<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
VALLEN CORPORATION
(Name of Subject Company)
SHIELD ACQUISITION CORP.
HAGEMEYER P.P.S. NORTH AMERICA, INC.
HAGEMEYER N.V.
(Bidders)
----------------
COMMON STOCK, PAR VALUE $0.50 PER SHARE
(Title of Class of Securities)
----------------
919260109
(CUSIP Number of Class of Securities)
----------------
DAVID G. GUNDLING
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
HAGEMEYER P.P.S. NORTH AMERICA, INC.
100 GALLERIA PARKWAY, SUITE 1120
ATLANTA, GEORGIA 30339
TELEPHONE: (770) 541-6151
FACSIMILE: (770) 541-6645
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
<PAGE>
COPY TO:
GABRIEL DUMITRESCU, ESQ.
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
191 PEACHTREE STREET, N.E.
16TH FLOOR
ATLANTA, GEORGIA 30303
TELEPHONE: (404) 572-6600
FACSIMILE: (404) 572-6999
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<CAPTION>
TRANSACTION VALUE* AMOUNT OF FILING FEE**
<S> <C>
$190,881,675 $38,177
</TABLE>
* Estimated solely for purposes of calculating the amount of the filing fee.
The filing fee calculation assumes the purchase of 7,635,267 shares of
common stock, par value $0.50 per share, (the "Shares"), of Vallen
Corporation at a price of $25.00 per Share in cash, without interest. Such
amount reflects the purchase of 7,192,264 Shares outstanding and 443,003
Shares issuable pursuant to the exercise of outstanding options.
** The amount of the filing fee calculated in accordance with Rule 0-11 under
the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the value of the transaction.
Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Not applicable.
Form or Registration No.: Not applicable.
Filing Part: Not applicable.
Date Filed: Not applicable.
- --------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 919260109
- --------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
Shield Acquisition Corp.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
58-2504037
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b)[_]
(3) SEC USE ONLY
-------------------------------------------------------------------------
(4) SOURCE OF FUNDS
AF
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(e) OR 2(f)
[_]
(6) CITIZENSHIP OR PLACE OF ORIGIN
Texas
(7) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
(8) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
(9) PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7)
0.0%
(10) TYPE OF REPORTING PERSON
CO
<PAGE>
CUSIP NO. 919260109
- --------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
Hagemeyer P.P.S. North America, Inc.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
58-2501931
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[_]
(b)[_]
(3) SEC USE ONLY
-------------------------------------------------------------------------
(4) SOURCE OF FUNDS
AF
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(e) OR 2(f)
[_]
(6) CITIZENSHIP OR PLACE OF ORIGIN
Delaware
(7) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
(8) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
(9) PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7)
0.0%
(10) TYPE OF REPORTING PERSON
CO
<PAGE>
CUSIP NO. 919260109
- --------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
Hagemeyer N.V.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
N/A
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[_]
(b)[_]
(3) SEC USE ONLY
-------------------------------------------------------------------------
(4) SOURCE OF FUNDS
WC
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(e) OR 2(f)
[_]
(6) CITIZENSHIP OR PLACE OF ORIGIN
The Netherlands
(7) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
(8) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
[_]
(9) PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7)
0.0%
(10) TYPE OF REPORTING PERSON
OO
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") refers to
the offer by Shield Acquisition Corp., a Texas corporation ("Purchaser") and
wholly owned subsidiary of Hagemeyer P.P.S. North America, Inc., a Delaware
corporation ("Parent") and an indirect wholly owned subsidiary of Hagemeyer
N.V., a company organized under the laws of the Netherlands ("Hagemeyer"), to
purchase all of the outstanding shares of common stock, par value $0.50 per
share (the "Shares"), of Vallen Corporation, a Texas corporation (the
"Company"), at a price of $25.00 per share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated as of November 19, 1999 (the "Offer to Purchase"), a
copy of which is attached hereto as Exhibit (a)(1), and in the related Letter
of Transmittal, a copy of which is attached hereto as Exhibit (a)(2) (which, as
they may be amended or supplemented from time to time, together constitute the
"Offer").
ITEM 1.SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Vallen Corporation, and the address
of its principal executive office is 13333 Northwest Freeway, Houston,
Texas 77040. The telephone number at such address is (713) 462-8700.
(b) The information set forth in the "Introduction" to the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in "Section 6--Price Range of the Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.
ITEM 2.IDENTITY AND BACKGROUND.
(a)-(d),(g) This Statement is filed by Purchaser, Parent and Hagemeyer. The
information set forth in the "Introduction" and "Section 9--Certain
Information Concerning Purchaser, Parent and Hagemeyer" of the
Offer to Purchase and Schedule I thereto is incorporated herein by
reference.
(e)-(f) During the past five years, none of Purchaser, Parent nor Hagemeyer
nor, to the best knowledge of Purchaser, Parent and Hagemeyer, any of
the persons listed in Schedule I of the Offer to Purchase has been (i)
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) party to a civil proceeding of a judicial
or administrative body of competent jurisdiction as a result of which
any such person was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) Other than the transactions described in Item 3(b) below, none of
Purchaser, Parent nor Hagemeyer nor, to the best knowledge of Purchaser,
Parent and Hagemeyer, any of the persons listed in Schedule I of the
Offer to Purchase has entered into any transaction with the Company, or
any of the Company's affiliates which are corporations, since the
commencement of the Company's third full fiscal year preceding the date
of this Statement, the aggregate amount of which was equal to or greater
than one percent of the consolidated revenues of the Company for (i) the
fiscal year in which such transaction occurred or (ii) the portion of
the current fiscal year which has occurred if the transaction occurred
in such year.
(a)(2) Other than the transactions described in Item 3(b) below, none of
Purchaser, Parent nor Hagemeyer nor, to the best knowledge of Purchaser,
Parent and Hagemeyer, any of the persons listed in Schedule I of the
Offer to Purchase has entered into any transaction since the
commencement of the
<PAGE>
Company's third full fiscal year preceding the date of this Statement,
with the executive officers, directors or affiliates of the Company
which are not corporations, in which the aggregate amount involved in
such transaction or in a series of similar transactions, including all
periodic installments in the case of any lease or other agreement
providing for periodic payments or installments, exceeds $40,000.
(b) The information set forth in the "Introduction," "Section 9--Certain
Information Concerning Purchaser, Parent and Hagemeyer," "Section 11--
Background of the Offer; Purpose of the Offer and the Merger; The
Merger Agreement; Certain Other Agreements" and "Section 12--Plans for
the Company; Other Matters" of the Offer to Purchase is incorporated
herein by reference.
ITEM 4.SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "Section 10--Source and Amount of Funds"
of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5.PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the "Introduction," "Section 11--
Background of the Offer; Purpose of the Offer and the Merger; The
Merger Agreement; Certain Other Agreements," and "Section 12--Plans
for the Company; Other Matters" of the Offer to Purchase is
incorporated herein by reference.
(f)-(g) The information set forth in "Section 7--Effect of the Offer on the
Market for the Shares; Nasdaq Quotation; Exchange Act Registration;
Margin Regulations" of the Offer to Purchase is incorporated herein by
reference.
ITEM 6.INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in "Section 9--Certain Information
Concerning Purchaser, Parent and Hagemeyer" and "Section 11--
Background of the Offer; Purpose of the Offer and the Merger; The
Merger Agreement; Certain Other Agreements" of the Offer to Purchase
is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "Introduction," "Section 10--Source and
Amount of Funds," "Section 11--Background of the Offer; Purpose of the Offer
and the Merger; The Merger Agreement; Certain Other Agreements," "Section 12--
Plans for the Company; Other Matters" and "Section 16--Fees and Expenses" of
the Offer to Purchase is incorporated herein by reference.
ITEM 8.PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Section 16--Fees and Expenses" of the Offer
to Purchase is incorporated herein by reference.
ITEM 9.FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in "Section 9--Certain Information Concerning
Purchaser, Parent and Hagemeyer" of the Offer to Purchase is incorporated
herein by reference.
<PAGE>
ITEM 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or
relationships between Purchaser, Parent and Hagemeyer, or to the best
knowledge of Purchaser, Parent and Hagemeyer, any of the persons listed
in Schedule I of the Offer to Purchase, and the Company, or any of its
executive officers, directors, controlling persons or subsidiaries.
(b)-(c) The information set forth in the "Introduction," "Section 14--
Conditions to the Offer," and "Section 15--Certain Legal Matters" of
the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in "Section 7--Effect of the Offer on the
Market for the Shares; Nasdaq Quotation; Exchange Act Registration;
Margin Regulations" and "Section 15--Certain Legal Matters" of the Offer
to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, to the extent not otherwise incorporated herein by
reference, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
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(a)(1) Offer to Purchase dated November 19, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
(a)(4) Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
Guidelines for Certification of Taxpayer Identification Number on
(a)(6) Substitute Form W-9.
(a)(7) Summary Advertisement dated November 19, 1999.
(c)(1) Agreement and Plan of Merger, dated as of November 14, 1999, among
Purchaser, Parent and the Company.
(c)(2) Confidentiality Agreement, dated as of September 9, 1999, between the
Company and an affiliate of Parent.
(c)(3) Guarantee, dated as of November 14, 1999, by Hagemeyer N.V.
(c)(4) Shareholders' Agreement, dated November 14, 1999, among Parent and
Leonard J. Bruce, Bruce Partners, Ltd. and Bruce Interests.
(c)(5) Option Agreement, dated November 14, 1999, among Parent, Purchaser and
the Company.
(d) Not applicable.
(e) Not applicable.
</TABLE>
<PAGE>
SIGNATURE
After due inquiry and to the best of their knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
correct and complete.
Dated: November 19, 1999
SHIELD ACQUISITION CORP.
By: /s/ David G. Gundling
__________________________________
Name: David G. Gundling
Title: President and Chief Executive Officer
HAGEMEYER P.P.S. NORTH AMERICA, INC.
By: /s/ David G. Gundling
__________________________________
Name: David G. Gundling
Title: President and Chief Executive Officer
HAGEMEYER N.V.
By: /s/ J. H. Riddell
__________________________________
Name: J. H. Riddell
Title: Chief Financial Officer
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Vallen Corporation
at
$25.00 Net Per Share
by
Shield Acquisition Corp.
an indirect wholly owned subsidiary of
Hagemeyer N.V.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF NOVEMBER 14, 1999, BY AND AMONG HAGEMEYER P.P.S. NORTH AMERICA, INC.
("PARENT"), SHIELD ACQUISITION CORP. ("PURCHASER") AND VALLEN CORPORATION (THE
"COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED
THAT THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN) ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS, HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER, AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES (AS DEFINED HEREIN) PURSUANT TO THE OFFER.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined herein) a
number of Shares which, together with any Shares beneficially owned by Parent
and its affiliates, constitutes at least two thirds of the Shares outstanding
(on a fully diluted basis) on the date Shares are accepted for payment. The
Offer is also subject to other terms and conditions set forth in this Offer to
Purchase. The Offer is not subject to a financing condition. See Section 14.
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares should either (i) complete and sign the enclosed Letter of Transmittal
(or facsimile thereof) in accordance with the Instructions in the Letter of
Transmittal, have such shareholder's signature thereon guaranteed (if required
by Instruction 1 to the Letter of Transmittal), mail or deliver the Letter of
Transmittal (or a facsimile thereof) and any other required documents to the
Depositary (as defined herein) and either deliver the certificates for such
Shares to the Depositary or tender such Shares pursuant to the procedure for
book-entry transfer set forth in Section 3 of this Offer to Purchase or (ii)
request such shareholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such shareholder. Any shareholder
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee to tender such Shares.
Any shareholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, or who cannot
deliver all required documents to the Depositary prior to the expiration of
the Offer, may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other tender offer materials may also be directed to
the Information Agent. A shareholder may also contact brokers, dealers,
commercial banks or trust companies for assistance.
---------------
The Dealer Manager for the Offer is:
Deutsche Banc Alex. Brown
Deutsche Bank Securities Inc.
November 19, 1999
<PAGE>
TABLE OF CONTENTS
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Page
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INTRODUCTION............................................................ 1
THE OFFER............................................................... 4
1. Terms of the Offer............................................... 4
2. Acceptance for Payment and Payment............................... 5
3. Procedures for Tendering Shares.................................. 6
4. Withdrawal Rights................................................ 9
5. Certain Federal Income Tax Consequences.......................... 9
6. Price Range of the Shares; Dividends............................. 11
7. Effect of the Offer on the Market for the Shares; Nasdaq
Quotation; Exchange Act Registration; Margin Regulations......... 11
8. Certain Information Concerning the Company....................... 12
9. Certain Information Concerning Purchaser, Parent and Hagemeyer... 15
10. Source and Amount of Funds....................................... 17
11. Background of the Offer; Purpose of the Offer and the Merger; The
Merger Agreement; Certain Other Agreements....................... 17
12. Plans for the Company; Other Matters............................. 30
13. Dividends and Distributions...................................... 33
14. Conditions to the Offer.......................................... 33
15. Certain Legal Matters............................................ 34
16. Fees and Expenses................................................ 37
17. Miscellaneous.................................................... 38
SCHEDULE I.............................................................. I-1
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-i-
<PAGE>
To the Holders of Common Stock
of Vallen Corporation:
INTRODUCTION
Shield Acquisition Corp., a Texas corporation ("Purchaser") and an indirect
wholly owned subsidiary of Hagemeyer N.V., a company organized under the laws
of the Netherlands ("Hagemeyer"), hereby offers to purchase all outstanding
shares of common stock, par value $0.50 per share (the "Shares" or "Common
Stock"), of Vallen Corporation, a Texas corporation (the "Company"), at a
price of $25.00 per Share (the "Offer Price"), net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer").
Tendering shareholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by Purchaser pursuant to the Offer. Shareholders who hold
their Shares through a bank or broker should check with such institution as to
whether they will charge any service fees. Purchaser will pay all fees and
expenses of Deutsche Bank Securities Inc., which is acting as the Dealer
Manager for the Offer (in such capacity the "Dealer Manager"), ChaseMellon
Shareholder Services, L.L.C., which is acting as the depositary for the Offer
(in such capacity, the "Depositary"), and ChaseMellon Consulting Services,
L.L.C., which is acting as information agent for the Offer (in such capacity,
the "Information Agent"), incurred in connection with the Offer and in
accordance with the terms of the agreements entered into between Purchaser
and/or Parent and each such person. See Section 16.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 14, 1999 (the "Merger Agreement"), by and among Hagemeyer
P.P.S. North America, Inc., a Delaware corporation and an indirect wholly
owned subsidiary of Hagemeyer ("Parent"), Purchaser and the Company. Pursuant
to the Merger Agreement, as soon as practicable, but in any event no later
than two business days, after satisfaction or waiver, if permissible, of all
conditions to the Merger (as defined below), including the approval of the
Merger Agreement by the shareholders of the Company (if and to the extent
required by applicable law), Purchaser will be merged with and into the
Company (the "Merger") and the Company will be the surviving corporation in
the Merger (the "Surviving Corporation") in accordance with the Texas Business
Corporation Act, as amended (the "TBCA"). At the effective time of the Merger
(the "Effective Time"), each Share then outstanding (other than Shares held by
(i) the Company or any of its subsidiaries, (ii) Parent or any of its
subsidiaries, including Purchaser, and (iii) shareholders who properly perfect
their dissenters' rights of appraisal under the TBCA) will be converted into
the right to receive in cash the same consideration per Share paid under the
Offer (the "Merger Consideration"), without interest. The Merger Agreement is
more fully described in Sections 11 and 14.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS
OF THE COMPANY'S SHAREHOLDERS, HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
Salomon Smith Barney Inc. and William Blair & Company, L.L.C., financial
advisors to the Company (together, the "Company Financial Advisors"), have
delivered to the Company Board separate written opinions, each dated November
14, 1999, to the effect that, as of such date and based upon and subject to
certain matters stated in their respective opinions, the $25.00 per Share cash
consideration to be received by the holders of Shares (other than Parent and
its affiliates) in the Offer and the Merger, taken as a whole, was fair, from
a financial point of view, to such holders. Copies of these opinions are
attached as exhibits to the Company's
<PAGE>
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-
9"), which has been filed by the Company with the Securities and Exchange
Commission (the "Commission") in connection with the Offer and which is being
mailed to holders of Shares herewith. Holders of Shares are urged to read
these opinions carefully.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration date (as defined herein) a
number of Shares which, together with any Shares beneficially owned by Parent
and its affiliates, constitutes two thirds of the Shares outstanding (on a
fully diluted basis) on the date Shares are accepted for payment (the "Minimum
Condition"). The Offer is also subject to other terms and conditions. See
Section 14.
The Merger Agreement provides that, upon the purchase by Purchaser of at
least two thirds of the Shares pursuant to the Offer and from time to time
thereafter, Parent shall be entitled to designate such number of directors,
rounded down to the next whole number, on the Company Board so that the
percentage of Parent's nominees on the Company Board equals the percentage of
outstanding Shares beneficially owned by Parent and its affiliates. The
Company will, at such time, upon the request of Purchaser, promptly take all
actions available to the Company to cause such persons designated by Parent to
be elected to the Board of Directors, including using its reasonable best
efforts to increase the size of the Board of Directors or secure resignations
of incumbent directors or both.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption of the Merger Agreement by the requisite vote of
shareholders of the Company, if required by the TBCA. Under the TBCA and
pursuant to the Company's Articles of Incorporation, the affirmative vote of
the holders of two thirds of the outstanding Shares is the only vote of any
class or series of the Company's capital stock that would be necessary to
approve the Merger Agreement and the Merger at any required meeting of the
Company's shareholders. IF THE MINIMUM CONDITION IS SATISFIED, AS A RESULT OF
THE PURCHASE OF SHARES BY PURCHASER PURSUANT TO THE OFFER, PURCHASER AND ITS
AFFILIATES WILL OWN AT LEAST TWO THIRDS OF THE OUTSTANDING SHARES AND
PURCHASER WILL BE ABLE TO EFFECT THE MERGER WITHOUT THE AFFIRMATIVE VOTE OF
ANY OTHER SHAREHOLDER. The Merger Agreement is more fully described in
Sections 11 and 14.
Under Article 5.16 of the TBCA, if a corporation owns at least 90% of the
outstanding shares of each class of stock of a subsidiary corporation, the
corporation holding such stock may merge such subsidiary into itself, or
itself into such subsidiary, without any action or vote on the part of the
board of directors or the shareholders of such other corporation (a "short-
form merger"). Pursuant to the Merger Agreement, in the event that Purchaser
acquires at least 90% of the outstanding Shares in the Offer, Purchaser and
Parent shall take all necessary actions to cause the Merger to become
effective, as soon as practicable after the expiration of the Offer, without a
meeting of the shareholders of the Company. Even if Purchaser does not own 90%
of the outstanding Shares following consummation of the Offer, Parent or
Purchaser could seek to purchase additional Shares in the open market or
otherwise or may exercise the option described below in order to reach the 90%
threshold and to effect a short-form merger. The consideration per Share paid
for any Shares acquired in open market purchases may be greater or less than
the Offer Price. Parent currently intends to effect a short-form merger of
Purchaser into the Company, if permitted to do so under the TBCA. See Section
12.
In connection with the Merger Agreement, Parent, Purchaser and the Company
have entered into an Option Agreement dated as of November 14, 1999 (the
"Option Agreement"), pursuant to which the Company granted to Purchaser an
irrevocable option to purchase from the Company, at the Offer Price, newly
issued Shares in an amount equal to the number of Shares (up to a maximum of
10% of the number of Shares outstanding) that, when added to the number of
Shares owned by Purchaser and its affiliates immediately following
consummation of the Offer, constitutes 90% of the Shares then outstanding on a
fully diluted basis (giving effect to the issuance of such Shares). The option
is exercisable at any time during the two business days following the
acceptance for payment by Purchaser of all Shares purchasable pursuant to the
Offer (including any extension of the Offer). The Option Agreement is
described more fully in Section 11.
2
<PAGE>
As a condition and an inducement to Parent's entering into the Merger
Agreement, Mr. Leonard J. Bruce, Bruce Partners, Ltd., and Bruce Interests
(each, a "Shareholder" and collectively, the "Shareholders"), who collectively
are the beneficial owners of 4,067,412 Shares (approximately 56% of the total
outstanding Shares), concurrently with the execution and delivery of the
Merger Agreement have entered into a Shareholders' Agreement dated as of
November 14, 1999 (the "Shareholders' Agreement") with Parent and Purchaser
pursuant to which they have agreed, among other things, to tender all of their
Shares pursuant to the Offer. The Shareholders' Agreement is described more
fully in Section 11.
This Offer to Purchase and the related Letter of Transmittal contain
important information and should be read carefully before any decision is made
with respect to the Offer.
3
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THE OFFER
1.Terms of the Offer.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension
or amendment), Purchaser will accept for payment and pay for all Shares
validly tendered prior to the Expiration Date, and not withdrawn in accordance
with applicable law and Section 4. The term "Expiration Date" shall mean 12:00
Midnight, New York City time, on Friday, December 17, 1999, unless and until
Purchaser, in accordance with the terms of the Merger Agreement, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by Purchaser, shall expire.
The Offer is conditioned upon the satisfaction of the Minimum Condition,
the expiration or termination of all waiting periods imposed by the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
and any similar provisions of the laws of Canada or Mexico, and the other
conditions set forth in Section 14. If such conditions are not satisfied prior
to the Expiration Date, Purchaser reserves the right, subject to the terms of
the Merger Agreement and subject to complying with applicable rules and
regulations of the Commission, to (i) decline to purchase any Shares tendered
in the Offer and terminate the Offer and return all tendered Shares to the
tendering shareholders, (ii) waive any or all conditions to the Offer (except
the Minimum Condition) and, to the extent permitted by applicable law,
purchase all Shares validly tendered, (iii) extend the Offer and, subject to
the right of shareholders to withdraw Shares until the Expiration Date, retain
all Shares that have been tendered during the period or periods for which the
Offer is extended, or (iv) subject to the next paragraph, amend the Offer.
The Merger Agreement provides that, without the prior written consent of
the Company, Purchaser shall not (and Parent shall cause Purchaser not to) (i)
decrease the Offer Price or change the form of the consideration or decrease
the number of Shares sought pursuant to the Offer, (ii) change the conditions
to the Offer (other than to increase the Offer Price), (iii) impose additional
conditions to the Offer, (iv) waive the Minimum Condition, (v) terminate or
withdraw the Offer or extend the Expiration Date (except as required by law)
beyond the initial Expiration Date, or (vi) amend any term of the Offer in any
manner adverse to holders of Shares. Notwithstanding the provisions of the
preceding sentence (a) Purchaser may, in its sole discretion, increase the
Offer Price and waive any condition to the Offer, other than the Minimum
Condition, in whole or in part, (b) the Offer may be extended by Purchaser in
connection with an increase in the Offer Price so as to comply with applicable
rules and regulations of the Commission, (c) if all conditions to Purchaser's
obligation to accept for payment and pay for Shares pursuant to the Offer are
not satisfied or waived by the scheduled Expiration Date, and if all such
conditions are then still reasonably capable of being satisfied prior to the
Termination Date (as defined below), Purchaser will extend the Offer for an
additional period of ten business days and may, in its discretion, extend the
Offer from time to time (each such individual extension not to exceed ten
business days) until such conditions are satisfied or waived, but in no event
beyond January 31, 2000 (or March 31, 2000 if the only condition remaining
unfulfilled at January 31, 2000 is approval by any required governmental
entity and Parent and the Company are continuing to seek to obtain such
approval) (the "Termination Date"), and (d) the Offer may be extended by
Purchaser, in its sole discretion, for one additional period of up to ten
business days, but not beyond the Termination Date, if on the expiration date
of the Offer (as it may previously have been extended) the conditions of the
Offer shall have been satisfied or earlier waived, but the number of Shares
that have been validly tendered and not withdrawn, together with any Shares
beneficially owned by Parent and its affiliates, represents less than 90% of
the then issued and outstanding shares of Common Stock on a fully diluted
basis.
The Merger Agreement requires Purchaser to accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer if all
conditions to the Offer are satisfied on the Expiration Date.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by a public announcement thereof, with the
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance
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with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Without limiting the obligation of
Purchaser under such Rules or the manner in which Purchaser may choose to make
any public announcement, Purchaser currently intends to make announcements by
issuing a press release to the Dow Jones News Service. As used in this Offer
to Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
If Purchaser extends the Offer, or if Purchaser (whether before or after
its acceptance for payment of Shares) is delayed in its purchase of, or
payment for, Shares or is unable to pay for Shares pursuant to the Offer for
any reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of Purchaser, and such Shares
may not be withdrawn except to the extent tendering shareholders are entitled
to withdrawal rights as described in Section 4. However, the ability of
Purchaser to delay the payment for Shares which Purchaser has accepted for
payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by, or on behalf of, holders of securities promptly after the termination or
withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In a
public release, the Commission has stated its view that an offer must remain
open for a minimum period of time following a material change in the terms of
the Offer and that waiver of a material condition, such as the Minimum
Condition, is a material change in the terms of the Offer. The release states
that an offer should remain open for a minimum of five business days from the
date a material change is first published, or sent or given to security
holders and that, if material changes are made with respect to information not
materially less significant than the offer price and the number of shares
being sought, a minimum of 10 business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment. If, prior to the Expiration Date, Purchaser increases the
consideration offered to holders of Shares pursuant to the Offer, such
increased consideration will be paid to all holders whose Shares are purchased
in the Offer whether or not such Shares were tendered prior to such increase.
The Company has provided Purchaser with the Company's shareholder lists and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished
to brokers, dealers, banks and similar persons whose names, or the names of
whose nominees, appear on the shareholder lists or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
2.Acceptance for Payment and Payment.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), Purchaser will accept for payment and will pay for,
as soon as practicable after the Expiration Date, all Shares validly tendered
prior to the Expiration Date and not properly withdrawn in accordance with
Section 4.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from Purchaser and
transmitting
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<PAGE>
payment to tendering shareholders. In all cases, payment for Shares accepted
for payment pursuant to the Offer will be made only after timely receipt by
the Depositary of (i) certificates for such Shares (or a timely Book Entry
Confirmation (as defined below) with respect thereto), (ii) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer,
an Agent's Message (as defined below), and (iii) any other documents required
by the Letter of Transmittal. Accordingly, payment may be made to tendering
shareholders at different times if delivery of the Shares and other required
documents occur at different times. The per share consideration paid to any
holder of Shares pursuant to the Offer will be the highest per share
consideration paid to any other holder of such Shares pursuant to the Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE
PAID BY PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply in whole
or in part with any applicable law. If Purchaser is delayed in its acceptance
for payment of, or payment for, Shares or is unable to accept for payment or
pay for Shares pursuant to the Offer for any reason, then, without prejudice
to Purchaser's rights under the Offer (including such rights as are set forth
in Sections 1 and 14) (but subject to compliance with Rule 14e-1(c) under the
Exchange Act), the Depositary may, nevertheless, on behalf of Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent tendering shareholders are entitled to exercise, and duly exercise,
withdrawal rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering shareholder, or such other person
as the tendering shareholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility (as defined in
Section 3) pursuant to the procedures set forth in Section 3, such Shares will
be credited to such account maintained at the Book-Entry Transfer Facility as
the tendering shareholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. If no such instructions are given with respect to Shares delivered
by book-entry transfer, any such Shares not tendered or not purchased will be
returned by crediting the account at the Book-Entry Transfer Facility
designated in the Letter of Transmittal as the account from which such Shares
were delivered.
Purchaser reserves the right, subject to the terms of the Merger Agreement,
to transfer or assign, in whole or in part, from time to time, to one or more
of its wholly owned subsidiaries, the right to purchase Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering shareholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
3.Procedures for Tendering Shares.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message (as defined below), and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates evidencing tendered Shares must be
received by the Depositary at one of such addresses or such Shares must be
delivered to the Depositary pursuant to the procedures for book-entry transfer
set forth below and a Book-Entry Confirmation must be received by the
Depositary, in each case prior to the Expiration Date, or (ii) the tendering
shareholder must comply with the guaranteed delivery procedures described
below.
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Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date
of this Offer to Purchase. Any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of
Shares by causing the Book-Entry Transfer Facility to transfer such Shares
into the Depositary's account in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at
the Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message, and any other required documents must, in
any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering shareholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation."
DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal or (ii) if such Shares are tendered for the account
of a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all
other cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed
or accompanied by appropriate stock powers, in either case, signed exactly as
the name or names of the registered holders or owners appear on the
certificates, with the signatures on the certificates or stock powers
guaranteed as aforesaid. See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer
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cannot be completed on a timely basis or time will not permit all required
documents to reach the Depositary prior to the Expiration Date, such
shareholder's tender may be effected if all the following conditions are met:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(3) the certificates for (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and any other required documents, are received by the
Depositary within three trading days after the date of execution of
such Notice of Guaranteed Delivery. A "trading day" is any day on which
the Nasdaq Stock Market is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mailed to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Binding Agreement. The valid tender of Shares pursuant to one of the
procedures described above will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and subject to the
conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including through delivery of an Agent's Message), the tendering shareholder
will irrevocably appoint designees of Parent as such shareholder's attorneys-
in-fact and proxies in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of such shareholder's
rights with respect to the Shares tendered by such shareholder and accepted
for payment by Purchaser and with respect to any and all non-cash dividends,
distributions, rights, other Shares or other securities issued or issuable in
respect of such Shares on or after November 14, 1999 (collectively,
"Distributions"). All such appointments as attorneys-in-fact and proxies will
be considered coupled with an interest in the tendered Shares. Such
appointments will be effective if, as and when, and only to the extent that,
Purchaser accepts for payment Shares tendered by such shareholder as provided
herein. All such powers of attorney and proxies will be irrevocable and will
be deemed granted in consideration of the acceptance for payment by Purchaser
of Shares tendered in accordance with the terms of the Offer. Upon the
effectiveness of such appointments, any and all prior powers of attorney,
proxies and consents given by such shareholder with respect to such Shares
(and any and all Distributions) will, without further action, be revoked and
no subsequent powers of attorney, proxies, consents or revocations may be
given by such shareholder (and, if given, will not be deemed effective). The
designees of Parent will thereby be empowered to exercise all voting and other
rights with respect to such Shares (and any and all Distributions), including,
without limitation, in respect of any annual or special meeting of the
Company's shareholders (and any adjournment or postponement thereof), actions
by written consent in lieu of any such meeting or otherwise, as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's acceptance for
payment of such Shares, Purchaser must be able to exercise full voting,
consent and other rights with respect to such Shares (and any and all
Distributions), including voting at any meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. Purchaser reserves the absolute
right to reject any or all tenders of any Shares determined by it not to be in
proper form or the acceptance for payment of which, or payment for which, may,
in the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves
the absolute right, in its sole discretion, subject to the provisions of the
Merger Agreement, to waive any defect or irregularity in any tender of Shares
of any particular shareholder, whether or not similar defects or
irregularities are waived in the case of
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other shareholders. No tender of Shares will be deemed to have been validly
made until all defects or irregularities relating thereto have been cured or
waived. None of Purchaser, Parent, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Subject to the terms of the Merger Agreement, Purchaser's
interpretation of the terms and conditions of the Offer in this regard
(including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Backup Withholding. Under the "backup withholding" provisions of federal
income tax law, unless a tendering registered holder, or its assignee (in
either case, the "Payee"), satisfies the conditions described in Instruction
10 of the Letter of Transmittal or is otherwise exempt, the cash payable as a
result of the Offer may be subject to backup withholding tax at a rate of 31%
of the gross proceeds. To prevent backup withholding, each Payee should
complete and sign the Substitute Form W-9 provided in the Letter of
Transmittal. See Instruction 10 to the Letter of Transmittal.
4.Withdrawal Rights.
Except as otherwise provided in this Section 4 or as provided by applicable
law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior
to the Expiration Date and, unless theretofore accepted for payment and paid
for by Purchaser pursuant to the Offer, may also be withdrawn at any time
after January 18, 2000.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of the Shares to be withdrawn, if different from the name of the person
who tendered the Shares. If certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 3 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, the
Depositary, the Dealer Manager, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5.Certain Federal Income Tax Consequences.
The following is a general summary of certain federal income tax
consequences of the Offer and the Merger relevant to a beneficial holder of
Shares whose Shares are tendered and accepted for payment pursuant to the
Offer or whose Shares are converted into the right to receive cash in the
Merger (a "Holder"). This discussion is for general information only and does
not purport to consider all aspects of federal income taxation that may be
relevant to holders of Shares. The discussion is based on the provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing
regulations promulgated thereunder and administrative and judicial
interpretations thereof, all as in effect as of the date hereof and all of
which are subject to change (possibly with
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retroactive effect). This discussion applies only to Holders that hold Shares
as "capital assets" within the meaning of Section 1221 of the Code (generally,
property held for investment), and does not apply to Shares acquired pursuant
to the exercise of employee stock options or otherwise as compensation, Shares
held as part of a "straddle," "hedge," "conversion transaction," "synthetic
security" or other integrated investment, or to certain types of Holders
(including, without limitation, financial institutions, insurance companies,
tax-exempt organizations and dealers in securities) that may be subject to
special rules. This discussion does not address the federal income tax
consequences to a Holder that, for federal income tax purposes, is a non-
resident alien individual, a foreign corporation, a foreign partnership or a
foreign estate or trust, nor does it consider the effect of any state, local,
foreign or other tax laws.
EACH HOLDER SHOULD CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF THE SALE OF ITS SHARES, INCLUDING THE APPLICATION AND
EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS AND POSSIBLE CHANGES IN
TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for federal income tax purposes and may also be a
taxable transaction under applicable state, local and foreign income and other
tax laws. For federal income tax purposes, a Holder who sells Shares pursuant
to the Offer or receives cash in exchange for Shares pursuant to the Merger
will generally recognize capital gain or loss equal to the difference (if any)
between the amount of cash received and the Holder's adjusted tax basis in
Shares sold or surrendered in the Merger. Gain or loss must be determined
separately for each block of Shares tendered pursuant to the Offer or
surrendered for cash pursuant to the Merger (for example, Shares acquired at
the same cost in a single transaction). Such capital gain or loss will be
long-term capital gain or loss if the Holder has held such Shares for more
than one year at the time of the consummation of the Offer or the Merger. For
federal income tax purposes, net capital gain recognized by individuals (or an
estate or certain trusts) from the sale of property held for more than twelve
months will generally be taxed at a maximum tax rate of 20%. There are
limitations on the deductibility of capital losses.
Payments in connection with the Offer or Merger may be subject to "backup
withholding" at a rate of 31% unless a Holder of Shares (i) provides a correct
taxpayer identification number ("TIN") (which, for an individual Holder, is
the Holder's social security number) and any other required information, or
(ii) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, and otherwise complies with applicable
requirements of the backup withholding rules. A Holder that does not provide a
correct TIN may be subject to penalties imposed by the Internal Revenue
Service (the "IRS"). Shareholders may prevent backup withholding by completing
and signing the Substitute Form W-9 included as part of the Letter of
Transmittal. Any amount paid as backup withholding does not constitute an
additional tax and will be creditable against the Holder's federal income tax
liability, provided that the required information is given to the IRS. Each
Holder should consult its tax advisor as to such Holder's qualification for
exemption from backup withholding and the procedure for obtaining such
exemption.
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6.Price Range of the Shares; Dividends.
The Shares are traded on the Nasdaq Stock Market under the symbol "VALN".
The following table sets forth, for each of the fiscal quarters indicated, the
high and low reported sales price per Share on the Nasdaq Stock Market.
<TABLE>
<CAPTION>
Common Stock
----------------
High Low
------ ------
<S> <C> <C>
Year Ended May 31, 1998
First Quarter......................................... $ 19 7/8 $ 17 7/8
Second Quarter........................................ 22 3/8 18 3/4
Third Quarter......................................... 21 1/8 19 7/16
Fourth Quarter........................................ 21 20
Year Ended May 31, 1999
First Quarter......................................... $ 22 3/4 $ 17 1/2
Second Quarter........................................ 20 5/8 17
Third Quarter......................................... 21 3/4 18 1/2
Fourth Quarter........................................ 18 3/4 14
Year Ending May 31, 2000
First Quarter......................................... $ 17 1/4 $13 5/8
Second Quarter (through November 18, 1999)............ 24 7/8 13 3/8
</TABLE>
On November 12, 1999, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the Nasdaq Stock Market was $19 3/4 per Share. On
November 18, 1999, the last full trading day prior to the commencement of the
Offer, the last reported sales price of the Shares on the Nasdaq Stock Market
was $24 11/16 per Share. Shareholders are urged to obtain a current market
quotation for the Shares.
The Company did not declare or pay any cash dividends during any of the
periods indicated in the above table. In addition, under the terms of the
Merger Agreement, the Company is not permitted to declare or pay dividends
with respect to the Shares without the prior written consent of Parent, and
Parent does not intend to consent to any such declaration or payment.
7. Effect of the Offer on the Market for the Shares; Nasdaq Quotation;
Exchange Act Registration; Margin Regulations.
Market for the Shares. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of holders of Shares and the number of Shares
that might otherwise trade publicly and, depending upon the number of Shares
so purchased, could adversely affect the liquidity and market value of the
remaining Shares held by the public. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market price for, or marketability
of, the Shares or whether it would cause future market prices to be greater or
less than the Offer Price.
Nasdaq Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements for continued
inclusion in the Nasdaq Stock Market. In order to satisfy the requirements to
maintain inclusion, there must be at least 1.1 million shares publicly held by
at least 400 round lot holders, with a market value of at least $15 million
and either (1) a market capitalization of $50 million or (2) total assets and
total revenue of $50 million each in the Company's most recently completed
fiscal year or in two of the last three most recently completed fiscal years.
Shares held directly or indirectly by directors, officers or beneficial owners
of more than 10% of the Shares are not considered as being publicly held for
this purpose. If the Nasdaq Stock Market were to cease to publish quotations
for the Shares, it is possible that the Shares would continue to trade in the
over-the-counter market and that prices or other quotations would be reported
by
11
<PAGE>
other sources. The extent of the public market for such Shares and the
availability of such quotations would depend upon such factors as the number
of shareholders and/or the aggregate market value of such securities remaining
at such time, the interest in maintaining a market in the Shares on the part
of securities firms, the possible termination of registration under the
Exchange Act (as described below) and other factors. The Company's most recent
Annual Report on Form 10-K stated that there were approximately 1,350 holders
of Shares, including individual participants in certain security position
listings. The Company has informed Purchaser that it currently has
approximately 325 holders of record of Shares.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to its shareholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b),
the requirement of furnishing a proxy statement pursuant to Section 14(a) in
connection with shareholders' meetings and the related requirement of
furnishing an annual report to shareholders, and the requirements of Rule 13e-
3 under the Exchange Act with respect to "going private" transactions.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant
to Rule 144 or Rule 144A promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), may be impaired or eliminated.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding continued
qualification for Nasdaq Stock Market quotation, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. In
addition, if registration of the Shares under the Exchange Act were to be
terminated, the Shares would no longer constitute "margin securities."
8.Certain Information Concerning the Company.
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been furnished by the Company or taken
from, or based upon, publicly available documents and records on file with the
Commission and other public sources. The summary information concerning the
Company in this Section 8 and elsewhere in this Offer to Purchase is derived
from the Company's Annual Report on Form 10-K for the fiscal year ended May
31, 1999 and other publicly available reports and documents filed by the
Company with the Commission. The summary information set forth below is
qualified in its entirety by reference to such documents (which may be
obtained and inspected as described below) and should be considered in
conjunction with the more comprehensive financial and other information in
such documents. None of Hagemeyer, Parent, Purchaser, the Dealer Manager or
the Information Agent assumes any responsibility for the accuracy or
completeness of the information contained in such documents and records, or
for any failure by the Company to disclose events that may have occurred and
may affect the significance or accuracy of any such information but which are
not known to Hagemeyer, Parent, Purchaser, the Dealer Manager or the
Information Agent.
General. The Company was incorporated under the laws of Texas in 1960.
According to the Company's 1999 Form 10-K, the Company is in the following
business segments: industrial distribution and industrial safety product
manufacturing.
The industrial distribution segment serves commercial, U.S. and local
government markets with a wide variety of products and support services
involved in maintaining individual worker safety and workplace environment
protection, and accounts for 95% of the Company's total sales. The industrial
distribution segment
12
<PAGE>
consists principally of operating subsidiaries, Vallen Safety Supply Company,
All Supplies, Inc. and Vallen Safety Supply Company, Ltd., a Canadian
corporation. Also included in this segment are operations of three 50% owned
affiliates: Proveedora de Seguridad Industrial del Golfo, S.A., a Mexican
company that distributes safety products and support services throughout
Mexico; Century Sales & Service Limited, an Edmonton, Alberta based Canadian
corporation that distributes mill supply industrial hardware and safety
equipment; and Vallen-Acetogen Safety Chile, S.A., a Chilean corporation
formed in December 1998 that distributes safety equipment products into
commercial markets from its Santiago base. The Company reports having 162
operating locations, owned either through wholly owned subsidiaries or through
joint ventures, for its industrial distribution segment.
The industrial safety products manufacturing segment, through the Company's
Encon Safety Products, Inc. subsidiary, manufactures industrial safety
equipment and non-prescription optical quality eyewear, which are marketed
through the Company's industrial distribution outlets and other unaffiliated
distributors.
The Company's principal offices are located at 13333 Northwest Freeway,
Houston, Texas 77040 and its telephone number at such address is (713) 462-
8700.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company, excerpted or
derived from the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1999 and its Quarterly Report on Form 10-Q for the quarter ended
August 31, 1999, each as filed with the Commission pursuant to the Exchange
Act.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following
summary is qualified in its entirety by reference to such reports and other
documents and all of the financial information (including any related notes)
contained therein. Such reports, documents and financial information may be
inspected and copies may be obtained from the Commission in the manner set
forth below.
VALLEN CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
In thousands (except per share and ratio data)
<TABLE>
<CAPTION>
Three Months
Ended August 31, Fiscal Year Ended May 31,
----------------- --------------------------
1999 1998 1999 1998 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales......................... $ 70,679 $ 72,936 $306,118 $294,863 $257,786
Net earnings...................... $ 1,074 $ 1,833 $ 7,346 $ 10,235 $ 8,764
Diluted earnings per common
share............................ $ 0.15 $ 0.26 $ 1.01 $ 1.39 $ 1.19
FINANCIAL POSITION AT THE END OF
PERIOD
Total assets..................... $140,846 $134,594 $142,980 $136,569 $117,402
Net working capital.............. $ 82,799 $ 79,821 $ 85,277 $ 78,691 $ 63,552
Current asset ratio.............. 5.5:1 5.7:1 5.4:1 4.7:1 5.3:1
Total debt....................... $ 16,772 $ 14,935 $ 16,790 $ 13,631 $ 10,968
Debt-to-equity ratio............. 0.16:1 0.15:1 0.16:1 0.14:1 0.12:1
SHAREHOLDERS' EQUITY AT THE END OF
PERIOD
Shareholders' equity............. $108,144 $101,993 $106,887 $100,870 $ 91,339
Weighted average number of common
shares outstanding--diluted..... 7,237 7,325 7,290 7,365 7,335
Book value per share............. $ 14.94 $ 13.92 $ 14.66 $ 13.70 $ 12.45
</TABLE>
13
<PAGE>
Company Projections. To the knowledge of Hagemeyer, Parent and Purchaser,
the Company does not as a matter of course make public forecasts as to its
future financial performance. However, in connection with the discussions and
negotiations described in Section 11, the Company furnished Parent with
certain financial projections which Parent and Purchaser believe are not
publicly available. Neither Parent nor Purchaser has verified the accuracy of
such financial projections.
It is the understanding of Parent and Purchaser that the projections were
not prepared with a view to public disclosure or compliance with published
guidelines of the Commission or the guidelines established by the American
Institute of Certified Public Accountants regarding projections or forecasts
and are included herein only because such information was provided to Parent
and Purchaser.
These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from the
projections. The Company has advised Hagemeyer, Purchaser and Parent that its
internal financial forecasts (upon which the projections provided to Parent
were based in part) are, in general, prepared solely for internal use and are
subjective in many respects and thus susceptible to interpretations and
periodic revision based on actual experience and business developments. The
projections also reflect numerous assumptions (not all of which were provided
to Parent), all made by management of the Company, with respect to industry
performance, general business, economic, market and financial conditions and
other matters, all of which are difficult to predict, many of which are beyond
the Company's control and none of which were subject to approval by Hagemeyer,
Parent or Purchaser. Accordingly, there can be no assurance that the
assumptions made in preparing the projections will prove accurate, and actual
results may be materially greater or less than those contained in the
projections. The inclusion of the projections herein should not be regarded as
an indication that any of Hagemeyer, Parent, Purchaser, the Company or their
respective affiliates or representatives considered or consider the
projections to be a reliable prediction of future events, and the projections
should not be relied upon as such. None of Hagemeyer, Parent, Purchaser, the
Company or any of their respective affiliates or representatives assumes any
responsibility for the validity, reasonableness, accuracy or completeness of
the projections. None of Hagemeyer, Parent, Purchaser, the Company or any of
their respective affiliates or representatives has made, or makes, any
representation to any person regarding the information contained in the
projections and none of them intends to update or otherwise revise the
projections to reflect circumstances existing after the date when made or to
reflect the occurrence of future events even in the event that any or all of
the assumptions underlying the projections are shown to be in error.
14
<PAGE>
The following is an overview of the financial projections of the Company's
operations for the fiscal years ending May 31, 2000 through May 31, 2002:
SUMMARY FINANCIAL PROJECTIONS 2000-2002(1)
In thousands (except per share data)
<TABLE>
<CAPTION>
Fiscal Year Ending May 31,
----------------------------
2000 2001 2002
-------- -------- --------
<S> <C> <C> <C>
Net sales......................................... $386,999 $465,374 $557,022
Cost of goods sold(2)............................. 284,167 330,610 384,613
-------- -------- --------
Gross profit..................................... 102,833 134,764 172,410
Selling, general and administrative(2)............ 79,480 100,497 126,296
Other operating expenses/(Inc.)(3)................ (549) (1,210) (904)
-------- -------- --------
EBITDA........................................... 23,901 35,478 47,018
Depreciation and amortization..................... 4,764 6,660 8,557
-------- -------- --------
EBIT............................................. 19,138 28,818 38,461
(Income) from Unconsolidated Affiliates........... -- -- --
Net interest expense (income)..................... 1,319 3,381 4,410
-------- -------- --------
Pretax income.................................... 17,819 25,437 34,052
Income taxes...................................... 5,767 8,695 12,255
Minority interest................................. 46 -- --
-------- -------- --------
Net income before extraordinary items............ $ 12,006 $ 16,742 $ 21,797
Other (gains) losses, net......................... (255) -- --
-------- -------- --------
Net income after extraordinary items............. $ 12,261 $ 16,742 $ 21,797
======== ======== ========
Diluted earnings per share........................ $ 1.65 $ 2.30 $ 2.99
Diluted shares outstanding........................ 7,290 7,290 7,290
</TABLE>
- --------
(1) Figures adjusted to reflect the Company's 50% ownership in unconsolidated
subsidiaries.
(2) Excludes depreciation and amortization.
(3) Excludes nonrecurring items, net of taxes, of $255 for Canadian 50% owned
subsidiary in 2000.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information
as of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's shareholders and filed with the Commission. Such reports, proxy
statements and other information are available for inspection at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at Seven
World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such information
are also obtainable by mail, upon payment of the Commission's customary
charges, by writing to the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains a website on the
Internet at http://www.sec.gov that contains reports, proxy statements and
other information relating to the Company which have been filed via the
Commission's EDGAR System.
9.Certain Information Concerning Purchaser, Parent and Hagemeyer.
General. Purchaser is a newly formed Texas corporation and is a wholly
owned subsidiary of Parent, which in turn is an indirect wholly owned
subsidiary of Hagemeyer. Purchaser was organized in connection with the Offer
and the Merger and has not carried on any significant activities other than in
connection with the Offer
15
<PAGE>
and the Merger. Until immediately prior to the time Shares are purchased
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in any significant activities
other than those incident to its formation and capitalization and the
transactions contemplated by the Offer and the Merger.
Parent is a Delaware corporation and an indirect wholly owned subsidiary of
Hagemeyer. Parent was recently organized and, although it does not currently
carry on any significant operating activities, it is intended that it will
hold Hagemeyer's professional products and services interests in the United
States.
The principal offices of Purchaser and Parent are located at 100 Galleria
Parkway, Suite 1120, Atlanta, Georgia 30339. The telephone number of Purchaser
and Parent at such location is (770) 541-6151.
Hagemeyer is a company organized under the laws of the Netherlands.
Hagemeyer is an international marketing and distribution company with
operations in Europe, North America and the Asia-Pacific region. The Hagemeyer
group operates in over sixty countries and has approximately 22,000 employees
worldwide. Its shares are listed on the stock exchange in Amsterdam and form
part of the AEX index. Hagemeyer has unconditionally guaranteed all
obligations of Parent and Purchaser under the Merger Agreement. See Section
11.
The principal offices of Hagemeyer are located at Rijksweg 69, 1410 AC
Naarden, the Netherlands. The telephone number of Hagemeyer at such location
is 011-31-35-695-76-11.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent
nor Hagemeyer has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company,
including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent or
Hagemeyer, any of their respective affiliates, nor, to the best knowledge of
Purchaser, Parent or Hagemeyer, any of the persons listed on Schedule I, has
had, since January 1, 1996, any business relationships or transactions with
the Company or any of its executive officers, directors or affiliates that
would be required to be reported under the rules of the Commission. Except as
described in this Offer to Purchase, there have been no contacts, negotiations
or transactions between Purchaser, Parent or Hagemeyer, any of their
respective affiliates or, to the best knowledge of Purchaser, Parent or
Hagemeyer, any of the persons listed on Schedule I and the Company or its
affiliates concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, election of directors or a sale or other
transfer of a material amount of assets.
Available Information. Pursuant to Rule 14d-3 under the Exchange Act,
Hagemeyer, Parent and Purchaser have filed with the Commission a Tender Offer
Statement on Schedule 14D-1, together with exhibits, including this Offer to
Purchase and the Merger Agreement ( the "Schedule 14D-1"), which provides
certain additional information with respect to the Offer. The Schedule 14D-1
and any amendments thereto, including exhibits, are available for inspection
and copies are obtainable at the public reference facilities of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices
of the Commission located at Seven World Trade Center, Suite 1300, New York,
New York, 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such information are obtainable by mail,
upon payment of the Commission's customary charges, by writing to the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549 or by accessing the Commission's website at http://www.sec.gov.
16
<PAGE>
10.Source and Amount of Funds.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by Purchaser to consummate the Offer and the Merger
and pay the fees and expenses of the Offer and the Merger expected to be
incurred by Parent, is estimated to be approximately $188 million. Purchaser
will obtain all such funds from Parent, either directly or indirectly, in the
form of capital contributions and/or loans from Hagemeyer and/or its
affiliates. Hagemeyer expects to fund the capital contributions and/or loans
to Parent and Purchaser through available cash and borrowings in the ordinary
course under existing credit facilities.
11. Background of the Offer; Purpose of the Offer and the Merger; The Merger
Agreement; Certain Other Agreements.
Background of the Offer. The first contacts between Hagemeyer and the
Company occurred during September and October 1999, when Hagemeyer, through
Deutsche Bank Securities Inc., its financial advisor, had various contacts
with the Company and Salomon Smith Barney Inc. ("Salomon Smith Barney"), one
of the Company's two financial advisors (Salomon Smith Barney together with
William Blair & Company, L.L.C., the Company's other financial advisor, the
"Company Financial Advisors") to assess the possibility of an acquisition of
the Company. Following these contacts, Hagemeyer and the Company entered into
a confidentiality agreement and, on September 15, 1999, Hagemeyer and its
representatives received copies of a Confidential Memorandum describing the
Company and its operations.
On September 23, 1999, Hagemeyer executives and representatives of Deutsche
Bank Securities Inc. met with the Company to receive a presentation by Company
management and reviewed certain information about the Company and its
operations.
On October 11, 1999, the deadline set by the Company for receipt of
preliminary indication of interests from parties interested in acquiring the
Company, Hagemeyer submitted its non-binding indication of interest to acquire
the Company at a price of $22.00 per Share in cash.
Following discussions with the Company Financial Advisors concerning a
possible transaction, on October 15, 1999, Hagemeyer indicated to the Company
that it would be willing to increase the consideration to be paid to the
Company shareholders to $24.00 per share.
On October 20, 21 and 22, representatives of Hagemeyer, and its legal
counsel, independent accountants and financial advisors, reviewed due
diligence materials made available by the Company in a data room at the
offices of the Company's legal counsel.
On November 4, 1999, Hagemeyer's Supervisory Board authorized Hagemeyer's
management to continue negotiations with the Company and, if those
negotiations were successful on terms acceptable to Hagemeyer management, to
enter into a definitive agreement for the acquisition of the Company by a cash
tender offer.
On November 4, 1999, Hagemeyer informed the Company that it had
substantially completed its due diligence investigation of the Company's
operations and indicated that it would consider increasing the consideration
to $25.00 per Share if the Company would facilitate closing the transaction as
soon as practicable and, if at all possible, prior to the end of the year.
On November 8, 1999, the Company's legal counsel delivered a draft of the
proposed Merger Agreement and related transaction documents to Hagemeyer and
its advisors.
On November 10, 1999, Hagemeyer's legal counsel provided initial comments
to the draft Merger Agreement and related transaction documents.
17
<PAGE>
On November 12, 1999, Hagemeyer's financial advisors and legal counsel met
with representatives of the Company's legal counsel and Company Financial
Advisors to discuss and negotiate the terms of the Merger Agreement and
related transaction documents.
On November 14, 1999, representatives of Hagemeyer and the Company
finalized the Merger Agreement and related transaction documents on terms that
the Company's representatives considered satisfactory to present to the
Company Board for consideration. The Company Board approved the Merger
Agreement and the related transaction documents, which were executed and
delivered by the parties shortly after the meeting.
On November 15th, prior to commencement of trading of the Shares on the
Nasdaq Stock Market, the Company and Parent issued a joint public announcement
of the execution of the Merger Agreement and related documents and of the
terms of the Offer and the Merger.
Purpose of the Offer and the Merger. The purpose of the Offer and the
Merger is to enable Hagemeyer, through Parent, to acquire control of, and the
entire equity interest in, the Company. In the Merger Agreement, Purchaser and
the Company have agreed to effect the Merger in accordance with the provisions
of the Merger Agreement as promptly as practicable following consummation of
the Offer. Set forth below is a summary of the material provisions of the
Merger Agreement, a copy of which is filed as an exhibit to the Schedule 14D-
1. Such Exhibit should be available for inspection and copies should be
obtainable, in the manner set forth in Section 9 (except that it will not be
available at the regional offices of the Commission). The following summary is
qualified in its entirety by reference to the Merger Agreement.
Shareholders of the Company who sell their Shares in the Offer will cease
to have any equity interest in the Company or any right to participate in its
earnings and future growth. If the Merger is consummated, non-tendering
shareholders will no longer have an equity interest in the Company and instead
will have only the right to receive cash consideration pursuant to the Merger
Agreement or to exercise statutory dissenters' rights of appraisal under the
TBCA. See Section 12. Similarly, after selling their Shares in the Offer, or
subsequent to the Merger, shareholders of the Company will not bear the risk
of any decrease in the value of the Company.
The primary benefits of the Offer and the Merger to the shareholders of the
Company are that such shareholders are being afforded an opportunity to sell
all of their Shares for cash at $25.00 per Share, a price that represents a
significant premium over the recent historical market prices of the Shares.
The Merger Agreement. The following summary of the Merger Agreement does
not purport to be complete and is qualified by reference to the text of the
Merger Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1
and incorporated herein by reference. Shareholders of the Company are urged to
read the Merger Agreement in its entirety.
The Offer
The Merger Agreement provides for the commencement of the Offer as promptly
as practicable after November 14, 1999, but in no event later than November
19, 1999. The Merger Agreement also provides that the obligation of Purchaser
to accept for payment, and to pay for, Shares tendered pursuant to the Offer
is subject to the conditions set forth in Section 14. Pursuant to the Merger
Agreement, Purchaser generally has the right to waive any condition to the
Offer and to make any change in the terms or conditions of the Offer. However,
Purchaser may not, without the prior written consent of the Company: waive the
Minimum Condition; decrease the price per Share, change the form of the
consideration or decrease the number of Shares sought in the Offer; change the
conditions to the Offer, impose additional conditions to the Offer, terminate
or withdraw the Offer, or extend the expiration date of the Offer (except as
required by law, or as required or permitted by the Merger Agreement
provisions described below) beyond the initial Expiration Date; or amend any
terms of the Offer in any manner adverse to the holders of shares of Common
Stock.
Notwithstanding the provisions of the preceding paragraph, without the
consent of the Company: (i) Purchaser may increase the Offer Price and waive
any condition to the Offer (other than the Minimum Condition); (ii) Purchaser
may extend the Offer for any period required by any rule, regulation or
interpretation
18
<PAGE>
of the Commission or any period required by applicable law; and (iii) if any
of the conditions of the Offer has not been satisfied or waived and all such
conditions of the Offer are still reasonably capable of being satisfied prior
to the Termination Date, Purchaser must extend the Offer for one additional
period of ten (10) business days, and may at its discretion extend the Offer
from time to time until such conditions are satisfied or waived, but in no
event beyond the Termination Date. For purposes of the Merger Agreement, the
term "Termination Date" means January 31, 2000 (or March 31, 2000 if the only
condition remaining unfulfilled at January 31, 2000 is approval by any
required Governmental Entity and Parent and the Company are continuing to seek
such approval).
For purposes of the Merger Agreement, "Governmental Entity" means any
court, administrative agency or commission or other governmental authority or
instrumentality, whether domestic or foreign.
Furthermore, the Offer may be extended by Purchaser, in its sole
discretion, for one additional period of up to ten business days, but not
beyond the Termination Date, if on the expiration date of the Offer the
conditions of the Offer set forth in Section 14 have been satisfied or earlier
waived, except that the number of Shares that have been validly tendered and
not withdrawn, together with any Shares beneficially owned by Parent and its
affiliates, represents less than 90% of the then issued and outstanding Shares
on a fully diluted basis.
Subject only to satisfaction or waiver of the conditions to the Offer set
forth in Section 14, Purchaser will, and Parent will cause Purchaser to,
accept for payment and pay for, in accordance with the terms of the Offer, all
Shares validly tendered and not withdrawn pursuant to the Offer as soon as it
is permitted to do so under applicable law. Parent has agreed to provide or
cause to be provided to Purchaser on a timely basis all funds necessary to
accept for payment and pay for all Shares that Purchaser becomes obligated to
accept for payment and pay for pursuant to the Offer.
The Merger
The Merger Agreement provides that as promptly as practicable after all
conditions to the Merger set forth therein have been satisfied or, to the
extent permitted thereunder, waived, Purchaser will be merged with and into
the Company in accordance with the TBCA. As a result of the Merger, the
separate existence of Purchaser will cease and the Company will continue as
the Surviving Corporation. At the Effective Time, each share of Common Stock
outstanding immediately prior to the Effective Time (other than shares held in
the treasury of the Company or its direct or indirect wholly owned
subsidiaries or shares as to which dissenters' rights of appraisal have been
exercised) will be converted into the right to receive the Merger
Consideration. See Section 12 "Plans for the Company; Other Matters--Other
Matters--Appraisal Rights of Shareholders Dissenting from the Merger" for
information regarding procedures available to shareholders to dissent from the
Merger under the TBCA.
The Merger Agreement provides that the Company will, if required by
applicable law, call and hold a special meeting of its shareholders as soon as
practicable following the consummation of the Offer for the purpose of
approving the Merger contemplated thereby and prepare and file with the
Commission under the Exchange Act a proxy statement with respect to the
meeting of shareholders. The Company has agreed in the Merger Agreement to use
its best efforts to respond to any comments of the Commission or its staff and
to cause the Proxy Statement to be mailed to the Company's shareholders as
promptly as practicable after responding to all such comments to the
satisfaction of the staff, and to keep Parent informed of all its
correspondence with the Commission with respect to the Proxy Statement.
Pursuant to the Merger Agreement, the Company through its Boards of Directors,
will recommend to its shareholders that the Merger Agreement be approved.
The Merger Agreement also provides that if Purchaser acquires in the Offer
a number of shares of Common Stock that, together with any shares beneficially
owned by Parent and its affiliates, represents at least 90% of the outstanding
Common Stock, no solicitation of proxies will be undertaken and the parties
will instead take all
19
<PAGE>
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the expiration of the Offer without a meeting of
shareholders in accordance with Article 5.16 of the TBCA.
Stock Options; Restricted Stock; Employee Stock Purchase Plan
Immediately prior to the Effective Time, each then outstanding and
exercisable option to purchase shares of Common Stock (other than options
granted under the Company's Employee Stock Purchase Plan, a "Company Option")
is to be canceled by the Company and in consideration of such cancellation,
the Company will pay to the holders of Company Options an amount in respect
thereof equal to the product of (A) the excess, if any, of (i) the Merger
Consideration over (ii) the exercise price per share of Common Stock subject
to the unexercised portion of such Company Option immediately prior to its
cancellation and (B) the number of shares of Common Stock subject to the
unexercised portion of such Company Option immediately prior to its
cancellation. Each payment will be less any required withholding taxes and
without interest. The Company has agreed to use its commercially reasonable
best efforts to obtain the consent of each holder of Company Options to such
cancellation if such consent is required under the terms thereof.
Immediately prior to the Effective Time, each outstanding share of
restricted stock that is not vested will be canceled by the Company without
any consideration whatsoever. Except as otherwise agreed to by the Company and
Parent, the Company will use its reasonable best efforts to ensure that (i)
all plans, programs or arrangements providing for the issuance or grant of any
interest in respect of the capital stock of the Company or any of its
subsidiaries terminate as of the Effective Time (including the Employee Stock
Purchase Plan). Prior to the consummation of the Offer, the Company has
agreed, if necessary, to amend the terms of the applicable plans, programs and
arrangements to give effect to these provisions.
The Company Board has terminated the Company's Employee Stock Purchase Plan
effective November 15, 1999 but subject to consummation of the Offer, and no
further contributions to purchase Shares or issuances of Shares under the
Employee Stock Purchase Plan will be permitted. Each participant in the
Employee Stock Purchase Plan will, in consideration for the termination of the
right to purchase Shares thereunder, receive upon consummation of the Offer
(or as soon as practicable thereafter) from the Company in lieu of each Share
that could have been purchased under the Employee Stock Purchase Plan had the
then applicable Plan Year (as defined in the Employee Stock Purchase Plan)
ended on the date of consummation of the Merger, an amount in cash equal to
the difference between the Merger Consideration and the Issue Price (as
defined in the Employee Stock Purchase Plan) determined with reference to the
first business day of the applicable Plan Year (as defined in the Employee
Stock Purchase Plan), to the extent such difference is a positive number. All
funds contributed to the Employee Stock Purchase Plan which have not been used
to purchase Common Stock as of the termination date will be returned, in cash,
without interest, to participants of the Employee Stock Purchase Plan.
Representations and Warranties
The Merger Agreement contains various customary representations and
warranties of the parties. Among these are representations and warranties: (i)
by the Company, Parent and Purchaser as to their respective corporate status,
the authorization and the enforceability of the Merger Agreement against each
such party, the information to be provided by each such party for inclusion in
the Commission filings related to the Offer and the Merger, finders' fees, and
non-contravention; (ii) by the Company as to its subsidiaries, compliance with
laws, capitalization, the accuracy of its financial statements and filings
with the Commission, the absence of certain materially adverse changes or
events affecting the Company, the absence of material litigation, the absence
of material adverse changes with respect to its material contracts, real
property, material assets and tangible property owned by the Company and its
subsidiaries, certain tax matters, certain employee benefits and pension plan
matters, certain labor matters, certain environmental matters, insurance,
intellectual property, receipt of opinions of financial advisors, licenses and
approvals, year 2000 readiness, the inapplicability of provisions of Article
13 of the TBCA, the absence of questionable payments, and the Company's
relations with suppliers and customers; and (iii) by Parent as to the
organization of Purchaser, the absence of material litigation, and financial
capability. The representations and warranties contained in the Merger
Agreement will not survive the Effective Time.
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Covenants
The Merger Agreement contains various customary covenants of the parties. A
description of certain of these covenants are as follows:
Conduct of Business. Except as expressly permitted or contemplated
by the Merger Agreement, the Company has agreed that it will, and will
use its commercially reasonable best efforts to cause each of the
Company's subsidiaries to, conduct operations in the ordinary and usual
course of business consistent with past practice and use commercially
reasonable best efforts to preserve intact their respective business
organizations' goodwill, keep available the services of their
respective present officers and key employees, and preserve the
goodwill and business relationships with customers, suppliers and
others having business relationships with them to the end that it is
intended that the goodwill and ongoing businesses of the Company and
any of its subsidiaries will be materially unimpaired at the Effective
Time.
In particular, except as otherwise permitted by the Merger
Agreement, prior to the Effective Time, without the consent of Parent,
which consent may not be unreasonably withheld or delayed by Parent as
to matters other than those referred to in clause (p) below, the
Company has agreed that it will not, and will cause each of the
Company's subsidiaries not to:
(a) amend or propose to amend their respective organizational
documents; or split, combine or reclassify their outstanding capital
stock or declare, set aside or pay any dividend or distribution in
respect of any capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, except for dividends and
distributions paid by the Company's subsidiaries to other subsidiaries
of the Company or to the Company;
(b) (i) issue, sell, pledge or dispose of, or agree to, authorize
or propose the issuance, sale, pledge or disposition of, any additional
shares of, or any options, warrants or rights of any kind to acquire
any shares of, their capital stock of any class, any debt or equity
securities convertible into or exchangeable for such capital stock or
any other equity related right (including any phantom stock or SAR
rights), other than any such issuance pursuant to options, warrants,
rights, agreements or convertible securities outstanding as of the date
hereof in accordance with their terms; (ii) redeem, purchase, acquire
or offer to purchase or acquire any (x) shares of its capital stock or
(y) long-term debt other than as required by governing instruments
relating thereto; or (iii) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(c) enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other
arrangements or agreements with any directors, officers or key
employees except for (i) normal or budgeted salary increases, merit
bonuses and annual bonuses, (ii) arrangements in connection with
employee transfers, (iii) agreements with new employees, in the case of
(i), (ii), or (iii), in the ordinary course of business consistent with
past practice or (iv) agreements to pay bonuses to key employees for
the purpose of retaining such employees through the Effective Date;
(d) (i) adopt, enter into or amend any, or become obligated under
any new bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, health care, employment or other
employee benefit plan, agreement, trust, fund or arrangement for the
benefit or welfare of any employee or retiree, except in the ordinary
course of business consistent with past practice or as required to
comply with changes in applicable law occurring after the date hereof
or (ii) except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in
a material increase in benefits or compensation expense to the Company,
increase the compensation or fringe benefits of any director, officer
or employee in any manner, or pay any benefit that, in any such case,
is not required by any plan and arrangement as in effect prior to the
date hereof;
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(e) make any commitment or enter into any material contract or
agreement (including any agreement relating to the hiring of an
individual as an employee or consultant) providing for expenditures by
the Company in excess of $100,000, except in the ordinary course of
business consistent with past practice;
(f) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or
ownership of the Company or any of its subsidiaries;
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(h) revalue any of its assets, including, without limitation,
writing down the value of its inventory or writing off notes or
accounts receivable, other than in the ordinary course of business;
(i) make any material tax election or settle or compromise any
material income tax liability;
(j) pay, or agree to pay, in excess of $100,000 in connection with
the settlement or compromise of any pending or threatened suit, action
or claim;
(k) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise) in
excess of $100,000 other than the payment, discharge or satisfaction in
the ordinary course of business of liabilities reflected or reserved
against in, or contemplated by, the financial statements (or the notes
thereto) as of May 31, 1999 of the Company incurred in the ordinary
course of business consistent with past practice;
(l) waive, redeem, amend or allow to lapse any material term or
condition of any confidentiality or "standstill" agreement to which the
Company or any of the Company's subsidiaries is a party;
(m) (i) incur or assume any long-term or short-term indebtedness
for borrowed money ("debt") or issue any debt securities except for
borrowings under existing lines of credit in the ordinary course of
business; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person except in the ordinary course of
business consistent with past practice and in amounts not material to
the Company or any of its subsidiaries; (iii) make any loans, advances
or capital contributions to, or, except for immaterial investments in
the ordinary course of business consistent with past practice,
investments in, any other person (other than to wholly owned
subsidiaries of the Company or the Company, with respect to its
subsidiaries, or customary loans or advances to employees in the
ordinary course of business consistent with past practice and in
amounts not material to the maker of such loan or advance); (iv) pledge
or otherwise encumber shares of capital stock of the Company or its
subsidiaries; or (v) mortgage or pledge any of its assets, tangible or
intangible, or create or suffer to exist any Lien thereupon except in
the ordinary course of business consistent with past practices;
(n) (i) sell, lease or dispose of any assets outside the ordinary
course of business or any assets which in the aggregate are material to
the Company or any of its subsidiaries; or (ii) enter into any similar
material commitment or transaction outside the ordinary course of
business;
(o) (i) except as disclosed by the Company in writing to Parent,
acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business organization or division
thereof or any equity interest therein, or any assets, for
consideration in excess of $1,000,000 individually or in the aggregate;
and (ii) authorize any capital expenditure or expenditures which, in
the aggregate, are in excess of the amounts therefor set forth in the
Company 1999 capital expenditures budget delivered to Parent prior to
the date hereof; or
(p) take or agree to take any of the foregoing actions or any
action that is reasonably likely to result in any of its
representations and warranties set forth in the Merger Agreement
becoming untrue or incorrect.
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Access to Financial and Operational Information. Subject to compliance
with applicable law, upon reasonable notice, the Company has agreed in the
Merger Agreement that it will, and will use its commercially reasonable
best efforts to cause each of its subsidiaries to, give Parent, its
directors, its counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business hours to the
offices, properties, books and records of the Company and the Company's
subsidiaries. The Company has agreed to furnish to Parent, its counsel,
financial advisors, auditors and other authorized representatives financial
and operating data as they may reasonably request; and will instruct and
request the Company's directors, officers, employees, counsel and financial
advisors to cooperate with Parent in its investigation of the Company and
its subsidiaries' business. The Company has agreed to assist Parent in the
planning for the combination of the businesses of the Company and Parent
following the consummation of the Merger. All information so obtained will
be governed by the Confidentiality Agreement dated September 9, 1999
between the Company and an affiliate of Parent (the "Confidentiality
Agreement").
No Solicitation; Other Offers. Until the termination of the Merger
Agreement and except as expressly permitted by the following provisions,
the Company has agreed that it will not, and that it will instruct (or
where it has such power cause) each of its subsidiaries and each officer,
director or employee of or any investment banker, attorney, accountant or
other advisor or representative of, the Company or any of its subsidiaries
not to, directly or indirectly, (i) solicit or initiate the submission of
any Acquisition Proposal (as defined below) or of any inquiries or
proposals that constitute, or may reasonably be expected to lead to, any
Acquisition Proposal, (ii) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect
to the Company or any of its subsidiaries to facilitate, the submission of
any Acquisition Proposal or the making of any inquiries or proposals that
constitute, or may reasonably be expected to lead to, any Acquisition
Proposal, (iii) amend or grant any waiver or release under any standstill
or similar agreement with respect to any class of equity securities of the
Company, or (iv) agree to, approve or recommend any Acquisition Proposal or
enter into any agreement with respect to any Acquisition Proposal (other
than a confidentiality agreement as described below).
The Merger Agreement expressly provides that, despite the general
provisions described in the preceding paragraph, the Company may
nevertheless take or permit any action otherwise prohibited by clause (ii),
(iii) or (iv) of the preceding paragraph in respect of any Acquisition
Proposal (A) that the Company Board determines in good faith, after
consultation with one or both of the Company Financial Advisors or any
other independent, nationally recognized financial advisor, would, if
accepted, constitute, or be reasonably likely to lead to, a Superior
Proposal (as defined in the Merger Agreement), if (B) prior to taking such
action, the Company: (1) provides reasonable notice to Parent to the effect
that it is taking such action; (2) has received from such person an
executed confidentiality/standstill agreement in reasonably customary form
and in any event containing terms at least as stringent as those contained
in the Confidentiality Agreement executed by an affiliate of Parent as of
the date of its execution (and such person not to be released from the
standstill obligations set forth therein solely due to the existence of the
Merger Agreement or any modification of the Merger Agreement proposed by
Parent); and (3) in the case of (x) any action to waive or release any
obligation under any such confidentiality/standstill agreement not to
purchase or offer to purchase shares of the Company's capital stock or
options to purchase such shares or (y) any action to agree to, approve or
recommend any Acquisition Proposal or to enter into any agreement with
respect to any Acquisition Proposal (other than a
confidentiality/standstill agreement), the Company Board has (I) received a
written Superior Proposal, (II) has notified Parent in writing (a "Notice")
that it intends to authorize such action (the Company being required to
deliver a new Notice in respect of any revised Superior Proposal),
attaching the most recent version (or draft) of such Superior Proposal to
such Notice (which version (or draft) will be updated on a reasonably
current basis), (III) during the five (5) business day (or, in the case of
any Notice with respect to a particular third party other than the initial
Notice with respect to such third party's Acquisition Proposal, two (2)
business day) period after delivery of the Notice, the Company, in addition
to any negotiations with the third party, has exercised its best efforts to
negotiate with, and will have caused its respective financial and legal
advisors to exercise their best efforts to negotiate with, Parent to
attempt to make such adjustments in the terms and conditions of the Merger
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Agreement, the Offer and the Merger, as would enable the Company Board to
determine in good faith that there is no longer a Superior Proposal as
compared to the terms and conditions of the Merger Agreement, the Offer and
the Merger after considering the results of such negotiations, and (IV) the
Company Board concludes after considering the results of such negotiations,
that the Superior Proposal giving rise to the Company's Notice continues to
be a Superior Proposal.
For purposes of the Merger Agreement, "Acquisition Proposal" means an
inquiry, offer or proposal regarding any of the following (other than the
transactions contemplated by the Merger Agreement) involving the Company or
any of its subsidiaries: (i) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction; (ii)
any sale, lease, exchange, mortgage, pledge, transfer or other disposition
of all or substantially all the assets of the Company or any of its
subsidiaries, taken as a whole, in a single transaction or series of
related transactions; (iii) any tender offer or exchange offer for 20
percent or more of the outstanding Shares or the filing of a registration
statement under the Securities Act in connection therewith; or (iv) any
public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
For purposes of the Merger Agreement, "Superior Proposal" means a
written Acquisition Proposal on terms that the Company Board determines in
its good faith judgment (after consultation with one or both of the Company
Financial Advisors or any other independent, nationally recognized
financial advisor) would, if accepted, be more favorable from a financial
point of view to the Company's shareholders than the Offer and the Merger.
The Company has agreed to notify Parent of any Acquisition Proposal
(including, without limitation, the material terms and conditions and the
identity of the person making it) as promptly as reasonably practicable
after receipt, and thereafter to inform Parent on a reasonably prompt basis
of the status of any discussions or negotiations with such a third party,
and any material changes to the terms and conditions of such Acquisition
Proposal. The Company has also, as agreed in the Merger Agreement, ceased
and terminated, and instructed (or where it had such power caused) its
subsidiaries and its and their respective officers, directors, employees,
investment bankers, attorneys, accountants and other agents to cease and
terminate, any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any possible Acquisition
Proposal.
The Company has further agreed in the Merger Agreement that the Company
Board will not withdraw or modify, in a manner adverse to Parent, its
approval or recommendation of the Merger Agreement, the Offer or the Merger
unless (i) a Superior Proposal is pending at the time the Company Board
determines to take any such action, and (ii) the Company Board determines
in good faith to approve or recommend such Superior Proposal (and in
connection therewith, to withdraw or modify its approval or recommendation
of the Merger Agreement, the Offer or the Merger).
Indemnification and Insurance. For six years after the Effective Time,
Parent is required by the Merger Agreement to cause the Surviving
Corporation to indemnify and hold harmless each present and former director
and officer of the Company and its subsidiaries as provided in their
respective charters and bylaws and as provided or permitted pursuant to any
agreement or arrangement and with respect of acts or omissions occurring at
or prior to the Effective Time. In the event any such claim or claims are
asserted or made within such six year period, all rights to indemnification
in respect to any such claim or claims will continue until disposition of
any and all such claim or claims. The Surviving Corporation in the Merger,
and Parent are also obligated to maintain or cause to be maintained in
effect, for not less than six years from the Effective Time, the current
policies of the directors' and officers' liability insurance maintained by
the Company, or substitute policies of at least the same coverage, with
respect to all matters, including the transactions contemplated by the
Merger Agreement, occurring prior to, and including, the Effective Time;
provided that, in the event that any claim or claims are asserted or made
within such six-year period, such insurance will be continued in respect of
any such claim or claims until final disposition of any and all such claim
or claims. These provisions are for the benefit of, and may be enforced by,
each indemnified party, his or her heirs and his or her representatives.
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Retention and Severance Arrangements. From and after the Effective Time,
the Merger Agreement requires the Surviving Corporation to honor all
existing written retention and severance arrangements adopted by the
Company or any of its subsidiaries for the benefit of any current or former
officer, director or employee of the Company or any of its subsidiaries.
These provisions are for the benefit of, and may be enforced by, each
person covered by such arrangements, his or her heirs and his or her
representatives.
Reasonable Best Efforts. Subject to the terms and conditions of the
Merger Agreement, each party to the Merger Agreement has agreed to use its
commercially reasonable best efforts promptly to take, or cause to be taken
all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the Merger Agreement, subject to
the requisite vote of shareholders of the Company (if required), including
providing information and using its commercially reasonable best efforts to
obtain promptly all necessary or appropriate waivers, consents and
approvals, and to effect promptly all necessary registrations and filings
(including filings under the HSR Act and similar provisions of the laws of
Canada or Mexico). Parent has agreed to pay all costs and expenses,
including, without limitation, all filing fees and counsel fees, incurred
in connection with obtaining regulatory approvals under the HSR Act and
similar provisions of the laws of Canada or Mexico.
Public Announcements. Parent and the Company will consult with each
other before issuing any press release or making any public statement with
respect to the Merger Agreement and the transactions contemplated by the
Merger Agreement.
Conditions to the Offer
See Section 14 for information regarding the conditions to the obligation
of Purchaser to accept for payment, and to pay for, Shares pursuant to the
Offer.
Conditions to the Merger
The Merger Agreement provides that the obligations of the Company, Parent
and Purchaser to consummate the Merger are subject to the satisfaction of the
following conditions: (i) if required by Texas law, the Merger Agreement shall
have been approved and adopted by the shareholders of the Company in
accordance with such law; and (ii) no statute, rule, regulation, executive
order, decree, injunction or restraining order will have been enacted,
promulgated or enforced (and not repealed, superseded or otherwise made
inapplicable) by any court or Governmental Entity, which prohibits the
consummation of the transactions contemplated by the Merger Agreement (each
party agreeing to use all commercially reasonable best efforts to have any
such order, decree or injunction lifted).
Termination
The Merger Agreement may be terminated at any time prior to the Effective
Time (notwithstanding any approval of the Merger Agreement by the shareholders
of the Company), but only:
(a) by mutual written consent of the Boards of Directors of Parent
and the Company,
(b) by either Parent or the Company, if (i) the offer has not been
consummated on or before January 31, 2000 (or March 31, 2000 if the
only condition remaining unfulfilled at January 31, 2000 is approval by
any required Governmental Entity, and Parent and the Company are
continuing to seek to obtain such approval); (ii) any Governmental
Entity, the consent of which is a condition to the obligations of
Parent and the Company to consummate the Offer or the Merger, shall
have determined not to grant its consent, and all appeals of such
determination will have been taken and have been unsuccessful; or (iii)
any court of competent jurisdiction shall have issued an order,
judgment or decree (other than a temporary restraining order)
restraining, enjoining or otherwise prohibiting the Offer or the Merger
and such order, judgment or decree shall have become final and
nonappealable; provided however, that the right to terminate the Merger
Agreement pursuant to the Merger Agreement will not
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be available to any party whose failure to fulfill any obligation under
the Merger Agreement has been the cause of, or resulted in, the failure
of the consummation of the Offer to occur on or before such date;
(c) by the Company, if Parent or Purchaser has failed to commence
the Offer as provided in the Merger Agreement;
(d) by Parent, if (i) there has been a breach by the Company of any
representation or warranty set forth in the Merger Agreement (without
giving effect to any materiality or Material Adverse Effect (as defined
below) limitations contained in such representations or warranties),
which has not been cured within ten business days following receipt by
the Company of written notice of such breach and which breach,
individually or in the aggregate together with all other breaches not
so cured, would result in a Material Adverse Effect; (ii) there has
been a material breach by the Company of any covenant or agreement set
forth in the Merger Agreement, which breach has not been cured within
ten business days following receipt by the Company of written notice of
such breach; (iii) the Offer is terminated or expires in accordance
with its terms as a result of the failure of any of the conditions to
the Offer without Purchaser having purchased any shares of Common Stock
pursuant to the Offer; provided, however, that the right to terminate
pursuant to this clause (iii) is not available if Parent's or
Purchaser's failure to perform any of its covenants or agreements under
the Merger Agreement results in the failure of such condition; or (iv)
the Company Board, whether or not permitted by the Merger Agreement,
has withdrawn or modified in a manner adverse to Parent its approval or
recommendation of the transactions contemplated by the Merger Agreement
or recommended an Acquisition Proposal. However, the right to terminate
the Merger Agreement pursuant to clause (i) or (ii) of the preceding
sentence is not available to Parent if it, at the time, is in material
breach of any representation, warranty, covenant or agreement set forth
in the Merger Agreement; or
(e) by the Company, if (i) there has been a breach by Parent of any
representation or warranty set forth in the Merger Agreement (without
giving effect to any materiality or Material Adverse Effect limitations
contained in such representations or warranties), which has not been
cured within ten business days following receipt by Parent of written
notice of such breach and which breach, individually or in the
aggregate together with all other breaches not so cured, would result
in a Material Adverse Effect; (ii) there has been a material breach of
any covenant, agreement or obligation of Parent or Purchaser to conduct
or consummate the Offer as provided in the Merger Agreement; (iii)
there has been a material breach by Parent of any other covenant or
agreement set forth in the Merger Agreement, which breach is not cured
within ten (10) business days following receipt by Parent of written
notice of the breach; or (iv) prior to the consummation of the Offer,
(A) the Company Board has determined in good faith that it is in the
best interest of the Company's shareholders for the Company to
terminate the Merger Agreement and to enter into an agreement with a
third party with respect to or to consummate a Superior Proposal, (B)
the Company Board has authorized the Company, subject to complying with
the terms of the Merger Agreement, to enter into a binding written
agreement with a third party concerning a Superior Proposal, and the
Company notifies Parent in writing (a "Termination Notice", which may,
if applicable also be a Notice pursuant to the provisions described
above under "--No Solicitation; Other Offers") that the Company intends
to enter into such an agreement (the Company being required to deliver
a new Termination Notice in respect of any revised Superior Proposal
from such third party or its affiliates that the Company proposes to
accept), attaching the most current version (or draft) of such
agreement to such Termination Notice (which version (or draft) will be
updated on a reasonably current basis), (C) during the five (5)
business day (or, in the case of any Termination Notice with respect to
a particular third party other than the initial Termination Notice with
respect to such third party's Acquisition Proposal, two (2) business
day) period after delivery of the Termination Notice, the Company, in
addition to any negotiations with the third party, will use its best
efforts to negotiate with, and will cause its respective financial and
legal advisors to use their best efforts to negotiate with, Parent to
attempt to make such adjustments in the terms and conditions of the
Merger Agreement, the Offer and the Merger, in the terms and conditions
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of the Superior Proposal, as would enable the Company Board to
determine in good faith that there is no longer a Superior Proposal as
compared to the terms and conditions of the Merger Agreement, the Offer
and the Merger after considering the results of such negotiations; and
(D) the Company Board has concluded, after considering the results of
such negotiations, that any Superior Proposal giving rise to the
Company's Termination Notice continues to be a Superior Proposal.
However, the right to terminate the Merger Agreement pursuant to clause
(i), (ii) or (iii) of the preceding sentence is not available to the
Company if it, at the time, is in material breach of any
representation, warranty, covenant or agreement set forth in the Merger
Agreement. In addition, the Company may not effect any termination
pursuant to clause (iv) above unless (x) prior thereto or concurrently
therewith the Company pays to Parent in immediately available funds the
Fee required to be paid as described below under "--Termination Fee and
Expenses" and (y) such termination is within two (2) business days
after the termination of the five (5) (or, if applicable, two (2))
business day period referred to in sub-clause (C) above.
For purposes of the Merger Agreement, "Material Adverse Effect" means any
change, effect, event or occurrence that, individually or in the aggregate
with all other changes, effects, events or occurrences is or would reasonably
be expected to materially adversely impact (i) the financial condition,
assets, properties or results of operations of such person or entity and its
direct and indirect parents and subsidiaries, taken as a whole, other than any
such adverse effects relating to general economic or market conditions or to
the industry in which the Company operates or (ii) the ability of such person
or entity to perform its obligations under the Merger Agreement or to
consummate the transactions contemplated thereby.
If the Merger Agreement is terminated pursuant to any of these provisions,
it will become void and of no effect, except for certain enumerated provisions
relating to confidentiality, expenses and the Fee and Expenses described below
under "--Termination Fee and Expenses" (if applicable), with no liability on
the part of any party thereto, except for any breach of a party's covenants or
obligations under the enumerated provisions. However, no party hereto will be
relieved from liability for any willful or intentional breach of the Merger
Agreement.
Amendments and Waivers
Any term or provision of the Merger Agreement may be amended, and the
observance of any term of the Merger Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only by
a writing signed by the party to be bound thereby. The waiver by a party of
any breach or default in the performance will not be deemed to constitute a
waiver of any other default or any succeeding breach or default, unless such
waiver so expressly states. At any time before or after approval of the Merger
Agreement and the Merger by the shareholders of the Company and prior to the
Effective Time, the Merger Agreement may be amended or supplemented by the
parties with respect to any of the terms contained in the Merger Agreement,
except that following approval by the shareholders of the Company there will
be no amendment or change to the provisions with respect to the Merger
Consideration without further approval by the shareholders of the Company, and
no other amendment will be made which by law requires further approval by such
shareholders without such further approval.
Termination Fee and Expenses
Except as provided below, all costs and expenses incurred in connection
with the Merger Agreement will be paid by the party incurring those costs or
expenses.
Pursuant to the Merger Agreement, the Company has agreed to pay Parent in
same-day funds a termination fee of $7.5 million (the "Fee") on the date of
such termination if the Merger Agreement is terminated pursuant to the
provisions described above in clause (iv) of paragraph (d) or clause (iv) of
paragraph (e) under "--Termination".
In the event that the Merger Agreement is terminated by Parent pursuant to
the provisions described above in clause (i) of paragraph (d) under "--
Termination," then the Company will reimburse Parent and Purchaser's fees and
out-of-pocket expenses incurred in connection with the Merger Agreement and
the transactions
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contemplated hereby ("Expenses"), not to exceed $1.5 million in the aggregate,
promptly upon receipt of requests for such reimbursement accompanied by
invoices or other reasonable evidence of payment of such fees and out-of-
pocket costs and expenses by Parent or Purchaser, and if within twelve (12)
months after such termination a Company Acquisition (as defined in the Merger
Agreement) occurs or the Company enters into an agreement to effect or
publicly announces a plan or proposal to effect a Company Acquisition and at
any time thereafter such Company Acquisition occurs, then the Company will
immediately pay Parent the Fee less the actual amount of Expenses previously
paid.
For purposes of the Fee provisions of the Merger Agreement, a "Company
Acquisition" means the occurrence of any of the following events: (i) the
acquisition by a third party of fifty percent (50%) or more of the assets of
the Company and its subsidiaries, taken as a whole; (ii) the acquisition by a
third party of fifty percent (50%) or more of the outstanding shares of Common
Stock or any securities convertible into or exchangeable for shares of Common
Stock that would constitute fifty percent (50%) or more of the outstanding
shares of Common Stock upon such conversion or exchange, or any combination of
the foregoing; (iii) the acquisition by the Company of the assets or stock of
a third party if, as a result of which, the outstanding shares of the Common
Stock immediately prior thereto are increased by one hundred percent (100%) or
more; or (iv) the merger, consolidation or business combination of the Company
with or into a third party, where, following such merger, consolidation or
business combination, the shareholders of the Company immediately prior to
such transaction do not hold, immediately after such transaction, securities
of the surviving entity constituting more than fifty percent (50%) of the
total voting power of the surviving entity.
If the Merger Agreement is terminated by Parent pursuant to the provisions
described above in clause (iii) of paragraph (d) under "--Termination" due to
the Minimum Condition not being satisfied and after an Acquisition Proposal
has been commenced or publicly announced and either (i) that third party's
Acquisition Proposal results in that party consummating a Company Acquisition
or (ii) within twelve (12) months after such termination, the Company enters
into an agreement to effect or publicly announces a plan or proposal to effect
a Company Acquisition that has a value per share of Common Stock at the time
of the agreement or announcement that is greater than the Offer Price, then
the Company will immediately pay Parent the Fee.
Under no circumstances will the Fee or Expenses be payable by the Company
more than once (if at all). Any Fee and Expenses paid by the Company will
reduce any amounts otherwise payable by the Company to Parent or Purchaser
hereunder, including by reason of any breach of the Merger Agreement or any
representation, warranty, covenant or agreement herein or hereunder.
Certain Other Agreements.
Option Agreement
The following summary of the Option Agreement does not purport to be
complete and is qualified by reference to the text of the Option Agreement, a
copy of which is filed as an exhibit to the Schedule 14D-1 and incorporated
herein by reference. Shareholders of the Company are urged to read the Option
Agreement in its entirety.
Pursuant to the Option Agreement, the Company granted to Purchaser an
irrevocable option (the "Short Form Merger Option") to purchase up to that
number of newly issued shares of Common Stock (the "Short Form Merger Option
Shares") equal to the number of shares that, when added to the number of
Shares owned by Purchaser and its affiliates immediately following Purchaser's
purchase of all Shares purchasable pursuant to the Offer (including under any
extension of the Offer), shall constitute 90% of the Shares then outstanding
on a fully diluted basis (giving effect to the issuance of the Short Form
Merger Option Shares) for a cash consideration per Short Form Merger Option
Share equal to the Offer Price; provided, however, that in no event shall the
number of Short Form Merger Option Shares for which the Short Form Merger
Option is exercisable exceed 10% of the issued and outstanding shares of
Common Stock.
The Short Form Merger Option may be exercised by Purchaser at any time
during the two business days following, and will become exercisable upon, the
date of acceptance for payment by Purchaser of all Shares purchasable pursuant
to the Offer (including under any extension of the Offer) in accordance with
the terms of the Merger Agreement.
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The Option Agreement provides that it shall terminate upon the first to
occur of (i) the termination of the Merger Agreement, (ii) the Effective Time
and (iii) the failure of Purchaser to exercise the Short Form Merger Option
during the period in which it is exercisable as set forth above.
Shareholders' Agreement
The following summary of the Shareholders' Agreement does not purport to be
complete and is qualified by reference to the text of the Shareholders'
Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1 and
incorporated herein by reference. Shareholders of the Company are urged to
read the Shareholders' Agreement in its entirety.
As an inducement and a condition to Parent and Purchaser's entering into
the Merger Agreement and incurring the obligations therein, the Shareholders
who have voting power and dispositive power with respect to an aggregate of
4,067,412 Shares, representing approximately 56% of the Shares outstanding on
November 14, 1999, entered into a Shareholders' Agreement concurrently with
the execution and delivery of the Merger Agreement. The Shareholders are
Leonard J. Bruce, Bruce Partners Ltd., a Texas limited partnership, and Bruce
Interests, a Texas general partnership. Each of the Shareholders has agreed
(i) to validly tender and sell each Shareholder's shares of Common Stock in
accordance with the terms of the Offer, as set forth in the Merger Agreement;
(ii) to vote each Shareholder's shares of Common Stock (x) in favor of the
Merger Agreement, (y) against any action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement, and (z) against the
following actions: (A) any extraordinary corporate transaction; (B) any sale,
lease or transfer of a material amount of the assets or business of the
Company or its subsidiaries (C) any change in the present capitalization of
the Company; (D) any change in directors constituting a majority of the
Company's Board of Directors; (E) any other action that would impede,
interfere with, delay, postpone, discourage or adversely affect the Offer, the
Merger or the transactions contemplated by the Merger Agreement; and (iii)
that such Shareholder will not enter into any agreement with any person that
would be inconsistent with or a violation of the provisions of the
Shareholders' Agreement.
Each of the Shareholders has agreed that, prior to the termination of the
Shareholder Agreement pursuant to its terms, each Shareholder will not,
without the prior consent of Parent and Purchaser: (i) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect
to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment
or other disposition of, any or all of such Shareholder's Shares, or any
interest therein, (ii) grant any proxies or powers of attorney, deposit any of
such Shareholder's Shares into a voting trust or enter into a voting
agreement, understanding or arrangement with respect to any of such
Shareholder's Shares, or (iii) take any action that would make any
representation or warranty of such Shareholder contained in the Shareholders'
Agreement untrue or incorrect or result in a breach by such Shareholder of
such Shareholder's obligations under the Shareholders' Agreement.
In addition, each Shareholder (a) has waived any rights of appraisal or
rights to dissent from the Merger that such Shareholder may have; (b) has
agreed that he will not, and will instruct such Shareholder's representatives
not to, take any action which, if taken by the Company, would constitute a
violation of the non- solicitation provisions described above under "--No
Solicitation; Other Offers"; (c) will not request that the Company register
the transfer (book-entry or otherwise) of any certificate or certificated
interest representing any of such Shareholder's Shares, unless such transfer
is made in compliance with the Shareholders' Agreement; and (d) will cooperate
with the Company to fulfill such Shareholder's obligations, if any, under the
HSR Act with respect to the transaction contemplated by the Merger Agreement.
In addition, each Shareholder, Parent and Purchaser has agreed to execute and
deliver such additional documents as may be reasonably necessary or desirable
to consummate and make effective, in the most expeditious manner practicable,
the tender of each Shareholder's Shares by such Shareholder.
The Shareholders' Agreement shall terminate on the first to occur of: (i)
purchase of the Shareholders' Shares pursuant to the Offer; (ii) the Effective
Time; (iii) the termination of the Merger Agreement by any party thereto in
accordance with its terms; (iv) Purchaser's failure to commence the Offer
within five (5) business days
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following the date of the initial public announcement of the execution of the
Merger Agreement; (v) the termination or expiration of the Offer without
Purchaser's having accepted for payment and paid for all shares of Common
Stock tendered pursuant thereto, provided that each Shareholder's right to
terminate pursuant to clause (vi) will not be available to the Shareholder if
such Shareholder is then in material breach of the Shareholders' Agreement and
such breach has been the proximate cause of the Offer having so expired or
having been so terminated; (vii) any modification of any term or condition of
the Offer as to which prior written consent of the Company is required under
"--The Offer" (whether or not such consent is obtained); and (viii) the
applicable date set forth in the Merger Agreement.
Guarantee
The following is a summary of material provisions of the guarantee (the
"Guarantee") dated November 14, 1999 executed by Hagemeyer in favor of the
Company, the complete text of which is filed as an exhibit to the Schedule
14D-1. This summary is qualified in its entirety by reference to the
Guarantee, which is incorporated herein by reference thereto. Shareholders of
the Company are urged to read the Guarantee in its entirety.
As an inducement to the Company to enter into, and consummate the
transactions contemplated by, the Merger Agreement, Hagemeyer has
unconditionally, absolutely and irrevocably guaranteed to the Company and any
third party beneficiaries under the Merger Agreement (to the extent of their
third party beneficiary rights thereunder) the full and punctual payment and
performance of all covenants, agreements, obligations and liabilities of
Parent, Purchaser and the Surviving Corporation contained in the Merger
Agreement or in connection with the Offer, the Merger and the other
transactions contemplated by the Merger Agreement. The Guarantee is a
guarantee of payment and performance and not collectibility. Hagemeyer has
waived diligence, presentment, demand of performance, filing of any claim, any
right to require any proceeding for and against Parent, Purchaser or the
Surviving Corporation, protest, notice and all demands whatsoever in
connection with the performance of its obligations under the Guarantee.
Hagemeyer also agreed to perform certain covenants set forth in the Merger
Agreement as if it were a party thereto and to cooperate with Parent and
Purchaser to fulfill their obligations under the HSR Act with respect to the
transactions contemplated by the Merger Agreement. Hagemeyer also agreed, in
its capacity as ultimate parent entity of the Parent, to cause Parent in its
capacity as sole shareholder of Purchaser to approve and adopt the Merger, the
Merger Agreement and the transactions contemplated thereby. Hagemeyer
submitted to the exclusive jurisdiction of the state civil district court in
and for Harris County in the State of Texas (or, if such court lacks subject
matter jurisdiction, any appropriate state or federal court in Harris County
in the State of Texas), for purposes of any action arising from, relating to,
or growing out of the guarantee and acknowledged that service or delivery to
its agent for service of process shall constitute good and sufficient service.
Confidentiality Agreement
The Company and an affiliate of Parent are parties to the Confidentiality
Agreement which contains customary terms, including standstill provisions and
restrictions on solicitations by Parent of certain employees of the Company.
The foregoing description of the Confidentiality Agreement is qualified in its
entirety by reference thereto. The Confidentiality Agreement, a copy of which
is filed as an exhibit to the Schedule 14D-1, is incorporated herein by
reference. Shareholders of the Company are urged to read the Confidentiality
Agreement in its entirety.
12.Plans for the Company; Other Matters.
Plans for the Company. If, as and to the extent that Purchaser acquires
control of the Company, Purchaser intends to conduct a detailed review of the
Company and its assets, corporate structure, capitalization, operations,
properties, policies, management and personnel and to consider and determine
what, if any, changes would be desirable in light of the circumstances which
then exist. Such changes could include, among other things, changes in the
Company's business, corporate structure, Articles of Incorporation, By-laws,
capitalization, management or dividend policy.
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Assuming the Minimum Condition is satisfied and Purchaser purchases Shares
pursuant to the Offer, Parent intends to exercise promptly its rights under
the Merger Agreement to obtain majority representation on, and control of, the
Company Board. Parent will exercise such rights by causing the Company to
elect to the Company Board the following individuals: Richard J. Higgerson,
David G. Gundling, Peter Th. M. Koomen, and Allen D. Altman. Information with
respect to such directors is contained in Schedule I hereto and in Annex A to
the Schedule 14D-9. The Merger Agreement provides that, upon the purchase of
and payment for any Shares by Parent or any of its subsidiaries pursuant to
the Offer, Parent shall be entitled to designate such number of directors,
rounded down to the next whole number, on the Company Board such that the
percentage of its designees on the Company Board shall equal the percentage of
the outstanding Shares beneficially owned by Parent and its affiliates at such
time. The Merger Agreement provides that the directors of Purchaser and the
officers of the Company at the Effective Time of the Merger will, from and
after the Effective Time, be the initial directors and officers, respectively,
of the Surviving Corporation.
Purchaser or an affiliate of Purchaser may, following the consummation or
termination of the Offer, seek to acquire additional Shares through open
market purchases, privately negotiated transactions, a tender offer or
exchange offer or otherwise, upon such terms and at such prices as it shall
determine, which may be more or less than the price to be paid pursuant to the
Offer. Purchaser and its affiliates also reserve the right to dispose of any
or all Shares acquired by them, subject to the terms of the Merger Agreement.
Except as disclosed in this Offer to Purchase, and except as may be
effected in connection with the integration of operations referred to above,
none of Purchaser, Parent or Hagemeyer has any present plans or proposals that
would result in an extraordinary corporate transaction, such as a merger,
reorganization, liquidation, relocation of operations, or sale or transfer of
a material amount of assets, involving the Company or any of its subsidiaries,
or any material changes in the Company's capitalization, corporate structure,
business or composition of its management or the Company Board.
Other Matters.
Shareholder Approval. Under the TBCA, the approval of the Company Board and
(subject to the short-form merger (as defined herein) provisions described
below) the affirmative vote of the holders of two thirds of the outstanding
Shares are required to adopt and approve the Merger Agreement and transactions
contemplated thereby. The Company has represented in the Merger Agreement that
the execution and delivery of the Merger Agreement by the Company and the
consummation by the Company of the transactions contemplated by the Merger
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject to the approval of the Merger by the Company's
shareholders, if required, in accordance with the TBCA. The Company Board has
approved the Merger Agreement for purposes of Part Five of the TBCA (related
solely to mergers), and the Company has represented to Parent and Purchaser
that the Company Board has taken actions sufficient to render the restrictions
on certain business combinations contained in Part Thirteen of the TBCA
inapplicable to the Merger Agreement and the transactions contemplated
thereby. Therefore, unless the Merger is consummated pursuant to the short-
form merger provisions under the TBCA described below (in which case no
further corporate action by the shareholders of the Company will be required
to complete the Merger), the only remaining required corporate action of the
Company will be the approval of the Merger Agreement and the transactions
contemplated thereby by the affirmative vote of the holders of two thirds of
the Shares. The Merger Agreement provides that Parent will vote, or cause to
be voted, all of the Shares then owned by Parent, Purchaser or any of Parent's
other subsidiaries and affiliates in favor of the approval of the Merger and
the adoption of the Merger Agreement. Assuming that the Minimum Condition is
satisfied, Parent, Purchaser and Parent's other subsidiaries will acquire in
the aggregate at least two thirds of the Shares entitled to vote on the
approval of the Merger and the Merger Agreement and will have the ability to
effect the Merger without the affirmative votes of any other shareholders.
Short-Form Merger. Article 5.16 of the TBCA provides that if a corporation
owns at least 90% of the outstanding shares of each class of stock of another
corporation, the corporation holding such stock may merge itself into such
corporation without any action or vote on the part of the board of directors
or the shareholders of
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such other corporation (a "short-form merger"). In the event that Parent,
Purchaser and any other subsidiaries of Parent acquire in the aggregate at
least 90% of the outstanding Shares, pursuant to the Offer or otherwise, then,
at the election of Parent, a short-form merger could be effected without any
approval of the Company Board or the shareholders of the Company, subject to
compliance with the provisions of Article 5.16 of the TBCA. Additionally, if,
immediately prior to the Expiration Date of the Offer (as it may be extended),
the Shares tendered and not withdrawn pursuant to the Offer constitute less
than 90% of the outstanding Shares, Purchaser may extend the Offer for one
additional period not to exceed an aggregate of ten business days (but not
beyond the Termination Date), notwithstanding that all conditions to the Offer
are satisfied as of such Expiration Date of the Offer, in order to obtain
tenders of a sufficient number of additional Shares to allow it to effect a
short-form merger. Even if Parent and Purchaser do not own 90% of the
outstanding Shares following consummation of the Offer, Parent and Purchaser
could exercise the option described above in Section 11 and could also seek to
purchase additional Shares in the open market or otherwise in order to reach
the 90% threshold and employ a short-form merger. Parent presently intends to
effect a short-form merger if permitted to do so under the TBCA.
Appraisal Rights of Shareholders Dissenting from the Merger
The Company's shareholders have no dissenters' rights of appraisal with
regard to the Offer, but could have such rights with regard to the Merger if
they do not accept the Offer. The rights of holders of shares of Common Stock
to dissent from the Merger are governed by Sections 5.11-5.13 and 5.16 of the
TBCA. Under that statute, a holder of Common Stock as of the record date for
determination of shareholders entitled to notice of the Merger (or the meeting
to vote on the Merger, if applicable), who files a written objection to the
Merger, who has not voted in favor of the Merger, and who has made a demand
for compensation within the specified period applicable under the TBCA, could
be entitled, as an alternative to receiving the consideration offered in the
Merger for Common Stock, to a judicial determination of the fair value of the
holder's Common Stock. In order to obtain such a judicial determination, a
dissenting shareholder would also, if the Surviving Corporation did not do so,
be required to file the required petition in a court of competent jurisdiction
in the county in which the principal office of the Company is located, asking
for a finding and determination of the fair value of the dissenting
shareholder's shares of Common Stock. After a hearing on the petition, the
court would determine the dissenting shareholders who have complied with the
provisions of the TBCA relating to dissenters' rights and have become entitled
to the valuation of and payment for their shares of Common Stock, and would
appoint one or more qualified appraisers to determine that value.
After receipt of the appraiser's report, the court would determine the fair
value of the shares of Common Stock held by the dissenting shareholders
entitled to payment and would direct the payment of that value by the Company,
as the Surviving Corporation in the Merger. Upon payment of the judgment to
the dissenting shareholders, the dissenting shareholders would cease to have
any interest in their shares. In the absence of fraud in the transaction, the
remedy provided by the provisions of TBCA relating to dissenters' rights of a
shareholder objecting to the Merger would be the exclusive remedy for the
value of shares of Common Stock or money damages to such shareholder with
respect to the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING SHAREHOLDERS IS NOT A
COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY SHAREHOLDERS DESIRING
TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE PRESERVATION AND EXERCISE OF
DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF
THE TBCA. FAILURE TO FOLLOW THE PROCEDURES SET FORTH IN SUCH PROVISIONS MAY
RESULT IN A LOSS OF SUCH RIGHTS.
The foregoing description of certain provisions of TBCA is not complete and
is qualified in its entirety by reference to the TBCA.
Going Private Transactions
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger. However, Rule 13e-3 would be
inapplicable if (a) the Shares are deregistered under the Exchange Act prior
to the Merger or (b) such Merger is consummated within one year after the
purchase of the Shares pursuant to the Offer and such Merger provided for
shareholders to receive cash for their Shares in an amount at least equal to
the Offer Price.
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If applicable, Rule 13e-3 requires, among other things, that certain financial
information concerning the fairness of the proposed transaction and the
consideration offered to minority shareholders in such transaction be filed
with the Commission and disclosed to shareholders prior to the consummation of
the Merger.
13.Dividends and Distributions.
Pursuant to the Merger Agreement, the Company has agreed not to declare,
pay or set aside any dividend or other distribution in cash or property in
respect of its capital stock or issue or sell any securities convertible into,
or exchangeable for, or options, warrants to purchase, or rights to subscribe
for any shares of its capital stock or subdivide or in any way reclassify any
shares of its capital stock, or repurchase, cancel, or redeem any such shares
prior to the consummation of the Merger.
14.Conditions to the Offer.
Notwithstanding any other provision of the Offer, Purchaser will be
required to accept for payment and, subject to any applicable rules and
regulations of the Commission, including Rule 14e-l(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after expiration or termination of the Offer), to pay for any and all
Shares tendered, unless:
(i) there have not been validly tendered and not withdrawn prior to the
time the Offer shall otherwise expire a number of Shares which, together with
any Shares beneficially owned by Parent and its affiliates, constitutes at
least two thirds of the Shares outstanding on a fully diluted basis; or
(ii) any applicable waiting periods under the HSR Act (or similar
provisions of the laws of Canada or Mexico) applicable to the transactions
contemplated by the Merger Agreement shall not have expired or been terminated
prior to the expiration of the Offer; or
(iii) at any time on or after November 14, 1999 and before acceptance
for payment of such Shares any of the following events shall occur and be
continuing:
(A) any U.S. or foreign governmental entity or any foreign,
federal, state or local court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction
or other order (other than the application to the Offer and
the Merger of applicable waiting periods under the HSR Act (or
similar provisions of the laws of Canada or Mexico)) which is
in effect and which (1) prevents or prohibits consummation of
the Offer or the Merger, (2) prohibits or limits the ownership
or operation by the Company, Parent or any of their affiliates
or subsidiaries of all or any material portion of the business
or assets of the Company or any of its subsidiaries, (3)
imposes material limitations on the ability of Parent,
Purchaser or any other subsidiary of Parent to hold or to
exercise effectively full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares,
acquired by Purchaser pursuant to the Offer or otherwise on
all matters properly presented to the Company's shareholders,
including, without limitation, the approval and adoption of
the Merger Agreement and the transactions contemplated
thereby, (4) requires divestiture by Parent, Purchaser or any
other affiliate of Parent of the Shares, or (5) requires
Parent, the Company or any of their respective affiliates to
enter into a divestiture, hold-separate, business limitation
or similar agreement or undertaking, except in the case of
clauses (2), (3), (4) and (5) for any prohibition, limitation
or requirement which would not, individually or in the
aggregate materially and adversely affect the economic or
business benefits to Parent and its affiliates of the
transactions contemplated by the Merger Agreement or the
ability of Parent or the Surviving Corporation to conduct its
business substantially in the manner such business is being
conducted as of November 14, 1999; or
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(B) the representations and warranties of the Company contained in
the Merger Agreement (without giving effect to any materiality
or Material Adverse Effect (as defined in the Merger
Agreement) limitations contained therein) shall fail to be
true and correct when made and as of the date of the
consummation of the Offer as though made on and as of such
date (except for representations and warranties made as of a
specified date, which shall be true and correct as of such
date) and the failure of such representations and warranties
to be so true and correct, individually or in the aggregate,
has or would result in a Material Adverse Effect on the
Company; or
(C) the Company shall not have performed or complied in all
material respects with its obligations, agreements or
covenants under the Merger Agreement to be performed or
complied with by it; or
(D) the Merger Agreement shall have been terminated in accordance
with its terms; or
(E) except as to matters disclosed in the Company SEC Reports (as
defined in the Merger Agreement) filed prior to the date of
the Merger Agreement, there shall have occurred a material
adverse change in the financial condition or results of
operations of the Company and its subsidiaries taken as a
whole; or
(F) there shall have occurred (1) any general suspension of, or
limitation on prices for, trading in securities on any
national securities exchange or the over-the counter market in
the United States (other than shortening of trading hours or
any coordinated trading halt triggered solely as a result of a
specified increase or decrease in a market index) for a
continuous period of five (5) days, (2) a declaration of a
banking moratorium or any suspension of payments in respect of
banks in the United States, (3) any material limitation
(whether or not mandatory) by any U.S. or foreign governmental
entity on the extension of credit by banks or other lending
institutions in the United States, (4) a commencement of a war
or armed hostilities or other national calamity directly
involving the United States, Canada or Mexico and Parent shall
have determined that there is a reasonable likelihood that
such event would have a material adverse significance to
Parent and its subsidiaries, or the Company and its
subsidiaries, all taken as a whole, or (5) in the case of any
of the foregoing existing at the time of the execution of the
Merger Agreement, a material acceleration or worsening
thereof.
Parent and Purchaser will not be required to consummate the Offer if any of
the foregoing conditions to the Offer is not satisfied or waived (as permitted
under the Merger Agreement) and, in the reasonable judgment of Purchaser in
any such case, and regardless of the circumstances (including any action or
inaction by Parent or Purchaser other than any action or inaction by Parent or
Purchaser constituting a breach of the Merger Agreement) giving rise to any
condition, such condition makes it inadvisable to proceed with such
acceptances for payment or such payments.
15.Certain Legal Matters.
General. Except as described in this Section 15, based on information
provided by the Company, none of the Company, Purchaser or Parent is aware of
(i) any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Shares by Parent or Purchaser
pursuant to the Offer, the Merger or otherwise, or (ii) except as set forth
herein, any approval or other action by any governmental, administrative or
regulatory agency or authority, domestic or foreign, that would be required
prior to the acquisition of Shares by Purchaser pursuant to the Offer, the
Merger or otherwise. Should any such approval or other action be required,
Purchaser and Parent currently contemplate that such approval or other action
will be sought, except as described below under "State Antitakeover Statutes."
While, except as otherwise described in this Offer to Purchase, Purchaser does
not presently intend to delay the acceptance for payment of, or payment for,
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if
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needed, would be obtained or would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result
in consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of, or other substantial
conditions complied with, in the event that such approvals were not obtained
or such other actions were not taken or in order to obtain any such approval
or other action. If certain types of adverse action are taken with respect to
the matters discussed below, Purchaser could decline to accept for payment, or
pay for, any Shares tendered. See Section 14 for a statement of the conditions
to the Offer, including conditions with respect to governmental actions.
State Takeover Laws and Texas Business Combination Law. Purchaser has not
attempted to comply with any state takeover statutes in connection with the
Offer or the Merger, although in the Merger Agreement, the Company has
represented that the Company Board has taken actions sufficient to render
Section 13 of the TBCA inapplicable to the Merger Agreement and the
transactions contemplated thereby. Purchaser reserves the right to challenge
the validity or applicability of any state law allegedly applicable to the
Offer or the Merger, and nothing in this Offer nor any action taken in
connection herewith is intended as a waiver of that right. In the event that
it is asserted that one or more state takeover statutes apply to the Offer or
the Merger, and it is not determined by an appropriate court that such statute
or statutes do not apply or are invalid as applied to the Offer or the Merger,
as applicable, Purchaser may be required to file certain documents with, or
receive approvals from, the relevant state authorities, and the Purchaser
might be unable to accept for payment or purchase Shares tendered pursuant to
the Offer or be delayed in continuing or consummating the Offer. In such case,
the Purchaser may not be obligated to accept for purchase, or pay for, any
Shares tendered. See Section 14.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal
executive offices or principal places of business in such states. In Edgar v.
MITE Corp., the Supreme Court of the United States (the "Supreme Court")
invalidated on constitutional grounds the Illinois Business Takeover statute,
which, as a matter of state securities law, made certain corporate
acquisitions more difficult. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court held that the State of Indiana may, as a matter
of corporate law and, in particular, with respect to those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquirer from voting on the affairs of a target corporation without
the prior approval of the remaining shareholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of shareholders in the state and were incorporated there.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Texas will by their terms
apply to the Offer, and, except as set forth above with respect to Part
Thirteen of the TBCA, neither Parent nor Purchaser has attempted to comply
with any state antitakeover statute or regulation. Purchaser reserves the
right to challenge the applicability or validity of any state law purportedly
applicable to the Offer and nothing in this Offer to Purchase or any action
taken in connection with the Offer is intended as a waiver of such right. If
it is asserted that any state antitakeover statute is applicable to the Offer
and an appropriate court does not determine that it is inapplicable or invalid
as applied to the Offer, Purchaser might be required to file certain
information with, or to receive approvals from, the relevant state
authorities, and Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer or may be delayed in consummating the
Offer. In such case, Purchaser may not be obligated to accept for purchase, or
pay for, any Shares tendered. See Section 14.
Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "DOJ") and the Federal Trade Commission (the "FTC")
and certain waiting period requirements have been satisfied.
Parent and Hagemeyer filed its Notification and Report Form with respect to
the Offer under the HSR Act on November 19, 1999. Assuming that the Company
complies with its filing requirements under the HSR Act, the waiting period
under the HSR Act with respect to the Offer will expire at 11:59 p.m., New
York City time,
35
<PAGE>
on December 3, 1999, the fifteenth day after the date Parent's and Hagemeyer's
form was filed, unless early termination of the waiting period is granted.
However, the DOJ or the FTC may extend the waiting period by requesting
additional information or documentary material from Parent or the Company. If
such a request is made, such waiting period will expire at 11:59 p.m., New
York City time, on the tenth day after substantial compliance by Parent with
such request. Only one extension of the waiting period pursuant to a request
for additional information is authorized by the HSR Act. Thereafter, such
waiting period may be extended only by court order or with the consent of
Parent. In practice, complying with a request for additional information or
material can take a significant amount of time. In addition, if the DOJ or the
FTC raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental
agency concerning possible means of addressing those issues and may agree to
delay consummation of the transaction while such negotiations continue.
Purchaser will not accept for payment Shares tendered pursuant to the Offer
unless and until the waiting period requirements imposed by the HSR Act with
respect to the Offer have been satisfied. See Section 14.
The FTC and the DOJ frequently scrutinize the legality under the U.S.
Antitrust Laws (as defined below) of transactions such as Purchaser's
acquisition of Shares pursuant to the Offer and the Merger. At any time before
or after Purchaser's acquisition of Shares, the DOJ or the FTC could take such
action under the U.S. Antitrust Laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares
pursuant to the Offer or otherwise seeking divestiture of Shares acquired by
Purchaser or divestiture of substantial assets of Parent or its subsidiaries.
Private parties, as well as state governments, may also bring legal action
under the U.S. Antitrust Laws under certain circumstances. Based upon an
examination of information provided by the Company relating to the businesses
in which Hagemeyer and the Company are engaged, Parent and Purchaser believe
that the acquisition of Shares by Purchaser will not violate the U.S.
Antitrust Laws. Nevertheless, there can be no assurance that a challenge to
the Offer or other acquisition of Shares by Purchaser on antitrust grounds
will not be made or, if such a challenge is made, of the result. See Section
14 for a statement of the conditions to the Offer, including conditions with
respect to litigation and certain governmental actions.
As used in this Offer to Purchase, "U.S. Antitrust Laws" shall mean and
include the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act,
the Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or
restraint of trade.
The Company has informed Purchaser that the Company, through a 50% owned
affiliate, conducts certain operations in Mexico. The Merger would therefore
be subject to the Federal Law of Economic Competition (Ley Federal de
Competencia Economica) (the "FLEC") and the Merger constitutes a
"concentration" (i.e., merger) subject to review by the Mexican Federal
Competition Commission (Comision Federal de Competencia) (the "MFCC"). A
notification must be filed with the MFCC in connection with the Offer and the
Merger before consummation of the Merger. Parent intends to make the necessary
notification under the FLEC as soon as practicable. The Merger may be
consummated after filing the necessary notification; however, the MFCC must
ultimately issue a favorable final ruling which could possibly contain certain
conditions relating to the Mexican part of the Merger. The imposition of
conditions by the MFCC would, however, be unlikely since Purchaser does not
have a presence in Mexico and since it is not expected that the Merger will
create any anticompetitive conditions regulated by the FLEC. Under the FLEC,
the substantive test for a non-challenging or conditioning resolution is
whether the notified merger diminishes, damages, or impedes the competition
process by granting power to the acquiror to, inter alia, unilaterally fix
prices or to substantially restrict output in the relevant market, by
displacing other economic agents out of the market or impeding access to the
relevant market, and by substantially allowing parties to incur in
monopolistic practices. Once the notification is filed, the MFCC has an
initial maximum term of 45 calendar days from the date the notification is
filed or the date in which additional information requested by the MFCC is
filed, to issue a final ruling on the matter. In extraordinary circumstances,
this period may be extended by the Chairman of the MFCC for an additional 60
calendar days if the transaction in question requires additional analysis or
review by the MFCC.
36
<PAGE>
If the parties learn, based on information which subsequently becomes
available to them, that the Offer is a "notifiable transaction" for purposes
of Part IX of the Competition Act (Canada), they will proceed to make the
required pre-merger notification filing as soon as it is practicable. The
Company has informed Purchaser that the Company conducts certain operations in
Canada. The Offer and the Merger would therefore be subject to the provisions
of the Competition Act (Canada), which require pre-merger notification for
certain transactions. In the event that such a notification is required, a
statutory waiting period of seven or 21 days (depending on whether a short or
long form is used) following the making of the filing would apply prior to
which the transaction could not be completed. These minimum statutory waiting
periods will be extended to 14 and 42 days, respectively, under draft
regulations which are expected to be proclaimed into force by the Canadian
government by the end of 1999. Parent and Purchaser believe that the Offer is
not a "notifiable transaction" for purposes of Part IX of the Competition Act
(Canada) and that no pre-merger notification is required in Canada in
connection with the Offer and the Merger.
However, at any time before or within three years after the completion of
the Offer or the Merger, and notwithstanding the expiry of any applicable
waiting period under the Competition Act (Canada), the Commissioner of
Competition could take action under the Competition Act (Canada) to seek to
enjoin, modify or dissolve the Merger if it would be likely to prevent or
lessen competition substantially. Hagemeyer, Parent and Purchaser believe that
the Merger is not likely to prevent or lessen competition substantially.
Nevertheless, there can be no assurance that a challenge of the Merger will
not be made in Canada at any time before or within three years from
consummation or, if such a challenge is made, what the result would be.
16.Fees and Expenses.
Hagemeyer and Parent have engaged Deutsche Bank Securities Inc. ("Deutsche
Bank") to act as financial advisor and Dealer Manager in connection with the
Offer and the Merger. Hagemeyer has agreed to pay Deutsche Bank compensation
for its services as Dealer Manager and financial advisor in connection with
the Offer and the Merger as follows: (i) a retainer fee of $100,000 upon the
execution of the engagement letter with Deutsche Bank; (ii) an announcement
fee of $300,000 upon the commencement of a tender offer or the execution of a
definitive agreement for the acquisition of the Company; and (iii) in the
event an acquisition of the Company is consummated, a transaction fee of 1.0%
of the aggregate consideration payable in the acquisition (including
indebtedness and certain other liabilities repaid, retired or assumed in
connection with the acquisition) reduced by the amount of any previously paid
retainer fee and announcement fee. In the event a transaction is not
consummated but Hagemeyer receives a break-up or similar fee, Hagemeyer will
pay Deutsche Bank a fee of 20% of such break-up or similar fee. Parent and
Hagemeyer have also agreed to reimburse Deutsche Bank for all reasonable out-
of-pocket fees, expenses and costs, including reasonable fees and expenses of
legal counsel, and to indemnify Deutsche Bank and certain related persons
against certain liabilities and expenses in connection with the Offer and the
Merger, including certain liabilities under the federal securities laws.
Purchaser and Parent have retained ChaseMellon Consulting Services, L.L.C.
to serve as the Information Agent and ChaseMellon Shareholder Services, L.L.C.
to serve as the Depositary in connection with the Offer. The Information Agent
may contact holders of Shares by personal interview, mail, telephone, telex,
telegraph and other methods of electronic communication and may request
brokers, dealers, commercial banks, trust companies and other nominees to
forward the Offer materials to beneficial holders. The Information Agent and
the Depositary will each receive reasonable and customary compensation for
their services, be reimbursed for certain reasonable out-of-pocket expenses
and be indemnified against certain liabilities in connection with their
services, including certain liabilities and expenses under the federal
securities laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees
or commissions to any broker or dealer or other person or entity in connection
with the solicitation of tenders of Shares pursuant to the Offer. Brokers,
dealers, banks and trust companies will be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding the
Offer materials to their customers.
37
<PAGE>
17.Miscellaneous.
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of the Shares pursuant thereto,
Purchaser shall make a good faith effort to comply with such statute or seek
to have such statute declared inapplicable to the Offer. If, after such good
faith effort, Purchaser cannot comply with such state statute, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) holders of
Shares in such state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the Commission a
Solicitation/Recommendation Statement on Schedule 14D-9 pursuant to Rule 14d-9
under the Exchange Act, setting forth its recommendation with respect to the
Offer and the reasons for its recommendation and furnishing certain additional
related information. Such Schedules and any amendments thereto, including
exhibits, should be available for inspection and copies should be obtainable
in the same manner set forth in Section 9 of this Offer to Purchase (except
that such material will not be available at the regional offices of the
Commission).
SHIELD ACQUISITION CORP.
November 19, 1999
38
<PAGE>
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER, PARENT,
HAGEMEYER AND PURCHASER DESIGNEES TO THE COMPANY BOARD
1. Directors and Executive Officers of Purchaser. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Purchaser. Unless otherwise indicated,
each such person is a citizen of the United States of America, and the
business address of each such person is c/o Hagemeyer P.P.S. North America,
Inc., 100 Galleria Parkway, Suite 1120, Atlanta, Georgia 30339. Unless
otherwise indicated, each such person has held his or her present occupation
as set forth below, or has been an executive officer of Purchaser, or the
organization indicated, for the past five years.
Present Principal Occupation or Employment;
Material Positions Held During the Past Five
Years
Name
David G. Gundling........ Mr. Gundling has been a member of the Board of
Directors, President and Chief Executive
Officer of Purchaser since its organization in
November 1999. Mr. Gundling has been a member
of the Board of Directors, President and Chief
Executive Officer of Parent since October 1999.
He has also served as President and Chief
Executive Officer of Hagemeyer Holdings, Inc.
since May 1999 and Hagemeyer Electrical and
Electronics Supply Company, Inc. since November
1999. Mr. Gundling also serves as a member of
the Board of Directors of Hagemeyer Holdings,
Inc. Prior to serving in these positions, Mr.
Gundling served as President and Chief
Executive Officer of Hagemeyer Foods (N.A.),
Inc. beginning in February 1997. Prior to
joining Hagemeyer, Mr. Gundling was the
President and Chief Operating Officer for Super
Rite Foods, Inc. and he served as a member of
the Board of Directors of Super Rite
Corporation until 1995.
Richard J. Higgerson..... Mr. Higgerson has been a member of the Board of
Directors of Purchaser since November 1999 and
has been Chairman of the Board of Directors of
Parent since October 1999. Mr. Higgerson was
appointed to the Board of Management of
Hagemeyer in April 1994. In April 1999, he
retired as a member of the Board of Management
and returned to his home country of the United
States of America where he continues to assist
Hagemeyer in a non-executive capacity.
I.H.H.J.M. Manders....... Mr. Manders has been a member of the Board of
Directors of Purchaser since November 1999 and
has served as a member of the Board of
Directors of Parent since October 1999. He was
appointed as Secretary and Treasurer of Parent
in November 1999. Mr. Manders is Corporate
Secretary of Hagemeyer.
2. Directors and Executive Officers of Parent. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Parent. Unless otherwise indicated,
each such person is a citizen of the United States of America and the business
address of each such person is c/o Hagemeyer P.P.S. North America, Inc., 100
Galleria Parkway, Suite 1120, Atlanta, Georgia 30339. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with Parent. Unless otherwise
I-1
<PAGE>
indicated, each such person has held his or her present occupation as set
forth below, or has been an executive officer at Parent for the past five
years.
Present Principal Occupation or Employment;
Material Positions Held During the Past Five
Years
Name
David G. Gundling......... See biographical information for Mr. Gundling
set forth above.
Richard J. Higgerson...... See biographical information for Mr. Higgerson
set forth above.
I.H.H.J.M. Manders ....... See biographical information for Mr. Manders
set forth above.
3. Directors and Executive Officers of Hagemeyer. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each person holding a position with Hagemeyer equivalent to that of a director
or executive officer. Unless otherwise indicated, each such person is a
citizen of the Netherlands, and the business address of each such person is
c/o Hagemeyer N.V., Rijksweg 69, 1410 AC Naarden, the Netherlands. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with Hagemeyer. Unless otherwise indicated, each such
person has held his or her present occupation as set forth below, or has been
an executive officer at Hagemeyer, or the organization indicated, for the past
five years.
Present Principal Occupation or Employment;
Material Positions Held During the Past Five
Years
Name
E. J. van der Hagen....... Mr. van der Hagen is Chairman of the
Supervisory Board and has served on the
Supervisory Board since 1984. Mr. van der Hagen
has been Chairman of the Supervisory Board of
Verenigde Bedrijven Nutricia in Zoetermeer
since 1992.
P. A. W. Roef............. Mr. Roef is the Vice Chairman of the
Supervisory Board and has served as a member of
the Supervisory Board since 1980. Mr. Roef also
serves as Chairman of the Supervisory Board of
Pook & Cloppenburg N.V., VNU B.V. and Parcom
B.V. Mr. Roef also serves as a member of
various other Supervisory Boards. Mr. Roef
served as Chairman of the Board of Management
of Gamma Holding N.V. from 1975 until 1995.
T.Y. Yasuda............... Mr. Yasuda is a United States citizen and has
been a member of the Supervisory Board since
1986. Mr. Yasuda is an Executive Director of
First Pacific Company Ltd. and has been
associated with the First Pacific Group of
companies since 1983.
P. J. Kalff............... Mr. Kalff has been a member of the Supervisory
Board since 1994. Mr. Kalff has been Chairman
of the Board of Management of ABN AMRO Bank
N.V. since 1994. He also serves as a member of
various other Supervisory Boards.
W. F. Th. Corpeleijn...... Mr. Corpeleijn has been a member of the
Supervisory Board since 1998. Mr. Corpeleijn
has been a partner of Stibbe Sinmont Monahan
Duhot since 1980. He also serves as a member of
various other Supervisory Boards.
D. G. Eustace.............
Mr. Eustace is a British and Canadian citizen
and has been a member of the Supervisory Board
since April 1999. Mr. Eustace
I-2
<PAGE>
has served as Vice Chairman of the Board of
Management and Group Management Committee of
Philips Electronics N.V. since 1997. Prior
thereto, Mr. Eustace served as Executive Vice
President of Philips Electronics N.V. from 1992
until 1997. Mr. Eustace also serves as a member
of various Supervisory Boards.
Rob ter Harr.............. Mr. ter Haar was appointed to the Supervisory
Board and Chairman of the Board of Management
in April 1999. Mr. ter Harr joined Hagemeyer in
January 1999 as Advisor to the Board of
Management. Prior thereto, Mr. ter Haar served
as Chairman of the Board of Management of De
Boer Unigro N.V. from 1997 until 1999, and as
Chairman of the Board of Management of Unigro
N.V., a predecessor to De Boer Unigro N.V. from
1993 until 1997.
Hendrik J. de Graaf....... Mr. de Graaf has been a member of the Board of
Management since 1994. Since joining Hagemeyer
in 1990, Mr. De Graaf has been responsible for
the Hagemeyer Group's electrotechnical
materials distribution activities and the
international expansion of this product
category.
James H. Riddell.......... Mr. Riddell is a British citizen and has been a
member of the Board of Management since 1996.
Mr. Riddell joined Hagemeyer in 1995 as Chief
Financial Officer. Prior thereto, Mr. Riddell
served as Group Finance Director of Hammerson
plc in the United Kingdom. Mr. Riddell is a
member of the Supervisory Board of Ceteco N.V.,
a company within the Hagemeyer Group.
Anthony A. B. Teves....... Mr. Teves has been a member of the Board of
Management since 1991. Mr. Teves' principal
area of responsibility is corporate
development. Mr. Teves holds positions on
Supervisory Boards of several companies within
the Hagemeyer Group, including Ceteco N.V. Mr.
Teves is a director of Groenwoudt Groep B.V.
Henk Ph. Ingwersen........ Mr. Ingwersen has been a member of the Board of
Management since April 1998. Prior thereto, Mr.
Ingwersen served as Advisor to the Board
beginning in January 1998. Prior to joining
Hagemeyer, Mr. Ingwersen served as a member of
the Board of Management of A.R.M.-Stokvis B.V.
from 1995 to 1998 and as a member of the Board
of Management of HLC Ltd. Hong Kong from 1994
to 1995.
G. L. Pickles............. Mr. Pickles is an Australian citizen and has
been a member of the Board of Management since
April 1999. As of January 1999, Mr. Pickles has
management responsibility for Hagemeyer's
activities in the Asia-Pacific region. Mr.
Pickles served as Chief Executive Officer of
Tech Pacific Group from 1990 until 1999.
I.H.H.J.M. Manders ....... See biographical information for Mr. Manders
set forth above.
4. Purchaser Designees to the Company Board. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each person who the Purchaser intends to designate for election to the Company
Board if the Minimum Condition is satisfied. Unless otherwise indicated, each
such person is a citizen of the Netherlands, and the business address of each
such person is c/o Hagemeyer N.V., Rijksweg 69, 1410 AC Naarden, the
Netherlands. Unless otherwise indicated, each such person has held his or her
present occupation as set forth below, or has been an executive officer at the
organization indicated, for the past five years.
I-3
<PAGE>
Present Principal Occupation or Employment;
Material Positions Held During the Past Five
Years
Name
Richard J. Higgerson See biographical information for Mr. Higgerson
set forth above.
David G. Gundling See biographical information for Mr. Gundling
set forth above. Mr. Gundling is a U.S. citizen
and his business address is c/o Hagemeyer
P.P.S. North America, Inc., 100 Galleria
Parkway, Suite 1120, Atlanta, Georgia 30339.
Peter Th. M. Koomen Mr. Koomen has served as a member of the Board
of Directors of Hagemeyer Holdings, Inc. since
May 1999. Mr. Koomen has been a member of the
Board of Directors of Stichting Pensioenfunds
Sagittarius, the Hagemeyer Company Pensionfund,
since January 1998. He has also been Group Tax
Director of Hagemeyer N.V. since April of 1995.
Prior to joining Hagemeyer in 1995, Mr. Koomen
was General Tax Counsel of Group 4 Securitas
International B.V.
Allen D. Altman Mr. Altman is a founding shareholder of Altman,
Kritzer & Levick, P.C., an Atlanta-based law
firm established in 1974. Mr. Altman is a U.S.
citizen and his business address is c/o Altman,
Kritzer & Levick, P.C., 6400 Powers Ferry Road,
N.W., Suite 224, Atlanta, Georgia 30339.
I-4
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
shareholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary, at the applicable address set
forth below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<CAPTION>
By Mail: By Hand: By Overnight:
<S> <C> <C>
Reorganization Department Reorganization Department
Reorganization Department 120 Broadway 85 Challenger Road
PO Box 3301 13th Floor Mail Stop--Reorg
South Hackensack, NJ 07606 New York, NY 10271 Ridgefield Park, NJ 07660
</TABLE>
Facsimile (for eligible institutions only): (201) 296-4293
Confirm facsimile by telephone ONLY: (201) 296-4860
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent at
its address and telephone number set forth below. Shareholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
Consulting Services, L.L.C.
450 West 33rd Street, 14th Floor
New York, New York 10001
Banks and Brokers Please Call (212) 273-8083
All Others Call Toll-Free (877) 698-6869
The Dealer Manager for the Offer is:
Deutsche Banc Alex. Brown
Deutsche Bank Securities Inc.
31 West 52nd Street
New York, New York 10019
Call Toll-Free (877) 305-4919
<PAGE>
Letter of Transmittal
To Tender Shares of Common Stock
of
Vallen Corporation
Pursuant to the Offer to Purchase
Dated November 19, 1999
by
Shield Acquisition Corp.
an indirect wholly owned subsidiary of
Hagemeyer N.V.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Stop-Reorg
New York, NY 10271 Ridgefield Park, NJ 07660
</TABLE>
By Facsimile Transmission:
(for eligible institutions only)
(201) 296-4293
Confirm facsimile by telephone ONLY:
(201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE
DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL
SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by shareholders of Vallen
Corporation if certificates for Shares (as such term is defined below) are to
be forwarded herewith or, unless an Agent's Message (as defined in
Instruction 2 below) is utilized, if delivery of Shares is to be made by book-
entry transfer to an account maintained by the Depositary at the Book-Entry
Transfer Facility (as defined in, and pursuant to the procedures set forth in,
Section 3 of the Offer to Purchase). Shareholders who deliver Shares by book-
entry transfer are referred to herein as "Book-Entry Shareholders" and other
shareholders who deliver Shares are referred to herein as "Certificate
Shareholders."
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation
(as defined in Section 3 of the Offer to Purchase) with respect to, their
Shares and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents
to the Book-Entry Transfer Facility will not constitute delivery to the
Depositary.
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and
Address(es)
of
Registered
Holder(s)
(Please
fill in, if Shares Tendered
blank) (Attach additional list if necessary)
- --------------------------------------------------------------
Total Number
of Shares Number
Certificate Evidenced by of Shares
Number(s)* Certificate(s)* Tendered**
-----------------------
-----------------------
-----------------------
-----------------------
-----------------------
-----------------------
<S> <C> <C> <C>
Total Shares
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced
by any certificate(s) delivered to the Depositary are being tendered.
See Instruction 4.
<PAGE>
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ________________________________________________
Account Number _______________________________________________________________
Transaction Code Number ______________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) _______________________________________________
Window Ticket Number (if any) ________________________________________________
Date of Execution of Notice of Guaranteed Delivery ___________________________
Name of Institution that Guaranteed Delivery _________________________________
If delivered by Book-Entry Transfer, check box: [_]
Account Number _______________________________________________________________
Transaction Code Number ______________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Shield Acquisition Corp., a Texas
corporation ("Purchaser") and an indirect wholly owned subsidiary of Hagemeyer
N.V., a company organized under the laws of the Netherlands ("Hagemeyer"), the
above-described shares of common stock, par value $0.50 per share (the
"Shares"), of Vallen Corporation, a Texas corporation (the "Company"),
pursuant to Purchaser's offer to purchase all of the outstanding Shares at a
price of $25.00 per Share, net to the seller in cash, without interest thereon
(the "Offer Price") upon the terms and subject to the conditions set forth in
the Offer to Purchase dated November 19, 1999 and in this Letter of
Transmittal (which, together with any amendments or supplements thereto or
hereto, collectively constitute the "Offer"). The undersigned understands that
Purchaser reserves the right to transfer or assign, in whole at any time, or
in part from time to time, to one or more wholly owned subsidiaries of
Hagemeyer P.P.S. North America, Inc., a Delaware corporation and an indirect
wholly owned subsidiary of Hagemeyer ("Parent"), the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve Purchaser of its obligations under the
Offer and will in no way prejudice the rights of tendering shareholders to
receive payment for Shares validly tendered and accepted for payment pursuant
to the Offer. Receipt of the Offer is hereby acknowledged.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 14, 1999 (the "Merger Agreement"), by and among Purchaser,
Parent and the Company.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other
Shares or other securities issued or issuable in respect thereof on or after
November 14, 1999 (collectively, "Distributions")) and irrevocably constitutes
and appoints the Depositary the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Shares (and all Distributions), with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (i) deliver certificates for
such Shares (and any and all Distributions), or transfer ownership of such
Shares (and any and all Distributions) on the account books maintained by the
Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares (and any and all Distributions) for
transfer on the books of the Company, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints David G. Gundling and Peter Th. M. Koomen, in their respective
capacities as officers of Purchaser, and any individual who shall thereafter
succeed to any such office of Purchaser, and each of them, as the attorneys-
in-fact and proxies of the undersigned, each with full power of substitution
and resubstitution, to vote at any annual or special meeting of the Company's
shareholders or any adjournment or postponement thereof or otherwise in such
manner as each such attorney-in-fact and proxy or his substitute shall in his
sole discretion deem proper with respect to, to execute any written consent
concerning any matter as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, and to
otherwise act as each such attorney-in-fact and proxy or his substitute shall
in his sole discretion deem proper with respect to, all of the Shares (and any
and all Distributions) tendered hereby and accepted for payment by Purchaser.
This appointment will be effective if and when, and only to the extent that,
Purchaser accepts such Shares for payment pursuant to the Offer. This power
3
<PAGE>
of attorney and proxy are irrevocable and are granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the
Offer. Such acceptance for payment shall, without further action, revoke any
prior powers of attorney and proxies granted by the undersigned at any time
with respect to such Shares (and any and all Distributions), and no subsequent
powers of attorney, proxies, consents or revocations may be given by the
undersigned with respect thereto (and, if given, will not be deemed
effective). Purchaser reserves the right to require that, in order for Shares
(or other Distributions) to be deemed validly tendered, immediately upon
Purchaser's acceptance for payment of such Shares, Purchaser must be able to
exercise full voting, consent and other rights with respect to such Shares
(and any and all Distributions), including voting at any meeting of the
Company's shareholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that the undersigned owns the Shares
tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that the
tender of the tendered Shares complies with Rule 14e-4 under the Exchange Act,
and that when the same are accepted for payment by Purchaser, Purchaser will
acquire good, marketable and unencumbered title thereto and to all
Distributions, free and clear of all liens, restrictions, charges and
encumbrances and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby and all
Distributions. In addition, the undersigned shall remit and transfer promptly
to the Depositary for the account of Purchaser all Distributions in respect of
the Shares tendered hereby, accompanied by appropriate documentation of
transfer, and, pending such remittance and transfer or appropriate assurance
thereof, Purchaser shall be entitled to all rights and privileges as owner of
each such Distribution and may withhold the entire purchase price of the
Shares tendered hereby or deduct from such purchase price, the amount or value
of such Distribution as determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in
the Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the terms of the Merger
Agreement, the price to be paid to the undersigned will be the amended price
notwithstanding the fact that a different price is stated in this Letter of
Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return
any certificates for Shares not tendered or accepted for payment in the
name(s) of the registered holder(s) appearing above under "Description of
Shares Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price of all
Shares purchased and/or return any certificates for Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return
any certificates evidencing Shares not tendered or not accepted for payment
(and any accompanying documents, as appropriate) in the name(s) of, and
deliver such check and/or return any such certificates (and any accompanying
documents, as appropriate) to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment Instructions," please
credit any Shares tendered herewith by book-entry transfer that are not
accepted for payment by crediting the account at the Book-Entry Transfer
4
<PAGE>
Facility designated above. The undersigned recognizes that Purchaser has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder thereof if Purchaser does not
accept for payment any of the Shares so tendered.
[_]CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
Number of shares represented by lost, destroyed or stolen certificates: _______
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
To be completed ONLY if the To be completed ONLY if certifi-
check for the purchase price of cates for Shares not tendered or
Shares accepted for payment is to not accepted for payment and/or
be issued in the name of someone the check for the purchase price
other than the undersigned or if of Shares accepted for payment
Shares tendered hereby and deliv- are to be sent to someone other
ered by book-entry transfer that than the undersigned or to the
are not accepted for payment are undersigned at an address other
to be returned by credit to an than that shown under "Descrip-
account maintained at the Book tion of Shares Tendered."
Entry Transfer Facility other
than the account indicated.
Mail check and/or Share certifi-
cates to:
Issue check and/or Share certifi- Name _____________________________
cates to: (Please Print)
Address __________________________
Name _____________________________ __________________________________
(Please Print) (Include Zip Code)
Address __________________________ __________________________________
__________________________________ (Tax Identification or Social
(Include Zip Code) Security Number)
__________________________________
(Tax Identification or Social
Security Number)
Credit Shares delivered by Book-
Entry Transfer and not purchased
to the Book-Entry Transfer
Facility Account
__________________________________
(Account Number)
5
<PAGE>
IMPORTANT
SHAREHOLDER SIGN HERE
(Also Complete Substitute Form W-9 Below)
X ___________________________________________________________________________
X ___________________________________________________________________________
(Signature(s) of Owner(s))
Dated: ________________________ , 1999
Must be signed by registered holder(s) exactly as name(s) appear(s) on
the Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please set forth full title. See
Instruction 5. (For information concerning signature guarantees, see
Instruction 3.)
Name(s) _____________________________________________________________________
____________________________________________________________________________
(Please Print)
Capacity (full title) _______________________________________________________
(See Instruction 4)
Address _____________________________________________________________________
____________________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number ______________________________________________
Taxpayer Identification or Social Security No. ______________________________
(COMPLETE THE SUBSTITUTE FORM W-9 CONTAINED HEREIN)
SIGNATURE GUARANTEE
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature ________________________________________________________
Name(s) ____________________________________________________________________
(Please Print)
Title _______________________________________________________________________
Name of Firm ________________________________________________________________
Address _____________________________________________________________________
Area Code and Telephone No. _________________________________________________
Dated: ________________________ , 1999
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Instruction 1, includes
any participant in any of the Book-Entry Transfer Facilities' systems whose
name appears on a security position listing as the owner of the Shares) of
Shares tendered herewith, unless such registered holder(s) have completed
either the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (b) if such
Shares are tendered for the account of a financial institution (including most
commercial banks, savings and loan associations and brokerage houses) that is
a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Shares; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by shareholders of
the Company either if Share certificates are to be forwarded herewith or,
unless an Agent's Message (as defined below) is utilized, if delivery of
Shares is to be made by book-entry transfer pursuant to the procedures set
forth herein and in Section 3 of the Offer to Purchase. For a shareholder to
validly tender Shares pursuant to the Offer, either (a) a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), together with
any required signature guarantees or an Agent's Message (in connection with
book-entry transfer) and any other required documents, must be received by the
Depositary at one of its addresses set forth herein prior to the Expiration
Date and either (i) certificates for tendered Shares must be received by the
Depositary at one of such addresses prior to the Expiration Date or (ii)
Shares must be delivered pursuant to the procedures for book-entry transfer
set forth herein and in Section 3 of the Offer to Purchase and a Book-Entry
Confirmation must be received by the Depositary prior to the Expiration Date
or (b) the tendering shareholder must comply with the guaranteed delivery
procedures set forth herein and in Section 3 of the Offer to Purchase.
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-
entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth herein and in Section
3 of the Offer to Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all tendered Shares), together
with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and any other required documents
must be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the Nasdaq Stock Market is open for business.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
7
<PAGE>
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering shareholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. Partial Tenders. (Not applicable to shareholders who tender by book-
entry transfer). If fewer than all the Shares evidenced by any Share
certificate delivered to the Depositary herewith are to be tendered hereby,
fill in the number of Shares that are to be tendered in the box entitled
"Number of Shares Tendered." In any such case, new certificate(s) for the
remainder of the Shares that were evidenced by the old certificates will be
sent to the registered holder, unless otherwise provided in the appropriate
box on this Letter of Transmittal, as soon as practicable after the Expiration
Date or the termination of the Offer. All Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of the authority of such person so
to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares
not tendered or not accepted for payment are to be issued in the name of a
person other than the registered holder(s). Signatures on any such Share
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
8
<PAGE>
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the transfer
and sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or
if tendered certificates are registered in the name of any person other than
the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder(s) or such other
person) payable on account of the transfer to such other person will be
deducted from the purchase price of such Shares purchased unless evidence
satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
7. Special Payment and Delivery Instructions; Wire Transfers. If a check
for the purchase price of any Shares accepted for payment is to be issued in
the name of, and/or Share certificates for Shares not accepted for payment or
not tendered are to be issued in the name of and/or returned to, a person
other than the signer of this Letter of Transmittal or if a check is to be
sent, and/or such certificates are to be returned, to a person other than the
signer of this Letter of Transmittal, or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be
completed. Any shareholder(s) delivering Shares by book-entry transfer may
request that Shares not purchased be credited to such account maintained at a
Book-Entry Transfer Facility as such shareholder(s) may designate in the box
entitled "Special Payment Instructions." If no such instructions are given,
any such Shares not purchased will be returned by crediting the account at the
Book-Entry Transfer Facility designated above as the account from which such
Shares were delivered.
8. Requests for Assistance or Additional Copies. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address and phone number set forth
below, or from brokers, dealers, commercial banks or trust companies.
9. Waiver of Conditions. Subject to the Merger Agreement, Purchaser
reserves the absolute right in its sole discretion to waive, at any time or
from time to time, any of the specified conditions of the Offer (with certain
exceptions as specified in Section 1 of the Offer to Purchase), in whole or in
part, in the case of any Shares tendered.
10. Backup Withholding. In order to avoid "backup withholding" of
federal income tax on payments of cash pursuant to the Offer, a shareholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such shareholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify,
under penalties of perjury, that such TIN is correct and that such shareholder
is not subject to backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the shareholder upon filing an
income tax return.
The shareholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
9
<PAGE>
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is
checked, the shareholder or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number below in order to avoid backup
withholding. Notwithstanding that the box in Part 3 is checked and the
Certificate of Awaiting Taxpayer Identification Number is completed, the
Depositary will withhold 31% on all payments made prior to the time a properly
certified TIN is provided to the Depositary. However, such amounts will be
refunded to such shareholder if a TIN is provided to the Depositary within 60
days.
Certain shareholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign shareholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
11. Lost, Destroyed or Stolen Share Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The shareholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING SHAREHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
such shareholder's correct taxpayer identification number on Substitute Form
W-9 below. If such shareholder is an individual, the taxpayer identification
number is his or her social security number. If a tendering shareholder is
subject to backup withholding, such shareholder must cross out item (2) of the
certification box on the Substitute Form W-9. If the Depositary is not
provided with the correct taxpayer identification number, the shareholder may
be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such shareholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that shareholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. Exempt shareholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9
to the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the shareholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
10
<PAGE>
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such shareholder is awaiting a taxpayer identification number).
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering shareholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future,
such shareholder should write "Applied For" in the space provided for in the
TIN in Part 1, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% on all payments of the purchase price
until a TIN is provided to the Depositary.
PAYER'S NAME: ChaseMellon Shareholder Services
SUBSTITUTE PART 1: PLEASE PROVIDE YOUR TIN IN
THE FORM W-9 BOX AT RIGHT AND
CERTIFY BY SIGNING AND DATING
BELOW
Form W-9 ------------------
DEPARTMENT OF Social Security
THE TREASURY Number
INTERNAL REVENUE (If awaiting TIN write "Applied or Employer
SERVICE For") Identification
Number
PAYER'S REQUEST
----------------------------------------------------------
FOR TAXPAYER
IDENTIFICATION Part 3
NUMBER (TIN) ----------------------------------- Awaiting [_]
Name (Please Print) TIN
-----------------------------------
Address
-----------------------------------
City State Zip Code
----------------------------------------------------------
PART 2 -- CERTIFICATE -- Under penalties of perjury, I
certify that:
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting for a
number to be issued for me), and
(2) I am not subject to backup withholding because: (a)
I am exempt from backup withholding, or (b) I have not
been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a
result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item
(2) above if you have been notified by the IRS that you
are currently subject to backup withholding because of
under-reporting interest or dividends on your tax
returns. However, if after being notified by the IRS
that you are subject to backup withholding, you receive
another notification from the IRS that you are no
longer subject to backup withholding, do not cross out
such item (2). (Also see instructions in the enclosed
GUIDELINES).
Signature ________________ Date _________________ , 1999
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
11
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth below:
The Information Agent for the Offer is:
Consulting Services, L.L.C.
450 West 33rd Street, 14th Floor
New York, New York 10001
Banks and Brokers Please Call (212) 273-8083
All Others Call Toll-Free (877) 698-6869
The Dealer Manager for the Offer is:
Deutsche Banc Alex. Brown
Deutsche Bank Securities Inc.
31 West 52nd Street
New York, New York 10019
Call Toll-Free (877) 305-4919
12
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
Tender of Shares of Common Stock
of
Vallen Corporation
to
Shield Acquisition Corp.
an indirect wholly owned subsidiary of
Hagemeyer N.V.
(not to be used for signature guarantees)
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, par value $0.50 per share (the "Shares"),
of Vallen Corporation, a Texas corporation, are not immediately available, if
the procedure for book-entry transfer cannot be completed prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or if time
will not permit all required documents to reach the Depositary prior to the
Expiration Date. Such form may be delivered by hand, transmitted by facsimile
transmission or mailed to the Depositary. See Section 3 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
Reorganization
Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ
07606 13th Floor Mail Stop-Reorg
New York, NY 10271 Ridgefield Park, NJ 07660
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 296-4293
For Confirmation Telephone:
(201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE
INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST
APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF
TRANSMITTAL.
Ladies and Gentlemen:
The undersigned hereby tenders to Shield Acquisition Corp., a Texas
corporation and an indirect wholly owned subsidiary of Hagemeyer N.V., a
company organized under the laws of the Netherlands, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated November
19, 1999 and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, constitute the "Offer"), receipt of which
is hereby acknowledged, the number of shares set forth below of common stock,
par value $0.50 per share (the "Shares"), of Vallen Corporation, a Texas
corporation, pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
- -------------------------------------- --------------------------------------
(Number of Shares)
--------------------------------------
(Name(s) of Record Holder(s): (Please
- -------------------------------------- Print))
- --------------------------------------
(Certificate Nos. (if available)) --------------------------------------
Check box if Shares will be tendered --------------------------------------
by book-entry transfer: [_] (Address(es))
- -------------------------------------- --------------------------------------
(Account Number) (Zip Code)
_______________________________ , 1999 --------------------------------------
(Dated) (Area Code and Tel. No.)
--------------------------------------
--------------------------------------
(Signature(s))
2
<PAGE>
GUARANTEE
(Not to be used for signature guarantees)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, guarantees to deliver to the Depositary
either certificates representing the Shares tendered hereby, in proper form
for transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's accounts at The Depository Trust Company, in each case with
delivery of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, or an Agent's
Message, and any other documents required by the Letter of Transmittal, within
three Nasdaq Stock Market trading days (as defined in the Offer to Purchase)
after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
---------------------------------------------------------------
(Name of Firm)
---------------------------------------------------------------
(Authorized Signature)
---------------------------------------------------------------
(Name) (Please Print)
---------------------------------------------------------------
(Title)
---------------------------------------------------------------
---------------------------------------------------------------
(Address)
---------------------------------------------------------------
(Zip Code)
---------------------------------------------------------------
(Area Code and Tel. No.)
Dated: _________________________ , 1999
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Vallen Corporation
at
$25.00 Net Per Share
by
Shield Acquisition Corp.
an indirect wholly owned subsidiary of
Hagemeyer N.V.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
November 19, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Shield Acquisition Corp., a Texas corporation
("Purchaser") and an indirect wholly owned subsidiary of Hagemeyer N.V., a
company organized under the laws of the Netherlands ("Hagemeyer"), to act as
Dealer Manager in connection with Purchaser's offer to purchase all outstanding
shares of common stock, par value $0.50 per share (the "Shares"), of Vallen
Corporation, a Texas corporation (the "Company"), at $25.00 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated November 19, 1999 (the "Offer to Purchase") and in
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, constitute the "Offer") enclosed herewith. Please furnish
copies of the enclosed materials to those of your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the
Offer to Purchase) that number of Shares which represents at least two thirds
of the Shares outstanding (on a fully diluted basis) on the date Shares are
accepted for payment. The Offer is also subject to other conditions set forth
in the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated November 19, 1999;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be
delivered to the Depositary, or if the procedures for book-entry
transfer cannot be completed, by the Expiration Date (as defined in
the Offer to Purchase);
4. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to
the Offer;
5. A letter to shareholders of the Company from Leonard J. Bruce,
Chairman of the Board of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 dated
November 19, 1999, which has been filed by the Company with the
Securities and Exchange Commission;
<PAGE>
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to ChaseMellon Shareholder Services, L.LC.
(the "Depositary").
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), Purchaser will accept for payment and pay for Shares
which are validly tendered prior to the Expiration Date and not theretofore
properly withdrawn when, as and if Purchaser gives oral or written notice to
the Depositary of Purchaser's acceptance of such Shares for payment pursuant
to the Offer. Payment for Shares purchased pursuant to the Offer will in all
cases be made only after timely receipt by the Depositary of (i) certificates
for such Shares, or timely confirmation of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company, pursuant
to the procedures described in Section 3 of the Offer to Purchase, (ii) a
properly completed and duly executed Letter of Transmittal (or a properly
completed and manually signed facsimile thereof) or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry transfer and
(iii) all other documents required by the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Dealer Manager, the Information Agent and the
Depositary as described in the Offer to Purchase) for soliciting tenders of
Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse
brokers, dealers, commercial banks and trust companies for customary mailing
and handling costs incurred by them in forwarding the enclosed materials to
their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of
the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares, and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and in
the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent at its address and telephone number set forth on the back
cover of the Offer to Purchase.
Very truly yours,
Deutsche Banc Alex. Brown
Deutsche Bank Securities Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF HAGEMEYER, PURCHASER, THE COMPANY, THE DEALER MANAGER, THE
INFORMATION AGENT, THE DEPOSITARY OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Vallen Corporation
at
$25.00 Net Per Share
by
Shield Acquisition Corp.
an indirect wholly owned subsidiary of
Hagemeyer N.V.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED.
November 19, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated November
19, 1999 and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer") in
connection with the offer by Shield Acquisition Corp., a Texas corporation
("Purchaser") and an indirect wholly owned subsidiary of Hagemeyer N.V., a
company organized under the laws of the Netherlands ("Hagemeyer"), to purchase
for cash all outstanding shares of common stock, par value $0.50 per share
(the "Shares"), of Vallen Corporation, a Texas corporation (the "Company"). We
are the holder of record of Shares held for your account. A tender of such
Shares can be made only by us as the holder of record and pursuant to your
instructions. The enclosed Letter of Transmittal is furnished to you for your
information only and cannot be used by you to tender Shares held by us for
your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is invited to the following:
1. The offer price is $25.00 per Share, net to you in cash without
interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined in the Offer to Purchase) and the
transactions contemplated thereby, including the Offer and the Merger
(each as defined in the Offer to Purchase), has unanimously determined
that the Offer and the Merger are fair to and in the best interests of
the Company's stockholders and unanimously recommends that stockholders
accept the Offer and tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Friday, December 17, 1999, unless the Offer is extended.
<PAGE>
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in
the Offer to Purchase) that number of Shares which represents two thirds
of the Shares outstanding (on a fully diluted basis) on the date Shares
are accepted for payment. The Offer is also subject to other conditions
set forth in the Offer to Purchase. See Section 14 of the Offer to
Purchase.
6. Any stock transfer taxes applicable to the sale of Shares to Purchaser
pursuant to the Offer will be paid by Purchaser, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
Except as disclosed in the Offer to Purchase, Purchaser is not aware of any
state in which the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. In any jurisdiction in
which the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
Purchaser by Deutsche Bank Securities Inc., the Dealer Manager of the Offer,
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares
will be tendered unless otherwise specified on the reverse side of this
letter. Your instructions should be forwarded to us in sufficient time to
permit us to submit a tender on your behalf prior to the expiration of the
Offer.
2
<PAGE>
Instructions with Respect to the
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Vallen Corporation
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated November 19, 1999 and the related Letter of
Transmittal in connection with the Offer by Shield Acquisition Corp., a Texas
corporation and an indirect wholly owned subsidiary of Hagemeyer N.V., a
company organized under the laws of the Netherlands, to purchase all
outstanding shares of common stock, par value $0.50 per share (the "Shares"),
of Vallen Corporation, a Texas corporation.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) held by you for the account of
the undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares to be Tendered:* SIGN HERE
- ------------------------- Shares
Dated: , 1999
------------------------------------------
Signature(s)
------------------------------------------
Print Name(s)
------------------------------------------
Address(es)
------------------------------------------
Area Code and Telephone Number
------------------------------------------
Tax ID or Social Security Number
- ---------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Give the
For this type of account: SOCIAL SECURITY
number of--
- -----------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife The actual owner
of the account
or, if
joint funds,
either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor,
guardian or committee for a or incompetent
designated ward, minor or person(3)
incompetent person
7. a. The usual revocable The grantor-
savings trust (grantor trustee(1)
is also trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of--
----------------------------------------------------
8. Sole proprietorship The owner(4)
account
9. A valid trust, estate, or The legal entity
pension trust (Do not furnish
the identifying
number of the
personal
representative or
trustee unless
the legal entity
itself is not
designated in the
account title)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account The partnership
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a state or
local government, school
district, or prison) that
receives agricultural
program payments
</TABLE>
- ------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate or pension trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
Substitute Form W-9 PAGE 2
- --------------------------------------------------------------------------------
Obtaining a Number
If you don't have a taxpayer . Payments described in section
identification number or you don't 6049(b)(5) to nonresident
know your number, obtain Form SS-5, aliens.
Application for a Social Security . Payments on tax-free covenant bonds
Number Card, or Form SS-4, Application under section 1451.
for Payments made by certain foreign
. organizations.
Employer Identification Number, at the
local office of the .
Payments made to a nominee.
Social Security Administration or the Exempt payees described above should
Internal Revenue Service and apply for file Form W-9 to
a number. avoid possible erroneous backup
withholding. FILE THIS
Payees Exempt from Backup Withholding FORM WITH THE PAYER, FURNISH YOUR
Payees specifically exempted from TAXPAYER
backup withholding on IDENTIFICATION NUMBER, WRITE "EXEMPT"
ALL payments include the following: ON THE FACE
. OF THE FORM, AND RETURN IT TO THE
A corporation. PAYER, IF THE
.A financial institution.
.An organization exempt from tax PAYMENTS ARE INTEREST, DIVIDENDS, OR
under section 501(a), or PATRONAGE
an individual retirement plan. DIVIDENDS, ALSO SIGN AND DATE THE
FORM.
.The United States or any agency or Certain payments other than interest,
instrumentality thereof. dividends, and
A State, the District of Columbia, a
.possession of the patronage dividends that are not
United States, or any subdivision or subject to information
instrumentality thereof. reporting are also not subject to
backup withholding. For
A foreign government, a political
. subdivision of a foreign government,
or any agency or instrumentality
thereof.
details, see the regulations under
An international organization or any sections 6041, 6041A(a),
.agency, or 6045, and 6050A.
instrumentality thereof. Privacy Act Notice.--Section 6109
.A registered dealer in securities or requires most recipients
commodities registered of dividend, interest, or other
in the U.S. or a possession of the payments to give taxpayer
U.S. identification numbers to payers who
A real estate investment trust. must report the
.
.
A common trust fund operated by a payments to IRS. IRS uses the numbers
bank under section for identification
584(a). purposes. Payers must be given the
.An exempt charitable remainder numbers whether or not
trust, or a non-exempt recipients are required to file tax
trust described in section returns. Beginning January
4947(a)(1). 1, 1984, payers must generally
withhold 20% of taxable
An entity registered at all times
. under the Investment
Company Act of 1940. interest, dividend, and certain other
.A foreign central bank of issue. payments to a payee
Payments of dividends and patronage who does not furnish a taxpayer
dividends not identification number to a
payer. Certain penalties may also
apply.
generally subject to backup
withholding include the following: Penalties
Payments to nonresident aliens
.subject to withholding (1) Penalty for Failure to Furnish
under section 1441. Taxpayer Identification
Number.--If you fail to furnish your
. taxpayer identification
Payments to partnerships not engaged
in a trade or number to a payer, you are subject to
business in the U.S. and which have a penalty of $50 for
at least one each such failure unless your failure
nonresident partner. is due to reasonable
cause and not to willful neglect.
Payments of patronage dividends (2) Failure to Report Certain Dividend
where the amount and Interest
received is not paid in money. Payments.--If you fail to include any
portion of an includible
.
Payments made by certain foreign payment for interest, dividends, or
organizations. patronage dividends in
.Payments made to a nominee. gross income, such failure will be
Payments of interest not generally treated as being due to
subject to backup negligence and will be subject to a
withholding include the following: penalty of 5% on any
. portion of an under-payment
attributable to that failure unless
Payments of interest on obligations there is clear and convincing evidence
issued by individuals. to the contrary.
(3) Civil Penalty for False
Note: You may be subject to backup Information With Respect to
withholding if this Withholding.--If you make a false
interest is $600 or more and is paid statement with no
in the course of the reasonable basis which results in no
payer's trade or business and you imposition of backup
have not provided your correct withholding, you are subject to a
taxpayer identification number to penalty of $500.
the payer. (4) Criminal Penalty for Falsifying
Information.--
.Payments of tax-exempt interest Falsifying certifications or
(including exempt interest dividends affirmations may subject you to
under section 852). criminal penalties including fines
and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT
YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase dated November 19, 1999 and the related Letter
of Transmittal and is being made to all holders of Shares. Purchaser (as defined
below) is not aware of any state where the making of the Offer is prohibited by
any applicable law. If Purchaser becomes aware of any jurisdiction where the
making of the Offer or the acceptance of Shares is not in compliance with
applicable law, Purchaser will make a good faith effort to comply with such law.
If, after such good faith effort, Purchaser cannot comply with such law, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in such jurisdiction. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by
Deutsche Bank Securities Inc., the Dealer Manager of the Offer, or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF VALLEN CORPORATION AT $25.00 NET PER SHARE BY SHIELD ACQUISITION CORP., AN
INDIRECT WHOLLY OWNED SUBSIDIARY OF HAGEMEYER N.V.
Shield Acquisition Corp., a Texas corporation (the "Purchaser") and an
indirect wholly owned subsidiary of Hagemeyer N.V., a company organized under
the laws of the Netherlands ("Hagemeyer"), is offering to purchase all the
outstanding shares of common stock, $0.50 par value per share (the "Shares"), of
Vallen Corporation, a Texas corporation (the "Company"), at a price of $25.00
per Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated November
19,1999 (the "Offer to Purchase") and in the related form of Letter of
Transmittal (the "Letter of Transmittal"). The Offer to Purchase and the Letter
of Transmittal, together with any amendments or supplements thereto,
collectively constitute the "Offer".
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, DECEMBER 17, 1999, UNLESS THE OFFER IS EXTENDED. THE
OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND
NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT NUMBER OF
SHARES WHICH CONSTITUTES AT LEAST TWO THIRDS OF THE SHARES OUTSTANDING ON A
FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS.
SEE SECTION 14 OF THE OFFER TO PURCHASE.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 14, 1999 (the "Merger Agreement"), by and among Purchaser,
Hagemeyer P.P.S. North America, Inc. ("Parent") and the Company. The Merger
Agreement provides that as soon as practicable after the completion of the Offer
and the satisfaction or waiver, if permissible, of all conditions contained in
the Merger Agreement, and in
<PAGE>
accordance with the Texas Business Corporation Act (the "TBCA"), Purchaser will
be merged with and into the Company (the "Merger"). Following consummation of
the Merger, the Company will continue as the surviving corporation and will be a
wholly owned subsidiary of Parent. At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares held by any subsidiary of the Company or in
the treasury of the Company, or by Parent, Purchaser or any other subsidiary of
Parent, which Shares will be cancelled, and other than Shares, if any, held by
shareholders who perfect their appraisal rights pursuant to Article 5.12 of the
TBCA) will be converted into the right to receive $25.00 in cash, without
interest.
The Board of Directors of the Company (i) has unanimously determined that
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, are fair to, and in the best interests of, the Company's
shareholders, (ii) has unanimously approved the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, and (iii)
unanimously recommends that the Company's shareholders accept the Offer and
tender their Shares pursuant to the Offer.
The term "Expiration Date" shall mean 12:00 Midnight, New York City time,
on Friday, December 17, 1999, unless and until Purchaser (in accordance with the
terms of the Merger Agreement) shall have extended the period of time during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by Purchaser, shall
expire. Subject to the applicable rules and regulations of the Securities and
Exchange Commission and to applicable law, Purchaser expressly reserves the
right, in its discretion (subject to the terms and conditions of the Merger
Agreement), at any time and from time to time, to extend for any reason the
period of time during which the Offer is open (each such individual extension
not to exceed ten business days), including the occurrence of any of the events
specified in Section 14 of the Offer to Purchase, by giving oral or written
notice of such extension to the Depositary (as defined below); provided,
however, that Purchaser may not extend the Offer beyond January 31, 2000 (or
March 31, 2000 if the only condition remaining unfulfilled at January 31, 2000
is approval by any required governmental entity, and Parent and the Company are
continuing to seek to obtain such approval), without the prior written consent
of the Company. Any such extension will be followed by a public announcement
thereof by no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the right of a tendering shareholder to withdraw such shareholder's
Shares. Without limiting the manner in which Purchaser may choose to make any
public announcement, Purchaser will have no obligation to publish, advertise or
otherwise communicate any such announcement other than by issuing a press
release to the Dow Jones News Service or otherwise as may be required by
applicable law.
Tendering shareholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase
of Shares by Purchaser pursuant to
<PAGE>
the Offer. Shareholders who hold their shares through a bank or broker should
check with such institution as to whether they charge any service fees.
Purchaser will pay the fees and expenses of ChaseMellon Shareholder Services,
which is acting as depositary (in such capacity, the "Depositary"), and
ChaseMellon Consulting Services, which is acting as the Information Agent (in
such capacity, the "Information Agent"), in connection with the Offer. For
purposes of the Offer, Purchaser will be deemed to have accepted for payment,
and thereby purchased, Shares properly tendered to Purchaser and not withdrawn
as, if and when Purchaser gives oral or written notice to the Depositary of its
acceptance for payment of such Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering shareholders for the
purpose of receiving payments from Purchaser and transmitting payments to
tendering shareholders.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or a confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase)), (ii) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message (as defined in the
Offer to Purchase), and (iii) any other documents required by the Letter of
Transmittal. The per Share consideration paid to any shareholder pursuant to
the Offer will be the highest per Share consideration paid to any other
shareholder pursuant to the Offer. Under no circumstances will interest be paid
on the purchase price to be paid by Purchaser for Shares, regardless of any
extension of the Offer or any delay in making such payment.
Except as otherwise provided below and in Section 4 of the Offer to
Purchase, tenders of Shares made pursuant to the Offer are irrevocable. Shares
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment pursuant to the
Offer, may also be withdrawn at any time after January 18, 2000, or such later
time as may apply if the Offer is extended. For a withdrawal to be effective, a
written, telegraphic or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth in the Offer
to Purchase and must specify the name of the person having tendered the Shares
to be withdrawn, the number of Shares to be withdrawn, and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such certificates, the serial numbers shown on
such certificates must be submitted to the Depositary and, unless such Shares
have been tendered for the account of an Eligible Institution (as defined in the
Offer to Purchase), the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant
to the procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and
<PAGE>
otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals
of tenders of Shares may not be rescinded, and any Shares properly withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by Purchaser, in its
sole discretion, which determination will be final and binding.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Company has provided Purchaser with the Company's shareholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
relevant documents will be mailed to record holders of Shares, and will be
furnished by Purchaser to brokers, dealers, banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
shareholder lists, or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer documents may be directed
to the Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth below, and copies will be furnished promptly at
Purchaser's expense. Neither Parent nor Purchaser will pay any fees or
commissions to any broker or dealer or other person (other than the Dealer
Manager, the Information Agent and the Depositary) for soliciting tenders of
Shares pursuant to the Offer.
The Information Agent for the Offer is:
ChaseMellon Consulting Services, L.L.C.
450 West 33rd Street
14th Floor
New York, New York 10001
Banks and Brokers Please Call (212) 273-8083
All Others Call Toll-Free (877) 698-6869
The Dealer Manager for the Offer is:
Deutsche Banc Alex. Brown
Deutsche Bank Securities Inc.
31 West 52nd Street
New York, New York 10019
Call Toll-Free (877) 305-4819
November 19, 1999
<PAGE>
EXHIBIT (C)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
HAGEMEYER P.P.S. NORTH AMERICA, INC.
SHIELD ACQUISITION CORP.
AND
VALLEN CORPORATION
<PAGE>
TABLE OF CONTENTS
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Page
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ARTICLE I. THE OFFER................................................... 2
Section 1.1. The Offer............................................. 2
Section 1.2. Offer Documents....................................... 3
Section 1.3. Company Actions....................................... 3
Section 1.4. Designation of Company Directors after Completion
of Offer............................................. 5
ARTICLE II. THE MERGER................................................. 5
Section 2.1. The Merger............................................ 5
Section 2.2. Conversion of Capital Stock........................... 6
Section 2.3. Exchange of Certificates.............................. 7
Section 2.4. Stock Options......................................... 9
Section 2.5. Time and Place of Closing............................. 10
ARTICLE III. CORPORATE ORGANIZATION AND GOVERNANCE OF THE
SURVIVING CORPORATION................................................. 10
Section 3.1. Articles of Incorporation............................. 10
Section 3.2. Bylaws................................................ 10
Section 3.3. Directors and Officers................................ 10
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............. 10
Section 4.1. Corporate Existence and Power......................... 10
Section 4.2. Corporate Authorization............................... 11
Section 4.3. Subsidiaries.......................................... 11
Section 4.4. Governmental Authorization............................ 12
Section 4.5. Non-Contravention..................................... 12
Section 4.6. Capitalization........................................ 13
Section 4.7. SEC Reports and Financial Statements.................. 14
Section 4.8. Absence of Certain Changes or Events.................. 14
Section 4.9. Disclosure Documents.................................. 15
Section 4.10. Litigation............................................ 16
Section 4.11. Contracts............................................. 16
Section 4.12. Real Property; Material Assets........................ 16
Section 4.13. Taxes................................................. 17
Section 4.14. Employee Benefit Plans; ERISA......................... 18
Section 4.15. Labor Matters......................................... 20
Section 4.16. Compliance with Laws.................................. 21
Section 4.17. Environmental Matters................................. 21
Section 4.18. Insurance............................................. 22
Section 4.19. Intellectual Property................................. 23
Section 4.20. Finders' Fees......................................... 24
Section 4.21. Opinion of Financial Advisor.......................... 24
Section 4.22. Licenses; Approvals................................... 24
Section 4.23. Year 2000 Compliance.................................. 24
Section 4.24. TBCA Article 13....................................... 24
</TABLE>
i
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<TABLE>
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ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT.................... 25
Section 5.1. Corporate Existence and Power......................... 25
Section 5.2. Corporate Authorization............................... 26
Section 5.3. Governmental Authorization............................ 26
Section 5.4. Non-Contravention..................................... 27
Section 5.5. Organization of Purchaser............................. 27
Section 5.6. Disclosure Documents.................................. 27
Section 5.7. Litigation............................................ 27
Section 5.8. Finders' Fees......................................... 28
Section 5.9. Financial Capability.................................. 28
ARTICLE VI. COVENANTS OF THE COMPANY................................... 28
Section 6.1. Conduct of Business of the Company Pending the
Effective Time...................................... 28
Section 6.2. Access to Financial and Operational Information....... 30
ARTICLE VII. COVENANTS OF PARENT....................................... 31
Section 7.1. Conduct of Business of Parent Pending the
Effective Time...................................... 31
ARTICLE VIII. COVENANTS OF PARENT AND THE COMPANY...................... 31
Section 8.1. Agreement to Cooperate; Further Assurances............ 31
Section 8.2. No Solicitation....................................... 31
Section 8.3. Shareholder Approval.................................. 33
Section 8.4. Company Shareholders' Meeting......................... 34
Section 8.5. Confidential Information.............................. 34
Section 8.6. Communications........................................ 35
Section 8.7. Obligations of Purchaser.............................. 35
Section 8.8. Expenses.............................................. 35
Section 8.9. Indemnification and Insurance......................... 35
Section 8.10. Retention and Severance Arrangements.................. 35
ARTICLE IX. CONDITIONS OF THE MERGER................................... 36
Section 9.1. Conditions to Obligations of Each Party............... 36
ARTICLE X. TERMINATION OF AGREEMENT.................................... 36
Section 10.1. Termination........................................... 36
Section 10.2. Certain Actions Prior to Termination.................. 38
Section 10.3. Effect of Termination................................. 38
Section 10.4. Termination Fee....................................... 38
ARTICLE XI. MISCELLANEOUS.............................................. 39
Section 11.1. Further Assurances.................................... 39
Section 11.2. Survival.............................................. 39
Section 11.3. Notices............................................... 39
Section 11.4. Governing Laws and Consent to Jurisdiction............ 41
Section 11.5. Binding Upon Successors and Assigns; Assignment....... 41
Section 11.6. Severability.......................................... 41
Section 11.7. Entire Agreement; Third Party Beneficiaries........... 41
Section 11.8. Other Remedies........................................ 41
Section 11.9. Amendment and Waivers................................. 41
</TABLE>
ii
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<S> <C> <C>
Section 11.10. Disclosure Schedules................................ 42
Section 11.11. No Waiver........................................... 42
Section 11.12. Construction of Agreement........................... 42
Section 11.13. Counterparts........................................ 42
ANNEX A
- -------
Conditions of the Offer
SCHEDULES
- ---------
Company Disclosure Schedule
Parent Disclosure Schedule
</TABLE>
iii
<PAGE>
CERTAIN DEFINITIONS
-------------------
<TABLE>
<CAPTION>
DEFINED TERM SECTION
- ------------ -------
<S> <C>
Acquisition Proposal 8.2(a)
Agreement Introduction
Articles of Merger 2.1(b)
Certificates 2.3(b)
Claim 8.9
Code 2.3(g)
Company Introduction
Company Acquisition 10.4(b)
Company Board 1.3
Company Common Stock Recital C
Company Disclosure Schedule Article IV
Company ERISA Affiliate 4.14(b)
Company Financial Advisors 1.3
Company Options 2.4
Company Preferred Stock 4.6
Company SEC Reports 4.7
Company Securities 4.6
Company Shareholders' Meeting 8.3(a)
Company Subsidiaries 4.3
Company Systems 4.23(b)
Company Year 2000 Compliant 4.23(b)
Company Year 2000 Plan 4.23(a)
Confidentiality Agreement 6.2
Corporations Introduction
Contamination 4.17(a)
Copyrights 4.19(a)
Dissenting Shares 2.2(d)
Dissenting Shareholder 2.2(d)
Effective Date 2.1(b)
Effective Time 2.1(b)
Environmental Law 4.17(a)
ERISA 4.14(b)
Exchange Act 1.1(a)
Exchange Fund 2.3(a)
Expense Evidence 10.4(a)
Expenses 10.4(a)
Fee 10.4(a)
Governmental Entity 4.4
HSR Act 4.4(b)
Hazardous Substance 4.17(a)
Indemnified Parties 8.9
IRS 4.13(b)
Intellectual Property Assets 4.19(a)
Lien 4.5(d)
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iv
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<TABLE>
<S> <C>
Marks 4.19(a)
Material Adverse Effect 4.1
Merger Recital C
Merger Consideration 2.2(c)
Multiemployer Plan 4.14(e)
Notice 8.2(a)
Purchaser Introduction
Offer Recital C
Offer Consideration 1.1(a)
Offer Documents 1.2
Parent Introduction
Parent Disclosure Schedule Article V
Patents 4.19(a)
Paying Agent 2.3(a)
Pension Plans 4.14(b)
Policies 4.18
Proxy Statement 4.9
RCRA 4.17(b)
SEC 1.1(b)
Schedule 14D-1 1.2
Schedule 14D-9 1.3
Securities Act 4.4(d)
Superior Proposal 8.2(a)
Surviving Corporation 2.1(a)
Taxes 4.13(a)
TBCA Recital C
Termination Date 10.1(b)
Termination Notice 10.1(d)
Welfare Plans 4.14(b)
</TABLE>
v
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 14, 1999 (this
"Agreement"), is by and among HAGEMEYER P.P.S. NORTH AMERICA, INC., a Delaware
corporation ("Parent"), SHIELD ACQUISITION CORP., a Texas corporation and a
wholly owned subsidiary of Parent ("Purchaser"), and VALLEN CORPORATION, a Texas
corporation (the "Company") (Purchaser and the Company being hereinafter
sometimes collectively referred to as the "Constituent Corporations").
RECITALS
A. The Boards of Directors of Parent, Purchaser and the Company each have
determined that the Offer and the Merger is advisable and fair to, and in the
best interests of, their respective shareholders, and have approved the business
combination described in this Agreement, including the transactions and plan of
merger provided for herein in which Purchaser would merge with and into the
Company, and the Company would become a wholly owned subsidiary of Parent.
B. The Board of Directors of each of the Company and Purchaser has adopted
a resolution recommending that the plan of merger be approved by the
shareholders of that corporation.
C. Leonard J. Bruce, Bruce Partners, Ltd., a Texas limited partnership,
and Bruce Interests Partnership, a Texas general partnership (collectively, the
"Major Shareholders"), are, together, the beneficial owners of approximately 56%
of the issued and outstanding shares of common stock, $.50 par value per share
("Company Common Stock"), of the Company and simultaneously with the execution
and delivery of this Agreement, and as a condition and inducement to Parent's
willingness to enter into this Agreement, have entered into a Shareholders'
Agreement (the "Shareholders' Agreement") providing for certain matters with
respect to his shares of Company Common Stock, the tender of such shares and
certain other actions relating to the Offer and the Merger and the other
transactions contemplated by this Agreement.
D. In furtherance of such combination it is proposed that (i) Purchaser
conduct a cash tender offer pursuant to the terms and conditions of this
Agreement for all of the outstanding shares of Company Common Stock (such cash
tender offer, as described in more detail in Article I below, the "Offer"), and
(ii) that upon consummation of the Offer, Purchaser merge with and into the
Company pursuant to the applicable provisions of the Texas Business Corporation
Act, as amended (the "TBCA"), and the terms and conditions of this Agreement
(such merger, as described in more detail in Article II below, the "Merger").
E. Simultaneously with the execution and delivery of this Agreement, and
as a condition and inducement to Parent's willingness to enter into this
Agreement, the Company has entered into an Option Agreement (the "Option
Agreement") with Parent and Purchaser pursuant to which the Company has granted
to Purchaser an option to purchase shares of Company Common Stock on the terms
and subject to the conditions set forth therein.
<PAGE>
F. Simultaneously with the execution and delivery of this Agreement, and
as a condition and inducement to the Company's willingness to enter into this
Agreement, Hagemeyer N.V., a corporation organized under the laws of the
Netherlands ("Hagemeyer"), has executed, delivered and entered into a Guarantee
(the "Guarantee") for the benefit of the Company and any third party
beneficiaries under this Agreement pursuant to which Hagemeyer has, among other
things, unconditionally, absolutely and irrevocably guaranteed the full and
punctual payment and performance of all covenants, agreements, obligations and
liabilities of Parent, Purchaser and the Surviving Corporation (as defined
herein) contained in or in connection with the other agreements and transactions
contemplated by this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties, covenants, agreements and conditions contained in
this Agreement, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I.
THE OFFER
Section 1.1. The Offer.
(a) Provided that none of the events set forth in clause (iii) of Annex A
hereto shall have occurred and be continuing, as promptly as practicable (but in
any event not later than five business days after the public announcement of the
execution and delivery of this Agreement), Parent shall cause Purchaser to
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), the Offer to purchase all of the
outstanding shares of Company Common Stock at a price of Twenty-Five Dollars
($25.00) per share, net to the seller in cash (as such may be increased by
Purchaser from time to time, the "Offer Consideration"). The obligation of
Parent and Purchaser to accept for payment and to pay for shares of Company
Common Stock validly tendered in the Offer and not withdrawn shall be subject
only to those conditions set forth in Annex A hereto.
(b) Without the prior written consent of the Company, Purchaser shall not
(and Parent shall cause Purchaser not to): (i) decrease the Offer Consideration
or change the form of consideration or decrease the number of shares of Company
Common Stock sought pursuant to the Offer; (ii) change the conditions to the
Offer (other than to increase the Offer Consideration); (iii) impose additional
conditions to the Offer; (iv) waive the condition that there shall be validly
tendered and not withdrawn prior to the time the Offer expires a number of
shares of Company Common Stock which, together with any shares of Company Common
Stock beneficially owned by Parent and its affiliates, constitutes at least a
two-thirds of the shares of Company Common Stock outstanding on a fully-diluted
basis as of the date of purchase; (v) terminate or withdraw the Offer or extend
the expiration date of the Offer (except as required by law) beyond the initial
expiration date thereof (which shall be the 20th business day after the
commencement (within the meaning of Rule 14d-2 under the Exchange Act) of the
Offer); or (vi) amend any term of the Offer in any manner adverse to holders of
shares of Company Common Stock. Notwithstanding the provisions of the preceding
sentence: (A) Purchaser may increase the Offer Consideration and may waive any
condition to the Offer (other than the condition referred to in clause (iv) of
the preceding sentence), in whole or in part, in its sole discretion; (B) the
Offer may be extended
2
<PAGE>
by Purchaser in connection with an increase in the consideration to be paid
pursuant to the Offer so as to comply with applicable rules and regulations of
the United States Securities and Exchange Commission (the "SEC"); (C) if any of
the conditions to the Offer set forth in Annex A has not been satisfied or
waived, and if all of such conditions are then still reasonably capable of being
satisfied prior to the Termination Date (as defined in Section 10.1), Purchaser
shall extend the Offer for one additional period of ten (10) business days, and
may, at its discretion, extend the Offer from time to time (each such individual
extension not to exceed ten business days after the previously scheduled
expiration date) until such conditions are satisfied or waived, but in no event
beyond the Termination Date; and (D) the Offer may be extended by Purchaser, in
its sole discretion, for one additional period of up to ten business days, but
not beyond the Termination Date, if on the expiration date of the Offer (as it
may previously have been extended) the conditions of the Offer described in
Annex A hereto shall have been satisfied or earlier waived, but the number of
shares of Company Common Stock that have been validly tendered and not
withdrawn, together with any shares of Company Common Stock beneficially owned
by Parent and its affiliates, represents less than 90% of the then issued and
outstanding shares of Company Common Stock on a fully diluted basis. Subject
only to satisfaction or waiver of the conditions to the Offer set forth in Annex
A, Purchaser shall, and Parent shall cause Purchaser to, accept for payment and
pay for, in accordance with the terms of the Offer, all shares of Company Common
Stock validly tendered and not withdrawn pursuant to the Offer as soon as it is
permitted to do so under applicable law. Parent shall provide or cause to be
provided to Purchaser on a timely basis all funds necessary to accept for
payment and pay for all shares of Company Common Stock that Purchaser becomes
obligated to accept for payment and pay for pursuant to the Offer.
Section 1.2. Offer Documents. As soon as practicable on the date of
commencement of the Offer, Parent and Purchaser shall (x) jointly file or cause
to be filed with the SEC a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer which shall contain the offer to
purchase and related letter of transmittal and other ancillary Offer documents
and instruments pursuant to which the Offer will be made (collectively with any
supplements or amendments thereto, the "Offer Documents") and shall contain (or
shall be amended in a timely manner to contain) all information which is
required to be included therein in accordance with the Exchange Act and the
rules and regulations thereunder and any other applicable law, and shall comply
in all material respects with the requirements of the Exchange Act and any other
applicable law and (y) mail or cause to be mailed the Offer Documents to the
record holders of the Company Common Stock. Parent, Purchaser and the Company
each agrees promptly to correct any information provided by it for use in the
Offer Documents if and to the extent that it shall have become false or
misleading in any material respect, and Purchaser further agrees to take all
lawful action necessary to cause the Offer Documents as so corrected to be filed
promptly with the SEC and disseminated to the holders of Company Common Stock,
in each case as and to the extent required by applicable law. In conducting the
Offer, Parent and Purchaser shall comply in all material respects with the
provisions of the Exchange Act and any other applicable law. The Company and
its counsel shall be given the opportunity to review and comment on the Offer
Documents and any amendments thereto prior to the publication, dissemination or
filing thereof with the SEC.
Section 1.3. Company Actions. The Company hereby consents to the Offer
and represents that: (a) the Board of Directors of the Company (the "Company
Board"), at a meeting duly called and held, has, on the basis of matters
considered by the Company Board as of the
3
<PAGE>
date of such meeting, (i) determined that each of the Offer and the Merger is
fair to and in the best interests of the holders of Company Common Stock, (ii)
approved and declared advisable this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, (iii) such approval constitutes
approval by the Company Board of this Agreement and the transactions
contemplated hereby, including the Merger, for purposes of Part Five and Article
13 of the TBCA and (iv) resolved to recommend acceptance of the Offer and
approval and adoption of this Agreement and the Merger by the holders of Company
Common Stock; and (b) Salomon Smith Barney Inc. and William Blair & Company,
L.L.C. (together, the "Company Financial Advisors") have delivered to the Board
of Directors of the Company their separate written opinions to the effect that
as of the date of the Agreement the consideration to be received in the Offer
and the Merger, taken as a whole, is fair, from a financial point of view, to
the holders of Company Common Stock (other than Parent and its affiliates)
(photocopies of which have been or will be delivered to Parent). The Company
hereby agrees to file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") containing the recommendation of the Company Board referred to
in clause (a) (iv) of the preceding sentence (subject to the fiduciary duties of
the Company Board under Texas law) and shall mail or cause to be mailed the
Schedule 14D-9 to the holders of the Company Common Stock. The Company will use
its reasonable efforts to cause the Schedule 14D-9 to be filed with the SEC as
promptly as is practicable after, and if practicable on the same date as,
Parent's and Purchaser's Schedule 14D-1 is filed with the SEC and to permit such
Schedule 14D-9 to be mailed together with the Offer Documents; provided,
however, that in any event the Schedule 14D-9 shall be filed with the SEC and
mailed to the holders of Company Common Stock no later than 10 business days
following the commencement of the Offer. The Schedule 14D-9 shall comply in all
material respects with the Exchange Act and any other applicable law and shall
contain (or shall be amended in a timely manner to contain) all information
which is required to be included therein in accordance with the Exchange Act and
the rules and regulations thereunder and any other applicable law. The Company,
Parent and Purchaser each agrees promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect, and the Company further agrees to
take all lawful action necessary to cause the Schedule 14D-9 as so corrected to
be filed promptly with the SEC and disseminated to the holders of Company Common
Stock, in each case as and to the extent required by applicable law. Parent,
Purchaser and their counsel shall be given the opportunity to review and comment
on the Schedule 14D-9 and any amendments thereto prior to the filing thereof
with the SEC. In connection with the Offer, the Company shall promptly furnish
Purchaser with security position listings and all available listings or computer
files containing the names and addresses of the record holders of the Company
Common Stock as of the latest practicable date and shall furnish Parent and
Purchaser with such information and assistance (including updated lists of
shareholders and lists of security positions) as Parent and Purchaser or any of
their agents may reasonably request in communicating the Offer to the record and
beneficial holders of Company Common Stock. Subject to the requirements of
applicable law, and except for such actions as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer and
the Merger, Parent and Purchaser and each of their affiliates, associates,
partners, employees, agents and advisors shall hold in confidence the
information contained in such lists and files, shall use such information only
in connection with the Offer and the Merger, and, if this Agreement is
terminated, shall deliver promptly to the Company all copies of such information
in their possession.
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Section 1.4. Designation of Company Directors after Completion of Offer.
(a) Promptly upon Purchaser's consummation of the Offer, Purchaser will be
entitled, subject to compliance with Section 14(f) of the Exchange Act, to
designate that number (rounded down to the next greatest whole number) of
directors on the Company Board that is equal to the product of the total number
of directors on the Company Board multiplied by the percentage that the
aggregate number of shares of Company Common Stock owned by Purchaser or any
affiliate of Purchaser (including for purposes of this Section 1.4 such shares
of Company Common Stock as are accepted for payment pursuant to the Offer but
excluding shares of Company Common Stock held by the Company or any Company
Subsidiaries) bears to the number of shares of Company Common Stock outstanding.
The Company will cause (i) each committee of the Company Board, (ii) the board
of directors of each Company Subsidiary, and (iii) each committee of such
Company Subsidiary board to include persons designated by Purchaser constituting
the same percentage of each such committee or board as Purchaser's designees are
of the Company Board. The Company will, upon request by Purchaser, promptly
increase the size of the Company Board and/or exercise its best efforts to
secure the resignations of such number of directors as necessary to enable
Purchaser designees to be elected to the Company Board and to cause Purchaser's
designees to be so elected. Nothing in this Section 1.4 will require the
Company to elect any person a director if such election would violate applicable
law. After the time that Purchaser's designees constitute a majority of the
Company Board, any action on the part of the Company with respect to this
Agreement or any of the transactions contemplated hereby will require the vote
of a majority of the directors who are not employees of the Company or designees
of Purchaser.
(b) Subject to applicable law, the Company will promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.4 and will include in the Schedule 14D-9 disseminated to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if Purchaser has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.4. Parent and Purchaser will supply to the
Company and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
ARTICLE II.
THE MERGER
Section 2.1. The Merger.
(a) At the Effective Time (as defined below) and subject to the terms and
conditions hereof and the provisions of the TBCA: (i) Purchaser will be merged
with and into the Company in accordance with the TBCA; (ii) the separate
existence of Purchaser shall thereupon cease; and (iii) the Company shall
continue as the surviving corporation in the Merger (the "Surviving
Corporation"), as a wholly owned subsidiary of Parent.
(b) Subject to the terms and conditions hereof, the Merger shall be
consummated as promptly as practicable, but in any event no later than two
business days, after satisfaction or, to the extent permitted hereunder, waiver
of all of the conditions to each party's obligation to
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consummate the Merger contained in Article IX, by duly filing appropriate
articles of merger (the "Articles of Merger"), together with a plan of merger
attached thereto setting forth only that information required by Article 5.01(B)
(or Article 5.16(B), if applicable) of the TBCA, in such form as is required by,
and executed in accordance with, the relevant provisions of the TBCA. The Merger
shall be effective at such time as the Articles of Merger shall have been duly
filed with the Secretary of State of the State of Texas and shall have become
effective in accordance with the TBCA (the "Effective Time"). The date on which
the Effective Time shall occur is referred to herein as the "Effective Date."
(c) The separate corporate existence of the Company, as the Surviving
Corporation, with all its purposes, objects, rights, privileges, powers,
certificates and franchises, shall continue unimpaired by the Merger. The
Surviving Corporation shall succeed to all the properties and assets of the
Constituent Corporations and to all debts, causes of action and other interests
due or belonging to the Constituent Corporations and shall be subject to, and
responsible for, all the debts, liabilities and duties of the Constituent
Corporations with the effect set forth in Article 5.06 of the TBCA.
Section 2.2. Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger:
(a) Capital Stock of Purchaser. Each issued and outstanding share of the
capital stock of Purchaser shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock. All shares of Company Common Stock
that are owned by the Company as treasury stock and any shares of Company Common
Stock owned by any direct or indirect wholly owned subsidiary of the Company
shall be cancelled and retired and shall cease to exist, and no stock of Parent
or other consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section 2.3(e), each
issued and outstanding share of Company Common Stock (other than shares to be
cancelled in accordance with Section 2.2(b) and Dissenting Shares (as defined
below)) shall be converted into the right to receive an amount of cash per share
equal to the Offer Consideration (such amount referred to in connection with the
Merger as the "Merger Consideration") payable to the holder thereof upon
surrender of the certificate representing such shares of Company Common Stock.
All such shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares, shall
cease to have any rights with respect thereto, except the right to receive the
Merger Consideration, without interest, upon the surrender of such certificate
in accordance with Section 2.3.
(d) Shares of Dissenting Shareholders. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding shares of Company Common
Stock held by any shareholder who has not voted such shares in favor of or
consented to the Merger and who complies with all the provisions of Article 5.12
of the TBCA (a "Dissenting Shareholder") concerning the right of shareholders to
dissent from the Merger and require appraisal of their shares of Company Common
Stock ("Dissenting Shares") will not be converted as described in Section
2.2(c), but will become the right to receive such consideration as may be
determined to
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be due to such Dissenting Shareholder pursuant to the laws of the State of
Texas. If, after the Effective Time, such Dissenting Shareholder withdraws his
or her demand for appraisal or fails to perfect or otherwise loses his or her
right of appraisal, in any case pursuant to the TBCA, his or her shares of
Company Common Stock will be deemed to be converted as of the Effective Time
into the right to receive the Merger Consideration, without interest, upon the
surrender of such certificate in accordance with the terms of this Agreement.
The Company will give Parent (i) prompt notice of any demands for appraisal of
shares of Company Common Stock received by the Company and (ii) the opportunity
to participate in and direct all negotiations and proceedings with respect to
any such demands. The Company will not, without the prior written consent of
Parent, make any payment with respect to, or settle, offer to settle, or
otherwise negotiate, any such demands.
Section 2.3. Exchange of Certificates.
(a) Paying Agent. As soon as practicable after the date hereof, but in
any event within fifteen (15) business days after the date hereof, Parent and
the Company shall enter into an agreement on customary terms with an appropriate
and qualified paying agent (the "Paying Agent"), which provides that Parent
shall deposit with the Paying Agent, for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this Section 2.3 and the
Articles of Merger, through the Paying Agent, at least two (2) business days
prior to the Effective Time, cash in an amount equal to the aggregate amount of
Merger Consideration that may become payable pursuant to Section 2.2 (such
amount being hereinafter referred to as the "Exchange Fund"). Parent agrees to
use its commercially reasonable best efforts to cause the Paying Agent to comply
with the terms of this Section 2.3.
(b) Exchange Procedures. As soon as practicable after the Effective Time,
the Paying Agent will mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates") (i) a notice
(advising that the Merger has become effective) and a letter of transmittal, in
customary and appropriate form, which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and (ii) instructions for use
by holders of Certificates in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled in exchange therefor to receive,
and the Paying Agent shall promptly pay, after the Effective Time, the amount of
cash into which the shares theretofore represented by such Certificate have been
converted pursuant to the provisions of Section 2.2, and the Certificate so
surrendered shall forthwith be cancelled. If any cash is to be paid to a name
other than that in which the Certificate surrendered in exchange therefor is
registered, the person requesting such payment shall pay to the Paying Agent any
transfer or other taxes required by reason of the payment of cash to a person
other than the registered holder of such Certificate or establish to the
satisfaction of the Paying Agent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.3, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the amount of cash contemplated by
this Section 2.3. No interest will be paid or will accrue on any cash payable
pursuant to Section 2.2.
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(c) Distributions with Respect to Unexchanged Shares. No cash shall be
paid to the holder of any unsurrendered Certificate until the holder of record
of such Certificate shall surrender such Certificate in accordance with this
Section 2.3. If any holder of converted shares of Company Common Stock shall be
unable to surrender such holder's Certificates because such Certificates shall
have been lost or destroyed, such holder may deliver in lieu thereof an
affidavit (and, if required by Parent, an indemnity bond) in form and substance
and with surety (if applicable) reasonably satisfactory to Parent.
(d) No Further Ownership Rights in Company Common Stock. All cash paid
upon the surrender for exchange of the Certificates in accordance with the terms
hereof shall be deemed to have been paid in full satisfaction of all rights
pertaining to such shares of Company Common Stock theretofore represented by
such Certificates. If, after the Effective Time, Certificates are presented to
the Surviving Corporation or the Paying Agent for any reason, they shall be
cancelled and exchanged as provided in this Section 2.3, except as otherwise
provided by law.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the shareholders of the Company six (6) months after
the Effective Time shall be delivered to Parent, upon demand, and any
shareholders of the Company who have not theretofore complied with this Article
II shall thereafter look only to Parent for payment of their claim for the
Merger Consideration. All interest accrued in respect to the Exchange Fund
shall inure to the benefit of and be paid to Parent.
(f) No Liability. None of Parent, Purchaser, the Company or the Paying
Agent shall be liable to any person in respect to any shares of Company Common
Stock (or dividends or distributions with respect thereto) or cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to the end of the applicable period after the Effective
Time under escheat laws (or immediately prior to such earlier date on which any
payment in respect of such Certificates would otherwise escheat to or become the
property of any governmental entity), any such payment in respect of such
Certificates shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(g) Withholding Rights. Parent, the Surviving Corporation and the Paying
Agent shall be entitled to deduct and withhold, from the consideration otherwise
payable pursuant to this Agreement to any former holder of shares of Company
Common Stock, such amounts as Parent, the Surviving Corporation, the Company (or
any of its Subsidiaries (as defined in Section 4.3) or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "Code") or any provision of
state, local or foreign Tax law. To the extent that amounts are so withheld by
Parent, the Surviving Corporation or the Paying Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
former holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by Parent, the Surviving Corporation or the
Paying Agent.
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(h) Stock Transfer Books. The stock transfer books of the Company shall
be closed immediately upon the Effective Time and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company.
Section 2.4. Stock Options
(a) Immediately prior to the Effective Time, each then outstanding option
to purchase shares of Company Common Stock (other than options granted under the
Company's Employee Stock Purchase Plan (the "Employee Stock Purchase Plan")),
which is then exercisable (in each case, a "Company Option") shall be canceled
by the Company and in consideration of such cancellation, the Company shall pay
to the holders of Company Options an amount in respect thereof equal to the
product of (A) the excess, if any, of (i) the Merger Consideration over (ii) the
exercise price per share of Company Common Stock subject to the unexercised
portion of such Company Option immediately prior to its cancellation and (B) the
number of shares of Company Common Stock subject to the unexercised portion of
such Company Option immediately prior to its cancellation. Such payment, if
any, shall be less any required withholding Taxes and without interest. The
Company shall use its commercially reasonable best efforts to obtain the consent
of each holder of Company Options to such cancellation if such consent is
required under the terms thereof.
(b) Immediately prior to the Effective Time, each outstanding share of
restricted stock that is not vested shall be canceled by the Company without any
consideration whatsoever.
(c) Except as otherwise agreed to by the Company and Parent, the Company
shall use its reasonable best efforts to ensure that (i) all plans, programs or
arrangements providing for the issuance or grant of any interest in respect of
the capital stock of the Company or any of its Subsidiaries shall terminate as
of the Effective Time (including the Employee Stock Purchase Plan as provided in
Section 2.5 below).
(d) Prior to the consummation of the Offer, the Company shall, if
necessary, amend the terms of the applicable plans, programs and arrangements to
give effect to the provisions of this Section 2.4.
Section 2.5. Company Employee Stock Purchase Plan. The Company Board
shall terminate the Employee Stock Purchase Plan effective November 15, 1999
(but subject to consummation of the Offer) and no further contributions to
purchase Company Common Stock or issuances of shares of Company Common Stock
under the Employee Stock Purchase Plan shall be permitted. Each participant in
the Employee Stock Purchase Plan shall, in consideration for the termination of
the right to purchase shares of Company Common Stock thereunder, receive at the
Effective Time (or as soon as practicable thereafter) from the Company in lieu
of each share of Company Common Stock that could have been purchased under the
Employee Stock Purchase Plan had the then applicable Plan Year (as defined in
the Employee Stock Purchase Plan) ended on such termination date, an amount in
cash equal to the difference between the Merger Consideration and the Issue
Price (as defined in the Employee Stock Purchase Plan) determined with reference
to the first business day of the applicable Plan Year (as defined in the
Employee Stock Purchase Plan), to the extent such difference is a positive
number. All funds contributed to the Employee Stock Purchase Plan which have
not been used to purchase Company Common Stock as of the termination date shall
be returned, in cash, without interest, to participants in the Employee Stock
Purchase Plan.
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Section 2.6. Time and Place of Closing. The closing of the Merger shall
take place at the offices of Mayor, Day, Caldwell & Keeton, L.L.P., 700
Louisiana, Suite 1900, Houston, Texas 77002, as promptly as practicable after
satisfaction or, to the extent permitted hereunder, waiver of all of the
conditions to each party's obligation to consummate the Merger contained in
Article IX.
ARTICLE III.
CORPORATE ORGANIZATION AND GOVERNANCE
OF THE SURVIVING CORPORATION
Section 3.1. Articles of Incorporation. At the Effective Time, the
Articles of Incorporation of the Company as in effect immediately prior to the
Effective Time, and until thereafter altered, amended or repealed in accordance
with the TBCA and the Articles of Incorporation and Bylaws of the Surviving
Corporation, shall be the Articles of Incorporation of the Surviving
Corporation.
Section 3.2. Bylaws. At the Effective Time, the Bylaws of the Company as
in effect immediately prior to the Effective Time, and until thereafter altered,
amended or repealed in accordance with the TBCA and the Articles of
Incorporation and Bylaws of the Surviving Corporation, shall be the Bylaws of
the Surviving Corporation.
Section 3.3. Directors and Officers. At and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Articles of Incorporation and
Bylaws, the directors and officers of Purchaser at the Effective Time shall be
the directors and officers of the Surviving Corporation.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company has delivered to Parent on or prior to the execution hereof a
disclosure schedule (the "Company Disclosure Schedule"). The information in the
Company Disclosure Schedule shall be deemed a part of the Company's
representations and warranties herein. Except as disclosed in the Company
Disclosure Schedule, the Company represents and warrants to Parent as set forth
below:
Section 4.1. Corporate Existence and Power. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas and has all corporate power required to own or lease its
properties and to carry on its business as now conducted. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the nature of its activities makes such qualification
necessary, except where the failure to be so qualified or to be in good standing
would not have a Material Adverse Effect on the Company. For purposes of this
Agreement, a "Material Adverse Effect," with respect to any person or entity,
shall mean any change, effect, event or occurrence that, individually or in the
aggregate with all other changes, effects, events or occurrences is or would
reasonably be expected to materially adversely impact (i) the financial
condition, assets, properties or results of operations of such person or entity
and its direct and indirect parents and subsidiaries (including the
Subsidiaries), taken as a whole, other than any such adverse effects relating to
general economic or market conditions or to the industry in which the Company
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operates or (ii) the ability of such person or entity to perform its obligations
under this Agreement or to consummate the transactions contemplated hereby. The
Company has delivered or made available to Parent true and complete copies of
the Articles of Incorporation and Bylaws of the Company.
Section 4.2. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement, and each agreement to be executed
by the Company in connection herewith, and the consummation by the Company of
the transactions contemplated hereby and thereby, are within the Company's
corporate powers and have been duly authorized by all necessary corporate
action, except for the approval of this Agreement and the transactions
contemplated hereby by the Company's shareholders to the extent required by
applicable law. This Agreement and each agreement to be executed by the Company
in connection herewith have been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery hereof and
thereof by each other party hereto and thereto, constitute valid and binding
agreements of the Company, enforceable against the Company in accordance with
their terms, except that (i) the enforceability hereof and thereof may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
Section 4.3. Subsidiaries. All of the Company's Subsidiaries are listed
or otherwise described on the Company Disclosure Schedule, and except as set
forth on the Company Disclosure Schedule, the Company has no Subsidiaries and
does not own, directly or indirectly, beneficially or of record, any shares of
capital stock or other security of any other entity or any other material
investment in any other corporation, partnership, limited liability company,
joint venture or similar entity. The term "Subsidiary" or "Company Subsidiary"
means, when used with reference to any entity, any corporation or other
organization, whether incorporated or unincorporated, (i) of which such party or
any other subsidiary of such party is a general or managing partner or managing
member, (ii) the outstanding voting securities or interests of which, having by
their terms ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or other
organization, are directly or indirectly owned or controlled by such party or by
any one or more of its subsidiaries, or (iii) of which fifty percent (50%) or
more of the value of the outstanding equity securities or interests (including
membership interests) of which are owned directly or indirectly by such party.
(a) Each Company Subsidiary that is a corporation is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, except where the failure to be so would not
individually or in the aggregate have a Material Adverse Effect on the Company.
Each Company Subsidiary that is a partnership or a limited liability company is
duly formed and validly existing under the laws of its jurisdiction of
formation, except where the failure to be so would not individually or in the
aggregate have a Material Adverse Effect on the Company.
(b) Each Company Subsidiary has the corporate power, the limited liability
company power or the partnership power, as the case may be, to carry on its
business as it is now being
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conducted or presently proposed to be conducted, except where the failure to be
so would not individually or in the aggregate have a Material Adverse Effect on
the Company.
(c) Each Company Subsidiary that is a corporation is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the nature of its activities makes such qualification necessary, except
where the failure to be so qualified would not have a Material Adverse Effect on
the Company.
Section 4.4. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement, and each agreement to be executed
by the Company in connection herewith, and the consummation by the Company of
the transactions contemplated hereby and thereby, require no action by or in
respect of, or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign
("Governmental Entity"), other than:
(a) the filing of the Articles of Merger in accordance with the TBCA;
(b) compliance with any applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and, if
applicable, similar provisions of the laws of Canada, Mexico and Chile;
(c) compliance with any applicable requirements of the Exchange Act and
the rules and regulations promulgated thereunder;
(d) compliance with any applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder;
(e) compliance with any applicable foreign or state securities or "blue
sky" laws, rules or regulations; and
(f) such other filings or registrations with, or authorizations, consents
or approvals of, Governmental Entities, the failure of which to make or obtain
would not (i) result in a Material Adverse Effect on the Company or (ii)
materially and adversely affect the ability of the Company to consummate the
transactions contemplated hereby.
Section 4.5. Non-Contravention. The execution, delivery and performance
by the Company of this Agreement, and each agreement to be executed by the
Company in connection herewith, and the consummation by the Company of the
transactions contemplated hereby and thereby, do not and will not:
(a) contravene or conflict with any provision of the respective charters
or bylaws (or similar governing documents) of the Company or any of the Company
Subsidiaries except where such contravention or conflict would not have a
Material Adverse Effect on the Company;
(b) assuming compliance with the matters referred to in Section 4.4 and
assuming the requisite approval of the Company's shareholders of the
transactions contemplated by this Agreement, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company or
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any of its respective properties or assets, except where such contravention,
conflict or violation would not have a Material Adverse Effect on the Company;
(c) conflict with or result in a material breach or violation of, or
constitute a default under (i) any material agreement, contract or other
instrument binding upon the Company or (ii) assuming compliance with the matters
referred to in Section 4.4, any material license, franchise, permit or other
similar authorization held by the Company, except where such conflict, breach,
violation, default or result would not have a Material Adverse Effect on the
Company; or
(d) result in the creation or imposition of any Lien (as defined below)
that could have a Material Adverse Effect on the Company. For purposes of this
Agreement, the term "Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrances of any kind in respect
of such asset.
Section 4.6. Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of Company Common Stock and 1,000,000 shares of
preferred stock, par value $1.00 per share (the "Company Preferred Stock"). As
of November 12, 1999, there were outstanding:
(i) 7,192,264 shares of Company Common Stock and 2,575,811 shares of
Company Common Stock held in treasury;
(ii) no shares of Company Preferred Stock; and
(iii) Company Options to purchase an aggregate of 443,003 shares of
Company Common Stock.
The items in clauses (i) through (iii) above are herein referred to collectively
as the "Company Securities." All outstanding shares of Company Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable and free from any preemptive rights. Except as set forth in this
Section 4.6, there are outstanding (i) no shares of capital stock or other
voting securities of the Company, (ii) no securities issued by the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (iii) no options or other rights to acquire from the
Company, and no obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
other voting securities of the Company and (iv) no equity equivalents, or
interests in the ownership or earnings of the Company or its subsidiaries to
repurchase, redeem or otherwise acquire any of the Company Securities or
ownership interest of the Subsidiaries. Except as provided in Section 2.4,
there are no outstanding obligations of the Company or any Company Subsidiaries
to repurchase, redeem or otherwise acquire any Company Securities or ownership
interests of the Subsidiaries. No holder of Company Securities has, as of the
date hereof, any contractual right to require the Company to file any
registration statement under the Securities Act or to include any such
securities in any registration statement proposed to be filed by the Company
under the Securities Act. Except as disclosed in written information made
available to Parent, all of the outstanding capital stock of the Company's
Subsidiaries is owned by the Company, directly or indirectly, free and clear of
any Lien or any other limitation or restriction (including any restriction on
the right to vote or sell the same, except as may be provided as a matter of
law).
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Section 4.7. SEC Reports and Financial Statements. Each periodic report,
registration statement and definitive proxy statement filed by the Company with
the SEC since June 1, 1996 (as such documents since the time of their filing
have been amended and each document filed between the date hereof and the
Effective Time, the "Company SEC Reports"), which include all the documents
(other than preliminary material) that the Company was required to file with the
SEC, as of their respective dates, complied as to form in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, applicable to such Company SEC Reports. None of the Company SEC Reports
contained any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except for such
statements, if any, as have been modified or superseded by subsequent filings
prior to the date hereof. The consolidated financial statements of the Company
included in such reports comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the cases of
the unaudited statements, as permitted by Form 10-Q of the SEC) and fairly
present (subject in the case of the unaudited statements, to normal, recurring
audit adjustments) in all material respects the consolidated financial position
of the Company and the Company Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended.
Section 4.8. Absence of Certain Changes or Events. Except as and to the
extent disclosed or reflected in the Company SEC Reports filed with the SEC
prior to the date hereof (the "Filed Company SEC Reports"), neither the Company
nor any of its Subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company. Except as and to the extent disclosed by the Company in the Filed
Company SEC Reports, from June 1, 1999 through the date of this Agreement, the
Company and its Subsidiaries have conducted their business in the ordinary and
usual course consistent with past practice and there has not been:
(a) any change, effect, event or occurrence which does or would reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company.
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any Company Securities;
(c) any amendment of any term or condition of any outstanding
security of the Company or any of its Subsidiaries (except for acceleration of
vesting as a result of the transactions contemplated by this Agreement);
(d) (i) any incurrence or assumption by the Company or any of its
Subsidiaries of any indebtedness for borrowed money other than in the ordinary
course of business consistent with past practice or (ii) any guarantee,
endorsement or contractual assumption of liability (whether directly,
contingently or otherwise) by the Company or any of its Subsidiaries for the
obligations of any other person other than in the ordinary course of business
consistent with past
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practice (other than any wholly owned Subsidiary of the Company, or the Company,
with respect to its Subsidiaries);
(e) any creation or assumption by the Company or any of its
Subsidiaries of any Lien of any kind or nature whatsoever on any asset of the
Company or any of its Subsidiaries other than in the ordinary course of business
consistent with past practice;
(f) any making of any loan, advance or capital contribution to or
investment in any person by the Company or any of its Subsidiaries other than
(i) loans, advances or capital contributions to or investments in wholly owned
Subsidiaries of the Company or (ii) loans or advances to employees of the
Company or any of its Subsidiaries made in the ordinary course of business
consistent with past practice;
(g) (i) any contract or agreement entered into by the Company or any of
its Subsidiaries relating to any material acquisition or disposition of any
assets or business or (ii) any material modification, amendment, assignment,
termination or relinquishment by the Company or any of its Subsidiaries of any
material contract, license or other right (including any insurance policy naming
it as a beneficiary or a loss payee) other than, in the case of (i),
transactions, commitments, contracts or agreements in the ordinary course of
business consistent with past practice;
(h) any material change in any method of accounting or accounting
principles or practice (for financial accounting or tax purposes) by the Company
or any of its Subsidiaries, except for any such change required by reason of a
change in GAAP;
(i) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any of its Subsidiaries, other
than grants of severance or termination pay to employees (but not officers or
directors) in the ordinary course of business consistent with past practice;
(ii) entering into any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of the Company or any of its Subsidiaries; (iii)_increase
in benefits payable under any existing severance or termination pay policies or
employment agreements; or (iv) increase in compensation, bonus or other benefits
payable to directors, officers or employees of the Company or any of its
Subsidiaries other than, in the case of clause (iv) only, increases in
compensation, bonus or other benefits payable to employees of the Company or any
of its Subsidiaries in the ordinary and usual course of business consistent with
past practice or merit increases in salaries of employees at regularly scheduled
times in customary amounts consistent with past practices; or
(j) any action or proceeding commenced, threatened or proposed, to condemn
or take by eminent domain or other governmental action any real or personal
property owned or used by the Company and its Subsidiaries, other than such
actions or proceedings that have not had and would not reasonable be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
Section 4.9. Disclosure Documents. None of the information supplied or to
be supplied by the Company for inclusion in the Offer Documents, the Schedule
14D-9 or any proxy statement relating to a meeting of the Company's shareholders
held in connection with the
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shareholders' approval of the transactions contemplated hereby (if applicable,
and as the same may be amended or supplemented from time to time, the "Proxy
Statement") will, either at the time of publication, filing with the SEC or
mailing thereof to shareholders of the Company or, in the case of the Proxy
Statement (if applicable), at the time of the meeting of such shareholders held
in connection with the transactions contemplated hereby, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Schedule 14D-9 and the Proxy Statement (if
applicable) will comply as to form in all material respects with the provisions
of the Exchange Act, except that no representation or warranty is made by the
Company with respect to information supplied by Parent or Purchaser for
inclusion therein.
Section 4.10. Litigation. There is no action, suit, proceeding, claim or
investigation pending, or to the knowledge of the Company, threatened against
the Company or any Company Subsidiary or any of their respective properties or
assets which is, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole.
Neither the Company nor any Subsidiary is subject to an outstanding material
judgment, order, writ, injunction or decree.
Section 4.11. Contracts. All materials contracts and agreements (and all
amendments, modifications and supplements thereto and all side letters to which
the Company or any of its Subsidiaries is a party materially affecting the
obligations of any party thereunder) to which the Company or any of its
Subsidiaries is a party or by which any of their properties or assets are bound
(collectively, the "Material Contracts") are legally valid and binding in
accordance with their terms and in full force and effect except that (i) the
enforceability thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The Company has complied in all material respects with such
contracts, leases, agreements and arrangements, and, to the knowledge of the
Company, all other parties to such contracts, leases, agreements and
arrangements have complied with the provisions of such contracts, leases,
agreements and arrangements, and to the knowledge of the Company, no party is in
default thereunder, and no event has occurred (including giving notice) which,
but for the passage of time or the giving of notice or both, would constitute a
default thereunder, except, in each case, where the invalidity of the lease,
contract, agreement or arrangement or the default or breach thereunder or
thereof would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
Section 4.12. Real Property; Material Assets; Tangible Property.
(a) The Company Disclosure Schedule sets forth all of the real property
owned by the Company or any Company Subsidiary. The Company and each Company
Subsidiary has good and marketable title to all real property and other assets
it owns subject to no encumbrance, lien, charge or other restriction (including,
without limitation, any restriction on transfer) of any kind or character and
there is no condition, restriction or reservation affecting the title to or
utility of any of its material properties or assets, other than (i) such
imperfections or irregularities of title, encumbrances, claims, liens, charges
or other conditions, restrictions or reservations as do not materially affect
the use of the properties or assets subject thereto or affected thereby or
otherwise materially impair business operations at such properties, (ii)
statutory liens securing
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payments (including taxes) not yet due and (iii) such imperfections or
irregularities of title, encumbrances, claims, liens, charges or other
conditions, restrictions or reservations as do not have a Material Adverse
Effect on the Company.
(b) Except as does not have a Material Adverse Effect on the Company, with
regard to buildings and improvements owned by the Company, (i) there are no
structural or nonstructural defects of a material character, (ii) such buildings
and improvements are not in violation of the requirements of any Governmental
Entity, and all necessary final certificates of occupancy have been issued for
such buildings and improvements, (iii) all licenses and permits required by
Governmental Entities have been issued for such buildings and improvements and
the operations conducted in connection with them and (iv) the current use of the
buildings and improvements does not violate such licenses and permits.
(c) The Company Disclosure Schedule sets forth all leases, subleases and
other agreements under which the Company or any of its Subsidiaries uses or
occupies or has the right to use or occupy, now or in the future, any real
property (the "Real Property Leases"). Each of the Company and its Subsidiaries
has a good and valid leasehold interest in each parcel of real property leased
by it free and clear of all Liens.
(d) With such exceptions as have not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company, (i) each of the Real Property Leases is valid and enforceable in
accordance with its terms, (ii) there is no default under any Real Property
Leases either by the Company or any of its Subsidiaries or, to the knowledge of
the Company, by any other party thereto, (iii) no event has occurred that with
the lapse of time or the giving of notice or both would constitute a default
thereunder by the Company or any of its Subsidiaries (including the consummation
of the Merger) or, to the knowledge of the Company, any other party, and (iv) no
party to any such contract or agreement has given notice to the Company or any
of its Subsidiaries of or made any claim against the Company or any of its
Subsidiaries with respect to any breach or default thereunder.
(e) With such exceptions as have not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company, (i) with respect to the tangible properties and assets of the
Company and its Subsidiaries (excluding real property) that are material to the
conduct of the business of the Company or any of its Subsidiaries, the Company
and its Subsidiaries have good title to, or hold pursuant to valid and
enforceable leases or licenses, all such properties and assets and (ii) all of
the assets of the Company and its Subsidiaries have been maintained and repaired
for their continued operation and are in good repair and condition.
Section 4.13. Taxes.
(a) The Company and the Company Subsidiaries (i) have timely filed (or the
Company had timely filed in their behalf) or will file or cause to be filed when
due (taking into account extensions) with the appropriate Federal, state, local,
provincial, foreign and other governmental agencies, all material tax returns,
estimates, reports and documents of a similar nature relating to taxes required
by applicable laws to be filed by it, and all such returns, estimates and
reports are or will be at the time of filing, true, complete and correct in all
material respects, (ii) either paid when due and payable or established adequate
reserves or otherwise
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accrued on the Company's financial statements all material Federal, state,
local, municipal, governmental, provincial or foreign taxes, levies, duties,
licenses and registration fees and charges of any nature whatsoever, and
unemployment and social security taxes and income tax withholding, including
interest and penalties thereon ("Taxes"), and there are no material taxes,
interest, penalties, assessments or deficiencies claimed in writing by any
taxing authority and received by the Company that, in the aggregate, would
result in any Tax liability in excess of the amount of the reserves or accruals,
and (iii) have or will establish in accordance with its normal accounting
practices and procedures accruals and reserves that, in the aggregate, are
adequate for the payment of all material Taxes not yet due and payable and
attributable to any period preceding the Effective Time.
(b) Neither the Company nor any predecessor corporation, nor any of their
respective subsidiaries, has executed or filed with the Internal Revenue Service
("IRS") or any other taxing authority any agreement or other document with
respect to Taxes, including any agreement extending, or having the effect of
extending, the period of assessment or collection of any material Taxes.
(c) During the three (3) years prior to the date of this Agreement,
neither the Company nor any Subsidiary has constituted either a "distributing
corporation" or a "controlled corporation" (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of stock qualifying for Tax-free
treatment under Section 355 of the Code.
(d) No audit or other administrative or court proceedings in which the
total proposed adjustments to net income exceed $50,000 are pending with respect
to Federal, state or foreign income or franchise Taxes of the Company or any of
its Subsidiaries and no written notice thereof has been received.
(e) No claim in writing has been made by a Tax authority in a jurisdiction
where neither the Company nor any Subsidiary files Tax returns that the Company
or any Subsidiaries is or may be subject to taxation in that jurisdiction.
(f) Neither the Company nor any Subsidiary is a party to any contract,
agreement or other arrangement which provides for the payment of any amount
which would not be deductible by reason of Section 162(m) or Section 280G of the
Code.
(g) The Company has made available to Parent true and complete copies of
(i) all Federal, state and foreign income and franchise Tax Returns of the
Company and any Subsidiaries for the preceding three taxable years and (ii) any
audit report issued within the last three years (or otherwise with respect to
any audit or proceeding in progress) relating to Taxes of the Company or any of
its Subsidiaries.
(h) No Subsidiary of the Company owns any shares of Company Common Stock.
Section 4.14. Employee Benefit Plans; ERISA.
(a) Neither the Company nor any of the Company Subsidiaries is a party to
any oral or written (i) employment, severance, collective bargaining or
consulting agreement not terminable on 60 days' or less notice, (ii) agreement
with any current or former executive officer or other current or former key
employee of the Company or any Company Subsidiary (A) the
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benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving the Company or any Company
Subsidiary of the nature of any of the transactions contemplated by this
Agreement, (B) providing any term of employment or compensation guarantee
extending for a period longer than six months, or (C) providing severance
benefits or other benefits after the termination of employment of such executive
officer or key employee regardless of the reason for such termination of
employment, (iii) agreement, plan or arrangement under which any person may
receive payments subject to the tax imposed by Section 4999 of the Code, or (iv)
agreement or plan, including, without limitation, any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, the
benefits of which would be increased, or the vesting of benefits of which would
be accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be calculated
on the basis of any of the transactions contemplated by this Agreement.
(b) The Company has delivered or made available to Parent full and
complete copies of all "Employee Pension Benefit Plans" ("Pension Plans") and
all "Employee Welfare Benefit Plans" ("Welfare Plans") as such terms are defined
in Sections 3(2) and 3(1) respectively of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which are maintained, contributed
to, or required to be contributed to by the Company or any corporation or other
entity which under Section 4001(b) of ERISA is under common control with the
Company (a "Company ERISA Affiliate"). Each Pension Plan and Welfare Plan of
the Company and the Company ERISA Affiliates has been maintained in all material
respects in compliance with its terms and all provisions of ERISA and the Code
(including rules and regulations thereunder) and other applicable laws. Neither
the Company nor any Company ERISA Affiliate is subject to potential liability
under Section 4069(a) of ERISA.
(c) No Pension Plan or Welfare Plan of the Company or any Company ERISA
Affiliate is currently subject to an audit or other investigation by the IRS,
the Department of Labor, the Pension Benefit Guaranty Corporation or any other
Governmental Entity nor are any such plans subject to any lawsuits or legal
proceedings of any kind or to any material pending disputed claims by employees
or beneficiaries covered under any such plan or by any other parties.
(d) No "prohibited transaction," as defined in Section 406 of ERISA or
Section 4975 of the Code, resulting in material liability to the Company or any
Company ERISA Affiliate has occurred with respect to any Pension Plan or Welfare
Plan. The Company has no knowledge of any breach of fiduciary responsibility
under Part 4 of Title I of ERISA which has resulted in or would result in any
material liability to the Company, any trustee, administrator or fiduciary of
any Pension Plan or Welfare Plan of the Company or any Company ERISA Affiliate.
(e) Neither the Company nor any Company ERISA Affiliate has maintained or
contributed to, or been obligated or required to contribute to, a "Multiemployer
Plan," as such term is defined in Section 4001(a)(3) of ERISA. Neither the
Company nor any Company ERISA Affiliate has either withdrawn, partially or
completely, or instituted steps to withdraw, partially or completely, from any
Multiemployer Plan nor has any event occurred which would enable a Multiemployer
Plan to give notice of and demand payment of any material withdrawal liability
with respect to the Company or any Company ERISA Affiliate.
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(f) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company or any Company ERISA Affiliate that,
individually or collectively, could give rise to the payment of any material
amount that would not be deductible pursuant to the terms of Sections 162(m) or
280G of the Code.
(g) The Company has delivered or made available to Parent full and
complete copies or descriptions of each Pension Plan, Welfare Plan and each
other material agreement, policy, plan or other arrangement, whether written or
oral, express or implied, fixed or contingent, to which the Company or any
Company ERISA Affiliate is a party or by which the Company or any Company ERISA
Affiliate is bound, which is or relates to a pension, option, bonus, deferred
compensation, retirement, stock purchase, profit-sharing, severance pay, health,
welfare, incentive, vacation, sick leave, medical disability, hospitalization,
life or other insurance or fringe benefit plan, policy or arrangement
(collectively, "Company Employee Benefit Plans").
(h) The Company has delivered or made available to Parent, for each
Pension Plan which is intended to be "qualified" within the meaning of Section
401(a) of the Code, a copy of the most recent determination letter issued by the
IRS to the effect that each such Plan is so qualified and that each trust
created thereunder is tax exempt under Section 501 of the Code, and the Company
is unaware of any fact or circumstances that would jeopardize the qualified
status of each such Pension Plan or the tax exempt status of each trust created
thereunder.
(i) The Company does not sponsor, maintain, participate in or contribute
to (and is not required to contribute to) (i) any Pension Plan that is subject
to minimum funding requirements of Section 412 of the Code or Section 302 of
ERISA, or Title IV of ERISA (ii) foreign Pension Plans; or (iii) voluntary
employee benefit associations intended to be exempt from Federal Income Tax
under Section 501(c)(9) of the Code.
(j) Except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, (i) all payments required to be made by or under
any Company Employee Benefit Plan, any related trusts, insurance policies or
ancillary agreements, or any collective bargaining agreement have been timely
made, and (ii) the Company and its Subsidiaries have performed all obligations
required to be performed by them under any Company Employee Benefit Plan.
(k) None of the Company Employee Benefit Plans provides for post-
employment life or health insurance, benefits or coverage for any participant or
any beneficiary of a participant, except as may be required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or as may be
offered as individual conversion rights.
(l) Neither the Company nor any of its Subsidiaries currently maintains or
has ever previously maintained a Pension Plan which is not intended to be
"qualified" within the meaning of Section 401(a) of the Code.
Section 4.15. Labor Matters. (a) Neither the Company nor any of the
Company Subsidiaries is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by the Company or any
Company Subsidiary, and, to the knowledge of the Company, there are no
activities or proceedings of any labor union or any such employees to organize
any such employees.
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(b) There are no unfair labor practice charges, grievances or complaints
pending or threatened in writing by or on behalf of any employee or group of
employees of the Company or its Subsidiaries.
(c) There are no complaints, charges or claims against the Company or its
Subsidiaries pending, or threatened in writing to be brought or filed, with any
Governmental Entity or arbitrator based on, arising out of, in connection with,
or otherwise relating to the employment or termination of employment of any
individual by the Company or any of its Subsidiaries.
(d) Except for violations which do not have and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company, the Company and each of its Subsidiaries is in compliance with all
laws relating to the employment of labor, including all such laws and orders
relating to wages, hours, collective bargaining, discrimination, civil rights,
safety and health, workers' compensation and the collection and payment of
withholding and/or Social Security Taxes and similar Taxes. The Company and each
of its Subsidiaries has complied with the Workers Adjustment and Retraining
Notification Act (or any similar state or local law) and has not incurred any
liabilities or obligations in connection therewith which remain outstanding.
Section 4.16. Compliance with Laws. Except for violations which do not
have and would not have, individually or in the aggregate, a Material Adverse
Effect on the Company, neither the Company nor any Company Subsidiary is in
violation or has received any notices of violations of federal, state or local
laws, regulations or ordinances relating to its business and operations,
including, without limitation, the Occupational Safety and Health Act and the
Americans with Disabilities Act, and no notice of any pending inspection or
inquiry or of the violation of any such law, regulation or ordinance has been
received by the Company or any Company Subsidiary.
Section 4.17. Environmental Matters.
(a) Definitions. As used in this Agreement, "Environmental Law" means any
federal, state or local statute, regulation or ordinance pertaining to the
protection of human health or the environment and any applicable orders,
judgments, decrees, permits, licenses or other authorizations or mandates under
such laws. "Hazardous Substance" means any hazardous, toxic, radioactive or
infectious substance, material or waste as defined, listed or regulated under
any Environmental Law, and includes without limitation petroleum oil and its
fractions. "Contamination" means the existence (actual or reasonably suspected)
in the environment of a Hazardous Substance, if the existence or suspected
existence of such Hazardous Substance requires any investigatory, remedial,
removal or other response action under any Environmental Law, if such response
action legally could be required by any Governmental Entity.
(b) Environmental Compliance.
(i) The Company and each Company Subsidiary possesses all material
governmental and other licenses it is required to carry under any
Environmental Law for its business as now conducted. No material violation
exists in respect of, and no proceeding is pending or threatened to revoke
or limit, any such license. The Company and each Company Subsidiary is
operating its business in material compliance with all
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Environmental Laws. No incident regarding environmental matters has
occurred in connection with the business of the Company or any Company
Subsidiary that was required to be reported to a Governmental Entity under
any Environmental Law that was not so reported, except where the failure to
report would not have a Material Adverse Effect on the Company.
(ii) No real property currently or previously owned, leased or
occupied by the Company or any Company Subsidiary is or during the
Company's or any Company Subsidiary's ownership or occupation was used as a
hazardous waste treatment, storage or disposal facility within the meaning
of Subtitle C of the Resource Conservation and Recovery Act ("RCRA") or any
comparable state Environmental Law. No real property currently owned,
leased or occupied by the Company or any Company Subsidiary and, to the
Company's knowledge, no real property previously owned, leased or occupied
by the Company or any Company Subsidiary is listed on the National Priority
List or the Comprehensive Environmental Response, Compensation and
Liability Information System list compiled by the Environmental Protection
Agency or any comparable listing compiled by any state or local
Governmental Entity having jurisdiction over environmental matters.
(iii) Neither the Company nor any Company Subsidiary has received
notice from any Governmental Entity or other person that it has been named
as a responsible or potentially responsible party with respect to any site
listed on the lists described in paragraph (ii) above or that it otherwise
is potentially liable for Contamination under any Environmental Law.
(iv) Except as would not have a Material Adverse Effect on the
Company, no portion of any property currently owned, leased or occupied by
the Company or any Company Subsidiary is Contaminated. Except as would not
have a Material Adverse Effect on the Company, with respect to property
previously owned, leased or occupied by the Company or any Company
Subsidiary, no Contamination occurred during the Company's or any Company
Subsidiary's ownership, lease or occupancy.
Section 4.18. Insurance. The Company and all of its Subsidiaries maintain
insurance with respect to their respective properties and business against loss
or damage of the kinds customarily insured against by corporations of
established reputations engaged in the same or similar business and similarly
situated, of such types and in amounts as disclosed to Parent. Within the past
three (3) years, neither the Company nor any of its Subsidiaries has received
any refusal of insurance coverage or any notice that a defense will be afforded
with reservation of rights, or any notice of any cancellation or other
indication that any Policy (as defined below) is no longer in full force and
effect or will not be renewed or that the issuer of any Policy is not willing or
able to perform its obligations thereunder. To the knowledge of the Company,
there are no outstanding requirements or recommendations by any current insurer
or underwriter with respect to the business or assets of the Company or any of
its Subsidiaries which require or recommend changes in the conduct of their
respective businesses, or require any repairs or other work to be done with
respect to any of the Company's or any of its Subsidiaries' assets, properties
or products. All material property (fire and extended coverage perils),
business interruption, public liability, workers' compensation, directors' and
officers' liability and other insurance policies and fidelity and surety bonds
of the Company or any Company Subsidiary in
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the Company's possession that have been provided to Parent (the "Policies") are
currently in full force and effect. To the Company's knowledge, there are no
disputes with insurers under the Policies, and all premiums due and payable
thereto have been paid. To the Company's knowledge, there are no pending or
threatened cancellations or nonrenewals or premium increases with respect to any
of the Policies, and the Company and each Company Subsidiary is in compliance
with all material conditions contained in its Policies.
Section 4.19. Intellectual Property.
(a) The term "Intellectual Property Assets" means collectively:
(i) all registered and unregistered trademarks, service marks and
applications (collectively, "Marks");
(ii) all patents and patent applications (collectively, "Patents");
(iii) all copyrights in both published works and unpublished works
that are material to the Company's or any Company Subsidiary's businesses
(collectively, "Copyrights"); and
(iv) all trade secrets used in the conduct of the businesses of the
Company and Company Subsidiaries.
(b) The Company and each Company Subsidiary owns, has the right to use,
sell, license, dispose of, and to bring actions for the misappropriation of all
of the Intellectual Property Assets, material to the conduct of its business
without any conflict with or infringement of the rights of others, free and
clear of all liens, charges, encumbrances or other restrictions of any kind.
(c) To the Company's knowledge, no Intellectual Property Asset material to
the conduct of business of the Company or any Company Subsidiary is infringed or
has been challenged.
(d) There is no action, suit, proceeding, judgment, order or writ pending,
or to the Company's knowledge, threatened against the Company or any Company
Subsidiary contesting the validity, ownership or right to use, sell, license,
dispose of or to bring actions for the misappropriation of the Intellectual
Property Assets material to the conduct of its business.
(e) Subject to such exceptions as have not and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
there have been no claims made or notices that the conduct of the Company's or
any of its Subsidiaries' business has infringed the intellectual property rights
of any third party.
(f) To the knowledge of the Company, (i) the Company and its Subsidiaries
have taken all reasonably necessary measures to protect and preserve the
validity and enforceability of the Intellectual Property Assets and the goodwill
associated therewith, including, without limitation, the confidentiality and
enforceability of trade secrets and the confidentiality of all confidential and
proprietary information included within the Intellectual Property Assets, and
(ii)
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no trade secret, or confidential and proprietary information has been disclosed
to any third party other than pursuant to appropriate non-disclosure agreements
consistent with industry practice.
Section 4.20. Finders' Fees. Except for Salomon Smith Barney Inc. and
William Blair & Company, L.L.C., there is no investment banker, broker, finder
or other intermediary that has been retained by or is authorized to act on
behalf of the Company who is entitled to any fee or commission in connection
with the transactions contemplated by this Agreement.
Section 4.21. Opinions of Financial Advisors. The Board of Directors of
the Company has received the separate opinions of the Company Financial Advisors
to the effect that, as of the date of this Agreement, the consideration to be
received in the Offer and Merger, taken as a whole, is fair, from a financial
point of view, to the holders of Company Common Stock (other than of Parent and
its affiliates).
Section 4.22. Licenses; Approvals. The Company and each Company
Subsidiary hold all licenses, permits and other regulatory approvals necessary
to conduct their respective businesses as presently conducted except where the
failure to obtain or hold such license, permit or regulatory approval would not
have a Material Adverse Effect on the Company. All such licenses, permits and
other regulatory approvals related to the business, operations and facilities of
the Company and each Company Subsidiary are in full force and effect, except
where any failure of such license, permit or regulatory approval to be in full
force and effect would not have a Material Adverse Effect on the Company.
Section 4.23. Year 2000 Compliance. Except as would not reasonably be
expected to have, individually or in the aggregate, a Materially Adverse Effect
on the Company and the Subsidiaries taken as a whole, the functions, including
without limitation, date-reliant (which includes year-reliant) functions of all
hardware, software, computers, equipment, devices with embedded electronics and
business critical systems used in the conduct of the business of the Company or
the Company Subsidiaries (collectively, the "Systems") are capable of continuing
to operate up to, during and after the year 2000 without the necessity of any
re-programming or the installation of any new microchip, processor or other
equipment, (ii) neither the performance nor functionality of the Systems will be
affected by any changes caused by the advent of the year 2000 to the field
configuration which contains the date information within any part of the Systems
and (iii) the Systems shall suffer no faults in the processing of dates and
date-dependent information or data, including, without limitation, in
calculations, comparisons and sequencing of information or data. To the
knowledge of the Company, the Systems shall be free of surreptitious codes, such
as back door, time bomb, drop dead devices or other software routine designed to
disable a computer program automatically with the passage of time, and
unauthorized codes such as a computer virus, Trojan horse, worm or other
software routines or hardware components designed to permit unauthorized access
or to disable, erase or otherwise harm software, hardware or data. The Company
and its Subsidiaries have not received written notice from any customer,
supplier or financial institution that such party expects its operations to be
disrupted as a result of Systems failures due to year 2000 problems, which
disruption, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect on the Company and the Subsidiaries taken as a
whole.
Section 4.24. TBCA Article 13. The Company Board has approved this
Agreement and each agreement to be executed by the Company in connection
herewith, and taken such actions
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sufficient to render the provisions of Article 13 of the TBCA inapplicable to
this Agreement and the transactions contemplated herein and therein.
Section 4.25. Absence of Questionable Payments. Neither the Company nor
any of its Subsidiaries nor, to the Company's knowledge, any director, officer,
agent, employee or other person acting on behalf of the Company or any of its
Subsidiaries, has used any corporate or other funds for unlawful contributions,
payments, gifts, or entertainment, or made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of Section 30A of the
Exchange Act. Neither the Company nor any of its Subsidiaries nor, to the
Company's knowledge, any director, officer, agent, employee or other person
acting on behalf of the Company or any of its Subsidiaries, has accepted or
received any unlawful contributions, payments, gifts, or expenditures. To the
Company's knowledge, the Company and each of its Subsidiaries which is required
to file reports pursuant to Section 12 or 15(d) of the Exchange Act is in
compliance with the provisions of Section 13(b) of the Exchange Act.
Section 4.26. Suppliers and Customers. Since January 1, 1999, neither the
Company's nor any of its Subsidiaries' relationship with any material customer
or supplier has been terminated or materially altered. The Company and each of
its Subsidiaries has good commercial relationships with each of its material
suppliers and to the Company's knowledge, there are no facts concerning such
suppliers that would reasonably be expected to result in any material
interruption in the timely supply by such supplier to the Company or any of its
Subsidiaries of any such materials other than ordinary course delays experienced
from time to time. Neither the Company nor any of its Subsidiaries has received
any indication that any such material supplier intends to terminate or
materially alter the terms of its supply relationship with the Company or any of
its Subsidiaries. The Company and each of its Subsidiaries has good commercial
relationships with its material customers, and neither the Company nor any of
its Subsidiaries has received any indication that any such customer intends to
terminate or materially alter its relationship with the Company or any of its
Subsidiaries.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent has delivered to the Company on or prior to the execution hereof a
disclosure schedule (the "Parent Disclosure Schedule"). The information in the
Parent Disclosure Schedule shall be deemed a part of Parent's representations
and warranties herein. Except as disclosed in the Parent's Disclosure Schedule,
Parent represents and warrants to the Company as set forth below:
Section 5.1. Corporate Existence and Power.
(a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all corporate power
required to own or lease its properties and to carry on its business as now
conducted. Parent is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or to be in good standing would not have a Material Adverse Effect on Parent.
Parent has delivered or made available to the Company true and complete copies
of the certificate of incorporation and bylaws of Parent.
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(b) Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas and has all corporate power
required to own or lease its properties and to carry on its business as now
conducted. Purchaser is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or to be in good standing would not have a Material Adverse Effect on Purchaser.
Parent or Purchaser has delivered or made available to the Company true and
complete copies of the certificate of incorporation and bylaws of Purchaser.
Section 5.2. Corporate Authorization. The execution, delivery and
performance by Parent and Purchaser of this Agreement, and each agreement to be
executed by Parent and Purchaser in connection herewith, and the consummation by
Parent and Purchaser of the transactions contemplated hereby and thereby, are
within Parent's and Purchaser's corporate powers and have been duly authorized
by all necessary corporate action to the extent required by applicable law and
the applicable stock exchange rules and regulations. This Agreement and each
agreement to be executed by Parent or Purchaser in connection herewith have been
duly and validly executed and delivered by Parent and Purchaser and, assuming
the due authorization, execution and delivery hereof and thereof by each other
party hereto and thereto, constitute valid and binding agreements of Parent and
Purchaser, enforceable against Parent and Purchaser in accordance with their
terms except that (i) the enforceability hereof and thereof may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
Section 5.3. Governmental Authorization. The execution, delivery and
performance by Parent and Purchaser of this Agreement, and each agreement to be
executed by Parent or Purchaser pursuant hereto, and the consummation by Parent
and Purchaser of the transactions contemplated hereby and thereby, require no
action by or in respect of, or filing with, any Governmental Entity, other than:
(a) the filing of the Articles of Merger in accordance with the TBCA;
(b) compliance with any applicable requirements of the HSR Act and (if
applicable) similar provisions of the laws of Canada, Mexico and Chile;
(c) compliance with any applicable requirements of the Exchange Act;
(d) compliance with any applicable requirements of the Securities Act;
(e) compliance with any applicable foreign or state securities or "blue
sky" laws, rules or regulations; and
(f) such other filings or registrations with, or authorizations, consents
or approvals of, Governmental Entities, the failure of which to make or obtain
(i) would not reasonably be expected to have a Material Adverse Effect on Parent
or Purchaser or (ii) would not materially and adversely affect the ability of
Parent or Purchaser to consummate the transactions contemplated hereby and
operate their respective businesses as heretofore operated.
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Section 5.4. Non-Contravention. The execution, delivery and performance
by Parent and Purchaser of this Agreement, and each agreement to be executed by
Parent or Purchaser in connection herewith, and the consummation by Parent and
Purchaser of the transactions contemplated hereby and thereby, do not and will
not:
(a) contravene or conflict with any provision of the respective charters
or bylaws (or similar governing documents) of Parent or any of its subsidiaries
except where such breach would not have a Material Adverse Effect on Parent;
(b) assuming compliance with the matters referred to in Section 5.3 and
assuming the requisite approval of Parent's shareholders of the transactions
contemplated by this Agreement, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Parent or any of its subsidiaries or any
of their respective properties or assets, except where such contravention,
conflict or violation would not have a Material Adverse Effect on Parent;
(c) conflict with or result in a material breach or violation of, or
constitute a default under, or result in any third party having any right of
termination, amendment, acceleration or cancellation of, or loss of a material
benefit under, (i) any material agreement, contract or other instrument binding
upon Parent or any Parent Subsidiary or (ii) assuming compliance with the
matters referred to in Section 5.3, any material license, franchise, permit or
other similar authorization held by Parent or any Parent Subsidiary, in each
case except where such conflict, breach, violation, default or result would not
have a Material Adverse Effect on Parent; or
(d) result in the creation or imposition of any Lien that could have a
Material Adverse Effect on Parent.
Section 5.5. Organization of Purchaser. The authorized capital stock of
Purchaser consists of 1,000 shares of common stock, par value $.01 per share,
all of which are outstanding. All the issued and outstanding capital stock of
Purchaser is owned by Parent. Purchaser has not conducted any business prior to
the date hereof and has no assets, liabilities or obligations of any nature
other than those incident to its formation and pursuant to this Agreement.
Section 5.6. Disclosure Documents. None of the information supplied or to
be supplied by Parent for inclusion in the Offer Documents, the Schedule 14D-9
or the Proxy Statement (if applicable) will, either at the time of mailing
thereof to shareholders of the Company or at the time of the meeting of such
shareholders to be held in connection with the transactions contemplated hereby,
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the provisions of the
Exchange Act, except that no representation or warranty is made by Parent with
respect to information supplied by the Company for inclusion therein.
Section 5.7. Litigation. There is no action, suit, proceeding, claim or
investigation pending, or to the knowledge of Parent, threatened against or
affecting Parent or any of its subsidiaries or any of their assets which would
reasonably be expected to have a Material Adverse Effect on Parent. To the
knowledge of Parent, there are no, and have not been any, facts, conditions or
incidents that are reasonably likely to result in any such action, suit,
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proceeding, claim or investigation, except for actions, suits, proceedings,
claims or investigations that would not, individually or in the aggregate, have
a Material Adverse Effect on Parent. Neither Parent nor any of its subsidiaries
is subject to or in default with respect to any writ, order, judgment,
injunction or decree that has or that, individually or in the aggregate, would
have a Material Adverse Effect on Parent.
Section 5.8. Finders' Fees. Except for Deutsche Banc Securities Inc.,
there is no investment banker, broker, finder or other intermediary that has
been retained by or is authorized to act on behalf of Parent who is entitled to
any fee or commission in connection with the transactions contemplated by this
Agreement.
Section 5.9. Financial Capability. As of the date hereof, Parent has
sufficient financial resources available to it through its ultimate parent or
other of its affiliates to consummate the transactions contemplated by this
Agreement. None of Parent's or Purchaser's obligations pursuant to this
Agreement are subject to Parent's or Purchaser's obtaining or securing any
financing or credit support for the transactions contemplated hereby.
ARTICLE VI.
COVENANTS OF THE COMPANY
From the date hereof until the occurrence of the earlier of (i) the
Effective Time or (ii) termination of this Agreement, the Company agrees that:
Section 6.1. Conduct of Business of the Company Pending the Effective
Time. Except as expressly permitted or contemplated by this Agreement, or by
the Company Disclosure Schedule, the Company shall, and shall use its
commercially reasonable best efforts to cause each of the Company Subsidiaries
to, conduct their operations in the ordinary and usual course of business
consistent with past practice and use its commercially reasonable best efforts
to preserve intact their respective business organizations' goodwill, keep
available the services of their respective present officers and key employees,
and preserve the goodwill and business relationships with customers, suppliers
and others having business relationships with them to the end that it is
intended that the goodwill and ongoing businesses of the Company and any Company
Subsidiary shall be materially unimpaired at the Effective Time. Without
limiting the generality of the foregoing, and except as otherwise permitted by
this Section 6.1 and Section 8.2 or the other terms of this Agreement, prior to
the Effective Time, without the consent of Parent, which consent shall not be
unreasonably withheld or delayed as to matters other than those referred to in
clause (p) below, the Company will not, and will cause each of the Company
Subsidiaries not to:
(a) amend or propose to amend their respective organizational documents;
or split, combine or reclassify their outstanding capital stock or declare, set
aside or pay any dividend or distribution in respect of any capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, except for
dividends and distributions paid by Company Subsidiaries to other Company
Subsidiaries or to the Company;
(b) (i) issue, sell, pledge or dispose of, or agree to, authorize or
propose the issuance, sale, pledge or disposition of, any additional shares of,
or any options, warrants or rights of any kind to acquire any shares of, their
capital stock of any class, any debt or equity securities
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convertible into or exchangeable for such capital stock or any other equity
related right (including any phantom stock or SAR rights), other than any such
issuance pursuant to options, warrants, rights, agreements or convertible
securities outstanding as of the date hereof in accordance with their terms;
(ii) redeem, purchase, acquire or offer to purchase or acquire any (x) shares of
its capital stock of (y) long-term debt other than as required by governing
instruments relating thereto; or (iii) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(c) enter into or amend any employment, severance, special pay arrangement
with respect to termination of employment or other arrangements or agreements
with any directors, officers or key employees except for (i) normal or budgeted
salary increases, merit bonuses and annual bonuses, (ii) arrangements in
connection with employee transfers, (iii) agreements with new employees, in the
case of (i), (ii), or (iii), in the ordinary course of business consistent with
past practice or (iv) agreements to pay bonuses to key employees for the purpose
of retaining such employees through the Effective Date;
(d) (i) adopt, enter into or amend any, or become obligated under any new
bonus, profit sharing, compensation, stock option, pension, retirement, deferred
compensation, health care, employment or other employee benefit plan, agreement,
trust, fund or arrangement for the benefit or welfare of any employee or
retiree, except in the ordinary course of business consistent with past practice
or as required to comply with changes in applicable law occurring after the date
hereof or (ii) except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company, increase
the compensation or fringe benefits of any director, officer or employee in any
manner, or pay any benefit that, in any such case, is not required by any plan
and arrangement as in effect prior to the date hereof;
(e) make any commitment or enter into any material contract or agreement
(including any agreement relating to the hiring of an individual as an employee
or consultant) providing for expenditures by the Company in excess of $100,000,
except in the ordinary course of business consistent with past practice;
(f) alter through merger, liquidation, reorganization, restructuring or in
any other fashion the corporate structure or ownership of the Company or any
Company Subsidiary;
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(h) revalue any of its assets, including, without limitation, writing down
the value of its inventory or writing off notes or accounts receivable, other
than in the ordinary course of business;
(i) make any material tax election or settle or compromise any material
income tax liability;
(j) pay, or agree to pay, in excess of $100,000 in connection with the
settlement or compromise of any pending or threatened suit, action or claim;
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(k) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise) in excess
of $100,000 other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in, or
contemplated by, the financial statements (or the notes thereto) as of May 31,
1999 of the Company incurred in the ordinary course of business consistent with
past practice;
(l) waive, redeem, amend or allow to lapse any material term or condition
of any confidentiality or "standstill" agreement to which the Company or any
Company Subsidiary is a party;
(m) (i) incur or assume any long-term or short-term indebtedness for
borrowed money ("debt") or issue any debt securities except for borrowings under
existing lines of credit in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except in the
ordinary course of business consistent with past practice and in amounts not
material to the Company or any of its Subsidiaries; (iii) make any loans,
advances or capital contributions to, or, except for immaterial investments in
the ordinary course of business consistent with past practice, investments in,
any other person (other than to wholly owned Subsidiaries of the Company or the
Company, with respect to its Subsidiaries, or customary loans or advances to
employees in the ordinary course of business consistent with past practice and
in amounts not material to the maker of such loan or advance); (iv) pledge or
otherwise encumber shares of capital stock of the Company or its Subsidiaries;
or (v) mortgage or pledge any of its assets, tangible or intangible, or create
or suffer to exist any Lien thereupon except in the ordinary course of business
consistent with past practice;
(n) (i) sell, lease or dispose of any assets outside the ordinary course
of business or any assets which in the aggregate are material to the Company or
any of its Subsidiaries; or (ii) enter into any similar material commitment or
transaction outside the ordinary course of business;
(o) (i) except as set forth in the Company Disclosure Schedule or
otherwise disclosed by the Company in writing to Parent on or prior to the date
hereof, acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business organization or division thereof
or any equity interest therein, or any assets, for consideration in excess of
$1,000,000 individually or in the aggregate; and (ii) authorize any capital
expenditure or expenditures which, in the aggregate, are in excess of the
amounts therefor set forth in the Company 1999 capital expenditures budget
delivered to Parent prior to the date hereof; or
(p) take or agree to take any of the foregoing actions or any action that
is reasonably likely to result in any of its representations and warranties set
forth in this Agreement becoming untrue or incorrect.
Section 6.2. Access to Financial and Operational Information. Subject to
compliance with applicable law, upon reasonable notice, the Company will, and
will use its commercially reasonable best efforts to cause each of the Company
Subsidiaries to, give Parent, its directors, its counsel, financial advisors,
auditors and other authorized representatives reasonable access during normal
business hours to the offices, properties, books and records of the Company and
the Company Subsidiaries; will furnish to Parent, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data with respect to the Company
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and the Company Subsidiaries as such persons may reasonably request; and will
instruct and request the Company's directors, officers, employees, counsel and
financial advisors to cooperate with Parent in its investigation of the business
of the Company and the Company Subsidiaries and in the planning for the
combination of the businesses of the Company and Parent following the
consummation of the Merger. All information obtained pursuant to this Section
shall be governed by the Confidentiality Agreement dated September 9, 1999
between Parent and the Company (the "Confidentiality Agreement").
ARTICLE VII.
COVENANTS OF PARENT
Section 7.1. Conduct of Business of Parent Pending the Effective Time.
From the date hereof until the occurrence of the earlier of (i) the Effective
Time or (ii) termination of this Agreement, Parent agrees that prior to the
Effective Time, without the consent of the Company, which consent shall not be
unreasonably withheld as to matters other than those referred to in clause (b)
below, Parent will not, and will cause each of its subsidiaries not to, take or
agree to take any action that is reasonably likely to result (a) in any of its
representations and warranties set forth in this Agreement becoming untrue or
(b) in any of the conditions to the Merger set forth in Article IX not being
satisfied.
ARTICLE VIII.
COVENANTS OF PARENT AND THE COMPANY
From the date hereof until the occurrence of the earlier of (i) the
Effective Time or (ii) termination of this Agreement, the Company and Parent
agree that:
Section 8.1. Agreement to Cooperate; Further Assurances. Subject to the
terms and conditions of the Agreement, each of the Company and Parent shall use
its commercially reasonable best efforts promptly to take, or cause to be taken
all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, subject to the requisite vote
of shareholders of the Company (if required), including providing information
and using its commercially reasonable best efforts to obtain promptly all
necessary or appropriate waivers, consents and approvals, and to effect promptly
all necessary registrations and filings (including filings under the HSR Act and
similar provisions of the laws of Canada or Mexico). Parent shall pay all costs
and expenses, including, without limitation, all filing fees and counsel fees,
incurred in connection with obtaining regulatory approvals under the HSR Act and
similar provisions of the laws of Canada or Mexico.
Section 8.2. No Solicitation.
(a) From the date hereof until the termination of this Agreement and
except as expressly permitted by the following provisions of this Section 8.2,
the Company will not, and will instruct (or where it has such power cause) each
of its Subsidiaries and each officer, director or employee of or any investment
banker, attorney, accountant or other advisor or representative of, the Company
or any of its Subsidiaries not to, directly or indirectly, (i) solicit or
initiate the submission of any Acquisition Proposal (as defined in Section
8.2(c)) or of any inquiries or proposals that constitute, or may reasonably be
expected to lead to, any Acquisition Proposal, (ii) participate in any
discussions or negotiations regarding, or furnish to any person any non-
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public information with respect to the Company or any of its Subsidiaries to
facilitate, the submission of any Acquisition Proposal or the making of any
inquiries or proposals that constitute, or may reasonably be expected to lead
to, any Acquisition Proposal, (iii) amend or grant any waiver or release under
any standstill or similar agreement with respect to any class of equity
securities of the Company, or (iv) agree to, approve or recommend any
Acquisition Proposal or enter into any agreement with respect to any Acquisition
Proposal (other than a confidentiality agreement as described below); provided,
however, that the Company may nevertheless take or permit any action otherwise
prohibited by clause (ii), (iii) or (iv) of this sentence in respect of any
Acquisition Proposal (A) that the Company Board determines in good faith, after
consultation with one or both of the Company Financial Advisors or any other
independent, nationally recognized financial advisor, would, if accepted,
constitute, or be reasonably likely to lead to, a Superior Proposal (as
hereinafter defined), if (B) prior to taking such action, the Company: (1)
provides reasonable notice to Parent to the effect that it is taking such
action; (2) has received from such person an executed confidentiality/standstill
agreement in reasonably customary form and in any event containing terms at
least as stringent as those contained in the Confidentiality Agreement (as
defined in Section 6.2) as of the date of its execution (it being understood
that such person shall not be released from the standstill obligations set forth
therein solely due to the existence of this Agreement or any modification of
this Agreement proposed by Parent); and (3) in the case of (x) any action to
waive or release any obligation under any such confidentiality/standstill
agreement not to purchase or offer to purchase Company Securities or (y) any
action to agree to, approve or recommend any Acquisition Proposal or to enter
into any agreement with respect to any Acquisition Proposal (other than a
confidentiality/standstill agreement), the Company Board has (I) received a
written Superior Proposal, (II) has notified Parent in writing (a "Notice") that
it intends to authorize such action (it being understood that the Company shall
be required to deliver a new Notice in respect of any revised Superior
Proposal), attaching the most recent version (or draft) of such Superior
Proposal to such Notice (which version (or draft) shall be updated on a
reasonably current basis), (III) during the five (5) business day (or, in the
case of any Notice with respect to a particular third party other than the
initial Notice with respect to such third party's Acquisition Proposal, two (2)
business day) period after delivery of the Notice the Company, in addition to
any negotiations with the third party, has exercised its best efforts to
negotiate with, and shall have caused its respective financial and legal
advisors to exercise their best efforts to negotiate with, Parent to attempt to
make such adjustments in the terms and conditions of this Agreement, the Offer
and the Merger as would enable the Company Board to determine in good faith that
there is no longer a Superior Proposal as compared to the terms and conditions
of this Agreement, the Offer and the Merger after considering the results of
such negotiations, and (IV) the Company Board concludes after considering the
results of such negotiations, that the Superior Proposal giving rise to the
Company's Notice continues to be a Superior Proposal. For purposes of this
Agreement, "Superior Proposal" means a written Acquisition Proposal on terms
that the Company Board determines in its good faith judgment (after consultation
with one or both of the Company Financial Advisors or any other independent,
nationally recognized financial advisor) would, if accepted, be more favorable
from a financial point of view to the Company's shareholders than the Offer and
the Merger. The Company shall notify Parent of any Acquisition Proposal
(including, without limitation, the material terms and conditions thereof and
the identity of the person making it) as promptly as reasonably practicable
after its receipt thereof, and shall thereafter inform Parent on a reasonably
prompt basis of the status of any discussions or negotiations with such a third
party, and any material changes to the terms and conditions of such Acquisition
Proposal. Immediately after the execution and delivery of this Agreement, the
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Company will, and will instruct (or where it has such power cause) its
Subsidiaries and its and their respective officers, directors, employees,
investment bankers, attorneys, accountants and other agents to, cease and
terminate any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any possible Acquisition Proposal.
(b) The Company Board will not withdraw or modify, in a manner adverse to
Parent, its approval or recommendation of this Agreement, the Offer or the
Merger unless (i) a Superior Proposal is pending at the time the Company Board
determines to take any such action, and (ii) the Company Board determines in
good faith to approve or recommend such Superior Proposal (and in connection
therewith, to withdraw or modify its approval or recommendation of this
Agreement, the Offer or the Merger).
(c) "Acquisition Proposal" means an inquiry, offer or proposal regarding
any of the following (other than the transactions contemplated by this
Agreement) involving the Company or any of its Subsidiaries: (i) any merger,
consolidation, share exchange, recapitalization, business combination or other
similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of all or substantially all the assets of the Company or
any of its Subsidiaries, taken as a whole, in a single transaction or series of
related transactions; (iii) any tender offer or exchange offer for 20 percent or
more of the outstanding shares of Company Common Stock or the filing of a
registration statement under the Securities Act in connection therewith; or (iv)
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
Section 8.3. Shareholder Approval.
(a) To the extent shareholder approval of the Merger and this Agreement is
required by law, the Company will take all action necessary in accordance with
the TBCA and the Company's Articles of Incorporation and By-laws to convene a
meeting of the holders of Company Common Stock (the "Company Shareholders'
Meeting") as promptly as practicable following the consummation of the Offer to
consider and vote upon the Merger and this Agreement.
(b) The Proxy Statement prepared by the Company in connection with the
obtaining of shareholder approval, if so required, shall include the
recommendation of the Company Board, subject to its fiduciary duties under Texas
law, to the holders of Company Common Stock that the holders of Company Common
Stock vote in favor of the adoption of this Agreement and the Merger.
(c) The Company Board shall, subject to its fiduciary duties under Texas
law and to the extent shareholder approval is so required, (i) cause the Company
to use its commercially reasonable efforts (through its agents or otherwise) to
solicit from the holders of the Company Common Stock proxies in favor of the
Merger and this Agreement and (ii) cause the Company to take all other lawful
action reasonably necessary to secure shareholder approval of the Merger and
this Agreement.
(d) Notwithstanding the foregoing, if Purchaser shall acquire in the Offer
a number of shares of Company Common Stock that, together with any shares
beneficially owned by Parent and its affiliates, represents at least 90% of the
outstanding Company Common Stock, no solicitation of proxies shall be undertaken
and the parties shall instead take all necessary and
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appropriate action to cause the Merger to become effective as soon as
practicable after the expiration of the Offer without a meeting of shareholders
in accordance with Article 5.16 of the TBCA.
(e) To the extent solicitation of shareholder approval of the Merger and
this Agreement is required by applicable law: (i) the Company shall prepare a
preliminary Proxy Statement relating to the Company Shareholders' Meeting and a
form of proxy for use in connection with the Company Shareholders' Meeting; (ii)
the Company shall cause the preliminary Proxy Statement to be filed with the
SEC at the earliest practicable date following the consummation of the Offer;
(iii) Parent and the Company shall cooperate with each other in the preparation
of the Proxy Statement, and the Company shall notify Parent of the receipt of
any comments of the SEC with respect to the preliminary Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent promptly copies of all
correspondence between the Company or any representative of the Company and the
SEC; (iv) as promptly as practicable after comments are received from the SEC
with respect to the preliminary Proxy Statement, the Company shall use its
commercially reasonable efforts to respond to the comments of the SEC and, to
the extent comments of the SEC relate to Parent or Purchaser, Parent and
Purchaser shall use their commercially reasonable efforts to respond to the
comments of the SEC; and (v) the Company shall give Parent and its counsel the
opportunity to review all amendments and supplements to the Proxy Statement and
all responses to requests for additional information and replies to comments of
the SEC prior to their being filed with or sent to the SEC, and Parent and
Purchaser shall provide the Company, on a timely basis with such information
about them as may be required to be included in the Proxy Statement or as may be
reasonably required to respond to any comment of the SEC.
Section 8.4. Company Shareholders' Meeting.
(a) To the extent solicitation of shareholder approval of the Merger and
this Agreement is required by applicable law, after all the comments received
from the SEC have been cleared by the SEC staff and all information required to
be contained in the Proxy Statement has been included therein by the Company:
(i) the Company shall file with the SEC the definitive Proxy Statement and the
Company shall use its commercially reasonable efforts to have the Proxy
Statement cleared by the SEC as soon thereafter as practicable; and (ii) the
Company shall cause the Proxy Statement to be mailed to record holders of
Company Common Stock as promptly as practicable after clearance by the SEC.
(b) Parent and Purchaser agree to cause all shares of Company Common Stock
purchased pursuant to the Offer and all other shares of Company Common Stock
beneficially owned by Parent, Purchaser or any affiliate of Parent, or with
respect to which Parent, Purchaser or any affiliate of Parent otherwise may
exercise voting control, to be voted in favor of the approval and adoption of
the Merger and this Agreement.
Section 8.5. Confidential Information. Except as otherwise contemplated
by this Agreement, the Company and Parent acknowledge that the Confidentiality
Agreement shall remain in full force and effect at all times prior to the
Effective Time and after any termination of this Agreement except as provided in
such Confidentiality Agreement, and reaffirm their agreement to comply with the
terms thereof.
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Section 8.6. Communications. Parent and the Company will consult with
each other before issuing, and will provide each other the opportunity to
review, comment upon and concur with, any press release, Form 8-K or other
public statement with respect to the transactions contemplated by this
Agreement, and will not issue any such press release, file any Form 8-K with the
SEC or make any such public statement prior to such consultation, except as may
be required by applicable law, court process or pursuant to applicable exchange
requirements. The parties agree that the initial press release to be issued
with respect to the transactions contemplated by this Agreement will be in the
form heretofore agreed to by the parties.
Section 8.7. Obligations of Purchaser. Parent will take all action
necessary to cause Purchaser to perform its obligations under this Agreement and
to consummate the Merger on the terms and conditions set forth in this
Agreement. Purchaser will not issue any shares of its capital stock, any
securities convertible into or exchangeable for its capital stock, or any
option, warrant or other right to acquire its capital stock to any person or
entity other than Parent.
Section 8.8. Expenses. All fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby (except,
if applicable, for the Fees and Expenses, reimbursement contemplated by Section
10.4) shall be paid by the party incurring such expenses.
Section 8.9. Indemnification and Insurance. After the Effective Time, the
Surviving Corporation and the Parent shall indemnify and hold harmless each
present and former director and officer of the Company and the Company
Subsidiaries (the "Indemnified Parties") as provided in their respective
charters and bylaws and as otherwise provided or permitted pursuant to any
agreement or arrangement in effect at the date hereof (to the extent consistent
with applicable law), and with respect to indemnification for acts and omissions
occurring at or prior to the Effective Time, which rights to be indemnified and
held harmless shall survive the Merger and shall continue in full force and
effect for a period of six years from the Effective Time; provided, that, in the
event any claim or claims (a "Claim or Claims") are asserted or made within such
six-year period, all rights to indemnification in respect of any such Claim or
Claims shall continue until disposition of any and all such Claim or Claims.
The Surviving Corporation and Parent shall maintain or cause to be maintained in
effect for not less than six years from the Effective Time the current policies
of the directors' and officers' liability insurance maintained by the Company
(provided that the Surviving Corporation and the Parent may substitute therefor
policies of at least the same coverage containing terms and conditions that are
not less advantageous so long as no lapse in coverage occurs as a result of such
substitution) with respect to all matters, including the transactions
contemplated hereby, occurring prior to, and including, the Effective Time;
provided that, in the event that any Claim or Claims are asserted or made within
such six-year period, such insurance shall be continued in respect of any such
Claim or Claims until final disposition of any and all such Claim or Claims.
The provisions of this Section are for the benefit of, and may be enforced by,
each Indemnified Party, his or her heirs and his or her representatives.
Section 8.10. Retention and Severance Arrangements. From and after the
Effective Time, the Surviving Corporation will honor all existing written
retention and severance arrangements adopted by the Company or any of the
Company Subsidiaries for the benefit of any current or former officer, director
or employee of the Company or any of the Company
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Subsidiaries. The provisions of this Section are for the benefit of, and may be
enforced by, each person covered by such arrangements, his or her heirs and his
or her representatives.
ARTICLE IX.
CONDITIONS OF THE MERGER
Section 9.1. Conditions to Obligations of Each Party. The respective
obligations of the Company, on the one hand, and Parent and Purchaser, on the
other hand, to consummate the Merger are subject to the satisfaction or waiver,
at or prior to the Effective Time, of each of the following conditions:
(a) The Company's shareholders shall have duly approved this Agreement and
the transactions contemplated hereby if and to the extent required by the TBCA
and other applicable law.
(b) No statute, rule, regulation, executive order, decree, injunction or
restraining order shall have been enacted, promulgated or enforced (and not
repealed, superseded or otherwise made inapplicable) by any court or
Governmental Entity, which prohibits the consummation of the transactions
contemplated by this Agreement (each party agreeing to use all commercially
reasonable best efforts to have any such order, decree or injunction lifted).
ARTICLE X.
TERMINATION OF AGREEMENT
Section 10.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time whether before or after the approval by the
shareholders of the Company:
(a) by mutual consent of the Boards of Directors of Parent and the
Company;
(b) by Parent or the Company, on or after the date when any of the
following shall have occurred ("Termination Date"): (i) the consummation of the
Offer shall not have occurred on or before January 31, 2000 (or March 31, 2000
if the only condition remaining unfulfilled at January 31, 2000 is approval by
any required Governmental Entity, and Parent and the Company are continuing to
seek to obtain such approval); (ii) any Governmental Entity, the consent of
which is a condition to the obligations of Parent and the Company to consummate
the Offer or the Merger, shall have determined not to grant its consent, and all
appeals of such determination shall have been taken and have been unsuccessful;
or (iii) any court of competent jurisdiction shall have issued an order,
judgment or decree (other than a temporary restraining order) restraining,
enjoining or otherwise prohibiting the Offer or the Merger and such order,
judgment or decree shall have become final and nonappealable; provided however,
that the right to terminate this Agreement pursuant to this Section 10.1(a)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
consummation of the Offer to occur on or before such date;
(c) by the Company, if Parent or Purchaser shall have failed to commence
the Offer as provided in Section 1.1 hereof;
(d) by Parent, if (i) there has been a breach by the Company of any
representation or warranty set forth in this Agreement (without giving effect to
any materiality or Material
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Adverse Effect limitations contained in such representations or warranties),
which has not been cured within ten business days following receipt by the
Company of written notice of such breach and which breach, individually or in
the aggregate together with all other breaches not so cured, would result in a
Material Adverse Effect; (ii) there has been a material breach by the Company of
any covenant or agreement set forth in this Agreement, which breach has not been
cured within ten business days following receipt by the Company of written
notice of such breach; (iii) the Offer is terminated or expires in accordance
with its terms as a result of the failure of any of the conditions to the Offer
without Purchaser having purchased any shares of Company Common Stock pursuant
to the Offer; provided, however, that the right to terminate pursuant to this
clause (iii) is not available if Parent's or Purchaser's failure to perform any
of its covenants or agreements under this Agreement results in the failure of
such condition; or (iv) the Company Board, whether or not permitted by this
Agreement, shall have withdrawn or modified in a manner adverse to Parent its
approval or recommendation of the transactions contemplated by this Agreement or
recommended an Acquisition Proposal; provided, however, that the right to
terminate this Agreement pursuant to this Section 10.1(d)(i) or (ii) shall not
be available to Parent if it, at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this Agreement; or
(e) by the Company, if (i) there has been a breach by Parent of any
representation or warranty set forth in this Agreement (without giving effect to
any materiality or Material Adverse Effect limitations contained in such
representations or warranties), which has not been cured within ten (10)
business days following receipt by Parent of written notice of such breach and
which breach, individually or in the aggregate together with all other breaches
not so cured, would result in a Material Adverse Effect; (ii) there shall have
been a material breach of any covenant, agreement or obligation of Parent or
Purchaser as provided in Section 1.1 hereof; (iii) there has been a material
breach by Parent of any other covenant or agreement set forth in this Agreement,
which breach is not cured within ten business days following receipt by Parent
of written notice of such breach; or (iv) prior to the consummation of the
Offer, (A) the Company Board shall have determined in good faith that it is in
the best interest of the Company's shareholders for the Company to terminate
this Agreement and to enter into an agreement with a third party with respect to
or to consummate a Superior Proposal, (B) the Company Board shall have
authorized the Company, subject to complying with the terms of this Agreement,
to enter into a binding written agreement with a third party concerning a
Superior Proposal and the Company notifies Parent in writing (the "Termination
Notice", which may, if applicable also be a Notice pursuant to Section 8.2(a))
that it intends to enter into such an agreement (it being understood that the
Company shall be required to deliver a new Termination Notice in respect of any
revised Superior Proposal from such third party or its affiliates that the
Company proposes to accept), attaching the most current version (or draft) of
such agreement to such Termination Notice (which version (or draft) shall be
updated on a reasonably current basis), (C) during the five (5) business day
(or, in the case of any Termination Notice with respect to a particular third
party other than the initial Termination Notice with respect to such third
party's Acquisition Proposal, two (2) business day) period after delivery of the
Termination Notice, the Company in addition to any negotiations with the third
party, shall have used its best efforts to negotiate with, and shall have caused
its respective financial and legal advisors to use their best efforts to
negotiate with, Parent to attempt to make such adjustments in the terms and
conditions of this Agreement, the Offer and the Merger in the terms and
conditions of the Superior Proposal, as would enable the Company Board to
determine in good faith that there is no longer a Superior Proposal as compared
to the terms and conditions of this Agreement, the Offer and the Merger
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after considering the results of such negotiations; and (D) the Company Board
shall have concluded, after considering the results of such negotiations, that
any Superior Proposal giving rise to the Company's Termination Notice continues
to be a Superior Proposal; provided, however, that the right to terminate this
Agreement pursuant to this Section 10.1(e)(i), (ii) or (iii) shall not be
available to the Company if it, at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this Agreement; and
provided, further, however, that the Company may not effect any termination
pursuant to Section 10.1(e)(iv) unless (x) prior thereto or concurrently
therewith the Company pays to Parent in immediately available funds the Fee
required to be paid pursuant to Section 10.4(a) and (y) such termination is
within two (2) business days after the termination of the five (5) (or, if
applicable, two (2)) business day period referred to in clause (C) above.
Section 10.2. [Reserved]
Section 10.3. Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company as provided in Section 10.1 hereof,
this Agreement shall forthwith become void (except as set forth in the last
sentence of Section 6.2 (confidentiality) and in Sections 8.5 (confidentiality),
8.6 (communication), 8.8 (expenses), 10.4 (termination fee, if applicable) and
Article XI, and there shall be no liability on the part of Parent, Purchaser or
the Company or their respective officers or directors, except for any breach of
a party's covenants or obligations under such provisions. Notwithstanding the
foregoing, no party hereto shall be relieved from liability for any willful or
intentional breach of this Agreement.
Section 10.4. Termination Fee.
(a) Notwithstanding any other provision of this Agreement, in the event
that this Agreement is terminated by the Company pursuant to Section 10.1(e)(iv)
or by Parent pursuant to Section 10.1(d)(iv), then the Company shall pay Parent
in same-day funds a termination fee of $7.5 million (the "Fee"), on the date of
such termination.
(b) Notwithstanding any other provision of this Agreement, in the event
that this Agreement is terminated by Parent pursuant to Section 10.1(d)(i), then
the Company shall reimburse Parent's and Purchaser's fees and out-of-pocket
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby ("Expenses"), not to exceed $1.5 million in the
aggregate, promptly upon receipt of requests for such reimbursement accompanied
by invoices or other reasonable evidence of payment of such fees and out-of-
pocket costs and expenses by Parent or Purchaser ("Expense Evidence"), and if
within twelve (12) months after such termination a Company Acquisition (as
hereinafter defined) occurs or the Company enters into an agreement to effect or
publicly announces a plan or proposal to effect a Company Acquisition and at any
time thereafter such Company Acquisition occurs, then the Company shall
immediately pay Parent the Fee less the actual amount of Expenses previously
paid pursuant to this Section 10.4(b). A "Company Acquisition" means the
occurrence of any of the following events: (i) the acquisition by a third party
of fifty percent (50%) or more of the assets of the Company and its
Subsidiaries, taken as a whole; (ii) the acquisition by a third party of fifty
percent (50%) or more of the outstanding shares of Company Common Stock or any
securities convertible into or exchangeable for shares of Company Common Stock
that would constitute fifty percent (50%) or more of the outstanding shares of
Company Common Stock upon such conversion or exchange, or any combination of the
foregoing; (iii) the acquisition by
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the Company of the assets or stock of a third party if, as a result of which,
the outstanding shares of Company Common Stock immediately prior thereto are
increased by one hundred percent (100%) or more, or (iv) the merger,
consolidation or business combination of the Company with or into a third party,
where, following such merger, consolidation or business combination, the
shareholders of the Company immediately prior to such transaction do not hold,
immediately after such transaction, securities of the surviving entity
constituting more than fifty percent (50%) of the total voting power of the
surviving entity.
(c) Notwithstanding any other provisions of this Agreement, in the event
that this Agreement is terminated by Parent pursuant to Section 10.1(d)(iii) due
to the condition set forth in paragraph 2(i) of Annex A not having been
satisfied after an Acquisition Proposal shall have been commenced or publicly
announced and either (i) that third party's Acquisition Proposal results in that
party consummating a Company Acquisition, or (ii) within twelve (12) months
after such termination, the Company enters into an agreement to effect or
publicly announces a plan or proposal to effect a Company Acquisition that has a
value per share of Company Common Stock at the time of the agreement or
announcement that is greater than the Offer Consideration, then the Company
shall immediately pay Parent the Fee.
(d) For avoidance of doubt, under no circumstances will the Fee or
Expenses be payable by the Company more than once (if at all). Any Fee and
Expenses paid hereunder will reduce any amounts otherwise payable by the Company
to Parent or Purchaser hereunder, including by reason of any breach of this
Agreement or any representation, warranty, covenant or agreement herein or
hereunder.
ARTICLE XI.
MISCELLANEOUS
Section 11.1. Further Assurances. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement. The covenants and agreements contained in this
Agreement shall survive the Effective Time and, if the Agreement is terminated,
the provisions of Section 10.3 shall apply.
Section 11.2. Survival. None of the representations and warranties in
this Agreement shall survive the termination of this Agreement or the Effective
Time; provided, however, the termination of this Agreement shall not relieve any
party hereto from any liability for any willful or intentional breach of this
Agreement.
Section 11.3. Notices. Whenever any party hereto desires or is required
to give any notice, demand, or request with respect to this Agreement, each such
communication shall be in writing and shall be effective only if it is delivered
by personal service or mailed, United States registered or certified mail,
postage prepaid, or sent by prepaid overnight courier or confirmed telecopier,
addressed as follows:
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(a) if to Parent or Purchaser, to:
Hagemeyer P.P.S. North America, Inc.
100 Galleria Parkway, Suite 1120
Atlanta, Georgia 30339
Attention: Mr. David G. Gundling
Telecopy: 770-541-6645
with a copy (which shall not constitute notice) to:
Hagemeyer N.V.
Rijksweg 69
P.O. Box 5111
1410 AC Naarden
The Netherlands
Attention: Ivo Manders, Esq.
Telecopy: 31-35-695-7687
and
Altman, Kritzer & Levick, P.C.
6400 Powers Ferry Road, N.W., Suite 224
Atlanta, Georgia 30339
Attention Allen D. Altman, Esq.
Telecopy: 770-303-1130
and
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, Suite 1600
Atlanta, Georgia 30303
Attention: Gabriel Dumitrescu, Esq.
Telecopy: 404-572-6999
(b) if to the Company, to:
Vallen Corporation
13333 Northwest Freeway
Houston, Texas 77040
Attention: Chief Executive Officer
Telecopy: 713-462-7634
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with a copy (which shall not constitute notice) to:
Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002-2778
Attention: John B. Clutterbuck
Telecopy: 713-225-7047
Such communications shall be effective when they are received by the addressee
thereof. Any party may change its address for such communications by giving
notice thereof to the other parties in conformity with this Section 11.3.
SECTION 11.4. GOVERNING LAWS AND CONSENT TO JURISDICTION. THE LAWS OF THE
STATE OF TEXAS (IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES) SHALL GOVERN ALL
ISSUES CONCERNING THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION OF ITS TERMS,
AND THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES.
EACH OF THE PARTIES HEREOF IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE COURTS OF THE STATE OF TEXAS AND THE FEDERAL COURTS OF THE UNITED STATES OF
AMERICA LOCATED IN HOUSTON, TEXAS (AND THE TEXAS STATE AND FEDERAL COURTS HAVING
JURISDICTION OVER APPEALS THEREFROM) IN RESPECT OF THIS AGREEMENT, THE OTHER
AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN AND THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT AND SUCH OTHER DOCUMENTS AND AGREEMENTS.
Section 11.5. Binding Upon Successors and Assigns; Assignment. This
Agreement and the provisions hereof shall be binding upon each of the parties,
their permitted successors and assigns. This Agreement may not be assigned by
any party without the prior consent of each other.
Section 11.6. Severability. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall continue in full force and effect and in
no way be affected, impaired or invalidated.
Section 11.7. Entire Agreement; Third Party Beneficiaries. This
Agreement, including the Company Disclosure Schedule, the Parent Disclosure
Schedule and Annex A hereto, together with the Confidentiality Agreement and the
other agreements and instruments referenced herein, (a) constitutes the entire
understanding, and agreement of the parties with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto and (b) is not intended to confer upon
any person other than the parties any rights or remedies hereunder other than in
Sections 8.9 and 8.10, which are intended to be for the benefit of the persons
covered thereby and may be enforced by such persons.
Section 11.8. Other Remedies. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party shall be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.
Section 11.9. Amendment and Waivers. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally
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or in a particular instance and either retroactively or prospectively) only by a
writing signed by the party to be bound thereby. The waiver by a party of any
breach hereof or default in the performance hereof shall not be deemed to
constitute a waiver of any other default or any succeeding breach or default,
unless such waiver so expressly states. At any time before or after approval of
this Agreement and the Merger by the shareholders of the Company and prior to
the Effective Time, this Agreement may be amended or supplemented by the parties
hereto with respect to any of the terms contained in this Agreement, except that
following approval by the shareholders of the Company there shall be no
amendment or change to the provisions hereof with respect to the Merger
Consideration without further approval by the shareholders of the Company, and
no other amendment shall be made which by law requires further approval by such
shareholders without such further approval.
Section 11.10. Disclosure Schedules. Each of the Parent Disclosure
Schedule and the Company Disclosure Schedule is an integral part of this
Agreement and all statements disclosed on any part of any such schedule shall be
deemed to be disclosed in all parts of such schedule and not only in connection
with the specific representation with respect to which such statements are
explicitly referenced.
Section 11.11. No Waiver. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
Section 11.12. Construction of Agreement. A reference to an Article,
Section or Annex shall mean an Article of, Section in, or Annex to, this
Agreement unless otherwise explicitly set forth. The titles and headings herein
are for reference purposes only and shall not in any manner limit the
construction of this Agreement which shall be considered as a whole. The words
"include," "includes" or similar phrases when used herein shall be deemed in
each case to be followed by the words "without limitation." The term
"consummation of the Offer" or similar phrase when used herein means the first
purchase of Company Common Stock pursuant to the Offer.
Section 11.13. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all the parties reflected hereon as signatories.
(signature page follows)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
HAGEMEYER P.P.S. NORTH AMERICA, INC.
By:
------------------------------------------
David G. Gundling
President and Chief Executive Officer
SHIELD ACQUISITION CORP.
By:
-----------------------------------------
David G. Gundling
President and Chief Executive Officer
VALLEN CORPORATION
By:
-----------------------------------------
Leonard J. Bruce
Chairman of the Board
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ANNEX A
CONDITIONS OF THE OFFER
1. Defined Terms. Unless otherwise defined in this Annex A, capitalized
terms that appear in this Annex A have the meanings provided in the Agreement
and Plan of Merger of which this Annex A is an integral part.
2. Offer Conditions. Notwithstanding any other provision of the Offer,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-l(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
shares of Company Common Stock promptly after expiration or termination of the
Offer), to pay for any shares of Company Common Stock tendered, and may postpone
the acceptance for payment or, subject to the restriction referred to above,
payment for any shares of Company Common Stock tendered, and (subject to Section
1.1(b) of the Agreement, as defined below) may amend or terminate the Offer
(whether or not any shares of Company Common Stock have theretofore been
purchased or paid for) if:
(i) there have not been validly tendered and not withdrawn prior to the
time the Offer shall otherwise expire a number of shares of Company Common Stock
which, together with any shares of Company Common Stock beneficially owned by
Parent and its affiliates, constitutes at least two thirds of the shares of
Company Common Stock outstanding on a fully diluted basis; or
(ii) any applicable waiting periods under the HSR Act (or similar
provisions of the laws of Canada or Mexico) applicable to the transactions
contemplated by the Agreement shall not have expired or been terminated prior to
the expiration of the Offer; or
(iii) at any time on or after the date of the Agreement and before
acceptance for payment of such shares of Company Common Stock any of the
following events shall occur and be continuing:
(A) any U.S. or foreign governmental entity or any foreign, Federal,
state or local court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order (other than the application to the
Offer and the Merger of applicable waiting periods under the HSR Act (or
similar provisions of the laws of Canada or Mexico) which is in effect and
which (1) prevents or prohibits consummation of the Offer or the Merger,
(2) prohibits or limits the ownership or operation by the Company, Parent
or any of their affiliates or Subsidiaries of all or any material portion
of the business or assets of the Company or any of its Subsidiaries, (3)
imposes material limitations on the ability of Parent, Purchaser or any
other Subsidiary of Parent to hold or to exercise effectively full rights
of ownership of the shares of Company Common Stock, including, without
limitation, the right to vote the shares of Company Common Stock, acquired
by Purchaser pursuant to the Offer or otherwise on all matters properly
presented to the Company's shareholders, including, without limitation, the
approval and adoption of the Agreement and the transactions contemplated
thereby, (4) requires divestiture by Parent, Purchaser or any other
affiliate of Parent of the shares of Company Common Stock, or (5) requires
Parent, the Company or any of their respective affiliates to enter into a
divestiture, hold-separate, business limitation or similar agreement or
undertaking, except
A-1
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in the case of clauses (2), (3), (4) and (5) for any prohibition,
limitation or requirement which would not, individually or in the aggregate
materially and adversely affect the economic or business benefits to Parent
and its affiliates of the transactions contemplated by the Agreement or the
ability of Parent or the Surviving Corporation to conduct its business
substantially in the manner such business is being conducted as of the date
of the Agreement; or
(B) the representations and warranties of the Company contained in the
Agreement (without giving effect to any materiality or Material Adverse
Effect limitations contained therein) shall fail to be true and correct
when made and as of the date of the consummation of the Offer as though
made on and as of such date (except for representations and warranties made
as of a specified date, which shall be true and correct as of such date)
and the failure of such representations and warranties to be so true and
correct, individually or in the aggregate, has or would result in a
Material Adverse Effect on the Company; or
(C) the Company shall not have performed or complied in all material
respects with its obligations, agreements or covenants under the Agreement
to be performed or complied with by it; or
(D) the Agreement shall have been terminated in accordance with its
terms; or
(E) except as to matters disclosed in the Company SEC Reports filed
prior to the date of the Agreement, there shall have occurred a material
adverse change in the financial condition or results of operations of the
Company and its Subsidiaries taken as a whole; or
(F) there shall have occurred (1) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or the over-the counter market in the United States (other than
shortening of trading hours or any coordinated trading halt triggered
solely as a result of a specified increase or decrease in a market index)
for a continuous period of five (5) days, (2) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (3) any material limitation (whether or not mandatory) by any U.S.
or foreign governmental entity on the extension of credit by banks or other
lending institutions in the United States, (4) a commencement of a war or
armed hostilities or other national calamity directly involving the United
States, Canada or Mexico and Parent shall have determined that there is a
reasonable likelihood that such event would have a material adverse
significance to Parent and its Subsidiaries, or the Company and its
Subsidiaries, all taken as a whole, or (5) in the case of any of the
foregoing existing at the time of the execution of the Agreement, a
material acceleration or worsening thereof;
and, in the reasonable judgment of Purchaser in any such case, and regardless of
the circumstances (including any action or inaction by Parent or Purchaser other
than any action or inaction by Parent or Purchaser constituting a breach of the
Agreement) giving rise to any condition, such condition makes it inadvisable to
proceed with such acceptances for payment or such payments.
A-2
<PAGE>
COMPANY DISCLOSURE SCHEDULE
C-1
<PAGE>
PARENT DISCLOSURE SCHEDULE
--------------------------
P-1
<PAGE>
EXHIBIT (C)(2)
[SALOMON SMITH BARNEY LETTERHEAD]
September 9, 1999
Hagemeyer Holdings, Inc.
100 Galleria Parkway, Suite 1120
Atlanta, GA 30339
Attention: David Gundling
President & CEO
Ladies and Gentlemen:
In connection with your consideration of a possible acquisition by you of
all or part of, or investment in, Vallen Corporation (the "Company") by way of
merger, a sale of assets or stock, or otherwise (a "Transaction"), you have
requested information concerning the Company, Salomon Smith Barney Inc.
("Salomon Smith Barney") and William Blair and Company L.L.C. ("William Blair")
are acting as advisors to the Company.
As a condition to and consideration for your being furnished with such
information, including any Confidential Information Memorandum prepared by the
Company, you agree to treat any information, whether oral or written, concerning
the Company, its affiliates and subsidiaries that is furnished to you by or on
behalf of the Company, whether furnished before or after the date of this
letter, together with analyses, compilations, studies or other documents
prepared by you or any of your directors, officers, employees, agents or
advisors (including, without limitation, attorneys, accountants, consultants,
bankers, financial advisors and any representatives of your advisors)
(collectively, "Representatives") that contain or otherwise reflect such
information (hereinafter collectively referred to as the "Evaluation Material"),
in accordance with the provisions of this agreement. The term "Evaluation
Material" does not include information that (a) was or becomes generally
available to the public other than as a result of a disclosure by you or your
Representatives or (b) was or becomes available to you on a non-confidential
basis from a source other than the Company or its advisors, provided that such
source was not known by you after due inquiry to be bound by any agreement with
the Company to keep such information confidential, or otherwise prohibited from
transmitting the information to you by a contractual, legal or fiduciary
obligation.
You hereby agree that the Evaluation Material will be used solely for the
purpose of evaluating a possible Transaction between the Company and you and not
for any other purposes (including, without limitation, to solicit any customers,
clients or
<PAGE>
Hagemeyer Holdings, Inc.
September 9, 1999
Page 2
accounts), and that such information will be kept confidential by you and your
Representatives, except to the extent that disclosure of such information (a)
has been consented to in writing by the Company, (b) subject to the procedures
agreed to below, is required by law, regulation, supervisory authority or other
applicable judicial or governmental order or (c) is made to your Representatives
who need to know such information for the purpose of evaluating any such
possible Transaction between the Company and you (it being understood that such
Representatives shall have been advised of this agreement and shall have agreed
to be bound by the provisions hereof). In any event, you shall be responsible
for any breach of this agreement by any of your Representatives and you agree,
at your sole expense, to take all reasonable measures (including but not limited
to court proceedings) to restrain your Representatives from prohibited or
unauthorized disclosure or use of the Evaluation Material. You further agree
that the Evaluation Material that is in written form shall not be copied or
reproduced at any time without the prior written consent of the Company.
In addition, without the prior written consent of the Company, you will
not, and will direct your Representatives not to, disclose to any person (a)
that the Evaluation Material has been made available to you or your
Representatives, (b) that discussions or negotiations are taking place
concerning a possible Transaction between the Company and you or (c) any terms,
conditions or other facts with respect to any such possible Transaction,
including the status thereof.
In the event that you are requested or required by law, regulation,
supervisory authority or other applicable judicial or governmental order to
disclose any Evaluation Material, you will provide the Company with prompt
written notice of such request or requirement and cooperate with the Company so
that the Company may seek an appropriate protective order. If, failing the entry
of a protective order, you are, in the opinion of your counsel, compelled to
disclose Evaluation Material, you may disclose that portion of the Evaluation
Material that your counsel advises that you are compelled to disclose and will
exercise reasonable efforts to obtain assurance that confidential treatment will
be accorded to that portion of the Evaluation Material that is being disclosed.
In any event, you will not oppose action by the Company to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the Evaluation Material.
Until the earliest of (a) the execution by you of a definitive agreement
regarding a Transaction with the Company, (b) an acquisition of the Company by a
third party, or (c) one year from the date of this agreement, you agree not to
initiate or maintain contact (except for those contacts made in the ordinary
course of business) with any officer, director or employee of the Company
regarding the Company's business, operation, prospects or finances, except with
the express permission of the Company. It is understood that Salomon Smith
Barney will arrange for appropriate contacts for due diligence purposes. All (i)
communications regarding this transaction, (ii) requests for additional
information, (iii) requests for facility tours or management meetings, and (iv)
discussions or questions regarding procedures, will be submitted or directed to
Salomon Smith Barney.
<PAGE>
Hagemayer Holdings, Inc.
September 9, 1999
Page 3
You agree not to directly or indirectly solicit for employment any of
the current employees of the Company so long as they are employed by the
Company, during the period in which there are discussions conducted pursuant
hereto and for a period of one year thereafter, without the prior written
consent of the Company.
In consideration of the Evaluation Material being furnished to you, you
hereby further agree that, without the prior written consent of the Board of
Directors of the Company, for a period of one year from the date hereof, neither
you nor any of your affiliates (as such term is defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended), acting alone or as part of a
group, will (1) acquire or offer or agree to acquire, directly or indirectly, by
purchase or otherwise, any voting securities or securities convertible into
voting securities of the Company or any of its subsidiaries or affiliates, (2)
propose to enter into, directly or indirectly, any merger or business
combination involving the Company or any of its subsidiaries or affiliates, (3)
otherwise seek to influence or control, in any manner whatsoever (including
proxy solicitation or otherwise), the management or policies of the Company or
(4) assist, advise or encourage (including by knowingly providing or arranging
financing for that purpose) any other person in doing any of the foregoing.
You hereby acknowledge that you are aware and that you will advise your
Representatives that the federal and state securities laws prohibit any person
who has material, non-public information about a company from purchasing or
selling securities of such a company or from communicating such information to
any other person under circumstances in which it is reasonably foreseeable that
such person is likely to purchase or sell such securities.
All Evaluation Material disclosed by the Company shall be and shall
remain the property of the Company. If you determine not to proceed with a
possible Transaction, you will promptly inform Salomon Smith Barney of that
decision and you shall promptly return or destroy all Evaluation Material
furnished to you. In addition, within five days after being so requested by the
Company, you shall return or destroy all Evaluation Material furnished to you.
Except to the extent a party is advised in writing by counsel such destruction
is prohibited by law, you will also destroy all written material, memoranda,
notes, copies, excerpts and other writings or recordings whatsoever prepared by
you or your Representatives based upon, containing or otherwise reflecting any
Evaluation Material. Any destruction of materials shall be confirmed to the
Company by you in writing. Any Evaluation Material that is not returned or
destroyed, including without limitation any oral Evaluation Material, shall
remain subject to the confidentiality obligations set forth in this agreement.
You understand and acknowledge that any and all information contained
in the Evaluation Material is being provided without any representation or
warranty, express or implied, as to the accuracy or completeness of the
Evaluation Material, on the part of the Company, Salomon Smith Barney or William
Blair. You agree that none of the Company, Salomon Smith Barney, William Blair
or any of their respective affiliates or representatives shall have any
liability to you or any of your Representatives with respect to Evaluation
Material. It is understood that the scope of any representations and
<PAGE>
Hagemeyer Holdings, Inc.
September 9, 1999
Page 4
warranties to be given by the Company will be negotiated along with other terms
and conditions in arriving at a mutually acceptable form of definitive agreement
should discussions between you and the Company progress to such a point.
You agree that unless and until a definitive written agreement regarding a
Transaction between the Company and you has been approved by the Company's Board
of Directors, executed and delivered, neither the Company nor you will be under
any legal obligation of any kind whatsoever with respect to such a Transaction
except for the matters specifically agreed to herein. You further acknowledge
and agree that the Company reserves the right in its sole discretion, to reject
any and all proposals made by you or any of your Representatives with regard to
a Transaction between the Company and you, and to terminate discussions and
negotiations with you at any time.
You understand that (a) the Company shall be free to conduct any process
with respect to a possible Transaction as the Company in its sole discretion
shall determine (including, without limitation, by negotiating with any
prospective party and entering into a definitive written agreement without prior
notice to you or any other person), (b) any procedures relating to such
Transaction may be changed at any time without notice to you or any other
person and (c) you shall not have any claim whatsoever against the Company,
Salomon Smith Barney, William Blair, or any of their respective directors,
officers, stockholders, owners, affiliates, agents or representatives, arising
out of or relating to any possible or actual Transaction (other than those as
against parties to a definitive written agreement with you in accordance with
the terms thereof).
It is understood and agreed that the Company would be irreparably and
immediately harmed and that money damages would not be a sufficient remedy in
the event of any breach of this agreement and that the Company shall be
entitled to specific performance and injunctive or other equitable relief as a
remedy for any such breach and you further agree to waive any requirement for
the security or posting of any bond in connection with such remedy. Such remedy
shall not be deemed to be the exclusive remedy for breach of this agreement but
shall be in addition to all other remedies available at law or equity to the
Company.
In the event of litigation relating to this agreement if a court of
competent jurisdiction determines in a final, non-appealable order that a party
has breached this agreement, then such party shall be liable and pay to the non-
breaching party the reasonable legal fees and expenses such non-breaching party
has incurred in connection with such litigation, including any appeal therefrom.
This agreement is for the benefit of the Company, Salomon Smith Barney and
William Blair and is governed by the laws of the State of Texas without regard
to conflict of laws principles. An action brought in connection with this
agreement shall be brought in the federal or state courts located in the City of
Houston, Texas, and the parties hereto hereby irrevocably consent to the
jurisdiction of such courts. Your obligations under this agreement shall
terminate one (1) year after the date hereof, except as otherwise explicitly
stated above.
<PAGE>
Hagemeyer Holdings, Inc.
September 9, 1999
Page 5
This agreement may not be amended except in writing signed by both parties
hereto. No failure or delay by the Company in exercising any right hereunder or
any partial exercise thereof shall operate as a waiver thereof or preclude any
other or further exercise of any right hereunder. The invalidity or
unenforceability of any provision of this agreement shall not affect the
validity or enforceability of any other provisions of this agreement, which
shall remain in full force and effect.
This agreement may be executed in counterparts. Please confirm that the
foregoing is in accordance with your understanding of our agreement by signing
and returning to us a copy of this letter.
Very truly yours,
SALOMON SMITH BARNEY INC.
on behalf of
VALLEN CORPORATION
BY: [SIGNATURE APPEARS HERE]
----------------------------------
Accepted and agreed to as of
the date set forth above:
HAGEMEYER HOLDINGS, INC.
By: [SIGNATURE APPEARS HERE]
--------------------------
<PAGE>
EXHIBIT (C)(3)
GUARANTEE
As an inducement to Vallen Corporation, a Texas corporation (the
"Company"), to enter into, and consummate the transactions contemplated by, the
Agreement and Plan of Merger, dated as of November 14, 1999 (the "Merger
Agreement"), by and among the Company, HAGEMEYER P.P.S. NORTH AMERICA, INC., a
Texas corporation ("Parent"), and SHIELD ACQUISITION CORP., a Texas corporation
("Purchaser"), HAGEMEYER N.V., a corporation organized under the laws of the
Netherlands ("Hagemeyer"), hereby unconditionally, absolutely and irrevocably
guarantees to the Company and any third party beneficiaries under the Merger
Agreement (to the extent of their third party beneficiary rights thereunder) the
full and punctual payment and performance of all covenants, agreements,
obligations and liabilities of Parent, Purchaser and the Surviving Corporation
(as defined in the Merger Agreement) contained in the Merger Agreement or in
connection with the Offer, the Merger (as both are defined in the Merger
Agreement) and the other transactions contemplated by the Merger Agreement.
This is a guarantee of payment and performance and not collectibility.
Hagemeyer is the primary obligor under this Guarantee. Hagemeyer hereby waives
diligence, presentment, demand of performance, filing of any claim, any right to
require any proceeding for and against Parent, Purchaser or the Surviving
Corporation, protest, notice and all demands whatsoever in connection with the
performance of its obligations herein.
Hagemeyer hereby represents and warrants that:
(a) Hagemeyer is a corporation duly incorporated, validly existing and in
good standing under the laws of the Netherlands and has all corporate power and
authority to carry on its business as now being conducted and is duly qualified
to do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect (as defined in the Merger Agreement) on
Hagemeyer or a material adverse effect on the ability of Hagemeyer to perform
its obligations hereunder or consummate the transactions contemplated hereby.
(b) Hagemeyer has the requisite corporate power and authority to enter into
this Guarantee. The execution and delivery of this Guarantee by Hagemeyer has
been duly authorized by the Supervisory Board of Hagemeyer, and no other
corporate proceedings on the part of Hagemeyer is necessary to authorize this
Guarantee or the performance by Hagemeyer of its obligations hereunder.
(c) This Guarantee has been duly executed and delivered by Hagemeyer and
constitutes a valid and binding obligation of Hagemeyer, enforceable against
Hagemeyer in accordance with its terms.
(d) The execution and delivery of the Guarantee by Hagemeyer do not and the
performance of its obligations hereunder and compliance with the provisions
hereof will not (x) violate any of the provisions of the certificate or articles
of incorporation or by-laws (or similar
<PAGE>
documents) of Hagemeyer or any of its subsidiaries (as defined in the Merger
Agreement), in each case as amended to the date of this Guarantee, (y) subject
to the governmental filings and other matters referred to in Section 5.4 of the
Merger Agreement, violate, result in a breach of or default (with or without
notice or lapse of time, or both) under, or give rise to a material obligation,
a right of termination, cancellation or acceleration of any obligation or loss
of a material benefit under, or require the consent of any person under, any
indenture, or other agreement, permit, concession, franchise, license or other
instrument or undertaking to which Hagemeyer or any of its subsidiaries is a
party or by which Hagemeyer or any of its subsidiaries or any of their
respective assets is bound or affected, or (z) subject to the governmental
filings and other matters referred to in Section 5.4, violate any law, rule or
regulation applicable to Hagemeyer, or any order, writ, judgment, injunction,
decree, determination or award applicable to Hagemeyer currently in effect,
which, in the case of clauses (y) and (z) above, would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Hagemeyer
or its ability to perform under the Guarantee.
(e) No consent, approval, order or authorization of, or declaration,
registration or filing with, or notice to, any Governmental Entity (as defined
in the Merger Agreement) which has not been received or made is required by or
with respect to Hagemeyer or any of its subsidiaries in connection with the
execution and delivery of this Guarantee by Hagemeyer or the performance by
Hagemeyer of its obligations hereunder, except for the governmental filings and
other matters referred to in Section 5.4 of the Merger Agreement.
Hagemeyer agrees to perform the covenants set forth in Section 8.1 of the
Merger Agreement as if it were a party thereto. Hagemeyer agrees that it shall
cooperate with Parent and Purchaser to fulfill their obligations under the HSR
Act (as defined in the Merger Agreement) with respect to the transactions
contemplated by the Merger Agreement.
Hagemeyer agrees, in its capacity as sole shareholder of Parent, to cause
Parent in its capacity as sole shareholder of Purchaser to approve and adopt the
Merger, the Merger Agreement and the transactions contemplated thereby.
This Guarantee shall be governed by, and construed in accordance with, the
laws of the State of Texas, without reference to its conflict of laws
provisions, and the Hagemeyer hereby (i) submits to the exclusive jurisdiction
of the state civil district court in and for Harris County in the State of Texas
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in Harris County in the State of Texas), for purposes of any
action arising from, relating to, or growing out of this Guarantee, (ii) agrees
that it shall not attempt to deny or defeat such jurisdiction by motion or other
request for leave from any such court, and (iii) agrees that it shall not bring
any such action other than in the state civil district court in and for Harris
County in the State of Texas (or if such court lacks subject matter
jurisdiction, any appropriate state or federal court in Harris County of the
State of Texas). Hagemeyer acknowledges that service or delivery to CT
Corporation in Houston, Texas, whom Hagemeyer hereby appoints as its agent for
service of process and agrees to engage, shall constitute good and sufficient
service. Such appointment by Hagemeyer shall be solely for the purposes set
forth in this Guarantee and shall not be deemed an appointment for any other
purpose. Hagemeyer's agreement to be subject to service of process as provided
above shall be effective only for the purpose of the Company's
2
<PAGE>
enforcement of this agreement and no third party beneficiary rights shall arise
to any third party beneficiary for it to seek to use this agreement as
Hagemeyer's admission for any other matter that Hagemeyer is doing business in
Texas or that Hagemeyer is subject to service of process in Texas for any other
purpose. Nothing herein shall be construed to require Hagemeyer to maintain any
assets in the United States.
IN WITNESS WHEREOF, Hagemeyer has executed and delivered this Guarantee as
of the _____ day of __________, 1999.
HAGEMEYER N.V.
By:
------------------------------
Name:
---------------------------
Title:
---------------------------
In the presence of:
By:
------------------------------
Name:
---------------------------
Title:
---------------------------
3
<PAGE>
EXHIBIT (C)(4)
SHAREHOLDERS' AGREEMENT
SHAREHOLDERS' AGREEMENT, dated as of November 14, 1999 ("Agreement"),
is made and entered into by and among HAGEMEYER P.P.S. NORTH AMERICA, INC., a
Delaware corporation ("Parent"); SHIELD ACQUISITION CORP., a wholly owned
subsidiary of Parent and a Texas corporation ("Purchaser"); and Leonard J.
Bruce, an individual residing in the State of Texas, Bruce Partners, Ltd., a
Texas limited partnership, and Bruce Interests Partnership, a Texas general
partnership (each a "Shareholder," and collectively, the "Shareholders").
WITNESSETH:
WHEREAS, on the date hereof, Parent, Purchaser, and Vallen Corporation, a
Texas corporation (the "Company"), entered into an Agreement and Plan of Merger
(as such agreement may hereafter be amended, restated or renewed from time to
time, the "Merger Agreement"), pursuant to which Purchaser will commence the
Offer (capitalized terms used and not otherwise defined herein having the
respective meanings ascribed to them in the Merger Agreement);
WHEREAS, each Shareholder is the Beneficial Owner (as defined below) and
has the sole right to vote and dispose of his or its respective shares of the
Company Common Stock listed on Schedule I attached hereto ("Shareholder's
Shares"); and
WHEREAS, as an inducement and a condition to their entering into the Merger
Agreement and incurring the obligations set forth therein, Parent and Purchaser
have required that the Shareholders enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein and in the Merger
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Affiliate" means, with respect to any specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified.
(b) "Beneficially Own" or "Beneficial Owner" or "Beneficial Ownership"
with respect to any securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), including pursuant to any
agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities Beneficially Owned by
Persons with whom such Person would constitute a "group" within the meaning of
Section 13(d)(3) of the Exchange Act.
<PAGE>
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
(d) "Representative" means, with respect to any Person, as applicable,
such Person's officers, managing general partner, directors, employees, agents
and representatives (including any investment banker, financial advisor, agent,
representative or expert retained by or acting on behalf of such Person or its
subsidiaries).
(e) "Termination Event" shall mean the first to occur of: (i) purchase
of the Shareholders' Shares pursuant to the Offer; (ii) the Effective Time;
(iii) the termination of the Merger Agreement by any party thereto in accordance
with its terms; (iv) Purchaser's failure to commence the Offer within five (5)
business days following the date of the initial public announcement of the
execution of the Merger Agreement; (v) the termination or expiration of the
Offer without Purchaser's having accepted for payment and paid for all shares of
Company Common Stock tendered pursuant thereto, provided that each Shareholder's
right to terminate pursuant to this clause (vi) shall not be available to the
Shareholder if such Shareholder is then in material breach of this Agreement and
such breach has been the proximate cause of the Offer having so expired or
having been so terminated; (vii) any modification of any term or condition of
the Offer as to which prior written consent of the Company is required pursuant
to Section 1.1(b) of the Merger Agreement in the form executed and delivered as
of the date hereof (whether or not such consent is obtained); and (viii) the
applicable date set forth in Section 10.1(b) of the Merger Agreement.
2. AGREEMENT TO TENDER; VOTING OF THE SHARES.
(a) During the period commencing on the date hereof and until a
Termination Event, each Shareholder, severally, hereby agrees that such
Shareholder shall: (i) validly tender and sell (and not withdraw), pursuant to
and in accordance with the terms of the Offer, not later than the fifth business
day after the receipt by the Shareholder of the offer to purchase, transmittal
letter and other relevant Offer Documents (or as soon as practicable thereafter
as shall be permitted by the relevant court or governmental authority), such
Shareholder's Shares (as defined in Section 3(a)) and any shares of Company
Common Stock acquired by such Shareholder after the date hereof and prior to a
Termination Event, whether upon exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution or otherwise); (ii) at any meeting of the
Company's shareholders (whether annual or special, and whether or not an
adjourned or postponed meeting), however called, or in connection with any
written consent of the Company's shareholders, vote (or cause to be voted) all
of such Shareholder's Shares: (x) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval and adoption of
the Merger and the terms thereof and each of the other actions contemplated by
the Merger Agreement and this Agreement and any actions required in furtherance
thereof and hereof; (y) against any action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement; and (z) except as otherwise
agreed to in writing in advance by Parent and Purchaser, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement and this Agreement): (A) any extraordinary
2
<PAGE>
corporate transaction, such as a merger, consolidation or other business
combination, involving the Company or any of its subsidiaries; (B) any sale,
lease or transfer of a material amount of the assets or business of the Company
or its subsidiaries, or any reorganization, restructuring, recapitalization,
special dividend, dissolution, liquidation or winding up of the Company or its
subsidiaries; (C) any change in the present capitalization of the Company,
including any proposal to sell any equity interest in the Company or any of its
subsidiaries or any amendment of the Articles of Incorporation or By-laws of the
Company; (D) any change in directors constituting a majority of the Company's
Board of Directors; (E) any other action that would impede, interfere with,
delay, postpone, discourage or adversely affect the Offer, the Merger, or the
transactions contemplated by the Merger Agreement; and (iii) such Shareholder
shall not enter into any agreement with any Person the effect of which would be
inconsistent with or violative of the provisions and agreement contained in this
Section 2(a).
(b) Each Shareholder hereby acknowledges that Purchaser's obligation
to accept for payment shares of the Company Common Stock purchased pursuant to
the Offer, including the Shares, is subject to the terms and conditions of the
Offer. Upon the terms and subject to the conditions of the Offer, Parent shall
cause Purchaser to accept for payment and pay for all shares of Company Common
Stock (including each Shareholder's Shares) validly tendered and not withdrawn
pursuant to the Offer as soon as Purchaser is permitted to do so under
applicable law.
(c) Each Shareholder shall permit Purchaser to publish and to disclose
in the Offer Documents and, if shareholder approval is required under applicable
law, the Proxy Statement, if any (including all documents and schedules filed
with the SEC), such Shareholder's identity and ownership of the Company Common
Stock and each Shareholder's commitments, arrangements and understandings under
this Agreement. Parent and Purchaser shall permit the Shareholders to disclose
the terms of this Agreement in each Shareholder's Schedule 13D, as applicable,
with respect to the Shareholder's Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. Each Shareholder,
severally, hereby represents and warrants to Parent and Purchaser as follows:
(a) Ownership of Shares. Such Shareholder is the Beneficial Owner of
the number of shares of Company Common Stock Beneficially Owned by such
Shareholder on the date hereof set forth opposite such Shareholder's name on
Schedule I attached hereto under the heading "Shareholder's Shares." Such
Shareholder has sole power to issue instructions with respect to the matters set
forth in Section 2 hereof, sole power of disposition, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to such Shareholder's Shares with no
material limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement. Except for such
Shareholder's Shares, such Shareholder is not the Beneficial Owner of any shares
of Company Common Stock.
(b) No Conflicts. (i) Except for filings under the Exchange Act or the
HSR Act, no filing with, and no permit, authorization, consent or approval of,
any United States state or federal public body or authority is necessary for the
execution of this Agreement by such
3
<PAGE>
Shareholder and the consummation by such Shareholder of the transactions
contemplated hereby, except where the failure to obtain such consent, permit,
authorization, approval or filing would not interfere with such Shareholder's
ability to perform its obligations hereunder, and (ii) none of the execution and
delivery of this Agreement by such Shareholder, the consummation by such
Shareholder of the transactions contemplated hereby or compliance by such
Shareholder with any of the provisions hereof shall (x) result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which such Shareholder is a party or by which such
Shareholder or any of such Shareholder's properties or assets may be bound, or
(y) violate any order, writ, injunction, decree, judgment, order, statute, rule
or regulation applicable to such Shareholder or any of such Shareholder's
properties or assets, in each such case except to the extent that any conflict,
breach, default or violation would not interfere with the ability of such
Shareholder to perform its obligations hereunder.
(c) Execution, Delivery and Performance. This Agreement constitutes
the valid and binding obligation of such Shareholder and is enforceable in
accordance with its terms, except as enforceability may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally and general principles of
equity. The execution, delivery and performance of this Agreement will not
violate any other agreement to which such Shareholder is a party, including,
without limitation, any voting agreement, partnership agreement, other
shareholders agreement or voting trust. As to the Shareholder who is a natural
person, such Shareholder hereby represents that such Shareholder (i) has the
full power and capacity necessary to enter into and perform his obligations
under this Agreement, and (ii) has read all provisions of this Agreement, has
reviewed such provisions with counsel to the extent such Shareholder deemed
appropriate, understands each of such provisions and voluntarily agrees to be
bound thereby. As to the Shareholder that is a partnership, such Shareholder
hereby represents that such partnership is duly formed, validly existing and in
good standing under the laws of the state of its organization with full
partnership power and authority necessary to enter into this Agreement and to
perform its obligations hereunder.
(d) No Encumbrances. Such Shareholder's Shares are held by such
Shareholder, or by a nominee or custodian for the benefit of such Shareholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever, except this Agreement and applicable securities laws.
(e) Reliance. Such Shareholder understands and acknowledges that
Parent and Purchaser are entering into the Merger Agreement, and are incurring
the obligations set forth therein, in reliance upon such Shareholder's execution
and delivery of this Agreement.
4. REPRESENTATIONS OF PARENT AND PURCHASER. Parent and Purchaser, jointly
and severally, hereby represent and warrant to the Shareholders as follows:
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<PAGE>
(a) Organization, Standing and Corporate Power. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, and each has
adequate corporate power and authority to own its properties and carry on its
business as presently conducted. Each of Parent and Purchaser has the corporate
power and authority to enter into and perform all of its obligations under this
Agreement and to consummate the transactions contemplated hereby.
(b) No Conflicts. (i) Except, for filings under the Exchange Act and
the HSR Act, no filing with, and no permit, authorization, consent or approval
of, any state or federal public body or authority is necessary for the execution
of this Agreement by either Parent or Purchaser and the consummation by Parent
and Purchaser of the transactions contemplated hereby, except where the failure
to obtain such consent, permit, authorization, approval or filing would not
interfere with its ability to perform their respective obligations hereunder,
and (ii) none of the execution and delivery of this Agreement by Parent or
Purchaser, the consummation by Parent or Purchaser of the transactions
contemplated hereby or compliance by Parent and Purchaser with any of the
provisions hereof shall (x) conflict with or result in any breach of any
applicable organizational documents applicable to Parent or Purchaser, (y)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of Parent's or Purchaser's properties or
assets may be bound, or (z) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to Parent or Purchaser
or any of Parent's or Purchaser's properties or assets, in each such case except
to the extent that any conflict, breach, default or violation would not
interfere with the ability of Parent or Purchaser to perform their respective
obligations hereunder.
(c) Execution, Delivery and Performance. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Purchaser. This Agreement constitutes the valid and
binding obligations of Parent and Purchaser and is enforceable in accordance
with its terms, except as enforceability may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and general principles of equity.
5. CERTAIN COVENANTS.
(a) Restriction on Transfer, Proxies and Non-interference. Prior to
the occurrence of a Termination Event, except as required by this Agreement,
each Shareholder, severally, hereby agrees that such Shareholder shall not
directly or indirectly without the prior written consent of Parent and
Purchaser: (i) offer for sale, sell, transfer, tender, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to the offer for sale, sale, transfer, tender,
pledge, encumbrance, assignment or other disposition of, any or all of such
Shareholder's Shares, or any interest
5
<PAGE>
therein, (ii) grant any proxies or powers of attorney, deposit any of such
Shareholder's Shares into a voting trust or enter into a voting agreement,
understanding or arrangement with respect to any of such Shareholder's Shares,
or (iii) take any action that would make any representation or warranty of such
Shareholder contained in this Agreement untrue or incorrect or result in a
breach by such Shareholder of such Shareholder's obligations under this
Agreement.
(b) Waiver of Appraisal Rights. Each Shareholder hereby waives any
rights of appraisal or rights to dissent from the Merger that such Shareholder
may have.
(c) No Solicitation. Prior to the occurrence of a Termination Event,
each Shareholder, severally, hereby agrees that such Shareholder will not, and
will instruct such Shareholder's Representatives not to, take any action which,
if taken by the Company, would constitute a violation of Section 8.2(a) of the
Merger Agreement. Notwithstanding the foregoing, it is expressly stipulated
that any action that may be taken by the Company or the Company Board pursuant
to the proviso of Section 8.2(a) of the Merger Agreement may likewise be taken
by any Shareholder or any Representative of a Shareholder as such.
(d) Stop Transfer. Prior to a Termination Event, each Shareholder,
severally, agrees that such Shareholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Shareholder's Shares, unless
such transfer is made in compliance with this Agreement.
(e) HSR Act. Each Shareholder, severally, agrees that such
Shareholder shall cooperate with the Company to fulfill such Shareholder's
obligations, if any, under the HSR Act with respect to the transactions
contemplated by the Merger Agreement.
(f) Further Assurances. From time to time, at the other parties'
reasonable request and without further consideration, each Shareholder, Parent
and Purchaser shall execute and deliver such additional documents as may be
reasonably necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the tender of each Shareholder's Shares by such
Shareholder as contemplated by Section 2 of this Agreement.
6. MISCELLANEOUS.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
(b) Recapitalization. In the event of a stock dividend or
distribution, or any change in shares of Company Common Stock by reason of any
stock dividend, split-up, recapitalization, combination, exchange of shares of
Company Common Stock or the like, for each Shareholder the term "Shareholder's
Shares" shall be deemed to refer to and include the Shareholder's Shares as well
as all such stock dividends and distributions and any shares into which or for
which any or all of such Shareholder's Shares may changed or exchanged.
6
<PAGE>
(c) Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or delegated, in
whole or in part, by operation of law or otherwise, by any of the parties hereto
without the prior written consent of the other parties, except that Purchaser
may assign its rights and obligations, in whole or in part, to any of its
Affiliates, but no such assignment shall relieve Purchaser of its obligations
hereunder if such assignee does not perform such obligations. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
(d) Amendment, Waivers, etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, or by mail
(registered or certified mail, postage prepaid, return receipt requested), or by
any courier service, such as Federal Express, providing proof of delivery, or by
transmission by telecopy, confirmed received. All communications hereunder
shall be delivered to the respective parties at the following addresses:
If to Parent or Purchaser:
Hagemeyer P.P.S. North America, Inc.
100 Galleria Parkway, Suite 1120
Atlanta, Georgia 30339
Attention: Mr. David G. Gundling
Telecopy: 770-541-6645
With a copy (which shall not constitute notice) to:
Hagemeyer N.V.
Rijksweg 69
P.O. Box 5111
1410 AC Naarden
The Netherlands
Attention: Ivo Manders, Esq.
Telecopy: 31-35-695-7687
and
Altman, Kritzer & Levick, P.C.
6400 Powers Ferry Road, N.W., Suite 224
Atlanta, Georgia 30339
Attention Allen D. Altman, Esq.
Telecopy: 770-303-1130
7
<PAGE>
and
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, Suite 1600
Atlanta, Georgia 30303
Attention: Gabriel Dumitrescu, Esq.
Telecopy: 404-572-6999
If to the Shareholders:
Leonard J. Bruce
3633 Chevy Chase
Houston, TX 77019
With a copy (which shall not constitute notice) to:
Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002-2778
Attention: John B. Clutterbuck
Telecopy: 713-225-7047
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative
8
<PAGE>
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) No Third-Party Beneficiaries. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity
who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Texas, without giving effect to the
principles of conflicts of law thereof.
(1) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(m) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement. This Agreement shall not
be effective as to any party hereto until such time as this Agreement or a
counterpart thereof has been executed and delivered by each party hereto.
(n) Termination. This Agreement shall terminate for all purposes, and
shall have no further force and effect, upon the occurrence of any Termination
Event.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized officers effective as of the date and year
first above written.
HAGEMEYER P.P.S. NORTH AMERICA, INC.
By:
-------------------------------------
Name: David G. Gundling
Title: President and Chief Executive Officer
SHIELD ACQUISITION CORP.
By:
-------------------------------------
Name: David G. Gundling
Title: President and Chief Executive Officer
SHAREHOLDERS:
-------------------------------------
Leonard J. Bruce
BRUCE PARTNERS, LTD.
By:
-------------------------------------
Leonard J. Bruce, its Managing General Partner
By:
-------------------------------------
Robert W. Bruce, its General Partner, with
respect to exercising joint power to vote the
Shareholder's Shares as agreed in Section 2(a)
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BRUCE INTERESTS PARTNERSHIP
By:
-------------------------------------
Robert W. Bruce, partner
By:
-------------------------------------
Leonard Bruce, Jr., partner
By:
-------------------------------------
Robin V. Bruce, partner
By:
-------------------------------------
Carter M. Bruce, partner
By:
-------------------------------------
Christine L. Bruce, partner
11
<PAGE>
SCHEDULE I
----------
LEONARD J. BRUCE 6,747
BRUCE PARTNERS, LTD. 3,943,665
BRUCE INTERESTS PARTNERSHIP 117,000
12
<PAGE>
EXHIBIT (C)(5)
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO CERTAIN
RESTRICTIONS CONTAINED HEREIN AND TO RESALE RESTRICTIONS UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
OPTION AGREEMENT
OPTION AGREEMENT, dated as of November 14, 1999 (the "Agreement"), among
HAGEMEYER P.P.S. NORTH AMERICA, INC., a Delaware corporation ("Parent"), SHIELD
ACQUISITION CORP., a Texas corporation and a direct wholly owned subsidiary of
Parent ("Purchaser"), and VALLEN CORPORATION, a Texas corporation (the
"Company"). Capitalized terms used and not defined in this Agreement shall have
the meaning ascribed to them in the Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), by and among Parent, Purchaser and the
Company.
WHEREAS, concurrently with the execution of this Agreement, Parent,
Purchaser and the Company are entering into the Merger Agreement, providing for
the making of a tender offer (as defined in the Merger Agreement, the "Offer")
to purchase all of the issued and outstanding shares of the common stock, par
value $.50 per share, of the Company (as defined in the Merger Agreement, the
"Company Common Stock") at a price per share equal to the Offer Consideration
(as defined in the Merger Agreement) and, following the completion of the Offer,
the merger (as defined in the Merger Agreement, the "Merger") of Purchaser and
the Company, whereby each share of Company Common Stock not purchased pursuant
to the Offer (other than shares owned by Parent, Purchaser or any other wholly
owned subsidiary of Parent, shares held in the treasury of the Company and
Dissenting Shares (as defined in the Merger Agreement)) will be converted into
the right to receive in cash an amount equal to the Offer Consideration in
accordance with the terms of the Merger Agreement; and
WHEREAS, the Company desires to induce Parent and Purchaser to enter into
the Merger Agreement and, therefore, has agreed to grant to Purchaser the Short
Form Merger Option (as defined in Section 1).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto hereby agree as follows:
1. Grant of Short Form Merger Option. The Company hereby grants to
Purchaser an irrevocable option (the "Short Form Merger Option") to purchase up
to that number of newly issued shares of Common Stock (the "Short Form Merger
Option Shares") equal to the number of shares that, when added to the number of
shares owned by Purchaser and its affiliates immediately following Purchaser's
purchase of all shares of Company Common Stock purchasable pursuant to the Offer
(including under any extension of the Offer), shall constitute 90% of the shares
of Common Stock then outstanding on a fully diluted basis (giving effect to the
issuance of the Short Form Merger Option Shares) for a cash consideration per
Short Form Merger Option Share equal to the Offer Consideration; provided,
however, that in no event shall the number of Short Form Merger Option Shares
for which the Short Form Merger Option is exercisable exceed 10% of the issued
and outstanding shares of Company Common Stock.
<PAGE>
2. Exercise of the Short Form Merger Option.
(a) Exercise. The Short Form Merger Option may be exercised by
Purchaser at any time during the two business days following, and will
become exercisable upon, the date of acceptance for payment by Purchaser of
all shares of Common Stock purchasable pursuant to the Offer (including
under any extension of the Offer) in accordance with the terms of the
Merger Agreement. In the event Purchaser wishes to exercise the Option,
Purchaser shall give written notice of its exercise of the Short Form
Merger Option, specifying the number of shares of Common Stock owned by
Purchaser and its affiliates immediately following completion of the Offer
and a place and a time (which shall not be less than three business days
from the date of such notice) for the closing of such purchase. The
Company shall, within two business days after receipt of such notice,
deliver written notice to Purchaser specifying the number of Short Form
Merger Option Shares.
(b) Payment and Delivery of Certificates Upon Exercise. At the
closing under this Section 2: (i) the Company will deliver to Purchaser a
certificate or certificates representing the number of Short Form Merger
Option Shares so purchased and (ii) Purchaser will make payment to the
Company of the aggregate price for the Short Form Merger Option Shares
being purchased by wire transfer in an amount equal to the product of (x)
the Offer Consideration and (y) the total number of Short Form Merger
Option Shares delivered at such closing. The Company shall pay all Company
expenses, and any and all United States Federal, state and local taxes and
other charges, that may be payable by the Company in connection with the
preparation, issuance and delivery of stock certificates under this
Section 2.
3. Termination. This Agreement shall terminate upon the first to occur of
(i) the termination of the Merger Agreement, (ii) the Effective Time of the
Merger (as defined in the Merger Agreement) and (iii) the failure of Purchaser
to exercise the Short Form Merger Agreement during the period in which it is
exercisable as set forth in Section 2(a).
4. Waiver and Amendment. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This
Agreement may not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the parties hereto.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights. No
single or partial exercise of any right, remedy, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. Any waiver shall be effective only in
the specific instance and for the specific purpose for which given and shall not
constitute a waiver to any subsequent or other exercise of any right, remedy,
power or privilege hereunder.
5. Entire Agreement; No Third-Party Beneficiaries; Severability. This
Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Parent, Purchaser and the
Company (i) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any person
other
2
<PAGE>
than the parties hereto (or their respective successors and assigns) any rights,
remedies, obligations or liabilities hereunder. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. If for any
reason such court determines that the Option does not permit Purchaser to
acquire the full number of shares of Common Stock as provided in Section 2 (as
may be adjusted herein), it is the express intention of the Company to allow
Purchaser to acquire or to acquire such lesser number of shares as may be
permissible without any amendment or modification hereof.
6. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties, except that Purchaser may assign, in its sole discretion, any or all of
its rights, interests and obligations hereunder to Parent. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and permitted
assigns.
7. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given (and shall be deemed to have
been duly received if so given) if personally delivered or sent by registered or
certified mail, postage prepaid, or telecopy addressed to the respective parties
at their addresses specified in the Merger Agreement.
8. Specific Performance. Each of the parties hereto acknowledges and
agrees that in the event of any breach by the Company of this Agreement, Parent
and Purchaser would be irreparably and immediately harmed and could not be made
whole by monetary damages. It is accordingly agreed that the Company will
waive, in any action for specific performance, the defense of adequacy of a
remedy at law, and Parent and Purchaser shall be entitled, in addition to any
other remedy to which they may be entitled at law or in equity, to compel
specific performance of this Agreement in any action instituted in a court of
competent jurisdiction.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to the conflict
of laws provisions thereof.
10. 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 agreement.
3
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
officers of each of the parties hereto all as of the date first above written.
HAGEMEYER P.P.S. NORTH AMERICA, INC.
By:
--------------------------------------
Name: David G. Gundling
Title: President and Chief Executive Officer
SHIELD ACQUISITION CORP.
By:
--------------------------------------
Name: David G. Gundling
Title: President and Chief Executive Officer
VALLEN CORPORATION
By:
--------------------------------------
Leonard J. Bruce
Chairman of the Board
4
