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 inc
