|
Exhibit 2.2
OPTION AND VOTING
AGREEMENT
BY AND
AMONG
PEM HOLDING
CO.
AND
THE PERSONS LISTED ON
SCHEDULE I HERETO
Dated as of January 17,
2005
OPTION AND VOTING
AGREEMENT
This OPTION AND VOTING
AGREEMENT (this “ Agreement ”) is entered into
as of January 17, 2005, by and among PEM Holding Co., a Delaware
corporation (“ Purchaser ”), and the persons
listed on Schedule I hereto (each, together with any permitted
assigns hereunder, a “ Stockholder ,” and,
collectively, the “ Stockholders ”).
W I T N E S S E T
H:
WHEREAS, as of the date
hereof, each Stockholder (1) “beneficially owns” (for
the purpose of this Agreement, as such term is defined in Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) and/or is entitled to dispose of (or to direct the
disposition of) the number of shares of Common Stock, of Penn
Engineering & Manufacturing Corp., a Delaware corporation (the
“ Company ”), set forth opposite such
Stockholder’s name on Schedule I hereto (together with any
shares of Common Stock or other non-voting capital stock of the
Company acquired by such stockholder after the date hereof, the
“ Subject Common Shares ”) and (2) beneficially
owns and/or is entitled to dispose of (or to direct the disposition
of) and to vote (or to direct the voting of) the number of shares
of Class A Common Stock of the Company set forth opposite such
Stockholder’s name on Schedule I hereto (together with any
shares of Class A Common Stock or other voting capital stock of the
Company acquired by such Stockholder after the date hereof, the
“ Subject Class A Common Shares ”);
WHEREAS, Purchaser and the
Company propose to enter into an Agreement and Plan of Merger,
dated as of the date hereof, by and among the Company, PN Merger
Sub Inc. (“ Sub ”) and Purchaser (the “
Merger Agreement ”), pursuant to which, subject to the
terms and conditions of the Merger Agreement, Sub will merge with
and into the Company with the Company being the surviving
corporation; and
WHEREAS, concurrently with
the execution and delivery of the Merger Agreement and as a
condition and inducement to Purchaser’s willingness to enter
into the Merger Agreement, the Stockholders are executing this
Agreement whereby each Stockholder agrees to vote 92% of his, her
or its Subject Class A Common Shares pursuant to the terms and
conditions of this Agreement.
NOW, THEREFORE, in
consideration of the foregoing and the mutual promises,
representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Capitalized
Terms . For purposes of this Agreement, capitalized terms used
and not defined herein shall have the respective meanings ascribed
to them in the Merger Agreement.
Section 1.2 Other
Definition . For purposes of this Agreement, “Proxy
Term” shall mean the period from the execution of this
Agreement until the earlier of (i) the date on which the Merger
Agreement is terminated in accordance with its terms or (ii) the
Effective Date.
Section 1.3
Interpretation. The words “hereof,”
“herein” and “hereunder” and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and Section references are to this Agreement unless
otherwise specified. Whenever the words “include,”
“includes” or “including” are used is this
Agreement, they shall be deemed to be followed by the words
“without limitation.” The headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. No
provision of this Agreement shall be construed to require
Purchaser, any Stockholder or any of their respective Subsidiaries
or Affiliates to take any action that would violate any applicable
Law or take any action that would result in the automatic
conversion of the Company’s Common Stock into shares with
voting rights.
ARTICLE II
VOTING
Section 2.1 Agreement to
Vote the Stockholder’s Subject Class A Common Shares .
During the Proxy Term, each Stockholder agrees that, at any annual,
special or other meeting of the stockholders of the Company, and at
any adjournment or postponement thereof, and in connection with any
action of the stockholders of the Company taken by written consent,
such Stockholder will:
(a) appear in person or by
proxy at each such meeting or otherwise cause his, her or its
Subject Class A Common Shares to be counted as present at such
meeting for purposes of calculating a quorum; and
(b) vote (or cause to be
voted) 92% of his, her or its Subject Class A Common Shares (i) in
favor of the approval of the terms of the Merger Agreement
(including any amendments thereto), the Merger and the Transaction
and (ii) (other than the Transaction) against any action, proposal,
transaction or agreement that could reasonably be expected to (A)
result in a breach in any respect of any covenant, representation
or warranty or any other obligation or agreement of the Company
contained in the Merger Agreement or of such Stockholder contained
in this Agreement, (B) preclude fulfillment of a condition under
the Merger Agreement to the Company’s, Purchaser’s or
Sub’s respective obligations to consummate the Merger or (C)
impede, interfere or be inconsistent with, delay, postpone,
discourage or adversely affect the Transaction or this Agreement.
Any such vote shall be cast or consent shall be given in accordance
with such procedures relating thereto so as to ensure that it is
duly counted for purposes of determining that a quorum is present
and for purposes of recording the results of such vote or consent.
Any vote by a Stockholder of his, her or its Subject Class A Common
Shares that is not in accordance with this Section 2.1 shall be
considered null and void.
Section 2.2 Grant of
Irrevocable Proxy . If requested by Purchaser, each Stockholder
will grant an irrevocable proxy, in customary form satisfactory to
the Purchaser, to vote in favor of the Merger, appointing Purchaser
and any designee of Purchaser, and each of them individually, as
such Stockholder’s proxy and attorney-in-fact, with full
power of substitution and re-substitution, subject to Section 2.4
of this Agreement, during the Proxy Term with respect to 92% of
such Stockholder’s Subject Class A Common Shares in
accordance with Section 2.1. This proxy will be given to secure the
performance of the duties of such Stockholder under this
Agreement.
Section 2.3 Nature of
Irrevocable Proxy . THE PROXY AND POWER OF ATTORNEY GRANTED
PURSUANT TO SECTION 2.2 BY EACH STOCKHOLDER SHALL BE IRREVOCABLE
DURING THE PROXY TERM, SHALL BE DEEMED TO BE COUPLED WITH AN
INTEREST SUFFICIENT IN LAW TO SUPPORT AN IRREVOCABLE PROXY AND
SHALL REVOKE ANY AND ALL PRIOR PROXIES GRANTED BY SUCH STOCKHOLDER.
The power of attorney granted by each Stockholder herein is a
durable power of attorney and shall survive the dissolution,
bankruptcy, death or incapacity of such Stockholder and any
obligation of such Stockholder under this Agreement and shall be
binding upon the heirs, personal representatives, successors and
assigns of such Stockholder. Each Stockholder hereby revokes all
other proxies and powers of attorney with respect to all of his,
her or its Subject Class A Common Shares that may have heretofore
been appointed or granted, and no subsequent proxy or power of
attorney shall be given (and if given, shall not be effective) by
such Stockholder with respect thereto.
Section 2.4
Limitations . Schedule 5.3(j) of the Purchaser Disclosure
Schedule sets forth all shares of Class A Common Stock that
Purchaser and its Affiliates beneficially own. Except as provided
in this Agreement, Purchaser shall not, and shall cause its
Affiliates not to, purchase or otherwise acquire during the Proxy
Term any interest, including any voting or dispositive rights, in
any additional shares of Class A Common Stock or take any other
action that would result in the automatic conversion of the
Company’s Common Stock into shares with voting rights.
Notwithstanding anything in this Agreement to the contrary, in no
event shall the voting power of the Subject Class A Common Shares
to be obtained by Purchaser pursuant to this Article II or Article
III of this Agreement, together with shares of Class A Common Stock
beneficially owned by Purchaser and its Affiliates, exceed 49% of
all outstanding shares of Class A Common Stock taken as a
whole.
ARTICLE III
OPTION
Section 3.1 Option .
In order to induce Purchaser and Sub to enter into the Merger
Agreement, each Stockholder hereby grants to Purchaser an
irrevocable option (the “ Option ”) to purchase
from such Stockholder (a) any or all of such
Stockholder’s Subject Common
Shares and (b) subject to Section 2.4 of this Agreement, up to 92%
of such Stockholder’s Subject Class A Common Stock ((a) and
(b) together, the “ Option Shares ”), in each
case, at a purchase price per share equal to $18.25.
Section 3.2 Effectiveness
and Duration . The Option shall become effective and
exercisable immediately following the date that the Merger
Agreement has been amended as contemplated by Section 8.1(g) of the
Merger Agreement (pursuant to which Purchaser and the Company shall
have agreed to make adjustments to the terms and conditions of the
Merger Agreement such that the Acquisition Proposal made by the
Third Party no longer constitutes a Superior Proposal). The
exercise of the Option shall be subject to (i) the expiration or
termination of all waiting periods under the HSR Act required for
the purchase of the Option Shares upon such exercise and (ii) the
absence of any preliminary or final injunction or other order
issued by any Governmental Authority prohibiting the exercise of
the Option pursuant to this Agreement. The Option shall remain
exercisable until the earlier of the Effective Date or the
termination of the Merger Agreement (in each case, such date being
referred to as the “ Option Expiration Date ”);
provided that the Option shall terminate and the Option
Expiration Date shall have been deemed to occur if, after one year
following the original Option Expiration Date, (A) the HSR Act
waiting period shall not have expired or been waived or (B) there
shall be in effect any such injunction or order.
Section 3.3 Recapture of
Profits . If within 12 months following the termination of the
Merger Agreement under circumstances which caused the Company to
owe a Break-Up Fee and/or Expense Payment to Purchaser pursuant to
Section 6.6(h) of the Merger Agreement, any Stockholder shall sell,
transfer or otherwise dispose of any or all of his, her or its
Subject Common Shares or Subject Class A Common Shares to a Third
Party in connection with a transaction whereby the Third Party is
acquiring more than 50% of the voting power of the Class A Common
Stock or a majority of the equity interest in the Company pursuant
to a purchase of shares, merger, tender offer, exchange offer, sale
of substantially all of the Company’s assets or a similar
business combination (a “ Subsequent Sale ”) at
a per share price (or equivalent per share cash proceeds, in the
case of a sale of substantially all assets or other distributions
or dividends to Stockholders) in excess of $18.25 (the “
Subsequent Sale Price ”), then each Stockholder shall
promptly (but in any event within three Business Days of the
completion of the Subsequent Sale) pay to Purchaser an amount equal
to 25% of (a) the excess of the Subsequent Sale Price over $18.25
multiplied by the number of Subject Common Shares sold, transferred
or disposed of by such Stockholder in the Subsequent Sale
plus (b) the excess of the Subsequent Sale Price over $18.25
multiplied by the number (subject to Section 2.4 of this Agreement,
up to the number that represents 92% of such Stockholder’s
Subject Class A Common Shares) of Subject Class A Common Stock
sold, transferred or disposed of by such Stockholder in the
Subsequent Sale.
ARTICLE IV
COVENANTS
Section 4.1 Generally
.
(a) During the Proxy Term,
each Stockholder agrees that, except as expressly contemplated by
the terms of this Agreement, he, she or it shall not (i) sell,
transfer, tender, pledge, give, encumber, assign, convert into
another class of securities of the Company or otherwise dispose of
(collectively, a “ Transfer ”) or enter into any
contract, option or other agreement with respect to, or consent to,
a Transfer of or grant a proxy or power of attorney, deposit into
any voting trust, enter into any voting agreement, or create after
the date hereof any Liens of any nature whatsoever with respect to,
any or all of his, her or its Subject Class A Common Shares or
Subject Common Shares; provided , however , that the
foregoing shall not prevent the Stockholder from entering into a
voting agreement with a Third Party who has made a Superior
Proposal that has been accepted by the Board of Directors of the
Company, which voting agreement does no more than commit the
Stockholder to vote in favor of the Superior Proposal or (ii) take
any action that would have the effect of preventing, impeding,
interfering with or adversely affecting such Stockholder’s
ability to perform his, her or its obligations under this
Agreement; provided that such Stockholder shall be permitted
pursuant to this Agreement to (A) transfer any Subject Common Stock
and Subject Class A Common Stock to any family member or trust,
family partnership or other vehicle established by such Stockholder
for estate planning purposes which or who agrees in writing to be
bound by all of the obligations and limitations set forth herein or
(B) exercise any options convertible or exchangeable for shares of
Common Stock.
(b) During the Proxy Term,
each Stockholder agrees not to take any action that would make any
representation or warranty of such Stockholder contained herein
untrue or incorrect in any material respect or have the effect of
preventing or disabling any Stockholder from performing his, her or
its obligations under this Agreement.
(c) In the event of a stock
dividend or distribution, or any change in the Common Stock or
Class A Common Stock by reason of any stock dividend or
distribution, split-up, recapitalization, combination, exchange of
shares
|
