shareholder Meeting. Subject to Section 6.03,
(i) the Board of Directors of the Company shall recommend
approval and adoption of this Agreement and the Merger and
include the Company Board Recommendation in the Company Proxy
Statement, (ii) use its reasonable best efforts to obtain
the Company Shareholder Approval and (iii) otherwise comply
in all material respects with all legal requirements applicable
to such meeting. Unless this Agreement is validly terminated in
accordance with Section 10.01, the Company shall establish
a record date for, duly call, give notice of, convene and hold
the Company Shareholder Meeting, even if the Board of Directors
or any committee thereof shall have made an Adverse
Recommendation Change. The Company shall not change the record
date for the Company Shareholder Meeting or postpone or adjourn
the Company Shareholder Meeting; provided, however, (A) the
Company may postpone or adjourn the Company Shareholder Meeting
(x) with the prior written consent of Parent or (y) if
the Company has provided a written notice to Parent and Merger
Subsidiary pursuant to Section 6.03 that it intends to make
an Adverse Recommendation Change in connection with a Superior
Proposal or Intervening Event or take action pursuant to
Section 10.01(d)(i) with respect to a Superior Proposal and
the deadline contemplated by Section 6.03 with respect to
such notice has not been reached, and (B) the Company shall
postpone or adjourn the Company Shareholder Meeting (x) for
the absence of a quorum; (y) to allow reasonable additional
time for the filing and mailing of any supplemental or amended
disclosure, which the Board of Directors has determined in good
faith after consultation with outside counsel is necessary under
Applicable Law, and for such supplemental or amended disclosure
to be disseminated and reviewed by the Companys
stockholders prior to the Company Shareholder Meeting or
(z) if required by Applicable Law; provided, further, that,
in the case of (A) and (B) above, such postponement or
adjournment of the Company Shareholder Meeting shall only be to
the earliest practicable future date. Unless Parent shall have
consented to in writing in advance, the approval and adoption of
this Agreement and the Merger shall be the only matter (other
than procedural matters) which the Company shall propose to be
acted on by the Companys shareholders at the Company
Shareholder Meeting.
Section
6.03.
No
Solicitation; Other Offers.
(a) Subject to Section 6.03(b), the Company
shall not, and shall cause its Subsidiaries not to, and shall
not knowingly permit its and their officers, directors,
employees, investment bankers, attorneys, accountants,
consultants and other authorized agents, advisors or
representatives (collectively,
Representatives
) to, directly or indirectly,
(i) solicit, initiate or take any action to knowingly
facilitate or encourage (including by way of furnishing to any
Third Party any non-public information) the submission or making
of any Acquisition Proposal or any proposal that is reasonably
likely to lead to any Acquisition Proposal, (ii) enter
into, continue or participate in any discussions or negotiations
with, furnish any information relating to the Company or any of
its Subsidiaries or afford access to the business, properties,
assets, books or records of the Company or any of its
Subsidiaries to, any Third Party that to the knowledge or the
Company is seeking to make, or has made, an Acquisition Proposal
or any proposal that is reasonably likely to lead to an
Acquisition Proposal, (iii) withdraw, qualify or modify, in
each case, in a manner adverse to Parent or publicly propose to
withdraw, qualify or modify, in each case, in a manner adverse
to Parent the Company Board Recommendation, recommend, adopt or
approve or publicly propose to recommend, adopt or approve an
Acquisition Proposal, (any of the foregoing in this clause
(iii), an
Adverse Recommendation Change
), or
(iv) enter into any agreement in principle, letter of
intent, term sheet, merger agreement, acquisition agreement, or
other similar instrument constituting or relating to an
Acquisition Proposal or enter into any agreement or agreement in
principle requiring the Company to abandon, terminate or fail to
consummate the transactions contemplated by this Agreement or
breach its obligations hereunder. The Company shall, and shall
cause its Subsidiaries to, and shall instruct their respective
Representatives to, cease immediately and terminate any and all
existing activities, discussions or negotiations, if any, with
any Third Party conducted prior to the date of this
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Agreement with respect to any Acquisition Proposal and shall
instruct any such Third Party (or its agents or advisors) in
possession of confidential information about the Company that
was furnished by or on behalf of the Company to return or
destroy all such information. The Company shall make its
Representatives aware of the provisions of this
Section 6.03. Without limiting the foregoing, it is agreed
that any violation of the foregoing restrictions by any of the
Companys Subsidiaries or any Representative of the Company
or any of its Subsidiaries shall be deemed to be a breach of
this Section 6.03 by the Company.
(b) Notwithstanding Section 6.03(a), at any time
prior to the adoption of this Agreement by the Companys
shareholders, the Board of Directors, directly or indirectly
through advisors, agents or other intermediaries, may, subject
to compliance with Section 6.03(d), (i) engage in
negotiations or discussions (including, as a part thereof,
making any counterproposal or counter offer to) with any Third
Party that, subject to the Companys compliance with
Section 6.03(a), has made after the date of this Agreement
in circumstances not involving a breach of this Agreement a
Superior Proposal or an unsolicited bona fide Acquisition
Proposal that the Board of Directors determines in good faith
(after consultation with a financial advisor of nationally
recognized reputation and outside legal counsel) is reasonably
likely to lead to a Superior Proposal, provided that, prior to
taking such action, the Board of Directors determines in good
faith, after consultation with outside legal counsel to the
Company, that failure to take such action would reasonably be
expected to be inconsistent with its fiduciary duties under
Applicable Law and (ii) thereafter furnish to such Third
Party nonpublic information relating to the Company or any of
its Subsidiaries pursuant to a confidentiality agreement in
customary form with terms no less favorable to the Company than
those contained in the Confidentiality Agreement;
provided
that (A) such confidentiality agreement shall expressly
permit the Company to comply with the provisions of this
Section 6.03 and may not include any provision calling for
an exclusive right to negotiate with the Company, (B) the
Company will not, and will not allow its Subsidiaries or its or
their Representatives to, disclose any commercially sensitive
non-public information of the Company or any of its Subsidiaries
to such Person, except in a manner consistent with the
Companys past practice in dealing with the disclosure of
such information and (C) all such information (to the
extent that such information has not been previously provided or
made available to Parent) is provided or made available to
Parent, as the case may be, prior to or substantially
concurrently with the time it is provided or made available to
such Third Party). In addition, notwithstanding
Section 6.03(a), at any time prior to the adoption and
approval of this Agreement by the Companys shareholders,
the Board of Directors, may, subject to compliance with
Section 6.03(d), make an Adverse Recommendation Change if
the Board of Directors determines in good faith, after
consultation with outside legal counsel to the Company, that
failure to take such action would reasonably be expected to be
inconsistent with its fiduciary duties under Applicable Law;
provided, however, that (A) if such Adverse Recommendation
Change is in response to an Acquisition Proposal, such Adverse
Recommendation Change (1) may only be made if the Board of
Directors reasonably determines in good faith (after
consultation with a financial advisor of nationally recognized
reputation and outside legal counsel) that such Acquisition
Proposal constitutes a Superior Proposal and (2) may not be
made until the third Business Day following Parents
receipt of written notice from the Company advising Parent that
the Board of Directors intends to take such action and
specifying the reasons therefor, including the terms and
conditions of any Superior Proposal that is the basis for the
proposed action by the Board of Directors and (B) if such
Adverse Recommendation Change is other than in response to an
Acquisition Proposal, such Adverse Recommendation Change
(1) must be in response to an Intervening Event,
(2) may not be made (x) until the third business day
following Parents receipt of written notice from the
Company advising Parent that the Board of Directors intends to
take such action and specifying the reasons therefore and
(y) unless the Company, during such three Business Day
period, shall have offered to negotiate with (and, if accepted,
negotiated in good faith with), and shall have caused its
respective financial and legal counsel to offer to negotiate
with (and, if accepted, negotiate in good faith with), Parent in
making adjustments to the terms and conditions of this Agreement
so that an Adverse Recommendation Change is no longer necessary.
An Adverse Recommendation Change permitted by
Section 6.03(b) will not constitute a breach by Company of
this Agreement.
(c) Nothing contained herein shall prevent the Board
of Directors from complying with requirements
Rule 14e-2(a)
under the 1934 Act or complying with the requirements of
Rule 14d-9
under the 1934 Act with regard to an Acquisition Proposal,
so long as any action taken or statement made to so comply is
consistent with this Section 6.03(b). For the avoidance of
doubt, a stop, look and listen or similar
communication of the type contemplated by
Rule 14d-9(f)
under the 1934 Act, an express rejection of any applicable
Acquisition Proposal or
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an express reaffirmation of its recommendation to the
shareholders of the Company in favor of the Merger shall not be
deemed to be an Adverse Recommendation Change (including for
purposes of Section 10.01(c)(i)).
(d) The Company (A) shall notify Parent promptly
(but in no event later than 24 hours) after
(i) receipt by the Company (or any of its Representatives)
of any Acquisition Proposal, any inquiry or proposal (written or
oral) that would be reasonably expected to lead to an
Acquisition Proposal or of any request for information relating
to the Company or any of its Subsidiaries or for access to the
business, properties, assets, books or records of the Company or
any of its Subsidiaries by any Third Party that to the knowledge
of the Company may be considering making, or has made, an
Acquisition Proposal or (ii) a determination by the Company
to provide information or to engage in discussions or
negotiations concerning an Acquisition Proposal pursuant to
Section 6.03(b), in each case, which notice shall be
provided orally and in writing and shall identify the Third
Party making such proposal and the material terms and conditions
of, any such Acquisition Proposal (including any material
changes thereto), inquiry, proposal or request and shall include
copies of any written materials received from or on behalf of
such Third Party relating to such Acquisition Proposal, inquiry,
proposal or request, and (B) thereafter shall promptly
(and, in any event, within 24 hours) keep Parent informed
of all material developments affecting the status and terms of
any Acquisition Proposal, inquiry, proposal or request (and the
Company shall provide Parent with copies of any additional
written materials received from or on behalf of such Third Party
relating to such Acquisition Proposal, inquiry, proposal or
request). The Company (i) shall not, and shall cause its
Subsidiaries not to, terminate, amend, modify, render
inapplicable, or grant any waiver, permission, exemption or
release under, any standstill, confidentiality or similar
Contract to which the Company or any of its Subsidiaries is a
party (a
Standstill Agreement
);
(ii) shall promptly (and, in any event, within
24 hours) notify Parent of any breach of which it is aware
of any Standstill Agreement by the counterparty thereto, or any
request by such counterparty to terminate, amend, modify, render
inapplicable, or grant any waiver, permission, exemption or
release under any such Standstill Agreement and
(iii) shall, and shall cause its Subsidiaries to, use its
reasonable best efforts to enforce, to the fullest extent
permitted under Applicable Law each such Standstill Agreement at
the request of Parent, including by obtaining injunctions to
prevent any breaches of such Standstill Agreement and to enforce
specifically the material terms and provisions thereof in any
court of competent jurisdiction. Notwithstanding anything to the
contrary contained in this Section 6.03, nothing in this
Agreement shall prohibit the Company from terminating, amending,
modifying, rendering inapplicable, or granting any waiver,
permission, exemption or release under, any Standstill Agreement
with respect to a Third Party that, subject to the
Companys compliance with Section 6.03(a), has made
after the date of this Agreement in circumstances not involving
a breach of this Agreement a Superior Proposal or an unsolicited
bona fide Acquisition Proposal that the Board of Directors
determines in good faith (after consultation with a financial
advisor of nationally recognized reputation and outside legal
counsel) is reasonably likely to lead to a Superior Proposal,
provided
that, prior to taking such action, the Board of
Directors determines in good faith, after consultation with
outside legal counsel to the Company, that failure to take such
action would reasonably be expected to be inconsistent with its
fiduciary duties under Applicable Law. The Company shall not,
and shall cause its Subsidiaries not to, enter into any
confidentiality agreement with any Third Party subsequent to the
date of this Agreement except as permitted or required pursuant
to Section 6.03(b), and neither the Company nor any of its
Subsidiaries shall be party to any agreement that prohibits the
Company from providing to Parent or Merger Subsidiary any
information provided or made available to any other Person
pursuant to a confidentiality agreement permitted by
Section 6.03(b).
Superior Proposal
means any bona fide,
unsolicited written Acquisition Proposal for at least a majority
of the outstanding shares of Company Common Stock or all or
substantially all of the assets of the Company and its
Subsidiaries on terms that the Board of Directors determines in
good faith, after consultation with a financial advisor of
nationally recognized reputation and outside legal counsel and
taking into account all relevant factors, including the terms
and conditions of the Acquisition Proposal (including price, the
identity of the Person making the proposal, form of
consideration, closing conditions, any governmental and other
approval requirements, the ability to fully finance the
proposal, the expected timing and likelihood of consummation and
such other aspects of the proposal as the Board in good faith
deems relevant), would result in a transaction (i) that if
consummated, is more favorable to Companys shareholders
from a financial point of view than the Merger or, if
applicable, any binding proposal by Parent capable of being
accepted by the Company to amend the terms of this Agreement,
(ii) that is reasonably capable of being completed on the
terms proposed, and (iii) for which financing, if a cash
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transaction (whether in whole or in part), is then fully
committed or reasonably determined to be available by the Board
of Directors.
Intervening Event
means a material event,
material development or material change in circumstances
relating to the Company or its Subsidiaries which (i) is
materially favorable to the long-term financial condition or
results of operations of the Company and its Subsidiaries, taken
as a whole (ii) did not result from, arise out of, or be
attributable to (A) changes, effects, developments or
events in the economy or the financial, credit or securities
markets in general (including changes in interest or exchange
rates), (B) the announcement or pendency of the
transactions contemplated by this Agreement or (C) any
changes in Applicable Law or GAAP (or any interpretation
thereof), (iii) was neither known to the Board of Directors
nor reasonably foreseeable as of or prior to the date hereof and
(iv) becomes known to or by the Board of Directors prior to
the Effective Time; provided, however, that in no event shall an
Intervening Event include (x) the receipt of an Acquisition
Proposal or (y) any event or change relating to Parent.
Section
6.04.
Access to Information;
Confidentiality
.
(a) From the date of this Agreement until the
Effective Time and subject to Applicable Law, the Company shall,
and shall cause its Subsidiaries to, upon reasonable notice,
(i) give to Parent, its counsel, financial advisors,
auditors and other authorized representatives reasonable access
during normal business hours to its offices, properties, books
and records, (ii) furnish to Parent, its counsel, financial
advisors, auditors and other authorized representatives such
financial and operating data and other information as such
Persons may reasonably request and (iii) instruct its
employees, counsel, financial advisors, auditors and other
authorized representatives to cooperate with Parent in its
investigation. Any investigation pursuant to this
Section 6.04 shall be conducted in such manner as not to
interfere unreasonably with the conduct of the business of the
Company and its Subsidiaries. Nothing contained in this
Section 6.04 shall, prior to the Effective Time, require
the Company to take any action that would, based on the advice
of outside legal counsel, constitute a waiver of the
attorney-client or similar privilege or trade secret protection
held by the Company or any of its Subsidiaries or violate
confidentiality obligations owing to third parties; provided,
however, that if any information is withheld by the Company or
any of its subsidiaries pursuant to the foregoing, the Company
shall inform Parent as to the general nature of what is being
withheld; and provided, further, that the Company shall use its
reasonable best efforts to (i) accommodate any request from
Parent for access or information pursuant to this
Section 6.04 in a manner that does not result in such a
waiver or violation or (ii) obtain the required consent of
such third party to provide such access or disclosure.
(b) All information furnished pursuant to this
Section 6.04 shall be subject to the confidentiality
agreement, dated as of July 2, 2010, between IPC Manager
III, L.P. and the Company (the
Confidentiality
Agreement
), except for disclosure to potential
investors as required in connection with the Financing subject
to customary confidentiality protections.
(c) No investigation by any of the parties or their
respective Representatives shall modify, nullify, amend or
otherwise affect the representations, warranties, covenants or
agreements of the other parties set forth herein.
Section
6.05.
Financing
.
(a) Prior to the Closing, the Company shall, and
shall cause its Subsidiaries to, and shall use reasonable best
efforts to cause its and its Subsidiaries respective
Representatives to, use reasonable best efforts to provide to
Parent and Merger Subsidiary such cooperation reasonably
requested by Parent that is necessary, proper or advisable in
connection with the Debt Financing (including the marketing
efforts in connection therewith) and the repayment of any debt
of the Company, including:
(i) furnishing Parent and Merger Subsidiary the
Required Information;
(ii) participating in a reasonable number of
meetings, presentations, road shows, due diligence sessions and
sessions with rating agencies and assisting Parent in obtaining
ratings as contemplated by the Debt Financing;
(iii) assisting with the preparation of customary
materials for rating agency presentations, offering documents,
private placement memoranda, bank information memoranda,
prospectuses, tender offer documents and similar documents
required in connection with the Debt Financing and the repayment
of any debt of
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the Company, including execution and delivery of customary
representation letters in connection with bank information
memoranda; provided, that any such memoranda, prospectuses and
other documents relating to the Debt Financing shall contain
disclosure and financial statements with respect to the Company
or the Surviving Corporation reflecting the Surviving
Corporation
and/or
its
Subsidiaries as the obligor;
(iv) obtaining accountants comfort letters,
appraisals, surveys, engineering reports, environmental and
other inspections (including providing reasonable access to
Parent and its agents to all Owned Real Property for such
purposes; provided, that such access does not include the right
to conduct any invasive soil or groundwater sampling without the
Companys prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed), title insurance,
legal opinions and other documentation and items relating to the
Debt Financing as reasonably requested by Parent and customary
for financings similar to the Financing;
(v) providing monthly financial statements in the
form provided internally to senior management of the Company
within three calendar days after providing internally to senior
management of the Company;
(vi) providing and executing documents as may be
reasonably requested by Parent, including executing and
delivering, as of the Effective Time, a certificate of the Chief
Financial Officer of the Company or any Subsidiary with respect
to solvency matters substantially in the form attached to the
Debt Financing Commitment, and consents of accountants for use
of their reports in any materials relating to the Debt Financing
and reasonably facilitating the pledging or the re-affirmation
of the pledge of collateral (including cooperation in connection
with the pay-off of existing debt and the release of related
liens);
(vii) taking reasonable best efforts to
(A) permit the prospective lenders involved in the Debt
Financing to evaluate the Companys current assets, cash
management and accounting systems, policies and procedures
relating thereto for the purposes of establishing collateral
arrangements as of the Effective Time and (B) assist Parent
to establish or maintain, effective as of the Effective Time,
bank and other accounts and blocked account agreements and lock
box arrangements in connection with the Debt Financing;
(viii) using reasonable best efforts to assist Parent
to obtain waivers, consents, estoppels and approvals, to the
extent necessary, proper or advisable in connection with the
Debt Financing, from other parties to material leases,
encumbrances and contracts to which the Company or any
Subsidiary of the Company is a party and to arrange discussions
among Parent, Merger Subsidiary and their financing sources with
other parties to material leases, encumbrances and contracts as
of the Effective Time;
(ix) executing and delivering underwriting or
purchase agreements, supplemental indentures, customary
certificates, hedging agreements or other documents and
instruments relating to guarantees, the pledge of collateral and
other matters anciallary to the Debt Financing as may be
reasonably requested by Parent,; and
(x) taking all corporate actions, subject to the
occurrence of the Effective Time, reasonably requested by Parent
that are necessary or customary to permit the consummation of
the Debt Financing and to permit the proceeds thereof, together
with the cash and marketable securities at the Company and its
Subsidiaries (not needed for other purposes), to be made
available to the Company on the Closing Date to consummate the
Merger.
provided
,
however
, that, (a) irrespective of
the above, no obligation of the Company or any of its
Subsidiaries under any certificate, document or instrument shall
be effective until the Effective Time and none of the Company or
any of its Subsidiaries shall be required to take any action
under any certificate, document or instrument that is not
contingent upon the Closing or, in the case of a tender offer,
the acceptance of the securities subject to such offer, or that
would be effective prior to the Effective Time, (b) nothing
herein shall require such cooperation to the extent it would
interfere unreasonably with the business or operations of the
Company or its Subsidiaries and (c) none of the Company or
any of its Subsidiaries shall be required to issue any offering
document. None of the Company or any of its Subsidiaries shall
be required to bear any cost or expense or to pay any commitment
or other similar fee or make any other payment in connection
with the Financing or any of the foregoing prior to the
Effective Time. If the Effective Time does not occur, Parent
shall indemnify and hold harmless the Company, its Subsidiaries
and the Representatives from and against any and all
liabilities, losses, damages, claims, costs, expenses, interest,
awards, judgments and penalties suffered or incurred by them in
connection with the Debt Financing (other than to the extent
such losses arise from the misconduct of the Company, any of its
Subsidiaries or their Representatives and
A-33
any information utilized in connection therewith (other than
historical information relating to the Company or its
Subsidiaries provided by the Company for use in the Financing
offering documents). Parent shall, promptly upon request by the
Company, reimburse the Company for all documented and reasonable
out-of-pocket
costs incurred by the Company or its Subsidiaries in connection
with this Section 6.05(a), including legal fees and
expenses reasonably incurred. The Company hereby consents to the
use of its and its Subsidiaries logos in connection with
the Debt Financing; provided that such logos shall be used
solely in a manner that is not intended to nor reasonably likely
to harm, disparage or otherwise adversely affect the Company or
any of its Subsidiaries.
(b) Parent and Merger Subsidiary shall use their
reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary,
proper or advisable to arrange and obtain the Debt Financing on
the terms and conditions described in the Debt Financing
Commitments. Parent and Merger Subsidiary may replace, amend or
supplement the Debt Financing Commitments to add lenders, lead
arrangers, bookrunners, syndication agents or similar entities
that have not executed the Debt Financing Commitments as of the
date hereof if the addition of such additional parties,
individually or in the aggregate, would not prevent, delay or
impair the availability of the financing under the Debt
Financing Commitments or the consummation of the transactions
contemplated by this Agreement, or may amend, replace or
supplement the Debt Financing Commitments in any other manner,
so long as such replacement, amendment or supplement would not
(x) reduce the aggregate amount of the Debt Financing,
including as a result of fees or original issue discount (unless
the Equity Financing is increased by a corresponding amount), or
(y) impose new or additional conditions, or otherwise
amend, modify or expand any conditions to the receipt of the
Debt Financing in a manner that would reasonably be expected to
(i) delay or prevent the Closing Date, (ii) make the
funding of the Debt Financing (or satisfaction of the conditions
to obtaining the Debt Financing) less likely to occur or
(iii) adversely impact the ability of Parent or Merger
Subsidiary to enforce its rights against the other parties to
the Debt Financing Commitments or the definitive agreements with
respect thereto. For purposes of this Section 6.05,
references to Financing shall include the financing
contemplated by the Financing Commitments as permitted to be
replace, amended or supplemented by this Section 6.05(b)
and references to Financing Commitments or
Debt Financing Commitments shall include such
documents as permitted to be replaced, amended or supplemented
by this Section 6.05(b). Without limiting the foregoing,
Parent and Merger Subsidiary shall use their reasonable best
efforts to (i) subject to the provisions hereof and the
Debt Financing Commitments, maintain in effect the Debt
Financing Commitments until the date the transactions
contemplated by this Agreement are consummated,
(ii) satisfy all conditions and covenants applicable to
Parent and Merger Subsidiary in the Debt Financing Commitments
(including by consummating the financing pursuant to the terms
of the Equity Financing Commitments subject to the terms and
conditions thereof) at or prior to Closing and otherwise comply
with its obligations thereunder, (iii) enter into
definitive agreements with respect thereto on the terms and
conditions (including the flex provisions) contemplated by the
Debt Financing Commitments, (iv) consummate the Financing
at or prior to the Closing on the terms and subject to the
conditions of the Debt Financing Commitments, (v) enforce
its rights under the Debt Financing Commitments and
(vi) cause the lenders and other Persons providing
Financing to fund on the Closing Date the Financing contemplated
to be funded on the Closing Date by the Debt Financing
Commitments (or such lesser amount as may be required to
consummate the Merger and the other transactions contemplated
hereby) subject to the conditions set forth in the Debt
Financing Commitments. Without limiting the generality of the
foregoing, Parent and Merger Subsidiary shall give the Company
prompt notice: (A) of any breach or default by any party to
any Financing Commitment of which they are aware under the Debt
Financing Commitments or any definitive document related to the
Financing of which Parent or its Affiliates becomes aware;
(B) of the receipt of any written notice or other written
communication from any Person with respect to any
(x) actual or potential breach, default, termination or
repudiation by any party to any Financing Commitment or any
definitive document related to the Financing or any provisions
of the Financing Commitment or any definitive document related
to the Financing or (y) material dispute or disagreement
between or among any parties to any Financing Commitment or any
definitive document related to the Financing (but excluding, for
the avoidance of doubt, any ordinary course negotiations with
respect to the terms of the Financing or any definitive
agreement with respect thereto); and (C) if for any reason
Parent or Merger Subsidiary believes in good faith that it will
not be able to obtain all or any portion of the Financing in the
manner or from the sources contemplated by the Financing
Commitment; provided, that in no event will Parent or Merger
Subsidiary be under any obligation to disclose any information
that is subject to attorney-client or similar privilege if
Parent and Merger Subsidiary shall have used their reasonable
best efforts to disclose such
A-34
information in a way that would not waive such privilege. As
soon as reasonably practicable, but in any event within three
Business Days after the date the Company delivers Parent or
Merger Subsidiary a written request, Parent and Merger
Subsidiary shall provide any information reasonably requested by
the Company relating to any circumstance referred to in clause
(A), (B) or (C) of the immediately preceding sentence.
If any portion of the Debt Financing becomes unavailable as
contemplated in the Debt Financing Commitments, Parent shall use
its reasonable best efforts to arrange and obtain alternative
financing from alternative sources on terms and conditions that
are no less favorable, in the aggregate, to Parent (taking into
account the flex provisions set forth in the Debt Financing
Commitments) than those set forth in the Debt Financing
Commitment for the financing being replaced, in an amount
sufficient to consummate the transactions contemplated by this
Agreement as promptly as practicable following the occurrence of
such event but no later than the earlier of the last Business
Day of the Marketing Period. For purposes of this Agreement,
Marketing Period
shall mean the first period
of twelve consecutive Business Days after the date of this
Agreement throughout which (A) Parent shall have the
Required Information and (B) the conditions set forth in
Section 9.01 shall have been satisfied and nothing has
occurred and no condition exists that would cause any of the
conditions set forth in Section 9.02 to fail to be
satisfied assuming the Closing were to be scheduled for any time
during such twelve consecutive Business Day
period;
provided, further
, that if such period
has not ended on or prior to December 15, 2010 then it will
not commence until January 3, 2011. The Marketing Period
shall not commence and shall not be deemed to have commenced if,
prior to the completion of such period, (A) the
Companys independent registered accounting firm shall have
withdrawn its audit opinion with respect to any financial
statements contained in the Required Information, in which case
the Marketing Period shall not be deemed to commence until the
time at which a new unqualified audit opinion is issued with
respect to the consolidated financial statements for the
applicable periods by the Companys independent registered
accounting firm or another independent registered accounting
firm reasonably acceptable to Parent, (B) the Company shall
have publicly announced any intention to restate any of its
financial information contained in the Company SEC Documents, in
which case the Marketing Period shall not be deemed to commence
until the time at which such restatement has been completed and
the Company SEC Documents have been amended or the Company has
announced that it has concluded that no restatement shall be
required or (C) the Company shall have failed to file any
report with the SEC by the date required under the 1934 Act
containing any financial information that would be required, if
such offering documents were a filed registration statement, to
be contained therein or incorporated therein by reference, in
which case the Marketing Period shall not be deemed to commence
until the time at which all such report have been filed.
Notwithstanding the foregoing, if the Required Information is
not Compliant throughout and on the last day of such period,
then a new twelve consecutive Business Day period shall commence
upon Parent receiving updated Required Information that is
Compliant. Notwithstanding the foregoing, the Marketing Period
shall end on any earlier date that is the date on which the Debt
Financing otherwise is obtained. Subject to the terms of this
Agreement and Applicable Law, Parent may commence its marketing
of the offering(s) of debt securities contemplated by the Debt
Financing Commitments at any time after the date of this
Agreement. For purposes of this Agreement,
Required
Information
shall mean, as of any date, (i) such
financial statements, financial data, audit reports and other
pertinent information regarding the Company and its Subsidiaries
of the type required by SEC
Regulation S-X
and SEC
Regulation S-K
under the 1933 Act (including pro forma financial
information, provided that it is understood that assumptions
underlying the pro forma adjustments to be made are the
responsibility of Parent) for registered offerings of debt
securities of the type contemplated by the Debt Financing
Commitment, to the extent the same is of the type and form
customarily included, under current market practice, in private
placements under Rule 144A under the 1933 Act to
consummate the offering (provided that in no circumstance shall
the Company be required to provide subsidiary financial
statements or any other information of the type required by
Rule 3-10
or
Rule 3-16
of
Regulation S-X,
Compensation Disclosure and Analysis required by
Regulation S-K
Item 402(b) or other information customarily excluded from
a Rule 144A offering memorandum), and (ii) such other
information and data as are otherwise necessary in order to
receive customary comfort letters with respect to
the financial statements and data referred to in clause (i)
of this definition (including negative assurance
comfort) from the independent auditors of the Company and its
Subsidiaries on any date during the relevant period. Parent
shall keep the Company informed on a reasonably current basis in
reasonable detail of the status of its efforts to arrange the
Debt Financing and concurrently provide copies of all material
documents provided to the lenders or otherwise related to the
Debt Financing to the Company.
A-35
(c) Parent and Merger Subsidiary acknowledge and
agree that the obtaining of the Financing, or any alternative
financing, is not a condition to Closing and reaffirm their
obligation to consummate the transactions contemplated by this
Agreement irrespective and independently of the availability of
the Financing or any alternative financing, subject to
fulfillment or waiver of the conditions set forth in
Article 9 and subject further to the provisions of
Section 11.04(e) and Section 11.13. In the event that
all or any portion of the Debt Financing to be obtained through
the issuance of the Senior Notes as contemplated by the Debt
Financing Commitments has not been obtained on or prior to the
Closing, Parent shall use its reasonable best efforts to cause,
no later than the Closing, the senior secured credit facility
contemplated by the Debt Financing Commitments to be drawn and
the proceeds of such credit facility to be used to replace such
portion of the Senior Notes not issued at Closing.
Section
6.06.
FIRPTA
Certificate.
Pursuant to Treasury Regulation.
§ 1.897-2(h) and Treasury Regulation.
§ 1.1445-2(c)(3), on or prior to the Closing Date, the
Company shall furnish to Parent a statement certifying that the
Company is not a U.S. real property interest because the
Company is not and has not been a United States real
property holding corporation (within the meaning of
Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
ARTICLE 7
Covenants
of Parent
Section
7.01.
Conduct of
Parent.
From the date of this Agreement until the
Effective Time, except with the Companys prior written
consent, Parent shall not take any action that would make any
representation or warranty of Parent hereunder inaccurate in any
material respect at, or as of any time before, the Effective
Time or would materially delay the Closing.
Section
7.02.
Obligations of Merger
Subsidiary.
Parent shall take all action
necessary to cause Merger Subsidiary to perform its obligations
under this Agreement and to consummate the Merger on the terms
and conditions set forth in this Agreement.
Section
7.03.
Voting of
Shares.
Parent shall vote all shares of Company
Common Stock beneficially owned by it or any of its Subsidiaries
in favor of adoption of this Agreement at the Company
Shareholder Meeting.
Section
7.04.
Director and Officer
Liability.
Parent shall cause the Surviving
Corporation, and the Surviving Corporation hereby agrees, to do
the following:
(a) For six years after the Effective Time, Parent
shall cause the Surviving Corporation to indemnify and hold
harmless each current and former officer and director of the
Company and its Subsidiaries and each person who served as a
fiduciary under or with respect to any employee benefit plan
(within the meaning of Section 3(3) of ERISA) (each,
together with such persons heirs, executors or
administrators, an
Indemnified Person
)
against any costs or expenses (including advancing
attorneys fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to
each Indemnified Person to the fullest extent permitted by
Applicable Law; provided, however, that such advance shall be
conditioned upon the Surviving Companys receipt of an
undertaking by or on behalf of the Indemnified Person to repay
such amount if it shall be ultimately determined by final
judgment of a court of competent jurisdiction that the
Indemnified Person is not entitled to be indemnified pursuant to
this Section 7.04(a)), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in
connection with any actual or threatened claim, action, suit,
arbitration, proceeding or investigation in respect of or
arising out of acts or omissions occurring or alleged to have
occurred at or prior to the Effective Time to the fullest extent
permitted by Delaware Law or any other Applicable Law or
provided under the Companys Organizational Documents in
effect on the date hereof; and provided, further, that such
indemnification shall be subject to any limitation imposed from
time to time under Applicable Law.
(b) An Indemnified Person shall notify Parent and the
Surviving Corporation in writing promptly upon learning of any
claim, action, suit, proceeding, investigation or other matter
in respect of which such indemnification may be sought. Parent
and the Surviving Corporation shall have the right, but not the
obligation, to assume and control the defense of (including the
investigation of, and corrective action required
A-36
to be undertaken in response to) any litigation, claim or
proceeding relating to any acts or omissions covered under this
Section 7.04 with counsel reasonably selected by Parent or
the Surviving Corporation (and, if Parent or the Surviving
Corporation shall have assumed such defense, it shall not be
liable for the fees or expenses of any separate counsel retained
by the Indemnified Person); provided, however, that an
Indemnified Person shall be permitted to participate in the
defense thereof at its own expense; and provided further,
however, that Parent or the Surviving Corporation shall not be
liable for any settlement effected without its written consent.
(c) Parent shall cause the Surviving Corporation to
continue in full force and effect for a period of six years from
the Effective Time the provisions in existence in the
Companys and its Subsidiaries Organizational
Documents in effect on the date of this Agreement regarding
elimination of liability of directors, indemnification and
exculpation of officers, directors and employees and advancement
of expenses.
(d) For six years after the Effective Time, Parent
shall cause the Surviving Corporation to provide officers
and directors liability, fiduciary liability and similar
insurance (collectively,
D&O Insurance
)
in respect of acts or omissions occurring prior to the Effective
Time covering each Indemnified Person covered as of the date of
this Agreement by the Companys D&O Insurance policies
on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date of this
Agreement, as well as covering claims brought against each
Indemnified Person under ERISA (or a six-year prepaid tail
policy providing coverage benefits and terms no less
favorable to the Indemnified Persons than the Companys
current such policy as well as covering claims brought against
each Indemnified Person under ERISA; for the avoidance of doubt,
at the request of the Company, Parent shall purchase such
tail policy prior to the Effective Time, subject to
the approval of the Company of the insurance carrier and the
terms of such policy (such consent not be unreasonably withheld,
delayed or conditioned), and, in such case, Parent shall cause
such policy to be in full force and effect for its full term,
and cause all obligations thereunder to be honored by the
Surviving Corporation);
provided
that, in
satisfying its obligation under this Section 7.04(d),
Parent shall not be obligated to pay annual premiums in the
aggregate in excess of 300% of the amount per annum the Company
paid in its last full fiscal year, which amount the Company has
disclosed to Parent prior to the date of this Agreement and
provide
d further
that, if the aggregate annual premiums
of such insurance coverage exceed such amount, Parent shall be
obligated to obtain a policy with the greatest coverage
available, with respect to matters occurring prior to the
Effective Time, for a cost not exceeding such amount.
(e) If Parent, the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges
into any other Person and shall not be the continuing or the
Surviving Corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such
case, to the extent necessary, proper provision shall be made so
that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, shall assume the obligations
set forth in this Section 7.04.
(f) The rights of each Indemnified Person under this
Section 7.04 shall be in addition to any rights such Person
may have under the Organizational Documents of the Company or
any of its Subsidiaries, or under Delaware Law or any other
Applicable Law or under any agreement of any Indemnified Person
with the Company or any of its Subsidiaries. These rights shall
survive consummation of the Merger and are intended to benefit,
and shall be enforceable by, each Indemnified Person.
Section
7.05.
Employee Matters
.
(a) Parent agrees that, during the period commencing
at the Effective Time and ending on the first anniversary of the
Effective Time, the employees of the Company and its
Subsidiaries as of the Effective Time who remain employees of
the Surviving Corporation or any of its Subsidiaries following
the Effective Time (the
Current Employees
)
will be provided with (i) base salary and, subject to
Section 7.05(b), bonus opportunities (including annual and
quarterly bonus opportunities and long-term incentive
opportunities) which are no less favorable in the aggregate than
the aggregate base salary and bonus opportunities provided by
the Company and its Subsidiaries immediately prior to the
Effective Time, (ii) retirement and welfare benefits and
perquisites (excluding defined benefit pension, retiree medical
and life insurance, and equity and equity based benefits) that
are substantially comparable in the aggregate to the retirement
and welfare benefits and perquisites provided by the Company and
its Subsidiaries immediately prior to the Effective Time and
(iii) severance benefits that are
A-37
substantially comparable in the aggregate to those set forth in
any employment or severance agreement between the Company and
any such Current Employee or any severance policy or practice of
the Company or its Subsidiaries (as applicable) with respect to
the Current Employees in effect on the date hereof listed on
Section 7.05 of the Company Disclosure Schedule and made
available to Parent.
(b) Parent shall make payment of the amounts payable
to each employee of the Company or any of its Subsidiaries under
the Companys 2010 annual incentive plan at the time
bonuses would otherwise be paid under such plan in accordance
with the terms of such plan, provided that the Board of
Directors shall determine prior to the Effective Time an
estimated bonus pool for 2010 and the allocation thereof based
on then available
2010 year-to-date
financial statements of the Company along with forecasts for any
then remaining portion of calendar year 2010, which amounts (and
the methodology and procedures for determining such amounts)
shall be set forth on Section 7.05(b) of the Company
Disclosure Schedule. Following Closing, the board of directors
of the Surviving Corporation, using the same methodology and
procedures as the Board of Directors used to determine the
estimated bonus pool for 2010 (as set forth on
Section 7.05(b) of the Company Disclosure Schedule) shall
determine the final amount of the bonus pool based on the
audited 2010 financial statements of the Company, and the final
bonus pool shall be allocated, as appropriate, on a pro rata
basis such that the proportionate allocations to each employee
shall not be adjusted. For purposes of determining the bonus
pool,
EBITDA
shall be determined as set forth
on Section 7.05(b)of the Company Disclosure Schedule.
(c) At the Effective Time, each award under the
Companys long term cash incentive arrangements, including
any restricted cash awards and similar arrangements, shall vest
100% and become free of any restrictions, and shall, as of the
Effective Time, be payable in full to each individual with an
outstanding award or grant under any such award agreement in the
amounts set forth for each such individual on
Section 7.05(c) of the Company Disclosure Schedule, and all
such amounts shall be paid as promptly as practicable following
the Effective Time (but in no event later than the date of
payment with respect to the Company Stock Options under
Section 2.05(a)).
(d) At the Effective Time, each stock unit in respect
of a share of Company Common Stock issued under the Director
Deferred Fee Plan shall be assumed by Parent and distributable
in accordance with and in the time and manner set forth under
the terms of the Director Deferred Fee Plan.
(e) With respect to any employee benefit plan in
which any Current Employee first becomes eligible to
participate, on or after the Effective Time (the
New
Company Plans
), Parent shall: (i) use reasonable
best efforts to cause its third-party insurance providers or
third-party administrators to waive all pre-existing conditions,
exclusions and waiting periods with respect to participation and
coverage requirements applicable to such Current Employee under
any New Company Plans which provide medical benefits and in
which such Current Employee may be eligible to participate after
the Effective Time, but only to the extent waived or otherwise
met under an analogous Employee Plan, and (ii) recognize
service of Current Employees accrued prior to the Effective Time
(to the extent such service was recognized by the Company and
its Subsidiaries under Employee Plans) as if such service were
with Parent and its Subsidiaries for purposes of eligibility to
participate in and vesting credit (but not for the purposes of
benefit accruals) under any New Company Plan in which such
Current Employees may be eligible to participate after the
Effective Time; provided, however, that in no event shall any
such credit be given to the extent it would result in the
duplication of benefits for the same period of service.
(f) No provision of this Section 7.05
(i) creates any third-party beneficiary or other rights,
including any rights of continued employment or rights to a
particular term of employment, for any employee of the Company
or its Subsidiaries (including any beneficiary or dependent
thereof) other than Parent, the Company and their respective
successors and assigns, (ii) constitutes an employment
agreement or an amendment to or adoption of any employee benefit
plan of or by any member of Parent, the Company or their
Subsidiaries, or (iii) shall alter or limit the ability of
Parent, the Company or any of their respective Subsidiaries to
amend, modify or terminate any benefit plan, program, agreement
or arrangement at any time assumed, established, sponsored or
maintained by any of them in accordance with the terms of such
plan, program, agreement or arrangement and applicable law.
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ARTICLE 8
Covenants
of Parent and the Company
Section
8.01.
Reasonable Best Efforts
.
(a) Subject to the terms and conditions of this
Agreement, the Company and Parent shall use their reasonable
best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or
advisable under Applicable Law to consummate in the most
expeditious manner possible the transactions contemplated by
this Agreement, including (i) preparing and filing as
promptly as practicable with any Governmental Authority or other
third party all documentation to effect all necessary filings,
notices, petitions, statements, registrations, submissions of
information, applications and other documents, (ii) taking
all appropriate actions, and doing, or causing to be done, all
things necessary, proper or advisable under Applicable Laws to
consummate and make effective the transactions contemplated by
this Agreement, including using its reasonable best efforts to
obtain and maintain all approvals, consents, registrations,
permits, licenses, certificates, variances, exemptions, orders,
franchises, authorizations and other confirmations of all
Governmental Authorities or other third parties that are
necessary, proper or advisable to consummate the transactions
contemplated by this Agreement and to fulfill the conditions to
the transactions contemplated by this Agreement,
(iii) defending any actions, suits, claims, investigations
or proceedings threatened or commenced by any Governmental
Authority relating to the transactions contemplated by this
Agreement, including seeking to have any stay, temporary
restraining order or preliminary injunction entered by any
Governmental Authority vacated or reversed, and
(iv) cooperating to the extent reasonable with the other
parties hereto in their efforts to comply with their obligations
under this Agreement.
(b) In furtherance and not in limitation of the
foregoing, each of Parent and the Company shall make an
appropriate filing of a Notification and Report Form pursuant to
the HSR Act with respect to the transactions contemplated hereby
and all other filings required (1) under any applicable
non-US antitrust or competition laws and (2) under any
other applicable competition, merger control, antitrust or
similar law that the Company and Parent deem advisable or
appropriate with respect to the transactions contemplated hereby
as promptly as practicable and in any event within ten Business
Days of the date of this Agreement and to supply as promptly as
practicable any additional information and documentary material
that may be requested pursuant to the HSR Act and to use their
reasonable best efforts to take all other actions necessary to
cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable. In addition,
Parent shall use its reasonable best efforts to take or cause to
be taken all actions necessary, proper or advisable to obtain
any consent, waiver, approval or authorizations relating to the
HSR Act or similar non-US laws that are required for the
consummation of the transactions contemplated by this Agreement,
which efforts shall include, without limitation, the proffer by
Parent of its willingness to accept an order providing for the
divestiture by Parent of such of its assets and businesses as
are necessary to fully consummate the transactions contemplated
by this Agreement, and an offer to hold separate such assets and
businesses pending such divestiture; provided, however, that
such efforts shall not include such a proffer
and/or
offer
by Parent if the divestiture or holding separate of assets
contemplated thereby would reasonably be expected to have a
Material Adverse Effect on the Company. In the event that the
FTC or the DOJ or any other Governmental Authority requires the
divestiture or the holding separate by Parent of any assets, no
adjustment shall be made to the Merger Consideration and Parent
shall be required to hold such assets separate, or to divest
them, as the case may be, following the Closing; provided,
however, that Parent shall not be required to divest or hold
separate assets if such divestiture or holding separate of
assets would reasonably be expected to have a Material Adverse
Effect on the Company. Notwithstanding this Section 8.01 or
any other provision herein, the Company shall not, without
Parents prior written consent, commit to any divestiture
or agree to any restriction on its business that would
reasonably be expected to have a Material Adverse Effect on the
Company.
Section
8.02.
Certain Filings
.
(a) The Company and Parent shall cooperate with one
another (i) in connection with the preparation of the
Company Proxy Statement, (ii) in determining whether any
action by or in respect of, or filing with, any Governmental
Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material
Contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (iii) in
taking such actions or making any such filings, furnishing
information required in
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connection therewith or with the Company Proxy Statement and
seeking timely to obtain any such actions, consents, approvals
or waivers.
(b) Each of Parent and the Company shall promptly
notify the other party of any communication it receives from any
Governmental Authority relating to the matters that are the
subject of this Agreement and permit the other party to review
in advance any proposed communication by such party to any
Governmental Authority and shall provide each other with copies
of all correspondence, filings or communications between them or
any of their representatives and any Governmental Authority.
Neither Parent nor the Company shall agree to participate in any
meeting with any Governmental Authority in respect of any such
filings, investigation or other inquiry unless it consults with
the other party in advance and, to the extent permitted by such
Governmental Authority, gives the other party the opportunity to
attend and participate at such meeting.
Section
8.03.
Public
Announcements.
Except with respect to the
announcement of any Adverse Recommendation Change (or proposed
Adverse Recommendation Change), Parent and the Company shall
consult with each other before issuing any press release, making
any other public statement or scheduling any press conference or
conference call with investors or analysts with respect to this
Agreement or the transactions contemplated hereby and, except as
may be required by Applicable Law or any listing agreement with
or rule of any national securities exchange or association,
shall not issue any such press release, make any such other
public statement or schedule any such press conference or
conference call before such consultation.
Section
8.04.
Stock
Exchange De-listing.
Prior to the Closing Date,
the Company shall cooperate with Parent and use its reasonable
best efforts to take, or cause to be taken, all actions, and do
or cause to be done all things, reasonably necessary, proper or
advisable on its part under Applicable Laws and rules and
policies of NASDAQ to enable the de-listing by the Surviving
Corporation of the Company Common Stock from NASDAQ and the
deregistration of the Company Common Stock under the
1934 Act as promptly as practicable after the Effective
Time, and in any event no more than ten calendar days after the
Closing Date.
Section
8.05.
Further
Assurances.
At and after the Effective Time, the
officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of
the Company or Merger Subsidiary, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on
behalf of the Company or Merger Subsidiary, any other actions
and things to vest, perfect or confirm of record or otherwise in
the Surviving Corporation any and all right, title and interest
in, to and under any of the rights, properties or assets of the
Company acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger.
Section
8.06.
Rule 16b-3.
The
Company shall, and shall be permitted to, take all actions as
may be reasonably requested by any party hereto to cause any
dispositions of equity securities of the Company by each
individual who is a director or officer of the Company, and who
would otherwise be subject to
Rule 16b-3
under the 1934 Act, to be exempt under
Rule 16b-3
under the 1934 Act.
Section
8.07.
Shareholder
Litigation.
The Company shall not settle or offer
to settle any shareholder litigation against the Company
and/or
its
directors or executive officers relating to this Agreement and
the transactions contemplated hereunder, whether commenced prior
to or after the execution and delivery of this Agreement,
without Parents prior written consent (such consent not to
be unreasonably withheld, delayed or conditioned), and the
Company shall use its reasonable best efforts to keep Parent
reasonably informed with respect to status of, and any material
developments in, any such litigation.
Section
8.08.
Notices
of Certain Events.
Each of the Company and Parent
shall promptly notify the other of:
(a) any notice or other communication from any
Governmental Authority in connection with the transactions
contemplated by this Agreement
(b) any action, suit, claim or proceeding commenced
or, to the knowledge of the parties, threatened against any
party in connection with this Agreement and the transactions
contemplated hereunder.
(c) any inaccuracy of any representation or warranty
contained in this Agreement at any time during the term of this
Agreement that could reasonably be expected to give rise to a
risk of termination set forth in Section 10.01(c)(ii) or
Section 10.01(d)(ii), as the case may be; and
A-40
(d) any failure of that party to comply with or
satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder that could reasonably be expected
to give rise to a right of termination set forth in
Section 10.01(c)(ii) or Section 10.01(d)(ii), as the
case may be.
provided, however,
that the delivery of any notice
pursuant to this Section 8.08 shall not limit or otherwise
affect the remedies available hereunder to the party receiving
that notice.
ARTICLE 9
Conditions
to the Merger
Section
9.01.
Conditions
to the Obligations of Each Party.
The obligations
of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction (or, to the extent
permissible, waiver) of the following conditions:
(a) the Company Shareholder Approval shall have been
obtained in accordance with Delaware Law; and
(b) no Applicable Law shall (i) prohibit the
consummation of the Merger or (ii) render the consummation
of the Merger illegal.
(c) (i) The applicable waiting period, together
with any extensions thereof, under the HSR Act shall have
expired or been terminated and (ii) all other
authorizations, approvals, consents, or expirations of
applicable waiting periods required to be obtained under any
Applicable Law shall have been obtained or occurred, except
where the failure to obtain such authorizations, approvals or
consents would not have or reasonably be expected to have a
Material Adverse Effect.
Section
9.02.
Conditions
to the Obligations of Parent and Merger
Subsidiary.
The obligations of Parent and Merger
Subsidiary to consummate the Merger are subject to the
satisfaction (or, to the extent permissible, waiver by Parent)
of the following further conditions:
(a) (i) the Company shall have performed in all
material respects all of its obligations hereunder required to
be performed by it at or prior to the Effective Time, (ii)
(A) the representations and warranties of the Company
contained in Section 4.05 (Capitalization) shall be true
and correct, other than inaccuracies that do not, individually
or in the aggregate, require payments pursuant to Article 2
in excess of $500,000, at and as of the date of this Agreement
and as of the Effective Time as if made at and as of such time
(or, in the case of those representations and warranties that
are made as of a particular date or period, as of such date or
period), (B) the representations and warranties of the
Company contained in Section 4.01 (Corporate Existence and
Power), Section 4.02 (Corporate Authorization),
Section 4.10(i) (Absence of Certain Changes),
Section 4.11 (No Undisclosed Material Liabilities),
Section 4.20 (Antitakeover Statutes) and Section 4.22
(Finders Fees) shall be true and correct in all material
respects at and as of the date of this Agreement and as of the
Effective Time as if made at and as of such time (or, in the
case of those representations and warranties that are made as of
a particular date or period, as of such date or period) and
(C) the other the representations and warranties of the
Company contained in this Agreement shall be true and correct
(disregarding all qualifications or limitations as to
materially, Material Adverse Effect and
words of similar import set forth therein) at and as of the date
of this Agreement and as of the Effective Time as if made at and
as of such time (or, in the case of those representations and
warranties that are made as of a particular date or period, as
of such date or period), except where the failure of such
representations and warranties to be so true and correct would
not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company; and
(iii) Parent shall have received a certificate signed by
the chief executive officer or chief financial officer of the
Company to the foregoing effect; and
(b) since the date of this Agreement, there shall not
have occurred and be continuing any event, occurrence,
revelation or development of a state of circumstances or facts
which, individually or in the aggregate, has had a Material
Adverse Effect on the Company;
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Section
9.03.
Conditions
to the Obligations of the Company.
The
obligations of the Company to consummate the Merger are subject
to the satisfaction (or, to the extent permissible, waiver by
the Company) of the following further conditions:
(a) each of Parent and Merger Subsidiary shall have
performed in all material respects all of its obligations
hereunder required to be performed by it at or prior to the
Effective Time;
(b) the representations and warranties of Parent
contained in this Agreement shall be true and correct
(disregarding all qualifications or limitations as to
materially, Material Adverse Effect and
words of similar import set forth therein) at and as of the date
of this Agreement and as of the Effective Time as if made at and
as of such time (or, in the case of those representations and
warranties that are made as of a particular date or period, as
of such date or period), except where the failure of such
representations and warranties to be so true and correct would
not reasonably be expected to, individually or in the aggregate,
materially delay or impair the ability of Parent or Merger
Subsidiary to consummate the transactions contemplated hereby on
a timely basis; and
(c) the Company shall have received a certificate
signed by the chief executive officer or chief financial officer
of Parent to the effect of clauses (a) and (b) above.
ARTICLE 10
Termination
Section
10.01.
Termination.
This
Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the shareholders of the Company):
(a) by mutual written agreement of the Company and
Parent;
(b) by either the Company or Parent, if:
(i) the Merger has not been consummated on or before
April 5, 2011 (the
End Date
); provided,
that the right to terminate this Agreement pursuant to this
Section 10.01(b)(i) shall not be available to any party
whose breach of any provision of this Agreement results in the
failure of the Merger to be consummated by such time;
(ii) there shall be any Applicable Law that
(A) makes consummation of the Merger illegal or otherwise
prohibited or (B) enjoins the Company or Parent from
consummating the Merger and such enjoinment shall have become
final and nonappealable provided, however, that the party
seeking to terminate this Agreement pursuant to this
Section 10.01(b)(ii) shall have used all reasonable best
efforts as may be required by Section 8.01 to prevent,
oppose and remove such Applicable Law; or
(iii) the Company Shareholder Meeting shall have been
convened and a vote to approve this Agreement shall have been
taken thereat and the Company Shareholder Approval shall not
have been obtained;
(c) by Parent, if:
(i) (A) an Adverse Recommendation Change shall
have occurred; (B) the Company shall have willfully
breached in any material respect any of its obligations under
Section 6.03; (C) if a third party commences a tender
or exchange offer for Company Common Stock that constitutes an
Acquisition Proposal, or otherwise makes an Acquisition Proposal
public, and, within ten Business Days after the public
announcement of the commencement of such tender or exchange
offer, or the public announcement of such Acquisition Proposal,
the Company shall have failed to publicly reaffirm the Company
Board Recommendation; (D) the Company shall have failed to
recommend, in a
Solicitation/Recommendation
Statement on
Schedule 14D-9,
against any Acquisition Proposal subject to Regulation 14D
under the 1934 Act within ten Business Days after the
commencement of such Acquisition Proposal (including, for these
purposes, by taking no position with respect to the acceptance
by the Companys stockholders of a tender offer or exchange
offer
A-42
within such period, which shall constitute a failure to
recommend against such offer); or (E) the Company shall
have failed to include in the Company Proxy Statement the
Company Board Recommendation;
(ii) a breach of any representation or warranty or
failure to perform any covenant or agreement on the part of the
Company set forth in this Agreement shall have occurred
(A) that would cause the condition set forth in
Section 9.02(a) not to be satisfied; and (B) such
breach or failure is not cured by the Company by the earlier of
(x) the End Date or (y) thirty calendar days following
receipt by the Company of written notice of such breach or
failure provided that, at the time of the delivery of such
written notice, Parent shall not be in material breach of its
obligations under this Agreement; or
(iii) if a Material Adverse Effect shall have
occurred since the date of this Agreement that is not capable of
being cured prior to the End Date.
(d) by the Company if:
(i) the Board of Directors authorizes the Company,
subject to complying with the terms of this Agreement, to enter
into a written agreement concerning an Acquisition Proposal not
resulting from any breach by the Company of its obligations
under Section 6.03 that the Board of Directors determines
in good faith (after consultation with a financial advisor of
nationally recognized reputation and outside legal counsel)
constitutes a Superior Proposal;
provided
, that
(x) the Company shall have paid any amounts due pursuant to
Section 11.04(b) prior to, or concurrently with, such
termination and (y) the Company enters into a definitive
agreement providing for the implementation of such Superior
Proposal concurrently with such termination; and
provided
,
further
, that, prior to any such
termination, (A) the Company notifies Parent in writing of
its intention to terminate this Agreement and to enter into a
binding written agreement concerning such Superior Proposal,
attaching the most current version of such agreement to such
notice (a
Superior Proposal Notice
);
(B) during the three Business Day period following
Parents receipt of a Superior Proposal Notice (the
Notice Period
), the Company shall have
offered to negotiate with (and, if accepted, negotiated in good
faith with), and shall have caused its respective financial and
legal advisors to offer to negotiate with (and, if accepted,
negotiate in good faith with), Parent in making adjustments to
the terms and conditions of this Agreement; (C) the Board
shall have determined in good faith, after the end of such three
Business Day period, and after considering the results of such
negotiations and the revised proposals made by Parent, if any,
that the Superior Proposal giving rise to such notice continues
to be a Superior Proposal; provided, however, that any
amendment, supplement or modification to the financial terms or
other material terms of any Acquisition Proposal shall be deemed
a new Acquisition Proposal and the Company may not terminate
this Agreement pursuant to this Section 10.01(d)(i) unless
the Company has complied with the requirements of this
Section 10.01(d)(i) with respect to such new Acquisition
Proposal, including sending a Superior Proposal Notice with
respect to such new Acquisition Proposal and offering to
negotiate for two Business Days from such new Superior
Proposal Notice; and (D) the Board shall have
determined in good faith, after consulting with and receiving
the advice of outside counsel, that the failure to terminate
this Agreement would reasonably be expected to be inconsistent
with its fiduciary obligations to the Companys
stockholders under Delaware Law;
(ii) a breach of any representation or warranty or
failure to perform any covenant or agreement on the part of
Parent or Merger Subsidiary set forth in this Agreement shall
have occurred (A) that would cause the condition set forth
in Section 9.03(a) or Section 9.03(b) not to be
satisfied; and (B) such breach or failure is not cured by
the earlier of (x) the End Date or (y) thirty calendar
days following receipt by the Company of written notice of such
breach or failure provided that, at the time of the delivery of
such written notice, the Company shall not be in material breach
of its obligations under this Agreement; or
(iii) (A) the Company has given written notice
to Parent that it believes the three Business Day period
contemplated by Section 2.01(b) has commenced and at least
5 Business Days have elapsed from the date of such notice and
(B) Parent and Merger Subsidiary fail to consummate the
transactions contemplated by this Agreement within two Business
Days following the date the Closing should have occurred
pursuant to Section 2.01(b); provided that during such two
Business Day period following the
A-43
date the Closing should have occurred pursuant to Section
2.01(b), no party shall be entitled to terminate this Agreement
pursuant to Section 10.01(b)(i).
The party desiring to terminate this Agreement pursuant to this
Section 10.01 (other than pursuant to Section 10.01(a)
shall give notice of such termination to the other party,
including a description in reasonable detail of the reasons for
such termination, to the other party in accordance with
Section 11.01, specifying the provision or provisions
hereof pursuant to which such termination is effected.
Section
10.02.
Effect
of Termination.
If this Agreement is terminated
pursuant to Section 10.01, this Agreement, except for
Section 6.04(b), the applicable provisions of this
Section 10.02 and Article 11, shall become void and of
no effect without liability of any party (or any shareholder,
director, officer, employee, agent, consultant or representative
of such party) to the other party hereto;
provided
that,
subject to Section 11.04(e) and Section 11.04(f), if
such termination shall result from the intentional and material
breach by any party of any representation or warranty, covenant
or agreement contained herein, such party shall be fully liable
for any and all liabilities and damages incurred or suffered by
the other party as a result of such breach.
ARTICLE 11
Miscellaneous
Section
11.01.
Notices.
All
notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Parent or Merger Subsidiary, to:
Razor Holdco Inc.
c/o IPC
Manager III, L.P.
277 Park Avenue,
39
th
Floor
New York, New York 10172
Attention: Eva Mongiardo, Chief Financial Officer
Facsimile No.:
(212) 551-4524
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: David Zeltner, Matthew J. Gilroy
Facsimile:
212-310-8007
if to the Company, to:
Thermadyne Holdings Corporation
16052 Swingley Ridge Rd., Suite 300
Chesterfield, MO 63017
Attention: Paul D. Melnuk Chairman of the Board
Facsimile No.:
636-728-3010
with copies to:
Thermadyne Holdings Corporation
16052 Swingley Ridge Rd., Suite 300
Chesterfield, MO 63017
Attention: Nick H. Varsam General Counsel
Facsimile No.:
636-728-3010
A-44
with a copy to:
Bryan Cave LLP
211 North Broadway, Suite 3600
St. Louis, Missouri 63102
Attention: William F. Seabaugh
Facsimile No.:
314-552-8450
or to such other address or facsimile number as such party may
hereafter specify for the purpose by notice to the other parties
hereto. All such notices, requests and other communications
shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. on a Business Day in
the place of receipt. Otherwise, any such notice, request or
communication shall be deemed to have been received on the next
succeeding Business Day in the place of receipt.
Section
11.02.
Non-Survival
of Representations and Warranties.
The
representations and warranties contained herein and in any
certificate or other writing delivered pursuant hereto shall not
survive the Effective Time, or except as otherwise provided in
Section 10.02, upon termination of this Agreement.
Section
11.03.
Amendments
and Waivers.
(a) Any provision of this Agreement may be amended or
waived prior to the Effective Time if, but only if, such
amendment or waiver is in writing and is signed, in the case of
an amendment, by each party to this Agreement or, in the case of
a waiver, by each party against whom the waiver is to be
effective;
provided
that, after the Company Shareholder
Approval there shall be no amendment or waiver that pursuant to
Delaware Law requires further Company Shareholder Approval
without their further approval.
(b) No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any
rights or remedies provided by Applicable Law.
Section
11.04.
Expenses
.
(a) Except as otherwise provided herein, all costs
and expenses incurred in connection with this Agreement shall be
paid by the party incurring such cost or expense; provided,
however, Parent and the Company shall equally bear the filing
fees of the Notification and Report Forms filed under the HSR
Act and any premerger notification and reports filed under
similar applicable antitrust law of any non United States
Governmental Authority.
(b) If a Company Payment Event (as hereinafter
defined) occurs, the Company shall pay IPC Manager III, L.P. (by
wire transfer of immediately available funds), if pursuant to
clause (x) below, simultaneously with the occurrence of
such termination, if pursuant to clause (y) below, within
two Business Days after such termination, or, if pursuant to
clause (z) below, simultaneously following the entry into a
written agreement in respect of, or if earlier, the consummation
of the Acquisition Proposal referred to in such Company Payment
Event, a fee equal to $6,440,000 (the
Company
Termination Fee
), plus the documented reasonable
out-of-pocket
fees and expenses incurred by Parent and Merger Subsidiary in
connection with this Agreement or the transactions contemplated
hereby up to an aggregate of $2 million.
Company Payment Event
means the termination
of this Agreement pursuant to (x) Section 10.01(d)(i),
(y) Section 10.01(c)(i) or
(z) Section 10.01(b)(i), Section 10.01(b)(iii) or
Section 10.01(c)(ii) but only if in the case of clause (z)
(A) prior to such termination, an Acquisition Proposal
shall have been made to the shareholders of the Company
generally or shall have otherwise been publicly disclosed or
proposed by a Third Party, and (B) within 12 months
following the date of such termination, the Company enters into
a written agreement in respect of, or consummates a transaction
described in the definition of Acquisition Proposal
(provided, that for purposes of this definition only, all
references to 20% in the definition of Acquisition
Proposal shall be deemed instead to be 50%).
A-45
(c) If a Parent Payment Event (as hereinafter
defined) occurs, Parent shall pay the Company (by wire transfer
of immediately available funds) as promptly as practical (and,
in any event, within two Business Days following such
termination) a fee (the
Parent Termination
Fee
) equal to $25,000,000.
Parent Payment Event
means the termination of
this Agreement pursuant to (x)Section 10.01(d)(ii) or
(y) Section 10.01(d)(iii).
(d) Each of the Company, Parent and Merger Subsidiary
acknowledges that the agreements contained in this
Section 11.04 are an integral part of the transactions
contemplated by this Agreement and that, without these
agreements, none of the parties would enter into this Agreement.
In the event that the Company shall fail to pay the Company
Termination Fee when due or Parent or Merger Subsidiary shall
fail to pay the Parent Termination Fee when due, the Company or
Parent and Merger Subsidiary, as the case may be, shall
reimburse the other party for all reasonable expenses actually
incurred or accrued by such other party (including reasonable
expenses of counsel) in connection with the collection under and
enforcement of this Section 11.04. The parties hereto agree
that in no event shall (i) Parent be required to pay the
Parent Termination Fee on more than one occasion or
(ii) the Company be required to pay the Company Termination
Fee on more than one occasion.
(e) Notwithstanding anything to the contrary in this
Agreement, if Parent and Merger Subsidiary fail to effect the
Closing for any or no reason or otherwise breach this Agreement
(whether willfully, intentionally, unintentionally or otherwise)
or fail to perform hereunder (whether willfully, intentionally,
unintentionally or otherwise), then the Companys sole and
exclusive remedy (whether at law, in equity, in contract, in
tort or otherwise) against Parent, Merger Subsidiary, the
Guarantor and any of their respective former, current and future
direct or indirect equity holders, controlling persons,
shareholders, directors, officers, employees, agents,
Affiliates, members, financing sources (including the parties to
the Financing Commitments), managers, general or limited
partners or assignees (each a
Parent Related
Party
and collectively, the
Parent Related
Parties
) or any Parent Related Party of any Parent
Related Party for any breach, loss or damage shall be to
terminate this Agreement and receive payment of the Parent
Termination Fee, in each case, only to the extent provided by
Section 11.04(c) or pursuant to the Guarantee, as
applicable; and upon payment of such amount, no Person shall
have any rights or claims against any of the Parent Related
Parties or any Parent Related Party of any Parent Related Party
under this Agreement, the Guarantee, the Financing Commitments
or otherwise, whether at law or equity, in contract, in tort or
otherwise, and none of the Parent Related Parties or any Parent
Related Party of any Parent Related Party shall have any further
liability or obligation relating to or arising out of this
Agreement or the transactions contemplated by this Agreement.
For the avoidance of doubt, in no event shall Parent and Merger
Subsidiary, the Parent Related Parties or any Parent Related
Party of any Parent Related Party have any liability under or in
respect of this Agreement, the Guarantee, the Financing
Commitments or the transactions related hereto or thereto in
excess of an aggregate amount equal to the Parent Termination
Fee.
(f) If the Agreement is terminated in circumstances
in which the Company is required to pay the Company Termination
Fee to IPC Manager III, L.P. pursuant to Section 11.04(b)
of this Agreement, Parents and Merger Subsidiarys
sole and exclusive remedy (whether at law, in equity, in
contract, in tort or otherwise), without prejudice to the remedy
of specific performance set forth in Section 11.13, against
the Company for any breach, loss or damage shall be to receive
payment of the Company Termination Fee; and upon payment of such
amount, no Person shall have any rights or claims against the
Company and its Affiliates and any of their respective former,
current and future direct or indirect equity holders,
controlling persons, shareholders, directors, officers,
employees, agents, Affiliates, members, managers, general or
limited partners or assignees (each a
Company Related
Party
and collectively the
Company Related
Parties
) under this Agreement or otherwise, whether at
law or equity, in contract, in tort or otherwise, and none of
the Company Related Parties or any Company Related Party of any
Company Related Party shall have any further liability or
obligation relating to or arising out of this Agreement or the
transactions contemplated by this Agreement. For the avoidance
of doubt and subject only to the possible entitlement to
specific performance as set forth in Section 11.13 with
respect to Parent and Merger Subsidiary, if the Company
Termination Fee is paid pursuant to Section 11.04(b), in no
event shall the Company, its Affiliates, the Company Related
Parties or any Company Related Party of any Company Related
Party have any liability under or in respect of this Agreement
or the transactions related hereto in excess of an aggregate
amount equal to the Company Termination Fee.
A-46
Section
11.05.
Disclosure
Schedule References.
If and to the extent
any information required to be furnished in any Section of the
Company Disclosure Schedule is contained in this Agreement or in
any other Section of the Company Disclosure Schedule, such
information shall be deemed to be included in all Sections of
the Company Disclosure Schedule in which the information would
otherwise be required to be included only to the extent that it
is reasonably and readily apparent that such disclosure is
applicable to such other Section. Disclosure of any fact or item
in any Section of the Company Disclosure Schedules shall not be
considered an admission by the disclosing party that such item
or fact (or any non-disclosed item or information of comparable
or greater significance) represents a material exception or
fact, event or circumstance or that such item has had or would
reasonably be expected to have a Material Adverse Effect on the
Company or Parent, as the case may be, or that such item or fact
will in fact exceed any applicable threshold limitation set
forth in the Agreement and shall not be construed as an
admission by the disclosing party of any non-compliance with, or
violation of, any Third Party rights (including but not limited
to any Intellectual Property rights) or any Applicable Law of
any Governmental Authority, such disclosures having been made
solely for the purposes of creating exceptions to the
representations made herein or of disclosing any information
required to be disclosed under the Agreement.
Section
11.06.
Binding
Effect; Benefit; Assignment.
(a) The provisions of this Agreement shall be binding
upon and, except as provided in Section 7.04, shall inure
to the benefit of the parties hereto and their respective
successors and assigns. Except as (i) provided in
Section 7.04, (ii) to the extent the Effective Time
occurs, for the rights of holders of Company Common Stock,
Company Restricted Shares and Company Stock Options under
Article 2 of this Agreement on and after the Effective Time
to receive payment therefor, and (iii) with respect to each
of the Persons whose liability is limited in accordance with
Section 11.04(e) and Section 11.04(f) to the extent
provided therein, including, the Parent Related Parties and
Company Related Parties who shall be express third party
beneficiaries of, and shall be entitled to rely on,
Section 11.04(e), Section 11.04(f), Section 11.08
and Section 11.09 and this Section 11.06, no provision
of this Agreement is intended to confer any rights, benefits,
remedies, obligations or liabilities hereunder upon any Person
other than the parties hereto and their respective successors
and assigns.
(b) No party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement
without the prior written consent of each other party hereto;
provided
, that prior to the mailing of the Proxy
Statement to the Companys stockholders, Parent may
designate, by written notice to the Company, another wholly
owned direct or indirect Subsidiary to be a constituent
corporation in lieu of Merger Subsidiary, in which event all
references herein to Merger Subsidiary shall be deemed
references to such other Subsidiary, except that all
representations and warranties made herein with respect to
Merger Subsidiary as of the date of this Agreement shall be
deemed representations and warranties made with respect to such
other Subsidiary as of the date of such designation; provided
that any such designation shall not impede or delay the
consummation of the transactions contemplated by this Agreement
or otherwise materially impede the rights of the stockholders of
the Company under this Agreement.
Section
11.07.
Governing
Law.
This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
applicable to agreements made and to be performed in such state,
without regard to the conflicts of law rules of such state.
Section
11.08.
Jurisdiction.
The
parties hereto agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out
of or in connection with, this Agreement, the Guarantee, the
Financing Commitments or the transactions contemplated hereby or
thereby (including against any third party) shall be brought in
the Delaware Court of Chancery or, if such court shall not have
jurisdiction, any federal court sitting in Delaware, so long as
one of such courts shall have subject matter jurisdiction over
such suit, action or proceeding, and that any cause of action
arising out of this Agreement shall be deemed to have arisen
from a transaction of business in the State of Delaware, and
each of the parties hereby irrevocably consents to the
jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding in any such court
or that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Process in any
such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the
jurisdiction of any
A-47
such court. Without limiting the foregoing, each party agrees
that service of process on such party as provided in
Section 11.01 shall be deemed effective service of process
on such party.
Section
11.09.
WAIVER
OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE GUARANTEE, THE FINANCING COMMITMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (INCLUDING AGAINST ANY PARENT
RELATED PARTY OR COMPANY RELATED PARTY).
Section
11.10.
Counterparts;
Effectiveness.
This Agreement may be signed in
any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto
were upon the same instrument. Delivery of a signed counterpart
of a signature page of this Agreement by facsimile or by PDF
file (portable document format file) shall be as effective as
delivery of a manually signed counterpart of this Agreement.
This Agreement shall become effective when each party hereto
shall have received a counterpart hereof signed by all of the
other parties hereto. Until and unless each party has received a
counterpart hereof signed by the other party hereto, this
Agreement shall have no effect and no party shall have any right
or obligation hereunder (whether by virtue of any other oral or
written agreement or other communication).
Section
11.11.
Entire
Agreement.
This Agreement, the Confidentiality
Agreement and the Guarantee constitute the entire agreement
between the parties with respect to the subject matter thereof
and supersedes all prior agreements and understandings, both
oral and written, between the parties with respect to the
subject matter thereof.
Section
11.12.
Severability.
If
any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other
Governmental Authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions
of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated so long as
the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any
party. Upon such a determination, the parties shall negotiate in
good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent
possible.
Section
11.13.
Specific
Performance.
The parties hereto agree that
irreparable damage would occur if any provision of this
Agreement were not performed by the Company in accordance with
the specific terms hereof or were otherwise breached by the
Company. It is accordingly agreed that Parent and Merger
Subsidiary shall be entitled, without posting a bond or similar
indemnity, to an injunction or injunctions to prevent breaches
of this Agreement or to enforce specifically the performance of
the terms and provisions hereof in any federal court located in
the State of Delaware or any Delaware state court, in addition
to any other remedy to which they are entitled at law or in
equity. The Company agrees that it will not oppose the granting
of an injunction, specific performance and other equitable
relief when expressly available pursuant to the terms of this
Agreement on the basis that Parent and Merger Subsidiary have an
adequate remedy at law or an award of specific performance is
not an appropriate remedy for any reason at law or equity.
Notwithstanding anything to the contrary in this Agreement, the
parties hereto agree that the Company shall not be entitled to
an injunction, specific performance or other equitable relief to
prevent breaches of this Agreement or to enforce specifically
the terms hereof.
A-48
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
RAZOR HOLDCO INC.
|
|
|
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By:
|
/s/ Douglas
R. Korn
Name: Douglas
R. Korn
|
RAZOR MERGER SUB INC.
|
|
|
|
By:
|
/s/ Douglas
R. Korn
Name: Douglas
R. Korn
|
THERMADYNE HOLDINGS CORPORATION
|
|
|
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By:
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/s/ Martin
Quinn
Name: Martin
Quinn
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Title President
A-49
ANNEX I
SECOND
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
THERMADYNE HOLDINGS CORPORATION
THERMADYNE HOLDINGS CORPORATION (the
Corporation
), a corporation organized and
existing under the General Corporation Law of the State of
Delaware (the
DGCL
) does hereby certify as
follows:
The Certificate of Incorporation of the Corporation, as amended
and restated hereby, shall, upon its filing with the Secretary
of State of the State of Delaware, read in its entirety as
follows:
FIRST:
The name of the Corporation is:
Thermadyne Holdings Corporation.
SECOND:
The address of the registered office
of the Corporation in the State of Delaware is 160 Greentree
Drive, Suite 101, Dover, Delaware 19904. The name of the
registered agent of the Corporation at such address is National
Registered Agents, Inc.
THIRD:
The purpose of the Corporation is to
engage in any lawful act or activity for which corporations may
be organized under the DGCL, as from time to time amended.
FOURTH:
The total number of shares of capital
stock which the Corporation shall have authority to issue is
1,000 shares of common stock, par value $0.01 per share.
Except as otherwise provided by law, the shares of stock of the
Corporation may be issued by the Corporation from time to time
in such amounts, for such consideration and for such corporate
purposes as the board of directors of the Corporation (the
Board of Directors
) may from time to time
determine.
FIFTH:
The number of directors of the
Corporation shall be fixed from time to time by the by-laws or
amendment thereof adopted by the Board of Directors. Election of
directors need not be by written ballot.
SIXTH:
In furtherance and not in limitation of
the powers conferred by law, subject to any limitations
contained elsewhere in these articles of incorporation, by-laws
of the Corporation may be adopted, amended or repealed by a
majority of the Board of Directors of the Corporation, but any
by-laws adopted by the Board of Directors may be amended or
repealed by the stockholders entitled to vote thereon.
SEVENTH:
A director of the Corporation shall
not be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the
directors duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or knowing violation of
law, (iii) under Section 174 of the DGCL, or
(iv) for any transaction from which the director derived an
improper personal benefit. Any repeal or amendment of this
Article SEVENTH by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the
Corporation arising from an act or omission occurring prior to
the time of such repeal or amendment. In addition to the
circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of
this Article SEVENTH, a director shall not be liable to the
Corporation or its stockholders to such further extent as
permitted by any law hereafter enacted, including without
limitation any subsequent amendment to the DGCL.
EIGHTH:
The Corporation shall indemnify any
person who was, is, or is threatened to be made a party to a
proceeding (as hereinafter defined) by reason of the fact that
he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the
Corporation, is or was serving at the request of the Corporation
as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or
domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other
enterprise, to the fullest extent permitted under the DGCL, as
the same exists or may hereafter be amended. Such right shall be
a contract right and as such shall run to the benefit of any
director or officer who is elected and accepts the position of
director or officer of the Corporation or elects to continue to
serve as a director or officer of the Corporation while this
Article EIGHTH is in effect. Any repeal or amendment of
this Article EIGHTH shall be prospective only and shall not
limit the rights of any such director or officer or the
obligations of the Corporation with respect to any claim arising
from or related to the services
of such director or officer in any of the foregoing capacities
prior to any such repeal or amendment to this
Article EIGHTH. Such right shall include the right to be
paid by the Corporation expenses incurred in defending any such
proceeding in advance of its final disposition to the maximum
extent permitted under the DGCL, as the same exists or may
hereafter be amended. If a claim for indemnification or
advancement of expenses hereunder is not paid in full by the
Corporation within 60 days after a written claim has been
received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the
unpaid amount of the claim, and if successful in whole or in
part, the claimant shall also be entitled to be paid the
expenses of prosecuting such claim. It shall be a defense to any
such action that such indemnification or advancement of costs of
defense are not permitted under the DGCL, but the burden of
proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its board of directors or
any committee thereof, independent legal counsel, or
stockholders) to have made its determination prior to the
commencement of such action that indemnification of, or
advancement of costs of defense to, the claimant is permissible
in the circumstances nor an actual determination by the
Corporation (including its board of directors or any committee
thereof, independent legal counsel, or stockholders) that such
indemnification or advancement is not permissible shall be a
defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event
of the death of any person having a right of indemnification
under the foregoing provisions, such right shall inure to the
benefit of his or her heirs, executors, administrators, and
personal representatives. The rights conferred above shall not
be exclusive of any other right which any person may have or
hereafter acquire under any statute, by-law, resolution of
stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent
of the Corporation to the fullest extent permitted by law.
As used herein, the term proceeding means any
threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, arbitrative, or
investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to
such an action, suit, or proceeding.
NINTH:
The Corporation expressly elects not to
be governed by Section 203 of the DGCL.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned has duly executed this
Amended and Restated Certificate of Incorporation on
this
day
of ,
20 .
Name:
Title:
SIGNATURE PAGE TO THERMADYNE
HOLDINGS CORPORATION SECOND AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION
ANNEX B
GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
§
262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to
such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor
consented thereto in writing pursuant to § 228 of this
title shall be entitled to an appraisal by the Court of Chancery
of the fair value of the stockholders shares of stock
under the circumstances described in subsections (b) and
(c) of this section. As used in this section, the word
stockholder means a holder of record of stock in a
corporation; the words stock and share
mean and include what is ordinarily meant by those words; and
the words depository receipt mean a receipt or other
instrument issued by a depository representing an interest in 1
or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the
shares of any class or series of stock of a constituent
corporation in a merger or consolidation to be effected pursuant
to § 251 (other than a merger effected pursuant to
§ 251(g) of this title), § 252,
§ 254, § 255, § 256,
§ 257, § 258, § 263 or
§ 264 of this title:
(1) Provided, however, that no appraisal rights under
this section shall be available for the shares of any class or
series of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of the meeting of stockholders to act
upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or
(ii) held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any
shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote
of the stockholders of the surviving corporation as provided in
§ 251(f) of this title.
(2) Notwithstanding paragraph (1) of this
subsection, appraisal rights under this section shall be
available for the shares of any class or series of stock of a
constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
§§ 251, 252, 254, 255, 256, 257, 258, 263 and 264
of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares of stock
(or depository receipts in respect thereof) or depository
receipts at the effective date of the merger or consolidation
will be either listed on a national securities exchange or held
of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.
and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.,
b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary
Delaware corporation party to a merger effected under
§ 253 or § 267 of this title is not owned by
the parent immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware
corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as
a result of an amendment to its certificate of incorporation,
any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all
of the assets of the corporation. If the certificate of
incorporation contains such a provision, the
B-1
procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply
as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record
date for notice of such meeting (or such members who received
notice in accordance with § 255(c) of this title) with
respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) of this section that
appraisal rights are available for any or all of the shares of
the constituent corporations, and shall include in such notice a
copy of this section and, if 1 of the constituent corporations
is a nonstock corporation, a copy of § 114 of this
title. Each stockholder electing to demand the appraisal of such
stockholders shares shall deliver to the corporation,
before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholders shares.
Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such
stockholders shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection
and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved
pursuant to § 228, § 253, or § 267
of this title, then either a constituent corporation before the
effective date of the merger or consolidation or the surviving
or resulting corporation within 10 days thereafter shall
notify each of the holders of any class or series of stock of
such constituent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such
class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section and, if 1 of
the constituent corporations is a nonstock corporation, a copy
of § 114 of this title. Such notice may, and, if given
on or after the effective date of the merger or consolidation,
shall, also notify such stockholders of the effective date of
the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or
resulting corporation the appraisal of such holders
shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such
holders shares. If such notice did not notify stockholders
of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second
notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of
such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or
(ii) the surviving or resulting corporation shall send such
a second notice to all such holders on or within 10 days
after such effective date; provided, however, that if such
second notice is sent more than 20 days following the
sending of the first notice, such second notice need only be
sent to each stockholder who is entitled to appraisal rights and
who has demanded appraisal of such holders shares in
accordance with this subsection. An affidavit of the secretary
or assistant secretary or of the transfer agent of the
corporation that is required to give either notice that such
notice has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice,
each constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the
notice is given, provided, that if the notice is given on or
after the effective date of the merger or consolidation, the
record date shall be such effective date. If no record date is
fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of
the merger or consolidation, the surviving or resulting
corporation or any stockholder who has complied with
subsections (a) and (d) of this section hereof and who
is otherwise entitled to appraisal rights, may commence an
appraisal proceeding by filing a petition in the Court of
Chancery demanding a determination of the value of the stock of
all such stockholders. Notwithstanding the foregoing, at any
time within 60 days after the effective date of the merger
or consolidation, any stockholder who
B-2
has not commenced an appraisal proceeding or joined that
proceeding as a named party shall have the right to withdraw
such stockholders demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within
120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) of this
section hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate
number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholders
written request for such a statement is received by the
surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal
under subsection (d) of this section hereof, whichever is
later. Notwithstanding subsection (a) of this section, a
person who is the beneficial owner of shares of such stock held
either in a voting trust or by a nominee on behalf of such
person may, in such persons own name, file a petition or
request from the corporation the statement described in this
subsection.
(f) Upon the filing of any such petition by a
stockholder, service of a copy thereof shall be made upon the
surviving or resulting corporation, which shall within
20 days after such service file in the office of the
Register in Chancery in which the petition was filed a duly
verified list containing the names and addresses of all
stockholders who have demanded payment for their shares and with
whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the
petition shall be filed by the surviving or resulting
corporation, the petition shall be accompanied by such a duly
verified list. The Register in Chancery, if so ordered by the
Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders shown
on the list at the addresses therein stated. Such notice shall
also be given by 1 or more publications at least 1 week
before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or
such publication as the Court deems advisable. The forms of the
notices by mail and by publication shall be approved by the
Court, and the costs thereof shall be borne by the surviving or
resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After the Court determines the stockholders
entitled to an appraisal, the appraisal proceeding shall be
conducted in accordance with the rules of the Court of Chancery,
including any rules specifically governing appraisal
proceedings. Through such proceeding the Court shall determine
the fair value of the shares exclusive of any element of value
arising from the accomplishment or expectation of the merger or
consolidation, together with interest, if any, to be paid upon
the amount determined to be the fair value. In determining such
fair value, the Court shall take into account all relevant
factors. Unless the Court in its discretion determines otherwise
for good cause shown, interest from the effective date of the
merger through the date of payment of the judgment shall be
compounded quarterly and shall accrue at 5% over the Federal
Reserve discount rate (including any surcharge) as established
from time to time during the period between the effective date
of the merger and the date of payment of the judgment. Upon
application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, proceed to trial upon the
appraisal prior to the final determination of the stockholders
entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation
pursuant to subsection (f) of this section and who has
submitted such stockholders certificates of stock to the
Register in Chancery, if such is required, may participate fully
in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair
value of the shares, together with interest, if any, by the
surviving or resulting corporation to the stockholders entitled
thereto. Payment shall be so made to each such stockholder, in
the case of holders of uncertificated stock forthwith, and the
case of holders of shares represented by certificates upon the
surrender to the corporation of the certificates representing
such stock. The Courts decree may be enforced as other
decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this
State or of any state.
B-3
(j) The costs of the proceeding may be determined by
the Court and taxed upon the parties as the Court deems
equitable in the circumstances. Upon application of a
stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the
appraisal proceeding, including, without limitation, reasonable
attorneys fees and the fees and expenses of experts, to be
charged pro rata against the value of all the shares entitled to
an appraisal.
(k) From and after the effective date of the merger
or consolidation, no stockholder who has demanded appraisal
rights as provided in subsection (d) of this section shall
be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholders demand for an
appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the
merger or consolidation as provided in subsection (e) of
this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval
may be conditioned upon such terms as the Court deems just;
provided, however that this provision shall not affect the right
of any stockholder who has not commenced an appraisal proceeding
or joined that proceeding as a named party to withdraw such
stockholders demand for appraisal and to accept the terms
offered upon the merger or consolidation within 60 days
after the effective date of the merger or consolidation, as set
forth in subsection (e) of this section.
(l) The shares of the surviving or resulting
corporation to which the shares of such objecting stockholders
would have been converted had they assented to the merger or
consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
B-4
ANNEX
C
CONFIDENTIAL
October 5,
2010
The Board of Directors
Thermadyne Holdings Corporation
16052 Swingley Ridge Road, Suite 300
Chesterfield, MO 63017
Members of the Board:
You have asked Oppenheimer & Co. Inc.
(Oppenheimer) to render a written opinion
(Opinion) to the Board of Directors of Thermadyne
Holdings Corporation (Thermadyne) as to the
fairness, from a financial point of view, to the holders of
Thermadyne Common Stock (as defined below) of the Consideration
(as defined below) to be received by such holders as provided
for in an Agreement and Plan of Merger (the
Agreement) proposed to be entered into among Razor
Holdco Inc. (Parent), Razor Merger Sub Inc., a
wholly owned subsidiary of Parent (Merger Sub), and
Thermadyne. The Agreement provides for, among other things, the
merger of Merger Sub with and into Thermadyne (the
Merger) pursuant to which each outstanding share of
the common stock, par value $0.01 per share, of Thermadyne
(Thermadyne Common Stock) will be converted into the
right to receive $15.00 in cash (the Consideration).
In arriving at our Opinion, we:
(a) reviewed the execution version, dated
October 5, 2010, of the Agreement;
(b) reviewed publicly available audited financial
statements of Thermadyne for years ended December 31, 2009,
December 31, 2008 and December 31, 2007 and unaudited
financial statements of Thermadyne for the six-month period
ended June 30, 2010;
(c) reviewed financial forecasts and estimates
relating to Thermadyne prepared by the management of Thermadyne;
(d) reviewed historical market prices and trading
volumes for Thermadyne Common Stock;
(e) held discussions with the senior management of
Thermadyne with respect to the business, financial condition,
operating results and future prospects of Thermadyne;
(f) held discussions, at the direction of Thermadyne,
with selected third parties to solicit indications of interest
in the possible acquisition of Thermadyne;
(g) reviewed and analyzed certain publicly available
financial data for companies that we deemed relevant;
(h) reviewed and analyzed certain publicly available
financial information for transactions that we deemed relevant;
(i) analyzed the estimated present value of the
future cash flows of Thermadyne based on financial forecasts and
estimates prepared by the management of Thermadyne;
(j) reviewed the premiums paid, based on publicly
available information, in merger and acquisition transactions we
deemed relevant in evaluating the Merger;
(k) reviewed other public information concerning
Thermadyne we deemed relevant; and
(l) performed such other analyses, reviewed such
other information and considered such other factors as we deemed
appropriate.
In rendering our Opinion, we relied upon and assumed, without
independent verification or investigation, the accuracy and
completeness of all of the financial and other information
provided to or discussed with us by Thermadyne and its
employees, representatives and affiliates or otherwise reviewed
by us. The management of Thermadyne provided to us two
alternative sets of financial forecasts and estimates relating
to Thermadyne and
C-1
The Board of Directors
Thermadyne Holdings Corporation
October 5, 2010
prepared by the management of Thermadyne, identified to us as
Base Case and Growth Case. At the
direction of the management of Thermadyne and with your consent,
we have assumed, without independent verification or
investigation, that such forecasts and estimates were reasonably
prepared on bases reflecting the best available information,
estimates and judgments of the management of Thermadyne as to
the future financial condition and operating results of
Thermadyne. You have also informed us of the greater risks and
uncertainties inherent in achieving the results of the Growth
Case forecasts and estimates in the amounts and at the times
contemplated thereby. We have also assumed, with your consent,
that the Merger will be consummated in accordance with its terms
without waiver, modification or amendment of any material term,
condition or agreement and in compliance in all material
respects with all applicable laws and other requirements and
that, in the course of obtaining the necessary regulatory or
third party approvals, consents and releases with respect to the
Merger, no delay, limitation, restriction or condition will be
imposed that would have an adverse effect on Thermadyne or the
Merger.
We have neither made nor obtained any independent evaluations or
appraisals of the assets or liabilities, contingent or
otherwise, of Thermadyne. We are not expressing any opinion as
to the underlying valuation, future performance or long-term
viability of Thermadyne or the price at which shares of
Thermadyne Common Stock will trade at any time. We also express
no view as to, and our Opinion does not address, the solvency of
Thermadyne under any state, federal or other laws relating to
bankruptcy, insolvency or similar matters. In addition, we
express no view as to, and our Opinion does not address, any
terms or other aspects or implications of the Merger (other than
the Consideration to the extent expressly specified herein) or
any aspect or implication of any other agreement, arrangement or
understanding entered into in connection with the Merger or
otherwise or the fairness of the amount or nature of, or any
other aspect relating to, the compensation to be received by any
individual officers, directors or employees of any parties to
the Merger, or any class of such persons, relative to the
Consideration or otherwise. In addition, we express no view as
to, and our Opinion does not address, the underlying business
decision of Thermadyne to proceed with or effect the Merger nor
does our Opinion address the relative merits of the Merger as
compared to any alternative business strategies that might exist
for Thermadyne or the effect of any other transaction in which
Thermadyne might engage. Our Opinion is necessarily based on the
information available to us and general economic, financial and
stock market conditions and circumstances as they exist and can
be evaluated by us on the date hereof. As you are aware, the
credit, financial and stock markets have been experiencing
unusual volatility and we express no opinion or view as to the
potential effects, if any, of such volatility on Thermadyne,
Parent or the proposed Merger. It should be understood that,
although subsequent developments may affect this Opinion, we do
not have any obligation to update, revise or reaffirm this
Opinion. This Opinion is for the use of the Board of Directors
of Thermadyne (in its capacity as such) in connection with its
evaluation of the Merger and does not constitute a
recommendation to any stockholder as to how such stockholder
should vote or act with respect to any matters relating to the
Merger or otherwise.
The issuance of this Opinion was approved by an authorized
committee of Oppenheimer. As part of our investment banking
business, we are regularly engaged in valuations of businesses
and securities in connection with acquisitions and mergers,
underwritings, secondary distributions of securities, private
placements and valuations for other purposes.
We have acted as financial advisor to Thermadyne in connection
with the Merger and will receive a fee for our services, a
portion of which is payable upon delivery of this Opinion and a
significant portion of which is contingent upon consummation of
the Merger. In addition, Thermadyne has agreed to reimburse our
expenses arising, and indemnify us against certain liabilities
that may arise, out of our engagement. In the ordinary course of
business, we and our affiliates may actively trade securities of
Thermadyne, and its and Irving Place Capital Management,
L.P.s respective affiliates for our and our
affiliates own accounts and for the accounts of customers
and, accordingly, may at any time hold a long or short position
in such securities.
C-2
The Board of Directors
Thermadyne Holdings Corporation
October 5, 2010
Based upon and subject to the foregoing, and such other factors
as we deemed relevant, it is our opinion that, as of the date
hereof, the Consideration to be received in the Merger by
holders of Thermadyne Common Stock is fair, from a financial
point of view, to such holders.
Very truly yours,
/s/
Oppenheimer &
Co. Inc.
OPPENHEIMER &
CO. INC.
C-3
ANNEX D
Execution
Copy
VOTING
AGREEMENT
VOTING AGREEMENT (this
Agreement
), dated as
of October 5, 2010, by and among Razor Holdco Inc., a
Delaware corporation (
Parent
), and the
parties listed on
Annex I
hereto (each, a
Shareholder
). Capitalized terms used but not
defined in this Agreement have the meanings ascribed thereto in
the Merger Agreement (as defined below).
RECITALS
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, Thermadyne Holdings Corporation, a Delaware
corporation (the
Company
), Parent and Razor
Merger Sub Inc. are entering into an Agreement and Plan of
Merger of even date herewith (as it may be amended, restated,
supplemented or modified from time to time but without giving
effect to any amendment, restatement, supplement or other
modification that decreases the Merger Consideration, the
Merger Agreement
);
WHEREAS, as of the date hereof, each Shareholder is the record
and beneficial owner of, and has the right to vote and dispose
of, the shares of Company Common Stock identified opposite such
Shareholders name on
Annex I
(such shares,
together with any other shares of Company Common Stock with
respect to which such Shareholder acquires beneficial ownership
prior to the termination hereof, collectively, the
Shareholder Shares
); and
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, Parent has required that each Shareholder
enter into this Agreement and, in order to induce Parent to
enter into the Merger Agreement, each Shareholder is willing to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
1.
Agreements of each Shareholder
.
(a)
Voting
.
From the date
hereof until any termination of this Agreement in accordance
with its terms, at any meeting of the shareholders of the
Company however called (or any action by written consent in lieu
of a meeting) or any adjournment thereof, each Shareholder shall
vote its Shareholder Shares (or cause them to be voted) or (as
appropriate) execute written consents in respect thereof,
(i) in favor of (A) the adoption of the Merger
Agreement and the approval of the transactions contemplated
thereby and (B) approval of any proposal to adjourn or
postpone such meeting to a later date if there are not
sufficient votes for adoption and approval of the foregoing on
the date on which such meeting is held, (ii) against any
Acquisition Proposal or any other proposal made in opposition to
adoption of the Merger Agreement and (iii) against any
agreement (including any amendment of any agreement), amendment
of the Companys Organizational Documents or other action,
in each case, that is intended or could reasonably be expected
to prevent or materially impede, interfere with or delay the
consummation of the transactions contemplated by the Merger
Agreement. Any such vote shall be cast (or consent shall be
given) by each Shareholder in accordance with such procedures
relating thereto so as to ensure that it is duly counted,
including for purposes of determining that a quorum is present
and for purposes of recording the results of such vote (or
consent) (to the fullest extent that such Shareholder Shares may
be counted for quorum purposes under Applicable Law). Except as
set forth in this
Section 1(a)
, none of the
Shareholders shall be restricted from voting in favor of,
against or abstaining with respect to any other matters
presented to the stockholders of the Company, provided such
other matters do not breach any of such Shareholders
obligations under this
Section 1(a)
. In
the event that such Shareholders proxy has been granted to
Parent pursuant to
Section 1(b)
, Shareholder shall
have no obligations under this
Section 1(a)
with
respect to the meeting of the shareholders of Company for which
such proxy has been granted.
D-1
(b)
Proxy
.
(i) In furtherance of each Shareholders
agreement in
Section 1(a)
, each Shareholder hereby
appoints Parent as each Shareholders proxy and
attorney-in-fact (with full power of substitution), for and in
the name, place and stead of each Shareholder, to vote all
Shareholder Shares (at any meeting of shareholders of the
Company however called or any adjournment thereof), or to
execute one or more written consents in respect of the
Shareholder Shares, (i) in favor of (A) the adoption
of the Merger Agreement and the approval of the transactions
contemplated thereby and (B) approval of any proposal to
adjourn or postpone such meeting to a later date if there are
not sufficient votes for adoption and approval of the foregoing
on the date on which such meeting is held, (ii) against any
Acquisition Proposal or any other proposal made in opposition to
adoption of the Merger Agreement and (iii) against any
agreement (including any amendment of any agreement), amendment
of the Companys Organizational Documents or other action,
in each case, that is intended or could reasonably be expected
to prevent or materially impede, interfere with or delay the
consummation of the transactions contemplated by the Merger
Agreement;
provided
,
however
, that each
Shareholders grant of the proxy contemplated by this
Section 1(b)
shall be effective if, and only if,
such Shareholder has not delivered to the Secretary of the
Company at least ten business days prior to such meeting a duly
executed proxy card previously approved by Parent voting such
Shareholder Shares in the manner specified in
Section 1(a)
or in the event such proxy card has
been thereafter modified or revoked or otherwise fails to
provide evidence of such Shareholders compliance with its
obligations under
Section 1(a)
in form and substance
reasonably acceptable to Parent.
(ii) It is hereby agreed that the Parent will use any
proxy granted by any Shareholder solely in accordance with
Applicable Law and will only vote the Shareholder Shares subject
to such proxy with respect to the matters and in the manner
specified in
Section 1(b)
.
(iii) Such proxy shall be valid and irrevocable until
the termination of this Agreement in accordance with
Section 4
. Any proxy granted hereunder shall
terminate, and any underlying appointment shall automatically be
revoked and rescinded and of no force and effect, upon the
termination of this Agreement.
(iv) Each Shareholder represents that any and all
other proxies heretofore given in respect of Shareholder Shares
are revocable, and that such other proxies have been revoked.
Each Shareholder affirms that the foregoing proxy is:
(i) given (A) in connection with the execution of the
Merger Agreement and (B) to secure the performance of each
Shareholders duties under this Agreement,
(ii) coupled with an interest and may not be revoked except
as otherwise provided in this Agreement and (iii) intended
to be irrevocable prior to termination of this Agreement in
accordance with Delaware Law. All authority herein conferred
shall be binding upon the successors and assigns of each
Shareholder.
(c)
Appraisal Rights
.
Each
Shareholder hereby waives, and agrees not to exercise or assert,
any appraisal or similar rights in connection with the
transactions contemplated by the Merger Agreement.
(d)
Restriction on Transfer; Proxies;
Non-Interference; etc
.
From the date hereof
until any termination of this Agreement in accordance with its
terms, each Shareholder shall not, directly or indirectly
(i) sell, transfer, give, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or
other arrangement or understanding with respect to the sale,
transfer, gift, pledge, encumbrance, assignment or other
disposition of, any Shareholder Shares (or any right, title or
interest thereto or therein), (ii) deposit any Shareholder
Shares into a voting trust or grant any proxies or enter into a
voting agreement, power of attorney or voting trust with respect
to any Shareholder Shares or (iii) agree (whether or not in
writing) to take any of the actions referred to in the foregoing
clauses (i) or (ii) of this
Section 1(d)
.
Notwithstanding the foregoing, a Shareholder may transfer its
Shareholder Shares to any controlled Affiliate thereof, if such
affiliate transferee, agrees in writing, in an instrument
reasonably acceptable to Parent, to be bound by this Agreement
as a Shareholder hereunder.
(e)
No Solicitation
.
Each
Shareholder agrees to comply with and, not take any action
prohibited by,
Section 6.03
of the Merger Agreement.
(f)
No Ownership
Interest
.
Nothing contained in this Agreement
shall be deemed to vest in Parent any direct or indirect
ownership or incidence of ownership of or with respect to any
Shareholder Shares, other than the right to vote the Shareholder
Shares upon the terms and subject to the conditions of this
Agreement. Except as provided in this Agreement, all rights,
ownership and economic benefits of and relating to each
Shareholder Shares
D-2
shall remain vested in and belong to such Shareholder. Nothing
in this Agreement shall be interpreted as obligating any
Shareholder to exercise any warrants, options, conversion of
convertible securities or otherwise to acquire Company Common
Stock.
(g)
Publication
.
Each
Shareholder (i) consents to Parent publishing and
disclosing each Shareholders identity and ownership of
Company Common Stock and the nature of each Shareholders
commitments, arrangements and understandings under this
Agreement, in each case, solely to the extent required to be
disclosed under Applicable Law in the Company Proxy Statement
(including all schedules and documents filed with the SEC) or
any other disclosure document required to be filed or made under
Applicable Law in connection with the Merger and any other
transactions contemplated by the Merger Agreement and
(ii) agrees to give promptly to Parent any information
Parent may reasonably require for the preparation of any such
disclosure documents (
provided
, that the foregoing shall
not require any Shareholder to disclose (i) any
information, that in the reasonable judgment of such
Shareholder, would result in the disclosure of any trade secrets
of third parties or violate any of its confidentiality
obligations owed to third parties, (ii) any information
that would, in the reasonable judgment of the such Shareholder,
waive the protection of attorney-client privilege, or
(iii) any sensitive or confidential information that would
expose such Shareholder or any of its affiliates to the risk of
liability). To the extent practicable, each such Shareholder
shall have a reasonable opportunity to review and comment on any
such announcement or disclosure prior to its publication, filing
or disclosure. Each Shareholder agrees to promptly notify Parent
of any required corrections with respect to any information
supplied by each Shareholder specifically for use in any such
disclosure document, if and to the extent that any such
information shall have become false or misleading in any
material respect.
2.
Representations and Warranties of
Parent
.
Parent represents and warrants to
each Shareholder as of the date hereof that:
(a)
Organization;
Authority
.
Parent is a limited liability
company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization. Parent
has all necessary limited liability or corporate power and
authority, as applicable, to execute and deliver this Agreement
and to perform their respective obligations hereunder. The
execution and delivery by Parent of this Agreement and, subject
to the terms and conditions of the Merger Agreement, the
performance of its obligations hereunder, have been duly
authorized by all necessary action on the part of Parent. This
Agreement has been duly executed and delivered by Parent and,
assuming due authorization, execution and delivery hereof by
each Shareholder, constitutes a valid and binding obligation of
Parent, enforceable against it in accordance with its terms
(subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws affecting
creditors rights generally and general principles of
equity).
(b)
Consents and Approvals;
Non-Contravention
.
The execution and delivery
by Parent of this Agreement and the performance of its
obligations hereunder require no action by or in respect of, or
filing with, any Governmental Authority, other than,
(i) the filing with the SEC of any Schedules 13D or 13G or
amendments to Schedules 13D or 13G and filings under
Section 16 (as applicable) of the 1934 Act, as may be
required in connection with this Agreement and the transactions
contemplated under the Merger Agreement and (ii) any
actions or filings the absence of which would not be reasonably
expected to, individually or in the aggregate, materially delay
or impair the performance by Parent of any of its obligations
under this Agreement on a timely basis. Neither the execution
and delivery of this Agreement by Parent, nor the performance by
Parent of its obligations hereunder will, (A) contravene,
conflict with, or result in any violation or breach of any
provision of the Organizational Documents of Parent or
(B) assuming compliance with the matters referred to in
this
Section 2(b)
, contravene, conflict with or
result in a violation or breach of any provision of any
Applicable Law, except in the case of clause (B), as would not
be reasonably expected to, individually or in the aggregate,
materially delay or impair the performance by Parent of any of
its obligations under this Agreement.
3.
Representations and Warranties of each
Shareholder
.
Each Shareholder represents and
warrants, severally and not jointly, to Parent as of the date
hereof that:
(a)
Organization;
Authority
.
Such Shareholder is a limited
partnership that is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization.
Such Shareholder has all necessary limited partnership power and
authority to execute and deliver this Agreement and to perform
its
D-3
obligations hereunder. The execution and delivery by such
Shareholder of this Agreement and the performance of its
obligations hereunder have been duly authorized and approved by
all necessary action on the part of such Shareholder and no
further action on the part of such Shareholder is necessary to
authorize the execution and delivery by such Shareholder of this
Agreement or the performance by such Shareholder of its
obligations hereunder. This Agreement has been duly executed and
delivered by such Shareholder and, assuming due and valid
authorization, execution and delivery hereof by Parent,
constitutes a valid and binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with its
terms (subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws affecting
creditors rights generally and general principles of
equity).
(b)
Consents and Approvals;
Non-Contravention
.
The execution and delivery
by such Shareholder of this Agreement and the performance of its
obligations hereunder require no action by or in respect of, or
filing with, any Governmental Authority, other than,
(i) the filing with the SEC of any Schedules 13D or 13G or
amendments to Schedules 13D or 13G and filings under
Section 16 (as applicable) of the 1934 Act, as may be
required in connection with this Agreement and (ii) any
actions or filings the absence of which would not be reasonably
expected to, individually or in the aggregate, materially delay
or impair the performance by such Shareholder of any of its
obligations under this Agreement on a timely basis. Neither the
execution and delivery of this Agreement by such Shareholder,
nor the performance by such Shareholder of its obligations
hereunder will, (A) contravene, conflict with, or result in
any violation or breach of any provision of the Organizational
Documents of such Shareholder, (B) assuming compliance with
the matters referred to in this
Section 3(b)
,
contravene, conflict with or result in a violation or breach of
any provision of any Applicable Law, (C) result in the
creation or imposition of any Lien on the right to vote any
Shareholder Shares, except in the case of clauses (B) and
(C), as would not be reasonably expected to, individually or in
the aggregate, materially delay or impair the performance by
such Shareholder of any of its obligations under this Agreement.
(c)
Ownership of
Shares
.
Such Shareholder owns, beneficially
and of record, the Shareholder Shares set forth opposite its
name on
Annex I
(as may be subject to adjustment as
set forth in
Section 5(b)
). Such Shareholder owns
such Shareholder Shares free and clear of any proxy, voting
restriction, adverse claim or other Lien (other than proxies and
restrictions in favor of Parent pursuant to this Agreement and
except for such transfer restrictions of general applicability
as may be provided under the Securities Act and the blue
sky laws of the various states of the United States).
Without limiting the foregoing, except for proxies and
restrictions in favor of Parent pursuant to this Agreement and
except for such transfer restrictions of general applicability
as may be provided under the Securities Act and the blue
sky laws of the various states of the United States, such
Shareholder has sole voting power and sole power of disposition
with respect to its Shareholder Shares, with no restrictions on
such Shareholders rights of voting or disposition
pertaining thereto and no Person other than such Shareholder has
any right to direct or approve the voting or disposition of any
Shareholder Shares. As of the date hereof, such Shareholder does
not own, beneficially or of record, any securities of the
Company other than as set forth on Annex I.
(d)
Opportunity to Review;
Reliance
.
Such Shareholder has had the
opportunity to review this Agreement with counsel of his or its
own choosing. Such Shareholder understands and acknowledges that
Parent is entering into the Merger Agreement in reliance upon
such Shareholders execution, delivery and performance of
this Agreement.
4.
Termination
.
This
Agreement and the proxy granted pursuant to
Section 1(b)
hereof shall terminate on the first to
occur of the (a) Effective Time, (b) termination of
the Merger Agreement in accordance with its terms, (c) the
effectiveness of any amendment, modification, supplement to, or
waiver under, the Merger Agreement which amendment,
modification, supplement or waiver would reduce the amount or
change the form of the Merger Consideration payable in the
Merger unless consented to in writing by each Shareholder and
(d) the mutual written consent of the Parent and each
Shareholder. Notwithstanding the foregoing, (i) nothing
herein shall relieve any party from liability for breach of this
Agreement and (ii) the provisions of this
Section 4
and
Section 5
shall survive
any termination of this Agreement.
D-4
5.
Miscellaneous
.
(a)
Expenses
.
All costs and
expenses incurred in connection with the obligations hereunder
shall be paid by the party incurring such costs and expenses.
(b)
Additional Shares
.
Until
any termination of this Agreement in accordance with its terms,
each Shareholder shall promptly notify Parent of the number of
shares, if any, as to which each Shareholder acquires record or
beneficial ownership after the date hereof. Any shares as to
which each Shareholder acquires record or beneficial ownership
after the date hereof and prior to termination of this Agreement
shall be Shareholder Shares for purposes of this Agreement.
Without limiting the foregoing, in the event of any stock split,
stock dividend or other change in the capital structure of the
Company affecting shares of Company Common Stock, the number of
shares constituting Shareholder Shares shall be adjusted
appropriately and this Agreement and the obligations hereunder
shall attach to any additional shares of Company Common Stock or
other voting securities of the Company issued to each
Shareholder in connection therewith.
(c)
Definition of Beneficial
Ownership
.
For purposes of this
Agreement, beneficial ownership with respect to (or
to own beneficially) any securities shall mean
having beneficial ownership of such securities (as
determined pursuant to
Rule 13d-3
under the 1934 Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing.
(d)
Further Assurances
.
From
time to time, at the reasonable request of Parent and at the
sole cost of Parent, each Shareholder shall execute and deliver
such additional documents and take all such further action as
may be necessary to perform the obligations hereunder.
(e)
Amendments; Waiver
.
This
Agreement may not be amended or supplemented, except by a
written agreement executed by each of the parties hereto. At
anytime prior to the termination of this Agreement, any party to
this Agreement may, subject to Applicable Law, (i) waive
any inaccuracies in the representations and warranties of any
other party hereto, (ii) extend the time for the
performance of any of the obligations or acts of any other party
hereto or (iii) waive compliance by the other party with
any of the agreements contained herein. Notwithstanding the
foregoing, no failure or delay by any party to this Agreement in
exercising any right hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other
right hereunder. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
(f)
Assignment
.
Except as
set forth in
Section 1(d)
, neither this Agreement
nor any of the rights, interests or obligations hereunder shall
be assigned, in whole or in part, by operation of law or
otherwise, by any of the parties without the prior written
consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the parties hereto and their respective
successors and permitted assigns. Any purported assignment not
permitted under this
Section 5(f)
shall be null and
void.
(g)
Entire Agreement
.
This
Agreement constitutes the entire agreement, and supersedes all
other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the
subject matter hereof.
(h)
No Third Party
Beneficiaries
.
Nothing in this Agreement,
express or implied, is intended to or shall confer upon any
Person other than the parties hereto (and their respective
successors and permitted assigns) any right or remedy of any
nature whatsoever under or by reason of this Agreement.
(i)
Governing Law; Enforcement; Jurisdiction;
Waiver of Jury Trial
.
(i) This Agreement, and any other agreement, document
or instrument delivered pursuant hereto, and all claims or
causes of action (whether in contract or tort) that may be based
upon, arise out of or relate to this Agreement (or such other
document) or the negotiation, execution, termination,
performance or nonperformance of this Agreement (or such other
document) (including any claim or cause of action based upon,
arising out of or related to any representation or warranty made
in or in connection with this Agreement or as an inducement to
enter into this Agreement), shall be governed by the internal
laws of the State of Delaware, without regard to its conflicts
of law principles.
D-5
(ii) The parties hereto agree that any suit, action
or proceeding seeking to enforce any provision of, or based on
any matter arising out of or in connection with, this Agreement
or the obligations hereunder (including against any third party)
shall be brought in the Delaware Court of Chancery or, if such
court shall not have jurisdiction, any federal court sitting in
Delaware, so long as one of such courts shall have subject
matter jurisdiction over such suit, action or proceeding, and
that any cause of action arising out of this Agreement shall be
deemed to have arisen from a transaction of business in the
State of Delaware, and each of the parties hereby irrevocably
consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action
or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter
have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party agrees that service
of process on such party as provided in
Section 5(k)
shall be deemed effective service of process on such party.
(iii) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
OBLIGATIONS HEREUNDER.
(j)
Specific
Enforcement
.
The parties agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached, and that
money damages or other legal remedies would not be an adequate
remedy for any such damages. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement, and to enforce specifically
the terms and provisions of this Agreement in the Delaware Court
of Chancery or, if such court shall not have jurisdiction, any
federal court sitting in Delaware, so long as one of such courts
shall have subject matter jurisdiction over such suit, action or
proceeding, this being in addition to any other remedy to which
they are entitled at law or in equity.
(k)
Notices
.
All notices,
requests and other communications to any party hereunder shall
be in writing (including email and facsimile transmission) and
shall be given:
if to Parent, to:
Razor Holdco Inc.
c/o IPC
Manager III, L.P.
277 Park Avenue, 39th Floor
New York, New York 10172
Attention: Eve Mongiardo, Chief Financial Officer
Facsimile No.:
(212) 551-4524
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: David Zeltner, Matthew J. Gilroy
Facsimile No.:
212-310-8007
if to each Shareholder, to:
Angelo Gordon & Co., L.P.
245 Park Avenue
26th Floor
New York, New York 10167
Attention: Kirk Wickman
Facsimile:
212-338-9611
D-6
with a copy to:
Akin Gump Strauss Hauer & Feld, LLP
One Bryant Park
New York, New York 10036
Attention: David DUrso
Facsimile:
212-872-1002
or such other address, email address or facsimile number as such
party may hereafter specify by like notice to the other parties
hereto. All such notices, requests and other communications
shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. in the place of
receipt and such day is a Business Day in the place of receipt.
Otherwise, any such notice, request or communication shall be
deemed not to have been received until the next succeeding
Business Day in the place of receipt.
(l)
Severability
.
If any
term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other Governmental
Authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated so long as the economic
or legal substance of the obligations hereunder are not affected
in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order
that the obligations hereunder be performed as originally
contemplated to the fullest extent possible.
(m)
Interpretation
.
The
words hereof, herein and
hereunder and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. The captions herein
are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof. References
to Sections are to Sections of this Agreement unless otherwise
specified. Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular.
Whenever the words include or including
are used in this Agreement, they shall be deemed to be followed
by the words without limitation, whether or not they
are in fact followed by those words or words of like import.
Writing, written and comparable terms
refer to printing, typing and other means of reproducing words
(including electronic media) in a visible form. Except as the
context may otherwise require, references to any agreement or
contract are to that agreement or contract as amended, modified
or supplemented from time to time in accordance with the terms
hereof and thereof. References to any Person include the
successors and permitted assigns of that Person. References to
law, laws or to a particular statute or
law shall be deemed also to include any Applicable Law. The
parties agree that the terms and language of this Agreement were
the result of negotiations between the parties and their
respective advisors and, as a result, there shall be no
presumption that any ambiguities in this Agreement shall be
resolved against any party. Any controversy over construction of
this Agreement shall be decided without regard to events of
authorship or negotiation.
(n)
Counterparts
.
This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Delivery of an executed counterpart of a signature page of this
Agreement by facsimile or by PDF file (portable document format
file) shall be as effective as delivery of a manually executed
counterpart of this Agreement.
(o)
Shareholder Obligations Several and not
Joint
.
The obligations of each Shareholder
hereunder shall be several and not joint, and no Shareholder
shall be liable for any breach of the terms of this Agreement by
any other Shareholder.
(p)
Survival of Representations and
Warranties
.
The representations and
warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the
Effective Time.
[Signature
Pages Follow]
D-7
IN WITNESS WHEREOF, the parties have caused this Voting
Agreement to be duly executed as of the date first above written.
RAZOR HOLDCO INC.
Name: Douglas R. Korn
SIGNATURE PAGE TO VOTING AGREEMENT
AG SUPER ADVANTAGE, L.P.
AG CNG FUND, L.P.
AG MM, L.P.
AG CAPITAL RECOVERY PARTNERS, L.P.
PHS BAY COLONY FUND, L.P.
AG CAPITAL RECOVERY PARTNERS II, L.P.
AG ELEVEN PARTNERS, L.P.
GAM ARBITRAGE INVESTMENTS, INC.
AG SUPER FUND INTERNATIONAL PARTNERS, L.P.
NUTMEG PARTNERS, L.P.
PHS PATRIOT FUND, L.P.
AG PRINCESS, L.P.
AG SUPER FUND, L.P.
AG CAPITAL FUNDING PARTNERS, L.P.
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By:
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Angelo Gordon & Co., L.P.,
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as Investment Manager
Name: Kirk Wickman
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Title:
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Chief Administrative Officer
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SIGNATURE PAGE TO VOTING AGREEMENT
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IMPORTANT SPECIAL MEETING INFORMATION
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Electronic Voting
Instructions
You can vote by Internet
or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the two
voting
methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE
BAR.
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Proxies submitted by the Internet
or telephone must be received by 11:59 PM EST the day before the special meeting.
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Vote
by Internet
Log
on to the Internet and go
to
www.investorvote.com/tickersymbol
Follow
the steps outlined on the secured website.
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Vote
by
telephone
Call
toll free 1-800-652-VOTE (8683) within the
USA,
US territories &
Canada any time on a touch tone
telephone. There is
NO
CHARGE
to you for the call.
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Using a
black
ink
pen, mark your votes with an
X
as shown in this
example. Please do not write outside the designated areas.
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x
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Follow the instructions provided by the recorded message.
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Special Meeting Proxy Card
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▼
IF YOU HAVE NOT VOTED VIA
THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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A
Proposals THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ITEM 1 AND FOR ITEM 2.
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For
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Against
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Abstain
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For
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Against
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Abstain
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1.
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To adopt the Agreement and Plan of Merger,
dated as of October 5, 2010, as it may be amended from time to time, by and among Razor
Holdco Inc., Razor Merger Sub Inc. and Thermadyne Holdings Corporation.
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o
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o
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o
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2.
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To adjourn the special meeting to a later
date, if necessary or appropriate, to solicit additional proxies if there are
insufficient votes at the time of the special meeting to approve the proposal
to adopt the Agreement and Plan of Merger.
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o
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o
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o
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B
Non-Voting Items
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Change of Address
Please print new address below.
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C
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Authorized Signatures This section must be
completed for your vote to be counted. Date and Sign Below
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Note:
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Please sign exactly as your name or names appear on this proxy.
When shares of common stock are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer, giving full title as such.
If signer is a partnership, please sign in partnership name by authorized person.
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Date (mm/dd/yyyy) Please
print date below.
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Signature 1 Please keep signature within the
box.
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Signature 2 Please keep signature within the
box.
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/ /
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n
+
▼
IF YOU HAVE NOT VOTED VIA
THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE
BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
▼
Proxy THERMADYNE HOLDINGS CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 2, 2010
The undersigned, having received the notice and
accompanying Proxy Statement for said meeting, hereby appoints Paul D. Melnuk and Nick H. Varsam and each of
them acting alone, with full power of substitution, as the undersigneds proxy and attorney-in-fact to vote at the Special
Meeting of Stockholders of Thermadyne Holdings Corporation (the Company) to be held on December 2, 2010 (the Special
Meeting), or at any adjournment thereof, all shares of voting stock of the Company which the undersigned may be entitled to vote.
The above proxies are hereby instructed to vote as shown on the reverse of this card and in their
discretion upon such other business as may properly come before the Special Meeting or at any adjournment thereof.
This proxy, when properly executed, will be voted in
the manner directed herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSAL
1 AND FOR PROPOSAL 2.
The Board of Directors recommends a vote FOR proposal 1 and a vote FOR proposal 2.
(Continued and to be signed on the reverse side)
Thermadyne Hldgs Corp (MM) (NASDAQ:THMD)
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