<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
ELJER INDUSTRIES, INC.
(NAME OF SUBJECT COMPANY)
ZURN ACQUISITION CO., INC.
ZURN INDUSTRIES, INC.
(BIDDERS)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
287161103
----------------
(CUSIP NUMBER OF CLASS OF SECURITIES)
DENNIS HAINES
GENERAL COUNSEL AND SECRETARY
ZURN INDUSTRIES, INC.
ONE ZURN PLACE
ERIE, PENNSYLVANIA 16505
(814) 452-2111
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
----------------
COPIES TO:
DAVID G. HEIMAN
JONES, DAY, REAVIS & POGUE
901 LAKESIDE AVENUE
CLEVELAND, OHIO 44114
(216) 586-3939
----------------
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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$189,961,464 $37,993
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* Estimated for purposes of calculating the filing fee only. Such amount was
derived by multiplying $24.00, the amount offered for each share of common
stock, par value $1.00 per share (the "Shares"), of Eljer Industries, Inc.,
by the sum of (i) 7,153,657, representing all of the Shares issued and
outstanding as of December 14, 1996 and (ii) 761,404, representing all of
the Shares reserved for issuance upon the exercise of all outstanding
options to purchase Shares as of December 14, 1996.
** 1/50th of 1% of the Transaction Valuation.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: NOT APPLICABLE FILING PARTY: NOT APPLICABLE
FORM OR REGISTRATION NO.: NOT APPLICABLE DATE FILED: NOT APPLICABLE
PAGE 1 OF 140 PAGES
(EXHIBIT INDEX IS LOCATED ON PAGE 7)
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<PAGE>
14D-1
CUSIP NO. 287161103 PAGE 2 OF 140 PAGES
NAME OF REPORTING PERSONS
1.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Zurn Acquisition Co., Inc.
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2. (a) [_]
(b) [X]
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SEC USE ONLY
3.
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SOURCES OF FUNDS
4.
BK, AF
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) or 2(f)
5.
[_]
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CITIZENSHIP OR PLACE OF ORGANIZATION
6.
Delaware
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7.
0
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES
8.
[_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
9.
0%
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TYPE OF REPORTING PERSON
10.
CO
<PAGE>
14D-1
CUSIP NO. 287161103 PAGE 3 OF 140 PAGES
NAME OF REPORTING PERSONS
1.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Zurn Industries, Inc.
25-1040754
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2. (a) [_]
(b) [X]
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SEC USE ONLY
3.
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SOURCES OF FUNDS
4.
WC, BK
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) or 2(f)
5.
[_]
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CITIZENSHIP OR PLACE OF ORGANIZATION
6.
Pennsylvania
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
7.
0
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES
8.
[_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
9.
0%
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TYPE OF REPORTING PERSON
10.
CO, HC
<PAGE>
This Tender Offer Statement on Schedule 14D-1 is filed by Zurn Industries,
Inc., a Pennsylvania corporation ("Parent"), and Zurn Acquisition Co., Inc., a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"),
relating to the offer by Purchaser to purchase all of the outstanding shares
of common stock, par value $1.00 per share (the "Shares"), of Eljer
Industries, Inc., a Delaware corporation (the "Company"), at a purchase price
of $24.00 per Share, net to the seller in cash, on the terms and subject to
the conditions set forth in the Offer to Purchase, dated December 20, 1996
(the "Offer to Purchase"), and in the related Letter of Transmittal and any
amendments or supplements thereto, copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively (which collectively constitute the
"Offer").
The item numbers and responses thereto below are in accordance with the
requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Eljer Industries, Inc., a Delaware
corporation. The address of its principal executive offices is 17120 Dallas
Parkway, Dallas, Texas 75248.
(b) The information set forth on the cover page and under "Introduction" in
the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d), (g) This Statement is filed by Purchaser and Parent. The
information set forth on the cover page, under "Introduction," in Section 9
("Certain Information Concerning Purchaser and Parent") and in Schedule I of
the Offer to Purchase is incorporated herein by reference.
(e)-(f) None of Purchaser, Parent or, to the knowledge of Purchaser and
Parent, any of the persons listed in Schedule I to the Offer to Purchase has
during the last five years been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of a competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS, OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a)-(b) The information set forth under "Introduction" and in Sections 8
("Certain Information Concerning the Company"), 9 ("Certain Information
Concerning Purchaser and Parent"), 11 ("Background of the Offer") and 12
("Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; Other Matters") of the Offer to Purchase is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(e) The information set forth under "Introduction" and in Section 12
("Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; Other Matters") of the Offer to Purchase is incorporated herein by
reference.
(f)-(g) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares, Stock Exchange Listing and Exchange Act Registration,
and Margin Securities") of the Offer to Purchase is incorporated herein by
reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a)-(b) The information set forth under "Introduction" and in Section 9
("Certain Information Concerning Purchaser and Parent") of the Offer to
Purchase is incorporated herein by reference.
Page 4 of 140 Pages
<PAGE>
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth under "Introduction" and in Sections 9 ("Certain
Information Concerning Purchaser and Parent") and 12 ("Purpose of the Offer
and the Merger; Plans for the Company; the Merger Agreement; Other Matters")
of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth under "Introduction" and in Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in Section 9 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth under "Introduction" and in Sections 9
("Certain Information Concerning Purchaser and Parent") and 12 ("Purpose of
the Offer and the Merger; Plans for the Company; the Merger Agreement; Other
Matters") of the Offer to Purchase is incorporated herein by reference.
(b)-(c) The information set forth in Sections 14 ("Certain Conditions of the
Offer") and 15 ("Certain Legal Matters") of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares, Stock Exchange Listing and Exchange Act Registration,
and Margin Securities") of the Offer to Purchase is incorporated herein by
reference.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<C> <S>
(a)(1) Offer to Purchase, dated December 20, 1996
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
(a)(4) Nominees
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
Guidelines for Certification of Taxpayer Identification Number on
(a)(6) Substitute Form W-9
(a)(7) Form of Summary Advertisement dated December 20, 1996
(a)(8) Text of Joint Press Release of Zurn Industries, Inc. and Eljer
Industries, Inc., dated December 16, 1996
Letter, dated December 9, 1996, addressed to Zurn Industries, Inc. from
(b)(1) Bankers Trust Company
Letter, dated December 10, 1996, addressed to Zurn Industries, Inc.
(b)(2) from NationsBank, N.A.
Letter, dated December 12, 1996, addressed to Zurn Industries, Inc.
(b)(3) from Societe Generale
(b)(4) Letter, dated December 10, 1996, addressed to Zurn Industries, Inc.
from PNC Bank, National Association
(b)(5) Letter, dated December 10, 1996, addressed to Zurn Industries, Inc.
from Brown Brothers Harriman & Co.
(c)(1) Agreement and Plan of Merger, dated December 14, 1996, among Zurn
Industries, Inc., Zurn Acquisition Co., Inc. and Eljer Industries,
Inc.
(c)(2) Confidentiality and Standstill Agreement, dated August 21, 1996,
between Zurn Industries, Inc. and Eljer Industries, Inc., as amended
November 5, 1996 and November 7, 1996
(d) Not applicable
(e) Not applicable
(f) Not applicable
Consent of Ernst & Young LLP, Independent Auditors of Zurn Industries,
(g)(1) Inc.
</TABLE>
Page 5 of 140 Pages
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: December 20, 1996 Zurn Acquisition Co., Inc.
By: /s/ Robert R. Womack
---------------------------------
NAME: ROBERT R. WOMACK
TITLE: PRESIDENT
Dated: December 20, 1996 Zurn Industries, Inc.
By: /s/ Robert R. Womack
--------------------------------
NAME: ROBERT R. WOMACK
TITLE: CHAIRMAN AND CHIEF
EXECUTIVE OFFICER
Page 6 of 140 Pages
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
(a)(1) Offer to Purchase, dated December 20, 1996......................
(a)(2) Letter of Transmittal...........................................
(a)(3) Notice of Guaranteed Delivery...................................
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.............................................
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.............................
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.........................................
(a)(7) Form of Summary Advertisement dated December 20, 1996...........
(a)(8) Text of Joint Press Release of Zurn Industries, Inc. and Eljer
Industries, Inc., dated December 16, 1996......................
(b)(1) Letter, dated December 9, 1996, addressed to Zurn Industries,
Inc. from Bankers Trust Company................................
(b)(2) Letter, dated December 10, 1996, addressed to Zurn Industries,
Inc. from NationsBank, N.A.....................................
(b)(3) Letter, dated December 12, 1996, addressed to Zurn Industries,
Inc. from Societe Generale.....................................
(b)(4) Letter, dated December 10, 1996, addressed to Zurn Industries,
Inc. from PNC Bank, National Association.......................
(b)(5) Letter, dated December 10, 1996, addressed to Zurn Industries,
Inc. from Brown Brothers Harriman & Co.........................
(c)(1) Agreement and Plan of Merger, dated December 14, 1996, among
Zurn Industries, Inc., Zurn Acquisition Co., Inc. and Eljer
Industries, Inc................................................
(c)(2) Confidentiality and Standstill Agreement, dated August 21, 1996,
between Zurn Industries, Inc. and Eljer Industries, Inc., as
amended November 5, 1996 and November 7, 1996..................
(d) Not applicable..................................................
(e) Not applicable..................................................
(f) Not applicable..................................................
(g)(1) Consent of Ernst & Young LLP, Independent Auditors of Zurn
Industries, Inc................................................
</TABLE>
Page 7 of 140 Pages
<PAGE>
EXHIBIT 99.(a)(1)
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ELJER INDUSTRIES, INC.
AT
$24.00 NET PER SHARE
BY
ZURN ACQUISITION CO., INC.
A WHOLLY OWNED SUBSIDIARY
OF
ZURN INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 21, 1997, UNLESS THE OFFER IS EXTENDED
THE BOARD OF DIRECTORS OF ELJER INDUSTRIES, INC. (THE "COMPANY") HAS
DETERMINED THAT EACH OF THE OFFER AND THE MERGER DESCRIBED HEREIN IS FAIR TO,
AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS (THE "STOCKHOLDERS"),
HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS (SUBJECT TO THE LIMITATIONS
SET FORTH IN THE MERGER AGREEMENT) THAT THE STOCKHOLDERS ACCEPT THE OFFER AND
TENDER ALL OF THEIR SHARES PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN)
THAT NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE, OF THE
COMPANY WHICH CONSTITUTES AT LEAST 50.1% OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS ON THE DATE OF PURCHASE. THE OFFER IS ALSO SUBJECT TO CERTAIN
OTHER CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE "INTRODUCTION" AND
SECTIONS 1 AND 14 OF THIS OFFER TO PURCHASE.
----------------
IMPORTANT
Any Stockholder desiring to tender all or a portion of that Stockholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
manually signed facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, mail or deliver it and any other required documents to
the Depositary and either deliver the certificates for those Shares to the
Depositary along with the Letter of Transmittal or tender those Shares
pursuant to the procedures for book-entry transfer set forth in Section 3
hereof, or (2) request his or her broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for the stockholder. Any
Stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact that broker,
dealer, commercial bank, trust company or other nominee if the stockholder
wishes to tender such Shares.
Any Stockholder who desires to tender Shares and whose certificates
representing those Shares are not immediately available or who cannot comply
with the procedure for book-entry transfer on a timely basis should tender
those Shares by following the procedures for guaranteed delivery set forth in
Section 3 hereof.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their addresses and telephone numbers set forth
on the back cover of this Offer to Purchase. Requests for additional copies of
this Offer to Purchase, the Letter of Transmittal and other related materials
may be directed to the Information Agent or to brokers, dealers, commercial
banks and trust companies.
----------------
The Dealer Manager for the Offer is:
DEUTSCHE MORGAN GRENFELL INC.
December 20, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION............................................................ 1
1. Terms of the Offer................................................. 3
2. Acceptance for Payment and Payment for Shares...................... 4
3. Procedure for Tendering Shares..................................... 5
4. Withdrawal Rights.................................................. 7
Certain Federal Income Tax Consequences of the Offer and the
5. Merger............................................................ 8
6. Price Range of the Shares; Dividends on the Shares................. 9
7. Effect of the Offer on the Market for the Shares, Stock Exchange
Listing
and Exchange Act Registration, and Margin Securities.............. 10
8. Certain Information Concerning the Company......................... 11
9. Certain Information Concerning Purchaser and Parent................ 13
10. Source and Amount of Funds......................................... 15
11. Background of the Offer............................................ 16
12. Purpose of the Offer and the Merger; Plans for the Company; the
Merger
Agreement; Other Matters.......................................... 19
13. Dividends and Distributions........................................ 32
14. Certain Conditions of the Offer.................................... 33
15. Certain Legal Matters.............................................. 34
16. Fees and Expenses.................................................. 36
17. Miscellaneous...................................................... 36
SCHEDULE I.............................................................. S-1
</TABLE>
<PAGE>
To the Holders of Common Stock of
Eljer Industries, Inc.:
INTRODUCTION
Zurn Acquisition Co., Inc., a Delaware corporation ("Purchaser"), hereby
offers to purchase all of the outstanding shares of common stock, par value
$1.00 per share (the "Shares" or the "Common Stock"), of Eljer Industries,
Inc., a Delaware corporation (the "Company"), at a purchase price of $24.00
per Share, net to the seller in cash (the "Offer Consideration"), upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer"). Purchaser
is a direct, wholly owned subsidiary of Zurn Industries, Inc., a Pennsylvania
corporation ("Parent").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
December 14, 1996 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that after the
purchase of Shares pursuant to the Offer, subject to the satisfaction or
waiver of certain conditions, Purchaser will be merged with and into the
Company (the "Merger"), with the Company surviving the Merger as a wholly
owned subsidiary of Parent (the "Surviving Corporation"). In the Merger, each
Share (excluding Shares owned, directly or indirectly, by the Company or any
of its wholly owned subsidiaries or by Parent, Purchaser or any other wholly
owned subsidiary of Parent, and Shares owned by stockholders who have properly
exercised their appraisal rights under Delaware law) issued and outstanding
immediately prior to the effective time of the Merger (the "Effective Time")
will be converted at the Effective Time into the right to receive the Offer
Consideration (or any greater amount paid pursuant to the Offer), in cash,
without interest and less any required withholding taxes (the "Merger
Consideration").
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS DETERMINED THAT EACH
OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS (THE "STOCKHOLDERS"), HAS APPROVED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
AND RECOMMENDS (SUBJECT TO THE LIMITATIONS SET FORTH IN THE MERGER AGREEMENT)
THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES PURSUANT
THERETO.
BEAR, STEARNS & CO. INC., THE COMPANY'S FINANCIAL ADVISOR ("BEAR STEARNS"),
HAS DELIVERED TO THE COMPANY ITS OPINION THAT THE CONSIDERATION TO BE RECEIVED
BY THE STOCKHOLDERS IN THE OFFER AND THE MERGER IS FAIR, FROM A FINANCIAL
POINT OF VIEW, TO THE STOCKHOLDERS. A COPY OF THE WRITTEN OPINION OF BEAR
STEARNS IS CONTAINED IN THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON
SCHEDULE 14D-9 (THE "SCHEDULE 14D-9") FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") IN CONNECTION WITH THE OFFER, A COPY OF WHICH IS
BEING FURNISHED TO THE STOCKHOLDERS CONCURRENTLY WITH THIS OFFER TO PURCHASE.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) THAT NUMBER OF SHARES WHICH CONSTITUTES AT LEAST 50.1% OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM
SHARE CONDITION"). THE OFFER ALSO IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTIONS 1 AND 14.
The Company has informed Purchaser that, as of December 13, 1996, 7,153,657
Shares were issued and outstanding, and 761,404 Shares were reserved for
issuance to holders of outstanding stock options granted by the Company (the
"Options"). At least 3,965,446 Shares must be validly tendered pursuant to the
Offer and not withdrawn in order for the Minimum Share Condition to be met.
The consummation of the Merger is subject to the satisfaction or waiver of a
number of conditions, including, if required, the approval of the Merger by
the requisite vote or consent of the Stockholders. Under the
<PAGE>
Delaware General Corporation Law (the "DGCL"), the Stockholder vote necessary
to approve the Merger must be the affirmative vote of at least a majority of
the outstanding Shares, including Shares held by Purchaser and its affiliates.
If the Minimum Share Condition is satisfied and Purchaser purchases at least
50.1% of the outstanding Shares in the Offer, Purchaser will be able to effect
the Merger without the affirmative vote of any other Stockholder. If, however,
Purchaser acquires at least 90% of the outstanding Shares pursuant to the
Offer or otherwise, Purchaser will be able to effect the Merger pursuant to
the "short-form" merger provisions of Section 253 of the DGCL, without prior
notice to, or any action by, any other Stockholder. In that event, Purchaser
intends to effect the Merger as promptly as practicable following the purchase
of Shares in the Offer. See Section 12.
The Merger Agreement is more fully described in Section 12. Certain federal
income tax consequences of the sale of Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
Tendering Stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer or
the Merger. Purchaser will pay all charges and expenses of Deutsche Morgan
Grenfell Inc., as the Dealer Manager (the "Dealer Manager"), Harris Trust
Company of New York, as the depositary (the "Depositary"), and Morrow & Co.,
Inc., as the information agent (the "Information Agent"), in connection with
the Offer. See Section 16.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
2
<PAGE>
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment (and thereby purchase) all
Shares that are validly tendered and not withdrawn in accordance with Section
4 prior to the Expiration Date. As used in the Offer, the term "Expiration
Date" means 12:00 midnight, New York City time, on Tuesday, January 21, 1997,
unless and until Purchaser, in accordance with the terms of the Offer and the
Merger Agreement, shall have extended the period of time during which the
Offer is open, in which event the term "Expiration Date" means the latest time
and date at which the Offer, as so extended, expires. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1(c)(6) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
In the event that the Offer is not consummated, Purchaser may seek to
acquire Shares through open-market purchases, privately negotiated
transactions or otherwise, upon such terms and conditions and at such prices
as it shall determine, which may be more or less than the Offer Consideration
and could be for cash or other consideration.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Share Condition and the expiration or termination of all waiting
periods imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the regulations thereunder (the "HSR Act"). The Offer is also
subject to certain other conditions set forth in Section 14. Subject to the
terms of the Merger Agreement, Purchaser expressly reserves the right (but
will not be obligated) to waive any or all of the conditions of the Offer.
Pursuant to the Merger Agreement, if by the Expiration Date any or all of the
conditions to the Offer are not satisfied or waived, Purchaser will extend the
Expiration Date for one or more periods not exceeding 60 calendar days (or, if
required by the Company in its sole discretion, 120 calendar days) in the
aggregate. In addition, the Merger Agreement permits Purchaser to extend the
Expiration Date for up to 20 business days after the initial Expiration Date.
Subject to the terms of the Merger Agreement and the rights of tendering
Stockholders to withdraw their Shares, Purchaser will retain all tendered
Shares until the Expiration Date.
Subject to the terms of the Merger Agreement described above, Purchaser
expressly reserves the right, subject to applicable law, to extend the period
of time during which the Offer is open by giving oral or written notice of
such extension to the Depositary and by making a public announcement of such
extension. There can be no assurance that Purchaser will exercise its right to
extend the Offer. Purchaser also expressly reserves the right, subject to
applicable law (including applicable rules of the Commission) and to the terms
of the Merger Agreement, at any time or from time to time, (i) to delay
acceptance for payment of, or payment for, any Shares, regardless of whether
the Shares were theretofore accepted for payment, or to terminate the Offer
and not accept for payment or pay for any Shares not theretofore accepted for
payment or paid for, upon the occurrence of any of the conditions specified in
Section 14, by giving oral or written notice of such delay in payment or
termination to the Depositary, and (ii) to waive any conditions or otherwise
amend the Offer in any respect, by giving oral or written notice to the
Depositary. Any extension, delay in payment, termination or amendment will be
followed as promptly as practicable by public announcement, the announcement
in the case of an extension to be issued no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. Without limiting the manner in which Purchaser may choose to make any
public announcement, Purchaser will have no obligation to publish, advertise
or otherwise communicate any such announcement, otherwise than by issuing a
release to the Dow Jones News Service or as otherwise may be required by law.
The reservation by Purchaser of the right to delay acceptance for payment of,
or payment for, Shares is subject to the provisions of Rule 14e-1(c) under the
Exchange Act, which requires that Purchaser pay the consideration offered or
return the Shares deposited by or on behalf of Stockholders promptly after the
termination or withdrawal of the Offer. Any delay in acceptance for payment or
payment beyond the time permitted by applicable law will be effectuated by an
extension of the period of time during which the Offer is open.
Pursuant to the terms of the Merger Agreement, without the prior written
consent of the Company, Purchaser will not (and Parent will cause Purchaser
not to) (i) decrease or change the form of consideration
3
<PAGE>
payable in the Offer or decrease the number of Shares sought pursuant to the
Offer, (ii) change the conditions to the Offer, (iii) impose additional
conditions to the Offer, (iv) extend the Expiration Date (except as required
by law and except as described in the second preceding paragraph), (v) waive
the Minimum Share Condition or (vi) amend any term of the Offer in any manner
adverse to holders of Shares; provided, however, that, except as set forth
above and subject to applicable legal requirements, Purchaser may waive any
other condition to the Offer in its sole discretion; and provided, further,
that the Offer may be extended in connection with the increase in the
consideration to be paid pursuant to the Offer so as to comply with applicable
rules and regulations of the Commission. Assuming the prior satisfaction or
waiver of the conditions to the Offer, Purchaser will accept for payment, and
pay for, in accordance with the terms of the Offer, all Shares validly
tendered and not withdrawn pursuant to the Offer as soon as practicable after
the Expiration Date.
The Commission has announced that, under its interpretation of Rules 14d-
4(c) and 14d-6(d) under the Exchange Act, material changes in the terms of a
tender offer or information concerning a tender offer may require that the
tender offer be extended so that it remains open a sufficient period of time
to allow security holders to consider such material changes or information in
deciding whether or not to tender or withdraw their securities. The minimum
period during which an offer must remain open following material changes in
the terms of the Offer or information concerning the Offer, other than a
change in price or a change in percentage of securities sought, will depend
upon the facts and circumstances, including the relative materiality of the
terms or information. If Purchaser decides to increase or, subject to the
consent of the Company, to decrease the consideration in the Offer, to make a
change in the percentage of Shares sought or to change or waive the Minimum
Share Condition and if, at the time that notice of any such change is first
published, sent or given to Stockholders, the Offer is scheduled to expire at
any time earlier than the tenth business day after (and including) the date of
that notice, the Offer will be extended at least until the expiration of that
period of ten business days.
The Company has provided Purchaser with its stockholder list and security
position listings for the purpose of disseminating the Offer to the
Stockholders. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and will
be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
Company stockholder list or, if applicable, who are listed as participants in
a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment (and thereby purchase) and
pay for Shares that are validly tendered and not properly withdrawn on or
prior to the Expiration Date, as soon as practicable after the later of the
following dates: (i) the Expiration Date and (ii) the date of satisfaction or
waiver of all the conditions to the Offer set forth in this Offer to Purchase.
Subject to the applicable rules of the Commission, Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares
in order to comply, in whole or in part, with any other applicable law,
government regulation or condition contained therein. See Sections 1 and 14.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for the
Shares (or a timely Book-Entry Confirmation (as defined in Section 3) with
respect to the Shares), (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with all required
signature guarantees or an Agent's Message (as defined below) in connection
with a book-entry transfer and (iii) all other documents required by the
Letter of Transmittal. See Section 3.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility (as defined in Section 3) to and received by the Depositary
and forming part of a Book-Entry Confirmation, which states that (i) such
Book-Entry Transfer Facility has received an express acknowledgement from the
participant in such Book-Entry Transfer Facility tendering the Shares that are
the subject of such Book-Entry Confirmation, (ii) such
4
<PAGE>
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and (iii) Purchaser may enforce such agreement against such
participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) tendered Shares as, if and when Purchaser
gives oral or written notice to the Depositary of Purchaser's acceptance of
such Shares for payment. In all cases, payment for Shares purchased pursuant
to the Offer will be made by deposit of the purchase price with the
Depositary, which will act as agent for the tendering Stockholders for the
purpose of receiving payment from Purchaser and transmitting payment to the
tendering Stockholders whose Shares shall have been accepted for payment. If,
for any reason, acceptance for payment of any Shares tendered pursuant to the
Offer is delayed, or Purchaser is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to Purchaser's rights under
Section 14, the Depositary may, nevertheless, on behalf of Purchaser, retain
the tendered Shares, and such Shares may not be withdrawn, except to the
extent that the tendering Stockholders are entitled to withdrawal rights as
described in Section 4 and as otherwise required by Rule 14e-1(c) under the
Exchange Act. Under no circumstances will interest accrue on the consideration
to be paid for the Shares by Purchaser, regardless of any delay in making such
payment.
If any tendered Shares are not purchased for any reason or if certificates
are submitted for more Shares than are tendered, certificates for the Shares
not purchased or tendered will be returned pursuant to the instructions of the
tendering Stockholder without expense to the tendering Stockholder (or, in the
case of Shares delivered by book-entry transfer into the Depositary's account
at a Book-Entry Transfer Facility pursuant to the procedures set forth in
Section 3, the Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility) as promptly as practicable following
the expiration, termination or withdrawal of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Share pursuant to the Offer, Purchaser will pay the increased
consideration for all of the Shares purchased pursuant to the Offer, whether
or not the Shares were tendered prior to the increase in consideration.
3. PROCEDURE FOR TENDERING SHARES
Valid Tenders. For Shares to be validly tendered pursuant to the Offer,
either (i) a Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees
and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase on or prior to the Expiration Date and either (a)
certificates representing tendered Shares must be received by the Depositary
at any one of those addresses prior to the Expiration Date or (b) the Shares
must be delivered pursuant to the procedures for book-entry transfer set forth
below and a Book-Entry Confirmation must be received by the Depositary on or
prior to the Expiration Date or (ii) the tendering Stockholder must comply
with the guaranteed delivery procedures set forth below. No alternative,
conditional or contingent tenders will be accepted.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (the "Book-Entry Transfer Facility") for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in either of the Book-Entry
Transfer Facility systems may make book-entry delivery of Shares by causing
the applicable Book-Entry Transfer Facility to transfer the Shares into the
Depositary's account at the Book-Entry Transfer Facility in accordance with
the Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of the Shares may be effected through book-entry transfer
into the Depositary's account at the Book-Entry Transfer Facility, the Letter
of Transmittal (or a manually signed facsimile thereof), properly completed
and duly executed with any required signature guarantees and any other
required documents must, in any case, be transmitted to, and received by, the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date, or the tendering Stockholder must
comply with the guaranteed delivery procedures described below. The
confirmation of a book-entry transfer of Shares into the Depositary's account
at a Book-Entry Transfer Facility as described above is referred to as a
"Book-Entry Confirmation." DELIVERY OF THE LETTER OF TRANSMITTAL OR OTHER
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY OF
THE LETTER OF TRANSMITTAL OR SUCH OTHER DOCUMENTS TO THE DEPOSITARY.
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<PAGE>
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder (which term, for purposes of this Section, includes any participant in
either of the Book-Entry Transfer Facility systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loans associations and brokerage houses) that is a participant in
the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(an "Eligible Institution"). In all other cases, all signatures on the Letter
of Transmittal must be guaranteed by an Eligible Institution. See Instruction
1 of the Letter of Transmittal. If the certificates representing Shares are
registered in the name of a person other than the signer of the Letter of
Transmittal or if payment is to be made or certificates for Shares not
tendered or not accepted for payment are to be returned to a person other than
the registered holder of the certificates surrendered, then the tendered
certificates representing Shares must be endorsed or accompanied by
appropriate stock powers, in each case signed exactly as the name or names of
the registered holder or owners appear on the certificates, with the
signatures on the certificates or stock powers guaranteed by an Eligible
Institution as described above and as provided in the Letter of Transmittal.
See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a Stockholder wishes to tender Shares pursuant to
the Offer and the Stockholder's certificates are not immediately available or
the procedures for book-entry transfer cannot be completed on a timely basis
or time will not permit all required documents to be received by the
Depositary prior to the Expiration Date, the Shares may nevertheless be
tendered if all the following guaranteed delivery procedures are complied
with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser with this Offer
to Purchase, is received by the Depositary as provided below prior to the
Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer or a Book-Entry Confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof) and all required signature
guarantees or an Agent's Message and any other documents required by the
Letter of Transmittal, are received by the Depositary within three New York
Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery.
THE NOTICE OF GUARANTEED DELIVERY MAY BE DELIVERED BY HAND OR TRANSMITTED BY
TELEGRAM, FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST INCLUDE
AN ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN THE NOTICE
OF GUARANTEED DELIVERY.
IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED
FACSIMILE THEREOF) IS RECEIVED BY THE DEPOSITARY AT ONE OF ITS ADDRESSES SET
FORTH ON THE BACK COVER OF THIS OFFER TO PURCHASE PRIOR TO THE EXPIRATION
DATE.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL
AND ANY OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE
TENDERING STOCKHOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE DEPOSITARY. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Notwithstanding any other provision of this Offer to Purchase, payment for
Shares accepted for payment pursuant to the Offer in all cases will be made
only after timely receipt by the Depositary of certificates for (or Book-Entry
Confirmation with respect to) the Shares, a Letter of Transmittal (or a
manually signed facsimile
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<PAGE>
thereof), properly completed and duly executed with all required signature
guarantees and all other documents required by the Letter of Transmittal (or,
in the case of a book-entry transfer, an Agent's Message).
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING OF 31% OF THE PAYMENTS MADE TO STOCKHOLDERS WITH RESPECT TO THE
PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER OR THE MERGER, A
STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH HIS OR HER CORRECT TAXPAYER
IDENTIFICATION NUMBER AND CERTIFY THAT HE OR SHE IS NOT SUBJECT TO BACKUP
FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED
IN THE LETTER OF TRANSMITTAL. SEE INSTRUCTION 10 OF THE LETTER OF TRANSMITTAL.
SEE SECTION 5 BELOW.
Determination of Validity. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination shall
be final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares determined not to be in proper form or the
acceptance of or payment for which may, in the opinion of counsel, be unlawful
and reserves the absolute right to waive any defect or irregularity in any
tender of Shares. Subject to the terms of the Merger Agreement, Purchaser also
reserves the absolute right to waive or amend any or all of the conditions of
the Offer. Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and its instructions) will be final and
binding on all parties. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
None of Purchaser, Parent, the Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to
give any such notification.
Appointment as Proxy. By executing a Letter of Transmittal, a tendering
Stockholder irrevocably appoints designees of Purchaser as his attorneys-in-
fact and proxies, with full power of substitution, in the manner set forth in
the Letter of Transmittal, to the full extent of the Stockholder's rights with
respect to the Shares tendered by the Stockholder and purchased by Purchaser
and with respect to any and all other Shares or other securities issued or
issuable in respect of those Shares, on or after the date of the Offer. All
such powers of attorney and proxies will be considered coupled with an
interest in the tendered Shares. Such appointment will be effective when, and
only to the extent that, Purchaser accepts the Shares for payment. Upon
acceptance for payment, all prior powers of attorney and proxies given by the
Stockholder with respect to the Shares (and any other Shares or other
securities so issued in respect of such purchased Shares) will be revoked,
without further action, and no subsequent powers of attorney and proxies may
be given (and, if given, will not be deemed effective) by the Stockholder. The
designees of Purchaser will be empowered to exercise all voting and other
rights of the Stockholder with respect to such Shares (and any other Shares or
securities so issued in respect of such purchased Shares) as they in their
sole discretion may deem proper, including, without limitation, in respect of
any annual or special meeting of the Stockholders, or any adjournment or
postponement of any such meeting.
Purchaser reserves the absolute right to require that, in order for Shares
to be validly tendered, immediately upon Purchaser's acceptance for payment of
the Shares, Purchaser must be able to exercise full voting and other rights
with respect to the Shares, including voting at any meeting of Stockholders
then scheduled.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment by Purchaser as provided in this Offer to
Purchase, may also be withdrawn at any time after February 17, 1997. If
Purchaser extends the Offer, is delayed in its purchase of or payment for
Shares, or is unable to purchase or pay for Shares for any reason then,
without prejudice to the rights of Purchaser, tendered Shares may be retained
by the Depositary on behalf of Purchaser and may not be withdrawn, except to
the extent that tendering Stockholders are entitled to withdrawal rights as
set forth in this Section 4.
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<PAGE>
The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the provisions of Rule 14e-
1(c) under the Exchange Act, which requires Purchaser to pay the consideration
offered or to return Shares deposited by or on behalf of Stockholders promptly
after the termination or withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the persons who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered the Shares. If certificates evidencing Shares have been delivered or
otherwise identified to the Depositary then, prior to the release of the
certificates, the tendering Stockholder must also submit the serial numbers
shown on the particular certificates evidencing the Shares to be withdrawn,
and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution (except in the case of Shares tendered for the account of
an Eligible Institution). If Shares have been tendered pursuant to the
procedure for book-entry transfer set forth in Section 3, the notice of
withdrawal must specify the name and number of the account at the applicable
Book-Entry Transfer Facility to be credited with the withdrawn Shares. All
questions as to the form and validity (including time of receipt) of notices
of withdrawal will be determined by Purchaser, in its sole discretion, which
determination shall be final and binding on all parties. No withdrawal of
Shares will be deemed to have been made properly until all defects and
irregularities have been cured or waived. None of Parent, Purchaser, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failing to give such
notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3
above.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted into the right to receive the Merger
Consideration in the Merger (including any cash amounts received by dissenting
Stockholders pursuant to the exercise of appraisal rights). This discussion is
based upon the provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), the applicable Treasury Regulations promulgated and proposed
thereunder, judicial authority and administrative rulings and practice.
Legislative, judicial or administrative changes or interpretations are subject
to change, possibly on a retroactive basis, at any time and could alter or
modify the statements and conclusions set forth below. It is assumed for
purposes of this discussion that the Shares are held as "capital assets"
within the meaning of Section 1221 of the Code (i.e., property held for
investment). This discussion does not address all aspects of federal income
taxation that may be relevant to a particular Stockholder in light of such
Stockholder's personal investment circumstances, or those Stockholders subject
to special treatment under the federal income tax laws (for example, life
insurance companies, tax-exempt organizations, foreign corporations and
nonresident alien individuals) or to Stockholders who acquired their Shares
through the exercise of employee stock options or other compensation
arrangements. In addition, the discussion does not address any aspect of
foreign, state, local or estate and gift taxation that may be applicable to a
Stockholder.
Consequences of the Offer and the Merger to Stockholders
The receipt of the Offer Consideration and the Merger Consideration (and any
cash amounts received by dissenting Stockholders pursuant to the exercise of
appraisal rights) will be a taxable transaction for federal income tax
purposes (and also may be a taxable transaction under applicable state, local
and other income tax laws). In general, for federal income tax purposes, a
Stockholder will recognize gain or loss equal to the difference between his or
her adjusted tax basis in the Shares sold pursuant to the Offer or converted
to cash in
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the Merger or pursuant to the exercise of appraisal rights and the amount of
cash received therefor. Such gain or loss will be capital gain or loss and
will be long-term gain or loss, if, on the date of sale (or, if applicable,
the date of the Merger) the Shares were held for more than one year.
Backup Tax Withholding
Under the Code, a Stockholder may be subject, under certain circumstances,
to "backup withholding" at a 31% rate with respect to payments made in
connection with the Offer or the Merger. Backup withholding generally applies
if the Stockholder (i) fails to furnish his social security number or other
taxpayer identification number ("TIN"), (ii) furnishes an incorrect TIN, (iii)
fails properly to report interest or dividends, or (iv) under certain
circumstances, fails to provide a certified statement, signed under penalties
of perjury, that the TIN provided is his correct number and that he or she is
not subject to backup withholding. Backup withholding is not an additional tax
but merely an advance payment, which may be refunded to the extent it results
in an overpayment of tax. Certain persons generally are exempt from backup
withholding, including corporations and financial institutions. Certain
penalties apply for failure to furnish correct information and for failure to
include the reportable payments in income. Each Stockholder should consult
with his or her own tax advisor as to his or her qualifications for exemption
from withholding and the procedure for obtaining such exemption.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS
TO DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 (the "Company 10-K") and Quarterly Report on Form 10-Q
for the quarterly period ended September 29, 1996 (the "Company 10-Q") and
information supplied to Purchaser by the Company, the principal trading market
for the Shares is the NYSE, and the Shares trade on the NYSE under the symbol
"ELJ." The Company has not paid regular cash dividends on the Shares. The
following table sets forth, for the periods indicated, the high and low sale
prices per Share reported by the NYSE Composite Reporting System.
<TABLE>
<CAPTION>
HIGH LOW
-------- -------
<S> <C> <C>
1994:
First Quarter.......................................... $ 9 1/4 $ 6 5/8
Second Quarter......................................... 8 1/2 5 7/8
Third Quarter.......................................... 8 1/2 6 1/2
Fourth Quarter......................................... 7 3/4 5 1/8
1995:
First Quarter.......................................... $ 6 3/4 $ 4 1/8
Second Quarter......................................... 6 1/2 5
Third Quarter.......................................... 6 1/4 4 5/8
Fourth Quarter......................................... 12 3 3/4
1996:
First Quarter.......................................... $ 11 1/4 $ 8 1/2
Second Quarter......................................... 12 7/8 9 5/8
Third Quarter.......................................... 11 8 5/8
Fourth Quarter (through December 13)................... 14 1/8 9 3/4
</TABLE>
On December 13, 1996, the last full trading day before the public
announcement of Purchaser's intention to acquire the Shares, the last reported
sale price on the NYSE was $13.50 per Share. On December 19, 1996, the last
full trading day before the commencement of the Offer, the last reported sale
price on the NYSE was $23.50 per Share. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES.
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<PAGE>
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION, AND MARGIN SECURITIES.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of
holders of Shares, which could adversely affect the liquidity and market value
of the remaining Shares held by Stockholders other than Purchaser. Purchaser
cannot predict whether the reduction in the number of Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Shares or whether such reduction
would cause future market prices to be greater or less than the Offer
Consideration.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing
and may, therefore, be delisted from such exchange. According to the NYSE's
published guidelines, the NYSE would consider delisting the Shares if, among
other things, the number of publicly-held Shares (excluding Shares held by
officers, directors, their immediate families and other concentrated holdings
of 10% or more) were less than 600,000, there were fewer than 1,200 holders of
at least 100 shares or the aggregate market value of the publicly-held Shares
were less than $5 million.
The Company has advised that, as of December 13, 1996, there were 7,153,657
Shares issued and outstanding. If, as a result of the purchase of Shares
pursuant to the Offer, the Shares no longer meet the requirements of the NYSE
for continued listing and the listing of Shares is discontinued, the market
for the Shares could be adversely affected. If the NYSE were to delist the
Shares (which Purchaser intends to cause the Company to seek if it acquires
control of the Company and the Shares no longer meet the NYSE listing
requirements), it is possible that the Shares would trade on another
securities exchange or in the over-the-counter market and that price
quotations for the Shares would be reported by such exchange or through the
Nasdaq Stock Market, Inc.'s National Market ("NASDAQ") or other sources. The
extent of the public market for the Shares and availability of such quotations
would, however, depend upon such factors as the number of holders and/or the
aggregate market value of the publicly-held Shares at such time, the interest
in maintaining a market in the Shares on the part of securities firms, the
possible termination of registration of the Shares under the Exchange Act and
other factors.
The Shares are currently registered under Section 12(b) of the Exchange Act.
Such registration may be terminated upon application of the Company to the
Commission if the Shares are neither listed on a national securities exchange
nor held by 300 or more holders of record. Termination of the registration of
the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to holders of Shares and to the
Commission and would make certain of the provisions of the Exchange Act, such
as the short-swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy statement pursuant to Section 14(a) in
connection with a stockholders' meeting and the related requirement of an
annual report to stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions, no longer
applicable to the Shares. Furthermore, "affiliates" of the Company and persons
holding "restricted securities" of the Company may be deprived of the ability
to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act of 1933 (the "Securities Act"). If registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be "margin
securities," or eligible for listing or NASDAQ reporting. Purchaser intends to
seek to cause the Company to terminate registration of the Shares under the
Exchange Act as soon after consummation of the Offer as the requirements for
termination of registration of the Shares are met.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to
extend credit on the collateral of such Shares. Depending upon factors similar
to those described above regarding listing and market quotations, the Shares
might no longer constitute "margin securities" for the purposes of the Federal
Reserve Board's margin regulations and, therefore, could no longer be used as
collateral for loans made by brokers.
10
<PAGE>
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal executive offices
located at 17120 Dallas Parkway, Dallas, Texas 75248. According to the Company
10-K, the Company, through its subsidiaries, is a leading manufacturer of high
quality building products for residential construction, commercial
construction and repair and remodeling markets. The Company manufactures and
markets plumbing and heating, ventilating and air conditioning ("HVAC")
products in North America and HVAC products in Europe. The Company markets its
products through wholesale distribution channels and, in North America,
directly to building products retailers.
United States Brass Corporation, an indirect wholly owned subsidiary of the
Company ("US Brass"), filed a voluntary petition for reorganization under
Chapter 11 of the Federal Bankruptcy Code in the United States Bankruptcy
Court for the Eastern District of Texas on May 23, 1994.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the Company 10-K
and the Company 10-Q. More comprehensive financial information is included in
such reports and other documents filed by the Company with the Commission, and
the following summary is qualified in its entirety by reference to such
reports and other documents and all of the financial information (including
any related notes) contained therein. Such reports and other documents should
be available for inspection and copies should be obtainable in the manner set
forth below under "Available Information."
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEAR*
---------------------- ---------------------------
SEPTEMBER 29, OCTOBER
1996 1, 1995 1995 1994 1993
------------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales................... $290,370 $294,223 $397,386 $406,063 $387,562
Cost of sales............... 213,124 219,279 295,180 293,365 278,374
Selling and administrative
expenses.................... 56,373 56,098 73,670 81,767 80,902
Income from operations...... 21,509 14,378 21,262 269 21,071
Interest expense............ 9,231 11,467 14,982 12,662 14,647
Income (loss) before income
taxes....................... 12,907 3,020 6,755 (12,397) 6,437
Net income (loss)........... 10,328 2,434 4,889 (12,224) 3,898
Net income (loss) per share. 1.43 0.34 0.69 (1.72) 0.55
</TABLE>
- --------
* Fiscal years 1995, 1994 and 1993 ended on December 31, 1995, January 1, 1995
and January 2, 1994, respectively.
CONSOLIDATED BALANCE SHEET DATA:
<TABLE>
<CAPTION>
AT
JANUARY
AT SEPTEMBER 29, AT OCTOBER 1, AT DECEMBER 31, 1,
1996 1995 1995 1995
---------------- ------------- --------------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Total assets............ $244,117 $251,543 $252,287 $257,057
Total liabilities....... 268,816 287,747 286,745 296,636
Shareholders' equity
(deficit)............... (24,699) (36,204) (34,458) (39,579)
</TABLE>
Certain Company Projections. During the course of discussions among Parent,
Purchaser and the Company that led to the execution of the Merger Agreement
(see Section 11 below), the Company provided Purchaser and Parent with certain
non-public business and financial information about the Company. The
information included a profit and loss statement which projected for the
Company and its subsidiaries, on a consolidated basis, (i) for
11
<PAGE>
the fiscal year ending December 29, 1996, (A) net sales of approximately
$399.5 million, (B) gross profit of approximately $107.2 million, (C) net
operating income of approximately $29.3 million, (D) net income of
approximately $12.4 million, (E) earnings before interest, taxes, depreciation
and amortization ("EBITDA") of approximately $37.1 million and (F) earnings
per share of approximately $1.72; (ii) for the fiscal year ending December 28,
1997, (A) net sales of approximately $430.2 million, (B) gross profit of
approximately $123.5 million, (C) net operating income of approximately $43.1
million, (D) net income of approximately $26.1 million, (E) EBITDA of
approximately $52.0 million and (F) earnings per share of approximately $3.62
($3.33 assuming the issuance of Shares as contemplated by the Third Amended
Plan of Reorganization proposed by US Brass and the Company (the "Bankruptcy
Plan")); (iii) for the fiscal year ending January 3, 1999, (A) net sales of
approximately $453.0 million, (B) gross profit of approximately $133.5
million, (C) net operating income of approximately $51.2 million, (D) net
income of approximately $34.3 million, (E) EBITDA of approximately $61.2
million and (F) earnings per share of approximately $4.77 ($4.06 assuming the
issuance of Shares as contemplated by the Bankruptcy Plan); and (iv) for the
fiscal year ending January 2, 2000, (A) net sales of approximately $473.6
million, (B) gross profit of approximately $138.4 million, (C) net operating
income of approximately $53.5 million, (D) net income of approximately $37.6
million, (E) EBITDA of approximately $64.0 million, and (F) earnings per share
of approximately $5.23 ($4.45 assuming the issuance of Shares as contemplated
by the Bankruptcy Plan). The profit and loss statements for fiscal year 1996,
1997, 1998 and 1999 assume an effective tax rate of 24.9%, 10.6%, 10.6% and
11.6%, respectively.
The Company does not as a matter of course make public any projections as to
future performance or earnings, and the projections set forth above are
included in this Offer to Purchase only because the information was provided
by the Company to Purchaser and Parent. The projections were not prepared with
a view to public disclosure or compliance with the published guidelines of the
Commission or the guidelines established by the American Institute of
Certified Public Accountants regarding projections or forecasts. None of the
Company, Purchaser or Parent or their respective financial advisors or any of
their respective directors or officers assumes any responsibility for the
accuracy of any of the projections. The Company has advised Purchaser and
Parent that the Company's internal financial forecasts (upon which the
projections provided to Parent were based in part) are, in general, prepared
solely for internal use and capital budgeting and other management purposes,
are subjective in many respects and are based on certain assumptions relating
to the implementation of certain programs and initiatives which may or may not
be implemented or, if implemented, may not produce the results assumed by
management in the preparation of its internal financial forecasts. As a result
of the foregoing, the projections provided to Parent and included herein are
susceptible to interpretation and periodic revision based on actual experience
and business developments. In addition, the estimates and assumptions
underlying the projections are inherently subject to significant economic and
competitive uncertainties and contingencies which are difficult or impossible
to predict accurately and are beyond the Company's, Purchaser's and Parent's
control, and there can be no assurance that the projected results will be
realized. Accordingly, it is expected that there will be differences between
actual and projected results, and actual results may be materially higher or
lower than those projected.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance with the Exchange Act, the
Company files periodic reports, proxy statements and other information with
the Commission relating to its business, financial condition and other
matters. The Company is required to disclose in such proxy statements certain
information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of those persons
in transactions with the Company. Such reports, proxy statements and other
information may be inspected at the Commission's office at 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection and
copying at the regional offices of the Commission located at Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies may be obtained
upon payment of the Commission's prescribed fees by writing to its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549, or through the
Commission's Website (http://www.sec.gov). Such material can also be obtained
at the office of The National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
12
<PAGE>
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained in this Offer to Purchase has been taken from
or is based upon publicly available documents on file with the Commission and
other publicly available information. Although Purchaser and Parent do not
have any knowledge that any such information is untrue, neither Purchaser nor
Parent takes any responsibility for the accuracy or completeness of such
information or for any failure by the Company to disclose events that may have
occurred and may affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Purchaser, a Delaware corporation, was organized to acquire all of the
Shares pursuant to the Offer and the Merger and has not conducted any
unrelated activities since its organization. All of the outstanding capital
stock of Purchaser is owned directly by Parent. The principal executive
offices of Purchaser are located at One Zurn Place, Erie, Pennsylvania 16505.
Parent is a Pennsylvania corporation, with its principal executive offices
located at One Zurn Place, Erie, Pennsylvania 16505. According to Parent's
Annual Report on Form 10-K for the fiscal year ended March 31, 1996 (the
"Parent 10-K"), Parent, together with its subsidiaries, designs, constructs,
manufactures, markets and operates in two industry segments: Water Control and
Power Systems. In October 1996, Parent announced its intent to sell its Power
Systems businesses and, as a result, Parent's dominant continuing operations
are those of the Water Control segment.
The Water Control segment includes products such as plumbing products
(including roof, floor, and trench drains, backwater valves recovery systems,
flush valves, shower heads, faucets and hand dryers for commercial, industrial
and institutional applications), tubular brass and plumbing supplies,
residential, commercial, and industrial pressure reducing and regulating
valves, construction of water resource and treatment systems, and automatic
interior fire protection sprinkler systems.
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries, partially excerpted from the Parent
10-K and Parent's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1996 (the "Parent 10-Q"). More comprehensive financial
information is included in such reports and other documents filed by Parent
with the Commission, and the following summary is qualified in its entirety by
reference to such reports and other documents and all the financial
information (including any related notes) contained therein. The Parent 10-K
and the Parent 10-Q are incorporated herein by reference. Such reports and
other documents should be available for inspection and copies should be
obtainable from the offices of the Commission in the same manner as set forth
under "Available Information" in Section 8 above.
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, YEAR ENDED MARCH 31,
------------------ ----------------------------
1996 1995 1996 1995 1994
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales.................... $164,073 $130,343 $421,539 $395,233 $709,225
Cost of sales................ 118,487 91,775 331,942 312,537 611,014
Marketing and administration. 28,959 25,708 70,194 64,517 62,019
Interest income.............. (1,541) (1,682) (3,368) (5,035) (5,035)
Interest expense............. 651 1,999 3,496 3,859 3,128
Other income................. (1,628) (1,590) (2,559) (1,303) (1,351)
Continuing operations income
(loss) before
income taxes................ 19,145 14,133 26,428 21,849 (11,389)
Net income (loss)............ 3,491 8,724 16,670 9,324 (13,876)
Earnings (loss) per share:
Continuing operations....... 0.97 0.70 1.41 1.24 (0.49)
Net income (loss)........... 0.28 0.71 1.35 0.76 (1.12)
</TABLE>
CONSOLIDATED BALANCE SHEET DATA:
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT MARCH 31,
----------------- -----------------
1996 1995 1996 1995
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Working capital............................ $180,197 $158,256 $173,836 $155,535
Total assets............................... 341,195 417,051 394,647 414,696
Total current liabilities.................. 58,781 138,227 113,158 142,844
Long-term obligations...................... 6,403 9,002 6,711 9,525
Retirement obligations..................... 43,869 43,679 43,823 43,397
Shareholders' equity....................... 232,142 226,143 230,955 218,930
Dividends paid............................. 2,470 3,950 6,415 10,888
Dividends paid per share................... 0.20 0.32 0.52 0.88
Dividends declared per share............... 0.20 0.20 0.40 0.88
</TABLE>
Except as set forth in this Offer to Purchase, none of Parent, Purchaser or
any of their respective subsidiaries (collectively, the "Purchaser Entities"),
or, to the knowledge of any of the Purchaser Entities, any of the persons
listed in Schedule I, has any contract, arrangement, understanding or
relationship (whether or not legally enforceable) with any other person with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer
or the voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or
the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, none of the Purchaser Entities, or, to the knowledge of any of the
Purchaser Entities, any of the persons listed in Schedule I, has had, since
January 4, 1993, any transactions with the Company or any of its affiliates
that would be required to be disclosed in the Schedule 14D-1. Except as set
forth in this Offer to Purchase, since January 4, 1993, there have been no
contacts, negotiations or transactions between the Purchaser Entities or, to
the knowledge of any of the Purchaser Entities, any of the persons listed in
Schedule I, and the Company or its affiliates concerning a merger,
consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets. Except as set forth in this Offer to Purchase, none of the
Purchaser Entities or, to the knowledge of any of the Purchaser Entities, any
of the persons listed in Schedule I, beneficially owns any Shares or has
effected any transactions in the Shares in the past 60 days.
14
<PAGE>
10. SOURCE AND AMOUNT OF FUNDS
Source and Amount of Funds. The aggregate amount of funds required by the
Purchaser to pay the aggregate purchase price to be paid pursuant to the Offer
and the Merger is estimated to be approximately $200 million. These funds are
expected to be provided to the Purchaser in the form of capital contributions
or advances made by Parent. Parent plans to obtain the funds for such capital
contributions or advances from its available cash and working capital and
through loans from a group of banks (the "Banks") from which Parent has
obtained written financing commitments (the "Commitments").
Pursuant to the Commitments, Parent expects to obtain senior financing of up
to $250 million (the "Senior Financing") to finance a portion of the aggregate
purchase price to be paid pursuant to the Offer and the Merger, to refinance
certain existing indebtedness of Parent and the Company and the Company's
subsidiaries, to pay related costs and expenses and to provide for ongoing
working capital and funds for general corporate purposes.
The Commitments contemplate that the Banks will provide three separate
facilities to Parent consisting of : (i) a term facility (the "AT Facility")
of up to $90 million; (ii) a term facility (the "RT Facility") of up to $110
million (the AT Facility, together with the RT Facility, being the "Term
Facilities"); and (iii) a revolving facility (the "Revolving Facility") of up
to $50 million (the Revolving Facility, together with the Term Facilities,
being the "Facilities"). Loans under the AT Facility will be used to finance a
portion of the cash payments required to consummate the Offer and the Merger
and to pay related costs and expenses. Loans under the RT Facility will be
used to refinance certain existing indebtedness of the Company and its
subsidiaries. Loans under the Revolving Facility will be used for working
capital and general corporate purposes.
The Term Facilities will mature on the sixth anniversary of the "Closing
Date," which is the initial borrowing date of the term portion of the Senior
Financing, subject to quarterly amortization to be determined. The Revolving
Facility will terminate on the sixth anniversary of the Closing Date.
At the option of Parent, the loans will bear interest at (i) the Base Rate
plus the Applicable Margin; or (ii) the Eurodollar Rate plus the Applicable
Margin for 1, 2, 3 or 6 month interest periods; provided that Eurodollar loans
will not be available until the Syndication Date has been reached. The
Syndication Date is the earlier of 60 days after the Closing Date and the date
on which the agent determines that the primary syndication has been completed.
The Base Rate is defined as the higher of an announced prime rate and the
federal funds rate + 1/2 of 1%. The Applicable Margin initially will be 1% for
Base Rate loans and 2% for Eurodollar loans, and will be reduced in certain
circumstances.
Interest in respect of Base Rate loans will be payable quarterly in arrears
on the last business day of each fiscal quarter. Interest on Eurodollar loans
will be payable at the end of the applicable interest period, but not less
frequently than quarterly. All interest and fees will be calculated on the
basis of the number of actual days elapsed in a 360-day year. Upon any default
in payment, overdue loans and other overdue amounts will bear interest at 2%
above the otherwise applicable rate.
The Commitments contemplate the payment of fees on account of any unused
portion of the Revolving Facility and the Term Facilities. Such fees will
initially equal .375% of such unused portions payable quarterly in arrears.
The amount of such fees are subject to reduction in certain circumstances.
Loans under the Term Facilities must be mandatorily repaid and thereafter
the Revolving Facility will be mandatorily reduced as a result of (i) asset
sales (with certain exceptions and certain reinvestments in the business to be
permitted), (ii) certain debt incurrences, (iii) certain equity issuances, and
(iv) annual excess cash flow to be specified in the credit documentation.
Loans may be voluntarily repaid at any time upon appropriate notice, subject
in all cases to breakage costs if Eurodollar loans are prepaid other than on
the last day of the applicable interest period.
Obligations (a) under the AT Facility and the Revolving Facility will be
guaranteed (i) prior to the consummation of the Merger, by each direct and
indirect domestic subsidiary of Parent (including the Purchaser
15
<PAGE>
but excluding the Company and its subsidiaries) and (ii) after the
consummation of the Merger, by each direct and indirect subsidiary of Parent
and (b) under the RT Facility will be guaranteed by Parent and each domestic
subsidiary of Parent that is not a borrower under the RT Facility.
Obligations under the Facilities will be secured by (i) a pledge of 100%
(65% in the case of the capital stock of a foreign subsidiary) of the stock of
all subsidiaries held by a borrower or any guarantor (including prior to the
consummation of the Merger, the capital stock of the Company owned by Parent
or Purchaser, which pledge will be structured to satisfy the requirements of
Regulation U promulgated under the Exchange Act) and (ii) all other
unencumbered tangible and intangible assets of such borrowers and guarantors.
The Commitments are subject to, among other things, (a) the negotiation,
execution and delivery of definitive documentation, (b) there not having
occurred any material adverse change in the business, assets, liabilities,
operations, condition (financial or otherwise) or prospects of Parent and its
subsidiaries taken as a whole or the Company and its subsidiaries taken as a
whole since March 31, 1996 and December 31, 1995, respectively, (c) the
absence of a material adverse change occurring in the financial markets which
has a material adverse effect on the syndication of Senior Financing, (d) the
full amount of the Senior Financing having been committed to by the
participants therein, (e) there being no inaccuracy in any representation or
warranty contained in the definitive documentation providing for the
Facilities, (f) Purchaser acquiring, pursuant to the Offer, such number of
Shares as is sufficient to permit Purchaser to cause the Merger to be
consummated without the requirement of any other affirmative votes, (g) all
governmental and third-party approvals necessary to consummate the Offer and
the Merger being obtained, (h) the Banks' receipt of satisfactory opinions of
counsel relating to the transactions contemplated by the Commitments, (i)
there being no pending or threatened litigation by any entity with respect to
the Senior Financing or which could have a material adverse effect on the
business, assets, liabilities, operations, condition (financial or otherwise)
or prospects of Parent and its subsidiaries taken as a whole or of the Company
and its subsidiaries (other than US Brass) taken as a whole, (j) the Banks'
receipt of a satisfactory solvency opinion, (k) the Banks' receipt of a
satisfactory environmental and hazardous substances analysis and (l) there
being, after giving effect to the initial borrowings and to the full use of
the RT Facility, no indebtedness for borrowed money of, or guaranteed by, the
Company and its subsidiaries outstanding other than indebtedness to the Banks
under the RT Facility and such other indebtedness, if any, as is satisfactory
to the Banks. The definitive documentation providing for the Facilities is
expected to contain customary and other appropriate representations,
warranties, conditions, covenants and events of defaults.
The foregoing summary is qualified in its entirety by reference to the text
of the letters evidencing the Commitments, copies of which are filed as
exhibits to the Schedule 14D-1 and incorporated in this Offer to Purchase by
reference and may be inspected in the same manner as set forth under
"Available Information" in Section 8 above. If and when the definitive
documentation providing for the Facilities is executed, copies will be filed
with the Commission. Because the procurement of the Facilities is subject to,
among other things, the negotiation, execution and delivery of definitive
documentation on terms satisfactory to the Banks, there can be no assurance
that the terms described above will be the actual or only terms of the
Facilities.
Although no definitive plan or arrangement for repayment of borrowings under
the Facilities has been made, Parent expects that it will repay any amounts
borrowed with cash flow from operations and internally generated funds
(including, if the Merger is consummated, those of the Company) and from other
sources which may include the proceeds from future public or private sales of
debt or equity securities. The sources for repayment of such borrowings will
also depend upon Parent's review from time to time of the advisability of
certain actions, as well as prevailing interest rates, financial and other
economic conditions and such other factors as Parent may deem appropriate.
11. BACKGROUND OF THE OFFER
Over the course of the last twelve months, the Company has from time to time
received inquiries from interested parties as to the Company's interest in a
merger or other business combination transaction. During this time, the
Company began discussions with its historical financial advisor, Bear Stearns,
as to the proper response to these inquiries.
16
<PAGE>
During June and July 1996, a broker representing Parent discussed with
certain members of the Company's senior management the Company's interest in
pursuing a business combination transaction with Parent. The Company's
management indicated that the Company was not for sale, although management of
the Company indicated that it would be open to additional discussions with
Parent.
In early August 1996, Robert R. Womack, the Chairman and Chief Executive
Officer of Parent, requested a meeting with senior management of the Company.
On August 12, 1996, Mr. Womack met with Scott G. Arbuckle, the Chairman and
Chief Executive Officer of the Company. At this meeting, which was also
attended by other members of senior management of the Company, the Company and
Parent shared general information regarding their respective businesses and
operations.
Immediately following the August 12, 1996 meeting, the Company met with
representatives of Bear Stearns to discuss the formal retention of Bear
Stearns to analyze strategic alternatives, as well as to assist the Company
with responses to continuing inquiries from potential suitors. On August 19,
1996, the Company formally retained Bear Stearns to act as its exclusive
financial advisor in connection with a broad based financial and business
analysis of strategic alternatives in order to make recommendations to the
Board of Directors of the Company regarding ways to maximize shareholder
value.
On August 20, 1996, the Board of Directors of the Company held a regularly
scheduled meeting, at which representatives of Bear Stearns were present.
Senior management of the Company briefed the Board regarding the August 12,
1996 meeting with representatives of Parent, and indicated to the Board that
there could be a basis for a transaction with Parent. The Board reminded
management that the Company was not for sale, but that management could
continue discussions with Parent and other interested parties with respect to
a possible business combination transaction, provided the Company obtained a
confidentiality agreement from Parent and any such interested parties. On
August 21, 1996, Parent and the Company entered into a confidentiality and
standstill agreement.
In late August, Parent and its counsel began a due diligence examination of
US Brass. This examination continued through early December. During this
period, Parent retained Deutsche Morgan Grenfell Inc. ("DMG") to assist in
pursuing discussions with the Company.
On September 8, 1996, in advance of a scheduled September 9, 1996 meeting,
Mr. Womack travelled to Dallas to meet with Mr. Arbuckle to discuss further
their respective companies and to define an approach to further discussions.
The next day, members of senior management of both the Company and Parent,
together with representatives from their respective financial advisors, met in
Dallas to discuss in more detail the respective businesses and to attempt to
identify and define potential areas of synergy that could be developed between
the two companies. In addition, management of the Company reviewed with Parent
the Company's projected financial results for the then current quarter ending
September 29, 1996.
In mid-September 1996, DMG provided to Bear Stearns a due diligence request,
which was forwarded to the Company. Thereafter and continuing through November
1996, the Company provided various materials to Parent and its advisors in
response to the due diligence request. In addition, during this period further
discussions were held among the inside and outside legal advisors to the
Company and Parent with respect to US Brass. Management of the Company and
Parent also had discussions during this period regarding various operational
and financial issues.
On October 6, 1996, Mr. Womack met with Mr. Arbuckle in Dallas to further
discuss strategies for a possible business combination. Representatives of DMG
and Bear Stearns also attended this meeting. On October 7, 1996, Mr. Womack
and representatives of Parent met with Mr. Arbuckle and representatives of the
Company. At this meeting the Company discussed a number of topics related to
its business, including its projected 1996 financial results and the status of
the US Brass bankruptcy proceedings. The Company provided Parent with copies
of the Company's internal projections for fiscal year 1996 and the next three
fiscal years. During the
17
<PAGE>
course of this meeting, the Company's representatives indicated that a price
per Share in excess of $20.00 would be required in order for the Company to
have any interest in continuing discussions.
At the Company's next regularly scheduled Board meeting, which was held on
October 15, 1996, members of management reported to the Board regarding their
further discussions with Parent. The Board considered and approved the three
year plan that was provided to Parent at the October 6, 1996 meeting, and the
Board discussed the advisability of selling the Company. The Board also
directed Bear Stearns to talk with parties that had previously made inquiries
with respect to a possible business combination transaction.
On October 28, 1996, a regular meeting of the Board of Directors of Parent
was convened. At this meeting, the Board authorized Parent's management to
pursue further discussions with the Company and to continue the due diligence
effort. On the next day, Mr. Womack met with Mr. Arbuckle to discuss the
general terms of a merger transaction between Parent and the Company.
On November 1, 1996 and November 5, 1996, respectively, members of senior
management of the Company met in Dallas with members of management from two
other parties potentially interested in exploring a business combination with
the Company. Confidentiality agreements had previously been entered into with
each of these parties. At these meetings, the Company and the other parties
shared information with respect to their respective businesses and operations
and discussed potential synergies.
In early November 1996, the confidentiality agreement between Parent and the
Company was amended to permit Parent and the Company to pursue discussions
with their respective lenders concerning the transaction. During this period,
Parent held meetings with its bank group and its counsel to discuss the
prospective merger and the necessary financing.
On November 13, 1996, a meeting of the Company's Executive Committee was
held, at which Mr. Arbuckle and Bear Stearns provided an update on the status
of the Company's discussions with Parent. In addition, Mr. Arbuckle advised
the Executive Committee of the Company's early November meetings with two
other interested parties, and updated them on the status of those discussions.
On November 19, 1996, DMG delivered a term sheet to Bear Stearns outlining
certain terms of the proposed transaction. The term sheet did not indicate a
price, but did address, among other things, a joint marketing agreement, a
termination/expense reimbursement provision and various employee benefit
issues. Later that day, Bear Stearns advised DMG that one of the other
interested parties had expressed a willingness to pay approximately $22 per
Share. On November 25, 1996, Mr. Arbuckle telephoned Mr. Womack to discuss the
term sheet.
On November 27, 1996, Parent's legal counsel submitted a draft merger
agreement to the Company and its counsel outlining the proposed terms, other
than price, of the proposed transaction.
On December 3, 1996, after additional discussions with one of the other
interested parties, Bear Stearns advised Mr. Womack that it believed that a
price of $24 per Share would be required in order for the transaction to gain
the support of the Company's management.
On December 4, 1996, counsel to the Company provided comments to the
proposed merger agreement to Parent and the Board of Directors of the Company.
Shortly thereafter, Parent completed its environmental, tax and accounting due
diligence effort in respect of the Company.
On December 9, 1996, a meeting of the Board of Directors of Parent was
convened. During this meeting, Parent's Board approved a merger transaction
with the Company in which Stockholders would receive $24 per Share payable in
cash.
On December 10, 1996, a telephonic meeting of the Company's Executive
Committee was held, at which Bear Stearns and the Company's legal counsel were
present. At the meeting, Mr. Arbuckle reported that Parent's
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board had approved a transaction at $24 per share, subject to negotiation of a
definitive agreement. Mr. Arbuckle reported that a meeting was scheduled for
the next day in Dallas to negotiate the terms of a merger agreement, and that
a Board meeting would be called for December 14, 1996 to discuss approval of a
transaction (to the extent the parties could agree on the terms over the next
couple of days).
On December 11, 1996, members of senior management of the Company and
Parent, together with their respective financial and legal advisors, met in
Dallas to discuss the terms of the proposed merger agreement. By the end of
the day, the parties had negotiated the principal terms of a proposed merger
agreement, whereby the Parent would acquire the Company in a tender offer.
Under the terms of the proposed merger agreement, Parent would cause a newly
formed subsidiary to merge with the Company following the tender offer, with
the Company surviving the merger. A substantially final draft of the proposed
merger agreement was distributed on December 11, 1996 to the Company's Board
of Directors, the Company and Parent (and to their respective
representatives).
On December 14, 1996, Parent delivered to the Company a firm offer of $24
per Share based on the proposed merger agreement and a meeting of the Board of
Directors of the Company was convened. During the meeting, the Company's Board
of Directors received the oral opinion of Bear Stearns that, based upon and
subject to certain matters identified by Bear Stearns, the consideration to be
received by the Stockholders in the Offer and the Merger was fair, from a
financial point of view, to the Stockholders. The Company's Board was also
advised that the other interested parties had declined to pursue further
discussions with the Company in view of the price offered by Parent. At the
conclusion of the meeting, the Board approved the merger agreement subject to
a reduction in the proposed termination fee included in the draft merger
agreement to $8.5 million. A representative from Bear Stearns thereafter
telephoned Mr. Womack to discuss the Board's action. Following discussions,
Mr. Womack agreed to the Board's request concerning the termination fee. Later
that day, the Merger Agreement was executed and delivered by Parent, Purchaser
and the Company.
On December 16, 1996, Parent and the Company publicly announced the
execution of the Merger Agreement.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; OTHER MATTERS
Purpose of the Offer and the Merger
The purpose of the Offer and the Merger is to enable Purchaser to acquire,
in one or more transactions, control of the Company and the entire equity
interest in the Company. The Offer is intended to increase the likelihood that
the Merger will be completed promptly. The acquisition of the entire equity
interest in the Company has been structured as a cash tender offer followed by
a cash merger in order to provide a prompt and orderly transfer of ownership
of the Company from the Stockholders to Parent and to provide the Stockholders
with cash for all of their Shares.
Plans for the Company
Following the Merger, the Company will be operated as a subsidiary of
Parent. Except as otherwise provided in this Offer to Purchase, Purchaser and
Parent have no current plans or proposals that would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation or sale or transfer of a material amount of assets involving the
Company or any subsidiary, or any other material changes in the Company's
capitalization, dividend policy, corporate structure, business or composition
of its management.
Parent intends, from time to time after completion of the Offer, to evaluate
and review the Company's operations and the potential opportunities for
rationalization and the achievement of synergies with Parent's operations, and
to consider what, if any, changes would be desirable in light of the results
of such evaluations and reviews. After such review, it is possible that Parent
might modify its current plans not to dispose of any businesses or assets of
the Company and not effect any changes in the Company's operations.
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The Merger Agreement
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full
text of the Merger Agreement, which is incorporated by reference and a copy of
which has been filed with the Commission as an exhibit to the Schedule 14D-1.
The Merger Agreement may be examined, and copies obtained from the offices of
the Commission in the same manner as set forth in Section 8 above.
The Offer. The Merger Agreement provides for the commencement of the Offer.
Without the prior written consent of the Company, Purchaser has agreed not to
(and Parent has agreed to cause Purchaser not to) (i) decrease or change the
form of the Offer Consideration or decrease the number of Shares sought
pursuant to the Offer, (ii) change the conditions to the Offer, (iii) impose
additional conditions to the Offer, (iv) extend the Expiration Date (except
(A) as required by applicable law, (B) that Purchaser may extend the
Expiration Date for up to 20 business days after the initial Expiration Date,
and (C) that if any condition to the Offer is not satisfied or waived,
Purchaser shall extend the Expiration Date for one or more periods not
exceeding 60 calendar days (or, if required by the Company in its sole
discretion, 120 calendar days) in the aggregate), (v) waive the Minimum Share
Condition, or (vi) amend any term of the Offer in any manner adverse to the
Stockholders; provided, however, that, except as set forth above and subject
to applicable legal requirements, Purchaser may waive any other condition to
the Offer in its sole discretion; and provided further that the Offer may be
extended in connection with an increase in the consideration to be paid
pursuant to the Offer to comply with applicable rules and regulations of the
Commission.
Board Representation. The Merger Agreement provides that promptly upon the
purchase by Purchaser pursuant to the Offer of such number of Shares which
represents at least 50.1% of the outstanding Shares (on a fully diluted
basis), and from time to time thereafter, (i) Parent shall be entitled to
designate such number of directors, rounded up to the next whole number as
will give Parent representation on the Board equal to the product of (x) the
number of directors on the Board (giving effect to any increase in the number
of directors pursuant to the Merger Agreement) and (y) the percentage that
such number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being the "Board Percentage"), and (ii) the Company
will, upon request by Parent, promptly satisfy the Board Percentage by (x)
increasing the size of the Board or (y) using reasonable efforts to secure the
resignations of such number of directors as is necessary to enable Parent's
designees to be elected to the Board and shall use its best efforts to cause
Parent's designees promptly to be so elected, subject in all instances to
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. Following the election or appointment of Parent's designees
pursuant to the Merger Agreement and prior to the Effective Time, any
amendment or termination of the Merger Agreement, extension for the
performance or waiver of the obligations or other acts of Parent or Purchaser
or waiver of the Company's rights thereunder shall require the concurrence of
a majority of the directors of the Company then in office who are directors on
the date of the Merger Agreement and who voted to approve the Merger
Agreement. The Company is today mailing to the Stockholders a copy of an
Information Statement prepared in accordance with Rule 14f-1 promulgated under
the Exchange Act, relating to the possible designation by Parent, pursuant to
the Merger Agreement, of certain persons to be appointed to the Board other
than at a meeting of the Stockholders.
Consideration to be Paid in the Merger. The Merger Agreement provides that,
upon the terms and subject to the conditions set forth in the Merger Agreement
and in accordance with the DGCL, Purchaser will be merged with and into the
Company at the Effective Time. In the Merger, each Share issued and
outstanding immediately prior to the Effective Time (excluding Shares owned,
directly or indirectly, by the Company or any of its wholly owned subsidiaries
or Shares owned by Parent, Purchaser or any other wholly owned subsidiary of
Parent and Dissenting Shares (as defined in the Merger Agreement)) will be
converted into the right to receive $24.00 per share, payable to the holder
thereof without any interest thereon, less any required withholding taxes,
upon surrender and exchange of a certificate representing such Shares. Each
share of the capital stock of Purchaser issued and outstanding immediately
prior to the Effective Time will be converted into and become one fully paid
and nonassessable share of common stock, par value $1.00 per share, of the
Surviving Corporation (as defined in the Merger Agreement), which will
thereupon become a wholly owned subsidiary of Parent. Each Share and all
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other shares of capital stock of the Company that are owned by the Company or
any subsidiary of the Company and all Shares owned by Parent, Purchaser or any
other subsidiary of Parent shall be cancelled and retired and shall cease to
exist and no consideration shall be delivered or deliverable in exchange
therefor. The Merger will become effective upon the filing of a certificate of
merger with the Secretary of State of the State of Delaware or at such time
thereafter as is provided in the certificate of merger.
Company Stock Options. The Merger Agreement provides that, at the Effective
Time, each holder of (i) a then-outstanding option to purchase shares under
the Company's Long-Term Executive Incentive Compensation Plan (the "LTIP"),
whether or not then exercisable (the "Options"), shall, in settlement thereof,
receive for each Share subject to such Option an amount (subject to any
applicable withholding tax) in cash equal to the difference between the Merger
Consideration and the per Share exercise price of such Option to the extent
such difference is a positive number (such amount being hereinafter referred
to as the "Option Consideration"), (ii) any then-outstanding shares of
restricted common stock awarded under the LTIP ("Restricted Shares") shall, in
settlement thereof, receive for each Restricted Share an amount (subject to
any applicable withholding tax) in cash equal to the Merger Consideration (the
"Restricted Share Consideration") and (iii) any then-outstanding phantom stock
unit under the Eljer Industries, Inc. 1995 Long-Term Incentive Plan (the
"Incentive Plan"), whether or not then exercisable (the "Phantom Rights"),
shall, in settlement thereof, receive for each Phantom Right an amount
(subject to applicable withholding tax) in cash equal to the difference
between the Merger Consideration and the Initial Value (as defined in the
Incentive Plan) of such Phantom Right to the extent such difference is a
positive number (such amount being hereinafter referred to as the "Phantom
Right Consideration"); provided, however, that with respect to any person
subject to Section 16(a) of the Exchange Act, any such amount shall be paid as
soon as practicable after the first date payment can be made without liability
to such person under Section 16(b) of the Exchange Act. Upon receipt of the
Option Consideration, the Restricted Share Consideration or the Phantom Right
Consideration, the Option or the Phantom Right, as the case may be, shall be
cancelled and the Restricted Shares shall be surrendered and cancelled. The
surrender of an Option, a Restricted Share or a Phantom Right to the Company
in exchange for the Option Consideration, the Restricted Share Consideration
or the Phantom Right Consideration shall be deemed a release of any and all
rights the holder had or may have had in respect of such Option, Restricted
Share or Phantom Right. Prior to the Effective Time, the Company has agreed to
use its reasonable efforts to obtain all necessary consents or releases from
holders of Options, Restricted Shares or Phantom Rights and to take all such
other lawful action as may be necessary to give effect to the transactions
contemplated by the foregoing described provisions of the Merger Agreement
(except for any such action that may require the approval of the Company's
stockholders). Except as otherwise agreed to by the parties, (i) the LTIP and
the Incentive Plan shall terminate as of the Effective Time and the provisions
in any other plan, program or arrangement providing for the issuance or grant
of any other interest in respect of the capital stock of the Company or any
subsidiary thereof, shall be canceled as of the Effective Time, and (ii) the
Company shall use reasonable best efforts to assure that following the
Effective Time no participant in the LTIP, the Incentive Plan or other plans,
programs or arrangements shall have any right thereunder to acquire equity
securities of the Company, the Surviving Corporation or any subsidiary
thereof.
Stockholder Meeting. The Merger Agreement provides that the Company will, as
soon as practicable following the acceptance for payment of and payment for
Shares by Purchaser in the Offer, duly call, give notice of, convene and hold
a meeting of its Stockholders for the purpose of approving the Merger
Agreement and the transactions contemplated thereby. In connection with such
meeting, if required by applicable law to consummate the Merger, the Company,
in consultation with Parent, shall prepare and file with the Commission a
preliminary proxy statement, together with a form of proxy or information
statement (the "Preliminary Proxy Statement"). The Company has agreed to use
its reasonable best efforts to respond to all Commission comments with respect
to the Preliminary Proxy Statement and, subject to compliance with the
Commission's rules and regulations, to cause such proxy statement to be mailed
to the Stockholders at the earliest practicable date.
If Purchaser, or any other wholly owned subsidiary of Parent, acquires at
least 90% of the outstanding Shares in the Offer, at the request of Purchaser,
all parties to the Merger Agreement will take all necessary actions to cause
the Merger to become effective as soon as practicable after the expiration of
the Offer, without a meeting of the Stockholders, in accordance with the
provisions of the DGCL.
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Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties. These include representations
and warranties by the Company with respect to, among other things, (i)
organization, standing and power, (ii) capital structure, (iii) authority, no
violations, consents and approvals, (iv) Commission documents, (v) information
supplied, (vi) compliance with applicable laws, (vii) litigation, (viii)
taxes, (ix) pension and benefit plans and ERISA, (x) absence of certain
changes and events, (xi) opinion of financial advisor, (xii) vote required,
(xiii) labor matters, (xiv) intangible property, (xv) environmental matters,
(xvi) certain defaults, (xvii) brokerage fees and commissions and (xviii) full
disclosure.
Parent and Purchaser also have made certain representations and warranties
with respect to, among other things, (i) organization, standing and power,
(ii) authority, no violations, consents and approvals, (iii) information
supplied, (iv) interim operations of Purchaser and (v) financing.
Conduct of Business Pending the Merger. The Company has agreed that during
the period from the date of the Merger Agreement and continuing until the
earlier of (i) such time as Parent or Purchaser obtains majority
representation on the Board or (ii) the Effective Time (except as expressly
contemplated or permitted by the Merger Agreement or by the Bankruptcy Plan,
or consented to by Parent in writing) the Company and its subsidiaries will
conduct their businesses in the usual, regular and ordinary course in
substantially the same manner as previously conducted, and will use reasonable
efforts to preserve intact its present business organizations, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that its goodwill and ongoing business will not be impaired
in any material respect at the Effective Time. The Company has further agreed
that during this period it will not, nor will it permit any of its
subsidiaries to: (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, other than cash
dividends or distributions paid by a wholly owned subsidiary of the Company to
the Company or another wholly owned subsidiary of the Company; (ii) split,
combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (iii) repurchase or otherwise
acquire, or permit any subsidiary to purchase or otherwise acquire, any shares
of its capital stock, except as provided in the Merger Agreement; (iv) except
pursuant to the exercise of Options, grant any options, warrants or rights to
purchase Shares or amend or reprice any Option or the LTIP or grant any
Phantom Rights or stock appreciation rights; (v) issue, deliver or sell, or
authorize or propose to issue, deliver or sell, any shares of its capital
stock of any class or series, any Company voting debt or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, Company voting debt or convertible securities other than issuances of
Shares as permitted by the Merger Agreement; (vi) amend its or any
subsidiary's certificate of incorporation or bylaws (or comparable
organizational documents); (vii) acquire or agree to acquire by merger or
consolidation or purchase a substantial equity interest in or substantial
portion of assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof;
(viii) sell, lease, encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its assets except for dispositions in
the ordinary course of business consistent with past practices which are not
material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole; (ix) authorize, recommend, propose or announce
an intention to adopt a plan of complete or partial liquidation or dissolution
of the Company or any of its subsidiaries; (x) voluntarily take or agree or
commit voluntarily to take any action that would make untrue in any material
respect any of the representations or warranties contained in the Merger
Agreement or cause any of the Company's covenants or conditions to the Merger
to not be satisfied in all material respects; (xi) (A) except for normal
increases to officers and key employees consistent with past practice, grant
any increases in the compensation of any of its directors, officers or key
employees, (B) pay or agree to pay any pension, retirement allowance or other
employee benefit not required or contemplated by any existing Company ERISA
Plans or Company Benefit Arrangements (both terms as defined in the Merger
Agreement) as in effect on the date of the Merger Agreement to any such
director, officer or key employee, whether past or present, (C) enter into or
materially amend any employment, severance or termination agreement with any
such director, officer or key employee, or (D) except as may be required to
comply with applicable law, become obligated under any Company ERISA Plan or
Company Benefit Arrangements which was not in existence on the date of the
Merger Agreement, or amend any such plan or arrangement in existence on the
date
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of the Merger Agreement if such amendment would have the effect of enhancing
any benefits thereunder; (xii) except for borrowings in the ordinary course of
business under its existing credit facilities or arrangements, assume or incur
indebtedness for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or warrants or rights to acquire any debt securities
of the Company or any of its subsidiaries or guarantee any debt securities of
others or enter into any lease or create any mortgages, liens, security
interests or other encumbrances on the property of the Company or any of its
subsidiaries in connection with any indebtedness thereof, or enter into any
agreement or arrangement to maintain the financial condition of another
person; (xiii) take any action, other than in the ordinary course of business
consistent with past practice or as required by the Commission or by law, to
effect any material change in any of its accounting policies, procedures and
practices; or (xiv) make or authorize or permit any of its subsidiaries to
make or authorize any capital expenditures in excess of $5,000,000 that is not
included in the capital budget furnished to Parent. In addition, the Company
has agreed to confer on a regular and frequent basis with Parent, report on
operational matters, promptly advise Parent of any change or event having, or
which could reasonably be expected to have, a Material Adverse Effect (as
defined in the Merger Agreement) on the Company, and promptly furnish Parent
(or its counsel) with copies of all filings made by the Company with the
Commission or any other state or federal governmental entity in connection
with the Merger Agreement and the transactions contemplated thereby.
Other Agreements. The Company, Purchaser and Parent have agreed to take all
reasonable actions necessary to comply promptly with all legal requirements
that may be imposed on such party with respect to the Offer, the Merger and
the transactions contemplated by the Merger Agreement (including furnishing
all information required under the HSR Act and in connection with approvals of
or filings with any governmental entity) and promptly to cooperate with and
furnish information to each other in connection with any such requirements
imposed upon any of them or their subsidiaries in connection with the Offer,
the Merger and the transactions contemplated by the Merger Agreement. Without
limiting the generality or effect of the foregoing, each of the Company,
Parent and Purchaser will, and will cause its subsidiaries to, take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any governmental entity or other public or private third party required to
be obtained or made by the Company, Parent or any of their subsidiaries in
connection with the Offer, the Merger, the Merger Agreement or the taking of
any action contemplated thereby; provided, however, that Parent need not agree
with the Department of Justice or any other governmental entity to hold
separate, sell or otherwise dispose of any subsidiary of Parent or the Company
or assets or properties of any of the foregoing, in each case, which Parent
determines, in good faith, would materially affect the value of the
acquisition as a whole to Parent.
No Solicitation. The Merger Agreement provides that from and after the date
of the Merger Agreement until the termination of the Merger Agreement, the
Company may not, and may not permit any of its subsidiaries, or any of its or
their officers, directors, employees, representatives, agents or affiliates,
directly or indirectly, to initiate, solicit or facilitate the making of any
proposal that constitutes an Acquisition Proposal (as defined below), or to
enter into or maintain or continue discussions or negotiate with any person or
entity in respect of an Acquisition Proposal; provided, however, that nothing
contained in the Merger Agreement shall prohibit the Company from (i)
furnishing information to, or engaging in discussions or negotiations with, or
agreeing to or endorsing an Acquisition Proposal from, any person or entity
that makes an unsolicited Acquisition Proposal if, and only to the extent
that, (A) the Board, after consultation with legal counsel (who may be the
Company's regularly engaged legal counsel), determines in good faith that such
action is necessary for the Board to comply with its fiduciary duties under
applicable law and (B) the Company (x) provides prior notice to Parent to the
effect that it is taking such action and (y) receives from such person or
entity an executed confidentiality agreement in reasonably customary form or
(ii) failing to make, withdrawing, modifying or amending its recommendation if
there exists an Acquisition Proposal and the Board, after consultation with
legal counsel as aforesaid, determines that such action is necessary for the
Board to comply with its fiduciary duties under applicable law. The Company
must promptly notify Parent after receipt of any Acquisition Proposal or any
request for nonpublic information relating to the Company or any subsidiary or
for access to the properties, books or records of the Company or any
subsidiary by any person who has informed the Company that such person is
considering making, or has made, an Acquisition Proposal, and the Company will
keep Parent informed in
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reasonable detail of the status and details of any such Acquisition Proposal.
For purposes of the Merger Agreement, "Acquisition Proposal" means any bona
fide proposal with respect to a merger, consolidation, share exchange or
similar transaction involving the Company or any subsidiary of the Company, or
any purchase of all or any significant portion of the assets of the Company or
any subsidiary of the Company, or any significant equity interest in the
Company or any subsidiary of the Company, other than the transactions
contemplated by the Merger Agreement. The Company is not prohibited from
taking and disclosing to the Stockholders a position contemplated by Rule 14e-
2(a) promulgated under the Exchange Act or from making any disclosure to the
Stockholders which the Board, after consultation with legal counsel (who may
be the Company's regularly engaged legal counsel), determines in good faith is
required under applicable law.
Fees and Expenses. The Merger Agreement provides that, except as described
below, all costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated by the Merger Agreement will be paid by the
party incurring the expenses. The Company has agreed to pay Purchaser a fee in
immediately available funds equal to $8,500,000 upon termination of the Merger
Agreement for any of the following reasons (each a "Trigger Event"): (i) the
Company shall have entered into a definitive agreement with respect to any
Acquisition Proposal other than the transactions contemplated by the Merger
Agreement; or (ii) the Board shall have withdrawn, or modified or amended in a
manner materially adverse to Parent or Purchaser, its approval or
recommendation of the Offer, the Merger or the Merger Agreement. Also, the
costs incurred in connection with printing and mailing proxy materials to the
Stockholders of the Company will be borne equally by the Company and Parent.
Employee Benefits. From and after the Effective Time, Parent has agreed to
cause the Surviving Corporation to honor and perform all existing severance
agreements between the Company and certain of its officers. In addition, the
Company has agreed to make certain amendments to its existing Change-in-
Control Severance Plan for salaried, non-contract, non-union employees of the
Company. The Merger Agreement also provides that Parent will cause the
Surviving Corporation to pay Scott G. Arbuckle, Chairman of the Board and
Chief Executive Officer of the Company, on the Closing Date (as defined in the
Merger Agreement) all amounts that will be owing to him under his employment
agreement and executive severance agreement as a result of the transactions
contemplated by the Merger Agreement.
Indemnification; Directors' and Officers' Insurance. The Merger Agreement
provides that the Company shall, and from and after the Effective Time, the
Surviving Corporation shall, indemnify, defend and hold harmless each person
who is now, or has been at any time prior to the date of the Merger Agreement
or who becomes prior to the Effective Time, an officer or director of the
Company or any of its subsidiaries (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses (including reasonable attorneys' fees
and expenses), liabilities or judgments or amounts that are paid in settlement
with the approval of the indemnifying party (which approval shall not be
unreasonably withheld) of or in connection with any threatened or actual
claim, action, suit, proceeding or investigation based in whole or in part on
or arising in whole or in part out of the fact that such person is or was a
director or officer of the Company or any of its subsidiaries whether
pertaining to any matter existing or occurring at or prior to the Effective
Time and whether asserted or claimed prior to, or at or after, the Effective
Time ("Indemnified Liabilities"), including all Indemnified Liabilities based
in whole or in part on, or arising in whole or in part out of, or pertaining
to the Merger Agreement or the transactions contemplated thereby, in each case
to the full extent a corporation is permitted under the DGCL to indemnify its
own directors or officers as the case may be (and Parent and the Surviving
Corporation, as the case may be, will pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
full extent permitted by law). Without limiting the foregoing, in the event
any such claim, action, suit, proceeding or investigation is brought against
any Indemnified Parties (whether arising before or after the Effective Time),
(i) the Indemnified Parties may retain counsel satisfactory to them and the
Company (or to them and the Surviving Corporation after the Effective Time)
and the Company (or after the Effective Time, the Surviving Corporation) shall
pay all fees and expenses of such counsel for the Indemnified Parties promptly
as statements therefor are received; and (ii) the Company (or after the
Effective Time, the Surviving Corporation) will use all reasonable efforts to
assist in the vigorous defense of any such matter, provided that neither the
Company nor the Surviving Corporation shall be liable for any settlement
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effected without its prior written consent (which consent shall not
unreasonably be withheld). Any Indemnified Party wishing to claim
indemnification under the Merger Agreement, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Company (or after
the Effective Time, the Surviving Corporation) (but the failure so to notify
shall not relieve a party from any liability which it may have under the
Merger Agreement except to the extent such failure prejudices such party), and
shall deliver to the Company (or after the Effective Time, the Surviving
Corporation) the undertaking contemplated by Section 145(e) of the DGCL. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to each such matter unless there is, under applicable standards
of professional conduct, a conflict on any significant issue between the
positions of any two or more Indemnified Parties. All rights to
indemnification under the Merger Agreement, including provisions relating to
advances of expenses incurred in defense of any action or suit, existing in
favor of the Indemnified Parties with respect to matters occurring through the
Effective Time, shall survive the Merger and shall continue in full force and
effect for a period of not less than six years from the Effective Time;
provided, however, that all such rights to indemnification in respect of any
Indemnified Liabilities asserted or made within such period shall continue
until the disposition of such Indemnified Liabilities.
The Merger Agreement provides that for a period of six years following the
Effective Time, Parent shall cause the Surviving Corporation to keep in effect
the provisions in its Certificate of Incorporation and Bylaws as of the date
of the Merger Agreement providing for exculpation of director and officer
liability and indemnification to the fullest extent provided by the DGCL,
which provisions shall not be amended, repealed or otherwise modified except
as required by applicable law or except for amendments or modifications that
would not adversely affect the rights thereunder of any Indemnified Party.
For a period of six years after the Effective Time, the Surviving
Corporation will cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by the Company and its
subsidiaries (provided that Parent may substitute therefor policies of at
least the same coverage and amounts containing terms and conditions which are
no less advantageous in any material respect to the Indemnified Parties) with
respect to matters arising before the Effective Time, provided that Parent
shall not be required to pay an annual premium for such insurance in excess of
200% of the last annual premium paid by the Company prior to the date of the
Merger Agreement, but in such case shall purchase as much coverage as possible
for such amount.
The indemnification and directors' and officers' insurance provisions of the
Merger Agreement are intended to be for the benefit of, and are enforceable
by, each Indemnified Party, and each such Indemnified Party's heirs and his
personal representatives and are binding on all successors and assigns of
Purchaser, the Company and the Surviving Corporation.
Conditions to the Merger. Pursuant to the Merger Agreement, the obligation
of each party to effect the Merger is subject to the satisfaction, prior to
the Closing Date, of the following conditions: (i) the Merger Agreement and
the Merger shall have been adopted by the affirmative vote of the holders of a
majority of the Shares entitled to vote thereon if such vote is required by
applicable law; provided, that Parent and Purchaser must vote all Shares
purchased pursuant to the Offer in favor of the Merger, (ii) the waiting
period (and any extension thereof) applicable to the Merger under the HSR Act
shall have terminated or shall have expired, (iii) no temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect,
provided, however, that prior to invoking this condition, the party so
invoking this condition shall have used its commercially reasonable efforts to
have any such Injunction vacated, and (iv) Purchaser shall have accepted for
payment and paid for all Shares validly tendered in the Offer and not
withdrawn, provided, however, that, neither Parent nor Purchaser may invoke
this condition if Purchaser has failed to purchase Shares so tendered and not
withdrawn in violation of the terms of the Merger Agreement or the Offer.
The obligations of Parent and Purchaser to effect the Merger are subject to
the condition that the Company shall have performed in all material respects
all obligations required to be performed by it under the Merger
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Agreement on or before the earlier of (i) such time as Parent's designees
shall constitute at least a majority of the Company's Board pursuant to the
Merger Agreement and (ii) the Closing Date; provided, however, that no failure
by the Company to have so performed in all material respects any such
obligation shall constitute a failure of satisfaction of the foregoing
condition where the Company's failure of performance occurred, and was
actually known to Parent, at or prior to the time Parent, Purchaser or any of
their affiliates accepted for payment any Shares pursuant to the Offer.
The obligation of the Company to effect the Merger is subject to the
satisfaction of the following conditions, any or all of which may be waived in
whole or in part by the Company: (i) the representations and warranties of
Parent and Purchaser set forth in the Merger Agreement shall be true and
correct in all material respects as of the date of the Merger Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date; and (ii) Parent and Purchaser shall have performed in all material
respects all obligations required to be performed by them under the Merger
Agreement on or prior to the Closing Date.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent, by: (i) mutual written consent of the
Company and Parent, or by mutual action of their respective boards of
directors; (ii) the Company, if Purchaser fails to commence the Offer within
five business days following the date of the initial public announcement of
the Offer; (iii) either the Company or Parent, so long as such party has not
materially breached its obligations under the Merger Agreement, if the Merger
is not consummated on or before May 15, 1997; provided, that such right to
terminate the Merger Agreement is not available to any party whose failure to
fulfill any obligation under the Merger Agreement has been the cause of, or
resulted in, the failure of the Merger to occur on or before such date; (iv)
the Company or Parent in the event that a Trigger Event has occurred, provided
that the Company's right to terminate the Merger Agreement shall be available
only if it has paid Purchaser the fee payable upon the occurrence of a Trigger
Event under the Merger Agreement; (v) Parent, if the Offer expires or is
withdrawn or terminated in accordance with the terms and conditions thereof
without any Shares being purchased by Purchaser thereunder by reason of the
failure to satisfy any condition to the Offer; (vi) the Company, if the Offer
shall have expired or have been withdrawn or terminated without any Shares
being purchased by Purchaser on or prior to the 60th (or, if extended as
contemplated by the Merger Agreement, the 120th) day after the date of
commencement of the Offer; (vii) the Company, if Parent or Purchaser
materially breaches any of its respective representations and warranties or
covenants contained in the Merger Agreement; or (viii) either the Company or
Parent, if any permanent injunction or other order of a court of competent
authority preventing the consummation of the Merger shall have become final
and nonappealable. In the event of termination of the Merger Agreement by
either the Company or Parent as provided therein, the Merger Agreement shall
forthwith become void and there shall be no liability or obligation on the
part of Parent, Purchaser or the Company, or their respective affiliates,
officers, directors or shareholders, except: (i) with respect to (A) the
Confidentiality Agreement (as defined below), and (B) the termination fee
obligation of the Company described above, (ii) to the extent that such
termination results from the intentional or willful breach by a party thereto
of any of its representations or warranties, or any of its covenants or
agreements as set forth in the Merger Agreement, and (iii) with respect to
Parent and Purchaser, to the extent that such termination results from Parent
and Purchaser not having sufficient cash on hand or financing resources in an
aggregate amount sufficient to enable Parent and Purchaser to pay all amounts
specified in the Merger Agreement.
Amendment. Subject to applicable law and the Merger Agreement, the Merger
Agreement may be amended, modified or supplemented only by written agreement
of Parent, Purchaser and the Company at any time prior to the Effective Time
with respect to any of the terms contained therein; provided, however, that
after the Merger Agreement is approved by the Stockholders, no such amendment
or modification shall reduce the amount or change the form of consideration to
be delivered to the Stockholders or adversely affect the rights of the
Stockholders.
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Assignment. Neither the Merger Agreement nor any of the rights, interests or
obligations thereunder may be assigned or delegated by any of the parties
thereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Purchaser may assign and delegate,
in its sole discretion, all (but not less than all) of its rights, interests
and obligations thereunder to any newly-formed direct or indirect wholly owned
subsidiary of Parent formed solely for the purpose of engaging in the
transactions contemplated by the Merger Agreement and not engaged in any
business activities or conducting any operations other than in connection with
the transactions contemplated thereby.
Timing. The exact timing and details for the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Purchaser has agreed to
cause the Merger to be consummated on the terms set forth above, there can be
no assurance as to the timing of the Merger.
Delaware Law. The Board has approved the Merger Agreement and the
transactions contemplated by it, including the Offer and the Merger, for
purposes of Section 203 of the DGCL. Accordingly, the restrictions of Section
203 do not apply to the transactions contemplated by the Offer or the Merger
Agreement. See Section 15.
Article Eighth of the Restated Certificate of Incorporation
Article Eighth of the Restated Certificate of Incorporation of the Company
provides that certain "business combinations" (including certain mergers)
involving the Company and certain "interested stockholders" require the
affirmative vote of the holders of at least 80% of the voting power of all of
the then outstanding shares of the voting stock of the Company, voting
together as a single class. The Company has represented in the Merger
Agreement that if properly approved, among other things, the Merger Agreement
and the transactions contemplated thereby, including the Offer and the Merger,
and such approval is sufficient to render Article Eighth inapplicable to the
Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger.
The Rights Agreement
The Company and Harris Trust and Savings Bank (the "Rights Agent") are
parties to a Rights Agreement dated as of April 14, 1989 and amended on July
31, 1989, January 4, 1990, and November 5, 1991 (as amended, the "Rights
Agreement"). Pursuant to the Rights Agreement, on April 14, 1989 (the "Record
Date") the Board of Directors of the Company declared and paid a dividend of
one common stock purchase right (a "Right") for each Share outstanding at the
close of business on such date. Except as set forth below, each Right, when it
becomes exercisable, entitles the registered holder to purchase from the
Company one Share at a purchase price of $111.00 (the "Purchase Price"),
subject to any adjustments which have been made prior to the date hereof and
to any adjustments which may be made subsequent to the date hereof.
The following is a summary of the material terms of the Rights Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the Rights Agreement. This
summary is further qualified by certain amendments (also described below) to
the Rights Agreement effected in connection with the execution of the Merger
Agreement and the transactions contemplated thereby (including the Offer and
the Merger). A copy of the Rights Agreement and the amendments thereto
described in the preceding sentence are filed as Exhibits 5 and 8 to the
Schedule 14D-9, respectively, and are incorporated herein by reference.
Until the earlier to occur of (i) the tenth day after the first date of
public announcement by the Company or an Acquiring Person (as hereinafter
defined) that an Acquiring Person has become such (a "Shares Acquisition
Date") or (ii) the tenth business day (or such later date as may be determined
by action of the Board of Directors prior to such time as any person becomes
an Acquiring Person) after the date of the commencement by any Person (other
than the Company, any subsidiary of the Company, any employee benefit plan of
the Company or any subsidiary of the Company, or any entity holding Shares for
or pursuant to the terms of any such plan) of, or
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the first public announcement of the intention of any person (other than the
Company, any subsidiary of the Company, any employee benefit plan of the
Company or of any subsidiary of the Company, or any holding Shares for or
pursuant to the terms of any such plan) to commence, a tender offer or
exchange offer the consummation of which would result in any person becoming
the beneficial owner of shares of Common Stock aggregating, in the case of any
person who or which is an Existing 15% Holder (as hereinafter defined), the
Increased Percentage (as hereinafter defined) or more, or, in the case of any
other person, 15% or more, of the then outstanding shares of Common Stock (the
earlier of (i) or (ii) being the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Stock certificate outstanding as
of the Record Date, by such Common Stock certificate.
"Acquiring Person" means any person who or which, together with all
affiliates and associates of such person, (x) was the beneficial owner as of
November 5, 1991 of 15% or more of the shares of Common Stock then outstanding
(an "Existing 15% Holder") and thereafter the beneficial owner of a percentage
of the shares of Common Stock then outstanding equal to or greater than the
percentage of shares of Common Stock beneficially owned by such Existing 15%
Holder, together with all affiliates and associates of such Existing 15%
Holder, as of November 5, 1991, plus 1% (the "Increased Percentage"), or (y)
is not an Existing 15% Holder but is the beneficial owner of 15% or more of
the shares of Common Stock then outstanding, but in any case shall not include
(i) the Company, (ii) any subsidiary of the Company and (iii) any employee
benefit plan of the Company or any subsidiary of the Company or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no person shall become an "Acquiring Person" as
the result of an acquisition of shares of Common Stock by the Company which,
by reducing the number of shares of Common Stock outstanding, increases the
proportionate number of shares of Common Stock beneficially owned to, in the
case of a person who or which is an Existing 15% Holder, a percentage equal to
or greater than the Increased Percentage or, in the case of any other Person,
15% or more of the shares of Common Stock then outstanding; provided, however,
that if a person, other than those persons referred to in clause (i), (ii) or
(iii) above, shall become the beneficial owner of, in the case of a person who
or which is an Existing 15% Holder, a percentage of the shares of Common Stock
then outstanding equal to or greater than the Increased Percentage or, in the
case of any other Person, 15% or more of the shares of Common Stock then
outstanding, by reason of Common Stock purchases by the Company and shall,
after such purchases by the Company, become the beneficial owner of any
additional shares of Common Stock, then such Person shall be deemed to be an
"Acquiring Person."
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of shares of Common Stock, will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock, outstanding as of the Record Date,
even without such notation, will also constitute the transfer of the Rights
associated with the shares of Common Stock represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the shares of Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights. Each share of Common Stock issued after the Distribution Date and
prior to the earlier of the redemption or expiration of the Rights pursuant to
exercise of any option, warrant, right or conversion privilege contained in
any option, warrant, right or convertible security issued by the Company prior
to the Distribution Date (other than the Rights) shall also include the right
to receive a Right (unless the Board of Directors provides to the contrary at
the time of issuance of any such option, warrant, right or convertible
security) and Rights Certificates evidencing such Rights shall be issued at
the time of issuance of such shares of Common Stock.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on May 1, 1999 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
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The Purchase Price payable, and the number of shares of Common Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a
stock dividend on, or a subdivision, combination or reclassification of, the
Common Stock, (ii) upon the grant to holders of the shares of Common Stock of
certain rights or warrants to subscribe for or purchase shares of Common Stock
at a price, or securities convertible into shares of Common Stock with a
conversion price, less than the then current market price of the shares of
Common Stock or (iii) upon the distribution to holders of the shares of Common
Stock of evidences of indebtedness or assets (excluding a regular quarterly
cash dividend at a rate not in excess of 125% of the rate of the last regular
quarterly cash dividend theretofore paid or a dividend payable in shares of
Common Stock) or of subscription rights or warrants (other than those referred
to above).
No adjustment in the Purchase Price is required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price;
provided, however, that any such adjustments not made on account of the
foregoing are carried forward and taken into consideration in any subsequent
adjustment. No fractional shares of Common Stock will be issued and in lieu
thereof an adjustment in cash will be made based on the market price of the
shares of Common Stock on the last trading day prior to the date of exercise.
The number of outstanding Rights and the number of shares of Common Stock
issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in shares of Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
In the event that, on or after the Shares Acquisition Date, the Company is
acquired in a merger or other business combination transaction, or 50% or more
of its consolidated assets or earning power are sold (in one transaction or a
series of transactions other than in the ordinary course of business), proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
of the Right, that number of common shares of the acquiring company which at
the time of such transaction have a market value equal to two times the
Purchase Price. In the event that (i) any person becomes an Acquiring Person
(except where such person becomes an Acquiring Person through a purchase of
shares of Common Stock pursuant to a cash tender offer for all of the
outstanding shares of Common Stock, which purchase causes such person to be
the beneficial owner of 80% or more of the shares of Common Stock then
outstanding), (ii) the Company is the surviving corporation in a merger with
such Acquiring Person or any associate or affiliate thereof and the Common
Stock of the Company remains outstanding and not changed into or exchanged for
stock or other securities of any other person or the Company or cash or any
other property, or (iii) an Acquiring Person engages in certain specified
self-dealing transactions, proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person
(which thereafter will be void), will thereafter have the right to receive
upon exercise thereof that number of shares of Common Stock of the Company
having a market value equal to two times the Purchase Price. The foregoing
exercise rights are subject to the Company's rights to redeem or exchange the
rights, as described below.
At any time after any person becomes an Acquiring Person, but prior to the
acquisition by such person, together with its affiliates and associates, of
beneficial ownership of 50% or more of the outstanding shares of Common Stock,
the Board of Directors of the Company may exchange the Rights (other than
Rights owned by such person which have become void), in whole or in part, at
an exchange ratio of one share of Common Stock (or of a share of a class or
series of the Company's preferred stock having equivalent rights, preferences
and privileges) per Right (subject to adjustment).
At any time prior to the earlier to occur of (i) the close of business on
the tenth business day after the Shares Acquisition Date or (ii) the Final
Expiration Date, the Board of Directors of the Company may redeem all, but not
less than all, of the then outstanding Rights at a price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the Record Date (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. After the redemption period has expired, the Company's
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right of redemption may be reinstated in certain instances if an Acquiring
Person reduces its beneficial ownership to 10% or less of the outstanding
shares of Common Stock in a transaction or series of transactions not
involving the Company. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price.
Prior to the Distribution Date, the Company may supplement or amend any
provision of the Rights Agreement without the approval of any stockholders.
From and after the Distribution Date, the Company may, subject to certain
limitations, supplement or amend the Rights Agreement without the approval of
any holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained
therein which may be defective or inconsistent with any other provisions
therein, (iii) to shorten or lengthen any time period thereunder, including,
without limitation, changing the Final Expiration Date to a date after May 1,
1999 or (iv) to change or supplement the provisions thereof in any manner
which the Company may deem necessary or desirable and which shall not
adversely affect (as determined by the Company) the interests of the holders
of Rights Certificates (other than an Acquiring Person or an affiliate or
associate of an Acquiring Person).
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
IN CONNECTION WITH THE EXECUTION OF THE MERGER AGREEMENT AND IN
CONTEMPLATION OF THE TRANSACTIONS CONTEMPLATED THEREBY (INCLUDING, WITHOUT
LIMITATION, THE OFFER AND THE MERGER), THE BOARD OF DIRECTORS HAS ADOPTED,
APPROVED AND AUTHORIZED ALL ACTIONS NECESSARY SO THAT (I) THE EXECUTION AND
DELIVERY OF THE MERGER AGREEMENT, THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREBY (INCLUDING, WITHOUT LIMITATION, THE OFFER AND THE MERGER)
AND THE OTHER MATTERS PROVIDED FOR THEREIN WILL NOT RESULT IN (A) PARENT OR
PURCHASER OR ANY OF THEIR RESPECTIVE AFFILIATES OR ASSOCIATES BEING AN
ACQUIRING PERSON, (B) THE OCCURRENCE OF A DISTRIBUTION DATE OR (C) THE RIGHTS
BECOMING EXERCISABLE AND (II) THE FINAL EXPIRATION DATE WILL OCCUR IMMEDIATELY
PRIOR TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER (COLLECTIVELY, THE
"RIGHTS CONDITIONS"). PURSUANT TO THE BOARD OF DIRECTORS' ADOPTION, APPROVAL
AND AUTHORIZATION OF THE FOREGOING ACTIONS, AND IN SATISFACTION OF THE RIGHTS
CONDITIONS, THE COMPANY AND THE RIGHTS AGENT HAVE ENTERED INTO AMENDMENT NO. 4
TO RIGHTS AGREEMENT DATED AS OF DECEMBER 14, 1996 ("AMENDMENT NO. 4"), A COPY
OF WHICH IS FILED AS AN EXHIBIT TO THE SCHEDULE 14D-9 AND INCORPORATED HEREIN
BY REFERENCE.
OTHER MATTERS
Appraisal Rights. No appraisal rights are available to Stockholders in
connection with the Offer. However, if the Merger is consummated, a
Stockholder will have certain rights under Section 262 of the DGCL to dissent
and demand appraisal of, and payment in cash for the fair value of, that
Stockholder's Shares. Those rights, if the statutory procedures are complied
with, could lead to a judicial determination of the fair value (excluding any
value arising from the Merger) required to be paid in cash to dissenting
Stockholders for their Shares. Any judicial determination of the fair value of
Shares could be based upon considerations other than or in addition to the
Offer Consideration and the market value of the Shares, including asset values
and the investment value of the Shares. The value so determined could be more
or less than the Offer Consideration or the Merger Consideration.
If a Stockholder who demands appraisal under Section 262 of the DGCL fails
to perfect, or effectively withdraws or loses, his or her right to appraisal
as provided in the DGCL, the Shares of that Stockholder will be converted into
the Merger Consideration in accordance with the Merger Agreement. A
Stockholder may withdraw his demand for appraisal by delivering to Purchaser a
written withdrawal of such demand for appraisal and acceptance of the Merger.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of those rights.
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Going Private Transactions. Rule 13e-3 under the Exchange Act is applicable
to certain "going-private" transactions. Purchaser does not believe that Rule
13e-3 will be applicable to the Merger, unless, among other things, the Merger
is completed more than one year after termination of the Offer. If applicable,
Rule 13e-3 would require, among other things, that certain financial
information regarding the Company and certain information regarding the
fairness of the Merger and the consideration offered to minority Stockholders
be filed with the Commission and disclosed to minority Stockholders prior to
consummation of the Merger.
Confidentiality Agreement. The Company and Parent have entered into a
Confidentiality and Standstill Agreement dated August 21, 1996, as amended
November 5, 1996 and November 7, 1996 (the "Confidentiality Agreement"). The
following is a summary of the material terms of the Confidentiality Agreement.
This summary is not a complete description of the terms and conditions of the
Confidentiality Agreement and is qualified in its entirety by reference to the
full text of the Confidentiality Agreement, which is incorporated by reference
and a copy of which has been filed with the Commission as an exhibit to the
Schedule 14D-1.
Under the Confidentiality Agreement, each of the Company and Parent have
agreed (i) to use certain information concerning the business, prospects,
financial condition, operations, assets and liabilities of each party
furnished by each to the other and all analyses, compilations, data, notes,
interpretations and the like prepared by a party based in whole or in part on
such information (collectively, "Confidential Information") obtained from the
other solely for purposes of evaluating a possible negotiated business
combination involving Parent and the Company (a "Transaction"); (ii) not to
disclose the Confidential Information to any third party, except for its
directors, officers and representatives of certain of its advisors
(collectively, its "Representatives"); (iii) to inform its Representatives of
the confidential natures of the Confidential Information; (iv) to take all
reasonable precautions necessary to prevent the disclosure of the Confidential
Information by its Representatives to any third party; and (v) to be
responsible for any breach of the Confidentiality Agreement by its
Representatives. If either party is required by legal process to disclose any
Confidential Information, such party agrees to give the other party prompt
notice so that the other party may seek a protective order and/or waive the
notifying party's compliance with the Confidentiality Agreement. If a party is
compelled to disclose Confidential Information, such party may disclose, after
notice to the other party, only that portion of the Confidential Information
that such party is advised by counsel is legally required to be disclosed. The
term "Confidential Information" does not include certain information that (i)
is or becomes generally available to the public other than as a result of a
disclosure in violation of the Confidentiality Agreement; (ii) is or becomes
available to the receiving party from a source other than the delivered party
or its Representatives; or (iii) was within the receiving party's possession
prior to being furnished by or on behalf of the delivering party.
The Confidentiality Agreement provides that none of the Company, Parent or
their respective Representatives will disclose to any person the existence,
status or terms of any negotiations or agreements between them concerning a
possible Transaction or that such party has provided to or received from the
other Confidential Information without obtaining the prior written consent of
the other party. The Confidentiality Agreement also provides that, unless a
Transaction is consummated, each party will not, for a period of two years
from the date of the Confidentiality Agreement, solicit employment of (other
than by means of a general advertisement) any of the (i) employees of the
other party with whom it had contact during the process contemplated by the
Confidentiality Agreement or (ii) management level personnel or officers of
the other party.
Each of the Parent and the Company have also agreed in the Confidentiality
Agreement that, until the expiration of two years from the date of the
Confidentiality Agreement, without the prior written consent of the Board of
Directors of the other party, it and its affiliates will not (i) in any manner
acquire, agree to acquire or make any proposal or offer or otherwise seek to
acquire, directly or indirectly, any securities (or rights in respect
thereof), assets or property of the other party or any of its subsidiaries,
whether such agreements or proposals or offers are made with or to the other
party (or any controlling person or successor thereof) or any of its
subsidiaries; (ii) enter into or agree, offer, seek or propose to enter into
or otherwise be involved in or part of, directly or indirectly, any merger,
acquisition transaction or other business combination involving the other
party or any of its subsidiaries or any of their respective assets; (iii)
make, or in any way participate in, directly or indirectly, any "solicitation"
of "proxies" (as such terms are used in the proxy rules of the Exchange Act)
to
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vote, or seek to advise or influence any person with respect to the voting of,
any voting securities of the other party or any of its subsidaries, (iv) form,
join or in any way participate in a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to any voting securities of the
other party or any of its subsidiaries; (v) otherwise act, alone or in concert
with others, to seek or propose to control or influence the management, Board
of Directors or policies of the other party; (vi) directly or indirectly enter
into any discussions, negotiations, arrangements or understandings with any
other person (except internal discussions and planning activities involving
its Representatives) with respect to any of the foregoing activities or
propose any of such activities to any other person (other than its
Representatives); (vii) publicly disclose any intention, plan or arrangement
inconsistent with the foregoing; and (viii) directly or indirectly advise,
encourage, provide assistance (including debt or equity financial assistance)
to or hold discussions with or invest in any other person in connection with
any of the foregoing. Each party has also agreed that, during such two-year
period, neither it nor any of its affiliates will take any initiative with
respect to the other party or any of its subsidiaries that could reasonably be
expected to require the other party to make a public announcement regarding
(i) such initiative, (ii) any of the activities referred to in this paragraph,
(iii) the possibility of a Transaction or any similar transaction or (iv) the
possibility of such party or any other person acquiring control of the other
party, whether by means of a business combination or otherwise. However, the
provisions of the Confidentiality Agreement described in this paragraph do not
apply to a party in the event of a bona fide publicly announced proposal,
offer or agreement by a third party not acting in concert with such party (i)
to acquire more than 51% of any class of stock (or rights in respect thereof)
of the other party or (ii) to acquire the other party, or all or substantially
all of its assets, by means of a merger, consolidation, asset purchase or
other similar transaction. Additionally, the chief executive officer of a
party may contact the chief executive officer of the other party for the
purpose of expressing continuing or renewed interest in a Transaction,
provided that, unless invited to do so by the chief executive officer of the
other party, no offer or proposal shall be made that would require public
disclosure or formal consideration by such other party or its Board of
Directors.
Notwithstanding anything to the contrary contained in the Merger Agreement
or in the Confidentiality Agreement, the taking by any party of any action
contemplated by the provisions in the Merger Agreement to be taken by such
party will not constitute a breach of any provision of the Confidentiality
Agreement.
13. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date of the Merger Agreement, the Company should (i)
split, combine or otherwise change the Shares or its capitalization, (ii)
acquire currently outstanding Shares, or otherwise cause a reduction in the
number of outstanding Shares or (iii) issue or sell additional Shares, shares
of any other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, then, subject to the provisions of Section 14,
Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Consideration and other terms of the Offer,
including, without limitation, the number or type of securities offered to be
purchased.
If, on or after the date of the Merger Agreement, the Company declares or
pays any cash dividend on the Shares, makes other distributions on the Shares
or issues with respect to the Shares any additional Shares, shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, payable or distributable to Stockholders of
record prior to the transfer of the Shares purchased pursuant to the Offer or
their nominees or any transferee on the Company's stock transfer records,
then, subject to Section 14 below, (i) the Offer Consideration may, in the
sole discretion of Purchaser, be reduced by the amount of any cash dividend or
cash distribution and (ii) the whole of any non-cash dividend, distribution or
issuance to be received by the tendering Stockholders will (A) be received and
held by the tendering Stockholders for the account of Purchaser and will be
required to be promptly remitted and transferred by each tendering Stockholder
to the Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer or (B) at the direction of Purchaser, be exercised
for the benefit of Purchaser, in which case the proceeds of exercise promptly
will be remitted to Purchaser. Pending the remittance and subject to
applicable law, Purchaser will be entitled to all rights and privileges as
owner of any
32
<PAGE>
non-cash dividend, distribution, issuance or proceeds and may withhold the
entire Offer Consideration or deduct from the Offer Consideration the amount
or value of the non-cash dividend, distribution, issuance or proceeds, as
determined by Purchaser in its sole discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceding paragraphs and
nothing in this Offer to Purchase shall constitute a waiver by Purchaser or
Parent of any of its rights under the Merger Agreement or a limitation of
remedies available to Purchaser or Parent for any breach of the Merger
Agreement, including termination of the Merger Agreement.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after expiration or termination of the Offer), to pay for any Shares
tendered, and may postpone the acceptance for payment or, subject to the
restrictions referred to above, payment for any Shares tendered, and, subject
to the terms of the Merger Agreement, may amend or terminate the Offer
(whether or not any Shares have theretofore been purchased or paid for
pursuant to the Offer) (i) unless the following conditions have been
satisfied: (A) there have been validly tendered and not withdrawn prior to the
time the Offer shall otherwise expire a number of Shares which constitutes
50.1% of the Shares outstanding on a fully-diluted basis on the date of
purchase ("on a fully diluted basis" having the following meaning, as of any
date: the number of Shares outstanding, together with the number of Shares the
Company is then required to issue pursuant to obligations outstanding at that
date under employee stock option or other benefit plans or otherwise); and (B)
any applicable waiting periods under the HSR Act shall have expired or been
terminated prior to the expiration of the Offer; and/or (ii) if at any time on
or after the date of the Merger Agreement and before acceptance for payment
of, or payment for, such Shares, any of the following events shall occur and
are continuing:
(A) any United States or foreign governmental entity or authority or any
United States or foreign court of competent jurisdiction in the United
States or any foreign country shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order which is in effect and which (1) materially
restricts, prevents or prohibits consummation of the transactions
contemplated by the Merger Agreement, including the Offer or the Merger,
(2) prohibits or limits materially the ownership or operation by Parent or
any of its subsidiaries of all or any material portion of the business or
assets of the Company and its subsidiaries taken as a whole or compels the
Company, Parent, or any of their subsidiaries to dispose of or hold
separate all or any material portion of the business or assets of the
Company and its subsidiaries taken as a whole, or (3) imposes material
limitations on the ability of Parent, Purchaser or any other subsidiary of
Parent to exercise effectively full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares acquired by
Purchaser pursuant to the Offer or otherwise on all matters properly
presented to the Company's Stockholders, including, without limitation, the
approval and adoption of the Merger Agreement and the transactions
contemplated thereby; provided that Parent and Purchaser shall have used
their respective reasonable efforts to cause any such order, decree,
judgment or injunction to be vacated or lifted;
(B) there shall be instituted or pending any action or proceeding before
any United States or foreign court or governmental entity or authority by
any United States or foreign governmental entity or authority seeking any
order, decree or injunction having any effect set forth in (A) above;
(C) the representations and warranties of the Company contained in the
Merger Agreement (without giving effect to the materiality limitations
contained therein) shall not be true and correct as of the Expiration Date
as though made on and as of such date (except for representations and
warranties made as of a specified date, which shall not be true and correct
as of the specified date), except for any breach or breaches which, in the
aggregate, would not have a Material Adverse Effect (as defined in the
Merger Agreement) with respect to the Company; provided that any suits,
actions or proceedings initiated or threatened against the Company or any
of its officers or directors by any Stockholder of the Company (or
33
<PAGE>
any group thereof) on or after the date of the Merger Agreement or the
transactions contemplated by the Merger Agreement ("Stockholder Suits")
shall not be given effect in determining whether or not the condition set
forth in this subparagraph (C) has been satisfied;
(D) the Company shall not have performed or complied in all material
respects with its obligations under the Merger Agreement to be performed or
complied with by it and such failure continues until the later of (1)
fifteen days after actual receipt by it of written notice from Purchaser
setting forth in detail the nature of such failure or (2) the Expiration
Date;
(E) there shall have occurred any material adverse change, or any
development that is reasonably likely to result in a material adverse
change, in the business, properties, assets, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries
taken as a whole; provided that neither (i) the US Brass Bankruptcy Events
(as defined in the Merger Agreement) nor (ii) any Stockholder Suits shall
be given effect in determining whether or not the condition set forth in
this subparagraph (E) has been satisfied;
(F) the Merger Agreement shall have been terminated in accordance with
its terms;
(G) prior to the purchase of Shares pursuant to the Offer, the Board
shall have withdrawn or materially modified or changed (including by
amendment of the Schedule 14D-9) in a manner adverse to Purchaser its
recommendation of the Offer, the Merger Agreement or the Merger;
(H) there has occurred the declaration of a banking moratorium or any
limitation or suspension of payments in respect of the extension of credit
by banks or other lending institutions in the United States; or
(I) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that any person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent or its affiliates or any
group of which any of them is a member, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of more than 50% of any class or series of capital stock of the
Company (including the Shares), through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted an option,
right or warrant, conditional or otherwise, to acquire beneficial ownership
of more than 50% of any class or series of capital stock of the Company
(including the Shares).
The foregoing conditions (other than the Minimum Share Condition) are for
the sole benefit of Purchaser and its affiliates and may be asserted by
Purchaser regardless of the circumstances (including, without limitation, any
action or inaction by Purchaser or any of its affiliates other than a material
breach by Parent or Purchaser of the Merger Agreement) giving rise to any such
condition or may be waived by Purchaser, in whole or in part, from time to
time in its sole discretion, except as otherwise provided in the Merger
Agreement. The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right and may be asserted at any time and
from time to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, but without any independent
investigation, neither Purchaser nor Parent is aware of any license or
regulatory permit that appears to be material to the business of the Company
and its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares as contemplated in this Offer to Purchase or
of any approval or other action by any governmental authority that would be
required for the acquisition or ownership of Shares by Purchaser as
contemplated in this Offer to Purchase. Should any such approval or other
action be required, Purchaser and Parent presently contemplate that such
approval or other action will be sought, except as described below, under
"State Takeover Laws." While, except as otherwise expressly described in this
Section 15, Purchaser does not presently intend to delay the acceptance for
payment of or payment for Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval
or other action, if needed, would be obtained or would be obtained without
substantial conditions or that failure to obtain any such approval or other
action might not result in consequences adverse to the Company's business
34
<PAGE>
or that certain parts of the Company's business might not have to be disposed
of if such approvals were not obtained or other actions were not taken or in
order to obtain any such approval or other action. If certain types of adverse
action are taken with respect to the matters discussed below, Purchaser could
decline to accept for payment or pay for any Shares tendered. See Section 14
above for certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable
to attempts to acquire securities of corporations that are incorporated or
have assets, stockholders, executive offices or places of business in those
states. In Edgar v. MITE Corp., the Supreme Court of the United States held
that the Illinois Business Takeover Act, which involved state securities laws
that made the takeover of certain corporations more difficult, imposed a
substantial burden on interstate commerce and therefore was unconstitutional.
In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the
United States held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided
that the laws were applicable only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval of either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company has represented in the Merger Agreement that it
properly approved, among other things, the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, and
such approval is sufficient to render Section 203 of the DGCL inapplicable to
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger.
Based on information supplied by the Company and the Company's
representations in the Merger Agreement, Purchaser does not believe that any
other state takeover statutes apply to the Offer or the Merger. Neither
Purchaser nor Parent has currently complied with any state takeover statute or
regulation. Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer or the Merger
and nothing in this Offer to Purchase or any action taken in connection with
the Offer or the Merger is intended as a waiver of that right. If it is
asserted that any state takeover statute is applicable to the Offer or the
Merger and an appropriate court does not determine that it is inapplicable or
invalid as applied to the Offer or the Merger, Purchaser might be required to
file certain information with, or to receive approvals from, the relevant
state authorities, and Purchaser might be unable to accept for payment or pay
for Shares tendered pursuant to the Offer, or be delayed in consummating the
Offer or the Merger. In such case, Purchaser may not be obligated to accept
for payment or pay for any Shares tendered pursuant to the Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar-day waiting period following the filing by Purchaser of a
Notification and Report Form with respect to the Offer, unless Purchaser
receives a request for additional information or documentary material from the
Antitrust Division or the Federal Trade Commission (the "FTC") or unless early
termination of the waiting period is granted. Such filing was made on December
18, 1996 and such waiting period will expire at 11:59 p.m. on January 2, 1997.
If, within the initial 15-day waiting period, either the Antitrust Division or
the FTC requests additional information or documentary material from Purchaser
concerning the Offer, the waiting period will be extended and would expire
11:59 p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Purchaser with such request. Only one extension of
the waiting period pursuant to a request for additional information is
authorized by the HSR Act. Thereafter, the waiting period may be extended only
by court order or with the consent of Purchaser. In practice, complying with a
request for additional information or documentary material can take a
significant amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental
agency concerning possible means of addressing those issues and may agree to
delay consummation of the transaction while the negotiations continue. For
information regarding the obligations of the Company, Parent and Purchaser in
this regard, see "The Merger Agreement--Other Agreements" in Section 12.
35
<PAGE>
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant
to the Offer or the consummation of the Merger or seeking the divestiture of
Shares acquired by Purchaser or the divestiture of substantial assets of
Purchaser or its subsidiaries, or the Company or its subsidiaries. Private
parties may also bring legal action under the antitrust laws under certain
circumstances. There can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, of the
result of that challenge. See Section 14 for certain conditions to the Offer,
including conditions with respect to litigation.
16. FEES AND EXPENSES
DMG is acting as Dealer Manager in connection with the Offer and has
provided certain financial advisory services to Parent in connection with the
proposed acquisition of the Company. DMG will not receive separate
compensation for its service as Dealer Manager. However, Parent has agreed to
pay DMG a "retainer fee" of $250,000 in connection with the retention of DMG
as financial advisor to Parent. Further, Parent has agreed to pay DMG a
"success fee" of $2.5 million (less the retainer fee) payable upon
consummation of the Merger. Parent's fee arrangement with DMG also includes a
termination fee arrangement whereby DMG would receive $700,000 in the event
that the Merger Agreement is terminated in circumstances where Parent receives
the termination fee contemplated by the Merger Agreement.
In addition, Parent has agreed to reimburse DMG for all out-of-pocket
expenses incurred by DMG and to indemnify DMG and certain related persons
against certain liabilities and expenses, including certain liabilities under
the federal securities laws. In the ordinary course of its business, DMG and
its affiliates may actively trade in the Shares for its or their own accounts
and for the account of its or their customers, and, accordingly, may at any
time hold a long or short position in the Shares.
Purchaser has retained Morrow & Co., Inc. to act as the Information Agent,
and Harris Trust Company of New York to act as the Depositary, in connection
with the Offer. The Information Agent and the Depositary each will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith, including certain
liabilities under the federal securities laws.
Except as set forth above, Purchaser will not pay any fees or commissions to
any broker or dealer or other person for soliciting tenders of Shares pursuant
to the Offer. Brokers, dealers, commercial banks and trust companies will be
reimbursed by Purchaser for customary mailing and handling expenses incurred
by them in forwarding the offering materials to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) Stockholders residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of the jurisdiction. However, Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to Stockholders in that
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of Purchaser by one or more registered brokers or
dealers that are licensed under the laws of the jurisdiction.
Purchaser has filed with the Commission the Schedule 14D-1 pursuant to Rule
14d-1 under the Exchange Act containing certain additional information with
respect to the Offer. The Schedule and any amendments to the Schedule,
including exhibits, may be examined and copies may be obtained from the
principal office of the Commission in the manner set forth in Section 8 above
(except that they will not be available at the regional offices of the
Commission).
36
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE
OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, THE INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
ZURN ACQUISITION CO., INC.
DECEMBER 20, 1996
37
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT
A. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The directors of Purchaser are Robert R. Womack and John R. Mellett. The
executive officers of Purchaser are Robert R. Womack, President, Dennis
Haines, Secretary, and John R. Mellett, Treasurer. Each of the directors and
executive officers of Purchaser is also a director and/or executive officer of
Parent. Information concerning the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Purchaser is set
forth in the table of the directors and executive officers of Parent. The
business address of each such person is c/o Zurn Industries, Inc., One Zurn
Place, Erie, Pennsylvania 16505. All directors and officers of Purchaser are
citizens of the United States.
B. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five years of each director and executive officer of Parent and
Purchaser. Unless otherwise indicated below, (i) each individual has held his
or her positions for more than the past five years and (ii) the business
address of each person is c/o Zurn Industries, Inc., One Zurn Place, Erie,
Pennsylvania 16505. Except as otherwise stated below, all directors and
officers listed below are citizens of the United States. Directors are
identified with a single asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR PERIOD
NAME AGE AT 12/1/96 EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY SERVED
---- -------------- ------------------------------------------- ------
<S> <C> <C> <C>
Robert R. Womack* 59 Chairman and Chief Executive Officer Since 1995
Director and Chief Executive Officer Since 1994
Independent Consultant 1993-1994
Vice Chairman and Chief Executive Officer 1990-1993
(1992-1993) and President and Chief Operating
Officer (1990-1992)--IMO Industries, Inc.,
Lawrenceville, NJ (controls, pumps, and
engineered power products)
Donald L. Butynski 52 Group Vice President Since 1995
President--National Energy Production 1986-1995
Corporation,
Redmond, WA (a subsidiary of Parent)
Frank E. Sheeder, Jr. 53 Group Vice President Since 1995
President and Chief Executive Officer-- 1994-1995
Furmanite, Inc.,
Richardson, TX (engineering and maintenance
services), a subsidiary of Kaneb Services,
Inc.
Independent Consultant 1992-1994
Senior Vice President--Rhone Poulenc Inc., 1990-1992
Cranbury, NJ (specialty chemicals business)
John R. Mellett 47 Senior Vice President and Chief Financial Since 1995
Officer
Senior Vice President and Chief Financial 1992-1995
Officer and Vice President-Finance (1992-
1994)--LeFebure Corporation, Cedar Rapids, IA
(supplier of capital equipment and services
to financial institutions), a subsidiary of
De La Rue, PLC
Independent Consultant 1991-1992
James A. Zurn 54 Senior Vice President Since 1981
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR PERIOD
NAME AGE AT 12/1/96 EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY SERVED
---- -------------- ------------------------------------------- ------
<S> <C> <C> <C>
William J. Durbin 51 Vice President--Human Resources Since 1996
Vice President--Human Resources, Amcast 1984-1996
Industrial Corporation, Dayton, OH
(manufacturer of automotive and flow-control
products)
John E. Rutzler III 55 Vice President-Controller Since 1989
Dennis Haines 43 General Counsel and Secretary Since 1993
Associate General Counsel 1989-1993
Zoe Baird* 44 Director Since 1993
Visiting Scholar, Yale Law School, New Haven, Commencing
CT Jan. 1, 1997
Senior Vice President and General Counsel, 1990-1996
Aetna Life and Casualty Company, Hartford, CT
(multiline insurance company)
Director of Southern New England
Telecommunications Corporation and The
Southern New England Telephone Company
Michael K. Brown* 59 Director Since 1995
(Citizen of United Director and Senior Advisor, Brown Brothers Since 1993
Kingdom) Harriman (HK) Ltd., Hong Kong (a merchant
banking organization)
General Manager, Emirates Bank International 1989-1993
Ltd., Hong Kong (financial institution)
Director of, among others, Export Credit
Insurance Corporation of Singapore, Hong Kong
Government Industry Development Board, and
Hong Kong Government Textiles Advisory Board
William E. Butler* 65 Director Since 1992
Director, Chairman and Chief Executive 1991-1996
Officer, Eaton Corporation, Cleveland, OH
(manufacturer of vehicle powertrain
components and controls)
Director of Bearings, Inc., Ferro
Corporation,
The Goodyear Tire & Rubber Company, and
Pitney-Bowes, Inc.
Edward J. Campbell* 68 Director Since 1986
President, JI Case Co., Racine, WI (farm 1992-1994
and construction machinery and equipment)
President, Newport News Shipbuilding, Newport 1979-1992
News, VA (shipbuilding and repairing)
Director of Global Marine, Inc. and Titan
Wheel International
Robert D. Neary* 63 Director Since 1995
Trustee Chairman and President, Armada Funds, Since 1996
Wilmington, DE (group of mutual funds)
Co-Chairman, Ernst & Young LLP, Cleveland, OH 1984-1993
(international accounting and consulting
firm)
Director, Cold Metal Products, Inc. (strip Since 1994
steel producer and service center processor)
</TABLE>
S-2
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
Stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary, at one of the addresses set forth
below:
THE DEPOSITARY IS:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
BY MAIL: BY HAND: BY OVERNIGHT COURIER
<S> <C> <C>
Wall Street Station Receive Window 77 Water Street, 4th Floor
P.O. Box 1010 77 Water Street, 4th Floor New York, NY 10005
New York, NY 10268-1010 New York, NY 10005
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers listed below. Additional copies of this Offer to Purchase, the Letter
of Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below and will be furnished promptly at
Purchaser's expense. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
909 Third Avenue, 20th Floor
New York, NY 10022
Call Toll Free: (800) 566-9061
BANKS AND BROKERAGE FIRMS, PLEASE CALL: (800) 662-5200
THE DEALER MANAGER FOR THE OFFER IS:
Deutsche Morgan Grenfell Inc.
31 West 52nd Street
New York, NY 10019
BROKERS AND BANKS, PLEASE CALL (800) 334-1898
<PAGE>
EXHIBIT 99.(a)(2)
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
ELJER INDUSTRIES, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED DECEMBER 20, 1996
OF
ZURN ACQUISITION CO., INC.
A WHOLLY OWNED SUBSIDIARY
OF
ZURN INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 21, 1997, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Overnight Courier:
77 Water Street, 4th Floor
New York, NY 10005
By Mail: By Facsimile Transmission: By Hand:
Wall Street Station (for Eligible Institutions Only) Receive Window
P.O. Box 1010 (212) 701-7636 77 Water Street,
New York, NY 10268-1010 (212) 701-7637 5th Floor
New York, NY
Confirm by Telephone:
(800) 245-7630
DESCRIPTION OF SHARES TENDERED
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
NAME(S) AND ADDRESS(ES)
OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON THE CERTIFICATE(S) TENDERED
CERTIFICATES(S)) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
OF SHARES
REPRESENTED NUMBER OF
CERTIFICATE BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL NUMBER
OF SHARES
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares
represented by Certificates delivered to the Depositary are being
tendered. See Instruction 4.
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST
SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of Eljer Industries, Inc. (the "Stockholders") if certificates
evidencing Shares ("Certificates") are to be forwarded with this Letter of
Transmittal or if delivery of Shares is to be made by book-entry transfer to
an account maintained by Harris Trust Company of New York (the "Depositary")
at The Depository Trust Company ("DTC") or the Philadelphia Depository Trust
Company ("PDTC") (each, a "Book-Entry Transfer Facility") pursuant to the
procedures set forth in Section 3 of the Offer to Purchase (as defined below).
Stockholders whose Certificates are not immediately available or who cannot
deliver either their Certificates for, or a Book-Entry Confirmation (as
defined in Section 3 of the Offer to Purchase) with respect to, their Shares
and all other required documents to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) may tender their
Shares according to the guaranteed delivery procedures set forth in Section 3
of the Offer to Purchase. See Instruction 2 hereof. Delivery of documents to a
Book-Entry Transfer Facility does not constitute delivery to the Depositary.
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution:
---------------------------------------------
Check Box of applicable Book-Entry Transfer Facility:
[_] DTC [_] PDTC
Account Number:
------------------------------------------------------------
Transaction Code Number:
---------------------------------------------------
[_] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Stockholder(s)
---------------------------------------
Window Ticket Number (if any)
----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
-------------------------
Name of Institution which Guaranteed Delivery
------------------------------
If delivered by book-entry transfer, check box of applicable Book-Entry
Transfer Facility:
[_] DTC [_] PDTC
Account No.
----------------------------------------------------------------
Transaction Code No.
-------------------------------------------------------
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Zurn Acquisition Co., Inc., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Zurn
Industries, Inc., a Pennsylvania corporation, the above-described shares of
common stock, par value $1.00 per share (the "Shares"), of Eljer Industries,
Inc., a Delaware corporation (the "Company"), at a purchase price of $24.00
per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated December
20, 1996 (the "Offer to Purchase"), receipt of which is hereby acknowledged,
and in this Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or
assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
Purchaser of its obligations under the Offer or prejudice the rights of the
tendering Stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the undersigned
hereby sells, assigns, and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all of the Shares that are being tendered
hereby and any and all other Shares or other securities issued or issuable in
respect thereof on or after December 14, 1996 (a "Distribution") and
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares (and any
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Certificates evidencing such Shares (and any Distributions), or transfer
ownership of such Shares (and all Distributions) on the account books
maintained by a Book-Entry Transfer Facility, together, in any such case, with
all accompanying evidences of transfer and authenticity to, or upon the order
of, Purchaser, upon receipt by the Depositary as the undersigned's agent, of
the purchase price with respect to such Shares, (ii) present such Shares (and
any Distributions) for transfer on the books of the Company, and (iii) receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and subject
to the conditions of the Offer.
The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to
all shares tendered hereby and accepted for payment and paid for by Purchaser
(and any Distributions), including without limitation, the right to vote such
Shares (and any Distributions) in such manner as each such attorney and proxy
or his substitute shall, in his sole discretion, deem proper. All such powers
of attorney and proxies, being deemed to be irrevocable, shall be considered
coupled with an interest in the Shares tendered with this Letter of
Transmittal. Such appointment will be effective when, and only to the extent
that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior powers of attorney and proxies given by the undersigned
with respect to such Shares (and any Distributions) will be revoked, without
further action, and no subsequent powers of attorneys and proxies may be given
with respect thereto (and, if given, will be deemed ineffective). The
designees of Purchaser will, with respect to the Shares (and any
Distributions) for which such appointment is effective, be empowered to
exercise all voting and other rights of the undersigned with respect to such
Shares (and any Distributions) as they in their sole discretion may deem
proper. Purchaser reserves the absolute right to require that, in order for
Shares to be deemed validly tendered, immediately upon the acceptance for
payment of such Shares, Purchaser or its designees be able to exercise full
voting rights with respect to such Shares (and any Distributions), including
voting at any meeting of Stockholders then scheduled.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
3
<PAGE>
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any Distributions) and that, when the same are accepted for
payment and paid for by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and that the Shares tendered hereby (and any Distributions)
will not be subject to any adverse claim. The undersigned, upon request, will
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of Shares tendered hereby (and any Distributions). In addition, the
undersigned shall promptly remit and transfer to the Depositary for the
account of Purchaser any and all Distributions issued to the undersigned on or
after December 14, 1996 in respect of the Shares tendered hereby, accompanied
by appropriate documentation of transfer, and pending such remittance and
transfer or appropriate assurance thereof, the Purchaser shall be entitled to
all rights and privileges as owner of any such Distributions and may withhold
the entire purchase price or deduct from the purchase price the amount of
value thereof, as determined by Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in
the instructions to this Letter of Transmittal will constitute a binding
agreement between the undersigned and the Purchaser with respect to such
Shares upon the terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Purchaser may not be required to accept for payment
any of the Shares tendered hereby.
Unless otherwise indicated in this Letter of Transmittal under "Special
Payment Instructions," please issue the check for the purchase price and
return any Certificates evidencing Shares not tendered or not accepted for
payment in the name(s) of the registered holder(s) appearing under
"Description of Shares Tendered." Similarly, unless otherwise indicated under
"Special Delivery Instructions," please mail the check for the purchase price
and return any Certificates evidencing Shares not tendered or not accepted for
payment (and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under "Description of Shares Tendered." In the
event that both the "Special Payment Instructions" and the "Special Delivery
Instructions" are completed, please issue the check for the purchase price and
return any such Certificates evidencing Shares not tendered or not accepted
for payment (and accompanying documents, as appropriate) in the name(s) of,
and deliver such check and return such Certificates (and accompanying
documents, as appropriate) to, the person(s) so indicated. Unless otherwise
indicated herein under "Special Payment Instructions," in the case of book-
entry delivery of Shares, please credit the account maintained at the Book-
Entry Transfer Facility indicated above with respect to any Shares not
accepted for payment. The undersigned recognizes that Purchaser has no
obligation pursuant to the "Special Payment Instructions" to transfer any
Shares from the name of the registered holder if the Purchaser does not accept
for payment any of the Shares tendered hereby.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if To be completed ONLY if
Certificates for Shares not Certificates for Shares not
tendered or not accepted for tendered or not accepted for
payment and the check for the payment and the check for the
purchase price of Shares accepted purchase price of Shares accepted
for payment are to be issued in for payment are to be sent to
the name of someone other than the someone other than the undersigned
undersigned, or if Shares or to the undersigned at an
delivered by book-entry transfer address other than that shown
that are not accepted for payment above.
are to be returned by credit to an
account maintained at a Book-Entry Mail check and/or certificate(s)
Transfer Facility, other than to to:
the account indicated above.
Issue check and/or certificate(s) Name
------------------------------
to: (PLEASE TYPE OR PRINT)
Address
---------------------------
Name
------------------------------
(PLEASE TYPE OR PRINT)
-----------------------------------
Address (INCLUDE ZIP CODE)
---------------------------
-----------------------------------
(INCLUDE ZIP CODE)
-----------------------------------
(TAX IDENTIFICATION OR SOCIAL
SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
5
<PAGE>
IMPORTANT
STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE
FORM W-9 BELOW
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
Dated: , 199
------------------------
(MUST BE SIGNED BY THE REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON
THE CERTIFICATE OR ON A SECURITY POSITION LISTING OR BY PERSON(S) AUTHORIZED
TO BECOME REGISTERED HOLDER(S) BY CERTIFICATES AND DOCUMENTS TRANSMITTED
HEREWITH. IF SIGNATURE IS BY TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS,
ATTORNEYS-IN-FACT, AGENTS, OFFICERS OR CORPORATIONS OR OTHERS ACTING IN A
FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE PROVIDE THE FOLLOWING
INFORMATION. SEE INSTRUCTION 5.)
Name(s):
--------------------------------------------------------------------
-----------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity (full title):
------------------------------------------------------
Address:
--------------------------------------------------------------------
-----------------------------------------------------------------------------
(INCLUDE A ZIP CODE)
Area Code and Telephone No.:
------------------------------------------------
(HOME)
------------------------------------------------
(BUSINESS)
Taxpayer Identification or Social Security No.:
-----------------------------
(COMPLETE SUBSTITUTE FORM W-9 BELOW)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature(s):
----------------------------------------------------
Name:
-----------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Title:
----------------------------------------------------------------------
Name of Firm:
---------------------------------------------------------------
Address:
--------------------------------------------------------------------
-----------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
------------------------------------------------
Dated: , 199
------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, no signature
guarantee is required on this Letter of Transmittal (a) if this Letter of
Transmittal is signed by the registered holder(s) (which term, for the
purposes of this document, includes any participant in any of the Book-Entry
Transfer Facility systems whose name appears on a security position listing as
the owner of the Shares) of Shares tendered herewith and such registered
holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on this
Letter of Transmittal or (b) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.
If the Certificates are registered in the name of a person other than the
signer of this Letter of Transmittal or if payment is to be made or
Certificates for Shares not tendered or not accepted for payment are to be
returned to a person other than the registered holder of the Certificates
tendered, then the tendered Certificates must be endorsed or accompanied by
duly executed stock powers, in either case signed exactly as the name or names
of the registered owner or owners appear on the Certificates, with the
signatures on the Certificates or stock powers guaranteed by an Eligible
Institution as provided in this Letter of Transmittal. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
Stockholders if Certificates evidencing Shares are to be forwarded with this
Letter of Transmittal or if delivery of Shares is to be made pursuant to the
procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase. For Shares to be validly tendered pursuant to the Offer, either (a)
a Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees and any
other documents required by this Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth in this Letter of Transmittal
on or prior to the Expiration Date and either (i) Certificates representing
tendered Shares must be received by the Depositary at one of those addresses
on or prior to the Expiration Date or (ii) Shares must be delivered pursuant
to the procedures for book-entry transfer set forth in Section 3 of the Offer
to Purchase and a Book-Entry Confirmation must be received by the Depositary
on or prior to the Expiration Date, or (b) the tendering Stockholder must
comply with the guaranteed delivery procedures set forth below and in Section
3 of the Offer to Purchase.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary
or complete the procedures for book-entry transfer on or prior to the
Expiration Date may nevertheless tender their Shares by following the
guaranteed delivery procedures set forth in Section 3 of the Offer to
Purchase. Pursuant to such procedure: (i) tender must be made by or through an
Eligible Institution, (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by Purchaser,
must be received by the Depositary on or prior to the Expiration Date, and
(iii) Certificates representing all tendered Shares in proper form for
transfer, or a Book-Entry Confirmation with respect to all the tendered
Shares, together with a Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, and any required signature
guarantees or an Agent's Message (as defined in Section 2 of the Offer to
Purchase) and any other documents required by this Letter of Transmittal, must
be received by the Depositary within three New York Stock Exchange trading
days after the date of such Notice of Guaranteed Delivery. If Certificates are
forwarded separately to the Depositary, a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) must accompany
each delivery.
The method of delivery of Certificates, this Letter of Transmittal and any
other required documents is at the option and sole risk of the tendering
Stockholder and delivery will be deemed made only when actually received by
the Depositary. If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
7
<PAGE>
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering Stockholders, by execution
of this Letter of Transmittal (or a manually signed facsimile thereof), waive
any right to receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of Transmittal is
inadequate, the information required under "Description of Shares Tendered"
should be listed on a separate signed schedule attached to this Letter of
Transmittal.
4. PARTIAL TENDERS. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary with this Letter of Transmittal are
to be tendered, fill in the number of Shares which are to be tendered in the
box entitled "Number of Shares Tendered." In such cases, a new Certificate for
the remainder of the Shares that were evidenced by your old Certificate(s)
will be sent, without expense, to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on this
Letter of Transmittal, as soon as practicable after the Expiration Date. All
Shares evidenced by Certificate(s) delivered to the Depositary will be deemed
to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all the owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
Certificates.
If this Letter of Transmittal or any Certificates or instruments of transfer
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, that person should so indicate when signing, and
proper evidence satisfactory to the Purchaser of that person's authority to so
act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on the Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificates for such
Shares. Signatures on the Certificates or instruments of transfer must be
guaranteed by an Eligible Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, the Purchaser
will pay or cause to be paid any transfer taxes with respect to the transfer
and sale of Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or (in the circumstances
permitted hereby) if Certificates for Shares not tendered or not purchased are
to be registered in the name of, any person other than the registered
holder(s), or if tendered Certificates are registered in the name of any
person other than the person(s) signing this Letter of Transmittal, the amount
of any transfer taxes (whether imposed on the registered holder(s) or such
person) payable on account of the transfer to such person will be deducted
from the purchase price unless satisfactory evidence of the payment of such
taxes or exemption therefrom is submitted.
8
<PAGE>
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Certificate(s) listed in this Letter
of Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and Certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent and
Certificates are to be returned to someone other than the signer of this
Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. If any
tendered Shares are not purchased for any reason and the Shares are delivered
by book-entry transfer, the Shares will be credited to an account maintained
at the appropriate Book-Entry Transfer Facility.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to the Information Agent at its address or
telephone number set forth below. Requests for additional copies of the Offer
to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or to brokers, dealers, commercial
banks and trust companies. Such materials will be furnished at Purchaser's
expense.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser (subject to certain limitations in the Merger Agreement (as defined
in the Offer to Purchase)), in whole or in part, at any time or from time to
time, in the Purchaser's sole discretion.
10. BACKUP WITHHOLDING TAX. Each tendering Stockholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN")
on Substitute Form W-9, which is provided under "Important Tax Information"
below and to certify that the Stockholder is not subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering Stockholder to a penalty and 31% federal income tax
backup withholding on the payment of the purchase price for the Shares. If the
tendering Stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future, the tendering Stockholder
should follow the instructions set forth in Part III of the Substitute Form W-
9 and sign and date both the Substitute Form W-9 and the "Certificate of
Awaiting Taxpayer Identification." If the Stockholder has indicated in Part
III that a TIN has been applied for and the Depositary is not provided with a
TIN by the time of payment, the Depositary will withhold 31% of all payments
of the purchase price, if any, made thereafter pursuant to the Offer until a
TIN is provided to the Depositary.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Depositary at the telephone number printed on the first page of this Letter of
Transmittal. The holders will then be instructed as to the procedure to be
followed in order to replace the Certificate(s). This Letter of Transmittal
and related documents cannot be processed until the procedures for replacing
lost or destroyed Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
(TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND ANY
OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Stockholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payer) with
such Stockholder's correct TIN on Substitute Form W-9 below. If such
Stockholder is an individual, the TIN is his social security number. If the
tendering Stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future, the Stockholder should so
indicate on the Substitute Form W-9. See Instruction 10. If the Depositary is
not provided with the correct TIN, the Stockholder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that
are made to the Stockholder with respect to Shares purchased pursuant to the
Offer may be subject to backup federal income tax withholding.
9
<PAGE>
Certain Stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing "exempt" across the
face of, and by signing and dating, the Substitute Form W-9. In order for a
foreign individual to qualify as an exempt recipient, that Stockholder must
submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Forms for such statements can be obtained from the
Depositary. See the enclosed Guidelines for Certificates of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the Stockholder. Backup withholding is not an additional
tax. Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a Stockholder
must provide the Depositary with his correct TIN by completing the Substitute
Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that the Stockholder is awaiting a TIN) and that (1) such
Stockholder is exempt from backup withholding, (2) the Stockholder has not
been notified by the Internal Revenue Service that he is subject to backup
withholding as a result of failure to report all interest or dividends or (3)
the Internal Revenue Service has notified the Stockholder that he is no longer
subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
10
<PAGE>
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
--------------------------------
PART I--Taxpayer Identification Number-- PART III
For All Accounts
SUBSTITUTE Enter your taxpayer identification number
FORM W-9 in the appropriate box. For most Social security
individuals and sole proprietors, this is number
your Social Security Number. For other
entities, it is your Employer --------------
Identification Number. If you do not have
DEPARTMENT a number, see "How to Obtain a TIN" in
OF THE the enclosed Guidelines. OR
TREASURY
INTERNAL Note: if the account is in more than one
REVENUE name, see the chart on page 2 of the Employer
SERVICE enclosed Guidelines to determine what Identification
number to enter. Number
-----------------------------------------
PART II--For Payees Exempt From Backup
Withholding (see enclosed Guidelines and --------------
complete as instructed therein).
If awaiting TIN,
write "Applied
For".
- --------------------------------------------------------------------------------
CERTIFICATION.--Under penalties of
perjury, I certify that:
(1) The number shown on this form is my correct taxpayer
identification number, or I am waiting for a number
to be issued to me and either (a) I have mailed or
delivered an application to receive a taxpayer
identification number to the appropriate Internal
Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or
deliver an application in the near future. I
PAYER'S understand that if I do not provide a taxpayer
REQUEST FOR identification number, 31% of all reportable payments
TAXPAYER made to me thereafter will be withheld until I
IDENTIFICATION provide a number;
NUMBER
(2) I am not subject to backup withholding because (a) I
am exempt from backup withholding, or (b) I have not
been notified by the Internal Revenue Service ("IRS")
that I am subject to backup withholding as a result
of a failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer
subject to backup withholding; and
(3) Any other information provided on this form is true,
correct and complete.
CERTIFICATION INSTRUCTIONS--You must cross out item (2)
above if you have been notified by the IRS that you are
currently subject to backup withholding because of
underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were
subject to backup withholding you received another
notification from the IRS that you are no longer subject
to backup withholding, do not cross out item (2).
--------------------------------------------------------------
SIGNATURE DATE , 199
------------------------- --
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR INSTRUCTIONS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN
THE BOX IN PART III OF THE SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office
or (2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by
the time of payment, 31% of all payments of the purchase price pursuant to
the Offer made to me thereafter will be withheld until I provide a number.
SIGNATURE DATE
------------------------------------------ --------
- --------------------------------------------------------------------------------
11
<PAGE>
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue, 20th Floor
New York, NY 10022
(212) 754-8000
Call Toll Free: (800) 566-9061
Banks and Brokerage Firms,
Please Call: (800) 662-5200
The Dealer Manager for the Offer is:
DEUTSCHE MORGAN GRENFELL INC.
31 West 52nd Street
New York, NY 10019
(212) 469-7302 Call Collect
Call Toll Free: (800) 334-1898
December 20, 1996
12
<PAGE>
EXHIBIT 99.(a)(3)
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
ELJER INDUSTRIES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, par value $1.00 per share (the "Shares"),
of Eljer Industries, Inc., a Delaware corporation, are not immediately
available or time will not permit all required documents to reach Harris Trust
Company of New York (the "Depositary") on or prior to the Expiration Date (as
defined in the Offer to Purchase), or the procedures for delivery by book-
entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or transmitted by facsimile
transmission or mailed to the Depositary. See Section 3 of the Offer to
Purchase.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Overnight Courier:
77 Water Street, 4th Floor
New York, NY 10005
By Mail: By Facsimile Transmission: By Hand:
Wall Street (for Eligible Institutions only) Receive Window
Station (212) 701-7636 77 Water Street,
P.O. Box 1010 (212) 701-7637 5th Floor
New York, NY New York, NY
10268-1010
Confirm by Telephone:
(212) 701-7624
(800) 245-7630
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION
TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Zurn Acquisition Co., Inc., a Delaware
corporation and a wholly owned subsidiary of Zurn Industries, Inc., a
Pennsylvania corporation, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated December 20, 1996 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"),
receipt of which is hereby acknowledged, the number of Shares indicated below
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
Number of Shares:
----------------
Share Certificate Nos. (if available):
---------------------------------
---------------------------------
If Shares will be delivered by book-entry
transfer, check one box:
[_] The Depository Trust Company
[_] Philadelphia Depository Trust Company
Account Number
--------------------
Dated: , 199 --
Name(s) of Record Holder(s):
---------------------------------
---------------------------------
PLEASE TYPE OR PRINT
Address(es)
----------------------
---------------------------------
ZIP CODE
Area Code and Telephone Number:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
SIGNATURE(S)
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an Eligible Institution (as such term is defined in Section
3 of the Offer to Purchase), hereby guarantees to deliver to the Depositary at
one of its addresses set forth above (i) the certificates representing all
tendered Shares, in proper form for transfer, or a Book Entry Confirmation (as
defined in Section 3 of the Offer to Purchase) with respect to such Shares,
(ii) a Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with all required signature guarantees,
or, in the case of a book-entry transfer of Shares, an Agent's Message (as
defined in Section 2 of the Offer to Purchase) and (iii) all other documents
required by the Letter of Transmittal, all within three New York Stock
Exchange trading days after the date hereof.
<PAGE>
<TABLE>
<S> <C>
Name of Firm:______________________________ ___________________________________________
AUTHORIZED SIGNATURE
Address:___________________________________ Name:______________________________________
PLEASE TYPE OR PRINT
___________________________________________ Title:_____________________________________
ZIP CODE
Area Code and
Tel. No.:_________________________________ Dated:______________________________, 199
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE DELIVERED ONLY WITH THE
LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT 99.(a)(4)
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ELJER INDUSTRIES, INC.
AT
$24.00 NET PER SHARE
BY
ZURN ACQUISITION CO., INC.
A WHOLLY OWNED SUBSIDIARY
OF
ZURN INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 21, 1997, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks, December 20, 1996
Trust Companies and Other Nominees:
We have been appointed by Zurn Acquisition Co., Inc., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Zurn Industries, Inc., a
Pennsylvania corporation ("Parent"), to act as Dealer Manager in connection
with its offer to purchase all of the outstanding shares of common stock, par
value $1.00 per share (the "Shares"), of Eljer Industries, Inc., a Delaware
corporation (the "Company"), at $24.00 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in Purchaser's Offer to
Purchase, dated December 20, 1996, and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer"). Please furnish copies of the enclosed materials to
those of your clients for whose accounts you hold Shares in your name or in
the name of your nominee.
Enclosed herewith for your information and for forwarding to your clients
are copies of the following documents:
1. Offer to Purchase, dated December 20, 1996.
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients, together with Guidelines of the Internal
Revenue Service for Certification of Taxpayer Identification Number on
Substitute Form W-9 providing information relating to backup federal income
tax withholding. Facsimile copies of the Letter of Transmittal may be used
to tender Shares.
3. A letter to stockholders of the Company from Scott G. Arbuckle,
Chairman and Chief Executive Officer of the Company, together with (a) a
Solicitation/Recommendation Statement on Schedule 14D-9 and (b) an
Information Statement pursuant to Section 14(f) of the Securities Exchange
Act of 1934 and Rule 14f-1 thereunder, each of which has been filed with
the Securities and Exchange Commission by the Company and mailed to
stockholders of the Company.
4. Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if neither of the two procedures for tendering Shares set forth in
the Offer to Purchase can be completed on a timely basis.
5. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard to
the Offer.
6. Return envelope addressed to Harris Trust Company of New York, the
Depositary.
<PAGE>
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JANUARY 21, 1997,
UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The tender price is $24.00 per Share, net to the seller in cash.
2. The Offer is conditional upon, among other things, there being validly
tendered and not properly withdrawn on or prior to the Expiration Date (as
defined in the Offer to Purchase) that number of Shares which constitute at
least 50.1% of the Shares outstanding on a fully-diluted basis on the date
of purchase. The Offer is also subject to certain other conditions. See the
Introduction and Sections 1 and 14 of the Offer to Purchase.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant
to the Offer. However, federal income tax backup withholding at a rate of
31% may be required, unless an exemption is provided or unless the required
tax identification information is provided. See Instruction 10 of the
Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, January 21, 1997, unless the Offer is extended.
6. The Board of Directors of the Company has determined that the Offer
and the Merger (as defined in the Offer to Purchase) are fair to, and in
the best interests of, the Company's stockholders, has approved the Merger
Agreement (as defined in the Offer to Purchase) and the transactions
contemplated by the Merger Agreement, including the Offer and the Merger,
and recommends (subject to the limitations set forth in the Merger
Agreement) that the Company's stockholders accept the Offer and tender all
their Shares pursuant thereto.
7. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates for such Shares
(the "Certificates") pursuant to the procedures set forth in Section 3 of
the Offer to Purchase, or a timely Book-Entry Confirmation (as defined in
the Offer to Purchase) with respect to such Shares, (b) the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed
and duly executed with any required signature guarantees or an Agent's
Message (as defined in the Offer to Purchase) in connection with a book-
entry transfer, and (c) any other documents required by the Letter of
Transmittal. Accordingly, payment may not be made to all tendering
stockholders at the same time depending upon when Certificates are actually
received by the Depositary.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) and
any required signature guarantees, or an Agent's Message (as defined in the
Offer to Purchase) in connection with a book-entry transfer of Shares, and any
other required documents should be sent to the Depositary and (ii) either
Share Certificates representing the tendered Shares or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) should be delivered to the
Depositary in accordance with the instructions set forth in the Letter of
Transmittal and the Offer to Purchase.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to forward the Certificates for such Shares or other required
documents or complete the procedures for book-entry transfer on or prior to
the Expiration Date, a tender may be effected by following the guaranteed
delivery procedures specified in Section 3 of the Offer to Purchase.
Neither Purchaser nor Parent will pay any fees or commissions to any broker
or dealer or other person (other than the Dealer Manager, the Information
Agent or the Depositary, as described in the Offer to Purchase) for soliciting
tenders of Shares pursuant to the Offer. Purchaser will, however, upon
request, reimburse you for customary mailing and handling expenses incurred by
you in forwarding any of the enclosed materials to your clients. Purchaser
will pay or cause to be paid any stock transfer taxes payable on the transfer
of the Shares to it, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
2
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, Morrow &
Co., Inc., the Information Agent for the Offer, or the undersigned at their
respective addresses and telephone numbers set forth on the back cover of the
Offer to Purchase.
Very truly yours,
Deutsche Morgan Grenfell Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF PURCHASER, PARENT, THE COMPANY, THE
DEALER MANAGER, THE INFORMATION AGENT, THE DEPOSITARY OR ANY AFFILIATE OF
ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR
MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER
OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED
THEREIN.
3
<PAGE>
EXHIBIT 99.(a)(5)
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ELJER INDUSTRIES, INC.
BY
ZURN ACQUISITION CO., INC.
A WHOLLY OWNED SUBSIDIARY
OF
ZURN INDUSTRIES, INC.
AT
$24.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 21, 1997, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated December
20, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") and other materials relating to the offer by Zurn
Acquisition Co., Inc., a Delaware corporation ("Purchaser") and a wholly owned
subsidiary of Zurn Industries, Inc., a Pennsylvania corporation, to purchase
all of the outstanding shares of common stock, par value $1.00 per share (the
"Shares"), of Eljer Industries, Inc., a Delaware corporation (the "Company"),
at a purchase price of $24.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer. Holders of Shares
whose certificates for such Shares (the "Certificates") are not immediately
available or who cannot deliver their Certificates and all other required
documents to the depositary (the "Depositary") or complete the procedures for
book-entry transfer on or prior to the Expiration Date (as defined in the
Offer to Purchase) must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
We are (or our nominee is) the holder of record of Shares held by us for
your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL
ACCOMPANYING THIS LETTER IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND
CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender any or all of the Shares held by us for your account, upon the terms
and subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $24.00 per Share, net to the seller in cash.
2. The Offer is conditional upon, among other things, there being validly
tendered and not properly withdrawn on or prior to the Expiration Date that
number of Shares which constitute at least 50.1% of the Shares outstanding
on a fully-diluted basis on the date of purchase. The Offer is also subject
to certain other conditions. See the Introduction and Sections 1 and 14 of
the Offer to Purchase.
3. The Offer is being made for all outstanding Shares.
4. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant
to the Offer. However, federal income tax backup withholding at a rate of
31% may be required, unless an exemption is provided or unless the required
taxpayer identification information is provided. See Instruction 10 of the
Letter of Transmittal.
<PAGE>
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, January 21, 1997, unless the Offer is extended.
6. The Board of Directors of the Company has determined that the Offer
and the Merger (as defined in the Offer to Purchase) are fair to, and in
the best interests of, the Company's stockholders, has approved the Merger
Agreement (as defined in the Offer to Purchase), and the transactions
contemplated by the Merger Agreement, including the Offer and the Merger,
and recommends (subject to the limitations set forth in the Merger
Agreement) that the Company's stockholders accept the Offer and tender all
of their Shares pursuant to the Offer.
7. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) Certificates pursuant to the
procedures set forth in Section 3 of the Offer to Purchase, or a timely
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect
to such Shares, (b) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with any required
signature guarantees or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry transfer, and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment may
not be made to all tendering stockholders at the same time depending upon
when Certificates are actually received by the Depositary.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making
of the Offer or acceptance thereof would not be in compliance with the laws of
such jurisdiction. In any jurisdiction where the securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of the Purchaser by Deutsche Morgan
Grenfell Inc., the Dealer Manager of the Offer, or one or more registered
brokers or dealers licensed under the laws of such jurisdictions.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and
returning to us the instruction form set forth below. Please forward your
instructions to us in ample time to permit us to submit a tender on your
behalf prior to the Expiration Date. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise specified on the
instruction form set forth below.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ELJER INDUSTRIES, INC.
BY
ZURN ACQUISITION CO., INC.
A WHOLLY OWNED SUBSIDIARY
OF
ZURN INDUSTRIES, INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to
Purchase, dated December 20, 1996, and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") in connection with the offer by Zurn Acquisition Co.,
Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary
of Zurn Industries, Inc., a Pennsylvania corporation, to purchase all of the
outstanding shares of common stock, par value $1.00 per share (the "Shares"),
of Eljer Industries, Inc., a Delaware corporation.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are
held by you for the account of the undersigned, upon the terms and subject to
the conditions set forth in the Offer.
Number of Shares to be Tendered:* _________________________________________
Date: _____________________________________________________________________
---------------------------------------------------------------------------
SIGN HERE
Signature(s): _____________________________________________________________
Print Name(s): ____________________________________________________________
Print Address(es): ________________________________________________________
Area Code and Telephone Number(s): ________________________________________
Taxpayer Identification or Social Security Number(s): _____________________
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
EXHIBIT 99.(a)(6)
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- --------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7. a The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- --------------------------------------------------
- --------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
- --------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99.(a)(7)
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
December 20, 1996 and the related Letter of Transmittal and is not being made
to (nor will tenders be accepted from or on behalf of) holders of Shares
residing in any jurisdiction in which the making of the Offer or acceptance
thereof would not be in compliance with the laws of such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Purchaser by Deutsche Morgan Grenfell Inc., the Dealer Manager of
the Offer, or one or more registered brokers or dealers licensed under the laws
of such jurisdictions.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Eljer Industries, Inc.
by
Zurn Acquisition Co., Inc.
A Wholly Owned Subsidiary
of
Zurn Industries, Inc.
at
$24.00 Net Per Share
Zurn Acquisition Co., Inc., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Zurn Industries, Inc., a Pennsylvania corporation
(the "Parent"), is offering to purchase all of the outstanding shares of common
stock, par value $1.00 per share (the "Shares"), of Eljer Industries, Inc., a
Delaware corporation (the "Company"), at $24.00 per Share, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated December 20, 1996 (the "Offer to Purchase") and
in the related Letter of Transmittal (which together constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, JANUARY 21, 1997, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT EACH OF THE
OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS
(SUBJECT TO THE LIMITATIONS SET FORTH IN THE MERGER AGREEMENT) THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES PURSUANT
TO THE OFFER.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the Offer
to Purchase) that number of Shares representing at least 50.1% of the Shares
outstanding on a fully diluted basis (the "Minimum Share Condition").
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated December 14, 1996 (the "Merger Agreement"), among the Parent, the
Purchaser and the Company. The Merger Agreement provides that, among other
things, the Purchaser will make the Offer and that following the purchase of
Shares pursuant to the Offer, subject to the satisfaction or waiver of certain
conditions set forth in the Merger Agreement and in accordance with relevant
provisions of the Delaware General Corporation Law ("DGCL"), the Purchaser will
be merged with and into the Company (the "Merger"). Following consummation of
the Merger, the Company will continue as the surviving corporation and will be a
wholly owned subsidiary of the Parent. At the effective time of the Merger (the
"Effective Time"), each Share (excluding Shares owned, directly or indirectly,
by the Company or any of its wholly owned subsidiaries or by Parent, Purchaser
or any other wholly owned subsidiary of Parent and Shares owned by stockholders
who have properly exercised their appraisal rights under Delaware law) issued
and outstanding immediately prior to the Effective Time will be cancelled and
automatically converted into the right to receive cash in an amount equal to the
price per Share paid pursuant to the Offer, without interest (and less any
required withholding taxes).
The consummation of the Merger is subject to the satisfaction or waiver
of a number of conditions, including, if required, the approval of the Merger by
the requisite vote of the stockholders of the Company. Under the DGCL, the
stockholder vote necessary to approve the Merger will be the affirmative vote of
at least a majority of the outstanding shares, including Shares held by the
Purchaser and its affiliates. If the Minimum Share Condition is satisfied and
the Purchaser purchases at least a majority of the outstanding Shares in the
Offer, the Purchaser will be able to effect the Merger without the affirmative
vote of any other stockholder of the Company. If the Purchaser acquires at least
90% of the outstanding Shares pursuant to the Offer or otherwise, the Purchaser
will be able to effect the Merger pursuant to the "short-form" merger provisions
of Section 253 of the DGCL, without prior notice to, or any action by, any other
stockholder of the Company.
The Offer is subject to certain conditions set forth in the Offer to
Purchase. If any such condition is not satisfied, the Purchaser may, subject to
the terms of the Merger Agreement, (i) terminate the Offer and return all
tendered Shares to tendering stockholders, (ii) extend the Offer and, subject to
withdrawal rights as set forth below, retain all such Shares until the
expiration of the Offer as so extended, (iii) waive such condition and, subject
to any requirement to extend the time during which the Offer is open, purchase
all Shares validly tendered prior to the Expiration Date and not withdrawn or
(iv) delay acceptance for payment of or payment for Shares, subject to
applicable law, until satisfaction or waiver of the conditions to the Offer.
The Purchaser reserves the right, subject to applicable law, to extend
the period of time during which the Offer is open by giving oral or written
notice of such extension to Harris Trust Company of New York (the "Depositary").
Any such extension will be followed as promptly as practicable by public
announcement thereof no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment (and thereby purchased) tendered Shares when, as and if the
Purchaser gives oral or written notice to the Depositary of its acceptance of
such Shares for payment. Payment for Shares accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of certificates
for such Shares (or a confirmation of a book-entry transfer of such Shares into
the Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase)), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) (unless, in the case of book-entry transfer,
an Agent's Message (as defined in the Offer to Purchase) is utilized) and any
other documents required by the Letter of Transmittal.
Tenders of Shares made pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date. Thereafter, such tenders are irrevocable,
except that they may be withdrawn at any time after February 17, 1997 unless
theretofore accepted for payment as provided in the Offer to Purchase. For a
withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth in the Offer to Purchase and must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holders of the Shares, if
different from the person who tendered the Shares. If the Shares to be withdrawn
have been delivered to the Depositary, a signed notice of withdrawal with
(except in the case of Shares tendered by an Eligible Institution (as defined in
the Offer to Purchase)) signatures guaranteed by an Eligible Institution must be
submitted prior to the release of such Shares. In addition, such notice must
specify, in the case of Shares tendered by delivery of certificates, the name of
the registered holder (if different from that of the tendering stockholder) and
the serial numbers shown on the particular certificates evidencing the Shares to
be withdrawn or, in the case of Shares tendered by book-entry transfer, the name
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, is contained in the Offer to Purchase and is
incorporated herein by reference.
The Company has agreed to provide the Purchaser with the Company's
stockholder list and security position listings for the purpose of disseminating
the Offer to holders of Shares. The Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished to
brokers, banks and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
Requests for copies of the Offer to Purchase, the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent or the Dealer Manager as set forth below, and copies will be furnished
promptly at the Purchaser's expense. The Purchaser will not pay any fees or
commissions to any broker or dealer or any other person (other than the Dealer
Manager and the Information Agent) for soliciting tenders of Shares pursuant to
the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Call Toll Free: (800) 566-9061
Banks and Brokerage Firms,
Please Call: (800) 662-5200
The Dealer Manager for the Offer is:
Deutsche Morgan Grenfell[LOGO]
Deutsche Morgan Grenfell Inc.
31 West 52nd Street
New York, New York 10019
(212) 469-7302 Call Collect
Call Toll Free: (800) 334-1898
December 20, 1996
<PAGE>
EXHIBIT 99.(a)(8)
<PAGE>
FOR IMMEDIATE RELEASE
December 16, 1996
ZURN INDUSTRIES, INC. TO BUY ELJER INDUSTRIES, INC.
Dallas, TX...Eljer Industries, Inc. (NYSE:ELJ) and Zurn Industries, Inc.
(NYSE:ZRN) announced today the execution of a definitive merger agreement in
which an affiliate of Zurn has agreed to acquire all of the outstanding shares
of common stock of Eljer for $24.00 per share in cash. Zurn will commence a
tender offer for the Eljer shares by Friday, December 20, 1996. The expiration
date of the tender offer will be 20 business days following commencement,
unless the offer is extended.
Eljer, based in Dallas, TX is a leading manufacturer and marketer of high
quality building products, including plumbing, heating and ventilation
products, for residential and commercial construction, remodeling and repair,
and do-it-yourself markets. Eljer's 1995 revenues were $397.4 million. With FY
1996 reported revenues of $421.5 million, Zurn, based in Erie, PA, is an
industry leader in manufacturing and marketing of plumbing products
(principally to the specification markets) and in providing water resource
construction services and fire protection systems.
The merger of Zurn and Eljer will create a leader in plumbing products and
HVAC markets. Zurn and Eljer believe that the merger offers very attractive
product and market synergies for both Zurn and Eljer products.
The transaction has received the approval of the Boards of Directors of both
companies and is subject to only customary regulatory approvals. The Board of
Directors of Eljer recommends that the offer be accepted by the Eljer
shareholders.
"The acquisition of Eljer fits perfectly with Zurn's strategic focus on
plumbing products and the growth of those businesses," said Robert R. Womack,
Zurn Chairman and CEO. "Eljer's products and markets are very complementary
with those of Zurn and we believe the combined business has significant
advantages."
Commenting on the merger, Scott G. Arbuckle, Eljer Chairman and CEO, said, "We
are pleased to have reached an agreement with Zurn which we feel is in the
best interest of our shareholders and also provides the Company with a strong
partner and resources for future growth. The management teams of our two
organizations fit well and we believe the outlook for the combined
organization to be exciting."
Zurn has indicated that it will finance this transaction through a combination
of internal cash resulting from its recent sale of business units and loans
committed by its existing lenders.
Deutsche Morgan Grenfell Inc. acted as financial adviser to Zurn and Bear,
Stearns & Co., Inc. was financial advisor to Eljer. Deutsche Morgan Grenfell
will act as dealer-manager for the tender offer.
* * *
Contact:Zurn Industries, Inc.
John R. Mellett
Chief Financial Officer
Erie, PA
814/452-2111
Deutsche Morgan Grenfell
Jonathan P. Wendell
New York, NY
212/469-8016
Contact:Eljer Industries, Inc.
Brooks F. Sherman
Chief Financial Officer
Dallas, TX
972/407-2603
Bear, Stearns & Co. Inc.
Sheldon I. Stein
Dallas, TX
214/979-7935
<PAGE>
EXHIBIT 99.(b)(1)
<PAGE>
[BANKERS TRUST COMPANY
One Bankers Trust Plaza, New York, New York 10006]
December 9, 1996 Mailing Address
P.O. Box 318
Zurn Industries, Inc. Church Street Station
One Zurn Place, Box 2000 New York, New York
Erie, PA 16514 10008
re: Acquisition Financing
---------------------
Gentlemen:
Zurn Industries, Inc. ("Zurn") has informed Bankers
Trust Company ("BTCo") that Zurn is considering the acquisition
(the "Acquisition") of a company hereto identified to BTCo and
referred to as Raven ("Target"). The Acquisition would be
effected by a public tender offer (the "Tender Offer") made by
Zurn or a newly created wholly owned subsidiary of Zurn ("Acq.
Sub") for all of the outstanding common stock of Target, followed
by a merger (the "Second Step Merger") of Target with Acq. Sub.
You have further informed us that senior financing (the "Senior
Financing") of up to $250 million will be required to finance the
aggregate purchase price to be paid by Zurn and its subsidiaries
pursuant to the Acquisition, to refinance existing indebtedness
of Zurn and of Target and its subsidiaries, to pay related costs
and expenses and to provide for ongoing working capital and
general corporate purposes.
BTCo is pleased to confirm that it is willing, subject
to the terms and conditions set forth herein and in the Summary
of Terms attached hereto as Exhibit A (the "Term Sheet"), to
provide up to $75 million of the Senior Financing and to act as
agent and arranger with respect thereto. It is anticipated that
certain other financial institutions acceptable to you and us
(the "Initial Banks") would commit to participate in the Senior
Financing prior to the commencement of the Tender Offer in an
aggregate amount equal to the remainder of the Senior Financing.
BTCo reserved the right, prior to or after execution of the
definitive credit documentation, to syndicate the Senior
Financing to one or more other financial institutions
(collectively with BTCo and the Initial Banks, the "Banks") that
will become parties to such definitive credit documentation
pursuant to a syndication to be managed by BTCo. You agree to
actively assist, and to use your reasonable best efforts to cause
Target to actively assist, BTCo in achieving a syndication that
is satisfactory to BTCo and you. Such syndication will be
accomplished by a variety of means, including direct contact
during the syndication between your senior management, senior
management of Target and the proposed syndicate members,
including by participating in a reasonable number of meetings
with such proposed syndicate members. To assist BTCo in its
syndication efforts, you hereby agree (a) to provide and use your
reasonable best efforts to cause Target to provide BTCo and the
<PAGE>
other syndicate members upon request with all information
reasonably deemed necessary by us to complete syndication,
including but not limited to information and evaluations prepared
by you or Target relating to your and Target's business and (b)
to assist, and use your reasonable best efforts to cause Target
to assist, BTCo upon request in the preparation of an information
Memorandum to be used in connection with the syndication of the
Senior Financing.
BTCo's commitment hereunder is also subject to (a)
there not having occurred any material adverse changes in the
business, assets, liabilities, operations, condition (financial
or otherwise) or prospects of Zurn and its subsidiaries taken as
a whole or Target and its subsidiaries taken as whole since March
31, 1996 and December 31, 1995, respectively; (b) no material
adverse change occurring in the financial markets generally after
the date hereof which has a material adverse effect on the
syndication of senior loan facilities generally, as reasonably
determined by BTCo; (c) the full amount of the Senior Financing
having been committed to by BTCo and the Initial Banks; and (d)
the other conditions set forth herein and in the Term Sheet.
BTCo will continue its ongoing due diligence of the corporate
organization of Target and its subsidiaries and in connection
assure adequate protection for the Banks. BTCo's commitment
hereunder will terminate on January 31, 1997 unless the initial
borrowing date under the term portion of the Senior Financing
(the "Closing Date") has occurred.
To induce BTCo to issue this letter and to proceed with
documenting the proposed financing, you hereby agree that all
reasonable fees and expenses (including the reasonable fees and
expenses of counsel and other consultants) of BTCo and its
affiliates arising in connection with this letter (and our due
diligence in connection herewith) and the other transactions
described herein shall be for your account, whether or not the
Senior Financing is made available or definitive credit documents
are executed. You further agree to indemnify and hold harmless
BTCo, the Initial Banks and each director, officer, employee and
affiliate thereof (collectively, each, an "indemnified person")
from and against any and all actions, suits, proceedings
(including any investigations or inquiries), claims, losses,
damages, liabilities or expenses of any kind or nature whatsoever
which may be incurred by or asserted against or involve any such
indemnified person as a result of or arising out of or in any way
related to or resulting from this letter and, upon demand, to pay
and reimburse each indemnified person for any reasonable legal or
other out-of-pocket expenses incurred in connection with
investigating, defending or preparing to defend any such action,
suit, proceeding (including any inquiry or investigation) or
claim (whether or not any such indemnified person is a party to
any action or proceeding out of which any such expenses arise),
provided, however, that you shall not have to indemnify any
indemnified person to the extent that any such loss, claim,
damage, expense or liability resulted from the gross negligence
<PAGE>
or willful misconduct of any indemnified person. This letter is
issued for your benefit only and no other person or entity may
rely thereof. Neither BTCo nor any other person shall be
responsible or liable to you or any other person for
consequential damages which may be alleged as a result of this
letter or the financing contemplated hereby.
The provisions of the immediately preceding paragraph
shall survive any termination of this letter.
You acknowledge that BTCo and its affiliates may be
providing debt financing, equity capital or other services
(including financial advisory services) to other companies in
respect of which you, Target or your affiliates may have
conflicting interests. Neither BTCo nor its affiliates will use
confidential information obtained from you, Target or any of your
affiliates by virtue of the transactions contemplated by this
letter or their other relationships with you and your affiliates
in connection with the engagement of BTCo and its affiliates with
other companies, and neither BTCo nor its affiliates will furnish
any such information to such other companies. Likewise, neither
BTCo nor its affiliates has any obligation to use in connection
with the transactions contemplated by this letter, or to furnish
to you or any of your affiliates, confidential information
obtained from other companies. You also acknowledge that BTCo
and its affiliates may be providing other services and/or other
financing to you in connection with the Acquisition and that this
letter relates only to the Senior Financing, with all such other
services and/or other financing to you in connection with the
acquisition and that this letter relates only to the Senior
Financing, with all such other services and financing to be
agreed upon pursuant to other documentation.
BTCo shall have the right to review and approve all
public announcements and filings relating to the Acquisition
which refer to BTCo or the other Banks before they are made (such
approval not to be unreasonably withheld or delayed).
BTCo reserves the right to employ the services of its
affiliates (including BT Securities Corporation ("BTSC") in
providing services contemplated by this letter and to allocate,
in whole or in part, to such affiliates certain fees payable to
BTCo in such manner as BTCo and its affiliates may agree in their
sole discretion. You acknowledge that BTCo may share with any of
its affiliates (including BTSC) any information related to you,,
or any of the matters contemplated hereby. BTCo agrees to treat,
and cause any such affiliate to treat, all non-public information
provided to it either by you or as confidential information in
accordance with customary banking industry practices.
This letter may be executed in any number of
counterparts, each of which shall be an original and all of
which, when taken together, shall constitute one agreement. This
<PAGE>
letter shall be governed by, and construed in accordance with,
the laws of the State of New York.
Except as otherwise required by law or unless BTCo has
otherwise consented, you are not authorized prior to your
acceptance of this letter as provided in the following paragraph
to show or circulate this letter to any other person or entity
(other than your legal or financial advisors in connection with
your evaluation hereof). If this letter is not accepted by you
as provided in the following paragraph, please promptly return
this letter (any copies hereof) to the undersigned.
If you are in agreement with the foregoing, please sign
and return to each of BTCo the enclosed copy of this letter,
together with a copy of the enclosed fee letter, no later than
5:00 p.m., New York time, on December 17, 1996. If you fail to
do so, this letter will terminate at such time and you are
requested to return same and the enclosed fee letter to BTCo.
Very truly yours,
BANKERS TRUST COMPANY
By________________________
Title: Vice President
Agreed to and Accepted this
___ day of ______________, 1996
ZURN INDUSTRIES, INC.
By______________________________
Title
<PAGE>
EXHIBIT A
---------
SUMMARY OF TERMS/1/
----------------
Borrower: Zurn Industries, Inc. ("Zurn") provided that Target's direct
operating subsidiary ("Op. Co.") shall be the borrower under
the RT Facility referred to below.
Purpose: Loans under the AT Facility referred to below will be used to
finance in part the cash payments to be made in respect of
Target's capital stock pursuant to the Acquisition and to pay
related costs and expenses. Loans under the RT Facility will
be used to refinance existing indebtedness of Target and Op.
Co. and to finance a contribution by Target and/or Op. Co. to
a settlement fund (the "Contribution"). The Revolving
Facility may be used for working capital and general
corporate purposes of the Borrower and its subsidiaries,
including refinancing the existing debtor in possession
financing of a subsidiary of Op. Co. currently subject to a
bankruptcy proceeding ("Bankruptcy Sub") upon confirmation of
a reorganization plan for Bankruptcy Sub acceptable to BTCo
and the Required Banks (the "Plan Confirmation").
Agent: BTCo.
Banks: BTCo., the Initial Banks and a syndicate of other financial
institutions arranged by BTCo (collectively, the "Banks").
Facilities: A. A term facility (the "AT Facility") of up to $90 million will
be available to be incurred on the Closing Date and, to the
extent necessary, on the date on which the Second Step Merger
is completed (the "Merger Date"). Once repaid, loans under
the AT Facility (the "AT Loans") may not be reborrowed.
B. A term facility (the "RT Facility" and together with the AT
Facility, the "Term Facilities") of up to $110 million will
be available to be incurred pursuant to (x) a borrowing on
the Merger Date (or such earlier date as is acceptable to
BTCo) and (y) a
- ---------------------
/1/ Capitalized terms used herein and not defined herein shall
have the meanings provided in the commitment letter to which
this summary is attached.
<PAGE>
borrowing on the date the Contribution is made. Once repaid,
loans under the RT Facility ("RT Loans" and together with AT
Loans, the "Term Loans").
C. A revolving credit facility (the "Revolving Facility") of up
to $50 million will be available to be used through loans
("Revolving Loans" and together with the Term Loans the
"Loans") and letters of credit (subject to a $25 million
sublimit) after the Closing Date and prior to the Maturity
Date referred to below. Revolving Loans may be repaid and
reborrowed.
Maturity: A. The Term Facilities will mature on the sixth anniversary of
the Closing Date (the "Maturity Date"), subject to quarterly
amortization to be determined.
B. The Revolving Facility will terminate on the Maturity Date.
Interest Rate: At the Borrower's option, Loans will bear interest at:
(1) Base Rate plus the Applicable Margin; or
(2) Eurodollar Rate (adjusted for maximum reserves) plus the
Applicable Margin for 1, 2, 3 or 6 month interest
periods, provided that Eurodollar loans will not be
--------
available until the Syndication Date (i.e. the earlier of
(i) 60 days after the Closing Date and (ii) the date on
which the Agent determines that the primary syndication
has been completed) has been reached.
The Base Rate is defined as the higher of (i) the announced
prime rate of BTCo and (ii) the federal funds rate + 1/2 of
1%.
The Applicable Margin initially will be 1%, if Base Rate
loans, and 2%, if Eurodollar loans. The Applicable Margins
will be reduced upon the Plan Confirmation and will be based
on the then applicable ratio (the "Ratio") of Total
Indebtedness to Adjusted EDITDA (in each case of Zurn and its
subsidiaries on a consolidated basis) as agreed upon.
<PAGE>
The credit agreement governing the Senior Financing (the
"Credit Agreement") shall include standard protective
provisions for such matters as increased costs, funding
losses, capital adequacy, illegality and withholding taxes.
Interest in respect of Base Rate loans shall be payable
quarterly in arrears on the last business day of each fiscal
quarter. Interest in respect of Eurodollar loans shall be
payable at the end of the applicable interest period, but not
less frequently than quarterly. All interest and fees will be
calculated on the basis of the number of actual days elapsed
in a 360-day year. After and during continuance of any
payment default, overdue Loans and other overdue amounts will
bear interest at 2% above the rate otherwise applicable
thereto.
Commitment Fees: Per annum percentage of unused Revolving Facility and unused
Term Facilities for the period commencing on the Closing
Date, payable quarterly in arrears, initially equal to .375%.
The Commitment Fee will be reduced upon the Plan Confirmation
and will be based on the then applicable Ratio as agreed
upon.
Letter of Credit Applicable Margin for Eurodollar Loans plus a .25% facing
Fee: fee for issuer, payable quarterly in arrears.
Optional Commit- The unused Revolving Facility may be voluntarily reduced or
ment Reductions: terminated by Zurn at any time without penalty.
Repayments: The Term Loans will be mandatorily repaid and thereafter the
Revolving Facility will be mandatorily reduced as a result of
asset sales (with certain exceptions and certain
reinvestments in the business to be permitted), of certain
debt incurrences and of certain equity issuances and from
annual excess cash flow (to be defined). Loans may be
voluntarily repaid at any time upon appropriate notice,
subject in all cases to breakage costs if Eurodollar loans
are prepaid other than on the last day of the applicable
interest period. Repayments of Term Loans shall be allocated
between the Term Facilities in a manner to be determined.
<PAGE>
Guaranties: The obligations (A) under the AT Facility and the Revolving
Facility will be guaranteed (x) prior to the Merger Date, by
each direct and indirect domestic subsidiary of Zurn
(including Acquisition Subsidiary but excluding Target and
its subsidiaries) and (y) after the Merger Date, by each
direct and indirect domestic subsidiary of Zurn and (B) under
the RT Facility will be guaranteed by Zurn and each domestic
subsidiary of Zurn (other than Op. Co.), in each case subject
to such exceptions (including Bankruptcy Sub prior to the
Plan Confirmation) as are satisfactory to the Banks (each a
"Guarantor").
Collateral Loans will be secured by (i) 100% (65% in the case of the
Security: stock of a foreign subsidiary) of the stock of all
subsidiaries held by a Borrower or any Guarantor (including,
prior to the Merger Date, the stock of Target owned by Zurn
or Acq. Sub., which pledge will be structured to satisfy
Regulation U requirements) and (ii) all other tangible and
intangible assets of the Borrowers and the Guarantors, with
such exceptions as are acceptable to the Banks.
Documentation: The Senior Financing will be subject to the negotiation,
execution and delivery of the definitive Credit Agreement and
related guaranties, security agreements and other support
documentation satisfactory to the Borrowers, the Agent, and
the other Banks. Such Credit Agreement will contain
representations and warranties, conditions, precedent,
covenants, events of default and other provisions appropriate
for transaction of this type and others reasonably determined
by the Agent to be appropriate including (without limitation)
the following:
A. Conditions Conditions precedent to each borrowing will include
Precedent: customary borrowing conditions such as accuracy of
representations and absence of events of default and, with
respect to the initial borrowing, will also include, without
limitation:
1. Zurn, Acq. Sub. and Target shall have executed a Merger
Agreement (the "Merger Agreement") relating to the Second
Step Merger and such Merger Agreement and all related
documentation shall be
<PAGE>
reasonably satisfactory to BTCo and the Required Banks and
shall be in full force and effect.
2. Zurn or Acq. Sub. shall have purchased pursuant to an
Offer to Purchase (which shall be satisfactory to BTCo),
and in compliance with applicable law, such number of
shares of common stock of Target as is sufficient to
Permit Zurn or Acq. Sub. to cause the Second Step Merger
to be consummated without the requirement of any other
affirmative votes, and the conditions thereto specified in
the Offer to Purchase shall have been satisfied (or, if
material, waived to the extent consented to by BTCo and
the Required Banks).
3. The Banks' satisfaction that all governmental and third
party approvals necessary to consummate the Tender Offer
and the Merger shall have been obtained and remain in
effect. In addition, there shall be in effect no
injunction, stay or similar order impacting (including by
materially delaying, imposing burdensome conditions on or
otherwise) the consummation of the Tender Offer or the
Second Step Merger.
4. Nothing shall have occurred (nor shall any of the Banks
become aware of any facts not previously known) which BTCo
or the Required Banks shall determine is reasonably likely
to have a material adverse effect (i) on the business,
assets, liabilities, operations, condition (financial or
otherwise) or prospects of Zurn and its subsidiaries taken
as a whole or of Target and its subsidiaries (other than
the Bankruptcy Sub) taken as a whole or (ii) on the rights
and remedies of the Banks or on the ability of the
Borrowers and/or other credit parties to perform their
obligations to the Agent and the Banks.
5. The Banks' receipt of satisfactory opinions of counsel
relating to the transactions contemplated hereby.
6. No litigation by any entity (private or governmental)
shall be pending or
<PAGE>
threatened (i) with respect to the Senior Financing or
(ii) which BTCo or the Required Banks shall reasonably
determine could have a materially adverse effect on the
business, assets, liabilities, operations, condition
(financial or otherwise) or prospects of Zurn and its
subsidiaries taken as a whole or of Target and its
subsidiaries (other than Bankruptcy Sub) taken as a whole.
7. The Banks' receipt of a satisfactory solvency letter.
8. The Banks' receipt of environmental and hazardous
substances analysis in scope and substance, and from
persons, reasonably satisfactory to BTCo.
9. After giving effect to the initial borrowings and to the
full use of the RT Facility, no indebtedness for borrowed
money of, or guaranteed by, Target and its subsidiaries
will be outstanding other than the RT Loans and such other
Indebtedness, if any, as is satisfactory to BTCo and the
Required Banks.
B. Covenants: Zurn and its subsidiaries (including Target and its
subsidiaries on and after the Closing Date) will be required
to comply with covenants that are customary for transactions
of this type, including, without limitation, the following
(with exceptions to be mutually agreed upon):
1. No fundamental changes in business.
2. Restrictions on liens (negative pledge), additional
indebtedness (including contingent obligations),
investments (including in respect of joint ventures),
capital expenditures and on the granting of a negative
pledge to other creditors.
3. Limitation on mergers, etc. and on sales and purchases
of assets.
<PAGE>
4. Restrictions on dividends and other restricted payments.
5. Restrictions on prepayments of, and amendments to,
certain material agreements.
6. Requirement to obtain interest rate protection in amounts
to be determined.
7. Financial covenants to be determined, including minimum
consolidated net worth, maximum Total Indebtedness to
Total Capitalization, minimum fixed charges coverage
ratio and minimum ratio of EBITDA to interest expense, in
each case of Zurn and its subsidiaries on a consolidated
basis.
8. Providing customary financial information.
9. Maintenance of insurance.
10. Maintenance of Target and its subsidiaries (the "Target
Group") as separate entities from Zurn and its other
subsidiaries (the "Zurn Group") adherence to corporate
separateness requirements between Target Group on one
hand and Zurn Group on the other and restrictions on
transfers of assets, indebtedness or liabilities from
one Group to the other Group.
C. Events of Will include (without limitation and with appropriate
Default: baskets and grace periods to be agreed upon) non-payment,
misrepresentation, breach of covenants, cross-defaults,
bankruptcy, ERISA and judgments. Also, there will be an event
of default if the Second Step Merger does not occur within a
specified time after the Closing Date. Finally, there will be
a change in control (to be defined) event of default or
mandatory termination and prepayment in full.
<PAGE>
Assignments and Each Bank may assign all or a portion of its loans and
Participations: commitments under the Senior Financing, or sell
participations therein, to another person or persons,
provided that (i) each such assignment shall be in a minimum
amount of $5,000,000 and shall be subject to certain
conditions (including, without limitation, the approval of
Zurn and the Agent, which approvals will not be unreasonably
withheld) and (ii) no purchaser of a participation shall have
the right to exercise or to cause the selling Bank to
exercise voting rights in respect of the Senior Financing
(except as to certain customary issues). In connection with
any assignment, the assignor Banks shall pay the Agent an
assignment fee to be determined.
Required Banks: Banks holding 51% of the commitments and outstanding under
the Facilities.
Governing Law: The State of New York. There will be a mutual waiver of trial
by jury.
Lenders' Counsel: White & Case.
<PAGE>
EXHIBIT 99.(b)(2)
<PAGE>
[NATIONSBANK]
December 10, 1996
Zurn Industries, Inc.
One Zurn Place, Box 2000
Erie, Pennsylvania 16514
RE: Acquisition Financing
Gentlemen:
Zurn Industries, Inc. ("Zurn") has informed the undersigned (the
"Bank") that Zurn is considering the acquisition (the
"Acquisition") of a company hereto identified to the Bank and
referred to as Raven ("Target"). The Acquisition would be
effected by a public tender offer (the "Tender Offer") made by
Zurn or a newly created wholly owned subsidiary of Zurn ("Acq.
Sub") for all of the outstanding common stock of Target, followed
by a merger (the "Second Step Merger") of Target with Acq. Sub.
You have further informed us that senior financing (the "Senior
Financing") of up to $250 million will be required to finance the
aggregate purchase price to be paid by Zurn and its subsidiaries
pursuant to the Acquisition, to refinance existing indebtedness
of Zurn and of Target and its subsidiaries, to pay related costs
and expenses and to provide for ongoing working capital and
general corporate purposes.
The Bank is pleased to confirm that it is willing, subject to the
terms and conditions set forth herein and in the Summary of Terms
attached hereto as Exhibit A (the "Term Sheet") to provide up to
$75 million of the Senior Financing. The Bank's commitment
hereunder is also subject to (a) there not having occurred any
material adverse change in the business, assets, liabilities,
operations, condition (financial or otherwise) or prospects of
Zurn and its subsidiaries taken as a whole or Target and its
subsidiaries taken as a whole since March 31, 1996 and December
31, 1995, respectively; (b) the full amount of the Senior
Financing having been committed to; (c) the documentation
governing the Senior Financing being satisfactory to the Bank;
(d) Bank being named an agent to the Senior Financing; (e) the
unused and unreduced portion of the RT Facility referred to in
the Term Sheet also being made subject to Commitment Fees; and
(f) the other conditions set forth herein and in the Term Sheet.
You agree to indemnify and hold harmless the Bank and each
director, officer, employee and affiliate thereof (collectively,
each, an "indemnified person") from and against any and all
actions, suits, proceedings (including any investigations or
inquiries), claims, losses, damages, liabilities or expenses of
<PAGE>
any kind or nature whatsoever which may be incurred by or
asserted against or involve any such indemnified person as a
result of or arising out of or in any way related to or resulting
from this letter and, upon demand, to pay and reimburse each
indemnified person for any reasonable legal or other out-of-
pocket expenses incurred in connection with investigating,
defending or preparing to defend any such action, suit,
proceeding (including any inquiry or investigation) or claim
(whether or not any such indemnified person is a party to any
action or proceeding out of which any such expenses arise),
provided, however, that you shall not have to indemnify any
indemnified person to the extent that any such loss, claim,
damage, expense or liability resulted from the gross negligence
or willful misconduct of any indemnified person. This letter is
issued for your benefit only and no other person or entity may
rely thereon. Neither the Bank nor any other person shall be
responsible or liable to you or any other person for
consequential damages which may be alleged as a result of this
letter or the financing contemplated hereby.
The provisions of the immediately preceding paragraph shall
survive any termination of this letter.
This letter may be executed in any number of counterparts, each
of which shall be an original and all of which, when taken
together, shall constitute one agreement. This letter shall be
governed by, and construed in accordance with, the laws of the
State of New York.
Except as otherwise required by law or unless we have otherwise
consented, you are not authorized prior to your acceptance of
this letter, as provided in the following paragraph, to show or
circulate this letter to any other person or entity (other than
your legal or financial advisors in connection with your
evaluation hereof). If this letter is not accepted by you as
provided in the following paragraph, please promptly return this
letter (and any copies hereof) to the undersigned.
If you are in agreement with the foregoing, please sign and
return to the Bank, with a copy to Bankers Trust Company, as
agent under the Senior Financing, the enclosed copy of this
letter, together with an executed copy of the enclosed fee
letter, no later than 5:00 p.m., New York time, on December 17,
1996. If you fail to do so, this letter will terminate at such
<PAGE>
time. In addition, this letter shall also terminate should the
Senior Financing not have closed prior to January 31, 1997.
Sincerely,
NATIONSBANK, N.A.
By: ______________________________
Title: Senior Vice President
Agreed to and Accepted this
___ day of December, 1996:
ZURN INDUSTRIES, INC.
By: ______________________________
Title:
<PAGE>
EXHIBIT 99.(b)(3)
<PAGE>
[SOCIETE GENERALE]
December 12, 1996
Zurn Industries, Inc.
One Zurn Place, Box 2000
Erie, PA 16514
RE: Acquisition Financing
Gentlemen:
Zurn Industries, Inc. ("Zurn") has informed the undersigned (the
"Bank") that Zurn is considering the acquisition (the
"Acquisition") of a company hereto identified to the Bank and
referred to as Raven ("Target"). The Acquisition would be
effected by a public tender offer (the "Tender Offer") made by
Zurn or a newly created wholly owned subsidiary of Zurn ("Acq.
Sub") for all of the outstanding common stock of Target, followed
by a merger (the "Second Step Merger") of Target with Acq. Sub.
You have further informed us that senior financing (the "Senior
Financing") of up to $250 million will be required to finance the
aggregate purchase price to be paid by Zurn and its subsidiaries
pursuant to the Acquisition, to refinance existing indebtedness
of Zurn and of Target and its subsidiaries, to pay related costs
and expenses and to provide for ongoing working capital and
general corporate purposes.
The Bank is pleased to confirm that it is willing, subject to the
terms and conditions set forth herein and in the Summary of Terms
attached hereto as Exhibit A (the "Term Sheet"), to provide up to
$75,000,000 of the Senior Financing. The Bank's commitment
hereunder is also subject to (a) there not having occurred any
material adverse change in the business, assets, liabilities,
operations, condition (financial or otherwise) or prospects of
Zurn and its subsidiaries taken as a whole or Target and its
subsidiaries taken as a whole since March 31, 1996 and December
31, 1995, respectively; (b) the full amount of the Senior
Financing having been committed to; (c) the documentation
governing the Senior Financing being satisfactory to the Bank;
and (d) the other conditions set forth herein and in the Term
Sheet.
You agree to indemnify and hold harmless the Bank and each
director, officer, employee and affiliate thereof (collectively,
each, an "indemnified person") from and against any and all
actions, suits, proceedings (including any investigations or
inquiries), claims, losses, damages, liabilities or expenses of
any kind or nature whatsoever which may be incurred by or
asserted against or involve any such indemnified person as a
<PAGE>
result of or arising out of or in any way related to or resulting
from this letter and, upon demand, to pay and reimburse each
indemnified person for any reasonable legal or other out-of-
pocket expenses incurred in connection with investigating,
defending or preparing to defend any such action, suit,
proceeding (including any inquiry or investigation) or claim
(whether or not any such indemnified person is a party to any
action or proceeding out of which any such expenses arise),
provided, however, that you shall not have to indemnify any
indemnified person to the extent that any such loss, claim,
damage, expense or liability resulted from the gross negligence
or willful misconduct for any indemnified person. This letter is
issued for your benefit only and no other person or entity may
rely thereon. Neither the Bank nor any other person shall be
responsible or liable to you or any other person for
consequential damages which may be alleged as a result of this
letter or the financing contemplated hereby.
The provisions of the immediately preceding paragraph shall
survive any termination of this letter.
This letter may be executed in any number of counterparts, each
of which shall be an original and all of which, when taken
together, shall constitute one agreement. This letter shall be
governed by, and construed in accordance with, the laws of the
State of New York.
Except as otherwise required by law or unless we have otherwise
consented, you are not authorized prior to your acceptance of
this letter as provided in the following paragraph to show or
circulate this letter to any other person or entity (other than
your legal or financial advisors in connection with your
evaluation hereof). If this letter is not accepted by you as
provided in the following paragraph, please promptly return this
letter (and any copies hereof) to the undersigned.
If you are in agreement with the foregoing, please sign and
return to the Bank, with a copy to Bankers Trust Company, as
agent under the Senior Financing, the enclosed copy of this
letter, together with a copy of the enclosed fee letter, no later
than 5:00 p.m., New York time, on December 17, 1996. If you fail
to do so, this letter will terminate at such time and you are
requested to return same and the enclosed fee letter to the Bank.
Very truly yours,
By: Alan Zinser
Title: Assistant Vice President
<PAGE>
Agreed to and Accepted this
12th day of December, 1996:
ZURN INDUSTRIES, INC.
By:_________________________________
Title: Senior Vice President
& CFO
<PAGE>
EXHIBIT 99.(b)(4)
<PAGE>
[PNC Bank]
December 10, 1996
Zurn Industries, Inc.
Attn: John E. Mellett
Senior Vice President and
Chief Financial Officer
One Zurn Place, Box 2000
Erie, PA 16514
RE: Acquisition Financing
Dear John:
Zurn Industries, Inc. ("Zurn") has informed the undersigned (the
"Bank") that Zurn is considering the acquisition (the
"Acquisition") of a company hereto identified to the Bank and
referred to as Raven ("Target"). The Acquisition would be
effected by a public tender offer (the "Tender Offer") made by
Zurn or a newly created wholly owned subsidiary of Zurn ("Acq.
Sub") for all of the outstanding common stock of Target, followed
by a merger (the "Second Step Merger") of Target with Acq. Sub.
You have further informed us that senior financing (the "Senior
Financing") of up to $250 million will be required to finance the
aggregate purchase price to be paid by Zurn and its subsidiaries
pursuant to the Acquisition, to refinance existing indebtedness
of Zurn and of Target and its subsidiaries, to pay related costs
and expenses and to provide for ongoing working capital and
general corporate purposes.
The Bank is pleased to confirm that it is willing, subject to the
terms and conditions set forth herein in the Summary of Terms
attached hereto as Exhibit A (the "Term Sheet"), to provide up to
$50 million of the Senior Financing. The Bank's commitment
hereunder is also subject to (a) there not having occurred any
material adverse change in the business, assets, liabilities,
operations, condition (financial or otherwise) or prospects of
Zurn and its subsidiaries taken as a whole or Target and its
subsidiaries taken as a whole since March 31, 1996 and December
31, 1995, respectively; (b) the full amount of the Senior
Financing having been committed to; (c) the documentation
governing the Senior Financing being satisfactory to the Bank;
and (d) the other conditions set for the herein and in the Term
Sheet.
You agree to indemnify and hold harmless the Bank and each
director, officer, employee and affiliate thereof (collectively,
each, an "indemnified person") from and against any and all
actions, suits, proceedings (including any investigations or
inquiries), claims, losses, damages, liabilities or expenses of
<PAGE>
any kind or nature whatsoever which may be incurred by or
asserted against or involve any such indemnified person as a
result of or arising out of or in any way related to or resulting
from this letter and, upon demand, to pay and reimburse each
indemnified person for any reasonable legal or other out-of-
pocket expenses incurred in connection with investigating,
defending or preparing to defend any such action, suit,
proceeding (including any inquiry or investigation) or claim
(whether or not any such indemnified person is a party to any
action or proceeding out of which any such expenses arise),
provided, however, that you shall not have to indemnify any
indemnified person to the extent that any such loss, claim,
damage, expense or liability resulted from the gross negligence
or willful misconduct of any indemnified person. This letter is
issued for your benefit only and no other person or entity may
rely thereon. Neither the Bank nor any other person shall be
responsible or liable to you or any other person for
consequential damages which may be alleged as a result of this
letter or the financing contemplated hereby.
The provisions of the immediately preceding paragraph shall
survive any termination of this letter.
This letter may be executed in any number of counterparts each of
which shall be an original and all of which, when taken together,
shall constitute one agreement. This letter shall be governed
by, and construed in accordance with, the laws of the State of
New York.
Except as otherwise required by law or unless we have otherwise
consented, you are not authorized prior to your acceptance of
this letter as provided in the following paragraph to show or
circulate this letter to any other person or entity (other than
your legal or financial advisors in connection with your
evaluation hereof). If this letter is not accepted by you as
provided in the following paragraph, please promptly return this
letter (and any copies hereof) to the undersigned.
If you are in agreement with the foregoing, please sign and
return to the Bank, with a copy to Bankers Trust Company, as
agent under the Senior Financing, the enclosed copy of this
letter, together with a copy of the enclosed fee letter, no later
than 5:00 p.m., New York time, on December 10, 1996. If you fail
<PAGE>
to do so, this letter will terminate at such time and you are
requested to return same and the enclosed fee letter to the Bank.
Very truly Yours,
PNC Bank, National Association
By: ____________________________
Title: Vice President
By: ____________________________
Title: Vice President
Agreed to and Accepted this
_____ day of ______________,
1996:
ZURN INDUSTRIES, INC.
By: ____________________________
Title: _________________________
JFS/mlp
<PAGE>
EXHIBIT 99.(b)(5)
<PAGE>
[BROWN BROTHERS HARRIMAN & CO. 40 Watson Street
Boston-New York-Philadelphia Boston, MA 02109-3661]
December 10, 1996
Zurn Industries, Inc.
One Zurn Place, Box 2000
Erie, PA 16514
Re: Acquisition Financing
---------------------
Gentlemen:
Zurn Industries, Inc. ("Zurn") has informed the
undersigned (the "Bank") that Zurn is considering the acquisition
(the "Acquisition") of a company hereto identified to the Bank
and referred to as Raven ("Target"). The Acquisition would be
effected by a public tender offer (the "Tender Offer") made by
Zurn or a newly-created wholly owned subsidiary of Zurn ("Acq.
Sub") for all of the outstanding common stock of Target, followed
by a merger (the "Second Step Merger") of Target with Acq. Sub.
You have further informed us that senior financing (the "Senior
Financing") of up to $250 million will be required to finance the
aggregate purchase price to be paid by Zurn and its subsidiaries
pursuant to the Acquisition, to refinance existing indebtedness
of Zurn and Target and its subsidiaries, to pay related costs and
expenses and to provide for ongoing working capital and general
corporate purposes.
The Bank is pleased to confirm that it is willing,
subject to the terms and conditions set forth herein and in the
Summary of Terms attached hereto as Exhibit A (the "Term Sheet"),
to provide up to $10 million of the Senior Financing. The Bank's
commitment hereunder is also subject to (a) there not having
occurred any material adverse change in the business, assets,
liabilities, operations, condition (financial or otherwise) or
prospects of Zurn and its subsidiaries taken as a whole or Target
and its subsidiaries taken as a whole since March 31, 1996 and
December 31, 1995, respectively; (b) the full amount of the
Senior Financing have been committed to; (c) the documentation
governing the Senior Financing being satisfactory to the Bank;
and (d) the other conditions set forth herein and in the Term
Sheet.
You agree to indemnify and hold harmless the Bank and
each partner, director, officer, employee and affiliate thereof
(collectively, each, an "indemnified person") from and against
any and all actions, suits, proceeding (including any
investigations or inquiries), claims, losses, damages,
liabilities or expenses of any kind or nature whatsoever which
may be incurred by or asserted against or involve any such
indemnified person as a result of or arising out of or in any way
<PAGE>
related to or resulting from this letter and, upon demand, to pay
and reimburse each indemnified person for any reasonable legal or
other out-of-pocket expenses incurred in connection with
investigating, defending or preparing to defend any such action,
suit, proceeding (including any inquiry or investigation) or
claim (whether or not any such indemnified person is a party to
any action or proceeding out of which any such expenses arise),
provided, however, that you shall not have to indemnify and
indemnified person to the extent that any such loss, claim,
damage, expense or liability resulted from the gross negligence
or willful misconduct of any indemnified person. This letter is
issued for your benefit only and no other person or entity may
rely thereon. Neither the Bank nor any other person shall be
responsible or liable to you or any other person for
consequential damages which may be alleged as a result of this
letter or the financing contemplated hereby.
The provisions of the immediately preceding paragraph
shall survive any termination of this letter.
This letter may be executed in any number of
counterparts, each of which shall be an original and all of
which, when taken together, shall constitute one agreement. This
letter shall be governed by, and construed in accordance with,
the laws of the State of New York.
Except as otherwise required by law or unless we have
otherwise consented, you are not authorized prior to your
acceptance of this letter as provided in the following paragraph
to show or circulate this letter to any other person or entity
(other than your legal or financial advisors in connection with
your evaluation hereof). If this letter is not accepted by you
as provided in the following paragraph, please promptly return
this letter (and any copies hereof) to the undersigned.
If this letter is not accepted by you as provided in
the immediately preceding paragraph, please immediately return
this letter (and any copies hereof) to the undersigned.
Very truly yours,
_____________________________
By: William J. Whelan, Jr.
Title: Senior Manager
Agreed to and Accepted this
____ day of __________, 1996
ZURN INDUSTRIES, INC.
y:___________________________
Title
<PAGE>
EXHIBIT 99.(c)(1)
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
ZURN INDUSTRIES, INC.,
ZURN ACQUISITION CO., INC.
AND
ELJER INDUSTRIES, INC.
DATED DECEMBER 14, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated December 14, 1996 (this "Agreement"),
among Zurn Industries, Inc., a Pennsylvania corporation ("Parent"), Zurn
Acquisition Co., Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and Eljer Industries, Inc., a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent, by means of the merger
of Sub with and into the Company (the "Merger"), upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, to effectuate the acquisition, Parent and the Company each desire
that Parent cause Sub to commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $1.00 per share, of the Company
(the "Shares" or the "Company Common Stock") upon the terms and subject to the
conditions set forth in this Agreement and the Offer Documents (as defined in
Section 1.2) and the Board of Directors of the Company has approved such
tender offer and is recommending (subject to the limitations contained herein)
that the Company's stockholders accept the tender offer and tender their
shares of Company Common Stock pursuant thereto; and
WHEREAS, Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Offer (as defined
in Section 1.1) and the Merger and also to prescribe various conditions to the
consummation thereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
The Offer
1.1 The Offer. (a) Provided that none of the events set forth in Exhibit A
hereto shall have occurred and be continuing, as promptly as practicable (but
in any event not later than five business days after the public announcement
of the execution and delivery of this Agreement), Parent shall cause Sub to
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), an offer to purchase (the "Offer")
all outstanding shares of the Company Common Stock at a price of $24.00 per
share, net to the seller in cash (as paid pursuant to the Offer, the "Offer
Consideration"). The obligation of Parent and Sub to commence the Offer, to
consummate the Offer and to accept for payment and to pay for shares of
Company Common Stock validly tendered in the Offer and not withdrawn shall be
subject only to those conditions set forth in Exhibit A hereto.
(b) Without the prior written consent of the Company, Sub shall not (and
Parent shall cause Sub not to) (i) decrease or change the form of the Offer
Consideration or decrease the number of Shares sought pursuant to the Offer,
(ii) change the conditions to the Offer, (iii) impose additional conditions to
the Offer, (iv) extend the expiration date of the Offer beyond the initial
expiration date of the Offer (except (A) as required by applicable law, (B)
that Sub may extend the expiration date of the Offer for up to 20 business
days after the initial expiration date of the Offer (which shall be the 20th
business day after commencement of the Offer), and (C) that if any condition
to the Offer has not been satisfied or waived, Sub shall extend the expiration
date of the Offer for one or more periods not exceeding 60 calendar days (or,
if required by the Company in its sole discretion, 120 days calendar days) in
the aggregate), (v) waive the condition that there shall be validly tendered
and not withdrawn prior to the time the Offer expires a number of Shares which
constitutes 50.1% of the Shares outstanding on a fully-diluted basis on the
date of purchase ("on a fully-diluted basis" meaning, as of any date, the
number of
1
<PAGE>
Shares outstanding, together with the Shares which the Company may be required
to issue pursuant to obligations outstanding at that date under employee stock
or similar benefit plans or otherwise), or (vi) amend any term of the Offer in
any manner adverse to holders of shares of Company Common Stock; provided,
however, that, except as set forth above and subject to applicable legal
requirements, Sub may waive any other condition to the Offer in its sole
discretion; and provided further, that the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as
to comply with applicable rules and regulations of the United States
Securities and Exchange Commission (the "SEC"). Assuming the prior
satisfaction or waiver of the conditions to the Offer, Sub shall accept for
payment, and pay for, in accordance with the terms of the Offer, all shares of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer
as soon as practicable after the expiration date thereof.
1.2 Offer Documents. As soon as practicable on the date of commencement of
the Offer, Parent and Sub shall file or cause to be filed with the SEC a
Tender Offer Statement on Schedule 14D-1 ("Schedule 14D-1") with respect to
the Offer which shall contain the offer to purchase and related letter of
transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made (collectively with any supplements or amendments
thereto, the "Offer Documents") and which Parent and Sub jointly represent,
warrant and covenant will comply in all material respects with the Exchange
Act and any other applicable law and shall contain (or shall be amended in a
timely manner so as to contain) all information which is required to be
included therein in accordance with the Exchange Act and the rules and
regulations thereunder and any other applicable law; provided, however, that
no agreement or representation is hereby made or shall be made by Parent or
Sub with respect to information supplied by the Company in writing expressly
for inclusion in, or with respect to Company information derived from the
Company's public SEC filings which is incorporated by reference in, the Offer
Documents; and provided, further, however, that no representation, warranty or
covenant is made or shall be made herein by the Company with respect to
information contained in the Offer Documents other than information supplied
by the Company in writing expressly for inclusion in, or with respect to
Company information derived from the Company's public SEC filings which is
incorporated by reference in, the Offer Documents.
Parent, Sub and the Company each agree promptly to correct any information
provided by them for use in the Offer Documents if and to the extent that it
shall have become false or misleading in any material respect and Parent and
Sub further jointly and severally agree to take all lawful action necessary to
cause the Offer Documents as so corrected to be filed promptly with the SEC
and to be disseminated to holders of Company Common Stock, in each case as and
to the extent required by applicable law. In conducting the Offer, Parent and
Sub shall comply in all material respects with the provisions of the Exchange
Act and any other applicable law. The Company and its counsel shall be given a
reasonable opportunity to review and comment on the Offer Documents and any
amendments thereto prior to the filing thereof with the SEC.
1.3 Company Actions. The Company hereby consents to the Offer and represents
that (a) its Board of Directors (at a meeting duly called and held) has (i)
determined that each of this Agreement, the Offer and the Merger are fair to
and in the best interests of the Company and its stockholders, (ii) approved
this Agreement and the transactions contemplated hereby, including the Offer
and the Merger, and such approval is sufficient to render (x) Section 203 of
the Delaware General Corporation Law (the "DGCL") inapplicable to this
Agreement and the transactions contemplated hereby, including the Offer and
the Merger, and (y) Article Eighth of the Restated Certificate of
Incorporation of the Company inapplicable to this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, and
(iii) resolved (subject to the limitations herein contained) to recommend
acceptance of the Offer and adoption of this Agreement by the holders of
Company Common Stock, and (b) Bear, Stearns & Co. Inc. has delivered to the
Board of Directors of the Company its opinion that the Offer Consideration to
be received by the holders of Company Common Stock in the Offer is fair, from
a financial point of view, to such holders. The Company hereby consents to the
inclusion in the Offer Documents of the recommendation referred to in this
Section 1.3; provided, however, that the Company's Board of Directors may
withdraw, modify or change such recommendation to the extent that, after
consultation with legal counsel (who may be the Company's regularly engaged
legal counsel), it determines in good faith that such
2
<PAGE>
action is necessary for the Board of Directors to comply with its fiduciary
duties under applicable law. The Company hereby agrees to file with the SEC
simultaneously with the filing by Parent and Sub of Schedule 14D-1, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, "Schedule 14D-9") containing such
recommendations of the Board of Directors of the Company in favor of the Offer
and the Merger; provided, however, that the Company's Board of Directors may
withdraw, modify or change such recommendation to the extent that, after
consultation with legal counsel (who may be the Company's regularly engaged
legal counsel), it determines in good faith that such action is necessary for
the Board of Directors to comply with its fiduciary duties under applicable
law. The Company represents, warrants and covenants that Schedule 14D-9 shall
comply in all material respects with the Exchange Act and any other applicable
law and shall contain (or shall be amended in a timely manner so as to
contain) all information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations thereunder and
any other applicable law. The Company agrees to include in the Schedule 14D-9
information furnished by Parent or Sub in writing concerning Parent's
Designees (as such term is defined in Section 1.4 hereof), as required by
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. The Company,
Parent and Sub each agree promptly to correct any information provided by them
for use in Schedule 14D-9 if and to the extent that it shall have become false
or misleading in any material respect and the Company further agrees to take
all lawful action necessary to cause Schedule 14D-9 as so corrected to be
filed promptly with the SEC and disseminated to the holders of Company Common
Stock, in each case as and to the extent required by applicable law. Parent,
Sub and their counsel shall be given a reasonable opportunity to review
Schedule 14D-9 and any amendments thereto prior to the filing thereof with the
SEC. In connection with the Offer, the Company shall promptly furnish Parent
with mailing labels, security position listings and all available listings or
computer files containing the names and addresses of the record holders of the
Company Common Stock as of the latest practicable date and shall furnish
Parent with such information and assistance (including updated lists of
stockholders, mailing labels and lists of security positions) as Parent or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of Company Common Stock. Subject to the requirements of
applicable law, and except for such actions as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the Offer
and the Merger, Parent and Sub and each of their affiliates, associates,
partners, employees, agents and advisors shall hold in confidence the
information contained in such labels, lists and files, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated in accordance with its terms, shall deliver promptly
to the Company (or destroy and certify to the Company the destruction of) all
copies of such information (and any copies, compilations or extracts thereof
or based thereon) then in their possession or under their control.
1.4 Directors. (a) Promptly upon the purchase by Sub pursuant to the Offer
of such number of shares of Company Common Stock which represents at least
50.1% of the outstanding shares of Company Common Stock (on a fully diluted
basis), and from time to time thereafter, (i) Parent shall be entitled to
designate such number of directors ("Parent's Designees"), rounded up to the
next whole number as will give Parent, subject to compliance with Section
14(f) of the Exchange Act, representation on the Board of Directors of the
Company equal to the product of (x) the number of directors on the Board of
Directors of the Company (giving effect to any increase in the number of
directors pursuant to this Section 1.4) and (y) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being, the "Board Percentage"), and (ii) the Company
shall, upon request by Parent, promptly satisfy the Board Percentage by (x)
increasing the size of the Board of Directors of the Company or (y) using
reasonable efforts to secure the resignations of such number of directors as
is necessary to enable Parent's Designees to be elected to the Board of
Directors of the Company and shall use best efforts to cause Parent's
Designees promptly to be so elected, subject in all instances to compliance
with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder.
At the request of Parent, the Company shall take, at Parent's expense, all
lawful action necessary to effect any such election. Parent will supply to the
Company in writing and be solely responsible for any information with respect
to itself, the Parent's Designees and its officers, directors and affiliates
required by Section 14(f) of the Exchange and Rule 14f-1 promulgated
thereunder to be included in Schedule 14D-9. Notwithstanding the foregoing, at
all times prior to the Effective Time the Company's Board of Directors shall
include at least two Continuing Directors (as defined in Section 1.4(b)).
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(b) Following the election or appointment of Parent's Designees pursuant to
this Section 1.4 and prior to the Effective Time (as defined in Section 2.3)
of the Merger, any amendment or termination of this Agreement, extension for
the performance or waiver of the obligations or other acts of Parent or Sub or
waiver of the Company's rights hereunder shall require the concurrence of a
majority of directors of the Company then in office who are directors on the
date hereof and who voted to approve this Agreement (such directors, the
"Continuing Directors").
ARTICLE II
The Merger
2.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL, Sub shall be merged with and
into the Company at the Effective Time. Each of the parties shall use its
respective reasonable best efforts to cause the Merger to occur as promptly as
possible (subject to the limitations herein contained). At the Effective Time,
the separate corporate existence of Sub shall cease, and the Company shall
continue as the surviving corporation and a wholly owned subsidiary of Parent
(Sub and the Company are sometimes hereinafter referred to as "Constituent
Corporations" and, as the context requires, the Company is sometimes
hereinafter referred to as the "Surviving Corporation"), and shall continue
under the name "Eljer Industries, Inc."
2.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8.1, the closing of the Merger (the "Closing") shall take place at 10:00 a.m.,
New York time, on the first business day following satisfaction or waiver of
the conditions set forth in Article VII (the "Closing Date"), at the offices
of Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York unless
another date, time or place is agreed to in writing by the parties hereto.
2.3 Effective Time of the Merger. Subject to the provisions of this
Agreement, the parties hereto 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, as provided in the DGCL, as soon
as practicable on or after the Closing Date. The Merger shall become effective
upon such filing or at such time thereafter as is provided in the Certificate
of Merger (the "Effective Time").
2.4 Effects of the Merger. (a) The Merger shall have the effects as set
forth in the applicable provisions of the DGCL.
(b) The directors and the officers of Sub immediately prior to the Effective
Time shall, from and after the Effective Time, be the initial directors and
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 Surviving Corporation's Certificate of
Incorporation and Bylaws.
(c) The Certificate of Incorporation of Sub immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
DGCL.
(d) The Bylaws of Sub as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation until thereafter amended as
provided by applicable law, the Certificate of Incorporation or the Bylaws.
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ARTICLE III
Effect of The Merger on The Capital Stock of The Constituent Corporations;
Exchange of Certificates
3.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any shares of Company
Common Stock or the holder of any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into
and become one fully paid and nonassessable share of common stock, par value
$1.00 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of
Company Common Stock and all other shares of capital stock of the Company that
are owned by the Company and all shares of Company Common Stock and other
shares of capital stock of the Company owned by Parent, Sub or any other
wholly-owned Subsidiary (as defined below) of Parent or the Company shall be
canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor. As used in this Agreement, the
word "Subsidiary", with respect to any party, means any corporation,
partnership, joint venture or other organization, whether incorporated or
unincorporated, of which: (i) such party or any other Subsidiary of such party
is a general partner; (ii) voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation, partnership, joint venture or other organization is held by such
party or by any one or more of its Subsidiaries, or by such party and any one
or more of its Subsidiaries; or (iii) at least 50% of all classes of equity
securities is, directly or indirectly, owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and any one or more of
its Subsidiaries.
3.2 Conversion of Securities. At the Effective Time, by virtue of the Merger
and without any action on the part of Sub, the Company or the holders of any
of the shares thereof:
(a) (i) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (excluding (i) shares owned, directly
or indirectly, by the Company or any wholly-owned Subsidiary of the Company or
by Parent, Sub or any other wholly-owned Subsidiary of Parent and (ii)
Dissenting Shares (as defined in Section 3.6)) shall be converted into the
right to receive the Offer Consideration, payable to the holder thereof,
without any interest thereon (the "Merger Consideration"), less any required
withholding taxes, upon surrender and exchange of a Certificate (as defined in
Section 3.3).
(ii) All such shares of Company Common Stock, when converted as provided in
Section 3.2(a)(i), no longer shall be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each Certificate
previously evidencing Shares shall thereafter represent only the right to
receive the Merger Consideration. The holders of Certificates previously
evidencing Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to the Company Common Stock except as
otherwise provided herein or by law and from and after the Effective Time such
Certificates shall represent only the right to receive for their Shares the
Merger Consideration, without any interest thereon, upon surrender of the
Certificates in accordance with the provisions of Section 3.3.
3.3 Payment for Shares. (a) Paying Agent. Prior to the Effective Time, Sub
shall appoint a United States bank or trust company reasonably acceptable to
the Company to act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration, and Parent shall deposit or shall cause to be deposited
with the Paying Agent in a separate fund established for the benefit of the
holders of shares of Company Common Stock, for payment in accordance with this
Article III, through the Paying Agent (the "Payment Fund"), immediately
available funds in amounts necessary to make the payments pursuant to Section
3.2(a)(i) and this Section 3.3 to holders (other than (i) the Company or any
wholly-owned Subsidiary of the Company or Parent, Sub or any other wholly-
owned Subsidiary of Parent, or (ii) holders of Dissenting Shares). The Paying
Agent shall, pursuant to irrevocable instructions, pay the Merger
Consideration out of the Payment Fund. From time to time at or after the
Effective Time, Parent shall take all lawful action necessary to make or cause
to be made the appropriate
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cash payments, if any, to holders of Dissenting Shares. The Paying Agent shall
invest portions of the Payment Fund as Parent directs in obligations of or
guaranteed by the United States of America, in commercial paper obligations
receiving the highest investment grade rating from either Moody's Investors
Services, Inc. and/or Standard & Poor's Corporation, or in certificates of
deposit, bank repurchase agreements or banker's acceptances of commercial
banks with capital exceeding $1,000,000,000 (collectively, "Permitted
Investments"); provided, however, that the maturities of Permitted Investments
shall be such as to permit the Paying Agent to make prompt payment to former
holders of Company Common Stock entitled thereto as contemplated by this
Section 3.3. Parent shall cause the Payment Fund to be promptly replenished to
the extent of any losses incurred as a result of Permitted Investments. All
earnings on Permitted Investments shall be paid to Sub. If for any reason
(including losses) the Payment Fund is inadequate to pay the amounts to which
holders of shares of Company Common Stock shall be entitled under this Section
3.3, Parent shall in any event be liable for payment thereof. The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall instruct the Paying Agent to mail to each holder
of record (other than the Company or any wholly-owned Subsidiary of the
Company or Parent, Sub or any other wholly-owned Subsidiary of Parent) of a
Certificate or Certificates which, immediately prior to the Effective Time,
evidenced outstanding shares of Company Common Stock (the "Certificates"), (i)
a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent, and shall be in such
form and have such other customary provisions as Parent reasonably may
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment therefor. Upon surrender of a Certificate
for cancellation to the Paying Agent together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive in respect thereof cash in an amount equal to the product of (x) the
number of shares of Company Common Stock represented by such Certificate and
(y) the Merger Consideration, and the Certificate so surrendered shall
forthwith be canceled. Absolutely no interest shall be paid or accrued on the
Merger Consideration payable upon the surrender of any Certificate. If payment
is to be made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of the surrendered Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. Until surrendered in accordance with the provisions of this
Section 3.3(b), each Certificate (other than Certificates representing Shares
owned by the Company or any wholly-owned Subsidiary of the Company or Parent,
Sub or any other wholly-owned Subsidiary of Parent) shall represent for all
purposes only the right to receive the Merger Consideration with respect to
the shares of Company Common Stock formerly evidenced by such Certificate.
(c) Termination of Payment Fund; Interest. Any portion of the Payment Fund
which remains undistributed to the holders of Company Common Stock for six
months after the Effective Time shall be delivered to Parent, upon demand, and
any holders of Company Common Stock who have not theretofore complied with
this Article III and the instructions set forth in the letter of transmittal
mailed to such holder after the Effective Time shall thereafter look only to
Parent for payment of the Merger Consideration to which they are entitled.
(d) No Liability. Neither Parent nor the Surviving Corporation shall be
liable to any holder of shares of Company Common Stock for any cash from the
Payment Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(e) Withholding Rights. Parent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any holder
of shares of Company Common Stock such amounts as Parent may be required to
deduct and withhold with respect to such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld, such withheld
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
such deduction and withholding was made.
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3.4 Stock Transfer Books. At the Effective Time, the stock transfer books of
the Company shall be closed and there shall be no further registration of
transfers of shares of Company Common Stock thereafter on the records of the
Company.
3.5 Stock-Based Executive Compensation Arrangements. At the Effective Time,
each holder of (a) a then-outstanding option to purchase Shares under the
Company's Long-Term Executive Incentive Compensation Plan (the "LTIP") (a true
and correct copy of which has been delivered by the Company to Parent),
whether or not then exercisable (the "Options"), shall, in settlement thereof,
receive for each Share subject to such Option an amount (subject to any
applicable withholding tax) in cash equal to the difference between the Merger
Consideration and the per Share exercise price of such Option to the extent
such difference is a positive number (such amount being hereinafter referred
to as, the "Option Consideration"), (b) any then-outstanding shares of
restricted Company Common Stock awarded under the LTIP ("Restricted Shares")
shall, in settlement thereof, receive for each Restricted Share converted
pursuant to Section 3.2(a) an amount (subject to any applicable withholding
tax) in cash equal to the Merger Consideration (the "Restricted Share
Consideration"), and (c) any then-outstanding phantom stock unit under the
Eljer Industries, Inc. 1995 Long-Term Incentive Plan (the "Incentive Plan"),
whether or not then exercisable (the "Phantom Rights") shall, in settlement
thereof, receive for each Phantom Right an amount (subject to applicable
withholding tax) in cash equal to the difference between the Merger
Consideration and the Initial Value (as defined in the Incentive Plan) of such
Phantom Right to the extent such difference is a positive number (such amount
being hereinafter referred to as, the "Phantom Right Consideration");
provided, however, that with respect to any person subject to Section 16(a) of
the Exchange Act, any such amount shall be paid as soon as practicable after
the first date payment can be made without liability to such person under
Section 16(b) of the Exchange Act. Upon receipt of the Option Consideration,
the Restricted Share Consideration or the Phantom Right Consideration, the
Option or the Phantom Right shall be cancelled and the Restricted Shares shall
be surrendered and cancelled. The surrender of an Option, a Restricted Share
or a Phantom Right to the Company in exchange for the Option Consideration,
the Restricted Share Consideration or the Phantom Right Consideration shall be
deemed a release of any and all rights the holder had or may have had in
respect of such Option, Restricted Share or Phantom Right. Prior to the
Effective Time, the Company shall use its reasonable efforts to obtain all
necessary consents or releases from holders of Options, Restricted Shares or
Phantom Rights under the LTIP and the Incentive Plan and take all such other
lawful action as may be necessary to provide for and give effect to the
transactions contemplated by this Section 3.5 (except for any such action that
may require the approval of the Company's stockholders). Except as otherwise
agreed to by the parties, (i) the LTIP and the Incentive Plan shall terminate
as of the Effective Time and the provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any Subsidiary thereof, shall
be canceled as of the Effective Time, and (ii) the Company shall use
reasonable best efforts to assure that following the Effective Time no
participant in the LTIP, the Incentive Plan or other plans, programs or
arrangements shall have any right thereunder to acquire equity securities of
the Company, the Surviving Corporation or any Subsidiary thereof.
3.6 Dissenting Shares. Notwithstanding any other provisions of this
Agreement to the contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing
and who shall have demanded properly in writing appraisal for such shares in
accordance with Section 262 of the DGCL (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
Merger Consideration. Such stockholders instead shall be entitled to receive
payment of the appraised value of such shares of Company Common Stock held by
them in accordance with the provisions of such Section 262, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
shares of Company Common Stock under such Section 262 shall thereupon be
deemed to have been converted into and to have become exchangeable, as of the
Effective Time, for the right to receive, without any interest thereon, the
Merger Consideration upon surrender in the manner provided in Section 3.3, of
the Certificate or Certificates that, immediately prior to the Effective Time,
evidenced such shares of Company Common Stock.
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ARTICLE IV
Representations and Warranties
4.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and Sub as follows (it being expressly
understood that, to the extent that any representation or warranty shall be
untrue or incorrect as a result of (i) the status of United States Brass
Corporation ("US Brass") as a debtor and debtor-in-possession under the
jurisdiction of the United States Bankruptcy Court for the Eastern District of
Texas, (ii) the past or future assertion of claims against US Brass in
connection with its reorganization proceedings, or (iii) the occurrence of any
other events, developments or actions with respect to US Brass in such
reorganization proceedings (collectively, the "US Brass Bankruptcy Events"),
such representation or warranty shall nonetheless be deemed to be true and
correct for all purposes of this Agreement):
(a) Organization, Standing and Power. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation, has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted, and is duly qualified and in
good standing to conduct business in each jurisdiction in which the business
it is conducting, or the operation, ownership or leasing of its properties,
makes such qualification necessary, other than in such jurisdictions where the
failure so to qualify or be in good standing could not reasonably be expected
to have a Material Adverse Effect (as defined below) with respect to the
Company. The entities identified on Schedule 4.1(a) represent all of the
Subsidiaries of the Company, and the Company does not own any equity interest
in any other entity other than the Subsidiaries. The Company has heretofore
made available to Parent complete and correct copies of its Restated
Certificate of Incorporation and Bylaws and the Certificate of Incorporation
and Bylaws (or other comparable documents) of each of its Subsidiaries. As
used in this Agreement, a "Material Adverse Effect" shall mean, with respect
to any party, a material adverse effect, or any development that is reasonably
likely to result in a material adverse effect, on the business, financial
condition or results of operations of such party and its Subsidiaries, taken
as a whole.
(b) Capital Structure. The authorized capital stock of the Company consists
of 50,000,000 shares of Company Common Stock and 10,000,000 shares of
Preferred Stock, par value $1.00 per share ("Preferred Stock"). As of the date
hereof: (i) 7,153,657 Shares (including 40,600 Restricted Shares) are issued
and outstanding, (ii) no shares of Preferred Stock are issued and outstanding,
(iii) 33,593 Shares are held by the Company or its direct or indirect wholly
owned Subsidiaries, and (iv) no bonds, debentures, notes or other instruments
or evidence of indebtedness having the right to vote (or convertible into, or
exercisable or exchangeable for, securities having the right to vote) on any
matters on which the Company stockholders may vote ("Company Voting Debt") are
issued or outstanding. All outstanding Shares were duly authorized and are
validly issued, fully paid and nonassessable and are not subject to preemptive
or other similar rights. Except as set forth on Schedule 4.1(b), all
outstanding shares of capital stock of the Subsidiaries of the Company are
owned by the Company or a direct or indirect Subsidiary of the Company, free
and clear of all liens, charges, encumbrances, claims and options. As of the
date hereof, except as set forth in this Section 4.1(b) or Schedule 4.1(b),
except for the common stock purchase rights (the "Rights") issued pursuant to
the Rights Agreement dated as of April 14, 1996, as amended, between the
Company and Harris Trust and Savings Bank (the "Rights Agreement") and except
for the tentative settlement entered into in November 1995 pursuant to which
it was agreed that 17.5% of the issued and outstanding shares of the common
stock of the Company will be issued to a trust to be created pursuant to the
Bankruptcy Plan (as hereinafter defined) in the US Brass Bankruptcy there are
outstanding: (i) no shares of capital stock, Company Voting Debt or other
voting securities of the Company; (ii) no securities of the Company or any
Subsidiary of the Company convertible into, or exchangeable or exercisable
for, shares of capital stock, Company Voting Debt or other voting securities
of the Company or any Subsidiary of the Company; (iii) no stock appreciation
rights, phantom stock awards or similar rights or awards have been issued or
granted by the Company or any Subsidiary of the Company; and (iv) no options,
warrants, calls, rights (including preemptive rights), commitments or
agreements to which the Company or any Subsidiary of the Company is a party or
by which it is bound, in any case obligating the Company or any Subsidiary of
the Company to issue, deliver, sell, purchase, redeem or acquire, or cause to
be issued, delivered, sold, purchased,
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redeemed or acquired, additional shares of capital stock or any Company Voting
Debt or other voting securities of the Company or of any Subsidiary of the
Company, or obligating the Company or any Subsidiary of the Company to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement. Set forth on Schedule 4.1(b) is a list of all options, warrants and
rights to purchase shares of Company Common Stock, and all Phantom Rights and
stock appreciation rights outstanding as of the date hereof and the exercise
prices or Initial Values, as applicable, relating thereto. There are not as of
the date hereof and there will not be at the Effective Time any stockholder
agreements, voting trusts or other agreements or understandings to which the
Company is a party or by which it is bound relating to the voting of any
shares of the capital stock of the Company which will limit in any way the
solicitation of proxies by or on behalf of the Company from, or the casting of
votes by, the stockholders of the Company with respect to the Merger. There
are no restrictions on the Company to vote the stock of any of its
Subsidiaries.
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and authority to enter
into this Agreement and, subject, if required with respect to consummation
of the Merger, to the Company Stockholder Approval (as defined in Section
4.1(c)(iii)), to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject, if required with
respect to consummation of the Merger, to the Company Stockholder Approval.
This Agreement has been duly executed and delivered by the Company and,
subject, if required with respect to consummation of the Merger, to the
Company Stockholder Approval, and, assuming that this Agreement constitutes
the valid and binding agreement of Parent and Sub, constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms
except that the enforcement hereof may be limited by (a) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) (the
foregoing exception, the "Bankruptcy Exception").
(ii) The execution and delivery of this Agreement by the Company do not,
and the consummation of the transactions contemplated hereby by the Company
will not, (x) conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or the
loss of a benefit under, or the creation of a lien, pledge, security
interest or other encumbrance on assets or property, or right of first
refusal with respect to any asset or property (any such conflict,
violation, default, right of termination, cancellation or acceleration,
loss, creation or right of first refusal, a "Violation"), pursuant to any
provision of the Certificate of Incorporation or Bylaws of the Company or
the equivalent constituent documents of any of its Subsidiaries or (y)
except as set forth on Schedule 4.1(c)(ii) hereto and assuming the
consents, approvals, authorizations, permits, filings and notifications
referred to in Section 4.1(c)(iii) are duly and timely obtained or made
and, if required, the Company Stockholder Approval has been obtained,
result in any Violation of any (i) loan or credit agreement, note,
mortgage, indenture, lease, Company ERISA Plan (as defined in Section
4.1(i)), Company Benefit Arrangements (as defined in Section 4.1(i)) or
other agreement, obligation, instrument, Company Permit (as defined in
Section 4.1(f)), concession, franchise or license applicable to the Company
or any of its Subsidiaries or their respective properties or assets or (ii)
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or their respective
properties or assets (collectively, "Laws"). The Board of Directors of the
Company has taken all actions necessary under the DGCL, including approving
the transactions contemplated by this Agreement, to ensure that Section 203
of the DGCL does not, and will not, apply to the transactions contemplated
in this Agreement. The Board of Directors of the Company has also taken all
actions necessary under Article EIGHTH of the Company's Restated
Certificate of Incorporation, including approving the transactions
contemplated by this Agreement, to ensure that such Article EIGHTH does
not, and will not, apply to the transactions contemplated in this
Agreement. The Company and its Board of Directors have taken all actions
necessary so that (i) the execution and delivery of this Agreement, the
consummation of the transactions
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contemplated hereby and the other matters provided for herein will not
result in (A) Purchaser or Sub or any of their respective Affiliates or
Associates being an Acquiring Person, (B) the occurrence of a Distribution
Date, or (C) the Rights becoming exercisable and (ii) the Final Expiration
Date will occur immediately prior to the purchase of Shares pursuant to the
Offer (the terms "Acquiring Person," "Affiliate," "Associate,"
"Distribution Date" and "Final Expiration Date" having the respective
meanings ascribed thereto in the Rights Agreement).
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, notice to, or permit from any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is required
by or with respect to the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby which,
if not obtained or made, would reasonably be expected to have a Material
Adverse Effect with respect to the Company, except for: (A) the filing of a
premerger notification and report form by the Company under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended and the rules and
regulations thereunder (the "HSR Act") and the expiration or termination of
the applicable waiting period thereunder; (B) the filing with the SEC of
(x) if required by applicable law, a proxy or information statement in
definitive form relating to a meeting of the holders of Company Common
Stock (the "Company's Stockholders Meeting") to adopt this Agreement
("Company Stockholder Approval") (such proxy or information statement as
amended or supplemented from time to time being hereinafter referred to as
the "Proxy Statement"), (y) Schedule 14D-9 in connection with the Offer,
and (z) such reports under and such other compliance with the Exchange Act
and the rules and regulations thereunder as may be required in connection
with this Agreement and the transactions contemplated hereby; (C) the
filing of the Certificate of Merger with the Secretary of State of the
State of Delaware; (D) the consents, approvals, orders, authorizations,
registrations, declarations or filings set forth on Schedule 4.1(c)(iii);
and (E) such filings and approvals as may be required by any applicable
state securities, "blue sky" or takeover laws.
(d) SEC Documents. The Company has made available to Parent a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by the Company with the SEC since January 1, 1993 and
prior to the date of this Agreement (the "Company SEC Documents") which are
all the documents (other than preliminary material) that the Company was
required to file with the SEC since such date. As of their respective dates,
(i) the Company SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such Company SEC Documents, and (ii)
none of the Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the Company SEC Documents complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and present fairly, in all material respects, in accordance with applicable
requirements of GAAP (subject, in the case of the unaudited statements, to
normal, recurring adjustments, none of which are material) the consolidated
financial position of the Company and its consolidated Subsidiaries as of
their respective dates and the consolidated results of operations and the
consolidated cash flows of the Company and its consolidated Subsidiaries for
the periods presented therein.
(e) Information Supplied. None of the information supplied or to be supplied
in writing by the Company expressly for inclusion or incorporation by
reference in (i) any of the Offer Documents will, at the time the Offer
Documents are first published, sent or given to holders of Company Common
Stock, and at any time they are amended or supplemented, 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, in light of the
circumstances under which they are made, not misleading, and (ii) the Proxy
Statement will, on the date it is first mailed to the holders
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of the Company Common Stock or at the time of the Company's Stockholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Company makes no representations with respect to
information supplied in writing by Parent or Sub expressly for inclusion in
the Proxy Statement.
(f) Compliance with Applicable Laws. The Company and its Subsidiaries hold
all permits, licenses, variances, exemptions, orders, franchises and approvals
of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except where the failure to
hold any such Company Permits would not reasonably be expected to have a
Material Adverse Effect with respect to the Company. Except as disclosed in
the Company SEC Documents, the businesses of the Company and its Subsidiaries
are not being conducted in violation of any Laws, other than Laws the
violation of which would not reasonably be expected to have a Material Adverse
Effect with respect to the Company. No investigation or review by any
Governmental Entity with respect to the Company or any of its Subsidiaries is
pending or, to the knowledge of the Company, threatened, other than those the
outcome of which would not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, "to the knowledge of the Company" and all
phrases of like import shall mean facts or circumstances within the personal
knowledge of Scott Arbuckle, Brooks Sherman, or George Hanthorn, in each case
after reasonably inquiry.
(g) Litigation. Except as disclosed in the Company SEC Documents or on
Schedule 4.1(g) and except for any suits, actions or proceedings initiated or
threatened against the Company or any of its officers or directors by any
shareholder of the Company (or any group thereof) on or after the date hereof
with respect to this Agreement or the transactions contemplated hereby, there
is no suit, action or proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary of the Company,
nor is there any written judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any
Subsidiary of the Company, which is reasonably likely to result in a Material
Adverse Effect on the Company or its ability to consummate the transactions
contemplated hereby.
(h) Taxes. Except as disclosed on Schedule 4.1(h):
(i) All Tax returns, statements, reports and forms (including estimated
tax or information returns and reports) required to be filed with any
Taxing Authority with respect to any Pre-Closing Tax Period (defined below)
by or on behalf of the Company or any Subsidiary of the Company
(collectively, the "Returns") have, to the extent required to be filed on
or before the date hereof, been filed when due in accordance with all
applicable laws.
(ii) As of the time of filing, the Returns correctly reflected in all
material respects the facts regarding the income, business, assets,
operations, and activities and status of the Company and its Subsidiaries.
(iii) All Taxes shown as due and payable on the Returns that have been
filed have been timely paid, or withheld and remitted to the appropriate
Taxing Authority.
(iv) The reserves established for Taxes with respect to the Company and
its Subsidiaries for any Pre-Closing Tax Period (including any Pre-Closing
Tax Period for which no Return has yet been filed) reflected on the books
of the Company and its Subsidiaries (excluding any provision for deferred
income taxes) are adequate in accordance with GAAP.
(v) Neither the Company nor any Subsidiary of the Company is delinquent
in the payment of any Tax or has requested any extension of time within
which to file any Return except for extensions granted as a matter of
right.
(vi) Neither the Company nor any Subsidiary of the Company (or any member
of any affiliated, consolidated, combined or unitary group of which the
Company or any Subsidiary of the Company is or has been a member) has
granted any extension or waiver of the statute of limitations period
applicable to any Return, which period (after giving effect to such
extension or waiver) has not yet expired.
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(vii) There is no action, suit or proceeding now pending and no claim,
audit or investigation now pending of which the Company is aware or, to the
knowledge of the Company, any action, suit, claim, audit or investigation
threatened against or with respect to the Company or any Subsidiary of the
Company in respect of any Tax.
(viii) None of the Company, any Subsidiary of the Company or any other
person on behalf of the Company or any Subsidiary of the Company has
entered into any agreement or consent pursuant to Section 341(f) of the
Code.
(ix) There are no liens for Taxes upon the assets of the Company or any
Subsidiary of the Company except liens for current Taxes not yet due.
(x) Neither the Company nor any Subsidiary of the Company will be
required to include any adjustment in taxable income for any Post-Closing
Tax Period (defined below) under Section 481(c) of the Code (or any similar
provision of the Tax laws of any jurisdiction) as a result of a change in
method of accounting for a Pre-Closing Tax Period or pursuant to the
provisions of any agreement entered into with any Taxing Authority with
regard to the Tax liability of the Company or any Subsidiary of the Company
for any Pre-Closing Tax Period.
(xi) Neither the Company nor any Subsidiary of the Company has been a
member of an affiliated, consolidated, combined or unitary group with
respect to which any corporation (other than the Company or any Subsidiary
of the Company, or any predecessors thereof) was the common parent.
(xii) Schedule 4.1(h) contains a list of all jurisdictions (whether
foreign or domestic) to which any Tax imposed on overall net income is
properly payable by the Company or any Subsidiary of the Company.
(xiv) For purposes of this paragraph 4.1(h):
(A) "Tax" shall mean (1) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem,
value added, transfer, franchise, profits, license, withholding on
amounts paid to or by the Company or any Subsidiary of the Company,
payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty, addition to tax or
additional amount imposed by any governmental authority (domestic or
foreign) responsible for the imposition of any such tax (a "Taxing
Authority"), (2) any liability of the Company or any Subsidiary for the
payment of any amounts of any of the foregoing types described as a
result of being a member of an affiliated, consolidated, combined or
unitary group, and (3) liability of the Company or any Subsidiary for
the payment of any amounts as a result of being party to any Tax
sharing agreement or arrangement (whether or not written) binding the
Company or any Subsidiary of the Company or with respect to the payment
of any amounts of any of the foregoing types as a result of any express
or implied obligation to indemnify any other person.
(B) "Pre-Closing Tax Period" shall mean any Tax period (or portion
thereof) ending on or before the close of business on the Closing Date.
(C) "Post-Closing Tax Period" shall mean any Tax period (or portion
thereof) ending after the close of business on the Closing Date.
(i) Pension And Benefit Plans; ERISA.
Schedule 4.1(i) hereto contains a true and complete list of each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), maintained, contributed to or
required to be contributed to by the Company or any of its Subsidiaries for
the benefit of current, former and retired employees or their beneficiaries
(the "Company ERISA Plans") and each other plan, contract, program or
arrangement maintained, contributed to or required to be contributed to by the
Company or any of its Subsidiaries for the benefit of current, former or
retired employees and directors or their beneficiaries (the "Company Benefit
Arrangements" and, together with the Company ERISA Plans, the "Plans"). Each
Company ERISA Plan and each Company Benefit Arrangement is, and has at all
times, operated in compliance
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<PAGE>
in all material respects with its terms (including any applicable collective
bargaining agreements) and all applicable laws, including but not limited to
the Code, federal and state securities laws and ERISA, and no "reportable
event," "prohibited transaction" or breach of fiduciary duty (within the
meaning of ERISA) or termination has occurred with respect to any Company
ERISA Plan under circumstances which present a risk of any material liability
to any governmental authority or other person. None of the Company ERISA Plans
or Company Benefit Arrangements is a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA or a "multiple employer plan" within the meaning
of Section 413(c) of the Code or Section 4063 of ERISA. No event has occurred
which would cause the Company to incur (i) any liability to the Pension
Benefit Guaranty Corporation under Title IV of ERISA or (ii) any withdrawal
liability to a "multiemployer plan" or "multiple employer plan," in each case
except for liabilities which could not reasonably be expected to have a
Material Adverse Effect with respect to the Company. Copies or descriptions of
each Company ERISA Plan and Company Benefit Arrangement (and, where
applicable, the most recent summary plan description, actuarial report,
determination letter, annual report (Form 5500) and trust agreement relating
to such Company ERISA Plan and Company Benefit Arrangement), and such other
information as has been reasonably requested by Parent, have been made
available to Parent for review prior to the date hereof. Each Company ERISA
Plan intended to qualify under Section 401(a) of the Code is identified on
Schedule 4.1(i) and, to the knowledge of the Company, is so qualified, and, to
the knowledge of the Company, each trust maintained in connection with each
such plan is tax exempt under Section 501(a) of the Code. The Internal Revenue
Service (the "IRS") has issued favorable determination letters with respect to
each Company ERISA Plan and each Company Benefit Arrangement and related trust
intended to qualify under Section 401(a) of the Code, and the IRS has not
taken any action to revoke any such letter. If and to the extent applicable,
no Company ERISA Plan and no Company Benefit Arrangement has or has incurred
an accumulated funding deficiency within the meaning of ERISA (S) 302 or Code
(S) 412, nor has any waiver of the minimum funding standards of ERISA (S) 302
and Code (S) 412 been requested of or granted by the IRS with respect to any
Company ERISA Plan or Company Benefit Arrangement, nor has any lien in favor
of any such plan arisen under Code (S) 412(n) or ERISA (S) 302(f). Except as
indicated on Schedule 4.1(i), no Plan is self funded by the Company. Except as
disclosed on Schedule 4.1(i), with respect to any insurance policy providing
funding for benefits under any Company ERISA Plan or Company Benefit
Arrangement, there is no liability of the Company in the nature of a
retroactive rate adjustment, loss sharing arrangement, or other actual or
contingent liability, there will be no such liability arising wholly or
partially out of events occurring prior to the execution of this Agreement,
nor would there be any such liability if the Company cancelled such policy as
of the date hereof. Except as disclosed on Schedule 4.1(i), no action, suit,
grievance, arbitration or other manner of litigation, or claim with respect to
the Plans or the assets thereof (other than routine claims for benefits made
in the ordinary course of plan administration) are pending or, to the
knowledge of the Company, threatened against or with respect to the Plans, the
Company or any fiduciaries (as defined in Section 3(21) of ERISA) of the Plans
(including any action, suit, grievance, arbitration or other manner of
litigation, or claim regarding conduct which allegedly interferes with the
attainment of rights under a Plan, in each case except for actions, suits,
grievances, arbitrations, claims, or other matters that could not reasonably
be expected to have a Material Adverse Effect with respect to the Company.
Except as set forth in Schedule 4.1(i), all expenses and liabilities relating
to all of the Plans have been, and will at the Closing Date be, fully and
properly accrued in all material respects on the appropriate Plan's books and
records and disclosed in each case to the extent required and in accordance
with generally accepted accounting principles and in the Plan financial
statements. Except as set forth on Schedule 4.1(i), no Plan is funded through
a "welfare benefit fund" as defined in Section 419(e) of the Code.
(j) Absence of Certain Changes or Events. Since September 30, 1996, the
business of the Company and its Subsidiaries has been carried on only in the
ordinary course and there has not been any adverse change in the business,
financial condition or results of operations which has resulted in or
reasonably could be expected to result in a Material Adverse Effect with
respect to the Company.
(k) Opinion of Financial Advisor. The Company has received the opinion of
Bear, Stearns & Co. Inc. to the effect that, as of the date hereof, the Offer
Consideration to be received by the holders of Company Common Stock in the
Offer and the Merger Consideration to be received by the holders of Company
Common Stock in the Merger is fair, from a financial point of view, to such
holders.
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(l) Vote Required. In the event that Section 253 of the DGCL is inapplicable
and unavailable to effectuate the Merger, the affirmative vote of the holders
of a majority of the outstanding shares of Company Common Stock is the only
vote of the holders of any class or series of the Company's capital stock
necessary (under applicable law, the Restated Certificate of Incorporation of
the Company or otherwise) to approve the Merger and this Agreement and the
transactions contemplated hereby.
(m) Labor Matters. Except as set forth on Schedule 4.1(m), neither the
Company nor any of its Subsidiaries is a party to any employment, severance
compensation, labor or collective bargaining agreement and there are no
employment, severance compensation, labor or collective bargaining agreements
which pertain to employees of the Company or any of its Subsidiaries. The only
employment agreements and severance compensation agreements with officers of
the Company or any of its Subsidiaries are set forth on Schedule 4.1(m). No
labor organization or group of employees of the Company or any of its
Subsidiaries has made a pending written demand for recognition or
certification.
(n) Intangible Property.
(i) Schedule 4.1(n) sets forth a list of each material trademark, trade
name, patent, service mark, brand mark, brand name, proprietary computer
program, proprietary database, industrial design or copyright owned by, or
used in connection with the businesses of, the Company or any of its
Subsidiaries as well as a list of all registrations thereof and pending
applications therefor, and each license or other contract relating thereto
(collectively, the "Company Intangible Property"). Items identified with an
asterisk on Schedule 4.1(n) are owned by the Company ("Company Owned
Intangible Property"). Except as set forth on Schedule 4.1(n), all of the
Company Owned Intangible Property is owned by the Company or its
Subsidiaries free and clear of any and all liens, claims or encumbrances,
other than liens, claims and encumbrances which would not materially impair
the value of such Company Owned Intangible Property or its use in the
conduct of the businesses conducted by the Company and its Subsidiaries.
Except as set forth on Schedule 4.1(n), the use of the Company Intangible
Property by the Company or its Subsidiaries does not conflict with,
infringe upon, violate or interfere with or constitute an appropriation of
any right, title, interest or goodwill, including, without limitation, any
intellectual property right, trademark, trade name, patent, service mark,
brand mark, brand name, computer program, database, industrial design,
copyright or any pending application therefor of any other person, except
in each case as would not materially impair the value of such Company
Intangible Property or its use in the conduct of the businesses conducted
by the Company and its Subsidiaries. There have been no claims made (or, to
the knowledge of the Company, threatened) and neither the Company nor any
of its Subsidiaries has received any notice of any claim that any of the
Company Intangible Property is invalid or unenforceable or conflicts with
the asserted rights of any other person or has not been used or enforced or
has failed to be used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of any of the Company
Intangible Property.
(ii) Each of the Company and its Subsidiaries owns, or has a valid right
to use, all Company Intangible Property necessary for the operation of its
business and has not forfeited or otherwise relinquished any Company
Intangible Property.
(iii) Except as set forth on Schedule 4.1(n), each of the licenses or
other contracts relating to the Company Intangible Property (collectively,
the "Company Intangible Property Licenses") is in full force and effect and
is valid and enforceable in accordance with its terms (subject to the
Bankruptcy Exception), and there is no material default under any Company
Intangible Property License either by the Company or any of its
Subsidiaries or, to the knowledge of the Company, by any other party
thereto and there has been no failure to maintain or enforce any material
rights with respect to the Company Intangible Property Licenses. The
transactions contemplated by this Agreement will not invalidate any Company
Intangible Property License to which the Company or any of its Subsidiaries
is a party or by which any of them are bound or result in any requirement
to pay material additional amounts in order to continue to use any such
Company Intangible Property License.
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(o) Environmental Matters.
(i) For purposes of this Agreement:
(A) "Environmental Law" means any applicable law regulating or
prohibiting Releases into any part of the environment (indoor or
outdoor), or pertaining to the protection of natural resources or the
environment including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA") (42
U.S.C. (S)(S) 9601, et seq.), the Hazardous Materials Transportation
Act (49 U.S.C. (S)(S) 1801, et seq.), the Resource Conservation and
Recovery Act (42 U.S.C.(S)(S) 6901, et seq.), the Clean Water Act (33
U.S.C. (S)(S) 1251, et seq.), the Clean Air Act (33 U.S.C. (S)(S) 7401,
et seq.), the Toxic Substances Control Act (15 U.S.C. (S)(S) 7401, et
seq.) and the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. (S)(S) 136, et seq.), and the regulations promulgated pursuant
thereto, and any such applicable foreign or domestic state or local
statutes, and the regulations promulgated pursuant thereto, as such
laws are in effect on the date hereof;
(B) "Hazardous Material" means any substance, material or waste which
is regulated by any public or governmental authority in the
jurisdictions in which the Company or its Subsidiaries conducts
business, or the United States, including, without limitation, any
material or substance which is defined as a "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "contaminant," "toxic waste" or
"toxic substance" under any provision of any Environmental Law;
(C) "Release" means any release, spill, effluent, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment, including, without
limitation, any property owned, operated or leased by the Company or
any of its Subsidiaries; and
(D) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a governmental entity
or required under any Environmental Law, or voluntarily undertaken to
(i) clean up, remove, treat, or in any other way ameliorate or address
any Hazardous Materials or other substance in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not endanger
or threaten to endanger the public health or welfare of the indoor or
outdoor environment; (iii) perform preremedial studies and
investigations or post-remedial monitoring and care pertaining or
relating to a Release; or (iv) achieve or maintain compliance with any
Environmental Law.
(ii) Except as disclosed in the Company SEC Documents, as set forth in
Schedule 4.1(o), or where the failure to comply would not reasonably be
expected to have a Material Adverse Effect with respect to the Company, the
operations of the Company and its Subsidiaries have complied and currently
comply with all Environmental Laws. Except as set forth in Schedule 4.1(o),
neither the Company nor any of its Subsidiaries has received any notice
with respect to any of its facilities of any violation of any Environmental
Law or any possible liability or remediation obligation arising under any
Environmental Law other than those violations, liabilities or obligations
which would not reasonably be expected to have a Material Adverse Effect
with respect to the Company.
(iii) The Company and its Subsidiaries are not subject to any outstanding
material orders, judgments, agreements or contracts with or issued by any
Governmental Entity or other person respecting (A) Environmental Laws, (B)
any Remedial Action or (C) any Release or threatened Release of a Hazardous
Material except as described in Schedule 4.1(o).
(p) Certain Defaults. Except as set forth on Schedule 4.1(p), neither the
Company nor any of its Subsidiaries is, or has received written notice that
any other party is, in default under any material written contract or other
agreement to which the Company or any Subsidiary is a party or otherwise
bound.
(q) Brokerage Fees and Commissions; Legal Fees. Except for Bear, Stearns &
Co. Inc. (a copy of whose engagement letter with the Company has been
furnished to Parent), no person or entity is entitled to receive from the
Company or any of its Subsidiaries any investment banking, brokerage or
finder's fee or fees for financial
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consulting or other advisory services in connection with this Agreement or the
transactions contemplated hereby based upon arrangements made by or on behalf
of the Company. The fees and expenses of Bear, Stearns & Co. Inc. as a result
of its representation of the Company in connection with this Agreement and the
transactions contemplated hereby shall not exceed $3,250,000.
(r) Full Disclosure. None of the representations or warranties contained in
this Section 4.1 nor any of the disclosures contained in the Schedules
attached hereto contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements contained herein or therein, in light of the circumstances
under which they are made, not misleading.
4.2 Representations and Warranties of Parent and Sub. Parent and Sub,
jointly and severally, represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, and each has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified and in
good standing to conduct business in each jurisdiction in which the business
it is conducting, or the operation, ownership or leasing of its properties,
makes such qualification necessary, other than in such jurisdictions where the
failure so to qualify or be in good standing could not reasonably be expected
to have a Material Adverse Effect with respect to Parent. Parent has delivered
to the Company complete and correct copies of the respective Certificates of
Incorporation and Bylaws, or equivalent organizational documents, of Parent
and Sub.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Sub.
This Agreement has been duly executed and delivered by each of Parent and
Sub and assuming this Agreement constitutes the valid and binding agreement
of the Company, constitutes a valid and binding obligation of Parent and
Sub enforceable in accordance with its terms, subject to the Bankruptcy
Exception.
(ii) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby by each of Parent and Sub will not
result in any Violation pursuant to any provision of the Certificate of
Incorporation or Bylaws (or comparable governing instruments) of Parent or
Sub or any of their respective Subsidiaries or, except as set forth on
Schedule 4.2(b)(iii) hereto and assuming the consents, approvals,
authorizations, permits, filings and notifications referred to in Section
4.2(b)(iii) are duly and timely obtained or made, result in any Violation
of any (i) loan or credit agreement, note, mortgage, indenture, lease,
employee benefit plan, or other agreement, obligation, instrument, permit,
concession, franchise or license applicable to Parent or any of its
Subsidiaries or their respective properties or assets or (ii) any Laws
applicable to Parent or any of its Subsidiaries or their respective
properties or assets.
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, notice to, or permit from any Governmental
Entity is required by or with respect to Parent or Sub in connection with
the execution and delivery of this Agreement by each of Parent and Sub or
the consummation by each of Parent or Sub of the transactions contemplated
hereby which, if not obtained or made, would reasonably be expected to have
a Material Adverse Effect with respect to Parent, except for: (A) filings
under the HSR Act; (B) the filing with the SEC of (x) Schedule 14D-1,
respectively, in connection with the commencement and consummation of the
Offer and (y) such reports under and such other compliance with the
Exchange Act and the rules and regulations thereunder, as may be required
in connection with this Agreement and the transactions contemplated hereby;
(C) the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware; and (D) the filings identified on Schedule
4.2(b)(iii).
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(c) Information Supplied. The Offer Documents, including Schedule 14D-1,
will contain (or will be amended in a timely manner so as to contain) all
information which is required to be included therein in accordance with the
Exchange Act and the rules and regulations thereunder and any other applicable
law, and will conform in all material respects with the requirements of the
Exchange Act and any other applicable law. The information contained in the
Offer Documents (other than information furnished in writing by the Company
expressly for inclusion in the Offer Documents, as to which Parent and Sub
make no representations or warranties) will not, at the respective times such
Offer Documents are filed with the SEC (or such filings are amended or
supplemented) or published, sent or given to the Company's stockholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by
Parent or Sub or any affiliate of Parent for inclusion or incorporation by
reference in (i) Schedule 14D-9 will, at the time Schedule 14D-9 is filed with
the SEC, and at any time it is amended or supplemented, 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, in light of the
circumstances under which they are made, not misleading or (ii) the Proxy
Statement will, on the date it is first mailed to the holders of the Company
Common Stock or at the time of the Company's Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event with respect
to Parent or Sub, or with respect to any information supplied by Parent or Sub
for inclusion in the Schedule 14D-9 or the Proxy Statement, shall occur which
is required to be described in an amendment of, or a supplement to, such
document, Parent or Sub shall so describe the event to the Company.
(d) Interim Operations of Sub. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby and has not engaged in any
business activities or conducted any operations other than in connection with
the transactions contemplated hereby. Sub is a wholly-owned subsidiary of
Parent.
(e) Financing. Parent and Sub collectively have cash on hand or financing
commitments from financially responsible third parties, or a combination
thereof, in an aggregate amount sufficient to enable Parent and Sub to (i) pay
in full (A) the Offer Consideration, (B) the Merger Consideration (including
the Restricted Share Consideration), (C) the Option Consideration, (D) the
Phantom Right Consideration, and (E) all fees and expenses payable by Parent
and Sub in connection with this Agreement and the transactions contemplated
thereby and (ii) refinance such of the Company's existing indebtedness as,
pursuant to its terms, will become due and payable prior to its stated
maturity as a result of the consummation of the transactions contemplated
hereby.
ARTICLE V
Covenants Relating to Conduct of Business
5.1 Covenants of the Company. During the period from the date of this
Agreement and continuing until the earlier of (i) such time as Parent or Sub
obtains majority representation on the Board of Directors of the Company (the
"Board") or (ii) the Effective Time, the Company agrees as to the Company and
its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or by the Third Amended Joint Plan of Reorganization proposed by US
Brass and the Company dated November 27, 1996 (as amended in accordance with
Section 5.1(o) hereof from time to time, the "Bankruptcy Plan"), or to the
extent that Parent shall otherwise consent in writing):
(a) Ordinary Course. The Company and its Subsidiaries shall carry on their
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, and shall use reasonable efforts to preserve
intact its present business organizations, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it to the end that its
goodwill and ongoing business shall not be impaired in any material respect at
the Effective Time.
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(b) Dividends; Changes in Stock. The Company shall not, nor shall it permit
any of its Subsidiaries to: (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, other than cash
dividends or distributions paid by a wholly-owned Subsidiary of the Company to
the Company or another wholly-owned Subsidiary of the Company; (ii) split,
combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (iii) repurchase or otherwise
acquire, or permit any Subsidiary to purchase or otherwise acquire, any shares
of its capital stock, except as required pursuant to the terms of any
securities outstanding on the date hereof or as contemplated by any employee
benefit or stock plans or any employment or severance agreement, as in effect
on the date hereof.
(c) Issuance of Securities. Except pursuant to the exercise of Options, the
Company shall not, nor shall it permit any of its Subsidiaries to, (i) grant
any options, warrants or rights to purchase shares of Company Common Stock or
grant any Phantom Rights or stock appreciation rights, (ii) amend or reprice
any Option or the LTIP, or (iii) issue, deliver or sell, or authorize or
propose to issue, deliver or sell, any shares of its capital stock of any
class or series (including, without limitation, any Shares), any Company
Voting Debt or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, Company Voting Debt or convertible
securities, other than (A) the issuance of Shares upon the exercise of Options
under the LTIP which are outstanding on the date hereof, or in satisfaction of
stock grants or stock based awards made prior to the date hereof and set forth
on Schedule 4.1(b) (in any case as in effect on the date hereof) or (B)
issuances by a wholly-owned Subsidiary of its capital stock to its parent.
(d) Governing Documents. The Company shall not amend or propose to amend
its, or permit any Subsidiary to amend its, Certificate of Incorporation or
Bylaws (or comparable organizational documents).
(e) No Solicitation. From and after the date hereof until the termination of
this Agreement, the Company shall not, and shall not permit any of its
Subsidiaries, or any of its or their officers, directors, employees,
representatives, agents or affiliates (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of
its Subsidiaries), directly or indirectly, to initiate, solicit, or facilitate
(including by way of furnishing non-public information or assistance) the
making of any proposal that constitutes an Acquisition Proposal (as defined
below), or enter into or maintain or continue discussions or negotiate with
any person or entity in respect of an Acquisition Proposal, provided, however,
that nothing contained in this Agreement shall prohibit the Company from:
(i) furnishing information to, or engaging in discussions or negotiations
with, or agreeing to or endorsing an Acquisition Proposal from, any person
or entity that makes an unsolicited Acquisition Proposal if, and only to
the extent that, (A) the Board, after consultation with legal counsel (who
may be the Company's regularly engaged legal counsel), determines in good
faith that such action is necessary for the Board to comply with its
fiduciary duties under applicable law and (B) the Company (x) provides
prior notice to Parent to the effect that it is taking such action and (y)
receives from such person or entity an executed confidentiality agreement
in reasonably customary form; or
(ii) failing to make, withdrawing, modifying or amending its
recommendation referred to in Section 1.3 if there exists an Acquisition
Proposal and the Board, after consultation with legal counsel as aforesaid,
determines that such action is necessary for the Board to comply with its
fiduciary duties under applicable law.
Subject to the immediately preceding sentence, the Company shall immediately
cease any existing negotiations with any parties conducted heretofore with
respect to any of the foregoing. The Company will promptly notify Parent after
receipt of any Acquisition Proposal or any request for nonpublic information
relating to the Company or any Subsidiary or for access to the properties,
books or records of the Company or any Subsidiary by any person who has
informed the Company that such person is considering making, or has made, an
Acquisition Proposal, and the Company will keep Parent informed in reasonable
detail of the status and details of any such Acquisition Proposal. For
purposes of this Agreement, "Acquisition Proposal" shall mean any bona fide
proposal with respect to a merger, consolidation, share exchange or similar
transaction involving the
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Company or any Subsidiary of the Company, or any purchase of all or any
significant portion of the assets of the Company or any Subsidiary of the
Company, or any significant equity interest in the Company or any Subsidiary
of the Company, other than the transactions contemplated hereby. Nothing
contained in this Section 5.1(e) shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders which the Board, after consultation with legal counsel
(who may be the Company's regularly engaged legal counsel), determines in good
faith is required under applicable law. Notwithstanding anything contained in
this Agreement to the contrary, (x) any action by the Board permitted by this
Section 5.1(e) shall not constitute a breach of this Agreement by the Company
and (y) a "stop-look-and-listen" communication with respect to the Offer, the
Merger or this Agreement of the nature contemplated in Rule 14d-9 under the
Exchange Act made by the Company as a result of an Acquisition Proposal shall
in no event be deemed a withdrawal or modification by the Board of its
approval or recommendation of the Offer, the Merger and this Agreement.
(f) No Acquisitions. The Company shall not, nor shall it permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof.
(g) No Dispositions. Other than dispositions in the ordinary course of
business which are not material, individually or in the aggregate, to the
Company and its Subsidiaries taken as a whole, the Company shall not, nor
shall it permit any of its Subsidiaries to, sell, lease, encumber or otherwise
dispose of, or agree to sell, lease (whether such lease is an operating or
capital lease), encumber or otherwise dispose of, any of its assets.
(h) Advice of Changes; SEC Filings. The Company shall confer on a reasonably
regular basis with Parent, report on operational matters and promptly advise
Parent orally and in writing of any change or event having, or which could
reasonably be expected to have, a Material Adverse Effect on the Company. The
Company shall promptly provide Parent (or its counsel) with copies of all
filings made by the Company with the SEC or any other state or federal
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
(i) No Dissolution, Etc. The Company shall not authorize, recommend, propose
or announce an intention to adopt a plan of complete or partial liquidation or
dissolution of the Company or any of its Subsidiaries.
(j) Other Actions. The Company will not voluntarily take, nor will it permit
any of its Subsidiaries voluntarily to take or agree or commit voluntarily to
take, any action that results in any of the Company's representations or
warranties hereunder being untrue in any material respect or in any of the
Company's covenants hereunder or any of the conditions to the Merger not being
satisfied in all material respects.
(k) Certain Employee Matters. The Company and its Subsidiaries shall not:
(i) except for normal increases to officers and key employees consistent with
past practice, grant any increases in the compensation of any of its
directors, officers or key employees; (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or contemplated by
any of the existing Company ERISA Plans or Company Benefit Arrangements as in
effect on the date hereof to any such director, officer or key employee,
whether past or present; (iii) enter into any new, or materially amend any
existing, employment or severance or termination agreement with any such
director, officer or key employee; or (iv) except as may be required to comply
with applicable law, become obligated under any new Company ERISA Plan or
Company Benefit Arrangements, which was not in existence on the date hereof,
or amend any such plan or arrangement in existence on the date hereof if such
amendment would have the effect of enhancing any benefits thereunder.
Notwithstanding the foregoing, Parent agrees that to the extent that a covered
employee of the Company is unable to meet the targets set forth in the 1997
Executive Incentive Compensation Program or those targets are changed, in
either case as a result of a Change of Control as defined in the 1995 Long
Term Incentive Plan, the employee's 1997 bonus will be paid at par.
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(l) Indebtedness. Except for borrowings in the ordinary course of business
under its existing credit facilities or arrangements, the Company shall not,
nor shall the Company permit any of its Subsidiaries to, assume or incur any
indebtedness for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or warrants or rights to acquire any debt securities
of the Company or any of its Subsidiaries or guarantee any debt securities of
others or enter into any lease (whether such lease is an operating or capital
lease) or create any mortgages, liens, security interests or other
encumbrances on the property of the Company or any of its Subsidiaries in
connection with any indebtedness thereof, or enter into any "keep well" or
other agreement or arrangement to maintain the financial condition of another
person.
(m) Accounting. The Company shall not take any action, other than in the
ordinary course of business, consistent with past practice or as required by
the SEC or by law, to effect any material change in any of its current
accounting policies, procedures and practices.
(n) Capital Expenditures. The Company shall not make or authorize nor shall
the Company permit any of its Subsidiaries to make or authorize any capital
expenditures in excess of $5,000,000 that is not included in the capital
budget previously furnished to Parent.
(o) U.S. Brass Chapter 11 Case. The Company shall not act in any material
respect in the Chapter 11 case of U.S. Brass, pending in the United States
Bankruptcy Court, Eastern District of Texas (case no. 94-40823S) without
reasonable advance notice to and the consent of Parent, which consent shall
not be withheld unreasonably. In particular, the Company shall not propose or
agree to any amendment to or modification of the Third Amended Joint Plan of
Reorganization proposed in said Chapter 11 case by the Company and U.S. Brass,
dated November 27, 1996. Nothing contained in this Section 5.1(o) is intended
in any way to affect the duties, obligations or responsibilities of U.S. Brass
as a debtor under Chapter 11 of the Bankruptcy Code.
5.2 Notices of Certain Events. The Company and Parent shall promptly notify
the other of:
(i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the
transactions contemplated by this Agreement; and
(ii) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings commenced
or, to the actual knowledge of the executive officers of the notifying
party, threatened against, relating to or involving or otherwise affecting
such party or any of its Subsidiaries which, if pending on the date of this
Agreement, would have been required to have been disclosed, in the case of
the Company, pursuant to Section 4.1(g), or which, in the case of either
the Company or Parent, relate to the consummation of the transactions
contemplated by this Agreement.
ARTICLE VI
Additional Covenants and Agreements
6.1 Preparation of the Proxy Statement; Company Stockholders Meeting; Merger
without a Company Stockholders Meeting. (a) As soon as practicable following
the acceptance for payment of and payment for shares of Company Common Stock
by Sub in the Offer, if required by applicable law in order to consummate the
Merger, the Company, in consultation with Parent, shall prepare and file with
the SEC a preliminary proxy statement, together with a form of proxy, or
information statement (the "Preliminary Proxy Statement") relating to the
Merger in accordance with the Exchange Act and the rules and regulations
thereunder. Parent, Sub and the Company will cooperate with each other in the
preparation of the Preliminary Proxy Statement. Without limiting the
generality or effect of the foregoing, the Company shall use its reasonable
efforts to respond to all SEC comments with respect to the Preliminary Proxy
Statement and, subject to compliance with SEC rules and regulations, to cause
the Proxy Statement to be mailed to the Company's stockholders at the earliest
practicable date. Parent and Sub will furnish to the Company the information
relating to Parent and Sub required under the Exchange Act and the rules and
regulations thereunder to be set forth in the Proxy Statement.
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(b) The Company will, as soon as practicable following the acceptance for
payment of and payment for shares of Company Common Stock by Sub in the Offer,
if required by law to consummate the Merger, duly call, give notice of,
convene and hold the Company Stockholders Meeting for the purpose of approving
this Agreement and the transactions contemplated hereby. At the Company
Stockholders Meeting, Parent shall cause all of the Shares then owned by
Parent and Sub and any of their respective Subsidiaries or controlled
affiliates to be voted in favor of the Merger.
(c) Notwithstanding the foregoing clauses (a) and (b), in the event that Sub
or any other wholly-owned Subsidiary of Parent shall acquire at least 90% of
the outstanding shares of Company Common Stock in the Offer, the parties
hereto shall, at the request of Sub, take all necessary actions to cause the
Merger to become effective, as soon as practicable after the expiration of the
Offer, without a meeting of stockholders of the Company, in accordance with
Section 253 of the DGCL.
(d) Parent shall (i) cause Sub promptly to submit this Agreement and the
transactions contemplated hereby for approval and adoption by the written
consent of its sole stockholder; (ii) cause the shares of capital stock of Sub
to be voted for adoption and approval of this Agreement and the transactions
contemplated hereby; and (iii) cause to be taken all additional actions
necessary for Sub to adopt and approve this Agreement and the transactions
contemplated hereby.
6.2 Access to Information. (a) Upon reasonable notice, the Company shall
(and shall cause each of its Subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of Parent access,
during normal business hours during the period prior to the Effective Time, to
all of its properties, books, contracts, commitments and records (including,
without limitation, tax returns) of the Company and its Subsidiaries and cause
the Company's and its Subsidiaries' independent accountants to provide access
to their work papers and such other information as Parent may reasonably
request and, during such period, the Company shall (and shall cause each of
its Subsidiaries to) furnish promptly to Parent (i) a copy of each report,
schedule, registration statement and other document filed or received by the
Company or any such Subsidiary during such period pursuant to SEC requirements
and (ii) all other information concerning the business, properties and
personnel of the Company or any such Subsidiary as Parent may reasonably
request. Parent agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.2 for any
purpose unrelated to the consummation of the transactions contemplated by this
Agreement.
(b) The Confidentiality and Standstill Agreement, dated as of August 21,
1996, between Parent and the Company (the "Confidentiality Agreement") shall
apply with respect to information furnished thereunder or hereunder and any
other activities contemplated thereby.
6.3 Legal Conditions to Merger. Each of the Company, Parent and Sub will
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on such party with respect to the Offer, the
Merger and the transactions contemplated by this Agreement (including
furnishing all information required under the HSR Act and in connection with
approvals of or filings with any other Governmental Entity) and will promptly
cooperate with and furnish information to each other in connection with any
such requirements imposed upon any of them or any of their Subsidiaries in
connection with the Offer, the Merger and the transactions contemplated by
this Agreement. Without limiting the generality or effect of the foregoing,
each of the Company, Parent and Sub will, and will cause its Subsidiaries to,
take all reasonable actions necessary to obtain (and will cooperate with each
other in obtaining) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity or other public or private third party,
required to be obtained or made by the Company, Parent or any of their
Subsidiaries in connection with the Offer, the Merger, this Agreement or the
taking of any action contemplated hereby or thereby; provided, however, that
Parent need not agree with the Department of Justice or any other Governmental
Entity to hold separate, sell or otherwise dispose of any Subsidiary of Parent
or the Company or assets or properties of any of the foregoing, in each case,
which the Parent determines, in good faith, would materially affect the value
of the acquisition as a whole to Parent.
6.4 Fees and Expenses. (a) Except as otherwise provided in this Section 6.4,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense.
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(b) The Company agrees to pay Sub a fee in immediately available funds equal
to $8,500,000 upon the termination of this Agreement pursuant to Section
8.1(d) for any of the following reasons (each, a "Trigger Event"):
(i) the Company shall have entered into a definitive agreement with
respect to any Acquisition Proposal other than the transactions
contemplated by this Agreement; or
(ii) the Board shall have withdrawn, or modified or amended in a manner
materially adverse to Parent or Sub, its approval or recommendation of the
Offer, the Merger or this Agreement.
(c) The costs incurred in connection with printing and mailing proxy
materials to shareholders of the Company shall be borne equally by the Company
and Parent.
6.5 Brokers or Finders. Except for Bear, Stearns & Co. Inc., the Company
represents, as to itself, its Subsidiaries and its affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or
will be entitled to any broker's or finders fee or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement. The fees and expenses of Bear, Stearns & Co. Inc. shall be paid by
the Company in accordance with the Company's agreements with such firm, and
the Company agrees to indemnify and hold Parent harmless from and against any
and all claims, liabilities or obligations with respect to any other fees,
commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by the Company or any of its affiliates.
Except for the firms identified on Schedule 6.5, Parent and Sub jointly and
severally represent as to themselves and their Subsidiaries and Affiliates
that no agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any broker's or finders fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement. The fees and expenses of the firms identified
on Schedule 6.5 shall be paid by Parent and Sub in accordance with the
Parent's agreements with such firms. Parent agrees to indemnify and hold
Company harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted
by any person on the basis of any act or statement alleged to have been made
by Parent or its affiliates.
6.6 Best Efforts. Subject to the terms and conditions of this Agreement,
each of the parties hereto agrees to use its best efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, subject, as
applicable, to the Company Stockholder Approval, including cooperating fully
with the other party, including by provision of information and making of all
necessary filings in connection with, among other things, approvals under the
HSR Act. In case at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of either of the Constituent
Corporations, the proper officers and directors of each party to this
Agreement shall take all such necessary action.
6.7 Conduct of Business of Sub. During the period of time from the date of
this Agreement to the Effective Time, Sub shall not engage in any activities
of any nature except as provided in or contemplated by this Agreement.
6.8 Publicity. The parties will consult with each other and will mutually
agree upon any press release or public announcement pertaining to this
Agreement or the transactions contemplated hereby, including the Offer and the
Merger, and shall not issue any such press release or make any such public
announcement prior to such consultation and agreement, except as may be
required by applicable law or by the rules of the New York Stock Exchange,
Inc., in which case the party proposing to issue such press release or make
such public announcement shall use reasonable efforts to consult in good faith
with the other party before issuing any such press release or making any such
public announcement.
6.9 Employee Benefits. From and after the Effective Time, Parent shall cause
the Surviving Corporation to honor and perform each of the severance
agreements and plans identified on Schedule 6.9; and, to the extent
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necessary under these agreements and plans, the preceding clause shall be
deemed an assumption of the Company's obligations under these agreements and
plans by the Surviving Corporation. The Company has heretofore delivered to
Parent a true and complete copy of each such agreement and plan. Without
limiting the generality of the foregoing, Parent shall cause the Surviving
Corporation to pay to Scott Arbuckle, on the Closing Date, all amounts that
will be owing to him under his Employment Agreement and Executive Severance
Agreement, in each case as amended, as a result of the transactions
contemplated by this Agreement. In addition, prior to the consummation of the
Offer, the Company shall take such actions as may be necessary to amend its
existing Change-In-Control Severance Payment Plan dated June 1, 1991 for
Employees of the Company so that such plan, as amended, shall provide for the
benefits specified on Schedule 6.9 hereto.
6.10 Indemnification; Directors' and Officers' Insurance. (a) The Company
shall, and from and after the Effective Time, the Surviving Corporation shall,
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time, an
officer or director of the Company or any of its Subsidiaries (the
"Indemnified Parties") against all losses, claims, damages, costs, expenses
(including reasonable attorneys' fees and expenses), liabilities or judgments
or amounts that are paid in settlement with the approval of the indemnifying
party (which approval shall not be unreasonably withheld) of or in connection
with any threatened or actual claim, action, suit, proceeding or investigation
based in whole or in part on or arising in whole or in part out of the fact
that such person is or was a director or officer of the Company or any of its
Subsidiaries whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to, or at or
after, the Effective Time ("Indemnified Liabilities"), including all
Indemnified Liabilities based in whole or in part on, or arising in whole or
in part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent a corporation is
permitted under the DGCL to indemnify its own directors or officers as the
case may be (and Parent and the Surviving Corporation, as the case may be,
will pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by law).
Without limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified Parties
(whether arising before or after the Effective Time), (i) the Indemnified
Parties may retain counsel satisfactory to them and the Company (or them and
the Surviving Corporation after the Effective Time) and the Company (or after
the Effective Time, the Surviving Corporation) shall pay all fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor
are received; and (ii) the Company (or after the Effective Time, the Surviving
Corporation) will use all reasonable efforts to assist in the vigorous defense
of any such matter, provided that neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its prior
written consent (which consent shall not unreasonably be withheld). Any
Indemnified Party wishing to claim indemnification under this Section 6.10,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify the Company (or after the Effective Time, the Surviving
Corporation) (but the failure so to notify shall not relieve a party from any
liability which it may have under this Section 6.10 except to the extent such
failure prejudices such party), and shall deliver to the Company (or after the
Effective Time, the Surviving Corporation) the undertaking contemplated by
Section 145(e) of the DGCL. The Indemnified Parties as a group may retain only
one law firm to represent them with respect to each such matter unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified
Parties. All rights to indemnification under this Section 6.10(a), including
provisions relating to advances of expenses incurred in defense of any action
or suit, existing in favor of the Indemnified Parties with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; provided, however, that all such rights to indemnification
in respect of any Indemnified Liabilities asserted or made within such period
shall continue until the disposition of such Indemnified Liabilities.
(b) For a period of six years following the Effective Time, Parent shall
cause the Surviving Corporation to keep in effect the provisions in its
Certificate of Incorporation and Bylaws as of the date hereof providing for
exculpation of director and officer liability and indemnification to the
fullest extent provided by the DGCL, which provisions shall not be amended,
repealed, or otherwise modified except as required by applicable law or except
for amendments or modifications that would not adversely affect the rights
thereunder of any Indemnified Party.
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(c) For a period of six years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by the Company and its
Subsidiaries (provided that Parent may substitute therefor policies of at
least the same coverage and amounts containing terms and conditions which are
no less advantageous in any material respect to the Indemnified Parties) with
respect to matters arising before the Effective Time, provided that Parent
shall not be required to pay an annual premium for such insurance in excess of
200% of the last annual premium paid by the Company prior to the date hereof,
but in such case shall purchase as much coverage as possible for such amount.
(d) The provisions of this Section 6.10 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his heirs and his
personal representatives and shall be binding on all successors and assigns of
Sub, the Company and the Surviving Corporation.
ARTICLE VII
Conditions Precedent
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
adopted by the affirmative vote of the holders of a majority of the Shares
entitled to vote thereon if such vote is required by applicable law; provided
that the Parent and Sub shall vote all Shares purchased pursuant to the Offer
in favor of the Merger.
(b) HSR Act. The waiting period (and any extension thereof) applicable to
the Merger under the HSR Act shall have been terminated or shall have expired.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of Merger shall be in effect;
provided, however, that prior to invoking this condition, the party so
invoking this condition shall have used its commercially reasonable efforts to
have any such Injunction vacated.
(d) Completion of the Offer. Sub shall have accepted for payment and paid
for all shares of Company Common Stock validly tendered in the Offer and not
withdrawn; provided, however, that neither Parent nor Sub may invoke this
condition if Sub shall have failed to purchase shares of Company Common Stock
so tendered and not withdrawn in violation of the terms of this Agreement or
the Offer.
7.2 Conditions of Obligations of Parent and Sub. The obligations of Parent
and Sub to effect the Merger are subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by Parent
and Sub:
(a) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement on or before the earlier of (i) such time as Parent's
Designees shall constitute at least a majority of the Company's Board of
Directors pursuant to Section 1.4 of this Agreement and (ii) the Closing Date;
provided, however, that no failure by the Company to have so performed in all
material respects any such obligation shall constitute a failure of
satisfaction of the foregoing condition where the Company's failure of
performance occurred, and was actually known to Parent, at or prior to the
time Parent, Sub or any of their affiliates accepted for payment any shares of
Company Common Stock pursuant to the Offer.
Notwithstanding the foregoing, the obligations of Parent and Sub to effect
the Merger shall not be relieved by the failure of any of the foregoing
conditions if such failure is the result, directly or indirectly, of any
breach by Parent or Sub of any of their material obligations under this
Agreement.
24
<PAGE>
7.3 Conditions of Obligations of the Company. The obligation of the Company
to effect the Merger is subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by the
Company:
(a) Representations and Warranties. The representations and warranties of
Parent and Sub set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date.
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall have
performed in all material respects all obligations required to be performed by
them under this Agreement on or prior to the Closing Date.
ARTICLE VIII
Termination and Amendment
8.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent:
(a) by mutual written consent of the Company and Parent, or by mutual action
of their respective Boards of Directors;
(b) by the Company, if Sub shall have failed to commence the Offer within
five business days following the date of the initial public announcement of
the Offer;
(c) by either the Company or Parent, so long as such party has not
materially breached its obligations hereunder, if the Merger shall not have
been consummated on or before May 15, 1997; provided, that the right to
terminate this Agreement under this Section 8.1(c) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has
been the cause of or resulted in the failure of the Merger to occur on or
before such date;
(d) by either the Company or Parent in the event that a Trigger Event shall
have occurred under Section 6.4(b); provided that the Company's right to
terminate this Agreement under this Section 8.1(d) shall be available only if
the Company shall have paid to Sub the fee provided for in Section 6.4(b);
(e) by Parent, if the Offer shall have expired or have been withdrawn or
terminated in accordance with the terms and conditions thereof without any
shares of Company Common Stock being purchased by Sub thereunder by reason of
the failure to satisfy any condition set forth in Exhibit A hereto;
(f) by the Company, if the Offer shall have expired or have been withdrawn
or terminated without any shares of Company Common Stock being purchased by
Sub thereunder on or prior to the 60th (or, if extended as contemplated by
Section 1.2, the 120th) day after the date of commencement of the Offer
pursuant to Section 1.2 hereof;
(g) by the Company, if Parent or Sub materially breaches any of their
respective representations and warranties or covenants contained in this
Agreement; or
(h) by either the Company or Parent, if any permanent injunction or other
order of a court or other competent authority preventing the consummation of
the Merger shall have become final and non-appealable.
8.2 Effect of Termination. In the event of termination of this Agreement by
either the Company or Parent as provided in Section 8.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the
part of Parent, Sub or the Company or their respective affiliates, officers,
directors or stockholders except (i) with respect to this Section 8.2, the
last sentence of Section 6.2(a), and Sections 6.2(b), 6.4 and 6.5, (ii) to the
extent that such termination results from the intentional or wilful breach by
a party hereto
25
<PAGE>
of any of its representations or warranties, or of any of its covenants or
agreements, in each case, as set forth in this Agreement (except as provided
in Section 9.7) and (iii) with respect to Parent and Sub, to the extent that
such termination results from the breach, for whatever reason, of the
representations and warranties of Parent and Sub contained in Section 4.2(e)
hereof or from the failure of Parent and Sub to consummate the transactions
contemplated hereby because Parent and Sub do not have sufficient cash on hand
or financing resources in an aggregate amount sufficient to enable Parent and
Sub to pay all of the amounts specified in Section 4.2(e) hereof.
8.3 Amendment. Subject to applicable law and to Section 1.4(b), this
Agreement may be amended, modified or supplemented only by written agreement
of Parent, Sub and the Company at any time prior to the Effective Time with
respect to any of the terms contained herein; provided, however, that, after
this Agreement is adopted by the Company's stockholders, no such amendment or
modification shall reduce the amount or change the form of consideration to be
delivered to the stockholders of the Company or adversely affect the rights of
the stockholders of the Company.
8.4 Extension; Waiver. At any time prior to the Effective Time, and subject
to Section 1.4(b) and applicable law, the parties hereto, by action taken or
authorized by their respective Boards of Directors, may, to the extent legally
allowed: (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto; (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto; and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such
rights.
ARTICLE IX
General Provisions
9.1 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements contained in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the agreements contained in Article III
and Sections 6.9 and 6.10. The Confidentiality Agreement shall survive the
execution and delivery of this Agreement, and the provisions of the
Confidentiality Agreement shall apply to all information and material
delivered by any party hereunder.
9.2 Notices. Any notice or communication required or permitted hereunder
shall be in writing and either delivered personally, telegraphed or telecopied
or sent by a nationally recognized overnight courier or certified or
registered mail, postage prepaid, and shall be deemed to be given, dated and
received when so delivered by courier, personally, telegraphed or telecopied
or, if mailed, five business days after the date of mailing to the following
address, or to such other address or addresses as such person may subsequently
designate by notice given hereunder:
(a) if to Parent or Sub, to:
Zurn Industries, Inc.
One Zurn Place
Erie, Pennsylvania 16505
Attn: Dennis Haines, Esq.
Telecopy: (814) 459-3535
with a copy to:
Jones, Day, Reavis & Pogue
901 Lakeside Avenue
Cleveland, Ohio 44114
Attn: David G. Heiman, Esq.
Telecopy: (216) 579-0212
26
<PAGE>
(b) if to the Company, to:
Eljer Industries, Inc.
17120 Dallas Parkway
Dallas, Texas 75248
Attn: George W. Hanthorn, Esq.
Telecopy: (972) 407-7238
with copies to:
Weil, Gotshal & Manges LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201
Attn: Thomas A. Roberts, Esq.
Telecopy: (214) 746-7777
9.3 Interpretation. When a reference is made in this Agreement to Sections,
such reference shall be to a Section of this Agreement unless otherwise
indicated. The table of contents, and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the word "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same instrument and
shall become effective when executed and delivered by each of the parties, it
being understood that all parties need not sign the same counterpart.
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (together with the Confidentiality Agreement and any
other documents and instruments referred to herein) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and,
except as provided in Sections 6.9 and 6.10, is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
Notwithstanding anything to the contrary contained herein or in the
Confidentiality Agreement, the taking by any party of any action contemplated
by the provisions hereof to be taken by such party shall in no event
constitute a breach of any provision of the Confidentiality Agreement.
9.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to
the principles of conflict of laws thereof.
9.7 Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to be
null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or required
hereby, the validity, legality and enforceability of the remaining provisions
and obligations contained or set forth herein shall not in any way be affected
or impaired thereby, unless the foregoing inconsistent action or the failure
to take an action constitutes a material breach of this Agreement or makes
this Agreement impossible to perform, in which case this Agreement shall
terminate pursuant to Article VIII hereof. Upon any such holding that any
provision of this Agreement is null, void or unenforceable, the parties will
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 to the
end that the transactions contemplated by this Agreement are consummated to
the extent possible. Except as otherwise contemplated by this Agreement, to
the extent that a party hereto took an action inconsistent herewith or failed
to take action consistent herewith or required hereby pursuant to an order or
judgment of a court or other competent authority, such party shall incur no
liability or obligation unless such party did not in good faith seek to resist
or object to the imposition or entering of such order or judgment.
27
<PAGE>
9.8 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned or delegated by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign and delegate, in its
sole discretion, all (but not less than all) of its rights, interests and
obligations hereunder to any newly-formed direct or indirect wholly-owned
Subsidiary of Parent formed solely for the purpose of engaging in the
transactions contemplated hereby and not engaged in any business activities or
conducting any operations other than in connection with the transactions
contemplated hereby. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused the Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
Zurn Industries, Inc.
/s/ Robert R. Womack
By: _________________________________
Title: Chairman and Chief Executive
Officer
Zurn Acquisition Co., Inc.
/s/ Robert R. Womack
By: _________________________________
Title: President
Eljer Industries, Inc.
/s/ Scott G. Arbuckle
By: _________________________________
Title: President and Chief Executive
Officer
28
<PAGE>
EXHIBIT A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Sub shall not be required
to accept for payment or, subject to any applicable rules and regulations of
the SEC, including Rule 14e-1(c) under the Exchange Act (relating to Sub's
obligation to pay for or return tendered Shares promptly after expiration or
termination of the Offer), to pay for any Shares tendered, and may postpone
the acceptance for payment or, subject to the restrictions referred to above,
payment for any Shares tendered, and, subject to the terms of the Agreement,
may amend or terminate the Offer (whether or not any Shares have theretofore
been purchased or paid for pursuant to the Offer) (A) unless the following
conditions have been satisfied: (i) there have been validly tendered and not
withdrawn prior to the time the Offer shall otherwise expire a number of
Shares which constitutes 50.1% of the Shares outstanding on a fully-diluted
basis on the date of purchase (the "Minimum Share Condition") ("on a fully-
diluted basis" having the following meaning, as of any date: the number of
Shares outstanding, together with the number of Shares the Company is then
required to issue pursuant to obligations outstanding at that date under
employee stock option or other benefit plans or otherwise) and (ii) any
applicable waiting periods under the HSR Act shall have expired or been
terminated prior to the expiration of the Offer; and/or (B) if at any time on
or after the date of the Agreement and before acceptance for payment of, or
payment for, such Shares, any of the following events shall occur and are
continuing:
(a) any United States or foreign governmental entity or authority or any
United States or foreign court of competent jurisdiction in the United
States or any foreign country shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order which is in effect and which (1) materially
restricts, prevents or prohibits consummation of the transactions
contemplated by the Agreement, including the Offer or the Merger, (2)
prohibits or limits materially the ownership or operation by Parent or any
of its Subsidiaries of all or any material portion of the business or
assets of the Company and its Subsidiaries taken as a whole or compels the
Company, Parent, or any of their Subsidiaries to dispose of or hold
separate all or any material portion of the business or assets of the
Company and its Subsidiaries taken as a whole, or (3) imposes material
limitations on the ability of Parent, Sub or any other Subsidiary of Parent
to exercise effectively full rights of ownership of any Shares, including,
without limitation, the right to vote any Shares acquired by Sub pursuant
to the Offer or otherwise on all matters properly presented to the
Company's stockholders, including, without limitation, the approval and
adoption of the Agreement and the transactions contemplated thereby;
provided that Parent and Sub shall have used their respective reasonable
efforts to cause any such order, decree, judgment, or injunction to be
vacated or lifted.
(b) there shall be instituted or pending any action or proceeding before
any United States or foreign court or governmental entity or authority by
any United States or foreign governmental entity or authority seeking any
order, decree or injunction having any effect set forth in (a) above;
(c) the representations and warranties of the Company contained in the
Agreement (without giving effect to the materiality limitations contained
therein) shall not be true and correct as of the expiration date of the
Offer (as the same may be extended from time to time) as though made on and
as of such date (except for representations and warranties made as of a
specified date, which shall not be true and correct as of the specified
date), except for any breach or breaches which, in the aggregate, would not
have a Material Adverse Effect with respect to the Company; it being
expressly understood, however, that any suits, actions or proceedings
initiated or threatened against the Company or any of its officers or
directors by any shareholder of the Company (or any group thereof) on or
after the date hereof with respect to this Agreement or the transactions
contemplated hereby shall not be given effect in determining whether or not
the condition set forth in this subparagraph (c) has been satisfied.
(d) the Company shall not have performed or complied in all material
respects with its obligations under the Agreement to be performed or
complied with by it and such failure continues until the later of (A)
fifteen days after actual receipt by it of written notice from Sub setting
forth in detail the nature of such failure or (B) the expiration date of
the Offer;
A-1
<PAGE>
(e) there shall have occurred any material adverse change, or any
development that is reasonably likely to result in a material adverse
change, in the business, properties, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries
taken as a whole; it being expressly understood, however, that neither (i)
the U.S. Brass Bankruptcy Events nor (ii) any suits, actions or proceedings
initiated or threatened against the Company or any of its officers or
directors by any shareholder of the Company (or any group thereof) on or
after the date hereof with respect to this Agreement or the transactions
contemplated hereby shall be given effect in determining whether or not the
condition set forth in this subparagraph (e) has been satisfied.
(f) the Merger Agreement shall have been terminated in accordance with
its terms;
(g) prior to the purchase of Shares pursuant to the Offer, the Board
shall have withdrawn or materially modified or changed (including by
amendment of Schedule 14D-9) in a manner adverse to Sub its recommendation
of the Offer, the Agreement or the Merger;
(h) there has occurred the declaration of a banking moratorium or any
limitation or suspension of payments in respect of the extension of credit
by banks or other lending institutions in the United States; or
(i) it shall have been publicly disclosed or Sub shall have otherwise
learned that any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent or its affiliates or any group of which
any of them is a member, shall have acquired beneficial ownership
(determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of
more than 50% of any class or series of capital stock of the Company
(including the Shares), through the acquisition of stock, the formation of
a group or otherwise, or shall have been granted an option, right or
warrant, conditional or otherwise, to acquire beneficial ownership of more
than 50% of any class or series of capital stock of the Company (including
the Shares).
The foregoing conditions (other than the Minimum Share Condition) are for
the sole benefit of Sub and its affiliates and may be asserted by Sub
regardless of the circumstances (including, without limitation, any action or
inaction by Sub or any of its affiliates other than a material breach by
Parent or Sub of the Agreement) giving rise to any such condition or may be
waived by Sub, in whole or in part, from time to time in its sole discretion,
except as otherwise provided in the Agreement. The failure by Sub at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right and may be
asserted at any time and from time to time. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to them in the
Agreement and Plan of Merger among the Parent, Sub and the Company to which
this Exhibit A is attached (the "Agreement").
A-2
<PAGE>
EXHIBIT 99.(c)(2)
<PAGE>
CONFIDENTIALITY AND STANDSTILL AGREEMENT
This Confidentiality and Standstill Agreement (the "Agreement") is entered
into as of this 21st day of August, 1996, by and between Eljer Industries, Inc.,
a Delaware corporation ("ELJ"), and Zurn Industries, Inc. ("ZRN"), a
Pennsylvania corporation.
WITNESSETH:
WHEREAS, ELJ and ZRN may consider engaging in discussions with respect to a
possible negotiated business combination involving ZRN and ELJ (the
"Transaction") and prior to or during the course of any such discussions ZRN and
ELJ each may have disclosed or may disclose and make available to the other
certain information concerning its business, prospects, financial condition,
operations, assets and liabilities;
WHEREAS, all such information furnished to a party or its Representatives
(as defined below) by or on behalf of the other party (irrespective of the form
of communication and whether such information is so furnished before, on or
after the date hereof), and all analyses, compilations, data, studies, notes,
interpretations, memoranda or other documents prepared by a party or its
Representatives containing or based in whole or in part on any such furnished
information are collectively referred to herein as the "Confidential
Information;" and
WHEREAS, each of ELJ and ZRN hereby agrees to receive such Confidential
Information of the other and to disclose such Confidential Information to the
other subject to the following terms and conditions.
NOW, THEREFORE, for and in consideration of the mutual promises and
obligations contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, hereby agree as follows:
1. Non-Disclosure of Confidential Information.
------------------------------------------
(a) Each of ZRN and ELJ shall (i) use the Confidential Information
obtained from the other solely for the purpose of evaluating a possible
Transaction and for no other competitive or other purpose; (ii) not disclose the
Confidential Information to any third party, except for disclosures to its
directors, officers and representatives of its advisors (such as independent
accountants, investment bankers, consultants and
<PAGE>
attorneys) acting on its behalf (collectively, its "Representatives") who in
each case, in such party's reasonable judgment, need to know such information
for the purpose of evaluating a possible Transaction and who are set forth on
Annex A hereto; provided that prospective financing sources shall not be
--------
considered "Representatives" to whom Confidential Information may be disclosed
in accordance with this paragraph 1 unless set forth on Annex A hereto, as it
may be amended by the parties from time to time; (iii) inform its
Representatives of the confidential nature of the Confidential Information and
direct its Representatives to treat the Confidential Information confidentially;
(iv) take all additional reasonable precautions necessary to prevent the
disclosure of the Confidential Information by its Representatives to any third
party; and (v) be responsible for any breach of this Agreement by its
Representatives.
(b) If either party is required (by interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any Confidential Information, it is agreed that such party
will provide the other party with prompt notice of such request so that such
other party may seek an appropriate protective order and/or waive the notifying
party's compliance with the provisions of this Agreement. If in the absence of
a protective order either party is nonetheless compelled to disclose
Confidential Information, such party may disclose without liability hereunder
only that portion of the Confidential Information that such party is advised by
outside counsel is legally required to be disclosed; provided that such party
gives to the other party written notice of the information to be disclosed as
far in advance of its disclosure as is practicable and, upon such other party's
request, uses reasonable efforts to obtain assurances that confidential
treatment will be accorded to such information.
2. Non-Disclosure of Negotiations or Agreements. Except as required by
--------------------------------------------
law, neither ZRN, ELJ nor their respective Representatives shall disclose to any
person (including, without limitation, any director, officer or employee, not
set forth on Annex A) the existence, status or terms of any discussions,
negotiations or agreements between them concerning a possible Transaction,
including without limitation any offer, letter of intent, proposal, price, value
or valuation, or any similar terms, agreements or understandings between ZRN and
ELJ with respect thereto, or that such party has provided to or received from
the other Confidential Information without obtaining the prior written consent
of the other party, which consent will not be unreasonably withheld. The term
"person" as used in this Agreement will be interpreted broadly to include the
media and any corporation, company, group, partnership or other entity or
individual.
2
<PAGE>
3. Ownership of Confidential Information. All written Confidential
-------------------------------------
Information delivered by one party hereto to the other party pursuant to the
Agreement shall be and remain the property of the delivering party, and upon the
written request of the delivering party, the receiving party shall (i) promptly
return such Confidential Information and shall not retain any copies or other
reproductions or extracts thereof, (ii) destroy or have destroyed all memoranda,
notes, reports, analyses, compilations, studies, interpretations, or other
documents derived from or containing Confidential Information, and all copies
and other reproductions and extracts thereof, and (iii) provide a certificate to
the delivering party certifying that the foregoing materials have, in fact, been
destroyed or returned, signed by an authorized officer supervising such
destruction or return. Notwithstanding the return of destruction of the
Confidential Information, each party and its Representatives will continue to be
bound by the confidentiality and other obligations hereunder.
4. Information Not Deemed Confidential Information. The term
-----------------------------------------------
"Confidential Information" does not include information that (i) is or becomes
generally available to the public other than as a result of a disclosure by the
receiving party or its Representatives in violation of this Agreement; (ii) is
or becomes available to the receiving party from a source other than the
delivering party or its Representatives, provided that such source is not known
by the receiving party to be bound by an obligation of confidentiality to such
delivering party or its Representatives; or (iii) was within the receiving
party's possession prior to being furnished to the receiving party by or on
behalf of the delivering party, provided that the person providing such
information to the receiving party was not bound by a confidentiality agreement
with the delivering party or otherwise prohibited from transferring such
information to the receiving party by any contractual, legal or fiduciary
obligation.
5. No Warranty. Neither ZRN, ELJ nor any of their respective officers,
-----------
directors, employees, representatives or agents makes any representation or
warranty, express or implied, as to the accuracy and completeness of any
Confidential Information provided by it, and no liability shall result to the
delivering party from its use, except as forth in a definitive agreement for a
Transaction. Only the representations and warranties that are made in a
definitive agreement for a Transaction, when, as, and if it is executed, and
subject to such limitations and restrictions as may be specified therein, shall
have any legal effect.
6. No Agreement. Unless a definitive agreement regarding a Transaction
------------
between ZRN and ELJ has been executed and delivered, neither ELJ, ZRN nor any of
their stockholders or affiliates will be under any legal obligation of any kind
whatsoever
3
<PAGE>
with respect to such a Transaction by virtue of this Agreement or any other
written or oral expression with respect to such Transaction except, in the case
of this Agreement, matters specifically agreed to herein. Each party further
acknowledges and agrees that each party reserves the right, in its sole
discretion, to reject any and all proposals made by the other party or any of
its Representatives with regard to a Transaction, to deny any request for
Confidential Information (regardless of the reasonableness of such request) and
to terminate discussions or negotiations with the other party at any time.
Neither this paragraph nor any other provision in this Agreement can be waived
or amended except by written consent of ZRN and ELJ, which consent shall refer
specifically to this paragraph (or such other provision) and explicitly make
such waiver or amendment.
7. Non Solicitation. Unless a Transaction is consummated, each party
----------------
agrees that, for a period of two years from the date hereof, it will not
directly or indirectly solicit employment of (other than by means of a general
advertisement) any of the (i) employees of the other party with whom it has had
contact during the process contemplated by this Agreement or (ii) management
level personnel or officers of the other party. It is expressly understood that
this Agreement is not intended to preclude the ability of the companies to
compete with one another in the ordinary course and that each party will arrange
with the designated Representative(s) (and no other person) for appropriate
contacts for due diligence purposes. Unless otherwise agreed by either party,
all (i) communications regarding a possible Transaction, (ii) requests for
additional information, (iii) requests for facility tours or management
meetings, or (iv) discussions or questions regarding procedures, will be
submitted or directed only to the designated Representative(s) (and no other
person).
8. Non-public Information. Each of ZRN and ELJ has outstanding publicly-
----------------------
held securities and the Confidential Information contains material non-public
information. Each of the parties acknowledges that it is (i) aware, and has
advised or will advise its Representatives, that the United States securities
laws prohibit any person in possession of material non-public information about
a company from purchasing or selling securities of such company, and from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person may purchase or sell such
securities and (ii) familiar with the Securities and Exchange Act of 1934, as
amended, and the rules and regulations thereunder, and each party agree that it
will neither use nor permit any of its Representatives to use any Confidential
Information in violation of such Act or rules or regulations, including without
limitation, Rules 10b-5 and 14e-3.
4
<PAGE>
9. Standstill. Each of the parties agrees that, until the expiration of
----------
two years from the date of this Agreement, without the prior written consent of
the Board of Directors of the other party, it and its affiliates will not (i) in
any manner acquire, agree to acquire or make any proposal or offer or otherwise
seek to acquire, directly or indirectly, any securities (or rights in respect
thereof), assets or property of the other party or any of its subsidiaries,
whether such agreements or proposals or offers are made with or to the other
party (or any controlling person or successor thereof) or any of its
subsidiaries; (ii) enter into or agree, offer, seek or propose to enter into or
otherwise be involved in or part of, directly or indirectly, any merger,
acquisition transaction or other business combination involving the other party
or any of its subsidiaries or any of their respective assets; (iii) make, or in
any way participate in, directly or indirectly, any "solicitation" of "proxies"
(as such terms are used in the proxy rules of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) to vote, or seek to advise or influence
any person with respect to the voting of, any voting securities of the other
party or any of its subsidiaries, (iv) form, join or in any way participate in a
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) with
respect to any voting securities of the other party or any of its subsidiaries;
(v) otherwise act, alone or in concert with others, to seek or propose to
control or influence the management, Board of Directors or policies of the other
party; (vi) directly or indirectly enter into any discussions, negotiations,
arrangements or understandings with any other person (except internal
discussions and planning activities involving its Representatives) with respect
to any of the foregoing activities or propose any of such activities to any
other person (other than its Representatives); (vii) publicly disclose any
intention, plan or arrangement inconsistent with the foregoing; (viii) directly
or indirectly advise, encourage, provide assistance (including debt or equity
financial assistance) to or hold discussions with or invest in any other person
in connection with any of the foregoing. Each party also agrees that, during
such two-year period, neither it nor any of its affiliates will: (i) request
the other party or its advisors, directly or indirectly, to (1) amend or waive
any provision of this paragraph (including this sentence) or (2) otherwise
consent to any action inconsistent with any provision of this paragraph
(including this sentence); or (ii) take any initiative with respect to the other
party or any of its subsidiaries that could reasonably be expected to require
the other party to make a public announcement regarding (1) such initiative, (2)
any of the activities referred to in this paragraph, (3) the possibility of a
Transaction or any similar transaction or (4) the possibility of such party or
any other person acquiring control of the other party, whether by means of a
business combination or otherwise. Notwithstanding any other provision hereof,
this Section 9 shall not apply to a party in the event of a bona fide publicly
announced proposal, offer or agreement by a third party not acting in concert
with such party (i) to acquire more than 51% of any class of stock (or rights
in respect
5
<PAGE>
thereof) of the other party or (ii) to acquire the other party, or all or
substantially all of its assets, by means of a merger, consolidation, asset
purchase or other similar transaction. Additionally, the Chief Executive Officer
of a party may contact the Chief Executive Officer of the other party for the
purpose of expressing continuing or renewed interest in a Transaction, provided
that, unless invited to do so by the Chief Executive Officer of the other party,
no offer or proposal shall be made that would require public disclosure or
formal consideration by such other party or its Board of Directors.
10. No Waiver. No failure or delay by either 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 right, power or privilege hereunder. Any waiver
of a breach hereof shall be in writing and shall not operate or be construed as
a waiver of any other or subsequent breach.
11. Remedies. It is understood and agreed that money damages would not be
--------
a sufficient remedy for any breach of this Agreement by either party and that
the non-breaching party shall be entitled to equitable relief, including
specific performance and injunction, as a remedy for any such breach. Each
party agrees to waive, and to use its best efforts to cause its directors,
officers, employees or agents to waive, any requirement for the securing or
posting of any bond in connection with such remedy. Such remedies shall not be
deemed to be the exclusive remedies for a breach of this Agreement by either
party, but shall be in addition to all other remedies available at law or in
equity to the non-breaching party.
12. Governing Law. This Agreement is for the benefit of the parties and
-------------
their respective directors, officers, employees, representatives and agents and
their respective successors and assigns and shall be governed by and construed
in accordance with the internal substantive laws and not the choice of law rules
of the State of Texas.
13. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute but one and the same agreement.
14. Severability. If any provision of this Agreement is found to violate
------------
any statute, regulation, rule, order, decision or decree of any governmental
authority, court, agency or exchange, such invalidity shall not be deemed to
affect any other provision hereof or the validity of the remainder of this
Agreement, and such invalid provision
6
<PAGE>
shall be deemed deleted herefrom to the minimum extent necessary to cure such
violation.
ELJER INDUSTRIES, INC.
By: /s/ G. W. Hanthorn
-------------------------------
G. W. Hanthorn
Vice President
ZURN INDUSTRIES, INC.
By: /s/ Robert R. Womack
-------------------------------
Robert R. Womack
Chairman and Chief Executive Officer
7
<PAGE>
ANNEX A
ELJER INDUSTRIES, INC.
-- Bear, Stearns & Co. Inc.
-- Arthur Andersen & Co.
ZURN INDUSTRIES, INC.
-- Southwest Securities
-- Ernst & Young LLP
-- Deutsche Morgan Grenfell/C.J. Lawrence Inc.
8
<PAGE>
FIRST AMENDMENT TO
CONFIDENTIALITY AND STANDSTILL AGREEMENT
MADE THIS 5th day of November, 1996, by and between Eljer Industries, Inc.
("ELJ") and Zurn Industries, Inc. ("ZRN"), amending that certain Confidentiality
and Standstill Agreement between ELJ and ZRN dated as of the 21st day of August,
1996 ("Confidentiality and Standstill Agreement").
FOR GOOD AND VALUABLE CONSIDERATION, the adequacy and receipt of which is
hereby acknowledged, and intending to be legally bound, ELJ and ZRN agree as
follows:
1. Capitalized terms used herein shall have the meanings assigned to them
in the Confidentiality and Standstill Agreement.
2. Annex A of the Confidentiality and Standstill Agreement is amended to
permit ZRN to disclose Confidential Information to participating banks
under ZRN's revolving credit agreement. Those banks include
NationsBank N.A., Chase Manhattan Bank, N.A., KeyCorp Bank, National
City Bank, Bankers Trust Company, PNC Bank, N.A. Societe Generale, and
Brown Brothers Harriman & Co.
3. Except as hereby amended, the Confidentiality and Standstill Agreement
remains in full force and effect.
IN WITNESS WHEREOF, each of the parties has set its hand by duly authorized
officers.
ELJER INDUSTRIES, INC.
By: /s/ Scott G. Arbuckle
---------------------------
Its: Chairman and CEO
ZURN INDUSTRIES, INC.
By: /s/ Robert R. Womack
---------------------------
Its: Chairmand and CEO
<PAGE>
SECOND AMENDMENT TO
CONFIDENTIALITY AND STANDSTILL AGREEMENT
MADE THIS 7th day of November, 1996, by and between Eljer Industries, Inc.
("ELJ") and Zurn Industries, Inc. ("ZRN"), amending that certain Confidentiality
and Standstill Agreement between ELJ and ZRN dated as of the 21st day of August,
1996 ("Confidentiality and Standstill Agreement").
FOR GOOD AND VALUABLE CONSIDERATION, the adequacy and receipt of which is
hereby acknowledged, and intending to be legally bound, ELJ and ZRN agree as
follows:
1. Capitalized terms used herein shall have the meanings assigned to them
in the Confidentiality and Standstill Agreement.
2. Annex A of the Confidentiality and Standstill Agreement is amended to
permit ELJ to disclose Confidential Information to participating banks
under ELJ's revolving credit agreement. Those banks include
NationsBank of Texas, N.A., Morgan Guaranty Trust Company of New York,
The First National Bank of Chicago, DK Acquisition Partners, Foothill
Capital Group, Third Avenue Value Fund, Inc. and Comac Partners.
3. Except as hereby amended, the Confidentiality and Standstill Agreement
remains in full force and effect.
IN WITNESS WHEREOF, each of the parties has set its hand by duly authorized
officers.
ELJER INDUSTRIES, INC.
By: /s/ George Hanthorn
---------------------
Its: /s/ Vice President
--------------------
ZURN INDUSTRIES, INC.
By: /s/ Dennis Haines
-------------------
Its: /s/ General Counsel and Secretary
-----------------------------------
<PAGE>
EXHIBIT 99.(g)(1)
<PAGE>
EXHIBIT -- CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Schedule 14D-1 Tender Offer
Statement of Zurn Industries, Inc. dated December 20, 1996 of our report dated
May 16, 1996, except for the Subsequent Event note, as to which the date is June
27, 1996 included in Item 8 with respect to the consolidated financial
statements and financial statement schedule incorporated by reference or
included in the Annual Report on Form 10-K of Zurn Industries, Inc. for the year
ended March 31, 1996.
/s/ Ernst & Young LLP
Erie, Pennsylvania
December 20, 1996
