<PAGE>
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
(Amendment No. )
Check the appropriate box:
[_]Preliminary Information Statement
[_]Confidential, for Use of the Commission only (as permitted by Rule 14c-
5(d)(2))
[X]Definitive Information Statement
CADE INDUSTRIES, INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[_]No fee required.
[X]Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies: Common
Stock, par value $.001 per share (including the associated Common Stock
purchase rights)
2) Aggregate number of securities to which transaction applies (including
shares of Common Stock subject to outstanding stock options): 4,068,940
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): $5.05
4) Proposed maximum aggregate value of transaction: $20,548,147
5) Total fee paid: $21*
[X]Fee paid previously with preliminary materials.
[X]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $23,208
2) Form, Schedule or Registration Statement No.: Schedule 14D-1
3) Filing Party: United Technologies Corporation and Sphere Corporation
4) Date Filed: October 21, 1999
- --------
* The amount previously paid assumed the purchase of 22,977,952 shares of
Common Stock, par value $.001 per share (the "Common Stock"), of Cade
Industries, Inc. (the "Company"), including the associated Common Stock
purchase rights (the "Shares"), 21,606,207 of which were outstanding as of
October 20, 1999 and 1,371,745 of which were then subject to outstanding
options, at $5.05 per Share. As of December 7, 1999 (the record date for
the special meeting), there were 21,606,207 Shares outstanding
(representing 18,930,035 Shares purchased by Sphere Corporation (the
"Purchaser") and 2,676,172 Shares held by persons other than Purchaser) and
1,392,768 Shares subject to outstanding options, which total number of
Shares (including the Shares subject to outstanding options) is greater by
21,023 Shares than the number of Shares for which a filing fee was paid on
October 21, 1999 pursuant to the Schedule 14D-1 of Purchaser and United
Technologies Corporation. The total fee with respect to the securities to
which this transaction applies is $4,810, of which $4,089 was previously
paid as part of the $23,208 paid in connection with the October 21, 1999
Schedule 14D-1 filing and $21 was previously paid in connection with the
December 22, 1999 confidential filing of the preliminary Schedule 14C.
<PAGE>
[LOGO OF CADE INDUSTRIES, INC.]
2365 Woodlake Drive, Suite 120 . Okemos, Michigan 48864
(517) 347-1333 . Fax (517) 347-6185
www.cade-industries.com
January 6, 2000
Dear Shareholders:
As announced on October 21, 1999, Cade Industries, Inc. (the "Company")
entered into an Agreement and Plan of Merger (the "Merger Agreement"), dated
as of October 21, 1999, with United Technologies Corporation, a Delaware
corporation ("Parent"), and Sphere Corporation, a Wisconsin corporation and a
wholly-owned subsidiary of Parent ("Purchaser"), which provides for the
acquisition of the Company by Parent in two steps. The first step was a cash
tender offer by Purchaser to acquire all of the outstanding shares of common
stock of the Company (including the associated common stock purchase rights)
at $5.05 per share, net to the seller in cash. The tender offer was completed
on December 3, 1999 and Purchaser purchased approximately 18.9 million shares,
or approximately 87.6 percent of the Company's outstanding shares, pursuant to
the tender offer. The merger of Purchaser with and into the Company (the
"Merger"), in which the Company will be the surviving corporation, is the
second and final step in the acquisition of the Company by Parent and is
intended to complete the acquisition of any shares of common stock of the
Company not acquired by Purchaser pursuant to the tender offer. As a result of
the Merger, the Company will become a wholly-owned subsidiary of Parent. In
the Merger, each outstanding share of common stock of the Company (other than
shares owned by Parent, Purchaser or any subsidiary of Parent, Purchaser or
the Company, held in the treasury of the Company, or held by shareholders who
exercise dissenters' rights under the Wisconsin Business Corporation Law, if
any) will be converted into the right to receive $5.05 in cash, without
interest thereon, all as more fully set forth and described in the
accompanying Information Statement and the Merger Agreement, a copy of which
is attached as Annex I to the Information Statement.
On Friday, February 4, 2000, a special meeting of shareholders will be held
for the purpose of approving the Merger Agreement. The affirmative vote of a
majority of the aggregate voting power of the outstanding shares of common
stock of the Company will be necessary to approve the Merger Agreement. As a
result of the consummation of Purchaser's tender offer, Purchaser owns and has
the right to vote a sufficient number of outstanding shares such that approval
of the Merger Agreement at the special meeting is assured without the
affirmative vote of any other shareholder.
You are welcome to attend the special meeting; however, you are not being
asked for a proxy and are requested not to send one. The accompanying
Information Statement explains the terms of the Merger. Please read the
accompanying Information Statement carefully.
We appreciate your loyalty and support as a shareholder of our Company in
the past and as we move forward with this transition to new ownership.
Sincerely,
/s/ Richard R. Barnhart
Richard R. Barnhart
PRESIDENT
<PAGE>
CADE INDUSTRIES, INC.
2365 WOODLAKE DRIVE, SUITE 120
OKEMOS, MICHIGAN 48864
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY, FEBRUARY 4, 2000
To the shareholders of Cade Industries, Inc.
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Special Meeting") of
shareholders of Cade Industries, Inc. (the "Company") will be held on Friday,
February 4, 2000, at 9:00 a.m., local time, at the Milwaukee Athletic Club,
758 North Broadway, Milwaukee, Wisconsin 53202, for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement and Plan
of Merger, dated as of October 21, 1999 (the "Merger Agreement"), by
and among the Company, United Technologies Corporation, a Delaware
corporation ("Parent") and Sphere Corporation, a Wisconsin corporation
and a wholly-owned subsidiary of Parent ("Purchaser"). The Merger
Agreement provides, among other things, for (i) the merger of Purchaser
with and into the Company (the "Merger"), with the Company to continue
as the surviving corporation, and (ii) the conversion of all of the
issued and outstanding shares of common stock, $.001 par value per
share (the "Common Stock") of the Company, including the associated
Common Stock purchase rights issued pursuant to the Rights Agreement,
dated as of August 4, 1998, as amended as of October 21, 1999, between
the Company and Firstar Bank Milwaukee, N.A. (formerly named Firstar
Trust Company), as Rights Agent (the "Rights" and, together with the
Common Stock, the "Shares") (other than Shares owned by Parent,
Purchaser or any subsidiary of Parent, Purchaser or the Company, held
in the treasury of the Company, or held by shareholders who exercise
dissenters' rights under the Wisconsin Business Corporation Law, if
any) into the right to receive $5.05 per Share in cash, without
interest thereon, all as more fully described in the accompanying
Information Statement and the Merger Agreement, a copy of which is
attached as Annex I to the Information Statement.
2. To consider and act upon any other business which may be properly
brought before the Special Meeting or any adjournment or postponement
thereof.
Only holders of record of the Shares at the close of business on December 7,
1999 (the "Record Date") will be entitled to receive notice of, and to vote
at, the Special Meeting.
You are cordially invited to attend the Special Meeting; however, proxies
are not being solicited for the Special Meeting. If you wish to vote your
Shares, you or your representative must be present in person at the Special
Meeting.
Shareholders and beneficial shareholders will be entitled to assert
dissenters' rights under sections 180.1301 through 180.1331 of the Wisconsin
Business Corporation Law. Shareholders should read the Information Statement
and Annex IV thereto for a description of all statutory provisions related to
dissenters' rights.
You should not send any Share certificates at this time. After the Merger is
completed, you will receive a letter of transmittal containing instructions on
where to send your Share certificates.
Neither the Company nor its management is soliciting your proxy.
On Behalf of the Board of Directors,
/s/ Stephen B. Swigert
Stephen B. Swigert
SECRETARY
Okemos, Michigan
January 6, 2000
<PAGE>
CADE INDUSTRIES, INC.
2365 WOODLAKE DRIVE, SUITE 120
OKEMOS, MICHIGAN 48864
INFORMATION STATEMENT
This Information Statement is being furnished to holders of common stock,
par value $.001 per share (the "Common Stock"), of Cade Industries, Inc., a
Wisconsin corporation (the "Company"), including the associated Common Stock
purchase rights (the "Rights") issued pursuant to the Rights Agreement (the
"Rights Agreement"), dated as of August 4, 1998, as amended as of October 21,
1999, between the Company and Firstar Bank Milwaukee, N.A. (formerly named
Firstar Trust Company), as Rights Agent (the Common Stock and the Rights,
together, the "Shares"), in connection with the proposed merger (the "Merger")
of Sphere Corporation, a Wisconsin corporation ("Purchaser") and a wholly-
owned subsidiary of United Technologies Corporation, a Delaware Corporation
("Parent"), with and into the Company as contemplated by the Agreement and
Plan of Merger, dated as of October 21, 1999, among Parent, Purchaser and the
Company (the "Merger Agreement"). The Merger, in which the Company will be the
surviving corporation, is the second and final step in the acquisition of the
Company by Parent. The first step was a cash tender offer by Purchaser to
acquire all outstanding Shares at $5.05 per Share, net to the seller in cash
(the "Offer"). The Offer was completed on December 3, 1999 and Purchaser
purchased approximately 18.9 million Shares, or approximately 87.6 percent of
the issued and outstanding Shares, pursuant to the Offer. In the Merger, each
outstanding Share (other than Shares owned by Parent, Purchaser or any
subsidiary of Parent, Purchaser or the Company, held in the treasury of the
Company, or held by shareholders who exercise dissenters' rights under the
Wisconsin Business Corporation Law (the "WBCL"), if any ("Dissenting Shares"))
will be converted into the right to receive $5.05 in cash, without interest
thereon. A copy of the Merger Agreement is attached hereto as Annex I. As a
result of the Merger, the Company will become a wholly-owned subsidiary of
Parent.
The Special Meeting of shareholders of the Company (including any and all
adjournments or postponements thereof, the "Special Meeting") will be held on
Friday, February 4, 2000, at 9:00 a.m., local time at the Milwaukee Athletic
Club, 758 North Broadway, Milwaukee, Wisconsin 53202.
Shareholders are welcome to attend the Special Meeting; however, proxies are
not being solicited for the Special Meeting. Shareholders who wish to vote
their Shares must be present in person or be represented by a duly authorized
representative at the Special Meeting.
Only holders of record of the Shares at the close of business on December 7,
1999 are entitled to receive notice of, and to vote at, the Special Meeting.
On such date, there were 21,606,207 Shares outstanding. The presence in person
or by proxy of the holders of a majority of the votes entitled to be cast by
Shares entitled to vote will be necessary to constitute a quorum for the
transaction of business at the Special Meeting. The affirmative vote of a
majority of the aggregate voting power of the issued and outstanding Shares
will be necessary to approve the Merger Agreement. Each Share is entitled to
one vote, except that the voting power of Shares held by Parent and Purchaser
(other than Shares acquired directly from the Company, if any) in excess of 20
percent of the aggregate voting power of the outstanding Shares is limited to
10 percent of the full voting power of such shares pursuant to Section
180.1150 of the WBCL. As a result of the consummation of the Offer, Purchaser
owns approximately 87.6 percent of the issued and outstanding Shares, or
approximately 68 percent of the aggregate voting power of the issued and
outstanding Shares and intends to vote all such Shares in favor of the Merger
Agreement. Accordingly, the approval of the Merger Agreement at the Special
Meeting is assured without the affirmative vote of any other shareholder.
You are urged to review this Information Statement carefully to decide
whether to accept the $5.05 in cash, without interest, or to exercise
dissenters' rights under sections 180.1301 through 180.1331 of the WBCL. See
"Dissenters' Rights" below for a description of certain of the statutory
provisions related to dissenters' rights and Annex IV which contains a copy of
Sections 180.1301 through 180.1331 of the WBCL.
This Information Statement is first being mailed on or about January 6,
2000, to the holders of record of the Shares at the close of business on
December 7, 1999.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY. PLEASE DO NOT SEND IN ANY SHARE CERTIFICATES AT THIS TIME.
This Information Statement is dated January 6, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SUMMARY................................................................... 1
The Companies........................................................... 1
General................................................................. 1
Procedure for Receipt of Merger Consideration........................... 1
Dissenters' Rights...................................................... 2
The Merger.............................................................. 2
Source and Amount of Funds.............................................. 3
Selected Financial Information of the Company........................... 3
Price Range of the Shares; Dividends.................................... 5
GENERAL................................................................... 7
THE SPECIAL MEETING....................................................... 7
PROCEDURE FOR RECEIPT OF THE MERGER CONSIDERATION......................... 8
Surrender and Payment for Shares........................................ 8
Backup Withholding...................................................... 8
DISSENTERS' RIGHTS........................................................ 9
THE MERGER................................................................ 10
Background of the Offer and the Merger.................................. 10
Recommendation of the Board............................................. 13
Opinion of Robert W. Baird & Co. Incorporated........................... 14
Purpose of the Merger................................................... 19
Certain Effects of the Offer and the Merger............................. 19
Plans for the Company................................................... 20
Interests of Certain Persons in the Merger.............................. 20
Certain Agreements and Plans............................................ 20
Certain Federal Income Tax Consequences................................. 20
Accounting Treatment of the Merger...................................... 21
Regulatory and Other Approvals.......................................... 21
CERTAIN INFORMATION CONCERNING THE COMPANY................................ 22
CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER....................... 24
THE MERGER AGREEMENT...................................................... 27
THE SHAREHOLDER OPTION AGREEMENT.......................................... 33
SOURCE AND AMOUNT OF FUNDS................................................ 34
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF MANAGEMENT.................. 35
AVAILABLE INFORMATION..................................................... 36
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......................... 36
ANNEXES:
Annex IAgreement and Plan of Merger
Annex II Fairness opinion of Robert W. Baird & Co. Incorporated
Annex III Directors Designated by Purchaser
Annex IV Sections 180.1301 through 180.1331 of the Wisconsin Business
Corporation Law
</TABLE>
i
<PAGE>
SUMMARY
The following is a brief summary of certain information contained elsewhere
in this Information Statement, including the annexes hereto, or in the
documents incorporated herein by reference. Reference is made to, and this
summary is qualified in its entirety by, the more detailed information
contained in this Information Statement, in the annexes hereto and the
documents incorporated by reference herein. Capitalized terms used in this
summary and not defined herein have the meanings ascribed to them elsewhere in
this Information Statement. Shareholders are urged to read this Information
Statement and the annexes hereto in their entirety.
The Companies
The Company. The Company is a Wisconsin corporation with its principal
executive offices located at 2365 Woodlake Drive, Suite 120, Okemos, Michigan
48864. The telephone number of the Company at such location is (517) 347-1333.
The Company conducts its operations primarily through four operating
subsidiaries, Cade AutoAir, Inc., (formerly Auto-Air Composites, Inc.), Cade
Composites, Inc., Cade HAC, Inc. (formerly H.A.C. Corporation) and Cade Cenco,
Inc. (formerly Central Engineering Company). The Company is engaged worldwide
in the design, manufacture, and repair and overhaul of high technology
composite components and engine test facilities for the aerospace, air
transport and specialty industries, principally through two segments. For
further information concerning the Company, see "Certain Information Concerning
the Company", "Available Information" and "Incorporation of Certain Information
by Reference".
Parent. Parent is a Delaware corporation based in Hartford, Connecticut.
Through its consolidated subsidiaries, Parent provides a broad range of high
technology products and support services to the building systems and aerospace
industries.
Purchaser. Purchaser is a Wisconsin corporation and a wholly-owned subsidiary
of Parent. To date, Purchaser has engaged in no activities other than those
incident to its formation, the Offer and the Merger.
The principal offices of Parent and Purchaser are located at One Financial
Plaza, Hartford, Connecticut 06101. The telephone number of Parent and
Purchaser at such location is (860) 728-7000. For further information
concerning Parent and Purchaser, see "Certain Information Concerning Parent and
Purchaser".
General
This Information Statement is being delivered in connection with the Merger
of Purchaser with and into the Company, with the Company as the surviving
corporation in the Merger (the "Surviving Corporation"). As a result of the
Merger, the Company will become a wholly-owned subsidiary of Parent. In the
Merger, each outstanding Share (other than Shares owned by Parent, Purchaser or
any subsidiary of Parent, Purchaser or the Company, held in the treasury of the
Company, or Dissenting Shares) will be converted into the right to receive
$5.05 in cash per Share (subject to applicable withholding tax or as may apply
to payments in connection with the performance of services), without interest
thereon (the "Merger Consideration"). A copy of the Merger Agreement is
attached hereto as Annex I.
Pursuant to the Merger Agreement, Purchaser commenced the Offer on October
21, 1999 for all outstanding Shares at a price of $5.05 per Share, net to the
seller in cash. The Offer expired at 5:00 p.m., New York City time, on Friday,
December 3, 1999. Pursuant to the Offer, Purchaser purchased approximately 18.9
million Shares. This represents approximately 87.6 percent of the outstanding
Shares.
Procedure for Receipt of Merger Consideration
Following the consummation of the Merger, a letter of transmittal and
instructions for use in effecting the surrender of the Shares for payment of
the Merger Consideration will be sent under separate cover to all holders
<PAGE>
of Shares outstanding immediately prior to the Merger. The letter of
transmittal must be completed as directed and returned with certificates
representing Shares. Checks for the Merger Consideration will be sent to
Shareholders, except for holders of Dissenting Shares, after receipt of the
letter of transmittal and the certificates. See "Procedure For Receipt of the
Merger Consideration".
Dissenters' Rights
Under the WBCL, holders of Shares who do not vote to approve the Merger
Agreement and who otherwise strictly comply with the applicable requirements of
the WBCL have the right to dissent and demand payment in cash of the "fair
value" of their Shares. See "Dissenters' Rights" and Annex IV hereto.
The Merger
Background to the Offer and the Merger. For a description of events leading
to the approval of the Merger Agreement by the Board of Directors of the
Company (the "Board"), see "The Merger--Background of the Offer and the
Merger".
Approval of the Board. On October 20, 1999, the Board unanimously approved
the Merger Agreement, approved the Offer and the Merger, determined that the
Offer and the Merger are in the best interests of the Company's shareholders
and unanimously recommended that the Company's shareholders accept the Offer
and tender their Shares pursuant to the Offer. The Board unanimously recommends
that the Company's shareholders approve the Merger Agreement and the
transactions contemplated thereby, including the Merger. See "The Merger--
Recommendation of the Board".
Interests of Certain Persons in the Merger. Certain existing and former
members of the Company's management and the Board (as well as employees of the
Company) have interests in the Merger that are different from, or in addition
to, the interests of the Company's shareholders generally. These interests
relate to, among other things, (i) the acceleration of the exercisability of
outstanding options to purchase Shares and the exchange of outstanding options
for a cash payment and (ii) the terms of certain severance agreements and/or
employment agreements between the Company and certain executive officers,
providing for cash payments and other benefits upon a change of control of the
Company (which would include the Offer and the Merger). See "The Merger--
Interests of Certain Persons in the Merger".
Opinion of Robert W. Baird & Co. Incorporated. Robert W. Baird & Co.
Incorporated ("Baird") delivered its written opinion, dated as of October 20,
1999, to the Company to the effect that, as of such date, the $5.05 per Share
cash consideration to be received by the shareholders of the Company in the
Offer and the Merger was fair, from a financial point of view, to such
shareholders (other than Parent and its affiliates). The full text of Baird's
opinion is set forth in Annex II hereto and is incorporated herein by
reference. Shareholders are urged to read the Baird opinion carefully and in
its entirety. See "The Merger--Opinion of Robert W. Baird & Co. Incorporated"
and Annex II hereto.
Purpose of the Merger. The purpose of the Merger is to enable Parent, through
Purchaser, to acquire the remaining equity interest in the Company not
currently owned by Purchaser. The first step in the acquisition of the Company
was the Offer by Purchaser to acquire all of the outstanding Shares. The Merger
is intended to complete the acquisition of any Shares not acquired by Purchaser
in the Offer. See "The Merger--Purpose of the Merger".
Conditions to the Merger. The respective obligations of Parent, Purchaser and
the Company to consummate the Merger and the transactions contemplated thereby
are subject to the satisfaction or waiver where permissible, before the
effective time of the Merger (the "Effective Time"), of certain conditions,
including: (a) the shareholders of the Company shall have duly adopted the plan
of merger contained in the Merger Agreement,
2
<PAGE>
(b) all necessary waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") applicable to the Merger
Agreement and the transactions contemplated thereby shall have expired or been
terminated, (c) the consummation of the Merger is not prohibited, restricted or
made illegal by any statute, rule, regulation, executive order, judgment,
decree or injunction of a court or any governmental entity (provided that each
party agreed to use all commercially reasonable efforts to have such
prohibition lifted) and (d) Purchaser shall have accepted for payment and paid
for Shares tendered pursuant to the Offer. Conditions (b) and (d) have been
satisfied. See "The Merger Agreement--Conditions to the Consummation of the
Merger".
Certain Federal Income Tax Consequences. The exchange of Shares for cash
pursuant to the Merger will be a taxable transaction for U.S. federal income
tax purposes and may also be taxable under applicable state, local, foreign or
other tax laws. See "The Merger--Certain Federal Income Tax Consequences".
Regulatory Matters. The waiting period under the HSR Act, terminated on
November 2, 1999. See "The Merger--Regulatory and Other Approvals".
Source and Amount of Funds
Parent and Purchaser have estimated that the total amount of funds required
to purchase all of the outstanding Shares pursuant to the Offer and the Merger
and to pay related fees and expenses will be approximately $117,338,000. Of
such amount, approximately $95.6 million was used to purchase Shares pursuant
to the Offer. The funding of the Offer has been, and the funding of the Merger
will be, obtained from Parent's available cash on hand at the time of
completion of the Offer and the Merger, respectively. See "Source and Amount of
Funds".
Selected Financial Information of the Company
Set forth below is certain summary consolidated financial information for the
Company's last three fiscal years as contained in the Company's Annual Report
on Form 10-K for the years ended December 31, 1997 and December 31, 1998 and
for the nine month periods ended September 30, 1998 and September 30, 1999, as
contained in the Company's Quarterly Report on Form 10-Q for the quarters ended
September 30, 1998 and 1999. More comprehensive financial information is
included in such reports (including management's discussion and analysis of
financial condition and results of operations) and other documents filed by the
Company with the Securities and Exchange Commission (the "SEC") and the
following summary is qualified in its entirety by reference to such reports and
other documents and all of the financial information and notes contained
therein. Copies of such reports and other documents may be examined at or
obtained from the SEC in the manner set forth below under "Available
Information" and "Incorporation of Certain Information by Reference".
3
<PAGE>
CADE INDUSTRIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
See Notes to Selected Consolidated Financial Information under "Certain
Information Concerning the Company" below.
<TABLE>
<CAPTION>
Nine Months ended
Year ended December 31, September 30,
----------------------- -----------------
1998 1997 1996 1999 1998
------- ------- ------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of Income
Data:
Sales............................... $95,792 $55,804 $34,867 $ 78,595 $ 71,514
Cost of sales....................... 74,478 43,481 26,705 60,836 55,447
Selling, general and administrative
expenses........................... 14,219 8,100 6,097 10,400 10,732
Income from operations.............. 7,095 4,223 2,065 7,359 5,335
Interest expense--net............... 947 833 729 928 949
Income before income taxes.......... 6,148 3,390 1,336 6,431 4,386
Net income.......................... 4,242 2,353 1,058 4,202 3,111
Net income per common share:
Basic............................. 0.19 0.11 0.05 0.19 0.14
Fully Diluted..................... 0.19 0.11 0.05 0.19 0.14
<CAPTION>
At December 31, At September 30,
----------------------- -----------------
1998 1997 1996 1999 1998
------- ------- ------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents........... $ 580 $ 1,093 $ 22 $ 976 $ 695
Working capital (current assets less
current liabilities)............... 11,487 11,435 7,999 14,249 11,593
Property and equipment, net......... 19,197 17,662 15,006 20,874 19,036
Total assets........................ 62,275 54,570 35,304 66,389 60,111
Long-term debt, net of current
maturities......................... 8,313 10,683 4,839 8,724 9,155
Shareholders' equity................ 27,054 23,333 20,683 30,857 26,290
</TABLE>
4
<PAGE>
Price Range of the Shares; Dividends
The Shares are currently traded on the Nasdaq National Market System
("Nasdaq/NMS") under the symbol "CADE". The following table sets forth the
range of high and low sale prices for the Shares for each of the periods
indicated. The prices below may reflect intraday trading prices and may include
intradealer prices without retail mark up, mark down or commission and may not
reflect actual transactions.
<TABLE>
<CAPTION>
Cash
Dividend
High Low Paid
-------- -------- --------
<S> <C> <C> <C>
1997
First Quarter...................................... $1 16/32 $ 1 7/32 --
Second Quarter..................................... 1 20/32 1 9/32 --
Third Quarter...................................... 3 15/32 1 15/32 --
Fourth Quarter..................................... 3 16/32 2 8/32 --
1998
First Quarter...................................... $ 3 5/32 $2 10/32 --
Second Quarter..................................... 4 4/32 2 25/32 --
Third Quarter...................................... 3 15/32 1 30/32 --
Fourth Quarter..................................... 2 22/32 2 4/32 --
1999
First Quarter...................................... $2 27/32 $ 2 1/8 --
Second Quarter..................................... 2 11/16 2 1/32 --
Third Quarter...................................... 3 17/32 2 35/64 --
Fourth Quarter..................................... 5 1/32 3 5/32 --
2000
First Quarter (through January 5, 2000)............ $ 5 $4 31/32 --
</TABLE>
The Rights trade together with the Common Stock. On October 20, 1999, the
last full trading day prior to the public announcement of the terms of the
Offer and the Merger and commencement of the Offer, the reported closing price
on the Nasdaq/NMS was $3 7/8 per Share. On January 5, 2000, the last full
trading day prior to the printing of this Information Statement, the closing
sales price of the Shares on the Nasdaq/NMS was $4 31/32 per Share.
Shareholders are urged to obtain a current market quotation for the Shares.
The Company has never paid cash dividends on its Shares and does not
currently intend to do so prior to the Effective Time.
Shareholders are urged to obtain current market quotations for the Shares.
5
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this Information Statement including statements
concerning expected savings, revenues, earnings per share and debt levels, are
"forward-looking statements" as defined under the securities laws. The
Company's operations, products, and markets are subject to a number of risk
factors, which may cause actual results to vary materially from those
anticipated in the forward-looking statements. The Company's SEC filings, as
updated from time to time, contain important information identifying a number
of these risk factors, including economic, political, climatic, currency,
regulatory, technological, competitive and other important factors. This
information can be found in the "Management's Discussion and Analysis of
Financial Condition and Results of Operation", "Quantitative and Qualitative
Disclosures about Market Risk" and "Forward-Looking Statements" Sections of the
Company's Annual Report on Form 10-K, as amended and as updated by the
Company's other SEC filings from time to time. Shareholders and other readers
are urged to consider these factors carefully in evaluating the forward-looking
statements and are cautioned not to place undue reliance on such forward-
looking statements. The forward-looking statements made herein are only made as
of the date of this Information Statement and each of the Company, Parent and
Purchaser undertakes no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstances.
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GENERAL
This Information Statement is being delivered to shareholders of the Company
in connection with the Merger of Purchaser with and into the Company, with the
Company as the Surviving Corporation. As a result of the Merger, the Company
will become a wholly-owned subsidiary of Parent, and each outstanding Share
(other than Shares owned by Parent, Purchaser, or any subsidiary of Parent,
Purchaser or the Company, held in the treasury of the Company (which Shares,
by virtue of the Merger and without any action on the part of the holder
thereof, shall be canceled without payment of any consideration therefor) and
other than Dissenting Shares) will be converted at the Effective Time into the
right to receive the Merger Consideration. A copy of the Merger Agreement is
attached hereto as Annex I.
The Merger is the second and final step in the acquisition of the Company by
Parent. The first step was a cash tender offer by Purchaser to acquire all of
the outstanding Shares at $5.05 per Share, net to the seller in cash. The
Offer has been completed, and Purchaser has purchased approximately 18.9
million Shares pursuant to the Offer. This represents approximately 87.6
percent of the issued and outstanding Shares. The Merger is intended to
complete the acquisition of any Shares not acquired by Purchaser pursuant to
the Offer.
THE SPECIAL MEETING
The Special Meeting will be held on Friday, February 4, 2000 at the
Milwaukee Athletic Club, 758 North Broadway, Milwaukee, Wisconsin 53202, at
9:00 a.m. local time, for the purpose of approving the Merger Agreement.
As of the date of this Information Statement, the Board does not know of any
other business to be brought before the Special Meeting, and the Company's By-
laws specifically require that the purpose or purposes of the Special Meeting
be set forth in the Notice of Special Meeting accompanying this Information
Statement.
Only holders of record of Shares outstanding at the close of business on
December 7, 1999 (the "Record Date") are entitled to receive notice of, and to
vote at, the Special Meeting. On the Record Date, there were approximately 551
holders of record, with 21,606,207 Shares outstanding.
The presence in person or by proxy of the holders of a majority of the votes
entitled to be cast by Shares entitled to vote will be necessary to constitute
a quorum for the transaction of business at the Special Meeting. Abstentions
and broker non-votes, if any, will be considered present for the purpose of
establishing a quorum. Assuming a quorum is present, the affirmative vote of a
majority of the aggregate voting power of the issued and outstanding Shares
will be necessary to approve the Merger Agreement. In determining whether the
Merger Agreement has received the requisite number of affirmative votes under
Wisconsin law, abstentions and broker non-votes, if any, will have the same
effect as votes cast against approval of the Merger Agreement.
Each Share is entitled to one vote, except that the voting power of Shares
held by Parent and Purchaser (other than Shares acquired directly from the
Company, if any) in excess of 20 percent of the aggregate voting power of the
outstanding Shares is limited to 10 percent of the full voting power of such
Shares pursuant to Section 180.1150 of the WBCL. As a result of the
consummation of the Offer, Purchaser owns approximately 87.6 percent of the
outstanding Shares, or approximately 68 percent of the aggregate voting power
of the issued and outstanding Shares, and intends to vote all such Shares in
favor of the Merger Agreement. Accordingly, the approval of the Merger
Agreement at the Special Meeting is assured without the affirmative vote of
any other shareholder.
Shareholders are entitled to exercise dissenters' rights under the WBCL as a
result of the Merger. See "Dissenters' Rights" and Annex IV hereto.
Representatives of Deloitte & Touche LLP, the Company's independent auditors
for the current year as well as for all years since 1995, are not expected to
be present, make a statement or be available to respond to questions at the
Special Meeting.
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PROCEDURE FOR RECEIPT OF THE MERGER CONSIDERATION
Surrender and Payment for Shares
Parent has appointed Citibank, N.A. to act as paying agent (the "Paying
Agent") under the Merger Agreement. Prior to the Effective Time, Parent will
make available or cause to be made available to the Paying Agent the funds
necessary for the Paying Agent to make the payments due to the holders of
Shares issued and outstanding immediately prior to the Effective Time who are
entitled to receive the Merger Consideration.
As soon as reasonably practicable after the Effective Time, the Surviving
Corporation will cause to be mailed to each person who was, at the Effective
Time, a holder of record of issued and outstanding Shares, a letter of
transmittal (the "Letter of Transmittal") and instructions (the
"Instructions") for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented such Shares (the
"Certificates"), in exchange for payment therefor. For a shareholder to
validly surrender Shares pursuant to the Merger, a Certificate for surrendered
Shares properly endorsed or otherwise in proper form for transfer, together
with a properly completed and duly executed Letter of Transmittal must be
received by the Paying Agent. Until surrendered, such Certificates (other than
Certificates representing Shares owned by Parent or Purchaser or any of their
respective subsidiaries and Certificates representing Dissenting Shares) will
represent solely the right to receive the Merger Consideration with respect to
each of the Shares represented thereby. The Paying Agent will, pursuant to
irrevocable written instruction, make the payments of the Merger
Consideration. To the extent that amounts are withheld pursuant to applicable
withholding tax rules or as may apply to payments in connection with the
performance of services, such amounts will be treated for all purposes as
having been paid to the shareholder in respect of whom such deduction and
withholding was made by the Surviving Corporation or the Paying Agent. No
interest will be paid or will accrue on the amount payable upon the surrender
of any such Certificate. If payment is to be made to a person other than the
registered holder of the Certificate surrendered, it will be a condition of
such payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the Certificate
surrendered or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. None of the Surviving Corporation
or Parent will be liable to any holder of Certificates formerly representing
Shares for any amount paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Pursuant to the Merger Agreement, any portion of the funds made available to
the Paying Agent for the payment of the Merger Consideration which remains
unclaimed by the holders of Certificates for six months following the
Effective Time, will be repaid to the Surviving Corporation, and thereafter
such former shareholders of the Company will be entitled to look to the
Surviving Corporation only as general creditors thereof with respect to the
cash payable without interest upon due surrender of their Certificates. If any
Certificates shall not have been surrendered prior to six years after the
Effective Time (or such earlier date as shall be immediately prior to such
date as such unclaimed funds would otherwise become subject to any abandoned
property, escheat or similar law), unclaimed funds payable with respect to
such Certificates shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto.
At the Effective Time, the stock transfer books of the Company will be
closed, and no transfer of Shares will thereafter be made. Subject to
applicable laws in the case of Dissenting Shares, if, after the Effective
Time, Certificates are presented to the Surviving Corporation for transfer,
they will be canceled and exchanged as described in the preceding paragraphs.
Backup Withholding
In order to avoid "backup withholding" of federal income tax on payments of
cash pursuant to the Merger, a shareholder surrendering Certificates in the
Merger must, unless an exemption applies, provide the Paying Agent with such
shareholder's correct taxpayer identification number ("TIN") on a Substitute
Form W-9 and
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certify under penalties of perjury that such TIN is correct and that such
shareholder is not subject to backup withholding. If a shareholder does not
provide such shareholder's correct TIN or fails to provide the certifications
described above, the Internal Revenue Service (the "IRS") may impose a penalty
on such shareholder and payment of cash to such shareholder pursuant to the
Merger may be subject to backup withholding of 31 percent. All shareholders
surrendering Certificates pursuant to the Merger should complete and sign the
main signature form and the Substitute Form W-9 included as part of the Letter
of Transmittal to provide the information and certification necessary to avoid
backup withholding (unless an applicable exemption exists and is proved in a
manner satisfactory to Parent and the Paying Agent). Certain shareholders
(including, among others, certain corporations and certain foreign individuals
and entities) are not subject to backup withholding. Non-corporate foreign
shareholders should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the Paying
Agent, in order to avoid backup withholding.
DISSENTERS' RIGHTS
Under Sections 180.1301 through 180.1331 of the WBCL, dissenters' rights are
available to holders and beneficial owners of Shares (each a "Dissenting
Shareholder"), subject to the procedures described therein. Dissenters' rights
permit a shareholder to object to the Merger and demand payment of the "fair
value" of their Shares in cash in connection with the consummation of the
Merger.
Under the WBCL, dissenters' rights are available to shareholders of a
corporation in a merger if (i) a Wisconsin corporation is a party to the
merger, (ii) shareholder approval of the merger is required under the WBCL and
(iii) either the merger is a "business combination" (as defined in Section
180.1130(3) of the WBCL) or the shares of stock being converted in the merger
are not registered on a national securities exchange or quoted on the Nasdaq
National Market on the record date fixed to determine the shareholders of such
company entitled to notice of the special meeting at which the shareholders
will vote on the merger.
If a merger constitutes a "business combination" and dissenters' rights are
available, the "fair value" of the shares is the shares' "market value"
determined pursuant to Section 180.1130(9)(a) of the WBCL. In the case of
shares quoted on the Nasdaq National Market (as is the case with respect to
the Shares), "fair value" is deemed to be the highest closing sales price per
share reported on the Nasdaq National Market during the 30-day period
preceding the date on which the fair value is determined or, if no quote is
available, as determined in good faith by the board of directors of the
corporation. The "fair value", as so determined, could be more or less than
the value per Share to be paid pursuant to the Merger.
On the Record Date, the Merger qualified as a "business combination" under
the WBCL and shareholders of the Company therefore have the right to dissent
from the Merger. To receive in cash the fair value of their Shares in lieu of
the Merger Consideration, such Dissenting Shareholders are required to follow
certain procedures set forth in the WBCL. The following is a brief summary of
such procedures, which does not purport to be complete and is qualified in its
entirety by reference to the statutory provisions of the WBCL governing
dissenters' rights. Holders of shares should read Annex IV hereto for a
description of all statutory provisions related to Dissenters' Rights.
Pursuant to Section 180.1321 of the WBCL, any owner or beneficial owner of
Shares desiring to assert dissenters' rights shall do all of the following:
(i) deliver to the Company by mail or by delivery in person to the principal
office of the Company, before the vote to approve the Merger Agreement is
taken at the Special Meeting, written notice which includes such Dissenting
Shareholder's intent to demand payment for such Shares if the proposed Merger
is effectuated and (ii) not vote in favor of the Merger Agreement. In
addition, beneficial shareholders must also submit to the Company the consent
of the record shareholders to the dissent not later than they assert
dissenters' rights. A Dissenting Shareholder who fails to satisfy the
foregoing will waive his or her rights under Sections 180.1301 through
180.1331 of the WBCL and will not be entitled to payment of the fair value of
such Shares by the Company under such Sections. A shareholder may assert
dissenters' rights as to fewer than all of the shares registered in his or her
name only if the shareholder dissents with respect to all shares
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beneficially owned by any one person and notifies the Company in writing of
the name and address of each person on whose behalf he or she asserts
dissenters' rights. Within ten (10) days after the Merger Agreement is
approved at the Special Meeting, the Company will deliver a written
dissenters' notice to each of its shareholders who has dissented to the Merger
Agreement in accordance with Section 180.1321 of the WBCL. Upon receipt of
such notice, each Dissenting Shareholder has 30 days to demand payment in
writing, certify when the Dissenting Shareholder acquired its Shares and
surrender the Certificate or Certificates formerly representing such Shares
with respect to which he or she has dissented. A Dissenting Shareholder who
does not demand payment within the designated time period will waive his or
her rights under Sections 180.1301 through 180.1331 of the WBCL, will not be
entitled to payment for his or her Shares under such Sections and shall be
bound by the terms of the Merger Agreement. Upon receipt of a payment demand
or on the day of the consummation of the Merger, whichever is later, the
Company shall pay each Dissenting Shareholder who has demanded payment in
accordance with Section 180.1323 the amount that the Company estimates to be
the fair value of such Shares, plus accrued interest. A Dissenting Shareholder
who does not agree with the Company's estimate of the fair value of his or her
shares or the amount of interest due, must, in accordance with Section
180.1328, notify the Company of his or her estimate of the fair value of his
or her Shares and the amount of interest due within 30 days after the Company
made or offered payment for such Shares. Dissenting Shareholders who do not
give the Company notice in accordance with Section 180.1328 waive their rights
to demand payment under such Section. If the Dissenting Shareholder and the
Company cannot agree upon the fair value of the Shares or amount of interest
due, the Company must file a petition in any court of competent jurisdiction
in the county in which its principal office or registered office is located,
requesting such court determine the fair value of such Shares and the accrued
interest thereon. If the Company fails to institute such a proceeding within
60 days after the Company receives the Dissenting Shareholder's notice
pursuant to Section 180.1328, the Company shall pay each Dissenting
Shareholder whose demand remains unsettled the amount demanded by such
Dissenting Shareholder.
THE MERGER
Background of the Offer and the Merger
The Company has been a long-time supplier of Pratt & Whitney, a Division of
Parent, which accounts for approximately 25 percent, 26 percent and 18 percent
of the Company's fiscal years 1996, 1997 and 1998 sales, respectively. The
aggregate amount of such sales was approximately $8,568,000, $14,400,000, and
$17,000,000 for fiscal years 1996, 1997 and 1998 respectively. Such
transactions were negotiated at arms length. Beginning in 1998, the Company
considered the possibility of entering into a joint venture with Pratt &
Whitney, concerning the provision of certain products. On December 10 and
December 17, 1998, representatives of Parent and the Company toured certain of
the Company's facilities in connection with these discussions.
On July 1, 1999, in the course of a meeting among Richard Lund, the
Company's President and Chief Executive Officer, Mr. Richard Joseph, the
Company's Vice President, Mr. Mark Biagetti, Director Strategic Planning--
Pratt & Whitney and Mr. Bill Montanile, Director Component Repair--Pratt &
Whitney, Pratt & Whitney representatives indicated that they may have an
interest in considering either the acquisition of the Company or forming a
joint venture with the Company. The individuals began a discussion of
synergies from a combination of their respective companies through a joint
venture or business combination. No understandings or agreements were reached
during these discussions.
On July 22, 1999, Mr. Biagetti and Mr. Mike Groenhout, Manager, Strategic
Planning of Parent presented a letter dated July 21, 1999 expressing a non-
binding indication of interest in exploring a potential acquisition of all the
outstanding Shares for cash indicating a price range per Share of $3.25 to
$3.75 subject to customary conditions, including satisfactory completion of
substantive due diligence by Parent. At that meeting, Mr. Lund indicated that
the valuation was below his expectations and that he would not present this
matter to the Company's Board for discussion. As a consequence, certain
financial information about the Company and its prospects was shared with
Parent and the parties agreed to continue discussions. No understandings or
agreements were reached.
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Between July 22, 1999 and July 28, 1999, the parties discussed Parent's
valuation of the Company. Various earnings and valuation methods were
discussed, but no understandings or agreements were reached in these
discussions nor were any prices discussed.
On July 29, 1999, Mr. Lund received a letter from an officer of Pratt &
Whitney suggesting a combination at $4.00 to $4.85 per Share, subject to
similar customary conditions as in the July 21, 1999 letter. Mr. Lund began
discussing a potential business combination. Mr. Lund indicated that this
proposal would be submitted to the Company's Corporate Strategy Committee or
the entire Board.
On July 29, 1999, the Company held a meeting of its Corporate Strategy
Committee. After reviewing the proposal, the committee recommended that the
proposal be presented to the Board at the Company's upcoming Board meeting the
next week.
On August 2, 1999, at a regularly scheduled Board meeting, Mr. Lund
presented the non-binding letter of interest from Parent as well as one from
another entity received at the same time. The Board reviewed both proposals,
the comparative information and other industry information. After review of
both proposals, the Board decided to reject both. The Board rejected them
because it did not believe that the amounts were consistent with the values
obtained from similar transactions in the industry in the last year or
represented the true value of the Company.
On August 4, 1999, Mr. Lund informed Parent as well as the other bidder of
the Board's decision. Mr. Lund informed Mr. Biagetti and requested that he
reconsider his position and consider the value, profitability and growth of
the Company as well as the costs associated with being a public company which
would be greatly reduced by such business combination.
On August 27, 1999, during a telephone call Mr. Biagetti and Mr. Lund
discussed the proposals and Mr. Biagetti indicated that Parent would be
prepared to revise the value range indicated in its latest non-binding
expression of interest to $5.00 per Share plus assumption of all debt. On that
same day, the Corporate Strategy Committee of the Board met and discussed the
recent $5.00 proposal. The committee recommended a Board meeting to review the
proposal.
On August 30, 1999, the Board held a special meeting to review the revised
indication of interest from Parent. After considerable discussion and review
of valuations from the Company's advisers, the Board authorized officers of
the Company to continue negotiations to achieve a higher valuation and to
retain an investment banker to provide a fairness opinion, if an agreement was
reached.
On August 31, 1999, Mr. Lund met with Mr. Biagetti and Mr. Ed DiSanto, Vice
President of Business Development-Pratt & Whitney in Hartford, Connecticut, to
review the possible business combination and discuss the previous proposal. At
this meeting Mr. Lund indicated that the Board would not accept the value of
$5.00 per Share indicated by Parent.
On September 8, 1999, Messrs. DiSanto and Biagetti called Mr. Lund and
indicated that the top range would be $5.00 to $5.10 per Share.
On September 10, 1999, the Company engaged Baird to render its opinion as to
the fairness, from a financial point of view, of the consideration to be paid
in the Offer and the Merger.
On September 12, 1999, Mr. Lund, Mr. Sandford, Chairman of the Board, and
Messrs. DiSanto and Biagetti discussed the indicated value. During that
conversation, Parent agreed to increase the indicated value to $5.10 per
Share, subject to the conditions indicated in Parent's July 29, 1999 letter,
including the results of Parent's due diligence investigations of the Company.
On September 13, 1999, representatives from the Company met to discuss the
timetable and broad terms of the Merger Agreement and a Confidentiality
Agreement.
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On September 20, 1999, Mr. Chenevert, the President of Pratt & Whitney, sent
Mr. Lund a revised non-binding expression of interest regarding a possible
transaction on the same terms as in the July 29, 1999 letter with a price of
$5.10 per Share.
On September 21, 1999, the Board met with representatives of Baird to
consider Parent's proposal and authorized Parent to begin a due diligence
review and preparation of the Merger Agreement. On September 22, 1999, Parent
and the Company entered into the Confidentiality Agreement.
Beginning September 27, 1999, and continuing through mid-October, 1999,
representatives of Parent and Purchaser conducted a detailed due diligence
review of the Company.
On October 1, 1999, Parent submitted to the Company a proposed Merger
Agreement and Shareholder Option Agreement and the parties and their legal
advisors began to negotiate the terms of the proposed transaction.
On October 18, 1999, Mr. DiSanto met with Mr. Lund to discuss the material
terms and conditions of the proposed transaction. Among other things, Mr.
DiSanto indicated that, in view of the results of Parent's due diligence
investigation, Parent believed that a reduction in the indicated value of
$5.10 per Share was appropriate.
On October 19 and 20, 1999, the parties and their legal advisors met in New
York, New York to negotiate the terms of the Merger Agreement and related
agreements. The terms included an indicated price per Share of $5.05.
On October 20, 1999, the Company held a Board meeting and reviewed the Offer
and the Merger Agreement with legal counsel and Baird. As a result of this
meeting, the Company recommended the Offer as in the best interests of the
shareholders.
At that same meeting, Baird rendered its opinion to the effect that the
consideration to be received in the Offer and the Merger was fair, from a
financial point of view, to the holders of Shares of the Company (other than
Parent and its affiliates). This opinion was confirmed in writing by letter
dated October 20, 1999. At that same meeting, the Board also considered
several factors, including the fact that the Offer was an all cash tender
offer not subject to financing conditions and could be consummated relatively
quickly, and reviewed the terms of the Offer and the opinion of Baird.
Based upon these presentations and factors and its review of the terms of
the agreement, the Board approved the Offer, the Shareholder Option Agreement
(as defined below), the Merger and the Merger Agreement and resolved to
recommend acceptance of the Offer by the Company's shareholders.
On October 21, 1999 (i) the Company, Parent and Purchaser entered into the
Merger Agreement, (ii) each of the directors of the Company entered into the
Shareholder Option Agreement with Purchaser and (iii) the Company entered into
agreements with certain employees. The terms of each of the Merger Agreement,
the Shareholder Option Agreement and the employee agreements are set forth
below, respectively, in "The Merger Agreement", "The Shareholder Option
Agreement", and "Certain Agreements and Plans--Employment Agreements").
Before the opening of trading on October 21, 1999 Parent and the Company
issued a press release announcing the execution of the Merger Agreement and
the Shareholder Option Agreement and the Offer was commenced.
The Offer expired at 5:00 p.m., New York City time, on Friday, December 3,
1999. Pursuant to the Offer, Purchaser purchased 19 million Shares, at a price
of $5.05 per Share. As a result of the Offer, Purchaser owns of record
approximately 87 percent of the issued and outstanding Shares, which includes
all the Shares held by the directors and executive officers of the Company
prior to the Offer.
Following the consummation of the Offer, pursuant to the Merger Agreement,
Molly F. Cade, Conrad G. Goodkind, William T. Gross, Joseph R. O'Gorman,
Terrell L. Ruhlman and John W. Sandford resigned as directors and officers of
the Company and its subsidiaries, Chester P. Beach, Robert H. Harvey,
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Robert F. Leduc, Jothi Purushotaman and Robert B. Weiner, each an officer of
Parent--Pratt & Whitney Division, were appointed to the Board to fill the
resulting vacancies and Richard R. Barnhart, Randolph W. Siuda and Stephen B.
Swigert, each an officer or employee of Parent--Pratt & Whitney Division, were
appointed President, Chief Financial Officer and Treasurer and Secretary,
respectively, of the Company. Biographical data for Chester P. Beach, Robert
H. Harvey, Robert F. Leduc, Jothi Purushotaman and Robert B. Weiner are set
forth in Annex III hereto. Richard A. Lund remains a director of the Company
but resigned as a director of the Company's subsidiaries and was replaced in
the offices he held.
Recommendation of the Board
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 Offer and the Merger Agreement;
(ii) 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, based in part on the information
provided by and the views expressed by management of the Company at several
Board meetings, including those on October 20, 1999 and September 21, 1999;
(iii) that the $5.05 per Share to be paid in the Offer and the Merger
represents a premium of approximately 30 percent over the $3.875 closing
sale price for the Shares on October 20, 1999, the last trading day prior
to the public announcement of the Offer and a premium of approximately 63
percent over the $3.10 average closing sale price for the Shares for the
three month period ended September 30, 1999;
(iv) the views expressed by management and the Board's conclusion that it
was not likely that any other party would enter into a transaction that was
more favorable to the Company and its shareholders;
(v) the financial presentations of Baird at the October 20, 1999 and
September 21, 1999 Board meetings and the oral opinion of Baird delivered
to the Board at the October 20, 1999 Board meeting (which opinion was
subsequently confirmed by delivery of a written opinion dated October 20,
1999) to the effect that, as of such date and based upon and subject to
certain matters stated in such opinion, the cash consideration of $5.05 per
Share to be received by holders of Shares in the Offer and the Merger, was
fair, from a financial point of view, to such holders (other than Parent
and its affiliates). Baird'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 to any shareholder. A
copy of the opinion of Baird is attached hereto as Annex II and is
incorporated herein by reference. See "Opinion of Robert W. Baird & Co.
Incorporated". Shareholders are urged to read the opinion of Baird
carefully and in its entirety;
(vi) the fact that the Merger Agreement, while prohibiting the Company
from actively soliciting a competitive proposal, permits the Company upon
receipt of a Superior Proposal (as defined in the Merger Agreement),
subject to compliance with the terms and conditions of the Merger Agreement
and if and to the extent required by the fiduciary duties of the Board, to
furnish information to or enter into discussions or negotiations with such
person who has made the Superior Proposal;
(vii) the Merger Agreement permits the Board, in the exercise of its
fiduciary duties, to terminate the Merger Agreement in favor of a Superior
Proposal, subject to the Company's compliance with the terms and conditions
of the Merger Agreement; upon such termination, the Company shall reimburse
Parent for out-of-pocket fees and expenses of Parent and Purchaser related
to the Offer and the Merger Agreement up to a maximum of $750,000 and pay
Parent a termination fee of $4,000,000 (together, representing
approximately 4 percent of the total transaction value);
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(viii) the fact that certain significant shareholders of the Company have
agreed to enter into an option agreement with Purchaser pursuant to which,
among other things, such shareholders have agreed to validly tender an
aggregate of approximately 26.5 percent of the outstanding Shares; and
(ix) the transactions contemplated by the Merger Agreement provide 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 recommendation as being based on the totality of the information
presented to and considered by it. In addition, individual members of the
Board may have given different weight to different factors.
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 the
Company's 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 $5.05 per Share.
Opinion of Robert W. Baird & Co. Incorporated
The Board retained Baird to assist in the examination of the fairness, from
a financial point of view, of the cash consideration of $5.05 per Share to be
paid to the holders of Shares (other than Parent and its affiliates) in the
Offer and the Merger (the "Consideration"). On October 20, 1999, Baird
rendered its oral opinion (which was subsequently confirmed in writing) to the
Board to the effect that, as of such date, the Consideration was fair, from a
financial point of view, to such holders.
The full text of Baird's opinion, dated October 20, 1999, which sets forth
the assumptions made, general procedures followed, matters considered and
limitations on the scope of review undertaken by Baird in rendering its
opinion, is attached as Annex II to this Information Statement and is
incorporated herein by reference. Baird's opinion is directed only to the
fairness, as of the date of the opinion and from a financial point of view, of
the Consideration to the Company's shareholders (other than Parent and its
affiliates) and does not constitute a recommendation to any shareholder. The
summary of Baird's opinion set forth below is qualified in its entirety by
reference to the full text of Baird's opinion attached as Annex II.
Shareholders are urged to read Baird's opinion carefully in its entirety.
In conducting its investigation and analysis and in arriving at its opinion
attached as Annex II, Baird reviewed such information and took into account
such financial and economic factors as it deemed relevant under the
circumstances. In that connection, among other things, Baird:
. reviewed certain internal information, primarily financial in nature,
including projections, concerning the business and operations of the
Company furnished to Baird for purposes of its analysis, as well as
publicly available information including, but not limited to, the
Company's recent filings with the SEC;
. reviewed the draft Merger Agreement in the form presented to the Board;
. compared the historical market prices and trading activity of the Shares
with those of certain other publicly traded companies Baird deemed
relevant;
. compared the financial position and operating results of the Company
with those of certain other publicly traded companies Baird deemed
relevant;
. compared the proposed financial terms of the Merger with the financial
terms of certain other business combinations Baird deemed relevant; and
. held discussions with members of the Company's senior management
concerning the Company's historical and current financial condition and
operating results, as well as future prospects.
14
<PAGE>
Baird also considered such other information, financial studies, analyses
and investigations and financial, economic and market criteria that Baird
deemed relevant for the preparation of this opinion. The Company did not place
any limitation upon Baird with respect to the procedures followed or factors
considered by Baird in rendering its opinion. Baird was not requested to, and
did not, solicit third party indications of interest in acquiring all or any
part of the Company. The Company and Parent determined the Consideration in
arm's-length negotiations.
In arriving at its opinion, Baird assumed and relied upon the accuracy and
completeness of all of the financial and other information that was publicly
available or provided to Baird by or on behalf of the Company, and was not
engaged, and did not attempt, to independently verify any such information.
Baird assumed, with the Company's consent, that all material assets and
liabilities (contingent or otherwise, known or unknown) of the Company are as
set forth in the Company's financial statements and that the financial
forecasts of the Company examined by Baird were reasonably prepared on bases
reflecting the best available estimates and good faith judgments of the
Company's senior management as to the future performance of the Company.
In conducting its review, Baird did not undertake nor obtain an independent
evaluation or appraisal of any of the assets or liabilities (contingent or
otherwise) of the Company, nor did Baird make a physical inspection of the
properties or facilities of the Company. Baird's opinion necessarily is based
upon economic, monetary and market conditions as they existed and could be
evaluated on the date of the opinion and does not predict or take into account
any changes that may have occurred, or information that may have become
available, after the date of such opinion. Baird's opinion does not constitute
an opinion as to the price at which the Shares will actually trade at any
time.
The following is a summary of the material financial analyses performed by
Baird in connection with rendering its opinion.
Analysis of Transaction Multiples and Premiums. Based on the cash
consideration of $5.05 net per Share (the "Per Share Equity Purchase Price"),
Baird calculated the implied "equity value" (defined as the Per Share Equity
Purchase Price multiplied by the total number of common shares outstanding of
the Company, including shares issuable upon the exercise of stock options) to
be $115.7 million. In addition, Baird calculated the implied "enterprise
value" (defined as the equity value plus the book value of total debt, less
cash and cash equivalents and assumed proceeds from the exercise of stock
options) to be $132.4 million. Baird then calculated the multiples of the
enterprise value to the Company's latest twelve months ended June 30, 1999
("LTM") sales; earnings before interest, taxes, depreciation and amortization
("EBITDA"); and earnings before interest and taxes ("EBIT"); as provided by
the senior management of the Company. Baird also calculated the multiples of
the equity value to the Company's LTM, projected 1999 and projected 2000 net
income, as provided by the senior management of the Company. Such multiples
are summarized in the table below, which is qualified in its entirety by
reference to the other disclosures contained in this section and Annex II of
this Information Statement.
<TABLE>
<CAPTION>
Implied Company
Transaction
Multiples
---------------
<S> <C>
Enterprise Value/Sales (LTM).............................. 1.3x
Enterprise Value/EBITDA (LTM)............................. 11.3x
Enterprise Value/EBIT (LTM)............................... 16.4x
Equity Value/Net Income (LTM)............................. 23.4x
Equity Value/Net Income (1999)............................ 20.2x
Equity Value/Net Income (2000)............................ 16.7x
</TABLE>
15
<PAGE>
Baird also calculated the premiums that the Per Share Equity Purchase Price
represented over the closing market price of the Shares for various time
periods ranging from 1-day to 2-years prior to October 15, 1999. Such premiums
are summarized in the table below.
<TABLE>
<CAPTION>
Implied
Transaction
Period Prior To 10/15/99 Premiums
------------------------ -----------
<S> <C>
1-Day....................................................... 26.3%
7-Days...................................................... 27.2%
30-Days..................................................... 46.9%
90-Days..................................................... 49.6%
180-Days.................................................... 137.6%
1-Year...................................................... 97.1%
2-Years..................................................... 61.6%
</TABLE>
Discounted Cash Flow Analysis. Baird performed a discounted cash flow
analysis of the Company's projected unlevered free cash flows (defined as net
income excluding after-tax net interest, plus depreciation and amortization,
less capital expenditures and increases in working investment) from 2000 to
2006, as provided by the Company's senior management. In such analysis, Baird
calculated the present values of the unlevered free cash flows from 2000 to
2006 by discounting such amounts at rates ranging from 12% to 14%. Baird
calculated the present values of the free cash flows beyond 2006 by assuming
terminal values ranging from 6.5x to 8.5x year 2006 EBITDA and discounting the
resulting terminal values at rates ranging from 12% to 14%. The summation of
the present values of the unlevered free cash flows and the present values of
the terminal values produced equity values ranging from $4.15 to $5.79 per
Share, as compared to the Per Share Equity Purchase Price of $5.05 per Share.
Comparable Publicly Traded Company Analysis. Baird reviewed certain publicly
available financial information as of the most recently reported period and
stock market information as of October 15, 1999 for certain publicly traded
companies that Baird deemed relevant. The group of selected publicly traded
companies reviewed is listed below.
<TABLE>
<S> <C>
.AAR .Hexcel
.Advanced Technical Products .Howmet
.Aero Systems Engineering .Ladish
.Aviation Sales .Precision Castparts
.Ducommun .Precision Standard
.First Aviation Services .Triumph Group
.Heico
</TABLE>
Such companies were chosen based on a review of publicly traded companies
that possessed general business, operating and financial characteristics
representative of companies in the industry in which the Company operates.
Baird noted that none of the companies reviewed is identical to the Company
and that, accordingly, the analysis of such companies necessarily involves
complex considerations and judgments concerning differences in the business,
financial and operating characteristics of each company and other factors that
affect the market values of such companies.
Baird calculated multiples as of October 15, 1999 of each company's implied
"equity value" (defined as the closing market price per share of each
company's common stock multiplied by the total number of common shares
outstanding of such company, including net shares issuable upon the exercise
of stock options and warrants) to its LTM reported net income and its
projected net income for calendar year 1999 and calendar year 2000, based on
earnings per share estimates provided by First Call. In addition, Baird
calculated each company's implied "enterprise value" (defined as the equity
value of each company, plus the book value of total debt, preferred stock and
minority interests, less cash and cash equivalents) to each company's LTM
sales, LTM
16
<PAGE>
EBITDA and LTM EBIT. Baird then compared the transaction multiples implied in
the Merger with the corresponding trading multiples for the selected
companies. A summary of such multiples is provided in the table below, which
is qualified in its entirety by reference to the other disclosures contained
in this section and Annex II of this Information Statement.
<TABLE>
<CAPTION>
Implied Selected Public Company
Trading Multiples
------------------------------------
Implied Company
Transaction
Multiples Low Average Median High
--------------- ------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Enterprise Value/Sales
(LTM)................... 1.3x 0.4x 0.9x 0.7x 3.2x
Enterprise Value/EBITDA
(LTM)................... 11.3x 3.1x 6.6x 6.0x 12.5x
Enterprise Value/EBIT
(LTM)................... 16.4x 3.9x 9.6x 7.3x 26.5x
Equity Value/Net Income
(LTM)................... 23.4x 5.2x 10.9x 8.3x 27.2x
Equity Value/Net Income
(1999).................. 20.2x 7.1x 11.8x 10.3x 22.0x
lEquity Value/Net Income
(2000).................. 16.7x 6.3x 9.7x 8.8x 17.8x
</TABLE>
In addition, Baird calculated the implied per share equity values for the
Shares based on the trading multiples of the selected public companies and
compared such values to the Per Share Equity Purchase Price of $5.05 per
Share. The implied per share equity values, based on the multiples that Baird
deemed relevant, are summarized in the table below, which is qualified in its
entirety by reference to the other disclosures contained in this section and
Annex II of this Information Statement.
<TABLE>
<CAPTION>
Implied Company
Per Share Equity Values
--------------------------
Low Average Median High
----- ------- ------ -----
<S> <C> <C> <C> <C>
Enterprise Value/EBITDA (LTM)....................... $0.85 $2.63 $2.33 $5.64
Enterprise Value/EBIT (LTM)......................... $0.65 $2.66 $1.85 $8.62
Equity Value/Net Income (LTM)....................... $1.12 $2.35 $1.79 $5.87
Equity Value/Net Income (1999)...................... $1.78 $2.95 $2.58 $5.51
Equity Value/Net Income (2000)...................... $1.91 $2.93 $2.66 $5.38
</TABLE>
Comparable Acquisition Analysis. Baird reviewed certain publicly available
financial information concerning completed or pending acquisition transactions
that Baird deemed relevant. The group of selected acquisition transactions is
listed below.
<TABLE>
<CAPTION>
Target Acquiror
------ --------
<S> <C>
Advanced Technical Products Veritas Capital Trust
Aerocell Structures Aviation Sales
Caribe Aviation Aviation Sales
Coltec Industries BF Goodrich
Decrane Aircraft Holdings DLJ Merchant Banking II
Greenwich Air Services General Electric
K-C Aviation Gulfstream Aerospace
Kratz-Wilde Machine Aviation Sales
Monitor Aerospace Stellex Industries
Rohr BF Goodrich
Sundstrand United Technologies
TIMCO Aviation Sales
Tri-Manufacturing TI Group
UNC Greenwich Air Services
Western Sky Industries McKechnie
Whitehall Aviation Sales
</TABLE>
17
<PAGE>
These acquisitions were chosen based on a review of completed and pending
acquisition transactions involving companies that possessed general business,
operating and financial characteristics representative of companies in the
industry in which the Company operates. Baird noted that none of the
acquisition transactions or subject target companies reviewed is identical to
the Merger or the Company, respectively, and that, accordingly, the analysis
of such acquisition transactions necessarily involves complex considerations
and judgments concerning differences in the business, financial and operating
characteristics of each subject target company and each acquisition
transaction and other factors that affect the values implied in such
acquisition transactions.
Baird calculated multiples of each acquisition transaction's implied "equity
value" (defined as the per share purchase price for each target company's
common stock multiplied by the total number of common shares outstanding of
such company, including net shares issuable upon the exercise of stock options
and warrants) to each target company's LTM net income based on financial
information available as of the respective transaction announcement dates. In
addition, Baird calculated multiples of each acquisition transaction's implied
"enterprise value" (defined as the equity value of each target company, plus
the book value of total debt, preferred stock and minority interests, less
cash and cash equivalents) to each target company's LTM sales, LTM EBITDA and
LTM EBIT based on financial information available as of the respective
transaction announcement dates. Baird also calculated the acquisition premiums
paid in such acquisition transactions (provided that the target companies were
publicly traded) based on stock market information available as of the
respective transaction announcement dates. Baird then compared the acquisition
transaction multiples and acquisition premiums implied in the Merger with the
corresponding acquisition transaction multiples and premiums for the selected
acquisition transactions. A summary of such multiples and premiums is provided
in the table below, which is qualified in its entirety by reference to the
other disclosures contained in this section and Annex II of this Information
Statement.
<TABLE>
<CAPTION>
Implied Selected Acquisition
Transaction Multiples/Premiums
---------------------------------------
Implied Company
Transaction
Multiples/Premiums Low Average Median High
------------------ -------- --------- -------- -------
<S> <C> <C> <C> <C> <C>
Enterprise Value/Sales
(LTM).................. 1.3x 0.5x 1.3x 1.3x 2.2x
Enterprise
Value/EBITDA(LTM)...... 11.3x 6.1x 9.7x 8.8x 15.9x
Enterprise Value/EBIT
(LTM).................. 16.4x 4.4x 12.8x 11.6x 20.6x
Equity Value/Net Income
(LTM).................. 23.4x 10.9x 21.5x 17.9x 35.6x
Acquisition Premiums
Paid/1/
1-Day Prior........... 26.3% 2.5 % 19.1% 21.1% 31.8%
30-Days Prior......... 46.9% 9.0 % 27.0% 25.5% 49.1%
90-Days Prior......... 49.6% (13.7)% 42.8% 37.8% 89.7%
</TABLE>
- --------
/1/ Premiums computed based on announcement date for selected acquisitions and
10/15/99 for the Company.
In addition, Baird calculated the implied per share equity values for the
Shares based on the acquisition transaction multiples of the selected
acquisition transactions and compared such values to the Per Share Equity
Purchase Price of $5.05 per Share. The implied per share equity values, based
on the multiples that Baird deemed relevant, are summarized in the table
below, which is qualified in its entirety by reference to the other
disclosures contained in this section and Annex II of this Information
Statement.
<TABLE>
<CAPTION>
Implied Company
Per Share Equity Values
--------------------------
Low Average Median High
----- ------- ------ -----
<S> <C> <C> <C> <C>
Enterprise Value/EBITDA (LTM)....................... $2.38 $4.21 $3.75 $7.37
Enterprise Value/EBIT (LTM)......................... $0.83 $3.79 $3.37 $6.54
Equity Value/Net Income (LTM)....................... $2.35 $4.64 $3.86 $7.68
</TABLE>
The foregoing summary does not purport to be a complete description of the
analyses performed by Baird or of its presentation to the Board. The
preparation of financial analyses and a fairness opinion is a complex
18
<PAGE>
process and is not necessarily susceptible to partial analyses or summary
description. Baird believes that its analyses (and the summary set forth
above) must be considered as a whole and that selecting portions of such
analyses and of the factors considered by Baird, without considering all of
such analyses and factors, could create an incomplete view of the processes
underlying the analyses conducted by Baird and its opinion. Baird did not
attempt to assign specific weights to particular analyses. Any estimates
contained in Baird's analyses are not necessarily indicative of actual values,
which may be significantly more or less favorable than as set forth therein.
Estimates of values of companies do not purport to be appraisals or
necessarily to reflect the prices at which companies may actually be sold.
Because such estimates are inherently subject to uncertainty, Baird does not
assume responsibility for their accuracy.
Baird, as part of its investment banking business, is continually engaged in
the evaluation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements, and
valuations for estate, corporate and other purposes. The Company retained
Baird because of its experience and expertise in the valuation of businesses
and their securities in connection with mergers and acquisitions. In the
ordinary course of business, Baird may from time to time trade the securities
of the Company or Parent for its own account or for the accounts of its
customers and, accordingly, may at any time hold long or short positions in
such securities.
Pursuant to an engagement letter agreement dated September 10, 1999, between
the Company and Baird, the Company has agreed to pay Baird a retainer fee of
$50,000 and an additional fee of $200,000 payable upon delivery of its
opinion, regardless of the conclusions reached by Baird in such opinion. The
Company has also agreed to reimburse Baird for its reasonable out-of-pocket
expenses. In addition, the Company has agreed to indemnify Baird, its
affiliates and their respective directors, officers, employees and agents and
controlling persons against certain liabilities relating to or arising out of
its engagement, including liabilities under the federal securities laws.
Purpose of the Merger
The purpose of the Merger is to enable Parent, through Purchaser, to acquire
the remaining equity interest in the Company not currently owned by Purchaser.
As a result of the Merger, the Company will become a wholly-owned subsidiary
of Parent. The Merger is the second and final step in the acquisition of the
Company by Parent. The Offer was the first step which resulted in Purchaser
owning approximately 87.6 percent of the outstanding Shares.
The acquisition of the Company has been structured as a cash tender offer
and a cash merger in order to provide a prompt and orderly transfer of
ownership of the Company from the public shareholders of the Company to
Parent. The purchase of Shares pursuant to the Offer increased the likelihood
that the Merger will be consummated.
Certain Effects of the Offer and the Merger
As a result of the Merger, Parent will own indirectly the entire equity
interest in the Company. Therefore, following the Merger, present holders of
Shares will no longer have an equity interest in the Company and will no
longer share in future earnings and potential growth of the Company, if any.
Instead, each holder of Shares immediately prior to the Effective Time (other
than Parent, Purchaser or any subsidiary of Parent, Purchaser or the Company,
or Dissenting Shareholders) will have the right to receive the Merger
Consideration to which such holder is entitled under the Merger Agreement.
Upon completion of the Merger, the Shares will no longer be quoted on the
Nasdaq National Market and will be deregistered under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). The deregistration of the Shares
under the Exchange Act will result in the suspension of the Company's
obligation to file reports pursuant to Section 15(d) thereunder.
19
<PAGE>
Plans for the Company
Upon the consummation of the Merger, the separate existence of Purchaser
will cease and the Company will continue its existence as the Surviving
Corporation. The Surviving Corporation will retain the name of the Company
and, under the WBCL, will possess all the rights, privileges, immunities,
powers, liabilities and duties of the Company.
Parent plans to continue to operate the Company substantially as the Company
has operated in the past.
Interests of Certain Persons in the Merger
Certain existing and former members of the Company's management and the
Board (as well as employees of the Company) have interests in the Merger that
are different from, or in addition to, the interests of the Company's
shareholders generally. These interests relate to, among other things, (i) the
acceleration of the exercisability of outstanding options to purchase Shares
and the exchange of outstanding options for a cash payment and (ii) the terms
of certain severance agreements and/or employment agreements between the
Company and certain executive officers, providing for cash payments and other
benefits upon a change of control of the Company (which would include the
Offer and the Merger).
Certain Agreements and Plans
Employment Agreements. The Company has entered into letter agreements with
certain of its managers, including Messrs. John Scanlon and Robert Spring
attached as Exhibits 99(c)(8) and 99(c)(9) to the Company's Schedule 14D-9
dated October 21, 1999, filed with the SEC and incorporated herein by
reference, providing for the continued employment of such persons after the
completion of the Offer, and among other matters, for certain severance
payments (generally six months of such manager's then current base salary,
unless eligible for severance benefits under a change of control, severance,
employment or other similar agreement, in which case the severance payments
under the letter agreements will not be required to be paid) if the manager's
employment with the Company terminates for any reason other than "cause" prior
to the three year anniversary of the Effective Time. For these purposes,
"cause" means (a) the manager is convicted of a crime involving moral
turpitude, fraud, theft, or embezzlement which results in or is intended to
result in the manager's personal enrichment at the expense of the Company, (b)
the commission of an act of fraud upon the Company or misappropriation of
funds or property of the Company, (c) a material violation of the Company's
policy concerning conflicts of interest or business ethics or (d) the result
of gross negligence or dereliction in the performance of the manager's job
responsibilities. The Company intends to grant in the aggregate options to
purchase up to 7,000 shares of Parent common stock to such managers.
Amendment of Change in Control Agreements. The Company and Richard Lund
(the Company's former President and Chief Executive Officer) and the Company
and Edward Stephens (the Company's former Chief Financial Officer),
respectively, have entered into an amendment (the "Change in Control
Amendment") to each such executive's existing change of control agreement with
the Company. The Change of Control Amendments for Messrs. Lund and Stephens
are attached as Exhibits 99(c)(6) and 99(c)(7), respectively, to the Company's
Schedule 14D-9 dated October 21, 1999 filed with the SEC and incorporated
herein by reference. Messrs. Lund and Stephens agreed in the Change in Control
Amendment to certain noncompetition and non-solicitation restrictions, and
also agreed not to voluntarily terminate their employment with the Company at
any time prior to January 31, 2000. The Company and Messrs. Lund and Stephens
also agreed in the Change in Control Amendment that neither Mr. Lund nor Mr.
Stephens would be entitled to any other payment or benefit conditioned or
related to any change in control of the Company other than the payments and
benefits expressly prescribed by each such executive's existing change in
control agreement, as amended by the Change in Control Amendment.
Certain Federal Income Tax Consequences
The receipt of cash for Shares pursuant to the Merger will be a taxable
transaction for U.S. federal income tax purposes and also may be taxable under
applicable state, local, foreign or other tax laws. Accordingly, a
20
<PAGE>
shareholder who receives cash in exchange for Shares in the Merger (including
as a result of perfecting his or her dissenters' rights under the WBCL) will
recognize gain or loss for federal income tax purposes equal to the
difference, if any, between the amount of cash received and the shareholder's
tax basis in the Shares sold or exchanged. Gain or loss will be determined
separately for each block of Shares (i.e., Shares acquired at the same time
and price) exchanged pursuant to the Merger. Such gain or loss generally will
be capital gain or loss if the Shares disposed of were held as capital assets
by the shareholder. Capital gains recognized by an individual shareholder
generally are subject to a maximum rate of 20 percent in respect of property
held for more than one year.
A shareholder that surrenders Shares in the Merger may be subject to
information reporting and backup withholding at a rate of 31 percent of
amounts paid to the shareholder unless the shareholder provides proof of an
applicable exemption or a correct TIN, and otherwise complies with applicable
requirements of the backup withholding rules. A TIN may be provided on the
Substitute Form W-9 included as part of the Letter of Transmittal. Any amounts
withheld under the backup withholding rules are not an additional tax and may
be refunded or credited against a shareholder's federal income tax liability,
provided the required information is furnished to the IRS. See "Procedure for
Receipt of the Merger Consideration--Backup Withholding".
The foregoing summary constitutes a general description of certain U.S.
federal income tax consequences of the Merger without regard to the particular
facts and circumstances of each shareholder of the Company and is based on the
provisions of the Internal Revenue Code of 1986, as amended, Treasury
Department Regulations issued pursuant thereto and published rulings and court
decisions in effect as of the date hereof, all of which are subject to change,
possibly with retroactive effect. Special tax consequences not described
herein may be applicable to certain shareholders subject to special tax
treatment (including insurance companies, tax-exempt organizations, financial
institutions or broker dealers, foreign shareholders and shareholders who have
acquired their Shares pursuant to the exercise of employee stock options or
otherwise as compensation). All shareholders should consult their tax advisors
with respect to specific tax effects applicable to them of the Merger,
including the applicability and effect of any state, local and foreign tax
laws.
Accounting Treatment of the Merger
The Merger will be accounted for under the "purchase" method of accounting,
whereby the purchase price for the Company will be allocated to the
identifiable assets and liabilities of the Company and its subsidiaries based
on their respective fair values.
Regulatory and Other Approvals
Antitrust. The HSR Act provides that certain acquisition transactions may
not be consummated until information has been furnished to the Antitrust
Division of the Department of Justice and to the Pre-merger Notification
Office of the Federal Trade Commission and certain waiting period requirements
have been satisfied. On November 2, 1999, the waiting period requirements
under the HSR Act were satisfied.
Other Federal and State Statutes. Except as described above and except for
the filing of Articles of Merger with the Department of Financial Institutions
of the State of Wisconsin to effectuate the Merger, there are no other federal
or state regulatory requirements which remain to be complied with in order for
the Merger to be consummated in accordance with the terms of the Merger
Agreement.
21
<PAGE>
CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Wisconsin corporation with its principal executive offices
located at 2365 Woodlake Drive, Suite 120, Okemos, Michigan 48864. The
telephone number of the Company at such location is (517) 347-1333.
The Company conducts its operations primarily through four operating
subsidiaries, Cade AutoAir, Inc., (formerly Auto-Air Composites, Inc.), Cade
Composites, Inc., Cade HAC, Inc. (formerly H.A.C. Corporation) and Cade Cenco,
Inc. (formerly Central Engineering Company).
The Company is engaged worldwide in the design, manufacture, and repair and
overhaul of high technology composite components and engine test facilities
for the aerospace, air transport and specialty industries, principally through
two segments.
The Company's core products include molded and bonded composite jet engine
components, metal fabricated and bonded composite airframe components and the
repair and overhaul of commercial and military gas turbine engine and airframe
components as well as flight nacelle structures ("Engine and Airframe Products
and Services") and engine test facilities, related computer software and data
acquisition systems, and associated equipment ("Test Facilities and
Equipment"). Engine and Airframe Products and Services include engine inlets
and cases, acoustical liners, fairings, auxiliary power unit enclosures,
various control surface products, access doors, wing tips, interior structures
and repair and overhaul services. Test Facilities and Equipment are used in
the ground testing and overhaul of major commercial jet engines and related
ground support equipment. These products are sold worldwide through the
Company's internal sales force and independent sales representatives to major
engine and airframe equipment manufacturers, airlines, U.S. Government and
overhaul facilities.
Set forth below is certain summary consolidated financial information for
the Company's last three fiscal years as contained in the Company's Annual
Report on Form 10-K for the years ended December 31, 1997 and December 31,
1998 and for the nine month periods ended September 30, 1998 and September 30,
1999, as contained in the Company's Quarterly Report on Form 10-Q for the
quarters ended September 30, 1998 and 1999. More comprehensive financial
information is included in such reports (including management's discussion and
analysis of financial condition and results of operation) and other documents
filed by the Company with the SEC, and the following summary is qualified in
its entirety by reference to such reports and other documents and all of the
financial information and notes contained therein. Copies of such reports and
other documents may be examined at or obtained from the SEC in the manner set
forth below.
22
<PAGE>
CADE INDUSTRIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months
ended September
Year ended December 31, 30,
----------------------- ---------------
1998 1997 1996 1999 1998
------- ------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of Income Data:
Sales................................. $95,792 $55,804 $34,867 $78,595 $71,514
Cost of sales......................... 74,478 43,481 26,705 60,836 55,447
Selling, general and administrative
expenses............................. 14,219 8,100 6,097 10,400 10,732
Income from operations................ 7,095 4,223 2,065 7,359 5,335
Interest expense--net................. 947 833 729 928 949
Income before income taxes............ 6,148 3,390 1,336 6,431 4,386
Net income............................ 4,242 2,353 1,058 4,202 3,111
Net income per common share:
Basic............................... 0.19 0.11 0.05 0.19 0.14
Fully Diluted....................... 0.19 0.11 0.05 0.19 0.14
Consolidated Balance Sheet Data:
Cash and cash equivalents............. $ 580 $ 1,093 $ 22 $ 976 $ 695
Working capital (current assets less
current liabilities)................. 11,487 11,435 7,999 14,249 11,593
Property and equipment, net........... 19,197 17,662 15,006 20,874 19,036
Total assets.......................... 62,275 54,570 35,304 66,389 60,111
Long-term debt, net of current
maturities........................... 8,313 10,683 4,839 8,724 9,155
Shareholders' equity.................. 27,054 23,333 20,683 30,857 26,290
</TABLE>
During the discussions between the Company and Parent that led to execution
of the Merger Agreement, the Company provided Parent with certain information
relating to the Company that Parent and Purchaser believe is not publicly
available. This information included projections of operating performance of
the Company for 1999 developed by the Company. The projections do not reflect
consummation of the Offer or the Merger or any other extraordinary transaction
involving the Company. The projection included a summary estimate, based upon
six-months actual results for 1999 and projected second half results, of sales
for 1999 of $106.0 million and operating income of $10.6 million. In addition,
the Company later provided Parent with a detailed budget for 1999 prepared as
of October 1998, with estimated sales for 1999 of $99.5 million and operating
income of $10.6 million. The information also included an estimate of 1999
earnings per Share of $0.27. These projections are based on a variety of
estimates and assumptions which involve judgements with respect to future
economic and competitive conditions, inflation rates and technology trends.
The Company has advised Parent and Purchaser that it does not as a matter of
course disclose projections as to future revenues, earnings or other income
statement data and the projections were not prepared with a view to public
disclosure. In addition, the projections were not prepared in accordance with
generally accepted accounting principles, or with a view to compliance with
the published guidelines of the SEC or the American Institute of Certified
Public Accountants regarding projections, which would require a more complete
presentation of the data than as shown above. The projections have not been
examined, reviewed or compiled by the Company's independent auditors, and
accordingly they have not expressed an opinion or provided any other assurance
on the data. The forecasted information is included herein solely because such
information was furnished to Parent and Purchaser prior to the Offer.
Accordingly, the inclusion of the projections in this Information Statement
should not be regarded as an
23
<PAGE>
indication that Parent, Purchaser or the Company or their respective financial
advisors or their respective officers and directors consider such information
to be accurate or reliable. In addition, because the estimates and assumptions
underlying the projections are inherently subject to significant economic and
competitive uncertainties and contingencies, which are difficult or impossible
to predict accurately and are beyond the control of the Company, Parent or
Purchaser, there can be no assurance that results set forth in the above
projections will be realized and it is expected that there will be differences
between actual and projected results, and actual results may be materially
higher or lower than those set forth above.
Additional non-financial information regarding the Company is also included
in the Company's Annual Report on Form 10-K for the year ended December 31,
1998. Such report, as well as other documents filed by the Company with the
Commission, are available for inspection and copies thereof should be
obtainable in the manner set forth under "Available Information" and
"Incorporation of Certain Information by Reference".
CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER
Purchaser is a Wisconsin corporation and, to date, has engaged in no
activities other than those incident to its formation, the Offer and the
Merger. Purchaser is a wholly-owned subsidiary of Parent. The principal
executive offices of Purchaser are located at One Financial Plaza, Hartford,
Connecticut 06101. The telephone number of Purchaser at such location is (860)
728-7000.
Parent is a Delaware corporation. Parent and its consolidated subsidiaries
provide high technology products to aerospace and building systems customers
throughout the world. Parent and its consolidated subsidiaries conduct their
business within four principal operating segments. The operating units of
Parent and its consolidated subsidiaries are grouped based upon the operating
segment in which they participate. The units participating in each operating
segment and their respective principal products are as follows:
. Otis offers a wide range of elevators, escalators, moving walks and
shuttle systems and related installation, maintenance and repair
services; and modernization products and services for elevators and
escalators.
. Carrier provides heating, ventilating and air conditioning (HVAC)
equipment for commercial, industrial and residential buildings; HVAC
replacement parts and services; building controls; commercial,
industrial and transport refrigeration equipment; and aftermarket
service and components.
. Pratt & Whitney provides large and small commercial and military
turbofan (jet) and turboprop engines, spare parts and product
support; specialized engine maintenance and overhaul and repair
services for airlines, government and private fleets; and rocket
engines and space propulsion systems and industrial gas turbines.
. Flight Systems is made up of Sikorsky and Hamilton Sunstrand.
Sikorsky offers military and commercial helicopters and maintenance
services. Hamilton Sunstrand offers engine and flight controls;
propellers; environmental controls systems; space life support
systems; electrical, mechanical and power systems products for
aircraft; rotary screw compressors, power transmission equipment;
pumps and other industrial products.
Until recently, Parent conducted its business through a fifth operating
segment. The business of this segment, which was conducted through UT
Automotive, manufactured automotive electrical and electronic components,
automotive trim systems and insulation and acoustical materials and systems.
On May 4, 1999, Parent completed the sale of its UT Automotive unit to Lear
Corporation. Parent's financial statements for the three year period ended
December 31, 1998, have been restated to reflect UT Automotive as a
discontinued operation. These restated financial statements have been filed in
Parent's Current Report on Form 8-K filed on June 11, 1999.
24
<PAGE>
On June 10, 1999, Parent completed the acquisition of Sundstrand
Corporation. Sundstrand Corporation was merged with a wholly-owned subsidiary
of Parent, which was renamed Hamilton Sundstrand Corporation. Hamilton
Sundstrand Corporation is a leader in the design and manufacture of
proprietary, technology based components and subsystems for aerospace and
industrial markets.
Parent's principal executive offices are located at One Financial Plaza,
Hartford, Connecticut 06101. The telephone number of Parent at such location
is (860) 728-7000.
Selected Financial Information. The following is selected consolidated
historical financial information included in Parent's Quarterly Report on Form
10-Q for the nine months ended September 30, 1999 and in Parent's Annual
Report on Form 10-K for the year ended December 31, 1998 as restated by its
Current Report on Form 8-K filed on June 11, 1999 to reflect UT Automotive as
a discontinued operation. More comprehensive financial and other information
is included in such reports (including management's discussion and analysis of
financial condition and results of operations) and in other reports and
documents filed by Parent with the SEC. The financial information set forth
below is qualified in its entirety by reference to such reports and documents
filed with the SEC and the financial statements and related notes contained
therein. These reports and other documents may be examined and copies thereof
may be obtained in the manner set forth under "Available Information".
25
<PAGE>
UNITED TECHNOLOGIES CORPORATION
SELECTED FINANCIAL INFORMATION
(In millions, except per share data)
<TABLE>
<CAPTION>
Nine months ended
Years ended December 31, September 30,
----------------------------- -------------------
1998 1997 1996 1999 1998
--------- --------- --------- --------- ---------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues..................... US$22,809 US$21,288 US$19,872 US$17,610 US$16,822
Research and development..... 1,168 1,069 1,014 886 844
Income from continuing
operations before interest,
taxes and minority
interests................... 2,007 1,762 1,530 1,363 1,529
Interest expense............. 197 188 213 175 140
Income taxes................. 568 514 430 334 436
Income from:
Continuing Operations..... 1,157 962 788 785 888
Discontinued Operation.... 98 110 118 40 80
Gain on Sale of
Discontinued Operation... -- -- -- 650 --
--------- --------- --------- --------- ---------
Net income................... 1,255 1,072 906 1,475 968
Earnings per share of Common
Stock
Basic
Continuing Operations..... 2.47 1.98 1.57 1.64 1.89
Discontinued Operation.... 0.21 0.24 0.24 .09 .18
Gain on Sale of
Discontinued Operation... -- -- -- 1.40 --
--------- --------- --------- --------- ---------
Net earnings.............. 2.68 2.22 1.81 3.13 2.07
Diluted
Continuing Operations..... 2.33 1.89 1.51 1.55 1.78
Discontinued Operation.... 0.20 0.21 0.23 .08 .16
Gain on Sale of
Discontinued Operation... -- -- -- 1.29 --
--------- --------- --------- --------- ---------
Net earnings.............. 2.53 2.10 1.74 2.92 1.94
Average number of shares
outstanding:
Basic...................... 456 469 483 463 457
Diluted.................... 495 507 517 504 496
</TABLE>
<TABLE>
<CAPTION>
At December 31, At
----------------------------- September 30,
1998 1997 1996 1999
--------- --------- --------- -------------
(unaudited)
<S> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents US$ 550 US$ 655 US$ 998 US$ 1,115
Working capital (excluding net
investment in discontinued
operations through 1998).......... 1,359 1,712 2,168 2,175
Total assets....................... 17,768 15,697 15,566 23,080
Long term debt (including current
maturities)....................... 1,669 1,389 1,506 3,111
Total debt......................... 2,173 1,567 1,709 3,522
Shareowners' equity................ 4,378 4,073 4,306 7,102
</TABLE>
26
<PAGE>
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full
text of the Merger Agreement, which is attached hereto as Annex I and is
incorporated herein by reference. Capitalized terms used but not defined in
this summary of the Merger Agreement have the meanings given to such terms in
the Merger Agreement.
The Offer. The Merger Agreement provided for the commencement of the Offer
and Purchaser commenced the Offer on October 21, 1999. The Offer expired at
5:00 p.m., New York City time, on Friday, December 3, 1999. At such time,
Purchaser accepted for payment approximately 18.9 million Shares validly
tendered and not withdrawn. This amount represents approximately 87.6 percent
of the outstanding Shares.
Directors. Pursuant to the Merger Agreement, after Purchaser has accepted
Shares for payment pursuant to the Offer or otherwise, which represent at
least a majority of the outstanding Shares, Purchaser has the right to have
persons designated by it become directors of the Company so that the total
number of such persons equals the number, rounded up to the next whole number,
which is the product of the total number of directors on the Board and the
percentage that such number of Shares so purchased bears to the total number
of Shares then outstanding. The Merger Agreement provides that the Company
will promptly take all actions necessary to cause such Purchaser designees to
be so elected, including, if necessary, seeking the resignations of one or
more existing directors. Following the election or appointment of Purchaser
designees and prior to the Effective Time, if any of the directors of the
Company then in office was a director of the Company on the date of the Merger
Agreement (the "Continuing Director"), any amendment of the Merger Agreement
which requires action by the Board, any extension of time for the performance
of any of the obligations or other acts of Parent or Purchaser under the
Merger Agreement and any waiver of compliance with any of the provisions of
the Merger Agreement for the benefit of the Company, will require the
concurrence of a majority of the Continuing Directors.
In accordance with the foregoing, following the consummation of the Offer,
Joseph R. O'Gorman, John W. Sandford, Molly F. Cade, Terrell L. Ruhlman,
William T. Gross and Conrad G. Goodkind resigned as directors of the Company
and Chester P. Beach, Robert H. Harvey, Robert F. Leduc, Jothi Purushotaman
and Robert B. Weiner, each an officer of Parent--Pratt & Whitney Division,
were appointed to the Board to fill the resulting vacancies. Richard A. Lund
remains a director of the Company, and is the sole Continuing Director.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof and in accordance with the applicable provisions of the
WBCL, at the Effective Time, Purchaser will be merged with and into the
Company, the separate corporate existence of Purchaser will thereupon cease
and the Company will continue as the Surviving Corporation. The Merger will be
effected by the filing at the time of Closing of appropriate articles of
merger relating to the Merger with the Department of Financial Institutions of
the State of Wisconsin.
The Company agreed pursuant to the Merger Agreement, to (i) convene and hold
the Special Meeting for the purpose of adopting the plan of merger contained
in the Merger Agreement; (ii) prepare and file with the SEC a preliminary
proxy statement relating to the Merger Agreement, and use its reasonable best
efforts (A) to obtain and furnish the information required to be included by
the SEC in the Proxy Statement (as defined below) and, after consultation with
Parent, to respond as soon as practicable to any comments made by the SEC with
respect to the preliminary proxy statement and to cause a definitive proxy
statement (the "Proxy Statement") to be mailed to its shareholders and (B) to
obtain the necessary approvals of the Merger and adoption of the Merger
Agreement by its shareholders; and (iii) include in the Proxy Statement the
recommendation of the Board that shareholders of the Company vote in favor of
the adoption of the plan of merger set forth in the Merger Agreement.
27
<PAGE>
In accordance with the foregoing, the Company filed this Information
Statement with the SEC, caused it to be mailed to Company shareholders giving
notice of the Special Meeting for the purpose of adopting the plan of merger,
and included in this Information Statement a recommendation of the Board that
shareholders of the Company vote in favor of the adoption of the plan of
merger.
Vote Required to Approve the Merger. In the Merger Agreement each of Parent
and Purchaser agreed that it will vote all of the Shares acquired by it or any
of their affiliates in favor of the Merger. Consequently, since Purchaser owns
approximately 68 percent of the aggregate voting power of the issued and
outstanding Shares (after giving effect to the limitation of voting rights for
certain large shareholders such as Purchaser in Section 180.1150 of the WBCL),
approval of the Merger Agreement will be assured without the affirmative vote
of any other shareholder of the Company.
Charter, Bylaws, Directors and Officers. The Merger Agreement provides that
the Articles of Incorporation and By-Laws of Purchaser in effect at the time
of the Effective Time shall be the Articles of Incorporation and By-Laws of
the Surviving Corporation until amended, subject to the provisions of the
Merger Agreement which provide that all rights to indemnification now existing
in favor of directors and officers of the Company and its Subsidiaries as
provided in their respective charters or by-laws shall survive the Merger and
continue in effect for not less than six years thereafter.
Conversion of Shares. The Merger Agreement provides that, at the Effective
Time, by virtue of the Merger and without any action on the part of the
holders thereof, each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by Parent, Purchaser or any Subsidiary
of Parent, Purchaser or the Company or held in the treasury of the Company,
all of which shall be canceled without consideration being exchanged therefor,
and other than Shares held by shareholders who exercise dissenters' rights
under the WBCL) will be converted into the Merger Consideration, promptly upon
surrender of the certificate formerly representing such Shares.
At the Effective Time, each share of common stock, $0.01 par value, of
Purchaser issued and outstanding immediately prior to the Effective Time will,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become one share of common stock of the
Surviving Corporation.
Pursuant to the Merger Agreement, prior to the consummation of the Offer,
the Company was required to take under the terms of the Merger Agreement, and
prior to the consummation of the Offer the Company took, all actions necessary
or desirable to provide for the cancellation, effective at the Effective Time,
of all the outstanding stock options (the "Existing Stock Options") granted
under any stock option, employment or similar plan or arrangement of the
Company or under any such similar plan or agreement which benefits any person
providing services to the Company or any subsidiary (the "Stock Option
Plans"), without any payment therefor except as otherwise provided in the
Merger Agreement, and the termination of all such Stock Option Plans. At the
Effective Time (or such earlier time as Purchaser shall designate) each holder
of an Existing Stock Option, whether or not then exercised or vested, will be
entitled, in settlement therefor, to an amount in cash (subject to any
applicable withholding taxes or as may apply to payments made in connection
with the performance of services) equal to the product of (i) the excess of
the Merger Consideration over the per share exercise or purchase price of such
Existing Stock Option and (ii) the number of Shares subject to such Existing
Stock Option (the "Option Consideration"). Notwithstanding the foregoing, the
Merger Agreement provides that no holder of an Existing Stock Option will be
entitled to any payment with respect to any such Existing Stock Option under
the Merger Agreement or otherwise unless he or she delivers to Purchaser a
consent to the cancellation of such Existing Stock Option in a form to be
prescribed by Purchaser.
Pursuant to the Merger Agreement, the Company was required to take all
actions necessary and appropriate to provide that, upon the Effective Time,
each then outstanding restricted stock award in respect of Shares and any
other stock based award (the "Stock Award") which is subject to any vesting
requirement and which was issued pursuant to a Stock Option Plan or any other
plan or arrangement shall, whether or not then exercisable or vested, become
100 percent vested. At the Effective Time, a holder of Shares underlying such
Stock Award
28
<PAGE>
shall be entitled to receive the Merger Consideration (subject to any
applicable withholding tax or as may apply to payments in connection with the
performance of services), upon the surrender of the certificate representing
such Shares. Notwithstanding the foregoing, the Merger Agreement provides that
no holder of a Stock Award will be entitled to any payment with respect to any
such Stock Award under the Merger Agreement or otherwise unless he or she
delivers to Purchaser a consent to the cancellation of such Stock Award in a
form to be prescribed by Purchaser.
Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent and
Purchaser with respect to, among other matters, its organization and
qualification, capitalization, authority, consents and approvals, public
filings, financial statements, absence of any material adverse effect on the
Company, information to be included in the Offer Documents and the Proxy
Statement, brokers, employee benefit plans, litigation, tax matters,
compliance with law, environmental matters, intellectual property, real
property, year 2000, material contracts, related party transactions,
inapplicability of state take-over statutes, the Rights Agreement (as defined
herein) and the vote required by the Company shareholders to approve the
Merger. Each of Parent and Purchaser has made customary representations and
warranties to the Company with respect to, among other matters, its
organization, qualifications, authority, information to be included in the
Offer Documents and the Proxy Statement, consents and approvals and operations
of Purchaser.
Solicitation. The Merger Agreement requires the Company, its Subsidiaries
and its and their respective officers, directors, employees, representatives,
agents or affiliates not to, directly or indirectly, encourage, solicit,
initiate or participate in any way in any discussions or negotiations with, or
provide any information to, or afford any access to the properties, books or
records of the Company or any of its Subsidiaries, or otherwise take any other
action to assist or facilitate, any Person or group concerning any offer or
proposal, or any indication of interest in making an offer or proposal which
is structured to permit such Person or group to acquire beneficial ownership
of any material portion of the assets of, or at least 5 percent of the equity
interest in, or businesses of, the Company pursuant to a merger, consolidation
or other business combination, sale of shares of capital stock, sale of
assets, tender offer or exchange offer or similar transaction, including any
single or multi-step transaction or series of related transactions, in each
case other than the Offer and the Merger ("Acquisition Proposal").
Notwithstanding the foregoing and subject to the Company notifying Parent and
Purchaser to that effect and to the prior execution by such Person or group of
a confidentiality agreement substantially in the form of the Confidentiality
Agreement, the Company may furnish information to or enter into discussions or
negotiations with any Person or entity that makes an unsolicited bona fide
Acquisition Proposal which the Board has reasonably determined in good faith,
after consulting with and receiving the advice of its independent financial
advisors to such effect, that the Person or entity making such inquiry
("Potential Acquiror") has the financial wherewithal to consummate such
Acquisition Proposal without having to obtain new financing, and after
receiving the advice of its independent financial advisors to such effect,
that such Acquisition Proposal would involve consideration that is superior to
the consideration under the Offer and the Merger and after consulting with and
receiving the advice of its outside counsel and independent financial advisors
to such effect, that such Acquisition Proposal is reasonably likely to be
consummated without undue delay ("Superior Proposal"), if, and only to the
extent that, the Board, after consultation with outside legal counsel to the
Company, determines in good faith that failure to do so would result in a
breach of the fiduciary duty of the Board to the shareholders of the Company
under applicable law. The Merger Agreement also requires the Company to
promptly (and in any event within 48 hours) notify Parent and Purchaser,
orally and in writing, if any such information is requested or any such
negotiations or discussions are sought to be initiated and to promptly
communicate to Parent and Purchaser the identity of the Potential Acquiror. If
the Company (or any of its Subsidiaries or its or their respective officers,
directors, employees, representatives, agents or affiliates) participates in
discussions or negotiations with, or provides information to, a Potential
Acquiror, the Company is obligated to keep Parent advised on a current basis
of any developments with respect thereto.
The Merger Agreement required the Company and its Subsidiaries and its and
their respective officers, directors, employees, representatives, agents and
affiliates to, as of the date of the Merger Agreement, immediately cease and
cause to be terminated any existing activities, discussions or negotiations
with any
29
<PAGE>
Persons other than Parent, Purchaser or any of their respective affiliates or
associates conducted prior to the date of the Merger Agreement with respect to
any Acquisition Proposal.
The Merger Agreement provides that unless and until the Merger Agreement has
been terminated, the Company shall not withdraw or modify, or propose publicly
to withdraw or modify, in a manner adverse to Parent or Purchaser, the
approval or recommendation of the Merger, approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal, release any third
party from any confidentiality or standstill agreement to which the Company is
a party or fail to enforce to the fullest extent possible any such agreement,
redeem the Rights or amend, or take any other action with respect to, the
Rights Agreement to facilitate any Acquisition Proposal or enter into any
letter of intent, agreement in principle, acquisition agreement or other
agreement related to any Acquisition Proposal. Any withdrawal or modification
by the Company of the approval or recommendation of the Merger shall not have
any effect on the approvals of the Company for the purpose of causing take-
over laws and the Rights Agreement to be inapplicable to the Merger Agreement
or the Shareholder Option Agreement.
Access to Information. The Merger Agreement provides that from and after the
date of the Merger Agreement, the Company will, and will cause its
Subsidiaries to, give Parent and Purchaser and their representatives full
access, during normal business hours, to the offices and other facilities and
to the books and records of the Company and its Subsidiaries, subject to
applicable confidentiality requirements.
Efforts. Subject to the terms and conditions provided in the Merger
Agreement, each of the Company, Parent and Purchaser agrees to use its
commercially reasonable efforts to take, or cause to be taken, all appropriate
action and to do or cause to be done all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective in the
most expeditious manner practicable the transactions contemplated by the
Merger Agreement.
Nothing in the Merger Agreement shall obligate Parent, Purchaser or any of
their respective Subsidiaries or affiliates to agree (a) to limit in any
manner whatsoever or not to exercise any rights of ownership of any securities
(including the Shares), or to divest, dispose of or hold separate any
securities or all or a material portion of their respective businesses, assets
or properties or of the business, assets or properties of the Company or any
of its Subsidiaries or (b) to limit in any material manner whatsoever the
ability of such entities (A) to conduct their respective businesses or own
such assets or properties or to conduct the businesses or own the properties
or assets of the Company and its Subsidiaries or (B) to control their
respective businesses or operations or the businesses or operations of the
Company and its Subsidiaries.
Indemnification; Directors' and Officers' Insurance. Pursuant to the Merger
Agreement, Parent and Purchaser have agreed that all rights to indemnification
existing in favor of the present or former directors, officers and employees
of the Company or any of its Subsidiaries as provided in the Company's
Articles of Incorporation or Bylaws, or the articles of organization, bylaws
or similar documents of any of the Company's Subsidiaries as in effect at the
date of the Merger Agreement with respect to matters occurring prior to the
Effective Time shall survive the Merger and continue in full force and effect
for a period of not less than the statutes of limitations applicable to such
matters, and Parent agreed to cause the Surviving Corporation to comply fully
with these obligations. The Merger Agreement further provides that the
Surviving Corporation will cause to be maintained in effect for a period of
six years after the Effective Time, in respect of acts or omissions occurring
prior to the Effective Time (but only in respect thereof), policies of
directors' and officers' liability insurance covering the persons covered by
the Company's existing directors' and officers' liability insurance policies
at the date of the Merger Agreement and providing substantially similar
coverage to such existing policies; provided, that the Surviving Corporation
will not be required in order to maintain such directors' and officers'
liability insurance policies to pay an annual premium in excess of 200 percent
of the aggregate annual amounts paid by the Company at the date of the Merger
Agreement to maintain the existing policies; and provided further that, if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of 200 percent of such amount, the Surviving
Corporation shall only be required to obtain as much coverage as can be
obtained by paying an annual premium equal to 200 percent of such amount.
30
<PAGE>
Employee Benefit Arrangements. The Merger Agreement provides that, prior to
the Effective Time, except as set forth below, the Company will, and will
cause its Subsidiaries to, and from and after the Effective Time, Parent will,
and will cause the Surviving Corporation to, honor, in accordance with their
terms all existing employment and severance agreements between the Company or
any of its Subsidiaries and any officer, director or employee of the Company
or any of its Subsidiaries to the extent disclosed in connection with the
Merger Agreement. The Merger Agreement also provides that the Company shall
take, or cause to be taken, all necessary action, as promptly as reasonably
practicable, and the Company has so taken or caused to be taken, to amend any
plan maintained by the Company or any of its Subsidiaries to eliminate, as of
the date of the signing of the Merger Agreement, all provisions for the
purchase of Shares directly from the Company or any of its Subsidiaries or
securities of any Subsidiary. The Merger Agreement also requires that Parent
and the Surviving Corporation cause service rendered by employees of the
Company and its Subsidiaries prior to the Effective Time to be taken into
account for vesting and eligibility purposes under employee benefit plans of
Parent, the Surviving Corporation and its Subsidiaries, to the same extent as
such service was taken into account under the corresponding plans of the
Company and its Subsidiaries for those purposes. In addition, the Merger
Agreement provides that employees of the Company and its Subsidiaries will not
be subject to any preexisting condition limitation under any health plan of
Parent, the Surviving Corporation or its Subsidiaries for any condition for
which they would have been entitled to coverage under the corresponding plan
of the Company or its Subsidiaries and to give such employees credit under
such plans for co-payments and deductibles satisfied prior to the Effective
Time.
Take-over Laws. The Merger Agreement provides that the Company will, upon
the request of Parent or Purchaser, take any reasonable steps to exclude the
applicability of, or to assist in any challenge by Parent or Purchaser to the
validity, or applicability to the Merger or any other transaction contemplated
by the Merger Agreement, or the Shareholder Option Agreement of, any Take-over
laws.
In accordance with the foregoing, the Company has taken steps to exclude the
applicability of any Take-over laws to the Merger or any other transaction
contemplated by the Merger Agreement, or the Shareholder Option Agreement.
Notification of Certain Matters. Parent and the Company have agreed to
promptly notify each other of the occurrence or non-occurrence of any event
the occurrence or non-occurrence of which is likely (i) to cause any
representation or warranty contained in the Merger Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time or (ii)
to result in any material failure of such party, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
the Merger Agreement; provided, however, that such notification will not
affect the remedies available under the Merger Agreement to the parties
receiving such notification.
Subsequent Filings. In the Merger Agreement the Company agreed that until
the Effective Time it will timely file with the SEC each form, report and
document required to be filed by the Company under the Exchange Act and will
promptly deliver to Parent and Purchaser copies of each such report filed with
the SEC. The Company further agreed that as of their respective dates, none of
such reports shall contain 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 that the audited consolidated financial statements and
unaudited interim financial statements of the Company included in such reports
shall be prepared in accordance with generally accepted accounting principles
in the United States and shall fairly present the financial position of the
Company and its consolidated Subsidiaries as at the dates thereof.
Public Announcements. The Merger Agreement provides that the Company, on the
one hand, and Parent and Purchaser, on the other hand, will consult with each
other prior to issuing any press release or otherwise making any public
statements with respect to the Merger or the Merger Agreement and will not
issue any such press release or make any such public statement prior to such
consultation, unless required by applicable law or stock exchange regulations.
31
<PAGE>
Conditions to the Consummation of the Merger. Pursuant to the Merger
Agreement, the respective obligations of Parent, Purchaser and the Company to
consummate the Merger are subject to the satisfaction or waiver, where
permissible, before the Effective Time of the following conditions: (i) the
plan of merger contained in the Merger Agreement shall have been adopted by
the affirmative vote of the shareholders of the Company required by applicable
law, (ii) all necessary waiting periods under the HSR Act applicable to the
Merger and any non-United States competition or antitrust laws which Purchaser
determines, in its reasonable discretion, are applicable to the Merger
Agreement and the transactions contemplated thereby shall have expired or been
terminated, (iii) the consummation of the Merger is not prohibited, restricted
or made illegal by any statute, rule, regulation, executive order, judgment,
decree or injunction of a court or any Governmental Entity (provided that each
party agreed to use all commercially reasonable efforts to have such
prohibition lifted) and (iv) Purchaser shall have accepted for purchase and
paid for Shares tendered pursuant to the Offer.
Conditions (ii) and (iv) above have been satisfied. On November 2, 1999, the
waiting period requirements under the HSR Act were satisfied, and on December
6, 1999 the Purchaser paid for and thereby acquired the Shares tendered
pursuant to the Offer.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, notwithstanding approval
thereof by the shareholders of the Company (with any termination by Parent
also being an effective termination by Purchaser):
(a) by the mutual written consent of the Company and Parent; or
(b) by Parent or the Company if any court of competent jurisdiction or
other Governmental Entity shall have issued an order, decree or ruling, or
taken any other action restraining, enjoining or otherwise prohibiting any
of the transactions contemplated by the Merger Agreement or the Shareholder
Option Agreement and such order, decree, ruling or other action shall have
become final and non-appealable.
Effect of Termination. In the event that the Merger Agreement is terminated
in accordance with its terms and the Merger is abandoned, the Merger Agreement
will become void and have no effect, without any liability on the part of any
party or its directors, officers or shareholders, other than the provisions
(among certain others) relating to the payment of certain fees and expenses,
including the Termination Fee (as defined below), which shall survive any such
termination; provided that no party would be relieved from liability for any
breach of the Merger Agreement.
Fees and Expenses. Except as provided below, whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Offer, the
Merger Agreement and the transactions contemplated by the Merger Agreement
will be paid by the party incurring such expenses. In the event that the
Merger Agreement is terminated pursuant to paragraph (b) under "Termination"
above and either (i) prior to such termination an Acquisition Proposal shall
have been made or publicly announced or (ii) within 12 months thereafter an
Acquisition Proposal shall have been consummated, then the Company will
reimburse Parent for the out-of-pocket fees and expenses of Parent and
Purchaser (including printing fees, filing fees and fees and expenses of its
legal and financial advisors) related to the Offer, the Merger Agreement, the
transactions contemplated thereby and any related financing up to a maximum of
$750,000 (collectively "Expenses") and pay Parent a termination fee of $4
million (the "Termination Fee") in immediately available funds by wire
transfer to an account designated by Parent. If such amounts become payable
pursuant to clause (i) they will be payable simultaneously with such
termination (in the case of a termination by the Company) or within one
business day thereafter (in the case of a termination by Parent). If such
amounts become payable pursuant to clause (ii) they shall be payable
simultaneously with completion of such Acquisition Proposal. The prevailing
party in any legal action undertaken to enforce the provisions of the Merger
Agreement will be entitled to recover from the other party the costs and
expenses (including attorneys' and expert witness fees) incurred in connection
with such action.
Amendment. To the extent permitted by applicable law, the Merger Agreement
may be amended by action taken by or on behalf of the Boards of Directors of
the Company, Parent and Purchaser, subject in the case of the Company to the
approval of the Continuing Directors as described under "Directors" above, at
any time
32
<PAGE>
before or after adoption of the Merger Agreement by the shareholders of the
Company but, after any such shareholder approval, no amendment may be made
which decreases the Merger Consideration or which adversely affects the rights
of the Company's shareholders hereunder without the approval of the
shareholders of the Company. Any amendment to the Merger Agreement must be in
writing.
Extension; Waiver. At any time prior to the Effective Time, the parties
hereto may, by action taken by or on behalf of their respective Boards of
Directors subject in the case of the Company to the approval of the Continuing
Directors as described under "Directors" above, (i) extend the time for the
performance of any of the obligations or other acts of any other party to the
Merger Agreement, (ii) waive any inaccuracies in the representations and
warranties contained therein of any other party thereto or in any document,
certificate or writing delivered pursuant to the Merger Agreement by any other
party thereto, or (iii) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations. Any agreement on
the part of any party to such extension or waiver must be in writing and
signed by such party.
THE SHAREHOLDER OPTION AGREEMENT
The following is a summary of certain provisions of the Shareholder Option
Agreement, dated as of October 21, 1999, by and between Purchaser and each of
the directors of the Company (the "Shareholder Option Agreement"). This
summary is not a complete description of the terms and conditions of the
Shareholder Option Agreement and is qualified in its entirety by reference to
the full text of the Shareholder Option Agreement, which is incorporated
herein by reference to, and a copy of which has been filed with the SEC as an
exhibit to the Schedule 14D-9.
In order to induce Parent and Purchaser to enter into the Merger Agreement,
and concurrent therewith, pursuant to the Shareholder Option Agreement, each
of the directors of the Company (each a "Shareholder" and collectively the
"Shareholders"), who owned in the aggregate approximately 26.5 percent of the
outstanding Shares on a fully diluted basis, agreed to validly tender in the
Offer and not withdraw all Shares beneficially owned by such Shareholders on
the date of the Shareholder Option Agreement or subsequently acquired by such
Shareholder. Pursuant to the terms and subject to the conditions of the
Shareholder Option Agreement, each Shareholder validly tendered in the Offer
and did not withdraw all Shares then beneficially owned by him and any
additional Shares with respect to which such Shareholder had acquired
beneficial ownership.
Each Shareholder has granted Purchaser an irrevocable option to purchase all
Shares owned by such Shareholder (the "Option Shares") at $5.05 per Share,
exercisable at any time in whole or in part after (i) the occurrence of any
event as a result of which the Parent is entitled to receive a Termination Fee
under the Merger Agreement or (ii) such Shareholder shall have breached
certain specified agreements contained in the Shareholder Option Agreement.
Each such option shall be exercisable until the date that is 90 days after the
date such option became exercisable. In the event that any person (other than
Purchaser or any of its affiliates or any Shareholder or any of its
affiliates) acquires a majority of the outstanding Shares, prior to the
termination of the Shareholder Option Agreement, in a tender offer or exchange
offer by such person to acquire, or a merger involving the acquisition of, all
outstanding Shares at a consideration per Share in excess of $5.05, the
exercise price for the Option Shares shall be increased by 50 percent of the
amount of such excess. If an Option has been exercised and Option Shares
acquired from a Shareholder by Purchaser prior to such an acquisition,
Purchaser shall, within ten days following such date, pay to such Shareholder
an amount in cash equal to the amount of such excess multiplied by the number
of such Option Shares. If the consideration in such tender or exchange offer
or merger includes securities, such securities shall be deemed to have a value
equal to the amount that would actually have been received in an orderly sale
of such securities commencing on the first business day following actual
receipt of such securities, in the written opinion of an investment banking
firm of national reputation selected by Purchaser and reasonably satisfactory
to the Shareholder.
Each Shareholder has agreed that at any meeting of the shareholders of the
Company or in connection with any written consent of the shareholders of the
Company, such Shareholder will vote (or cause to be voted) all
33
<PAGE>
Shares held of record or owned by such Shareholder (i) in favor of the Merger
and the Merger Agreement and the Shareholder Option Agreement and (ii) against
any Acquisition Proposal and against any action or agreement that would impede
or frustrate the Shareholder Option Agreement or result in a breach in any
respect of any obligation or agreement of the Company under the Merger
Agreement or which would result in any of the conditions to the Merger not
being fulfilled, see "The Merger Agreement--Conditions to the Consummation of
the Merger". Each Shareholder irrevocably granted to and appointed Purchaser
as such Shareholder's proxy and attorney-in-fact to vote the Shares owned by
such Shareholder, or grant a consent or approval in respect of such Shares, in
the manner specified above.
Each Shareholder has agreed that, except as provided by the Merger Agreement
and the Shareholder Option Agreement, such Shareholder will not (i) offer to
transfer, transfer or consent to any transfer, (ii) enter into any contract,
option or other agreement or understanding with respect to any transfer, (iii)
grant any proxy, power-of-attorney or other authorization or (iv) deposit into
a voting trust or enter into a voting agreement or arrangement, each with
respect to any or all Shares beneficially owned by such Shareholder.
Pursuant to the Shareholder Option Agreement, each Shareholder agreed that
such Shareholder shall not encourage, solicit, initiate or participate in any
way in any discussion or negotiation with, or provide information or otherwise
take any action to assist or facilitate, any person concerning any Acquisition
Proposal. Each Shareholder has agreed to cease any such existing activities
and to immediately communicate to Purchaser the terms of any Acquisition
Proposal.
Each Shareholder has waived any rights of appraisal or rights to dissent
from the Merger.
The Shareholder Option Agreement with respect to each Shareholder shall
terminate upon the earliest of (i) the Effective Time of the Merger, (ii)
April 30, 2000 or, if the Option is exercisable at April 30, 2000, such later
date as the Option shall no longer be exercisable, and (iii) termination of
the Merger Agreement, unless either (A) Parent is or may be entitled to
receive a Termination Fee under the Merger Agreement following such
termination or (B) prior to such termination such Shareholder has breached
certain specified agreements contained in the Shareholder Option Agreement.
SOURCE AND AMOUNT OF FUNDS
Parent and Purchaser estimate that the total amount of funds required to
purchase all of the outstanding Shares pursuant to the Offer and the Merger
and to pay related fees and expenses will be approximately $117,338,000. Of
such amount, approximately $95.6 million was used to purchase Shares tendered
pursuant to the Offer. Purchaser will obtain the remaining necessary funds
from Parent by means of capital contributions. Parent has and will obtain such
funds for such capital contributions from available cash on hand at the
Effective Time.
34
<PAGE>
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of the Record Date
with respect to the beneficial ownership of Shares by (a) all persons or
entities known to the Company to be the beneficial owner of five percent or
more of the Shares; (b) each executive officer of the Company named in the
Summary Compensation Table set forth in the Company's Proxy Statement, dated
March 31, 1999, relating to its 1999 Annual Meeting of Shareholders held on
May 4, 1999; (c) each of the current directors of the Company; and (d) all
executive officers and directors of the Company as a group. Unless otherwise
noted, each person has sole investment and voting power with respect to the
shares indicated (subject to applicable marital property laws). According to
information available to the Company as of the Record Date, all current
executive officers of the Company and all directors of the Company prior to
the consummation of the Offer tendered all of their Shares, if any (other than
any Shares issuable upon the exercise of existing Stock Options and Stock
Awards, which Shares they are deemed to beneficially own), pursuant to the
Offer.
<TABLE>
<CAPTION>
Number of Shares and Percent
Nature of Beneficial of
Name Ownership Class(1)
---- -------------------- --------
<S> <C> <C>
FIVE PERCENT SHAREHOLDERS
Parent and Purchaser(2)........................ 18,930,035 82.3%
DIRECTORS(3) AND EXECUTIVE OFFICERS(4)
Chester P. Beach............................... 0
Robert H. Harvey............................... 0
Robert F. Leduc................................ 0
Richard A. Lund................................ 287,000 1.25%
Jothi Purushotaman............................. 0
Robert B. Weiner............................... 0
Richard R. Barnhart............................ 0
Richard A. Joseph.............................. 17,000 *
John W. Sandford............................... 150,000 *
Randolph W. Siuda.............................. 0
Edward B. Stephens............................. 127,000 *
Stephen B. Swigert............................. 0
----------
All directors and executive officers as a group
(12 persons).................................. 581,000 2.53%
==========
</TABLE>
- --------
* Less than 1.0 percent
(1) Calculated by reference to the number of Shares on a fully diluted basis.
(2) Because Parent owns all of the capital stock of Purchaser, Parent may be
deemed to beneficially own the Shares beneficially owned by Purchaser. The
business address of each of Parent and Purchaser is at One Financial
Plaza, Hartford, Connecticut 06101.
(3) In accordance with the terms of the Merger Agreement, on December 6, 1999,
following the consummation of the Offer, Joseph R. O'Gorman, John W.
Sandford, Molly F. Cade, Terrell L. Ruhlman, William T. Gross and Conrad
G. Goodkind resigned as directors of the Company and Chester P. Beach,
Robert H. Harvey, Robert F. Leduc, Jothi Purushotaman and Robert B.
Weiner, each an officer of Parent--Pratt & Whitney Division, were
appointed to the Board to fill the resulting vacancies. Richard A. Lund
remained a director of the Company. For information regarding the newly-
appointed directors, see Annex III. The directors that resigned on
December 6, 1999 are deemed to beneficially own the following Shares which
may be acquired by options currently exercisable or exercisable within 60
days of the Record Date: 50,000 as to Ms. Cade and Messrs. Goodkind, Gross
and O'Gorman; and 150,000 as to Mr. Sandford.
(4) On December 6, 1999, Richard R. Barnhart, Randolph W. Siuda and Stephen B.
Swigert, each an officer or employee of Parent--Pratt & Whitney Division,
were appointed President, Chief Financial Officer and Treasurer and
Secretary, respectively, of the Company, and Richard A. Lund, John W.
Sandford and Edward B. Stephens were replaced as officers of the Company.
35
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports, proxy statements and other
information with the Commission. The Tender Offer Statement and Schedule 14D-
1, as amended, filed by Parent and Purchaser in connection with the Offer and
the Schedule 14D-9 filed by the Company in connection with the Offer, as well
as such reports, proxy statements and other information filed by the Company,
can be inspected and copied at the public reference facilities maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, and at the regional offices of the Commission located
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661 and Seven World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained at prescribed rates by writing to the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. In addition, such reports, proxy
statements and other information concerning the Company can be inspected at
the offices of the Nasdaq National Market, 1735 K Street, NW, Washington, D.C.
20006.
In addition, the Commission maintains a Web site that includes reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of such Web site is
http://www.sec.gov.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company (under File No. 0-12808) with
the SEC Commission pursuant to the Exchange Act are incorporated herein by
reference:
1. The Company's Annual Report on Form 10-K for the years ended December
31, 1997 and December 31, 1998, as amended.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1997 and 1998, March 31, 1999, June 30, 1999 and September
30, 1999.
3. The Company's Current Reports on Form 8-K dated December 6, 1999.
All other documents and reports filed by the Company with the SEC pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Information Statement and prior to the date of the Special
Meeting shall be deemed to be incorporated herein by reference in this
Information Statement and to be part hereof from the date of filing of such
documents or reports. Any statement contained herein or in a document all or a
portion of which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Information Statement to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Information Statement.
This Information Statement incorporates documents by reference which are not
presented herein or delivered herewith. Such documents (other than exhibits to
such documents unless such exhibits are specifically incorporated by
reference) are available, without charge, to any person, including any
beneficial owner, to whom this Information Statement is delivered, upon the
written or oral request of such person. Requests should be directed to Cade
Industries, Inc., 2365 Woodlake Drive, Suite 120, Okemos, Michigan 48864,
Attention: Sheryl A. Mull, telephone number (517) 347-1333.
36
<PAGE>
ANNEX I
AGREEMENT AND PLAN OF MERGER
AMONG
UNITED TECHNOLOGIES CORPORATION,
SPHERE CORPORATION
and
CADE INDUSTRIES, INC.
Dated as of October 21, 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE I
The Offer
<TABLE>
<S> <C>
Section 1.01 The Offer...................................................... 1
Section 1.02 Company Actions................................................ 2
Section 1.03 Shareholder Lists.............................................. 3
Section 1.04 Directors...................................................... 3
ARTICLE II
The Merger
Section 2.01 The Merger..................................................... 4
Section 2.02 Consummation of the Merger..................................... 4
Section 2.03 Effects of the Merger.......................................... 4
Section 2.04 Articles of Incorporation and Bylaws........................... 4
Section 2.05 Directors and Officers......................................... 4
Section 2.06 Conversion of Shares........................................... 4
Section 2.07 Conversion of Common Stock of Purchaser........................ 4
Section 2.08 Shareholders' Meeting.......................................... 4
Section 2.09 Merger Without Meeting of Shareholder.......................... 5
Section 2.10 Withholding Taxes.............................................. 5
ARTICLE III
Dissenting Shares; Payment for Shares; Options
Section 3.01 Dissenting Shares.............................................. 5
Section 3.02 Payment for Shares............................................. 5
Section 3.03 Closing of the Company's Transfer Books........................ 6
Section 3.04 Existing Stock Options......................................... 6
Section 3.05 Other Equity Based Awards...................................... 7
ARTICLE IV
Representations and Warranties of the Company
Section 4.01 Organization and Qualification................................. 7
Section 4.02 Capitalization................................................. 7
Section 4.03 Authority for this Agreement................................... 8
Section 4.07 Consents and Approvals; No Violation........................... 9
Section 4.05 Reports; Financial Statements.................................. 9
Section 4.04 Absence of Certain Changes..................................... 10
Section 4.07 Schedule 14D-9; Offer Documents and Proxy Statement............ 10
Section 4.08 Brokers........................................................ 11
Section 4.09 Employee Benefit Matters....................................... 11
Section 4.10 Litigation, etc................................................ 13
Section 4.11 Tax Matters.................................................... 14
Section 4.12 Compliance with Law; No Default................................ 14
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 4.13 Environmental Matters......................................... 15
Section 4.14 Intellectual Property......................................... 16
Section 4.15 Real Property................................................. 16
Section 4.16 Year 2000..................................................... 17
Section 4.17 Material Contracts............................................ 17
Section 4.18 Related Party Transactions.................................... 17
Section 4.19 State Takeover Statutes Inapplicable.......................... 17
Section 4.20 Rights Agreement.............................................. 18
Section 4.21 Required Vote of Company Shareholders......................... 18
ARTICLE V
Representations and Warranties of Parent and Purchaser
Section 5.01 Organization and Qualification................................ 18
Section 5.02 Authority for this Agreement.................................. 18
Section 5.03 Offer Documents; Proxy Statement.............................. 19
Section 5.04 Consents and Approvals; No Violation.......................... 19
Section 5.05 Operations of Purchaser....................................... 19
Section 5.06 Brokers....................................................... 19
ARTICLE VI
Covenants
Section 6.01 Conduct of Business of the Company............................ 19
Section 6.02 No Solicitation............................................... 21
Section 6.03 Access to Information......................................... 22
Section 6.04 Reasonable Best Efforts....................................... 23
Section 6.05 Indemnification and Insurance................................. 23
Section 6.06 Employee Matters.............................................. 24
Section 6.07 Takeover Laws................................................. 24
Section 6.08 Proxy Statement............................................... 24
Section 6.09 Notification of Certain Matters............................... 25
Section 6.10 Subsequent Filings............................................ 25
Section 6.11 Press Releases................................................ 25
ARTICLE VII
Conditions to Consummation of the Merger
Section 7.01 Conditions to Each Party's Obligation to Effect the Merger.... 25
ARTICLE VIII
Termination; Amendment; Waiver
Section 8.01 Termination................................................... 26
Section 8.02 Effect of Termination......................................... 27
Section 8.03 Fees and Expenses............................................. 27
Section 8.04 Amendment..................................................... 27
Section 8.05 Extension; Waiver; Remedies................................... 27
</TABLE>
ii
<PAGE>
ARTICLE IX
Miscellaneous
<TABLE>
<S> <C>
Section 9.01 Survival of Representations and Warranties..................... 28
Section 9.02 Entire Agreement; Assignment................................... 28
Section 9.03 Jurisdiction................................................... 28
Section 9.04 Validity....................................................... 28
Section 9.05 Notices........................................................ 29
Section 9.06 Governing Law.................................................. 29
Section 9.07 Descriptive Headings........................................... 29
Section 9.08 Parties in Interest............................................ 29
Section 9.09 Counterparts................................................... 29
Section 9.10 Certain Definitions............................................ 30
EXHIBIT A................................................................... A-1
</TABLE>
iii
<PAGE>
Glossary of Defined Terms
<TABLE>
<CAPTION>
Defined in
Defined Terms Section
------------- ----------
<S> <C>
Acquisition Proposal Section 6.02(f)
Agreement Opening Paragraph
Authorizations Section 4.13(a)(ii)
Baird Section 1.02
Certificates Section 3.02(b)
Closing Section 2.02
Code Section 2.10
Common Stock Section 1.01(a)
Company Permits Section 4.12(a)
Company SEC Reports Section 4.05(a)
Company Securities Section 4.02(a)
Company Opening Paragraph
Company Benefits Plans Section 4.09(f)
Confidentiality Agreement Section 1.02(a)
Continuing Directors Section 1.04(b)
Copyrights Section 4.14(d)(ii)
Disclosure Letter Article IV
Dissenting Shares Section 3.01
Effective Time Section 2.02
Environmental Disclosure Requirements Section 4.13(h)
Environmental Law Section 4.13(e)
ERISA Section 4.09(f)
Exchange Act Section 1.01(a)
Existing Stock Option Section 3.04
Expenses Section 8.03(b)
Expiration Date Exhibit A
FAA Section 4.12(b)
Governmental Entity Section 4.04
Hazardous Substance Section 4.13(f)
HSR Act Section 4.04
Legal Requirements Section 4.04
Material Adverse Effect Section 9.10
Material Contract Section 4.17
Merger Agreement Exhibit A
Merger Consideration Section 2.06
Merger Section 2.01
Offer Section 1.01(a)
Offer Conditions Section 1.01(a)
Offer Documents Section 1.01(b)
Offer Price Section 1.01(a)
Option Consideration Section 3.04
Option Recitals
Parent Opening Paragraph
Paying Agent Section 3.02(a)
Payment Fund Section 3.02(a)
Person Section 9.10
Plan Section 4.09(f)
Potential Acquiror Section 6.02(b)
Preferred Stock Section 4.02(a)
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Defined in
Defined Terms Section
------------- ----------
<S> <C>
Preliminary Proxy Statement Section 6.08
Proceeding Section 4.10
Proprietary Rights Section 4.14
Proxy Statement Section 4.07(b)
Purchaser Opening Paragraph
Real Property Leases Section 4.15(b)
Release Section 4.13(g)
Rights Section 1.01(a)
Rights Agreement Section 1.01(a)
Schedule 14D-1 Section 1.01(b)
Schedule 14D-9 Section 1.02(b)
SEC Section 1.01(a)
Shares Section 1.01(a)
Shareholder Option Agreement Recitals
Special Meeting Section 2.08
Stock Awards Section 3.05
Stock Option Plans Section 3.04
Subsidiary Section 9.10
Subsidiary Securities Section 4.02(b)
Superior Proposal Section 6.02(f)
Surviving Corporation Section 2.01
Takeover Laws Section 1.02(a)
Tax Section 4.11(b)
Tax Returns Section 4.11(b)
Termination Fee Section 8.03(b)
Year 2000 Compliant Section 4.16
WBCL Recitals
</TABLE>
v
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of October 21,
1999, among United Technologies Corporation, a Delaware corporation
("Parent"), Sphere Corporation, a Wisconsin corporation and a wholly owned
subsidiary of Parent ("Purchaser"), and Cade Industries, Inc., a Wisconsin
corporation (the "Company").
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company have each
determined that this Agreement and the transactions contemplated hereby,
including the Merger (as defined in Section 2.01), are advisable and fair to,
and in the best interests of, their respective shareholders;
WHEREAS, the Board of Directors of the Company has unanimously adopted
resolutions approving the acquisition of the Company by Parent, this Agreement
and the transactions contemplated hereby and the Shareholder Option Agreement
(as defined below), and has agreed to recommend that the Company's
shareholders approve the plan of merger (as such term is used in Section
180.1101 of the Wisconsin Business Corporation Law (the "WBCL") contained in
this Agreement and the transactions contemplated hereby and tender their
Shares (as defined below) in the Offer (as defined below);
WHEREAS, concurrently with the execution hereof and in order to induce
Parent and Purchaser to enter into this Agreement, Purchaser is entering into
a Shareholder Option Agreement dated as of the date hereof (the "Shareholder
Option Agreement") with the shareholders of the Company named therein under
which each such shareholder is, among other things, agreeing to tender all of
such shareholder Shares in the Offer and granting Parent an irrevocable option
(the "Option") to purchase all of such shareholder's Shares upon the terms and
conditions specified therein; and
WHEREAS, Parent, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
ARTICLE I
The Offer
Section 1.01 The Offer.
(a) (i) Provided that this Agreement shall not have been terminated in
accordance with Section 8.01 and that none of the events set forth in clause
(iii) of Exhibit A hereto shall have occurred or be existing, Purchaser shall,
and Parent shall cause Purchaser to, as promptly as practicable (but in no
event later than five business days following the public announcement of the
terms of this Agreement) commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) an offer to
purchase all outstanding shares of common stock of the Company, par value
$0.001 per share (the "Common Stock"), including the associated Common Stock
purchase rights (the "Rights") issued pursuant to the Rights Agreement dated
as of August 4, 1998 (the "Rights Agreement") between the Company and Firstar
Bank Milwaukee, N.A. (formerly named Firstar Trust Company), as Rights Agent
(the Common Stock and the Rights are hereinafter referred to as the "Shares"),
at a price (such price, or any higher price as may be paid in the Offer, the
"Offer Price") of $5.05 per Share, net to the seller in cash (the "Offer").
The obligation of Purchaser to consummate the Offer and to accept for payment
and to pay for any Shares tendered pursuant thereto shall be subject to only
those conditions set forth in Exhibit A hereto (the "Offer Conditions"), any
of which may be waived by
I-1
<PAGE>
Purchaser in its sole discretion. The initial expiration date of the Offer
shall be the twenty first business day following the commencement of the Offer
(determined in accordance with Rule 14d-1(e)(6) under the Exchange Act).
Purchaser expressly reserves the right to modify the terms of the Offer,
except that, without the prior written consent of the Company, Purchaser shall
not (A) decrease or change the form of the consideration payable in the Offer,
(B) decrease the number of Shares sought pursuant to the Offer, (C) impose
additional conditions to the Offer, (D) change the conditions to the Offer or
(E) make any other change in the terms or conditions of the Offer which is
materially adverse to the holders of Shares.
(ii) Subject to the terms and conditions of this Agreement and to the
satisfaction or waiver of the Offer Conditions as of any scheduled expiration
of the Offer, Purchaser shall accept for payment and pay for Shares validly
tendered and not withdrawn pursuant to the Offer as soon as practicable after
such expiration. Notwithstanding the foregoing, Purchaser may, without the
consent of the Company, (A) extend the Offer if at any scheduled expiration of
the Offer any of the Offer Conditions have not been satisfied or waived, (B)
if less than 90% of the outstanding Shares have been validly tendered and not
properly withdrawn pursuant to the Offer, extend the Offer from time to time
(but in no event beyond ten business days beyond the then scheduled expiration
date of the Offer) for the shortest period of time reasonably determined by
Parent as may be necessary to obtain the valid tender of 90% of the
outstanding Shares and (C) extend the Offer for any period required by any
regulation, interpretation or position of the Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Offer. In
addition, the Offer Price may be increased and the Offer may be extended to
the extent required by law in connection with such increase in each case
without the consent of the Company.
(b) On the date of commencement of the Offer, Parent and Purchaser shall
file or cause to be filed with the SEC a Tender Offer Statement on Schedule
14D-1 (together with all amendments and supplements thereto, the "Schedule
14D-1") with respect to the Offer which shall contain the offer to purchase
and related letter of transmittal and other ancillary Offer documents and
instruments pursuant to which the Offer will be made (collectively with any
supplements or amendments thereto, the "Offer Documents"). The Company and its
counsel shall be given a reasonable opportunity to review and comment on the
Offer Documents prior to their filing with the SEC. Parent and Purchaser agree
to provide the Company with, and to consult with the Company regarding, any
comments that may be received from the SEC or its staff with respect to the
Offer Documents promptly after receipt thereof. Parent, Purchaser and the
Company each agrees promptly to correct any information provided by it for use
in the Offer Documents if and to the extent that it shall have become false or
misleading in any material respect and Parent and Purchaser further agree to
take all steps necessary to cause the Offer Documents as so corrected to be
filed with the SEC and be disseminated to holders of Shares, in each case, as
and to the extent required by applicable law.
Section 1.02 Company Actions. (a) The Company hereby consents to the Offer
and represents and warrants that (i) the making of any offer and proposal and
the taking of any other action by Parent or Purchaser in connection with this
Agreement and the Shareholder Option Agreement and the transactions
contemplated hereby and thereby have been consented to by the Board of
Directors of the Company in accordance with the terms and provisions of the
Confidentiality Agreement, dated September 22, 1999 between Parent and the
Company (the "Confidentiality Agreement"), (ii) its Board of Directors (at a
meeting or meetings duly called and held prior to the date hereof) has
unanimously (A) determined that the Offer and the Merger (as hereinafter
defined) are advisable and fair to and in the best interests of, the
shareholders of the Company, (B) resolved to recommend acceptance of the Offer
and approval and adoption of a plan of merger (as such term is used in Section
180.1101 of the WBCL) contained in this Agreement by the shareholders of the
Company, (C) irrevocably taken, if and to the extent applicable, all necessary
steps to render Sections 180.1130 to 180.1150 of the WBCL inapplicable to the
Merger, the Shareholder Option Agreements and the acquisition of Shares
pursuant to the Offer and the Option and (D) irrevocably resolved to elect, to
the extent permitted by law, not to be subject to any "moratorium", "control
share acquisition", "business combination", "fair price" or other form of
anti-takeover laws and regulations (collectively, "Takeover Laws") of any
jurisdiction that may purport to be applicable to this Agreement or the
Shareholder Option Agreement and (iii) Robert W. Baird & Co. Incorporated
("Baird"), the Company's independent financial advisor, has advised the
Company's Board of
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Directors that, in its opinion, the consideration to be paid in the Offer and
the Merger to the Company's shareholders is fair, from a financial point of
view, to such shareholders.
(b) Upon commencement of the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
recommendations of its Board of Directors described in Section 1.02(a) and
hereby consents to the inclusion of such recommendations in the Offer
Documents and to the inclusion of a copy of the Schedule 14D-9 with the Offer
Documents mailed or furnished to the Company's shareholders. Parent, Purchaser
and their counsel shall be given a reasonable opportunity to review and
comment on the Schedule 14D-9 prior to its filing with the SEC. The Company
agrees to provide Parent and Purchaser with, and to consult with Parent and
Purchaser regarding, any comments that may be received from the SEC or its
staff with respect to the Schedule 14D-9 promptly upon receipt thereof.
Parent, Purchaser and the Company 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 agree to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and be disseminated to holders of
Shares, in each case, as and to the extent required by applicable law.
Section 1.03 Shareholder Lists. In connection with the Offer, the Company
shall promptly furnish Parent and Purchaser with mailing labels, security
position listings and any available listing or computer file containing the
names and addresses of the record holders of the Shares as of the latest
practicable date and shall furnish Parent and Purchaser with such information
and assistance (including periodic updates of such information) as Parent or
Purchaser or their agents may reasonably request in communicating the Offer to
the record and beneficial holders of the Shares.
Section 1.04 Directors. (a) Promptly upon the purchase by Purchaser pursuant
to the Offer or otherwise of such number of Shares as represents at least a
majority of the outstanding Shares, and from time to time thereafter,
Purchaser shall be entitled to designate such number of directors, rounded up
to the next whole number, on the Board of Directors of the Company as will
give Purchaser representation on the Board of Directors of the Company equal
to the product of the number of directors on the Board of Directors of the
Company and the percentage that such number of Shares so purchased bears to
the number of Shares outstanding, and the Company shall, upon request by
Purchaser, promptly increase the size of the Board of Directors of the Company
or use its best efforts to secure the resignations of such number of directors
as is necessary to provide Purchaser with such level of representation and
shall cause Purchaser's designees to be so elected. The Company will also use
its best efforts to cause persons designated by Purchaser to constitute the
same percentage as is on the entire Board of Directors of the Company to be on
(i) each committee of the Board of Directors of the Company and (ii) each
Board of Directors and each committee thereof of each Subsidiary of the
Company. The Company's obligations to appoint designees to its Board of
Directors shall be subject to Section 14(f) of the Exchange Act. At the
request of Purchaser, the Company shall take all actions necessary to effect
any such election or appointment of Purchaser's designees, including mailing
to its shareholders the information required by Section 14(f) of the Exchange
Act and Rule 14f-l promulgated thereunder which, unless Purchaser otherwise
elects, shall be so mailed together with the Schedule 14D-9. Parent and
Purchaser will promptly supply to the Company all information with respect to
themselves and their respective officers, directors and affiliates required by
such Section and Rule.
(b) Following the election or appointment of Purchaser's designees pursuant
to Section 1.04(a) and prior to the Effective Time (as defined below), and so
long as there shall be at least one Continuing Director (as defined below),
any amendment of this Agreement requiring action by the Board of Directors of
the Company, any extension of time for the performance of any of the
obligations or other acts of Parent or Purchaser under this Agreement and any
waiver of compliance with any of the agreements or conditions under this
Agreement for the benefit of the Company will require the concurrence of a
majority of the directors of the Company then in office who are directors of
the Company on the date hereof (the "Continuing Directors").
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ARTICLE II
The Merger
Section 2.01 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the WBCL, Purchaser
shall be merged with and into the Company (the "Merger") as soon as
practicable following the satisfaction or waiver, if permissible, of the
conditions set forth in Article VII hereof. The Company shall be the surviving
corporation in the Merger (the "Surviving Corporation") and shall continue its
existence under the laws of Wisconsin. In connection with the Merger, the
separate corporate existence of Purchaser shall cease. Upon the election of
Parent, the Merger may be structured so that the Company shall be merged with
and into Purchaser, with Purchaser continuing as the Surviving Corporation;
provided, however, that the Company shall be deemed not to have breached any
of its representations, warranties or covenants herein if and to the extent
such breach would have been attributable solely to such election.
Section 2.02 Consummation of the Merger. Subject to the provisions of this
Agreement, Purchaser and the Company shall cause the Merger to be consummated
by filing with the Department of Financial Institutions of the State of
Wisconsin a duly executed and verified articles of merger, as required by the
WBCL, and shall take all such other and further actions as may be required by
law to make the Merger effective. Prior to the filing referred to in this
Section, a closing (the "Closing") will be held at the offices of Cleary,
Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York (or such
other place as the parties may agree) for the purpose of confirming all the
matters contained herein. The time the Merger becomes effective in accordance
with applicable law is referred to as the "Effective Time."
Section 2.03 Effects of the Merger. The Merger shall have the effects set
forth herein and in the applicable provisions of the WBCL.
Section 2.04 Articles of Incorporation and Bylaws. The Articles of
Incorporation and the Bylaws of Purchaser, in each case as in effect
immediately prior to the Effective Time, shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation.
Section 2.05 Directors and Officers. The directors of Purchaser immediately
prior to the Effective Time and the officers of the Company immediately prior
to the Effective Time shall be the directors and officers, respectively, of
the Surviving Corporation until their death, permanent disability, resignation
or removal or until their respective successors are duly elected and
qualified.
Section 2.06 Conversion of Shares. Each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent,
Purchaser or any Subsidiary of Parent, Purchaser or the Company or held in the
treasury of the Company, all of which shall be canceled without consideration
being exchanged therefor, and other than Dissenting Shares, as defined in
Section 3.01 hereof) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted at the Effective Time into the
right to receive in cash an amount per Share (subject to any applicable
withholding tax specified in Section 2.10 hereof) equal to the Offer Price,
without interest (the "Merger Consideration"), upon the surrender of the
certificate representing such Shares as provided in Section 3.02. At the
Effective Time, each Existing Stock Option (as defined below) shall be
converted into the right to receive the Existing Stock Option Consideration
(as defined below) pursuant to Section 3.04 hereof.
Section 2.07 Conversion of Common Stock of Purchaser. Each share of common
stock, $0.01 par value, of Purchaser issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and become one share of
common stock of the Surviving Corporation.
Section 2.08 Shareholders' Meeting. Unless the Merger is consummated in
accordance with Section 180.1104 of the WBCL as contemplated by Section 2.09,
and subject to applicable law, the Company, acting through its Board of
Directors, shall, in accordance with applicable law, duly call, give notice
of, convene and
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hold a special meeting (the "Special Meeting") of its shareholders as soon as
practicable following the consummation of the Offer for the purpose of
adopting the plan of merger (within the meaning of Section 180.1101 of the
WBCL) set forth in this Agreement; and include in the Proxy Statement (as
defined below) the recommendation of its Board of Directors that shareholders
of the Company vote in favor of the adoption of the plan of merger set forth
in this Agreement. Parent and Purchaser each agree that, at the Special
Meeting, all of the Shares acquired pursuant to the Offer, the Option or
otherwise by Parent or Purchaser or any of their affiliates will be voted in
favor of the Merger.
Section 2.09 Merger Without Meeting of Shareholders. If Purchaser, or any
other direct or indirect Subsidiary of Parent, shall hold at least 90 percent
of the outstanding shares of each class of capital stock of the Company and
Parent elects, in its sole discretion, to consummate the Merger in accordance
with Section 180.1104 of the WBCL without a meeting of shareholders of the
Company, each of Parent, Purchaser and the Company shall take all necessary
and appropriate action to cause the Merger to become effective, as soon as
practicable after the consummation of the Offer, without a meeting of
shareholders of the Company, in accordance with such Section.
Section 2.10 Withholding Taxes. Parent, Purchaser and the Surviving
Corporation shall be entitled to deduct and withhold from the consideration
otherwise payable to a holder of Shares pursuant to the Offer or the Merger
any stock transfer taxes and such amounts as are required to be withheld under
the Internal Revenue Code of 1986, as amended (the "Code"), or any applicable
provision of state, local or foreign tax law. To the extent that amounts are
so withheld by Parent or Purchaser, such withheld amounts shall be treated for
all purposes of this Agreement and the Offer as having been paid to the holder
of the Shares in respect of which such deduction and withholding was made by
Parent or Purchaser.
ARTICLE III
Dissenting Shares; Payment for Shares; Options
Section 3.01 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary and unless the Merger is consummated in accordance with
Section 180.1104 of the WBCL, Shares which are issued and outstanding
immediately prior to the Effective Time and which are held by shareholders
exercising appraisal rights available under Sections 180.1301 to 180.1331 of
the WBCL (the "Dissenting Shares") shall not be converted into or be
exchangeable for 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 WBCL. Dissenting Shares
shall be treated in accordance with Subchapter XIII of the WBCL, if and to the
extent applicable. If any such holder shall have failed to perfect or shall
have effectively withdrawn or lost such right to appraisal, such holder's
Shares shall thereupon be converted into and become exchangeable only for the
right to receive, as of the Effective Time, the Merger Consideration without
any interest thereon. The Company shall give Parent and Purchaser (a) prompt
notice of any written demands for appraisal of any Shares, attempted
withdrawals of such demands, and any other instruments served pursuant to the
WBCL and received by the Company relating to rights to be paid the "fair
value" of Dissenting Shares, as provided in Sections 180.1301 to 180.1331 of
the WBCL and (b) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the WBCL. The Company shall not,
except with the prior written consent of Parent, voluntarily make any payment
with respect to any demands for appraisals of capital stock of the Company,
offer to settle or settle any demands or approve any withdrawal of any such
demands.
Section 3.02 Payment for Shares.
(a) Prior to the Effective Time, Parent will cause Purchaser to make
available to a bank or trust company designated by Parent (the "Paying Agent")
sufficient funds to make the payments pursuant to Section 2.06 hereof on a
timely basis to holders (other than Parent or Purchaser or any of their
respective Subsidiaries) of
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Shares that are issued and outstanding immediately prior to the Effective Time
(such amounts being hereinafter referred to as the "Payment Fund"). The Paying
Agent shall, pursuant to irrevocable written instructions, make the payments
provided for in the preceding sentence out of the Payment Fund. The Payment
Fund shall not be used for any other purpose, except as provided in this
Agreement.
(b) As soon as reasonably practicable after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each record
holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "Certificates"), a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent) and instructions for use in effecting the surrender of the
Certificate and receiving payment therefor. Following surrender to the Paying
Agent of a Certificate, together with such letter of transmittal duly
executed, the holder of such Certificate shall be paid in exchange therefor
cash in an amount (subject to any applicable withholding tax as specified in
Section 2.10 hereof) equal to the product of the number of Shares represented
by such Certificate multiplied by the Merger Consideration, and such
Certificate shall forthwith be canceled. No interest will be paid or accrued
on the cash payable upon the surrender of the Certificates. If payment is to
be made to a Person (as defined below) other than the Person in whose name the
Certificate surrendered is registered, it shall be a condition of payment that
the Certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the Person requesting such payment pay any
transfer or other taxes required by reason of the payment to a Person other
than the registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. From and after the Effective Time and until surrendered in
accordance with the provisions of this Section 3.02, each Certificate (other
than Certificates representing Shares owned by Parent or Purchaser or any of
their respective Subsidiaries, and certificates representing Dissenting
Shares) shall represent for all purposes solely the right to receive, in
accordance with the terms hereof, the Merger Consideration in cash multiplied
by the number of Shares evidenced by such Certificate, without any interest
thereon.
(c) Any portion of the Payment Fund (including the proceeds of any
investments thereof) that remains unclaimed by the former shareholders of the
Company for six months after the Effective Time shall be repaid to the
Surviving Corporation. Any former shareholders of the Company who have not
complied with Section 3.01 hereof prior to the end of such six-month period
shall thereafter look only to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) but only as general creditors thereof
for payment of their claim for the Merger Consideration, without any interest
thereon. Neither Parent nor the Surviving Corporation shall be liable to any
holder of Shares for any monies delivered from the Payment Fund or otherwise
to a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to six
years after the Effective Time (or such earlier date as shall be immediately
prior to such date as such unclaimed funds would otherwise become subject to
any abandoned property, escheat or similar law), unclaimed funds payable with
respect to such certificates shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any Person previously entitled thereto.
Section 3.03 Closing of the Company's Transfer Books. At the Effective Time,
the stock transfer books of the Company shall be closed and no transfer of
Shares shall thereafter be made. If, after the Effective Time, Certificates
are presented to the Surviving Corporation, they shall be canceled and
exchanged for cash as provided in this Article III, subject to applicable law
in the case of Dissenting Shares.
Section 3.04 Existing Stock Options. Prior to the consummation of the Offer,
the Company shall take all actions necessary or desirable (including obtaining
all required consents from optionees) to provide for the cancellation,
effective at the Effective Time, of all of the outstanding stock options (the
"Existing Stock Options") heretofore granted under any stock option,
employment or similar plan or arrangement of the Company or any such similar
plan or agreement which benefits any person providing services to the Company
or any Subsidiary (the "Stock Option Plans"), without any payment therefor
except as otherwise provided in
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this Section 3.04. At the Effective Time (or at such earlier time as Purchaser
shall designate), each holder of an Existing Stock Option shall, in settlement
thereof, be entitled to receive from the Surviving Corporation, an amount
(subject to any applicable withholding tax as specified in Section 2.10 hereof
or as may apply to payments made in connection with the performance of
services) in cash equal to the product of (i) the excess of the Merger
Consideration over the per share exercise or purchase price of such Existing
Stock Option and (ii) the number of Shares subject to such Existing Stock
Option (such amount being hereinafter referred to as the "Option
Consideration"). Except as otherwise agreed to by the parties, as of the
Effective Time, the Stock Option Plans shall terminate and any and all rights
under any provisions in any other plan, program or arrangement providing for
the issuance or grant of any other interest in respect of the capital stock of
the Company or any Subsidiary thereof shall be canceled. Notwithstanding the
foregoing, no holder of an Existing Stock Option shall be entitled to any
payment hereunder unless he or she delivers to Purchaser a consent to the
cancellation of such Existing Stock Option in a form to be prescribed by
Purchaser.
Section 3.05 Other Equity Based Awards. Prior to the Effective Time, the
Company shall take all necessary and appropriate actions (including obtaining
all applicable consents) to provide that, upon the Effective Time, each then
outstanding restricted stock award in respect of Shares and any other stock
based awards (collectively, the "Stock Awards") which is subject to any
vesting requirement and which was issued pursuant to a Stock Option Plan or
any other plan or arrangement shall, whether or not then exercisable or
vested, become 100% vested. At the Effective Time, a holder of Shares
underlying such Stock Award shall be entitled to receive the Merger
Consideration (subject to any applicable withholding tax as specified in
Section 2.10 hereof or as may apply to payments made in connection with the
performance of services), upon the surrender of the certificate representing
such Shares as provided in Section 3.02. Notwithstanding the foregoing, no
holder of a Stock Award shall be entitled to any payment hereunder unless he
or she delivers to Purchaser a consent to the cancellation of such Stock Award
in a form to be prescribed by Purchaser.
ARTICLE IV
Representations and Warranties
of the Company
Except as set forth in the Company SEC Reports (as defined below) filed and
available prior to the date of this Agreement or, with respect to any Section
of this Article IV, as set forth in the section of the disclosure letter
concurrently delivered by the Company to Parent with respect to this Agreement
(the "Disclosure Letter") that specifically relates to such Section, the
Company represents and warrants to Parent and Purchaser as follows:
Section 4.01 Organization and Qualification. The Company and each of its
Subsidiaries is a duly organized and validly existing corporation in good
standing under the laws of its jurisdiction of incorporation, with all
corporate power and authority to own its properties and conduct its business
as currently conducted and is duly qualified and in good standing as a foreign
corporation authorized to do business in each of the jurisdictions in which
the character of the properties owned or held under lease by it or the nature
of the business transacted by it makes such qualification necessary, except
where the failure to be so qualified and in good standing, individually or in
the aggregate, would not have a Material Adverse Effect. The Company has
heretofore made available to Parent and Purchaser accurate and complete copies
of the Articles of Incorporation and Bylaws (or similar governing documents)
as currently in effect of the Company and its Subsidiaries. Neither the
Company nor any of its Subsidiaries, directly or indirectly, owns any interest
in any Person other than in the Company's Subsidiaries.
Section 4.02 Capitalization. (a) The authorized capital stock of the
Company consists of One Hundred Million (100,000,000) shares of Common Stock
and Five Hundred (500) shares of 10% cumulative, non-voting Preferred Stock,
stated value $300 per share (the "Preferred Stock"). As of the close of
business on the day immediately preceding the date hereof: 21,606,207 Shares
were issued and outstanding, no shares of Preferred
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Stock were issued and outstanding and 742,652 Shares were held in the
Company's treasury. In addition, as of such date, there were outstanding
Existing Stock Options to purchase an aggregate of 1,312,000 Shares and up to
59,745 Shares were potentially issuable as Stock Awards. Since such date, the
Company has not issued any Shares other than upon the exercise of Existing
Stock Options outstanding on such date, has not granted any options, warrants
or rights or entered into other agreements or commitments to purchase Shares
(under the Stock Option Plans or otherwise) and has not split, combined or
reclassified any of its shares of capital stock. All of the outstanding Shares
have been duly authorized and validly issued and are fully paid and
nonassessable, except as provided in Section 180.0622 of the WBCL, and are
free of preemptive rights. Section 4.02(a) of the Disclosure Letter contains a
true, accurate and complete list, as of the date hereof, of the name of each
Existing Stock Option holder, the number of outstanding Existing Stock Options
held by such holder, the grant date of each such Existing Stock Option, the
number of Shares such holder is entitled to receive upon the exercise of each
Existing Stock Option and the corresponding exercise price. Except for the
Existing Stock Options and the Rights, there are no outstanding (i) securities
of the Company convertible into or exchangeable for shares of capital stock or
voting securities or ownership interests in the Company, (ii) options,
warrants, rights or other agreements or commitments to acquire from the
Company, or obligations of the Company to issue, any capital stock, voting
securities or other ownership interests in (or securities convertible into or
exchangeable for capital stock or voting securities or other ownership
interests in) the Company, (iii) obligations of the Company to grant, extend
or enter into any subscription, warrant, right, convertible or exchangeable
security or other similar agreement or commitment relating to any capital
stock, voting securities or other ownership interests in the Company (the
items in clauses (i), (ii) and (iii), together with the capital stock of the
Company, being referred to collectively as "Company Securities") or (iv)
obligations by the Company or any of its Subsidiaries to make any payments
based on the price or value of the Shares. There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any Company Securities. There are no voting trusts or other
agreements or understandings to which the Company or any of its Subsidiaries
is a party with respect to the voting of capital stock of the Company or any
of its Subsidiaries.
(b) The Company or another Subsidiary is the record and beneficial owner of
all the outstanding shares of capital stock of each Company Subsidiary, free
and clear of any lien, mortgage, pledge, charge, security interest or
encumbrance of any kind, and there are no irrevocable proxies with respect to
any such shares. There are no outstanding (i) securities of the Company or any
of its Subsidiaries convertible into or exchangeable for shares of capital
stock or other voting securities or ownership interests in any Subsidiary of
the Company, (ii) options, warrants, rights or other agreements or commitments
to acquire from the Company or any of its Subsidiaries (or obligations of the
Company or any of its Subsidiaries to issue) any capital stock, voting
securities or other ownership interests in, or any securities convertible into
or exchangeable for any capital stock, voting securities or ownership
interests in, any of its Subsidiaries, (iii) obligations of the Company or any
of its Subsidiaries to grant, extend or enter into any subscription, warrant,
right, convertible or exchangeable security or other similar agreement or
commitment relating to any capital stock, voting securities or other ownership
interests in any of the Company's Subsidiaries (the items in clauses (i), (ii)
and (iii), together with the capital stock of such Subsidiaries, being
referred to collectively as "Subsidiary Securities") or (iv) obligations of
the Company or any of its Subsidiaries to make any payment based on the value
of any shares of any Subsidiary. There are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any outstanding Subsidiary Securities.
Section 4.03 Authority for this Agreement. The Company has all necessary
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 and validly authorized by 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 so contemplated, other than, with respect to the Merger, the
approval and adoption of the plan of merger (as such term is used in Section
180.1101 of the WBCL) contained in this Agreement by the holders of a majority
of the outstanding Shares prior to the consummation of the Merger
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(unless the Merger is consummated pursuant to Section 180.1104 of the WBCL).
This Agreement has been duly and validly executed and delivered by the Company
and constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
Section 4.04 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by the Company nor the consummation of the
transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective Articles of Incorporation or Bylaws
(or other similar governing documents) of the Company or any of its
Subsidiaries, (b) require any consent, approval, authorization or permit of,
or filing with or notification to, any foreign, federal, state or local
government or subdivision thereof, or governmental, judicial, legislative,
executive, administrative or regulatory authority, agency, commission,
tribunal or body (a "Governmental Entity") except as may be required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Exchange Act and the WBCL, (c) require any consent, waiver or
approval or result in a default (or give rise to any right of termination,
cancellation, modification or acceleration) under any of the terms, conditions
or provisions of any note, license, agreement, contract, indenture or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
respective assets may be bound, (d) result in the creation or imposition of
any mortgage, lien, pledge, charge, security interest or encumbrance of any
kind on any asset of the Company or any of its Subsidiaries or (e) violate any
order, writ, injunction, judgment, decree, law, statute, rule, ordinance or
regulation ("Legal Requirements") applicable to the Company or any of its
Subsidiaries or by which any of their respective assets are bound, except in
the case of (b), (c) and (d) for any of the foregoing that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or a material adverse effect on the ability of the parties to
consummate the Offer or the Merger.
Section 4.05 Reports; Financial Statements.
(a) Since January 1, 1997 the Company has timely filed all forms, reports
and documents required to be filed by it with the SEC, all of which have
complied as of their respective filing dates in all material respects with all
applicable requirements of the Exchange Act and the rules and regulations of
the SEC promulgated thereunder. True and correct copies of all filings made by
the Company with the SEC since such date and prior to the date hereof (the
"Company SEC Reports"), whether or not required under applicable laws, rules
and regulations and including any registration statement filed by the Company
under the Securities Act of 1933, as amended, have been furnished to Parent
and Purchaser. None of the SEC Reports, including any financial statements or
schedules included or incorporated by reference therein, at the time filed,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The audited and unaudited consolidated financial statements of the
Company included (or incorporated by reference) in the Company SEC Reports
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis and fairly present the
consolidated financial position of the Company and its Subsidiaries as of
their respective dates, and the consolidated income, shareholders equity,
results of operations and changes in consolidated financial position or cash
flows for the periods presented therein.
(c) Except as reflected or reserved against or disclosed in the financial
statements of the Company included in the Company SEC Reports, and except as
incurred in the ordinary course of business consistent with past practice
since December 31, 1998, neither the Company nor any of its Subsidiaries has
any liabilities of any nature, whether accrued, absolute, fixed, contingent or
otherwise, whether due or to become due and whether or not required to be
recorded or reflected on a balance sheet under United States generally
accepted accounting principles. Since December 31, 1998, neither the Company
nor any of its Subsidiaries has incurred any such liabilities other than
liabilities that (i) have been incurred in the ordinary course of business
consistent with past practice and (ii) have not had and are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
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Section 4.06 Absence of Certain Changes. Since January 1, 1999, (a) the
Company and its Subsidiaries have not suffered any Material Adverse Effect or
any change, condition, event or development that could reasonably be expected
to have a Material Adverse Effect, (b) the Company and its Subsidiaries have
conducted their respective businesses in all material respects only in the
ordinary course consistent with past practice, except for the negotiation and
execution and delivery of this Agreement and (c) there has not been (i) any
declaration, setting aside or payment of any dividend or other distribution in
respect of the Shares or any repurchase, redemption or other acquisition by
the Company or any of its Subsidiaries of any outstanding shares of capital
stock or other securities in, or other ownership interests in, the Company or
any of its Subsidiaries or any amendment (or agreement to amend) the terms of
any such shares, securities or ownership interests, (ii) any entry into any
employment, change in control, deferred compensation or severance agreement
with, or any significant increase in the rate or terms (including any
acceleration of the right to receive payment) of compensation payable or to
become payable by the Company or any of its Subsidiaries to, their respective
directors, officers or employees, except increases to employees who are not
officers or directors occurring in the ordinary course of business, (iii) any
increase in the rate or terms (including any acceleration of the right to
receive payment) of any Plan (as defined below) or any other bonus, severance,
insurance, change in control, deferred compensation, pension or other employee
benefit plan, payment or arrangement made to, for or with any such directors,
officers or employees, (iv) any action by the Company which, if taken after
the date hereof, would constitute a breach of any of the clauses of Section
6.01 hereof, (v) any change by the Company in accounting methods, principles
or practices except as required by changes in United States generally accepted
accounting principles, (vi) any material labor dispute or other material
employment related problem, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of the Company or any Subsidiary, which employees were not then
subject to a collective bargaining agreement or any lockouts, strikes,
slowdowns, work stoppages or threats thereof by or with respect to such
employees, (vii) any revaluation by the Company or any of its Subsidiaries of
any of their respective assets, including write-downs of inventory or of
accounts receivable other than in the ordinary course of business consistent
with past practice or (viii) except by contracts entered into in the ordinary
course of business consistent with past practice, any entry into any
agreement, commitment or transaction by the Company which is material to the
Company and its Subsidiaries taken as a whole.
Section 4.07 Schedule 14D-9; Offer Documents and Proxy Statement.
(a) None of the information supplied or to be supplied by or on behalf of
the Company or any affiliate of the Company for inclusion in the Offer
Documents will, at the times such documents are filed with the SEC and are
mailed to shareholders of the Company, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading, or to correct any statement made in
any communication with respect to the Offer previously filed with the SEC or
disseminated to the shareholders of the Company. The Schedule 14D-9 will not,
at the time the Schedule 14D-9 is filed with the SEC and at all times prior to
the purchase of Shares by Purchaser pursuant to the Offer, 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, except that no
representation or warranty is made by the Company with respect to information
supplied in writing by Parent, Purchaser or an affiliate of Parent or
Purchaser expressly for inclusion therein. The Schedule 14D-9 will comply as
to form in all material respects with the provisions of the Exchange Act and
the rules and regulations of the SEC thereunder.
(b) The Proxy Statement, and any other schedule or document required to be
filed by the Company in connection with the Merger, will not, at the time the
Proxy Statement is first mailed and at the time of the Special Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading, or to correct any statement made in any earlier communication with
respect to the solicitation of any proxy or approval for the Merger in
connection with which the Proxy Statement shall be mailed, except that no
representation or warranty is made by the Company with respect to information
supplied in writing by Parent,
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Purchaser or an affiliate of Parent or Purchaser expressly for inclusion
therein. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations of the
SEC promulgated thereunder. The letter to shareholders, notice of meeting,
proxy statement and form of proxy, or the information statement, as the case
may be, that may be provided to shareholders of the Company in connection with
the Merger (including any amendments or supplements), and any schedules
required to be filed with the SEC in connection therewith, as from time to
time amended or supplemented, are collectively referred to as the "Proxy
Statement."
Section 4.08 Brokers. No Person or entity (other than Baird, a true and
complete copy of whose engagement letter as in effect has been furnished to
Parent and Purchaser) is entitled to receive any brokerage, finder's or other
fee or commission in connection with this Agreement or the transactions
contemplated hereby based upon agreements made by or on behalf of the Company,
any of its Subsidiaries or any of their respective officers, directors or
employees.
Section 4.09 Employee Benefit Matters.
(a) (i) The employees employed by the Company and its Subsidiaries are not
represented by any labor union or other labor representative, (ii) there are
no collective bargaining agreements or other similar arrangements in effect
with respect to such employees and (iii) there are no other Persons attempting
to represent or organize or purporting to represent for bargaining purposes
any employees employed by the Company or any of its Subsidiaries.
(b) (i) Since January 1, 1996 there has not occurred or been threatened any
strikes, slow downs, picketing, work stoppages, concerted refusals to work or
other similar labor activities with respect to employees employed by the
Company or any of its Subsidiaries and (ii) no material grievance or
arbitration or other Proceeding arising out of or under any collective
bargaining agreement relating to the Company or any of its Subsidiaries is
pending or threatened.
(c) The Company and each Subsidiary are in compliance in all material
respects with all Legal Requirements relating to the employment or termination
of employment of all former, current, and prospective employees, independent
contractors and "leased employees" (within the meaning of Section 414(n) of
the Code) of the Company and each Subsidiary.
(d) No individual has been treated by the Company or any Subsidiary as a
"leased employee" (within the meaning of Section 414(n) of the Code). There
are no material complaints, charges or claims against the Company or any
Subsidiary pending or threatened to be brought by or filed with any
Governmental Entity based on, arising out of, in connection with or otherwise
relating to the employment or termination of employment by the Company or any
Subsidiary of any individual involved in the business of the Company or any
Subsidiary, including individuals classified by the Company or any Subsidiary
as independent contractors or "leased employees" (within the meaning of
Section 414(n) of the Code), or the failure to employ any individual,
including, without limitation, any claim relating to employment
discrimination, equal pay, employee safety and health, immigration, wages and
hours or workers' compensation.
(e) There are no material liabilities, whether absolute or contingent, to
any employees employed by the Company or any Subsidiary relating to workers
compensation benefits that are not fully insured against by a bona fide third-
party insurance carrier. All premiums required to have been paid to date under
the insurance policy or fund with respect to each workers' compensation
arrangement that is funded wholly or partially through an insurance policy or
public or private fund, have been paid, all premiums required to be paid under
the insurance policy or fund through the Closing will have been paid on or
before the Closing and, as of the Closing, there will be no material liability
of the Company or any Subsidiary under any such insurance policy, fund or
ancillary agreement with respect to such insurance policy or fund in the
nature of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
occurring prior to the Closing.
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(f) "Company Benefit Plans" shall mean such employee or director benefit or
compensation plan, arrangement or agreement, including, without limitation,
pension, savings, retirement, welfare, insurance, severance, executive
compensation, profit-sharing, deferred compensation, incentive, bonus, stock-
option, stock purchase, and long-term performance plans, arrangements or
agreements, that are maintained, or contributed to, as of the date of this
Agreement by the Company or any of its Subsidiaries or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), all of which
together with the Company would be deemed a "single employer" within the
meaning of Section 4001 of the Employee Retirement Income Security Act of 1974
("ERISA") or Section 414(b), (c), (m) or (o) of the Code, or to which the
Company or any Subsidiary has any obligation to contribute, or with respect to
which the Company or any Subsidiary has any liability. Set forth in Section
4.09(f) of the Company Disclosure Letter is a list of the material Company
Benefit Plans and the Company shall, within fifteen (15) days following the
date hereof, provide Purchaser with a list of all Company Benefit Plans. The
Company has heretofore delivered or made available to Purchaser true and
complete copies of each material Company Benefit Plan and the following
related documents: (i) the actuarial report and Form 5500 for such Company
Benefit Plan (if applicable) for each of the last two years, (ii) the most
recent determination letter from the Internal Revenue Service (if applicable)
for such Company Benefit Plan and (iii) the most recent summary plan
description , including financial statements and actuarial valuations, for
such Company Benefit Plan. There is no legally binding arrangement or
commitment to create any additional Company Benefit Plans or intent to modify
or change any existing Company Benefit Plans.
(g) (i) Each of the Company Benefit Plans has been operated and administered
in accordance with its terms and with applicable Legal Requirements,
including, but not limited to, ERISA and the Code, except where the failure to
so operate and administer would not individually or in the aggregate result in
a Material Adverse Effect on the Company, (ii) each of the Company Benefit
Plans intended to be "qualified" within the meaning of Section 401(a) of the
Code has received a determination letter from the Internal Revenue Service
stating that it is so qualified, and, to the knowledge of the Company, there
are no existing circumstances or any events that have occurred that would
reasonably be expected to adversely affect the qualified status of any such
Company Benefit Plan, and the consummation of the transactions contemplated
hereby will not adversely affect the qualified status of any such Company
Benefit Plan (iii) with respect to each Company Benefit Plan that is subject
to Title IV of ERISA, the present value of accrued benefits under such plan,
based upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such plan's actuary with respect to such
plan, did not, as of its latest valuation date, exceed the then current value
of the assets of such plan allocable to such accrued benefits and, to the
knowledge of the Company no adverse change in such funded status has occurred,
(iv) no Company Benefit Plan provides benefits, including, without limitation,
death or medical benefits (whether or not insured), with respect to current or
former employees or directors of the Company or its Subsidiaries beyond their
retirement or other termination of service, other than (A) coverage mandated
by applicable Legal Requirements, (B) death benefits or retirement benefits
under any "employee pension plan" (as such term is defined in Section 3(2) of
ERISA), (C) deferred compensation benefits accrued as liabilities on the books
of it or its Subsidiaries or (D) benefits the full cost of which is borne by
the current or former employee or director (or his or her beneficiary), (v)
(A) no liability under Title IV or ERISA or Section 412 of the Code has been
incurred by the Company, its Subsidiaries or any ERISA Affiliate that has not
been satisfied in full, and no condition exists that presents a risk to the
Company, its Subsidiaries or any ERISA Affiliate of incurring a liability
thereunder, except where such liability would not reasonably be expected to
have a Material Adverse Effect on the Company, (B) no "reportable event" (as
defined in section 4043 of ERISA) has occurred with respect to any Company
Benefit Plan, (C) no Company Benefit Plan which is subject to Section 302 of
ERISA or Section 412 of the Code has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code,
respectively), whether or not waived and (D) the transactions contemplated
hereby will not result in any event described in section 4062(e) of ERISA,
(vi) no Company Benefit Plan is a "multiemployer pension plan" (as such term
is defined in Section 3(37) of ERISA), (vii) all contributions or other
amounts payable by the Company or its Subsidiaries as of the Effective Time
with respect to each Company Benefit Plan in respect of current or prior plan
years have been paid or accrued in accordance with Generally Accepted
Accounting Principles in the United States and Section 412 of the Code and
have been adequately accurately reflected in the audited and unaudited
consolidated financial statements of the Company included (or
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incorporated by reference) in the Company SEC Reports, (viii) neither the
Company nor its Subsidiaries has engaged in a transaction in connection with
which the Company or its Subsidiaries reasonably could be subject to either a
civil penalty assessed pursuant to Section 406, 409, 502(i), 502(l) or 4069 of
ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code, except
where any such penalty or tax would not, individually or in the aggregate,
have a Material Adverse Effect on the Company, (ix) to the knowledge of the
Company, there are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against the Company with any
of the Company Benefit Plans or any trusts related thereto, and neither the
Company, any Subsidiary nor any Company Benefit Plan is under audit or, to the
knowledge of the Company, is the subject of an audit or investigation by any
federal or state governmental agency (including, without limitation, by the
Internal Revenue Service, the Department of Labor or the Pension Guarantee
Benefit Corporation), nor, to the knowledge of the Company, is any such audit
or investigation pending or threatened and (x) no Company Benefit Plan
maintained outside of the United States has assets or book reserves that are
less than the accrued liabilities under such plans, and all Company Benefit
Plans maintained outside of the United States have been operated and
administered in accordance with applicable Legal Requirements, except where
the failure to so fund or provide book reserves for such plans or to so
operate and administer such plans would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company or its
Subsidiaries.
(h) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby (either alone or in
conjunction with any other event) will (A) result in any payment (including,
without limitation, severance, unemployment compensation, "excess parachute
payment" (within the meaning of Section 280G of the Code) whether or not such
payment could be considered to be reasonable compensation for services
rendered, forgiveness of indebtedness or otherwise) becoming due to any
current or former director or employee of the Company or any of its
Subsidiaries (or any group of such current or former directors or employees)
under any Company Benefit Plan or otherwise, (B) increase any benefits
otherwise payable under any Company Benefit Plan or (C) result in any
acceleration of the time of payment or vesting of any such benefits. No
deduction for U.S. Federal income tax purposes has been or is expected by the
Company or any Subsidiary to be disallowed for remuneration paid by the
Company or any of its Subsidiaries by reason of Section 162(m) of the Code
including by reason of the transactions contemplated hereby.
(i) With respect to each Company Benefit Plan, all material payments due
from the Company or any Subsidiary to the date hereof have been made and all
amounts properly accrued to the date hereof, or as of the Effective Date, as
liabilities of the Company or any Subsidiary that have not been paid have been
properly recorded on the books of the Company. All liabilities with respect to
any current or former employee of the Company or any Subsidiary, whether
contingent or otherwise, that the Purchaser will assume by reason of this
Agreement or by operation of law are accurately reflected in the audited and
unaudited consolidated financial statements of the Company included (or
incorporated by reference) in the Company SEC Reports.
(j) Except as provided on Schedule 4.09(j) of the Company Disclosure Letter,
neither the Company nor any Subsidiary maintains any plan, program or
arrangement or is a party to any contract that provides any benefits or
provides for payments to any Person in, based on or measured by the value of,
any equity security of, or interest in, the Company or any Subsidiary.
Section 4.10 Litigation, etc. There is no claim suit, action or legal,
administrative or arbitration proceeding (including any citations, complaints,
consent orders, compliance schedules or other similar enforcement orders) or,
any governmental investigation ("Proceeding") pending or, to the knowledge of
the Company, threatened against or relating to the Company or any of its
Subsidiaries that involve a claim against the Company or any of its
Subsidiaries in excess of $250,000 or that, individually or in the aggregate,
if adversely determined could reasonably be expected to have a Material
Adverse Effect or that in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the Offer or the Merger or any of the other
transactions contemplated hereby. Neither the Company nor any Subsidiary of
the Company is subject to any outstanding order, writ, injunction or decree
that, individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect.
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Section 4.11 Tax Matters.
(a) Each of the Company and its Subsidiaries has duly and timely filed all
Tax Returns required to be filed by it, and all such Tax Returns are true,
complete and accurate in all respects, except to the extent that any failure
to have filed such Tax Returns or any inaccuracies in such Tax Returns would
not reasonably be expected to have a Material Adverse Effect on the Company.
The Company and each of its Subsidiaries has paid all Taxes required to be
paid by it and has paid all Taxes that it was required to withhold from
amounts owing to any employee, creditor or third party except to the extent
that the failure pay or withhold Taxes in the aggregate would not reasonably
be expected to have a Material Adverse Effect on the Company. There are no
pending or threatened audits, examinations, investigations, deficiencies,
claims or other Legal Proceedings in respect of Taxes relating to the Company
or any Subsidiary, except for those relating to Taxes which, if adversely
determined, would not in the aggregate reasonably be expected to have a
Material Adverse Effect on the Company. There are no liens for Taxes upon the
assets of the Company or any Subsidiary other than liens for current Taxes not
yet due, liens for Taxes that are being contested in good faith by appropriate
proceedings, and liens for Taxes which in the aggregate would not reasonably
be expected to have a Material Adverse Effect on the Company. Neither the
Company nor any of its Subsidiaries has requested any extension of time within
which to file any Tax Returns in respect of any taxable year which have not
since been filed, nor made any request for waivers of the time to assess any
Taxes that are pending or outstanding, except where such requests or waivers
would not reasonably be expected to have a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries has made an election
under Section 341(f) of the Code. The consolidated federal income Tax Returns
of the Company and its Subsidiaries have been examined and closed, or the
statute of limitations has closed, with respect to all taxable years through
and including 1992. Neither the Company nor any of its Subsidiaries has any
liability for Taxes of any person (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any comparable
provision of state, local or foreign law). Neither the Company nor any
Subsidiary of the Company is a party to any agreement (with any person other
than the Company or its Subsidiaries) relating to the allocation or sharing of
Taxes.
(b) For purposes of this Agreement: (i) "Taxes" means any and all federal,
state, local, foreign or other taxes of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including, without
limitation, taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital
stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth, and taxes or other charges in the
nature of excise, withholding, ad valorem or value added, and (ii) "Tax
Return" means any return, report or similar statement (including the attached
schedules) required to be filed with respect to any Tax, including, without
limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
Section 4.12 Compliance with Law; No Default. (a) Neither the Company nor
any of its Subsidiaries is in conflict with, in default with respect to or in
violation of, (i) any Legal Requirement applicable to the Company or any of
its Subsidiaries or by which any property or asset of the Company or any of
its Subsidiaries is bound or affected or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries, or any property or
asset of the Company or any of its Subsidiaries, is bound or affected, in each
case except for any such conflicts, defaults or violations that have not had
and are not reasonably expected to have a Material Adverse Effect or a
material adverse effect on the ability of the parties to consummate the Offer
or the Merger. The Company and its Subsidiaries have all permits, licenses,
authorizations, consents, approvals and franchises from Governmental Entities
required to conduct their businesses as currently conducted (the "Company
Permits"), except for such permits, licenses, authorizations, consents,
approvals and franchises the absence of which, individually or in the
aggregate, have not had and are not reasonably expected to have a Material
Adverse Effect or a material adverse effect on the ability of the parties to
consummate the Offer or the Merger. The Company and its Subsidiaries are in
compliance with the terms of the Company Permits, except where the failure so
to comply in the aggregate has not had and is not reasonably
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expected to have a Material Adverse Effect or a material adverse effect on the
ability of the parties to consummate the Offer or the Merger.
(b) Without limiting the generality of the foregoing Section 4.12(a), the
Company and its Subsidiaries are in compliance with, and have received no
notice of non-compliance with, the applicable regulations of any applicable
aviation authorities (including the FAA). The Company and its Subsidiaries
have, and the Surviving Corporation and the Subsidiaries will at the Effective
Time have, all permits currently required by any applicable rule or regulation
of any applicable aviation authorities (including the FAA). "FAA" means the
U.S. Federal Aviation Administration (and any successor thereof).
Section 4.13 Environmental Matters.
(a) (i) The Company and each of its Subsidiaries have been at all times and
are in compliance in all material respects with all applicable Environmental
Laws (as defined below).
(ii) The Company and each of its Subsidiaries have obtained all permits,
licenses, consents, approvals, waivers, variances and other authorizations
("Authorizations") that are required with respect to the operation of its
business, property and assets under the Environmental Laws and all such
Authorizations are in full force and effect.
(iii) None of Company nor any of its Subsidiaries has received any
notice, request for information, complaint or administrative or judicial
order, and there is no investigation, action, suit or proceeding pending
nor to the knowledge of the Company, threatened, alleging or asserting
material liability or potential material liability against the Company or
any of its Subsidiaries under any Environmental Law or arising from or
related to a Release or threatened Release.
(iv) To the knowledge of the Company and each of its Subsidiaries, there
are no past or present conditions or circumstances at, or arising out of,
the operations of the Company or any of its Subsidiaries, including but not
limited to on-site or off-site Release, which are reasonably likely to
result in: (A) material liabilities or obligations for any cleanup,
remediation or corrective action under any Environmental Law, (B) material
claims arising under any Environmental Law for personal injury, property
damage, or damage to natural resources, or (C) material fines or penalties
arising under any Environmental Law.
(b) The Company has given Parent and Purchaser access to all records and
files in its possession at both its corporate headquarters and its facilities
currently owned, operated, leased, managed, used or controlled by the Company,
or any of its Subsidiaries, including all reports, studies, analyses, tests or
monitoring results, pertaining to Hazardous Substances, any Release or any
environmental concerns relating to facilities or real property owned or
operated (including leased) by the Company or any of its Subsidiaries or
concerning compliance with or liability under any Environmental Laws.
(c) For purposes of this Section 4.13, the definition of the Company shall
include, to the knowledge of the Company, all of the Company's former
Subsidiaries.
(d) Prior to the Effective Time, the Company has made all notifications,
registrations, and filings required under and have taken all other necessary
steps to effect the timely transfer of all Authorizations and to comply with
all Environmental Disclosure Requirements (as defined below) applicable to its
assets and the assets of its Subsidiaries and will provide a copy of any such
notification, registration, or filing to Purchaser prior to the Effective
Time.
(e) For purposes of this Agreement, "Environmental Law" means any statute,
law (including common law), ordinance, rule, regulation, order, judgment or
decree applicable to the Company or any of its Subsidiaries relating to (i)
the protection or preservation of the environment, worker health and safety,
human health as it relates to the environment or natural resources, (ii)
Releases or threatened Releases, (iii) the management (including use,
treatment, handling, storage, disposal, transportation, recycling or
remediation) of any Hazardous Substance; and (iv) the physical structure or
condition, or appropriate use of a building, facility, fixture or other
structure.
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(f) For purposes of this Agreement, "Hazardous Substance" means any
substance, pollutant, contaminant, chemical or other material (including
petroleum or any fraction thereof, asbestos or asbestos-containing-material,
polychlorinated biphenyls, urea formaldehyde foam insulation) or waste that is
identified or regulated under any Environmental Law.
(g) For purposes of this Agreement, "Release" means any spill, discharge,
leak, emission, disposal, injection, escape, dumping, leaching, dispersal,
emanation, migration or release of any kind whatsoever of any Hazardous
Substance or noxious noise or odor, at, in, on, into or onto the environment.
(h) For the purposes of this Agreement, "Environmental Disclosure
Requirements" means any laws requiring notification of the buyer of real
property, or notification, registration, or filing with any governmental
agency, prior to the sale of any real property or transfer of control of an
establishment, of the actual or threatened presence or Release into the
environment, or the use, disposal, or handling of Hazardous Substance on, at,
under, or near the real property to be sold or the establishment for which
control is to be transferred.
Section 4.14 Intellectual Property.
Except to the extent the inaccuracy of any of the following, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company, the Company and each of its Subsidiaries owns or
possesses adequate licenses or other legal rights to use all patents,
trademarks, trade names, trade dress, copyrights, service marks, trade
secrets, software, mailing lists, mask works, know-how and other proprietary
rights and information, including all applications with respect thereto
(collectively, "Proprietary Rights") used or held for use in connection with
the business of the Company and its Subsidiaries as currently conducted or as
contemplated to be conducted by the Company, and the Company is unaware of any
assertion or claim challenging the validity or enforceability of or the
Company's and its Subsidiaries' right to use any of the foregoing. To the
knowledge of the Company, after due inquiry for such purpose, the conduct of
the business of the Company and its Subsidiaries as currently conducted and as
contemplated to be conducted did not, does not and will not infringe or
violate in any way any Proprietary Rights of any third party that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company. To the knowledge of the Company, after
due inquiry for such purposes, there are no infringements or violations of any
Proprietary Rights owned by or licensed by or to the Company or any of its
Subsidiaries that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company.
Section 4.15 Real Property.
(a) Section 4.15(a) of the Disclosure Letter sets forth a true, correct and
complete list of all of the real property owned in fee by the Company and its
Subsidiaries. Each of the Company and its Subsidiaries has good and marketable
title to each parcel of real property owned by it free and clear of all
mortgages, pledges, liens, encumbrances and security interests, except (i)
those reflected or reserved against in the balance sheet of the Company dated
as of June 30, 1999 and included in the SEC Reports, (ii) Taxes and general
and special assessments not in default and payable without penalty and
interest and (iii) other liens, mortgages, pledges, encumbrances and security
interests which do not materially interfere with the Company's or such
Subsidiary's use and enjoyment of such real property.
(b) Section 4.15(b) of the Disclosure Letter sets forth a true, correct and
complete list of all leases, subleases and other agreements under which the
Company or any of its Subsidiaries uses or occupies or has the right to use or
occupy, now or in the future, any real property (the "Real Property Leases").
The Company has heretofore delivered to Parent and Purchaser true, correct and
complete copies of all Real Property Leases (including all modifications,
amendments, supplements, waivers and side letters thereto). Each Real Property
Lease is valid, binding and in full force and effect, all rent and other sums
and charges payable by the Company and its Subsidiaries as tenants thereunder
are current, and no termination event or condition or uncured default of a
material nature on the part of the Company or any such Subsidiary exists under
any Real Property Lease. Each of the Company and its Subsidiaries has a good
and valid leasehold interest in each parcel of real property
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leased by it free and clear of all mortgages, pledges, liens, encumbrances and
security interests, except (i) those reflected or reserved against in the
balance sheet of the Company dated as of September 30, 1999, (ii) Taxes and
general and special assessments not in default and payable without penalty and
interest, and (iii) other liens, mortgages, pledges, encumbrances and security
interests which do not materially interfere with the Company's use and
enjoyment of such real property or materially detract from or diminish the
value thereof.
Section 4.16 Year 2000. As of December 31, 1999, all internal computer
systems that are material to the business, finances or operations of the
Company will be (a) able to receive, record, store, process, calculate,
manipulate and output dates from and after January 1, 2000, time periods that
include January 1, 2000 and information that is dependent on or relates to
such dates or time periods, in the same manner and with the same accuracy,
functionality, data integrity and performance as when dates or time periods
prior to January 1, 2000 are involved and (b) able to store and output date
information in a manner that is unambiguous as to century ("Year 2000
Compliant"). To the knowledge of the Company and its Subsidiaries and upon
reasonable investigation, as of the Effective Time the systems of the
Company's and its Subsidiaries' material suppliers are Year 2000 Compliant.
Section 4.17 Material Contracts. The Company has made available to Parent
and Purchaser true, correct and complete copies of all contracts, agreements,
commitments, arrangements, leases (including with respect to personal
property) and other instruments to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or
any of their respective assets is bound which (a) involves or could involve
aggregate payments of more than $500,000, (b) involves or could involve
aggregate revenues of more than $500,000 and which contains provisions
relating to change of control or restrictions on assignment, (c) is with any
of the Company's officers, directors or affiliates, (d) is or could reasonably
be expected to be material to the Company and its Subsidiaries taken as a
whole, (e) is a confidentiality, standstill or similar agreement or (f)
contains covenants limiting the freedom to engage in any line of business or
compete with any Person or operate at any location (each, a "Material
Contract"). Neither the Company nor any of its Subsidiaries is, or has
received any notice or has any knowledge that any other party is, in default
in any material respect under any Material Contract, and there has not
occurred any event that with the lapse of time or the giving of notice or both
would constitute such a material default, except for such defaults,
individually or in the aggregate, that have not had and are not reasonably
expected to have a Material Adverse Effect or a material adverse effect on the
ability of the parties to consummate the Offer or the Merger.
Section 4.18 Related Party Transactions. No director, officer, partner,
employee, affiliate or associate of the Company or any of its Subsidiaries (a)
has borrowed any monies from or has outstanding any indebtedness or other
similar obligations to the Company or any of its Subsidiaries, (b) owns any
direct or indirect interest of any kind (other than the ownership of less than
5% of the stock of a publicly traded company) in, or is a director, officer,
employee, partner, affiliate or associate of, or consultant or lender to, or
borrower from, or has the right to participate in the management, operations
or profits of, any Person or entity which is (i) a competitor, supplier,
customer, distributor, lessor, tenant, creditor or debtor of the Company of
any of its Subsidiaries, (ii) engaged in a business related to the business of
the Company or any of its Subsidiaries or (iii) participated in any
transaction to which the Company or any of its Subsidiaries is a party; or (c)
is otherwise a party to any contract, arrangement or understanding with the
Company or any of its Subsidiaries.
Section 4.19 State Takeover Statutes Inapplicable. (a) Sections 180.1140 to
180.1145 of the WBCL are inapplicable to the Offer, the Merger, this Agreement
and the Shareholder Option Agreement and the transactions contemplated hereby
and thereby.
(b) Upon Purchaser's acquisition of at least seventy-five percent (75%) of
the outstanding Shares, Purchaser will (i) possess a majority of all the votes
entitled to be cast at such time on the plan of merger (as such term is
defined in Section 180.1103 of the WBCL) and (ii) have the sole power to
approve such plan of merger without the vote of any other shareholder of the
Company, provided, that, in the case of clause (ii), Purchaser complies with
Sections 180.1104(3) and (4) and 180.1132(1) of the WBCL, as applicable.
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(c) No vote by the Company shareholders under Section 180.1131 of the WBCL
will be required to approve the Merger except for the vote generally required
under Section 180.1103 of the WBCL, provided that this Agreement, the Offer
and the Shareholder Option Agreement are first publicly announced and the
Offer is commenced (within the meaning of Rule 14d-2 promulgated under the
Exchange Act) on the same day.
(d) The Company is not a "target company" which has "substantial assets
located in Wisconsin", as determined under Section 552.01(6)(b) of the
Wisconsin Statutes.
Section 4.20 Rights Agreement. The Company has irrevocably taken all
necessary action, including, without limitation, amending the Rights Agreement
with respect to all of the outstanding Rights issued pursuant to the Rights
Agreement, (a) to render the Rights Agreement inapplicable to this Agreement,
the Shareholder Option Agreement, the Offer, the Merger and the specific
transactions contemplated hereby and thereby, (b) to ensure that (i) Parent
and Purchaser, or either of them, are not deemed to be an Acquiring Person (as
defined in the Rights Agreement) pursuant to the Rights Agreement and (ii) no
Triggering Event (as such term is defined in the Rights Agreement) occur by
reason of the execution and delivery of this Agreement, the Shareholder Option
Agreement or the consummation of the Offer, the Merger or transactions
contemplated by this Agreement or the Shareholder Option Agreement and (c) so
that the Company will have no obligations under the Rights or the Rights
Agreement in connection with the Offer and the Merger and the holders of
Shares will have no rights under the Rights or the Rights Agreement in
connection with the Offer and the Merger. The Rights Agreement, as so amended
to comply with this Section, has not been further amended or modified. Copies
of all such amendments to the Rights Agreement have been previously provided
to Purchaser.
Section 4.21 Required Vote of Company Shareholders. Unless the Merger is
consummated in accordance with Section 180.1104 of the WBCL as contemplated by
Section 2.09, the only vote of the shareholders of the Company required to
adopt the plan of merger contained in this Agreement and approve the Merger is
the affirmative vote of the holders of not less than a majority of the
outstanding Shares. No other vote of the shareholders of the Company is
required by law, the Articles of Incorporation or Bylaws of the Company as
currently in effect or otherwise to adopt the plan of merger contained in this
Agreement and approve the Merger. Purchaser will have full voting power with
respect to any Shares purchased pursuant to the Offer or the Options to the
extent allowed under Section 180.1150 of the WBCL.
ARTICLE V
Representations And
Warranties of Parent and Purchaser
Parent and Purchaser represent and warrant to the Company as follows:
Section 5.01 Organization and Qualification. Each of Parent and Purchaser is
a duly organized and validly existing corporation in good standing under the
laws of the jurisdiction of its organization. All of the issued and
outstanding capital stock of Purchaser is owned directly or indirectly by
Parent.
Section 5.02 Authority for this Agreement. Each of Parent and Purchaser 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 Parent and Purchaser and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate proceedings on the part of
Parent and Purchaser. This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and constitutes a legal, valid and binding
agreement of each of Parent and Purchaser, enforceable against each of Parent
and Purchaser in accordance with its terms.
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Section 5.03 Offer Documents; Proxy Statement.
(a) None of the Offer Documents will, at the times such documents are filed
with the SEC and are mailed to the shareholders of the Company, contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent or Purchaser with
respect to information supplied in writing by the Company or an affiliate of
the Company expressly for inclusion therein. The Offer Documents will comply
as to form in all material respects with the provisions of the Exchange Act
and the rules and regulations of the SEC thereunder.
(b) None of the information supplied by Parent, Purchaser or any affiliate
of Parent or Purchaser specifically for inclusion in the Proxy Statement or
the Schedule 14D-9 will, at the date of filing with the SEC, and, in the case
of the Proxy Statement, at the time the Proxy Statement is mailed and at the
time of the Special Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Section 5.04 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Parent or Purchaser nor the consummation of the
transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective Certificates of Incorporation or
Bylaws (or other similar governing documents) of Parent or Purchaser, (b)
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (i) as may be required under
the HSR Act, any non-United States competition, antitrust and investment laws,
the Exchange Act, the WBCL, Chapter 552 of the Wisconsin Statute and the
"takeover" or "blue sky" laws of various states or (ii) where the failure to
obtain such consent, approval, authorization or permit, or to make such filing
or notification, would not, individually or in the aggregate, have a material
adverse effect on the ability of Parent or Purchaser to consummate the
transactions contemplated hereby, (c) require any consent, waiver or approval
or result in a default (or give rise to any right of termination,
cancellation, modification or acceleration) under any of the terms, conditions
or provisions of any note, license, agreement, contract, indenture or other
instrument or obligation to which Parent or Purchaser or any of their
respective Subsidiaries is a party or by which Parent or any of its
Subsidiaries or any of their respective assets may be bound, except for such
defaults (or rights of termination, cancellation, modification or
acceleration) as to which requisite waivers or consents have been obtained or
which would not in the aggregate have a material adverse effect on the ability
of Parent or Purchaser to consummate the transactions contemplated hereby or
(d) violate any Legal Requirement applicable to Parent, Purchaser or any of
their respective Subsidiaries or by which any of their respective assets are
bound, except for violations which would not, individually or in the
aggregate, have a material adverse effect on the ability of Parent or
Purchaser to consummate the transactions contemplated hereby.
Section 5.05 Operations of Purchaser. Purchaser was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted and will conduct its operations
only as contemplated hereby.
Section 5.06 Brokers. No Person or entity is entitled to receive any
brokerage, finder's or other fee or commission in connection with this
Agreement or the transactions contemplated hereby based upon agreements made
by or on behalf of Parent, Purchaser or any of their Subsidiaries or any of
their respective officers, directors or employees.
ARTICLE VI
Covenants
Section 6.01 Conduct of Business of the Company. Except as expressly
contemplated by this Agreement, during the period from the date of this
Agreement to the date on which a majority of the Company's directors are
designees of Parent or Purchaser, the Company will conduct and will cause each
of its Subsidiaries to conduct its operations according to its ordinary and
usual course of business and consistent with past practice, and the
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Company will use and will cause each of its Subsidiaries to use its
commercially reasonable efforts to preserve intact its business organization,
to keep available the services of its current officers and employees and to
preserve the goodwill of and maintain satisfactory relationships with those
Persons and entities having business relationships with the Company and its
Subsidiaries, and the Company will promptly advise Parent and Purchaser in
writing of any material change in the Company's or any of its Subsidiaries'
condition (financial or otherwise), properties, customer or supplier
relationships, assets, liabilities, business prospects or results of
operations. Without limiting the generality of the foregoing and except as
otherwise expressly provided in or contemplated by this Agreement or the
Disclosure Letter, during the period specified in the preceding sentence,
without the prior written consent of Parent which shall not be unreasonably
withheld, the Company will not and will not permit any of its Subsidiaries to:
(a) issue, sell, grant options, restricted shares or rights to purchase,
pledge, or authorize or propose the issuance, sale, grant of options,
restricted shares or rights to purchase or pledge of (i) any Company
Securities (including any Existing Stock Option or Stock Award) or
Subsidiary Securities, or grant or accelerate any right to convert or
exchange any Company Securities or Subsidiary Securities, other than Shares
issuable upon exercise of the Existing Stock Options or Stock Award or (ii)
any other securities in respect of, in lieu of or in substitution for
Shares outstanding on the date hereof or any other right the value of which
is based on the value of Company Securities or Subsidiary Securities;
(b) acquire or redeem, directly or indirectly, or amend any Company
Securities or Subsidiary Securities;
(c) split, combine or reclassify its capital stock or declare, set aside,
make or pay any dividend or distribution (whether in cash, stock or
property) on any shares of its capital stock (other than cash dividends
paid to the Company by its wholly-owned Subsidiaries with regard to their
capital stock);
(d) (i) make or offer to make any acquisition, by means of a merger or
otherwise, of assets or securities, or any sale, lease, encumbrance or
other disposition of assets or securities, in each case involving the
payment or receipt of consideration of $250,000 or more, except for
purchases of inventory made in the ordinary course of business and
consistent with past practice or (ii) except in the ordinary course
consistent with past practice, enter into a Material Contract or amend any
Material Contract or grant any release or relinquishment of any rights
under any Material Contract;
(e) incur or assume any long-term debt or short-term debt except for
short-term debt incurred in the ordinary course of business consistent with
past practice;
(f) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other Person except wholly-owned Subsidiaries of the Company;
(g) make any loans, advances or capital contributions to, or investments
in, any other Person (other than wholly-owned Subsidiaries of the Company);
(h) change any of the accounting principles or practices used by it;
(i) make any Tax election or settle or compromise any material federal,
state or local income Tax liability;
(j) propose or adopt any amendments to its Articles of Incorporation or
Bylaws (or similar documents);
(k) grant any stock-related, performance or similar awards or bonuses;
(l) forgive any loans to employees, officers, consultants or directors or
any of their respective affiliates or associates;
(m) enter into any new, or amend any existing, employment, severance,
consulting, retention, change in control, deferred compensation or salary
continuation agreements with or for the benefit of any current or former
officers, directors, employees or consultants, or grant any increases in
the compensation, wages,
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salaries, fringe benefits, perquisites or benefits to any current or former
officers, directors and employees (other than normal increases to persons
who are not officers or directors in the ordinary course of business
consistent with past practices and that do not result in a material
increase in benefits or compensation expense of the Company);
(n) make any deposits or contributions of cash or other property to or
take any other action to fund or in any other way secure the payment of
compensation or benefits under the Plans or agreements subject to the Plans
or any other plan, agreement, contract or arrangement of the Company
(except for any matching contributions to the Company's 401(k) plan which
are consistent with past practice);
(o) enter into, amend, or extend any collective bargaining or other labor
agreement;
(p) adopt, amend or terminate any Plan or any other bonus, severance,
insurance pension or other employee benefit plan or arrangement;
(q) settle or agree to settle any suit, action, claim, proceeding or
investigation (including any suit, action, claim, proceeding or
investigation relating to this Agreement or the transactions contemplated
hereby) or pay, discharge or satisfy or agree to pay, discharge or satisfy
any claim, liability or obligation (absolute or accrued, asserted or
unasserted, contingent or otherwise) other than the payment, discharge or
satisfaction of liabilities reflected or reserved against in full in the
financial statements as at June 30, 1999, incurred in the ordinary course
of business subsequent to June 30, 1999 or are less than $25,000 in the
aggregate;
(r) except as specifically permitted by Section 6.02, take, or agree to
commit to take, or fail to take any action that would result or is
reasonably likely to result in any of the Offer Conditions or any of the
conditions to the Merger set forth in Article VII not being satisfied, or
would make any representation or warranty of the Company contained herein
inaccurate in any material respect at, or as of any time prior to, the
Effective Time, or that would impair the ability to consummate the Offer or
the Merger in accordance with the terms hereof or materially delay such
consummation;
(s) convene any regular or special meeting (or any adjournment thereof)
of the shareholders of the Company other than the meeting contemplated by
Section 2.08 of this Agreement; or
(t) except as provided above, agree in writing or otherwise to take any
of the foregoing actions.
Section 6.02 No Solicitation. (a) The Company shall not, and shall cause its
Subsidiaries and its and their respective officers, directors, employees,
representatives (including investment bankers, attorneys and accountants),
agents or affiliates not to, directly or indirectly, encourage, solicit,
initiate or participate in any way in any discussions or negotiations with, or
provide any information to, or afford any access to the properties, books or
records of the Company or any of its Subsidiaries to, or otherwise take any
other action to assist or facilitate, any Person or group (other than Parent
or Purchaser or any affiliate or associate of Parent or Purchaser) concerning
any Acquisition Proposal (as defined below) or the possible making of an
Acquisition Proposal. Notwithstanding the foregoing and subject to compliance
with Section 6.02(b) and the prior execution by such Person or group of a
confidentiality agreement substantially in the form of the Confidentiality
Agreement, the Company may furnish information to or enter into discussions or
negotiations with any Person or entity that has made an unsolicited bona fide
Acquisition Proposal that the Board of Directors of the Company determines is
a Superior Proposal (as defined below) if, and only to the extent that, the
Board of Directors of the Company, after consultation with outside legal
counsel to the Company, determines in good faith that failure to do so would
result in a breach of the fiduciary duty of the Board of Directors of the
Company to the shareholders of the Company under applicable law.
(b) The Company will promptly (and in any event within 48 hours) notify
Parent and Purchaser, orally and in writing, if any such information is
requested or any such negotiations or discussions are sought to be initiated
and will promptly communicate to Parent and Purchaser the identity of the
Person or group making such request or inquiry (the "Potential Acquiror") and
any other terms of such request, inquiry or Acquisition Proposal. Such
notification shall include copies of any written communications received from
the Potential Acquiror. If the
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Company (or any of its Subsidiaries or its or their respective officers,
directors, employees, representatives, agents or affiliates) participates in
discussions or negotiation with, or provides information to, a Potential
Acquiror, the Company will keep Parent advised on a current basis of any
developments with respect thereto.
(c) The Company will, and will cause its Subsidiaries and its and their
respective officers, directors, employees, representatives, agents and
affiliates to, immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons other than Parent,
Purchaser or any of their respective affiliates or associates conducted prior
to the date hereof with respect to any Acquisition Proposal.
(d) Unless and until this Agreement has been terminated in accordance with
Section 8.01, the Company shall not (i) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Parent or Purchaser,
the approval or recommendation of the Offer or the Merger as set forth in
Section 1.02(a), (ii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal, (iii) release any third party from any
confidentiality or standstill agreement to which the Company is a party or
fail to enforce to the fullest extent possible, or grant any waiver or request
or consent to any Acquisition Proposal under any such agreement, (iv) redeem
the Rights or amend, or take any other action with respect to, the Rights
Agreement to facilitate any Acquisition Proposal or (v) enter into any letter
of intent, agreement in principle, acquisition agreement or other agreement
related to any Acquisition Proposal. Without limiting any other rights of
Parent and Purchaser under this Agreement in respect of any such action, any
withdrawal or modification by the Company of the approval or recommendation of
the Offer or the Merger shall not have any effect on the approvals of, and
other actions referred to herein for the purpose causing Takeover Laws and the
Rights Agreement to be inapplicable to, this Agreement and the Shareholder
Option Agreement and the transactions contemplated hereby and thereby, which
approvals and actions are irrevocable.
(e) Nothing contained in this Section 6.02 shall prohibit the Company or its
Board of Directors from taking and disclosing to the Company's Shareholders a
position with respect to a tender offer by a third party pursuant to Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act.
(f) For purposes of this Agreement, (i) "Acquisition Proposal" means any
offer or proposal, or any indication of interest in making an offer or
proposal, made by a Person or group at any time which is structured to permit
such Person or group to acquire beneficial ownership of any material portion
of the assets of, or at least 5% of the equity interest in, or businesses of,
the Company pursuant to a merger, consolidation or other business combination,
sale of shares of capital stock, sale of assets, tender offer or exchange
offer or similar transaction, including any single or multi-step transaction
or series of related transactions, in each case other than the Offer and the
Merger and (ii) "Superior Proposal" means any unsolicited, bona fide
Acquisition Proposal made in writing in respect of which the Board of
Directors of the Company has reasonably determined in good faith (A) after
consulting with and receiving the advice of its independent financial advisors
to such effect, that the Potential Acquiror has the financial wherewithal to
consummate such Acquisition Proposal without having to obtain new financing,
(B) after receiving the advice of its independent financial advisors to such
effect, that such Acquisition Proposal would involve consideration that is
superior to the consideration under the Offer and the Merger and (C) after
consulting with and receiving the advice of its outside counsel and
independent financial advisors to such effect, that such Acquisition Proposal
is reasonably likely to be consummated without undue delay.
Section 6.03 Access to Information.
(a) From and after the date of this Agreement, the Company will (i) give
Parent and Purchaser and their authorized accountants, investment bankers,
counsel and other representatives complete access (during regular business
hours upon reasonable notice) to all employees, plants, offices, warehouses
and other facilities and to all books, contracts, commitments and records
(including Tax returns) of the Company and its Subsidiaries and cause the
Company's and its Subsidiaries' independent public accountants to provide
access to their work papers and such other information as Parent or Purchaser
may reasonably request, (ii) permit Parent and Purchaser to make such
inspections as they may require, (iii) cause its officers and those of its
Subsidiaries to furnish Parent
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and Purchaser with such financial and operating data and other information
with respect to the business, properties and personnel of the Company and its
Subsidiaries as Parent or Purchaser may from time to time request and (iv)
furnish promptly to Parent and Purchaser a copy of each report, schedule and
other document filed or received by the Company during such period pursuant to
the requirements of the federal or state securities laws.
(b) Information obtained by Parent or Purchaser pursuant to Section 6.03(a)
shall be subject to the provisions of the Confidentiality Agreement, the terms
of which are incorporated herein by reference.
Section 6.04 Reasonable Best Efforts.
(a) Subject to the terms and conditions herein provided for, each of the
parties hereto agrees to use its commercially reasonable efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement; provided, however, that nothing
in this Agreement (other than as expressly provided for in Section 1.01) shall
obligate Parent or Purchaser to keep the Offer open beyond the expiration date
set forth in the Offer (as it may be extended from time to time). Without
limiting the foregoing, (i) each of the Company, Parent and Purchaser shall
use its commercially reasonable efforts to make promptly any required
submissions under the HSR Act which the Company or Parent determines should be
made, in each case, with respect to the Offer, the Merger, this Agreement or
the Shareholder Option Agreement and the transactions contemplated hereby and
thereby and (ii) Parent, Purchaser and the Company shall cooperate with one
another (A) in promptly determining whether any filings are required to be or
should be made or consents, approvals, permits or authorizations are required
to be or should be obtained under any other federal, state or foreign law or
regulation or whether any consents, approvals or waivers are required to be or
should be obtained from other parties to loan agreements or other contracts or
instruments material to the Company's business in connection with the
consummation of the transactions contemplated by this Agreement and (B) in
promptly making any such filings, furnishing information required in
connection therewith and seeking to obtain timely any such consents, permits,
authorizations, approvals or waivers. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each party to this
Agreement shall take all such necessary action.
(b) In the event that any action, suit, proceeding or investigation relating
hereto or to the transactions contemplated hereby is commenced, whether before
or after the Effective Time, the parties hereto agree to cooperate and use
their commercially reasonable efforts to defend vigorously against it and
respond thereto.
(c) Nothing in this Agreement shall obligate Parent, Purchaser or any of
their respective Subsidiaries or affiliates to agree (i) to limit in any
manner whatsoever or not to exercise any rights of ownership of any securities
(including the Shares), or to divest, dispose of or hold separate any
securities or all or a material portion of their respective businesses, assets
or properties or of the business, assets or properties of the Company or any
of its Subsidiaries or (ii) to limit in any material manner whatsoever the
ability of such entities (A) to conduct their respective businesses or own
such assets or properties or to conduct the businesses or own the properties
or assets of the Company and its Subsidiaries or (B) to control their
respective businesses or operations or the businesses or operations of the
Company and its Subsidiaries.
Section 6.05 Indemnification and Insurance.
(a) Parent and Purchaser agree that all rights to indemnification existing
in favor of the present or former directors, officers and employees of the
Company or any of its Subsidiaries as provided in the Company's Articles of
Incorporation or Bylaws, or the articles of organization, bylaws or similar
documents of any of the Company's Subsidiaries as in effect as of the date
hereof with respect to matters occurring prior to the Effective Time shall
survive the Merger and shall continue in full force and effect for a period of
not less than the statutes of limitations applicable to such matters, and
Parent agrees to cause the Surviving Corporation to comply fully with its
obligations hereunder and thereunder.
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(b) The Surviving Corporation will cause to be maintained in effect for a
period of six years after the Effective Time, in respect of acts or omissions
occurring prior to the Effective Time (but only in respect thereof), policies
of directors' and officers' liability insurance covering the persons currently
covered by the Company's existing directors' and officers' liability insurance
policies and providing substantially similar coverage to such existing
policies; provided, however, that the Surviving Corporation will not be
required in order to maintain such directors' and officers' liability
insurance policies to pay an annual premium in excess of 200% of the aggregate
annual amounts currently paid by the Company to maintain the existing policies
(which amount is not more than $50,000); and provided further that, if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of 200% of such amount, the Surviving Corporation
shall only be required to obtain as much coverage as can be obtained by paying
an annual premium equal to 200% of such amount.
(c) This Section 6.05 shall survive the consummation of the Merger and is
intended to benefit, and shall be enforceable, by any Person or entity
entitled to be indemnified hereunder (whether or not parties to this
Agreement).
Section 6.06 Employee Matters
(a) Prior to the Effective Time, except as set forth below, the Company
will, and will cause its Subsidiaries to, and from and after the Effective
Time, Parent will, and will cause the Surviving Corporation to, honor, in
accordance with their terms all existing employment and severance agreements
between the Company or any of its Subsidiaries and any officer, director or
employee of the Company or any of its Subsidiaries specified in Section
4.09(f) of the Disclosure Letter.
(b) The Company shall take, or cause to be taken, all action necessary, as
promptly hereafter as reasonably practicable, to amend any plan maintained by
the Company or any of its Subsidiaries to eliminate, as of the date hereof,
all provisions for the purchase of Shares directly from the Company or any of
its Subsidiaries or securities of any Subsidiary.
(c) Parent will, and will cause the Surviving Corporation to, cause service
rendered by employees of the Company and its Subsidiaries prior to the
Effective Time to be taken into account for vesting and eligibility purposes
under employee benefit plans of Parent, the Surviving Corporation and its
Subsidiaries, to the same extent as such service was taken into account under
the corresponding plans of the Company and its Subsidiaries for those
purposes. Employees of the Company and its Subsidiaries will not be subject to
any pre-existing condition limitation under any health plan of Parent, the
Surviving Corporation or its Subsidiaries for any condition for which they
would have been entitled to coverage under the corresponding plan of the
Company or its Subsidiaries in which they participated prior to the Effective
Time. Parent will, and will cause the Surviving Corporation and its
Subsidiaries, to give such employees credit under such plans for co-payments
made and deductibles satisfied prior to the Effective Time.
(d) No later than two business days prior to its distribution, the Company
and its Subsidiaries shall provide Parent and Purchaser with a copy of any
communication intended to be made to any of their respective employees
relating to the transactions contemplated hereby, and will provide an
opportunity for Parent and Purchaser to make reasonable revisions thereto.
Section 6.07 Takeover Laws. The Company shall, upon the request of Parent or
Purchaser, take all reasonable steps to exclude the applicability of, or to
assist in any challenge by Parent or Purchaser to the validity, or
applicability to the Offer, the Merger or any other transaction contemplated
by this Agreement or the Shareholder Option Agreement of, any Takeover Laws.
Section 6.08 Proxy Statement. Unless the Merger is consummated in accordance
with Section 180.1104 of the WBCL as contemplated by Section 2.09, the Company
shall prepare and file with the SEC, subject to the
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prior review and approval of Parent and Purchaser (which approval shall not be
unreasonably withheld), as soon as practicable after the consummation of the
Offer, a preliminary proxy or information statement (the "Preliminary Proxy
Statement") relating to the Merger as required by the Exchange Act and the
rules and regulations thereunder, with respect to the transactions
contemplated hereby. The Company shall obtain and furnish the information
required to be included in the Preliminary Proxy Statement, shall provide
Parent and Purchaser with, and consult with Parent and Purchaser regarding,
any comments that may be received from the SEC or its staff with respect
thereto, shall, subject to the prior review and approval of Parent and
Purchaser (which approval shall not be unreasonably withheld), respond
promptly to any such comments made by the SEC or its staff with respect to the
Preliminary Proxy Statement, shall cause the Proxy Statement to be mailed to
the Company's shareholders at the earliest practicable date and shall use its
commercially reasonable efforts to obtain the necessary approval of the Merger
by its shareholders.
Section 6.09 Notification of Certain Matters. The Company shall give prompt
notice to Parent and Purchaser, and Parent or Purchaser, as the case may be,
shall give prompt notice to the Company, of the occurrence, or non-occurrence,
of any event the occurrence, or non-occurrence, of which is likely (a) to
cause any representation or warranty of such party contained in this Agreement
(disregarding any materiality qualification contained therein) to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (b)
to result in any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied hereunder
(including the conditions set forth in Exhibit A); provided, however, that the
delivery of any notice pursuant to this Section 6.09 shall not limit or
otherwise affect the remedies available hereunder to any of the parties
receiving such notice.
Section 6.10 Subsequent Filingss. Until the Effective Time, the Company will
timely file with the SEC each form, report and document required to be filed
by the Company under the Exchange Act and will promptly deliver to Parent and
Purchaser copies of each such report filed with the SEC. As of their
respective dates, none of such reports shall contain 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. The audited consolidated financial
statements and unaudited interim financial statements of the Company included
in such reports shall be prepared in accordance with generally accepted
accounting principles in the United States applied on a consistent basis
(except as may be indicated in the notes thereto) and shall fairly present the
financial position of the Company and its consolidated Subsidiaries as at the
dates thereof and the results of their operations and changes in financial
position for the periods then ended.
Section 6.11 Press Releases. Parent, Purchaser and the Company will consult
with each other before issuing any press release or otherwise making any
public statements with respect to the Offer or the Merger or this Agreement
and shall not issue any such press release or make any such public statement
prior to such consultation (and affording the other party or parties an
opportunity to comment thereon), except as may be required by applicable law
or the rules and regulations of The Nasdaq Stock Market, the New York Stock
Exchange or other securities stock exchange or other quotation system on which
the securities of Parent or the Company are listed or quoted as the case may
be.
ARTICLE VII
Conditions to Consummation of the Merger
Section 7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the proposed Effective
Time, of the following conditions:
(a) unless the Merger is consummated pursuant to Section 180.1104 of the
WBCL as contemplated by Section 2.09, the plan of merger (as such term is
used in Section 180.1101 of the WBCL) contained in this Agreement shall
have been adopted by the affirmative vote of the shareholders of the
Company required by and in accordance with applicable law;
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(b) all necessary waiting periods under (i) the HSR Act applicable to the
Merger and (ii) any non-United States competition or antitrust laws which
Purchaser determines, in its reasonable discretion, are applicable to this
Agreement and the transactions contemplated hereby, shall have expired or
been terminated;
(c) no statute, rule, regulation, executive order, judgment, decree or
injunction shall have been enacted, entered, issued, promulgated or
enforced by any court or Governmental Entity against Parent, Purchaser or
the Company and be in effect that prohibits or restricts the consummation
of the Merger or makes such consummation illegal (each party agreeing to
use all commercially reasonable efforts to have such prohibition lifted);
and
(d) Purchaser shall have accepted for purchase and paid for the Shares
tendered pursuant to the Offer in accordance with the terms of this
Agreement (as the same may be amended from time to time).
ARTICLE VIII
Termination; Amendment; Waiver
Section 8.01 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time (notwithstanding approval thereof by the
shareholders of the Company) prior to the Effective Time (with any termination
by Parent also being an effective termination by Purchaser):
(a) by mutual written consent of the Company and Parent;
(b) by Parent or the Company if any court of competent jurisdiction or
other Governmental Entity shall have issued an order, decree or ruling, or
taken any other action restraining, enjoining or otherwise prohibiting any
of the transactions contemplated by this Agreement or the Shareholder
Option Agreement and such order, decree, ruling or other action shall have
become final and non-appealable;
(c) by the Company if (i) Purchaser fails to commence the Offer in
violation of Section 1.01 hereof, (ii) Purchaser shall not have accepted
for payment and paid for Shares pursuant to the Offer in accordance with
the terms thereof on or before January 10, 2000 or (iii) Purchaser fails to
purchase validly tendered Shares in violation of the terms of this
Agreement;
(d) by Parent if due to an occurrence or circumstance which would result
in a failure to satisfy any of the Offer Conditions, Purchaser shall have
(i) not commenced the Offer within the time required by Regulation 14D
under the Exchange Act, (ii) terminated the Offer without purchasing any
Shares pursuant to the Offer or (iii) failed to accept for payment Shares
pursuant to the Offer prior to January 10, 2000;
(e) by the Company, prior to the purchase of Shares pursuant to the
Offer, if (i) the Company has complied with its obligations under Section
6.02, (ii) the Company has given Parent and Purchaser at least three
business days advance notice of its intention to accept or recommend a
Superior Proposal and of all of the terms and conditions of such Superior
Proposal, (iii) the Company's Board of Directors, after taking into account
any modifications to the terms of the Offer and the Merger proposed by
Parent and Purchaser after receipt of such notice, continues to believe
such Acquisition Proposal constitutes a Superior Proposal and (iv) the
Board of Directors of the Company, after consultation with outside legal
counsel to the Company, determines in good faith that failure to do so
would result in a breach of the fiduciary duty of the Board of Directors of
the Company to the shareholders of the Company under applicable law;
provided that the termination described in this Section 8.01(e) shall not
be effective unless and until the Company shall have paid to Parent all of
the fees and expenses described in Section 8.02 including, without
limitation, the Termination Fee; or
(f) by Parent, prior to the purchase of Shares pursuant to the Offer, if
the Company breaches any of its covenants in Sections 6.02 or the Board of
Directors shall have resolved to effect any of the actions referred to in
Section 6.02(d).
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Section 8.02 Effect of Termination. If this Agreement is terminated and the
Merger is abandoned pursuant to Section 8.01 hereof, this Agreement, except
for the provisions of Sections 6.03(b), 8.02, 8.03 and Article IX hereof,
shall forthwith become void and have no effect, without any liability on the
part of any party or its directors, officers, employees or shareholders.
Nothing in this Section 8.02 shall relieve any party to this Agreement of
liability for any breach of this Agreement.
Section 8.03 Fees and Expenses. (a) Whether or not the Merger is
consummated, except as otherwise specifically provided herein, all costs and
expenses incurred in connection with the Offer, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
(b) In the event that this Agreement is terminated pursuant to (i) Section
8.01(e) or 8.01(f) or (ii) Section 8.01(b), 8.01(c)(ii) or 8.01(d) and (in the
case of clause (ii) only) either (A) prior to such termination an Acquisition
Proposal shall have been made or publicly announced or (B) within 12 months
thereafter an Acquisition Proposal shall have been consummated, then the
Company shall reimburse Parent for the out-of-pocket fees and expenses of
Parent and the Purchaser (including printing fees, filing fees and fees and
expenses of its legal and financial advisors) related to the Offer, this
Agreement, the transactions contemplated hereby and any related financing up
to a maximum of $750,000 (seven hundred and fifty thousand dollars)
(collectively "Expenses") and pay Parent a termination fee of $4,000,000
million (four million dollars) (the "Termination Fee") in immediately
available funds by wire transfer to an account designated by Parent. If such
amounts become payable pursuant to clause (i) or (ii)(A) of this Section
8.03(b), they shall be payable simultaneously with such termination (in the
case of a termination by the Company) or within one business day thereafter
(in the case of a termination by Parent). If such amounts become payable
pursuant to clause (ii)(B) of this Section 8.03(b), they shall be payable
simultaneously with completion of such Acquisition Proposal.
(c) Without limiting other remedies available to Parent or Purchaser under
this Agreement or otherwise, in the event this Agreement is terminated
pursuant to Section 8.01(c)(ii) or Section 8.01(d) as a result of the failure
to satisfy the conditions set forth in paragraph (f) of Exhibit A, then the
Company shall promptly (and in any event with one business day after such
termination) reimburse Parent for Expenses in immediately available funds by
wire transfer to an account designated by Parent.
(d) The prevailing party in any legal action undertaken to enforce this
Agreement or any provision hereof shall be entitled to recover from the other
party the costs and expenses (including attorneys' and expert witness fees)
incurred in connection with such action.
Section 8.04 Amendment. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, Parent and Purchaser, subject in the case of the
Company to Section 1.04(b), at any time before or after adoption of this
Agreement by the shareholders of the Company but, after any such shareholder
approval, no amendment shall be made which decreases the Merger Consideration
or which adversely affects the rights of the Company's shareholders hereunder
without the approval of the shareholders of the Company. This Agreement may
not be amended, changed, supplemented or otherwise modified except by an
instrument in writing signed on behalf of all of the parties.
Section 8.05 Extension; Waiver; Remedies. (a) At any time prior to the
Effective Time, the parties hereto, by action taken by or on behalf of the
respective Boards of Directors of the Company, Parent and Purchaser, subject
in the case of the Company to Section 1.04(b), may (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party or (iii)
waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of any party to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of
such party.
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(b) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party. The failure of any party hereto to exercise any rights,
power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy
or to demand such compliance.
ARTICLE IX
Miscellaneous
Section 9.01 Survival of Representations and Warranties. The representations
and warranties made in Articles IV and V shall not survive beyond the
Effective Time. This Section 9.01 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time.
Section 9.02 Entire Agreement; Assignment. This Agreement, together with the
Disclosure Letter and the Confidentiality Agreement, constitutes the entire
agreement between the parties with respect to subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to subject matter hereof. The Agreement
shall not be assigned by any party by operation of law or otherwise without
the prior written consent of the other parties, provided, that Parent or
Purchaser may assign any of their respective rights and obligations to any
direct or indirect Subsidiary of Parent, but no such assignment shall relieve
Parent or Purchaser, as the case may be, of its obligations hereunder.
Section 9.03 Jurisdiction. Each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any New York state court located in the
Borough of Manhattan, City of New York or any Federal court located in such
Borough in the event any dispute arises out of this Agreement or any
transaction contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that it will not bring any
action relating to this Agreement or any transaction contemplated by this
Agreement in any court other than any such court and (d) waives any right to
trial by jury with respect to any action related to or arising out of this
Agreement or any transaction contemplated by this Agreement. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of New York
located in the Borough of Manhattan, City of New York or in any Federal court
located in such Borough, and hereby further irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an
inconvenient forum.
Section 9.04 Validity. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of
any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.
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Section 9.05 Notices. All notices, requests, claims, demands and other
communications hereunder shall be given (and shall be deemed to have been duly
received if given) by hand delivery in writing or by facsimile transmission
with confirmation of receipt, as follows:
if to Parent or Purchaser:
United Technologies Corporation
United Technologies Building
1 Financial Plaza
Hartford, Connecticut 06101
Attention: General Counsel
Facsimile: 860-728-7862
and to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: Christopher E. Austin
Facsimile: 212-225-3999
if to the Company:
Cade Industries, Inc.
2365 Woodlake Drive, Suite 120
Okemos, MI 48864
Attention: Richard A. Lund
Facsimile: 517-347-6185
With a copy to:
Quarles & Brady LLP
411 E. Wisconsin Avenue
Milwaukee, WI 53202-4497
Attention: Conrad G. Goodkind
Facsimile: 414-271-3552
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 9.06 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except in so
far as mandatory provisions of the WBCL apply to the Merger.
Section 9.07 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
Section 9.08 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement except for Section 6.05 (which is intended to be for the benefit of
the Persons referred to therein, and may be enforced by any such Persons).
Section 9.09 Counterparts. This Agreement may be executed in counterparts
(by facsimile or otherwise), each of which shall be deemed to be an original,
but all of which, taken together, shall constitute one and the same agreement.
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Section 9.10 Certain Definitions.
(a) "beneficially owned" or "beneficial ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Exchange Act.
(b) "Material Adverse Effect" shall mean any material and adverse effect on
any of the condition (financial or otherwise), business, properties, assets,
liabilities, results of operations or prospects of the Company and its
Subsidiaries taken as a whole.
(c) "Person" shall mean any individual, corporation, limited liability
company, partnership, association, trust, estate or other entity or
organization.
(d) "Subsidiary" shall mean, when used with reference to an entity, any
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions, or a majority of the outstanding voting
securities of which, are owned directly or indirectly by such entity.
(e) The term "affiliate" shall have the meaning given to such term in Rule
12b-2 under the Exchange Act.
(f) The term "associate" shall have the meaning given to such term in Rule
12b-2 under the Exchange Act.
(g) The term "hereby" shall be deemed to refer to this Agreement in its
entirety, rather than to any Article, Section, or other portion of this
Agreement.
(h) The term "including" shall be deemed to be followed by the phrase
"without limitation."
(i) The term "the transactions contemplated hereby" shall include the making
and consummation of the Offer, the execution of the Shareholder Option
Agreement and the exercise by Parent and Purchaser of the Option and the
acquisition of Shares pursuant thereto and the exercise by Parent or Purchaser
of any other rights thereunder, and consummation of the Merger.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all at or on
the day and year first above written.
UNITED TECHNOLOGIES CORPORATION
By: /s/ Karl J. Kiapek
----------------------------------
Name: Karl J. Kiapek
Title:President & Chief Operating
Officer
SPHERE CORPORATION
By: /s/ Ari Bousbib
----------------------------------
Name: Ari Bousbib
Title:President and Director
CADE INDUSTRIES, INC.
By: /s/ Richard Lund
----------------------------------
Name: Richard Lund
Title:President & CEO
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EXHIBIT A
CONDITIONS TO THE OFFER
Capitalized terms used in this Exhibit A and not otherwise defined herein
shall have the meanings assigned to them in the Agreement to which it is
attached (the "Merger Agreement").
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment, purchase or pay for any Shares tendered in
connection with the Offer and may terminate or, subject to the terms of the
Merger Agreement, amend the Offer, if (i) there shall not be validly tendered
and not properly withdrawn prior to the expiration date for the Offer (the
"Expiration Date") that number of Shares which, together with any Shares
beneficially owned by Purchaser or Parent (including Shares which Purchaser
has the immediate right to acquire under the Shareholder Option Agreement),
represents at least 75% of the total number of outstanding Shares on a fully
diluted basis, (ii) any applicable waiting period under the HSR Act shall not
have expired or been terminated, or (iii) at any time on or after the date of
the Merger Agreement and prior to the Expiration Date, any of the following
conditions exist:
(a) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction,
proposed, sought, promulgated, enacted, entered, enforced, issued, amended
or deemed applicable to Parent, Purchaser, the Company, any other affiliate
of Parent or the Company, the Offer or the Merger, that is reasonably
likely, directly or indirectly, to (1) make the acceptance for payment of,
or payment for or purchase of some or all of the Shares pursuant to the
Offer illegal, or otherwise restrict or prohibit or make materially more
costly the consummation of the Offer or the Merger, (2) result in a
significant delay in or restrict the ability of Purchaser to accept for
payment, pay for or purchase some or all of the Shares pursuant to the
Offer or to effect the Merger, (3) render Purchaser unable to accept for
payment or pay for or purchase some or all of the Shares pursuant to the
Offer, (4) impose material limitations on the ability of Parent, Purchaser
or any of their respective Subsidiaries or affiliates to acquire or hold,
transfer or dispose of, or effectively to exercise all rights of ownership
of, some or all of the Shares including the right to vote the Shares
purchased by it pursuant to the Offer on an equal basis with all other
Shares on all matters properly presented to the Shareholders of the
Company, (5) require the divestiture by Parent, Purchaser or any of their
respective Subsidiaries or affiliates of any Shares, or require Purchaser,
Parent, the Company, or any of their respective Subsidiaries or affiliates
to dispose of or hold separate all or any material portion of their
respective businesses, assets or properties or impose any material
limitations on the ability of any of such entities to conduct their
respective businesses or own such assets, properties or Shares or on the
ability of Parent or Purchaser to conduct the business of the Company and
its Subsidiaries and own the assets and properties of the Company and its
Subsidiaries, (6) impose any material limitations on the ability of Parent,
Purchaser or any of their respective Subsidiaries or affiliates effectively
to control the business or operations of the Company, Parent, Purchaser or
any of their respective Subsidiaries or affiliates or (7) otherwise
materially adversely affect Parent, Purchaser, the Company or any of their
respective Subsidiaries or affiliates, or their business, assets,
liabilities, condition (financial or otherwise), results of operations or
prospects, or the value of the Shares or otherwise make consummation of the
Offer or the Merger unduly burdensome;
(b) there shall have been threatened, instituted or pending any action,
proceeding or counterclaim by or before any Governmental Entity,
challenging the making of the Offer or the acquisition by Purchaser of the
Shares pursuant to the Offer or the consummation of the Merger, or seeking
to obtain any material damages, or seeking to, directly or indirectly,
result in any of the consequences referred to in clauses (1) through (7) of
paragraph (a) above;
(c) there shall have occurred (1) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the United States, (2) the
declaration of any banking moratorium or any suspension of payments in
respect of banks or any limitation (whether or not mandatory) on the
extension of credit by lending institutions in the United States, (3) the
commencement of a war, armed hostilities or any other international or
national calamity involving the
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United States or (4) in the case of any of the foregoing existing at the
time of the execution of the Merger Agreement, a material acceleration or
worsening thereof;
(d) any Person or "group" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than Parent, Purchaser or the Option Grantors or
any of their respective affiliates shall have become the beneficial owner
(as that term is used in Rule 13d-3 under the Exchange Act) of more than
25% of the outstanding Shares;
(e) there shall have occurred any change, condition, event or development
that, individually or in the aggregate, has had or is reasonably likely to
have, a Material Adverse Effect;
(f) the Company shall have breached or failed to comply in any material
respect with any of its obligations, covenants, or agreements under the
Merger Agreement or any representation or warranty of the Company contained
in the Merger Agreement that is qualified as to materiality shall not be
true and correct, or any such representation or warranty that is not so
qualified shall not be true and correct and has had or is reasonably likely
to have a Material Adverse Effect, in each case either as of when made or
at and as of any time thereafter; or
(g) the Merger Agreement shall have been terminated pursuant to its terms
or shall have been amended pursuant to its terms to provide for such
termination or amendment of the Offer;
which, in the good faith judgment of Parent or Purchaser, in any case, and
regardless of the circumstances (excluding any direct action or inaction by
Parent or Purchaser or any of their affiliates which to Parent's and
Purchaser's knowledge is reasonably likely to cause any of the above
conditions to exist) giving rise to any such condition, makes it inadvisable
to proceed with the Offer or with acceptance for payment or payment for
Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted regardless of the circumstances (excluding any direct
action or inaction by Parent or Purchaser or any of their affiliates which to
Parent's or Purchaser's knowledge is reasonably likely to cause such condition
to exist) or waived by Parent or Purchaser in whole or in part at any time or
from time to time in its reasonable discretion subject to the terms and
conditions of the Merger Agreement. The failure of Parent or Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time. Any determination by Parent or
Purchaser concerning the events described above will be final and binding on
all parties.
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ANNEX II
October 20, 1999
Board of Directors
Cade Industries, Inc.
2365 Woodlake Drive, Suite 120
Okemos, MI 48864
Ladies and Gentlemen:
Cade Industries, Inc. (the "Company") proposes to enter into an Agreement
and Plan of Merger (the "Agreement") with United Technologies Corporation
("Parent") and Sphere Corporation, a wholly owned subsidiary of Parent
("Purchaser"). Pursuant to the Agreement: (i) Purchaser will make a tender
offer (the "Offer") for all of the outstanding shares of common stock, par
value $.001 per share ("Common Stock") of the Company at a price of $5.05 per
share in cash (the "Consideration") and (ii) following completion of the
Offer, Purchaser will be merged with and into the Company (the "Merger" and,
together with the Offer, the "Transaction") pursuant to which each issued and
outstanding share of Common Stock (other than Dissenting Shares (as defined in
the Agreement), shares owned by Parent, Purchaser or any subsidiary of Parent,
Purchaser or the Company, and shares held in the Company's treasury) will be
converted solely into the right to receive the Consideration.
You have requested our opinion as to the fairness, from a financial point of
view, of the Consideration to the holders of Common Stock (other than Parent
and its affiliates).
Robert W. Baird & Co. Incorporated ("Baird"), as part of its investment
banking business, is engaged in the evaluation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes.
In conducting our investigation and analysis and in arriving at our opinion
herein, we have reviewed such information and taken into account such
financial and economic factors as we have deemed relevant under the
circumstances. In that connection, we have, among other things: (i) reviewed
certain internal information, primarily financial in nature, including
projections, concerning the business and operations of the Company furnished
to us for purposes of our analysis, as well as publicly available information
including, but not limited to, the Company's recent filings with the
Securities and Exchange Commission; (ii) reviewed the draft Agreement in the
form presented to the Company's Board of Directors; (iii) compared the
historical market prices and trading activity of the Common Stock with those
of certain other publicly traded companies we deemed relevant; (iv) compared
the financial position and operating results of the Company with those of
other publicly traded companies we deemed relevant; and (v) compared the
proposed financial terms of the Transaction with the financial terms of
certain other business combinations we deemed relevant. We have held
discussions with members of the Company's senior management concerning the
Company's historical and current financial condition and operating results, as
well as the future prospects of the Company. We have not been requested to,
and did not, solicit third party indications of interest in acquiring all or
any part of the Company. We have also considered such other information,
financial studies, analyses and investigations and financial, economic and
market criteria which we deemed relevant for the preparation of this opinion.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of all of the financial and other information that was publicly
available or provided to us by or on behalf of the Company, and we have not
been engaged to independently verify any such information. We have assumed,
with your consent, that all material assets and liabilities (contingent or
otherwise, known or unknown) of the Company are as set forth in the Company's
financial statements. We have also assumed, with your consent, that the
financial forecasts examined by us were reasonably prepared on bases
reflecting the best available estimates and good
II-1
<PAGE>
Board of Directors
Cade Industries, Inc.
October 20, 1999
Page 2
faith judgments of the Company's senior management as to the future
performance of the Company. In conducting our review, we have not undertaken
nor obtained an independent evaluation or appraisal of any of the assets or
liabilities (contingent or otherwise) of the Company nor have we made a
physical inspection of the properties or facilities of the Company. Our
opinion necessarily is based upon economic, monetary and market conditions as
they exist and can be evaluated on the date hereof and does not predict or
take into account any changes which may occur, or information which may become
available, after the date hereof.
Our opinion has been prepared at the request and for the information of the
Board of Directors of the Company, and shall not be used for any other purpose
or disclosed to any other party without the prior written consent of Baird;
provided, however, that this letter may be reproduced in full in the Schedule
14D-9 and any Information Statement or Proxy Statement to be provided to the
Company's shareholders in connection with the Transaction. This opinion does
not address the relative merits of the Transaction and any other potential
transactions or business strategies considered by the Company's Board of
Directors and does not constitute a recommendation to any shareholder of the
Company as to how any such shareholder should act with respect to the
Transaction. Baird will receive a fee for rendering this opinion.
In the ordinary course of our business, we may from time to time trade the
securities of the Company or Parent for our own account or the accounts of our
customers and, accordingly, may at any time hold long or short positions in
such securities.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Consideration is fair, from a financial point of view, to
the holders of the Common Stock (other than Parent and its affiliates).
Very truly yours,
Robert W. Baird & Co. Incorporated
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<PAGE>
ANNEX III
DIRECTORS DESIGNATED BY PURCHASER
The following table sets forth the name, present principal occupation or
employment and five-year employment history for each of the directors of the
Company designated by Purchaser. All such directors are citizens of the United
States and their principal business address is United Technologies
Corporation, One Financial Plaza, Hartford CT 06101.
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment;
Name, Citizenship and Material Positions Held During the Past
Current Business Address Age Five Years
------------------------ --- ---------------------------------------
<C> <C> <S>
Chester P. Beach............... 45 Vice President and General Counsel of
Pratt & Whitney Division, United
Technologies Corporation; previously Vice
President and General Counsel of Hamilton
Sundstrand Corporation; former Vice
President, Contracts and Counsel of
Hamilton Standard Division, United
Technologies Corporation; former Vice
President, Contracts Management, Large
Commercial Engines, Pratt & Whitney
Division, United Technologies
Corporation; former Associate Counsel,
Pratt & Whitney Group, United
Technologies Corporation.
Robert H. Harvey............... 49 Vice President, Operations, Pratt &
Whitney Division, United Technologies
Corporation; previously Executive
Director, GM Europe, General Motors
Corporation; previously Director, North
American Operations, General Motors
Corporation; previously Director, North
American Operations, General Motors
Corporation; previously Director,
Suspension Systems, General Motors
Corporation.
Robert F. Leduc................ 42 Executive Vice President, Pratt & Whitney
Division, United Technologies
Corporation; previously Senior Vice
President, Engine Programs, Pratt &
Whitney Division, United Technologies
Corporation; previously Senior Vice
President, Propulsion Systems, Pratt &
Whitney Division, United Technologies
Corporation; previously Director,
Strategic Planning, Pratt & Whitney
Division, United Technologies
Corporation.
Jothi Purushotaman............. 47 Senior Vice President and Chief Financial
Officer of Pratt & Whitney Division,
United Technologies Corporation;
previously Vice President, Controller of
Pratt & Whitney Division, United
Technologies Corporation.
Robert B. Weiner............... 47 Vice President, Engine Services, Pratt &
Whitney Division, United Technologies
Corporation; previously Vice President,
Commercial Overhaul & Repair, Pratt &
Whitney Division, United Technologies
Corporation; previously General Manager,
Turbine Airfoils Product Center, Pratt &
Whitney Division, United Technologies
Corporation; previously General Manager,
Powerplant Production, Pratt & Whitney
Division, United Technologies
Corporation.
</TABLE>
III-1
<PAGE>
ANNEX IV
DISSENTERS' RIGHTS
SUBCHAPTER XIII
SECTIONS 180.1301 THROUGH 180.1331
OF THE
WISCONSIN BUSINESS CORPORATION LAW
180.1301 DEFINITIONS. IN ss. 180.1301 TO 180.1331:
(1) "Beneficial shareholder" means a person who is a beneficial owner of
shares held by a nominee as the shareholder.
(1m) "Business combination" has the meaning given in s. 180.1130(3).
(2) "Corporation" means the issuer corporation or, if the corporate
action giving rise to dissenters' rights under s. 180.1302 is a merger or
share exchange that has been effectuated, the surviving domestic
corporation or foreign corporation of the merger or the acquiring domestic
corporation or foreign corporation of the share exchange.
(3) "Dissenter" means a shareholder or beneficial shareholder who is
entitled to dissent from corporate action under s. 180.1302 and who
exercises that right when and in the manner required by ss. 180.1320 to
180.1328.
(4) "Fair value", with respect to a dissenter's shares other than in a
business combination, means the value of the shares immediately before the
effectuation of the corporate action to which the dissenter objects,
excluding any appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable. "Fair value", with respect to
a dissenter's shares in a business combination, means market value, as
defined in s. 180.1130(9)(a) 1 to 4.
(5) "Interest" means interest from the effectuation date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all of the circumstances.
(6) "Issuer corporation" means a domestic corporation that is the issuer
of the shares held by a dissenter before the corporate action.
HISTORY: 1989 a. 303; 1991 a. 16.
180.1302 RIGHT TO DISSENT.
(1) Except as provided in sub. (4) and s. 180.1008(3), a shareholder or
beneficial shareholder may dissent from, and obtain payment of the fair value
of his or her shares in the event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the issuer corporation is a
party if any of the following applies:
1. Shareholder approval is required for the merger by s. 180.1103 or
by the articles of incorporation.
2. The issuer corporation is a subsidiary that is merged with its
parent under s. 180.1104.
(b) Consummation of a plan of share exchange if the issuer corporation's
shares will be acquired, and the shareholder or the shareholder holding
shares on behalf of the beneficial shareholder is entitled to vote on the
plan.
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(c) Consummation of a sale or exchange of all, or substantially all, of
the property of the issuer corporation other than in the usual and regular
course of business, including a sale in dissolution, but not including any
of the following:
1. A sale pursuant to court order.
2. A sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the
shareholders within one year after the date of sale.
(d) Except as provided in sub. (2), any other corporate action taken
pursuant to a shareholder vote to the extent that the articles of
incorporation, bylaws or a resolution of the board of directors provides
that the voting or nonvoting shareholder or beneficial shareholder may
dissent and obtain payment for his or her shares.
(2) Except as provided in sub. (4) and s. 180.1008(3), the articles of
incorporation may allow a shareholder or beneficial shareholder to dissent
from an amendment of the articles of incorporation and obtain payment of the
fair value of his or her shares if the amendment materially and adversely
affects rights in respect of a dissenter's shares because it does any of the
following:
(a) Alters or abolishes a preferential right of the shares.
(b) Creates, alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares.
(c) Alters or abolishes a preemptive right of the holder of shares to
acquire shares or other securities.
(d) Excludes or limits the right of the shares to vote on any matter or
to cumulate votes, other than a limitation by dilution through issuance of
shares or other securities with similar voting rights.
(e) Reduces the number of shares owned by the shareholder or beneficial
shareholder to a fraction of a share if the fractional share so created is
to be acquired for cash under s. 180.0604.
(3) Notwithstanding sub. (1)(a) to (c), if the issuer corporation is a
statutory close corporation under ss. 180.1801 to 180.1837, a shareholder of
the statutory close corporation may dissent from a corporate action and obtain
payment of the fair value of his or her shares, to the extent permitted under
sub. (1)(d) or (2) or s. 180.1803, 180.1813(l)(d) or (2)(b), 180.1815(3) or
180.1829(1)(c).
(4) Except in a business combination or unless the articles of incorporation
provide otherwise, subs. (1) and (2) do not apply to the holders of shares of
any class or series if the shares of the class or series are registered on a
national securities exchange or quoted on the national association of
securities dealers, inc., automated quotations system on the record date fixed
to determine the shareholders entitled to notice of a shareholders meeting at
which shareholders are to vote on the proposed corporate action.
(5) Except as provided in s. 180.1833, a shareholder or beneficial
shareholder entitled to dissent and obtain payment for his or her shares under
ss. 180.1301 to 180.1331 may not challenge the corporate action creating his
or her entitlement under the action is unlawful or fraudulent with respect to
the shareholder, beneficial shareholder or issuer corporation.
HISTORY: 1989 a. 303; 1991 a. 16.
180.1303 DISSENT BY SHAREHOLDERS AND BENEFICIAL SHAREHOLDERS.
(1) A shareholder may assert dissenters' rights as to fewer than all of the
shares registered in his or her name only if the shareholder dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
he or she asserts dissenters' rights. The rights of a shareholder who under
this subsection asserts dissenters' rights as to fewer than all of the shares
registered in his or her name are determined as if the shares as to which he
or she dissents and his or her other shares were registered in the names of
different shareholders.
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<PAGE>
(2) A beneficial shareholder may assert dissenters' rights as to shares held
on his or her behalf only if the beneficial shareholder does all of the
following:
(a) Submits to the corporation the shareholder's written consent to the
dissent not later than the time that the beneficial shareholder asserts
dissenters' rights.
(b) Submits the consent under par. (a) with respect to all shares of
which he or she is the beneficial shareholder.
HISTORY: 1989 a. 303.
180.1320 NOTICE OF DISSENTERS' RIGHTS.
(1) If proposed corporate action creating dissenters' rights under s.
180.1302 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders and beneficial shareholders are or may be
entitled to assert dissenters' rights, under ss. 180.1301 to 180.1331 and
shall be accompanied by a copy of those sections.
(2) If corporate action creating dissenters' rights under s. 180.1302 is
authorized without a vote of shareholders, the corporation shall notify, in
writing and in accordance with s. 180.0141, all shareholders entitled to
assert dissenters' rights that the action was authorized and send them the
dissenters' notice described in s. 180.1322.
HISTORY: 1989 a. 303.
180.1321 NOTICE OF INTENT TO DEMAND PAYMENT.
(1) If proposed corporate action creating dissenters' rights under s.
180.1302 is submitted to vote at a shareholders' meeting, a shareholder or
beneficial shareholder who wishes to assert dissenters' rights shall do all of
the following:
(a) Deliver to the issuer corporation before the vote is taken written
notice that complies with s. 180.0141 of the shareholder's or beneficial
shareholder's intent to demand payment for his or her shares if the
proposed action is effectuated.
(b) Not vote his or her shares in favor of the proposed action.
(2) A shareholder or beneficial shareholder who fails to satisfy sub. (1) is
not entitled to payment for his or her shares under ss. 180.1301 to 180.1331.
HISTORY: 1989 a. 303.
180.1322 DISSENTERS' NOTICE.
(1) If proposed corporate action creating dissenters' rights under s.
180.1302 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders and beneficial
shareholders who satisfied s. 180.1321.
(2) The dissenters' notice shall be sent no later than 10 days after the
corporate action is authorized at a shareholders' meeting or without a vote of
shareholders, whichever is applicable. The dissenters' notice shall comply
with s. 180.0141 and shall include or have attached all of the following:
(a) A statement indicating where the shareholder or beneficial
shareholder must send the payment demand and where and when certificates
for certificated shares must be deposited.
(b) For holders of uncertificated shares, an explanation of the extent to
which transfer of the shares will be restricted after the payment demand is
received.
(c) A form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action and that requires the shareholder or beneficial
shareholder asserting dissenters' rights to certify whether he or she
acquired beneficial ownership of the shares before that date.
IV-3
<PAGE>
(d) A date by which the corporation must receive the payment demand,
which may not be fewer than 30 days nor more than 60 days after the date on
which the dissenters' notice is delivered.
(e) A copy of ss. 180.1301 to 180.1331.
HISTORY: 1989 a. 303.
180.1323 DUTY TO DEMAND PAYMENT.
(1) A shareholder or beneficial shareholder who is sent a dissenters' notice
described in s. 180.1322, or a beneficial shareholder whose shares are held by
a nominee who is sent a dissenters' notice described in s. 180.1322, must
demand payment in writing and certify whether he or she acquired beneficial
ownership of the shares before the date specified in the dissenters' notice
under s. 180.1322(2)(c). A shareholder or beneficial shareholder with
certificated shares must also deposit his or her certificates in accordance
with the terms of the notice.
(2) A shareholder or beneficial shareholder with certificated shares who
demands payment and deposits his or her share certificates under sub. (1)
retains all other rights of a shareholder or beneficial shareholder until
these rights are canceled or modified by the effectuation of the corporate
action.
(3) A shareholder or beneficial shareholder with certificated or
uncertificated shares who does not demand payment by the date set in the
dissenters' notice, or a shareholder or beneficial shareholder with
certificated shares who does not deposit his or her share certificates where
required and by the date set in the dissenters' notice, is not entitled to
payment for his or her shares under ss. 180.1301 to 180.1331.
HISTORY: 1989 a. 303.
180.1324 RESTRICTIONS ON UNCERTIFICATED SHARES.
(1) The issuer corporation may restrict the transfer of uncertificated
shares from the date that the demand for payment for those shares is received
until the corporate action is effectuated or the restrictions released under
s. 180.1326.
(2) The shareholder or beneficial shareholder who asserts dissenters' rights
as to uncertificated shares retains all of the rights of a shareholder or
beneficial shareholder, other than those restricted under sub. (1), until
these rights are canceled or modified by the effectuation of the corporate
action.
HISTORY: 1989 a. 303.
180.1325 PAYMENT.
(1) Except as provided in s. 180.1327, as soon as the corporate action is
effectuated or upon receipt of a payment demand, whichever is later, the
corporation shall pay each shareholder or beneficial shareholder who has
complied with s. 180.1323 the amount that the corporation estimates to be the
fair value of his or her shares, plus accrued interest.
(2) The payment shall be accompanied by all of the following:
(a) The corporation's latest available financial statements, audited and
including footnote disclosure if available, but including not less than a
balance sheet as of the end of a fiscal year ending not more than 16 months
before the date of payment, an income statement for that year, a statement
of changes in shareholders' equity for that year and the latest available
interim financial statements, if any.
(b) A statement of the corporation's estimate of the fair value of the
shares.
(c) An explanation of how the interest was calculated.
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<PAGE>
(d) A statement of the dissenter's right to demand payment under s.
180.1328 if the dissenter is dissatisfied with the payment.
(e) A copy of ss. 180.1301 to 180.1331.
HISTORY: 1989 a. 303.
180.1326 FAILURE TO TAKE ACTION.
(1) If an issuer corporation does not effectuate the corporate action within
60 days after the date set under s. 180.1322 for demanding payment, the issuer
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the issuer corporation effectuates the corporate action, the
corporation shall deliver a new dissenters' notice under s. 180.1322 and
repeat the payment demand procedure.
HISTORY: 1989 a. 303.
180.1327 AFTER-ACQUIRED SHARES.
(1) A corporation may elect to withhold payment required by s. 180.1325 from
a dissenter unless the dissenter was the beneficial owner of the shares before
the date specified in the dissenters' notice under s. 180.1322(2)(c) as the
date of the first announcement to news media or to shareholders of the terms
of the proposed corporate action.
(2) To the extent that the corporation elects to withhold payment under sub.
(1) after effectuating the corporate action, it shall estimate the fair value
of the shares, plus accrued interest, and shall pay this amount to each
dissenter who agrees to accept it in full satisfaction of his or her demand.
The corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated,
and a statement of the dissenter's right to demand under s. 180.1328 if the
dissenter is dissatisfied with the offer.
HISTORY: 1989 a. 303.
180.1328 PROCEDURE IF DISSENTER DISSATISFIED WITH PAYMENT OR OFFER.
(1) A dissenter may, in the manner provided in sub. (2), notify the
corporation of the dissenter's estimate of the fair value of his or her shares
and amount of interest due, and demand payment of his or her estimate, less
any payment received under s. 180.1325, or reject the offer under s. 180.1327
and demand payment of the fair value of his or her shares and interest due, if
any of the following applies:
(a) The dissenter believes that the amount paid under s. 180.1325 or
offered under s. 180.1327 is less than the fair value of his or her shares
or that the interest due is incorrectly calculated.
(b) The corporation fails to make payment under s. 180.1325 within 60
days after the date set under s. 180.1322 for demanding payment.
(c) The issuer corporation, having failed to effectuate the corporate
action, does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within 60 days after the date
set under s. 180.1322 for demanding payment.
(2) A dissenter waives his or her right to demand payment under this section
unless the dissenter notifies the corporation of his or her demand under sub.
(1) in writing within 30 days after the corporation made or offered payment
for his or her shares. The notice shall comply with s. 180.0141.
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<PAGE>
HISTORY: 1989 a. 303.
180.1330 COURT ACTION.
(1) If a demand for payment under s. 180.1328 remains unsettled, the
corporation shall bring a special proceeding within 60 days after receiving
the payment demand under s. 180.1328 and petition the court to determine the
fair value of the shares and accrued interest. If the corporation does not
bring the special proceeding within the 60-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(2) The corporation shall bring the special proceeding in the circuit court
for the county where its principal office or, if none in this state, its
registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall bring the special
proceeding in the county in this state in which was located the registered
office of the issuer corporation that merged with or whose shares were
acquired by the foreign corporation.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the special proceeding.
Each party to the special proceeding shall be served with a copy of the
petition as provided in s. 801.14.
(4) The jurisdiction of the court in which the special proceeding is brought
under sub. (2) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the
question of fair value. An appraiser has the power described in the order
appointing him or her or in any amendment to the order. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the special proceeding is entitled to
judgment for any of the following:
(a) The amount, if any, by which the court finds the fair value of his or
her shares, plus interest, exceeds the amount paid by the corporation.
(b) The fair value, plus accrued interest, of his or her shares acquired
on or after the date specified in the dissenter's notice under s.
180.1322(2)(c), for which the corporation elected to withhold payment under
s. 180.1327.
HISTORY: 1989 a. 303.
180.1331 COURT COSTS AND COUNSEL FEES.
(1) (a) Notwithstanding ss. 814.01 to 814.04, the court in a special
proceeding brought under s. 180.1330 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court and shall assess the costs against the corporation,
except as provided in par. (b).
(b) Notwithstanding ss. 814.01 and 814.04, the court may assess costs
against all or some of the dissenters, in amounts that the court finds to
be equitable, to the extent that the court finds the dissenters acted
arbitrarily, vexatiously or not in good faith in demanding payment under s.
180.1328.
(2) The parties shall bear their own expenses of the proceeding, except
that, notwithstanding ss. 814.01 to 814.04, the court may also assess the fees
and expenses of counsel and experts for the respective parties, in amounts
that the court finds to be equitable, as follows:
(a) Against the corporation and in favor of any dissenter if the court
finds that the corporation did not substantially comply with ss. 180.1320
to 180.1328.
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<PAGE>
(b) Against the corporation or against a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by this chapter.
(3) Notwithstanding ss. 814.01 to 814.04, if the court finds that the
services of counsel and experts for any dissenter were of substantial benefit
to other dissenters similarly situated, the court may award to these counsel
and experts reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
HISTORY: 1989 a. 303.
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