<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 5, 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
VERSA TECHNOLOGIES, INC.
(NAME OF SUBJECT COMPANY)
------------------------
VERSA TECHNOLOGIES, INC.
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
925116-10-5
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
ROBERT M. SUKALICH
VICE PRESIDENT -- FINANCE
VERSA TECHNOLOGIES, INC.
9301 WASHINGTON AVENUE
P.O. BOX 085012
RACINE, WISCONSIN 53408-5012
(414) 886-1174
(414) 886-4614 (FAX)
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF
THE PERSON FILING STATEMENT)
------------------------
With a copy to:
LAWRENCE BLOCK
SCHIFF HARDIN & WAITE
7200 SEARS TOWER
CHICAGO, ILLINOIS 60606
(312) 258-5592
(312) 258-5600 (FAX)
================================================================================
<PAGE> 2
ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Versa Technologies, Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 9301 Washington Avenue, Racine, Wisconsin 53408. The title of the
class of equity securities to which this Statement relates is the shares of
common stock, par value $.01 per share, of the Company (the "Common Stock"),
including the associated rights to purchase Series A Junior Participating
Preferred Stock (together with the Common Stock, the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to a tender offer by TVPA Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Applied Power
Inc., a Wisconsin corporation ("Parent" or "API"), disclosed in a Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1") dated September 5, 1997 to
purchase all outstanding Shares at a price of $24.625 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 September 5, 1997 (the
"Offer to Purchase") and the related Letter of Transmittal (which together
constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of September 2, 1997 (the "Merger Agreement") among Parent, the Purchaser and
the Company. The Merger Agreement provides that, among other things, as soon as
practicable after the consummation of the Offer and satisfaction or, if
permissible, waiver of the conditions to the Merger, the Purchaser shall be
merged with and into the Company (the "Merger"), the separate corporate
existence of the Purchaser shall cease, and the Company shall continue as the
surviving corporation (the "Surviving Corporation"). A copy of the Merger
Agreement is filed as Exhibit 1 to this Statement and is incorporated herein by
reference.
Stock Purchase and Dividend Reinvestment Plan. Holders of Shares through
the Company's Stock Purchase and Dividend Reinvestment Plan ("DRIP") will need
to contact the DRIP administrator, Firstar Trust Company, at 1-800-637-7549 in
order to make arrangements to tender Shares held in the DRIP pursuant to the
Offer.
According to the Offer to Purchase, the principal executive offices of the
Purchaser and Parent are located at 13000 West Silver Spring Drive, Butler,
Wisconsin 53007.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
Statement, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements or understandings between
the Company and its executive officers, directors and affiliates are described
on pages 6-9 of the Company's Proxy Statement dated June 16, 1997 for its 1997
Annual Meeting of Stockholders (the "1997 Proxy Statement"). Pages 6-9 are filed
as Exhibit 2 to this Statement and are incorporated herein by reference.
On August 28, 1997, the Company entered into Senior Executive Agreements
with Thomas J. Magulski, Robert M. Sukalich, Janet L. Ford and Edward V. Surek.
Under these Agreements, which have a term of two years, if there is a Change of
Control (as defined) after July 1, 1997, if the Company terminates the
employment of the executives other than for Good Cause (as defined), or if the
executives terminate their employment for Good Reason (as defined) or terminate
their employment at any time during the seventh month after a Change in Control
occurs, the executives will be entitled to be paid an amount equal to the sum of
Base Salary (as defined) plus Bonus (as defined), all multiplied by two. On
August 28, 1997, the Company also entered into similar agreements with 31 other
employees providing similar Change in Control benefits except that such
employees will receive payments equal to the sum of .50 plus .01923 for each
year of service with the Company or its subsidiaries multiplied by Base Salary
and Bonus and such employees will not receive any such payment unless they are
terminated without Good Cause or terminate voluntarily for Good Reason. The
Company also entered into a similar Senior Executive Agreement with Richard H.
Marks, President of Eder Industries, Inc., a subsidiary of the Company, on
August 28, 1997. Mr. Marks' agreement is identical to
2
<PAGE> 3
the agreements in effect for the other 31 employees except that Mr. Marks' right
to Change of Control benefits upon his voluntary termination of employment for
Good Reason will only apply if such termination occurs on or after March 1,
1999. In addition, Mr. Marks' Senior Executive Agreement provides that in the
event of a conflict between the provisions of that agreement and those of his
employment agreement in place prior to August 28, 1997, the provisions of the
latter agreement will control. The names of the employees who are party to these
agreements and the form of the agreement each of them executed are filed as
Exhibit 3 to this Statement and are incorporated herein by reference.
Under the terms of the Merger Agreement, the Company will offer to
repurchase each outstanding option to purchase Common Stock (including
outstanding options under the Company's 1996 Employee Stock Purchase Plan) from
the holder thereof immediately after the Offer has been consummated for an
amount in cash (less applicable withholding taxes) equal to the product of (i)
the number of shares of Common Stock previously subject to such option (whether
or not exercisable) multiplied by (ii) the excess, of the per share amount paid
to holders tendering their shares in the Offer over the exercise price per share
of the Common Stock previously subject to such option. Any such options not
exercised or sold to the Company as described above will be canceled as of the
Effective Time of Merger (as defined).
The Company has agreed to take such action as is necessary to terminate, as
of the Effective Time of Merger, the 1982 Employee Incentive Stock Option Plan,
the 1992 Employee Incentive Stock Option Plan, the Directors and Officers Stock
Option Plan, and the 1996 Employee Stock Purchase and Payroll Savings Plan.
On or prior to the Effective Time of Merger, the Company will distribute in
lump sum payments all amounts in each participant's deferred compensation
account in accordance with the Company's Deferred Compensation Plan for
Executives and Deferred Compensation Plan for Directors, and will terminate such
plans.
(c) Except as described below or incorporated herein, to the knowledge of
the Company, as of the date hereof, there exists no material contract,
agreement, arrangement or understanding and no actual or potential conflict of
interest between the Company or its affiliates and (i) the Company, its
executive officers, directors or affiliates or (ii) the Purchaser or its
executive officers, directors or affiliates.
INDEMNIFICATION UNDER DELAWARE LAW, THE COMPANY'S CERTIFICATE OF INCORPORATION
AND BY-LAWS AND THE MERGER AGREEMENT
The Company is a Delaware corporation. Under Delaware law, indemnification
of directors and officers is generally permitted for expenses incurred by them
by reason of their position with the corporation, if the director or officer has
acted in good faith and with the reasonable belief that his conduct was in the
best interest of the corporation. However, Delaware law does not permit a
corporation to indemnify persons against judgments in actions brought by or in
the right of the corporation (although it does permit indemnification in such
situations if approved by the Delaware Court of Chancery and for expenses of
such actions). Article SIXTH of the Company's Certificate of Incorporation, as
amended, provides that the Company shall, to the maximum extent permitted under
Delaware law, indemnify and advance expenses to any person who is or was a party
or is threatened to be made a party to any action, suit, proceeding or claim, by
reason of being a director or officer of the Company.
The Company maintains insurance policies that provide for the
indemnification of directors and officers pursuant to the provisions described
above.
The Merger Agreement provides that the Certificate of Incorporation and
Bylaws of the Surviving Corporation shall contain provisions with respect to
indemnification substantially as set forth in the Certificate of Incorporation
and Bylaws of the Company on the date of the Agreement, which provisions shall
not be amended, repealed or otherwise modified for a period of five years after
the Effective Time of Merger in any manner that would adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time of
Merger were directors or officers of the Company in respect of actions or
omissions occurring at or prior to the Effective Time of Merger, unless such
modification is required by law; provided, that in the event
3
<PAGE> 4
any claim or claims are asserted or made within such five-year period, all
rights to indemnification in respect of any such claim or claims shall continue
until disposition of any and all such claims.
The Merger Agreement also provides that Parent shall cause to be maintained
in effect for the Indemnified Parties (as defined below) for not less than five
years the current policies of directors and officers liability insurance and
fiduciary liability insurance maintained by the Company and the Subsidiaries (as
defined) with respect to matters occurring at or prior to the Effective Time of
Merger; provided, that Parent may substitute therefor policies of substantially
the same coverage containing terms and conditions which are no less advantageous
to the Company's present or former directors or officers or other employees
covered by such insurance policies prior to the Effective Time of Merger (the
"Indemnified Parties"). Notwithstanding the foregoing, in no case shall Parent
or the Surviving Corporation be required to pay an annual premium for such
insurance greater than 200% of the last annual premium paid prior to the date
hereof. Should payment of the maximum amount of premium provided for in the
previous sentence not allow the purchase of an amount of such insurance equal to
the amount provided under the current policies, Parent shall purchase the
maximum amount of insurance available for 200% of the last annual premium.
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
Such summary is qualified in its entirety by reference to the Merger Agreement,
a copy of which is filed herewith as Exhibit 1 and is incorporated herein by
reference. Capitalized terms not otherwise defined in the following summary of
certain provisions of the Merger Agreement have the respective meanings ascribed
to them in the Merger Agreement. In particular, when the term "Material Adverse
Effect" is used herein it has the meaning as defined in the Merger Agreement.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, the Purchaser will purchase all Shares
validly tendered pursuant to the Offer. The Merger Agreement provides that the
Purchaser may in its sole discretion waive, in whole or in part, at any time or
from time to time, any condition (other than the Minimum Condition, which may
not be waived without the prior written consent of the Company), increase the
price per Share payable in the Offer or make any other changes in the terms and
conditions of the Offer; provided that, unless previously approved by the
Company in writing, no change may be made that decreases the price per Share
payable in the Offer, changes the form of consideration payable in the Offer,
reduces the maximum number of Shares to be purchased in the Offer or imposes
conditions to the Offer in addition to those set forth herein. As of September
2, 1997, there were 5,596,083 Shares issued and outstanding, 378,741 shares of
Common Stock reserved for issuance under the Company's stock option plans and
agreements and stock purchase plan, and no other stock of the Company is
outstanding or committed to be issued. Based on this information and assuming
all holders of outstanding options to purchase shares of Common Stock will have
entered into agreements to have the Company repurchase such options on or prior
to the date Purchaser purchases the Shares pursuant to the Offer, the Company
believes that the Minimum Condition will be satisfied if the Purchaser acquires
at least 2,798,042 Shares in the Offer. Prior to approving the Merger Agreement,
the Board of Directors of the Company amended the Rights Agreement dated
December 13, 1988 between the Company and Firstar Trust Company. In that
amendment (a copy of which is attached as Exhibit 5 to this Statement and is
incorporated herein by reference), the Company provided that the Rights issuable
pursuant to that Rights Agreement would not be triggered by the Offer or the
Merger.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, and in accordance with Delaware law, the Purchaser shall be
merged with and into the Company as soon as practicable after satisfaction or
waiver of the conditions set forth in the Merger Agreement (the "Effective
Time"). The Merger shall become effective upon the filing of a Certificate of
Merger with the Secretary of State of the State of Delaware (or such later date
as is specified in the Certificate of Merger). As a result of the Merger, the
separate corporate existence of the Purchaser will cease and the Company will
continue as the surviving corporation (the "Surviving Corporation"). In the
Merger, each issued and outstanding Share (other than Shares owned directly or
indirectly by API or any of its subsidiaries or by the Company as treasury
stock, and other than Shares owned by stockholders who have properly exercised
rights of appraisal
4
<PAGE> 5
under Delaware law) will be converted into the right to receive $24.625 per
Share in cash without interest, and each issued and outstanding share of common
stock of the Purchaser will be converted into one fully paid and non-assessable
share of common stock of the Surviving Corporation.
The Merger Agreement provides that the certificate of incorporation and
by-laws of the Purchaser at the Effective Time will be the certificate of
incorporation and by-laws of the Surviving Corporation until amended in
accordance with applicable law. The Merger Agreement also provides that the
directors of the Purchaser at the Effective Time will be the directors of the
Surviving Corporation, and the officers of the Company at the Effective Time
will be the officers of the Surviving Corporation.
The Company's Board of Directors. The Merger Agreement provides that
promptly upon the purchase by Parent of a majority of the outstanding shares of
Company Common Stock pursuant to the Offer, either (i) a majority of the members
of the Board of Directors of the Company shall resign and the remaining members
of the Board of Directors of the Company shall fill all of the Board positions
so vacated with individuals designated by Parent or (ii) the size of the Board
of Directors of the Company shall be expanded and the vacant seats filled with
individuals designated by Parent so that Parent's designees shall constitute a
majority of the members of the Board of Directors of the Company. In any case,
at all times thereafter through the Effective Time of Merger a majority of the
Board of Directors of the Company shall be individuals designated by Parent. The
Company's obligation to appoint the Purchaser's designees to the Board of
Directors is subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder.
From and after the time, if any, that Parent's designees are appointed to
the Company's Board of Directors, any amendment of the Merger Agreement, any
termination of the Merger Agreement by the Company, any extension of time for
performance of any of the obligations of Parent or the Purchaser thereunder, or
any waiver of any condition to the obligations of the Company or any of the
Company's rights thereunder may be effected only by the action of a majority of
the directors of the Company then in office who were directors of the Company on
the date of the Merger Agreement, which action will be deemed to constitute the
action of the full Board of Directors of the Company; provided, however, that in
no event may the Company, Parent or the Purchaser amend the provision of the
Merger Agreement regarding the continuation of indemnification and insurance for
the Company's officers and directors. In addition, until the Effective Time of
Merger, the Company will use reasonable efforts to retain as members of its
Board of Directors at least two directors who were directors on the date of the
Merger Agreement (the "Company Designees"). If any or all of the Company
Designees resign, the remaining Company Designees (or, if no other Company
Designees remain on the Board, the last resigning Company Designee) shall have
the right to appoint a successor or successors to serve as Company Designees.
Parent and the Purchaser have agreed to cause each such appointment to be
effective. Nothing in this provision prohibits, or should be construed to
prohibit, any of Parent's designees to the Company's Board of Directors from
voting on the termination of the Merger Agreement.
Stockholders Meeting. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, duly call and
hold a special meeting of its stockholders (the "Special Meeting") as promptly
as practicable following the acceptance for payment and purchase of Shares by
the Purchaser pursuant to the Offer for the purpose of voting upon the Merger
Agreement, the Merger and related matters. The Board shall recommend approval
and adoption of the Merger Agreement by the Company's stockholders.
Interim Operations. In the Merger Agreement, the Company has agreed that
from and after the date of this Agreement and until the Effective Time of
Merger, the Company shall, and shall cause each of the Subsidiaries to:
(a) Carry on in Regular Course. Diligently carry on its business in
the regular course and substantially in the same manner as heretofore and
shall not make or institute any unusual or novel methods of purchase, sale,
lease, management, accounting or operation.
(b) Use of Assets. Use, operate, maintain and repair all of its
assets and properties in a normal business manner.
5
<PAGE> 6
(c) Contracts. Not modify or amend any Existing Contract; not do any
act or omit to do any act, or permit any act or omission to act, which will
cause a breach or termination of any of the Contracts.
(d) Insurance Policies. Use reasonable efforts to maintain all of the
Insurance Policies in full force and effect.
(e) Employment Matters. Not: (a) except as described in the
Disclosure Schedule, grant any increase in the rate of pay of any of its
employees, directors or officers; (b) institute or amend any Employee
Benefit Plan; or (c) enter into or modify any written employment,
severance, bonus, benefit, termination or related arrangement with any
Person.
(f) Contracts and Commitments. Not enter into any material contract
or commitment or engage in any transaction not in the usual and ordinary
course of business and consistent with its normal business practices, and
not purchase, lease, sell or dispose of any capital assets other than
within the limits set forth in the Company's Capital Expenditures Plan
approved by the Board of Directors of the Company and delivered to Parent
as part of the Disclosure Schedule.
(g) Indebtedness. Not, except in the ordinary course of business,
create, incur or assume any indebtedness, in excess of $6,000,000, from
which amount the repurchase of stock options by the Company and the lump
sum payments respecting the Company's Deferred Compensation Plans shall be
made, or permit the imposition of any Lien.
(h) Preservation of Relationships. Use its best efforts to preserve
its business organization intact, to retain the services of its present
officers and key employees and to preserve the goodwill of suppliers,
customers, creditors and others having business relationships with the
Company and/or the Subsidiaries.
(i) Compliance with Laws. Comply materially with all applicable laws.
(j) Taxes. Timely and properly file all federal, state, local and
foreign tax returns which are required to be filed, and pay or make
provision for the payment of all taxes owed by it.
(k) Amendments. Not amend its Certificate or Articles of
Incorporation or Bylaws.
(l) Dividends; Redemptions; Issuance of Stock. Not: (a) issue any
additional shares of stock of any class (except for the issuance of shares
upon exercise of options outstanding as of the date of this Agreement) or
grant any warrants, options or rights to subscribe for or acquire any
additional shares of stock of any class; (b) declare or pay any dividend or
make any capital or surplus distributions of any nature (including special
dividends), except for regularly scheduled quarterly dividends of $.11 made
by the Company or dividends by a Subsidiary to the Company; or (c) directly
or indirectly redeem, purchase or otherwise acquire, split, combine,
recapitalize or reclassify any of its capital stock or liquidate in whole
or in part.
(m) No Dispositions. Not sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, license, encumber or otherwise dispose
of, any of its assets, except in the ordinary course of business consistent
with past practice.
(n) Dissolution; Reorganization. Not adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of the
Subsidiaries.
(o) Litigation. Not settle or compromise any material claims,
litigation or governmental or administrative proceedings.
No Solicitation. In the Merger Agreement, the Company has agreed that it
shall not, and shall cause all of its officers, directors, employees, agents and
representatives (including, without limitation, any investment banker, financial
adviser, attorney or accountant retained or engaged by the Company) to not,
directly or indirectly: (i) initiate, solicit or encourage any inquiries
concerning an Acquisition (as defined) or an Acquisition Proposal (as defined);
(ii) engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person relating to an
Acquisition or an Acquisition Proposal; (iii) facilitate any effort or attempt
to make or implement an Acquisition Proposal; or (iv) consummate, agree or
commit to consummate any Acquisition or Acquisition Proposal. The Company shall
immediately cease or cause to be terminated any existing activities, discussions
or negotiations with any
6
<PAGE> 7
Person with respect to any of the foregoing activities. Notwithstanding the
foregoing, the Board of Directors of the Company may furnish information about
the Company to the Person making a Superior Proposal pursuant to a
confidentiality agreement in customary form and participate in discussions and
negotiations regarding such Superior Proposal if the Board of Directors of the
Company determines in good faith, upon the written advice of outside legal
counsel, that the failure to take such action would violate its fiduciary duties
to the Company Shareholders under applicable Law. In addition, the Company will
be permitted to take and disclose to the Company Shareholders a position
contemplated by Rules 14d-9 and 14e-2(a) under the Exchange Act with respect to
an Acquisition Proposal by means of a tender offer. The Company shall notify
Parent orally and in writing of any Acquisition Proposal, within 24 hours from
the receipt thereof, specifying all of the material terms and conditions of such
Acquisition Proposal and identifying the Person making such Acquisition
Proposal, shall keep Parent informed of the status and all material developments
and information regarding the Acquisition Proposal, and shall give Parent five
(5) calendar days' prior notice and an opportunity to negotiate with the Company
before entering into, executing or agreeing to any Acquisition or Acquisition
Proposal.
Directors' and Officers' Insurance; Indemnification. The Merger
Agreement's provisions relating to indemnification and insurance are described
above in this Item 3.
Company Stock Options and Employee Stock Purchase Plan. The Merger
Agreement's provisions relating to Company stock options are described above in
subsection (b) of this Item 3.
Conditions to the Merger. The Merger Agreement provides that the
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, at or prior to the Effective Time of
Merger of the following conditions:
(a) Injunction. There shall not be in effect any statute, rule,
regulation, executive order, decree, ruling or injunction or other order of
a court or governmental or regulatory agency of competent jurisdiction
directing that the transactions contemplated herein not be consummated;
provided, however, that prior to invoking this condition each party shall
use its best efforts to have any such decree, ruling, injunction or order
vacated.
(b) Governmental Approvals.
(1) All governmental consents, orders and approvals legally
required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained and be in effect at the
Effective Time of Merger.
(2) All necessary requirements of the HSR Act shall have been
complied with and any "waiting periods" applicable to the Merger and to
the transactions described in the Merger Agreement, including any
secondary acquisitions, which are imposed by the HSR Act shall have
expired prior to the Closing Date or shall have been terminated by the
appropriate agency.
(c) The Offer. Purchaser shall have purchased in accordance with the
terms of the Offer all shares of Company Common Stock validly tendered and
not withdrawn pursuant to the Offer.
(d) Approval of Company Shareholders; Certificate of Merger. To the
extent required by applicable law, the Merger Agreement, the Merger and the
transactions contemplated by the Merger Agreement shall have received the
requisite approval and authorization of the Company's stockholders provided
that Parent, the Purchaser and their respective subsidiaries shall vote all
of their shares of Company Common Stock in favor of the Merger.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, its organization, capitalization, financial
statements, public filings, labor relations, employee benefit plans, insurance,
compliance with laws, litigation, environmental matters, tax matters,
intellectual property, consents and approvals and undisclosed liabilities.
Termination and Termination Fee. The Merger Agreement provides that it may
be terminated and the Merger and the Offer may be abandoned at any time prior to
the Effective Time: (a) by mutual written
7
<PAGE> 8
agreement duly authorized by the Boards of Directors of Parent, the Purchaser
and the Company, respectively; (b) by Parent or the Company if (i) any court of
competent jurisdiction or any other governmental body or regulatory authority
shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the Offer or the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable, or (ii) the Purchaser shall not have purchased Shares
pursuant to the Offer on or before February 28, 1998; (c) by the Company if (i)
the Board of Directors of the Company shall have determined in good faith, upon
the written advice of outside legal counsel, that its fiduciary duties require
the termination of the Merger Agreement in order to pursue a Superior Proposal,
or (ii) the Purchaser shall have failed to commence the Offer within five (5)
business days following the date of the Merger Agreement or terminated the Offer
without purchasing Shares pursuant to the Offer; (d) by the Company if either
Parent or the Purchaser shall have breached in any material respect any of its
representations, warranties, covenants or other agreements contained in the
Merger Agreement which breach is incapable of being cured (or, if curable, shall
not have been cured within thirty (30) days after the giving of written notice
to Parent and the Purchaser); (e) by Parent if the Company shall have breached
or failed to perform any of its obligations, covenants or agreements contained
in the Merger Agreement (except to the extent any such breach gives rise to the
termination rights described in (f)(ii) below), or if the Company shall have
breached any of its representations or warranties set forth in the Merger
Agreement (disregarding all qualifications and exceptions contained therein
relating to knowledge, materiality or Material Adverse Effect), and all such
breaches and failures to perform, taken in the aggregate, shall have or shall be
reasonably likely to have a Material Adverse Effect; or (f) by Parent and the
Purchaser, if (i) the Board of Directors of the Company has withdrawn, or
materially modified or changed its favorable recommendation of the Offer, the
Merger or the Merger Agreement, or shall have approved or recommended any
Acquisition Proposal or Acquisition, (ii) the Company shall have breached its
obligations to notify Parent of an Acquisition Proposal and negotiate with
Parent with respect thereto, or its obligations to take necessary action to
render the Rights Agreement inapplicable to the Merger Agreement, the Merger and
the Offer, (iii) on a scheduled Expiration Date all conditions to the
Purchaser's obligation to accept for payment and pay for Shares other than the
Minimum Condition have been satisfied or waived and the Purchaser terminates the
Offer without purchasing Shares pursuant to the Offer (provided that the
satisfaction or waiver of all other conditions shall have been publicly
disclosed at least five business days before termination of the Offer), or (iv)
the Purchaser shall have otherwise terminated the Offer in accordance with the
Merger Agreement without purchasing Shares.
In the event of the termination of the Merger Agreement and abandonment of
the Offer, the Merger Agreement provides that all further obligations of the
parties under or pursuant to the Merger Agreement shall terminate without
further liability thereunder on the part of any party except under the
provisions of the Merger Agreement related to fees and expenses described below
and under certain other provisions of the Merger Agreement which survive
termination, provided that each party to the Merger Agreement will retain any
and all remedies which it may have for breach of contract provided by law.
The Merger Agreement provides that upon the occurrence of a Special Event
(as defined below) the Company will pay $5,000,000 to Parent and will reimburse
Parent for all documented out-of-pocket costs, fees and expenses incurred by
Parent and the Purchaser in connection with the preparation and negotiation of
the Merger Agreement and the transactions contemplated thereby; provided,
however, that in the case of a Special Event described in clause (a) of the
paragraph immediately below the Company will pay $1,000,000 to Parent and
reimburse Parent for all such documented out-of-pocket costs, fees and expenses
and will further pay to Parent an additional $4,000,000 if a Special Event
described in clause (b) of the paragraph immediately below thereafter occurs.
Any such amount due Parent will be paid and immediately available funds within
three (3) business days following the occurrence of the Special Event. If the
Company fails to timely pay the amount (or any portion thereof) due Parent
pursuant to this provision, the unpaid amount (or portion thereof) will accrue
interest at the rate of ten percent (10%) per anum until paid.
The term "Special Event" means the occurrence of any of the following
events: (a) the Board of Directors of the Company shall have withdrawn or
materially modified or changed its favorable recommendation of the Offer, or
shall have approved or recommended any Acquisition Proposal or Acquisition, or
any
8
<PAGE> 9
person unrelated to Parent shall have entered into an agreement with the Company
or any of its subsidiaries with respect to an Acquisition; (b) on or before
December 31, 1998 any person unrelated to Parent shall have consummated an
Acquisition; (c) Parent and the Purchaser shall have terminated the Offer due to
the existence, on the date of the Merger Agreement, of the condition set forth
in paragraph (e) under "Termination and Termination Fee" above, or due to the
existence, after the date of the Merger Agreement, of such condition as a result
of one or more events or circumstances arising after the date of the Merger
Agreement, if any such event or circumstance was not promptly disclosed to
Parent or was caused by the willful and deliberate act of the Company which the
Company cannot or will not cure; or (d) Parent and the Purchaser shall have
terminated the Merger Agreement as a result of the breach by the Company of its
obligations to notify Parent of an Acquisition Proposal and to negotiate with
Parent with respect thereto, or of its obligations to take all necessary action
to render the Rights Agreement inapplicable to the Merger Agreement, the Offer
and the Merger.
The Merger Agreement also contains other restrictions as to the conduct of
business by the Company pending the Merger, as well as representations and
warranties of each of the parties customary in transactions of this kind.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
Recommendation of the Board of Directors.
At a special meeting held on September 2, 1997, the Board of Directors of
the Company (the "Board") approved the Merger Agreement and the transactions
contemplated thereby and unanimously determined that the Merger and the Offer
are fair to, and in the best interests of, the Company and its shareholders. THE
BOARD UNANIMOUSLY RECOMMENDS THAT HOLDERS OF SHARES TENDER THEIR SHARES PURSUANT
TO THE OFFER. Copies of a letter to the Company's shareholders communicating
such approval and recommendation is filed as Exhibit 4 to this Statement and is
incorporated herein by reference.
Background of the Merger and the Offer.
James E. Mohrhauser, Chairman and CEO of the Company received several
letters from Richard G. Sim, Chairman, President and CEO of API during the past
few years expressing interest in putting API and the Company together.
On May 22, 1997, William P. Killian, a member of the Company's Board of
Directors, received a telephone call from Mr. Sim expressing interest in the
possible acquisition of the Company. Mr. Killian subsequently received a letter
from Mr. Sim outlining reasons for considering a possible merger. Mr. Killian
contacted Mr. Mohrhauser to advise him of the matter. Messrs. Mohrhauser and
Killian met at Mr. Killian's office on June 3, 1997 to review the letter and Mr.
Killian's conversation with Mr. Sim. Messrs. Mohrhauser and Sim met at the
University Club in Milwaukee on June 6, 1997 to discuss reasons why the two
companies should be put together.
On June 9, 1997, Messrs. Mohrhauser and Sim signed a non-disclosure
agreement. Mr. Mohrhauser agreed to provide additional information to Mr. Sim
regarding the financial results and forecasts of the Company's operating units.
On June 20, 1997, Mr. Sim, Gustav H.P. Boel, William J. Albrecht and Gary
Weismann of API met with Mr. Mohrhauser, Robert M. Sukalich, and Thomas J.
Magulski of the Company in Racine. The group discussed information provided by
the Company and additional information that would be necessary for due
diligence.
On July 2, 1997, Parent representatives toured Moxness Products and Mox-Med
operations in Racine, Portage, Wausau and East Troy, Wisconsin. They were
accompanied by Mr. Magulski. On July 3, 1997, additional Parent representatives
toured the Milwaukee Cylinder plant in Cudahy, Wisconsin. They were accompanied
by Mr. Magulski. The same day P. Burkart and Mr. Sim toured the Eder Industries
plant in Oak Creek, Wisconsin. They were accompanied by Mr. Magulski.
9
<PAGE> 10
On July 7, 1997, Messrs. Mohrhauser and Killian met with Messrs. Sim and
Arzbaecher. Mr. Sim presented an offer to acquire the Company using a pooling at
a price of $18.50 per share. Mr. Mohrhauser indicated that there were some
concerns associated with a pooling.
On July 14, 1997, Mr. Sukalich and representatives of Deloitte and Touche,
LLP met with Messrs. Arzbaecher, Richard D. Carroll and Douglas R. Dorszynski of
API to discuss issues associated with a pooling. On July 18, 1997, Messrs.
Mohrhauser and Killian received a letter from Mr. Arzbaecher of API discussing
the issues related to a pooling.
The Board of Directors of the Company met on July 22, 1997. The Board
agreed that API's offer should be considered and asked for additional
information in order to evaluate the benefits of such a transaction.
On July 24, 1997, Mr. Mohrhauser telephoned Mr. Sim to discuss the Board's
comments.
On July 29, 1997, Mr. Mohrhauser received a letter addressed to the
Company's Board of Directors describing the benefits of pooling.
On July 31, 1997, Mr. Mohrhauser, Lawrence Block and Mr. Sim met to discuss
the possible transaction. Mr. Sim advised Messrs. Mohrhauser and Block that API
would offer $22 per share for the Company on a pooling basis. Mr. Mohrhauser
advised Mr. Sim that a cash offer would be in the best interests of the
Company's shareholders and that the price of $22 should be reviewed.
A special meeting of the Board of Directors of the Company was held on
August 6, 1997. The Board concluded that in order to protect the shareholders,
it was essential that an outside firm be employed to offer a fairness opinion on
any offers. Several firms were considered. William Blair & Company, L.L.C. of
Chicago ("Blair") was selected to provide the opinion. On August 7, 1997, Mr.
Mohrhauser called Mr. Sim to advise him that the Board of Directors of the
Company had met the prior day and had decided to decline API's offer.
On August 13, 1997, Mr. Mohrhauser met with Phil W. Reitz of Blair. An
engagement letter was signed.
On August 14, 1997, Mr. Mohrhauser received a letter from API addressed to
the Board of Directors which included an offer to buy the Company's common stock
for $24.25 per share in cash. Over the next few days, Mr. Mohrhauser contacted
members of the Company's Board of Directors to advise them of the proposed
offer. A special meeting of the Board of Directors of the Company was held on
August 21, 1997 to review the offer made by API to purchase the Company's common
stock for $24.25 per share. The Board felt the offer must be considered and
authorized Blair to seek a price of $25.00 cash per share.
On August 23, 1997, the Company and Blair on the one hand and Blair and API
on the other had numerous telephone conversations which led to an agreed price
of $24.625 cash per share.
On August 28, 1997, while the parties were negotiating a definitive
agreement and related documents, Nasdaq contacted the Company to indicate that
there had been unusual market activity in the Common Stock and thereafter placed
a halt on trading in the Common Stock. In response, the Company issued a press
release announcing that it was engaged in discussions with Parent which could
result in the acquisition of the Company by Parent at a price of $24.625 per
Share, subject to negotiation of a definitive agreement and other conditions.
On September 2, 1997, the Board of Directors of the Company met to
consider, and approved, the proposed transaction. Parent's Board of Directors
likewise met and approved the transaction that day, and Parent, the Purchaser
and the Company entered into the Merger Agreement. In a joint press release
issued prior to the commencement of trading on September 3, 1997, Parent and the
Company announced, among other things, that they had entered into the Merger
Agreement and that the Offer would commence as soon as practicable, but in no
event later than five business days following execution of the Merger Agreement.
A copy of the press release follows:
10
<PAGE> 11
APPLIED POWER SIGNS DEFINITIVE AGREEMENT
TO PURCHASE VERSA TECHNOLOGIES, INC.
MILWAUKEE, SEPTEMBER 3, 1997 -- APPLIED POWER INC. (APW-NYSE) AND VERSA
TECHNOLOGIES INC. (VRSA-NASDAQ) announced today the signing of a definitive
agreement to purchase all the outstanding stock of Versa/Tek for $24.625 per
share in cash. Under the terms of the agreement, a subsidiary of Applied Power
will commence a tender offer for all of Versa/Tek's shares within 5 days. The
tender offer is contingent on antitrust approval and tender of at least a
majority of the shares outstanding. The total purchase price including Versa/Ten
stock options is approximately $140 million, which will be funded with expanded
borrowings from existing lenders.
The Board of Directors of Versa/Tek has unanimously approved the tender
offer and recommended that Versa/Tek shareholders accept the offer and tender
their shares. James E. Mohrhauser, Chairman and CEO of Versa Technologies, Inc.,
commented, "Versa/Tek's Board of Directors agreed that the offer is a fair offer
for our shareholders. The combined efforts of these businesses will undoubtedly
result in stronger products and programs for all the customers we serve."
Commenting on the acquisition, Richard G. Sim, Chairman and CEO of Applied
Power, stated: "We are excited about the Versa/Tek acquisition. For many years
we have thought the combination of Applied Power and Versa/Tek would have a
synergistic impact for both companies. The recent repositioning of Versa/Tek,
the disposition of the plastic businesses and the acquisition of the Eder
electronics business makes the fit stronger."
Versa/Tek, with annual sales of approximately $100 million (including the
full year impact of the Eder acquisition), is comprised of five businesses.
Power Gear, located in Beaver Dam WI, serves the recreational vehicle and truck
markets. Milwaukee Cylinder, located in Cudahy WI, specializes in hydraulic
cylinders to a variety of industrial markets. Eder, located in Oak Creek WI,
designs and manufacturers electronic and electrical systems to a variety of OEM
customers. Moxness Products, located in several WI locations, produces
industrial silicone products to a wide variety of end user markets. Mox-Med,
located in Portage WI, specializes in silicone related products to the medical
industry.
On the similarities of these markets with APW, Sim commented: "the
Versa/Tek end user markets match very well with Applied Power's. Our Engineered
Solutions segment serves the same or similar end user OEM customers as Power
Gear, Moxness Products, and Mox-Med, particularly the Truck and RV markets of
Power Gear. The combination of our Enerpac hydraulic tool business with the
Milwaukee Cylinder business is a natural fit in terms of distribution and
manufacturing. The Eder electronics business fits both our Engineered Solutions
and our Technical Environments and Enclosures businesses."
Sim continued: "three areas make the acquisition of Versa/Tek right for
Applied Power. The first is that Versa/Tek management has done a nice job of
repositioning the business away from the commodity type of business to more
value added products, which over the last 2 quarters has led to improved
profitability. The second is that the natural fit of the end user products and
channels should lead to higher sales penetration to both companies. The third is
the geographic presence of the two companies in southeast Wisconsin should lead
to some natural cost synergies between the two businesses. Taking all three of
these into account, our sense is that the acquisition should be accretive to EPS
in our fiscal year ending August 1998."
The above paragraph contains forward looking statements made pursuant to
the provisions of the Private Securities Litigation Reform Act of 1995. Applied
Power management cautions that these projections are based on current
understanding of the Versa Technologies business, and are highly dependent upon
a variety of factors which could cause actual results to differ from these
estimates. These include without limitation, general economic conditions, market
conditions in relevant markets, market acceptance of existing and new products
and successful integration of Versa/Tek with Applied Power.
Applied Power, headquartered in Wisconsin, is a global company comprised of
three business segments. Technical Environments and Enclosures expertise is in
configuring technical equipment for end users and in providing enclosures for
electronic equipment. Engineered Solutions supplies components and systems based
on hydraulic and vibration control technologies to a diverse group of OEM
customers. Distributed Products
11
<PAGE> 12
provides industrial and electrical tools and accessories through various
distributor and retail channels worldwide.
Versa Technologies, Inc., headquartered in Racine, Wisconsin, comprises
three business segments. The Electronics segment designs and manufactures custom
electronic and electrical systems for a broad range of applications. The
Engineered Materials segment fabricates custom engineered elastomeric components
for industrial and medical applications. The Fluid Power segment manufactures
custom engineered cylinders and hydraulic and electromechanical actuation
systems for a broad range of markets including the transportation, recreational
vehicle, and construction equipment markets.
* * * *
The Purchaser commenced the Offer on September 5, 1997.
Reasons for the Recommendation of the Company's Board of Directors.
In light of the Board's review of the Company's competitive and financial
position, recent operating results and prospects, the Board determined that the
Offer and the Merger are fair to, and in the best interests of, the Company and
its shareholders. In making such recommendation and in approving the Merger
Agreement and the transactions contemplated thereby, the Board considered a
number of factors, including, but not limited to, the following:
(i) the terms and conditions of the Merger Agreement;
(ii) the views expressed by management of the Company (at the Board
meetings on August 6, 1997 and August 21, 1997 and at several previous
Board meetings) regarding the financial condition, results of operations,
business and prospects of the Company, including the prospects of the
Company if the Company were to remain independent;
(iii) the recent trading price of the shares of Common Stock and that
the $24.625 per Share to be paid in the Offer and that the consideration in
the Merger represents a premium of approximately 21.6% over the $20.25
closing sale price for the Shares on August 28, 1997, the last trading day
prior to the public announcement of the discussions between the Company and
Parent, and a premium of approximately 44.9% over the $17.00 closing sale
price for the Shares one month prior on July 29, 1997;
(iv) the views expressed by management and the Board's conclusion that
it was not likely that any other party would consider a transaction that
was more favorable to the Company and its stockholders;
(v) the financial presentations of Blair at the August 21, 1997 and
September 2, 1997 Board meetings and the oral opinion of Blair delivered to
the Board at the September 2, 1997 Board meeting (which opinion was
subsequently confirmed by delivery of a written opinion dated September 2,
1997) to the effect that, as of such date and based upon and subject to
certain matters stated in such opinion, the cash consideration of $24.625
per Share to be received by holders of Shares in the Offer and the Merger,
taken together, was fair, from a financial point of view, to such holders.
Blair's opinion is directed only to the fairness, from a financial point of
view, of the cash consideration to be received in the Offer and the Merger
to holders of Shares and is not intended to constitute, and does not
constitute, a recommendation as to whether any shareholder should tender
Shares pursuant to the Offer. A copy of the opinion of William Blair &
Company, L.L.C. is attached hereto as Exhibit 6 and Annex II to this
Schedule 14D-9 and is incorporated herein by reference. STOCKHOLDERS ARE
URGED TO READ THE OPINION OF WILLIAM BLAIR & COMPANY, L.L.C. CAREFULLY AND
IN ITS ENTIRETY;
(vi) the Merger Agreement permits the Board, in the exercise of its
fiduciary duties, to furnish nonpublic information and data, and enter into
discussions and negotiations, in connection with an unsolicited acquisition
proposal and recommend an unsolicited acquisition proposal to the Company's
stockholders;
(vii) the Merger Agreement permits the Board, in the exercise of its
fiduciary duties, to terminate the Merger Agreement in favor of an
alternative acquisition proposals; upon such termination, the
12
<PAGE> 13
Company shall pay Parent a fee of $5,000,000 (representing approximately
3.6% of the total value of the consideration to be paid in the Offer and
the Merger); and
(viii) the transactions contemplated by the Merger Agreement provided
for an all cash payment to shareholders, with no financing condition.
The Board did not assign relative weights to the above factors or determine
that any factor was of particular importance. Rather, the Board viewed its
position and recommendations as being based on the totality of the information
presented to and considered by it.
The Board recognized that, while the consummation of the Offer gives the
Company's shareholders the opportunity to realize a significant premium over the
price at which the Shares were traded prior to the public announcement of the
Offer, tendering in the Offer would eliminate the opportunity for such
shareholders to participate in the future growth and profits of the Company. The
Board believes that the loss of the opportunity to participate in the growth and
profits of the Surviving Corporation was reflected in the Offer price of $24.625
per Share. The Board also recognized that there can be no assurance as to the
level of growth or profits to be attained by the Surviving Corporation in the
future.
It is expected that, if the Shares are not purchased by Parent in
accordance with the terms of the Offer or if the Merger is not consummated, the
Company's current management, under the general direction of the Board, will
continue to manage the Company as an ongoing business.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company has retained William Blair & Company, L.L.C. as its financial
advisor in connection with the Offer and the Merger. Pursuant to the terms of
Blair's engagement, the Company has agreed to pay Blair for its services an
aggregate financial advisory fee of $639,000. The Company also has agreed to
reimburse Blair for reasonable travel and other out-of-pocket expenses,
including reasonable legal fees and expenses, and to indemnify Blair and certain
related parties against certain liabilities, including liabilities under the
federal securities laws, arising out of Blair's engagement. In the ordinary
course of business, William Blair & Company, L.L.C. and its affiliates may
actively trade or hold the securities of the Company and Parent for their own
account or for the account of customers and, accordingly, may at any time hold a
long or short position in such securities.
Neither the Company nor any person acting on its behalf has employed,
retained or agreed to compensate any person to make solicitations or
recommendations to the stockholders concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
No transactions in the Shares have been effected during the past 60 days by
the Company or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company:
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth above, the Company is not engaged in any
negotiation in response to the Offer which relates to or would result in (i) an
extraordinary transaction, such as a merger or reorganization, involving the
Company or any subsidiary of the Company; (ii) a purchase, sale or transfer of
material amount of assets by the Company or any subsidiary of the Company; (iii)
a tender offer for or other acquisition of securities by or of the Company; or
(iv) any material change in the present capitalization or dividend policy of the
Company.
(b) Except as described in Item 3 or 4 above, there are no transactions,
Board resolutions, agreements in principle or signed contracts in response to
the Offer that relate to or would result in one or more of the events referred
to in Item 7(a) above.
13
<PAGE> 14
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The Information Statement attached hereto as Annex I is being furnished in
connection with the contemplated designation by Purchaser, pursuant to the
Merger Agreement, of certain persons to be appointed to the Board of Directors
of the Company other than at a meeting of the Company's stockholders following
the purchase by Purchaser of the number of Shares pursuant to the Offer
necessary to satisfy the Minimum Condition.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO.
- ---------
<S> <C> <C>
Exhibit 1 -- Agreement and Plan of Merger dated as of September 2, 1997
among the Parent, the Purchaser and the Company.
Exhibit 2 -- Pages 6-9 of the Company's Proxy Statement dated June 16,
1997.
Exhibit 3 -- Forms of Senior Executive Agreements with Employees of the
Company.
Exhibit 4 -- Letter to stockholders of the Company dated September 5,
1997.*
Exhibit 5 -- First Amendment to Rights Agreement between the Company and
the Rights Agent dated as of September 2, 1997.
Exhibit 6 -- Opinion of William Blair & Company, L.L.C. dated September
2, 1997 (included as Annex II to this Statement).*
</TABLE>
- ---------------
* Included with Schedule 14D-9 mailed to stockholders of the Company.
14
<PAGE> 15
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
VERSA TECHNOLOGIES, INC.
By: /s/ ROBERT M. SUKALICH
------------------------------------
Name: Robert M. Sukalich
Title: Vice President -- Finance
Dated: September 5, 1997
15
<PAGE> 16
ANNEX I
VERSA TECHNOLOGIES, INC.
9301 WASHINGTON AVENUE
P.O. BOX 085012
RACINE, WISCONSIN 53408-5012
------------------------
INFORMATION STATEMENT PURSUANT
TO SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
------------------------
This Information Statement, which is being mailed on or about September 5,
1997 to the holders of shares of the common stock, par value $.01 per share (the
"Common Stock") of Versa Technologies, Inc., a Delaware corporation (the
"Company"), is being furnished in connection with the designation by TVPA Corp.,
a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of
Applied Power Inc., a Wisconsin corporation ("Parent"), of persons (the
"Purchaser Designees") to the Board of Directors of the Company (the "Board").
Such designation is to be made pursuant to an Agreement and Plan of Merger dated
as of September 2, 1997 (the "Merger Agreement") among the Company, Parent and
the Purchaser.
Pursuant to the Merger Agreement, among other things, the Purchaser
commenced a cash tender offer on September 5, 1997 to purchase all of the issued
and outstanding shares (the "Shares") of the Company's Common Stock at a price
of $24.625 per Share, net to the seller in cash, as described in the Purchaser's
Offer to Purchase dated September 5, 1997 and the related Letter of Transmittal
(which Offer to Purchase and related Letter of Transmittal together constitute
the "Offer"). The Offer is scheduled to expire at 5:00 P.M. Eastern time on
Friday, October 3, 1997, unless extended. The Offer is subject to, among other
things, the condition that a number of Shares representing not less than a
majority of the Company's outstanding voting power on a fully diluted basis be
validly tendered prior to the expiration of the Offer and not withdrawn (the
"Minimum Condition"). The Merger Agreement also provides for the merger (the
"Merger") of the Purchaser with and into the Company as soon as practicable
after consummation of the Offer. Following the consummation of the Merger (the
"Effective Time"), the Company will be the surviving corporation (the "Surviving
Corporation") and a wholly owned subsidiary of the Parent. In the Merger, each
Share issued and outstanding immediately prior to the Effective Time (other than
Shares held in the treasury of the Company or by Parent, the Purchaser, or any
indirect or direct wholly owned subsidiary of Parent or the Company, and other
than Shares held by shareholders who shall have demanded and perfected appraisal
rights, if any, under Delaware law) will be canceled and converted automatically
into the right to receive cash in an amount of $24.625 or any higher price that
may be paid per Share in the Offer, without interest.
The terms of the Merger Agreement, a summary of the events leading up to
the Offer and the execution of the Merger Agreement and other information
concerning the Offer and the Merger are contained in the Offer to Purchase and
in the Solicitation/Recommendation Statement on Schedule 14D-9 of the Company
(the "Schedule 14D-9") with respect to the Offer, copies of which are being
delivered to shareholders of the Company contemporaneously herewith. Certain
other documents (including the Merger Agreement) were filed with the Securities
and Exchange Commission (the "SEC") as exhibits to the Schedule 14D-9 and as
exhibits to the Tender Offer Statement on Schedule 14D-1 of the Purchaser and
Parent (the "Schedule 14D-1"). The exhibits to the Schedule 14D-9 and the
Schedule 14D-1 may be examined at, and copies thereof may be obtained from, the
regional offices of and public reference facilities maintained by the SEC
I-1
<PAGE> 17
(except that the exhibits thereto cannot be obtained from the regional offices
of the SEC) in the manner set forth in Section 7 of the Offer to Purchase.
No action is required by the shareholders of the Company in connection with
the election or appointment of the Purchaser Designees to the Board. However,
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the mailing to the Company's shareholders of the information set
forth in this Information Statement prior to a change in a majority of the
Company's directors otherwise than at a meeting of the Company's shareholders.
The information contained in this Information Statement concerning the
Parent, the Purchaser and the Purchaser Designees has been furnished to the
Company by such persons, and the Company assumes no responsibility for the
accuracy or completeness of such information. The Schedule 14D-1 indicates that
the principal executive office of the Parent and Purchaser is located at 13000
West Silver Spring Drive, Butler, Wisconsin 53007.
GENERAL
The shares of Common Stock are the only class of voting securities of the
Company outstanding. Each share of Common Stock is entitled to one vote. As of
September 2, 1997, there were 5,596,083 shares of Common Stock outstanding. The
Board of Directors of the Company currently consists of eight members. Each
director holds office until his successor is elected and qualified or until his
earlier death, resignation or removal.
RIGHT TO DESIGNATE DIRECTORS; THE PURCHASER DESIGNEES
The Merger Agreement provides that promptly upon the purchase by Parent of
a majority of the outstanding shares of Company Common Stock pursuant to the
Offer, either (i) a majority of the members of the Board of Directors of the
Company shall resign and the remaining members of the Board of Directors of the
Company shall fill all of the board positions so vacated with individuals
designated by Parent or (ii) the size of the Board of Directors of the Company
shall be expanded and the vacant seats filled with individuals designated by
Parent so that Parent's designees shall constitute a majority of the members of
the Board of Directors of the Company. In any case, at all times thereafter
through the Effective Time of Merger a majority of the Board of Directors of the
Company shall be individuals designated by Parent.
From and after the time, if any, that the Purchaser Designees are appointed
to the Company's Board of Directors, any amendment of the Merger Agreement, any
termination of the Merger Agreement by the Company, any extension of time for
performance of any of the obligations of Parent or the Purchaser thereunder, or
any waiver of any condition to the obligations of the Company or any of the
Company's rights thereunder may be effected only by the action of a majority of
the directors of the Company then in office who were directors of the Company on
the date of the Merger Agreement, which action will be deemed to constitute the
action of the full Board of Directors of the Company; provided, however, that in
no event may the Company, Parent or the Purchaser amend the provision of the
Merger Agreement regarding the continuation of indemnification and insurance for
the Company's officers and directors. In addition, until the Effective Time of
Merger, the Company will use reasonable efforts to retain as members of its
Board of Directors at least two directors who were directors on the date of the
Merger Agreement (the "Company Designees"). If any or all of the Company
Designees resign, the remaining Company Designees (or, if no other Company
Designees remain on the Board, the last resigning Company Designee) shall have
the right to appoint a successor or successors to serve as Company Designees.
Parent and the Purchaser have agreed to cause each such appointment to be
effective. Nothing in this provision prohibits, or should be construed to
prohibit, any of the Purchaser Designees to the Company's Board of Directors
from voting on the termination of the Merger Agreement.
Purchaser has informed the Company that each of the Purchaser Designees
listed below has consented to act as a director.
I-2
<PAGE> 18
It is expected that the Purchaser Designees may assume office at any time
following the purchase by Purchaser of such number of Shares that satisfies the
Minimum Condition, which purchase cannot be earlier than October 3, 1997, and
that, upon assuming office, the Purchaser Designees will thereafter constitute
at least a majority of the Board.
Biographical information concerning each of the Purchaser Designees,
directors and executive officers is presented on the following pages.
PURCHASER DESIGNEES
The names, ages and positions of the Purchaser Designees are listed below.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH PARENT
- ---- --- --------------------
<S> <C> <C>
Richard G. Sim................... 52 Chairman, President and Chief Executive Officer; Director
William J. Albrecht.............. 46 Senior Vice President, Engineered Solutions
Robert C. Arzbaecher............. 37 Vice President, Chief Financial Officer
Douglas R. Dorszynski............ 45 Vice President, Tax and Treasurer
Anthony W. Asmuth III............ 55 Secretary
</TABLE>
Richard G. Sim was elected President and Chief Operating Officer of Parent
in 1985, Chief Executive Officer of Parent in 1986 and Chairman of the Board in
1988. From 1982 through 1985, Mr. Sim was a General Manager in the General
Electric Medical Systems Business Group. He is also a director of IPSCO Inc. and
Falcon Building Products, Inc.
William J. Albrecht was named Senior Vice President of Engineered Solutions
(a division of Parent) in 1994. Prior to that, he served as Vice President of
Power-Packer and APITECH (divisions of Parent) since 1991. He joined Parent in
1989 as General Manager of Parent's APITECH Division in the United States. Prior
to joining Parent, Mr. Albrecht was Director of National Accounts and Industrial
Power Systems at Generac Corp. from 1987 to 1989 and Vice President-Sales at NP
Marketing from 1985 to 1987.
Robert C. Arzbaecher was named Vice President and Chief Financial Officer
of Parent in 1994. He had served as Vice President, Finance of Distributed
Products from 1993 to 1994. He joined Parent in 1992 as Controller. From 1988
through 1991, Mr. Arzbaecher was employed by Grabill Aerospace Industries LTD,
where he last held the position of Chief Financial Officer. Prior to 1988, Mr.
Arzbaecher held various financial positions at Farley Industries Inc. and at
Grant Thornton and Company, a public accounting firm.
Douglas R. Dorszynski was appointed Vice President, Tax and Treasurer of
Parent in 1994. Mr. Dorszynski joined Parent in 1983 as Corporate Tax Manager
and was subsequently appointed Director, Tax and Special Project Planning of
Parent in 1985. Prior to joining Parent, Mr. Dorszynski was employed by Arthur
Young & Co., a public accounting firm, from 1978 to 1983.
Anthony W. Asmuth III is a partner in the law firm of Quarles & Brady,
Milwaukee, Wisconsin, having joined that firm in 1989. Quarles & Brady performs
legal services for Parent and certain of its subsidiaries. Prior to joining
Quarles & Brady, he was a partner with the law firm of Whyte Hirschboeck Dudek
S.C. Mr. Asmuth has previously served as Secretary of Parent from 1986 to 1993.
He was re-elected Secretary of Parent in 1994.
CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The names of the current directors and executive officers of the Company,
their ages as of March 31, 1997, and certain other information about them are
set forth below. As indicated above, some of the current
I-3
<PAGE> 19
directors may resign effective immediately following the purchase of Shares by
the Purchaser pursuant to the Offer.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
James E. Mohrhauser............... 74 Chairman and Chief Executive Officer and Director
Thomas J. Magulski................ 53 President and Chief Operating Officer and Director
Robert M. Sukalich................ 38 Vice President -- Finance and Treasurer
David J. McKendrey................ 60 President -- Fluid Power
Michael W. Garvey................. 53 President -- Engineered Materials
Richard H. Marks.................. 59 President -- Eder Industries and Director
Denis H. Carroll.................. 58 Director
William P. Killian................ 62 Director
Joan R. Lloyd..................... 47 Director
Herman B. McManaway............... 71 Director
Morris W. Reid.................... 71 Director
</TABLE>
The executive officers of the Company are elected annually by the Board of
Directors following the annual meeting of shareholders and serve at the
discretion of the Board of Directors.
Denis H. Carroll -- Chairman and Chief Executive Officer of CRL Industries,
Inc. (a holding company) since October 1992 and Vice President of American
Couplings Company since April 1997. President and Treasurer of American
Couplings Company from January 1970 to April 1997.
William P. Killian -- Vice President, Corporate Development and Strategy of
Johnson Controls, Inc., Milwaukee, Wisconsin (a diversified industrial products
and systems company) since April 1976. Mr. Killian is also a director of
Interstate Battery Systems of America, AquaChem, Inc., and Gehl Company.
Joan R. Lloyd -- President of Joan Lloyd & Associates, Inc. since November
1990 (a consulting firm specializing in organizational change). Prior to 1990
she held a number of management positions with Northwestern Mutual Life
Insurance Company, Milwaukee, Wisconsin.
Richard H. Marks -- President of Eder Industries, Inc. since December 1987.
Versa Technologies, Inc. acquired Eder Industries in October 1996.
Herman B. McManaway -- Retired. Vice President of Ruddick Corporation and
President of Ruddick Investment Co. from September 1973 to December 1986. Mr.
McManaway is also a director of Hughes Supply, Inc.
Thomas J. Magulski -- President and Chief Operating Officer of the Company
since December 14, 1993. Mr. Magulski worked as a business consultant for the
Company from March 1992 through September 1993. Prior to his involvement with
the Company, he was Vice President of Intertech Resources, Inc. from May 1985 to
March 1992. Mr. Magulski is also a director of STERIS Corporation.
James E. Mohrhauser -- Chairman of the Board of Directors and Chief
Executive Officer of the Company since April 1989. President and Chief Executive
Officer of the Company prior to April 1989.
Morris W. Reid -- Vice Chairman of the Board of Directors of the Company
since April 1, 1989. President of the Company from October 1989 to July 1992.
Chairman of the Board of Directors of the Company prior to April 1, 1989. Mr.
Reid is currently a business advisor and previously served as chairman of J. I.
Case Co. from 1972 to 1978. Mr. Reid is also a director of Research Products
Corporation.
DIRECTORS MEETINGS AND COMMITTEES
During the year ended March 31, 1997, the Board of Directors of the Company
held six meetings. Each director attended at least 75% of the meetings of the
Board and the Committees of which he is a member.
I-4
<PAGE> 20
Directors who are full-time employees of the Company receive no additional
compensation for services as Directors. Directors not so employed received
annual retainers of $8,500 and fees of $700 for each Board meeting attended and
$500 ($600 for the chairperson) for each committee meeting attended. In lieu of
the annual retainer and meeting fees, Mr. Reid receives $3,000 per month for
service as Vice Chairman of the Board of Directors and as a member of the
Executive Committee.
As of March 31, 1997, D. Carroll, W. Killian, H. McManaway, J. Lloyd, and
M. Reid, directors of the Company, and Mr. Lawrence Block, Secretary of the
Company, each held an option to purchase 5,000 shares of Common Stock of the
Company at a price of $14.12 per share, the fair market value of the Common
Stock on September 27, 1994, the date of grant.
Personnel, Compensation and Stock Option Committee. The Personnel,
Compensation and Stock Option Committee has responsibility for establishing
compensation objectives and policies for all employees and determining
compensation for the Company's executive officers. The Committee, consisting of
J. Lloyd (Chairperson), W. Killian, D. Carroll, and H. McManaway met one time
during the last fiscal year.
Audit Committee. The Audit Committee reviews and evaluates the
effectiveness of the Company's financial and accounting functions, including
review of the scope and results of the audit work performed by the independent
accountants and by the Company's internal accounting staff. The independent
accountants meet with the Audit Committee at least once a year to discuss the
results of their examinations. The Audit Committee, composed of W. Killian
(Chairperson), D. Carroll, J. Lloyd and H. McManaway, met twice during the last
fiscal year.
Nominating Committee. The Nominating Committee is responsible for the
nomination of candidates for election to the Board of Directors. It will
consider nominees recommended to the Secretary of the Company. The Nominating
Committee, composed of D. Carroll (Chairperson), W. Killian, and J. Lloyd, met
once during the last fiscal year.
Executive Committee. The Executive Committee meets on a regular basis to
advise management on important proposals and policy matters and to monitor
management and Company performance. The Executive Committee, currently composed
of J. Mohrhauser (Chairperson), T. Magulski and M. Reid, met seven times during
the last fiscal year.
I-5
<PAGE> 21
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto set forth certain information with
respect to the beneficial ownership of shares of Common Stock as of May 15, 1997
(i) individually by the chief executive officer of the Company, each of the four
other most highly paid executive officers of the Company in 1997 (the "Named
Executive Officers") and each director of the Company, (ii) by all executive
officers and directors of the Company as a group and (iii) by each person known
to the Company to be the beneficial owner of more than five percent of the
outstanding Common Stock. Except as noted below, each of the persons listed has
sole investment and voting power with respect to the shares indicated and the
address of each of the persons listed is c/o the Company:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY % OF
NAME ADDRESS OWNED CLASS
---- ---------------------------- ------------ -----
<S> <C> <C> <C>
Brinson Partners, Inc.................... Three First National Plaza 570,200 10.15
Chicago, IL 60602-4298
Fenimore Asset Management, Inc........... P.O. Box 310 551,383 9.81
Cobleskill, NY 12043
James E. Mohrhauser...................... 9301 Washington Avenue 436,134(1) 7.7
Racine, WI 53408-5012
T. Rowe Price Associates................. 100 East Pratt Street 351,000 6.25
Baltimore, MD 21202
State of Wisconsin Investment Board...... P.O. Box 7842 347,900 6.19
Madison, WI 53707
</TABLE>
- ---------------
(1) Includes 173,436 shares owed by Mr. James E. Mohrhauser's wife, for which
beneficial ownership is disclaimed. Also includes an option to purchase
33,000 shares exercisable within 60 days of May 15, 1997.
<TABLE>
<CAPTION>
SHARES OF STOCK PERCENT
NAME BENEFICIALLY OWNED OWNED
- ---- ------------------ --------
<S> <C> <C>
Denis H. Carroll............................................ 8,395(1) *
Michael W. Garvey........................................... 2,500(2) *
William P. Killian.......................................... 8,600(2) *
Joan R. Lloyd............................................... 3,692(3) *
David J. McKendrey.......................................... 37,500(2) *
Herman B. McManaway......................................... 10,850(2) *
Thomas J. Magulski.......................................... 32,740(2) *
Richard H. Marks............................................ 0 *
James E. Mohrhauser......................................... 436,134(4) 7.7
Morris W. Reid.............................................. 17,968(2) *
Robert M. Sukalich.......................................... 17,800(2) *
All directors and named officers as a group................. 576,179(5) 10.1
</TABLE>
- ---------------
* Less than one percent of the Company's outstanding shares of Common Stock.
(1) Includes 374 shares owned by Mr. Carroll's daughter for which beneficial
ownership is disclaimed. Also includes 2,500 shares issuable pursuant to
stock options exercisable within 60 days of May 15, 1997.
(2) Includes shares issuable pursuant to stock options exercisable within 60
days of May 15, 1997 as follows: M. Garvey, 2,500 shares; W. Killian, 7,600
shares; D. McKendrey, 27,500 shares; H. McManaway, 2,500 shares; T.
Magulski, 20,740 shares; Morris W. Reid, 2,500; and R. Sukalich, 17,500
shares.
I-6
<PAGE> 22
(3) Includes 117 shares owned by Ms. Lloyd's husband, for which beneficial
ownership is disclaimed. Also includes 2,500 shares issuable pursuant to
stock options exercisable within 60 days of May 15, 1997.
(4) Includes 173,436 shares owned by Mr. Mohrhauser's wife, for which beneficial
ownership is disclaimed. Also includes an option to purchase 33,000 shares
exercisable within 60 days of May 15, 1997.
(5) Includes 118,840 shares issuable pursuant to stock options exercisable
within 60 days of May 15, 1997.
I-7
<PAGE> 23
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information with respect to compensation
paid to or accrued on behalf of the Named Executive Officers in the fiscal years
ended March 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------- ------------
FISCAL AWARDS
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#)
- --------------------------- ------ ---------- --------- ------------
<S> <C> <C> <C> <C>
James E. Mohrhauser.................................... 1997 $228,800 $108,680 0
Chairman and Chief Executive Officer 1996 220,000 16,500 0
1995 200,000 100,000 0
Thomas J. Magulski..................................... 1997 $182,000 $ 77,805 0
President and Chief Operating Officer 1996 175,000 11,813 0
1995 160,000 72,000 25,000
Robert M. Sukalich..................................... 1997 $104,518 $ 39,717 0
Vice President -- Finance & Treasurer 1996 95,000 8,500 0
1995 84,700 33,880 15,000
David J. McKendrey..................................... 1997 $134,629 $ 57,083 0
President -- Fluid Power 1996 128,000 58,539 0
1995 122,810 53,729 15,000
Michael W. Garvey(1)................................... 1997 $118,833 $ 15,000 10,000
President -- Engineered Materials
</TABLE>
- ---------------
(1) Mr. Garvey joined the Company on April 1, 1996 as Vice President of
Operations for Mox-Med/ Moxness.
I-8
<PAGE> 24
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth (i) the number of shares of Common Stock
subject to options granted to each Named Executive Officer during fiscal year
1997, (ii) the percentage such grants represent of the total number of options
granted to all employees of the Company during fiscal year 1997 and (iii) the
expiration date of such options.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZED
----------------------------------------------------- VALUE AT ASSUMED
NUMBER OF RATES OF STOCK
SECURITIES # OF TOTAL PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ---- ------------- ------------ --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
James E. Mohrhauser................... None
Thomas J. Magulski.................... None
Robert M. Sukalich.................... None
David J. McKendrey.................... None
Michael W. Garvey..................... 10,000 16% 13.63 5/16/06 $85,800 $217,300
</TABLE>
- ---------------
(1) All options granted in fiscal 1997 become exercisable in 25% annual
increments beginning one year from the date of grant, and expire in ten
years from date of grant.
(2) Options are granted at market value on the date of grant. Market value is
the closing market price on the date of grant.
(3) Represents the potential realizable value net of the exercise price but
before any income taxes associated with the exercise that would be realized
assuming the options were held for the entire ten-year period and that the
stock price increased at compound rates of 5% and 10% a base price of $13.63
per share. Actual gains, if any, on stock option exercises and Common Stock
are dependent on the future performance of the Common Stock and overall
market conditions. There can be no assurance that the amounts reflected in
this table will be achieved.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table shows the value of exercisable and unexercisable
options held by each of the Named Executive Officers as of March 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTION SHARES IN-THE-MONEY OPTIONS
SHARES AT MARCH 31, 1997 (#) AT MARCH 31, 1997($)(1)
ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James E. Mohrhauser........... 33,000 0 $37,125 $0
Thomas J. Magulski............ 20,740 29,260 $ 0 $0
Robert M. Sukalich............ 17,500 7,500 $ 3,375 $0
David J. McKendrey............ 11,694 43,593 23,750 7,500 $20,625 $0
Michael E. Garvey............. 0 10,000 $ 0 $0
</TABLE>
- ---------------
(1) Represents the difference between $13.625, the closing price of the
Company's Common Stock on March 31, 1997, and the option exercise price.
EMPLOYMENT AGREEMENT
The Company's subsidiary, Eder Industries, Inc., entered into an employment
agreement with Mr. Richard H. Marks for a three-year period ending November 30,
1999. Under the agreement, Mr. Marks will receive a base salary of $226,000 and
be eligible to receive bonus compensation in accordance with the Company's bonus
plan for executive officers.
I-9
<PAGE> 25
CHANGE-IN-CONTROL ARRANGEMENTS
On August 28, 1997, the Company entered into Senior Executive Agreements
with Thomas J. Magulski, Robert M. Sukalich, Janet L. Ford and Edward V. Surek.
Under these Agreements, which have a term of two years, if there is a Change of
Control (as defined) after July 1, 1997, if the Company terminates the
employment of the executives other than for Good Cause (as defined), or if the
executives terminate their employment for Good Reason (as defined) or terminate
their employment at any time during the seventh month after a Change in Control
occurs, the executives will be entitled to be paid an amount equal to the sum of
Base Salary (as defined) plus Bonus (as defined), all multiplied by two. On
August 28, 1997, the Company also entered into similar agreements with 31 other
employees providing similar Change in Control benefits except that such
employees will receive payments equal to the sum of .50 plus .01923 for each
year of service with the Company or its subsidiaries multiplied by Base Salary
and Bonus and such employees will not receive any such payment unless they are
terminated without Good Cause or terminate voluntarily for Good Reason. The
Company also entered into a similar Senior Executive Agreement with Richard H.
Marks, on August 28, 1997. Mr. Marks' agreement is identical to the agreements
in effect for the other 31 employees except that Mr. Marks' right to Change of
Control benefits upon his voluntary termination of employment for Good Reason
will only apply if such termination occurs on or after March 1, 1999. In
addition, Mr. Marks' Senior Executive Agreement provides that in the event of a
conflict between the provisions of that agreement and those of his employment
agreement in place prior to August 28, 1997, the provisions of the latter
agreement will control.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater-than-ten-percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, during the fiscal year ended March 31, 1997,
all Section 16(a) filing requirements applicable to its officers, directors and
greater-than-ten-percent beneficial owners were complied with.
I-10
<PAGE> 1
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
APPLIED POWER INC.,
TVPA CORP.
AND
VERSA TECHNOLOGIES, INC.
Dated as of September 2, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Acquisition and Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Blair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Company Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 Company SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 Company Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15 Company Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16 Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.18 DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.19 Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.20 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.21 Effective Time of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.22 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.23 Environmental Claim, Environmental Hazardous Materials, Environmental
Laws, Environmental Permits and Environmental Release . . . . . . . . . . . . . . . . 3
1.24 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.25 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.26 Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.27 Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.28 Existing Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.29 Existing Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.30 Existing Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.31 Existing Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.32 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.33 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.34 Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.35 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
</TABLE>
ToC-i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1.36 Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.37 Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.38 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.39 Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.40 Minimum Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.41 Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.42 Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.43 Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.44 Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.45 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.46 Per Share Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.47 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.48 Product Liability Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.49 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.50 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.51 Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.52 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.53 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.54 Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.55 SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.56 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.57 Special Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.58 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.59 Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.60 Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Company Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Effective Time of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 Conversion of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Newco Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Exchange of Company Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7 Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.9 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
ToC-ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
3.10 Rights Agreement; Certificate of Incorporation Provision . . . . . . . . . . . . . . . 13
3.11 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Duties Concerning Representations and Covenants . . . . . . . . . . . . . . . . . . . 15
4.4 Deliveries of Information; Consultation . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.6 Legal Conditions to Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.8 Indemnification of Company Directors and Officers; Directors
and Officers Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.9 Company Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.10 Deferred Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . 21
5.1 Organization; Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.3 Authorization; Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 No Violation or Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.5 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7 Company SEC Reports and Books and Records . . . . . . . . . . . . . . . . . . . . . . 23
5.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.9 Contingent and Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 24
5.10 Existing Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.11 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.12 No Violation of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.13 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.14 Patents, Trademarks and Like Assets . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.15 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.17 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.18 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.19 No Pending Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.20 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.21 Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.22 Opinion of Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.23 Takeover Statutes; Certificate of Incorporation Provision . . . . . . . . . . . . . . 31
5.24 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
ToC-iii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
5.25 Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.26 Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.27 Product Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.28 Representations Complete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO . . . . . . . . . . . . . . . . . . 34
6.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 Authorization; Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.3 No Violation or Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.5 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.7 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.8 Offer Documents; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.9 Representations Complete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VII CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER . . . . . . . . . . . . . . . . 36
7.1 Carry on in Regular Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.2 Use of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.3 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.4 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.5 Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.6 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.7 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.8 Preservation of Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.11 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.12 Dividends; Redemptions; Issuance of Stock . . . . . . . . . . . . . . . . . . . . . . 37
7.13 No Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.14 Dissolution; Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.15 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE MERGER . . . . . . . . . . . . . . . . . . . . . . . 38
8.1 Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.2 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.3 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.4 Approval of Company Shareholders; Certificate of Merger . . . . . . . . . . . . . . . 38
</TABLE>
ToC-iv
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE IX TERMINATION; MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.2 Rights on Termination; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.3 Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . 40
9.4 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.9 Counterparts; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.12 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.13 No Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.14 Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
ToC-v
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of this 2nd day of
September, 1997 by and among APPLIED POWER INC., a Wisconsin corporation
("Parent"), TVPA CORP., a Delaware corporation ("Newco"), and VERSA
TECHNOLOGIES, INC., a Delaware corporation (the "Company").
RECITALS
WHEREAS, the respective Boards of Directors of Parent, Newco and the
Company have each determined that it is advisable and in the best interests of
each such respective entity and their shareholders for Newco to commence a cash
tender offer to purchase all outstanding shares of Company Common Stock (as
defined below), together with the corresponding Rights (as defined below), at a
price of $24.625 per share (the "Offer") and, following the consummation of the
Offer, to merge Newco with and into the Company (the "Merger"); and
WHEREAS, the Board of Directors of the Company has unanimously (i)
approved the Offer and the Merger, (ii) determined that the Offer and the
Merger are in the best interests of the Company Shareholders, and (iii)
approved and adopted this Agreement and the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings specified:
1.1 "Acquisition" and "Acquisition Proposal" shall have the
meanings specified in Section 4.5(a) of this Agreement.
1.2 "Affiliates" shall mean all Persons who are affiliates of the
Company, Purchaser or Newco, as the case may be, including all directors,
executive officers and 5% or more shareholders.
1.3 "Agreement" shall mean this Agreement and Plan of Merger,
together with the Exhibits and the Disclosure Schedule attached hereto, as the
same may be amended from time to time in accordance with the terms hereof.
1
<PAGE> 8
1.4 "Blair" shall mean William Blair & Co., L.L.C.
1.5 "Buildings" shall mean all buildings, fixtures, structures and
improvements used by the Company and the Subsidiaries and located on the Real
Estate.
1.6 "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.A. Section 9601,
et seq., and the rules, regulations and orders promulgated thereunder.
1.7 "Certificate of Merger" shall mean the appropriate Certificate
of Merger to be filed with the Delaware Secretary of State in connection with
the Merger.
1.8 "Closing Date" shall mean:
(a) That date following consummation of the Offer which
is the first business day after satisfaction (or waiver) of all of the
conditions set forth in Article VIII; or
(b) Such other date as the parties may mutually agree to
in writing.
1.9 "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, as the same may be in
effect from time to time.
1.10 "Company" shall mean Versa Technologies, Inc., a Delaware
corporation.
1.11 "Company Certificates" shall have the meaning specified in
Section 3.6(b)(i).
1.12 "Company Common Stock" shall mean all of the issued and
outstanding shares of common stock, $.01 par value per share, of the Company.
1.13 "Company SEC Reports" shall mean: (a) Annual Reports on Form
10-K for the years ended March 31, 1994, 1995, 1996 and 1997 (including any
amendments thereto) and related Annual Reports to Shareholders; (b) Quarterly
Reports on Form 10-Q for the quarters ended June 30, 1994, September 30, 1994,
December 31, 1994, June 30, 1995, September 30, 1995, December 31, 1995, June
30, 1996, September 30, 1996, December 31, 1996, and June 30, 1997; (c) Proxy
Statements dated June 19, 1995, June 17, 1996 and June 16, 1997; (d) the
Current Report on Form 8-K dated January 8, 1997; (e) two registration
statements on Form S-8, each filed on December 2, 1996; (f) the registration
statement on Form S-3 filed on November 18, 1994 and the related prospectus for
the Company's Stock Purchase and Dividend Reinvestment Plan dated January 27,
1995; and (g) all documents filed by the Company with the SEC after the date of
this Agreement and prior to the Effective Time of Merger.
1.14 "Company Shareholders" shall mean all Persons owning shares of
Company Common Stock on the relevant date.
2
<PAGE> 9
1.15 "Company Special Meeting" shall mean a special meeting of the
Company Shareholders for the purpose of considering the Merger, this Agreement
and the transactions contemplated hereby and for such other purposes as may be
necessary or desirable.
1.16 "Confidentiality Agreement" shall mean the non-disclosure
agreement between Parent and the Company dated June 9, 1997.
1.17 "Contracts" shall mean all of the material contracts,
agreements, leases and commitments, written or oral, to which the Company or
any Subsidiary is a party or by which the Company or any Subsidiary is bound,
including but not limited to those Contracts listed and described on the
Disclosure Schedule.
1.18 "DGCL" shall mean the Delaware General Corporation law, as the
same may be in effect from time to time.
1.19 "Disclosure Schedule" shall mean the Disclosure Schedule,
dated the date of this Agreement, delivered by the Company to Parent
contemporaneously with the execution and delivery of this Agreement.
1.20 "Dissenting Shares" shall have the meaning specified in
Section 3.9.
1.21 "Effective Time of Merger" shall have the meaning specified in
Section 3.3 of this Agreement.
1.22 "Employee Benefit Plans" shall mean any pension plan, profit
sharing plan, bonus plan, incentive compensation plan, stock ownership plan,
stock purchase plan, stock option plan, stock appreciation plan, employee
benefit or welfare plan, retirement plan, deferred compensation plan, fringe
benefit program, insurance plan, severance plan, disability plan, health care
plan, sick leave plan, death benefit plan, defined contribution plan or any
other plan or program to provide retirement income, fringe benefits or other
benefits to former or current employees of the Company or the Subsidiaries.
1.23 "Environmental Claim," "Environmental Hazardous Materials,"
"Environmental Laws," "Environmental Permits" and "Environmental Release" shall
have the meanings specified in Section 5.25 of this Agreement.
1.24 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be in effect from time to time.
1.25 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as the same may be in effect from time to time.
1.26 "Exchange Agent" shall have the meaning specified in Section
3.6(a).
3
<PAGE> 10
1.27 "Exchange Fund" shall have the meaning specified in Section
3.6(a).
1.28 "Existing Contracts" shall mean those Contracts which are
listed and briefly described on the Disclosure Schedule.
1.29 "Existing Liens" shall mean all Liens affecting a material
amount of the assets or properties of the Company or any Subsidiary on the date
of this Agreement, all of which are listed and briefly described on the
Disclosure Schedule.
1.30 "Existing Litigation" shall mean all pending or threatened
suits, audit inquiries, workers compensation claims, product warranty claims,
litigation, arbitrations, proceedings, governmental investigations, labor
grievances, citations and actions of any kind against the Company or any
Subsidiary, all of which are listed and briefly described on the Disclosure
Schedule.
1.31 "Existing Plans" shall mean all Employee Benefit Plans of the
Company and the Subsidiaries, all of which are listed and briefly described on
the Disclosure Schedule.
1.32 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as the same may be in effect from time to time.
1.33 "Indebtedness" shall mean all liabilities or obligations of
the Company or any Subsidiary, whether primary or secondary or absolute or
contingent, all of which are set forth on the Disclosure Schedule: (a) for
borrowed money; (b) evidenced by notes, bonds, debentures or similar
instruments; or (c) secured by Liens on any assets of the Company
1.34 "Indemnified Parties" shall have the meaning specified in
Section 4.8(b).
1.35 "Insurance Policies" shall mean all of the insurance policies
currently in effect and owned by the Company, all of which are listed and
briefly described on the Disclosure Schedule.
1.36 "Lien" shall mean, with respect to any material amount of
assets: (a) any mortgage, pledge, lien, charge, claim, restriction,
reservation, condition, easement, covenant, lease, encroachment, title defect,
imposition, security interest or other encumbrance of any kind; and (b) the
interest of a vendor or lessor under any conditional sale agreement, financing
lease or other title retention agreement relating to such assets.
1.37 "Material Adverse Effect" shall mean a material adverse effect
on the condition, business, assets, results of operations or prospects of the
Company and the Subsidiaries, taken as a whole, or of Parent and Newco, taken
as a whole, as the case may be.
1.38 "Merger" shall mean the merger of Newco with and into the
Company pursuant to this Agreement and the Certificate of Merger.
4
<PAGE> 11
1.39 "Merger Consideration" shall have the meaning in Section
3.4(a).
1.40 "Minimum Condition" shall have the meaning in Section 2.1(a)
of this Agreement.
1.41 "Newco" shall mean TVPA Corp., a Delaware corporation and
wholly-owned subsidiary of Parent.
1.42 "Offer" shall have the meaning in Section 2.1(a) of this
Agreement.
1.43 "Offer Documents" shall have the meaning in Section 2.1(c) of
this Agreement.
1.44 "Parent" shall mean Applied Power Inc., a Wisconsin
corporation.
1.45 "Permits" shall mean all licenses, permits, approvals,
franchises, qualifications, certificates, permissions, agreements and other
orders and governmental or regulatory authorizations required for the conduct
of the business of, and material to, the Company and the Subsidiaries. All
such Permits are listed and briefly described on the Disclosure Schedule.
1.46 "Per Share Amount" shall have the meaning specified in Section
2.1(a).
1.47 "Person" shall mean a natural person, corporation, trust,
partnership, governmental entity, agency or branch or a department thereof, or
any other legal entity.
1.48 "Product Liability Matters" shall mean any and all product
recalls, and liabilities or obligations or damages of any kind for death,
disease, or injury to Persons, businesses or property relating to the products
designed, produced, distributed, sold or shipped by the Company or the
Subsidiaries.
1.49 "Proxy Statement" shall mean the proxy statement (if any) to
be filed by the Company with the SEC and to be distributed to the Company
Shareholders in connection with the Company Special Meeting and the approval of
the Merger by the Company Shareholders.
1.50 "Real Estate" shall mean the parcels of real property owned or
leased by the Company or the Subsidiaries, all of which are identified in the
Disclosure Schedule.
1.51 "Representatives" shall have the meaning specified in Section
4.1(a).
1.52 "Rights" shall have the meaning in the Rights Agreement.
5
<PAGE> 12
1.53 "Rights Agreement" shall mean the Rights Agreement dated as of
December 13, 1988, as amended, between the Company and Firstar Trust Company,
as Rights Agent.
1.54 "Schedule 14D-9" shall have the meaning in Section 2.2(b).
1.55 "SEC" shall mean the Securities and Exchange Commission.
1.56 "Securities Act" shall mean the Securities Act of 1933, as the
same may be in effect from time to time.
1.57 "Special Event" shall have the meaning specified in Section
4.5(a).
1.58 "Subsidiary" shall mean any corporation or other entity, at
least a majority of the outstanding capital stock or other equity interests of
which shall at the time be owned by the Company directly or through one or more
corporations or other entities which are themselves Subsidiaries.
1.59 "Superior Proposal" shall have the meaning specified in
Section 4.5(a).
1.60 "Surviving Corporation" shall have the meaning specified in
Section 3.1.
ARTICLE II
THE OFFER
2.1 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 9.1 hereof and none of the conditions set
forth in paragraphs (a) through (g) of Annex A hereto shall have occurred or be
existing, as promptly as reasonably practicable (but in any event within five
business days from the initial public announcement of the execution of this
Agreement), Parent shall cause Newco to commence an offer to purchase all
outstanding shares of Company Common Stock, together with the corresponding
Rights, at a price of $24.625 per share net to the seller in cash, without
interest thereon (the "Per Share Amount"), which shall remain open for at least
twenty (20) business days (the "Offer") and, subject to the conditions of the
Offer, shall use its best efforts to consummate the Offer. Newco shall accept
for payment shares of Company Common Stock which have been validly tendered and
not withdrawn pursuant to the Offer at the earliest time following expiration
of the Offer as provided in Section 2.1(b) hereof. The obligations of Newco to
consummate the Offer, to accept for payment and to pay for any shares of
Company Common Stock tendered shall be subject only to those conditions set
forth in Annex A hereto, in addition to the condition that there be validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of shares of Company Common
6
<PAGE> 13
Stock which constitutes at least a majority of the then outstanding shares of
Company Common Stock entitled to vote, measured on a fully diluted basis (the
"Minimum Condition").
(b) Parent and Newco expressly reserve the right to waive
any condition set forth in Annex A hereto (except the Minimum Condition)
without the consent of the Company, and to make any other changes in the terms
and conditions of the Offer; provided, however, that neither Parent nor Newco
will, without the prior written consent of the Board of Directors of the
Company, decrease the amount or change the form of the consideration payable in
the Offer, decrease the number of shares of Company Common Stock sought
pursuant to the Offer, change the conditions to the Offer, impose additional
conditions or terms to the Offer, amend or waive the Minimum Condition or amend
any term of the Offer in any manner adverse to the Company Shareholders.
Assuming the prior satisfaction or waiver of the conditions to the Offer,
Parent and Newco covenant and agree to accept for payment and pay for, in
accordance with the terms of the Offer, shares of Company Common Stock tendered
pursuant to the Offer as soon as permitted to do so under applicable law.
Notwithstanding the foregoing, Parent and Newco shall have the right to (i)
extend the Offer, if at the then scheduled expiration date of the Offer any of
the conditions to Newco's obligation to accept for payment and pay for the
shares of Company Common Stock shall not be satisfied or waived, until such
time as such conditions are satisfied or waived, (ii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the SEC
or its staff applicable to the Offer, and (iii) extend the Offer for any reason
on one or more occasions for an aggregate period of not more than 30 business
days (for all such extensions) beyond the latest expiration date that would
otherwise be permitted under clause (i) or (ii) of this sentence.
(c) As soon as reasonably practicable on the date of
commencement of the Offer, Parent and Newco shall file with the SEC a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer which will
contain the offer to purchase and form of the related letter of transmittal
(together with any supplements or amendments thereto, the "Offer Documents").
The Offer Documents will comply in all material respects with the provisions of
applicable federal securities laws. Each of Parent, Newco and the Company
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 Parent and Newco each further agrees to take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and, if necessary or appropriate, disseminated to the Company
Shareholders, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents and any amendments
thereto prior to the filing thereof with the SEC.
7
<PAGE> 14
2.2 Company Actions.
(a) The Company hereby approves of and consents to the
Offer and represents that the Board of Directors of the Company, at a meeting
duly called and held, has unanimously (i) determined that the Offer and the
Merger, taken together, are fair to and in the best interests of the Company
Shareholders, (ii) approved and adopted this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and that such approval
constitutes the requisite approval of the Offer, this Agreement and the Merger
for purposes of Section 203(a)(1) of the DGCL and for purposes of rendering
Article ELEVENTH.A of the Company's Certificate of Incorporation inapplicable
to the Offer and the Merger, and (iii) resolved to recommend that the Company
Shareholders accept the Offer, tender their shares of Company Common Stock
thereunder to Newco and approve and adopt this Agreement and the Merger;
provided that such recommendation may be withdrawn, modified or amended if the
Company reasonably determines in good faith, based on the written advice of
outside legal counsel to the Company, that such action is necessary in order
for the Board of Directors of the Company to comply with its fiduciary duties
under applicable law. The Company consents to the inclusion of such
recommendation and approval in the Offer Documents. The Company further
represents that Blair has rendered its opinion to the Company's Board of
Directors in writing that the consideration to be received by the Company
Shareholders in the Offer and the Merger, taken together, is fair to such
shareholders from a financial point of view. The Company has been advised by
each of its directors and executive officers that such Person intends to tender
all shares of Company Common Stock owned by such Person pursuant to the Offer.
(b) The Company hereby agrees to file with the SEC as
soon as reasonably practicable on the date of commencement of the Offer a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") containing the
recommendations described in Section 2.2(a). The Schedule 14D-9 will comply in
all material respects with the provisions of applicable federal securities
laws. The Company, Parent and Newco 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 steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and disseminated to the Company
Shareholders, in each case as and to the extent required by applicable federal
securities laws. Notwithstanding anything to the contrary in this Agreement,
the Board of Directors of the Company may withdraw, modify or amend its
recommendation if the Company reasonably determines in good faith, based on the
written advice of outside legal counsel to the Company, that such action is
necessary in order for the Board of Directors of the Company to comply with its
fiduciary duties under applicable law. Parent and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9 and any
amendments thereto prior to the filing thereof with the SEC.
(c) In connection with the Offer, the Company will
promptly furnish Parent and Newco with mailing labels, security position
listings and any available listing or
8
<PAGE> 15
computer file containing the names and addresses of the record holders of the
Company Common Stock as of a recent date and will furnish the Parent and Newco
with such information and assistance (including without limitation updated
lists of Company Shareholders, mailing labels and lists of securities
positions) as Parent, Newco or their agents may reasonably request in
communicating the Offer to the Company Shareholders. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the documents constituting the Offer and any other documents
necessary to consummate the Merger, Parent and Newco and each of their
affiliates, associates and advisers shall use such information only in
connection with the Offer and the Merger and, if this Agreement is terminated,
will deliver to the Company all such information (and copies thereof) then in
their possession.
ARTICLE III
THE MERGER
3.1 The Merger. Subject to the terms and conditions of this
Agreement, as of the Effective Time of Merger, Newco and the Company shall
consummate the Merger in which (a) Newco will be merged with and into the
Company and the separate corporate existence of Newco shall thereupon cease;
(b) the Company shall be the successor or surviving corporation in the Merger
and shall continue to be governed by the laws of the State of Delaware; and (c)
the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected and
unimpaired by the Merger. The corporation surviving the Merger is sometimes
hereinafter referred to as the "Surviving Corporation." The Merger shall be
pursuant to the provisions of, and shall be with the effect provided in, the
applicable provisions of the DGCL.
3.2 Effect of the Merger.
(a) The Certificate of Incorporation of Newco, as in
effect immediately prior to the Effective Time of Merger, shall be the
Certificate of Incorporation of the Surviving Corporation until amended in
accordance with law.
(b) The Bylaws of Newco, as in effect immediately prior
to the Effective Time of Merger, shall be the Bylaws of the Surviving
Corporation until amended in accordance with law.
(c) The directors of Newco at the Effective Time of
Merger shall, from and after the Effective Time of Merger, be the initial
directors of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws then in effect.
9
<PAGE> 16
(d) The officers of the Company at the Effective Time of
Merger shall, from and after the Effective Time of Merger, be the initial
officers of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws.
3.3 Effective Time of Merger. The parties hereto will cause the
Certificate of Merger to be executed and filed on the Closing Date as provided
in the DGCL. The Merger shall become effective on the date of the filing of
the Certificate of Merger with the Delaware Secretary of State, or such other
date as is agreed upon by the parties and specified in the Certificate of
Merger. The date and time on which the Merger shall become effective is
referred to in this Agreement as the "Effective Time of Merger."
3.4 Conversion of Company Common Stock. At the Effective Time of
Merger, and without any action on the part of the holders thereof:
(a) Each share of Company Common Stock issued and
outstanding at the Effective Time of Merger, together with the corresponding
Right (other than shares and Rights owned by Parent, Newco, any wholly-owned
subsidiaries of either of them or any wholly-owned subsidiary of the Company,
or held in the treasury of the Company, or Dissenting Shares), shall be
converted into the right to receive the Per Share Amount in cash (the "Merger
Consideration"), payable to the holder thereof, without interest thereon, less
any required withholding of taxes, upon surrender of the certificate formerly
representing such share, and thereupon such share of Company Common Stock shall
be canceled and retired and cease to exist.
(b) Any shares of capital stock of the Company that are
held by the Company as treasury stock and any shares of Company Common Stock
owned by Parent, Newco or any wholly-owned subsidiaries of either of them or by
any wholly-owned subsidiary of the Company at the Effective Time of Merger
shall be canceled and retired and cease to exist.
3.5 Newco Stock. Each outstanding share of capital stock of Newco
issued and outstanding at the Effective Time of Merger shall, by virtue of the
Merger and without any action on the part of the holders thereof, be converted
into one validly issued, fully paid and non- assessable share of common stock
of the Surviving Corporation.
3.6 Exchange of Company Certificates.
(a) Exchange Agent. As of the Effective Time of Merger,
Parent shall deposit, or shall cause to be deposited, with such bank or trust
company as may be designated by Parent (the "Exchange Agent") for the benefit
of the holders of shares of Company Common Stock, the funds necessary to make
the payments pursuant to Section 3.4 hereof (the "Exchange Fund"), and to make
the appropriate payments, if any, to holders
10
<PAGE> 17
of Dissenting Shares. The Exchange Agent shall, pursuant to irrevocable
instructions, make the payments provided for in the preceding sentence out of
the Exchange Fund. The Exchange Agent shall invest portions of the Exchange
Fund as the Parent directs, provided that all such investments shall be in
obligations of or guaranteed by the United States of America, in commercial
paper obligations receiving the highest rating from either Moody's Investor's
Service Inc. or Standard & Poor's, or in certificates of deposit, bank
repurchase agreements or banker's acceptances of commercial banks with capital
exceeding $100 million (or in a money market mutual fund comprised of the
foregoing). The Exchange Fund shall not be used for any other purpose, except
as provided in this Agreement.
(b) Exchange Procedures.
(i) As soon as reasonably practicable after the
Effective Time of Merger, the Exchange Agent shall mail to each holder of
record of a certificate or certificates which immediately prior to the
Effective Time of Merger represented outstanding shares of Company Common Stock
(the "Company Certificates"): (A) a letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon delivery of the Company Certificates to the
Exchange Agent and which shall be in such form and have such other provisions
as Parent may reasonably specify; and (B) instructions to effect the surrender
of the Company Certificates for payment therefor.
(ii) Upon surrender of a Company Certificate for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, and with such other documents as the Exchange Agent may
reasonably require, the holder of such Company Certificate shall be entitled to
receive in exchange therefor cash in an amount equal to the Merger
Consideration multiplied by the number of shares of Company Common Stock
formerly represented by such Company Certificate, and such Company Certificate
shall forthwith be canceled. No interest will be paid or accrued on the cash
payable upon the surrender of the Company Certificates. If payment is to be
made to a Person other than the Person in whose name the Company Certificate
surrendered is registered, it shall be a condition of payment that the Company
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the Person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a Person other
than the registered holder of the Company Certificate surrendered (or establish
to the satisfaction of Parent that such tax has been paid or is not
applicable), and the Company Certificate so surrendered shall forthwith be
canceled.
(iii) Until surrendered as contemplated by this
Section 3.6, each Company Certificate shall be deemed at all times after the
Effective Time of Merger to represent only the right to receive the Merger
Consideration in cash multiplied by the number of shares of Company Common
Stock evidenced by the Company Certificate, without any interest thereon.
11
<PAGE> 18
(c) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the Company Shareholders as of a
date which is six (6) months after the Effective Time of Merger shall be
delivered to Parent, upon demand, and any Company Shareholders who have not
theretofore complied with this Article III shall thereafter look only to Parent
for payment of their claim for the Merger Consideration.
(d) No Liability. Neither the Exchange Agent nor any
party to this Agreement shall be liable to any Company Shareholder for any
shares of Company Common Stock or cash delivered to a public official pursuant
to any abandoned property, escheat or similar law.
(e) Withholding Rights. Parent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any Company Shareholder such amounts as Parent is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the Company Shareholder
in respect of which such deduction and withholding is made by Parent.
3.7 Stock Transfer Books. At the Effective Time of Merger, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. From and after the Effective Time of Merger,
the holders of Company Certificates representing shares outstanding immediately
prior to the Effective Time of Merger shall cease to have any rights with
respect to the shares of Company Common Stock represented thereby except as
otherwise provided in this Agreement or by law.
3.8 Shareholders' Meeting. If approval by the Company
Shareholders is required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(a) Duly call, give notice of, convene and hold the
Company Special Meeting as soon as reasonably practicable following the
consummation of the Offer for the purpose of considering and taking action on
this Agreement;
(b) Include in the Proxy Statement the recommendation of
the Board of Directors that the Company Shareholders vote in favor of the
approval and adoption of this Agreement and the transactions contemplated
hereby, unless the Company reasonably determines in good faith, based on the
written advice of outside legal counsel to the Company, that excluding such
recommendation is necessary in order for the Board of Directors of the Company
to comply with its fiduciary duties under applicable law; and
12
<PAGE> 19
(c) Use its best efforts to (i) obtain and furnish the
information required to be included by it in the Proxy Statement, and, after
consultation with Parent, respond promptly to any comments made by the SEC with
respect to the Proxy Statement and any preliminary version thereof and cause
the Proxy Statement to be mailed to the Company Shareholders at the earliest
practicable time following the consummation of the Offer, and (ii) obtain the
necessary approvals of the Merger and this Agreement by the Company
Shareholders unless the Company reasonably determines in good faith, based on
the advice of outside legal counsel to the Company, that not taking any such
action is necessary in order for the Board of Directors of the Company to
comply with its fiduciary duties under applicable law. Parent agrees that, at
the Company Special Meeting, all of the shares of Company Common Stock acquired
pursuant to the Offer or otherwise by the Parent, Newco or any other
majority-owned subsidiary of Parent will be voted in favor of the Merger and
this Agreement.
(d) Notwithstanding the foregoing, if, following the
completion of the Offer, the Merger may be consummated under the DGCL without a
vote of the Company Shareholders by virtue of the fact that Newco shall have
acquired at least 90% of the then outstanding shares of Company Common Stock,
the parties hereto agree to take all necessary and appropriate action to cause
the Merger to become effective as soon as reasonably practicable after the
acquisition of shares of Company Common Stock pursuant to the Offer without the
holding of the Company Special Meeting.
3.9 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, in the event that appraisal rights are available in connection
with the Merger pursuant to the DGCL, shares of Company Common Stock which are
issued and outstanding immediately prior to the Effective Time of Merger and
which are held by Company Shareholders who did not vote in favor of the Merger
and who comply with all of the relevant provisions of Section 262 of the DGCL
(the "Dissenting Shares") shall not be converted into the right to receive the
Merger Consideration, unless and until such holders shall have failed to
perfect or shall have effectively withdrawn or lost their rights to appraisal
under the DGCL. If any such holder shall have failed to perfect or shall have
effectively withdrawn or lost such right, such holder's shares of Company
Common Stock shall thereupon be deemed to have been converted into the right to
receive as of the Effective Time of Merger the Merger Consideration without any
interest thereon.
3.10 Rights Agreement; Certificate of Incorporation Provision. The
Company has taken and will continue to take all necessary action to ensure that
neither the execution or delivery of this Agreement nor the consummation of the
transactions contemplated hereby will cause any of the Rights to become subject
to an adjustment or exercisable pursuant to the terms of the Rights Agreement,
or to cause such Rights to separate from the Company Common Stock. The Company
also has taken and will continue to take all necessary action to ensure that
Article ELEVENTH.A of the Company's Certificate of Incorporation and Section
203 of the DGCL are inapplicable to this Agreement, the Offer and the Merger.
The Company shall provide evidence satisfactory to Parent that it has taken all
such actions.
13
<PAGE> 20
3.11 Stock Options.
(a) From and after the date and time that the Company
executes this Agreement, the Company shall not grant any options or other
rights to acquire shares of Company Common Stock.
(b) As promptly as practicable following the execution of
this Agreement by the parties hereto, the Company shall offer to repurchase
each outstanding stock option, whether or not such stock option is then
exercisable, for a cash purchase price (subject to withholding taxes) equal to
the product of (i) the number of shares of Company Common stock under such
option and (ii) the excess of the Per Share Amount over the exercise price
applicable to such option. Each such offer to repurchase outstanding stock
options shall be subject to the prior acceptance for payment by Newco of shares
of Company Common Stock in the Offer and shall provide for the payment of the
cash purchase price (described above) for such option immediately after the
acceptance for payment by Newco of shares of Company Common Stock.
(c) The Company shall take such action as is necessary to
terminate, as of the Effective Time of Merger, the 1982 Employee Incentive
Stock Option Plan, the 1992 Employee Incentive Stock Option Plan, the Directors
and Officers Stock Option Plan, the 1996 Employee Stock Purchase and Payroll
Savings Plan and all outstanding stock options which, as of the Effective Time
of Merger, have not been exercised or repurchased by the Company as provided in
Section 3.11(b).
(d) The Company represents and warrants to Parent and
Newco that there are no outstanding stock options to acquire shares of Company
Common Stock as to which the exercise price per share exceeds the Per Share
Amount.
ARTICLE IV
OTHER AGREEMENTS
4.1 Access.
(a) Upon reasonable notice, the Company shall (and shall
cause each of its Subsidiaries to) afford to the officers, employees,
accountants, legal counsel and other representatives of Parent
("Representatives") full access, during normal business hours, to all of its
and the Subsidiaries' properties, personnel, books, contracts, commitments and
records. Such access shall also include permitting Parent and its
environmental consultants to conduct phase-one environmental assessments at the
Real Estate and facilities of the Company and the Subsidiaries and, if deemed
appropriate by Parent based on the advice of its environmental consultants,
phase-two environmental investigations and other follow-up work on the Real
Estate and at such facilities.
14
<PAGE> 21
(b) The Company, Parent and Newco agree that the
provisions of the Confidentiality Agreement shall remain in full force and
effect; provided that, at the Effective Time of Merger, the Confidentiality
Agreement shall be deemed to have terminated without further action by the
parties.
4.2 Disclosure Schedule.
(a) Disclosure Schedule. Contemporaneously with the
execution and delivery of this Agreement, the Company is delivering to Parent
the Disclosure Schedule. The Disclosure Schedule is deemed to constitute an
integral part of this Agreement and to modify the representations, warranties,
covenants or agreements of the Company contained in this Agreement but only to
the extent that such representations, warranties, covenants or agreements
expressly refer to the Disclosure Schedule.
(b) Updates. Prior to the Closing Date, the Company
shall update the Disclosure Schedule by written notice to Parent regularly
according to such schedule as Parent may reasonably request, to reflect any
matters which have occurred from and after the date of this Agreement which, if
existing on the date of this Agreement, would have been required to be
described in the Disclosure Schedule. If requested by Parent, the Company
shall meet and discuss with Parent any change in the Disclosure Schedule made
by the Company which is, in the reasonable judgment of Parent, materially
adverse to the Merger, Parent or the Company. No update of the Disclosure
Schedule shall have the effect of curing any prior breach of a representation
or warranty made by the Company pursuant to this Agreement.
4.3 Duties Concerning Representations and Covenants. Each party
to this Agreement shall: (a) to the extent within its control, use best
efforts to cause all of its representations and warranties contained in this
Agreement to be true and correct in all respects at the Effective Time of
Merger with the same force and effect as if such representations and warranties
had been made on and as of the Effective Time of Merger; (b) use best efforts
to obtain any governmental or third party consents or approvals required by
this Agreement, to prevent any preliminary or permanent injunction or other
order by a court of competent jurisdiction or governmental entity relating to
the transactions contemplated by this Agreement and to cause all of the
conditions precedent set forth in Article VIII of this Agreement to be
satisfied; and (c) use best efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all other things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including without limitation, the
Offer and the Merger. Each party shall promptly inform the other parties after
it becomes aware that any condition precedent set forth in Article VIII hereof
or any condition in Annex A hereto will not, or is not reasonably likely to, be
satisfied.
15
<PAGE> 22
4.4 Deliveries of Information; Consultation.
(a) Deliveries. Prior to the Effective Time of Merger,
the Company shall furnish promptly to Parent: (i) a copy of each report,
schedule and other document filed by it or received by it pursuant to the
requirements of federal or state securities laws or any other applicable laws
promptly after such documents are available; (ii) the monthly consolidated
financial statements of the Company and consolidating financial statements by
unit or business segment (as prepared in accordance with its normal accounting
procedures) promptly after such financial statements are available; (iii) a
summary of any action taken by the Board of Directors, or any committee
thereof, of the Company; and (iv) all other information concerning the
business, properties and personnel of the Company as Parent may reasonably
request.
(b) Consultation. Prior to the Effective Time of Merger,
the Company shall confer and consult with representatives of Parent on a
regular and frequent basis to report on operational matters and the general
status of ongoing business operations of the Company.
(c) Franchises, etc. Prior to the Effective Time of
Merger, the Company shall use all reasonable efforts to maintain in effect all
Existing Permits. The Company shall notify Parent promptly in the event that
it becomes aware of any problem, complaint or proceeding which could result in
the termination or non-renewal of any such permit.
4.5 Acquisition Proposals.
(a) Definitions. As used in this Agreement, the
following terms shall have the meanings specified:
(i) "Acquisition" shall mean any or all of the
following, other than the Offer and the Merger: (A) a merger, share exchange,
consolidation, reorganization, combination or similar transaction involving the
Company or any Subsidiary; or (B) a purchase, exchange or tender offer for 20%
or more of the outstanding shares of the Company Common Stock or for 20% or
more of the outstanding shares of any Subsidiary; or (C) a purchase, lease or
other acquisition of all or any significant portion of the assets or any 20% or
greater equity interest (or any option, warrant or security convertible into
any such 20% or greater equity interest), of the Company or any Subsidiary; or
(D) any other extraordinary transaction involving the Company or any Subsidiary
which is voluntarily approved, consented to or undertaken by the Company or any
Subsidiary, the consummation of which could reasonably be expected to
materially impede, materially interfere with, prevent or materially delay the
Offer or the Merger.
(ii) "Acquisition Proposal" shall mean any
inquiry, request for information, expression of interest, indication of a
desire to have discussions, or the making of any proposal, by any Person
concerning an Acquisition.
16
<PAGE> 23
(iii) "Special Event" shall mean the occurrence of
any of the following events: (A) the Board of Directors of the Company shall
have withdrawn or materially modified or changed its favorable recommendation
of the Offer, or shall have approved or recommended any Acquisition Proposal or
Acquisition, or any Person unrelated to Parent shall have entered into an
agreement with the Company or any Subsidiary with respect to an Acquisition;
(B) on or before December 31, 1998 any Person unrelated to Parent shall have
consummated an Acquisition; (C) Parent and Newco shall have terminated the
Offer due to the existence, on the date of this Agreement, of the condition set
forth in paragraph (b) of Annex A, or due to the existence, after the date of
this Agreement, of such condition as a result of one or more events or
circumstances arising after the date of this Agreement, if any such event or
circumstance (i) was not promptly disclosed to Parent or (ii) was caused by the
wilful and deliberate act of the Company which the Company cannot or will not
cure; or (D) Parent and Newco shall have terminated this Agreement as provided
in Section 9.1(b)(ii) of this Agreement.
(iv) "Superior Proposal" shall mean a written bona
fide, unsolicited Acquisition Proposal by any Person (other than Parent) which
the Board of Directors determines in good faith, and in the exercise of
reasonable judgment (based on the advice of its independent financial
advisers), to be more favorable to the Company and the Company Shareholders
than the Offer and the Merger from a financial point of view, which proposal is
capable of being consummated without undue delay and has the requisite
financing committed to it or, as determined in good faith, and in the exercise
of reasonable judgment (based on the advice of its independent financial
advisers), is reasonably capable of being financed by such Person.
(b) Acquisition Proposals. The Company shall not, and
shall cause all of its officers, directors, employees, agents and
representatives (including, without limitation, any investment banker,
financial adviser, attorney or accountant retained or engaged by the Company)
to not, directly or indirectly: (i) initiate, solicit or encourage any
inquiries concerning an Acquisition or an Acquisition Proposal; (ii) engage in
any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any Person relating to an Acquisition or an
Acquisition Proposal; (iii) facilitate any effort or attempt to make or
implement an Acquisition Proposal; or (iv) consummate, agree or commit to
consummate any Acquisition or Acquisition Proposal. The Company shall
immediately cease or cause to be terminated any existing activities,
discussions or negotiations with any Person with respect to any of the
foregoing activities. Notwithstanding the foregoing, the Board of Directors of
the Company may furnish information about the Company to the Person making a
Superior Proposal pursuant to a confidentiality agreement in customary form and
participate in discussions and negotiations regarding such Superior Proposal if
the Board of Directors of the Company determines in good faith, upon the
written advice of outside legal counsel, that the failure to take such action
would violate its fiduciary duties to the Company Shareholders under applicable
law. In addition, the Company will be permitted to take and disclose to the
Company Shareholders a position contemplated by Rules 14d-9 and 14e-2(a) under
the Exchange Act with respect to an Acquisition Proposal
17
<PAGE> 24
by means of a tender offer. The Company shall notify Parent orally and in
writing of any Acquisition Proposal, within 24 hours from the receipt thereof,
specifying all of the material terms and conditions of such Acquisition
Proposal and identifying the Person making such Acquisition Proposal, shall
keep Parent informed of the status and all material developments and
information regarding the Acquisition Proposal, and shall give Parent five (5)
calendar days' prior notice and an opportunity to negotiate with the Company
before entering into, executing or agreeing to any Acquisition or Acquisition
Proposal.
(c) Special Fee. In order to induce Parent to enter into
this Agreement and to compensate Parent for the time and expenses incurred in
connection with this Agreement and the transactions contemplated by this
Agreement and the losses suffered by Parent from foregone opportunities, upon
the occurrence of a Special Event the Company shall pay $5,000,000 to Parent
and shall reimburse Parent for all documented out-of-pocket costs, fees and
expenses incurred by Parent and Newco in connection with the preparation and
negotiation of this Agreement and the transactions contemplated hereby;
provided, however, that in the case of a Special Event described in Section
4.5(a)(iii)(A) hereof the Company shall pay $1,000,000 to Parent and reimburse
Parent for all such documented out-of-pocket costs, fees and expenses and shall
further pay to Parent an additional $4,000,000 if a Special Event described in
Section 4.5(a)(iii)(B) thereafter occurs. Any such amount due Parent shall be
paid in immediately available funds within three (3) business days following
the occurrence of the Special Event. If the Company fails to timely pay the
amount (or any portion thereof) due Parent pursuant to this Section 4.5, the
unpaid amount (or portion thereof) shall accrue interest at the rate of ten
percent (10%) per annum until paid.
4.6 Legal Conditions to Merger. Each of the Company and Parent
will: (a) take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on it with respect to the Offer and the
Merger (including furnishing all information required in connection with
approvals of or filings with any governmental entity as described in Sections
8.2 of this Agreement); (b) promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon any of them in
connection with the Offer and the Merger; and (c) take all reasonable actions
necessary to obtain (and cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any governmental
entity or other public or private Person, required to be obtained or made by
the Company and Parent in connection with the Offer, the Merger or the taking
of any action contemplated thereby or by this Agreement.
4.7 Public Announcements. The Company and Parent will cooperate
with each other in the development and distribution of all news releases and
other public information disclosures with respect to this Agreement or any of
the transactions contemplated hereby and, except to the extent required by law
or any securities exchange, based on the written advice of counsel, shall not
issue any public announcement or statement prior to consultation with the other
parties.
18
<PAGE> 25
4.8 Indemnification of Company Directors and Officers; Directors
and Officers Liability Insurance.
(a) The Certificate of Incorporation and Bylaws of the
Surviving Corporation shall contain provisions with respect to indemnification
substantially as set forth in the Certificate of Incorporation and Bylaws of
the Company on the date of this Agreement, which provisions shall not be
amended, repealed or otherwise modified for a period of five years after the
Effective Time of Merger in any manner that would adversely affect the rights
thereunder of individuals who at any time prior to the Effective Time of Merger
were directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time of Merger, unless such modification
is required by law; provided, that in the event any claim or claims are
asserted or made within such five-year period, all rights to indemnification in
respect of any such claim or claims shall continue until disposition of any and
all such claims.
(b) Parent shall cause to be maintained in effect for the
Indemnified Parties (as defined below) for not less than five years the current
policies of directors and officers liability insurance and fiduciary liability
insurance maintained by the Company and the Subsidiaries with respect to
matters occurring at or prior to the Effective Time of Merger; provided, that
Parent may substitute therefor policies of substantially the same coverage
containing terms and conditions which are no less advantageous to the Company's
present or former directors or officers or other employees covered by such
insurance policies prior to the Effective Time of Merger (the "Indemnified
Parties"). Notwithstanding the foregoing, in no case shall Parent or the
Surviving Corporation be required to pay an annual premium for such insurance
greater than 200% of the last annual premium paid prior to the date hereof.
Should payment of the maximum amount of premium provided for in the previous
sentence not allow the purchase of an amount of such insurance equal to the
amount provided under the current policies, Parent shall purchase the maximum
amount of insurance available for 200% of the last annual premium.
4.9 Company Board.
(a) Promptly upon the purchase by Newco of a majority of
the outstanding shares of Company Common Stock pursuant to the Offer, either
(i) a majority of the members of the Board of Directors of the Company shall
resign and the remaining members of the Board of Directors of the Company shall
fill all of the Board positions so vacated with individuals designated by
Parent or (ii) the size of the Board of Directors of the Company shall be
expanded and the vacant seats filled with individuals designated by Parent so
that Parent's designees shall constitute a majority of the members of the Board
of Directors of the Company. In any case, at all times thereafter through the
Effective Time of Merger a majority of the Board of Directors of the Company
shall be individuals designated by Parent.
(b) The Company's obligation to appoint designees to the
Board of Directors of the Company shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-
19
<PAGE> 26
1 promulgated thereunder. The Company shall promptly take all actions required
pursuant to such Section and Rule in order to fulfill its obligations under
this Section 4.9 and shall include in the Schedule 14D-9 such information with
respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 to fulfill such obligations. Parent shall supply
to the Company and be solely responsible for any information with respect to it
and its nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f- 1.
(c) From and after the time, if any, that any of Parent's
designees are appointed to the Company's Board of Directors pursuant to this
Section 4.9, any amendment of this Agreement, any termination of this Agreement
by the Company, any extension of time for performance of any of the obligations
of Parent or Newco hereunder, or any waiver of any condition to the obligations
of the Company or any of the Company's rights hereunder may be effected only by
the action of a majority of the directors of the Company then in office who
were directors of the Company on the date hereof (or their successors
designated as set forth below), which action shall be deemed to constitute the
action of the full Board of Directors of the Company; provided, however, that
in no event may the Company, Parent or Newco amend Section 4.8 hereof;
provided further, however, that if there shall be no such directors, such
actions may be effected by majority vote of the entire Board of Directors of
the Company. Notwithstanding the foregoing, until the Effective Time of
Merger, the Company shall use reasonable efforts to retain as members of its
Board of Directors at least two directors who are directors of the Company as
of the date hereof ("Company Designees"); in the event of the resignation of
any or all of the Company Designees, the remaining Company Designees (or, if no
other Company Designees shall remain on the Board, the last resigning Company
Designee) shall have the right to appoint a successor or successors to serve as
Company Designees. Parent and Newco shall cause each such appointment to
become effective. Nothing in this Section 4.9(c) shall prohibit, or be
construed to prohibit, any of Parent's designees to the Company's Board of
Directors from voting on any matter described in Section 9.1 hereof.
4.10 Deferred Compensation Plans. On or prior to the Effective
Time of Merger, the Company shall distribute in lump sum payments all amounts
in each participant's deferred compensation account in accordance with the
Company's Deferred Compensation Plan for Executives and Deferred Compensation
Plan for Directors, and shall terminate such plans.
20
<PAGE> 27
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the relevant section of the Disclosure
Schedule, the Company hereby represents and warrants to Parent and Newco that:
5.1 Organization; Business. Each of the Company and the
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and is
qualified and in good standing as a foreign corporation in each jurisdiction
where the properties owned, leased or operated, or the business conducted, by
it requires such qualification. Each of the Company and the Subsidiaries has
all requisite power and authority (corporate or otherwise) to own its
properties and to carry on its business as it is now being conducted. The
Company has heretofore made available to Parent complete and correct copies of
its Certificate of Incorporation and Bylaws (and the articles or certificate of
incorporation and bylaws of each of the Subsidiaries). Set forth in the
Disclosure Schedule is a list of all Subsidiaries of the Company, the share
ownership of such Subsidiaries, their jurisdictions of incorporation and the
jurisdictions in which the Company and the Subsidiaries are qualified or
otherwise authorized to do business.
5.2 Capitalization. The entire authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock, $.01 par value per
share, of which 5,596,083 shares are issued and outstanding, and 1,000,000
shares of Preferred Stock, $.01 par value per share, none of which is issued or
outstanding. All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable. As of the date of this Agreement, 318,525 shares were reserved
for issuance upon exercise of outstanding options pursuant to the Company's
1982 Employee Incentive Stock Option Plan and 1992 Employee Incentive Stock
Option Plan, 30,216 shares were reserved for issuance upon exercise of
outstanding options pursuant to the Company's 1996 Employee Stock Purchase and
Payroll Savings Plan and 30,000 shares were reserved for issuance upon exercise
of outstanding options pursuant to the Company's Directors and Officers Stock
Option Plan. The Disclosure Schedule lists all outstanding options and other
rights to acquire shares of the Company's capital stock, which lists include
the holder's name, number of shares underlying the options or other rights, the
exercise price, grant date and applicable vesting provisions. Except as set
forth on the Disclosure Schedule, all outstanding shares of capital stock of
the Subsidiaries are owned by the Company or a direct wholly-owned Subsidiary
of the Company, free and clear of all Liens. Except as set forth on the
Disclosure Schedule, there are no outstanding or authorized options, warrants,
calls, rights (including preemptive rights), commitments or any other
agreements of any character which the Company or any of the Subsidiaries is a
party to, or may be bound by, requiring it to issue, transfer, sell, purchase,
redeem or acquire any shares of capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for,
any shares of capital stock of the Company or any of its subsidiaries.
21
<PAGE> 28
5.3 Authorization; Enforceability. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by unanimous vote of
the Board of Directors of the Company and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby (other than, with respect to the Merger,
if required, the approval and adoption of this Agreement by the Company
Shareholders). The Board of Directors has unanimously determined that the
Offer and the Merger are fair to and in the best interests of the Company
Shareholders and has unanimously determined to recommend that the Company
Shareholders approve the Merger and this Agreement. This Agreement is, and the
other documents and instruments required by this Agreement to be executed and
delivered by the Company will be, when executed and delivered by the Company,
the valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws generally affecting the rights of creditors and
subject to general equity principles.
5.4 No Violation or Conflict. The execution, delivery and
performance of this Agreement by the Company do not and will not: (a) conflict
with or violate any law or order, writ, injunction or decree applicable to the
Company or any Subsidiary or any of their respective assets; (b) conflict with
or violate the Certificate of Incorporation or Bylaws of the Company or the
articles of incorporation or bylaws of any Subsidiary; or (c) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration or Lien) under any Contract, except for such violations,
breaches or defaults which, in the aggregate, are not be reasonably likely to
have a Material Adverse Effect. The execution, delivery and performance of
this Agreement by the Company do not and will not require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (i) in connection with the
applicable requirements of the HSR Act, (ii) pursuant to the applicable
requirements of the Exchange Act, (iii) the filing of the Certificate of Merger
pursuant to the DGCL, (iv) as may be required by any applicable state
securities or "blue sky" laws or state takeover laws, (v) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or the transactions contemplated by this Agreement,
(vi) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not be reasonably likely
to, in the aggregate, have a Material Adverse Effect or prevent, materially
delay or materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement, or (vii) as set forth in the
Disclosure Schedule.
22
<PAGE> 29
5.5 Title to Assets. Each of the Company and the Subsidiaries
owns good and valid title to the assets and properties which it owns or
purports to own, free and clear of any and all Liens, except the Existing
Liens.
5.6 Litigation. Except for the Existing Litigation: (a) there is
no litigation, arbitration, proceeding, governmental investigation, citation or
action of any kind pending or, to the knowledge of the Company, proposed or
threatened, against or relating to the Company or any Subsidiary, nor is there
any basis known to the Company for any such action; and (b) there are no
actions, suits or proceedings pending or, to the knowledge of the Company,
proposed or threatened, against the Company or any Subsidiary by any Person
which question the legality, validity or propriety of the transactions
contemplated by this Agreement.
5.7 Company SEC Reports and Books and Records.
(a) The Company SEC Reports:
(i) Include all reports, registration statements,
definitive proxy statements, prospectuses and amendments thereto filed or
required to be filed by the Company with the SEC since March 31, 1994; did not
or will not, as the case may be, contain as of their respective dates any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and otherwise
complied or will comply, as the case may be, in all material respects with the
then applicable requirements of the Exchange Act and the Securities Act, as the
case may be, and the then applicable rules and regulations of the SEC
thereunder.
(b) The audited financial statements and unaudited
interim financial statements of the Company included in the Company SEC Reports
have been or will be, as the case may be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly present the financial
position of the Company as of the dates thereof and the results of its
operations and changes in financial position for the periods then ended,
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein.
5.8 Absence of Certain Changes. Except as disclosed in the
Company SEC Reports or in the Disclosure Schedule, since March 31, 1997:
(a) There has not been any change with respect to the
Company or any of the Subsidiaries which has had or is reasonably likely to
have a Material Adverse Effect;
23
<PAGE> 30
(b) There has not been any damage, destruction or loss
(whether or not covered by insurance) to the properties or assets of the
Company or any of the Subsidiaries which has had or is reasonably likely to
have a Material Adverse Effect;
(c) There has not been any transaction or commitment by
the Company or any of the Subsidiaries outside the ordinary course of business,
except for the transactions contemplated by this Agreement or as set forth in
the Disclosure Schedule;
(d) The business of the Company and each of the
Subsidiaries has been carried on only in the ordinary course and in the manner
consistent with past practice;
(e) Neither the Company nor any of the Subsidiaries has
incurred any material Liens, Indebtedness or liabilities (direct, absolute,
contingent or otherwise);
(f) There has not been any increase in the compensation
(including bonuses) payable or to become payable by the Company or the
Subsidiaries to any of their respective officers, or any significant increase
in the compensation payable to other employees or agents of the Company or any
of the Subsidiaries (other than in the ordinary course of business consistent
with past practice) or any adoption or amendment of any bonus, pension,
retirement, profit sharing or stock option plan, arrangement or agreement made
to or with any of such officers or employees;
(g) There has not been any declaration or payment or
setting aside the payment of any dividend or any distribution in respect of the
capital stock of the Company or any direct or indirect redemption, purchase or
other acquisition of any such stock by the Company, except as set forth in the
Disclosure Schedule; and
(h) The Company has not made any change to its or any
Subsidiary's accounting practices or methods, and has not made any tax
elections.
5.9 Contingent and Undisclosed Liabilities. Neither the Company
nor any Subsidiary has guaranteed or become a surety nor is it otherwise
contingently liable for the obligations of any other Person. The Company has
no liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) except for those which: (a) are disclosed in the
Company SEC Reports, the Disclosure Schedule or this Agreement; or (b) arose in
the ordinary course of business since March 31, 1997 and which have not had or
could not reasonably be expected to have a Material Adverse Effect.
5.10 Existing Contracts. The Existing Contracts are the only
Contracts which constitute:
(a) A lease of, or agreement to purchase or sell, any
capital assets, Real Estate or Buildings, other than agreements in the ordinary
course of business which have not had or are not reasonably likely to have a
Material Adverse Effect;
24
<PAGE> 31
(b) Any collective bargaining or union labor contracts;
(c) Any Employee Benefit Plan; or any management,
consulting, employment, personal service, agency or other contractor contracts
providing for employment or rendition of services which: (i) are in writing;
or (ii) create other than an at will employment relationship; or (iii) provide
for any profit sharing, retirement, severance or termination compensation; or
(iv) provide for any material commission, bonus, incentive, consulting or
additional compensation;
(d) Any agreements or notes evidencing any Indebtedness;
(e) Any agreement with a material customer or supplier of
the Company or any Subsidiary, other than regular invoices, sales confirmations
and purchase orders;
(f) An agreement for the storage, transportation,
treatment or disposal of any Environmental Hazardous Material;
(g) A power of attorney (revocable or irrevocable) given
to any Person by the Company or any Subsidiary that is in force;
(h) An agreement by the Company or any of the
Subsidiaries not to engage or compete in any business or in any geographical
area;
(i) An agreement restricting the right of the Company or
any Subsidiary to use or disclose any information in its possession;
(j) A partnership, joint venture or similar arrangement;
(k) Any agreement for the sale of substantially all of
the stock or assets of any Subsidiary;
(l) All licenses, royalty agreements, distributor
agreements and manufacturer's or sales representative agreements;
(m) All Contracts with any officer, director, employee or
shareholder of the Company or any Subsidiary;
(n) Any agreement or arrangement with any Affiliate; or
(o) Any other agreement which (i) involves an amount in
excess of $100,000; or (ii) any other material contract or commitment which is
not in the ordinary course of business of the Company or any Subsidiary or
which is not cancelable on 60 days or less notice to the other parties thereto.
True and complete copies of the Existing Contracts have been delivered to
Parent, and the Company and the Subsidiaries have fully
25
<PAGE> 32
performed each term, covenant and condition of each Existing Contract which is
to be performed by it or them at or before the date hereof, except where the
failure to perform such Existing Contract would not have a Material Adverse
Effect. Each of the Existing Contracts is in full force and effect and
constitutes a legal and binding obligation of the Company (and the
Subsidiaries, if applicable) and, to the knowledge of the Company, constitutes
the legal and binding obligation of the other parties thereto.
5.11 Insurance Policies. All real and personal property owned or
leased by the Company or the Subsidiaries has been and is being insured
against, and the Company and the Subsidiaries maintain liability insurance
against, such insurable risks and in such amounts as are set forth in the
Insurance Policies. The Insurance Policies constitute all insurance coverage
owned by the Company and the Subsidiaries and are in full force and effect, and
neither the Company nor any Subsidiary has received notice of or is otherwise
aware of any cancellation or threat of cancellation of such insurance. Except
as described in the Disclosure Schedule, no property damage, personal injury or
liability claims have been made, or are pending or threatened, against the
Company or any Subsidiary that are not covered by insurance. Within the past
three (3) years, no insurance company has canceled any insurance (of any type)
maintained by the Company or the Subsidiaries. To the knowledge of the
Company, the cost of any insurance currently maintained by the Company or the
Subsidiaries will not increase upon renewal other than increases consistent
with the general upward trend and the cost of obtaining insurance.
5.12 No Violation of Law. Except as set forth in the Disclosure
Schedule, neither the Company nor any of the Subsidiaries (nor any of the
assets of the Company or any of the Subsidiaries) violates or conflicts in any
material respect with any law, or any decree, judgment or order.
5.13 Brokers. Except for fees to Blair pursuant to the agreement
set forth in the Disclosure Schedule, the Company has not incurred any
brokers', finders', investment banking, advisory or any similar fee in
connection with the transactions contemplated by this Agreement.
5.14 Patents, Trademarks and Like Assets. All trademarks, trade
names, registered copyrights and patents and applications therefor owned by or
used by the Company or any of the Subsidiaries in its business are listed and
briefly described in the Disclosure Schedule. No proceedings have been
instituted or are pending or, to the knowledge of the Company proposed or
threatened, which challenge the validity or the ownership of such trademarks,
trade names, copyrights, patents and applications except as set forth in the
Disclosure Schedule. The Company has no knowledge of the use or infringement
of any such trademarks, trade names, copyrights, patents and applications by
any other Person except as set forth in the Disclosure Schedule. Neither the
Company nor any of the Subsidiaries has entered into any patent or trademark
license, technology transfer, non-disclosure or non-competition agreement
relating to its business except as set forth in the Disclosure Schedule. The
Company and the Subsidiaries own (or possess adequate and enforceable license
or
26
<PAGE> 33
other rights to use) all trademarks, trade names, copyrights, patents,
inventions and processes used in the conduct of their business, and no such use
or any other practice with respect to the business of the Company and the
Subsidiaries conflicts or has conflicted with the rights of others except as
set forth in the Disclosure Schedule. The Company and the Subsidiaries have
taken reasonable and necessary steps to protect their rights in all trademarks,
trade names, copyrights, patents, inventions and processes used in the conduct
of their business and, to the knowledge of the Company, no such rights have
been lost or are in jeopardy of being lost through failure to act by the
Company or any of the Subsidiaries.
5.15 Permits. The Permits listed on the Disclosure Schedule
constitute all material licenses, permits, approvals, franchises,
qualifications, permissions, agreements and other authorizations which the
Company and the Subsidiaries currently have and need for the conduct of their
respective business. Each such Permit is in full force and effect, the Company
and the Subsidiaries are in compliance with all material obligations,
restrictions or requirements thereof, and no facts or circumstances exist which
are reasonably likely to cause any of such Permits to be terminated, suspended
or further qualified or restricted.
5.16 Employee Benefit Plans.
(a) Except for the Existing Plans, neither the Company
nor any Subsidiary maintains, or is bound by, any Employee Benefit Plan. Each
Existing Plan that is an "employee benefit plan" as defined in ERISA is in
compliance in all material respects with ERISA. All of the Existing Plans
which are intended to meet the requirements of Section 401(a) of the Code have
been determined by the Internal Revenue Service to be "qualified" within the
meaning of the Code, and there are no facts which would adversely affect the
qualified status of any of the Existing Plans. Each Existing Plan has been
administered in accordance with its terms and is in material compliance with
all applicable laws. Any past Employee Benefit Plan that has been terminated
was done so in material compliance with all applicable laws, and there is no
basis for further liability or obligation of the Company or any Subsidiary
pursuant to any past Employee Benefit Plan. There is no litigation, action or
proceeding pending or, to the knowledge of the Company, threatened or proposed,
relating to any Employee Benefit Plan.
(b) There is no accumulated funding deficiency, within
the meaning of ERISA or the Code, in connection with the Existing Plans, and
all material contributions required to be made by the Company or any Subsidiary
to any Existing Plan have been made on or before their due dates and a
reasonable amount has been accrued for contributions to each Existing Plan for
its current plan year. No reportable event, as defined in ERISA, has occurred
in connection with the Existing Plans. The Existing Plans have not, nor has
any trustee or administrator of the Existing Plans, engaged in any prohibited
transaction as defined in ERISA or the Code.
27
<PAGE> 34
(c) Except as set forth on the Disclosure Schedule,
neither the Company nor any Existing Plan provides or has any obligation to
provide (or contribute to the cost of) post-retirement (or post-termination of
service) welfare benefits with respect to current or former employees of the
Company or the Subsidiaries, including without limitation post-retirement
medical, dental, life insurance, severance or any similar benefit, whether
provided on an insured or self-insured basis.
(d) Except as set forth on the Disclosure Schedule,
neither the Company nor any Subsidiary is required to contribute to any
multi-employer plan, as defined in ERISA. Neither the Company nor any of the
Subsidiaries has withdrawn from a multi-employer plan in which such withdrawal
has resulted or would result in any "withdrawal liability" within the meaning
of ERISA that has not been fully paid.
(e) Each Existing Plan that is an "employee welfare
benefit plan" as defined in ERISA may be amended or terminated at any time
after the Effective Time of Merger without liability to the Company or the
Subsidiaries.
(f) With respect to each Existing Plan, the Company and
the Subsidiaries have complied with the applicable health care continuation and
notice provisions of the Consolidation Omnibus Budget Reconciliation Act of
1985 and the proposed regulations thereunder, and the applicable requirements
of the Family Leave Act of 1993 and the regulations thereunder.
(g) The Offer, the Merger and the consummation of the
transactions contemplated by this Agreement will not entitle any current or
former employee of the Company or any Subsidiary to severance benefits or any
other payment, except as set forth in the Disclosure Schedule, or accelerate
the time of payment or vesting, or increase the amount of compensation due any
such employee.
(h) Correct and complete copies of all Existing Plans,
together with recent summary plan descriptions, IRS determination letters,
Forms 5500 and actuarial reports (if applicable), have been delivered to
Parent.
5.17 Labor Matters.
(a) All collective bargaining or other labor union
contracts or agreements to which the Company or any of the Subsidiaries is a
party are listed in the Disclosure Schedule and correct and complete copies
thereof have been delivered to Parent. There is no pending or threatened labor
dispute, strike or work stoppage against the Company or any of the Subsidiaries
which may interfere with the respective business activities of the Company or
the Subsidiaries.
(b) There is no pending or threatened charge or complaint
against the Company or the Subsidiaries by or before the National Labor
Relations Board or any
28
<PAGE> 35
representative thereof, or any comparable state agency or authorities. There
is no present or former employee of the Company or any Subsidiary who has any
material claim against the Company or any Subsidiary (whether under law, any
employment agreement or otherwise) on account of or for: (i) overtime pay,
other than overtime pay for the current payroll period; (ii) wages or salaries,
other than wages or salaries for the current payroll period; or (iii)
vacations, sick leave, time off or pay in lieu of vacation, sick leave or time
off, other than vacation, sick leave or time off (or pay in lieu thereof)
earned in the 12-month period immediately preceding the date of this Agreement
or incurred in the ordinary course of business and appearing as a liability on
the most recent financial statements included in the Company SEC Reports.
(c) There are no pending and unresolved claims by any
Person against the Company or any of the Subsidiaries arising out of any
statute, ordinance or regulation relating to discrimination to employees or
employee practices or occupational or safety and health standards.
5.18 Real Estate. The Real Estate: (a) constitutes all real
property and improvements leased or owned by the Company or the Subsidiaries;
(b) is not subject to any leases or tenancies of any kind; (c) is not in the
possession of any adverse possessors; (d) has direct access to and from a
public road or street; (e) is used in a manner which is consistent with
applicable law; (f) is, and has been since the date of possession thereof by
the Company or the Subsidiaries, in the peaceful possession of the Company or
the Subsidiaries; and (g) is served by all water, sewer, electrical, telephone,
drainage and other utilities required for the normal operations of the
Buildings and Real Estate. The Company will deliver to Parent prior to the
Effective Time of the Merger correct and complete copies of all title insurance
policies or commitments maintained by the Company with respect to the Real
Estate.
5.19 No Pending Acquisitions. Except for this Agreement, the
Company is not a party to or bound by any agreement, undertaking or commitment
with respect to an Acquisition.
5.20 Taxes.
(a) The Company and the Subsidiaries have timely and
properly filed all federal, state, local and foreign tax returns which were
required to be filed. The Company has paid or made adequate provision, in
reserves reflected in its financial statements included in the Company SEC
Reports in accordance with generally accepted accounting principles, for the
payment of all taxes (including interest and penalties) and withholding amounts
owed by it or assessable against it. No tax deficiencies have been proposed or
assessed against the Company or any of the Subsidiaries, and there is no basis
in fact for the assessment of any tax or penalty tax against the Company or any
of the Subsidiaries. No issue has been raised in any prior tax audit which, by
application of the same or similar principles, could reasonably be expected
upon a future tax audit to result in a proposed deficiency for any period.
29
<PAGE> 36
(b) No tax return of the Company or any of the
Subsidiaries is under audit or examination by any taxing authority, and no
written or unwritten notice of such an audit or examination has been received
by the Company or any of the Subsidiaries. Each deficiency (if any) resulting
from any audit or examination relating to taxes by any taxing authority has
been paid, except for deficiencies being contested in good faith. The income
tax returns of the Company and the Subsidiaries have been closed by audit by
the Internal Revenue Service or by operation of the applicable statute of
limitations for all fiscal years through and including March 31, 1993, and the
state income, sales and use or in gross proceeds tax returns of the Company and
the Subsidiaries have been closed by audit by the State of Wisconsin or by
operation of the applicable statute of limitations for all fiscal years through
and including March 31, 1992. Neither the Company nor any of the Subsidiaries
has consented to any extension of the statute of limitations with respect to
any open tax returns. The Company has not made any elections under Section
341(f) of the Code.
(c) There are no tax Liens upon any property or assets of
the Company or any of the Subsidiaries except for Liens for current taxes not
yet due and payable.
(d) Except as set forth on the Disclosure Schedule,
neither the Company nor any of the Subsidiaries is a party to or is bound by
any tax sharing agreement, tax indemnity obligation or similar agreement,
arrangement or practice with respect to taxes. All elections with respect to
taxes affecting the Company or any of the Subsidiaries as of the date hereof
are set forth on the Disclosure Schedule.
(e) The disallowance of a deduction under Section 162(m)
of the Code for employee remuneration will not apply to any amount paid or
payable by the Company or any of the Subsidiaries under any Contract, company
stock or option plan, Employee Benefit Plan, program, arrangement or
understanding currently in effect.
(f) Any amount or any entitlement that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transaction contemplated by this Agreement by any employee, officer or
director of the Company or any of the Subsidiaries who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or Employee Benefit Plan currently in effect would not
be characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code).
(g) The Company has delivered, or will deliver as soon as
practicable after the date of this Agreement, to Parent correct and complete
copies of all tax returns and reports of the Company and the Subsidiaries filed
for all periods not barred by the applicable statute of limitations.
5.21 Information Supplied. The Schedule 14D-9 and, if required for
the consummation of the Merger under applicable law, the Proxy Statement will
comply in all
30
<PAGE> 37
material respects with the applicable federal securities laws, except that no
representation is made by the Company with respect to information supplied by
Parent, Newco or any of their Affiliates in writing for inclusion in the
Schedule 14D-9 or the Proxy Statement or any amendments or supplements thereto.
The Schedule 14D-9 will not, at the time it is filed with the SEC and when it
is first published or sent or given to the Company Shareholders, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied by Parent or Newco in writing for inclusion in the Schedule 14D-9.
None of the information supplied or to be supplied by the Company for inclusion
in the Offer Documents or the Proxy Statement will, at the respective times
such documents are filed with the SEC and are first published or sent or given
to the Company Shareholders, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
5.22 Opinion of Financial Adviser. The Company has received the
written opinion of Blair, dated the date of this Agreement, to the effect that
the consideration to be received by the Company Shareholders in the Offer and
the Merger, taken together, is fair to the Company Shareholders from a
financial point of view, and a copy of such opinion has been delivered to
Parent and shall be filed with the Schedule 14D-9.
5.23 Takeover Statutes; Certificate of Incorporation Provision.
The Board of Directors of the Company has taken all actions required to render
the provisions of Section 203 of the DGCL and Article ELEVENTH.A of the
Company's Certificate of Incorporation inapplicable to the transactions
contemplated by this Agreement, including the Offer and the Merger. Section
552.05 of the Wisconsin Statutes is not applicable to the Agreement, the Offer
or the Merger because the Company is not a target company that meets the
requirements of Section 552.05(7) of the Wisconsin Statutes, but the Company is
a "target company" within the meaning of Section 552.01(6) of the Wisconsin
Statutes.
5.24 Rights Agreement. The Board of Directors of the Company has
amended or otherwise taken action with respect to the Rights Agreement to
provide that certificates with respect to the Rights will not be distributed
and that the Rights will not become subject to an adjustment, be exercisable or
separate from the Company Common Stock as a result of the execution of this
Agreement or the commencement or consummation of the Offer or the Merger.
31
<PAGE> 38
5.25 Environmental Protection.
(a) As used in this Section 5.25 of this Agreement:
(i) "Environmental Claim" shall mean any and all
administrative, regulatory or judicial actions, suits, demands, demand letters,
directives, claims, Liens, investigations, proceedings or notices of
noncompliance or violation (written or oral) by any Person alleging potential
liability (including, without limitation, potential liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, removal costs,
remedial costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from: (A) the presence, or
release into the environment, of any Environmental Hazardous Materials at any
location, whether or not owned by the Company or any of the Subsidiaries; or
(B) circumstances forming the basis of any violation or alleged violation, of
any Environmental law; or (C) any and all claims by any Person seeking damages,
contribution, indemnification, cost, recovery, compensation or injunctive
relief resulting from the presence or Environmental Release of any
Environmental Hazardous Materials.
(ii) "Environmental Laws" shall mean all laws or
policies relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), including, without limitation, laws and
regulations relating to Environmental Releases or threatened Environmental
Releases of Environmental Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Environmental Hazardous Materials.
(iii) "Environmental Hazardous Materials" shall
mean: (A) any petroleum or petroleum products, radioactive materials, asbestos
in any form that is or could become friable, urea formaldehyde foam insulation,
and transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls (PCBs) and radon gas; (B) any chemicals, materials or
substances which are now defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants,"
or words of similar import, under any Environmental law; and (C) any other
chemical, material, substance or waste, exposure to which is now prohibited,
limited or regulated by any governmental authority.
(iv) "Environmental Release" shall mean any
release, spill, emission, leaking, injection, deposit, disposal, discharge,
dispersal, leaching or mitigation into the atmosphere, soil, surface water,
groundwater or property.
(b) Except as set forth in the Disclosure Schedule, each
of the Company and the Subsidiaries: (i) to the knowledge of the Company, is
in compliance in all material respects with all applicable Environmental laws;
and (ii) has not received any
32
<PAGE> 39
communication (written or oral), from a governmental authority, that alleges
that the Company or any of the Subsidiaries is not in compliance with
applicable Environmental laws.
(c) Except as set forth in the Disclosure Schedule, each
of the Company and the Subsidiaries has obtained all material environmental,
health and safety permits and governmental authorizations (collectively, the
"Environmental Permits") necessary for its operations, and all such permits are
in good standing and each of the Company and the Subsidiaries is in material
compliance with all terms and conditions of the Environmental Permits.
(d) Except as set forth in the Disclosure Schedule, there
is no Environmental Claim pending or, to the knowledge of the Company,
threatened against the Company or any of the Subsidiaries or against any Person
whose liability for any Environmental Claim the Company or any of the
Subsidiaries has or may have retained or assumed either contractually or by
operation of law, or against any real or personal property or operations which
the Company or any of the Subsidiaries owns, leases or manages.
(e) Except as set forth in the Disclosure Schedule, there
have been no Environmental Releases of any Environmental Hazardous Material by
the Company or any of the Subsidiaries or, to the Company's knowledge, by any
other Person on real property owned, used, leased or operated by the Company or
any of the Subsidiaries.
(f) No real property at any time owned, operated, used or
controlled by the Company or any of the Subsidiaries is currently listed on the
National Priorities List or the Comprehensive Environmental Response,
Compensation and Liability Information System, both promulgated under CERCLA,
or on any comparable state list, and neither the Company nor any Subsidiary has
received any written notice from any Person under or relating to CERCLA or any
comparable state or local law.
(g) To the knowledge of the Company, no off-site location
at which the Company or any of the Subsidiaries has disposed or arranged for
the disposal of any waste is listed on the National Priorities List or on any
comparable state list and neither the Company nor any of the Subsidiaries has
received any written notice from any Person with respect to any off-site
location, of potential or actual liability or a written request for information
from any Person under or relating to CERCLA or any comparable state or local
law.
(h) The Disclosure Schedule includes an estimate by the
Company of future costs to the Company of compliance with, and environmental
cleanup and response under, Environmental laws.
5.26 Certain Transactions. Except as set forth in the Disclosure
Schedule, neither the Company nor any of the Subsidiaries is party to any
material transaction or agreement
33
<PAGE> 40
with any of its directors, officers, employees or Affiliates (or affiliates
thereof). No officer, director, employee of the Company or any Subsidiary nor
any of their affiliates, owns or has any significant ownership interest in any
corporation or other entity which is in competition with the Company or any
Subsidiary or which is engaged in a related or similar business to that of the
Company or any Subsidiary.
5.27 Product Matters. All instances of Product Liability Matters
that have occurred and for which notice has been received by the Company or any
Subsidiary within the past three (3) years are listed on the Disclosure
Schedule, including without limitation any product recall, re-work or post-sale
warning or similar action conducted with respect to the Company's products,
excluding any Product Liability Matter that did not or will not have a Material
Adverse Effect.
5.28 Representations Complete. None of the representations or
warranties made by the Company herein or in the Disclosure Schedule, in any
certificate furnished by the Company pursuant to this Agreement or in the
Company SEC Reports, when all such documents are read together in their
entirety, contains or will contain at the Effective Time of Merger any untrue
statement of a material fact, or omits or will omit at the Effective Time of
Merger to state any material fact necessary in order to the statements
contained herein or therein, in light of the circumstances under which they are
made, not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
Parent and Newco hereby represent and warrant to the Company that:
6.1 Organization.
(a) Parent is a corporation duly and validly organized
and existing under the laws of the State of Wisconsin. Newco is a corporation
duly and validly organized and existing under the laws of the State of
Delaware, and is a direct, wholly-owned subsidiary of Parent recently formed
for the purpose of engaging in the transactions described in the Agreement and
has no operating history.
(b) Each of Parent and Newco has full corporate power and
authority and all material franchises, permits, licenses, approvals,
authorizations, registrations, certificates, grants and orders necessary to
carry on its business as it is now conducted and to own, lease and operate its
assets and properties.
6.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement by Parent and Newco and all of the documents and
instruments required by this Agreement to be executed and delivered by Parent
and Newco are within the corporate power of Parent and Newco and have been duly
authorized by all necessary corporate
34
<PAGE> 41
action by Parent and Newco. This Agreement is, and the other documents and
instruments required by this Agreement to be executed and delivered by Parent
and Newco will be, when executed and delivered by Parent and Newco, the valid
and binding obligations of Parent and Newco, enforceable against Parent and
Newco in accordance with their respective terms, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws generally affecting the rights of creditors and
subject to general equity principles.
6.3 No Violation or Conflict. The execution, delivery and
performance of this Agreement by Parent and Newco do not and will not conflict
with or violate any law, the Articles of Incorporation or Bylaws of Parent, the
Certificate of Incorporation or Bylaws of Newco or any material contract or
agreement to which Parent or Newco is a party or by which either of them is
bound.
6.4 Litigation. To the knowledge of Parent, there are no actions,
suits or proceedings against Parent or Newco, or both, by any Person which
question the validity, legality or propriety of the transactions contemplated
by this Agreement.
6.5 Financing. Parent and Newco have or will have at the time
required sufficient funds available to consummate the Offer and the Merger and
the other transactions contemplated hereby, including the payment of related
fees and expenses.
6.6 Brokers. Neither Parent nor Newco has incurred any brokers',
finders', investment banking, advisory or any similar fee in connection with
the transactions contemplated by this Agreement.
6.7 Governmental Approvals. No permission, approval,
determination, consent or waiver by, or any declaration, filing or registration
with, any governmental or regulatory authority is required in connection with
the execution, delivery and performance of this Agreement by Parent and Newco
except (i) in connection with the applicable requirements of the HSR Act; (ii)
pursuant to the applicable requirements of the Exchange Act; (iii) the filing
of the Certificate of Merger pursuant to the DGCL, (iv) as may be required by
any applicable state securities or "blue sky" laws or state takeover laws, (v)
such filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or the transactions contemplated by this
Agreement or (vi) where the failure to obtain such consent, approval,
permission, or waiver by, or to make such declaration, filing or registration,
would not in the aggregate have a Material Adverse Effect on Parent or Newco or
materially affect their respective abilities to consummate the transactions
contemplated by this Agreement.
6.8 Offer Documents; Proxy Statement. The Offer Documents will
comply in all material respects with applicable federal securities laws, except
that no representation is made by Parent or Newco with respect to information
supplied by the Company in writing
35
<PAGE> 42
for inclusion in the Offer Documents or any amendments or supplements thereto.
None of the information supplied by Parent, Newco or their Affiliates in
writing for inclusion in the Proxy Statement or any amendments or supplements
thereto will, at the respective times the Proxy Statement or any amendments or
supplements thereto are filed with the SEC, at the time the Proxy Statement or
any amendments or supplements thereto are mailed to the Company Shareholders,
or at the time of the Company Special Meeting or at the Effective Time of
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
6.9 Representations Complete. None of the representations or
warranties made by Parent herein, in any certificate furnished by Parent
pursuant to this Agreement or in the Offer Documents, when all such documents
are read together in their entirety, contains or will contain at the Effective
Time of Merger any untrue statement of a material fact, or omits or will omit
at the Effective Time of Merger to state any material fact necessary in order
to make the statements contained herein or therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE VII
CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER
Except as otherwise may have been approved and agreed to by Parent,
from and after the date of this Agreement and until the Effective Time of
Merger, the Company shall, and shall cause each of the Subsidiaries to:
7.1 Carry on in Regular Course. Diligently carry on its business
in the regular course and substantially in the same manner as heretofore and
shall not make or institute any unusual or novel methods of purchase, sale,
lease, management, accounting or operation.
7.2 Use of Assets. Use, operate, maintain and repair all of its
assets and properties in a normal business manner.
7.3 Contracts. Not modify or amend any Existing Contract; not do
any act or omit to do any act, or permit any act or omission to act, which will
cause a breach or termination of any of the Contracts.
7.4 Insurance Policies. Use reasonable efforts to maintain all of
the Insurance Policies in full force and effect.
7.5 Employment Matters. Not: (a) except as described in the
Disclosure Schedule, grant any increase in the rate of pay of any of its
employees, directors or officers; (b)
36
<PAGE> 43
institute or amend any Employee Benefit Plan; or (c) enter into or modify any
written employment, severance, bonus, benefit, termination or related
arrangement with any Person.
7.6 Contracts and Commitments. Not enter into any material
contract or commitment or engage in any transaction not in the usual and
ordinary course of business and consistent with its normal business practices,
and not purchase, lease, sell or dispose of any capital assets, other than
within the limits set forth in the Company's Capital Expenditures Plan approved
by the Board of Directors of the Company and delivered to Parent as a part of
the Disclosure Schedule.
7.7 Indebtedness. Not, except in the ordinary course of business,
create, incur or assume any Indebtedness in excess of $6,000,000, from which
$6,000,000 amount the repurchase of stock options (to purchase shares of
Company Common Stock) by the Company and the lump sum payments respecting the
Company's Deferred Compensation Plans (both of which are provided for in this
Agreement) shall be made, or permit the imposition of any Lien.
7.8 Preservation of Relationships. Use its best efforts to
preserve its business organization intact, to retain the services of its
present officers and key employees and to preserve the goodwill of suppliers,
customers, creditors and others having business relationships with the Company
and/or the Subsidiaries.
7.9 Compliance with Laws. Comply materially with all applicable
laws.
7.10 Taxes. Timely and properly file all federal, state, local and
foreign tax returns which are required to be filed, and pay or make provision
for the payment of all taxes owed by it.
7.11 Amendments. Not amend its Certificate or Articles of
Incorporation or Bylaws.
7.12 Dividends; Redemptions; Issuance of Stock. Not: (a) issue any
additional shares of stock of any class (except for the issuance of shares upon
exercise of options outstanding as of the date of this Agreement) or grant any
warrants, options or rights to subscribe for or acquire any additional shares
of stock of any class; (b) declare or pay any dividend or make any capital or
surplus distributions of any nature (including special dividends), except for
regularly scheduled quarterly dividends of $.11 made by the Company or
dividends by a Subsidiary to the Company; or (c) directly or indirectly redeem,
purchase or otherwise acquire, split, combine, recapitalize or reclassify any
of its capital stock or liquidate in whole or in part.
7.13 No Dispositions. Not sell, lease, license, encumber or
otherwise dispose of, or agree to sell, lease, license, encumber or otherwise
dispose of, any of its assets, except in the ordinary course of business
consistent with past practice.
37
<PAGE> 44
7.14 Dissolution; Reorganization. Not adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of the
Subsidiaries.
7.15 Litigation. Not settle or compromise any material claims,
litigation or governmental or administrative proceedings.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where permissible, at or prior to the
Effective Time of Merger of the following conditions:
8.1 Injunction. There shall not be in effect any statute, rule,
regulation, executive order, decree, ruling or injunction or other order of a
court or governmental or regulatory agency of competent jurisdiction directing
that the transactions contemplated herein not be consummated; provided,
however, that prior to invoking this condition each party shall use its best
efforts to have any such decree, ruling, injunction or order vacated.
8.2 Governmental Approvals.
(a) All governmental consents, orders and approvals
legally required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained and be in effect at the Effective
Time of Merger.
(b) All necessary requirements of the HSR Act shall have
been complied with and any "waiting periods" applicable to the Merger and to
the transactions described in this Agreement, including any secondary
acquisitions, which are imposed by the HSR Act shall have expired prior to the
Closing Date or shall have been terminated by the appropriate agency.
8.3 The Offer. Newco shall have purchased in accordance with the
terms of the Offer all shares of Company Common Stock validly tendered and not
withdrawn pursuant to the Offer.
8.4 Approval of Company Shareholders; Certificate of Merger. To
the extent required by applicable law, this Agreement, the Merger and the
transactions contemplated by this Agreement shall have received the requisite
approval and authorization of the Company Shareholders; provided that Parent,
Newco and their respective subsidiaries shall vote all of their shares of
Company Common Stock in favor of the Merger.
38
<PAGE> 45
ARTICLE IX
TERMINATION; MISCELLANEOUS
9.1 Termination. This Agreement may be terminated and the Offer
and the Merger may be abandoned at any time prior to the Effective Time of
Merger as follows:
(a) By mutual written agreement duly authorized by the
Boards of Directors of Parent, Newco and the Company;
(b) By Parent and Newco if (i) the Board of Directors of
the Company shall have withdrawn or materially modified or changed its
favorable recommendation of the Offer, the Merger or this Agreement or shall
have approved or recommended any Acquisition Proposal or Acquisition; (ii) the
Company shall have breached Section 3.10 or 4.5(b) of this Agreement; (iii) on
a scheduled expiration date all conditions to Newco's obligation to accept for
payment and pay for shares of Company Common Stock pursuant to the Offer shall
have been satisfied or waived other than the Minimum Condition and Newco shall
have terminated the Offer without purchasing shares of Company Common Stock
pursuant to the Offer, provided that the satisfaction or waiver of all other
conditions shall have been publicly disclosed at least five business days
before termination of the Offer; or (iv) Newco shall have otherwise terminated
the Offer in accordance with the terms of this Agreement, including Annex A,
without purchasing shares of Company Common Stock pursuant to the Offer;
(c) By the Company if (i) the Board of Directors of the
Company shall have determined in good faith, upon the written advice of outside
legal counsel, that its fiduciary duties require the termination of this
Agreement in order to pursue a Superior Proposal; or (ii) Newco shall have (x)
failed to commence the Offer within five business days following the date of
this Agreement or (y) terminated the Offer without purchasing shares of Company
Common Stock pursuant to the Offer;
(d) By the Company if either Parent or Newco shall have
breached in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach is
incapable of being cured or shall not have been cured within 30 days after the
giving of written notice to Parent and Newco;
(e) By Parent (including Newco) if the Company shall have
breached or failed to perform any of its obligations, covenants or agreements
set forth in this Agreement (other than a breach by the Company of Section 3.10
or 4.5(b) hereof, in which case Parent and Newco shall have the right to
terminate this Agreement as provided in Section 9.1(b)(ii) above), or if the
Company shall have breached any of its representations or warranties set forth
in this Agreement (disregarding all qualifications and exceptions contained
therein relating to knowledge, materiality or Material Adverse Effect), and all
such breaches and failures to perform, taken in the aggregate, shall have or
shall be reasonably likely to have a Material Adverse Effect; or
39
<PAGE> 46
(f) By either Parent (including Newco) or the Company (i)
if Newco shall not have purchased shares of Company Common Stock pursuant to
the Offer on or before February 28, 1998 (provided, however, that the right to
terminate this Agreement under this Section 9.1(f) shall not be available to
any party whose action or failure to act has been the cause of or resulted in
such failure to purchase); or (ii) if any court of competent jurisdiction or
any other governmental body or regulatory authority shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the Offer or the Merger and such order, decree, ruling
or other action shall have become final and non-appealable.
9.2 Rights on Termination; Waiver. If this Agreement is
terminated pursuant to Section 9.1 of this Agreement, all further obligations
of the parties under or pursuant to this Agreement shall terminate without
further liability of any party to the others, provided that: (a) the
obligations of Parent and Newco contained in Sections 4.1(b), 4.7, 9.2 and 9.5
of this Agreement shall survive any such termination; (b) the obligations of
the Company contained in Sections 4.5(c), 4.7, 9.2 and 9.5 of this Agreement
shall survive any such termination; and (c) each party to this Agreement shall
retain any and all remedies which it may have for breach of contract provided
by law.
9.3 Survival of Representations, Warranties and Covenants. All
representations and warranties of the parties contained in this Agreement or
made pursuant to this Agreement shall terminate and be of no further force and
effect beyond the Effective Time of Merger. This Section 9.3 shall not limit
any covenant or agreement of the parties hereto which by its terms contemplates
performance after the Effective Time of Merger or the purchase of shares of
Company Common Stock by Newco pursuant to the Offer.
9.4 Entire Agreement; Amendment. This Agreement and the documents
referred to in this Agreement and required to be delivered pursuant to this
Agreement constitute the entire agreement among the parties pertaining to the
subject matter of this Agreement, and supersede all prior and contemporaneous
agreements, understandings, negotiations and discussions of the parties,
whether oral or written, and there are no warranties, representations or other
agreements between the parties in connection with the subject matter of this
Agreement, except as specifically set forth in this Agreement. This Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective boards of directors, at any time before or after approval of the
terms of this Agreement by the Company Shareholders (if required by law), but,
after any such approval, no amendment shall be made which by law requires
further approval by such shareholders without such further approval. No
amendment, supplement, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the parties to be bound thereby.
No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement, whether or not
similar, nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
40
<PAGE> 47
9.5 Expenses. Except as provided in Section 4.5(c) hereof, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses, whether or not the Offer and the Merger are
consummated.
9.6 Governing Law. This Agreement shall be construed and
interpreted according to the laws of the State of Wisconsin without regard to
applicable conflicts of law, except to the extent the DGCL shall be held to
govern the terms of the Merger.
9.7 Assignment. Prior to the Effective Time of Merger, this
Agreement shall not be assigned by the Company.
9.8 Notices. All communications or notices required or permitted
by this Agreement shall be in writing and shall be deemed to have been given at
the earlier of the date when actually delivered to an officer of a party by
personal delivery or telephonic facsimile transmission or when deposited in the
United States mail, certified or registered mail, postage prepaid, return
receipt requested, and addressed as follows, unless and until any of such
parties notifies the others in accordance with this Section of a change of
address:
If to Parent or Newco: Applied Power Inc.
Attention: Richard G. Sim
13000 West Silver Spring Drive
Butler, WI 53007-1093
Fax No.: 414-783-9790
with a copy to: Quarles & Brady
Attention: Anthony W. Asmuth III
411 East Wisconsin Avenue
Milwaukee, WI 53202
Fax No.: 414-271-3552
If to the Company: Versa Technologies, Inc.
Attention: James E. Mohrhauser
9301 Washington Avenue
Racine, WI 53406-5012
Fax No.: 414-886-4614
with a copy to: Schiff Hardin & Waite
Attention: Lawrence Block
7200 Sears Tower
Chicago, IL 60606
Fax No.: 312-258-5600
41
<PAGE> 48
9.9 Counterparts; Headings. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same Agreement. The
Table of Contents and Article and Section headings in this Agreement are
inserted for convenience of reference only and shall not constitute a part
hereof.
9.10 Interpretation. Unless the context requires otherwise, all
words used in this Agreement in the singular number shall extend to and include
the plural, all words in the plural number shall extend to and include the
singular, and all words in any gender shall extend to and include all genders.
9.11 Severability. If any provision, clause, or part of this
Agreement, or the application thereof under certain circumstances, is held
invalid, the remainder of this Agreement, or the application of such provision,
clause or part under other circumstances, shall not be affected thereby unless
such invalidity materially impairs the ability of the parties to consummate the
transactions contemplated by this Agreement.
9.12 Specific Performance. The parties agree that the assets and
business of the Company as a going concern constitute unique property. There
is no adequate remedy at law for the damage which any party might sustain for
failure of the other parties to consummate the Offer and the Merger and the
transactions contemplated by this Agreement, and accordingly, each party shall
be entitled, at its option, to the remedy of specific performance to enforce
the Offer and the Merger pursuant to this Agreement.
9.13 No Reliance. Except for the parties to this Agreement and any
permitted assignees, no Person is entitled to rely on any of the
representations, warranties and agreements of the parties contained in this
Agreement, and the parties assume no liability to any Person because of any
reliance on the representations, warranties and agreements of the parties
contained in this Agreement.
9.14 Disclosure Schedule. If a document or matter is disclosed in
the Disclosure Schedule, it shall be deemed to be disclosed for all purposes of
this Agreement without the necessity of specific repetition or cross-reference.
All capitalized terms used in the Disclosure Schedule shall have the
definitions specified in this Agreement.
[the remainder of this page is intentionally blank]
42
<PAGE> 49
IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of
Merger to be duly executed as of the date first above written.
APPLIED POWER INC.
By: /s/ Richard G. Sim
-----------------------------------
President and Chief
Executive Officer
TVPA CORP.
By: /s/ Richard G. Sim
-----------------------------------
President
VERSA TECHNOLOGIES, INC.
By: /s/ James E. Mohrhauser
-----------------------------------
Chairman and Chief Executive
Officer
43
<PAGE> 50
ANNEX A
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Offer or the Agreement and provided that Newco shall not be obligated to
accept for payment any shares of Company Common Stock until (i) expiration of
all applicable waiting periods under the HSR Act and (ii) the Minimum Condition
shall have been satisfied, Newco shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to Newco's obligation to pay for or
return tendered shares after the termination or withdrawal of the Offer), pay
for, or may delay the acceptance for payment of or payment for, any shares of
Company Common Stock tendered pursuant to the Offer, or may, subject to the
terms of the Agreement, terminate or amend the Offer if at any time on or after
the date of the Agreement, and before the time of payment for any of such
shares, any of the following conditions exists:
(a) There shall have occurred and be continuing as of the
then scheduled expiration date of the Offer (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock Exchange
or the Nasdaq National Market, (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States, (iii) a
commencement or escalation of a war, armed hostilities or other international
or national calamity directly involving the United States, (iv) any material
limitation (whether or not mandatory) by any governmental or regulatory
authority, agency or commission, domestic or foreign ("Governmental Entity"),
on the extension of credit by banks or other lending institutions in the United
States, (v) or in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(b) The Company shall have breached or failed to perform
any of its obligations, covenants or agreements under the Agreement, or any
representation or warranty of the Company as set forth in the Agreement
(disregarding all qualifications and exceptions contained therein relating to
knowledge, materiality or Material Adverse Effect) shall not have been true and
correct as of the date of the Agreement and as of the then scheduled expiration
date of the Offer as though made on and as of the then scheduled expiration
date of the Offer, provided that all such breaches, failures to perform and
untrue representations or warranties, taken in the aggregate, shall have or
shall be reasonably likely to have a Material Adverse Effect;
(c) Any court or Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order which is in effect and which
(i) restricts (other than restrictions which in the aggregate do not have a
Material Adverse Effect on Parent, Newco or the Company or which do not
materially restrict the ability of Parent and Newco to consummate the Offer and
the Merger as originally contemplated by Parent and Newco), prevents or
prohibits consummation of the Offer or the Merger, (ii) prohibits or limits
(other than limits
A-1
<PAGE> 51
which in the aggregate do not have a Material Adverse Effect on Parent, Newco
or the Company or which do not materially limit the ability of Parent to own
and operate all of the business and assets of Parent and the Company after the
consummation of the transactions contemplated by the Offer and the Agreement)
the ownership or operation by the Company, Parent or any of their subsidiaries
of all or any material portion of the business or assets of the Company and the
Subsidiaries taken as a whole, or as a result of the Offer or Merger compels
the Company, Parent or any of their subsidiaries to dispose of or hold separate
all or any material portion of their respective business or assets, (iii)
imposes limitations on the ability of Parent or any subsidiary of Parent to
exercise effectively full rights of ownership of any shares of Company Common
Stock, including, without limitation, the right to vote any shares of Company
Common Stock acquired by Newco pursuant to the Offer or otherwise on all
matters properly presented to the Company Shareholders including, without
limitation, the approval and adoption of the Agreement and the transactions
contemplated thereby, (iv) requires divestiture by Parent or any Affiliate of
Parent of any shares of Company Common Stock, or (v) otherwise materially
adversely affects the financial condition, business or results of operations of
the Company and the Subsidiaries taken as a whole;
(d) All consents, registrations, approvals, permits,
authorizations, notices, reports or other filings required to be obtained or
made by the Company, Parent or Newco with or from any governmental entity in
connection with the execution and delivery of the Agreement, the Offer and the
consummation of the transactions contemplated by this Agreement shall not have
been made or obtained as of the then scheduled expiration date of the Offer
(other than the failure to receive any consent, registration, approval, permit
or authorization or to make any notice, report or other filing that, in the
aggregate, is not reasonably likely to have a Material Adverse Effect on
Parent, Newco or the Company, or would not prevent the consummation of the
Offer or the Merger);
(e) There shall have occurred any one or more changes or
developments in the financial condition, properties, business or results of
operations of the Company or any of the Subsidiaries which, in the aggregate,
has or is reasonably likely to have a Material Adverse Effect;
(f) The Board of Directors of the Company (or any
committee thereof) shall have withdrawn or amended, or modified in a manner
adverse to Parent and Newco its recommendation of the Offer or the Merger, or
shall have endorsed, approved or recommended any other Acquisition Proposal, or
the Company shall have entered into any agreement with respect to an
Acquisition, or the Board of Directors of the Company (or any committee
thereof) shall have resolved to take any of the foregoing actions; or
A-2
<PAGE> 52
(g) The Agreement shall have been terminated by the
Company, or by Parent or Newco, in accordance with its terms, or Parent or
Newco shall have reached an agreement or understanding in writing with the
Company providing for termination or amendment of the Offer or delay in payment
for the shares of Company Common Stock;
which, in the reasonable judgment of Parent and Newco, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Newco) giving rise to any such conditions, make it inadvisable to proceed with
the Offer and/or with such acceptance for payment of or payment for shares of
Company Common Stock.
The foregoing conditions are for the sole benefit of Parent and Newco
and may be asserted by Parent or Newco regardless of the circumstances
(including any action or inaction by Parent or Newco) giving rise to such
condition or may be waived by Parent or Newco, in whole or in part at any time
and from time to time in its sole discretion. The failure by Parent or Newco
at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time.
A-3
<PAGE> 1
EXECUTIVE COMPENSATION AND RELATED MATTERS
The following summary compensation table shows the compensation for the
past three years earned by or awarded or paid to the persons who were the chief
executive officer and the four other executive officers of the Company (the
"Named Officers") whose compensation exceeded $100,000 during fiscal year 1997.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- ------------
FISCAL AWARDS
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS(#)
--------------------------- ------ ---------- --------- ------------
<S> <C> <C> <C> <C>
James E. Mohrhauser.................................. 1997 $228,800 $108,680 0
Chairman and Chief Executive 1996 220,000 16,500 0
Officer 1995 200,000 100,000 0
Thomas J. Magulski................................... 1997 $182,000 $ 77,805 0
President and Chief Operating 1996 175,000 11,813 0
Officer 1995 160,000 72,000 25,000
Robert M. Sukalich................................... 1997 $104,518 $ 39,717 0
Vice President--Finance & 1996 95,000 8,550 0
Treasurer 1995 84,700 33,880 15,000
David J. McKendrey................................... 1997 $134,629 $ 57,083 0
President--Fluid Power 1996 128,000 58,539 0
122,810 53,729 15,000
1995
Michael W. Garvey(1)................................. 1997 $118,833 $ 15,000 10,000
President--Engineered Materials
</TABLE>
- ---------------
(1) Mr. Garvey joined the Company on April 1, 1996 as Vice President of
Operations for Mox-Med/Moxness.
6
<PAGE> 2
OPTION GRANTS IN FISCAL YEAR 1997
The following table sets forth certain information as to options to
purchase Common Stock of the Company granted to the Named Officers under the
Versa Technologies, Inc. 1992 Employee Incentive Stock Option Plan during the
fiscal year ended March 31, 1997, and the potential realizable value of each
option grant.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(3)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#)(1) IN FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
---- ------------- -------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
James E. Mohrhauser......... None
Thomas J. Magulski.......... None
Robert M. Sukalich.......... None
David J. McKendrey.......... None
Michael W. Garvey........... 10,000 16% 13.63 5/16/06 $85,800 $217,300
</TABLE>
- ---------------
(1) All options granted in fiscal 1997 become exercisable in 25% annual
increments beginning one year from the date of grant, and expire in ten
years from date of grant. Upon a change in control of the Company all
granted options become exercisable.
(2) Options are granted at market value on the date of grant. Market value is
the closing market price on the date of grant.
(3) Represents the potential realizable value net of the exercise price but
before any income taxes associated with the exercise that would be realized
assuming the options were held for the entire ten-year period and that the
stock price increased at compound rates of 5% and 10% a base price of $13.63
per share. Actual gains, if any, on stock option exercises and Common Stock
are dependent on the future performance of the Common Stock and overall
market conditions. There can be no assurance that the amounts reflected in
this table will be achieved.
7
<PAGE> 3
OPTIONS EXERCISED IN FISCAL YEAR 1997
The following table sets forth the number and value of exercised options
and the number and value of unexercised options held by each of the Named
Officers at March 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR-END (#) AT FISCAL YEAR END(1)
ACQUIRED OR VALUE --------------------------- ---------------------------
NAME EXERCISED (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James E. Mohrhauser...... 33,000 0 $37,125 $ 0
Thomas J. Magulski....... 20,740 29,260 $ 0 $ 0
Robert M. Sukalich....... 17,500 7,500 $ 3,375 $ 0
David J. McKendrey....... 11,694 43,593 23,750 7,500 $20,625 $ 0
Michael W. Garvey........ 0 10,000 $ 0 $ 0
</TABLE>
- ---------------
(1) Represents the difference between $13.625, the closing price of the
Company's Common Stock on March 31, 1997, and the option exercise price.
EMPLOYMENT AGREEMENT
The Company's subsidiary, Eder Industries, Inc., entered into an employment
agreement with Mr. Richard H. Marks for a three year period ending November 30,
1999. Under the agreement, Mr. Marks will receive a base salary of $226,000 and
be eligible to receive bonus compensation in accordance with the Company's bonus
plan for executive officers.
PENSION BENEFITS
The Named Officers are participants in the Versa Technologies, Inc.
Salaried, Administrative and Clerical Employees' Pension Plan (the "Pension
Plan"). Remuneration covered by the Pension Plan includes salaries, wages,
overtime payments, bonuses and commissions. For the Named Officers, covered
remuneration is as reported in the Summary Compensation Table. To be eligible to
participate in the Pension Plan an individual must complete at least 1,000 hours
of service during the fiscal year.
The following table illustrates the annual single life annuity under the
Pension Plan, before adjustment for Social Security benefits, upon retirement at
age 65 at various average remuneration levels (the average of the five highest
out of the last ten years) and years of service classifications:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE -----------------------------------------------------
REMUNERATION($) 10 15 20 25 30 OR MORE
--------------- -- -- -- -- ----------
<S> <C> <C> <C> <C> <C>
$100,000................ $16,667 $ 25,000 $ 33,333 $ 41,667 $ 50,000
125,000................ 20,833 31,250 41,667 52,083 62,500
150,000................ 25,000 37,500 50,000 62,500 75,000
175,000................ 29,167 43,750 58,333 72,917 87,500
200,000................ 33,333 50,000 66,667 83,333 100,000
250,000................ 41,667 62,500 83,333 104,167 125,000
300,000................ 50,000 75,000 100,000 125,000 150,000*
350,000................ 58,333 87,500 116,667 145,833* 175,000*
400,000................ 66,667 100,000 133,333* 166,667* 200,000*
450,000................ 75,000 112,500 150,000* 187,500* 225,000*
</TABLE>
- ---------------
* These amounts are subject to reduction because of the annual pension
limitations imposed by the Employee Retirement Income Security Act of 1974;
the extent of any reduction, however, will vary in individual cases according
to circumstances existing at the time pension payments begin.
8
<PAGE> 4
The benefit calculation formula provides a benefit of 1 2/3% of average
remuneration, less 1 2/3% of primary Social Security benefits, times years of
service (to a maximum of 30 years). Calculations for the table do not include
the Social Security offset, since the amount of offset varies with the year a
participant attains age 65.
The Pension Plan allows for early retirement upon attainment of age 55. The
amount of the participant's monthly retirement income will be his basic benefit
reduced by an amount equal to .5% for each month that his payments commence
prior to age 65.
As of April 1, 1997, the full years of service credit were, Mr. Mohrhauser
28; Mr. Magulski, 3; Mr. Sukalich, 7; Mr. McKendrey, 33; and Mr. Garvey, 0. In
accordance with the requirements of the Internal Revenue Code, Mr. Mohrhauser's
benefits under the Pension Plan commenced on April 1, 1995. Mr. Mohrhauser
received $71,243 during fiscal year 1997.
SUPPLEMENTAL PENSION AGREEMENT
This agreement, entered into on July 15, 1976, provides that the Company
will pay Mr. James E. Mohrhauser annually an amount equal to 2 2/3% of his
average annual compensation (as defined in the Pension Plan), multiplied by his
years of service, and reduced by the sum of (a) 1 2/3% times his primary Social
Security benefit, multiplied by his years of service, and (b) the amount of
retirement benefits received or receivable as a single life annuity from all
other retirement plans maintained by the Company or any of its subsidiaries. Mr.
Mohrhauser's benefits began April 1, 1994. During fiscal year 1997, Mr.
Mohrhauser received the combined annual benefit provided by this agreement and
the Pension Plan in the amount of $148,330.
PERSONNEL, COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Personnel, Compensation and Stock Option Committee (the "Committee") of
the Board of Directors establishes compensation objectives and policies for all
employees and determines compensation for the Company's executive officers,
including the Named Officers. The Committee is comprised entirely of independent
outside directors.
The Committee's objectives are to provide rewards which are linked to
Company and individual performance, and ensure that compensation and benefits
are at competitive levels enabling the Company to attract and retain quality
employees.
The Committee annually approves the base salaries of all executive
officers. For all executive officers other than the Chief Executive Officer, the
Committee closely reviews with management its recommendations prior to approval
of such salaries. Factors considered by management in its recommendations and by
the Committee in its approval process are the individual performance of each
executive officer and his or her contribution to the overall performance of the
Company or operating division. Company and division performance is measured
against the operating plans, as approved by the Company's Board of Directors.
Achievement of the operating objectives stated in the plans does not result in a
predetermined level of compensation. Compensation practices for comparable
positions outside the Company, as well as each executive officer's
responsibilities and experience are also considered. The practice of
establishing base salaries is subjective.
The Committee approved a 4% increase in Mr. Mohrhauser's annual base salary
to $228,800 for fiscal 1997. The Committee felt the increase was in order as Mr.
Mohrhauser continues to provide strong leadership in the development of the new
management team and the refocus of the company.
Presidents of the Company's operating units participate in bonus plans.
Payments are made in cash pursuant to a plan approved annually by the Committee.
The plan provides for bonuses up to 40% of base salary for operating unit
presidents. Under the formula, up to 50% of bonus is paid for attaining the
business' budgeted operating income goal, up to 30% of bonus is paid for
attaining the division's budgeted sales goal, and up to 20% of bonus is paid for
attaining measurable objectives established for each participant in the plan. An
over-achievement component is included if a business exceeds 100% of its
operating income objective.
9
<PAGE> 1
Form "A" Contract
SENIOR EXECUTIVE AGREEMENT
This Senior Executive Agreement ("Agreement") is entered into as of
this ____ day of August, 1997, by and between VERSA TECHNOLOGIES, INC., a
Delaware corporation ("Employer") and ____________________________("Executive").
WITNESSETH:
WHEREAS, Executive is currently employed by Employer or an Affiliate or
Associate;
WHEREAS, Employer desires to provide security to Executive in
connection with Executive's employment with Employer; and
WHEREAS, Executive and Employer desire to enter into this Agreement
pertaining to the terms of the security Employer is providing to Executive with
respect to his employment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Affiliate" or "Associate" shall have the meaning set
forth in Rule 125-2 under the Securities Exchange Act of 1934.
<PAGE> 2
(b) "Base Salary" shall mean the average of Executive's
annual base salary at the rates in effect during the twenty-four (24)
months prior to an event that constitutes a termination of employment
under circumstances set forth in subsection 2(a); provided that such
average rate shall in no event be less than the highest annual rate in
effect for Executive at any time during the 24-month period preceding
the applicable Change in Control.
(c) "Beneficiary" shall mean the person or entity designated
by Executive, by written instrument delivered to Employer, to receive
the benefits payable under this Agreement in the event of his death. If
Executive fails to designate a Beneficiary, or if no Beneficiary
survives Executive, such death benefits shall be paid:
(i) to his surviving spouse; or
(ii) if there is no surviving spouse, to his
living descendants per stirpes:
or
(iii) if there is neither a surviving spouse nor
descendants, to his duly appointed and
qualified executor or personal
representative.
2
<PAGE> 3
(d) "Bonus" shall mean the average of the bonuses earned by Executive
for each of the two full fiscal years of Employer preceding an event that
constitutes a termination of employment under circumstances set forth in
subsection 2(a); provided that such average bonus shall in no event be less than
the highest bonus earned by Executive for any full fiscal year of Employer
ending during the 24-month period prior to the applicable Change in Control.
(e) A "Change in Control" shall be deemed to take place on the
occurrence of any of the following events on or after July 1, 1997;
(1) The acquisition by an entity, person or group (including
all Affiliates or Associates of such entity, person or group) of
beneficial ownership, as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934, of capital stock of Employer if after
such acquisition such entity, person or group is entitled to exercise
more than 50% of the outstanding voting power of all capital stock of
Employer entitled to vote in elections of directors ("Voting Power");
(2) The effective time of a merger or consolidation of
Employer with one or more other
3
<PAGE> 4
corporations as a result of which the holders of the outstanding Voting
Power of Employer immediately prior to such merger or consolidation
hold less than 50% of the Voting Power of the surviving or resulting
corporation; or
(3) The election to the Board of Directors of Employer of
candidates who were not recommended for election by the Board of
Directors of Employer in office immediately prior to the election, if
such candidates constitute a majority of those elected in that
particular election.
(f) "Good Cause" shall be deemed to exist if, and only if:
(1) Executive engages in acts or omissions constituting
dishonesty, intentional breach of fiduciary obligation or intentional
wrongdoing or malfeasance, in each case that results in substantial
harm to the business or property of Employer or any Affiliate or
Associate; or
(2) Executive is convicted of a felony violation involving
fraud or dishonesty.
(g) "Good Reason" shall exist if:
4
<PAGE> 5
(1) there is a significant change in the nature or the scope
of Executive's authority or in his overall working environment;
(2) Executive is assigned duties materially inconsistent with
his present duties, responsibilities and status;
(3) there is a reduction in Executive's monthly rate of base
salary or bonus; or
(4) Employer or an Affiliate or Associate changes by 40 miles
or more the principal location in which Executive is required to
perform services.
(5) The successor to the Employer fails to assume fully the
responsibility under this Agreement pursuant to Section 16.
(h) "Incentive Plan" shall mean any incentive, bonus, deferred
compensation or similar plan or arrangement currently or hereafter made
available by Employer or an Affiliate or Associate in which Executive is
eligible to participate.
(i) "Retirement Plan" shall mean any qualified or supplemental employee
pension benefit plan, as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), currently or hereinafter made
5
<PAGE> 6
available by Employer or an Affiliate or Associate in which Executive is
eligible to participate.
(j) "Severance Period" shall mean the period beginning on the date
Executive's employment with Employer and all Affiliates and Associates
terminates under circumstances described in subsection 2(a) and ending on the
date 24 months thereafter.
(k) "Term" shall mean the period beginning on the date hereof and
terminating on the date 24 months after the date hereof, provided that for each
day from and after the date hereof the Term will automatically be extended for
an additional day, unless either Employer or Executive has given written notice
to the other party of its or his election to cease such automatic extension, in
which case the Term shall be the 24 month period beginning on the date such
notice is received by such other party.
(l) "Welfare Plan" shall mean any health and dental plan, disability
plan, survivor income plan or life insurance plan, as defined in Section 3(1) of
ERISA, currently or hereafter made available by Employer or an Affiliate or
Associate in which Executive is eligible to participate.
2. Benefits Upon Termination of Employment. (a) The
6
<PAGE> 7
following provisions will apply if a Change in Control occurs during the Term,
and if (A) at any time during the 24 months after such Change in Control occurs
(whether during or after the expiration of the Term), (i) the employment of
Executive with Employer and all Affiliates and Associates is terminated by
Employer or such Affiliates and Associates for any reason other than Good Cause,
or (ii) Executive terminates his employment with Employer and all Affiliates and
Associates for Good Reason, or (B) at any time during the seventh month after
such Change in Control occurs (whether during or after the expiration of the
Term), Executive terminates his employment with Employer and such Affiliates and
Associates for any reason other than death:
(1) Employer shall pay Executive or his Beneficiary
an amount equal to the sum of (1) his Base Salary plus (2) his
Bonus, all multiplied by two. Such amount shall be paid to
Executive or his Beneficiary in a lump sum within 30 days
after his date of termination of employment.
(2) Executive or his Beneficiary, or any other person
entitled to receive benefits with respect to Executive under
any Incentive Plan, Retirement Plan, Welfare Plan, or any
other plan or program maintained by
7
<PAGE> 8
Employer or an Affiliate or Associate in which Executive
participates at the date of termination of employment, shall
receive any and all benefits accrued under such Plan or other
plan or program, to the date of termination of employment, the
amount, form and time of payment of such benefits to be
determined by the terms of such Incentive Plan, Retirement
Plan, Welfare Plan and other plan or program, and Executive's
employment shall be deemed to have terminated by reason of
retirement, and without regard to vesting limitations in all
such Plans (other than Retirement Plans subject to tax
qualification requirements of the Internal Revenue Code of
1986, as amended ("Code")) and other plans or programs under
circumstances that have the most favorable result for
Executive thereunder. Payment shall be made at the earliest
date permitted under any such Plan or other plan or program.
(3) To the extent not paid pursuant to subsection
2(2) above, Employer shall pay Executive an amount equal to
the pro rata portion of Executive's target annual incentive
bonus compensation for the fiscal year of Employer in which
the date of termination of employment
8
<PAGE> 9
occurs, under the incentive bonus compensation plan then
maintained by Employer or an Affiliate or Associate, that is
applicable to the period commencing on the first day of such
fiscal year and ending on the date of termination. Such amount
shall be paid to Executive or his Beneficiary in a lump sum
within 30 days after his date of termination of employment.
(4) If upon the date of termination of Executive's
employment, Executive holds any options with respect to stock
of Employer, all such options will immediately become
exercisable upon such date and will be exercisable pursuant to
the terms of the plan under which such options were granted.
Any restrictions on stock of Employer owned by Executive on
the date of termination of his employment will lapse on such
date. To the extent such acceleration of exercise of such
options, or such lapse of restrictions, is not permissible
under the terms of any plan pursuant to which the options or
restricted stock were granted, Employer will pay to Executive
or his Beneficiary, (1) an amount equal to the excess, if any,
of the aggregate fair market value of all stock of Employer
subject to such options, determined on the date
9
<PAGE> 10
of termination of employment, over the aggregate exercise
price of such stock, and Executive or his Beneficiary will
surrender all such options unexercised, and (2) the aggregate
fair market value on the date of termination of employment of
all such restricted stock and Executive or his Beneficiary
shall transfer such stock to Employer. Payments pursuant to
the preceding sentence will be made to Executive or his
Beneficiary in a lump sum within 30 days after his date of
termination of employment.
(5) During the Severance Period Executive and his
spouse and other dependents will continue to be covered
by all Welfare Plans in which he and his spouse and other
dependents were participating immediately prior to the date
of his termination as if he continued to be an employee of
Employer or an Affiliate or Associate and Employer will
continue to pay the costs of coverage of Executive and his
spouse and other dependents under such Welfare Plans on the
same basis as is applicable to active employees covered
thereunder; provided that, if participation in any one or
more of such Welfare Plans is not possible under the terms
thereof, Employer will provide substantially identical
benefits. Coverage under
10
<PAGE> 11
any such Welfare Plan will cease if and when Executive obtains
employment with another employer during the Severance Period,
and becomes eligible for coverage under any substantially
similar Welfare Plan provided by his new employer. Coverage
pursuant to this Section shall not be in satisfaction of
Employer's obligations with respect to Executive and his
dependents pursuant to the federal insurance continuation law
commonly referred to as "COBRA" as set forth in Section 4980B
of the Code.
(6) During the Severance Period, Executive shall not
be entitled to reimbursement for fringe benefits, including
without limitation, dues and expenses related to club
memberships, automobile expenses, expenses for professional
services and other similar perquisites.
(7) If Executive is using an automobile owned by
Employer or an Affiliate or Associate on the date of
termination, Executive shall have use of such automobile
during the severance period and may purchase the automobile
for its then book value if Executive so requests. During the
period when Executive uses the automobile, Employer shall
provide insurance coverage and reimburse executive for the
cost of routine maintenance.
11
<PAGE> 12
(8) Employer shall provide Executive with out
placement services of a nationally recognized out placement
firm until the earlier of (1) Executive's attainment of
employment, and (2) the end of the Severance Period.
(b) If the employment of Executive with Employer and all
Affiliates and Associates is terminated by Employer, or any Affiliate
or Associate, or by Executive, other than under circumstances set forth
in subsection 2(a), Executive's compensation shall be paid through the
date of his termination, and Employer shall have no further obligation
to Executive or any other person under this Agreement. Such termination
shall have no effect upon Executive's other rights, including but not
limited to rights under any Incentive Plan, Retirement Plan, Welfare
Plan or other employee plan or program.
(c) Notwithstanding anything herein to the contrary, in the
event Employer or any Associate or Affiliate shall terminate the
employment of Executive for Good Cause hereunder, Employer or such
Associate or Affiliate shall give Executive at least thirty (30) days
prior written notice specifying in detail the reason or reasons for
Executive's
12
<PAGE> 13
termination, and during such 30-day period, the Executive will have the
opportunity to cure the circumstances giving rise to termination for
good cause and the opportunity to be heard by Employer's Board of
Directors.
3. Setoff. No payments or benefits payable to or with respect to
Executive pursuant to this Agreement shall be reduced by any amount Executive
or his spouse or Beneficiary may earn or receive from employment with another
employer or from any other source, except as expressly provided in subsection
2(a)(5).
4. Death. If Executive's employment with Employer and all Affiliates
and Associates terminates either under circumstances described in Section 2, or
due to his death, then all unpaid amounts payable to Executive under subsections
2(a)(1), (2), (3) or (4) or 2(b), if any, as of the date of death, shall be paid
to his Beneficiary, and if subsection 2(a) applies, his spouse and other
dependents shall continue to be covered under all applicable Welfare Plans
during the remainder of the Severance Period, if any, pursuant to subsection
2(a)(5).
13
<PAGE> 14
5. No Solicitation of Representatives and Employees. Executive agrees
that he shall not, prior to a Change in Control or during the Severance Period,
directly or indirectly, in his individual capacity or otherwise, induce, cause,
persuade, or attempt to do any of the foregoing in order to cause, any
representative, agent or employee of Employer or any of its Affiliates and
Associates to terminate such person's employment relationship with Employer or
any of its Affiliates and Associates, or to violate the terms of any agreement
between said representative, agent or employee and Employer or any of its
Affiliates and Associates.
6. Confidentiality. Executive acknowledges that preservation of a
continuing business relationship between Employer or its Affiliates and
Associates and their respective customers, representatives, and employees is of
critical importance to the continued business success of Employer, its
Affiliates and Associates and that it is the active policy of Employer, its
Affiliates and Associates to guard as confidential certain information not
available to the public and relating to the business affairs of Employer, its
Affiliates and Associates. In view of the foregoing, Executive agrees that he
shall not at any time thereafter, without the prior written consent of Employer,
14
<PAGE> 15
disclose to any person or entity any such confidential information that was
obtained by Executive in the course of his employment by Employer or any of its
Affiliates or Associates. This section shall not be applicable if and to the
extent Executive is required to testify in a legislative, judicial or regulatory
proceeding pursuant to an order of Congress, any state or local legislature, a
judge, or an administrative law judge or is otherwise required by law to
disclose such information.
7. Forfeiture. If Executive shall at any time violate any obligation
of his under Sections 5 or 6 in a manner that results in material damage to
Employer, any Affiliate or Associate, or its business, he shall immediately
forfeit his right to any benefits under this Agreement, and Employer shall
thereafter have no further obligation hereunder to Executive or his spouse,
Beneficiary or any other person.
8. Executive Assignment. No interest of Executive or his spouse or
Beneficiary under this Agreement, or any right to receive any payment or
distribution hereunder, shall be subject in any manner to sale, transfer,
assignment, pledge, attachment, garnishment, or other alienation or encumbrance
of any kind, nor may such interest or right to receive a payment or distribution
be taken, voluntarily or involuntarily, for the satisfaction of the
15
<PAGE> 16
obligations or debts of, or other claims against, Executive or his spouse or
Beneficiary, including claims for alimony, support, separate maintenance, and
claims in bankruptcy proceedings.
9. Benefits Unfunded. All rights under this Agreement of Executive and
his spouse or Beneficiary, shall at all times be entirely unfunded, and no
provision shall at any time be made with respect to segregating any assets of
Employer for payment of any amounts due hereunder. Neither Executive, nor spouse
or his spouse or Beneficiary shall have any interest in or rights against any
specific assets of Employer, and Executive and his Beneficiary shall have only
the rights of a general unsecured creditor of Employer.
10. Waiver. No waiver by any party at any time of any breach by the
other party of, or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of any other
provisions or conditions at the same time or at any prior or subsequent time.
11. Applicable Law. This Agreement shall be construed and interpreted
pursuant to the laws of Wisconsin.
12. Entire Agreement. This Agreement contains the entire Agreement
between Employer and Executive and supersedes any and all previous agreements,
written or oral, between the parties relating
16
<PAGE> 17
to the subject matter hereof. No amendment or modification of the terms of this
Agreement shall be binding upon the parties hereto unless reduced to writing and
signed by Employer and Executive.
13. No Employment Contract. Nothing contained in this Agreement shall
be construed to be an employment contract between Executive and Employer.
14. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original.
15. Severability. In the event any provision of this Agreement is held
illegal or invalid, the remaining provisions of this Agreement shall not be
affected thereby.
16. Successors. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, representatives and
successors.
17. Employment with Affiliates and Associates. For purposes of this
Agreement, (A) employment or termination of employment of Executive shall mean
employment or termination of employment with Employer and all Affiliates and
Associates, (B) Base Salary and Bonuses shall include remuneration received by
Executive from Employer and all Affiliates and Associates, and (C) the terms
Incentive Plan, Retirement Plan and Welfare Plan or any other plan or program
maintained or made available by Employer shall include
17
<PAGE> 18
any such plans of any Affiliate or Associate of Employer.
18. Notice. Notices required under this Agreement shall be in writing
and sent by registered mail, return receipt requested, to the following
addresses or to such other address as the party being notified may have
previously furnished to the other party by written notice:
19. Attorneys Fees. In the event the Executive brings an action to
enforce the provisions of this Agreement and prevails in such action, the
Executive shall be entitled to recover from the Employer the Executive's
attorneys fees and other costs incurred in connection therewith. Employer agrees
to reimburse Executive for reasonable attorneys fees, not to exceed $1,500, in
connection with the review and negotiation of this Agreement.
18
<PAGE> 19
If to Employer: VERSA TECHNOLOGIES, INC.
------------------------
ATTN: JAMES E. MOHRHAUSER
Chairman
9301 Washington Avenue
P. O. Box 085012
Racine, Wisconsin 53408
If to Executive:
--------------------------------
--------------------------------
IN WITNESS WHEREOF, Executive has hereunto set his hand, and Employer
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
VERSA TECHNOLOGIES, INC.
By:
------------------------------
Title:
----------------------------
----------------------------------
Executive
19
<PAGE> 20
Form of "B" Contract
SENIOR EXECUTIVE AGREEMENT
This Senior Executive Agreement ("Agreement") is entered into as of
this __ day of August, 1997, by and between VERSA TECHNOLOGIES, INC., a Delaware
corporation ("Employer") and _____________________________ ("Executive").
WITNESSETH:
WHEREAS, Executive is currently employed by Employer or an Affiliate
or Associate;
WHEREAS, Employer desires to provide security to Executive in
connection with Executive's employment with Employer; and
WHEREAS, Executive and Employer desire to enter into this Agreement
pertaining to the terms of the security Employer is providing to Executive with
respect to his employment;
NOW, THEREFORE in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Affiliate" or "Associate" shall have the meaning set forth in
Rule 12b-2 under the Securities Exchange Act of 1934.
<PAGE> 21
(b) "Base Salary" shall mean the average of Executives annual base
salary at the rates in effect during the twenty-four (24) months prior
to an event that constitutes a termination of employment under
circumstances set forth in subsection 2(a); provided that such average
rate shall in no event be less than the highest annual rate in effect
for Executive at any time during the 24-month period preceding the
applicable Change in Control.
(c) "Beneficiary" shall mean the person or entity designated by
Executive, by written instrument delivered to Employer, to receive the
benefits payable under this Agreement in the event of his death. If
Executive fails to designate a Beneficiary, or if no Beneficiary
survives Executive, such death benefits shall be paid:
(i) to his surviving spouse; or
(ii) if there is no surviving spouse, to his living
descendants per stirpes:
or
(iii) if there is neither a surviving spouse nor
descendants, to his duly appointed and qualified
executor or personal representative.
2
<PAGE> 22
(d) "Bonus" shall mean the average of the bonuses earned by
Executive for each of the two full fiscal years of Employer preceding
an event that constitutes a termination of employment under
circumstances set forth in subsection 2(a); provided that such average
bonus shall in no event be less than the highest bonus earned by
Executive for any full fiscal year of Employer ending during the
24-month period prior to the applicable Change in Control.
(e) A "Change in Control" shall be deemed to take place on the
occurrence of any of the following events on or after July 1, 1997:
(1) The acquisition by an entity, person or group (including
all Affiliates or Associates of such entity, person or group) of
beneficial ownership, as that term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934, of capital stock of Employer
if after such acquisition such entity, person or group is entitled
to exercise more than 50% of the outstanding voting power of all
capital stock of Employer entitled to vote in elections of
directors ("Voting Power");
(2) The effective time of a merger or consolidation of Employer
with one or more other
3
<PAGE> 23
corporations as a result of which the holders of the outstanding
Voting Power of Employer immediately prior to such merger or
consolidation hold less than 50% of the Voting Power of the
surviving or resulting corporation; or
(3) The election to the Board of Directors of Employer of
candidates who were not recommended for election by the Board of
Directors of Employer in office immediately prior to the election,
if such candidates constitute a majority of those elected in that
particular election.
(f) "Good Cause" shall be deemed to exist if, and only if:
(1) Executive engages in acts or omissions constituting
dishonesty, intentional breach of fiduciary obligation or
intentional wrongdoing or malfeasance, in each case that results in
substantial harm to the business or property of Employer or any
Affiliate or Associate; or
(2) Executive is convicted of a felony violation involving
fraud or dishonesty.
(g) "Good Reason" shall exist:
4
<PAGE> 24
(1) there is a significant change in the nature or the scope of
Executive's authority or in his overall working environment;
(2) Executive is assigned duties materially inconsistent with
his present duties, responsibilities and status;
(3) there is a reduction in Executive's monthly rate of base
salary or bonus; or
(4) Employer or an Affiliate or Associate changes by 40 miles
or more the principal location in which Executive is required to
perform services.
(5) The successor to the Employer fails to assume fully the
responsibility under this Agreement pursuant to Section 16.
(h) "Incentive Plan" shall mean any incentive, bonus, deferred
compensation or similar plan or arrangement currently or hereafter
made available by Employer or an Affiliate or Associate in which
Executive is eligible to participate.
(i) "Retirement Plan" shall mean any qualified or supplemental
employee pension benefit plan, as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
currently or hereinafter made
5
<PAGE> 25
available by Employer or an Affiliate or Associate in which
Executive is eligible to participate.
(j) "Severance Period" shall mean the period beginning on the date
Executive's employment with Employer and all Affiliates and Associates
terminates under circumstances described in subsection 2(a) and ending
on the date 24 months thereafter.
(k) "Term" shall mean the period beginning on the date hereof and
terminating on the date 24 months after the date hereof, provided that
for each day from and after the date hereof the Term will
automatically be extended for an additional day, unless either
Employer or Executive has given written notice to the other party of
its or his election to cease such automatic extension, in which case
the Term shall be the 24 month period beginning on the date such
notice is received by such other party.
(l) "Welfare Plan" shall mean any health and dental plan,
disability plan, survivor income plan or life insurance plan, as
defined in Section 3(1) of ERISA, currently or hereafter made
available by Employer or an Affiliate or Associate in which Executive
is eligible to participate.
2. Benefits Upon Termination of Employment. (a) The
6
<PAGE> 26
following provisions will apply if a Change in Control occurs during
the Term, and if at any time during the 24 months after such Change in
Control occurs (whether during or after the expiration of the Term),
(i) the employment of Executive with Employer and all Affiliates and
Associates is terminated by Employer or such Affiliates and Associates
for any reason other than Good Cause, or (ii) Executive terminates his
employment with Employer and all Affiliates and Associates for Good
Reason.
(1) Employer shall pay Executive or his
Beneficiary an amount equal to the sum of (1)
his Base Salary plus (2) his Bonus, all
multiplied by an amount equal to the sum
of (1) .50 plus (2) .01923 for each year of
service, or pro rata portion thereof, of
Executive with Employer and all Affiliates
and Associates through his date of termination
of employment. Such amount shall be paid to
Executive or his Beneficiary in a lump Rum
within 30 days after his date of termination
of employment.
7
<PAGE> 27
(2) Executive or his Beneficiary, or any other person entitled
to receive benefits with respect to Executive under any Incentive
Plan, Retirement Plan, Welfare Plan, or any other plan or program
maintained by Employer or an Affiliate or Associate in which
Executive participates at the date of termination of employment, shall
receive any and all benefits accrued under such Plan or other plan or
program, to the date of termination of employment, the amount, form
and time of payment of such benefits to be determined by the terms of
such Incentive Plan, Retirement Plan, Welfare Plan and other plan or
program, and Executive's employment shall be deemed to have
terminated by reason of retirement, and without regard to vesting
limitations in all such Plans (other than Retirement Plans subject to
tax qualification requirements of the Internal Revenue Code of 1986,
as amended ("Code")) and other plans or programs under circumstances
that have the most favorable result for Executive thereunder. Payment
shall be made at the earliest date permitted under any such Plan or
other plan or program.
(3) To the extent not paid pursuant to subsection
8
<PAGE> 28
2(2) above, Employer shall pay Executive an amount equal to the pro
rata portion of Executive's target annual incentive bonus
compensation for the fiscal year of Employer in which the date of
termination of employment occurs, under the incentive bonus
compensation plan then maintained by Employer or an Affiliate or
Associate, that is applicable to the period commencing on the first
day of such fiscal year and ending on the date of termination. Such
amount shall be paid to Executive or his Beneficiary in a lump sum
within 30 days after his date of termination of employment.
(4) If upon the date of termination of Executive's employment,
Executive holds any options with respect to stock of Employer, all
such options will immediately become exercisable upon such date and
will be exercisable pursuant to the terms of the plan under which
such options were granted. Any restrictions on stock of Employer
owned by Executive on the date of termination of his employment will
lapse on such date. To the extent such acceleration of exercise of
such options, or such lapse of restrictions, is not permissible under
the terms of any plan pursuant to which the options or restricted
9
<PAGE> 29
stock were granted, Employer will pay to Executive or his
Beneficiary, (1) an amount equal to the excess, if any, of the
aggregate fair market value of all stock of Employer subject to such
options, determined on the date of termination of employment, over
the aggregate exercise price of such stock, and Executive or his
Beneficiary will surrender all such options unexercised, and (2) the
aggregate fair market value on the date of termination of employment
of all such restricted stock and Executive or his Beneficiary shall
transfer such stock to Employer. Payments pursuant to the preceding
sentence will be made to Executive or his Beneficiary in a lump sum
within 30 days after his date of termination of employment.
(5) During the Severance Period Executive and his spouse and
other dependents will continue to be covered by all Welfare Plans in
which he and his spouse and other dependents were participating
immediately prior to the date of his termination as if he continued
to be an employee of Employer or an Affiliate or Associate and
Employer will continue to pay the costs of coverage of Executive and
his spouse and other dependents under such Welfare Plans on the same
basis as is applicable to
10
<PAGE> 30
active employees covered thereunder; provided that, if participation
in any one or more of such Welfare Plans is not possible under the
terms thereof, Employer will provide substantially identical
benefits. Coverage under any such Welfare Plan will cease if and when
Executive obtains employment with another employer during the
Severance Period, and becomes eligible for coverage under any
substantially similar Welfare Plan provided by his new employer.
Coverage pursuant to this Section shall not be in satisfaction of
Employer's obligations with respect to Executive and his dependents
pursuant to the federal insurance continuation law commonly referred
to as "COBRA" as set forth in Section 4980B of the Code.
(6) During the Severance Period, Executive shall not be entitled
to reimbursement for fringe benefits, including without limitation,
dues and expenses related to club memberships, automobile expenses,
expenses for professional services and other similar perquisites.
(7) If Executive is using an automobile owned by Employer or an
Affiliate or Associate on the date of termination, Executive shall
have use of such automobile during the severance period and may
purchase the
11
<PAGE> 31
automobile for its then book value if Executive so requests. During
the period when Executive uses the automobile, Employer shall provide
insurance coverage and reimburse executive for the cost of routine
maintenance.
(8) Employer shall provide Executive with out placement services
of a nationally recognized out placement firm until the earlier of
(1) Executive's attainment of employment, and (2) the end of the
Severance Period.
(b) If the employment of Executive with Employer and all Affiliates
and Associates is terminated by Employer, or any Affiliate or Associate,
or by Executive, other than under circumstances set forth in subsection
2(a), Executive's compensation shall be paid through the date of his
termination, and Employer shall have no further obligation to Executive or
any other person under this Agreement. Such termination shall have no
effect upon Executive's other rights, including but not limited to rights
under any Incentive Plan, Retirement Plan, Welfare Plan or other employee
plan or program.
(c) Notwithstanding anything herein to the contrary, in the event
Employer or any Associate or Affiliate shall
12
<PAGE> 32
terminate the employment of Executive for Good Cause hereunder, Employer
or such Associate or Affiliate shall give Executive at least thirty (30)
days prior written notice specifying in detail the reason or reasons for
Executive's termination, and during such 30-day period, the Executive will
have the opportunity to cure the circumstances giving rise to termination
for good cause and the opportunity to be heard by Employer's Board of
Directors.
3. Setoff. No payments or benefits payable to or with respect to Executive
pursuant to this Agreement shall be reduced by any amount Executive or his
spouse or Beneficiary may earn or receive from employment with another employer
or from any other source, except as expressly provided in subsection 2(a)(5).
4. Death. If Executive's employment with Employer and all Affiliates and
Associates terminates either under circumstances described in Section 2, or due
to his death, then all unpaid amounts payable to Executive under subsections
2(a)(1), (2), (3) or (4) or 2(b), if any, as of the date of death, shall be
paid to his Beneficiary, and if subsection 2(a) applies, his spouse and other
dependents shall continue to be covered under all applicable Welfare Plans
during the remainder of the Severance Period, if any, pursuant to subsection
2(a)(5).
13
<PAGE> 33
5. No Solicitation of Representatives and Employees. Executive agrees that
he shall not, prior to a Change in Control or during the Severance Period,
directly or indirectly, in his individual capacity or otherwise, induce, cause,
persuade, or attempt to do any of the foregoing in order to cause, any
representative, agent or employee of Employer or any of its Affiliates and
Associates to terminate such person's employment relationship with Employer or
any of its Affiliates and Associates, or to violate the terms of any agreement
between said representative, agent or employee and Employer or any of its
Affiliates and Associates.
6. Confidentiality. Executive acknowledges that preservation of a
continuing business relationship between Employer or its Affiliates and
Associates and their respective customers, representatives, and employees is of
critical importance to the continued business success of Employer, its
Affiliates and Associates and that it is the active policy of Employer, its
Affiliates and Associates to guard as confidential certain information not
available to the public and relating to the business affairs of Employer, its
Affiliates and Associates. In view of the foregoing, Executive agrees that he
shall not at any time thereafter, without the prior written consent of
Employer,
14
<PAGE> 34
disclose to any person or entity any such confidential information that was
obtained by Executive in the course of his employment by Employer or any of
its Affiliates or Associates. This section shall not be applicable if and to
the extent Executive is required to testify in a legislative, judicial or
regulatory proceeding pursuant to an order of Congress, any state or local
legislature, a judge, or an administrative law judge or is otherwise required
by law to disclose such information.
7. Forfeiture. If Executive shall at any time violate any obligation of
his under Sections 5 or 6 in a manner that results in material damage to
Employer, any Affiliate or Associate, or its business, he shall immediately
forfeit his right to any benefits under this Agreement, and Employer shall
thereafter have no further obligation hereunder to Executive or his spouse,
Beneficiary or any other person.
8. Executive Assignment. No interest of Executive or his spouse or
Beneficiary under this Agreement, or any right to receive any payment or
distribution hereunder, shall be subject in any manner to sale, transfer,
assignment, pledge, attachment, garnishment, or other alienation or encumbrance
of any kind, nor may such interest or right to receive a payment or
distribution be taken, voluntarily or involuntarily, for the satisfaction of
the
15
<PAGE> 35
obligations or debts of, or other claims against, Executive or his spouse or
Beneficiary, including claims for alimony, support, separate maintenance, and
claims in bankruptcy proceedings.
9. Benefits Unfunded. All rights under this Agreement of Executive and his
spouse or Beneficiary, shall at all times be entirely unfunded, and no
provision shall at any time be made with respect to segregating any assets of
Employer for payment of any amounts due hereunder. Neither Executive, nor
spouse or his spouse or Beneficiary shall have any interest in or rights
against any specific assets of Employer, and Executive and his Beneficiary
shall have only the rights of a general unsecured creditor of Employer.
10. Waiver. No waiver by any party at any time of any breach by the other
party of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of any other
provisions or conditions at the same time or at any prior or subsequent time.
11. Applicable Law. This Agreement shall be construed and interpreted
pursuant to the laws of Wisconsin.
12. Entire Agreement. This Agreement contains the entire Agreement between
Employer and Executive and supersedes any and all previous agreements, written
or oral, between the parties relating
16
<PAGE> 36
to the subject matter hereof. No amendment or modification of the terms of this
Agreement shall be binding upon the parties hereto unless reduced to writing
and signed by Employer and Executive.
13. No Employment Contract. Nothing contained in this Agreement shall be
construed to be an employment contract between Executive and Employer.
14. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
15. Severability. In the event any provision of this Agreement is held
illegal or invalid, the remaining provisions of this Agreement shall not be
affected thereby.
16. Successors. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, representatives and
successors.
17. Employment with Affiliates and Associates. For purposes of this
Agreement, (A) employment or termination of employment of Executive shall mean
employment or termination of employment with Employer and all Affiliates and
Associates, (B) Base Salary and Bonuses shall include remuneration received by
Executive from Employer and all Affiliates and Associates, and (C) the terms
Incentive Plan, Retirement Plan and Welfare Plan or any other plan or program
maintained or made available by Employer shall include
17
<PAGE> 37
any such plans of any Affiliate or Associate of Employer.
18. Notice. Notices required under this Agreement shall be in writing and
sent by registered mail, return receipt requested, to the following addresses
or to such other address as the party being notified may have previously
furnished to the other party by written notice:
19. Attorneys Fees. In the event the Executive brings an action to enforce
the provisions of this Agreement and prevails in such action, the Executive
shall be entitled to recover from the Employer the Executive's attorneys fees
and other costs incurred in connection therewith. Employer agrees to reimburse
Executive for reasonable attorneys fees, not to exceed $1,500, in connection
with the review and negotiation of this Agreement.
18
<PAGE> 38
If to Employer: VERSA TECHNOLOGIES, INC.
-------------------------
ATTN: JAMES E. MOHRHAUSER
Chairman
9301 Washington Avenue
P.O. Box 085012
Racine, Wisconsin 53408
If to Executive: -------------------------
-------------------------
IN WITNESS WHEREOF, Executive has hereunto set his hand, and Employer has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
VERSA TECHNOLOGIES, INC.
By: -------------------
Title: ----------------
------------------------
Executive
19
<PAGE> 39
Form of "C" Contract
SENIOR EXECUTIVE AGREEMENT
This Senior Executive Agreement ("Agreement") is entered into as of
this __ day of August, 1997, by and between VERSA TECHNOLOGIES, INC., a Delaware
corporation ("Employer") and _____________________________ ("Executive").
WITNESSETH:
WHEREAS, Executive is currently employed by Employer or an Affiliate
or Associate;
WHEREAS, Employer desires to provide security to Executive in
connection with Executive's employment with Employer; and
WHEREAS, Executive and Employer desire to enter into this Agreement
pertaining to the terms of the security Employer is providing to Executive with
respect to his employment;
NOW, THEREFORE in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Affiliate" or "Associate" shall have the meaning set forth in
Rule 12b-2 under the Securities Exchange Act of 1934.
<PAGE> 40
(b) "Base Salary" shall mean the average of Executives annual base
salary at the rates in effect during the twenty-four (24) months prior
to an event that constitutes a termination of employment under
circumstances set forth in subsection 2(a); provided that such average
rate shall in no event be less than the highest annual rate in effect
for Executive at any time during the 24-month period preceding the
applicable Change in Control.
(c) "Beneficiary" shall mean the person or entity designated by
Executive, by written instrument delivered to Employer, to receive the
benefits payable under this Agreement in the event of his death. If
Executive fails to designate a Beneficiary, or if no Beneficiary
survives Executive, such death benefits shall be paid:
(i) to his surviving spouse; or
(ii) if there is no surviving spouse, to his living
descendants per stirpes:
or
(iii) if there is neither a surviving spouse nor
descendants, to his duly appointed and qualified
executor or personal representative.
2
<PAGE> 41
(d) "Bonus" shall mean the average of the bonuses earned by
Executive for each of the two full fiscal years of Employer preceding
an event that constitutes a termination of employment under
circumstances set forth in subsection 2(a); provided that such average
bonus shall in no event be less than the highest bonus earned by
Executive for any full fiscal year of Employer ending during the
24-month period prior to the applicable Change in Control.
(e) A "Change in Control" shall be deemed to take place on the
occurrence of any of the following events on or after July 1, 1997:
(1) The acquisition by an entity, person or group (including
all Affiliates or Associates of such entity, person or group) of
beneficial ownership, as that term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934, of capital stock of Employer
if after such acquisition such entity, person or group is entitled
to exercise more than 50% of the outstanding voting power of all
capital stock of Employer entitled to vote in elections of
directors ("Voting Power");
(2) The effective time of a merger or consolidation of Employer
with one or more other
3
<PAGE> 42
corporations as a result of which the holders of the outstanding
Voting Power of Employer immediately prior to such merger or
consolidation hold less than 50% of the Voting Power of the
surviving or resulting corporation; or
(3) The election to the Board of Directors of Employer of
candidates who were not recommended for election by the Board of
Directors of Employer in office immediately prior to the election,
if such candidates constitute a majority of those elected in that
particular election.
(f) "Good Cause" shall be deemed to exist if, and only if:
(1) Executive engages in acts or omissions constituting
dishonesty, intentional breach of fiduciary obligation or
intentional wrongdoing or malfeasance, in each case that results in
substantial harm to the business or property of Employer or any
Affiliate or Associate; or
(2) Executive is convicted of a felony violation involving
fraud or dishonesty.
(g) "Good Reason" shall exist:
4
<PAGE> 43
(1) there is a significant change in the nature or the scope of
Executive's authority or in his overall working environment;
(2) Executive is assigned duties materially inconsistent with
his present duties, responsibilities and status;
(3) there is a reduction in Executive's monthly rate of base
salary or bonus; or
(4) Employer or an Affiliate or Associate changes by 40 miles
or more the principal location in which Executive is required to
perform services.
(5) The successor to the Employer fails to assume fully the
responsibility under this Agreement pursuant to Section 16.
(h) "Incentive Plan" shall mean any incentive, bonus, deferred
compensation or similar plan or arrangement currently or hereafter
made available by Employer or an Affiliate or Associate in which
Executive is eligible to participate.
(i) "Retirement Plan" shall mean any qualified or supplemental
employee pension benefit plan, as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
currently or hereinafter made
5
<PAGE> 44
available by Employer or an Affiliate or Associate in which
Executive is eligible to participate.
(j) "Severance Period" shall mean the period beginning on the date
Executive's employment with Employer and all Affiliates and Associates
terminates under circumstances described in subsection 2(a) and ending
on the date 24 months thereafter.
(k) "Term" shall mean the period beginning on the date hereof and
terminating on the date 24 months after the date hereof, provided that
for each day from and after the date hereof the Term will
automatically be extended for an additional day, unless either
Employer or Executive has given written notice to the other party of
its or his election to cease such automatic extension, in which case
the Term shall be the 24 month period beginning on the date such
notice is received by such other party.
(l) "Welfare Plan" shall mean any health and dental plan,
disability plan, survivor income plan or life insurance plan, as
defined in Section 3(1) of ERISA, currently or hereafter made
available by Employer or an Affiliate or Associate in which Executive
is eligible to participate.
2. Benefits Upon Termination of Employment. (a) The
6
<PAGE> 45
following provisions will apply if a Change in Control occurs during
the Term, and if at any time during the 24 months after such Change in
Control occurs (whether during or after the expiration of the Term),
(i) the employment of Executive with Employer and all Affiliates and
Associates is terminated by Employer or such Affiliates and Associates
for any reason other than Good Cause, or (ii) Executive terminates his
employment with Employer and all Affiliates and Associates for Good
Reason on or after March 1, 1999 and with respect to the provisions
of subsections (1) through (3) and (5) through (8) of this section
2(a) or at any time after the date of this Agreement with respect to
the provisions of subsection (4) of this section 2(a).
(1) Employer shall pay Executive or his
Beneficiary an amount equal to the sum of (1)
his Base Salary plus (2) his Bonus, all
multiplied by an amount equal to the sum
of (1) .50 plus (2) .01923 for each year of
service, or pro rata portion thereof, of
Executive with Employer and all Affiliates
and Associates through his date of termination
of employment. Such amount shall be paid to
Executive or his Beneficiary in a lump Rum
within 30 days after his date of termination
of employment.
7
<PAGE> 46
(2) Executive or his Beneficiary, or any other person entitled
to receive benefits with respect to Executive under any Incentive
Plan, Retirement Plan, Welfare Plan, or any other plan or program
maintained by Employer or an Affiliate or Associate in which
Executive participates at the date of termination of employment, shall
receive any and all benefits accrued under such Plan or other plan or
program, to the date of termination of employment, the amount, form
and time of payment of such benefits to be determined by the terms of
such Incentive Plan, Retirement Plan, Welfare Plan and other plan or
program, and Executive's employment shall be deemed to have
terminated by reason of retirement, and without regard to vesting
limitations in all such Plans (other than Retirement Plans subject to
tax qualification requirements of the Internal Revenue Code of 1986,
as amended ("Code")) and other plans or programs under circumstances
that have the most favorable result for Executive thereunder. Payment
shall be made at the earliest date permitted under any such Plan or
other plan or program.
(3) To the extent not paid pursuant to subsection
8
<PAGE> 47
2(2) above, Employer shall pay Executive an amount equal to the pro
rata portion of Executive's target annual incentive bonus
compensation for the fiscal year of Employer in which the date of
termination of employment occurs, under the incentive bonus
compensation plan then maintained by Employer or an Affiliate or
Associate, that is applicable to the period commencing on the first
day of such fiscal year and ending on the date of termination. Such
amount shall be paid to Executive or his Beneficiary in a lump sum
within 30 days after his date of termination of employment.
(4) If upon the date of termination of Executive's employment,
Executive holds any options with respect to stock of Employer, all
such options will immediately become exercisable upon such date and
will be exercisable pursuant to the terms of the plan under which
such options were granted. Any restrictions on stock of Employer
owned by Executive on the date of termination of his employment will
lapse on such date. To the extent such acceleration of exercise of
such options, or such lapse of restrictions, is not permissible under
the terms of any plan pursuant to which the options or restricted
9
<PAGE> 48
stock were granted, Employer will pay to Executive or his
Beneficiary, (1) an amount equal to the excess, if any, of the
aggregate fair market value of all stock of Employer subject to such
options, determined on the date of termination of employment, over
the aggregate exercise price of such stock, and Executive or his
Beneficiary will surrender all such options unexercised, and (2) the
aggregate fair market value on the date of termination of employment
of all such restricted stock and Executive or his Beneficiary shall
transfer such stock to Employer. Payments pursuant to the preceding
sentence will be made to Executive or his Beneficiary in a lump sum
within 30 days after his date of termination of employment.
(5) During the Severance Period Executive and his spouse and
other dependents will continue to be covered by all Welfare Plans in
which he and his spouse and other dependents were participating
immediately prior to the date of his termination as if he continued
to be an employee of Employer or an Affiliate or Associate and
Employer will continue to pay the costs of coverage of Executive and
his spouse and other dependents under such Welfare Plans on the same
basis as is applicable to
10
<PAGE> 49
active employees covered thereunder; provided that, if participation
in any one or more of such Welfare Plans is not possible under the
terms thereof, Employer will provide substantially identical
benefits. Coverage under any such Welfare Plan will cease if and when
Executive obtains employment with another employer during the
Severance Period, and becomes eligible for coverage under any
substantially similar Welfare Plan provided by his new employer.
Coverage pursuant to this Section shall not be in satisfaction of
Employer's obligations with respect to Executive and his dependents
pursuant to the federal insurance continuation law commonly referred
to as "COBRA" as set forth in Section 4980B of the Code.
(6) During the Severance Period, Executive shall not be entitled
to reimbursement for fringe benefits, including without limitation,
dues and expenses related to club memberships, automobile expenses,
expenses for professional services and other similar perquisites.
(7) If Executive is using an automobile owned by Employer or an
Affiliate or Associate on the date of termination, Executive shall
have use of such automobile during the severance period and may
purchase the
11
<PAGE> 50
automobile for its then book value if Executive so requests. During
the period when Executive uses the automobile, Employer shall provide
insurance coverage and reimburse executive for the cost of routine
maintenance.
(8) Employer shall provide Executive with out placement services
of a nationally recognized out placement firm until the earlier of
(1) Executive's attainment of employment, and (2) the end of the
Severance Period.
(b) If the employment of Executive with Employer and all Affiliates
and Associates is terminated by Employer, or any Affiliate or Associate,
or by Executive, other than under circumstances set forth in subsection
2(a), Executive's compensation shall be paid through the date of his
termination, and Employer shall have no further obligation to Executive or
any other person under this Agreement. Such termination shall have no
effect upon Executive's other rights, including but not limited to rights
under any Incentive Plan, Retirement Plan, Welfare Plan or other employee
plan or program.
(c) Notwithstanding anything herein to the contrary, in the event
Employer or any Associate or Affiliate shall
12
<PAGE> 51
terminate the employment of Executive for Good Cause hereunder, Employer
or such Associate or Affiliate shall give Executive at least thirty (30)
days prior written notice specifying in detail the reason or reasons for
Executive's termination, and during such 30-day period, the Executive will
have the opportunity to cure the circumstances giving rise to termination
for good cause and the opportunity to be heard by Employer's Board of
Directors.
3. Setoff. No payments or benefits payable to or with respect to Executive
pursuant to this Agreement shall be reduced by any amount Executive or his
spouse or Beneficiary may earn or receive from employment with another employer
or from any other source, except as expressly provided in subsection 2(a)(5).
4. Death. If Executive's employment with Employer and all Affiliates and
Associates terminates either under circumstances described in Section 2, or due
to his death, then all unpaid amounts payable to Executive under subsections
2(a)(1), (2), (3) or (4) or 2(b), if any, as of the date of death, shall be
paid to his Beneficiary, and if subsection 2(a) applies, his spouse and other
dependents shall continue to be covered under all applicable Welfare Plans
during the remainder of the Severance Period, if any, pursuant to subsection
2(a)(5).
13
<PAGE> 52
5. No Solicitation of Representatives and Employees. Executive agrees that
he shall not, prior to a Change in Control or during the Severance Period,
directly or indirectly, in his individual capacity or otherwise, induce, cause,
persuade, or attempt to do any of the foregoing in order to cause, any
representative, agent or employee of Employer or any of its Affiliates and
Associates to terminate such person's employment relationship with Employer or
any of its Affiliates and Associates, or to violate the terms of any agreement
between said representative, agent or employee and Employer or any of its
Affiliates and Associates.
6. Confidentiality. Executive acknowledges that preservation of a
continuing business relationship between Employer or its Affiliates and
Associates and their respective customers, representatives, and employees is of
critical importance to the continued business success of Employer, its
Affiliates and Associates and that it is the active policy of Employer, its
Affiliates and Associates to guard as confidential certain information not
available to the public and relating to the business affairs of Employer, its
Affiliates and Associates. In view of the foregoing, Executive agrees that he
shall not at any time thereafter, without the prior written consent of
Employer,
14
<PAGE> 53
disclose to any person or entity any such confidential information that was
obtained by Executive in the course of his employment by Employer or any of
its Affiliates or Associates. This section shall not be applicable if and to
the extent Executive is required to testify in a legislative, judicial or
regulatory proceeding pursuant to an order of Congress, any state or local
legislature, a judge, or an administrative law judge or is otherwise required
by law to disclose such information.
7. Forfeiture. If Executive shall at any time violate any obligation of
his under Sections 5 or 6 in a manner that results in material damage to
Employer, any Affiliate or Associate, or its business, he shall immediately
forfeit his right to any benefits under this Agreement, and Employer shall
thereafter have no further obligation hereunder to Executive or his spouse,
Beneficiary or any other person.
8. Executive Assignment. No interest of Executive or his spouse or
Beneficiary under this Agreement, or any right to receive any payment or
distribution hereunder, shall be subject in any manner to sale, transfer,
assignment, pledge, attachment, garnishment, or other alienation or encumbrance
of any kind, nor may such interest or right to receive a payment or
distribution be taken, voluntarily or involuntarily, for the satisfaction of
the
15
<PAGE> 54
obligations or debts of, or other claims against, Executive or his spouse or
Beneficiary, including claims for alimony, support, separate maintenance, and
claims in bankruptcy proceedings.
9. Benefits Unfunded. All rights under this Agreement of Executive and his
spouse or Beneficiary, shall at all times be entirely unfunded, and no
provision shall at any time be made with respect to segregating any assets of
Employer for payment of any amounts due hereunder. Neither Executive, nor
spouse or his spouse or Beneficiary shall have any interest in or rights
against any specific assets of Employer, and Executive and his Beneficiary
shall have only the rights of a general unsecured creditor of Employer.
10. Waiver. No waiver by any party at any time of any breach by the other
party of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of any other
provisions or conditions at the same time or at any prior or subsequent time.
11. Applicable Law. This Agreement shall be construed and interpreted
pursuant to the laws of Wisconsin.
12. Entire Agreement. This Agreement contains the entire Agreement between
Employer and Executive and supersedes any and all previous agreements, written
or oral, between the parties relating
16
<PAGE> 55
to the subject matter hereof. No amendment or modification of the terms of this
Agreement shall be binding upon the parties hereto unless reduced to writing
and signed by Employer and Executive.
13. No Employment Contract. Nothing contained in this Agreement shall be
construed to be an employment contract between Executive and Employer.
14. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
15. Severability. In the event any provision of this Agreement is held
illegal or invalid, the remaining provisions of this Agreement shall not be
affected thereby.
16. Successors. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, representatives and
successors.
17. Employment with Affiliates and Associates. For purposes of this
Agreement, (A) employment or termination of employment of Executive shall mean
employment or termination of employment with Employer and all Affiliates and
Associates, (B) Base Salary and Bonuses shall include remuneration received by
Executive from Employer and all Affiliates and Associates, and (C) the terms
Incentive Plan, Retirement Plan and Welfare Plan or any other plan or program
maintained or made available by Employer shall include
17
<PAGE> 56
any such plans of any Affiliate or Associate of Employer.
18. Notice. Notices required under this Agreement shall be in writing and
sent by registered mail, return receipt requested, to the following addresses
or to such other address as the party being notified may have previously
furnished to the other party by written notice:
19. Attorneys Fees. In the event the Executive brings an action to enforce
the provisions of this Agreement and prevails in such action, the Executive
shall be entitled to recover from the Employer the Executive's attorneys fees
and other costs incurred in connection therewith. Employer agrees to reimburse
Executive for reasonable attorneys fees, not to exceed $1,500, in connection
with the review and negotiation of this Agreement.
20. Conflict with Employment Agreement. Nothing contained in this
Agreement shall be deemed to amend or modify the employment agreement dated as
of November 30, 1996 between Eder Industries Inc. and Employee (the
"Employment Agreement"). In the event of a conflict between the provisions of
this Agreement and the provisions of the Employment Agreement, the provisions of
the Employment Agreement shall prevail.
18
<PAGE> 57
If to Employer: VERSA TECHNOLOGIES, INC.
-------------------------
ATTN: JAMES E. MOHRHAUSER
Chairman
9301 Washington Avenue
P.O. Box 085012
Racine, Wisconsin 53408
If to Executive: -------------------------
-------------------------
IN WITNESS WHEREOF, Executive has hereunto set his hand, and Employer has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
VERSA TECHNOLOGIES, INC.
By: -------------------
Title: ----------------
------------------------
Executive
19
<PAGE> 58
SCHEDULE OF SENIOR EXECUTIVE AGREEMENTS
"A" Contracts:
Thomas J. Magulski
Robert M. Sukalich
Edward V. Surek
Janet L. Ford
"B" Contracts:
Michael N. Stein
David Hicks
Michael W. Garvey
Thomas D. Hynes
Michael E. Cahill
David B. Walsh
Craig L. McNulty
Michael A. Shuda
Kenneth A. Mazich
William Stern
Barbara M. Sawicky
Nicholas R. Recupero
Mark Summers
Brian J. Johnson
Bryan Sell
Hani A. Malek
Roger J. Rossman
Ronald W. Euer
Ronald R. Rutowski
Keith A. Hartlaub
Roger J. Neumann
David J. McKendrey
James M. Dougherty
David A. DeSutter
Charles Woodin
Gerald M. Peiffer
Robert H. Schneider
John A. Lindgren
Craig A. Wisner
James A. Covington
Gary E. McArthur
"C" Contract:
Richard H. Marks
<PAGE> 1
VERSA/TEK LOGO
VERSA TECHNOLOGIES, INC. / 9301 WASHINGTON AVENUE / P.O. BOX 085012 / RACINE, WI
53408-5012 / 414-886-1174 / FAX 414-886-4614
September 5, 1997
Dear Shareholder:
We are pleased to report that, on September 2, 1997, Versa Technologies,
Inc. (the "Company") entered into a merger agreement with Applied Power Inc. and
one of its subsidiaries that provides for the acquisition of the Company by
Applied Power at a price of $24.625 per share net to the seller in cash. Under
the terms of the proposed transaction, an Applied Power subsidiary is today
commencing a cash tender offer for all outstanding shares of the Company common
stock at $24.625 per share. Following the successful completion of the tender
offer, the Applied Power subsidiary will be merged into the Company and all
shares not purchased in the tender offer will be converted into the right to
receive $24.625 per share in cash in the merger.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE APPLIED POWER TENDER
OFFER AND UNANIMOUSLY DETERMINED THAT THE TERMS OF THE TENDER OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
ALL COMPANY SHAREHOLDERS TENDER THEIR SHARES IN THE APPLIED POWER TENDER OFFER.
In arriving at its recommendations, the Board of Directors gave careful
consideration to a number of factors. These factors included the opinion dated
September 2, 1997 of William Blair & Company L.L.C., financial advisor to the
Company, to the effect that, as of such date and based upon and subject to
certain matters stated in such opinion, the cash consideration of $24.625 per
share to be received by Company shareholders in the offer and the merger, taken
together, was fair from a financial point of view to such shareholders.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is
Applied Power's Offer to Purchase and related materials, including a Letter of
Transmittal for use in tendering shares. We urge you to read the enclosed
materials, including William Blair's opinion which is attached to the Schedule
14D-9, carefully.
The management and directors of Versa Technologies, Inc. thank you for the
support you have given the Company.
Sincerely,
JAMES E. MOHRHAUSER
James E. Mohrhauser
Chairman and Chief Executive Officer
<PAGE> 1
FIRST AMENDMENT
TO RIGHTS AGREEMENT
THIS AGREEMENT is made as of the 2nd day of September, 1997 by
and between Versa Technologies, Inc., a Delaware corporation (the "Company"),
and Firstar Trust Company (the "Rights Agent").
WHEREAS, the Company entered into a Rights Agreement as of
December 13, 1988 (the "Rights Agreement") with the First Wisconsin Trust
Company (the name of the Rights Agent before it changed its name to Firstar
Trust Company);
WHEREAS, the Company and the Rights Agent may from time to
time supplement or amend the Rights Agreement pursuant to the provisions of
Section 27 of the Rights Agreement; and
WHEREAS, no Distribution Date (as defined in Section 3(a) of
the Rights Agreement) has occurred;
WHEREAS, an appropriate officer of the Company has delivered a
certificate to the Rights Agent which states that this amendment complies with
the terms of Section 27 of the Rights Agreement; and
WHEREAS, all acts and things necessary to make this First
Amendment Agreement a valid, legal and binding instrument of the Company and
the Rights Agent have been duly done, performed and fulfilled, and the
execution and delivery hereof by each of the Company and the Rights Agent have
been in all respects duly authorized by the Company and the Rights Agent,
respectively;
<PAGE> 2
NOW, THEREFORE, the Company and the Rights Agent hereby agree
that:
1. Pursuant to Section 27 of the Rights Agreement, Section 1(a) of the
Rights Agreement is hereby amended by inserting at the end of the
first sentence thereof after the words "...capacity as trustee" the
words "or Applied Power Inc. of Butler, Wisconsin or any subsidiary
thereof."
2. Pursuant to Section 27 of the Rights Agreement, Section 3(a)(ii) of
the Rights Agreement is hereby amended by inserting into and at the
end of the first parenthetical phrase thereof after the words
"...capacity as trustee" the words "or Applied Power Inc. of Butler,
Wisconsin or any subsidiary thereof)".
3. Pursuant to Section 27 of the Rights Agreement, Section 11(a)(ii)(B)
of the Rights Agreement is hereby amended by inserting into and at the
end of the first parenthetical phrase thereof after the words
"...capacity as trustee" the words "or Applied Power Inc. of Butler,
Wisconsin or any subsidiary thereof)".
4. The receipt of proper notice from the Rights Agent by the Company
respecting the change in the name of the Rights Agent to Firstar Trust
Company is confirmed.
5. Pursuant to Section 25 of the Rights Agreement, the address for
notices to the Rights Agent hereafter shall be as follows:
Firstar Trust Company
Suite 301
1555 North River Center Drive
Milwaukee, Wisconsin 53212
Attention: Corporate Trust Services
6. The term "Agreement" as used in the Rights Agreement shall be deemed
to refer to the Rights Agreement as previously amended and as amended
hereby.
5. This First Amendment Agreement may be executed in two or more
counterparts and each of such counterparts shall for all purposes be
deemed to be an original and all such counterparts shall
2
<PAGE> 3
together constitute but one and the same instrument. Terms not
defined herein shall, unless the context otherwise requires, have the
meanings assigned to such terms in the Rights Agreement.
8. In all respects not inconsistent with the terms and provisions of this
First Amendment Agreement, the Rights Agreement is hereby ratified and
confirmed. In executing and delivering this First Amendment
Agreement, the Rights Agent shall be entitled to all of the privileges
and immunities afforded to the Rights Agent under the terms and
conditions of the Rights Agreement.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and year first
above written.
FIRSTAR TRUST COMPANY VERSA TECHNOLOGIES, INC.
By: /s/ Eugene R. Lee By: /s/ Robert Sukalich
--------------------- -------------------------------
Name: Eugene R. Lee Name: Robert M. Sukalich
Title: Vice President Title: Vice President - Finance
By: /s/ Gene E. Plueger By: /s/ Lawrence Block
----------------------- -------------------------------
Name: Gene E. Plueger Name: Lawrence Block
Title: Vice President Title: Secretary
4
<PAGE> 1
ANNEX II
[WILLIAM BLAIR & COMPANY LOGO]
September 2, 1997
Board of Directors
Versa Technologies, Inc.
9301 Washington Avenue
Racine, Wisconsin 53408-5012
Lady and Gentlemen:
You have requested our opinion as to the fairness, from a financial point
of view, to the common stockholders (collectively, the "Stockholders") of Versa
Technologies, Inc. (the "Company") of the consideration (the "Consideration") to
be received by the Stockholders pursuant to the terms of the Agreement and Plan
of Merger to be dated as of September 2, 1997 (the "Merger Agreement") by and
among the Company, Applied Power, Inc. ("Parent") and TVPA Corp. ("Newco"), a
wholly-owned subsidiary of Parent. The Merger Agreement provides, among other
things, for (i) the commencement by Newco of a tender offer (the "Tender Offer")
for all the outstanding shares of common stock, $.01 par value per share, (the
"Common Stock") of the Company for $24.625 per share, net to the seller in cash
and (ii) the subsequent merger of Newco with and into the Company (the "Merger,"
together with the Tender Offer, the "Transaction") pursuant to which each
outstanding share of Common Stock not previously tendered will be converted into
the right to receive $24.625 in cash.
In connection with our review of the proposed Transaction and the
preparation of our opinion herein, we have examined: (a) a draft dated August
28, 1997 of the Merger Agreement; (b) audited historical financial statements of
the Company for each of the five fiscal years ended March 31, 1997; (c) the
unaudited financial statements of the Company for the three months ended June
30, 1997; (d) certain internal financial information and forecasts for the
Company, prepared by the Company's management; and (e) certain other publicly
available information on the Company. We have also held discussions with members
of the senior management of the Company to discuss the foregoing and have
considered other matters which we have deemed relevant to our inquiry.
Although we have no reason to believe that any of the financial or other
information on which we have relied is not accurate or complete, we have assumed
the accuracy and completeness of all such information and have not attempted to
verify independently any of such information, nor have we made or obtained an
independent appraisal of the assets of the Company. With respect to financial
forecasts, we have assumed that such forecasts have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's management, as to the future financial performance of the Company. Our
opinion herein is based upon circumstances existing and disclosed to us and can
be evaluated as of the date of this letter.
In rendering our opinion, we have assumed that the Transaction will be
consummated on the terms described in the Merger Agreement, without any waiver
of any material terms or conditions by the Company. We have also assumed that
the final form of the Merger Agreement, including the exhibits thereto, as and
when executed, will be substantially similar to the last drafts thereof reviewed
by us.
In conducting our investigation and analyses and in arriving at our opinion
expressed herein, we have taken into account such accepted financial and
investment banking procedures and considerations as we have
222 West Adams Street Chicago, Illinois 60606 (312) 236-1600
<PAGE> 2
Board of Directors September 2, 1997
Versa Technologies, Inc.
deemed relevant, including (a) historical revenues, operating earnings,
operating cash flows, net income and capitalization, as to the Company and
certain publicly held companies; (b) the current financial position and results
of operations of the Company; (c) the historical market prices and trading
volumes of the Common Stock; (d) financial information concerning selected
actual and proposed business combinations which we believe to be relevant; and
(e) the general condition of the securities markets.
William Blair & Company has been engaged in the investment banking business
since 1935. We undertake the valuation of investment securities in connection
with public offerings, private placements, business combinations, estate and
gift tax valuations and similar transactions. For our services relating to the
Transaction, including the rendering of this opinion, the Company will pay us a
fee, a significant portion of which is contingent upon the consummation of the
Transaction, and indemnify us against certain liabilities. In the ordinary
course of business, we may for our own account and the accounts of our customers
at any time hold a long or short position in the securities of the Company.
This opinion is for the use and benefit of the Board of Directors of the
Company. Our opinion is limited to the fairness, from a financial point of view,
to the Stockholders of the Consideration, and we do not address the merits of
the underlying decision by the Company to engage in the Transaction and this
opinion does not constitute a recommendation to any Stockholder whether or not
to tender shares of Common Stock into the Tender Offer or how any Stockholder
should vote at a special meeting of the Stockholders to consider the Merger. It
is understood that this letter may not be disclosed or otherwise referred to
without our prior written consent, except that the opinion may be included in
its entirety in the Schedule 14D-9 and any proxy statement contemplated by the
Merger Agreement.
We are not expressing any opinion hereby as to the prices at which the
Company's shares of Common Stock will trade following the announcement of the
Transaction, which may vary depending upon, among other factors, changes in
interest rates, currency exchange rates, dividend rates, market conditions,
general economic conditions and other factors that generally influence the price
of securities.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of date hereof, the Consideration is fair, from a financial
point of view, to the Stockholders of the Company.
Very truly yours,
WILLIAM BLAIR & COMPANY, L.L.C.
