VOTING AGREEMENT
THIS VOTING AGREEMENT (this "AGREEMENT"), dated as of November 16,
2003, is made by and among each of the persons listed under the heading
"Stockholders" on the signature page hereto (collectively, the "STOCKHOLDERS"
and each, individually, a Stockholder"), and ▇▇▇▇▇▇ Associated Companies, Inc.,
a Pennsylvania corporation (the "PURCHASER").
WHEREAS, Sylvan Inc., a Nevada corporation (the "COMPANY"), the
Purchaser, and SAC Holding Co., a Pennsylvania corporation and a partially or
wholly owned subsidiary of the Purchaser (the "MERGER SUBSIDIARY"), are entering
into an Agreement and Plan of Merger (the "MERGER AGREEMENT"), dated the date
hereof, pursuant to which the Merger Subsidiary has agreed to merge with and
into the Company (the "MERGER").
WHEREAS, the consummation of the transactions contemplated by the
Merger Agreement is subject to certain conditions, including the approval of the
Merger by the holders of a majority of the outstanding shares of common stock of
the Company.
WHEREAS, the Stockholders are the collective record and beneficial
owners of 1,056,886 shares of common stock of the Company (the "ORIGINAL
SHARES"), representing approximately 20.5% of the shares of common stock of the
Company outstanding as of the date hereof (such shares, together with any shares
of capital stock of the Company acquired by any Stockholder or as to which any
Stockholder may acquire direct or indirect voting or investment power after the
date hereof and during the term of this Agreement, being collectively referred
to herein as the "STOCKHOLDER SHARES").
WHEREAS, as a condition to the willingness of the Purchaser to enter
into the Merger Agreement, and as an inducement to the Purchaser to do so, the
Stockholders have agreed as set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
1. DEFINITIONS. Capitalized terms used but not defined herein shall
have the meanings assigned to such terms in the Merger Agreement.
2. CERTAIN COVENANTS OF STOCKHOLDERS.
(a) Agreement to Vote. At any meeting of the stockholders of the
Company held prior to the Termination Date (as defined in Section 5(d) below),
however called, and at every adjournment thereof prior to the Termination Date,
or in connection with any written consent of the stockholders of the Company,
each Stockholder shall vote the Stockholder Shares (i) in favor of the approval
of the Merger and each of the other transactions contemplated by the Merger
Agreement to be performed by the Company and any actions required in furtherance
thereof; and (ii) against any Acquisition Proposal. Prior to the Termination
Date, no Stockholder shall enter into any agreement or understanding with any
Person, to vote, grant any proxy or give instructions with respect to the voting
of the Stockholder Shares in any manner inconsistent with
the preceding sentence, other than proxies for the election of directors at any
meeting of stockholders.
(b) Proxies.
(i) Each Stockholder hereby revokes any and all previous
proxies granted with respect to matters set forth in Section 2(a) above for
the Stockholder Shares.
(ii) Each Stockholder covenants and agrees in favor of the
Purchaser, that if the Purchaser so requests (x) not later than five days
prior to the date of the Company Stockholder Meeting, it shall deliver or
cause to be delivered to the Company duly executed proxies in favor of the
Purchaser, in form reasonably acceptable to the Purchaser, voting in favor
of the Merger together with a copy of the board resolutions authorizing such
proxies and (y) such proxies will not be revoked; provided, however, that if
a waiting period under the HSR Act or the pre-merger filing requirements of
any other jurisdiction applies to the grant of the proxies so requested, no
Stockholder shall deliver or grant such proxies until any applicable waiting
periods shall have expired or terminated.
(iii) Except as provided herein, prior to the Termination
Date, no Stockholder shall grant any proxies or powers of attorney with
respect to matters set forth in Section 2(a) above, deposit any of the
Stockholder Shares into a voting trust or enter into a voting agreement with
respect to any of the Stockholder Shares, in each case with respect to the
matters set forth in Section 2(a).
(c) Transfer of Stockholder Shares by Stockholder. Prior to the
Termination Date, no Stockholder shall (A) pledge or place any Lien on any
Stockholder Shares, other than pursuant to this Agreement, or (B) transfer,
sell, exchange or otherwise dispose of (including by gift) any Stockholder
Shares, other than pursuant to this Agreement or the Merger Agreement.
(d) Acquisition Proposal. No Stockholder shall, and no Stockholder
shall authorize any Affiliate, director, officer, employee, investment banker,
attorney or other advisor or representative of any Stockholder to, (i) directly
or indirectly solicit, initiate or knowingly encourage the submission of, any
Acquisition Proposal or (ii) directly or indirectly participate in any
discussions or negotiations regarding, or furnish to any Person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes or may reasonably be expected to lead
to, any Acquisition Proposal, except that nothing herein shall prohibit ▇▇▇▇▇▇
▇▇▇▇ from the exercise of his fiduciary duties as a director of the Company in
accordance with the Merger Agreement and Section 5(o) hereof.
(e) Inquiry. Except as prohibited by any Confidentiality Agreement to
which the Company or the Stockholders are a party, each Stockholder shall
promptly notify the Purchaser in writing of any contact, inquiry, submission,
proposal or offer of which any Stockholder becomes aware for an Acquisition
Proposal and of any request in connection with such a proposal for non-public
information relating to the Company or any of its Subsidiaries or
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any of the relevant details relating to such a proposal (including the identity
of the prospective party and the proposed terms and conditions) known at such
time.
2A. PROFIT SHARING.
(a) If the Merger Agreement is terminated pursuant to Section
10.01(c)(i), Section 10.01(c)(iv) or Section 10.01(d)(ii) thereof (in any such
case, a "TRIGGERING TERMINATION"), and within twelve (12) months following such
Triggering Termination, the Company merges with or into, or is acquired,
directly or indirectly, by merger or otherwise, by a Third Party in a
transaction in which all holders of shares of Company common stock (other than
Company management and their Affiliates) are entitled to receive consideration
for all of their shares of Company common stock (such event, an "ALTERNATIVE
TRANSACTION"), then, upon consummation of such Alternative Transaction, each
Stockholder shall pay to Purchaser an amount equal to fifty percent (50%) of the
"profit" (determined in accordance with Section 2A(b) below), if any, in respect
of (x) the Original Shares held by such Stockholder as of the date of this
Agreement, and (y) any additional shares of Company common stock owned of record
or beneficially by such Stockholder as of the date of consummation of such
Alternative Transaction (collectively, the "APPLICABLE SHARES").
(b) The "profit" associated with the consummation of such Alternative
Transaction shall be an amount (if positive) equal to (x) the aggregate
consideration paid in respect of the Applicable Shares as a result of the
consummation of such Alternative Transaction, valuing any noncash consideration
at its fair market value as set forth in subsection (c) below, less (y) the
product obtained by multiplying $12.25 by the number of Applicable Shares (the
amount by which "(x)" exceeds "(y)" being referred to herein as the "OVERAGE"),
less (z) the total amount of Taxes payable by such Stockholder on the Overage.
(c) For purposes of this Section 2A, the fair market value of any
noncash consideration consisting of:
(i) securities listed on a national securities exchange or
traded on the NASDAQ shall be equal to the average closing price per share of
such security as reported on such exchange or NASDAQ for the 5 trading days
prior to the date of determination; and
(ii) consideration which is other than securities of the form
specified in foregoing clause "(i)" shall be determined, as of the date of
consummation of the Alternative Transaction, by a nationally recognized
independent investment banking firm (which may be the investment banking firm
retained by the Special Committee of the Board of Directors of the Company, or
by the Board of Directors of the Company, to evaluate the consideration payable
in the Alternative Transaction) mutually selected, within three business days
after the event requiring selection of such investment banking firm , by
Purchaser, on the one hand, and the Stockholders, on the other hand, which
determination shall be made by such investment banking firm within 15 business
days after the date of such event; provided, however, that if Purchaser and the
Stockholders do not agree within three business days after the date of such
event as to the selection of an investment banking firm, then, by the end of the
fifth business day after the date of such event, each of Purchaser, on the one
hand, and the Stockholders, on the other hand, shall select an investment
banking firm, which two investment banking firms shall jointly make such
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determination within 20 business days after the date of such event, or, if such
two investment banking firms are unable to agree on such determination, the two
investment banking firms shall, by the end of the 20th business day after the
date of such event, select a third investment banking firm and notify such third
investment banking firm in writing (with a copy to Purchaser and the
Stockholders) of their respective determinations of the fair market value of
such noncash consideration, following which such third investment banking firm
shall, within 15 business days after the date of its selection, notify Purchaser
and the Stockholders in writing of its selection of one or the other of the two
original determinations of the fair market value of such noncash consideration;
provided further, that the reasonable and customary fees and expenses of all
such investment banking firms shall be borne equally by Purchaser, on the one
hand, and the Stockholders, on the other hand. The determination of the
investment banking firm shall be binding upon the parties.
(d) Any payment to be made by any Stockholder pursuant to this
Section 2A shall be made as follows following consummation of the Alternative
Transaction: (x) if the consideration paid in the Alternative Transaction is all
cash, such payment shall be made in cash within three business days following
receipt by such Stockholder of such consideration by wire transfer of same day
funds to an account designated by Purchaser, (y) if such consideration is all
noncash consideration, such payment shall be made through a transfer of such
noncash consideration to Purchaser, suitably endorsed for transfer (with the
method and timing of such transfer to be reasonably determined by Purchaser), or
(z) if such consideration is part cash and part noncash consideration, such
payment shall be made in cash (in the manner set forth in clause "(x)" above)
and in such noncash consideration (in the manner set forth in clause "(y)"
above) in the same proportion as such consideration is payable to such
Stockholder in accordance with the terms of the Alternative Transaction.
2B. PUT RIGHT.
(a) Purchaser hereby grants to each Stockholder an irrevocable option
(each such option, a "PUT OPTION") to sell to Purchaser at any time during the
Exercise Period all that Stockholder's Original Shares, in each case at a total
cash option exercise price equal to the product of (1) the total number of that
Stockholder's Original Shares multiplied by (2) $12.25 (each such price, a
"PURCHASE PRICE").
(b) In this Agreement, "EXERCISE PERIOD" means the period of 30 days
beginning on and including the date of a Triggering Termination. If there is no
Triggering Termination, then there shall be no Exercise Period.
(c) Each Stockholder must exercise its Put Option in whole only and the
Stockholders must collectively exercise all Put Options at the same time. To
exercise the Put Options, the Stockholders must deliver to Purchaser a written
notice of the Stockholders' intention to effect that exercise. The closing of
the purchase of the Original Shares subject to the Put Options will take place
in the office of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C. in Pittsburgh, Pennsylvania. Stockholders
will designate in their written notice the date and time of the closing, which
date may be not less than two (2) business days nor more than sixty (60) days
after the Stockholders have delivered such notice. At that closing, Purchaser
will pay in respect of each Put Option the Purchase Price payable under that Put
Option, as applicable, by wire transfer of immediately available funds to an
account or accounts designated in writing by the applicable Stockholder at
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least one business day prior to the closing date, against delivery of the
certificates representing the Original Shares subject to that Purchase Price,
duly endorsed for transfer to Purchaser and/or such additional or other evidence
of transfer as Purchaser may request.
3. REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS OF
STOCKHOLDERS. The Stockholders jointly and severally represent, warrant and
covenant to Purchaser that:
(a) Ownership. Each Stockholder is, as of the date hereof, the
beneficial owner of the Stockholder Shares set forth next to such Stockholder's
name on the signature page hereto, such Stockholder has the sole right to vote
such Stockholder Shares and there are no restrictions on rights of disposition
or other Liens pertaining to such Stockholder Shares. Except as created hereby,
none of the Stockholder Shares is subject to any voting trust or other
agreement, arrangement or restriction with respect to the voting of the
Stockholder Shares.
(b) Authority and Non-Contravention. Each Stockholder has the right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by the Stockholders and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary action
on the part of the Stockholders. This Agreement has been duly executed and
delivered by the Stockholders and constitutes a valid and binding obligation of
each Stockholder, enforceable against each Stockholder in accordance with its
terms, subject to general principles of equity and as may be limited by
bankruptcy, insolvency, moratorium, or similar laws affecting creditors' rights
generally. Such actions by the Stockholders require no action by or in respect
of, or filing with, any Governmental Authority with respect to any Stockholder,
other than any required filings under Section 13 of the Exchange Act.
(c) Total Shares. The Stockholder Shares are the only shares of capital
stock of the Company owned beneficially or of record as of the date hereof by
any Stockholder or any of their Affiliates, and (except for options held by
▇▇▇▇▇▇ ▇▇▇▇ to acquire up to 12,000 shares of Company common stock) such
Stockholder does not have any option to purchase or right to subscribe for or
otherwise acquire any securities of the Company and has no other interest in or
voting rights with respect to any other securities of the Company.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER. The
Purchaser represents, warrants and covenants to the Stockholders that:
(a) Power and Authority. The Purchaser has the right, power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement and the Merger Agreement. The execution and
delivery of this Agreement by the Purchaser and the consummation of the
transactions contemplated by this Agreement have been duly authorized by all
necessary action on the part of the Purchaser. This Agreement has been duly
executed and delivered by the Purchaser and constitutes a valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, subject to general principles of equity and as may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally.
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(b) Limitation on Voting Agreements. For so long as this Agreement
remains in effect, the Purchaser shall not obtain binding voting agreements,
proxies or other commitments to vote shares of Company common stock from any
other stockholder of the Company with respect to matters set forth in Section
2(a) hereof, provided, however, the Purchaser may obtain voting agreements,
proxies or commitments from officers, directors and employees of the Company,
provided that the total number of shares of common stock of the Company subject
to such voting agreements, proxies or commitments, when aggregated with the
Stockholder Shares, does not exceed 40% of the issued and outstanding shares of
Company common stock eligible to vote at the Company Stockholder Meeting.
5. MISCELLANEOUS.
(a) Expenses. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense. The
Purchaser will not object if the Company reimburses the Stockholders' legal fees
and expenses in connection with this Agreement and related matters, provided the
total amount to be reimbursed, together with the total amount of legal fees and
expenses of Steel Partners and its affiliates to be reimbursed, does not exceed
$60,000.
(b) Further Assurances. From time to time, at the request of the
Purchaser, in the case of Stockholders, or at the request of Stockholders, in
the case of the Purchaser, and without further consideration, each party shall
execute and deliver or cause to be executed and delivered such additional
documents and instruments and take all such further action as may be reasonably
necessary or desirable to consummate the transactions contemplated by this
Agreement.
(c) Specific Performance. The Stockholders, on the one hand, and
Purchaser, on the other, agree that the other party would be irreparably damaged
if for any reason either party fails to perform any of its obligations under
this Agreement, and that the other party would not have an adequate remedy at
law for money damages in such event. Accordingly, each party shall be entitled
to seek specific performance and injunctive and other equitable relief to
enforce the performance of this Agreement by the other party. This provision is
without prejudice to any other rights that such party may have against the other
party for any failure to perform their obligations under this Agreement.
(d) Amendments, Termination. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by each party
hereto. The representations, warranties, covenants and agreements set forth in
Sections 2, 3 and 4 above (but not Section 2A or Section 2B) shall terminate,
except with respect to liability for prior breaches thereof, upon the earliest
to occur of (i) the termination of the Merger Agreement in accordance with its
terms, (ii) the Effective Time, or (iii) April 15, 2004 (the earliest of such
dates, the "TERMINATION DATE"). The covenants and agreements set forth in
Section 2A above shall terminate, except with respect to liability for prior
breaches thereof, upon the earliest to occur of (i) the date that is twelve (12)
months and one day following the date of any Triggering Termination, (ii) the
Effective Time, or (iii) the date of any termination of the Merger Agreement
that does not constitute a Triggering Termination. The covenants and agreements
set forth in Section 2B above shall terminate, except with respect to liability
for prior breaches thereof, upon
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the earliest to occur of (i) the expiration of the Exercise Period (if the Put
Options have not been validly exercised during such Exercise Period), (ii) the
Effective Time, or (iii) the date of any termination of the Merger Agreement
that does not constitute a Triggering Termination.
(e) Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement 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, and inure to the benefit of, the parties hereto and their
respective successors and assigns.
(f) Certain Events. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder Shares and the Applicable
Shares and shall be binding upon any Person to which legal or beneficial
ownership of such shares shall pass, whether by operation of law or otherwise,
including any Stockholder's heirs, guardians, administrators or successors, and
each Stockholder further agrees to take such commercially reasonable actions as
may be necessary to effectuate the foregoing, provided such actions do not
require the expenditure of monies, other than immaterial amounts. In the event
of any stock split, stock dividend, reclassification, merger, reorganization,
recapitalization or other change in the capital structure of the Company
affecting the capital stock of the Company, the number of Stockholder Shares and
Applicable Shares shall be adjusted appropriately. This Agreement and the
representations, warranties, covenants, agreements and obligations hereunder
shall attach to any additional shares of capital stock of the Company or other
voting securities of the Company issued to or acquired by any Stockholder
directly or indirectly (including through the exercise of any warrants, stock
options or similar instruments). Each Stockholder shall cause the certificated
Stockholder Shares to have a legend placed conspicuously on such certificate to
the following effect:
"The shares of common stock evidenced by this
certificate are subject to a Voting Agreement dated
November ___, 2003, entered into by the record
owner of such shares and ▇▇▇▇▇▇ Associated
Companies, Inc.."
Each Stockholder shall cause a counterpart of this Agreement
to be deposited with the Company at its principal place of business or
registered office where it shall be subject to the same right of examination by
a stockholder of the Company, in Person or by agent or attorney, as are the
books and records of the Company.
(g) Entire Agreement. This Agreement (including the documents referred
to herein) (i) constitutes the entire agreement, and supersedes all prior
agreements and understanding, both oral and written, between the parties with
respect to the subject matter of this Agreement and (ii) is not intended to
confer upon any Person other than the parties any rights or remedies.
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(h) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, sent by documented
overnight delivery service or, to the extent receipt is confined, appropriate
telecopy address or telecopy number set forth below (or at such other address or
telecopy number for a party as shall be specified by like notice):
If to the Purchaser to:
▇▇▇▇▇▇ Associated Companies, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Stockholder, to:
Wynnefield Capital Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(i) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Nevada regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
(j) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and,
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
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(k) Interpretation. The headings contained in this Agreement are
inserted for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(l) Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
(m) Consent to Jurisdiction. Each party hereto irrevocably submits to
the nonexclusive jurisdiction of (a) the state courts of the State of New York
and (b) the United States federal district courts located in the State of New
York for the purposes of any suit, action or other proceeding arising out of
this Agreement or any transaction contemplated hereby.
(n) Attorney's Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements, in
addition to any other relief to which such party may be entitled.
(o) No Limitation on Actions of any Stockholder as Director. In the
event any Stockholder or any of Stockholder's Affiliates is a director of the
Company, notwithstanding anything to the contrary in this Agreement, nothing in
this Agreement is intended or shall be construed to require such Stockholder or
such affiliate to take or in any way limit any action that such Stockholder or
such affiliate may take to discharge such Stockholder's or such Affiliate's
fiduciary duties as a director of the Company.
* * * * *
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IN WITNESS WHEREOF, this Voting Agreement has been signed by or on
behalf of each of the parties as of the date first above written.
PURCHASER:
▇▇▇▇▇▇ ASSOCIATED COMPANIES, INC.
By:
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STOCKHOLDERS: ORIGINAL SHARES
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WYNNEFIELD PARTNERS SMALL CAP VALUE, L.P. 382,897
By: Wynnefield Capital Management, LLC, its General Partner
By:
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▇▇▇▇▇▇ ▇▇▇▇,
Co-Managing Member
WYNNEFIELD PARTNERS SMALL CAP VALUE, L.P. I 507,303
By: Wynnefield Capital Management, LLC, its General Partner
By:
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▇▇▇▇▇▇ ▇▇▇▇,
Co-Managing Member
WYNNEFIELD SMALL CAP VALUE OFFSHORE FUND, LTD. 178,686
By: Wynnefield Capital, Inc.
By:
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▇▇▇▇▇▇ ▇▇▇▇,
President
▇▇▇▇▇▇ ▇▇▇▇ -0-
----------------------------
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