<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY
STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
BIC CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BIC CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: Common
Shares, $1.00 par value per share
(2) Aggregate number of securities to which transaction applies: 5,404,396
Common Shares
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: $40.50
(4) Proposed maximum aggregate value of transaction:(1. $218,878,038
Total fee paid(1): $43,775.61
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
- ---------------
(1. The filing fee assumes that 5,404,396 Common Shares will be converted into
the right to receive $40.50 in cash per share in the merger described in
preliminary proxy materials filed herewith. The amount of the filing fee,
calculated in accordance with Exchange Act Rule 0-11(c)(1), equals 1/50th
of one percent of such proposed cash payment.
<PAGE> 2
[PRELIMINARY COPY]
CORPORATION
LOGO
500 BIC DRIVE - MILFORD, CONNECTICUT 06460 - (203) 783-2000
BRUNO BICH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
September , 1995
Dear Fellow Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
BIC Corporation (the "Special Meeting") to be held at the [Trumbull Marriott
Merritt Parkway, 180 Hawley Lane, Trumbull, Connecticut 06611], on ,
October , 1995, at [10:00] a.m., local time.
At the Special Meeting you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger, dated as of
August 15, 1995 (the "Merger Agreement"), pursuant to which BIC Merger
Corporation ("Mergeco"), a New York corporation and a majority-owned subsidiary
of Societe BIC S.A. ("Parent"), will be merged (the "Merger") with and into BIC
Corporation (the "Company"). The Company will be the surviving corporation in
the Merger and the entire equity interest in the Company will be owned by Parent
and the other shareholders of Mergeco. If the Merger is consummated, each
outstanding common share, par value $1.00 per share, of the Company (the "Common
Shares"), except those shares owned by Parent and the other shareholders of
Mergeco (the "Public Shares," and the holders thereof, the "Public
Shareholders") or by shareholders who perfect their dissenters' rights in
accordance with the New York Business Corporation Law, will be converted into
the right to receive $40.50 per share in cash, without interest. Under the terms
of the Merger Agreement, the Company will not pay the regular quarterly cash
dividend otherwise payable on October 30, 1995, even if the Merger is
consummated subsequent to such date.
Enclosed with this letter is a Notice of Special Meeting, Proxy Statement,
Proxy Card and return envelope. I urge you to read the enclosed material
carefully.
YOUR BOARD OF DIRECTORS, BASED UPON THE UNANIMOUS RECOMMENDATION OF A
SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS CONSISTING OF THREE PERSONS WHO ARE
NOT DIRECTORS, OFFICERS OR EMPLOYEES OF PARENT OR OFFICERS OR EMPLOYEES OF THE
COMPANY (THE "SPECIAL COMMITTEE"), HAS UNANIMOUSLY APPROVED THE MERGER, AND
RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
In arriving at its recommendation, your Board of Directors gave careful
consideration to a number of factors described in the accompanying Proxy
Statement, including, among other things, a recommendation of the Special
Committee and the opinion of Goldman, Sachs & Co., the financial advisor to the
Special Committee, that the $40.50 in cash per Public Share to be received by
the Public Shareholders pursuant to the Merger Agreement is fair to such Public
Shareholders. THE FULL TEXT OF SUCH OPINION IS ATTACHED AS ANNEX B TO THE PROXY
STATEMENT AND SHAREHOLDERS ARE URGED TO READ IT IN ITS ENTIRETY.
Pursuant to the New York Business Corporation Law, the affirmative vote of
holders of at least 66 2/3% of all of the outstanding Common Shares is required
to approve the Merger. The Voting Trustee, who exercises voting power over
Common Shares owned by the shareholders of Mergeco constituting 76% of the
outstanding shares has agreed, pursuant to the Merger Agreement, to vote such
Common Shares in favor of the approval and adoption of the Merger Agreement.
HOWEVER, THE MERGER AGREEMENT PROVIDES THAT IT IS A CONDITION TO THE
CONSUMMATION OF THE MERGER THAT THE MERGER AGREEMENT BE APPROVED AND ADOPTED BY
THE HOLDERS OF AT LEAST A MAJORITY OF THE PUBLIC SHARES OF THE COMPANY ACTUALLY
VOTED, IN PERSON OR BY PROXY (EXCLUDING ABSTENTIONS), AT THE SPECIAL MEETING.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Special
Meeting, please complete, sign and date the accompanying Proxy Card and return
it in the enclosed prepaid envelope as soon as possible. If you attend the
Special Meeting, you may vote your shares in person, even if you have previously
submitted a Proxy Card.
Your continued support of and interest in BIC Corporation is greatly
appreciated.
Sincerely,
Bruno Bich
Chairman of the Board
and Chief Executive Officer
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
<PAGE> 3
[PRELIMINARY COPY]
LOGO
BIC CORPORATION
500 BIC DRIVE
MILFORD, CT 06460
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER , 1995
To the Shareholders of BIC Corporation:
Notice is hereby given that a Special Meeting of Shareholders of BIC
Corporation (the "Company") will be held at the [Trumbull Marriott Merritt
Parkway, 180 Hawley Lane, Trumbull, Connecticut 06611], on , October
, 1995 at [10:00] a.m., local time (the "Special Meeting"), for the following
purposes:
1. To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated as of August 15, 1995 (the "Merger
Agreement"), pursuant to which BIC Merger Corporation ("Mergeco"), a New
York corporation and a majority-owned subsidiary of Societe BIC S.A., a
societe anonyme organized under the laws of the Republic of France
("Parent"), will be merged with and into the Company (the "Merger"). The
Company will be the surviving corporation in the Merger and the entire
equity interest in the Company will be owned by Parent and the other
shareholders of Mergeco. As a result of the Merger, each outstanding common
share, par value $1.00 per share, of the Company (the "Common Shares"),
except those shares owned by Parent and the other shareholders of Mergeco
(the "Public Shares," and the holders thereof, the "Public Shareholders")
and by shareholders who perfect their dissenters' rights in accordance with
the New York Business Corporation Law (the "NYBCL"), would be converted
into the right to receive $40.50 in cash, without interest, all as more
fully described in the accompanying Proxy Statement. Under the terms of the
Merger Agreement, the Company will not pay the regular quarterly cash
dividend otherwise payable on October 30, 1995, even if the Merger is
consummated subsequent to such date.
2. To transact such other business as may properly be brought before
the Special Meeting or any adjournments or postponements thereof.
Only holders of the Common Shares of record at the close of business on
, 1995 are entitled to notice of and to vote at the Special Meeting.
Each Common Share outstanding on such date is entitled to one vote at the
Special Meeting.
If the Merger is consummated, the shareholders of the Company who dissent
from the proposed Merger and comply with the requirements of Section 623 of the
NYBCL will have the right to receive payment in cash of the fair value of their
Common Shares. See "The Merger -- Dissenters' Rights" in the accompanying Proxy
Statement and Annex C thereto for a statement of the rights of dissenting
shareholders and a description of the procedures required to be followed to
obtain the fair value of the Common Shares.
Pursuant to the NYBCL, the affirmative vote of holders of at least 66 2/3%
of all of the outstanding Common Shares is required to approve the Merger. The
Voting Trustee, who exercises voting power over Common Shares owned by the
shareholders of Mergeco constituting 76% of the outstanding shares has agreed,
pursuant to the Merger Agreement, to vote such Common Shares in favor of the
approval and adoption of the Merger Agreement. HOWEVER, THE MERGER AGREEMENT
PROVIDES THAT IT IS A CONDITION TO THE CONSUMMATION OF THE MERGER THAT THE
MERGER AGREEMENT BE APPROVED AND ADOPTED BY THE HOLDERS OF AT LEAST A MAJORITY
OF THE PUBLIC SHARES OF THE COMPANY ACTUALLY VOTED, IN PERSON OR BY PROXY
(EXCLUDING ABSTENTIONS), AT THE SPECIAL MEETING.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF COMMON SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED PREPAID ENVELOPE WITHOUT
DELAY. ANY SHAREHOLDER PRESENT AT THE SPECIAL MEETING MAY VOTE PERSONALLY ON
EACH MATTER BROUGHT BEFORE THE SPECIAL MEETING AND ANY PROXY GIVEN BY A
SHAREHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
By Order of the Board of Directors,
Thomas M. Kelleher
General Counsel and Secretary
Milford, Connecticut
September , 1995
PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.
<PAGE> 4
[PRELIMINARY COPY]
LOGO
PROXY STATEMENT
BIC CORPORATION
500 BIC DRIVE
MILFORD, CONNECTICUT 06460
------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER , 1995
------------------------
This Proxy Statement is being furnished to the shareholders of BIC
Corporation, a New York corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board of
Directors") from holders of outstanding common shares, par value $1.00 per
share, of the Company (the "Common Shares"), for use at a Special Meeting of
Shareholders of the Company to be held on , October , 1995 at [10:00]
a.m., local time, at the [Trumbull Marriott Merritt Parkway, 180 Hawley Lane,
Trumbull, Connecticut 06611], and at any adjournments or postponements thereof
(the "Special Meeting"). This Proxy Statement and the related proxy card are
first being mailed to shareholders on or about September , 1995.
At the Special Meeting, holders of the Common Shares on the applicable
record date will consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated as of August 15, 1995 (the "Merger
Agreement"), pursuant to which: (a) BIC Merger Corporation ("Mergeco"), a New
York corporation and a majority owned subsidiary of Societe BIC S.A. ("Parent"),
a societe anonyme organized under the laws of the Republic of France, will be
merged with and into the Company (the "Merger"), and the entire equity interest
in the Company, as the surviving corporation in the Merger, will be owned by
Parent and the other shareholders of Mergeco; and (b) each Common Share that is
outstanding at the effective time of the Merger, other than Public Shares held
by Parent and the other shareholders of Mergeco (the "Public Shares") or Common
Shares in respect of which dissenters' rights have been perfected, will be
converted into the right to receive $40.50 per share in cash, without interest.
Common Shares held by Parent and the other shareholders of Mergeco will be
cancelled without consideration.
Pursuant to the New York Business Corporation Law ("NYBCL"), the
affirmative vote of holders of at least 66 2/3% of all of the outstanding Common
Shares is required to approve the Merger. The Voting Trustee, who exercises
voting power over Common Shares owned by the shareholders of Mergeco
constituting 76% (as hereinafter defined) of the outstanding shares has agreed,
pursuant to the Merger Agreement, to vote such Common Shares in favor of the
approval and adoption of the Merger Agreement. The Voting Trustee can cause the
Merger to be approved for purposes of the NYBCL without the vote of any of the
shareholders of the Company. However, the Merger Agreement provides that it is a
condition to the consummation of the Merger that the Merger Agreement be
approved and adopted by the holders of at least a majority of the Public Shares
of the Company actually voted, in person or by proxy (excluding abstentions), at
the Special Meeting. There can be no assurance that the conditions to the Merger
will be satisfied, or where permissible, waived or that the Merger will be
consummated. For further information concerning the terms and conditions of the
Merger, see "The Merger -- General."
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT IN CONNECTION
WITH THE SOLICITATION OF PROXIES MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OTHER PERSON.
All information contained in this Proxy Statement relating to Parent,
Mergeco and their affiliates (other than the Company) has been supplied by
Parent for inclusion herein and has not been independently verified by the
Company.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Special Meeting. Execution of the
accompanying proxy, however, confers on the designated proxyholders
discretionary authority to vote the Common Shares covered thereby in accordance
with their best judgment on such other business, if any, that may properly come
before, and all matters incident to the conduct of, the Special Meeting or any
adjournments or postponements thereof.
------------------------
The date of this Proxy Statement is September , 1995
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY............................................................................... 1
INTRODUCTION.......................................................................... 8
General............................................................................. 8
The Special Meeting................................................................. 8
Record Date; Quorum; Required Vote.................................................. 8
Proxies............................................................................. 9
Solicitation of Proxies............................................................. 9
THE PARTIES........................................................................... 10
The Company......................................................................... 10
Parent.............................................................................. 10
Mergeco............................................................................. 10
SPECIAL FACTORS....................................................................... 10
Background of the Merger............................................................ 10
Purpose and Structure of the Merger................................................. 16
Recommendation of the Special Committee and Board of Directors of the Company;
Fairness of the Merger........................................................... 17
Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses...................... 19
Certain Financial Projections....................................................... 26
Plans for the Company After the Merger.............................................. 28
Interest of Certain Persons in the Merger........................................... 28
Certain Effects of the Merger....................................................... 31
Certain Litigation.................................................................. 32
Certain U.S. Federal Income Tax Consequences........................................ 32
Fees and Expenses................................................................... 33
THE MERGER............................................................................ 34
General............................................................................. 34
Accounting Treatment................................................................ 38
Payment for Public Shares; Sources of Funds......................................... 38
Dissenters' Rights.................................................................. 38
MARKET PRICES AND DIVIDENDS........................................................... 40
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY................................... 41
OWNERSHIP OF COMMON SHARES............................................................ 42
Security Ownership of Certain Beneficial Owners..................................... 42
Security Ownership of Directors and Executive Officers of the Company............... 43
Security Ownership of Directors and Officers of Parent and Mergeco.................. 43
TRANSACTIONS BY CERTAIN PERSONS IN COMMON SHARES...................................... 43
MANAGEMENT OF PARENT, MERGECO AND THE COMPANY......................................... 44
Directors and Executive Officers of Parent.......................................... 44
Directors and Executive Officers of Mergeco......................................... 44
Directors and Executive Officers of the Company..................................... 45
INDEPENDENT PUBLIC ACCOUNTANTS........................................................ 46
SHAREHOLDER PROPOSALS................................................................. 46
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................................... 46
AVAILABLE INFORMATION................................................................. 47
MISCELLANEOUS......................................................................... 47
ANNEX A -- Agreement and Plan of Merger
ANNEX B -- Opinion of Goldman, Sachs & Co.
ANNEX C -- Section 623 of the New York Business Corporation Law
</TABLE>
i
<PAGE> 6
SUMMARY
The following is a brief summary of certain information contained elsewhere
in this Proxy Statement (the "Proxy Statement"). This summary is not intended to
be a complete description of the matters covered in this Proxy Statement and is
subject to and qualified in its entirety by reference to the more detailed
information contained elsewhere in this Proxy Statement, including the Annexes
hereto and the documents incorporated by reference herein. Capitalized terms
used but not defined in this Summary shall have the meanings ascribed to them
elsewhere in this Proxy Statement. Shareholders are urged to read carefully the
entire Proxy Statement, including the Annexes.
THE PARTIES
The Company. The Company focuses on the manufacture and sale of
high-quality, low-cost consumer products. These products include stationery
products, lighters and shavers. Through its wholly-owned subsidiary, BIC Sport
U.S.A. Inc., the Company also distributes sailboards which are purchased from a
subsidiary of Parent. While most of the Company's operations are conducted in
the United States, operations are also conducted through wholly-owned
subsidiaries at other locations in North and Central America. The Company was
incorporated in 1958 in New York. The Company's principal executive offices are
located at 500 BIC Drive, Milford, Connecticut 06460, and its telephone number
is (203) 783-2000.
Parent. Parent, a societe anonyme organized under the laws of the Republic
of France ("France"), is a worldwide organization, based in France, engaged
primarily in the business of selling and marketing high-quality, low-cost
consumer products such as stationery products, lighters and shavers. Through its
wholly-owned subsidiary, Conte, Parent manufactures and sells stationery
products such as pencils, coloring crayons, markers, felt pens and other office
and school supplies. Through its wholly-owned subsidiary, Guy Laroche, Parent
also conducts fashion operations. Parent's principal executive offices are
located at 9, rue Petit 92110 Clichy, France, and its telephone number is (011)
(331) 45-19-52-00.
Mergeco. Mergeco is a New York corporation recently organized by Parent
for the purpose of effecting the Merger pursuant to which Mergeco will be merged
with and into the Company. It has no material assets and has not engaged in any
activities except in connection with the Merger. The shareholders of Mergeco are
Parent, Bruno Bich and certain other members of the Bich family (the "Mergeco
Shareholders"). Mergeco's address is c/o BIC Corporation, 500 BIC Drive,
Milford, Connecticut 06460, and its telephone number is (203) 783-2000.
THE SPECIAL MEETING
Time, Date and Place. A Special Meeting of shareholders of the Company
will be held on , October , 1995 at [10:00] a.m., local time, at the
[Trumbull Marriott Merritt Parkway, 180 Hawley Lane, Trumbull, Connecticut
06611] (the "Special Meeting").
Purpose of the Special Meeting. The purpose of the Special Meeting is to
consider and vote upon a proposal to approve and adopt the Merger Agreement, a
copy of which is attached to this Proxy Statement as Annex A. See
"Introduction -- The Special Meeting."
Record Date; Quorum. The close of business on , 1995 (the
"Record Date") has been fixed as the record date for determining holders of
Common Shares entitled to vote at the Special Meeting. Each Common Share
outstanding on such date is entitled to one vote at the Special Meeting. As of
the Record Date, 23,559,244 Common Shares were outstanding and held of record by
holders. The presence, in person or by proxy, of the holders of a
majority of the Common Shares entitled to vote at the Special Meeting is
necessary to constitute a quorum for the transaction of business at the Special
Meeting. See "Introduction -- Record Date; Quorum; Required Vote."
Required Vote. Pursuant to the New York Business Corporation Law (the
"NYBCL"), the affirmative vote of holders of at least 66 2/3% of all of the
Common Shares is required to approve and adopt the Merger Agreement. The Voting
Trustee (as hereinafter defined), who exercises voting power over Common Shares
owned by the Mergeco Shareholders constituting 76% of the Common Shares has
agreed, pursuant to
<PAGE> 7
the Merger Agreement, to vote such Common Shares in favor of the approval and
adoption of the Merger Agreement. The Voting Trustee can cause the Merger
Agreement to be approved and adopted for purposes of the NYBCL without the vote
of any other shareholder of the Company. However, the Merger Agreement provides
that it is a condition to the consummation of the Merger that the Merger
Agreement be approved and adopted by the holders of at least a majority of the
Public Shares (as hereinafter defined) actually voted, in person or by proxy
(excluding abstentions), at the Special Meeting. See "Introduction -- Record
Date; Quorum; Required Vote" and "The Merger -- General -- Conditions to the
Merger; Amendment, Waiver and Termination."
Proxies. A proxy card is enclosed for use at the Special Meeting. A proxy
may be revoked at any time prior to its exercise at the Special Meeting. Common
Shares represented by properly executed proxies received at or prior to the
Special Meeting and which have not been revoked will be voted in accordance with
the instructions indicated therein. If no instructions are indicated on a
properly executed proxy, such proxy will be voted FOR approval and adoption of
the Merger Agreement. See "Introduction -- Proxies."
SPECIAL FACTORS
Background of the Merger. For a description of the events leading to the
approval and adoption of the Merger Agreement by the Company's Board of
Directors, see "Special Factors -- Background of the Merger."
Purpose and Structure of the Merger. Parent's purpose for the Merger is to
acquire all of the remaining equity interest in the Company not currently owned
by the Mergeco Shareholders for the reasons described in "Special
Factors -- Purpose and Structure of the Merger." The acquisition of the equity
interest represented by the Common Shares outstanding as of the Effective Time
(as hereinafter defined) and not currently owned by the Mergeco Shareholders
(the "Public Shares") from the holders of such shares (the "Public
Shareholders") is structured as a cash merger in order to transfer ownership of
that equity interest to Parent in a single transaction. See "Special
Factors -- Purpose and Structure of the Merger."
Recommendation of the Special Committee and Board of Directors; Fairness of
the Merger. A special committee (the "Special Committee") of three directors of
the Company who are not directors, officers or employees of Parent or officers
or employees of the Company concluded, and based on such conclusion the Board of
Directors of the Company (the "Board of Directors") concluded, that the terms of
the Merger are fair to, and in the best interests of, the Public Shareholders.
Accordingly, the Board of Directors, based upon the unanimous recommendation of
the Special Committee, has unanimously approved and adopted the Merger
Agreement. The Special Committee and the Board of Directors recommend a vote FOR
approval and adoption of the Merger Agreement. For a discussion of the factors
considered by the Special Committee and the Board of Directors in making their
recommendations, see "Special Factors -- Recommendation of the Special Committee
and Board of Directors of the Company; Fairness of the Merger."
Opinion of Financial Advisor. On August 15, 1995, Goldman Sachs delivered
its written opinion to the Special Committee that as of such date the $40.50 per
Public Share to be received by the Public Shareholders in the Merger is fair to
the Public Shareholders. The full text of the written opinion of Goldman Sachs,
which sets forth assumptions made, matters considered and limitations on the
review undertaken in connection with the opinion, is attached hereto as Annex B
and is incorporated herein by reference. Holders of Public Shares are urged to,
and should, read such opinion in its entirety. See "Special Factors -- Opinion
of Goldman, Sachs & Co.; Summary of Financial Analyses."
Plans for the Company after the Merger. Except as indicated in this Proxy
Statement, Parent does not have any present plans or proposals which relate to
or would result in an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries,
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries or any material change in the Company's capitalization or any other
material changes in the Company's corporate structure or business or the
composition of the Board of Directors or management. See "Special
Factors -- Plans for the Company after the Merger."
2
<PAGE> 8
Interest of Certain Persons in the Merger. In considering the
recommendations of the Special Committee and of the Board of Directors with
respect to the Merger, the Public Shareholders should be aware that certain
officers and directors have certain interests summarized below that present
actual or potential conflicts of interest in connection with the Merger. For a
more detailed discussion of such interests, see "Special Factors -- Interest of
Certain Persons in the Merger." The Special Committee and the Board of Directors
were aware of potential or actual conflicts of interest and considered them
along with other matters described under "Special Factors -- Recommendation of
the Special Committee and Board of Directors of the Company; Fairness of the
Merger."
As of the date of this Proxy Statement, the Mergeco Shareholders owned an
aggregate of 18,154,848 Common Shares, representing approximately 77% of the
outstanding Common Shares on that date. Bruno Bich, as voting trustee (the
"Voting Trustee"), exercises voting power over 17,912,648 of such shares,
including all Common Shares owned by Parent, pursuant to a Voting Trust
Agreement, dated as of February 5, 1991, by and among the Company, Parent, the
Voting Trustee and certain other parties (as amended, the "Voting Trust
Agreement"). The Mergeco Shareholders other than Parent own an additional
242,200 Common Shares not subject to the Voting Trust Agreement. See "Special
Factors -- Interest of Certain Persons in the Merger -- Voting Trust Agreement."
As of July 31, 1995, the directors and executive officers of the Company (other
than Bruno Bich) owned an aggregate of 42,811 Public Shares. See "Ownership of
Common Shares -- Security Ownership of Directors and Executive Officers of the
Company."
Bruno Bich, Chairman of the Board and Chief Executive Officer of the
Company, is also Chairman of the Board and Chief Executive Officer of Parent. On
August 17 and 18, 1995, Bruno Bich sold in market transactions an aggregate of
150,000 Common Shares not subject to the Voting Trust Agreement for $39.50 per
share, or an aggregate of approximately $5.9 million. See "Transactions by
Certain Persons in Common Shares."
Each member of the Special Committee will be paid $20,000 for serving
thereon. This compensation was authorized by the Board of Directors in order to
compensate the members thereof for the significant additional time commitment
that would be required of them in connection with fulfilling their duties and
responsibilities as members of the Special Committee and is payable without
regard to whether the Special Committee approved the Merger or whether the
Merger is consummated.
For a discussion of certain agreements by Parent with respect to
indemnification of, and insurance for, directors and officers of the Company,
see "The Merger -- General -- Indemnification and Insurance."
For a description of current relationships and certain transactions among
Parent, the Voting Trustee and the Company, see "Special Factors -- Interest of
Certain Persons in the Merger."
Certain Effects of the Merger. Upon consummation of the Merger, each
Public Share, other than shares as to which dissenters' rights have been
perfected under the NYBCL ("Dissenting Shares"), will be converted into the
right to receive $40.50 in cash, without interest. The Public Shareholders will
cease to have any ownership interest in the Company or rights as shareholders.
The Public Shareholders will no longer benefit from any increases in the value
of the Company and will no longer bear the risk of any decreases in value of the
Company.
Following the Merger, Parent, which currently owns approximately 63% of the
outstanding Common Shares, will own approximately 86% of the surviving
corporation's outstanding common shares, and the other Mergeco Shareholders, who
currently own approximately 14% of the outstanding Common Shares, will own
approximately 14% of the surviving corporation's outstanding common shares.
As a result of the Merger, the Company will be privately held and there
will be no public market for the Common Shares. Upon consummation of the Merger,
the Common Shares will cease to be quoted on the New York Stock Exchange
("NYSE"), the registration of the Common Shares under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), will be terminated and such shares
will no longer constitute "margin securities" under the rules of the Board of
Governors of the Federal Reserve System.
3
<PAGE> 9
Certain Litigation. On May 19, 1995 and May 22, 1995, various litigation
was commenced against the Company by shareholders of the Company in New York and
Connecticut state courts. These actions, purportedly named as class actions on
behalf of all Public Shareholders, varyingly named the Company, its directors,
certain of its officers and Parent as defendants. In these actions, plaintiffs
alleged that the defendants breached their fiduciary duties to plaintiffs and
the Company's other Public Shareholders in connection with Parent's proposal to
acquire the Public Shares for $36.50 per share.
The parties to these actions have reached an agreement in principle to
settle all such actions with prejudice, based on the terms of the Merger. The
settlement is subject to negotiation of a stipulation of settlement and approval
by the court following notice to the Public Shareholders. In connection with the
proposed settlement, the plaintiffs intend to apply for an award of attorneys'
fees and litigation expenses in the amount of $487,500. The defendants have
agreed not to oppose this application.
The defendants have denied, and continue to deny, that they have committed
or have threatened to commit any violation of law or breaches of duty to the
plaintiffs or the purported class. The defendants have agreed to the proposed
settlement because, among other reasons, such settlement would eliminate the
burden and expense of further litigation and would facilitate the consummation
of a transaction that they believe to be in the best interests of the Company
and the Public Shareholders.
Certain U.S. Federal Income Tax Consequences. The receipt of cash for
Public Shares pursuant to the Merger will be a taxable transaction for U.S.
federal income tax purposes and may be a taxable transaction for foreign, state
and local income tax purposes as well. Public Shareholders should consult their
own tax advisors regarding the U.S. federal income tax consequences of the
Merger, as well as any tax consequences under the laws of any state or other
jurisdiction. The Company will not recognize any gain or loss as a result of the
Merger for U.S. federal income tax purposes. See "Special Factors -- Certain
Federal Income Tax Consequences."
THE MERGER
General. Upon consummation of the Merger, Mergeco will be merged with and
into the Company and the Company will be the surviving corporation (the
"Surviving Corporation"). The Surviving Corporation will succeed to all the
rights and obligations of the Company and Mergeco. See "The Merger -- General."
Effective Time of Merger. Pursuant to the Merger Agreement, the Effective
Time will occur upon the filing of a certificate of merger by the New York
Department of State. See "The Merger -- General -- Effective Time of Merger."
Treatment of Shares in the Merger. At the Effective Time: (a) each Common
Share outstanding immediately prior to the Effective Time, except for (i) Common
Shares then owned by the Mergeco Shareholders and (ii) Dissenting Shares, shall
be converted into the right to receive $40.50 in cash, payable to the holder
thereof, without interest thereon, upon surrender of the certificate
representing such Common Share and (b) each Common Share outstanding immediately
prior to the Effective Time which is then owned by the Mergeco Shareholders
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be canceled and retired and cease to exist, without any conversion
thereof.
Each of the Mergeco Shareholders currently owns one Mergeco common share
for each Common Share expected to be owned by such Mergeco Shareholder at the
Effective Time. Immediately prior to the Effective Time, Parent will be issued
Mergeco preferred shares equal in number to the number of Public Shares
outstanding immediately prior to the Effective Time, in exchange for a payment
to Mergeco of an amount equal to the aggregate consideration payable to the
Public Shareholders in the Merger (other than Public Shareholders who exercise
dissenters' rights).
Each Mergeco common and preferred share outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and exchangeable for one fully
paid and non-assessable common share of the Surviving Corporation. See "The
Merger -- General -- Treatment of Shares in the Merger" and "-- Dissenters'
Rights."
4
<PAGE> 10
Exchange of Share Certificates. Promptly after the Effective Time, the
Surviving Corporation shall cause Mellon Securities Transfer Services, as Paying
Agent (the "Paying Agent"), to mail to each holder of record as of the Effective
Time (other than the Mergeco Shareholders) of an outstanding certificate or
certificates for Common Shares, a letter of transmittal and instructions for use
in effecting the surrender of such certificates for payment in accordance with
the Merger Agreement. Upon surrender to the Paying Agent of a certificate,
together with a duly executed letter of transmittal, the holder thereof shall be
entitled to receive cash in an amount equal to the product of the number of
Common Shares represented by such certificate and $40.50 in cash, without
interest thereon (the "Merger Consideration"), less any applicable withholding
tax, and such certificate shall then be canceled.
Until surrendered pursuant to the procedures described above, each
certificate (other than certificates representing Common Shares owned by the
Mergeco Shareholders and certificates representing Dissenting Shares), shall
represent for all purposes solely the right to receive the Merger Consideration
multiplied by the number of Common Shares evidenced by such certificate. See
"The Merger -- General -- Exchange of Share Certificates." SHAREHOLDERS OF THE
COMPANY SHOULD NOT SEND ANY SHARE CERTIFICATES WITH THEIR PROXY CARDS.
Conditions to the Merger; Amendment, Waiver and Termination. Pursuant to
the Merger Agreement, the obligations of each of Parent, Mergeco, the Voting
Trustee and the Company to effect the Merger are subject to the condition that
the proposal to approve and adopt the Merger Agreement at the Special Meeting
shall have received the affirmative vote of the holders of at least a majority
of the Public Shares actually voted, in person or by proxy, on such proposal
(excluding abstentions), and to certain additional conditions set forth in the
Merger Agreement. The parties to the Merger Agreement may each, pursuant to the
terms of the Merger Agreement, waive satisfaction of any of the conditions to
its obligations under the Merger Agreement; provided, however, that any waiver
by the Company must be approved by the Special Committee. The Merger Agreement
may be amended at any time by written agreement of the parties; provided, that
following approval by the Company's shareholders, no amendment may be made that
reduces the Merger Consideration or otherwise materially and adversely affects
the Public Shareholders without approval of at least a majority of the Public
Shares, and that any amendment must be approved on behalf of the Company by the
Special Committee. In certain circumstances the Merger Agreement may be
terminated at any time prior to the Effective Time, either before or after
approval by the shareholders of the Company. See "The Merger --
General -- Conditions to the Merger; Amendment, Waiver and Termination."
Sources of Funds. It is currently expected that approximately $219 million
will be required to pay the Merger Consideration to the Public Shareholders
(assuming no such holder exercises dissenters' rights) and approximately
$ will be required to pay the expenses of Parent and Mergeco in connection
with the Merger, and that such funds will be furnished from available general
funds of Parent. It is currently expected that approximately $ million
will be required to pay the expenses of the Company and that such funds will be
furnished from available general funds of the Company. See "The
Merger -- Sources of Funds" and "Special Factors -- Fees and Expenses."
Accounting Treatment. The Merger will be accounted for as a "purchase" as
such term is used under generally accepted accounting principles for accounting
and financial reporting purposes. See "The Merger -- Accounting Treatment."
Regulatory Approvals. No federal or state regulatory approvals are
required to be obtained, nor any regulatory requirements complied with, in
connection with consummation of the Merger by any party to the Merger Agreement,
except for the requirements of the NYBCL in connection with shareholder
approvals and consummation of the Merger, and the requirements of federal
securities law. See "The Merger -- General -- Representations and Warranties."
Dissenters' Rights. In connection with the Merger, the Public Shareholders
will be entitled to seek payment in cash of the fair value of their Common
Shares under Section 623 of the NYBCL ("Section 623"), subject to their
satisfaction of the conditions for dissenters' rights established by Section
623. Section 623 is set forth in full in Annex C hereto. See "The
Merger -- Dissenters' Rights."
5
<PAGE> 11
MARKET PRICES OF AND DIVIDENDS ON THE COMMON SHARES
The Common Shares are traded on the NYSE under the symbol "BIC."
The following table sets forth, for the calendar periods indicated, the
high and low sales prices per Common Share, as quoted on the NYSE.
<TABLE>
<CAPTION>
SALES PRICES
PER COMMON
SHARE
--------------
CALENDAR PERIODS HIGH LOW
--------------------------------------------------------------------- ---- ---
<S> <C> <C>
1993
First Quarter........................................................ $41 $30 7/8
Second Quarter....................................................... 33 7/8 26
Third Quarter........................................................ 31 3/8 27
Fourth Quarter....................................................... 33 5/8 27
1994
First Quarter........................................................ $31 7/8 $28
Second Quarter....................................................... 29 1/4 26 1/2
Third Quarter........................................................ 30 7/8 28
Fourth Quarter....................................................... 30 25 5/8
1995
First Quarter........................................................ $32 3/4 $28 1/4
Second Quarter....................................................... 39 3/8 30 5/8
Third Quarter (through September ).................................
</TABLE>
On May 18, 1995, the day prior to public announcement of Parent's original
merger proposal, the closing price of the Common Shares on the NYSE was $35 3/4
per share. On August 15, 1995, the day before the Merger Agreement was publicly
announced, the closing price of the Common Shares on the NYSE was $39 1/4 per
share. On September , 1995, the closing price of the Common Shares on the NYSE
was $ per share. HOLDERS OF COMMON SHARES ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THEIR SHARES.
Under the terms of the Merger Agreement, the Company will not pay the
regular quarterly cash dividend otherwise payable on October 30, 1995, even if
the Merger is consummated subsequent to such date. Although there can be no
assurance as to whether the proposed transaction will be effected, it is
currently anticipated that the Merger will be completed in late October or early
November of 1995.
6
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
Certain selected consolidated historical financial data of the Company is
set forth below and under "Selected Consolidated Financial Data of the Company."
The selected financial data at July 2, 1995 and July 3, 1994 and for the six
month periods then ended is unaudited but includes, in the opinion of
management, all adjustments necessary for a fair presentation of the results of
operations and the financial position at and for each of the interim periods
presented. Operating results for the six months ended July 2, 1995 are not
necessarily indicative of the results to be expected for the full year. The
selected financial data should be read in conjunction with the Consolidated
Financial Statements of the Company, related notes and other financial
information incorporated by reference into this Proxy Statement.
BIC CORPORATION
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------- AT END OF OR FOR FISCAL YEARS
JULY 2, JULY 3, ----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(U.S. DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales.......................... $257,413 $241,616 $475,118 $439,311 $417,377 $369,171 $329,246
Income before income taxes,
extraordinary credit and
cumulative effect of changes in
accounting principles............ $ 48,234 43,486 87,207 73,986 67,278 46,616 41,067
Net income......................... 28,622 25,357 51,021 34,964 39,935 28,059 24,055
Ratio of earnings to fixed
charges(1)....................... -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Per share:(2)
Income before extraordinary
credit and cumulative effect of
changes in accounting
principles..................... 1.21 1.10 2.19 1.90 1.70 1.12 0.92
Net income....................... 1.21 1.08 2.17 1.48 1.70 1.16 0.99
Cash dividends................... 0.46 0.40 0.80 0.72 1.06 0.56 1.06
BALANCE SHEET DATA
Working capital.................... 123,116 93,157 107,816 77,232 71,469 106,284 111,624
Long-term debt..................... 0 0 0 0 0 0 0
Total assets....................... 440,573 386,164 358,687 336,216 308,466 280,205 257,107
Total assets less research and
development and excess of assets
acquired over book value......... 428,683 372,575 345,947 321,778 292,329 280,205 257,107
Shareholders' equity............... 261,447 240,638 247,917 226,688 209,366 195,515 190,187
Book value per share............... 11.10 10.21 10.52 9.62 8.89 8.30 7.85
</TABLE>
- ---------------
(1) The Company had no fixed charges in any of the periods presented.
(2) Per share amounts have been retroactively restated to reflect the 1992 share
split effected in the form of a 100% share dividend. Cash dividends per
share represent the total dividends paid each year. The 1992 and 1990
dividends included a special cash dividend of $0.50 per share.
7
<PAGE> 13
INTRODUCTION
GENERAL
This Proxy Statement is being furnished to holders of the outstanding
common shares, par value $1.00 per share (the "Common Shares"), of BIC
Corporation (the "Company") in connection with the solicitation of proxies by
the Board of Directors of the Company (the "Board of Directors") for use at a
Special Meeting of Shareholders of the Company to be held on , October
, 1995, at [10:00] a.m., local time, at [the Trumbull Marriott Merritt
Parkway, 180 Hawley Lane, Trumbull, Connecticut 06611], including any
adjournments or postponements thereof (the "Special Meeting") .
THE SPECIAL MEETING
At the Special Meeting, holders of Common Shares will consider and vote
upon a proposal to approve and adopt an Agreement and Plan of Merger, dated as
of August 15, 1995 (the "Merger Agreement"), pursuant to which: (a) BIC Merger
Corporation ("Mergeco"), a New York corporation and a majority owned subsidiary
of Societe BIC S.A., a societe anonyme organized under the laws of the Republic
of France ("Parent"), will be merged with and into the Company (the "Merger"),
and the entire equity interest in the Company, as the surviving corporation in
the Merger, will be owned by Parent and the other shareholders of Mergeco; and
(b) each Common Share that is outstanding at the effective time of the Merger
(the "Effective Time"), other than Common Shares held by Parent and other
shareholders of Mergeco (the "Public Shares") or Public Shares in respect of
which dissenters' rights have been perfected, will be converted into the right
to receive $40.50 per share in cash, without interest (the "Merger
Consideration"). Common Shares held by Parent and the other shareholders of
Mergeco will be cancelled without consideration. Acting on the unanimous
recommendation of a special committee (the "Special Committee"), the Board of
Directors has unanimously approved and adopted the Merger Agreement. The Special
Committee and the Board of Directors unanimously recommend that shareholders
vote FOR approval and adoption of the Merger Agreement.
RECORD DATE; QUORUM; REQUIRED VOTE
The close of business on , 1995 (the "Record Date") has been
fixed as the record date for determining holders of Common Shares entitled to
vote at the Special Meeting. Each Common Share outstanding on such date is
entitled to one vote at the Special Meeting. As of the Record Date, 23,559,244
Common Shares were outstanding and held of record by approximately holders.
The presence, in person or by proxy, of the holders of a majority of the
outstanding Common Shares entitled to vote at the Special Meeting is necessary
to constitute a quorum for the transaction of business at the Special Meeting.
Pursuant to the New York Business Corporation Law (the "NYBCL"), the
affirmative vote of holders of at least 66 2/3% of all of the outstanding Common
Shares is required to approve and adopt the Merger Agreement. The Voting Trustee
(as hereinafter defined), who exercises voting power over Common Shares owned by
the shareholders of Mergeco constituting 76% of the outstanding shares has
agreed, pursuant to the Merger Agreement, to vote such Common Shares in favor of
the approval and adoption of the Merger Agreement. The Voting Trustee can cause
the Merger Agreement to be approved and adopted for purposes of the NYBCL
without the vote of any other shareholder of the Company. However, the Merger
Agreement provides that it is a condition to the consummation of the Merger that
the Merger Agreement be approved and adopted by the holders of at least a
majority of the Public Shares of the Company actually voted, in person or by
proxy (excluding abstentions), at the Special Meeting. For additional
information regarding the Common Shares owned by the Mergeco Shareholders and
the Company's directors and executive officers, see "Special Factors -- Interest
of Certain Persons in the Merger" and "Ownership of Common Shares."
Under the rules of the New York Stock Exchange (the "NYSE"), the proposal
to approve and adopt the Merger Agreement is considered a "non-discretionary
item" as to which brokerage firms may not vote in their discretion on behalf of
their clients if such clients have not furnished voting instructions.
Abstentions will (a)
8
<PAGE> 14
be considered in determining the presence of a quorum at the Special Meeting,
(b) will have the practical effect of a vote against approval and adoption of
the Merger Agreement for purposes of the vote required by the NYBCL since it
would be one less vote for such approval and (c) pursuant to the terms of the
Merger Agreement, will not be considered in determining whether a majority of
the Public Shares actually voted have voted in favor of the approval and
adoption of the Merger Agreement.
PROXIES
Common Shares represented by properly executed proxies received at or prior
to the Special Meeting and which have not been revoked will be voted in
accordance with the instructions indicated thereon. If no instructions are
indicated on a properly executed proxy, such proxies will be voted FOR approval
and adoption of the Merger Agreement.
A shareholder who has given a proxy may revoke such proxy at any time prior
to its exercise at the Special Meeting by (i) giving written notice of
revocation to the Secretary of the Company, (ii) properly submitting to the
Company a duly executed proxy bearing a later date, or (iii) attending the
Special Meeting and voting in person. Attendance at the Special Meeting will not
in and of itself revoke a proxy. All written notices of revocation and other
communications with respect to revocation of proxies should be addressed as
follows: BIC Corporation, 500 BIC Drive, Milford, CT 06460, Attention: Thomas M.
Kelleher, General Counsel and Secretary.
If the Special Meeting is adjourned or postponed for any purpose, at any
subsequent reconvening of the Special Meeting, all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the meeting (except for any proxies which have theretofore effectively been
revoked or withdrawn), notwithstanding that they may have been effectively voted
on the same or any other matter at a previous meeting.
SHAREHOLDERS SHOULD NOT SEND ANY SHARE CERTIFICATES WITH THEIR PROXY CARDS.
IF THE MERGER IS CONSUMMATED, THE PROCEDURE FOR THE EXCHANGE OF CERTIFICATES
REPRESENTING COMMON SHARES WILL BE AS SET FORTH IN THIS PROXY STATEMENT. SEE
"THE MERGER -- GENERAL -- EXCHANGE OF SHARE CERTIFICATES."
SOLICITATION OF PROXIES
The cost of solicitation of the shareholders of the Company will be paid by
the Company. Such cost will include the reimbursement of banks, brokerage firms,
nominees, fiduciaries and custodians for the expenses of forwarding solicitation
materials to beneficial owners of shares. In addition to the solicitation of
proxies by use of mail, the directors, officers and employees of the Company,
may solicit proxies personally or by telephone, telegraph or facsimile
transmission. Such directors, officers and employees will not be additionally
compensated for such solicitation but may be reimbursed for out-of-pocket
expenses incurred in connection therewith. In addition, the Company has retained
D.F. King & Co. Inc. to assist in soliciting proxies and to provide materials to
banks, brokerage firms, nominees, fiduciaries and other custodians. For such
services, the Company will pay to D.F. King & Co. Inc. a fee of approximately
$10,000, plus expenses.
9
<PAGE> 15
THE PARTIES
THE COMPANY
Incorporated in New York in 1958, the Company's primary focus is on the
manufacture and sale of high-quality, low-cost consumer products. These products
include stationery products, lighters and shavers. Through its wholly-owned
subsidiary BIC Sport U.S.A. Inc., the Company also distributes sailboards which
are purchased from a subsidiary of Parent. While most of the Company's
operations are conducted in the United States, operations are also conducted
through wholly-owned subsidiaries at other locations in North and Central
America. The Company's principal executive offices are located at 500 BIC Drive,
Milford, Connecticut 06460, and its telephone number is (203) 783-2000.
PARENT
Parent, a societe anonyme organized under the laws of the Republic of
France ("France"), is a worldwide organization, based in France, engaged
primarily in the business of selling and marketing high-quality, low-cost
consumer products such as stationery products, lighters and shavers. Through its
wholly-owned subsidiary, Conte, Parent manufactures and sells stationery
products such as pencils, coloring crayons, markers, felt pens and other office
and school supplies. Through its wholly-owned subsidiary, Guy Laroche, Parent
also conducts fashion operations. Parent's principal executive offices are
located at 9, rue Petit 92110 Clichy, France, and its telephone number is (011)
(331) 45-19-52-00.
MERGECO
Mergeco is a corporation recently organized by Parent for the purpose of
effecting the Merger. It has no material assets and has not engaged in any
activities except in connection with the Merger. The shareholders of Mergeco are
Parent, Bruno Bich and certain other members of the Bich family (the "Mergeco
Shareholders"). Mergeco's address is c/o BIC Corporation, 500 BIC Drive,
Milford, Connecticut 06460 and its telephone number is (203) 783-2000.
SPECIAL FACTORS
BACKGROUND OF THE MERGER
Parent organized the Company in 1958 to conduct Parent's operations in
North America. An initial public offering (the "IPO") of Common Shares
representing approximately 22% of the Common Shares then outstanding was
undertaken in September 1971. In connection with the IPO, and since that time,
the Company, Parent, certain members of the Bich family and others who owned
Common Shares and certain other parties entered into successive ten year voting
trust agreements with the Company, and Parent entered into various other
agreements with the Company to define the ongoing relationship between them. For
a description of such agreements, see "-- Interest of Certain Persons in the
Merger."
Parent has from time to time considered the possibility of acquiring all of
the outstanding Public Shares of the Company, among other reasons, to facilitate
the closer integration of the Company's operations with the global operations of
the BIC group. See "-- Purpose and Structure of the Merger." During the winter
of 1994-1995, Mr. Bruno Bich, the Chairman of the Board and Chief Executive
Officer of Parent, and the Chairman of the Board and Chief Executive Officer of
the Company, discussed with certain senior officers of the Company Parent's
possible interest in considering an acquisition of all of the outstanding Public
Shares at a future time.
Pursuant to an engagement letter dated April 28, 1995, Parent retained
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") to assist Parent in
evaluating a possible acquisition of the Public Shares and to render financial
advisory and investment banking services to Parent in the event that Parent
determined to do so. During the first two weeks of May, 1995, DLJ reviewed
certain public and non-public information with respect to the Company and also
discussed with certain members of the Company's management the business and
financial condition and prospects of the Company. After discussions with DLJ in
mid-May, Parent's senior management determined to recommend to Parent's Board of
Directors that Parent offer to acquire all of the outstanding Public Shares.
10
<PAGE> 16
At a special meeting of Parent's Board of Directors held in Paris on May
18, 1995, Bruno Bich reviewed with Parent's Board of Directors senior
management's proposal to acquire the outstanding Public Shares. Parent's
management reviewed the trading performance of the Common Shares over the past
several years and the relative value of the French franc compared to the U.S.
dollar during that period. Parent's management also reviewed the potential
advantages to be gained in operating flexibility and efficiencies from a
possible acquisition of the portion of the Company not already owned by Parent
and the other Mergeco Shareholders. See "-- Purpose and Structure of the
Merger." After discussing these matters, Parent's Board of Directors approved
the making of a proposal to acquire, in a cash merger, all of the outstanding
Public Shares at $36.50 per share (the "Proposal") and delegated to Mr. Bich the
authority to determine and negotiate the terms of a transaction, subject to
final approval by Parent's Board of Directors.
Later that day, Mr. Bich contacted the other members of the Company's Board
of Directors, as well as Raymond Winter, the Company's President and Chief
Operating Officer, Robert L. Macdonald, the Company's Vice President -- Finance
and Treasurer and Thomas M. Kelleher, the Company's General Counsel and
Secretary, and informed them that Parent would publicly announce the Proposal
the following day.
On May 19, 1995, Parent delivered to each member of the Board of Directors
a letter, the text of which was as follows:
May 19, 1995
Board of Directors of BIC Corporation
Gentlemen:
I am pleased to offer, on behalf of Societe BIC S.A. and certain
members of the Bich family, to acquire the equity interest represented by
all of the outstanding Common Shares (the "Public Shares") of BIC
Corporation not currently owned by Societe BIC S.A. and such Bich family
members. The principal terms are as follows:
1. The transaction would be a cash merger in which each holder of a
Public Share would receive U.S. $36.50 per share, or an aggregate of
approximately $192 million based on the number of Public Shares
outstanding as of February 15, 1995.
2. Consummation of the acquisition would be subject, among other
things, to (i) approval of the Board of Directors of BIC Corporation,
(ii) receipt of satisfactory confirmation from French tax authorities
regarding the French tax consequences of the transaction, and (iii)
other conditions customary in a transaction of this type.
3. We anticipate that, upon completion of the acquisition, Societe
BIC S.A. will seek to cause BIC Corporation Common Shares to be delisted
from trading on the New York Stock Exchange and to cause deregistration
of the Common Shares with the Securities and Exchange Commission.
We believe that our offer is a fair one that will benefit BIC
Corporation and its public shareholders. The proposed acquisition price is
equivalent to a 20% premium over the average closing price of BIC Common
Shares on the New York Stock Exchange over the 180 trading days ended May
18, 1995.
We wish to make it clear that we are not interested under any
circumstances in selling our interest in BIC Corporation and that there is
thus no prospect of a sale of a controlling interest to a third party.
We understand that you may wish to deliberate on this offer through a
special committee of independent directors and that such committee may wish
to retain its own advisors to assist in those deliberations. We invite your
representatives to meet with our advisors to discuss this proposal at your
earliest convenience.
11
<PAGE> 17
We hope you will give this proposal your prompt attention. We reserve
the right to amend or withdraw this proposal at any time in our discretion.
Sincerely,
Societe BIC S.A.
/s/ BRUNO BICH
Bruno Bich
Chairman and Chief Executive Officer
On May 19, 1995, prior to the opening of the Paris Bourse and the NYSE,
Parent also issued the following press release in Paris:
"SOCIETE BIC S.A. PROPOSES TO BUY PUBLIC INTEREST
IN ITS BIC CORPORATION SUBSIDIARY FOR $36.50 PER SHARE
Clichy, France, Societe BIC S.A. today announced a proposal to acquire
all of the equity interests in its BIC Corporation subsidiary (NYSE:BIC)
not currently owned by Societe BIC S.A. and members of the Bich family.
Under the proposed transaction, the public shareholders of BIC
Corporation would receive $36.50 a share in cash, or an aggregate of
approximately $192 millions for the 5,254,396 shares held by the public.
BIC Corporation has outstanding 23,559,244 shares of Common Stock, of which
Societe BIC S.A. and members of the Bich family own 18,304,848 shares, or
approximately 78%.
The offer is subject to the approval of the Board of Directors of BIC
Corporation, receipt of satisfactory confirmation from French tax
authorities regarding the French tax consequences of the transaction, and
other conditions customary in a transaction of this type.
The offer also noted that the proposed acquisition price is equivalent
to an approximately 20% premium over the average closing price of BIC
Corporation common stock on the NYSE over the 180 trading days ended May
18, 1995."
On May 23, 1995, a special meeting of the Board of Directors was held. All
directors, including Mr. Bich, were present, in person or by videoconference
facilities. At the special meeting, Mr. Bich outlined the terms of the Proposal
and Parent's reasons for proceeding with a transaction. See "-- Purpose and
Structure of the Merger." The Board then approved the creation of the Special
Committee, consisting of Robert E. Allen, David W. Heleniak and Antoine G.
Treuille, the three directors of the Company who are not directors, officers or
employees of Parent or officers or employees of the Company. The Special
Committee was authorized to review, evaluate and negotiate the terms of the
Proposal with Parent and its representatives and to make a recommendation to the
full Board of Directors concerning the Proposal. See "-- Interest of Certain
Persons in the Merger" for a description of certain relationships between
members of the Special Committee and the Company and Mr. Bich and his family.
The Board of Directors also authorized the Special Committee to retain
independent legal and financial advisors.
12
<PAGE> 18
On May 23, 1995, following the special Board of Directors meeting, the
Company issued the following press release:
"BIC CORPORATION ANNOUNCES FORMATION OF
SPECIAL COMMITTEE TO CONSIDER
PARENT'S BUY-OUT PROPOSAL
May 23, 1995 -- BIC Corporation today announced that its Board of
Directors had met and appointed a special committee consisting of three
independent directors to evaluate the buy-out proposal made last week by
BIC's French parent, Societe BIC S.A. Under the proposal, Societe BIC would
acquire in a cash merger the 5,254,396 shares of BIC Corporation common
stock not currently owned by Societe BIC or members of the Bich family for
$36.50 per share. The proposed acquisition, which has an aggregate value of
approximately $192 million, is subject, among other conditions, to approval
by BIC Corporation's Board of Directors. The BIC Corporation Board of
Directors noted that no assurance could be given as to whether or not any
transaction will occur or as to the timing or terms of any transaction."
On May 24, 1995, the Special Committee retained Goldman, Sachs & Co.
("Goldman Sachs") as independent financial advisor to the Special Committee and
Shearman & Sterling (a law firm of which Mr. Heleniak is a partner) as
independent legal advisor. For a description of the terms of the engagement of
Goldman Sachs and certain information concerning Goldman Sachs, see "-- Opinion
of Goldman, Sachs & Co.; Summary of Financial Analyses -- Goldman, Sachs & Co."
Goldman Sachs was authorized to analyze the Proposal and, after consultation
with the Company's senior management, to begin to determine whether it would be
in a position to render an opinion as to the fairness of the consideration to be
received by the Public Shareholders.
On May 26, 1995, the Special Committee met with representatives of Goldman
Sachs and Shearman & Sterling. During this organizational meeting, Goldman Sachs
discussed its preliminary timetable for conducting financial due diligence of
the Company.
From May 26, 1995 through June 12, 1995, members of the Special Committee
and its financial advisor reviewed certain public and non-public information
with respect to the Company. During this period, Goldman Sachs and Mr. Allen,
Chairman of the Special Committee, and the other members of the Special
Committee, also discussed the business and financial condition and prospects of
the Company with members of the senior management of the Company and Goldman
Sachs visited various manufacturing facilities of the Company.
On June 12, 1995, Debevoise & Plimpton, special counsel to Parent,
delivered to Shearman & Sterling a proposed merger agreement containing further
details of the Proposal.
On June 13, 1995, the Special Committee met with representatives of Goldman
Sachs and of Shearman & Sterling. During such meeting, representatives Shearman
& Sterling explained the legal responsibilities of the members of the Special
Committee and the legal principles applicable to actions taken by the Special
Committee with respect to the Proposal and representatives Goldman Sachs
described the financial due diligence performed by Goldman Sachs to date and
certain preliminary valuation analyses performed by Goldman Sachs. The Special
Committee directed Goldman Sachs to perform additional financial due diligence.
During the period from June 14 through June 26, 1995, representatives of
Goldman Sachs continued their due diligence, including further discussions with
senior management of the Company, including Mr. Bich, to discuss the Company's
business, financial condition and prospects. In the course of those discussions,
the Company's management emphasized that the Company did not, in the ordinary
course of its business, make forecasts or projections as to future sales,
earnings or other income statement data, cash flows or balance sheet and
financial position information, other than certain information contained in the
Company's annual budget relating solely to the fiscal year covered by such
budget (which budget is generally not made publicly available). While noting
that the Company's management does not prepare long-term projections in the
ordinary course, the Special Committee directed Goldman Sachs to work with the
Company's manage-
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ment in order to complete Goldman Sachs' financial analyses, using projections
to be developed by the Company's management solely to assist the Special
Committee and Goldman Sachs in evaluating the fairness of the consideration to
be received by the Public Shareholders in the proposed merger. Mr. Allen
participated in certain of these discussions held at the offices of the Company
on June 15, 1995. The final versions of these management projections (the
"Financial Projections"), and the assumptions underlying the preliminary and
final versions, are summarized in "-- Certain Financial Projections."
On June 21, 1995, the Special Committee met with representatives of Goldman
Sachs and Shearman & Sterling. During such meeting, representatives of Goldman
Sachs discussed preliminary versions of the Financial Projections with the
members of the Special Committee. It was noted by Goldman Sachs that the
Company's management was still working to refine the assumptions underlying the
Financial Projections and that they represented only preliminary estimates.
Representatives of Goldman Sachs also described certain preliminary valuation
analyses prepared by Goldman Sachs utilizing, among other things, the
preliminary versions of the Financial Projections. The Special Committee
directed Goldman Sachs to hold further discussions with senior management of the
Company concerning such preliminary versions.
On June 23, 1995, representatives of Goldman Sachs met with representatives
of DLJ to discuss the preliminary versions of the Financial Projections. Mr.
Bich participated in this meeting by telephone, and expressed reservations about
certain of the assumptions underlying these preliminary versions.
On June 26, 1995, the Special Committee met with representatives of Goldman
Sachs and Shearman & Sterling. During such meeting, representatives of Goldman
Sachs updated the Special Committee on discussions with management of the
Company concerning the preliminary versions of the Financial Projections. It was
agreed that more work remained to be done and the Special Committee again
directed Goldman Sachs to hold further discussions with senior management of the
Company concerning such preliminary versions.
On June 28, 1995, representatives of Goldman Sachs and DLJ met in New York
to discuss the valuation methodologies and assumptions used by DLJ in analyzing
the Proposal price and to provide Goldman Sachs with the benefit of such
information prior to the meeting of the Special Committee planned for the
following day.
On June 29, 1995, the Special Committee met with representatives of Goldman
Sachs and of Shearman & Sterling. During such meeting, representatives of
Goldman Sachs discussed with the Special Committee the valuation methodologies
and assumptions utilized by DLJ in analyzing the adequacy of the Proposal price.
Representatives of Goldman Sachs also described certain valuation analyses
prepared by Goldman Sachs utilizing, among other things, the preliminary
versions of the Financial Projections. The Special Committee authorized Goldman
Sachs to discuss with DLJ Goldman Sachs' valuation analyses. Likewise, Parent
instructed DLJ to discuss with Goldman Sachs DLJ's valuation analyses, in an
effort to develop a mutually agreeable basis for valuation of the Public Shares.
The next day, representatives of Goldman Sachs met with representatives of
DLJ to share with DLJ the valuation methodologies utilized by Goldman Sachs.
Representatives of DLJ and Goldman Sachs also discussed the areas of
disagreement between their valuation analyses but the meeting ended without
resolution of these differences.
On July 10, 1995, representatives of DLJ presented to representatives of
Goldman Sachs and Parent a report containing DLJ's valuation analyses. See
"-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses -- Donaldson,
Lufkin & Jenrette Securities Corporation -- July Report."
On July 11, 1995, the Special Committee met with representatives of Goldman
Sachs and Shearman & Sterling. At such meeting, representatives of Goldman Sachs
described recent meetings and conversations between representatives of Goldman
Sachs and DLJ. The Special Committee authorized Goldman Sachs to conduct further
discussions with DLJ concerning valuation issues.
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<PAGE> 20
On July 12, 1995, the Special Committee met with representatives of
Shearman & Sterling. During such meeting, representatives of Shearman & Sterling
updated the Special Committee on recent contacts between representatives of
Goldman Sachs and representatives of DLJ concerning their respective valuation
analyses.
On July 19, 1995, Mr. Bich and representatives of DLJ were invited to meet
with the Special Committee and Goldman Sachs in New York. At the meeting, the
parties continued to discuss the valuation issues identified in the prior
meetings between DLJ and Goldman Sachs. In particular, Mr. Bich and DLJ
suggested that certain assumptions contained in the preliminary versions of the
Financial Projections (specifically, those on which the "Upside Case" was based
(see "-- Certain Financial Projections")), which were utilized by Goldman Sachs'
in preparing its valuation analyses, were too aggressive. Mr. Bich observed
that, in his opinion: (i) all or nearly all of the productivity improvements and
operational efficiencies that could be implemented to improve the Company's
operating results had already been implemented; (ii) future revenue growth would
likely be more difficult due to an absence of significant new products, the
absence of opportunities for geographic expansion into faster-growing foreign
markets and pricing pressures on its commodity products; (iii) the Company was
not, in fact, comparable to certain of the companies identified as peers by
Goldman Sachs, in that it lacked a worldwide distribution network, had limited
product lines, and had much smaller advertising and research and development
budgets than such companies. The meeting ended without resolution of the
valuation issues separating Parent and the Special Committee.
On July 24, 1995, the Special Committee met with representatives of Goldman
Sachs and Shearman & Sterling. During such meeting, representatives of Goldman
Sachs reported to the Special Committee concerning recent discussions between
representatives of Goldman Sachs and DLJ. Mr. Allen then reported to the other
members of the Special Committee concerning discussions between him and a
representative of DLJ concerning the status of discussions between Parent and
the Special Committee. The Special Committee authorized Goldman Sachs to
continue discussions with DLJ.
Over the course of the next two weeks, Parent and the Special Committee,
through their financial advisors, continued their discussions of valuation
issues related to the Proposal. These discussions resulted in sufficient
progress that it was agreed that a meeting between Mr. Bich and Mr. Allen would
be useful in resolving the remaining issues separating the two sides in the
negotiation.
On August 4, 1995, Mr. Allen met with Mr. Bich in Paris. During the course
of a meeting which lasted several hours, the parties came substantially closer
to agreeing upon the price and other terms of a modified proposal.
On August 6, 1995, the Special Committee met with representatives of
Goldman Sachs and Shearman & Sterling. During such meeting, Mr. Allen described
his August 4 meeting in Paris with Mr. Bich. After discussion, the Special
Committee authorized Mr. Allen to pursue further negotiations with Mr. Bich
aimed at arriving at a mutually acceptable price. The Special Committee also
indicated to Goldman Sachs that it should prepare financial analyses based upon
the First Case and the Second Case described under "-- Certain Financial
Projections."
On August 7, 1995, Mr. Allen telephoned Mr. Bich from New York. During this
conversation, Messrs. Allen and Bich discussed an offer of $40.50 per Public
Share, subject to approval by the entire Special Committee, receipt by the
Special Committee of a written opinion from Goldman Sachs that such
consideration would be fair to the Public Shareholders and agreement on the
terms of a definitive merger agreement. Over the course of the next two days,
the parties held several telephone conversations to clarify the terms of the
proposed offer, during which they agreed that the Company would not pay the
regular quarterly cash dividend otherwise payable on October 30, 1995, even if
the Merger was consummated subsequent to such date.
On August 10, 1995, on instructions of the parties, Debevoise & Plimpton
and Shearman & Sterling met to begin negotiation of a definitive merger
agreement.
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<PAGE> 21
The parties continued to negotiate the final terms of the proposed offer
and definitive merger agreement for the next five days. On August 15, 1995, the
Special Committee met with representatives of Goldman Sachs and Shearman &
Sterling. Goldman Sachs rendered its written opinion to the Special Committee
that, as of such date, the $40.50 per Public Share to be received by the Public
Shareholders in the Merger was fair to the Public Shareholders. See "Special
Factors -- Opinion of Goldman, Sachs & Co.; Summary of Financial
Analyses -- Goldman, Sachs & Co." Shearman & Sterling reviewed the principal
terms and conditions of the Merger Agreement. After a full discussion, the
Special Committee determined that the terms of the Merger and the Merger
Agreement were fair to, and in the best interests of, the Public Shareholders.
The Special Committee then unanimously recommended to the Board of Directors
that it approve and adopt the Merger Agreement and unanimously recommended to
the Public Shareholders that such shareholders vote to approve and adopt the
Merger Agreement.
At a Board of Directors meeting immediately following the meeting of the
Special Committee, the Board of Directors unanimously determined that the Merger
was fair to, and in the best interests of, the Company and its shareholders,
approved and adopted the Merger Agreement, and recommended that its shareholders
vote to approve and adopt the Merger Agreement.
Prior to the opening of the Paris Bourse and the NYSE on August 16, 1995,
the Company and Parent issued a joint press release regarding the execution and
delivery of the Merger Agreement. The full text of the joint press release
follows:
"BIC CORPORATION AND SOCIETE BIC S.A.
ANNOUNCE AGREEMENT ON CASH MERGER
AT $40.50 PER SHARE
Milford, CT; Clichy, France, August 16, 1995 -- BIC Corporation
(NYSE:BIC) and its French parent, Societe BIC S.A., jointly announced today
that they have executed a definitive merger agreement pertaining to Societe
BIC S.A.'s previously announced proposal to acquire from public
shareholders the approximately 22% of BIC Corporation's Common Shares not
currently owned by Societe BIC S.A. and the Bich family. Under the
agreement, Societe BIC S.A. will acquire in the merger the publicly held
shares of BIC Corporation for a price of $40.50 per share in cash, or an
aggregate of approximately $219 million.
The merger agreement was approved and adopted by the Board of
Directors of BIC Corporation following the unanimous recommendation of the
merger by a special committee of independent directors. Goldman, Sachs &
Co. has served as financial advisor to the special committee.
The transaction, which will be financed out of Societe BIC's cash
position, is subject to certain customary conditions including approval of
a majority of the publicly held shares actually voted at a special meeting
of shareholders which will be called to consider the merger.
Although there can be no assurance as to whether the proposed
transaction will be effected, it is currently anticipated that the merger
will be completed in late October or early November of 1995. Under the
terms of the Merger Agreement, BIC Corporation will not pay the regularly
scheduled cash dividend payable on October 30, 1995, even if the merger is
consummated subsequent to such date.
BIC Corporation, headquartered in Milford, Connecticut, is a leading
U.S. manufacturer and distributor of stationery products, lighters and
shavers. 1994 sales were $475 million."
PURPOSE AND STRUCTURE OF THE MERGER
Parent's purpose for the Merger is to acquire all of the equity interest in
the Company represented by the Public Shares for the reasons described below.
The Board of Directors will, pursuant to the Merger Agreement, call the Special
Meeting to vote to approve and adopt the Merger Agreement. In the Merger, each
Public Share will be converted into the right to receive an amount in cash equal
to $40.50, without interest.
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<PAGE> 22
In determining to acquire the Public Shares at this time, Parent focused on
a number of factors. The Merger, if consummated, will simplify allocation of
business opportunities between the Company and Parent and its other affiliates,
particularly with regard to geographic expansion, while eliminating potential
conflicts of interest with the Company's minority Public Shareholders. In recent
times, the increasingly global nature of the BIC group's markets and the
character of its competitors and customers have required more unified worldwide
strategies and product policies, under unified management, in order to compete
more effectively. Parent believes the three principal markets in which the
Company competes (stationery products, lighters and shavers) are mature and
highly competitive markets in the United States. Due to the significantly larger
size of its principal competitors, the Company currently is unable to match
those competitors' expenditures on advertising, sales promotion, research and
development and capital projects. In addition, the Company possesses limited
trademarks and consequently has limited presence in higher growth markets
outside North America.
Accordingly, Parent has from time to time considered the possible
acquisition of the Public Shares of the Company, balancing the increasing need
for closer integration of the BIC group against continuing public ownership of
the Company. As the growth and globalization of the BIC group's global
competitors have become more pronounced, Parent has concluded that the
inevitable constraints in integrating its United States operations, together
with the need to continue to devote management attention to ensure that the
interests of the Public Shareholders are scrupulously observed in the course of
further integration of the Company into the BIC group, make it desirable for
Parent to acquire all of the Public Shares.
If consummated, the Merger will also terminate the Company's public status,
which Parent believes has not provided benefits that justify, as a business
matter, maintenance of that status. The Common Shares have never become, as was
originally intended, an attractive currency for acquisitions because of the thin
trading market for such shares. Moreover, Parent does not believe the Company
needs independent access to the capital markets, because sufficient funding, if
and when required, is available through Parent (which is a public company in
France). Parent also believes delisting of the Common Shares may improve overall
access to the capital markets for Parent by providing a single focus for public
investment.
Terminating the Company's public status will eliminate significant
compliance costs associated with such status (including stock exchange listing
fees and the costs of preparing reports and other information required pursuant
to the Exchange Act), thereby furthering the Company's ongoing cost-cutting
efforts (to which much of the Company's recent improvement in operating results
is due). Following consummation of the Merger, the Company will be able to
eliminate the time, expense and energy incurred in connection with stock
transfers, dividends, proxy notices, annual reports, compliance with the
Exchange Act and attendant legal issues. The Merger also promises additional
efficiencies in addition to the elimination of such compliance costs, including
increased sharing of management and technological expertise and economies of
scale resulting from centralized procurement of raw materials.
The acquisition of the Public Shares has been structured as a cash merger
in order to provide a prompt and orderly transfer of ownership of the equity
interest represented by Public Shares to Parent. Parent believes the current
time is an opportune one to acquire the entire remaining equity interest in the
Company, as the recent strength of the French franc against the U.S. dollar
allows Parent to offer Public Shareholders what it believes to be an attractive
premium for their Public Shares.
RECOMMENDATION OF THE SPECIAL COMMITTEE AND BOARD OF DIRECTORS OF THE COMPANY;
FAIRNESS OF THE MERGER
At a meeting held on August 15, 1995, the Special Committee unanimously
determined to recommend that the Board of Directors approve and adopt the Merger
Agreement and that the Board of Directors recommend to the Public Shareholders
that such shareholders vote to approve and adopt the Merger Agreement,
unanimously determined to recommend to the Public Shareholders that such
shareholders vote to approve and adopt the Merger Agreement and unanimously
determined that the terms of the Merger are fair to, and in the best interests
of, the Public Shareholders. At a meeting held immediately thereafter, at which
all of the directors of the Company were present, based on the unanimous
recommendation of the Special Committee, the Board of Directors unanimously
approved and adopted the Merger Agreement, unanimously
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<PAGE> 23
determined to recommend to the Public Shareholders that they vote to approve and
adopt the Merger Agreement and unanimously determined that the terms of the
Merger are fair to, and in the best interests of, the Company and its
shareholders. See "Special Factors -- Background of the Merger."
The Special Committee. In determining to recommend to the Board of
Directors that it approve and adopt the Merger Agreement, and in determining, to
date, the fairness of the terms of the Merger, the Special Committee considered
the following factors, each of which, in the Special Committee's view, supported
the Special Committee's determination to recommend the Merger.
(i) the financial condition, assets, results of operations, business
and prospects of the Company, and the risks inherent in achieving those
prospects, including the belief of management of the Company, as expressed
to the Special Committee and which the Special Committee found to be
reasonable, that (a) all or nearly all of the productivity improvements and
operational efficiencies that could be implemented to improve the Company's
operating results had already been implemented and (b) future revenue
growth would likely be more difficult due to (i) pressure on margins for
the Company's commodity products due to the trend toward concentration of
buying power in retailers of the Company's products, (ii) the absence of
significant new Company products, (iii) the absence of opportunities for
geographic expansion and (iv) the difficulty of the Company, to date, in
identifying significant acquisition opportunities;
(ii) the terms and conditions of the Merger Agreement, including the
amount and form of consideration, the nature of the parties'
representations, warranties, covenants and agreements, and the limited
number of conditions to the obligations of Parent and Mergeco under the
Merger Agreement, such that a closing would not be jeopardized despite even
material adverse changes in the Company's financial condition, operating
results or business;
(iii) the condition to the consummation of the Merger (which is not
otherwise required by the NYBCL or the Company's Restated Certificate of
Incorporation or By-laws) that the Merger receive the affirmative vote of
the holders of at least a majority of the Public Shares actually voted, in
person or by proxy (excluding abstentions), at the Special Meeting;
(iv) the history of the negotiations with respect to the Merger
Consideration that, among other things, led to an increase in Parent's
offer from $36.50 to $40.50 per Public Share, and the belief of the members
of the Special Committee that $40.50 per Public Share was the best price
that could be obtained from Parent;
(v) the fact that the $40.50 per share to be received by the Public
Shareholders in the Merger represented a premium of approximately 35.1%
over the reported average closing price of the Common Shares during the one
year period ending on May 18, 1995, the last full trading day before the
public announcement of Parent's initial Proposal;
(vi) the opinion of Goldman Sachs as to the fairness of the $40.50 per
Public Share to be received by the Public Shareholders and the analyses
presented to the Special Committee by Goldman Sachs (see "-- Opinion of
Goldman, Sachs & Co.; Summary of Financial Analyses -- Goldman, Sachs &
Co.");
(vii) stock price and trading volume history of the Common Shares and
the fact that such shares are thinly traded;
(viii) the unwillingness of Parent to consider a sale of the Company,
to spin off its ownership interest in the Company or to engage in other
alternative transactions with respect to the Company (as a result of which
the Special Committee did not solicit third party bids for the Company);
and
(ix) the availability of dissenters' rights under the NYBCL to
dissenting Public Shareholders in the Merger.
In light of the number and variety of factors the Special Committee
considered in connection with its evaluation of the Merger, the Special
Committee did not find it practicable to assign relative weights to the
foregoing factors, and, accordingly, the Special Committee did not do so.
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<PAGE> 24
Although the Special Committee did consider historical trading prices of
the Common Shares, the Special Committee did not consider trading prices of the
Common Shares for the period following the announcement of the Proposal because
it believed that such prices reflected anticipation of the possibility of the
purchase of the Public Shares by Parent. The Special Committee did consider the
going concern value of the Company as reflected in Goldman Sachs' discounted
cash flow analysis and Goldman Sachs' analysis of the premium to the Company's
book value implied by the amount of the Merger Consideration (see "-- Opinion of
Goldman Sachs, & Co.; Summary of Financial Analyses -- Goldman, Sachs & Co.").
The Special Committee necessarily consulted with Goldman Sachs during the
course of its work and analysis of the financial evaluation of the Company and
of the Proposal. The Special Committee believed that Goldman Sachs' analysis was
reasonable.
The Special Committee believes that the Merger is procedurally fair
because: (i) the Special Committee consisted of disinterested directors
appointed to represent the interests of, and to negotiate on an arm's length
basis with Parent on behalf of, the Public Shareholders; (ii) the Special
Committee retained and was advised by independent legal counsel; (iii) the
Special Committee retained Goldman Sachs as independent financial advisor to
assist it in evaluating the Proposal; and (iv) the condition to the consummation
of the Merger that the proposal to approve and adopt the Merger Agreement
receive the affirmative vote of the holders of at least a majority of the Public
Shares actually voted, in person or by proxy (excluding abstentions), on such
proposal. In addition, the Special Committee believes that the Merger is
procedurally fair because the $40.50 per Public Share price and the other terms
and conditions of the Merger Agreement resulted from active arm's length
bargaining between the Special Committee and Parent.
The Board of Directors of the Company. The Board of Directors has
unanimously determined, following the unanimous recommendation of the Special
Committee, that the Merger is fair to, and in the best interests of, the Company
and its shareholders, has approved and adopted the Merger Agreement, and
recommends that such holders vote to approve and adopt the Merger Agreement.
Parent and Voting Trustee. Neither Parent nor the Voting Trustee had any
involvement in the Special Committee's evaluation of the fairness of the Merger
to the Public Shareholders and did not undertake any formal evaluation of their
own as to the fairness to the Public Shareholders. However, Parent and the
Voting Trustee considered the advice of DLJ, Parent's financial advisor,
regarding, among other things, historical market prices for the Common Shares
(and the fact that the Merger Consideration is substantially more than the
trading prices of the Common Shares before Parent proposed the Merger),
valuations of other selected companies, the range of premiums paid in selected
minority buyouts since 1990, discounted cash flow analyses and the all cash
consideration. Parent and the Voting Trustee also considered the fact that the
Special Committee had received the written opinion of Goldman Sachs addressed to
the Special Committee to the effect that, as of the date thereof, the $40.50 per
Public Share to be received by the Public Shareholders in the Merger is fair to
the Public Shareholders and the fact that Parent determined such price on an
arm's length basis with the Special Committee, assisted by the Special
Committee's independent legal and financial advisors. Parent and the Voting
Trustee believe that these factors, when considered together, provide a
reasonable basis for Parent and the Voting Trustee to believe, as they do, that
the Merger is fair to the Public Shareholders. Parent and the Voting Trustee did
not attach specific relative weights to the factors considered in reaching their
views as to fairness.
OPINION OF GOLDMAN, SACHS & CO.; SUMMARY OF FINANCIAL ANALYSES
GOLDMAN, SACHS & CO. On August 15, 1995, Goldman Sachs delivered its
written opinion to the Special Committee that as of the date of such opinion the
$40.50 per Public Share to be received by the Public Shareholders in the Merger
is fair to the Public Shareholders.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS DATED AUGUST 15,
1995, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS
ANNEX B TO THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS
OF COMMON SHARES ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY.
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<PAGE> 25
A copy of the Goldman Sachs financial analysis discussed below has been
filed as an exhibit to the Schedule 13E-3 Transaction Statement (the "Schedule
13E-3") filed with the Securities and Exchange Commission (the "SEC") with
respect to the Merger, may be inspected and copied, and obtained by mail, from
the SEC as set forth in "Available Information" and will be made available for
inspection and copying at the principal executive offices of the Company at 500
BIC Drive, Milford, CT 06460 during regular business hours by any interested
shareholder of the Company or his or her representative who has been so
designated in writing.
In connection with its opinion, Goldman Sachs reviewed, among other things,
the Merger Agreement; the Annual Reports to shareholders and Annual Reports on
Form 10-K of the Company for each of the last five fiscal years ended January 1,
1995; certain interim reports to shareholders and Quarterly Reports on Form
10-Q; certain other communications from the Company to its shareholders; and
certain internal financial analyses and forecasts for the Company. Goldman Sachs
also held discussions with members of the senior management of the Company and
of Parent regarding the Company's past and current business operations,
financial condition and future prospects. In addition, Goldman Sachs reviewed
the reported price and trading activity for the Common Shares, compared certain
financial and stock market information for the Company with similar information
for certain other companies the securities of which are publicly traded,
reviewed the financial terms of certain recent business combinations, and
performed such other studies and analyses as it considered appropriate.
Goldman Sachs relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by it for
purposes of its opinion. In that regard, with respect to the Financial
Projections, which the Special Committee instructed Goldman Sachs to use for the
purposes of its analysis, Goldman Sachs assumed that such projections were
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the Company's senior management as to the future financial
performance of the Company. In addition, Goldman Sachs did not make an
independent evaluation or appraisal of the assets and liabilities of the Company
or any of its subsidiaries and Goldman Sachs has not been furnished with any
such evaluation or appraisal. Goldman Sachs relied, with the Special Committee's
permission, on statements made by management of Parent indicating that Parent
would not consent to a transaction involving a sale or recapitalization of the
Company, and Goldman Sachs was not requested or authorized to solicit, and did
not solicit, interest from any party with respect to an acquisition of the
outstanding Public Shares, the Company or its constituent businesses. Finally,
Goldman Sachs has been informed by Parent, and has relied with the Special
Committee's permission on such information, that Parent does not currently
intend to pursue a sale or recapitalization of the Company or its subsidiaries
after consummating the Merger pursuant to the Merger Agreement.
The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its written opinion to the Special
Committee on August 15, 1995, attached hereto as Annex B.
Historical Stock Trading Analysis. Goldman Sachs reviewed the historical
trading prices for the Public Shares. Such review indicated that the $40.50 per
Public Share in cash, without interest thereon (representing the Merger
Consideration to be received by the Public Shareholders in the Merger),
represented a premium to the average trading value of the Public Shares during
the one year period ending on May 18, 1995 (the last full trading day before the
date of public announcement of the Proposal) of 35.1%, with 40.3% of the public
float traded in such period.
Selected Companies Analysis. Goldman Sachs reviewed and compared certain
financial information relating to the Company to corresponding financial
information, ratios and public market multiples for the following 15 publicly
traded corporations: American Safety Razor; American Business Products; A.T.
Cross; Avery Dennison; Black & Decker; Dixon Ticonderoga; Duracell; Gillette
Co.; Hunt Manufacturing; Newell Co.; Pentech International; Premark; Rubbermaid;
Sunbeam Oster; and Parent (the "Selected Companies"). Representatives of Goldman
Sachs advised the Special Committee that there are no companies directly
comparable to the Company and the analysis had to be considered in light of that
qualification. Goldman Sachs calculated and compared various financial multiples
and ratios. The multiples of the Company were calculated using the following two
prices: a price of $35.88 per Public Share, representing the closing price of
the Public Shares on the NYSE on May 18, 1995; and a price of $30.85 per Public
Share, representing the
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<PAGE> 26
average closing price on the NYSE during the six-month period from December 17,
1994 through May 17, 1995. The multiples and ratios for the Company and for each
of the Selected Companies were based on the most recent publicly available
information. With respect to the Selected Companies, Goldman Sachs considered
levered market capitalization (i.e., market value of common equity plus
estimated market value of debt less cash) as a multiple of the latest twelve
months' ("LTM") revenue; LTM earnings before interest, taxes, depreciation and
amortization ("EBITDA"); and as a multiple of LTM earnings before interest and
taxes ("EBIT"). Goldman Sachs' analyses of the Selected Companies indicated
levered multiples of LTM revenue that ranged from 0.6x to 3.2x, with a median of
1.0x, compared to 1.6x at $35.88 per Public Share and 1.3x at $30.85 per Public
Share for the Company; LTM EBITDA that ranged from 5.3x to 13.6x, with a median
of 7.0x, compared to LTM EBITDA of 6.9x at $35.88 per Public Share and 5.8x at
$30.85 per Public Share for the Company; and LTM EBIT that ranged from 6.0x to
16.0x, with a median of 9.5x, compared to 8.7x at $35.88 per Public Share and
7.4x at $30.85 per Public Share for the Company. Goldman Sachs also considered
for the Selected Companies LTM EBITDA margins, which ranged from 10.5% to 24.7%,
with a median of 14.6%, compared to 23.1% for the Company; LTM EBIT margins,
which ranged from 7.5% to 20.2%, with a median of 12.1%, compared to 18.3% for
the Company; and LTM net income margins, which ranged from 2.4% to 11.7%, with a
median of 6.2%, compared to 11.0% for the Company. Goldman Sachs also considered
for the Selected Companies estimated calendar year 1995 and 1996 price/earnings
("P/E") ratios, which ranged from 6.3x to 134.5x for estimated calendar year
1995, with a median of 16.8x, and 5.0x to 20.4x for estimated calendar year
1996, with a median of 13.1x, compared to 14.8x and 14.6x at $35.88 per Public
Share, respectively, and 12.7x and 12.6x at $30.85 per Public Share,
respectively, for the Company; five-year compound annual growth rate ("CAGR") of
revenues for the five fiscal years ending in 1995 ranging from (3.3)% to 15.3%,
with a median of 7.6%, compared to 8.3% for the Company; five-year CAGR of net
income for the five fiscal years ending in 1994 ranging from (17.7)% to 107.6%,
with a median of 10.0%, compared to 17.7% for the Company; projected five-year
CAGR of earnings per share (based on First Call estimates as of August 11, 1995)
ranging from 5.0% to 17.0%, with a median of 14.0%, compared to 12.5% for the
Company; and debt to total capitalization ratios, which ranged from 0.0% to
82.3%, with a median of 34.4%, compared to 0.0% for the Company. The review also
indicated that the percentage of the 52-week high trading prices ranged from
40.0% to 100.0%, compared to 101.9% at $40.50 per Public Share, 90.3% at $35.88
per Public Share and 77.6% at $30.85 per Public Share for the Company and that
the current dividend yield for the Selected Companies ranged from 0.0% to 4.0%,
with a median of 1.6%, compared to 2.6% at $35.88 per Public Share and 3.0% at
$30.85 per Public Share for the Company.
Analysis of Merger Consideration. Goldman Sachs calculated the value for
the levered aggregate consideration to be received in the Merger based upon the
$40.50 per Public Share to be received by the Public Shareholders, plus debt and
minus cash and cash equivalents of the Company. Those calculations yielded a
levered aggregate consideration value of $890.4 million, excluding interest
expenses and transaction costs. The multiples and ratios for the Company were
based on information provided by the Company's management. Goldman Sachs
considered the levered aggregate consideration as a multiple of actual 1994 and
LTM sales, EBITDA, EBIT and net income of the Company. Goldman Sachs' analyses
indicated levered aggregate consideration multiples of actual 1994 sales of
1.87x and LTM sales of 1.81x, multiples of actual 1994 EBITDA of 8.02x and LTM
EBITDA of 7.85x, multiples of actual 1994 EBIT of 10.21x and LTM EBIT of 9.94x
and multiples of actual 1994 net income of 18.71x and LTM net income of 17.57x.
Goldman Sachs also considered the levered aggregate consideration as a multiple
of estimated 1995 and 1996 sales, EBITDA, EBIT and net income of the Company.
Goldman Sachs' analyses indicated levered aggregate consideration multiples of
estimated 1995 sales of 1.73x and estimated 1996 sales of 1.67x, multiples of
estimated 1995 EBITDA of 7.42x and estimated 1996 EBITDA of 7.15x, multiples of
estimated 1995 EBIT of 9.44x and estimated 1996 EBIT of 9.10x and multiples of
estimated 1995 net income of 16.87x and estimated 1996 net income of 16.26x. The
review also indicated a percentage of the levered aggregate consideration as a
premium to the book value per Public Share of 283.2%.
Discounted Cash Flow Analysis. Goldman Sachs performed a discounted cash
flow analysis based on the First Case and the Second Case Financial Projections.
See "-- Background of the Merger" and "-- Certain Financial Projections."
Goldman Sachs calculated a net present value of free projected cash flows for
the calendar years from 1995 through 2004 using discount rates ranging from
11.0% to 13.0%. Goldman
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<PAGE> 27
Sachs calculated the Company's terminal values based on multiples ranging from
6.6x to 9.9x projected EBITDA for calendar year 2004 and 8.0x to 12.0x projected
EBIT for calendar year 2004. These terminal values were then discounted to
present value using discount rates from 11.0% to 13.0%. Those discount rates and
terminal values produced implied per share values based on the First Case
Financial Projections ranging from $31.48 per Public Share to $45.62 per Public
Share and implied per share values based on the Second Case Financial
Projections ranging from $28.77 to $40.79 per Public Share.
Selected Transactions Analysis. Goldman Sachs analyzed certain information
relating to selected transactions in the consumer products and office products
industry since 1987 (the "Selected Transactions"). Such analysis indicated that
for the Selected Transactions levered aggregate consideration as a multiple of
(A) LTM sales ranged from 0.4x to 4.1x, with a mean of 1.6x, compared to 1.8x
for the levered aggregate consideration to be received in the Merger, (B) LTM
net income ranged from 10.9x to 81.1x, with a mean of 28.3x, compared to 17.6x
for the levered aggregate consideration to be received in the Merger, and (C)
LTM EBIT ranged from 5.9x to 31.0x, with a mean of 14.3x, compared to 9.9x for
the levered aggregate consideration to be received in the Merger. Goldman Sachs
indicated to the Special Committee that, for many of the specific transactions,
the information with respect to the various categories was not publicly
available.
Breakeven Return Analysis. Goldman Sachs computed a breakeven return
analysis based on the earnings of the Company to be acquired by Parent in the
Merger. The breakeven return analysis was computed based on 1996 projected
earnings for the Company using the First Case and the Second Case in order to
ascertain (A) the break-even per Common Share price that would have to be paid
by Parent and (B) the percentage of accretion or dilution to earnings per share
("EPS") that Parent would realize based on analysts' projected EPS for Parent.
Those analyses, based on various assumptions, including an exchange rate of 4.94
French francs to one U.S. dollar, $5.0 million in transaction related fees,
Parent tax rates of 39.5% and goodwill amortization periods of 40 years,
estimated that (A) the break-even price to be paid by Parent for each Public
Share is $40.26 under the First Case and $39.13 under the Second Case, compared
to the $40.50 per Public Share to be received by the Public Shareholders in the
Merger, and (B) the percentage of dilution to projected EPS realized by Parent
upon paying the $40.50 per Public Share to be received by the Public
Shareholders in the Merger is 0.1% under the First Case and 0.3% under the
Second Case.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is identical to the
Company or Parent or the contemplated transaction. The analyses were prepared
solely for purposes of Goldman Sachs providing its opinion to the Special
Committee as to the fairness of the $40.50 per Public Share to be received by
the Public Shareholders in the Merger and do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities actually may be
sold. Analyses based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. Because such analyses are inherently
subject to uncertainty, being based upon numerous factors or events beyond the
control of the parties or their respective advisors, none of the Company,
Parent, Goldman Sachs or any other person assumes responsibility if future
results are materially different from those forecast.
As described above, Goldman Sachs' opinion to the Special Committee was one
of many factors taken into consideration by the Special Committee in making its
determination to approve the Merger Agreement. The foregoing summary does not
purport to be a complete description of the analysis performed by Goldman Sachs
and is qualified by reference to the written opinion of Goldman Sachs set forth
in Annex B hereto.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes. The Special Committee
selected Goldman Sachs as
22
<PAGE> 28
financial advisor to the Special Committee because it is a nationally recognized
investment banking firm that has substantial experience in transactions similar
to the Merger.
Goldman Sachs provides a full range of financial, advisory and brokerage
services and in the course of its normal trading activities may, from time to
time, effect transactions and hold positions in the securities or options on
securities of the Company and/or Parent for its own account and for the account
of customers.
Pursuant to a letter agreement dated May 24, 1995 (the "Engagement
Letter"), the Company engaged Goldman Sachs to act as the Special Committee's
financial advisor in connection with the contemplated transaction. Pursuant to
the terms of the Engagement Letter, it was agreed that the Company would pay
Goldman Sachs a fee in connection with the rendering of its opinion of $800,000.
It was further agreed that the Company would reimburse Goldman Sachs for its
reasonable out-of-pocket expenses, including attorney's fees, and indemnify
Goldman Sachs against certain liabilities, including certain liabilities under
the federal securities laws.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION. As more fully
described under " -- Background of the Merger", DLJ was retained by Parent to
act solely as Parent's financial advisor (and not the advisor to or agent of any
other person), in connection with the Proposal and the Merger and other matters
arising in connection therewith pursuant to an engagement letter, dated as of
April 28, 1995, between Parent and DLJ. DLJ was not requested to, and did not,
render any opinion (oral or written) or advice concerning the fairness of the
Merger Consideration to the Public Shareholders or to any other party (including
Parent). Parent chose DLJ as its financial advisor based upon DLJ's reputation
as a leading investment banking firm.
Copies of the DLJ Materials (as defined below) have been filed as exhibits
to the Schedule 13E-3 filed with the SEC with respect to the Merger and may be
inspected and copied, and may be obtained by mail, from the SEC as set forth in
"Available Information" and will be made available for inspection and copying at
the principal executive offices of the Company at 500 BIC Drive, Milford, CT
06460, during regular business hours, by any interested shareholder of the
Company or his or her representative who has been so designated in writing.
June Report. On June 22, 1995, DLJ delivered to Parent a written
presentation (the "June Report" and, together with the July Report (as
hereinafter defined), the "DLJ Materials") regarding the Company's business and
prospects, and containing valuations of the Public Shares using a variety of
different methodologies. In formulating the DLJ Materials, DLJ, among other
things: reviewed certain publicly available documents and certain other
information, including preliminary versions of the Financial Projections (see
"-- Certain Financial Projections"); held discussions with senior executive
officers of the Company and Parent; visited facilities of the Company;
considered business trends in the business segments in which the Company
operates; reviewed public information with respect to certain other acquisitions
involving other companies in such business segments; reviewed public information
with respect to acquisition of minority interests; calculated valuations of the
Public Shares using selected publicly traded company information, premiums paid
in other minority interest acquisitions, and discounted cash flow analyses; and
considered, among other things, such other information, financial studies,
analyses and investigations and financial, economic and market criteria as it
deemed relevant.
Overview. The June Report was prefaced by an overview, wherein DLJ noted:
that the Proposal price reflected a premium to recent trading prices for the
Public Shares; that the transaction did not constitute a change in control
transaction; that the Company sells mature products in competitive and mature
markets; that the Proposal price implied trading multiples in excess of the
average multiple of the selected companies listed below; that the Company's
recent earnings growth in excess of revenue growth was driven by an effective
capital expenditure program and productivity improvements, and earnings from
productivity improvements tend to be regarded as less sustainable; and that the
Company is unable to match the marketing and advertising investments of its
principal competitors. As a result, the Company's growth rate and market shares
were likely to decline over time.
Selected Company Analysis. DLJ compared the Proposal to the recent trading
prices for a number of selected public companies, including Parent, The Gillette
Company, American Safety Razor, A.T. Cross Co.,
23
<PAGE> 29
Pentech International Inc., Dixon Ticonderoga Co., American Business Products,
Hunt Manufacturing Co. and Avery Dennison Corporation, by expressing the
Proposal price and each of such selected company's recent trading prices as
multiples of several financial criteria. DLJ advised Parent that there are no
companies directly comparable to the Company and the analysis had to be
considered in light of that qualification. DLJ believed the comparison to
trading prices of issuers not currently the subject of an acquisition was
relevant because the Proposal did not involve a change in control of the
Company.
The financial criteria included: price as a multiple of LTM EPS (where the
Proposal price of $36.50 represented a multiple of 16.2x, as compared to the
selected company average of 15.5x (the latter implying a per Public Share value
of $34.77)); price as a multiple of estimated 1995 EPS (where the Proposal price
of $36.50 represented a multiple of 15.3x, as compared to the selected company
average of 15.0x (the latter implying a per Public Share value of $35.64));
price as a multiple of estimated 1996 EPS (where the Proposal price of $36.50
represented a multiple of 14.9x, as compared to the selected company average of
13.8x (the latter implying a per Public Share value of $33.69)); "enterprise
value" (market price of all outstanding Common Shares, plus total Company debt,
less cash) as a multiple of LTM revenues (where the Proposal price of $36.50
represented a multiple of 1.6x, as compared to the selected company average of
1.1x (the latter implying a per Public Share value of $25.20)); enterprise value
as a multiple of LTM EBITDA (where the Proposal price of $36.50 represented a
multiple of 7.0x, as compared to the selected company average of 6.7x (the
latter implying a per Public Share value of $35.42)); and enterprise value as a
multiple of LTM EBIT (where the Proposal price of $36.50 represented a multiple
of 8.8x, and equaled the selected company average (and implying a per Public
Share value of $36.58)). The Proposal price exceeded the average of the per
Public Share values ($33.55) implied by the selected company financial criteria.
In the June Report, DLJ also included a valuation based on Parent's multiples
but concluded that Parent had more brand name recognition in its markets than
the Company, and, with its global presence, Parent competed in markets with more
potential than the Company's markets. DLJ believed the average of multiples
derived from the selected companies represented the best proxy for valuation,
since no one company surveyed was directly comparable to the Company.
Premium Analysis. The DLJ Materials contain a comparison of the premium
represented by the Proposal price to premiums offered in comparable acquisitions
of minority shareholdings during the last five years. DLJ found that, of 38
minority transactions surveyed since 1990, 23 had a premium of less than 30%,
while 13 had a premium of less than 20%. The Proposal price of $36.50
represented: a 15.9% premium to the market price one month prior to
announcement, as compared to median and average premiums of 23.7% and 29.8%,
respectively (implying per Public Share prices of $38.97 and $40.89,
respectively); a premium of 16.3% to the 52-week average trading price of the
Common Shares, as compared to median and average premiums of 16.2% and 23.9%,
respectively (implying per Public Share prices of $36.46 and $38.87,
respectively); a discount of 2.6% to the high trading price over the preceding
52 weeks, as compared to median and average discounts of 4.6% and 1.7% (implying
per Public Share prices of $35.79 and $36.86, respectively); and a 12.3% premium
to the high trading price in the 52 weeks preceding the date one month prior to
the announcement date, as compared to median and average premiums of 2.1% and
3.6% (implying per Public Share prices of $33.20 and $33.67, respectively).
Discounted Cash Flow Analysis. DLJ prepared three matrices of future per
Public Share values, based on the Upside Case, the First Case and the Second
Case contained in the Financial Projections, with a terminal multiple of
projected 1999 EBITDA and using various discount rates. See "-- Certain
Financial Projections". Each matrix assumed terminal enterprise value/EBITDA
multiples of 6.0x to 8.0x and discount rates of 9%x to 13%. In the Upside Case
matrix, this analysis indicated a low per Public Share value of $35.25, assuming
the lowest multiple and the highest discount rate, and a high per Public Share
value of $50.44, assuming the highest multiple and the lowest discount rate. The
First Case indicated a low per Public Share value of $31.09, assuming the lowest
multiple and the highest discount rate, and a high per Public Share value of
$44.30, assuming the highest multiple and the lowest discount rate. The Second
Case analysis indicated a low per Public Share value of $29.53, assuming the
lowest multiple and the highest discount rate, and a high per Public Share value
of $41.84, assuming the highest multiple and the lowest discount rate.
24
<PAGE> 30
Accretion/Dilution Analysis. The DLJ Materials also contained an analysis
of the Merger's accretive/ dilutive impact, on a pro forma basis, on Parent's
1994 and estimated 1995 EPS, based on a number of assumptions, including, among
other things, currency exchange rates, the actual performance of the Company and
prevailing interest rates.
July Report. On July 10, 1995, DLJ furnished to Parent and Goldman Sachs
its July Report, which was prepared in response to certain illustrative
financial analyses prepared by Goldman Sachs, based on the preliminary version
of the Financial Projections, and provided to DLJ in the context of the
negotiations. The July Report reiterated, and in some cases modified, certain of
the valuation analyses contained in the June Report (e.g., selected companies,
premiums paid and discounted cash flow analyses), and discussed the alternative
valuations presented by Goldman Sachs (e.g., change of control transactions,
present value of future stock prices and dividends paid, leveraged
recapitalization and leveraged buyout analyses).
Selected Companies. The July Report contains an analysis of the factors
influencing the choices of companies to be included in the universe of selected
companies. Based on a review of these factors, DLJ added to the selected
companies analysis contained in the June Report a compromise universe of three
additional populations: a "combined composite" population, consisting of the
selected companies included in the original survey, plus three companies
identified by Goldman Sachs -- Duracell International, Rubbermaid and Newell; a
"staples U.S.A." population, consisting of Rubbermaid, Newell, American Safety
Razor, Pentech International and Hunt Manufacturing; and a pair of "most
comparable companies" -- Parent and Newell. The "combined composite" population
yielded multiples of price/1995 EPS, price/1996 EPS, enterprise value/LTM
revenues, enterprise value/LTM EBITDA and enterprise value/LTM EBIT that
indicated per Public Share values that ranged from $30.90 to $40.21 (with an
average of $37.23); the "staples U.S.A." population multiples implied per Public
Share values ranging between $29.58 and $38.41 (with an average of $34.22); and
the "most comparable companies" population multiples implied per Public Share
values ranging from $36.03 to $40.39 (with an average of $38.29). The July
Report distinguishes some of the selected companies from the Company, which is
not diversified, is smaller than certain competitors, has a smaller budget for
advertising and research and development expenditures and has limited sources of
revenue growth. In addition, the July Report noted that, based on price/earnings
ratios, the Common Shares had traditionally traded below certain of the selected
companies.
Change of Control Analysis. The July Report studied a number of change in
control transactions involving other consumer products companies identified by
Goldman Sachs (including, among others, Parker Pen, Wilkinson Sword, Berol
Corporation and Waterman S.A.) over the past several years, analyzing
acquisition prices as multiples of the acquired companies' revenues, EBIT and
net income. This analysis implied per Public Share values ranging from $33.64 to
$41.93. The July Report notes that the precedent change of control transactions
involved significant synergies, cost cutting opportunities, productivity
improvements and a change of control, all of which are not applicable to the
proposed transaction.
Discounted Cash Flow Analyses. Again utilizing the Upside Case, the First
Case and the Second Case, DLJ analyzed terminal enterprise value/EBIT multiples
ranging from 8.0x to 10.0x, which implied (at 11.0% and 13.0% discount rates)
per Public Share values ranging from $36.51 to $46.48 (in the Upside Case),
$31.32 to $39.73 (in the First Case) and $29.69 to $37.51 (in the Second Case).
Using terminal multiples of 8.8x (which represented the multiple implied by the
Proposal price of $36.50), and the same discount rates, the Upside Case implied
per Public Share values of $39.10 to $42.33, the First Case implied per Public
Share values of $33.50 to $36.15 and the Second Case implied values of $31.71 to
$34.19.
Present Value of Future Stock Prices and Dividends. The July Report
contains a present valuation (based on the First Case and the Second Case) of
future stock prices in the years 1995 through 1999 (derived by multiplying
forecast future EPS by P/E multiples ranging from 10x to 16x), together with the
present value of regular cash dividends and a special "recapitalization"
dividend, assumed to be financed by new borrowings and excess cash. Depending on
the year and price/earnings multiple selected, the present value of future stock
prices for the Public Shares were estimated to range from $30.11 to $43.80 in
the First Case and $28.39 to $43.17 in the Second Case.
25
<PAGE> 31
Leveraged Recapitalization Analysis. In the July Report, DLJ considered
certain leveraged recapitalization analyses performed by Goldman Sachs. As an
alternative, DLJ performed leveraged recapitalization analyses that yielded
implied per Public Share values of between $34.84 and $39.04 (in the First Case)
and $34.50 and $38.55 (in the Second Case).
Leveraged Buyout Analysis. The July Report also contains a leveraged
buyout analysis. By increasing the threshold rate of return required on the
initial equity investment, reducing the leverage factor and applying the
analysis to the First and Second Cases, DLJ derived indicative per Public Share
values of $31.45 and $30.60, respectively.
Accretion/Dilution Analysis. The July Report also contains an analysis of
the impact of the Merger on Parent's 1995 EPS based on certain assumptions,
including, among other things, currency exchange rates, the actual performance
of the Company and prevailing interest rates.
DLJ has stated to Parent that, in its view, the DLJ Materials are not
necessarily susceptible to partial analysis or summary description. In addition,
DLJ has advised Parent that selecting portions of the DLJ Materials or of the
summary set forth above, without considering the analyses as a whole, could
create an incomplete view of the processes underlying DLJ's analyses. No company
or transaction used in the above analyses as a comparison is identical to the
Company or the contemplated transaction. The DLJ Materials were prepared solely
for the purposes described above and do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities actually may be
sold. Analyses based upon projected future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. Because such analyses are inherently
subject to uncertainty, being based upon numerous factors or events beyond the
control of the parties or their respective advisors, none of Parent, the Company
or DLJ or any other person assumes responsibility if future results are
materially different from those projected. The foregoing summary does not
purport to be a complete description of the DLJ Materials and its qualified by
reference to the DLJ Materials which are filed as exhibits to the Schedule
13E-3.
In the course of its investigation DLJ relied upon, and assumed the
accuracy and completeness of, publicly available information and the financial
and other information provided by the Company, but DLJ did not assume any
responsibility for independent verification for any of the foregoing
information. The DLJ Materials were based on preliminary versions of the
Financial Projections (see "-- Certain Financial Projections"), which were in
material respects identical to the final versions thereof. In addition, DLJ did
not make an independent evaluation or appraisal of the assets of the Company,
nor was DLJ furnished with any such evaluation or appraisals. The DLJ Materials
were based on facts and circumstances existing and disclosed to DLJ on the date
such materials were presented to Parent.
DLJ provides a full range of financial, advisory and brokerage services and
in the course of its normal trading activities may from time to time effect
transactions and hold positions in the securities or options on securities of
the Company and/or Parent for its own account and for the account of customers.
DLJ is acting as financial advisor to Parent in connection with the Merger.
Pursuant to the Parent's April 28, 1995 letter agreement, Parent has agreed to
pay DLJ a retainer fee of $250,000, and additional consideration of $1,125,000
(against which the retainer fee will be credited), payable upon acquisition, by
merger or in another form of business combination, of a majority of the Public
Shares, provided, that if Parent acquires less than 80% of the Public Shares,
such additional compensation shall equal $1,125,000 times the percentage of
Public Shares acquired, less the retainer fee. Parent has also agreed to
reimburse DLJ for its reasonable out-of-pocket expenses incurred (including the
reasonable fees and disbursements of its counsel) and to indemnify DLJ against
certain liabilities, including certain liabilities under the federal securities
laws.
CERTAIN FINANCIAL PROJECTIONS
At the direction of the Special Committee, in the course of their analysis
of the Company, representatives of Goldman Sachs discussed with senior
management of the Company, including Mr. Bich, the Company's business, financial
condition and prospects. See "-- Background of the Merger." In the course of
those discussions, the Company's management emphasized that the Company did not,
in the ordinary course of its
26
<PAGE> 32
business, make forecasts or projections as to future sales, earnings or other
income statement data, cash flows or balance sheet and financial position
information, other than certain information contained in the Company's annual
budget relating solely to the fiscal year covered by such budget (which budget
is generally not made publicly available). While noting that the Company's
management does not prepare long-term projections in the ordinary course, the
Special Committee directed Goldman Sachs to work with the Company's management
in order to complete Goldman Sachs' financial analyses, using projections to be
developed by the Company's management solely to assist the Special Committee and
Goldman Sachs in evaluating the fairness of the consideration to be received by
the Public Shareholders in the proposed merger, which projections were based
upon a variety of estimates and assumptions. The Financial Projections,
consisting of a First Case, a Second Case and an Upside Case, are summarized
below. In the course of further discussions between management of the Company,
DLJ, Goldman Sachs and members of the Special Committee, management of the
Company indicated that, subject to the various caveats expressed below relating
to the Financial Projections, it was management's belief that the future
operating performance of the Company would most probably fall between the First
Case and Second Case.
These three Financial Projections are summarized below:
FIRST CASE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------
(U.S. DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Revenues....................... $513.8 $533.2 $567.9 $605.1 $645.1 $686.4
EBIT........................... 94.3 97.8 104.2 111.0 118.3 125.9
Operating Profit Margin........ 18.3% 18.3% 18.3% 18.3% 18.3% 18.3%
</TABLE>
SECOND CASE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------
(U.S. DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Revenues....................... $506.6 $516.9 $541.3 $567.0 $594.0 $620.8
EBIT........................... 92.9 94.8 99.3 104.0 109.0 113.9
Operating Profit Margin........ 18.3% 18.3% 18.3% 18.3% 18.3% 18.3%
</TABLE>
UPSIDE CASE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------
(U.S. DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Revenues....................... $513.8 $533.2 $567.9 $605.1 $645.1 $686.4
EBIT........................... 99.6 106.0 116.7 128.2 140.6 152.9
Operating Profit Margin........ 19.4% 19.9% 20.5% 21.2% 21.8% 22.3%
</TABLE>
The First Case assumed that the Company's consolidated operating margins
remained constant at 1994 levels. The Second Case was based on assumptions that
the Company's consolidated operating margins remained constant at 1994 levels,
while growth in stationery products sales was reduced (to annual increases of
3.0% in units and 2.0% in price, commencing in 1996). The Upside Case assumed
4.5% unit and 3.5% price increases for stationery products, annual 2.0% unit and
0% price increases for lighters and (commencing in 1996) annual 1.5% unit and
4.0% price increases for shavers.
THE FOREGOING INFORMATION WAS NOT PREPARED WITH A VIEW TOWARD COMPLIANCE
WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS REGARDING FORWARD-LOOKING INFORMATION OR GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES AND WAS NOT REVIEWED BY INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE COMPANY OR PARENT. THE FINANCIAL PROJECTIONS WERE PREPARED
SOLELY FOR THE PURPOSE OF ASSISTING THE SPECIAL COMMITTEE AND ITS FINANCIAL
ADVISOR, GOLDMAN SACHS, IN EVALUATING THE FAIRNESS OF THE CONSIDERATION TO BE
RECEIVED BY THE PUBLIC SHAREHOLDERS IN CONNECTION WITH THE PROPOSAL AND THE
MERGER AND WERE BASED UPON A VARIETY OF ESTIMATES AND ASSUMPTIONS, SOME (BUT NOT
ALL) OF WHICH ARE SET FORTH ABOVE. THE ESTIMATES AND ASSUMPTIONS UNDERLYING THE
FINANCIAL PROJECTIONS INVOLVED JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS,
FUTURE ECONOMIC, COMPETITIVE, REGULATORY AND FINANCIAL MARKET CONDITIONS AND
FUTURE BUSINESS DECISIONS WHICH MAY NOT BE REALIZED AND ARE INHERENTLY SUBJECT
TO SIGNIFICANT BUSINESS, ECONOMIC, COMPETITIVE AND REGULATORY UNCERTAINTIES, ALL
OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL OF
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<PAGE> 33
THE COMPANY. WHILE THE COMPANY BELIEVES THESE ESTIMATES AND ASSUMPTIONS TO HAVE
BEEN REASONABLE, THERE CAN BE NO ASSURANCE THAT THE FINANCIAL PROJECTIONS WILL
BE REALIZED, AND ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE SHOWN. IN LIGHT
OF THE UNCERTAINTIES INHERENT IN FORWARD-LOOKING INFORMATION OF ANY KIND, AND
THE COMPANY'S LACK OF EXPERIENCE IN FINANCIAL FORECASTING, THE INCLUSION OF THE
FINANCIAL PROJECTIONS SHOULD NOT BE REGARDED AS AN INDICATION THAT PARENT, THE
COMPANY, THEIR RESPECTIVE FINANCIAL ADVISORS OR ANYONE WHO RECEIVED THIS
INFORMATION CONSIDERED OR CONSIDERS IT A RELIABLE PREDICTOR OF FUTURE OPERATING
RESULTS AND THIS INFORMATION SHOULD NOT BE RELIED ON AS SUCH. ADDITIONALLY, THE
FINANCIAL PROJECTIONS DO NOT REFLECT REVISED PROSPECTS FOR THE COMPANY'S
BUSINESSES, CHANGES IN GENERAL BUSINESS AND ECONOMIC CONDITIONS, OR ANY OTHER
TRANSACTION OR EVENT THAT HAS OCCURRED OR THAT MAY OCCUR AND THAT WAS NOT
ANTICIPATED AT THE TIME SUCH INFORMATION WAS PREPARED. NONE OF THE COMPANY,
PARENT, THEIR RESPECTIVE FINANCIAL ADVISORS OR ANY OTHER PARTY ASSUMES
RESPONSIBILITY FOR THE ACCURACY, REASONABLENESS, VALIDITY OR COMPLETENESS OF THE
FINANCIAL PROJECTIONS. THE COMPANY DOES NOT INTEND TO UPDATE OR SUPPLEMENT THIS
INFORMATION.
PLANS FOR THE COMPANY AFTER THE MERGER
Except as indicated in this Proxy Statement, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries or any
material change in the Company's capitalization or any other material changes in
the Company's corporate structure or business or the composition of the Board of
Directors or management.
Upon consummation of the Merger, Parent intends to retain the Company as a
partially-owned or wholly-owned subsidiary of Parent. Parent anticipates that
the assets, business and operations of the Company will be continued
substantially as they are currently being conducted. Management of Parent may,
however, cause the Company to make such changes as are deemed appropriate and
intends to continue to review the Company and its assets, businesses,
operations, properties, policies, corporate structure, capitalization and
management and consider if any changes would be desirable in light of the
circumstances then existing. In addition, Parent intends to continue to review
the business of the Company and identify synergies and cost savings. See
"-- Interest of Certain Persons in the Merger."
INTEREST OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors of the Company,
the shareholders of the Company should be aware that certain officers and
directors of the Company have certain interests in the Merger, including those
referred to below, that present actual or potential conflicts of interest in
connection with the Merger. The Special Committee and the Board of Directors
were aware of these potential or actual conflicts of interest and considered
them along with other matters described under "-- Recommendation of the Special
Committee and Board of Directors of the Company; Fairness of the Merger."
Common Share Ownership. Bruno Bich, who is the Chairman of the Board and
Chief Executive Officer of Parent, is the Chairman of the Board and Chief
Executive Officer of the Company. Mr. Bich was present and voted at meetings of
the Board held on May 23, 1995 and August 15, 1995. See "-- Background of the
Merger." As of the date of this Proxy Statement, the Mergeco Shareholders owned
an aggregate of 18,154,848 Common Shares, representing approximately 77% of the
Common Shares outstanding on that date. Bruno Bich, as Voting Trustee, exercises
voting power over 17,912,648 of such shares pursuant to the Voting Trust
Agreement, including all Common Shares owned by Parent. The Mergeco Shareholders
other than Parent own an additional 242,200 Common Shares not subject to the
Voting Trust Agreement. See "-- Voting Trust Agreement." The Merger Agreement
provides that, at the Effective Time of the Merger, all Common Shares then
beneficially owned by the Mergeco Shareholders will be cancelled without the
payment of any consideration therefor. On August 17 and 18, 1995, Bruno Bich
sold in market transactions an aggregate of
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<PAGE> 34
150,000 Common Shares not subject to the Voting Trust Agreement for $39.50 per
share, or an aggregate of approximately $5.9 million. See "Transactions by
Certain Persons in Common Shares".
As of July 31, 1995, the executive officers and directors of the Company
(other than Bruno Bich) owned an aggregate of 42,811 Public Shares, constituting
less than 1% of the total number of Common Shares then outstanding. Such
individuals have informed Parent that they intend to vote all of their Public
Shares in favor of the Merger. If the Merger is consummated, such persons will
receive an aggregate of approximately $1.73 million for their Public Shares.
The following table sets forth, as of July 31, 1995, the number of Public
Shares owned by, and the aggregate amounts to be received by, each executive
officer and director of the Company who owns any Public Shares (other than Bruno
Bich) pursuant to the Merger. Other than the individuals named below, no
executive officer or director of the Company owns any Public Shares.
<TABLE>
<CAPTION>
DIRECTOR/ NUMBER OF AMOUNT TO BE
EXECUTIVE OFFICER PUBLIC SHARES(A) RECEIVED
------------------------------------------------------- ---------------- ------------
<S> <C> <C>
Alexander Alexiades.................................... 24,000 $972,000
Director; retired Vice President and Treasurer
Robert E. Allen........................................ 2,000 81,000
Director
David W. Heleniak...................................... 1,000 40,500
Director
Antoine G. Treuille.................................... 1,200 48,600
Director
Raymond Winter......................................... 5,664(a) 229,392
President and Chief Operating Officer; Director
Al D'Addario........................................... 1,574 63,747
Vice President -- Manufacturing
Robert L. Macdonald.................................... 2,788(a) 112,914
Vice President -- Finance and Treasurer
James K. Palmer........................................ 2,779(a) 112,550
Director, Sales and Marketing
Thomas M. Kelleher..................................... 1,374(a) 55,647
General Counsel and Secretary
Jack Teague............................................ 432(a) 17,496
General Manager, Special Markets Division
</TABLE>
- ---------------
(a) Represents all Common Shares held as of July 31, 1995, including holdings
through the Company's 401(k) Plan.
Directors and Officers. Pursuant to the Merger Agreement, the directors
and officers of the Company will remain the directors and officers,
respectively, of the Surviving Corporation. Robert Macdonald, Vice
President -- Finance and Treasurer of the Company, has accepted (effective
October 1, 1995) the position of chief financial officer of Parent. Mr.
Alexiades represented the Company in various trade association matters in 1994,
for which he received $20,000.
Special Committee. Each member of the Board of Directors who was not, and
is not at the present time, an employee of the Company, or an affiliate of
Parent, serves on the Special Committee. Each member of the Special Committee
will be paid $20,000 for serving on the Special Committee. This compensation was
authorized by the Board of Directors of the Company in order to compensate the
members thereof for the significant additional time commitment that would be
required of them in connection with fulfilling their duties and responsibilities
as members of the Special Committee and is payable without regard to whether the
Special Committee approved the Merger or whether the Merger is consummated.
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<PAGE> 35
Each member of the Special Committee received $30,000 in 1994 for his
service as a director. Shearman & Sterling, a law firm of which Mr. Heleniak is
a partner, serves as the Special Committee's legal advisor in connection with
the Merger, for which it expects to receive fees of approximately $250,000.
Shearman & Sterling has, from time to time, done work for Bruno Bich, as well as
for the Company, for which it has received customary compensation. An investment
banking firm with which Mr. Treuille was at the time affiliated performed
certain advisory services for the Company in 1991 for which it received
customary compensation. In addition, Mr. Allen is Managing Director of Redding
Consultants, Inc., which was paid $67,914 in 1994 for marketing strategy
assistance performed for the Company.
Indemnification and Insurance. Parent has also agreed in the Merger
Agreement, subject to certain limitations, that for a period of six years after
the Effective Time, Parent shall, and shall cause the Surviving Corporation to,
indemnify, defend and hold harmless the present and former officers, directors,
employees and agents of the Company and its subsidiaries (collectively, the
"Indemnified Parties") from and against, and pay or reimburse the Indemnified
Parties for, all losses, obligations, expenses, claims, damages or liabilities
(whether or not resulting from third-party claims and including interest,
penalties, out-of-pocket expenses and attorneys' fees incurred in the
investigation or defense of any of the same or in asserting any of their rights
under the Merger Agreement) resulting from or arising out of actions or
omissions occurring on or prior to the Effective Time (including, without
limitation, the transactions contemplated by the Merger Agreement) to the full
extent permitted or required under applicable law and, in the case of
indemnification by the Surviving Corporation, to the fullest extent permitted
under the By-Laws of the Company in effect on the date of the Merger Agreement
(which provisions shall not be amended in any manner which adversely affects any
Indemnified Party for a period of six years), including provisions relating to
advances of expenses incurred in the defense of any action or suit. The Merger
Agreement further provides, subject to certain limitations, that for not less
than four years after the Effective Time, Parent shall, and shall cause the
Surviving Corporation to, maintain in effect directors' and officers' liability
insurance covering the Indemnified Parties who are currently covered by the
Company's existing directors' and officers' liability insurance, on terms and
conditions no less favorable to such directors and officers than those in effect
on the date of the Merger Agreement. See "The
Merger -- General -- Indemnification and Insurance."
Certain Agreements. Parent and certain of its affiliates are parties to
various contractual arrangements with the Company and certain of the Company's
affiliates. Because of Parent's control over the Company's operations, these
agreements were not the result of arm's length negotiations among independent
parties. Set forth below are summaries of certain of these arrangements. This
summary of the Voting Trust Agreement is qualified in its entirety by reference
to the copy filed with the SEC as an exhibit to the Schedule 13E-3 and
incorporated herein by this reference. Such agreement may be examined and copies
may be obtained at the place and in the manner set forth under "Available
Information."
Voting Trust Agreement. The Voting Trust Agreement was executed on
February 5, 1991, and amended on February 3, 1992 and July 5, 1993. The purpose
of the Voting Trust Agreement is to secure the continuity and stability of
policy and management of the Company. Marcel L. Bich and Bruno Bich were named
the voting trustees and Neil A. Pollio was named the sole successor voting
trustee. Since the death of Marcel L. Bich in May 1994, and in accordance with
the Voting Trust Agreement, Bruno Bich has been the sole Voting Trustee. Since
the death of Neil A. Pollio in 1991, Alexander Alexiades has served as sole
successor voting trustee.
Pursuant to the Voting Trust Agreement, the Participating Shareholders
deposited with the Voting Trustees the certificates for Common Shares owned by
them. The Participating Shareholders were issued voting trust certificates for
the Common Shares deposited with and transferred to the Voting Trustee. The
Participating Shareholders are entitled to all cash dividends declared and paid
on the Common Shares they deposited with the Voting Trustee, while the Voting
Trustee has the exclusive right to vote such Common Shares.
As of the Record Date, Bruno Bich, as Voting Trustee, exercised voting
control over 17,912,648 Common Shares (representing approximately 76.0% of the
outstanding Common Shares), of which (i) 14,829,836 Common Shares (representing
approximately 62.9% of the outstanding Common Shares) were beneficially
30
<PAGE> 36
owned by Parent, (ii) 2,541,406 Common Shares (representing approximately 10.8%
of the outstanding Common Shares) were beneficially owned by Bruno Bich and
trusts for the benefit of himself and members of his family, and (iii) 541,406
Common Shares (representing approximately 2.3% of the outstanding Common Shares)
were beneficially owned by Francois Bich. For additional information, see
"Ownership of Common Shares -- Security Ownership of Certain Beneficial Owners."
Technology Sharing and Mutual Purchasing Agreement. Under the terms of an
agreement dated June 30, 1971 (as amended, the "Agreement"), the Company and
Parent (which is engaged in substantially the same business as the Company) are
obligated to furnish each other information with respect to technological
improvements, whether patentable or otherwise, at no cost to the recipient. This
portion of the Agreement represents the formalization of the arrangement which
has prevailed between the parties since the Company's formation. In addition,
the Agreement provides that the Company and Parent shall be entitled, but shall
not be required, to purchase machinery, equipment and products from each other
at a price not greater than 120%, and raw materials at a price not greater than
110%, of the cost thereof. The Agreement was renewed in 1991 for an additional
term of five years. Pursuant to the terms of the Agreement, the Company's
purchases from and sales to Parent and its affiliates during 1994 aggregated
approximately $41.1 million and $12.4 million, respectively. In 1993, the
Company's purchases from and sales to Parent and its affiliates aggregated
approximately $42.2 million and $11.4 million, respectively. In the first half
of 1995, such purchases and sales aggregated $25.6 million and $7.3 million,
respectively.
CERTAIN EFFECTS OF THE MERGER
As a result of the Merger, the entire equity interest of the Company will
be owned by the Mergeco Shareholders. Therefore, following the Merger, the
Public Shareholders will no longer benefit from any increases in the value of
the Company and will no longer bear the risk of any decreases in the value of
the Company. In addition, following the Merger, the interest of Parent in the
Company's net book value and net income will increase to approximately 86% from
a current level of approximately 63% while the other shareholders of Mergeco
will continue to hold an interest of approximately 14%. Following the Merger, in
dollar terms, Parent's interest in 1994 fiscal year end net book value will
increase to $213.1 million from $156.1 million and its interest in 1994 fiscal
year net income will increase to $43.9 million from $32.1 million. Following the
Merger, the Mergeco Shareholders will benefit from any increases in the value of
the Company and also bear the risk of any decreases in the value of the Company.
The Public Shareholders will have no continuing interest in the Company
following the Merger. As a result, the Common Shares will no longer meet the
requirements of the NYSE for continued listing and will, therefore, be delisted
from the NYSE.
According to published guidelines, the Common Shares will no longer be
eligible for listing on the NYSE when, among other things, the number of record
holders of at least 100 Common Shares falls below 1,200, the number of publicly
held Common Shares (exclusive of holdings of officers, directors and their
families and other concentrated holdings of 10% or more ("NYSE Excluded
Holdings")) falls below 600,000 or the aggregate market value of publicly held
Common Shares (exclusive of NYSE Excluded Holdings) falls below $5,000,000.
The Common Shares currently constitute "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 the Common Shares. As a result of
the Merger, the Common Shares will no longer constitute "margin securities" for
purposes of the margin regulations of the Federal Reserve Board and therefore
will no longer constitute eligible collateral for credit extended by brokers.
The Common Shares are currently registered as a class of securities under
the Exchange Act. Registration of the Common Shares under the Exchange Act may
be terminated upon application of the Company to the SEC if the Common Shares
are not listed on a national securities exchange or quoted on NASDAQ and the re
are fewer than 300 record holders of the Public Shares. Termination of
registration of the Public Shares under the Exchange Act would substantially
reduce the information required to be furnished by the Company to its
shareholders and to the SEC and would make certain provisions of the
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<PAGE> 37
Exchange Act, such as the short-swing trading provisions of Section 16(b), the
requirement of furnishing a proxy statement in connection with shareholders'
meetings pursuant to Section 14(a), and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions, no longer applicable
to the Company. If registration of the Common Shares under the Exchange Act is
terminated, the Common Shares would no longer be eligible for NYSE listing. In
addition, "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, as
amended. It is the present intention of the Parent to seek to cause the Company
to make an application for the termination of the registration of the Common
Shares under the Exchange Act as soon as practicable after the Effective Time of
the Merger.
CERTAIN LITIGATION
Beginning on May 19, 1995, four actions were filed in the Supreme Court of
the State of New York, County of New York (the "Court"), by shareholders of the
Company. These actions, purportedly brought as class actions on behalf of all
Public Shareholders, named the Company, its directors, certain of its officers
and Parent as defendants, alleging that they breached their fiduciary duties to
plaintiffs and the other Public Shareholders in connection with Parent's
proposal to acquire the Public Shares for $36.50 per share. A stipulation and
order consolidating these four actions (the "Consolidation Order") under the
caption In re BIC Corp. Shareholders Litigation, Consolidated Index No.
112626/95, was signed by the parties on or about June 23, 1995, and submitted to
the Court. The Consolidation Order has not yet been entered. The Consolidated
Order provides that the defendants need not respond to the four original
complaints. The Consolidation Order further provides that plaintiffs shall file
a Consolidated and Amended Complaint after entry of the Consolidation Order.
Another action asserting similar claims on behalf of the same purported
class, entitled Rosenzweig v. BIC Corp., et al., was filed in the Connecticut
Superior Court, Judicial District of Ansonia/Milford on May 22, 1995. In
addition, another similar purported class action, entitled Kahn v. Societe BIC
S.A., et al., Index No. 01785, which names only Parent and Bruno Bich as
defendants, was filed on May 19, 1995 in the Supreme Court of the State of New
York, County of Queens. The time for defendants to respond to the complaints in
these actions has not expired.
The parties to these actions have reached an agreement in principle to
settle all such actions with prejudice, based on the terms of the Merger. The
settlement is subject to negotiation of a stipulation of settlement and approval
by the Court following notice to the Public Shareholders. In connection with the
proposed settlement, the plaintiffs intend to apply for an award of attorneys'
fees and litigation expenses in the amount of $487,500. The defendants have
agreed not to oppose this application.
The defendants have denied, and continue to deny, that they have committed
or have threatened to commit any violation of law or breaches of duty to the
plaintiffs or the purported class. The defendants have agreed to the proposed
settlement because, among other reasons, such settlement would eliminate the
burden and expense of further litigation and would facilitate the consummation
of a transaction that they believe to be in the best interests of the Company
and the Public Shareholders.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material federal income tax
consequences of the Merger to the holders of the Public Shares and to the
Company under the law in effect as of the date hereof. The following discussion
is for general information only, and may not apply to particular categories of
holders, such as financial institutions, broker-dealers and tax-exempt entities.
ALL HOLDERS OF THE PUBLIC SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
TAX CONSEQUENCES OF THE MERGER TO THEM WITH SPECIFIC REFERENCE TO THEIR
PARTICULAR TAX SITUATIONS, INCLUDING SUCH TAX CONSEQUENCES UNDER STATE, LOCAL
AND FOREIGN TAX LAWS.
The exchange of Public Shares for cash in connection with the Merger will
be a taxable transaction to the relevant Public Shareholder for federal income
tax purposes. In general, such Public Shareholder will recognize gain or loss in
an amount equal to the difference between the cash received and such Public
Shareholder's tax basis in such Public Shares. Such gain or loss will be a
capital gain or loss if such Public
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<PAGE> 38
Shareholder has held such Public Shares as capital assets within the meaning of
section 1221 of the Internal Revenue Code of 1986, as amended. Such capital gain
or loss will be a long-term capital gain or loss if such Public Shareholder has
held such Public Shares for more than one year as of the date of exchange. There
are certain limitations on the deductibility of capital losses. A Public
Shareholder who also owns, directly or by attribution, stock of Parent as of the
date of exchange should consult such Public Shareholder's own tax advisor
regarding the possibility that the cash received will be treated as a dividend.
Legislative proposals have been recently introduced in Congress to reduce
effective tax rates applicable to net long-term capital gains and to limit
further the deductibility of long-term capital losses. The proposals would apply
generally to transactions entered into after December 31, 1994. If the proposals
were enacted into law, long-term capital gains from the exchange of Public
Shares in the Merger would generally be taxed at reduced effective tax rates and
long-term capital losses from the exchange of Public Shares in the Merger would
be subject to further limitations on deductibility. However, it is not clear
whether the proposals will be enacted, and, if enacted, whether the proposals
will apply with respect to the exchange of Public Shares in the Merger.
Cash received in exchange for Public Shares in the Merger may be subject to
a backup withholding tax at a rate of 31%, unless the relevant Public
Shareholder is an exempt recipient or complies with certain identification
procedures.
The Company will not recognize gain or loss as a result of the Merger for
federal income tax purposes.
FEES AND EXPENSES
Estimated fees and expenses incurred or to be incurred by the Company in
connection with the Merger are approximately as follows:
<TABLE>
<S> <C>
Investment banking fees and expenses......................... $
Legal fees and expenses......................................
SEC filing fee...............................................
Printing and mailing fees....................................
Proxy Solicitation Agent fees................................
Paying Agent fees............................................
Special Committee fees.......................................
Miscellaneous expenses.......................................
----------
Total..............................................
=========
</TABLE>
The above fees and expenses do not include any fees and expenses that may
be payable to the attorneys for the plaintiffs as described in "-- Certain
Litigation." For information regarding Goldman Sachs' engagement by the Special
Committee , see "-- Opinion of Goldman, Sachs & Co.; Summary of Financial
Analyses -- Goldman, Sachs & Co.".
Estimated fees and expenses incurred or to be incurred by Parent in
connection with the Merger are investment banking fees and expenses of
$1,125,000, legal fees and expenses of $ and miscellaneous fees of
$ (including one half of the SEC filing fee and the printing fees
referenced above). For information regarding DLJ's engagement by Parent, see
"-- Opinion of Goldman, Sachs & Co.; Summary of Financial Analyses -- Donaldson,
Lufkin & Jenrette Securities Corporation."
Neither Parent nor the Company will pay any fees or commissions to any
broker or dealer or any other person (other than Goldman Sachs, DLJ, the Proxy
Solicitation Agent, and the Paying Agent) for soliciting Public Shares pursuant
to the Merger. Brokers, dealers, commercial banks and trust companies will, upon
request, be reimbursed by the Company for reasonable and necessary costs and
expenses incurred by them in forwarding materials to their customers.
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<PAGE> 39
THE MERGER
GENERAL
The following is a summary of the Merger Agreement. All references to and
summaries of the Merger Agreement in this Proxy Statement are qualified in their
entirety by reference to the Merger Agreement, a copy of which is attached
hereto as Annex A.
The Merger. The Merger Agreement provides for the merger of Mergeco with
and into the Company. The Company will be the Surviving Corporation and it will
continue its corporate existence under the laws of the State of New York. At the
Effective Time, the separate corporate existence of Mergeco shall cease. The
Surviving Corporation shall possess all the rights, privileges, immunities,
powers and purposes of Mergeco and the Company and shall assume and become
liable for all liabilities, obligations and penalties of the Company and
Mergeco.
Effective Time of Merger. The Effective Time will occur upon the filing of
the Certificate of Merger by the New York Department of State. The Certificate
of Merger will be filed as soon as practicable after requisite approval and
adoption of the Merger Agreement and the Merger by the shareholders of the
Company at the Special Meeting are obtained and the other conditions precedent
to the consummation of the Merger have been satisfied, or if permissible,
waived. See "-- Conditions of the Merger; Amendments, Waiver, and Termination."
Treatment of Shares in the Merger. At the Effective Time: (a) each Common
Share outstanding immediately prior to the Effective Time, except for (i) Common
Shares then owned by the Mergeco Shareholders and (ii) Dissenting Shares, shall
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive the Merger Consideration, upon
surrender of the certificate representing such Common Share; and (b) each Common
Share outstanding immediately prior to the Effective Time which is then owned by
the Mergeco Shareholders shall, by virtue of the Merger and without any action
on the part of the holder thereof, be canceled and retired and cease to exist,
without any conversion thereof.
Holders of Common Shares who do not vote in favor of the Merger at the
Special Meeting and who shall have properly elected to dissent in the manner
provided in Section 623 shall be entitled to payment of the fair value of their
Public Shares in accordance with the provisions of Section 623. See
"-- Dissenters' Rights."
Each Mergeco common and preferred share issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and exchangeable for
one fully paid and non-assessable common share of the Surviving Corporation.
Exchange of Share Certificates. The Parent has designated Mellon
Securities Transfer Services to act as the Paying Agent under the Merger
Agreement. Prior to the Effective Time, Parent shall, or Parent shall cause
Mergeco to, deposit in trust with the Paying Agent, cash in an aggregate amount
equal to the product of: (x) the number of Common Shares outstanding immediately
prior to the Effective Time (other than Common Shares owned by the Mergeco
Shareholders or Dissenting Shares); and (y) the Merger Consideration (such
amount being hereinafter referred to as the "Exchange Fund"). The Paying Agent
shall, pursuant to irrevocable instructions, make the payments provided for
under the Merger Agreement out of the Exchange Fund.
Promptly after the Effective Time, the Surviving Corporation shall cause
the Paying Agent to mail to each holder of record as of the Effective Time
(other than the Mergeco Shareholders) of an outstanding certificate or
certificates for Common Shares (the "Certificates"), a letter of transmittal and
instructions for use in effecting the surrender of such certificates for payment
in accordance with the Merger Agreement. Upon the surrender to the Paying Agent
of a Certificate, together with a duly executed letter of transmittal, the
holder thereof shall be entitled to receive cash in an amount equal to the
product of the number of Common Shares represented by such Certificate and the
Merger Consideration, less any applicable withholding tax, and such Certificate
shall then be canceled.
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<PAGE> 40
Until surrendered pursuant to the procedures described above, each
Certificate (other than Certificates representing Common Shares owned by the
Mergeco Shareholders and Certificates representing Dissenting Shares) shall
represent for all purposes the right to receive the Merger Consideration in cash
multiplied by the number of Common Shares evidenced by such Certificate, without
any interest thereon.
After the Effective Time, there shall be no transfers on the stock transfer
books of the Surviving Corporation of Common Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for an amount in cash equal to the Merger Consideration multiplied
by the number of Common Shares evidenced by such Certificate, without any
interest thereon.
Any portion of the Exchange Fund which remains unclaimed by the
shareholders of the Company for 180 days after the Effective Time (including any
interest, dividends, earnings or distributions received with respect thereto)
shall be repaid to the Surviving Corporation, upon demand. Any shareholders of
the Company who have not theretofore complied with the procedures set forth
above shall thereafter look only to the Surviving Corporation for payment of
their claim for the Merger Consideration per Common Share, without any interest
thereon, but shall have no greater rights against the Surviving Corporation than
may be accorded to general creditors of the Surviving Corporation under New York
law. Notwithstanding the foregoing, neither the Paying Agent nor any party to
the Merger Agreement shall be liable to any holder of certificates formerly
representing Common Shares for any amount to be paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Treatment of Employee Stock Plans. The Company will take all actions
necessary to amend the Company's Local 134 Employees' Share Purchase Plan,
401(k) Savings and Investment Plan and a non-contributory 401(k) plan for
certain unionized employees of the Company on or prior to the Effective Time to
delete as an investment option thereunder purchases of Common Shares.
Withholding Rights. Pursuant to the Merger Agreement, Parent, Mergeco, the
Surviving Corporation and the Paying Agent shall be entitled to deduct and
withhold from the amounts payable to any holder of Common Shares such amounts as
Parent, Mergeco, the Surviving Corporation or the Paying Agent is required to
deduct and withhold with respect to the making of such payment under applicable
tax law. To the extent that amounts are so deducted and withheld by Parent,
Mergeco, the Surviving Corporation or the Paying Agent, such amounts shall be
treated for all purposes of the Merger Agreement as having been paid to the
relevant holder of Common Shares.
Conditions to the Merger; Amendment, Waiver and Termination. Pursuant to
the Merger Agreement, the obligations of each of Parent, Mergeco, the Voting
Trustee and the Company, to effect the Merger are subject to the following
conditions: (a) the proposal to approve and adopt the Merger Agreement at the
Special Meeting shall have received the affirmative vote of the holders of at
least a majority of the Public Shares actually voted, in person or by proxy
(excluding abstentions), on such proposal, (b) the absence of (i) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States or France or (ii) a commencement of a war, armed hostilities or
other international or national calamity directly involving the United States or
France which has a material adverse effect on the general economic conditions in
the United States or France (other than the commencement of war or armed
hostilities in the Republic of Bosnia-Herzegovina), (c) the absence of any
effective statute, rule, regulation, a temporary, preliminary or permanent order
or injunction prohibiting consummation of the Merger or imposing material
limitations on the ability of the Mergeco Shareholders effectively to exercise
full rights of ownership with respect to the Common Shares and (d) the approval
and adoption of the Merger Agreement by the holders of the requisite number of
Common Shares in accordance with the NYBCL and Restated Certificate of
Incorporation and By-Laws of the Company. In addition: (a) the obligations of
Parent, Mergeco and the Voting Trustee to effect the Merger are subject to (i)
the accuracy of the representations and warranties made by the Company in the
Merger Agreement as of the date thereof and as of the Effective Time (except for
representations and warranties which address matters as of a particular date
which must be accurate as of such date), and (ii) the performance by the Company
in all material respects of the obligations required to be performed by the
Company prior to the Effective Time; and (b) the obligations of the Company to
effect the
35
<PAGE> 41
Merger are subject to (x) the accuracy of the representations and warranties
made by Parent and Mergeco in the Merger Agreement as of the date thereof and as
of the Effective Time (except for representations and warranties which address
matters as of a particular date which must be accurate as of such date), and (y)
the performance by Parent and Mergeco in all material respects of the
obligations required to be performed by Parent or Mergeco, as the case may be,
prior to the Effective Time.
The Parent or the Company, respectively, may waive the satisfaction of any
obligation, covenant, agreement or condition under the Merger Agreement on
behalf of Parent or Mergeco, on the one hand, or the Company, on the other,
provided that the waiver of any of the Company's rights under the Merger
Agreement requires the approval of the Special Committee.
The Merger Agreement may be amended by written agreement of Parent,
Mergeco, the Voting Trustee and the Company at any time prior to the Effective
Time, provided that (a) after the Merger Agreement is adopted by the Company's
shareholders, no such amendment shall be made that reduces the amount or changes
the form of Merger Consideration or otherwise materially and adversely affects
the rights of the Public Shareholders without the further approval of at least a
majority of the Public Shares actually voted, in person or by proxy (excluding
abstentions), on such proposal and (b) the approval of the Special Committee is
required for any amendment of the Merger Agreement and any extension by the
Company of the time for the performance of any obligations or other acts of
Parent or Mergeco.
The Merger Agreement may be terminated at any time prior to the Effective
Time, either before or after approval by the shareholders of the Company by: (a)
mutual consent of the respective Boards of Directors of Parent and Mergeco and
the Board of Directors, provided that the Special Committee shall have approved
such termination; (b) action of either of the respective Boards of Directors of
Parent and Mergeco or the Board of Directors if, without the fault of the
terminating party, the Merger shall not have been consummated on or prior to
January 31, 1996; (c) action of the respective Boards of Directors of Parent and
Mergeco, if the Board of Directors shall have withdrawn or modified in a manner
adverse to Mergeco its approval or recommendation of the Merger, the Merger
Agreement or the transactions contemplated thereby; or (d) action of either of
the respective Boards of Directors of Parent and Mergeco or the Board of
Directors, if any court of competent jurisdiction in the United States or other
governmental agency of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restraining, permanently enjoining or
otherwise prohibiting the Merger, and such order, decree, ruling or other action
shall have become final and non-appealable.
The Merger Agreement provides that in the event of its termination, no
party thereto will have any liability or further obligation to any other party
to the Merger Agreement, provided that any termination shall be without
prejudice to the rights of any party to the Merger Agreement arising out of
breach by any other party of any covenant or agreement contained in the Merger
Agreement, and provided further, that certain obligations under the Merger
Agreement shall survive any termination.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the Company to Parent and Mergeco, including
with respect to the following matters: (i) the due organization and valid
existence of the Company and its subsidiaries and similar corporate matters;
(ii) the capitalization of the Company and its subsidiaries; (iii) the due
authorization, execution and delivery of the Merger Agreement, its binding
effect on the Company, and the Board of Directors and Special Committee's
recommendation of the Merger to the Public Shareholders; (iv) regulatory filings
and approvals, and the lack of conflicts between the Merger Agreement and the
transactions contemplated thereby with the Company's Restated Certificate of
Incorporation or By-Laws, any contract to which it or its subsidiaries are
parties, or any law, rule, regulation, order, writ, injunction or decree binding
upon the Company or its subsidiaries; (v) the accuracy of the Company's SEC
filings, its financial statements and the absence of undisclosed liabilities;
(vi) the vote required to approve the Merger under the NYBCL; (vii) the accuracy
of the information provided by the Company for inclusion in this Proxy Statement
and the Schedule 13E-3; (viii) the opinion of Goldman Sachs; and (ix) the
absence of any brokers or finders (other than Goldman Sachs). Such
representations and warranties are subject, in certain cases, to specified
exceptions and qualifications.
36
<PAGE> 42
The Merger Agreement also contains representations and warranties of Parent
and Mergeco to the Company, including with respect to the following matters: (i)
the due organization and valid existence of each of Parent and Mergeco and
similar corporate matters; (ii) the capitalization of Mergeco; (iii) the due
authorization, execution and delivery of the Merger Agreement by Parent, Mergeco
and the Voting Trustee, and its binding effect on such parties; (iv) regulatory
filings and approvals, and the absence of conflicts of the Merger Agreement and
the transactions contemplated thereby with the charter or by-laws (or equivalent
documents) of each of Parent and Mergeco, or the Voting Trust Agreement, or with
any contract binding upon Parent, Mergeco or the Voting Trustee, or with any
law, rule, regulation, order, writ, injunction or decree binding upon any of
such parties; (v) Parent's and Mergeco's access to cash funds sufficient to
consummate the transactions contemplated by the Merger Agreement; (vi) the
formation and absence of prior activities of Mergeco; (vii) the accuracy of the
information provided by Parent or Mergeco for inclusion in this Proxy Statement
and the Schedule 13E-3; and (viii) the absence of brokers and finders (other
than DLJ). Such representations and warranties are subject, in certain cases, to
specified exceptions and qualifications.
Conduct of Business Pending the Merger. Pursuant to the Merger Agreement,
from the date thereof to the Effective Time, neither the Company nor any of its
subsidiaries, subject to certain exceptions, may declare, set aside or pay any
dividend or other distribution in respect of its capital stock, provided that
the Board of Directors may declare dividends in respect of its capital stock if
the Merger has not been consummated by December 31, 1995.
Certain Agreements. The Merger Agreement provides that the Company will as
soon as practicable: (i) acting through its Board of Directors, and subject to
the fiduciary duties thereof and applicable law, call and convene the Special
Meeting, (ii) prepare and file with the SEC a preliminary proxy statement and
mail the definitive proxy statement to its shareholders, and (iii) subject to
the fiduciary duties under applicable law of the Company's directors, use its
best efforts to obtain the necessary approvals by its shareholders of the Merger
Agreement and the transactions contemplated thereby. The Merger Agreement
provides that the proxy statement will include the respective recommendations of
the Board of Directors to the shareholders of the Company and of the Special
Committee to the Public Shareholders in favor of the adoption and approval of
the Merger Agreement and the transactions contemplated thereby. Notwithstanding
any other provision of the Merger Agreement to the contrary, if the Board of
Directors or the Special Committee determines, in good faith in the exercise of
its fiduciary duties under applicable law, to withdraw, modify or amend its
recommendation in favor of the Merger, such withdrawal, modification or
amendment will not constitute a breach of the Merger Agreement.
Pursuant to the Merger Agreement, the Company, Parent and Mergeco will
together prepare and file the Schedule 13E-3 under the Exchange Act. Parent,
Mergeco and the Company will each furnish all information concerning it, its
affiliates and certain other persons required to be included in the Proxy
Statement and the Schedule 13E-3 and respond promptly to any comments made by
the SEC with respect thereto.
Parent has agreed in the Merger Agreement that it will: (i) as soon as
practicable after the date thereof, cause the Merger Agreement to be approved by
the requisite vote of the Mergeco Shareholders; and (ii) cause Mergeco to
perform its obligations under the Merger Agreement. The Merger Agreement also
prohibits Mergeco from engaging in any business or activity other than in
connection with the Merger.
Best Efforts. Pursuant to the Merger Agreement, each of the parties will
use its best efforts to take, or cause to be taken, all appropriate actions, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable law or otherwise to consummate the Merger, including obtaining the
necessary consents of third parties and governmental authorities.
Indemnification and Insurance. Parent has agreed in the Merger Agreement,
subject to certain limitations, that for a period of six years after the
Effective Time, Parent shall, and shall cause the Surviving Corporation to,
indemnify, defend and hold harmless the "Indemnified Parties" (as defined) from
and against, and pay or reimburse the Indemnified Parties for, all losses,
obligations, expenses, claims, damages or liabilities (whether or not resulting
from third-party claims and including interest, penalties, out-of-pocket
expenses and attorneys' fees incurred in the investigation or defense of any of
the same or in asserting any of their rights under the Merger Agreement)
resulting from or arising out of actions or omissions occurring on or
37
<PAGE> 43
prior to the Effective Time (including, without limitation, the transactions
contemplated by the Merger Agreement) to the full extent permitted or required
under applicable law and, in the case of indemnification by the Surviving
Corporation, to the fullest extent permitted under the By-Laws of the Company in
effect on the date of the Merger Agreement (which provisions cannot be amended
in any manner which adversely affects any Indemnified Party for a period of six
years), including provisions relating to advances of expenses incurred in the
defense of any action or suit.
The Merger Agreement further provides that for not less than four years
after the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, maintain in effect directors' and officers' liability insurance
covering the Indemnified Parties who are currently covered by the Company's
existing directors' and officers' liability insurance, on terms and conditions
no less favorable to such directors and officers than those in effect on the
date of the Merger Agreement, provided that Parent or the Surviving Corporation
are not required to expend in any one year an amount in excess of 200% of the
annual premiums currently paid by the Company for such insurance.
ACCOUNTING TREATMENT
The Merger will be accounted for under the "purchase" method of accounting
whereby the purchase price will be allocated among the Company's assets and
liabilities based on the fair market value of the assets acquired and
liabilities assumed.
PAYMENT FOR PUBLIC SHARES; SOURCES OF FUNDS
Approximately $219 million will be required to pay the Merger Consideration
to the holders of all Public Shares outstanding at the Effective Time (assuming
no such holder perfects its dissenters' rights) and it is expected that
approximately $ will be required to pay the expenses of Parent and Mergeco
in connection with the Merger. Such funds will be furnished from available
general funds of Parent. It is currently expected that approximately $
million will be required to pay the expenses of the Company. Such funds will be
furnished from available general funds of the Company. See "Special
Factors -- Fees and Expenses."
DISSENTERS' RIGHTS
Shareholders who do not vote in favor of approval and adoption of the
Merger Agreement may have the right to seek payment in cash of the fair value of
their Common Shares by complying with the requirements of Section 623 of the
NYBCL. Failure of a shareholder to strictly adhere to the requirements of
Section 623 will result in the loss of such shareholder's dissenter's rights.
A dissenting shareholder must, before the taking of the vote on the Merger
Agreement, file with the Company a written objection. The objection must
include: a notice of the dissenting shareholder's election to dissent; the
shareholder's name and residence address; the number of shares as to which the
shareholder dissents; and a demand for payment of the fair value of such shares
if the Merger is effected. The written objection should be delivered to BIC
Corporation, 500 BIC Drive, Milford, Connecticut 06460, Attention: Thomas M.
Kelleher, General Counsel and Secretary, prior to the Special Meeting. To
effectively exercise dissenters' rights, such shareholder may not vote any of
his, her or its shares for the Merger Agreement. Within 10 days after the vote
of shareholders authorizing the Merger Agreement and the Merger, the Company
must give written notice of such authorization to each dissenting shareholder.
Within 20 days after the giving of such notice, any shareholder who elects to
dissent must file with the Company a written notice of such election, stating
such shareholder's name and residence address, the number of Common Shares as to
which dissent is made and a demand for payment of the fair value of such shares.
Such dissenting shareholder may not dissent as to less than all Common Shares
beneficially owned by the shareholder. Upon consummation of the Merger, a
dissenting shareholder shall cease to have any of the rights of a shareholder,
except the right to be paid the fair value of the dissenting shareholder's
shares, and any other rights under Section 623. At the time of filing the notice
of election of dissent or within one month thereafter, such shareholder must
submit certificates representing all such Common Shares to the Company or its
transfer agent. Failure to submit the certificates may result in the loss of
such shareholder's dissenter's rights. Within 15 days after the
38
<PAGE> 44
expiration of the period within which shareholders may file their notices of
election to dissent, or within 15 days after consummation of the Merger,
whichever is later (but not later than 90 days after the shareholders' vote
authorizing the Merger), the Company must make a written offer (which, if the
Merger has not been consummated, may be conditioned upon such consummation) to
each such dissenting shareholder who has filed such notice of election to pay
for the Common Shares at a specified price which the Company considers to be
their fair value. If the Company and the dissenting shareholder are unable to
agree as to such fair value, Section 623 provides for judicial determination of
fair value. A vote AGAINST approval and adoption of the Merger Agreement does
not constitute the written objection required to be filed by a dissenting
shareholder. Failure by a shareholder to vote AGAINST approval and adoption of
the Merger Agreement, however, will not constitute a waiver of rights under
Section 623 provided that a written objection has been properly filed and such
shareholder has not voted any of his, her or its shares FOR the approval and
adoption of the Merger Agreement.
The foregoing does not purport to be a complete statement of the provisions
of Section 623 and is qualified in its entirety by reference to such section,
which is reproduced in full as Annex C to this Proxy Statement.
THE PROVISIONS OF SECTION 623 ARE COMPLEX AND TECHNICAL IN NATURE.
SHAREHOLDERS DESIRING TO EXERCISE DISSENTERS' RIGHTS MAY WISH TO CONSULT
COUNSEL, SINCE THE FAILURE TO COMPLY STRICTLY WITH THESE PROVISIONS WILL RESULT
IN THE LOSS OF THEIR DISSENTERS' RIGHTS.
39
<PAGE> 45
MARKET PRICES AND DIVIDENDS
The Common Shares are traded on the NYSE under the symbol "BIC." The
Company paid quarterly cash dividends totaling $1.06 in 1990, $0.56 in 1991,
$1.06 in 1992, $.72 in 1993, $.80 in 1994 and $.46 through the second quarter of
1995. During the first quarter of 1995 the Board of Directors voted an increase
in the regular quarterly dividend from $.20 per Common Share to $0.23 per Common
Share.
Under the terms of the Merger Agreement, the Company will not pay the
regular quarterly cash dividend otherwise payable on October 30, 1995, even if
the Merger is consummated subsequent to such date. See "The
Merger -- General -- Conduct of Business Pending the Merger." Although there can
be no assurance as to whether the proposed transaction will be effected, it is
currently anticipated that the Merger will be completed in late October or early
November of 1995.
The following table sets forth, for the calendar periods indicated, the
high and low sales prices per Common Share, as quoted on the NYSE.
<TABLE>
<CAPTION>
SALES PRICES
PER COMMON
SHARE
--------------
CALENDAR PERIODS HIGH LOW
--------------------------------------------------------------------- ---- ---
<S> <C> <C>
1993
First Quarter........................................................ $41 $30 7/8
Second Quarter....................................................... 33 7/8 26
Third Quarter........................................................ 31 3/8 27
Fourth Quarter....................................................... 33 5/8 27
1994
First Quarter........................................................ $31 7/8 $28
Second Quarter....................................................... 29 1/4 26 1/2
Third Quarter........................................................ 30 7/8 28
Fourth Quarter....................................................... 30 25 5/8
1995
First Quarter........................................................ $32 3/4 $28 1/4
Second Quarter....................................................... 39 3/8 30 5/8
Third Quarter (through September ).................................
</TABLE>
On May 18, 1995, the last full trading day prior to the public announcement
of the Proposal, the last reported sale price per Common Share on the NYSE was
$35 3/4. On August 15, 1995, the last full trading day prior to the public
announcement that the parties had entered into the Merger Agreement, the last
reported sale price per Common Share on the NYSE was $39 1/4. On September ,
1995, the last reported sale price per Common Shares on the NYSE was
$ . HOLDERS OF COMMON SHARES ARE URGED TO OBTAIN A CURRENT MARKET
QUOTATION FOR THE COMMON SHARES.
40
<PAGE> 46
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
The following table sets forth selected consolidated historical financial
data of the Company. The selected financial data should be read in conjunction
with the Consolidated Financial Statements of the Company, related notes and
other financial information incorporated by reference into this Proxy Statement.
The selected financial data at July 2, 1995 and July 3, 1994 and for the six
month periods then ended is unaudited but includes, in the opinion of
management, all adjustments necessary for a fair presentation of the results of
operations and the financial position at and for each of the interim periods
presented. Operating results for the six months ended July 2, 1995 are not
necessarily indicative of the results to be expected for the full year. The
following summary is qualified in its entirety by reference to such financial
statements, related notes and other financial information.
BIC CORPORATION
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------- AT END OF OR FOR FISCAL YEARS
JULY 2, JULY 3, ----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(U.S. DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales.......................... $257,413 $241,616 $475,118 $439,311 $417,377 $369,171 $329,246
Income before income taxes,
extraordinary credit and
cumulative effect of changes in
accounting principles............ 48,234 43,486 87,207 73,986 67,278 46,616 41,067
Net income......................... 28,622 25,357 51,021 34,964 39,935 28,059 24,055
Ratio of earnings to fixed
charges(1)....................... -- -- -- -- -- -- --
Per share:(2)
Income before extraordinary
credit and cumulative effect of
changes in accounting
principles..................... 1.21 1.10 2.19 1.90 1.70 1.12 0.92
Net income....................... 1.21 1.08 2.17 1.48 1.70 1.16 0.99
Cash dividends................... 0.46 0.40 0.80 0.72 1.06 0.56 1.06
BALANCE SHEET DATA
Working Capital.................... 123,116 93,157 107,816 77,232 71,469 106,284 111,624
Long-term debt..................... 0 0 0 0 0 0 0
Total assets....................... 440,573 386,164 358,687 336,216 308,466 280,205 257,107
Total assets less research and
development and excess of assets
acquired over book value......... 428,683 372,575 345,947 321,778 292,329 280,205 257,107
Shareholders' equity............... 261,447 240,638 247,917 226,688 209,366 195,515 190,187
Book value per share............... 11.10 10.21 10.52 9.62 8.89 8.30 7.85
</TABLE>
- ---------------
(1) The Company had no fixed charges in any of the periods presented.
(2) Per share amounts have been retroactively restated to reflect the 1992 share
split effected in the form of a 100% share dividend. Cash dividends per
share represent the total dividends paid each year. The 1992 and 1990
dividends included a special cash dividend of $0.50 per share.
41
<PAGE> 47
OWNERSHIP OF COMMON SHARES
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of the date of this
Proxy Statement concerning the beneficial ownership of Common Shares by each
person known by the Company to own more than 5% of its Common Shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
--------------------- ----------------- --------
<S> <C> <C>
Bruno Bich.............................................. 18,154,848(1) 77.1%
BIC Corporation
Milford, Connecticut
Societe BIC S.A. ....................................... 14,829,836(2) 62.9%
9, rue Petit
92110 Clichy, France
</TABLE>
- ---------------
(1) Includes:
(a) 14,829,836 shares owned by Parent subject to the Voting Trust Agreement
. See "Special Factors -- Interest of Certain Persons in the
Merger -- Voting Trust Agreement;"
(b) 2,400,000 shares which are subject to the Voting Trust Agreement and an
additional 117,480 shares not subject to the Voting Trust Agreement,
all of which are owned indirectly by Bruno Bich, in trust for the
benefit of Bruno Bich and his family;
(c) 541,406 shares which are subject to the Voting Trust Agreement, owned
directly by Francois Bich, a brother of Bruno Bich;
(d) 141,406 shares which are subject to the Voting Trust Agreement, owned
directly by Bruno Bich;
(e) 67,200 shares which are owned indirectly by Bruno Bich, in trust for
the benefit of Bruno Bich's minor children;
(f) 55,500 shares which are not subject to the Voting Trust Agreement, held
in the name of Bruno Bich's minor children; and
(g) 2,020 shares which are not subject to the Voting Trust Agreement, owned
directly by Bruno Bich.
With the exception of the 2,541,406 shares subject to the Voting Trust
Agreement (the sum of the shares subject to the Voting Trust Agreement
identified in clauses (b) and (d)), Bruno Bich's interest in all other
shares subject to the Voting Trust Agreement arises solely from his being
Voting Trustee under the Voting Trust Agreement and he disclaims any
beneficial interest in such shares.
(2) Common Shares held by Parent subject to the Voting Trust Agreement.
42
<PAGE> 48
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information as of July 31, 1995,
with respect to the number of Common Shares of the Company owned by each
director and executive officer of the Company (other than Bruno Bich, whose
ownership of Common Shares is described above) and all directors and officers as
a group. Each individual has sole power to vote and sole power to dispose of all
of his Common Shares.
<TABLE>
<CAPTION>
NAME OF AMOUNT OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(A) CLASS
-------------------------------------------------------- -------------------- ----------
<S> <C> <C>
Alexander Alexiades..................................... 24,000 *
Robert E. Allen......................................... 2,000 *
David W. Heleniak....................................... 1,000 *
Antoine G. Treuille..................................... 1,200 *
Raymond Winter.......................................... 5,664 *
Robert L. Macdonald..................................... 2,788 *
Al D'Addario............................................ 1,574 *
James K. Palmer......................................... 2,779 *
Thomas M. Kelleher...................................... 1,374 *
Jack Teague............................................. 432 *
Directors and Executive Officers as a group (10 persons,
excluding Bruno Bich)................................. 42,811 *
</TABLE>
- ---------------
(a) Represents all Common Shares held as of July 31, 1995, including holdings
through the Company's 401(k) Plan.
* Each individual has stock holdings of less than 1%.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS OF PARENT AND MERGECO
As set forth in "Interest of Certain Persons in the Merger," certain
directors and executive officers of the Company are also directors and executive
officers of Parent and Mergeco. With the exception of the ownership of the
Common Shares by certain of such persons set forth in "Ownership of Common
Shares -- Security Ownership of Directors and Executive Officers of the
Company," no director or executive officer of Parent or Mergeco owns any Common
Shares.
TRANSACTIONS BY CERTAIN PERSONS IN COMMON SHARES
On August 17 and 18, 1995, Bruno Bich sold in market transactions an
aggregate of 150,000 Common Shares not subject to the Voting Trust Agreement for
$39.50 per share, or an aggregate of approximately $5.9 million. Certain
executive officers of the Company are participants in the Company's 401(k)
Savings and Investment Plan (the "401(k) Plan") and allocate some or all of
their contributions under such plan towards purchases of Common Shares for their
accounts. As of July 31, 1995, participants in the 401(k) Plan beneficially
owned an aggregate of 200,103 Common Shares. Participants in a noncontributory
401(k) Plan for certain unionized employees of the Company (the "Employee Plan")
owned as of such date an aggregate of 150,951 Common Shares. Fleet Bank, as
trustee under the 401(k) Plan, purchased in market transactions 1,795 Common
Shares for $39.375 per share on July 6, 1995, 2,000 Common Shares for $39.00 per
share on July 25, 1995, 1,755 Common Shares for $39.125 per share on July 27,
1995 and 1,274 Common Shares for $39.00 per share on August 9, 1995. Fleet Bank,
as trustee under the Employee Plan, purchased in market transactions 1,200
Common Shares for $39.00 per share on July 5, 1995, 951 Common Shares for
$38.875 per share on August 2, 1995 and 892 Common Shares for $39.00 per share
on August 8, 1995. Except as set forth above, since June 28, 1995, 60 days prior
to the filing of the Schedule 13E-3, none of Parent, the Company, Mergeco, the
Voting Trustee, any majority-owned subsidiary thereof, any director or executive
officer thereof, and no pension, profit-sharing or similar plan of Parent, the
Company or Mergeco has effected any purchases or sales of Common Shares. In
addition, none of Parent, the Company, the Voting Trustee or Mergeco has
purchased any Common Shares since January 1, 1993.
43
<PAGE> 49
MANAGEMENT OF PARENT, MERGECO AND THE COMPANY
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
Set forth below is the name and business address of each person who is a
director or executive officer of Parent, the present principal occupation or
employment of each such person and the name, principal business and address of
the corporation or other organization in which such occupation or employment of
each such person is conducted and the material occupations, positions, offices
and employment and the name, principal business and address of any corporation
or other organization in which any material occupation, position, office or
employment of each such person was held during the last five years. Unless
otherwise indicated, the address of each such person is and has been for the
past five years that of the Parent at 9, rue Petit 92110 Clichy, France. Unless
otherwise indicated, each person listed below is a citizen of France.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------ ------------------------------------------------------------
<S> <C>
Bruno Bich.................... Chairman of the Board and Chief Executive Officer since May
1993. Director since June 1986. Chairman of the Board and
Chief Executive Officer of the Company since January 8,
1992. President and Chief Executive Officer of the Company
from 1983 to 1992. Director of the Company since 1971.
Citizen of France and the United States.
Edouard Buffard............... Director since September 1954. Executive Vice President
since September 1972.
Claude Bich................... Director and Executive Vice President since June 1973.
Francois Bich................. Director since September 1977. Executive Vice-President
since May 1978.
Marie-Aimee Bich-Dufour....... Executive Vice-President since March 1995. Member of the
Paris Bar and practising avocat, Cabinet Vaisse Lardin et
Associes, 51 avenue Montaigne, 75008 Paris, France, from
January 1983 to February 1995.
Jacques-Henri Delaage......... Chief Financial Officer for more than five years.
Gaston Pirlot................. Director since May 1995. Director of European Affairs since
January 1995. Chairman of the Board of Conte, 6 rue Gerhard
Hansen, 62205 Boulogne, Sur Mer, France, since November
1992. Director of BIC BENELUX, Chaussee de Huecht, 55 1030
Bruxelles, Belgium, since March 1987. Citizen of Belgium.
Jean-Claude d'Entreves........ Director of International Development since April 1995.
Deputy Chief Executive Officer, September 1989 to May 1991.
Chairman and Chief Executive Officer of BIC Italia, Casella
Postale 13056, 20010 Milan, Italy, from May 1991 to March
1995. Citizen of Italy and the United Kingdom.
Charles de Menthon............ Export Manager for more than five years.
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF MERGECO
Set forth below is the name of each person who is a director or executive
officer of Mergeco. The present principal occupation or employment of each such
person, their five year employment history, their citizenship and their business
address is set forth above under "-- Directors and Executive Officers of
Parent".
<TABLE>
<CAPTION>
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
- ----------------------------------- --------------------------------------------------------
<S> <C>
Bruno Bich......................... Director; President and Treasurer; Chief Executive
Officer.
Marie-Aimee Bich-Dufour............ Director; Vice President and Secretary.
Gaston Pirlot...................... Director.
</TABLE>
44
<PAGE> 50
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is the name and business address of each person who is a
director or executive officer of the Company and, unless disclosed elsewhere
herein, the present principal occupation or employment of each such person and
the name, principal business and address of the corporation or other
organization in which such occupation or employment of each such person is
conducted and the material occupation, positions, offices and employment and the
name, principal business and address of any corporation or other organization in
which any material occupational position, office or employment of each such
person was held during the last five years. Unless otherwise indicated, the
business address of each such person is, and has been for the past five years,
that of the Company at 500 BIC Drive, Milford, CT 06460. Unless otherwise
indicated, each person listed below is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ----------------------------------- --------------------------------------------------------
<S> <C>
Alexander Alexiades................ Vice President and Treasurer from 1973 to March 1993.
Director since 1971.
Robert E. Allen.................... Managing Director with the consulting firm of Redding
Consultants, Inc., 11 Grumman Hill, Wilton, CT, since
1982. Director since 1992.
Bruno Bich......................... Chairman of the Board and Chief Executive Officer since
1992. President and Chief Executive Officer from 1983 to
1992. Director since 1971. Chairman of the Board and
Chief Executive Officer of Societe BIC S.A. since June
1993. Director since 1986. Citizen of France and the
United States.
Al D'Addario....................... Vice President -- Manufacturing, since September 1993.
Manager -- Manufacturing from January 1992 to September
1993. Plant Manager -- Lighter/Shaver from October 1991
to January 1992. Plant Manager -- Lighters from January
1989 to October 1991.
David W. Heleniak.................. Partner with the law firm of Shearman & Sterling, 599
Lexington Avenue, New York, NY 10022 since 1981.
Director since 1992.
Thomas M. Kelleher................. General Counsel and Secretary since 1994. Corporate
Counsel and Secretary from 1992 to 1994. Corporate
Counsel and Assistant Secretary from 1988 to 1992.
Robert L. Macdonald................ Vice President-Finance and Treasurer since 1993.
Controller from 1990 to 1993. Citizen of the United
Kingdom.
Antoine G. Treuille................ Senior Vice President with the investment firm of Desai
Capital Management, Inc., 540 Madison Avenue, New York,
NY, since 1992. Executive Vice President with the
investment firm of Entrecanales Inc., 767 Fifth Avenue,
New York, NY, from 1985 to 1992. Director since 1992.
Raymond Winter..................... President and Chief Operating Officer since 1992. Vice
President -- Sales & Marketing from 1985 to 1986 and
1991 to 1992. President of BIC Inc., 155 Oakdale Rd.,
Downsview, Ontario, Canada, from 1986 to 1994. Director
since 1992. Citizen of Canada.
</TABLE>
45
<PAGE> 51
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements and schedules included in the
Company's Annual Report on Form 10-K, incorporated by reference in this Proxy
Statement, have been audited by Deloitte & Touche LLP, independent public
accountants, as stated in their reports with respect thereto. It is expected
that representatives of Deloitte & Touche LLP will be present at the Special
Meeting, both to respond to appropriate questions of shareholders of the Company
and to make a statement if they desire.
SHAREHOLDER PROPOSALS
Under the NYBCL and the By-Laws of the Company, no other business may be
transacted at the Special Meeting. If the Merger is not for any reason
consummated, then, in accordance with regulations issued by the SEC, shareholder
proposals intended for presentation at the Company's 1996 annual meeting of
shareholders must be received by the Secretary of the Company no later than
, 1995, if such proposals are to be considered for inclusion in
the Company's proxy statement. Proposals should be mailed via certified mail and
addressed to Thomas M. Kelleher, General Counsel and Secretary, BIC Corporation,
500 BIC Drive, Milford CT 06460.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
001-06832) are incorporated by reference in this Proxy Statement:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 1995;
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
April 1, 1995 and July 2, 1995; and
3. The Company's Current Reports on Form 8-K filed on May 23, 1995 and
August 21, 1995.
All documents and reports filed by the Company with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Proxy Statement and prior to the date of the Special Meeting shall be deemed to
be incorporated by reference in this Proxy Statement and to be a part hereof
from the respective dates of filing of such documents or reports.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement.
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
TO SUCH DOCUMENTS) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT IS DELIVERED, ON WRITTEN OR ORAL
REQUEST TO BIC CORPORATION, 500 BIC DRIVE, MILFORD, CONNECTICUT 06460,
ATTENTION: THOMAS M. KELLEHER, GENERAL COUNSEL AND SECRETARY, TELEPHONE: (203)
783-2074. IN ORDER TO ENSURE DELIVERY OF THE DOCUMENTS PRIOR TO THE SPECIAL
MEETING, REQUESTS MUST BE RECEIVED BY , 1995.
46
<PAGE> 52
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith, files reports, proxy statements and other
information with the SEC. Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities of the SEC at
Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and
at the regional offices of the SEC located at 7 World Trade Center, 13th Floor,
Suite 1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th
Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material
can also be obtained at prescribed rates by writing to the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. In addition, such reports, proxy statements and other information can be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
This Proxy Statement includes information required by the SEC to be
disclosed pursuant to Rule 13e-3 under the Exchange Act, which governs so-called
"going private" transactions by certain issuers or their affiliates. In
accordance with that rule, the Company, Parent, Mergeco and Bruno Bich, as
Voting Trustee, have filed with the Commission, under the Exchange Act, a
Schedule 13E-3 with respect to the Merger. This Proxy Statement does not contain
all of the information set forth in the Schedule 13E-3, parts of which are
omitted in accordance with the regulations of the SEC. The Schedule 13E-3, and
any amendments thereto, including exhibits files as a part thereof, will be
available for inspection and copying at the offices of the SEC as set forth
above.
MISCELLANEOUS
Where information contained in this Proxy Statement rests particularly
within the knowledge of a person other than the Company, the Company has relied
upon information furnished by such person or contained in filings made by such
person with the SEC.
By Order of the Board of Directors
Thomas M. Kelleher
General Counsel and Secretary
47
<PAGE> 53
ANNEX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
SOCIETE BIC, S.A.
BIC MERGER CORPORATION,
BRUNO BICH,
as VOTING TRUSTEE
AND
BIC CORPORATION
Dated as of August 15, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 54
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
(NOT PART OF THE AGREEMENT)
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
PARTIES............................................................................ A-1
PREAMBLE........................................................................... A-1
ARTICLE I
THE MERGER
1.1. The Merger.................................................................... A-1
1.2. Certificate of Incorporation.................................................. A-1
1.3. By-Laws....................................................................... A-1
1.4. Directors and Officers........................................................ A-2
1.5. Effective Time................................................................ A-2
ARTICLE II
CONVERSION OF SHARES
2.1. Company Common Shares......................................................... A-2
2.2. Dissenting Shares............................................................. A-2
2.3. Purchaser Common Shares....................................................... A-3
2.4. Exchange of Shares............................................................ A-3
2.5. Employee Stock Plans.......................................................... A-4
2.6. Withholding Rights............................................................ A-4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1. Organization.................................................................. A-4
3.2. Capitalization................................................................ A-4
3.3. Authorization of this Agreement; Recommendation of Merger..................... A-5
3.4. Governmental Filings; No Conflicts............................................ A-5
3.5. Disclosure and Financial Statements; No Undisclosed Liabilities............... A-6
3.6. Vote Required................................................................. A-6
3.7. Opinion of Financial Advisor.................................................. A-6
3.8. Finders and Investment Bankers................................................ A-6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGECO
4.1. Organization.................................................................. A-6
4.2. Capitalization................................................................ A-7
4.3. Authorization of this Agreement............................................... A-7
4.4. Governmental Filings; No Violations........................................... A-7
4.5. Financial Ability to Perform.................................................. A-8
4.6. Formation of Mergeco; No Prior Activities..................................... A-8
4.7. Finders and Investment Bankers................................................ A-8
</TABLE>
i
<PAGE> 55
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
ARTICLE V
COVENANTS
5.1. Conduct of the Business of the Company........................................ A-8
5.2. Activities of Mergeco; Shareholder Approval; Issuance of Mergeco Preferred
Shares........................................................................ A-8
5.3. Obligations of Mergeco........................................................ A-8
5.4. Access to Information......................................................... A-9
5.5. Shareholders' Meeting......................................................... A-9
5.6. Proxy Statement and Schedule 13E-3............................................ A-9
5.7. Best Efforts.................................................................. A-10
5.8. Consents...................................................................... A-10
5.9. Public Announcements.......................................................... A-10
5.10. Indemnification............................................................... A-10
5.11. Transfer Taxes................................................................ A-11
ARTICLE VI
CLOSING CONDITIONS
6.1. Conditions to the Obligations of Each Party................................... A-12
6.2. Conditions to the Obligations of Parent, Mergeco and the Voting Trustee....... A-12
6.3. Conditions to the Obligations of the Company.................................. A-12
ARTICLE VII
CLOSING
7.1. Time and Place................................................................ A-13
7.2. Filings at the Closing........................................................ A-13
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1. Termination................................................................... A-13
8.2. Procedure and Effect of Termination........................................... A-13
ARTICLE IX
MISCELLANEOUS
9.1. Amendment and Modification.................................................... A-14
9.2. Waiver of Compliance; Consents................................................ A-14
9.3. Survival of Warranties........................................................ A-14
9.4. Notices....................................................................... A-15
9.5. Assignment; Parties in Interest............................................... A-15
9.6. Expenses...................................................................... A-16
9.7. Specific Performance.......................................................... A-16
9.8. Governing Law................................................................. A-16
9.9. Counterparts.................................................................. A-16
9.10. Interpretation................................................................ A-16
9.11. Entire Agreement.............................................................. A-16
</TABLE>
ii
<PAGE> 56
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 15, 1995, among Societe
BIC S.A. ("Parent"), a societe anonyme organized under the laws of France, BIC
Merger Corporation ("Mergeco"), a New York corporation more than two-thirds of
the outstanding capital stock of which is owned by Parent, solely for purposes
of Section 5.5 hereof, Bruno Bich, as voting trustee (the "Voting Trustee")
under a voting trust agreement, dated as of February 5, 1991, as amended (the
"Voting Trust Agreement"), among Parent, the Company (as hereinafter defined)
and the voting trustees and certain shareholders of the Company named therein,
and BIC Corporation, a New York corporation (the "Company").
WHEREAS, Parent and the other shareholders of Mergeco own an aggregate of
approximately 78% of the shares of common stock, par value $1.00 per share (the
"Common Shares") of the Company and have proposed to the Board of Directors of
the Company that Parent acquire the remaining Common Shares (the "Public Shares;
and the holders thereof; being referred to as the "Public Shareholders");
WHEREAS, the Board of Directors of each of Parent and Mergeco believes it
is in the best interest of each of Parent and Mergeco and their respective
shareholders, and the Board of Directors of the Company believes it is in the
best interest of the Company and its shareholders, to consummate the merger of
Mergeco with and into the Company (the "Merger"), upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, a Special Committee of the Board of Directors of the Company (the
"Special Committee") has determined that the Merger is fair to, and in the best
interests of, the Public Shareholders, and recommended the approval and adoption
of this Agreement to the Board of Directors of the Company; and
WHEREAS, the Boards of Directors (or equivalent governing bodies) of
Parent, Mergeco and the Company have approved and adopted this Agreement and
approved the Merger upon the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the representations, warranties and
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. (a) As promptly as practicable following the satisfaction
or waiver of the conditions set forth in Article VI hereof, and in accordance
with the provisions of this Agreement and the provisions of the New York
Business Corporation Law (the "NYBCL"), the parties hereto shall cause Mergeco
to be merged with and into the Company, and the Company shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of New York. At the
Effective Time (as hereinafter defined), the separate corporate existence of
Mergeco shall cease.
(b) The Merger shall have the effects specified in the NYBCL. The Surviving
Corporation shall possess all the rights, privileges, immunities, powers and
purposes of Mergeco and the Company and shall assume and become liable for all
the liabilities, obligations and penalties of the Company and Mergeco.
1.2. Certificate of Incorporation. The Certificate of Incorporation of the
Company in effect immediately prior to the Effective Time shall be the Restated
Certificate of Incorporation of the Surviving Corporation until thereafter
amended in accordance with provisions thereof and the NYBCL.
1.3. By-Laws. The By-Laws of the Company in effect immediately prior to
the Effective Time shall be the By-Laws of the Surviving Corporation until
thereafter amended, altered or repealed as provided therein and the NYBCL.
A-1
<PAGE> 57
1.4. Directors and Officers. The directors and officers of the Company
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation, each to hold office in accordance
with the Certificate of Incorporation and By-Laws of the Surviving Corporation.
1.5. Effective Time. As soon as practicable following the Closing (as
defined in Section 7.1 of this Agreement), and provided that this Agreement
shall not have been terminated pursuant to Article VIII hereof, the Company and
Mergeco will cause a certificate of merger (the "Certificate of Merger"),
together with any other documents required by law to effectuate the Merger, to
be executed, verified and delivered for filing by the New York Department of
State as provided in Section 904 of the NYBCL. The Merger shall become effective
on the date on which the Certificate of Merger has been filed by the New York
Department of State. The date and time when the Merger shall become effective is
herein referred to as the "Effective Time."
ARTICLE II
CONVERSION OF SHARES
2.1. Company Common Shares. (a) Each Common Share issued and outstanding
immediately prior to the Effective Time (except for (i) Common Shares then owned
beneficially or of record by the shareholders of Mergeco, (ii) Dissenting Shares
(as defined in Section 2.2 hereof) and (iii) Common Shares held in the Company's
treasury) shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive $40.50 in cash (such
cash amount being referred to hereinafter as the "Merger Consideration"),
payable to the holder thereof, without interest thereon, upon surrender of the
certificate representing such Common Share.
(b) Each Common Share issued and outstanding immediately prior to the
Effective Time which is then owned beneficially or of record by the shareholders
of Mergeco shall, by virtue of the Merger and without any action on the part of
the holder thereof, be canceled and retired and cease to exist, without any
conversion thereof.
(c) Each Common Share issued and held in the Company's treasury immediately
prior to the Effective Time shall, by virtue of the Merger, be canceled and
retired and cease to exist, without any conversion thereof.
(d) At the Effective Time the holders of certificates representing Common
Shares shall cease to have any rights as shareholders of the Company, except
such rights, if any, as they may have pursuant to the NYBCL, and, except as
aforesaid, their sole right shall be the right to receive cash as aforesaid.
2.2. Dissenting Shares. (a) Notwithstanding anything in this Agreement to
the contrary, any Common Shares which are outstanding immediately prior to the
Effective Time and which are held by shareholders who have not voted such shares
in favor of the approval of the Merger and adoption of this Agreement and who
shall have properly elected to dissent in the manner provided in Sections 623
and 910 of the NYBCL ("Dissenting Shares") shall not be converted into or be
exchangeable for the right to receive the Merger Consideration, but the holders
thereof shall be entitled to payment of the fair value of such shares in
accordance with the provisions of Sections 623 and 910 of the NYBCL; provided,
however, that in the case of (i) any holder of Dissenting Shares who shall
subsequently deliver a written withdrawal of his election to dissent (in
accordance with Section 623(e) of the NYBCL), or (ii) any holder who fails to
establish his entitlement to dissenters' rights as provided in Sections 623 and
910 of the NYBCL, or (iii) any holder who shall, for any other reason, become
ineligible to dissent, each Common Share held by any such holder shall thereupon
be deemed to have been converted into and to have become exchangeable for, as of
the Effective Time, the right to receive the Merger Consideration, without any
interest thereon.
(b) The Company shall give Parent (i) prompt written notice of any written
election to dissent, withdrawals of any election to dissent and any other
documents served pursuant to Sections 623 and 910 of the NYBCL received by the
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to any election to dissent under Sections 623 and 910 of the NYBCL.
Except with the prior written
A-2
<PAGE> 58
consent of Parent, the Company will not voluntarily make any payment with
respect to any election to dissent and will not settle or offer to settle any
such election.
2.3. Purchaser Common Shares. Each common share, par value $.001 per share
(the "Mergeco Common Shares") and each preferred share, par value $.001 per
share (the "Mergeco Preferred Shares"; and together with the Mergeco Common
Shares; the "Mergeco Shares"), of Mergeco issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and exchangeable for
one fully paid and non-assessable common share, par value $1.00 per share
("Surviving Corporation Common Shares"), of the Surviving Corporation. From and
after the Effective Time, each outstanding certificate theretofore representing
Mergeco Shares shall be deemed for all purposes to evidence ownership of and to
represent the same number of Surviving Corporation Common Shares.
2.4. Exchange of Shares. (a) Prior to the Effective Time, Parent shall, or
Parent shall cause Mergeco to, deposit in trust with a bank or trust company
with offices in New York designated by Parent and reasonably satisfactory to the
Company (the "Paying Agent"), cash in an aggregate amount equal to the product
of (x) the number of Common Shares issued and outstanding immediately prior to
the Effective Time (other than (i) Common Shares owned beneficially or of record
by the shareholders of Mergeco, (ii) Dissenting Shares and (iii) Common Shares
held in the Company's treasury) and (y) the Merger Consideration (such amount
being hereinafter referred to as the "Exchange Fund"). The Paying Agent shall,
pursuant to irrevocable instructions, make the payments provided for in Section
2.1(a) of this Agreement out of the Exchange Fund. The Paying Agent shall invest
the Exchange Fund as Parent directs, in direct obligations of the United States
of America, obligations for which the full faith and credit of the United States
of America is pledged to provide for the payment of all principal and interest,
commercial paper obligations receiving the highest rating from either Moody's
Investors Services, Inc. or Standard & Poor's Corporation, or certificates of
deposit, bank repurchase agreements or banker's acceptances of commercial banks
with capital exceeding $10 billion. Any net profit resulting from, or interest
or income produced by, such investments shall be payable to the Surviving
Corporation. Mergeco shall replace any monies lost through any investment made
pursuant to this Section 2.4(a) prior to the Effective Time, and the Surviving
Corporation shall replace any monies lost through any investment made pursuant
to this Section 2.4(a) after the Effective Time. The Exchange Fund shall not be
used for any other purpose except as provided in this Agreement.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Paying Agent to mail to each record holder (other than the
shareholders of Mergeco) as of the Effective Time of an outstanding certificate
or certificates which immediately prior to the Effective Time represented Common
Shares (the "Certificates") a form 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 instructions for use in effecting the surrender of the Certificates for
payment therefor. Upon surrender to the Paying Agent of a Certificate, together
with such letter of transmittal duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor cash in an amount equal to the
product of the number of shares represented by such Certificate and the Merger
Consideration, less any applicable withholding tax, and such Certificate shall
forthwith be canceled. No interest shall be paid or accrued on the cash payable
upon the surrender of the Certificates. If payment is to be made to a person
other than the person in whose name the Certificate surrendered 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 tax required by reason
of the payment to a person other than the registered holder of the Certificate
surrendered or establish to the satisfaction of the Paying Agent and the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.4, each
Certificate (other than Certificates representing Common Shares owned
beneficially or of record by the shareholders of Mergeco, Certificates
representing Dissenting Shares in respect of which appraisal rights are
perfected and Certificates representing Common Shares held in the Company's
treasury) shall represent for all purposes the right to receive the Merger
Consideration in cash multiplied by the number of Common Shares evidenced by
such Certificate, without any interest thereon.
A-3
<PAGE> 59
(c) After the Effective Time there shall be no transfers on the stock
transfer books of the Surviving Corporation of Common Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged for cash as provided in this Article II.
(d) Any portion of the Exchange Fund which remains unclaimed by the
shareholders of the Company for 180 days after the Effective Time (including any
interest, dividends, earnings or distributions received with respect thereto)
shall be repaid to the Surviving Corporation, upon demand. Any shareholders of
the Company who have not theretofore complied with Section 2.4(b) shall
thereafter look only to the Surviving Corporation for payment of their claim for
the Merger Consideration per Common Share, without any interest thereon, but
shall have no greater rights against the Surviving Corporation than may be
accorded to general creditors of the Surviving Corporation under New York law.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to any holder of Certificates formerly representing Common
Shares for any amount paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
2.5. Employee Stock Plans. The Company shall take all actions necessary to
amend the Company's Local 134 Employees' Share Purchase Plan, 401(k) Savings and
Investment Plan and a separate, non-contributory 401(k) plan for certain
unionized employees of the Company on or prior to the Closing to delete as an
investment option thereunder purchases of Common Shares.
2.6. Withholding Rights. Parent, Mergeco, the Surviving Corporation and
the Paying Agent shall be entitled to deduct and withhold from the amounts
payable (including the Merger Consideration) pursuant to this Agreement to any
holder of Common Shares such amounts as Parent, Mergeco, the Surviving
Corporation or the Paying Agent is required to deduct and withhold with respect
to the making of such payment under applicable tax law. To the extent that
amounts are so deducted and withheld by Parent, Mergeco, the Surviving
Corporation or the Paying Agent, such amounts shall be treated for all purposes
of this Agreement as having been paid to the relevant holder of Common Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Mergeco as follows:
3.1. Organization. The Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and
to conduct its business as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power and
authority would not, individually or in the aggregate, have a material
adverse effect on the business, condition (financial or otherwise),
properties or assets of the Company and its subsidiaries taken as a whole
(a "Material Adverse Effect").
3.2. Capitalization. The authorized capital stock of the Company
consists of (i) 50,000,000 Common Shares, of which, on August 10, 1995,
there were 23,559,244 shares issued and outstanding and (ii) 1,000,000
shares of preferred stock, par value $1.00 per share, of which, on August
10, 1995, there were no shares issued and outstanding. All of the Common
Shares are entitled to vote on matters submitted to the shareholders of the
Company. Except as set forth above, there are no shares of capital stock of
the Company authorized, issued or outstanding. All issued and outstanding
Common Shares are duly authorized, validly issued, fully paid and
nonassessable. Each of the Company's subsidiaries is listed in the
Company's Annual Report on Form 10-K for the fiscal year ending January 1,
1995 (the "1994 Form 10-K"), and except as and to the extent set forth in
the 1994 Form 10-K, the Company owns directly or indirectly all of the
issued and outstanding capital stock of each of its subsidiaries, free and
clear of all liens, pledges, security interests, claims or other
encumbrances. There are not now, and at the Effective Time there will not
be, any existing stock option or similar plans or options, warrants, calls,
subscriptions, preemptive rights or other rights or other agreements or
commitments whatsoever
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obligating the Company or any of its subsidiaries to issue, transfer,
deliver or sell or cause to be issued, transferred, delivered or sold any
additional shares of capital stock of the Company or any of its
subsidiaries, or obligating the Company or any of its subsidiaries to
grant, extend or enter into any such agreement or commitment.
3.3. Authorization of this Agreement; Recommendation of
Merger. (a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and, subject to approval by the
shareholders of the Company, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized and approved by the Company's Board of Directors and, except for
the adoption of this Agreement by the shareholders of the Company, no other
corporate proceedings on the part of the Company are necessary to authorize
this Agreement or consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company,
and subject only to adoption hereof by its shareholders (and assuming the
due authorization, execution and delivery hereof by Parent, Mergeco and the
Voting Trustee), this Agreement constitutes a valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms.
(b) The Board of Directors of the Company (at a meeting duly called
and held at which a quorum was present) has determined that the Merger is
fair to and in the best interests of the shareholders of the Company and
has resolved to recommend approval of the Merger and adoption of this
Agreement by the shareholders of the Company; provided, however, that such
recommendation may be withdrawn, modified or amended to the extent the
Company's Board of Directors deems it appropriate to do so in the exercise
of its fiduciary duties under applicable law, based upon the advice of
independent legal counsel (which may include the Company's regularly
engaged legal counsel).
(c) The Special Committee has determined that the Merger is fair to,
and in the best interests of, the Public Shareholders, and has recommended
the approval and adoption of this Agreement to the Board of Directors of
the Company and to the Public Shareholders; provided, however, that such
recommendation may be withdrawn, modified or amended to the extent that the
Special Committee deems it appropriate to do so in the exercise of its
fiduciary duties under applicable law, based upon the advice of legal
counsel to the Special Committee.
3.4. Governmental Filings; No Conflicts. Except for (a) filings
required under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (b) the filing and recordation of appropriate merger
documents as required by the NYBCL and, if applicable, the laws of other
states in which the Company is qualified to do business, (c) filings under
securities or blue sky laws or takeover statutes of the various states, (d)
the listing requirements of the New York Stock Exchange and (e) filings in
connection with any applicable transfer or other taxes in any applicable
jurisdiction, no filing with, and no permit, authorization, consent or
approval of, any public body or authority is necessary for the consummation
by the Company of the transactions contemplated by this Agreement, the
failure to make or obtain which would have, individually or in the
aggregate, a Material Adverse Effect or a material adverse effect on the
ability of the Company to consummate the transactions contemplated hereby.
Neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby nor compliance by the Company with
any of the provisions hereof will (i) conflict with or result in any
violation of any provision of the Restated Certificate of Incorporation or
By-Laws of the Company, (ii) result in a violation or breach of, or
constitute a default (or give rise to any right of termination,
cancellation or acceleration) under, any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which the Company
or any of its subsidiaries is a party or by which any of them or any of
their properties or assets is bound or (iii) assuming the truth of the
representations and warranties of Parent and Mergeco contained herein and
their compliance with all agreements contained herein and assuming the due
making or obtaining of all filings, permits, authorizations, consents and
approvals referred to in the preceding sentence, violate any statute, rule,
regulation, order, injunction, writ or decree of any public body or
authority by which the Company or any of its subsidiaries or any of their
respective assets or properties is bound, excluding from the foregoing
clauses (ii) and (iii) conflicts, violations, breaches or defaults which,
either individually or in the aggregate, would not
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have a Material Adverse Effect or a material adverse effect on the
Company's ability to consummate the transactions contemplated hereby.
3.5. Disclosure and Financial Statements; No Undisclosed
Liabilities. (a) As of the date of this Agreement, the Company has filed
all forms, reports and documents with the Securities and Exchange
Commission (the "SEC") since January 1, 1992, required to be filed by it
pursuant to the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") and the Exchange
Act and the rules and regulations promulgated thereunder (collectively, the
"Disclosure Statements"), all of which have complied in all material
respects with all applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder. As of
the date of this Agreement, none of such Disclosure Statements, at the time
filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
As of the date of this Agreement, the consolidated balance sheets and
the related statements of consolidated income, consolidated cash flows and
consolidated retained earnings (including the notes and schedules thereto)
of the Company and its subsidiaries contained or incorporated by reference
in the Disclosure Statements have been prepared from, and are in accordance
with, the books and records of the Company and its consolidated
subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, and present fairly the consolidated financial position of
the Company and its subsidiaries as of their respective dates, and the
consolidated results of their operations and their cash flows for the
periods presented therein, in conformity with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis,
except as otherwise noted therein, and subject in the case of quarterly
financial statements to normal year-end audit adjustments and except that
the quarterly financial statements do not contain all of the footnote
disclosures required by GAAP.
(b) As of the date of this Agreement, there is no liability of the
Company or any subsidiary thereof of any nature, whether absolute, accrued,
contingent or otherwise, which, individually or in the aggregate, is
material to the Company and its subsidiaries, taken as a whole, other than
as disclosed in the Disclosure Statements or incurred in the ordinary
course of business since the end of the first quarter of the Company's 1995
fiscal year.
3.6. Vote Required. The affirmative vote of the holders of two-thirds
of the outstanding Common Shares is the only vote of the holders of any
class or series of capital stock of the Company necessary to approve the
Merger under the NYBCL.
3.7. Opinion of Financial Advisor. The Special Committee has received
the opinion of Goldman, Sachs & Co. ("Goldman Sachs") dated August 15, 1995
that, as of the date of such opinion, the $40.50 per Common Share in cash
to be received by the Public Shareholders pursuant to this Agreement is
fair to the Public Shareholders.
3.8. Finders and Investment Bankers. All negotiations relating to
this Agreement and the transactions contemplated hereby have been carried
on without the intervention of any person acting on behalf of the Company
in such manner as to give rise to any valid claim against Parent, Mergeco,
the Company or the Surviving Corporation for any broker's or finder's fee
or similar compensation, except for Goldman Sachs, whose fees shall be paid
by the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGECO
Parent and Mergeco each jointly and severally represent and warrant to the
Company as follows:
4.1. Organization. Each of Parent and Mergeco is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and each has all requisite
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corporate power and authority to own, lease and operate its properties and
to conduct its business as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power and
authority would not, individually or in the aggregate, have a material
adverse effect on the business or financial condition of Parent and its
subsidiaries taken as a whole. More than two-thirds of the outstanding
Mergeco Shares are owned beneficially and of record by Parent.
4.2. Capitalization. The authorized capital stock of Mergeco on
August 10, 1995 consisted of (i) 23,559,294 Mergeco Common Shares, of which
there were 18,154,848 shares issued and outstanding, and (ii) 5,254,396
Mergeco Preferred Shares, of which there were no shares issued and
outstanding. All of the Mergeco Common Shares are entitled to vote on
matters submitted to the shareholders of Mergeco. Except as set forth
above, there are no shares of capital stock of Mergeco authorized, issued
or outstanding. All issued and outstanding Mergeco Common Shares are duly
authorized, validly issued, fully paid and nonassessable. Except as
provided in Section 5.2(c), there are not now, and, at the Effective Time
there will not be, any existing stock option or similar plans or options,
warrants, calls, subscriptions, preemptive rights or other rights or other
agreements or commitments whatsoever obligating Mergeco or any of its
subsidiaries to issue, transfer, deliver or sell or cause to be issued,
transferred, delivered or sold any additional shares of capital stock of
Mergeco, or obligating Mergeco to grant, extend or enter into any such
agreement or commitment.
4.3. Authorization of this Agreement. (a) Each of Parent and Mergeco
has all requisite corporate power and authority to execute and deliver this
Agreement and, subject to approval by the shareholders of Mergeco, to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized and approved by the Boards of
Directors (or equivalent governing bodies) of Parent and Mergeco, and,
except for the adoption of this Agreement by the shareholders of Mergeco,
no other corporate proceedings on the part of Parent or Mergeco are
necessary to authorize this Agreement or, except as provided in Section
5.2(c), consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by each of Parent and Mergeco
and, in the case of Mergeco subject only to adoption hereof by its
shareholders (assuming the due authorization, execution and delivery hereof
by the Company) constitutes a valid and binding agreement of each of Parent
and Mergeco.
(b) The Voting Trustee has all requisite power and authority pursuant
to the Voting Trust Agreement to execute and deliver this Agreement and to
consummate the transactions on its part to be consummated that are
contemplated hereby. The execution and delivery of this Agreement has been
duly and validly authorized by the Voting Trustee pursuant to the Voting
Trust Agreement, and no further action on the part of the Voting Trustee is
necessary to authorize this Agreement or consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Voting Trustee and (assuming the due authorization,
execution and delivery hereof by the other parties hereto) constitutes a
valid and binding agreement of the Voting Trustee.
4.4. Governmental Filings; No Violations. Except for (a) filings
required by the applicable requirements of the Exchange Act, (b) the filing
and recordation of appropriate merger documents as required by the NYBCL,
(c) filings under the securities or blue sky laws or takeover statutes of
the various states and (d) filings in connection with any applicable
transfer or other taxes in any applicable jurisdiction, no filing with, and
no permit, authorization, consent or approval of, any public body or
authority is necessary for the consummation by Parent, Mergeco or the
Voting Trustee of the transactions contemplated by this Agreement, the
failure to make or obtain which is reasonably likely to impair the ability
of Parent, Mergeco or the Voting Trustee to perform their respective
obligations hereunder or to consummate the transactions contemplated
hereby. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby nor compliance by
Parent, Mergeco or the Voting Trustee with any of the provisions hereof
will (i) conflict with or result in any violation of any provision of the
certificate of incorporation or by-laws (or equivalent governing
instruments) of Parent or Mergeco, or the Voting Trust Agreement, (ii)
result in a violation or breach of, or constitute a default (or give rise
to any right of termination, cancellation or acceleration) under, any note,
bond, mortgage,
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indenture, license, agreement or other instrument or obligation to which
any of Parent, Mergeco or the Voting Trustee is a party, or by which it or
any of its properties or assets is bound, or (iii) assuming the truth of
the representations and warranties of the Company hereunder and its
compliance with all agreements contained herein and assuming the due making
or obtaining of all filings, permits, authorizations, consents and
approvals referred to in the preceding sentence, violate any statute, rule,
regulation, order, injunction, writ or decree of any public body or
authority by which Parent, Mergeco or the Voting Trustee or any of their
respective properties or assets is bound, excluding from the foregoing
clauses (ii) and (iii) conflicts, violations, breaches or defaults which,
either individually or in the aggregate, are not reasonably likely to
impair materially the ability of Parent, Mergeco or the Voting Trustee to
perform their respective obligations hereunder or to consummate the
transactions contemplated hereby.
4.5. Financial Ability to Perform. Parent and Mergeco presently have,
and at the Effective Time will have, cash funds available sufficient to
consummate the transactions contemplated by this Agreement and to perform
their respective obligations under this Agreement.
4.6. Formation of Mergeco; No Prior Activities. Mergeco was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement. As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and,
except for this Agreement and any other agreements or arrangements
contemplated by this Agreement or in furtherance of the transactions
contemplated hereby, Mergeco has not and will not have incurred, directly
or indirectly, through any subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any person.
4.7. Finders and Investment Bankers. All negotiations relating to
this Agreement and the transactions contemplated hereby have been carried
on without the intervention of any person acting on behalf of Parent or
Mergeco in such manner as to give rise to any valid claim against Parent,
Mergeco, the Company or the Surviving Corporation for any broker's or
finder's fee or similar compensation, except for Donaldson, Lufkin &
Jenrette Securities Corporation, whose fees shall be paid by Parent.
ARTICLE V
COVENANTS
5.1. Conduct of the Business of the Company. During the period from the
date of this Agreement to the Effective Time, neither the Company nor any of its
subsidiaries will declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, or agree to do any of the foregoing; provided, that (a) if
the Merger has not been consummated by December 31, 1995, the Board of Directors
of the Company may after such date declare dividends in respect of its capital
stock and (b) any of the Company's direct or indirect wholly-owned subsidiaries
may declare, set aside or pay any dividend or other distribution with respect to
their capital stock.
5.2. Activities of Mergeco; Shareholder Approval; Issuance of Mergeco
Preferred Shares. (a) From the date of this Agreement to the Effective Time,
Mergeco will not conduct any business or engage in any activities of any nature
other than activities in connection with this Agreement or the transactions
contemplated hereby.
(b) As soon as practicable after the date hereof, Parent shall cause this
Agreement to be approved by the requisite vote of the shareholders of Mergeco.
(c) Prior to the Effective Time, Mergeco shall issue a number of voting
Mergeco Shares equal to the number of Public Shares.
5.3. Obligations of Mergeco. Parent shall take all actions necessary to
cause Mergeco to perform its obligations under this Agreement and to consummate
the Merger in accordance with the terms and conditions set forth in this
Agreement.
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5.4. Access to Information. Between the date of this Agreement and the
Effective Time, during normal business hours, upon reasonable notice and in such
a manner as will not unreasonably interfere with the conduct of the business of
the Company, the Company will (i) give Parent and its authorized representatives
reasonable access to all stores, offices, warehouses and other facilities and to
all books and records of the Company and its subsidiaries, (ii) permit Parent
and its authorized representatives to make such inspections as it may reasonably
require and (iii) cause its officers and those of its subsidiaries to furnish
Parent with a copy of each report, schedule and other document filed or received
by it during such period pursuant to the requirements of federal and state
securities laws and such financial and operating data and other information with
respect to the business and properties of the Company and its subsidiaries as
Parent may from time to time reasonably request.
5.5. Shareholders' Meeting. As soon as practicable, the Company, acting
through its Board of Directors, shall in accordance with applicable law, and
subject to the fiduciary duties under applicable law of the Board of Directors
(as determined by the Board of Directors in good faith after consultation with
independent legal counsel, which may include the Company's regularly engaged
legal counsel), take all steps necessary duly to call, give notice of, convene
and hold a special meeting of its shareholders (the "Shareholders' Meeting") for
the purpose of adopting and approving this Agreement and the transactions
contemplated hereby. The notice of such meeting shall contain the information
required to be included therein pursuant to the NYBCL. At such meeting, the
Voting Trustee will vote, or cause to be voted, all Common Shares then
beneficially owned by him on the record date for such meeting, in favor of the
approval of the Merger and adoption of this Agreement and the transactions
contemplated hereby.
5.6. Proxy Statement and Schedule 13E-3. (a) The Company will as soon as
practicable prepare and file with the SEC a proxy statement and a form of proxy,
in connection with the vote of the Company's stockholders with respect to the
Merger (such proxy statement, together with any amendments thereof or
supplements thereto, in each case in the form or forms mailed to the Company's
stockholders, being the "Proxy Statement"). The Company, Parent and Mergeco
shall together prepare and file a Transaction Statement on Schedule 13E-3 (the
"Schedule 13E-3") under the Exchange Act. Each of Parent, Mergeco and the
Company shall furnish all information concerning it, its affiliates and the
holders of its capital stock required to be included in the Proxy Statement and
the Schedule 13E-3 and, after consultation with each other, shall respond
promptly to any comments made by the SEC with respect to the Proxy Statement and
any preliminary version thereof and the Schedule 13E-3. The Company shall cause
the Proxy Statement to be mailed to its shareholders at the earliest practicable
time. The Proxy Statement shall include the respective recommendations of the
Company's Board of Directors to the shareholders of the Company and of the
Special Committee to the Public Shareholders, subject to the fiduciary duties
under applicable law of the directors of the Company or of the Company's
directors constituting the Special Committee (as determined by such directors in
good faith after consultation with independent legal counsel, which may include
the Company's regularly engaged legal counsel), in favor of the adoption and
approval of this Agreement and the transactions contemplated hereby. Subject to
the fiduciary duties under applicable law of the Company's directors (as advised
by independent legal counsel, which may include the Company's regularly engaged
legal counsel), the Company shall use its best efforts to obtain the necessary
approvals by its shareholders of this Agreement and the transactions
contemplated hereby. Notwithstanding anything to the contrary in this Agreement,
if the Board of Directors of the Company or the Special Committee determines, in
good faith after consultation with independent legal counsel (which may include
the Company's regularly engaged legal counsel) in the exercise of its fiduciary
duties under applicable law, to withdraw, modify or amend its recommendation in
favor of the Merger, such withdrawal, modification or amendment shall not
constitute a breach of this Agreement.
(b) The information supplied by the Company for inclusion in the Proxy
Statement or the Schedule 13E-3 shall not, at the time the Proxy Statement is
mailed, 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 were made,
not misleading or, at the time of the Shareholders' Meeting, as then amended or
supplemented, or at the Effective Time, omit to state any material fact
necessary to correct any statement originally supplied by the Company for
inclusion in the Proxy Statement or the Schedule 13E-3 which has become false or
misleading. If at any time prior to the Effective
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Time any event relating to the Company or any of its affiliates, or its, or its
affiliates', respective officers, directors or stockholders, should be
discovered which should be set forth in an amendment of, or a supplement to,
such Proxy Statement or Schedule 13E-3, the Company shall promptly so inform
Parent and Mergeco and will furnish all necessary information to Parent and
Mergeco relating to such event. All documents that the Company is responsible
for filing with the SEC in connection with the transactions contemplated by this
Agreement shall comply in all material respects, both as to form and otherwise,
with the Exchange Act and the rules and regulations thereunder.
(c) The information supplied or to be supplied by Parent or Mergeco for
inclusion in the Proxy Statement or the Schedule 13E-3 shall not, at the time
the Proxy Statement is mailed, 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 were made, not misleading or, at the time of the Shareholders' Meeting, as
then amended or supplemented, or at the Effective Time, omit to state any
material fact necessary to correct any statement originally supplied by Parent
or Mergeco for inclusion in the Proxy Statement or the Schedule 13E-3 which has
become false or misleading. If at any time prior to the Effective Time any event
relating to Parent or Mergeco or any of their respective affiliates, or their,
or their affiliates', respective officers, directors or stockholders should be
discovered which should be set forth in an amendment of, or a supplement to,
such Proxy Statement or Schedule 13E-3, Parent or Mergeco, as the case may be,
shall promptly so inform the Company and will furnish all necessary information
to the Company relating to such event. All documents that Parent and Mergeco are
responsible for filing with the SEC in connection with the transactions
contemplated by this Agreement shall comply in all material respects, both as to
form and otherwise, with the Exchange Act and the rules and regulations
thereunder.
5.7. Best Efforts. Subject to the terms and conditions herein provided and
the fiduciary duties under applicable law of the directors of the Company or of
the Company's directors constituting the Special Committee (as determined by
such directors in good faith after consultation with independent legal counsel,
which may include the Company's regularly engaged legal counsel), each of the
parties hereto agrees to use its best efforts consistent with applicable legal
requirements to take, or cause to be taken, all action, and to do, or cause to
be done, all things necessary or proper and advisable under applicable laws and
regulations to ensure that the conditions set forth in Article VI hereof are
satisfied and to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
5.8. Consents. Parent, Mergeco and the Company each shall use their best
efforts to obtain all material consents of third parties and governmental
authorities, and to make all governmental filings, necessary to the consummation
of the transactions contemplated by this Agreement.
5.9. Public Announcements. Parent, Mergeco and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Merger, this Agreement and the transactions
contemplated hereby and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law or
by obligations pursuant to any listing agreement with any securities exchange.
5.10. Indemnification. (a) For a period of six years after the Effective
Time, Parent shall, and shall cause the Surviving Corporation to, indemnify,
defend and hold harmless the present and former officers, directors, employees
and agents of the Company and its subsidiaries (collectively, the "Indemnified
Parties") from and against, and pay or reimburse the Indemnified Parties for,
all losses, obligations, expenses, claims, damages or liabilities (whether or
not resulting from third-party claims and including interest, penalties, out-
of-pocket expenses and attorneys' fees incurred in the investigation or defense
of any of the same or in asserting any of their rights hereunder) resulting from
or arising out of actions or omissions occurring on or prior to the Effective
Time (including, without limitation, the transactions contemplated by this
Agreement) to the full extent permitted or required under applicable law and, in
the case of indemnification by the Surviving Corporation, to the fullest extent
permitted under the By-Laws of the Company in effect on the date of this
Agreement (which provisions shall not be amended in any manner which adversely
affects any Indemnified Party for a period of six years), including provisions
relating to advances of expenses incurred in
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the defense of any action or suit; provided that in the event any claim or
claims are asserted or made within such six-year period, all rights to
indemnification in respect of each such claim shall continue until final
disposition of such claim. Without limiting the foregoing, in any case in which
approval by the Surviving Corporation is required to effectuate any
indemnification, Parent shall cause the Surviving Corporation to direct, at the
election of the Indemnified Party, that the determination of any such approval
shall be made by independent counsel selected by the Indemnified Party.
(b) For not less than four years after the Effective Time, Parent shall,
and shall cause the Surviving Corporation to, maintain in effect directors' and
officers' liability insurance covering the Indemnified Parties who are currently
covered by the Company's existing directors' and officers' liability insurance,
on terms and conditions no less favorable to such directors and officers than
those in effect on the date hereof; provided that in no event shall Parent or
the Surviving Corporation be required to expend in any one year an amount in
excess of 200% of the annual premiums currently paid by the Company for such
insurance; and, provided, further, that if the annual premiums of such insurance
coverage exceed such amount, the Parent shall be obligated to obtain a policy
with the greatest coverage available for a cost not exceeding such amount.
(c) Any Indemnified Party wishing to claim indemnification under Section
5.10(a) shall provide notice to Parent promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought, and the
Indemnified Party shall permit Parent (at Parent's expense) to assume the
defense of any claim or any litigation resulting therefrom; provided that (i)
counsel for Parent who shall conduct the defense of such claim or litigation
shall be reasonably satisfactory to the Indemnified Party, and the Indemnified
Party may participate in such defense at such Indemnified Party's expense, and
(ii) the omission by any Indemnified Party to give notice as provided herein
shall not relieve Parent of its indemnification obligation under this Agreement
except to the extent that such omission results in a failure of actual notice to
Parent and Parent is materially damaged as a result of such failure to give
notice. Parent shall not, in the defense of any such claim or litigation, except
with the consent of the Indemnified Party, consent to entry of any judgment or
enter into any settlement that provides for injunctive or other nonmonetary
relief affecting the Indemnified Party or that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim or
litigation. In the event that Parent does not accept the defense of any matter
as above provided, or counsel for the Indemnified Parties advises that there are
issues which raise conflicts of interest between Parent or the Surviving
Corporation and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and Parent or the Surviving Corporation shall pay
all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided that Parent shall not be
liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld). In any event, Parent and the
Indemnified Parties shall cooperate in the defense of any action or claim
subject to this Section 5.10 and the records of each shall be available to the
other with respect to such defense.
(d) This Section 5.10 is intended for the benefit of and to grant third
party rights to the Indemnified Parties whether or not parties to this Agreement
and each of the Indemnified Parties shall be entitled to enforce the covenants
contained herein.
(e) If Parent or the Surviving Corporation or any of their respective
successors or assigns (i) reorganizes or consolidates with or merges into any
other person and is not the resulting, continuing or surviving corporation or
entity of such reorganization, consolidation or merger, or (ii) liquidates,
dissolves or transfers all or substantially all of its properties and assets to
any person or persons, then, and in such case, proper provision will be made so
that the successors and assigns of Parent or the Surviving Corporation assumes
all of the obligations of Parent or the Surviving Corporation, as the case may
be, set forth in this Section 5.10.
5.11. Transfer Taxes. The Surviving Corporation shall pay any transfer
taxes (including any interest and penalties thereon and additions thereto)
payable in connection with the Merger and shall be responsible for the
preparation and filing of any required tax returns, declarations, reports,
schedules, terms and information returns with respect to such transfer taxes.
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ARTICLE VI
CLOSING CONDITIONS
6.1. Conditions to the Obligations of Each Party. The respective
obligations of each party hereto to effect the Merger shall be subject to the
satisfaction or waiver, at or prior to the Effective Time, of the following
conditions:
(a) the proposal to approve this Agreement at the Shareholder's
Meeting shall have received the affirmative vote of the holders of at least
a majority of the Public Shares actually voted, in person or by proxy, on
such proposal (excluding abstentions);
(b) there shall not have occurred (i) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or France or (ii) a commencement of a war, armed hostilities or
other international or national calamity directly involving the United
States or France which has a material adverse effect on the general
economic conditions in the United States or France (other than the
commencement of war or armed hostilities in the Republic of
Bosnia-Herzegovina);
(c) no statute, rule, regulation, temporary, preliminary or permanent
order or injunction shall have been promulgated, enacted, entered, enforced
or deemed applicable to the Merger or performance under this Agreement, by
any state, federal or foreign government or governmental authority or court
or governmental agency of competent jurisdiction and remain in effect that
(i) prohibits the consummation of the Merger or (ii) imposes material
limitations on the ability of the shareholders of Mergeco effectively to
exercise full rights of ownership with respect to the Common Shares;
provided, however, that the provisions of this Section 6.1(c) shall not be
a condition to the obligations of any party that has directly or indirectly
solicited or encouraged any such governmental or judicial action; and
(d) this Agreement shall have been approved and adopted by the
affirmative vote of the holders of the requisite number of Common Shares in
accordance with the Restated Certificate of Incorporation and By-Laws of
the Company and the NYBCL.
6.2. Conditions to the Obligations of Parent, Mergeco and the Voting
Trustee. The obligations of Parent, Mergeco and the Voting Trustee pursuant to
this Agreement to consummate the Merger are also subject to the satisfaction or
waiver, at or prior to the Effective Time, of the following additional
conditions:
(a) the representations and warranties of the Company contained herein
shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in
all material respects (in the case of any representation or warranty
without any materiality qualification) as of the date of this Agreement and
as of the Closing with the same effect as though all such representations
and warranties had been made as of the Closing, except (x) for any such
representations and warranties made as of a specified date, which shall be
true and correct as of such date, or (y) as expressly contemplated by this
Agreement, and Parent shall have received from the Company's President and
Chief Operating Officer an officer's certificate to this effect; and
(b) each and all of the covenants and agreements of the Company to be
performed and complied with pursuant to this Agreement prior to the Closing
shall have been duly performed and complied with in all material respects,
and Parent shall have received from the Company's President and Chief
Operating Officer an officer's certificate to this effect.
6.3. Conditions to the Obligations of the Company. The obligation of the
Company pursuant to this Agreement to consummate the Merger is also subject to
the satisfaction or waiver, at or prior to the Effective Time, of the following
additional conditions:
(a) the representations and warranties of Parent and Mergeco contained
herein shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in
all material respects (in the case of any representation or warranty
without any materiality qualification) as of the date of this Agreement and
as of the Closing with the same effect as though all such representations
and warranties had been made as of the Closing, except (x) for any such
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representations and warranties made as of a specified date, which shall be
true and correct as of such date, and (y) as expressly contemplated by this
Agreement, and the Company shall have received from Parent and Mergeco
officers' certificates to this effect; and
(b) each and all of the covenants and agreements of Parent and Mergeco
to be performed and complied with pursuant to this Agreement prior to the
Closing shall have been duly performed and complied with in all material
respects, and the Company shall have received from the Parent and Mergeco
officers' certificates to this effect.
ARTICLE VII
CLOSING
7.1. Time and Place. The closing of the Merger (the "Closing") shall take
place at the offices of Debevoise & Plimpton, 875 Third Avenue, New York, New
York, as soon as practicable following satisfaction or waiver of the conditions
set forth in Article VI. The date on which the Closing actually occurs is herein
referred to as the "Closing Date."
7.2. Filings at the Closing. At the Closing, Parent, Mergeco and the
Company shall cause the Certificate of Merger, together with any other documents
required by law to effectuate the Merger, to be executed, verified and delivered
for filing by the New York Department of State as provided by Section 904 of the
NYBCL, and shall take any and all other lawful actions and do any and all other
lawful things necessary to cause the Merger to become effective.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1. Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval by the shareholders of the
Company:
(a) by mutual consent of the respective Boards of Directors (or
equivalent governing bodies) of Parent and Mergeco and the Board of
Directors of the Company; provided, however, that any termination of this
Agreement pursuant to this Section 8.1(a) shall require the approval of the
Special Committee;
(b) by action of either the respective Boards of Directors (or
equivalent governing bodies) of Parent and Mergeco or the Board of
Directors of the Company if, without the fault of the terminating party,
the Merger has not been consummated on or prior to January 31, 1996;
(c) by action of the respective Boards of Directors (or equivalent
governing bodies) of Parent and Mergeco, if the Board of Directors of the
Company shall have withdrawn or modified in a manner adverse to Mergeco its
approval or recommendation of the Merger, this Agreement or the
transactions contemplated hereby; or
(d) by action of either of the respective Boards of Directors (or
equivalent governing bodies) of Parent and Mergeco or the Board of
Directors of the Company, if any court of competent jurisdiction in the
United States or other governmental agency of competent jurisdiction shall
have issued an order, decree or ruling or taken any other action
restraining, permanently enjoining or otherwise prohibiting the Merger, and
such order, decree, ruling or other action shall have become final and
non-appealable.
8.2. Procedure and Effect of Termination. In the event of termination and
abandonment of the Merger by either Parent and Mergeco or the Company pursuant
to Section 8.1, written notice thereof shall forthwith be given to the others,
and this Agreement shall terminate and the Merger shall be abandoned, without
further action by any of the parties hereto. Mergeco agrees that any termination
by Parent shall be conclusively binding upon it, whether given expressly on its
behalf or not, and the Company shall have no further obligation with respect to
it. If this Agreement is terminated as provided herein, no party hereto shall
have any liability or further obligation to any other party to this Agreement,
provided that any termination shall be without
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prejudice to the rights of any party hereto arising out of a breach by any other
party of any covenant or agreement contained in this Agreement, and provided,
further, that the obligations set forth in this Section 8.2 and Sections 3.8,
4.7, 9.6 and 9.8 shall in any event survive any termination.
ARTICLE IX
MISCELLANEOUS
9.1. Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of Parent,
Mergeco, the Voting Trustee and the Company at any time prior to the Effective
Time with respect to any of the terms contained herein, provided, that (a) after
this Agreement is adopted by the Company's shareholders pursuant to Section 5.5,
no such amendment or modification shall be made that reduces the amount or
changes the form of the Merger Consideration or otherwise materially and
adversely affects the rights of the Public Shareholders hereunder, without the
further approval of the holders of at least a majority of the Public Shares
actually voted, in person or by proxy, on such proposal (excluding abstentions)
and (b) the approval of the Special Committee shall be required for any
amendment or modification of this Agreement, any extension by the Company of the
time for the performance of any obligations or other acts of Parent or Mergeco
and any waiver of any of the Company's rights under this Agreement.
9.2. Waiver of Compliance; Consents. Any failure of Parent, Mergeco or the
Voting Trustee, on the one hand, or the Company, on the other hand, to comply
with any obligation, covenant, agreement or condition herein may be waived by
the Company or Parent, respectively, only by a written instrument signed by the
party granting such waiver (and if required pursuant to Section 9.1(b), by the
Special Committee), but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of any party
hereto, such consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 9.2.
Mergeco hereby agrees that any consent or waiver of compliance given by Parent
hereunder shall be conclusively binding upon it, whether given expressly on its
behalf or not.
9.3. Survival of Warranties. Each and every representation and warranty
made in this Agreement shall expire with, and be terminated and extinguished by,
the Merger, or the termination of this Agreement pursuant to Section 8.1. This
Section 9.3 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the Closing.
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9.4. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if (a) delivered personally or by overnight
courier, (b) mailed by registered or certified mail, return receipt requested,
postage prepaid, or (c) transmitted by telecopy, and in each case, addressed to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice; provided that notices of a change of address
shall be effective only upon receipt thereof):
(a) if to the Parent, Mergeco or the Voting Trustee, to
Societe BIC S.A.
9, Rue Petit
92110 Clichy
France
Telecopy: 011-331-45-19-52-04
Attention: Bruno Bich
President Directeur General
with a copy to
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: 212-909-6836
Attention: Andrew L. Sommer, Esq.
(b) if to the Company, to
BIC Corporation
500 BIC Drive
Milford, Connecticut 06460
Telecopy: 203-783-2108
Attention: Thomas M. Kelleher, Esq.
General Counsel and Secretary
with a copy to
Special Committee of the Board of Directors of BIC Corporation
c/o Robert E. Allen
Redding Consultants, Inc.
11 Grumman Hill
Wilton, Connecticut 06897
Telecopy: 203-762-1185
and to
Shearman & Sterling
Counsel to the Special Committee of the Board of Directors of BIC
Corporation
599 Lexington Avenue
New York, New York 10022
Telecopy: 212-848-7179
Attention: Peter Lyons, Esq.
Any notice so addressed shall be deemed to be given (x) three business days
after being mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid and (y) upon delivery, if transmitted by hand
delivery, overnight courier or telecopy.
9.5. Assignment; Parties in Interest. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the
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parties hereto without the prior written consent of the other parties. Except
for Section 5.10, which is intended for the benefit of the Indemnified Parties,
this Agreement is not intended to confer upon any other person except the
parties any rights or remedies under or by reason of this Agreement.
9.6. Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with the Offer, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses; provided, however, that the allocable share of each of Parent and the
Company for all expenses related to printing, filing and mailing the Proxy
Statement and all SEC and other regulatory filing fees incurred in connection
with the Proxy Statement and the Schedule 13E-3 shall be one-half.
9.7. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
9.8. Governing Law. This Agreement shall be governed by the laws of the
State of New York (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and remedies.
9.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.10. Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. As used in this Agreement, (i) the term "person" shall mean and
include an individual, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a government or any department or agency
thereof; (ii) the terms "affiliate" and "associate" shall have the meanings set
forth in Rule 12b-2 of the General Rules and Regulations promulgated under the
Exchange Act; and (iii) the term "subsidiary" of any specified corporation shall
mean any corporation of which the outstanding securities having ordinary voting
power to elect a majority of the board of directors are directly or indirectly
owned by such specified corporation.
9.11. Entire Agreement. This Agreement, including the schedules hereto,
embodies the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein and supersedes all prior agreements and
the understandings between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, Parent, Mergeco, the Voting Trustee and the Company
have caused this Agreement to be signed, by their respective duly authorized
officers or directly, as of the date first above written.
SOCIETE BIC S.A.
By /s/ Bruno Bich
------------------------------------
Name: Bruno Bich
Title: President Directeur General
BIC MERGER CORPORATION
By /s/ Bruno Bich
------------------------------------
Name: Bruno Bich
Title: President
BIC CORPORATION
By /s/ Raymond Winter
------------------------------------
Name: Raymond Winter
Title: President and Chief Operating
Officer
Solely for purposes of Section 5.5:
VOTING TRUSTEE
By /s/ Bruno Bich
-----------------------------------
Name: Bruno Bich
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DRAFT
ANNEX B
[FORM OF GOLDMAN, SACHS & CO. OPINION]
PERSONAL AND CONFIDENTIAL
Special Committee of the Board of Directors
BIC Corporation
500 BIC Drive
Milford, CT 06460
Gentlemen:
You have requested our opinion as to the fairness to the holders, other
than Societe BIC SA ("Societe) and the other stockholders of BIC Merger
Corporation ("Mergeco"), of the outstanding shares of Common Stock, par value
$1.00 per share (the "Common Shares"), of BIC Corporation (the "Company") of the
$40.50 per Common Share in cash to be received by such holders (the "Public
Shareholders") pursuant to the Agreement and Plan of Merger dated as of August
15, 1995, among Societe, Mergeco, Bruno Bich, as Voting Trustee, and the Company
(the "Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having acted as the financial advisor to the Special
Committee of the Board of Directors of the Company in connection with, and
having participated in certain of the negotiations leading to, the Agreement.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Annual Reports to Stockholders and Annual Reports on Form 10-K of
the Company for the five years ended December 31, 1994; certain interim reports
to stockholders and Quarterly Reports on Form 10-Q; certain other communications
from the Company to its stockholders; and certain internal financial analyses
and forecasts for the Company prepared by its management. We also have held
discussions with members of the senior management of the Company and of Societe
regarding the Company's past and current business operations, financial
condition and future prospects. In addition, we have reviewed the reported price
and trading activity for the Common Shares, compared certain financial and stock
market information for the Company with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations, and performed such other studies
and analyses as we considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. In that regard, with respect to certain financial
forecasts for the Company provided to us by senior management of the Company for
purposes of our analysis in connection with this opinion, which you have
instructed us to use for the purposes of our analysis, we have assumed that such
forecasts have been reasonably prepared on a basis reflecting the best currently
available estimates and judgments of the Company's senior management as to the
future financial performance of the Company. In addition, we have not made an
independent evaluation or appraisal of the assets and liabilities of the Company
or any of its subsidiaries and we have not been furnished with any such
evaluation or appraisal. We have relied, with your permission, on statements
made by management of Societe indicating that Societe would not consent to a
transaction involving a sale or recapitalization of the Company and we were not
requested or authorized to solicit, and did not solicit, interest from any party
with respect to an acquisition of the outstanding Common Shares, the Company or
its constituent businesses. Finally, we have been informed by Societe, and have
relied with your permission on such information, that Societe does not
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intend to pursue a sale or recapitalization of the Company or its subsidiaries
after consummating the merger pursuant to the Agreement.
Based upon and subject to the foregoing and based on such other matters as
we consider relevant, it is our opinion that as of the date hereof the $40.50
per Common Share in cash to be received by the Public Shareholders pursuant to
the Agreement is fair to the Public Shareholders.
Very truly yours,
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<PAGE> 75
ANNEX C
SEC. 623. PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT FOR SHARES
(a) A shareholder intending to enforce his right under a section of this
chapter to receive payment for his shares if the proposed corporate action
referred to the rein is taken shall file with the corporation, before the
meeting of shareholders at which the action is submitted to a vote, or at such
meeting but before the vote, written objection to the action. The objection
shall include a notice of his election to dissent, his name and residence
address, the number and classes of shares as to which he dissents and a demand
for payment of the fair value of his shares if the action is taken. Such
objection is not required from any shareholder to whom the corporation did not
give notice of such meeting in accordance with this chapter or where the
proposed action is authorized by written consent of shareholders without a
meeting.
(b) Within ten days after the shareholders' authorization date, which term
as used in this section means the date on which the shareholders' vote
authorizing such action was taken, or the date on which such consent without a
meeting was obtained from the requisite shareholders, the corporation shall give
written notice of such authorization or consent by registered mail to each
shareholder who filed written objection or from whom written objection was not
required, excepting any shareholder who voted for or consented in writing to the
proposed action and who thereby is deemed to have elected not to enforce his
right to receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any shareholder
from whom written objection was not required and who elects to dissent shall
file with the corporation a written notice of such election, stating his name
and residence address, the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares. Any shareholder who
elects to dissent from a merger under section 905 (Merger of subsidiary
corporation) or paragraph (c) of section 907 (Merger or consolidation of
domestic and foreign corporations) or from a share exchange under paragraph (g)
of section 913 (Share exchanges) shall file a written notice of such election to
dissent within twenty days after the giving to him of a copy of the plan of
merger or exchange or an outline of the material features thereof under section
905 or 913.
(d) A shareholder may not dissent as to less than all of the shares, as to
which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any beneficial
owner as to less than all of the shares of such owner, as to which such nominee
or fiduciary has a right to dissent, held of record by such nominee or
fiduciary.
(e) Upon consummation of the corporate action, the shareholder shall cease
to have any of the rights of a shareholder except the right to be paid the fair
value of his shares and any) other rights under this section. A notice of
election may be withdrawn by the shareholder at any time prior to his acceptance
in writing of an offer made by the corporation, as provided in paragraph (g),
but in no case later than sixty days from the date of consummation of the
corporate action except that if the corporation fails to make a timely offer, as
provided in paragraph (g), the time for withdrawing a notice of election shall
be extended until sixty days from the date an offer is made. Upon expiration of
such time, withdrawal of a notice of election shall require the written consent
of the corporation. In order to be effective, withdrawal of a notice of election
must be accompanied by the return to the corporation of any advance payment made
to the shareholder as provided in paragraph (g). If a notice of election is
withdrawn, or the corporate action is rescinded, or a court shall determine that
the shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenter's rights, he shall not have the
right to receive payment for his shares and he shall be reinstated to all his
rights as a shareholder as of the consummation of the corporate action,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have expired
or any such dividend or distribution other than in cash has been completed, in
lieu thereof, at the election of the corporation, the fair value thereof in cash
as determined by the board as of the time of such expiration or completion, but
without prejudice otherwise to any corporate proceedings that may have been
taken in the interim.
(f) At the time of filing the notice of election to dissent or within one
month thereafter the shareholder of shares represented by certificates shall
submit the certificates representing his shares to the corporation, or
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to its transfer agent, which shall forthwith note conspicuously thereon that a
notice of election has been filed and shall return the certificates to the
shareholder or other person who submitted them on his behalf. Any shareholder of
shares represented by certificates who fails to submit his certificates for such
notation as herein specified shall, at the option of the corporation exercised
by written notice to him within forty-five days from the date of filing of such
notice of election to dissent, lose his dissenter's rights unless a court, for
good cause shown, shall otherwise direct. Upon transfer of a certificate bearing
such notation, each new certificate issued therefor shall bear a similar
notation together with the name of the original dissenting holder of the shares
and a transferee shall acquire no rights in the corporation except those which
the original dissenting shareholder had at the time of transfer.
(g) Within fifteen days after the expiration of the period within which
shareholders may file their notices of election to dissent, or within fifteen
days after the proposed corporate action is consummated, whichever is later (but
in no case later than ninety days from the shareholders' authorization date),
the corporation or, in the case of a merger or consolidation, the surviving or
new corporation, shall make a written offer by registered mail to each
shareholder who has filed such notice of election to pay for his shares at a
specified price which the corporation considers to be their fair value. Such
offer shall be accompanied by a statement setting forth the aggregate number of
shares with respect to which notices of election to dissent have been received
and the aggregate number of holders of such shares. If the corporate action has
been consummated, such offer shall also be accompanied by (1) advance payment to
each such shareholder who has submitted the certificates representing his shares
to the corporation, as provided in paragraph (f), of an amount equal to eighty
percent of the amount of such offer, or (2) as to each shareholder who has not
yet submitted his certificates a statement that advance payment to him of an
amount equal to eighty percent of the amount of such offer will be made by the
corporation promptly upon submission of his certificates. If the corporate
action has not been consummated at the time of the making of the offer, such
advance payment or statement as to advance payment shall be sent to each
shareholder entitled thereto forthwith upon consummation of the corporate
action. Every advance payment or statement as to advance payment shall include
advice to the shareholder to the effect that acceptance of such payment does not
constitute a waiver of any dissenters' rights. If the corporate action has not
been consummated upon the expiration of the ninety day period after the
shareholders' authorization date, the offer may be conditioned upon the
consummation of such action. Such offer shall be made at the same price per
share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting shareholder holds as of the latest
available date, which shall not be earlier than twelve months before the making
of such offer, and a profit and loss statement or statements for not less than a
twelve month period ended on the date of such balance sheet or, if the
corporation was not in existence throughout such twelve month period, for the
portion thereof during which it was in existence. Notwithstanding the foregoing,
the corporation shall not be required to furnish a balance sheet or profit and
loss statement or statements to any shareholder to whom such balance sheet or
profit and loss statement or statements were previously furnished, nor if in
connection with obtaining the shareholders' authorization for consent to the
proposed corporate action the shareholders were furnished with a proxy or
information statement, which included financial statements, pursuant to
Regulation 14A or Regulation 14C of the United States Securities and Exchange
Commission. If within thirty days after the making of such offer, the
corporation making the offer and any shareholder agree upon the price to be paid
for his shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate action,
whichever is later, upon the surrender of the certificates for any such shares
represented by certificates.
(h) The following procedure shall apply if the corporation fails to make
such offer within such period of fifteen days, or if it makes the offer and any
dissenting shareholder or shareholders fail to agree with it within the period
of thirty days thereafter upon the price to be paid for their shares:
(1) The corporation shall, within twenty days after the expiration of
whichever is applicable of the two periods last mentioned, institute a
special proceeding in the supreme court in the judicial district in which
the office of the corporation is located to determine the rights of
dissenting shareholders and to fix the fair value of their shares. If, in
the case of merger or consolidation, the surviving or new corporation is
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a foreign corporation without an office in this state, such proceeding
shall be brought in the county where the office of the domestic
corporation, whose shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting shareholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not instituted
within such thirty day period, all dissenter's rights shall be lost unless
the supreme court, for good cause shown, shall otherwise direct.
(3) All dissenting shareholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be paid
for their shares, shall be made parties to such proceeding, which shall
have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in such proceeding upon each
dissenting shareholder who is a resident of this state in the manner
provided by law for the service of a summons, and upon each nonresident
dissenting shareholder either by registered mail and publication, or in
such other manner as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.
(4) The court shall determine whether each dissenting shareholder, as
to whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation does not
request any such determination or if the court finds that any dissenting
shareholder is so entitled, it shall proceed to fix the value of the
shares, which, for the purposes of this section, shall be the fair value as
of the close of business on the day prior to the shareholders'
authorization date. In fixing the fair value of the shares, the court shall
consider the nature of the transaction giving rise to the shareholder's
right to receive payment for shares and its effects on the corporation and
its shareholders, the concepts and methods then customary in the relevant
securities and financial markets for determining fair value of shares of a
corporation engaging in a similar transaction under comparable
circumstances and all other relevant factors. The court shall determine the
fair value of the shares without a jury and without referral to an
appraiser or referee. Upon application by the corporation or by any
shareholder who is a party to the proceeding, the court may, in its
discretion, permit pretrial disclosure, including, but not limited to,
disclosure of any expert's reports relating to the fair value of the shares
whether or not intended for use at the trial in the proceeding and
notwithstanding subdivision (d) of section 3101 of the civil practice law
and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to the
proceeding and is entitled thereto for the value of his shares so
determined.
(6) The final order shall include an allowance for interest at such
rate as the court finds to be equitable, from the date the corporate action
was consummated to the date of payment. In determining the rate of
interest, the court shall consider all relevant factors, including the rate
of interest which the corporation would have had to pay to borrow money
during the pendency of the proceeding. If the court finds that the refusal
of any shareholder to accept the corporate offer of payment for his shares
was arbitrary, vexatious or otherwise not in good faith, no interest shall
be allowed to him.
(7) Each party to such proceeding shall bear its own costs and
expenses, including, the fees and expenses of its counsel and of any
experts employed by it. Notwithstanding the foregoing, the court may, in
its discretion, apportion and assess all or any part of the costs, expenses
and fees incurred by the corporation against any or all of the dissenting
shareholders who are parties to the proceeding, including any who have
withdrawn their notices of election as provided in paragraph (e), if the
court finds that their refusal to accept the corporate offer was arbitrary,
vexatious or otherwise not in good faith. The court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by any or all of the dissenting shareholders who are parties to
the proceeding against the corporation if the court finds any of the
following: (A) that the fair value of the shares as determined materially
exceeds the amount which the corporation offered to pay; (B) that no offer
or required advance payment was made by the corporation; (C) that the
corporation failed to institute the special proceeding within the period
specified therefor; or (D) that the action of the corporation in complying
with its obligations as provided
C-3
<PAGE> 78
in this section was arbitrary, vexatious or otherwise not in good faith. In
making any determination as provided in clause (A), the court may consider
the dollar amount or the percentage, or both, by which the fair value of
the shares as determined exceeds the corporate offer.
(8) Within sixty days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to be
due him, upon surrender of the certificates for any such shares represented
by certificates.
(i) Shares acquired by the corporation upon the payment of the agreed value
therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be cancelled as provided in section 515
(Reacquired shares), except that, in the case of a merger or consolidation, they
may be held and disposed of as the plan of merger or consolidation may otherwise
provide.
(j) No payment shall be made to a dissenting shareholder under this section
at a time when the corporation is insolvent or when such payment would make it
insolvent. In such event, the dissenting shareholder shall, at his option:
(1) Withdraw his notice of election, which shall in such event be
deemed withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if it
is liquidated, be subordinated to the rights of creditors of the
corporation, but have rights superior to the non-dissenting shareholders,
and if it is not liquidated, retain his right to be paid for his shares,
which right the corporation shall be obliged to satisfy when the
restrictions of this paragraph do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation within
thirty days after the corporation has given him written notice that payment
for his shares cannot be made because of the restrictions of this
paragraph. If the dissenting shareholder fails to exercise such option as
provided, the corporation shall exercise the option by written notice given
to him within twenty days after the expiration of such period of thirty
days.
(k) The enforcement by a shareholder of his right to receive payment for
his shares in the manner provided herein shall exclude the enforcement by such
shareholder of any other right to which he might otherwise be entitled by virtue
of share ownership, except as provided in paragraph (e), and except that this
section shall not exclude the right of such shareholder to bring or maintain an
appropriate action to obtain relief on the ground that such corporate action
will be or is unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any notice to
be given by a corporation to a shareholder under this section shall be given in
the manner provided in section 605 (Notice of meetings of shareholders).
(m) This section shall not apply to foreign corporations except as provided
in subparagraph (e)(2) of section 907 (Merger or consolidation of domestic and
foreign corporations).
C-4
<PAGE> 79
[PRELIMINARY COPY]
PROXY
BIC CORPORATION 401(k) SAVINGS AND INVESTMENT PLAN
INSTRUCTIONS FOR SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT
To: Fleet Bank, as Trustee under the BIC Corporation 401(k) Savings and
Investment Plan.
In connection with the Special Meeting of Shareholders of BIC Corporation (the
"Company") to be held on , October , 1995, the undersigned hereby
instructs you with respect to voting, in person or by proxy, at such meeting,
and all adjournments thereof, all Common Shares of the Company in the
undersigned's account in the Plan with respect to which the undersigned is
entitled to give you voting instructions.
You are instructed to vote upon matters coming before the meeting, and unless
contrary direction is indicated, to vote the shares in connection with Proposal
1 as indicated on the reverse side.
(Continued from other side)
<PAGE> 80
I plan to attend
the meeting
/ /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL.
1. To approve and adopt the Agreement and Plan of Merger, dated as of August 15,
1995, by and among BIC Corporation (the "Company"), Societe BIC S.A.
("Parent"), a societe anonyme organized under the laws of France, Bruno Bich,
as voting trustee and BIC Merger Corporation ("Mergeco"), a New York
corporation and a majority owned subsidiary of Parent, and the merger of
Mergeco with and into the Company as contemplated thereby.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSAL UNLESS INSTRUCTIONS TO THE
CONTRARY ARE INDICATED. PLEASE NOTE THAT ALL ABSTAIN VOTES WILL BE COUNTED IN
DETERMINING THE EXISTENCE OF A QUORUM AT THE SPECIAL MEETING, BUT WILL NOT BE
VOTED FOR THE PROPOSAL.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT
Dated: , 1995
-------------------------------------
--------------------------------------------------
(Signature of Shareholder)
Please sign as name appears hereon. When signing
as attorney, executor, administrator, trustee or
guardian, please give full title as such. Joint
tenants should both sign.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
<PAGE> 81
[PRELIMINARY COPY]
PROXY
BIC CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
OCTOBER ___, 1995
The undersigned hereby constitutes and appoints BRUNO BICH, ALEXANDER ALEXIADES
and RAYMOND WINTER, and each of them, the attorneys and proxies of the
undersigned, with full power of substitution, to vote on behalf of the
undersigned all of the Common Shares of BIC Corporation (the "Company") which
the undersigned is entitled to vote at the Special Meeting of Shareholders of
the Company, to be held at the [Trumbull Marriott Merritt Parkway, 180 Hawley
Lane, Trumbull, Connecticut 06611], on _________, October ___, 1995, at 10:00
a.m., local time, and all adjournments thereof, upon the matters set forth on
the reverse side and upon all matters incident to the conduct of the Special
Meeting. This proxy revokes all prior proxies given by the undersigned. Receipt
of the Notice of Special Meeting and Proxy Statement is hereby acknowledged.
(Continued and to be signed and dated on the other side)
<PAGE> 82
I plan to attend
the meeting
/ /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL.
1. To approve and adopt the Agreement and Plan of Merger, dated as of August 15,
1995, by and among BIC Corporation (the "Company"), Societe BIC S.A.
("Parent"), a societe anonyme organized under the laws of France, Bruno Bich,
as voting trustee and BIC Merger Corporation ("Mergeco"), a New York
corporation and a majority owned subsidiary of Parent, and the merger of
Mergeco with and into the Company as contemplated thereby.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSAL UNLESS INSTRUCTIONS TO THE
CONTRARY ARE INDICATED. PLEASE NOTE THAT ALL ABSTAIN VOTES WILL BE COUNTED IN
DETERMINING THE EXISTENCE OF A QUORUM AT THE SPECIAL MEETING, BUT WILL NOT BE
VOTED FOR THE PROPOSAL.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT
Dated: , 1995
-------------------------------------
--------------------------------------------------
(Signature of Shareholder)
Please sign as name appears hereon. When signing
as attorney, executor, administrator, trustee or
guardian, please give full title as such. Joint
tenants should both sign.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
<PAGE> 83
[PRELIMINARY COPY]
PROXY
BIC CORPORATION LOCAL 134 EMPLOYEES SHARE PURCHASE PLAN
INSTRUCTIONS FOR SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT
To: Fleet Bank, as Trustee under the BIC Corporation Local 134 Share Purchase
Plan.
In connection with the Special Meeting of Shareholders of BIC Corporation (the
"Company") to be held on , October 19 , 1995, the undersigned hereby
instructs you with respect to voting, in person or by proxy, at such meeting,
and all adjournments thereof, all Common Shares of the Company in the
undersigned's account in the Plan with respect to which the undersigned is
entitled to give you voting instructions.
You are instructed to vote upon matters coming before the meeting, and unless
contrary direction is indicated, to vote the shares in connection with Proposal
1 as indicated on the reverse side.
(Continued from other side)
<PAGE> 84
I plan to attend
the meeting
/ /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL.
1. To approve and adopt the Agreement and Plan of Merger, dated as of August 15,
1995, by and among BIC Corporation (the "Company"), Societe BIC S.A.
("Parent"), a societe anonyme organized under the laws of France, Bruno Bich,
as voting trustee and BIC Merger Corporation ("Mergeco"), a New York
corporation and a majority owned subsidiary of Parent, and the merger of
Mergeco with and into the Company as contemplated thereby.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSAL UNLESS INSTRUCTIONS TO THE
CONTRARY ARE INDICATED. PLEASE NOTE THAT ALL ABSTAIN VOTES WILL BE COUNTED IN
DETERMINING THE EXISTENCE OF A QUORUM AT THE SPECIAL MEETING, BUT WILL NOT BE
VOTED FOR THE PROPOSAL.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT
Dated: , 1995
-------------------------------------
--------------------------------------------------
(Signature of Shareholder)
Please sign as name appears hereon. When signing
as attorney, executor, administrator, trustee or
guardian, please give full title as such. Joint
tenants should both sign.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
