<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
FIRST ALERT, INC.
(NAME OF SUBJECT COMPANY)
SENTINEL ACQUISITION CORP.
SUNBEAM CORPORATION
(BIDDERS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
31846N 10 2
------------------------
(CUSIP NUMBER OF CLASS OF SECURITIES)
DAVID C. FANNIN, ESQ.
SUNBEAM CORPORATION
1615 SOUTH CONGRESS AVENUE
SUITE 200
DELRAY BEACH, FL 33445
TELEPHONE: (561) 243-2100
FACSIMILE: (561) 243-2100
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
Copy to:
BLAINE V. FOGG, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NY 10022
TELEPHONE: (212) 735-3000
FACSIMILE: (212) 735-2000
------------------------
CALCULATION OF FILING FEE
TRANSACTION VALUATION* $137,890,252 AMOUNT OF FILING FEE $27,579
* Estimated for purposes of calculating the amount of the filing fee only. This
amount assumes the purchase of 26,264,810 shares of common stock, $.01 par
value (the 'Shares'), of First Alert, Inc. at a price of $5.25 per Share in
cash. Such number of Shares represents the 24,335,112 Shares outstanding as
of March 5, 1998 and assumes the issuance prior to the consummation of the
Offer of 1,929,698 Shares upon the exercise of outstanding options. The
amount of the filing fee calculated in accordance with Regulation 240.0-11 of
the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent
of the value of the transaction.
/ / Check box if any part of the fee is offset as provided by Rule 0-11 (a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Not applicable.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
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<PAGE>
CUSIP NO. 31846N 10 2
<TABLE>
<S> <C>
1. Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Sentinel Acquisition Corp.
2. Check the Appropriate Box if a Member of a Group (a) / / (b) / /
3. SEC Use only
4. Source of Funds
AF
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Item 2(e) or 2(f) / /
6. Citizenship or Place of Organization
Delaware
7. Aggregate Amount Beneficially Owned by Each Reporting Person
none
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares / /
9. Percent of Class Represented by Amount in Row (7)
10. Type of Reporting Person
CO
2
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CUSIP NO. 31846N 10 2
1. Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Sunbeam Corporation
2. Check the Appropriate Box if a Member of a Group (a) / / (b) / /
3. SEC Use only
4. Source of Funds
BK/OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(e) or 2(f) / /
6. Citizenship or Place of Organization
Delaware
7. Aggregate Amount Beneficially Owned By Each Reporting Person
none
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares / /
9. Percent of Class Represented by Amount in Row (7)
10. Type of Reporting Person
CO
3
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TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this 'Statement') relates to
the offer by Sentinel Acquisition Corp., a Delaware corporation ('Purchaser')
and a wholly owned indirect subsidiary of Sunbeam Corporation, a Delaware
corporation ('Parent'), to purchase all of the outstanding shares of common
stock, par value $.01 per share (the 'Shares'), of First Alert, Inc. a Delaware
corporation (the 'Company'), at $5.25 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated March 6, 1998 (the 'Offer to Purchase'), a copy of which
is attached hereto as Exhibit (a)(1), and in the related Letter of Transmittal,
a copy of which is attached hereto as Exhibit (a)(2) (which together constitute
the 'Offer').
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is First Alert, Inc. and the address of
its principal executive offices is 3901 Liberty Street Road, Aurora, IL 60504.
The telephone number of the Company at such location is (630) 851-7330.
(b) The information set forth in the 'INTRODUCTION' of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in 'Section 6--Price Range of the Shares;
Dividends on the Shares' of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by Purchaser and Parent. The
information set forth in the 'INTRODUCTION' and 'Section 9--Certain Information
Concerning Parent and Purchaser' of the Offer to Purchase is incorporated herein
by reference. The name, business address, present principal occupation or
employment, the material occupations, positions, offices or employments for the
past five years and citizenship of each director and executive officer of Parent
and Purchaser and the name, principal business and address of any corporation or
other organization in which such occupations, positions, offices and employments
are or were carried on are set forth in Schedule I of the Offer to Purchase and
incorporated herein by reference.
(e)-(f) During the last five years neither Purchaser nor Parent nor, to the
best knowledge of Purchaser and Parent, any of the persons listed in Schedule I
of the Offer to Purchase have been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or was a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction as a result of
which any such person was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons listed in Schedule I of the Offer to Purchase have entered into any
transaction with the Company, or any of the Company's affiliates which are
corporations, since the commencement of the Company's third full fiscal year
preceding the date of this Statement, the aggregate amount of which was equal to
or greater than one percent of the consolidated revenues of the Company for (i)
the fiscal year in which such transaction occurred or (ii) the portion of the
current fiscal year which has occurred if the transaction occurred in such year.
(a)(2) Other than the transactions described in Item 3(b) below, neither
Purchaser nor Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons listed in Schedule I of the Offer to Purchase have entered into any
transaction since the commencement of the Company's third full fiscal year
preceding the date of this Statement with the executive officers, directors or
affiliates of the Company which are not corporations, in which the aggregate
amount involved in such transaction or in a series of similar transactions,
including all periodic installments in the case of any lease or other agreement
providing for periodic payments or installments, exceeded $40,000.
4
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(b) The information set forth in the 'INTRODUCTION,' 'Section 9--Certain
Information Concerning Parent and Purchaser,' 'Section 11--Background of the
Offer; Purpose of the Offer and the Merger; The Merger Agreement and Certain
Other Agreements' and 'Section 12--Plans for the Company; Other Matters' of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in 'Section 10--Source and Amount of
Funds' of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
IITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the 'INTRODUCTION,' 'Section
11--Background of the Offer; Purpose of the Offer and the Merger; The Merger
Agreement and Certain Other Agreements' and 'Section 12-- Plans for the Company;
Other Matters' of the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in 'Section 7--Effect of the Offer on the
Market for the Shares; Stock Listing; Exchange Act Registration; Margin
Regulations' of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in 'Section 9--Certain Information
Concerning Parent and Purchaser' and 'Section 11--Background of the Offer;
Purpose of the Offer and the Merger; The Merger Agreement and Certain Other
Agreements' of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the 'INTRODUCTION,' 'Section 10--Source and
Amount of Funds,' 'Section 11--Background of the Offer; Purpose of the Offer and
the Merger; The Merger Agreement and Certain Other Agreements,' 'Section
12--Plans for the Company; Other Matters' and 'Section 16--Fees and Expenses' of
the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in 'Section 16--Fees and Expenses' of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in 'Section 9--Certain Information Concerning
Parent and Purchaser' of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Purchaser or Parent, or to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I of the Offer to Purchase, and the
Company, or any of its executive officers, directors, controlling persons or
subsidiaries.
(b)-(c) The information set forth in the 'INTRODUCTION,' 'Section 14--
Conditions to the Offer' and 'Section 15--Certain Legal Matters' of the Offer to
Purchase is incorporated herein by reference.
(d) The information set forth in 'Section 7--Effect of the Offer on the
Market for the Shares; Stock Listing; Exchange Act Registration; Margin
Regulations' and 'Section 15--Certain Legal Matters' of the Offer to Purchase is
incorporated herein by reference.
5
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(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated March 6, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Press Release of Parent dated March 2, 1998.
(a)(8) Press Release of Parent dated March 9, 1998.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of February 28, 1998, by and
among Parent, Purchaser and the Company.
(c)(2) Stock Sale Agreement, dated as of February 28, 1998, by and among
Parent, Purchaser, Thomas H. Lee Equity Partners, L.P. and certain other
stockholders of the Company listed therein.
(c)(3) Confidentiality Agreement, dated as of February 16, 1998, by and
between Parent and Thomas H. Lee Company, on behalf of the Company.
(d) None.
(e) Not applicable.
(f) None.
6
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: March 6, 1998
SENTINEL ACQUISITION CORP.
BY: /s/ David C. Fannin
--------------------------------
NAME: DAVID C. FANNIN
TITLE: Executive Vice President and
General Counsel
SUNBEAM CORPORATION
BY: /s/ David C. Fannin
--------------------------------
NAME: DAVID C. FANNIN
TITLE: Executive Vice President and
General Counsel
7
<PAGE>
INDEX TO EXHIBITS
</TABLE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE NO.
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<S> <C> <C>
(a)(1) -- Offer to Purchase, dated March 6, 1998.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Notice of Guaranteed Delivery.
(a)(4) -- Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) -- Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) -- Press Release of Parent dated March 2, 1998.
(a)(8) -- Press Release of Parent dated March 9, 1998.
(c)(1) -- Agreement and Plan of Merger, dated as of February 28,
1998, by and among Parent, Purchaser and the Company.
(c)(2) -- Stock Sale Agreement, dated as of February 28, 1998, by
and among Parent, Purchaser, Thomas H. Lee Equity
Partners, L.P. and certain other stockholders of the
Company listed therein.
(c)(3) -- Confidentiality Agreement, dated as of February 16, 1998,
by and and between Parent and Thomas H. Lee Company, on
behalf of the Company.
</TABLE>
8
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FIRST ALERT, INC.
AT
$5.25 NET PER SHARE
BY
SENTINEL ACQUISITION CORP.,
A WHOLLY OWNED INDIRECT SUBSIDIARY OF
SUNBEAM CORPORATION
------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED.
------------------------
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED AS OF
FEBRUARY 28, 1998 (THE 'MERGER AGREEMENT'), BY AND AMONG SUNBEAM CORPORATION
('PARENT'), SENTINEL ACQUISITION CORP. AND FIRST ALERT, INC. (THE 'COMPANY').
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN) AND HAS DETERMINED
THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED
AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES
WHICH, WHEN ADDED TO SHARES BENEFICIALLY OWNED BY PARENT (IF ANY), REPRESENTS AT
LEAST A MAJORITY OF THE SHARES OUTSTANDING (ASSUMING EXERCISE OF ALL OUTSTANDING
OPTIONS) ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT. THE OFFER IS ALSO SUBJECT
TO THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14.
------------------------
IMPORTANT
Any stockholder who desires to tender all or any portion of such
stockholder's Shares (as defined herein) should either (i) complete and sign the
Letter of Transmittal (or facsimile thereof) in accordance with the instructions
in the Letter of Transmittal, have such stockholder's signature thereon
guaranteed if required by Instruction 1 to the Letter of Transmittal, mail or
deliver the Letter of Transmittal (or a facsimile thereof) and any other
required documents to the Depositary and either deliver the certificates for
such Shares to the Depositary or tender such Shares pursuant to the procedures
for book-entry transfer set forth in Section 3 or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such stockholder. Any stockholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee to tender such Shares.
A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, or who cannot
deliver all required documents to the Depositary prior to the expiration of the
Offer, may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be directed to the Information Agent or to the
Dealer Manager at their respective addresses and telephone numbers set forth on
the back cover of this Offer to Purchase. A stockholder also may contact
brokers, dealers, commercial banks or trust companies for assistance concerning
the Offer.
------------------------
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO. INCORPORATED
March 6, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
INTRODUCTION............................................................................................... 1
THE OFFER.................................................................................................. 3
1. Terms of the Offer................................................................................... 3
2. Acceptance for Payment and Payment................................................................... 4
3. Procedure for Tendering Shares....................................................................... 5
4. Withdrawal Rights.................................................................................... 7
5. Certain Federal Income Tax Consequences.............................................................. 8
6. Price Range of the Shares; Dividends on the Shares................................................... 8
7. Effect of the Offer on the Market for the Shares; Stock Listing; Exchange Act Registration;
Margin Regulations................................................................................... 9
8. Certain Information Concerning the Company........................................................... 10
9. Certain Information Concerning Parent and Purchaser.................................................. 11
10. Source and Amount of Funds........................................................................... 13
11. Background of the Offer; Purpose of the Offer and the Merger; The Merger Agreement and
Certain Other Agreements............................................................................. 13
12. Plans for the Company; Other Matters................................................................. 23
13. Dividends and Distributions.......................................................................... 25
14. Conditions to the Offer.............................................................................. 25
15. Certain Legal Matters................................................................................ 27
16. Fees and Expenses.................................................................................... 29
17. Miscellaneous........................................................................................ 29
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER...................... I-1
</TABLE>
<PAGE>
To the Holders of Common Stock of
FIRST ALERT, INC.:
INTRODUCTION
Sentinel Acquisition Corp., a Delaware corporation ('Purchaser') and a
wholly owned indirect subsidiary of Sunbeam Corporation, a Delaware corporation
('Parent'), hereby offers to purchase all outstanding shares of common stock,
par value $.01 per share (the 'Shares'), of First Alert, Inc., a Delaware
corporation (the 'Company'), at a price of $5.25 per Share (the 'Offer Price'),
net to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the 'Offer').
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the sale of Shares pursuant to the Offer.
Purchaser will pay all fees and expenses of Morgan Stanley & Co. Incorporated
('Morgan Stanley'), which is acting as the Dealer Manager (the 'Dealer
Manager'), The Bank of New York, which is acting as the Depositary (the
'Depositary') and Hill & Knowlton, Inc. as Information Agent (the 'Information
Agent'), incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE 'COMPANY BOARD') HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, AND HAS DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF
SHARES AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
Salomon Brothers Inc and Smith Barney Inc. (collectively doing business as
'Salomon Smith Barney') and NationsBanc Montgomery Securities LLC each has
delivered to the Company Board its opinion, each dated as of February 28, 1998
(the 'Financial Advisors Opinions'), to the effect that, as of such date and
based upon and subject to certain matters stated therein, the consideration to
be received by the holders of Shares pursuant to the Merger Agreement is fair
from a financial point of view to such holders. The full text of the Financial
Advisors Opinions are attached as exhibits to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the 'Schedule 14D-9'),
which has been filed by the Company with the Securities and Exchange Commission
(the 'Commission') in connection with the Offer and which is being mailed to
holders of Shares herewith. Holders of Shares are urged to, and should, read the
Financial Advisors Opinions carefully in their entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES (THE 'MINIMUM SHARES') WHICH, WHEN ADDED TO THE NUMBER OF SHARES (IF
ANY), BENEFICIALLY OWNED BY PARENT, REPRESENTS AT LEAST A MAJORITY OF THE SHARES
OUTSTANDING (ASSUMING EXERCISE OF ALL OUTSTANDING OPTIONS) ON THE DATE SHARES
ARE ACCEPTED FOR PAYMENT (THE 'MINIMUM CONDITION'). See Section 14. The Company
has informed Purchaser that, as of February 28, 1998, there were (i) 24,335,112
Shares issued and outstanding and (ii) 1,929,698 Shares issuable pursuant to the
exercise of options. The Merger Agreement provides, among other things, that the
Company will not, without the prior written consent of Parent, issue any
additional Shares (except upon the exercise of outstanding options). Based on
the foregoing and assuming the issuance of 1,929,698 Shares issuable pursuant to
the exercise of outstanding options, Purchaser believes that the Minimum
Condition will be satisfied if 13,132,406 Shares are validly tendered and not
withdrawn prior to the expiration of the Offer.
The purpose of the Offer is to enable Parent, through Purchaser, to acquire
control of, and the entire interest in, the Company. The Offer is being made
pursuant to an Agreement and Plan of Merger, dated as of February 28, 1998 (the
'Merger Agreement'), by and among Parent, Purchaser and the Company. Pursuant to
the Merger Agreement and the Delaware General Corporation Law (the 'DGCL'), as
soon as practicable after the completion of the Offer and satisfaction or
waiver, if permissible, of all conditions, Purchaser, or a wholly
1
<PAGE>
owned subsidiary of Purchaser, will be merged with and into the Company (the
'Merger') and the Company will be the surviving corporation in the Merger (the
'Surviving Corporation'). At the effective time of the Merger (the 'Effective
Time'), each Share then outstanding (other than Shares held by (i) the Company
or any of its subsidiaries, (ii) Parent or any of its subsidiaries including the
Purchaser and (iii) stockholders who properly perfect their dissenters' rights
under the DGCL) will be converted into the right to receive $5.25 in cash or any
higher price per Share paid in the Offer (the 'Merger Consideration'), without
interest. The Merger Agreement is more fully described in Section 11.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement, if required by applicable law and the Company's Restated
Certificate of Incorporation (the 'Certificate of Incorporation'). See Section
14. Under the DGCL and pursuant to the Certificate of Incorporation, the
affirmative vote of the holders of a majority of the outstanding Shares is the
only vote of any class or series of the Company's capital stock that may be
necessary to approve the Merger Agreement and the Merger.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a 'short-form merger'). In the event
that Purchaser acquires in the aggregate at least 90% of the outstanding Shares
pursuant to the Offer or otherwise, then, at the election of Parent, a
short-form merger could be effected without any further approval of the Company
Board or the stockholders of the Company. In the Merger Agreement, Parent,
Purchaser and the Company have agreed that, notwithstanding that all conditions
to the Offer are satisfied or waived as of the scheduled Expiration Date,
Purchaser may extend the Offer for a period not to exceed ten business days,
subject to certain conditions, if the Shares tendered pursuant to the Offer are
less than 90% of the outstanding Shares. Even if Purchaser does not own 90% of
the outstanding Shares following consummation of the Offer, Parent or Purchaser
could seek to purchase additional shares in the open market or otherwise in
order to reach the 90% threshold and employ a short-form merger. The per share
consideration paid for any Shares so acquired may be greater or less than the
Offer Price. Parent presently intends to effect a short-form merger, if
permitted to do so under the DGCL, pursuant to which Purchaser will be merged
with and into the Company. See Section 12.
Pursuant to the Merger Agreement, following the purchase of Shares in the
Offer, Parent has the right to designate directors on the Company Board and
Parent intends to fully exercise that right. See Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
2
<PAGE>
THE OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, Purchaser will
accept for payment and pay for all Shares validly tendered, and not withdrawn,
prior to the Expiration Date. The term 'Expiration Date' shall mean 12:00
Midnight, New York City time, on Thursday, April 2, 1998 (the 'Initial
Expiration Date'), unless and until Purchaser, in accordance with the terms of
the Merger Agreement, shall have extended the period of time for which the Offer
is open, in which event the term 'Expiration Date' shall mean the latest time
and date at which the Offer, as so extended by Purchaser, shall expire. In the
Merger Agreement, Parent and Purchaser have agreed that if all conditions to
Purchaser's obligation to accept for payment and pay for Shares pursuant to the
Offer are not satisfied on the Initial Expiration Date, Purchaser shall extend
the Offer through April 30, 1998 and may, in its sole discretion, extend the
Offer for additional periods; provided, however, that Purchaser shall not extend
the Offer beyond June 1, 1998.
The Offer is conditioned upon the satisfaction of the Minimum Condition,
the expiration or termination of all waiting periods imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the 'HSR
Act'), and the other conditions set forth in Section 14. If such conditions are
not satisfied prior to the Expiration Date, Purchaser reserves the right,
subject to the terms of the Merger Agreement and subject to complying with
applicable rules and regulations of the Commission, to (i) decline to purchase
any Shares tendered in the Offer and terminate the Offer and return all tendered
Shares to the tendering stockholders, (ii) waive any or all conditions to the
Offer and, to the extent permitted by applicable law, purchase all Shares
validly tendered, (iii) extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain all Shares
which have been tendered during the period or periods for which the Offer is
extended or (iv) subject to the next sentence, amend the Offer. The Merger
Agreement provides that Purchaser will not decrease the Offer Price, decrease
the number of Shares sought in the Offer, amend any other condition to the Offer
in any manner adverse to the holders of the Shares or impose additional
conditions to the Offer without the written consent of the Company.
The Merger Agreement requires Purchaser to accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer if all
conditions to the Offer are satisfied on the Expiration Date. However, if,
immediately prior to the Initial Expiration Date, all conditions to the Offer
are satisfied but the number of Shares tendered and not withdrawn pursuant to
the Offer constitutes less than 90% of the Shares outstanding, Purchaser may
extend the Offer for a period not to exceed ten business days. As used in this
Offer to Purchase, 'business day' has the meaning set forth in Rule 14d-1 under
the Exchange Act.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, the announcement in the
case of an extension to be issued no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of Rule 14d-4(c) under the
Securities Exchange Act of 1934, as amended (the 'Exchange Act'). Without
limiting the obligation of Purchaser under such Rule or the manner in which
Purchaser may choose to make any public announcement, Purchaser currently
intends to make announcements by issuing a press release to the Dow Jones News
Service.
If Purchaser extends the Offer, or if Purchaser (whether before or after
its acceptance for payment of Shares) is delayed in its purchase of, or payment
for, Shares or is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may retain tendered Shares on behalf of Purchaser, and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to withdrawal
rights as described in Section 4. However, the ability of Purchaser to delay the
payment for Shares which Purchaser has accepted for payment is limited by Rule
14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by, or on behalf of,
holders of securities promptly after the termination or withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or
3
<PAGE>
information. In a public release, the Commission has stated that in its view an
offer must remain open for a minimum period of time following a material change
in the terms of the Offer and that waiver of a material condition, such as the
Minimum Condition, is a material change in the terms of the Offer. The release
states that an offer should remain open for a minimum of five business days from
the date a material change is first published, or sent or given to security
holders and that, if material changes are made with respect to information not
materially less significant than the offer price and the number of shares being
sought, a minimum of ten business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment. If, prior to the Expiration Date, Purchaser increases the
consideration offered to holders of Shares pursuant to the Offer, such increased
consideration will be paid to all holders whose Shares are purchased in the
Offer whether or not such Shares were tendered prior to such increase.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed by Purchaser to record holders of Shares and will be furnished by
Purchaser to brokers, dealers, banks and similar persons whose names, or the
names of whose nominees, appear on the stockholder lists or, if applicable, who
are listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions to the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for, promptly
after the Expiration Date, all Shares validly tendered prior to the Expiration
Date and not properly withdrawn in accordance with Section 4. All determinations
concerning the satisfaction of such terms and conditions will be within
Purchaser's sole discretion, which determinations will be final and binding. See
Sections 1 and 14. Subject to the Merger Agreement, Purchaser expressly reserves
the right, in its sole discretion, to delay acceptance for payment of, or
payment for, Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to a
bidder's obligation to pay the consideration offered or return the securities
deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or a timely Book EntryConfirmation (as defined below) with respect
thereto), (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message (as defined below), and (iii)
any other documents required by the Letter of Transmittal. The per share
consideration paid to any holder of Shares pursuant to the Offer will be the
highest per share consideration paid to any other holder of such Shares pursuant
to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if and when Purchaser gives oral or written notice to the Depositary
of Purchaser's acceptance for payment of such Shares. Payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY PURCHASER FOR THE SHARES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If Purchaser is delayed in its acceptance for payment of, or payment for,
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to Purchaser's rights under the
Offer (including such rights as are set forth in Sections 1 and 14) (but subject
to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent tendering stockholders are entitled to
exercise, and duly exercise, withdrawal rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates representing Shares not tendered or not accepted for
4
<PAGE>
purchase will be returned to the tendering stockholder, or such other person as
the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3, such Shares will be credited to such account
maintained at a Book-Entry Transfer Facility as the tendering stockholder shall
specify in the Letter of Transmittal, as promptly as practicable following the
expiration, termination or withdrawal of the Offer. If no such instructions are
given with respect to Shares delivered by book-entry transfer, any such Shares
not tendered or not purchased will be returned by crediting the account at the
Book-Entry Transfer Facility designated in the Letter of Transmittal as the
account from which such Shares were delivered.
Purchaser reserves the right to transfer or assign, in whole or in part, to
Parent or to any direct or indirect wholly owned subsidiary of Parent, the right
to purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message (as defined below), and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received by
the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined below) received by the Depositary), in each
case prior to the Expiration Date, or (ii) the tendering stockholder must comply
with the guaranteed delivery procedures set forth below.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company and the Philadelphia Depository Trust Company (each, a
'Book-Entry Transfer Facility' and, collectively, the 'Book-Entry Transfer
Facilities') for purposes of the Offer within two (2) business days after the
date of this Offer to Purchase. Any financial institution that is a participant
in the Book-Entry Transfer Facility's systems may make book-entry delivery of
Shares by causing the Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account in accordance with the Book-Entry Transfer Facility's
procedure for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a 'Book-Entry Confirmation.' DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term 'Agent's Message' means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any
5
<PAGE>
participant in any of the Book Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered therewith and such registered holder has not completed either the box
entitled 'Special Delivery Instructions' or the box entitled 'Special Payment
Instructions' on the Letter of Transmittal or (ii) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an 'Eligible Institution' and, collectively, 'Eligible Institutions'). In
all other cases, all signatures on Letters of Transmittal must be guaranteed by
an Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents, are received by the Depositary within
three trading days after the date of execution of such Notice of Guaranteed
Delivery. A 'trading day' is any day on which the Nasdaq National Market
(the 'Nasdaq National Market'), operated by the National Association of
Securities Dealers, Inc. (the 'NASD'), is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY PURCHASER FOR THE SHARES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder will
irrevocably appoint designees of Parent as such stockholder's attorneys-in-fact
and proxies in the manner set forth in the Letter of Transmittal, each with full
power of substitution, to the full extent of such stockholder's rights with
respect to the Shares tendered by such stockholder and accepted for payment by
Purchaser and with respect to any and all non-cash dividends, distributions,
rights, other Shares or other securities issued or issuable in respect of such
Shares on or after February 28, 1998 (collectively, 'Distributions'). All such
proxies will be considered coupled with an interest in the tendered Shares. Such
appointment will be effective if and when, and only to the extent that,
Purchaser accepts for
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<PAGE>
payment Shares tendered by such stockholder as provided herein. All such powers
of attorney and proxies will be irrevocable and will be deemed granted in
consideration of the acceptance for payment of Shares tendered in accordance
with the terms of the Offer. Upon such appointment, all prior powers of
attorney, proxies and consents given by such stockholder with respect to such
Shares (and any and all Distributions) will, without further action, be revoked
and no subsequent powers of attorney, proxies, consents or revocations may be
given by such stockholder (and, if given, will not be deemed effective). The
designees of Parent will thereby be empowered to exercise all voting and other
rights with respect to such Shares (and any and all Distributions), including,
without limitation, in respect of any annual or special meeting of the Company's
stockholders (and any adjournment or postponement thereof), actions by written
consent in lieu of any such meeting or otherwise, as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper. Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares,
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares (and any and all Distributions), including voting at any
meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by Purchaser, in its sole discretion, which determination
will be final and binding. Purchaser reserves the absolute right to reject any
or all tenders of any Shares determined by it not to be in proper form or the
acceptance for payment of which, or payment for which, may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right, in
its sole discretion, subject to the provisions of the Merger Agreement, to waive
any of the conditions of the Offer or any defect or irregularity in the tender
of any Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects or irregularities
relating thereto have been cured or waived. None of Purchaser, Parent, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Subject to the terms of the Merger Agreement, Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by Purchaser pursuant to
the Offer, may also be withdrawn at any time after May 4, 1998.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedures
for book-entry transfer as set forth in Section 3, any notice of withdrawal must
also specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will thereafter
be deemed not validly tendered for purposes of the Offer. However, withdrawn
Shares may be retendered by again following one of the procedures described in
Section 3 any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
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5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger relevant to beneficial holders of
Shares whose Shares are tendered and accepted for payment pursuant to the Offer
or whose Shares are converted to cash in the Merger. The discussion is for
general information only and does not purport to consider all aspects of federal
income taxation that might be relevant to beneficial holders of Shares. The
discussion is based on current provisions of the Internal Revenue Code of 1986,
as amended (the 'Code'), existing, proposed and temporary regulations
promulgated thereunder, rulings, administrative pronouncements and judicial
decisions, changes to which could materially affect the tax consequences
described herein and could be made on a retroactive basis. The discussion
applies only to beneficial holders of Shares in whose hands Shares are capital
assets within the meaning of Section 1221 of the Code and may not apply to
beneficial holders (i) who acquired their Shares pursuant to the exercise of
employee stock options or other compensation arrangements with the Company, (ii)
who perfect their appraisal rights under the DGCL, and (iii) who are subject to
special tax treatment under the Code (such as dealers in securities, insurance
companies, other financial institutions, regulated investment companies and
tax-exempt entities). In addition, this discussion does not discuss the federal
income tax consequences to a beneficial holder of Shares who, for United States
federal income tax purposes, is a non-resident alien individual, a foreign
corporation, a foreign partnership or a foreign estate or trust, nor does it
consider the effect of any foreign, state or local tax laws.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes and may also
be a taxable transaction under applicable state, local and foreign income and
other tax laws. In general, a beneficial holder who sells Shares pursuant to the
Offer or receives cash in exchange for Shares pursuant to the Merger will
recognize gain or loss for federal income tax purposes equal to the difference,
if any, between the amount of cash received and the beneficial holder's adjusted
tax basis in the Shares sold pursuant to the Offer or surrendered for cash
pursuant to the Merger. Gain or loss will be determined separately for each
block of Shares (i.e., Shares acquired at the same cost in a single transaction)
tendered pursuant to the Offer or surrendered for cash pursuant to the Merger.
Such gain or loss will be long-term capital gain or loss provided that a
beneficial holder's holding period for such Shares is more than twelve months at
the time of consummation of the Offer or Merger, as the case may be.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH BENEFICIAL HOLDER OF
SHARES IS URGED TO CONSULT SUCH BENEFICIAL HOLDER'S OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH BENEFICIAL HOLDER OF THE OFFER AND THE
MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded through the Nasdaq National Market under the symbol
'ALRT'. The following table sets forth, for each of the fiscal quarters
indicated, the high and low reported sales price per Share on the Nasdaq
National Market.
<TABLE>
<CAPTION>
COMMON
STOCK
-----------
HIGH LOW
---- ---
<S> <C> <C>
Fiscal Year Ending December 31, 1998
First Quarter (through March 5, 1998).......................................... $ 5 1/4 $1 5/8
Fiscal Year Ended December 31, 1997
First Quarter.................................................................. $ 4 1/8 $2 11/16
Second Quarter................................................................. 3 1/2 1 7/8
Third Quarter.................................................................. 4 2 3/4
Fourth Quarter................................................................. 3 1/2 1 7/8
Fiscal Year Ended December 31, 1996
First Quarter.................................................................. $11 3/8 $6 3/8
Second Quarter................................................................. 7 3/4 4
Third Quarter.................................................................. 6 3/8 4 3/8
Fourth Quarter................................................................. 6 1/8 3
</TABLE>
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<PAGE>
On February 27, 1998, the last full trading day prior to the public
announcement of the execution of the Merger Agreement by the Company, Parent and
Purchaser, the last reported sales price of the Shares on the Nasdaq National
Market was $3 1/8 per Share. On March 5, 1998, the last full trading day prior
to the commencement of the Offer, the last reported sales price of the Shares on
the Nasdaq National Market was $5 1/8 per Share. STOCKHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company did not declare or pay any cash dividends during any of the
periods indicated in the above table. The agreements governing the Company's
indebtedness contain provisions which currently prohibit the Company from
declaring or paying dividends with respect to the Shares. In addition, under the
terms of the Merger Agreement, the Company is not permitted to declare or pay
dividends with respect to the Shares without the prior written consent of
Parent.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which, depending upon the number of
Shares so purchased, could adversely affect the liquidity and market value of
the remaining Shares held by the public. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for, or marketability of,
the Shares or whether it would cause future market prices to be greater or less
than the Offer Price.
Nasdaq Quotation. The Common Stock is traded through the Nasdaq National
Market. Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the National Association of
Securities Dealers, Inc. (the 'NASD') for continued inclusion on the Nasdaq
National Market, which requires that an issuer either (i) have at least 750,000
publicly held shares, held by at least 400 shareholders, with a market value of
at least $5,000,000, capital and surplus (total shareholders' equity) of at
least $4 million and have a minimum bid price of $1 or (ii) have at least
1,000,000 publicly held shares, held by at least 400 shareholders, with a market
value of at least $15,000,000, have a minimum bid price of $5 and have either
(A) a market capitalization of at least $50,000,000 or (B) total assets and
revenues each of at least $50,000,000. If the Nasdaq National Market and the
Nasdaq Smallcap Market were to cease to publish quotations for the Shares, it is
possible that the Shares would continue to trade in the over-the-counter market
and that price or other quotations would be reported by other sources. The
extent of the public market for such Shares and the availability of such
quotations would depend, however, upon such factors as the number of
shareholders and/or the aggregate market value of such securities remaining at
such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act as described below, and other factors. The Purchaser cannot predict whether
the reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market place for, or marketability
of, the Shares or whether it would cause future market prices to be greater or
lesser than the Offer Price.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its stockholders and to the Commission and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement
pursuant to Section 14(a) in connection with stockholders' meetings and the
related requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to 'going
private' transactions, no longer applicable to the Company. Furthermore, the
ability of 'affiliates' of the Company and persons holding 'restricted
securities' of the Company to dispose of such securities pursuant to Rule 144 or
Rule 144A promulgated under the Securities Act of 1933, as amended (the
'Securities Act'), may be impaired or eliminated.
Margin Regulations. The Shares presently are 'margin securities' under the
regulations of the Board of Governors of the Federal Reserve System (the
'Federal Reserve Board'), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding stock exchange
listing and market quotations, it is possible that,
9
<PAGE>
following the Offer, the Shares would no longer constitute 'margin securities'
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. In
addition, if registration of the Shares under the Exchange Act were terminated,
the Shares would no longer constitute 'margin securities.'
Purchaser intends to seek delisting of the Shares from the Nasdaq National
Market and the termination of the registration of the Shares under the Exchange
Act as soon after the completion of the Offer as the requirements for such
delisting and termination are met. If the Nasdaq National Market listing and the
Exchange Act registration of the Shares are not terminated prior to the Merger,
then the Shares will be delisted from the Nasdaq National Market and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption 'Selected Financial
Information,' has been furnished by the Company or has been taken from or based
upon publicly available documents and records on file with the Commission and
other public sources. Neither Parent, Purchaser nor the Dealer Manager assumes
responsibility for the accuracy or completeness of the information concerning
the Company contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Parent, Purchaser or the Dealer Manager.
The Company, through its subsidiaries, is a leading manufacturer and
marketer of a broad range of residential safety products, anchored by its
leadership position in the United States residential smoke detector market. The
Company has capitalized on the First Alert(Registered) brand name and its
leading smoke detector market share to develop and market a broad range of
residential safety products, including carbon monoxide detectors, fire
extinguishers, rechargeable flashlights and lanterns, electronic and
electromechanical timers, nightlights, fire safes and chests, radon gas
detectors, fire escape ladders, child safety products and motion sensing
lighting controls. The Company is a Delaware corporation with its principal
executive offices at 3901 Liberty Street Road, Aurora, IL 60504. The telephone
number of the Company at such location is (630) 851-7330.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company, excerpted or
derived from the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 and its Quarterly Report on Form 10-Q for the quarter and nine
months ended September 28, 1997, both filed with the Commission pursuant to the
Exchange Act.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following summary
is qualified in its entirety by reference to such reports and other documents
and all of the financial information (including any related notes) contained
therein. Such reports and other documents may be inspected and copies may be
obtained from the Commission in the manner set forth below.
10
<PAGE>
FIRST ALERT, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEARS ENDED
------------------------------ ------------------------------------------------------
SEPTEMBER 28, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1996 1995 1994
------------- ------------- ---------------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales................... $ 115,668 $ 145,330 $ 205,607 $ 246,266 $ 248,404
Operating Income (loss)..... (12,681) (10,512) (25,519) 20,433 34,912
Net Income (loss)........... (9,211) (8,235) (18,702) 11,437 17,625
Net Income (loss) per
share.................... (0.38) (0.34) (0.76) 0.46 0.75
<CAPTION>
AT SEPTEMBER 28, AT DECEMBER 31, AT DECEMBER 31,
1997 1996 1995
---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
BALANCE SHEET DATA:
Total Assets................................................. $ 163,605 $ 186,491 $ 206,993
Total Liabilities............................................ 83,613 97,639 99,949
Stockholders' Equity......................................... 79,992 88,852 107,044
</TABLE>
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a website at
http://www.sec.gov that contains reports, proxy statements and other information
relating to the Company which have been filed via the EDGAR System.
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
Parent and Purchaser. Parent is a Delaware corporation and (with its
subsidiaries) is a leading consumer products company that designs, manufactures
and markets, nationally and internationally, a diverse portfolio of brand name
products. Parent's Sunbeam(Registered) and Oster(Registered) brands have been
household names for generations, both domestically and abroad, and Parent is a
market leader in many of its product categories. Parent's primary business is
the manufacture, marketing and distribution of durable household goods through
mass marketers and other distributors in the United States and internationally.
Parent also sells its products to commercial end users such as hotels and other
institutions.
Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. All of the outstanding
capital stock of Purchaser is owned indirectly by Parent. Until immediately
prior to the time Purchaser purchases Shares pursuant to the Offer, it is not
anticipated that Purchaser will have any significant assets or liabilities or
engage in activities other than those incident to its formation and
capitalization and the transactions contemplated by the Offer and the Merger.
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<PAGE>
On March 2, 1998, Parent announced that it had entered into three separate
agreements to acquire the Company, The Coleman Company, Inc. and Signature
Brands USA, Inc. The three transactions are subject to customary conditions,
including the receipt of required regulatory approvals, and are expected to be
financed as set forth in Section 10.
The Coleman Company, Inc., with 1997 revenues of approximately $1.1
billion, is the world's leading manufacturer and marketer of outdoor
recreational products. It manufactures and distributes widely diversified
product lines for camping, leisure time and hardware markets, under the
Coleman(Registered), Powermate(Registered), Camping Gaz(Registered) and
Eastpak(Registered) brand names. The Coleman transaction is valued at
approximately $2 billion, including the assumption of debt.
Signature Brands, with 1997 revenues of approximately $279 million, is a
leading manufacturer of a comprehensive line of consumer and professional
products, including coffee makers marketed under the Mr. Coffee(Registered)
brand name and consumer health products marketed under the Health-o-meter,
Counselor and Borg brand names. The Signature Brands transaction is valued at
approximately $245 million, including the assumption of debt.
The principal offices of Purchaser and Parent are located at 1615 South
Congress Avenue, Suite 200, Delray Beach, FL 33445. The telephone number of
Parent and Purchaser at such location is (561) 243-2100.
For certain information concerning the executive officers and directors of
Parent and Purchaser, see Schedule I.
Except as set forth in this Offer to Purchase, neither Purchaser nor
Parent, nor, to the best knowledge of Purchaser or Parent, any of the persons
listed on Schedule I, nor any associate or majority-owned subsidiary of any of
the foregoing, beneficially owns or has a right to acquire any Shares, and
neither Purchaser nor Parent nor, to the best of knowledge of Purchaser or
Parent, any of the persons or entities referred to above, nor any of the
respective executive officers, directors or subsidiaries of any of the
foregoing, has effected any transaction in the Shares during the past 60 days.
Concurrently with the execution and delivery of the Merger Agreement,
Thomas H. Lee Equity Partners L.P. and certain other stockholders set forth
therein (the 'Major Stockholders'), which have voting and dispositive power with
respect to 14,421,806 Shares, representing approximately 55% of the Shares
outstanding on February 28, 1998 (assuming exercise of all outstanding options),
entered into a Stock Sale Agreement, dated as of February 28, 1998 (the 'Stock
Sale Agreement'), with Parent. Pursuant to the Stock Sale Agreement, each Major
Stockholders has agreed, among other things, to pay to Parent any proceeds it
receives in excess of $5.25 per Share should it sell its Shares to any party
other than Parent or an affiliate of Parent within nine months of the date of
the Stock Sale Agreement, upon the terms and subject to the conditions set forth
therein. See Section 11.
Except as set forth in this Offer to Purchase, neither Purchaser nor Parent
has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company, including, but not limited
to, any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any securities of the Company, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against loss
or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of Purchaser, Parent,
any of their respective affiliates, nor, to the best knowledge of Purchaser or
Parent, any of the persons listed on Schedule I, has had, since December 31,
1994, any business relationships or transactions with the Company or any of its
executive officers, directors or affiliates that would require to be reported
under the rules of the Commission. Except as set forth in this Offer to
Purchase, since December 31, 1994 there have been no contacts, negotiations or
transactions between Purchaser, Parent, any of their respective affiliates or,
to the best knowledge of Purchaser, Parent, any of the persons listed on
Schedule I, and the Company or its affiliates concerning a merger, consolidation
or acquisition, tender offer or other acquisition of securities, election of
directors or a sale or other transfer of a material amount of assets.
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates
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<PAGE>
concerning Parent's directors and officers, their remuneration, options granted
to them, the principal holders of Parent's securities and any material interests
of such persons in transactions with Parent is required to be disclosed in proxy
statements distributed to Parent's stockholders and filed with the Commission.
Such reports, proxy statements and other information should be available for
inspection at the public reference facilities of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, Suite 1300, New York, NY 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661.
Copies of such information should be obtainable by mail, upon payment of the
Commission's customary charges, by writing to the Commission's principal office
at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains
a website at http://www.sec.gov that contains reports, proxy statements and
other information relating to Parent which have been filed via the EDGAR System.
Such materials should also be available at the offices of the New York Stock
Exchange ('NYSE'), 20 Broad Street, New York, NY 10005.
10. SOURCE AND AMOUNT OF FUNDS.
The Offer is not conditioned upon financing. The total amount of funds
required by Purchaser to consummate the Offer and the Merger, including the
possible refinancing of approximately $43 million of debt presently owed by the
Company and the payment of the fees and expenses of the Offer and the Merger, is
estimated to be approximately $180 million. Purchaser will obtain all such funds
from Parent in the form of capital contributions and/or loans. Parent presently
intends to obtain such funds from the syndicated loan market and securities sold
in the debt market. Parent is discussing the proposed terms of these financings
with its financial advisor, Morgan Stanley. Morgan Stanley has advised Parent
that Morgan Stanley is highly confident that under current market and economic
conditions a $2.2 billion credit facility for Parent can be successfully
syndicated to financial institutions. When the amounts and terms of these
financings have been determined, Purchaser will disclose the principal financial
terms thereof in a supplement to this Offer to Purchase. It is anticipated that
these financings will be repaid from funds generated internally by Parent and
its subsidiaries (including the Company after the Merger), although Parent may
in the future refinance these financings. THE SECURITIES SOLD IN THE DEBT MARKET
WILL BE SOLD IN A TRANSACTION NOT REGISTERED UNDER THE SECURITIES ACT WHICH
ANTICIPATES RESALES PURSUANT TO RULE 144A TO QUALIFIED INSTITUTIONAL BUYERS.
SUCH SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION OR AN APPLICABLE EXEMPTION FROM REGISTRATION. THE FOREGOING DOES
NOT CONSTITUTE AN OFFER TO PURCHASE OR A SOLICITATION OF AN OFFER TO BUY ANY
SUCH SECURITIES.
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER
AGREEMENT AND CERTAIN OTHER AGREEMENTS.
Background of the Offer.
On February 9, 1998, a representative of Morgan Stanley, Parent's financial
advisor, contacted a member of the Company Board, who is also an employee of the
Thomas H. Lee Company (the 'THL Co.'), to discuss Parent's interest in the
Company and another company in which the THL Co. had a significant interest. On
February 11, 1998, representatives of Morgan Stanley and Parent met with three
representatives of the Company who are also affiliated with the THL Co. Morgan
Stanley expressed Parent's serious interest in a possible business combination
involving the Company.
On February 12, 1998, after the Company publicly announced an adverse jury
verdict awarding $16.9 million, a Company representative called Morgan Stanley
to explain the jury verdict and to confirm Parent's interest in light of the
verdict. After Parent confirmed its interest in discussing an acquisition of the
Company, on February 17, 1998, B. Joseph Messner, President and Chief Executive
Officer of the Company, legal advisors to the Company and insurance advisors to
the Company discussed the jury verdict with Parent and its advisors. This call
was followed on February 18, 1998 by a meeting between representatives of Parent
and the insurance advisors to the Company to discuss the Company's cost and
ability to obtain insurance with respect to the subject matter of the jury
verdict.
13
<PAGE>
On February 16, 1998, Parent and the THL Co., the Company's principal
stockholder, entered into a Confidentiality Agreement (the 'Confidentiality
Agreement') pursuant to which Parent agreed, among other things, to treat as
confidential certain information provided to it by or on behalf of the Company.
See Section 11.
On February 19, 1998, Mr. Messner met in New York City with Parent and
Morgan Stanley to discuss the business and financial affairs of the Company and
the possible strategic impact a transaction would have on Parent.
On February 20, 1998, Morgan Stanley contacted one of the Company's
Directors and indicated Parent's desire to discuss in more detail a proposal for
the acquisition of the Company. The Director indicated that he would have to
discuss any proposal with the full Company Board and a representative of the
Company Board would then get back to Morgan Stanley.
On February 22, 1998, Salomon Smith Barney, one of the financial advisors
to the Special Committee of the Company Board formed that day, commenced
discussions with Morgan Stanley. Morgan Stanley communicated Parent's proposal
to acquire all equity securities of the Company at a price of $4.50 per share,
payable one-half in cash and one-half in equity securities of Parent.
On February 24th, the Company's financial advisors visited the Company to
conduct due diligence regarding the fairness of a potential transaction between
Parent and the Company. Mr. Messner, several executive officers of the Company
and certain legal advisors to the Company were present. In addition, discussions
continued between the Company's financial advisors and Parent's financial
advisors on February 23rd and 24th, and on the evening of February 24th, Parent
modified its offer to $5.00 per share, one-half payable in cash and one-half
payable in equity securities of Parent. The Company's financial advisors
indicated that Parent should consider an all cash offer at a higher price.
On February 25, 1998, Parent's representatives visited the Company's
facilities and discussions continued regarding possible synergies between Parent
and the Company. Late in the afternoon, the Company Board conducted a telephonic
meeting to discuss the status of the proposal. Mr. Messner and the Company's
financial advisors updated the Company Board on the current terms of the
proposal and informed the Special Committee and the other members of the Company
Board that on February 25th and 26th Parent's advisors were conducting extensive
diligence on the Company.
On February 26, 1998, discussions continued between the Company's financial
advisors and Parent's financial advisors regarding the terms of the transaction,
including the price payable to shareholders. Parent modified its proposal to an
all cash tender offer at a price of $5.00 per share. While negotiations
regarding price were continuing, legal, accounting and business due diligence
was performed by representatives of Parent at the facilities of the Company and
its accountants. On the same day, Parent's legal advisors delivered proposed
drafts of transaction documents to the Special Committee's legal counsel. The
draft documents contemplated a tender offer by the Purchaser, a wholly owned
indirect subsidiary of Parent, for all outstanding shares of the Company to be
followed by a merger of the Purchaser with and into the Company. Late in the
evening of February 26, 1998, special legal counsel to the Special Committee
furnished comments to Parent's counsel regarding the transaction documents.
On February 27, 1998, Parent continued its legal due diligence and the
Company and its financial advisors continued discussions regarding the fairness
of the potential transaction. After the meeting, negotiations proceeded between
advisors and counsel of Parent and the Special Committee. In addition, Parent
convened a meeting of its Board of Directors at which Parent's Board unanimously
approved a negotiating range and authorized certain officers of Parent to
proceed, on behalf of Parent, with negotiations related to the proposed
acquisition and, if terms satisfactory to such officers with respect to the
contract and within the predetermined range with respect to price could be
reached, to enter into a definitive agreement or agreements on behalf of Parent
in respect of such acquisition. Late in the evening, Parent proposed to
purchase, in a tender offer, all outstanding Shares of the Company at a price of
$5.25 per Share, net to the seller in cash.
The Company Board reconvened by telephone on the morning of February 28,
1998. The Company's financial advisors presented the Special Committee with
their respective opinions as to the fairness of the transaction and after
discussion, the Special Committee voted to recommend to the Company Board
approval of the transaction. After further discussion, the Company Board
approved the transaction on the terms presented at
14
<PAGE>
the meeting and authorized the Company, with the assistance and advice of
special counsel to the Special Committee, to complete the negotiation and
execution of a definitive agreement. The Special Committee and the Company Board
also approved, for purposes of Section 203 of the DGCL, the Stock Sale
Agreement. After the meeting, documentation of the transaction was completed and
a definitive agreement was executed on the evening of February 28, 1998.
On March 2, 1998, each of the Company and Parent publicly announced the
execution of a definitive agreement between the companies. A copy of the press
release issued by Parent has been filed with the Commission as an exhibit to the
Schedule 14D-1 of Parent and Purchaser (the 'Schedule 14D-1').
Purpose of the Offer and the Merger. The Purpose of the Offer and the
Merger is to enable Parent to acquire control of, and the entire equity interest
in, the Company. The Offer is being made pursuant to the Merger Agreement and is
intended to increase the likelihood that the Merger will be effected. The
purpose of the Merger is to acquire all of the outstanding Shares not purchased
pursuant to the Offer.
Stockholders of the Company who sell their Shares in the Offer will cease
to have any equity interest in the Company and any right to participate in its
earnings and future growth. If the Merger is consummated, non-tendering
stockholders will no longer have an equity interest in the Company and instead
will have only the right to receive cash consideration pursuant to the Merger
Agreement or to exercise statutory appraisal rights under the DGCL. See Section
12. Similarly, after selling their Shares in the Offer or the subsequent Merger,
stockholders of the Company will not bear the risk of any decrease in the value
of the Company.
The primary benefits of the Offer and the Merger to the stockholders of the
Company are that such stockholders are being afforded an opportunity to sell all
of their Shares for cash at a price which represents a premium of approximately
68% over the closing market price of the Shares on February 27, 1998, the last
full trading day prior to the initial public announcement that the Company,
Purchaser and Parent executed the Merger Agreement.
MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement
not discussed elsewhere in this Offer to Purchase. The summary does not purport
to be complete and is qualified in its entirety by reference to the complete
text of the Merger Agreement, a copy of which is filed with the Commission as an
Exhibit to the Schedule 14D-1 and is incorporated herein by reference.
Capitalized terms not otherwise defined below shall have the meanings set forth
in the Merger Agreement. The Merger Agreement may be examined and copies may be
obtained at the places and in the manner set forth in Section 9 of this Offer to
Purchase.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate organization, capital stock, options
or other rights to acquire Shares, authority to enter into the Merger Agreement,
required consents, no conflicts between the Merger Agreement and applicable laws
or agreements to which the Company or its assets may be subject, financial
statements, public filings, conduct of business, employee benefit plans, ERISA,
intellectual property, labor and employment matters, compliance with laws, tax
matters, litigation, environmental matters, material contracts, brokers' and
finders' fees, title to properties, absence of liens, votes required to approve
the Merger Agreement, undisclosed liabilities, product liability, disclosures in
proxy statement and tender offer documents and the absence of material adverse
changes.
In the Merger Agreement, each of Parent and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things, corporate organization, authority to enter into the Merger Agreement,
required consents, no conflicts between the Merger Agreement and the Certificate
of Incorporation and By-laws of Parent and Purchaser or laws applicable to
Parent or Purchaser, availability of funds to consummate the Offer and the
Merger, brokers' fees, disclosures in proxy statement and tender offer documents
and no prior activities by Purchaser.
Conditions to the Merger. The respective obligations of Parent and
Purchaser, on the one hand, and the Company, on the other hand, to effect the
Merger are subject to the satisfaction of each of the following conditions, any
and all of which may be waived in whole or in part by the Company, Parent or
Purchaser, as the
15
<PAGE>
case may be, to the extent permitted by applicable law: (i) each party to the
Merger Agreement shall have performed in all material respects its respective
obligations under the Merger Agreement required to be performed by it prior to
the Effective Time; (ii) all representations and warranties contained in the
Merger Agreement shall have been true and correct in all material respects at
the time made and shall be true and correct in all material respects as of the
Effective Time as though made on and as of such date; (iii) the Merger Agreement
shall have been approved and adopted by the requisite vote of the stockholders
of the Company, if required by applicable law and the Certificate of
Incorporation of the Company, in order to consummate the Merger; (iv) no
statute, rule, order, decree or regulation shall have been enacted or
promulgated by any government or any governmental agency or authority of
competent jurisdiction which prohibits the consummation of the Merger; (v) there
shall be no order or injunction of a court or other governmental authority of
competent jurisdiction in effect precluding, restraining, enjoining or
prohibiting consummation of the Merger; (vi) Parent, Purchaser or their
affiliates shall have purchased Shares pursuant to the Offer; and (vii) the
employees and the directors of the Company shall have consented to the treatment
of Options in the Merger Agreement.
The Company Board. Promptly upon the purchase of and payment for any Shares
by Parent or any of its subsidiaries pursuant to the Offer, Parent shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Company Board such that the percentage of its designees on the
Company Board shall equal the percentage of the outstanding Shares beneficially
owned by Parent and its affiliates. In furtherance thereof, the Company shall,
upon request of Purchaser, use its best efforts promptly to cause Parent's
designees to be so elected to the Company's Board, and in furtherance thereof,
to the extent necessary, increase the size of the Company Board. At such time,
the Company shall also cause persons designated by Parent to constitute at least
the same percentage (rounded up to the next whole number) as is on the Company
Board of each committee (or similar body) of the Company Board. Notwithstanding
the foregoing, Parent, Purchaser and the Company have agreed to use their
respective reasonable best efforts to ensure that at least two of the members of
the Board shall, at all times prior to the Effective Time be Continuing
Directors. The term 'Continuing Director' means (i) any member of the Company
Board on February 28, 1998, (ii) any member of the Company Board who is
unaffiliated with, and not a designee or nominee of, Parent or Purchaser, or
(iii) any successor of a Continuing Director who is (A) unaffiliated with, and
not a designee or nominee of, Parent or Purchaser, and (B) recommended to
succeed a Continuing Director by a majority of the Continuing Directors then on
the Company Board, and in each case under this clause (iii), who is not an
employee of the Company. The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations, including mailing to
stockholders the information required by Section 14(f) and Rule 14f-1 necessary
to enable Parent's designees to be elected to the Company Board. Parent or
Purchaser will supply the Company any information with respect to either of them
and their nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
From and after the time, if any, that Parent's designees constitute a
majority of the Company Board, any amendment or modification of the Merger
Agreement, any amendment to the Certificate of Incorporation or By-laws of the
Company inconsistent with the Merger Agreement, any termination of the Merger
Agreement by the Company, any extension of time for performance of any of the
obligations of Parent or Purchaser under the Merger Agreement, any waiver of any
condition to the Company's obligations under the Merger Agreement or any of the
Company's rights under the Merger Agreement or other action by the Company under
the Merger Agreement may be effected only by the action of a majority of the
Continuing Directors of the Company, which action shall be deemed to constitute
the action of any committee specifically designated by the Company Board to
approve the actions and transactions contemplated by the Merger Agreement and
the full Company Board.
Stockholders' Meeting; Proxy Statement. If required by applicable law in
order to consummate the Merger, the Company, acting through the Company Board,
shall, in accordance with applicable law: (i) duly call, give notice of, convene
and hold a special meeting of its stockholders (the 'Special Meeting') as
promptly as practicable following the acceptance for payment and purchase of
Shares by Purchaser pursuant to the Offer for the purpose of considering and
taking action upon the approval of the Merger and the adoption of the Merger
Agreement; (ii) prepare and file with the Commission a preliminary proxy or
information statement in accordance with the Exchange Act relating to the Merger
and the Merger Agreement and use its best efforts (x) to obtain and furnish the
information required to be included by the Exchange Act and the Commission in
the Proxy
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<PAGE>
Statement (as defined below) and, after consultation with Parent, to respond
promptly to any comments made by the Commission with respect to the preliminary
proxy or information statement and cause a definitive proxy or information
statement, including any amendment or supplement thereto (the 'Proxy
Statement'), to be mailed to its stockholders, provided that no amendment or
supplement to the Proxy Statement will be made by the Company without
consultation with Parent and its counsel and (y) to obtain the necessary
approvals of the Merger and the Merger Agreement by its stockholders; and (iii)
include in the Proxy Statement the recommendation of the Company Board that
stockholders of the Company vote in favor of the approval of the Merger and the
adoption of Company Agreement. Parent has agreed to vote, or cause to be voted,
all of the Shares then owned by it, Purchaser or any of its other subsidiaries
and affiliates in favor of the approval of the Merger and the adoption of the
Merger Agreement.
Options. The Merger Agreement provides that, immediately prior to the
Effective Time of the Merger, each then outstanding option to purchase Shares
(in each case, an 'Option'), whether or not then exercisable, shall be cancelled
by the Company and in consideration of such cancellation and except to the
extent that Parent or Purchaser and the holder of any such Option otherwise
agree, the Company (or, at Parent's option, Purchaser) shall pay to the holders
of Options an amount in respect thereof equal to the product of (A) the excess,
if any, of the Offer Price over the exercise price of each such Option and (B)
the number of Shares previously subject to the Option immediately prior to its
cancellation (such payment to be net of withholding taxes and without interest).
If required, the Company shall cause the Company's employees and directors to
consent to these transactions no later than the Effective Time. All stock option
or other equity based plans maintained with respect to the Shares ('Option
Plans') shall terminate as of the Effective Time and the provisions in any other
Benefit Plan providing for the issuance, transfer or grant of any capital stock
of the Company or any interest in respect of any capital stock of the Company
shall be deleted as of the Effective Time, and the Company shall use its best
efforts to ensure that following the Effective Time no holder of an Option or
any participant in any Option Plan shall have any right thereunder to acquire
any capital stock of the Company, Parent or the Surviving Corporation.
Interim Operations; Covenants. Pursuant to the Merger Agreement, the
Company has agreed that, until the acquisition of Shares pursuant to the Offer,
except as specifically contemplated by the Merger Agreement, the Company shall
and shall cause its subsidiaries to carry on their respective businesses in the
ordinary course and use all reasonable best efforts consistent with good
business judgment to preserve intact their current business organizations, keep
available the services of their current officers and key employees and preserve
their relationships consistent with past practice with desirable customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill and ongoing businesses shall
be unimpaired in all material respects at the Effective Time. Without limiting
the generality of the foregoing, the Company has covenanted and agreed that,
except as expressly contemplated by the Merger Agreement or the schedules
thereto, after the date of the Merger Agreement and prior to the Effective Date:
(i) neither the Company nor any of its subsidiaries shall, directly or
indirectly, amend its Certificate of Incorporation or By-laws or similar
organizational documents;
(ii) neither the Company nor any of its subsidiaries shall: (i)(A)
declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that
of its subsidiaries, except that a wholly-owned subsidiary of the Company
may declare and pay a dividend or make advances to its parent or the
Company or (B) redeem, purchase or otherwise acquire directly or indirectly
any of the Company's capital stock or that of its subsidiaries; (ii) issue,
sell, pledge, dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class of the Company or its subsidiaries, other than Shares
issued upon the exercise of Options outstanding on the date of the Merger
Agreement in accordance with the Option Plans as in effect on the date the
Merger Agreement; or (iii) split, combine or reclassify the outstanding
capital stock of the Company or of any of the subsidiaries of the Company;
(iii) except as permitted by the Merger Agreement, neither the Company
nor any of its subsidiaries shall acquire or agree to acquire (A) by
merging or consolidating with, or by purchasing a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof (including entities which are subsidiaries of the Company
or any of the Company's subsidiaries) or (B) any assets, including real
estate, except (x)
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purchases in the ordinary course of business consistent with past practice
or (y) expenditures consistent with the Company's current capital budget
previously provided to Parent (the 'Capital Budget');
(iv) neither the Company nor any of its subsidiaries shall make any
new capital expenditure or expenditures, other than capital expenditures
not to exceed, in the aggregate, the amounts provided for capital
expenditures in the Capital Budget;
(v) neither the Company nor any of its subsidiaries shall, except in
the ordinary course of business and except as otherwise permitted by the
Merger Agreement, amend or terminate any material contract or agreement set
forth in the SEC Documents to which the Company or any subsidiary is a
party where such amendment or termination would have a Material Adverse
Affect, or waive, release or assign any material rights or claims;
(vi) neither the Company nor any of its subsidiaries shall transfer,
lease, license, sell, mortgage, pledge, dispose of or encumber any property
or assets other than in the ordinary course of business and consistent with
past practice;
(vii) neither the Company nor any of its subsidiaries shall: (i) enter
into any employment or severance agreement with, or, except in accordance
with the existing written policies of the Company, grant any severance or
termination pay to, any officer, director or key employee of the Company or
any of its subsidiaries; or (ii) hire or agree to hire any new or
additional key employees or officers;
(viii) neither the Company nor any of its subsidiaries shall, except
as required to comply with applicable law or expressly provided in the
Merger Agreement, (A) adopt, enter into, terminate or amend any Benefit
Plan or other arrangement for the current or future benefit or welfare of
any director, officer or current or former employee, except to the extent
necessary to coordinate any such Benefit Plans with the terms of the Merger
Agreement, (B) increase in any manner the compensation or fringe benefits
of, or pay any bonus to, any director, officer or employee (except for
normal increases or bonuses in the ordinary course of business consistent
with past practice to employees other than directors, officers or senior
management personnel and that, in the aggregate, do not result in a
significant increase in benefits or compensation expense to the Company and
its subsidiaries relative to the level in effect prior to such action (but
in no event shall the aggregate amount of all such increases exceed 3% of
the aggregate annualized compensation expense of the Company and its
subsidiaries reported in the most recent audited financial statements of
the Company included in the SEC Documents)), (C) pay any benefit not
provided for under any Benefit Plan, (D) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Benefit
Plan (including the grant of stock options, stock appreciation rights,
stock based or stock related awards, performance units or restricted stock,
or the removal of existing restrictions in any Benefit Plans or agreements
or awards made thereunder) or (E) take any action to fund or in any other
way secure the payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Benefit Plan;
(ix) neither the Company nor any of its subsidiaries shall: (i) incur
or assume any long-term debt, or except in the ordinary course of business,
incur or assume any short-term indebtedness in amounts not consistent with
past practice; (ii) incur or modify any material indebtedness or other
liability except as set forth in the applicable schedule to the Merger
Agreement; (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person, except in the ordinary course of business
and consistent with past practice; (iv) make any loans, advances or capital
contributions to, or investments in, any other person (other than to wholly
owned subsidiaries of the Company or customary loans or advances to
employees in accordance with past practice); (v) settle any claims other
than in the ordinary course of business, in accordance with past practice,
and without admission of liability; or (vi) enter into any material
commitment or transaction;
(x) neither the Company nor any of its subsidiaries shall change any
of the accounting methods used by it unless required by GAAP;
(xi) neither the Company nor any of its subsidiaries shall make any
Tax election or settle or compromise any material Tax liability;
(xii) neither the Company nor any of its subsidiaries shall pay,
discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction of any such claims, liabilities or
obligations, in the ordinary course of
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business and consistent with past practice, of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company and
its consolidated subsidiaries; or, except in the ordinary course of
business consistent with past practice, waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar agreement
to which the Company or any of its subsidiaries is a party; and
(xiii) neither the Company nor any of its subsidiaries will enter into
an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to
do any of the foregoing.
In addition, pursuant to the Merger Agreement, the Company shall not, and
shall not permit any of its subsidiaries to, take any action that would result
in (i) any of its representations and warranties set forth in the Merger
Agreement that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) subject to the Company's right to take action
specifically permitted by the provisions of the Merger Agreement described under
'Negotiations' below, any of the conditions to the Offer not being satisfied.
Access; Confidentiality. Pursuant to the Merger Agreement, upon reasonable
notice, the Company shall (and shall cause each of its subsidiaries to) afford
to the officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records, and, during such period, the Company shall (and shall
cause each of its subsidiaries to) furnish promptly to Parent (a) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of Federal or state
securities Laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Except as otherwise
agreed to by the Company, unless and until Parent and Purchaser shall have
purchased at least a majority of the outstanding Shares pursuant to the Offer,
Parent will be bound by the terms of the Confidentiality Agreement.
Reasonable Efforts; Notification. Upon the terms and subject to the
conditions set forth in the Merger Agreement, each of the parties has agreed to
use all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer and the Merger,
and the other transactions contemplated by the Merger Agreement, including (i)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from any Governmental Entity and the making of all necessary
registrations and filings (including filings with any Governmental Entity, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging the Merger
Agreement or the consummation of any of the transactions contemplated by the
Merger Agreement, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed, and
(iv) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the purposes
of, the Merger Agreement; provided, however, that in connection with any filing
or submission or other action required to be made or taken by any party to
effect the Merger and all other transactions contemplated by the Merger
Agreement, the Company shall not without the prior written consent of Parent
commit to any divestiture transaction and Parent shall not be required to divest
or hold separate or otherwise take or commence to take any action that, in the
reasonable discretion of Parent, limits its freedom of action with respect to,
or its ability to retain, the Company or any of its affiliates or any material
portion of the assets of the Company.
Pursuant to the Merger Agreement, each of the Company, Parent and Purchaser
has agreed to provide prompt notice to the other of (i) any of their
representations or warranties contained in the Merger Agreement becoming untrue
or inaccurate in any respect (including in the case of representations or
warranties receiving knowledge of any fact, event or circumstance which may
cause any representation qualified as to the knowledge to be or become untrue or
inaccurate in any respect) or (ii) the failure by them to comply with or satisfy
in any material respect any covenant, condition or agreement to be complied with
or satisfied by them under the Merger Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under the Merger Agreement.
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Negotiations. Pursuant to the Merger Agreement, the Company has agreed that
it shall not, nor shall it permit any of its subsidiaries to, nor shall it
authorize (and shall use its best efforts not to permit) any officer, director
or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, (i) solicit or
initiate, or knowingly encourage the submission of, any Takeover Proposal (as
defined below) or (ii) participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, or take any other
action to knowingly facilitate the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal; provided, however,
that, prior to the acceptance for payment of Shares pursuant to the Offer, if in
the reasonable determination of the Company Board, after receiving advice from
outside legal counsel to the Company, such failure to act would be inconsistent
with its fiduciary duties to the Company's stockholders under applicable law,
the Company may, in response to an unsolicited Takeover Proposal, and subject to
compliance with the last paragraph of this section entitled 'Negotiations,' (A)
furnish information with respect to the Company to any person pursuant to a
confidentiality agreement with terms and conditions similar to the
Confidentiality Agreement and (B) participate in negotiations regarding such
Takeover Proposal. For purposes of the Merger Agreement, 'Takeover Proposal'
means (i) any bona fide proposal or offer from any Person relating to any direct
or indirect acquisition or purchase of all or a substantial part of the assets
of the Company or any of its subsidiaries or of any class of equity securities
of the Company or any of its subsidiaries or any tender offer or exchange offer
that if consummated would result in any person beneficially owning shares of any
class of equity securities of the Company or any of its subsidiaries, or any
merger, consolidation, business combination, sale of substantially all of the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries other than the transactions
contemplated by the Merger Agreement, or any other transaction the consummation
of which would reasonably be expected to impede, interfere with, prevent or
materially delay the Offer or the Merger or which would reasonably be expected
to dilute materially the benefits to Parent of the transactions contemplated by
the Merger Agreement which (ii) the Company Board reasonably determines in good
faith (based on advice of its financial advisors) is more favorable to all of
the Company's stockholders from a financial point of view than the Offer and the
Merger (taking into account any improvements to the Offer and the Merger
proposed in writing by Parent).
Pursuant to the Merger Agreement, the Company has agreed that neither the
Company Board nor any committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent or Purchaser, the approval
or recommendation by the Company Board or any such committee of the Offer, the
Merger Agreement or the Merger, (ii) approve or recommend, or propose to approve
or recommend, any Takeover Proposal or (iii) enter into any agreement with
respect to any Takeover Proposal. Notwithstanding the foregoing, in the event
that prior to the time of acceptance by Purchaser for payment of Shares in the
Offer, if in the reasonable determination of the Company Board, and after
receiving advice from outside legal counsel to the Company, failure to do so
would be inconsistent with its fiduciary duties to the Company's stockholders
under applicable law, the Company Board may (subject to the terms of this and
the following sentences) withdraw or modify its approval or recommendation of
the Offer, the Merger Agreement or the Merger, approve or recommend a Takeover
Proposal, or enter into an agreement with respect to a Takeover Proposal, in
each case at any time following delivery by the Company to Parent of written
notice (a 'Notice of Takeover Proposal') advising Parent that the Company Board
has received a Takeover Proposal, and specifying the material terms and
conditions of such Takeover Proposal and identifying the Person making such
Takeover Proposal unless the Takeover Proposal by its terms prohibits
disclosure.
Pursuant to the Merger Agreement, the Company has agreed that, in addition
to the obligations of the Company set forth in the immediately preceding
paragraph, (i) the Company shall advise Parent of any request for information,
and the material terms and conditions of such request and the identity of the
Person making any such Takeover Proposal if allowed by the Takeover Proposal or
inquiry, and (ii) the Company will keep Parent fully informed of the status and
details (including amendments or proposed amendments) of any such request or
inquiry.
Indemnification. The Merger Agreement provides that the Certificate of
Incorporation and By-Laws of the Surviving Corporation shall contain the
provisions with respect to indemnification and exculpation set forth in the
Certificate of Incorporation and By-Laws of the Company, which provisions shall
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would adversely
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affect the rights thereunder of individuals who at the Effective Time were
directors, officers, employees or agents of the Company, unless such
modification is required by law. Pursuant to the Merger Agreement the Company
shall, to the fullest extent permitted under applicable law or under the
Company's Certificate of Incorporation or By-Laws and regardless of whether the
Merger becomes effective, indemnify and hold harmless, and, after the Effective
Time, the Surviving Corporation shall, to the fullest extent permitted under
applicable law or under the Surviving Corporation's Certificate of Incorporation
or By-Laws, indemnify and hold harmless, each present and former director,
officer or employee of the Company or any of its subsidiaries (collectively, the
'Indemnified Parties') against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages and liabilities incurred in
connection with, and amounts paid in settlement of, any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative and wherever asserted, bought or filed, (x) arising out of or
pertaining to the transactions contemplated by the Merger Agreement or (y)
otherwise with respect to any acts or omissions or alleged acts or omissions
occurring at or prior to the Effective Time, to the same extent as provided in
the respective Certificate of Incorporation or By-Laws of the Company or its
subsidiaries as in effect on the date of the Merger Agreement, in each case for
a period of six years after the date of the Merger Agreement. In the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) any counsel retained by the Indemnified
Parties for any period after the Effective Time must be reasonably satisfactory
to the Surviving Corporation, (ii) after the Effective Time, the Surviving
Corporation shall pay the reasonable fees and expenses of such counsel, promptly
after statements therefor are received, and (iii) the Surviving Corporation will
cooperate in the defense of any such matter; provided, however, that the
Surviving Corporation shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld or
delayed); and provided, further, that, in the event that any claim or claims for
indemnification are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until the
disposition of any and all such claims. The Indemnified Parties as a group may
retain only one law firm to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties. These indemnity agreements shall extend, on the same terms to, and
shall inure to the benefit of and shall be enforceable by, each person or entity
who controls, or in the past controlled, any present or former director, officer
or employee of the Company or any of its subsidiaries. For a period of six years
after the Effective Time, Parent shall cause the Surviving Corporation to
maintain in effect, if available, directors' and officers' liability insurance
covering those persons who are currently covered by the Company's directors' and
officers' liability insurance policy (a copy of which has been made available to
Parent) on terms (including the amounts of coverage and the amounts of
deductibles, if any) that are comparable to the terms now applicable to
directors and officers of Parent, or, if more favorable to the Company's
directors and officers, the terms now applicable to them under the Company's
current policies; provided, however, that in no event shall Parent or the
Surviving Corporation be required to expend in excess of 200% of the annual
premium currently paid by the Company for such coverage; and provided further
that if the premium for such coverage exceeds such amount, Parent or the
Surviving Corporation shall purchase a policy with the greatest coverage
available for such 200% of the annual premium.
Termination. The Merger Agreement may be terminated and the Merger
contemplated thereby may be abandoned at any time prior to the Effective Time,
whether before or after approval of matters presented in connection with the
Merger by the stockholders of the Company:
(a) By the mutual written consent of Parent and the Company; provided,
however, that if Parent shall have designated a majority of the directors
pursuant to the applicable provisions of the Merger Agreement, such consent
of the Company may only be given if approved by the Continuing Directors.
(b) By either Parent or the Company: (i) if the Offer shall have
expired without any Shares being purchased therein by June 1, 1998;
provided, however, that the right to terminate the Merger Agreement under
this clause (b)(i) shall not be available to any party whose failure to
fulfill any obligation under the Merger Agreement has been the cause of, or
resulted in, the failure of Parent or Purchaser, as the case may be, to
purchase Shares pursuant to the Offer on or prior to such date; or (ii) if
any Governmental Entity shall have issued an order, decree or ruling or
taken any other action (which order, decree, ruling or other action the
parties hereto shall use their reasonable efforts to lift), in each case
permanently restraining, enjoining or
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otherwise prohibiting the transactions contemplated by the Merger Agreement
and such order, decree, ruling or other action shall have become final and
non-appealable.
(c) By the Company Board: (i) if the Company has approved a Takeover
Proposal in accordance with the provisions of the Merger Agreement
described under 'Negotiations' above, provided the Company has complied
with all provisions thereof, including the notice provisions therein, and
that it makes simultaneous payment of the Termination Fee (as defined under
'Termination Fee' below); or (ii) if, prior to the purchase of Shares
pursuant to the Offer, Parent or Purchaser breaches or fails in any
material respect to perform or comply with any of its covenants and
agreements contained in the Merger Agreement or breaches its
representations and warranties in any material respect; or (iii) if Parent
or Purchaser shall have terminated the Offer or the Offer expires without
Parent or Purchaser, as the case may be, purchasing any Shares pursuant
thereto; provided that the Company may not terminate the Merger Agreement
pursuant to this clause (c) (iii) if the Company is in material breach of
the Merger Agreement; or (iv) if Parent, Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of the
Offer; provided, that the Company may not terminate the Merger Agreement
pursuant to this clause (c)(iv) if the Company is in material breach of the
Merger Agreement.
(d) By Parent or Purchaser: (i) if prior to the purchase of the Shares
pursuant to the Offer, the Company Board shall have withdrawn, or modified
or changed in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger or shall
have approved a Takeover Proposal in accordance with the provisions of the
Merger Agreement described under 'Negotiations' above; or (ii) if Parent or
Purchaser shall have terminated the Offer without Parent or Purchaser
purchasing any Shares thereunder, provided that Parent or Purchaser may not
terminate the Merger Agreement pursuant to this clause (d)(ii) if Parent or
Purchaser is in material breach of the Merger Agreement; or (iii) if, due
to an occurrence that if occurring after the commencement of the Offer
would result in a failure to satisfy any of the conditions set forth in
Section 14, Parent, Purchaser or any of their affiliates shall have failed
to commence the Offer on or prior to five business days following the date
of the initial public announcement of the Offer.
Termination Fee. Pursuant to the Merger Agreement, the Company shall pay,
or cause to be paid, in same day funds to Parent the amount of $3,750,000 (the
'Termination Fee') upon demand if:
(i) Parent or Purchaser terminates the Merger Agreement under clause
(d)(i) under 'Termination' above;
(ii) the Company terminates the Merger Agreement pursuant to clause
(c)(i) under 'Termination above; or
(iii) prior to any termination of the Merger Agreement, a Takeover
Proposal shall have been made and within nine months after the termination
of the Merger Agreement a transaction constituting a Takeover Proposal is
consummated or the Company enters into an agreement with respect to or
approves or recommends a Takeover Proposal (whether or not related to a
Takeover Proposal made prior to any termination of the Merger Agreement);
provided, that no payment shall be made if the Merger Agreement has been
terminated pursuant to clause (b)(i), (c)(ii), (c)(iii) or (c)(iv) under
'Termination' above; and provided further, that if a Takeover Proposal (whether
or not related to a Takeover Proposal made prior to any termination of the
Merger Agreement) is made at a lower price per share than the Offer Price, then
the Company shall only pay in same day funds to Purchaser the amount of Parent's
and Purchaser's documented expenses (not to exceed $500,000) in connection with
the Merger Agreement and the transactions contemplated thereby.
STOCK SALE AGREEMENT
The following is a summary of certain provisions of the Stock Sale
Agreement. This summary does not purport to be complete and is qualified in its
entirety by reference to the complete text of the Stock Sale Agreement, a copy
of which is filed with the Commission as an Exhibit to the Schedule 14D-1 and is
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incorporated herein by reference. The Stock Sale Agreement may be examined and
copies may be obtained at the places and in the manner set forth in Section 9 of
this Offer to Purchase.
Pursuant to the Stock Sale Agreement, each Major Stockholder has agreed
that in the event that within nine months following the date of the Stock Sale
Agreement, the Major Stockholder shall sell, transfer or otherwise commit to
dispose of any or all of the Shares owned by such Major Stockholder to any party
other than Parent or an affiliate of Parent (a 'Sale') and realize a Profit (as
defined below) from such Sale, then the Major Stockholder shall pay to Parent an
amount equal to the Profit. Such amount shall be paid to Parent promptly
following the receipt of proceeds by the Major Stockholder or its affiliates
from such Sale. The term 'Profit' shall mean the excess, if any, of (a) the
aggregate consideration received by the Major Stockholder or its affiliates in
connection with the Sale over (b) the number of Shares sold, transferred or
disposed of in connection with the Sale multiplied by $5.25. Notwithstanding the
foregoing, the Major Stockholder will not have any obligation to pay the Profit
to Parent unless Parent is entitled to the Termination Fee pursuant to the
Merger Agreement.
CONFIDENTIALITY AGREEMENT
The following is a summary of certain provisions of the Confidentiality
Agreement. This summary does not purport to be complete and is qualified in its
entirety by reference to the complete text of the Confidentiality Agreement, a
copy of which is filed with the Commission as an Exhibit to the Schedule 14D-1
and is incorporated herein by reference. Capitalized terms not otherwise defined
below shall have the meanings set forth in the Confidentiality Agreement. The
Confidentiality Agreement may be examined and copies may be obtained at the
places and in the manner set forth in Section 9 of this Offer to Purchase.
The Confidentiality Agreement contains customary provisions pursuant to
which, among other matters, Parent has agreed, subject to certain exceptions, to
keep confidential, as more fully described therein, certain nonpublic,
confidential, information concerning the Company which is furnished to Parent by
or on behalf of the Company (the 'Evaluation Material'), and to use the
Evaluation Material solely for the purpose of evaluating a possible transaction
involving the Company and Parent and not in any way detrimental to the Company.
Parent has also agreed in the Confidentiality Agreement that until the
earlier of (i) the acquisition of the Company by Parent and (ii) two years from
the date of the Confidentiality Agreement, it shall not initiate or maintain
contact (except for contacts in the ordinary course of business) with any
officer, director, employee, supplier, distributor, broker or customer of the
Company concerning its operations, assets, prospects or finances, except with
the express written consent of the Company.
Parent has further agreed in the Confidentiality Agreement that, for a
period of two years from the date of the Confidentiality Agreement, unless
Parent receives the prior written consent of the Company, Parent will not,
directly or indirectly solicit for employment or hire any person who is
currently employed in a senior management position by the Company, except as
such employment may be accomplished pursuant to the consummation of a
transaction with the Company as contemplated by the Confidentiality Agreement or
pursuant to general solicitations of employment through advertisements or
similar means not directed towards employees of the Company or towards a class
of persons who only could be employed by the Company.
12. PLANS FOR THE COMPANY; OTHER MATTERS.
PLANS FOR THE COMPANY
Parent is conducting a detailed review of the Company and its business and
operations with a view towards determining how to optimally realize any
potential synergies which exist between the operations of the Company and those
of Parent. Such review is not expected to be completed until after the
consummation of the Merger, and, following such review, Parent will consider
what, if any, changes would be desirable in light of the circumstances then
existing.
Assuming the Minimum Condition is satisfied and Purchaser purchases Shares
pursuant to the Offer, Parent intends to promptly exercise its rights under the
Merger Agreement to obtain majority representation on, and control of, the
Company Board. See 'Merger Agreement--Company Board' below. Parent will exercise
such rights by causing the Company to elect to the Company Board one or more of
Messrs. Dunlap, Kersh, Fannin,
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Elson and Langerman, directors of Parent. Information with respect to such
directors is contained in Schedule I hereto and in the Schedule 14D-9. The
Merger Agreement provides that, upon the purchase of and payment for any Shares
by Parent or any of its subsidiaries pursuant to the Offer, Parent shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Company Board such that the percentage of its designees on the
Company Board shall equal the percentage of the outstanding Shares beneficially
owned by Parent and its affiliates. See Section 11. The Merger Agreement
provides that the directors and officers of Purchaser at the Effective Time of
the Merger will, from and after the Effective Time, be the initial directors and
officers, respectively, of the Surviving Corporation.
Purchaser or an affiliate of Purchaser may, following the consummation or
termination of the Offer, seek to acquire additional Shares through open market
purchases, privately negotiated transactions, a tender offer or exchange offer
or otherwise, upon such terms and at such prices as it shall determine, which
may be more or less than the price to be paid pursuant to the Offer. Purchaser
and its affiliates also reserve the right to dispose of any or all Shares
acquired by them, subject to the terms of the Merger Agreement.
Except as disclosed in this Offer to Purchase, and except as may be
effected in connection with the integration of operations referred to above,
neither Parent nor Purchaser has any present plans or proposals that would
result in an extraordinary corporate transaction, such as a merger,
reorganization, liquidation, relocation of operations, or sale or transfer of
assets, involving the Company or its subsidiaries, or any material changes in
the Company's corporate structure, business or composition of its management or
personnel.
OTHER MATTERS
Stockholder Approval. Under the DGCL, the approval of the Company Board and
the affirmative vote of the holders of a majority of the outstanding Shares are
required to adopt and approve the Merger Agreement and the transactions
contemplated thereby. The Company has represented in the Merger Agreement that
the execution and delivery of the Merger Agreement by the Company and the
consummation by the Company of the transactions contemplated by the Merger
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject to the approval of the Merger by the Company's
stockholders in accordance with the DGCL. In addition, the Company has
represented that the affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of the holders of any class or series of the
Company's capital stock which is necessary to approve the Merger Agreement and
the transactions contemplated thereby, including the Merger. Therefore, unless
the Merger is consummated pursuant to the short-form merger provisions under the
DGCL described below (in which case no further corporate action by the
stockholders of the Company will be required to complete the Merger), the only
remaining required corporate action of the Company will be the approval of the
Merger Agreement and the transactions contemplated thereby by the affirmative
vote of the holders of a majority of the Shares. The Merger Agreement provides
that Parent will vote, or cause to be voted, all of the Shares then owned by
Parent, Purchaser or any of Parent's other subsidiaries and affiliates in favor
of the approval of the Merger and the adoption of the Merger Agreement. In the
event that Parent, Purchaser and Parent's other subsidiaries acquire in the
aggregate at least a majority of the Shares entitled to vote on the approval of
the Merger and the Merger Agreement, they would have the ability to effect the
Merger without the affirmative votes of any other stockholders.
Short-Form Merger. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge itself into such
corporation without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a 'short-form merger'). In the event
that Parent, Purchaser and any other subsidiaries of Parent acquire in the
aggregate at least 90% of the outstanding Shares, pursuant to the Offer or
otherwise, then, at the election of Parent, a short-form merger could be
effected without any approval of the Company Board or the stockholders of the
Company, subject to compliance with the provisions of Section 253 of the DGCL.
In the Merger Agreement, Parent, Purchaser and the Company have agreed that,
notwithstanding that all conditions to the Offer are satisfied or waived as of
the scheduled Expiration Date, Purchaser may extend the Offer for a period not
to exceed ten business days, subject to certain conditions, if the Shares
tendered pursuant to the Offer are less than 90% of the outstanding Shares. Even
if Parent and Purchaser do not own 90% of the outstanding Shares following
consummation of the Offer, Parent and Purchaser could seek to purchase
additional shares in the open market or otherwise in order to reach the 90%
threshold and employ a short-form merger. The per share
24
<PAGE>
consideration paid for any Shares so acquired may be greater or less than that
paid in the Offer. Parent presently intends to effect a short-form merger if
permitted to do so under the DGCL.
Appraisal Rights. Holders of the Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, holders of the
Shares at the Effective Time will have certain rights pursuant to the provisions
of Section 262 of the DGCL to dissent and demand appraisal of, and to receive
payment in cash of the fair value of, their Shares. Dissenting stockholders of
the Company who comply with the applicable statutory procedures will be entitled
to receive a judicial determination of the fair value of their Shares (exclusive
of any element of value arising from the accomplishment or expectation of the
Merger) and to receive payment of such fair value in cash, together with a fair
rate of interest thereon, if any. Any such judicial determination of the fair
value of the Shares could be based upon factors other than, or in addition to,
the price per Share to be paid in the Merger or the market value of the Shares.
The value so determined could be more or less than the price per Share to be
paid in the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE DGCL
DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE ANY DISSENTERS' RIGHTS AVAILABLE UNDER THE
DGCL. THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain 'going private' transactions and which may under
certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer in which
Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes, however, that Rule 13e-3 will not be applicable to the Merger because
it is anticipated that the Merger would be effected within one year following
consummation of the Offer and in the Merger stockholders would receive the same
price per Share as paid in the Offer. If Rule 13e-3 were applicable to the
Merger, it would require, among other things, that certain financial information
concerning the Company, and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such a transaction, be filed with the Commission and disclosed to minority
stockholders prior to consummation of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Merger Agreement provides that from February 28,
1998 until the Effective Time, without the prior written consent of Parent, the
Company will not (i) change the number of authorized, issued or outstanding
shares of its capital stock, except upon the exercise of certain stock options
outstanding on February 28, 1998 and described in the applicable schedule to the
Merger Agreement, (ii) declare, set aside or pay any dividend or other
distribution or payment in cash, stock or property in respect of shares of its
capital stock, (iii) make any direct or indirect redemption, purchase or other
acquisition of any of its capital stock, (iv) split, combine or reclassify its
outstanding shares of capital stock, or (v) issue, grant or sell or agree or
propose to issue, grant or sell any shares of, or rights of any kind to acquire
any shares of, capital stock of the Company or its subsidiaries, except that the
Company may issue Shares upon the exercise of options outstanding on February
28, 1998 in accordance with Option Plans in effect on such date.
14. CONDITIONS TO THE OFFER.
Notwithstanding any other provisions of the Offer or the Merger Agreement,
and in addition to (and not in limitation of) Purchaser's rights to extend and
amend the Offer at any time in its sole discretion (subject to the provisions of
the Merger Agreement), Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) under the Exchange Act (relating to Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of, or (subject to the
provisions of Rule 14e-1(c) referred to above) the payment for, any tendered
Shares, and may terminate or amend the Offer as to any Shares not then paid for,
if the Minimum Condition is not satisfied by the Expiration Date, or if any
applicable waiting period under the HSR Act has not expired or terminated by the
Expiration Date, or if, at any
25
<PAGE>
time on or after the date of the Merger Agreement and prior to the Expiration
Date, any of the following events shall occur and be continuing:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or deemed applicable to the Offer or the Merger by any
domestic or foreign Federal or state governmental regulatory or
administrative agency or authority or court or legislative body or
commission which directly or indirectly (l) prohibits, or imposes any
material limitations on, Parent's or Purchaser's ownership or operation (or
that of any of their respective subsidiaries or affiliates) of all or a
material portion of their or the Company's businesses or assets, or compels
Parent or Purchaser or their respective subsidiaries and affiliates to
dispose of or hold separate any material portion of the business or assets
of the Company or Parent and their respective subsidiaries, in each case
taken as a whole, (2) prohibits, or makes illegal, the acceptance for
payment, payment for or purchase of Shares or the consummation of the
Offer, the Merger or the other transactions contemplated by the Merger
Agreement, (3) results in the delay in or restricts the ability of
Purchaser, or renders Purchaser unable, to accept for payment, pay for or
purchase some or all of the Shares, (4) imposes material limitations on the
ability of Purchaser or Parent effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
the Shares purchased by it on all matters properly presented to the
Company's stockholders, or (5) otherwise materially adversely affects the
consolidated financial condition, businesses or results of operations of
the Company and its subsidiaries, taken as a whole;
(b) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange
or in the NASDAQ National Market System, (2) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (3) a commencement of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States, (4) any material limitation
(whether or not mandatory) by any foreign or United States governmental
authority on the extension of credit by banks or other financial
institutions, (5) a change in general financial bank or capital market
conditions which has a material adverse effect on the ability of financial
institutions in the United States to extend credit or syndicate loans, or
(6) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(c)(1) the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and correct in any material respect
as of the date of the Merger Agreement and as of consummation of the Offer
as though made on or as of such date (unless made as of a certain date),
(2) the Company shall have failed to comply with its covenants and
agreements under the Merger Agreement in all material respects or (3) there
shall have occurred any events or changes which have had or which are
reasonably likely to have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole;
(d) the Company Board shall have withdrawn, or modified or changed in
a manner adverse to Parent or Purchaser (including by amendment of the
Schedule 14D-9) its recommendation of the Offer, the Merger Agreement, or
the Merger, or recommended another proposal or offer, or the Company Board,
upon request of Purchaser, shall fail to reaffirm such approval or
recommendation or shall have resolved to do any of the foregoing;
(e) the Merger Agreement shall have terminated in accordance with its
terms; or
(f) the Company shall not have obtained a waiver of the provision in
its Credit Agreement that an event of default shall occur and exist
thereunder as a result of the purchase of Shares in a number equal to or
greater than the Minimum Condition pursuant to the Offer;
which in the sole judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser) giving rise to such condition makes it inadvisable to proceed with
the Offer and/or with such acceptance for payment of or payments for Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be waived by Parent or Purchaser, in whole or in part at any time and
from time to time, in the sole discretion of, but based on the reasonable
judgment of, Parent or Purchaser. The failure by Parent or Purchaser at any time
to exercise any of the
26
<PAGE>
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.
15. CERTAIN LEGAL MATTERS.
General. Except as described in this Section 15, based on information
provided by the Company, none of the Company, Purchaser or Parent is aware of
any license or regulatory permit that appears to be material to the business of
the Company that might be adversely affected by Purchaser's acquisition of
Shares as contemplated herein or of any approval or other action by a domestic
or foreign governmental, administrative or regulatory agency or authority that
would be required for the acquisition and ownership of the Shares by Purchaser
as contemplated herein. Should any such approval or other action be required,
Purchaser and Parent presently contemplate that such approval or other action
will be sought, except as described below under 'State Antitakeover Statutes.'
While, except as otherwise described in this Offer to Purchase, Purchaser does
not presently intend to delay the acceptance for payment of, or payment for,
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of, or other substantial
conditions complied with, in the event that such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action. If certain types of adverse action are taken with respect to the
matters discussed below, Purchaser could decline to accept for payment, or pay
for, any Shares tendered. See Section 14 for certain conditions to the Offer,
including conditions with respect to governmental actions.
State Antitakeover Statutes. Section 203 of the DGCL, in general, prohibits
a Delaware corporation, such as the Company, from engaging in a 'Business
Combination' (defined as a variety of transactions, including mergers) with an
'Interested Stockholder' (defined generally as a person that is the beneficial
owner of 15% or more of a corporation's outstanding voting stock) for a period
of three years following the date that such person became an Interested
Stockholder unless prior to the date such person became an Interested
Stockholder, the board of directors of the corporation approved either the
Business Combination or the transaction that resulted in the stockholder
becoming an Interested Stockholder. The provisions of Section 203 of the DGCL
are not applicable to any of the transactions contemplated by the Merger
Agreement or the Stock Sale Agreement, since the Merger Agreement, the Stock
Sale Agreement and the transactions contemplated thereby were approved by the
Company Board prior to the execution thereof.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal executive
offices or principal places of business in such states. In Edgar v. MITE Corp.,
the Supreme Court of the United States (the 'Supreme Court') invalidated on
constitutional grounds the Illinois Business Takeover statute, which, as a
matter of state securities law, made certain corporate acquisitions more
difficult. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court held that the State of Indiana may, as a matter of corporate law
and, in particular, with respect to those aspects of corporate law concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without the prior approval of the
remaining presenting stockholders. The state law before the Supreme Court was by
its terms applicable only to corporations that had a substantial number of
stockholders in the state and were incorporated there.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than Delaware will by their terms apply to the
Offer, and, except as set forth above with respect to Section 203 of the DGCL,
neither Parent nor Purchaser has currently complied with any state antitakeover
statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
and nothing in this Offer to Purchase or any action taken in connection with the
Offer is intended as a waiver of such right. If it is asserted that any state
antitakeover statute is applicable to the Offer and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and Purchaser might be unable to
accept for payment or pay for Shares tendered pursuant to the Offer or may be
27
<PAGE>
delayed in consummating the Offer. In such case, Purchaser may not be obligated
to accept for payment, or pay for, any Shares tendered pursuant to the Offer.
See Section 14.
Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the 'DOJ') and the Federal Trade Commission (the 'FTC')
and certain waiting period requirements have been satisfied.
Parent and the Company expect to file soon their Notification and Report
Forms with respect to the Offer under the HSR Act. The waiting period under the
HSR Act with respect to the Offer will expire at 11:59 p.m., New York City time,
on the fifteenth day after the date Parent's form is filed unless early
termination of the waiting period is granted. However, the DOJ or the FTC may
extend the waiting period by requesting additional information or documentary
material from Parent or the Company. If such a request is made, such waiting
period will expire at 11:59 p.m., New York City time, on the tenth day after
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR Act. Thereafter, such waiting period may be extended only by court order
or with the consent of Parent. In practice, complying with a request for
additional information or material can take a significant amount of time. In
addition, if the DOJ or the FTC raises substantive issues in connection with a
proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue. The Purchaser will not accept for payment Shares tendered
pursuant to the Offer unless and until the waiting period requirements imposed
by the HSR Act with respect to the Offer have been satisfied. See Section 14.
The Merger may not be consummated until 30 calendar days after receipt by
the DOJ and the FTC of the Notification and Report Forms of both Parent and the
Company unless Purchaser acquires 50% or more of the outstanding Shares pursuant
to the Offer (which would be the case if the Minimum Condition were satisfied)
or the 30- day period is earlier terminated by the DOJ and the FTC. Within such
30-day period, the DOJ or the FTC may request additional information or
documentary materials from Parent and/or the Company. The Merger may not be
consummated until 20 days after such requests are substantially complied with by
both Parent and the Company. Thereafter, the waiting periods may be extended
only by court order or with the consent of Parent and the Company.
The FTC and the DOJ frequently scrutinize the legality under the Antitrust
Laws of transactions such as Purchaser's acquisition of Shares pursuant to the
Offer and the Merger. At any time before or after Purchaser's acquisition of
Shares, the DOJ or the FTC could take such action under the Antitrust Laws as it
deems necessary or desirable in the public interest, including seeking to enjoin
the acquisition of Shares pursuant to the Offer or otherwise seeking divestiture
of Shares acquired by Purchaser or divestiture of substantial assets of Parent
or its subsidiaries. Private parties, as well as state governments, may also
bring legal action under the Antitrust Laws under certain circumstances. Based
upon an examination of information provided by the Company relating to the
businesses in which Parent and the Company are engaged, Parent and Purchaser
believe that the acquisition of Shares by Purchaser will not violate the
Antitrust Laws. Nevertheless, there can be no assurance that a challenge to the
Offer or other acquisition of Shares by Purchaser on antitrust grounds will not
be made or, if such a challenge is made, of the result.
As used in this Offer to Purchase, 'Antitrust Laws' shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade.
Federal Reserve Board Regulations. Regulations G, U and X (the 'Margin
Regulations') of the Federal Reserve Board restrict the extension or maintenance
of credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly by margin stock. Such
secured credit may not be extended or maintained in an amount that exceeds the
maximum loan value of all the direct and indirect collateral securing the
credit, including margin stock and other collateral. The financing of the Offer
will not be
28
<PAGE>
directly or indirectly secured by the Shares or other securities which
constitute margin stock. Accordingly, all financing for the Offer will be in
full compliance with the Margin Regulations.
16. FEES AND EXPENSES.
Morgan Stanley is acting as Dealer Manager in connection with the Offer and
is providing certain financial advisory services to Purchaser and Parent in
connection with the Offer. Parent has agreed to pay Morgan Stanley a fee of
approximately $2,800,000 for such services, approximately 25% of which was
payable upon the execution of the Merger Agreement and the remainder of which is
payable upon consummation of the Merger. Parent has also agreed to reimburse
Morgan Stanley for its out-of-pocket expenses, including the reasonable fees and
expenses of its counsel and any other advisor retained by Morgan Stanley in
connection with its engagement and to indemnify Morgan Stanley and certain
related persons against certain liabilities and expenses, including certain
liabilities and expenses under the federal securities laws.
In the ordinary course of its business, Morgan Stanley engages in
securities trading, market-making and brokerage activities and may, at any time,
hold long or short positions and may trade or otherwise effect transactions in
securities of the Company.
The Purchaser and Parent have retained Hill & Knowlton, Inc. to act as the
Information Agent and The Bank of New York to act as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by personal interview, mail, telephone, telex, telegraph and other methods of
electronic communication and may request brokers, dealers, commercial banks,
trust companies and other nominees to forward the Offer materials to beneficial
holders. The Information Agent and the Depositary will each receive reasonable
and customary compensation for their services. Purchaser has also agreed to
reimburse each such firm for certain reasonable out-of-pocket expenses and to
indemnify each such firm against certain liabilities in connection with their
services, including certain liabilities under federal securities laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees
or commissions to any broker or dealer or other person for making solicitations
or recommendations in connection with the Offer. Brokers, dealers, banks and
trust companies will be reimbursed by Purchaser for customary mailing and
handling expenses incurred by them in forwarding the Offer materials to their
customers.
17. MISCELLANEOUS.
The Offer is being made to all holders of Shares other than the Company.
Purchaser is not aware of any jurisdiction in which the making of the Offer or
the tender of Shares in connection therewith would not be in compliance with the
laws of such jurisdiction. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by the Dealer Manager or
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act furnishing certain additional
information with respect to the Offer. The Schedule 14D-1 and any amendments
thereto, including exhibits, may be examined and copies may be obtained at the
same places and in the same manner set forth in Section 9 of this Offer to
Purchase (except that they will not be available at the regional offices of the
Commission).
SENTINEL ACQUISITION CORP.
March 6, 1998
29
<PAGE>
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets forth
the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Parent. Each such person is a citizen of the
United States of America and, the business address of each such person is c/o
Sunbeam Corporation, 1615 South Congress Avenue, Suite 200, Delray Beach, FL
33445. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to employment with Parent. Unless otherwise indicated,
each such person has held his or her present occupation as set forth below, or
has been an executive officer at Parent, or the organization indicated, for the
past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Albert J. Dunlap.......................... Director of Parent. Chairman of the Board of Directors and Chief
Executive Officer since July 18, 1996. Chairman and Chief Executive
Officer of Scott Paper Company from April 1994 to December 1995.
Managing Director and Chief Executive Officer of Consolidated Press
Holdings Limited (an Australian media, chemicals and agricultural
operation) from 1991 to 1993.
Russell A. Kersh.......................... Director of Parent. Vice Chairman and Chief Financial Officer since
February 1, 1998. Prior to that date, he served as Executive Vice
President, Finance and Administration since July 22, 1996. Executive
Vice President, Finance and Administration of Scott Paper Company
from June 1994 to December 1995. Served as the Chief Operating
Officer of Addidas America from January 1993 to May 1994.
David C. Fannin........................... Executive Vice President, General Counsel and Secretary since January
1994. Partner in the law firm of Wyatt, Tarrant and Combs from 1979
until 1993.
Donald R. Uzzi............................ Executive Vice President, Consumer Products Worldwide since January,
1997. Senior Vice President, Global Marketing from November 1996 to
January 1997. Mr. Uzzi joined Parent in September 1996 as Vice
President, Marketing and Product Development. Mr. Uzzi served as
President of the Beverage Division of Quaker Oats from January 1993
to July 1996.
Charles M. Elson.......................... Director of Parent. Professor of Law at Stetson University College of
Law since 1990 and serves as Of Counsel to the law firm of Holland &
Knight (since May 1995). Member of the American Law Institute and the
Advisory Council and Commis sions on Director Compensation and
Director Professionalism of the National Association of Corporate
Directors. Mr. Elson is Trustee of Talledega College and a Salvatori
Fellow of the Heritage Foundation. Mr. Elson is a director of Circon
Corporation (a medical product manufacturer).
Howard G. Kristol......................... Director of Parent. Partner in the law firm of Reboul, MacMurray,
Hewitt, Maynard & Kristol since 1976.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Peter A. Langerman........................ Director of Parent. Chairman of the Board from May 22, 1996 until
July 18, 1996. Senior Vice President of Franklin Mutual Advisers,
Inc., a registered investment advisor and a wholly owned subsidiary
of Franklin Resources, Inc., a diversified financial services
organization, since November 1996. Senior Vice President of Heine
Securities Corporation, an investment advisory service company, from
1986 to November 1996. Mr. Langerman has been a director of Franklin
Mutual Series Fund Inc. (previously Mutual Series Fund Inc.) since
1988 and a director of Metallurg Inc. (a metal and related materials
manufacturer) since 1997.
William T. Rutter......................... Director of Parent. Senior Vice President/Managing Director, Private
Banking, First Union National Bank of Florida, since 1986.
Faith Whittlesey.......................... Director of Parent. Mrs. Whittlesey has served as the Chief Executive
Officer of the American Swiss Foundation, a charitable and
educational foundation, since 1991. She is a member of the Board of
Directors of Valassis Communications, Inc.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets forth
the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Purchaser. Each such person is a citizen of
the United States of America and the business address of each such person is c/o
Sunbeam Corporation, 1615 South Congress Avenue, Suite 200, Delray Beach, FL
33445. Unless otherwise indicated, each such person has held his or her present
occupation as set forth below, or has been an executive officer at Parent, or
the organization indicated, for the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Albert J. Dunlap.......................... Director, Chairman of the Board of Directors, Chief Executive Officer
and President of Purchaser. See Part 1 of this Schedule I.
Russell A. Kersh.......................... Director, Chief Financial Officer and Treasurer of Pur chaser. See
Part 1 of this Schedule I.
David C. Fannin........................... Director, Executive Vice President, General Counsel and Secretary of
Purchaser. See Part 1 of this Schedule I.
</TABLE>
I-2
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
(for Eligible Institutions Only)
(212) 815-6213
Tender & Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
FOR CONFIRMATION TELEPHONE:
(800) 507-9357
</TABLE>
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the Guidelines for Certification of Taxpayer Identification on Substitute Form
W-9 may be directed to the Information Agent or the Dealer Manager at the
address and telephone numbers set forth below. Stockholders may also contact
their broker, dealer, commercial bank or trust company for assistance concerning
the Offer.
The Information Agent for the Offer is:
HILL & KNOWLTON
466 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(800) 755-3002
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO.
INCORPORATED
1585 BROADWAY
NEW YORK, NY 10036
(212) 761-6094 (CALL COLLECT)
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
FIRST ALERT, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED MARCH 6, 1998
OF
SENTINEL ACQUISITION CORP.,
A WHOLLY OWNED INDIRECT SUBSIDIARY OF
SUNBEAM CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED.
SHARES WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY
TIME PRIOR TO THE EXPIRATION DATE.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
For Confirmation Telephone:
(800) 507-9357
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of First Alert,
Inc. if certificates for Shares (as such term is defined below) are to be
forwarded herewith or, unless an Agent's message (as defined in Instruction 2
below) is utilized, if delivery of Shares is to be made by book-entry transfer
to an account maintained by the Depositary at a Book-Entry Transfer Facility (as
defined in and pursuant to the procedures set forth in Section 3 of the Offer to
Purchase). Stockholders who deliver Shares by book-entry transfer are referred
to herein as 'Book-Entry Stockholders' and other stockholders who deliver shares
are referred to herein as 'Certificate Stockholders.'
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation (as
defined in Section 3 of the Offer to Purchase) with respect to, their Shares and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY
MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
--------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number
------------------------------------------------------------
Transaction Code Number
---------------------------------------------------
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s)
-------------------------------------------------
Window Ticket Number (if any)
--------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
-----------------------------
Name of Institution which Guaranteed Delivery
----------------------------------
If delivered by Book-Entry Transfer, check box of Applicable Book-Entry Transfer
Facility:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number
-----------------------------------------------------------------
Transaction Code Number
--------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
TOTAL NUMBER OF
SHARES
SHARE REPRESENTED BY NUMBER OF
CERTIFICATE SHARE SHARES
NUMBER(S)(1) CERTIFICATE(S) TENDERED(2)
<S> <C> <C> <C>
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
TOTAL SHARES
-------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares represented
by Share certificates delivered to the Depositary are being tendered hereby.
See Instruction 4.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Sentinel Acquisition Corp., a Delaware
corporation ('Purchaser') and a wholly owned indirect subsidiary of Sunbeam
Corporation, a Delaware corporation ('Parent'), the above-described shares of
common stock, par value $.01 per share (the 'Shares'), of First Alert, Inc., a
Delaware corporation (the 'Company'), pursuant to Purchaser's offer to purchase
all of the outstanding Shares at a price of $5.25 per Share, net to the seller
in cash, without interest thereon (the 'Offer Price') upon the terms and subject
to the conditions set forth in the Offer to Purchase dated March 6, 1998, and in
this Letter of Transmittal (which, together with any amendments or supplements
thereto or hereto, collectively constitute the 'Offer'). The undersigned
understands that Purchaser reserves the right to transfer or assign, in whole at
any time, or in part from time to time, to one or more of its affiliates, the
right to purchase all or any portion of the Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer. Receipt of the Offer is hereby acknowledged.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 28, 1998 (the 'Merger Agreement'), by and among Parent, Purchaser
and the Company.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other Shares
or other securities issued or issuable in respect thereof on or after February
28, 1998 (collectively, 'Distributions')) and irrevocably constitutes and
appoints the Depositary the true and lawful Agent and attorney-in-fact of the
undersigned with respect to such Shares (and all Distributions), with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver certificates for such Shares (and any
and all Distributions), or transfer ownership of such Shares (and any and all
Distributions) on the account books maintained by any of the Book-Entry Transfer
Facilities, together, in any such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of Purchaser, (ii) present such
Shares (and any and all Distributions) for transfer on the books of the Company,
and (iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares (and any and all Distributions), all in accordance with
the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Albert J. Dunlap, Russell A. Kersh and David C. Fannin, in their
respective capacities as officers of Purchaser, and any individual who shall
thereafter succeed to any such office of Purchaser, and each of them, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof or otherwise in such
manner as each such attorney-in-fact and proxy or his substitute shall in his
sole discretion deem proper with respect to, to execute any written consent
concerning any matter as each such attorney-in-fact and proxy or his substitute
shall in his sole discretion deem proper with respect to, and to otherwise act
as each such attorney-in-fact and proxy or his substitute shall in his sole
discretion deem proper with respect to, all of the Shares (and any and all
Distributions) tendered hereby and accepted for payment by Purchaser. This
appointment will be effective if and when, and only to the extent that,
Purchaser accepts such Shares for payment pursuant to the Offer. This power of
attorney and proxy are irrevocable and are granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the Offer.
Such acceptance for payment shall, without further action, revoke any prior
powers of attorney and proxies granted by the undersigned at any time with
respect to such Shares (and any and all Distributions), and no subsequent powers
of attorney, proxies, consents or revocations may be given by the undersigned
with respect thereto (and, if given, will not be deemed effective). Purchaser
reserves the right to require that, in order for Shares or other securities to
be deemed validly tendered, immediately upon Purchaser's acceptance for payment
of such Shares, Purchaser must be able to exercise full voting, consent and
other rights with respect to such Shares (and any and all Distributions),
including voting at any meeting of the Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances and the same will not
be subject to any adverse claims. The undersigned will, upon request, execute
and deliver any additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby or deduct from such purchase price
the amount or value of such Distribution as determined by Purchaser in its sole
discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer (and if
the Offer is extended or amended, the terms or conditions of any such extension
or amendment). Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the Merger Agreement, the price to be paid
to the undersigned will be the amended price notwithstanding the fact that a
different price is stated in this Letter of
3
<PAGE>
Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated under 'Special Payment Instructions,' please
issue the check for the purchase price of all Shares purchased and/or return any
certificates for Shares not tendered or accepted for payment in the name(s) of
the registered holder(s) appearing above under 'Description of Shares Tendered.'
Similarly, unless otherwise indicated under 'Special Delivery Instructions,'
please mail the check for the purchase price of all Shares purchased and/or
return any certificates for Shares not tendered or not accepted for payment (and
any accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing above under 'Description of Shares Tendered.' In the event
that the boxes entitled 'Special Payment Instructions' and 'Special Delivery
Instructions' are both completed, please issue the check for the purchase price
of all Shares purchased and/or return any certificates evidencing Shares not
tendered or not accepted for payment (and any accompanying documents, as
appropriate) in the name(s) of, and deliver such check and/or return any such
certificates (and any accompanying documents, as appropriate) to, the person(s)
so indicated. Unless otherwise indicated herein in the box entitled 'Special
Payment Instructions,' please credit any Shares tendered herewith by book-entry
transfer that are not accepted for payment by crediting the account at the
Book-Entry Transfer Facility designated above. The undersigned recognizes that
Purchaser has no obligation, pursuant to the 'Special Payment Instructions,' to
transfer any Shares from the name of the registered holder thereof if Purchaser
does not accept for payment any of the Shares so tendered.
4
<PAGE>
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of To be completed ONLY if certificates for Shares not tendered
Shares accepted for payment is to be issued in the name of or not accepted for payment and/or the check for the
someone other than the undersigned, if certificates for purchase price of Shares accepted for payment is to be sent
Shares not tendered or not accepted for payment are to be to someone other than the undersigned or to the undersigned
issued in the name of someone other than the undersigned or at an address other than that shown under 'Description of
if Shares tendered hereby and delivered by book-entry Shares Tendered.'
transfer that are not accepted for payment are to be
returned by credit to an account maintained at a Book-Entry Mail check and/or Share certificates to:
Transfer Facility other than the account indicated above. Name
--------------------------------------------------
Issue check and/or Share certificate(s) to: (PLEASE PRINT)
Name Address
-------------------------------------------------- ------------------------------------------------
(PLEASE PRINT)
Address -------------------------------------------------------
---------------------------------------------- (INCLUDE ZIP CODE)
- ------------------------------------------------------- -------------------------------------------------------
(INCLUDE ZIP CODE) (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
- -------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
Credit Shares delivered by book-entry transfer and not
purchased to the Book-Entry Transfer Facility account set
forth below:
Check appropriate box:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
- -------------------------------------------------------
(ACCOUNT NUMBER)
</TABLE>
5
<PAGE>
<PAGE>
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: 1998
------------------------------,
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s)
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm
-------------------------------------------------------------------
Capacity (full title)
----------------------------------------------------------
Address
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-------------------------------------------------
Tax Identification or Social Security Number
-----------------------------------
(SEE SUBSTITUTE W-9 ON PAGE 9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
-----------------------------------------------------------
Name(s)
------------------------------------------------------------------------
(PLEASE PRINT)
Title
--------------------------------------------------------------------------
Name of Firm
-------------------------------------------------------------------
Address
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the box
entitled 'Special Payment Instructions' or the box entitled 'Special Delivery
Instructions' on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an 'Eligible Institution'). In all other cases, all signatures on this
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders of
the Company either if Share certificates are to be forwarded herewith or, unless
an Agent's Message is utilized, if delivery of Shares is to be made by
book-entry transfer pursuant to the procedures set forth herein and in Section 3
of the Offer to Purchase. For a stockholder validly to tender Shares pursuant to
the Offer, either (a) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees or an Agent's Message (in connection with book-entry transfer) and
any other required documents, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date and either (i)
certificates for tendered Shares must be received by the Depositary at one of
such addresses prior to the Expiration Date or (ii) Shares must be delivered
pursuant to the procedures for book-entry transfer set forth herein and in
Section 3 of the Offer to Purchase and a Book-Entry Confirmation must be
received by the Depositary prior to the Expiration Date or (b) the tendering
stockholder must comply with the guaranteed delivery procedures set forth herein
and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-entry
transfer procedures on a timely basis may tender their Shares by properly
completing and duly executing the Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth herein and in Section 3 of the Offer to
Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer (or
a Book-Entry Confirmation with respect to all tendered Shares), together with a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents must
be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A 'trading day' is any day on
which the Nasdaq National Market is open for business.
The term 'Agent's Message' means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under 'Description of
Shares Tendered' is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer). If fewer than all the Shares evidenced by any Share
certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares that are to be tendered in the box entitled 'Number of
Shares Tendered.' In any such case, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificates will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date or the
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
7
<PAGE>
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of the authority of such person so to act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares not
tendered or not accepted for payment are to be issued in the name of a person
other than the registered holder(s). Signatures on any such Share certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such other person) payable
on account of the transfer to such other person will be deducted from the
purchase price of such Shares purchased unless evidence satisfactory to
Purchaser of the payment of such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS; WIRE TRANSFERS. If a check
for the purchase price of any Shares accepted for payment is to be issued in the
name of, and/or Share certificates for Shares not accepted for payment or not
tendered are to be issued in the name of and/or returned to, a person other than
the signer of this Letter of Transmittal or if a check is to be sent, and/or
such certificates are to be returned, to a person other than the signer of this
Letter of Transmittal, or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. Any
stockholder(s) delivering Shares by book-entry transfer may request that Shares
not purchased be credited to such account maintained at a Book-Entry Transfer
Facility as such stockholder(s) may designate in the box entitled 'Special
Payment Instructions.' If no such instructions are given, any such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facility designated above as the account from which such Shares were delivered.
Purchaser has agreed to arrange to make payments of Shares accepted for payment
by wire transfer for holders of blocks of 45,000 shares or more. Stockholders
holding 45,000 shares or more should contact the Depositary at (800) 507-9357 in
order to complete such arrangements.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and phone numbers set forth below, or from brokers, dealers,
commercial banks or trust companies.
9. WAIVER OF CONDITIONS. Subject to the Merger Agreement, Purchaser
reserves the absolute right in its sole discretion to waive, at any time or from
time to time, any of the specified conditions of the Offer, in whole or in part,
in the case of any Shares tendered.
10. BACKUP WITHHOLDING. In order to avoid 'backup withholding' of federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ('TIN') on
Substitute Form W-9 in this Letter of Transmittal and certify, under penalties
of perjury, that such TIN is correct and that such stockholder is not subject to
backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund can be obtained by the stockholder upon filing an income tax
return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed 'Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9' for additional guidance on which
number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed 'Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9' for more instructions.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
8
<PAGE>
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION
DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR
GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
stockholder's correct taxpayer identification number on Substitute Form W-9
below. If such stockholder is an individual, the taxpayer identification number
is his social security number. If a tendering stockholder is subject to backup
withholding, such stockholder must cross out item (2) of the Certification box
on the Substitute Form W-9. If the Depositary is not provided with the correct
taxpayer identification number, the stockholder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made to
such stockholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding.
Certain stockholders (including, among others, all corporations, and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write 'Exempt' on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such stockholder is awaiting a taxpayer identification number).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
If the tendering stockholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, such stockholder
should write 'Applied For' in the space provided for in the TIN in Part 1, and
sign and date the Substitute Form W-9. If 'Applied For' is written in Part I and
the Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% on all payments of the purchase price until a TIN is provided to
the Depositary.
9
<PAGE>
<PAGE>
PAYER'S NAME: THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE
FORM W-9 THE RIGHT AND CERTIFY BY SIGNING AND --------------------------------------
DEPARTMENT OF THE TREASURY DATING BELOW. Social Security Number
INTERNAL REVENUE SERVICE (If awaiting TIN write 'Applied For')
OR
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION
NUMBER ('TIN')
--------------------------------------
Employer Identification Number
(If awaiting TIN write
'Applied For')
</TABLE>
PART 2--CERTIFICATE--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued for me), and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
(the 'IRS') that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or (c) the IRS has notified me that I
am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax returns. However, if after
being notified by the IRS that you are subject to backup withholding, you
receive another notification from the IRS that you are no longer subject to
backup withholding, do not cross out such item (2). (Also see instructions in
the enclosed Guidelines).
SIGNATURE
-----------------------------------
PART 3--Awaiting TIN / /
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a Taxpayer Identification Number to the Depositary by the time of
payment, 31% of all reportable payments made to me thereafter will be withheld,
but that such amounts will be refunded to me if I provide a certified Taxpayer
Identification Number to the Depositary within sixty (60) days.
SIGNATURE DATE , 1998
----------------------------------- ------------------
10
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth below:
The Information Agent for the Offer is:
HILL & KNOWLTON
466 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(800) 755-3002
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO.
INCORPORATED
1585 BROADWAY
NEW YORK, NY 10036
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
FIRST ALERT, INC.
TO
SENTINEL ACQUISITION CORP.
A WHOLLY OWNED INDIRECT SUBSIDIARY OF
SUNBEAM CORPORATION
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
representing shares of Common Stock, par value $.01 per share (the 'Shares'), of
First Alert, Inc., a Delaware corporation, are not immediately available, if the
procedure for book-entry transfer cannot be completed prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase), or if time will not
permit all required documents to reach the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase). Such form may be
delivered by hand, transmitted by facsimile transmission or mailed to the
Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange Department (for eligible financial Tender & Exchange Department
P.O. Box 11248 institutions only): 101 Barclay Street
Church Street Station (212) 815-6213 Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
For Confirmation Telephone:
(800) 507-9357
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Sentinel Acquisition Corp., a Delaware
corporation ('Purchaser') and a wholly owned indirect subsidiary of Sunbeam
Corporation, a Delaware corporation, upon the terms and subject to the
conditions set forth in Purchaser's Offer to Purchase dated March 6, 1998 and
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, constitute the 'Offer'), receipt of which is hereby
acknowledged, the number of shares set forth below of common stock, par value
$.01 per share (the 'Shares'), of First Alert, Inc., a Delaware corporation,
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
Number of Shares:
--------------------------------------------------------------
Certificate Nos. (if available):
-----------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Check one box if Shares will be tendered by book-entry transfer:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
Account Number:
----------------------------------------------------------------
Dated: , 1998
-------------------------------------------------------------------
Name(s) of Record Holder(s):
---------------------------------------------------
- --------------------------------------------------------------------------------
Please Print
Address(es):
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Zip Code
Area Code and Tel. No.:
--------------------------------------------------------
- --------------------------------------------------------------------------------
Signature (s):
-----------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, guarantees to deliver to the Depositary
either certificates representing the Shares tendered hereby, in proper form for
transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's accounts at The Depository Trust Company or the Philadelphia
Depository Trust Company, in each case with delivery of a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message, and any other documents required by
the Letter of Transmittal, within three trading days (as defined in the Offer to
Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
Name of Firm:
------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
Zip Code
Area Code and
Tel. No.:
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
Authorized Signature
Name:
--------------------------------------------------------------------------
Please Print
Title:
-------------------------------------------------------------------------
Dated: , 1998
-------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD
BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FIRST ALERT, INC.
AT
$5.25 NET PER SHARE
BY
SENTINEL ACQUISITION CORP.
A WHOLLY OWNED INDIRECT SUBSIDIARY OF
SUNBEAM CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED. SHARES WHICH ARE
TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
March 6, 1998
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We have been appointed by Sentinel Acquisition Corp., a Delaware
corporation ('Purchaser') and a wholly owned indirect subsidiary of Sunbeam
Corporation, a Delaware corporation ('Parent'), to act as Dealer Manager in
connection with Purchaser's offer to purchase all outstanding shares of common
stock, par value $.01 per share (the 'Shares'), of First Alert, Inc., a Delaware
corporation (the'Company'), at $5.25 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer to Purchase dated
March 6, 1998 (the 'Offer to Purchase') and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, constitute the
'Offer') enclosed herewith. Please furnish copies of the enclosed materials to
those of your clients for whose accounts you hold Shares registered in your name
or in the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the Offer
to Purchase) that number of Shares which constitutes at least a majority of the
Shares outstanding. The Offer is also subject to the other terms and conditions
contained in the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated March 6, 1998;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be
delivered to the Depositary, or if the procedures for book-entry transfer
cannot be completed, by the Expiration Date (as defined in the Offer to
Purchase);
4. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. A letter to stockholders of the Company from B. Joseph Messner,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 dated March 6,
1998, which has been filed by the Company with the Securities and Exchange
Commission;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
<PAGE>
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for Shares which are
validly tendered prior to the Expiration Date and not theretofore properly
withdrawn when, as and if Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. Payment for Shares purchased pursuant to the Offer will in all cases be
made only after timely receipt by the Depositary of (i) certificates for such
Shares, or timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company or the Philadelphia
Depository Trust Company, pursuant to the procedures described in Section 3 of
the Offer to Purchase, (ii) a properly completed and duly executed Letter of
Transmittal (or a properly completed and manually signed facsimile thereof) or
an Agent's Message in connection with a book-entry transfer and (iii) all other
documents required by the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent as described in the Offer to Purchase) for soliciting tenders of Shares
pursuant to the Offer. Purchaser will, however, upon request, reimburse brokers,
dealers, commercial banks and trust companies for customary mailing and handling
costs incurred by them in forwarding the enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry transfer of Shares, and any other
required documents, should be sent to the Depositary, and certificates
representing the tendered Shares should be delivered or such Shares should be
tendered by book-entry transfer, all in accordance with the Instructions set
forth in the Letter of Transmittal and in the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE INFORMATION AGENT, THE
DEPOSITARY, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FIRST ALERT, INC.
AT
$5.25 NET PER SHARE IN CASH
BY
SENTINEL ACQUISITION CORP.,
A WHOLLY OWNED INDIRECT SUBSIDIARY OF
SUNBEAM CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, APRIL 2, 1998, UNLESS THE OFFER IS EXTENDED. SHARES WHICH
ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated March 6,
1998 and the related Letter of Transmittal (which, together with any amendments
or supplements thereto, collectively constitute the 'Offer') in connection with
the offer by Sentinel Acquisition Corp., a Delaware corporation ('Purchaser'),
and a wholly owned indirect subsidiary of Sunbeam Corporation, a Delaware
corporation ('Parent'), to purchase for cash all outstanding shares of common
stock, par value $.01 per share (the 'Shares'), of First Alert, Inc., a Delaware
corporation (the 'Company'). We are the holder of record of Shares held for your
account. A tender of such Shares can be made only by us as the holder of record
and pursuant to your instructions. The enclosed Letter of Transmittal is
furnished to you for your information only and cannot be used by you to tender
Shares held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is invited to the following:
1. The offer price is $5.25 per Share, net to you in cash without
interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Offer and determined that the Offer is fair to, and in the best interest
of, the stockholders of the Company and recommends that stockholders accept
the Offer and tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Thursday, April 2, 1998, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date (as defined
in the Offer to Purchase) that number of Shares which, when added to Shares
beneficially owned by Parent (if any), represents at least a majority of
the Shares outstanding (assuming exercise of all outstanding options) on
the date Shares are accepted for payment.
6. Any stock transfer taxes applicable to the sale of Shares to
Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Except as disclosed in the Offer to Purchase, Purchaser is not aware of any
state in which the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. In any jurisdiction in
which the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer
<PAGE>
will be deemed to be made on behalf of Purchaser by one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares will
be tendered unless otherwise specified on the reverse side of this letter. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf prior to the expiration of the Offer.
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FIRST ALERT, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated March 6, 1998 and the related Letter of Transmittal in
connection with the Offer by Sentinel Acquisition Corp., a Delaware corporation
and a wholly owned indirect subsidiary of Sunbeam Corporation, a Delaware
corporation, to purchase all outstanding shares of common stock, par value $.01
per share (the 'Shares'), of First Alert, Inc., a Delaware corporation (the
'Company').
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
<TABLE>
<S> <C>
Number of Shares to be Tendered:*
------------------------------- Shares
Dated: --------------------------, 1998 ----------------------------------
----------------------------------
Signature(s)
----------------------------------
----------------------------------
Print Name(s)
----------------------------------
Address(es)
----------------------------------
Area Code and Telephone Number
----------------------------------
Tax ID or Social Security Number
</TABLE>
- ------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
2
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen, i.e. 00-0000000. The table below will help determine the number to
give the payer.
- ----------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ----------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of the account or,
(joint account) if combined funds, any one of the
individuals(2)
3. Husband and wife The actual owner of the account or,
(joint account) if joint funds, either person(2)
4. Custodian account of a minor (Uniform The minor(3)
Gift to Minors Act)
5. Adult and minor The adult or, if the minor is the
(joint account) only contributor, the minor(1)
6. Account in the name of guardian or The ward, minor, or incompetent
committee for a designated ward, person(4)
minor, or incompetent person
7. a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust under
State law
8. Sole proprietorship account The owner(5)
- --------------------------------------------------------------------------------
GIVE THE EMPLOYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------------------------------
9. A valid trust, estate, or pension The legal entity (do not furnish the
trust identifying number of the personal
representative or trustee unless the
legal entity itself is not
designated in the account title)(1)
10. Corporate account The corporation
11. Religious, charitable, or educational The organization
organization account
12. Partnership account held in the name The partnership
of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district, or
prison) that receives agricultural
program payments
- --------------------------------------------------------------------------------
(1) List first and circle the name of the legal trust, estate, or pension trust.
(2) List first and circle the name of the person whose number you furnish.
(3) Circle the minor's name and furnish the minor's social security number.
(4) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(5) Show the name of the owner.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a TIN or you don't know your number, obtain Internal
Revenue Service Form SS-5, Application for Social Security Number Card or Form
SS-4, Application for Employer Identification Number at your local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
o A corporation.
o A financial institution.
o An organization exempt from tax under Section 501(A) or an individual
retirement plan.
o The United States or any agency or instrumentality thereof.
o A state, the District of Columbia, a possession of the United States or any
subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
o An international organization or any agency or instrumentality thereof.
o A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under Section 584(a).
o An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
o An entity registered at all times under the Investment Company Act of 1940.
o A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
o Payments to nonresident aliens subject to withholding under Section 1441.
o Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
o Payments of tax-exempt interest (including exempt interest dividends under
section 852).
o Payments described in section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Exempt payees described above should file Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE 'EXEMPT' ON THE FACE OF THE FORM AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see sections 6041, 6041A(a), 6045, and 6050A.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend, interest
or other payments to give taxpayer identification numbers to payers who must
report the payments to the IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to
properly include any portion of an includible payment for interest, dividends,
or patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION-- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
SUNBEAM ACQUIRES THREE PUBLICLY TRADED CONSUMER
PRODUCTS COMPANIES:
COLEMAN, SIGNATURE BRANDS AND FIRST ALERT
*****Al Dunlap Signs New Three Year Contract*****
Delray Beach, FL, March 2, 1998 -- Sunbeam Corporation (NYSE: SOC) initiated an
aggressive expansion strategy today with the announcement of the acquisitions of
three separate market leading durable consumer product companies. These
transactions will enhance shareholder value by nearly tripling the Company's
annual revenues, expanding its geographic presence, complementing its existing
product lines and leveraging operational synergies. The three transactions will
total approximately $2.5 billion and will be meaningfully accretive to Sunbeam's
earnings within twelve months. The transactions are subject to regulatory
approvals and other customary conditions and are expected to close within the
next two months.
The Coleman Company, Inc. (NYSE: CLN), with 1997 revenues of $1.1 billion is the
global leader in outdoor recreation and hardware products with powerful brands
such as Coleman(R), Powermate(R), Camping Gaz(R) and Eastpak(R). The Company,
based in Wichita, KS, operates 17 manufacturing facilities and employs
approximately 6,000 people around the world. The transaction is valued at
approximately $2.0 billion, consisting of approximately $815 million in Sunbeam
stock and the balance in debt financing. Shareholders of The Coleman Company,
Inc. will receive $6.44 in cash and 0.5677 shares of Sunbeam stock for each
share of Coleman stock.
Signature Brands USA, Inc. (NASDAQ: SIGB), with 1997 revenues of $279 million,
is the North American leader in coffee makers marketed under the Mr. Coffee(R)
brand name and is a leader in consumer health products marketed under the Health
o meter(R) brand. The Company, based in Glenwillow, OH, operates two
manufacturing facilities and employs approximately 1,000 people. The transaction
is valued at approximately $250 million consisting of a cash tender offer of
$8.25 per SIGB share and the assumption of existing debt.
First Alert, Inc. (NASDAQ: ALRT) with 1997 revenues of $187 million, is the
worldwide leader in residential safety equipment, including smoke and carbon
monoxide detectors. The Company, which is based in Aurora, IL, operates two
manufacturing facilities and employs approximately 2,100 people. The transaction
is valued at approximately $175 million consisting of a cash tender offer of
$5.25 per ALRT share and the assumption of existing debt.
Albert J. Dunlap, Sunbeam's chairman and chief executive officer stated, "The
successful turnaround of Sunbeam, including the dramatic improvement of the
underlying business, has provided us with a solid platform for profitable
growth. These three separate transactions represent the next phase of our plan
to create value for Sunbeam's shareholders. We looked at various alternatives to
increase shareholder value. Ultimately we decided there is phenomenal value to
be created in assuming the
<PAGE>
Sunbeam
March 2, 1998
Page 2 of 3
leadership role in consolidating the industries in which we compete. These
acquisitions enable us to accelerate our growth rate by expanding our geographic
presence, entering new product lines and leveraging the strength of dominant
brand names such as Coleman(R), Camping Gaz(R), Eastpak(R), First Alert(R), Mr.
Coffee(R), and Health o meter(R), along with Sunbeam(R), Oster(R) and
Grillmaster(R)."
Mr. Dunlap added, "Our strategy is to become the global leader in the durable
consumer products industry through continued internal growth augmented by
further strategic acquisitions of high quality consumer brands. Our proven track
record coupled with our financial strength will enable us to successfully
execute this strategy."
The Company anticipates initial synergies of approximately $150 million which
will result in a substantial EPS accretion in 1999. A one time charge is
expected in 1998 in order to restructure and consolidate these three companies
into Sunbeam.
Additionally, the Company announced that Chairman and Chief Executive Officer
Albert J. Dunlap, along with Executive Vice Presidents Russell A. Kersh and
David C. Fannin have all renewed their commitment to the Company by signing new
three year employment contracts. Mr. Kersh was named to the new position of vice
chairman of Sunbeam. Mr. Dunlap stated, "I am eager to continue to create
tremendous value for our shareholders by building the leading durable consumer
products company in the world. This new employment agreement will put to rest
any rumors that I would leave the Company."
"This is a fantastic situation for all Sunbeam shareholders giving them the
opportunity to participate in the wealth that Al Dunlap and his team are
building," said Ronald O. Perelman, who will become Sunbeam's second largest
shareholder after the transaction. "Coleman will thrive as part of Sunbeam's
unbeatable family of brands," added Mr. Perelman.
Michael Price, president and chief executive officer of Franklin Mutual Series
Fund, Sunbeam's largest shareholder, praised the transactions and new contracts.
"With the simultaneous acquisitions of these three publicly traded companies,
Sunbeam is launching into a bold new phase as the consolidator in its
industries," Mr. Price said. "Utilizing Al's unique ability to restructure and
reposition companies, the opportunities for operating synergies and incremental
sales growth is substantial. Al's renewed commitment indicates to me that the
best is yet to come for Sunbeam and its shareholders," Mr. Price added.
Morgan Stanley & Co. Incorporated acted as financial advisor to Sunbeam in all
three of the aforementioned transactions.
2
<PAGE>
Sunbeam
March 2, 1998
Page 3 of 3
Sunbeam Corporation is a leading consumer products company that designs,
manufactures and markets, nationally and internationally, a diverse portfolio of
brand name products. The Company's Sunbeam(R) and Oster(R) brands have been
household names for generations, both domestically and abroad, and the Company
is a market leader in many of its product categories.
Cautionary Statements -- Statements contained in this press release, including
statements relating to the Company's expectations regarding anticipated
performance in the future are "forward looking statements," as such term is
defined in the Private Securities Litigation Reform Act of 1995. Actual results
could differ materially from the Company's statements in this release regarding
its expectations, goals, or projected results, due to various factors, including
those set forth in the Company's Cautionary Statements contained in its Form
10-K, filed with the Securities and Exchange Commission on March 31. 1997.
********************
The Company will conduct a conference call on
Monday, March 2, 1998 at 2:00 p.m. EST.
The call in number is (312) 470-0142.
Password: Sunbeam
***************
Please contact:
Media: Investors:
Mari Hope Rich Goudis
Hill & Knowlton Sunbeam Corporation
212-885-0306 561-243-2142
3
<PAGE>
Exhibit (a)(8)
FOR IMMEDIATE RELEASE
- ---------------------
Sunbeam Launches Tender Offers for
Signature Brands USA and First Alert
Del Ray Beach, FL, March 9, 1998 -- Sunbeam Corporation (NYSE:SOC) today
announced that it had commenced on Friday, March 6, 1998 cash tender offers for
Signature Brands USA, Inc. (NASDAQ:SIGB) and First Alert, Inc. (NASDAQ:ALRT)
pursuant to merger agreements previously entered into with each company.
The tender offers are being made at a price of $8.25 per share in cash for
Signature Brands and $5.25 per share in cash for First Alert. The offers and
withdrawal rights are scheduled to expire at 12 midnight, New York City time on
Thursday, April 2, 1998, unless the offers are extended by Sunbeam.
Shareholders wishing to accept the offers should tender their shares through The
Bank of New York. Sunbeam has retained Morgan Stanley & Co. Incorporated as its
financial advisor.
The offers are subject to the making of certain anti-trust filings and certain
conditions, including the tender of a majority of the outstanding First Alert
and Signature Brands shares.
This press release is neither an offer to purchase nor a solicitation of an
offer to sell securities. The tender offers are made only through the Offers to
Purchase and related Letters of Transmittal. For information regarding the
pricing, tender and delivery procedure and conditions of the tender offers,
reference is made to the Offers to Purchase and related Letters of Transmittal
and other related documents. Documents can be obtained by contacting Hill and
Knowlton, Inc., the information agent for the tender offers, at (800) 755-3002.
For further information please call:
Rich Goudis, Vice President, Investor Relations, Sunbeam Corporation
(561) 243-2143
Donald Quatrella, Hill and Knowlton, Inc.
(212) 885-0447
Investor Services, The Bank of New York
(800) 507-9357
Alexandre J. Fuchs, Morgan Stanley & Co. Incorporated
(212) 761-6094
<PAGE>
Exhibit (c)(1)
--------------------------------------------------
AGREEMENT AND PLAN OF MERGER
by and among
SUNBEAM CORPORATION
SENTINEL ACQUISITION CORP.
and
FIRST ALERT, INC.
dated as of
February 28, 1998
--------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer ...................................... 1
Section 1.2 Company Actions ................................ 3
Section 1.3 SEC Documents .................................. 4
Section 1.4 Directors ...................................... 5
Section 1.5 The Merger ..................................... 7
Section 1.6 Effective Time ................................. 8
Section 1.7 Closing ........................................ 8
Section 1.8 Stockholders' Meeting .......................... 8
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock .................... 10
Section 2.2 Exchange of Certificates ....................... 11
Section 2.3 Dissenters' Rights ............................. 12
Section 2.4 Transfer of Shares After the
Effective Time............................... 13
Section 2.5 Company Stock Plans ............................ 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Representations and Warranties of
the Company .................................. 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE PURCHASER
Section 4.1 Representations and Warranties of
Parent and the Purchaser ..................... 31
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the
Company ...................................... 33
Section 5.2 Access; Confidentiality ........................ 38
Section 5.3 Reasonable Efforts; Notification ............... 38
i
<PAGE>
Section 5.4 No Solicitation ................................ 40
Section 5.5 Publicity ...................................... 42
Section 5.6 Transfer Taxes ................................. 42
Section 5.7 State Takeover Laws ............................ 42
Section 5.8 Indemnification and Insurance .................. 42
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation
to Effect the Merger ......................... 45
ARTICLE VII
TERMINATION
Section 7.1 Termination .................................... 46
Section 7.2 Effect of Termination .......................... 48
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses .............................. 48
Section 8.2 Amendment and Modification...................... 49
Section 8.3 Nonsurvival of Representations and
Warranties ................................... 49
Section 8.4 Notices ........................................ 50
Section 8.5 Interpretation ................................. 50
Section 8.6 Counterparts ................................... 51
Section 8.7 Entire Agreement; No Third Party
Beneficiaries; Rights of Ownership............ 51
Section 8.8 Severability.................................... 51
Section 8.9 Governing Law................................... 51
Section 8.10 Assignment...................................... 51
SECTION 8.11 Enforcement..................................... 52
SECTION 8.12 Extension; Waiver............................... 52
SECTION 8.13 Procedure for Termination,
Amendment, Extension or Waiver................. 52
SECTION 8.14 Certain Undertakings of Parent.................. 53
SECTION 8.15 Company Disclosure Schedule..................... 53
SECTION 8.16 Definitions..................................... 53
Annex A Certain Conditions of the Offer
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of February 28, 1998,
by and among SUNBEAM CORPORATION, a Delaware corporation ("Parent"), SENTINEL
ACQUISITION CORP., a Delaware corporation and a wholly-owned Subsidiary of
Parent (the "Purchaser"), and FIRST ALERT, INC., a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent, the
Purchaser and the Company have unanimously determined that it is fair to and in
the best interests of their respective stockholders for Parent to acquire the
Company pursuant to a Merger (as defined below) in which Purchaser (or a
wholly-owned Subsidiary thereof) shall be merged with and into the Company upon
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, Parent proposes that the
Purchaser make an offer to purchase for cash the outstanding Shares (as defined
below) at a price of $5.25 per Share, net to the seller;
WHEREAS, concurrently with the execution and delivery of this
Agreement, certain stockholders of the Company have entered into a Stock Sale
Agreement (the "Stock Sale Agreement") with Parent pursuant to which, subject to
the terms and conditions specified therein, such stockholders are willing to pay
to Purchaser the proceeds upon the sale of certain Shares owned by such
stockholders after the date of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
covenants and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer. Subject to this Agreement not having
been terminated in accordance with the provisions of Section 7.1 hereof, as
promptly as practicable (but in no event later than five business days after the
public announcement of the execution hereof), the Purchaser shall commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
<PAGE>
amended (the "Exchange Act")) a tender offer (the "Offer") for all of the
outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of
the Company at a price of $5.25 per Share, net to the seller in cash (such
price, or such higher price per Share as may be paid in the Offer, being
referred to herein as the "Offer Price"), subject to the conditions set forth in
Annex A hereto.
The obligations of the Purchaser to commence the Offer and to
accept for payment and to pay for any Shares validly tendered on or prior to the
expiration of the Offer and not withdrawn shall be subject only to the
conditions set forth in Annex A hereto. The Offer shall be made by means of an
offer to purchase (the "Offer to Purchase") containing the terms set forth in
this Agreement and the conditions set forth in Annex A hereto.
The Purchaser shall not decrease the Offer Price or decrease
the number of Shares sought or amend any other condition of the Offer in any
manner adverse to the holders of the Shares (other than with respect to
insignificant changes or amendments and subject to the penultimate sentence of
this Section 1.1) or impose additional conditions without the written consent of
the Company, provided, however, that if on the initial scheduled expiration date
of the Offer, which shall be 20 business days after the date the Offer is
commenced, all conditions to the Offer shall not have been satisfied or waived,
the Purchaser may, from time to time, in its sole discretion, extend the
expiration date provided, however, that the expiration date of the Offer may not
be extended beyond June 1, 1998. 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. The Purchaser
shall, on the terms and subject to the prior satisfaction or waiver of the
conditions of the Offer, accept for payment and pay for Shares validly tendered
as promptly as practicable; provided, however, that if, immediately prior to the
initial expiration date of the Offer, the Shares validly tendered and not
withdrawn pursuant to the Offer equal less than 90% of the outstanding Shares,
the Purchaser may extend the Offer for a period not to exceed ten business days,
notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer. The Purchaser agrees that if all conditions set
2
<PAGE>
forth in Annex A are not satisfied on the initial expiration date of the Offer,
the Purchaser shall extend (and re-extend) the Offer through April 30, 1998 to
provide time to satisfy such conditions.
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to
the Offer and represents that the Board of Directors, at a meeting duly called
and held, has (i) unanimously determined that each of the Agreement, the Offer
and the Merger (as defined in Section 1.5) are fair to and in the best interests
of the stockholders of the Company, (ii) unanimously approved the Stock Sale
Agreement, the Offer, the acquisition of Shares pursuant to the Offer and the
Merger for purposes of Section 203 of the DGCL (the "Section 203 Approval"),
(iii) received the opinions of Salomon Smith Barney and NationsBanc Montgomery
Securities, financial advisors to the Company, to the effect that the Offer
Price to be received by holders of Shares pursuant to the Offer and the Merger
is fair to the stockholders of the Company from a financial point of view, (iv)
approved this Agreement and the transactions contemplated hereby, including the
Offer and the Merger (collectively, the "Transactions") and (v) resolved to
recommend that the stockholders of the Company accept the Offer, tender their
Shares thereunder to the Purchaser and approve and adopt this Agreement and the
Merger. The Company has been advised by each of its directors and by each
executive officer who as of the date hereof is actually aware (to the knowledge
of the Company) of the Transactions contemplated hereby that each such Person
either intends to tender pursuant to the Offer all Shares owned by such Person
or vote all Shares owned by such Person in favor of the Merger.
(b) In connection with the Offer, the Company will
promptly furnish or cause to be furnished to the Purchaser mailing labels,
security position listings and any available listing or computer file containing
the names and addresses of all holders of record of the Shares as of a recent
date, and shall furnish the Purchaser with such additional information
(including, but not limited to, updated lists of holders of the Shares and their
addresses, mailing labels and lists of security positions) and assistance as the
Purchaser or its agents may reasonably request in communicating the Offer to the
3
<PAGE>
record and beneficial holders of the Shares. Subject to the requirements of
applicable Law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Purchaser and its affiliates and associates shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger, and, if this
Agreement shall be terminated, will deliver to the Company all copies of such
information in their possession.
Section 1.3 SEC Documents.
(a) As soon as practicable on the date the Offer is
commenced, Parent and the Purchaser shall file with the United States Securities
and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
in accordance with the Exchange Act with respect to the Offer (together with all
amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-1" and the Schedule 14D-1 together with all amendments,
supplements and exhibits thereto, including the Offer to Purchase, being
collectively the "Offer Documents"). Concurrently with the commencement of the
Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 in accordance with the Exchange Act (together with
all amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-9"), which shall, subject to the fiduciary duty of the Board under
applicable law, contain the recommendation referred to in clause (iv) of Section
1.2(a) hereof.
(b) Parent and the Purchaser will take all steps
necessary to ensure that the Offer Documents, and the Company will take all
steps necessary to ensure that the Schedule 14D-9, will comply in all material
respects with the provisions of applicable Federal and state securities Laws
and, on the date filed with the SEC and on the date first published, sent or
given to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that Parent and
the Purchaser make no representation with respect to information furnished by
the Company for inclusion in the Offer Documents and the Company makes no
representa-
4
<PAGE>
tion with respect to information furnished by Parent or the Purchaser for
inclusion in the Schedule 14D-9. The information supplied in writing by the
Company for inclusion in the Offer Documents and by Parent or the Purchaser for
inclusion in the Schedule 14D-9 will not 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. Each of Parent and the
Purchaser will take all steps necessary to cause the Offer Documents, and the
Company will take all steps necessary to cause the Schedule 14D-9, to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent required by applicable Federal and state securities Laws. Each
of Parent and the Purchaser, on the one hand, and the Company, on the other
hand, will promptly correct any information provided by it for use in the Offer
Documents and the Schedule 14D-9 if and to the extent that it shall have become
false and misleading in any material respect and the Purchaser will take all
steps necessary to cause the Offer Documents, and the Company will take all
steps necessary to cause the Schedule 14D-9, as so corrected to be filed with
the SEC and to be disseminated to holders of the Shares, in each case as and to
the extent required by applicable Federal and state securities Laws. Parent and
its counsel shall be given a reasonable opportunity to review and comment upon
the Schedule 14D-9 and all amendments and supplements thereto prior to their
filing with the SEC or dissemination to stockholders of the Company. The Company
agrees to provide in writing Parent and its counsel with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments and shall provide
Parent and its counsel an opportunity to participate, including by way of
discussions with the SEC or its staff, in the response of the Company to such
comments.
Section 1.4 Directors.
(a) Promptly upon the purchase of and payment for
any Shares by Parent or any of its Subsidiaries pursuant to the Offer, Parent
shall be entitled to
5
<PAGE>
designate such number of directors, rounded up to the next whole number, on the
Board of Directors such that the percentage of its designees on the Board shall
equal the percentage of the outstanding Shares beneficially owned by Parent and
its affiliates. In furtherance thereof, the Company shall, upon request of the
Purchaser, use its best efforts promptly to cause Parent's designees to be so
elected to the Company's Board, and in furtherance thereof, to the extent
necessary, increase the size of the Board of Directors. At such time, the
Company shall also cause Persons designated by Parent to constitute at least the
same percentage (rounded up to the next whole number) as is on the Company's
Board of Directors of (i) each committee of the Company's Board of Directors,
and (ii) each committee (or similar body) of the Board of Directors.
Notwithstanding the provisions of this Section 1.4, the parties hereto shall use
their respective reasonable best efforts to ensure that at least two of the
members of the Board shall, at all times prior to the Effective Time (as defined
in Section 1.6 hereof) be, Continuing Directors (as defined below). For purposes
hereof, the term "Continuing Director" shall mean (i) any member of the Board as
of the date hereof, (ii) any member of the Board who is unaffiliated with, and
not a designee or nominee of Parent or Purchaser, or (iii) any successor of a
Continuing Director who is (A) unaffiliated with, and not a designee or nominee,
of Parent or Purchaser, and (B) recommended to succeed a Continuing Director by
a majority of the Continuing Directors then on the Board, and in each case under
clause (iii), who is not an employee of the Company. The Company shall promptly
take all actions required pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder in order to fulfill its obligations under this
Section 1.4(a), including mailing to stockholders the information required by
such Section 14(f) and Rule 14f-1 (or, at Parent's request, furnishing such
information to Parent for inclusion in the Offer Documents initially filed with
the SEC and distributed to the stockholders of the Company) as is necessary to
enable Parent's designees to be elected to the Company's Board of Directors.
Parent or the Purchaser will supply the Company any information with respect to
either of them and their nominees, officers, directors and affiliates required
by such Section 14(f) and Rule 14f-1. The provisions of this Section 1.4(a) are
in addition to and shall not limit any rights which the Purchaser, Parent or
6
<PAGE>
any of their affiliates may have as a holder or beneficial owner of Shares as a
matter of law with respect to the election of directors or otherwise.
(b) From and after the time, if any, that Parent's
designees constitute a majority of the Company's Board of Directors, any
amendment or modification of this Agreement, any amendment to the Certificate of
Incorporation or Bylaws inconsistent with this Agreement, any termination of
this Agreement by the Company, any extension of time for performance of any of
the obligations of Parent or the Purchaser hereunder, any waiver of any
condition to the Company's obligations hereunder or any of the Company's rights
hereunder or other action by the Company hereunder may be effected only by the
action of a majority of the Continuing Directors of the Company, which action
shall be deemed to constitute the action of any committee specifically
designated by the Board of Directors to approve the actions and Transactions
contemplated hereby and the full Board of Directors.
Section 1.5 The Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time (as defined in Section 1.6 hereof), the
Company and the Purchaser shall consummate a merger (the "Merger") pursuant to
which (a) the Purchaser (or a wholly-owned Subsidiary thereof) shall be merged
with and into the Company and the separate corporate existence of the Purchaser
(or a wholly-owned Subsidiary thereof) shall thereupon cease and (b) the Company
shall be the surviving corporation in the Merger (sometimes hereinafter referred
to as the "Surviving Corporation") and shall continue to be governed by the Laws
of the State of Delaware. In the event a wholly-owned Subsidiary of the
Purchaser rather than the Purchaser is merged with and into the Company in the
Merger, references herein to the Purchaser with respect to the Merger shall be
deemed to be references to such wholly-owned Subsidiary of the Purchaser.
Pursuant to the Merger, (x) the Restated Certificate of
Incorporation of the Company (the Certificate of Incorporation"), as in effect
immediately prior to the Effective Time, shall be the initial certificate of
incorporation of the Surviving Corporation and (y) the by-laws of the Company
(the "By-laws"), as in effect immediately prior to the Effective Time, shall be
the initial By-laws of the Surviving Corporation, each until
7
<PAGE>
thereafter changed or amended as provided therein or by applicable law. The
Merger shall have the effects specified in the Delaware General Corporation Law
(the "DGCL").
The directors and officers of the Purchaser at the Effective
Time shall be the initial directors and officers, respectively, of the Surviving
Corporation, in each case until their respective successors are duly elected and
qualified.
Section 1.6 Effective Time. Parent, the Purchaser and the
Company will cause a certificate of merger, or, if applicable, a certificate of
ownership and merger (as applicable, the "Certificate of Merger"), to be
executed and filed on the date of the Closing (as defined in Section 1.7) (or on
such other date as Parent and the Company may agree) with the Secretary of State
of Delaware (the "Secretary of State") as provided in the DGCL. The Merger shall
become effective on the date on which the Certificate of Merger has been duly
filed with the Secretary of State or such time as is agreed upon by the parties
and specified in the Certificate of Merger, and such time is hereinafter
referred to as the "Effective Time."
Section 1.7 Closing. The closing of the Merger (the
"Closing") shall take place at 10:00 a.m., local time, on a date to be specified
by the parties, which shall be no later than the second business day after
satisfaction or waiver of all of the conditions set forth in Article VI hereof
and, in the event that Purchaser determines to extend the Offer for up to ten
business days as provided for in Section 1.1 hereof, no later than the second
business day after the earlier of the completion of such ten business day period
or 90% of the outstanding Shares have been validly tendered and not withdrawn
pursuant to the Offer (the "Closing Date"), at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York, unless another date or place is
agreed to in writing by the parties hereto.
Section 1.8 Stockholders' Meeting.
(a) If required by applicable law in order to
consummate the Merger, the Company, acting
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through its Board of Directors, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and
hold a special meeting of its stockholders (the "Special Meeting") as
promptly as practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for the
purpose of considering and taking action upon the approval of the
Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a
preliminary proxy or information statement in accordance with the
Exchange Act relating to the Merger and this Agreement and use its best
efforts (x) to obtain and furnish the information required to be
included by the Exchange Act and the SEC in the Proxy Statement (as
hereinafter defined) and, after consultation with Parent, to respond
promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive proxy
or information statement, including any amendment or supplement thereto
(the "Proxy Statement") to be mailed to its stockholders, provided that
no amendment or supplement to the Proxy Statement will be made by the
Company without consultation with Parent and its counsel and (y) to
obtain the necessary approvals of the Merger and this Agreement by its
stockholders; and
(iii) include in the Proxy Statement the
recommendation of the Board that stockholders of the Company vote in
favor of the approval of the Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of
the Shares then owned by it, the Purchaser or any of its other Subsidiaries and
affiliates in favor of the approval of the Merger and the adoption of this
Agreement.
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ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any Shares or any shares of capital stock of the Purchaser:
(a) Purchaser Capital Stock. Each issued and
outstanding share of capital stock of the Purchaser shall be converted into and
become one fully paid and nonassessable share of common stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Purchaser-
Owned Stock. All Shares that are owned by the Company or any Subsidiary of the
Company and any Shares owned by Parent, the Purchaser or any Subsidiary of
Parent or the Purchaser shall be cancelled and retired and shall cease to exist
and no consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and outstanding
Share (other than Shares to be cancelled in accordance with Section 2.1(b) and
any Shares which are held by stockholders exercising appraisal rights pursuant
to Section 262 of the DGCL ("Dissenting Stockholders")) shall be converted into
the right to receive the Offer Price in cash, payable to the holder thereof,
without interest (the "Merger Consideration"), upon surrender of the certificate
formerly representing such Share in the manner provided in Section 2.2. All such
Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section 2.2,
without interest, or the right, if any, to receive payment from the Surviving
Corporation of the "fair value" of such Shares as determined in accordance with
Section 262 of the DGCL.
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Section 2.2 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time,
Parent shall designate a bank or trust company to act as agent for the holders
of the Shares in connection with the Merger (the "Paying Agent") to receive the
funds to which holders of the Shares shall become entitled pursuant to Section
2.1(c). Parent shall, from time to time, make available to the Paying Agent
funds in amounts and at times necessary for the payment of the Merger
Consideration as provided herein. All interest earned on such funds shall be
paid to Parent.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Paying Agent shall mail to each holder
of record of a certificate or certificates, which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates"), whose Shares
were converted pursuant to Section 2.1 into the right to receive the Merger
Consideration (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent and the Company may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment of the Merger Consideration. Upon surrender
of a Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each Share formerly represented
by such Certificate and the Certificate so surrendered shall forthwith be
cancelled. If payment of the Merger Consideration is to be made to a Person
other than the Person in whose name the surrendered Certificate is registered,
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that the
Person requesting such payment shall have paid any transfer and other taxes
required by reason of the payment of the Merger Consideration to a Person other
than the registered holder of the Certificate surrendered or shall have
established to the satisfaction of the Surviving Corporation that such tax
either has been paid or is not appli-
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cable. Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive the Merger Consideration in cash as contemplated by this Section 2.2.
The right of any stockholder to receive the Merger Consideration shall be
subject to and reduced by any applicable withholding obligation.
(c) Transfer Books; No Further Ownership Rights in
the Shares. At the Effective Time, the stock transfer books of the Company shall
be closed and thereafter there shall be no further registration of transfers of
the Shares on the records of the Company. From and after the Effective Time, the
holders of Certificates evidencing ownership of the Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided for herein or by applicable
law. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided in
this Article II.
(d) Termination of Fund; No Liability. At any time
following six months after the Effective Time, the Surviving Corporation shall
be entitled to require the Paying Agent to deliver to it any funds (including
any interest received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar Laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing, none of Parent, the Surviving Corporation or the Paying Agent
shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
Section 2.3 Dissenters' Rights. Notwithstanding anything in
this Agreement to the contrary, if any Dissenting Stockholder shall demand to be
paid the "fair value" of such holder's Shares, as provided in Section 262 of the
DGCL, such Shares shall not be converted into or be exchangeable for the right
to receive the Merger
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Consideration except as provided in this Section 2.3 and the Company shall give
the Parent notice thereof and the Parent shall have the right to participate in
all negotiations and proceedings with respect to any such demands. Neither the
Company nor the Surviving Corporation shall, except with the prior written
consent of the Parent, voluntarily make any payment with respect to, or settle
or offer to settle, any such demand for payment. If any Dissenting Stockholder
shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent, the Shares held by such Dissenting Stockholder shall thereupon be
treated as though such Shares had been converted into the Merger Consideration
pursuant to Section 2.1.
Section 2.4 Transfer of Shares After the Effective Time. No
transfer of Shares shall be made on the stock transfer books of the Surviving
Corporation at or after the Effective Time.
Section 2.5 Company Stock Plans. (a) Immediately prior to
the Effective Time, each then outstanding option to purchase shares (in each
case, an Option), whether or not then exercisable, shall be cancelled by the
Company and in consideration of such cancellation and except to the extent that
Parent or the Purchaser and the holder of any such Option otherwise agree, the
Company (or, at Parent's option, the Purchaser) shall pay to such holders of
Options an amount in respect thereof equal to the product of (A) the excess, if
any, of the Offer Price over the exercise price of each such Option and (B) the
number of Shares previously subject to the Option immediately prior to its
cancellation (such payment to be net of withholding taxes and without interest).
If required, the Company shall cause the Company's employees and directors to
consent to the transactions contemplated by this Section 2.5, no later than the
Effective Time.
(b) All stock option or other equity based plans
maintained with respect to the Shares ("Option Plans") shall terminate as of the
Effective Time and the provisions in any other Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or any interest
in respect of any capital stock of the Company shall be deleted as of the
Effective Time, and the Company shall use its best efforts to ensure that
following the Effective Time no holder of an
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Option or any participant in any Option Plan shall have any right thereunder to
acquire any capital stock of the Company, Parent or the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Represenatations and Warranties of the Company.
The Company represents and warrants to Parent and the Purchaser as follows:
(a) Organization, Standing and Corporate Power. Each
of the Company and each of its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction in
which it is organized and has the requisite corporate power and authority to
carry on its business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) would not have a
Material Adverse Effect on the Company. The Company has made available to Parent
complete and correct copies of the Certificate of Incorporation of the Company
and By-laws of the Company, in each case as amended to the date of this
Agreement, and has delivered the certificates of incorporation and by-laws or
other organizational documents of its Subsidiaries, in each case as amended to
the date of this Agreement, other than Subsidiaries which are incorporated in a
jurisdiction other than a State of the United States. The respective
certificates of incorporation and by-laws or other organizational documents of
the Subsidiaries of the Company do not contain any provision limiting or
otherwise restricting the ability of the Company to control such Subsidiaries.
(b) Subsidiaries. The list of Subsidiaries of the
Company filed by the Company with its most recent Report on Form 10-K is a true
and accurate list of all the Subsidiaries of the Company which are required to
be set forth therein. All the outstanding shares of capital stock of each
Subsidiary are owned by the Company
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or by another wholly owned Subsidiary of the Company, free and clear of all
Liens, except as set forth in Schedule 3.1(b) of the Company Disclosure
Schedule. There are no other companies in which the Company has a direct or
indirect ownership interest.
(c) Capital Structure. The authorized capital stock
of the Company consists of 30,000,000 Shares and 1,000,000 shares of preferred
stock, par value $.01 per share (the Preferred Shares"). As of the date hereof,
(i) 24,335,112 Shares and no Preferred Shares were issued and outstanding and
(ii) 1,929,698 shares were reserved for issuance upon exercise of outstanding
Options. Except as set forth above, as of the date of this Agreement: (i) no
shares of capital stock or other voting securities of the Company are issued,
reserved for issuance or outstanding; (ii) there were no stock appreciation
rights, restricted stock grant or contingent stock grants and there are no other
outstanding contractual rights to which the Company is a party the value of
which is based on the value of Shares; (iii) all outstanding shares of capital
stock of the Company are, and all shares which may be issued will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights; and (iv) there are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which stockholders of the Company may vote. Except as set forth above, as of the
date of this Agreement, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which the Company or any of its Subsidiaries is a party or by which any of
them is bound obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or of any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are not any outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries.
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(d) Authority; Noncontravention; Company Action. The
Company has the requisite corporate power and authority to enter into this
Agreement and, subject to approval of this Agreement by the holders of a
majority of the outstanding Shares, to consummate the Merger contemplated by
this Agreement. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject, in the case of the Merger, to approval of this
Agreement by the holders of a majority of the outstanding Shares. This Agreement
has been duly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding obligation of Parent and the Purchaser,
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar Laws now or hereafter in effect relating to creditors' rights generally
and (ii) the remedy of specific performance and injunctive relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. Except as set forth in Schedule 3.1(d) of
the Company Disclosure Schedule, the execution and delivery of this Agreement do
not, and the consummation of the Transactions contemplated by this Agreement
(including the changes in the composition of the Board of Directors of the
Company) and compliance with the provisions of this Agreement will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any lien or other encumbrance upon any of the properties or
assets of the Company or any of its Subsidiaries under, (i) the Certificate of
Incorporation, as amended, or By-laws of the Company or the comparable charter
or organizational documents of any of its Subsidiaries, (ii) any loan or credit
agreement note, bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to the Company or any of its
Subsidiaries or their respective properties or assets (including all agreements
described pursuant to Section 3.1(t)) or (iii) any judgment, order, decree,
statute, law, ordinance, rule or
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regulation applicable to the Company or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii) or
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) impair in any material respect
the ability of the Company to perform its obligations under this Agreement, (y)
prevent or impede, in any material respect, the consummation of any of the
Transactions contemplated by this Agreement or (z) impair, prevent or impede
materially the conduct of the Company's business substantially as now conducted.
No consent, approval, order or authorization of, or registration, declaration or
filing with, any Federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity") or any other party, is required by
the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the Transactions contemplated by this Agreement, except for (i) if required, the
filing of a premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing with the SEC of (x) the Schedule 14D-9, (y) a Proxy
Statement and (z) such reports under Section 13(a) of the Exchange Act as may be
required in connection with this Agreement and the Transactions contemplated by
this Agreement, (iii) the filing of the Certificate of Merger with the Secretary
of State and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, (iv) as may be required by any
applicable state securities or "blue sky" Laws, and (v) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, (x) impair, in any material respect, the ability of the Company to
perform its obligations under this Agreement, (y) prevent or significantly delay
the consummation of the Transactions contemplated by this Agreement or (z)
impair, prevent or impede materially the conduct of the Company's business
substantially as now conducted.
(e) SEC Documents; Financial Statements. The Company
has filed all reports, proxy statements, forms, and other documents required to
be filed with the
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SEC under the Securities Act and the Exchange Act since December 31, 1995 (the
"SEC Documents"). As of their respective dates, (i) the SEC Documents complied
in all material respects with the requirements of the Securities Act of 1933
(the "Securities Act"), or the Exchange Act, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and (ii) none of the SEC Documents 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. The financial
statements of the Company included in the SEC Documents are true and complete
and comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in Schedule 3.1(e) of
the Company Disclosure Schedule and except as set forth in the SEC Documents
filed and publicly available prior to the date of this Agreement, and except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the date of the most recent consolidated
balance sheet included in the SEC Documents filed and publicly available prior
to the date of this Agreement, neither the Company nor any of its Subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting principles to
be set forth on a consolidated balance sheet of the Company and its consolidated
Subsidiaries or in the notes thereto.
(f) Information Supplied. None of the information
supplied or to be supplied by the Company expressly for inclusion or
incorporation by reference in (i) the Offer Documents or (ii) the Proxy
Statement, will, and in the case of the Offer Documents, at the time the Offer
Documents are filed with the SEC and first
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published, sent or given to the Company's stockholders, or, in the case of the
Proxy Statement, on the date the Proxy Statement is first mailed to the
Company's stockholders and at the time of the meeting of the Company's
stockholders held to vote on approval and adoption of this Agreement, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not false or
misleading. The Proxy Statement will comply as to form in all material respects
with the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or the Purchaser for inclusion or incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as
set forth in SEC Documents or Schedule 3.1(g) of the Company Disclosure
Schedule, since September 28, 1997, the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course, and (i) there
has not been any Material Adverse Change in the Company and (ii) neither the
Company nor any of its Subsidiaries has taken any of the actions contemplated by
Section 5.1.
(h) Litigation. Except as set forth in SEC documents
or Schedules 3.1(h) and 3.1(x) of the Company Disclosure Schedule or to the
extent reserved for as reflected on the Company's financial statements for the
year ended December 31, 1996, there are (i) no suits, actions or proceedings
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries that, individually or in the
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aggregate, would reasonably be expected to have a Material Adverse Effect, (ii)
no complaints, lawsuits, charges or other proceedings pending or, to the
knowledge of the Company, threatened in any forum by or on behalf of any present
or former employee of the Company or any of its Subsidiaries, any applicant for
employment or classes of the foregoing alleging breach of any express or implied
contract of employment, any law or regulation governing employment or the
termination thereof or other discriminatory, wrongful or tortious conduct in
connection with the employment relationship that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect, (iii)
no judgments, decrees, injunctions or orders of any Governmental Entity or
arbitrator outstanding against the Company that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on the
Company; and (iv) none of the Intellectual Property is subject to any order,
writ, judgment, injunction, decree, determination or award that has, or would
reasonably be expected to have a Material Adverse Effect on the Company.
(i) Absence of Changes in Benefit Plans; SEC
Disclosure. Except as disclosed in Schedule 3.1(i) of the Company Disclosure
Schedule, there has not been any adoption or amendment by the Company or any of
its Subsidiaries or any ERISA Affiliate (as defined in Section 3.1(j) hereof) of
any Benefit Plan (as defined in Section 3.1(j) hereof) since September 28, 1997.
Except as disclosed in Schedule 3.1(i) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries has any formal plan or
commitment to create any additional Benefit Plan or modify or change any
existing Benefit Plan that would affect any employee or terminated employee of
the Company or a Subsidiary of the Company. All employment, consulting,
severance, termination, change in control or indemnification agreements,
arrangements or understandings between the Company or any of its Subsidiaries
and any current or former officer or director of the Company or any of its
Subsidiaries which are required to be disclosed in the SEC Documents have been
disclosed therein.
(j) Employee Benefits; ERISA. (i) Schedule 3.1(j) of
the Company Disclosure Schedule contains a true and complete list of each
material bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance or termination pay, health insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, other than a non-material fringe benefit plan,
sponsored, maintained or contributed to or required to be contributed to (at any
time during the past six years) by the Company or any of its Subsidiaries or by
any trade or business, whether or not incorporated (an "ERISA Affiliate"), that
is a member of a "controlled group" within the meaning of
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section 4001 of the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder ("ERISA") of which the
Company or a Subsidiary is a member or which is under "common control" within
the meaning of Section 4001 of ERISA, with the Company or a Subsidiary, for the
benefit of any employee or terminated employee of the Company, its Subsidiaries
or any ERISA Affiliate, whether formal or informal (the "Benefit Plans").
(ii) With respect to each Benefit Plan, the Company
has delivered a true and complete copy thereof (including all amendments
thereto), as well as true and complete copies of the two most recent annual
reports, if required under ERISA, with respect thereto; the two most recent
actuarial reports, if required under ERISA, with respect thereto; the two most
recent reports prepared with respect thereto in accordance with Statement of
Financial Accounting Standards No. 87, Employer's Accounting for Pensions; the
most recent Summary Plan Description, together with each Summary of Material
Modifications, if required under ERISA with respect thereto; if the Benefit Plan
is funded through a trust or any third party funding vehicle, the trust or other
funding agreement (including all amendments thereto) and the latest financial
statements thereof; and the most recent determination letter received from the
Internal Revenue Service with respect to each Benefit Plan that is intended to
be qualified under section 401 of the Internal Revenue Code of 1986, as from
time to time amended (the "Code").
(iii) No liability to the Pension Benefit Guaranty
Corporation ("PBGC") under Title IV of ERISA has been incurred by the Company,
its Subsidiaries or any ERISA Affiliate since the effective date of ERISA that
has not been satisfied in full, and no condition exists that presents a material
risk to the Company, its Subsidiaries or any ERISA Affiliate of incurring a
liability under such Title, other than liability for premiums due the PBGC
(which premiums have been paid when due). Each Benefit Plan has been operated
and administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code.
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(iv) The PBGC has not instituted proceedings to
terminate any Benefit Plan and no condition exists that presents a material risk
that such proceedings will be instituted.
(v) With respect to each Benefit Plan that is
subject to Section 302 of the Code or 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 exceed, as of its latest valuation
date, the then current value of the assets of such plan allocable to such
accrued benefits.
(vi) Neither the Company, nor any Subsidiary of the
Company, nor any trust created thereunder, nor any trustee or administrator
thereof has engaged in a transaction in connection with which the Company or any
Subsidiary of the Company, any such trust, or any trustee or administrator
thereof, or any party dealing with any Benefit Plan or any such trust could be
subject to either a civil penalty assessed pursuant to section 409 or 502(i) of
ERISA or a tax imposed pursuant to section 4975 or 4976 of the Code.
(vii) No Benefit Plan is a "multiemployer pension
plan," as such term is defined in section 3(37) of ERISA.
(viii) Each Benefit Plan which is intended to be
"qualified" within the meaning of section 401(a) of the Code is so qualified and
the trusts maintained thereunder are exempt from taxation under section 501(a)
of the Code and, to the knowledge of the Company, no event has occurred to cause
the loss of such qualified or exempt status.
(ix) No Benefit Plan provides health, death or
medical benefits (whether or not insured) with respect to current or former
employees of the Company or its Subsidiaries beyond their retirement or other
termination of service (other than (a) coverage mandated by applicable law or
(b) benefits the full cost of which is borne by the current or former employee
(or his beneficiary).
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(x) Except as set forth in Section 3.1(j) of the
Company Disclosure Schedule, the consummation of the Transactions contemplated
by this Agreement, alone, will not (a) entitle any current or former employee or
officer of the Company or any Subsidiary to severance pay, unemployment
compensation or any other payment, (b) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer, (c) result in any prohibited transaction described in section 406 of
ERISA or section 4975 of the Code for which an exemption is not available, or
(d) require the Company or any ERISA Affiliate to fund or make any payments to
any trust or other funding vehicle in respect of any Benefit Plan.
(xi) There are no pending, threatened or, to the
knowledge of the Company, anticipated claims by or on behalf of any Benefit
Plan, by any employee or beneficiary covered under any such Benefit Plan, or
otherwise involving any such Benefit Plan (other than routine claims for
benefits).
(xii) No Benefit Plan of the Company or its
Subsidiaries or other arrangement authorizes grants of either stock appreciation
rights or restricted stock of the Company and there are no outstanding stock
appreciation rights or restricted stock of the Company.
(xiii) Except as set forth in Schedule 3.1(j) of the
Company Disclosure Schedule, no material Benefit Plan is not subject to ERISA
pursuant to Section 4(b)(4) of ERISA.
(i) Taxes. (i) Each of the Company and each of its
Subsidiaries has timely filed (or has had timely filed on its behalf) all Tax
Returns required to be filed by it, and all such Tax Returns are true, complete
and correct in all material respects. Each of the Company and each of its
Subsidiaries has paid (or has had paid on its behalf) all Taxes (whether or not
shown as due on such Tax Returns), or the most recent financial statements
contained in the SEC Documents reflect adequate reserves in accordance with
generally accepted accounting principles for all Taxes not yet paid.
(ii) Except as set forth in Schedule 3.1(k) of the
Company Disclosure Schedule, (A) no defi-
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ciencies for any Taxes have been threatened, proposed, asserted or assessed
against the Company or any of its Subsidiaries, (B) no governmental authority is
conducting an audit with respect to Taxes or any Tax Return of the Company or
any of its Subsidiaries, (C) no extension or waiver of the statute of
limitations with respect to Taxes or any Tax Return has been granted by the
Company or any of its Subsidiaries, which remains in effect, (D) none of the
Company or any of its Subsidiaries is a party to any arrangement to allocate,
share or indemnify another party for Taxes, and (E) there are no liens for
material Taxes upon the assets of the Company or any of its Subsidiaries, except
for liens for Taxes not yet due.
(iii) As used in this Agreement, "Taxes" shall
include (A) any Federal, state, local or foreign net income, gross income,
receipts, windfall profit, severance, property, production, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or add-on
minimum, ad valorem, transfer, stamp or environmental tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, addition to tax or additional
amount imposed by any governmental authority, and (B) any liability for the
payment of amounts with respect to payments of a type described in clause (A) as
a result of being a member of an affiliated, consolidated, combined or unitary
group, or as a result of any obligation under a Tax sharing arrangement or a Tax
indemnity arrangement. As used in this Agreement, "Tax Returns" shall mean all
returns, reports, or statements required to be filed with respect to any Tax
(including any attachments thereto), including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax.
(l) No Excess Parachute Payments. Except as set forth
in Section 3.1(l) of the Company Disclosure Schedule, no amounts payable as a
result of the Transactions contemplated by this Agreement under the Benefit
Plans or any other plans or arrangements will constitute a "parachute payment"
to a "disqualified individual" as those terms are defined in section 280G of the
Code, without regard to whether such payment is reasonable
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compensation for personal services performed or to be performed in the future.
(m) Compliance with Applicable Laws. Except as set
forth in Schedule 3.1(m) of the Company Disclosure Schedule, to the knowledge of
the Company, the Company and each of its Subsidiaries have complied and are
presently complying in all material respects with all applicable laws (whether
statutory or otherwise), rules, regulations, orders, ordinances, judgments or
decrees of all governmental authorities (Federal, state, local or otherwise)
(collectively, "Laws"), including, but not limited to, the Federal Occupational
Safety and Health Act, the Federal Consumer Product Safety Act, the rules and
regulations of the Nuclear Regulatory Commission, and all Laws relating to the
safe conduct of business and environmental protection and conservation, the
Civil Rights Act of 1964 and Executive Order 11246 concerning equal employment
opportunity obligations of Federal contractors and any applicable health,
sanitation, fire, safety, labor, zoning and building Laws and ordinances, and
neither the Company nor any of its Subsidiaries has received notification of any
asserted present or past failure to so comply, except such non-compliance that
has not and will not prevent the Company from carrying on its business
substantially as now conducted or might reasonably be expected to result in a
Material Adverse Effect.
(ii) Each of the Company and its Subsidiaries has
in effect all material Federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights, including all authorizations under Environmental Laws ("Permits"),
necessary for it to own, lease or operate its properties and assets and to carry
on its business substantially as now conducted, there are no appeals nor any
other actions pending to revoke any such Permits, and there has occurred no
material default or violation under any such Permits.
(iii) To the knowledge of the Company, each of the
Company and its Subsidiaries is, and has been, and each of the Company's former
Subsidiaries, while a Subsidiary of the Company, was in compliance in all
material respects with all applicable Environmental Laws, except such
non-compliance that has not and will
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not prevent the Company from carrying on its business substantially as now
conducted or might reasonably be expected to result in a Material Adverse
Effect. To the knowledge of the Company, as of the date of this Agreement, there
are no circumstances or conditions that would be reasonably likely to prevent or
interfere with compliance by the Company or its Subsidiaries in the future with
Environmental Laws (or Permits issued thereunder) in effect as of the date of
this Agreement, except such circumstances or conditions that have not and will
not prevent the Company from carrying on its business substantially as now
conducted or might reasonably be expected to result in a Material Adverse
Effect.
(iv) Except as set forth on Schedule 3.1(m)(iv) of
the Company Disclosure Schedule, neither the Company nor any Subsidiary of the
Company has received any written claim, demand, notice, complaint, court order,
administrative order or request for information from any Governmental Entity or
private party, alleging violation of, or asserting any noncompliance with or
liability under or potential liability under, any Environmental Laws, except for
matters which are no longer threatened or pending and for which the Company or
its Subsidiaries are not subject to further requirements pursuant to an
administrative or court order, judgment, or a settlement agreement.
(v) To the knowledge of the Company, during the
period of ownership or operation by the Company and its Subsidiaries of any of
their respective current or previously owned or leased properties, there have
been no Releases of Hazardous Material in, on, under or affecting such
properties and none of the Company or its Subsidiaries have disposed of any
Hazardous Material or any other substance in a manner that has led, or could
reasonably be anticipated to lead to a Release except in each case for those
which individually or in the aggregate are not reasonably likely to have a
Material Adverse Effect. Prior to the period of ownership or operation by the
Company and its Subsidiaries of any of their respective current or previously
owned or leased properties, to the knowledge of the Company, no Hazardous
Material was generated, treated, stored, disposed of, used, handled or
manufactured at, or transported shipped or disposed of from, such current or
previously owned or leased properties, and there were no Releases of Hazardous
Material
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in, on, under or affecting any such property, except in each case for those
which individually or in the aggregate would not be reasonably likely to have a
Material Adverse Effect.
(vi) Except for leases entered into in the ordinary
course of business, as to which no notice of a claim for indemnity or
reimbursement has been received by the Company, and except as set forth on
Schedule 3.1(m)(vii) of the Company Disclosure Schedule, to the knowledge of the
Company, neither the Company nor any of its Subsidiaries has entered into any
agreement that may require it to pay to, reimburse, guarantee, pledge, defend,
indemnify, or hold harmless any Person for or against any Environmental
Liabilities and Costs.
(vii) Neither the Company nor any of its
Subsidiaries has treated, stored or disposed of "hazardous waste", as that term
is defined in the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et
seq., analogous state Laws, or the regulations promulgated thereunder, such that
the Company or any of its Subsidiaries would be required to obtain a permit
under said Laws for such treatment, storage or disposal and the failure to
obtain such permit would have a Material Adverse Effect.
(n) The Section 203 Approval is valid and in full
force and effect. Section 203 of the DGCL will not apply to the Stock Sale
Agreement, the Offer, the acquisition of Shares pursuant to the Offer or the
Merger. No other state takeover statute or similar statute or regulation applies
or purports to apply to the Offer, the Merger or the other Transactions
contemplated hereby.
(o) Voting Requirements. The affirmative vote of the
holders of a majority of all the Shares entitled to vote approving this
Agreement is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement and the Transactions
contemplated by this Agreement.
(p) Brokers. No broker, investment banker, financial
advisor or other Person, other than Salomon Smith Barney and NationsBanc
Montgomery Securities, the fees and expenses of which will be paid by the
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Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company. The
Company has provided Parent true and correct copies of all agreements between
the Company and each of Salomon Smith Barney and NationsBanc Montgomery
Securities, including, without limitations, any fee arrangements.
(q) Opinion of Financial Advisor. The Company has
received an opinions of Salomon Smith Barney and NationsBanc Montgomery
Securities, to the effect that, as of the date of this Agreement, the
consideration to be received in the Offer and the Merger by the Company's
stockholders is fair to the Company's stockholders from a financial point of
view, and a complete and correct signed copy of such opinion has been, or
promptly upon receipt thereof will be, delivered to Parent. Company has been
authorized by Salomon Smith Barney and NationsBanc Montgomery Securities to
permit the inclusion of such opinion in its entirety in the Offer Documents and
the Schedule 14D-9 and the Proxy Statement, so long as such inclusion is in form
and substance reasonably satisfactory to Salomon Smith Barney, NationsBanc
Montgomery Securities and their respective counsel.
(r) Intellectual Property. Except as set forth on
Schedule 3.1(r) of the Company Disclosure Schedule, the Company and/or its
Subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights to use all patents, trademarks (registered or unregistered), trade names,
service marks and copyrights and applications therefor (collectively,
"Intellectual Property Rights") that are used in the business of the Company and
its Subsidiaries as currently conducted except as would not have a Material
Adverse Effect. Each of the Company and each of its Subsidiaries owns or has
sufficient unrestricted right to use the Intellectual Property Rights in order
to allow it to conduct, and continue to conduct, its business as currently
conducted in all material respects, and the consummation of the Transactions
contemplated hereby will not alter or impair such ability in any respect. To the
knowledge of the Company, there are no pending oppositions, cancellations,
invalidity proceedings, interferences or re-examination proceedings with respect
to the Intellectual Property
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Rights that are reasonably likely to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has received any written notice from any
other Person pertaining to or challenging the right of the Company or any of its
Subsidiaries to use any of the Intellectual Property Rights. Except as set forth
in Section 3.1(r) of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries has made any claim of a violation or infringement by
others of its rights to or in connection with the Intellectual Property Rights
which is still pending.
(s) Title to Properties. Each of the Company and
each of its Subsidiaries has sufficiently good and valid title to, or an
adequate leasehold interest in, its material properties and assets (including
the real property) in order to allow it to conduct, and continue to conduct, its
business as currently conducted in all material respects.
(t) Contracts; Debt Instruments. Except as set forth
in the SEC Documents or Schedule 3.1(t) of the Company Disclosure Schedule,
there are no (i) agreements of the Company or any of its Subsidiaries containing
an unexpired covenant not to compete or similar restriction applying to the
Company or any of its Subsidiaries, (ii) interest rate, currency or commodity
hedging, swap or similar derivative transactions to which the Company is a party
or (iii) other contracts or amendments thereto that would be required to be
filed as an exhibit to a Form 10-K filed by the Company with the SEC as of the
date of this Agreement. Except to the extent set forth in the SEC Documents or
Schedule 3.1(t) of the Company Disclosure Schedule, to the knowledge of the
Company, there are no existing defaults (or circumstances or events that, with
the giving of notice or lapse of time or both would become defaults) of the
Company or any of its Subsidiaries (or, to the knowledge of the Company, any
other party thereto) under any of the agreements set forth in Schedule 3.1(t) of
the Company Disclosure Schedule.
(u) Labor Relations. Except to the extent set forth
in the SEC Documents or Schedule 3.1(u) of the Company Disclosure Schedule, (i)
to the knowledge of the Company, the Company and each of its Subsidiaries is,
and has at all times been, in material compliance
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with all applicable Laws respecting employment and employment practices, terms
and conditions of employment, wages, hours of work and occupational safety and
health, and are not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable law, ordinance or regulation,
except where the failure to comply would not be reasonably likely to cause a
Material Adverse Effect on the Company; (ii) there is no labor strike, slowdown,
stoppage or lockout actually pending, or to the knowledge of the Company
threatened against or affecting the Company or any of its Subsidiaries; (iii)
the Company or any of its Subsidiaries is not a party to or bound by any
collective bargaining or similar agreement with any labor organization. There
are no employment contracts or severance agreements with any employees of the
Company or any of its Subsidiaries, except as set forth in the SEC Documents or
in Schedule 3.1(j) of the Company Disclosure Schedule.
(v) Products Liability. As used in this subsection
3.1(v), the term "Product" shall mean any product designed, manufactured,
shipped, sold, marketed, distributed and/or otherwise introduced into the stream
of commerce by or on behalf of the Company or any of its Subsidiaries,
including, without limitation, any product sold in the United States by the
Company or any of its Subsidiaries as the distributor, agent, or pursuant to any
other contractual relationship with a non-U.S. manufacturer; and the term
"Defect" shall mean a defect or impurity of any kind, whether in design,
manufacture, processing, or otherwise, including, without limitation, any
dangerous propensity associated with any reasonably foreseeable use of a
Product, or the failure to warn of the existence of any defect, impurity, or
dangerous propensity. Except as set forth in Schedule 3.1(v) of the Company
Disclosure Schedule, (i) as of the date of this Agreement, there is no claim,
action, suit or proceeding pending before any Governmental Entity in which a
Product is alleged to have a Defect; (ii) nor, to the knowledge of the Company
and its Subsidiaries, as of the date of this Agreement, is any such claim,
action, suit or proceeding threatened or is there any valid basis for any such
claim, action, suit or inquiry, proceeding; (iii) nor, to the knowledge of the
Company and its Subsidiaries, would any such claim, action, suit or proceeding
referred to in clause (i) or (ii) of this Section 3.1(v), if adversely
determined, have, individually or in
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the aggregate, a Material Adverse Effect on the Company or any of its
Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE PURCHASER
Section 4.1 Representations and Warranties of Parent and the
Purchaser. Parent and the Purchaser represent and warrant to the Company as
follows:
(a) Organization, Standing and Corporate Power. Each
of Parent and the Purchaser is a corporation duly organized, validly existing
and in good standing under the Laws of the jurisdiction in which each is
incorporated and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of Parent and the Purchaser is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a Material Adverse Effect on
Parent.
(b) Authority; Noncontravention. Parent and the
Purchaser have the requisite corporate power and authority to enter into this
Agreement and to consummate the Transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Parent and the Purchaser and the
consummation by Parent and the Purchaser of the Transactions contemplated by
this Agreement have been duly authorized by all necessary corporate action on
the part of Parent and the Purchaser, as applicable. This Agreement has been
duly executed and delivered by Parent and the Purchaser and, assuming this
Agreement constitutes the valid and binding obligation of the Company,
constitutes a valid and binding obligation of each such party, enforceable
against each such party in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar Laws now or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and
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injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. The execution and
delivery of this Agreement do not, and the consummation of the Transactions
contemplated by this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of any lien upon any of the properties or assets of Parent under, (i) the
certificate of incorporation or by-laws of Parent or the Purchaser, (ii) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Parent or the Purchaser or their respective properties or assets, other than,
in the case of clause (ii), any such conflicts, violations, defaults, rights or
Liens that individually or in the aggregate would not (x) impair in any material
respect the ability of Parent and the Purchaser to perform their respective
obligations under this Agreement or (y) prevent or impede the consummation of
any of the Transactions contemplated by this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by Parent or the Purchaser in connection with
the execution and delivery of this Agreement or the consummation by Parent or
the Purchaser, as the case may be, of any of the Transactions contemplated by
this Agreement, except for (i) if required, the filing of a premerger
notification and report form under the HSR Act, (ii) the filing with the SEC of
(x) the Offer Documents and (y) such reports under the Exchange Act as may be
required in connection with this Agreement and the Transactions contemplated by
this Agreement, (iii) the filing of the Certificate of Merger with the Secretary
of State and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, (iv) as may be required by an
applicable state securities or "blue sky" Laws, and (v) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, (x) impair, in any material respect, the ability of Parent to perform
its obligations under this Agreement or (y) prevent or significantly delay the
consummation of the Transactions contemplated by this Agreement.
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(c) Information Supplied. None of the information
supplied or to be supplied by Parent or the Purchaser expressly for inclusion or
incorporation by reference in the Offer Documents, the Schedule 14D-1, the
Schedule 14D-9 or the Proxy Statement will, in the case of the Offer Documents,
the Schedule 14D-1 or the Schedule 14D-9, at the time they are filed with the
SEC and first published, sent or given to the Company's stockholders or, in the
case of the Proxy Statement, on the date the Proxy Statement is first mailed to
the Company's stockholders and at the time of the meeting of the Company's
stockholders held to vote on approval and adoption of this Agreement, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(d) Interim Operations of the Purchaser. The
Purchaser was formed solely for the purpose of engaging in the Transactions
contemplated hereby and has not engaged in any business activities or conducted
any operations other than in connection with the Transactions contemplated
hereby.
(e) Financing. Prior to the expiration of the Offer,
Purchaser will have all funds necessary for the purchase of the Shares pursuant
to the Offer. Prior to the Effective Time, Purchaser will have all funds
necessary to consummate the Merger and to consummate all other transactions
contemplated hereunder.
(f) Brokers. No broker, investment banker, financial
advisor or other Person, other than Morgan Stanley & Co. Incorporated, the fees
and expenses of which will be paid by the Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Parent or the Purchaser.
ARTICLE V
COVENANTS
Section 5.1 (a) Interim Operations of the Company. Until the
acquisition of the Shares pursuant
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to the Offer, except as specifically contemplated by this Agreement, the Company
shall and shall cause its Subsidiaries to carry on their respective businesses
in the ordinary course and use all reasonable best efforts consistent with good
business judgment to preserve intact their current business organizations, keep
available the services of their current officers and key employees and preserve
their relationships consistent with past practice with desirable customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill and ongoing businesses shall
be unimpaired in all material respects at the Effective Time. Without limiting
the generality of the foregoing, the Company covenants and agrees that, except
(i) as expressly contemplated by this Agreement, (ii) as set forth in Section
5.1 of the Company Disclosure Schedule or (iii) as agreed in writing by Parent,
after the date hereof and prior to the Effective Date:
(i) neither the Company nor any of its Subsidiaries
shall, directly or indirectly, amend its Certificate of Incorporation or By-laws
or similar organizational documents;
(ii) neither the Company nor any of its Subsidiaries
shall: (i)(A) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to the Company's capital stock
or that of its Subsidiaries, except that a wholly-owned Subsidiary of the
Company may declare and pay a dividend or make advances to its parent or the
Company or (B) redeem, purchase or otherwise acquire directly or indirectly any
of the Company's capital stock or that of its Subsidiaries; (ii) issue, sell,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class of
the Company or its Subsidiaries, other than Shares issued upon the exercise of
Options outstanding on the date hereof in accordance with the Option Plans as in
effect on the date hereof; or (iii) split, combine or reclassify the outstanding
capital stock of the Company or of any of the Subsidiaries of the Company;
(iii) except as permitted by this Agreement, neither
the Company nor any of its Subsidiaries
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shall acquire or agree to acquire (A) by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or other
business organization or division thereof (including entities which are
Subsidiaries of the Company or any of the Company's Subsidiaries) or (B) any
assets, including real estate, except (x) purchases in the ordinary course of
business consistent with past practice or (y) expenditures consistent with the
Company's current capital budget previously provided to Parent (the "Capital
Budget");
(iv) neither the Company nor any of its Subsidiaries
shall make any new capital expenditure or expenditures, other than capital
expenditures not to exceed, in the aggregate, the amounts provided for capital
expenditures in the Capital Budget;
(v) neither the Company nor any of its Subsidiaries
shall, except in the ordinary course of business and except as otherwise
permitted by this Agreement, amend or terminate any material contract or
agreement set forth in the SEC Documents to which the Company or any Subsidiary
is a party where such amendment or termination would have a Material Adverse
Affect, or waive, release or assign any material rights or claims;
(vi) neither the Company nor any of its Subsidiaries
shall transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber
any property or assets other than in the ordinary course of business and
consistent with past practice;
(vii) neither the Company nor any of its Subsidiaries
shall: (i) enter into any employment or severance agreement with or, except in
accordance with the existing written policies of the Company, grant any
severance or termination pay to any officer, director or key employee of the
Company or any its Subsidiaries; or (ii) hire or agree to hire any new or
additional key employees or officers;
(viii) neither the Company nor any of its
Subsidiaries shall, except as required to comply with applicable law or
expressly provided in this Agreement, (A) adopt, enter into, terminate or amend
any Benefit
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Plan or other arrangement for the current or future benefit or welfare of any
director, officer or current or former employee, except to the extent necessary
to coordinate any such Benefit Plans with the terms of this Agreement, (B)
increase in any manner the compensation or fringe benefits of, or pay any bonus
to, any director, officer or employee (except for normal increases or bonuses in
the ordinary course of business consistent with past practice to employees other
than directors, officers or senior management personnel and that, in the
aggregate, do not result in a significant increase in benefits or compensation
expense to the Company and its Subsidiaries relative to the level in effect
prior to such action (but in no event shall the aggregate amount of all such
increases exceed 3% of the aggregate annualized compensation expense of the
Company and its Subsidiaries reported in the most recent audited financial
statements of the Company included in the SEC Documents)), (C) pay any benefit
not provided for under any Benefit Plan, (D) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Benefit Plan
(including the grant of stock options, stock appreciation rights, stock based or
stock related awards, performance units or restricted stock, or the removal of
existing restrictions in any Benefit Plans or agreements or awards made
thereunder) or (E) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement, contract
or arrangement or Benefit Plan;
(ix) neither the Company nor any of its Subsidiaries
shall: (i) incur or assume any long-term debt, or except in the ordinary course
of business, incur or assume any short-term indebtedness in amounts not
consistent with past practice; (ii) incur or modify any material indebtedness or
other liability except as set forth in Schedule 5.1 of the Company Disclosure
Schedule; (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person, except in the ordinary course of business and consistent with
past practice; (iv) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to wholly owned Subsidiaries of the
Company or customary loans or advances to employees in accordance with past
practice); (v) settle any claims other than in the ordinary course of business,
in accor-
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dance with past practice, and without admission of liability; or (vi) enter into
any material commitment or transaction;
(x) neither the Company nor any of its Subsidiaries
shall change any of the accounting methods used by it unless required by GAAP;
(xi) neither the Company nor any of its Subsidiaries
shall make any Tax election or settle or compromise any material Tax liability;
(xii) neither the Company nor any of its Subsidiaries
shall pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction of any such claims, liabilities or
obligations, in the ordinary course of business and consistent with past
practice, of claims, liabilities or obligations reflected or reserved against
in, or contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its consolidated subsidiaries; or, except in the
ordinary course of business consistent with past practice, waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its Subsidiaries is a party; and
(xiii) neither the Company nor any of its
Subsidiaries will enter into an agreement, contract, commitment or arrangement
to do any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
(b) Other Actions. The Company shall not, and shall
not permit any of its Subsidiaries to, take any action that would result in (i)
any of its representations and warranties set forth in this Agreement that are
qualified as to materiality becoming untrue, (ii) any of such representations
and warranties that are not so qualified becoming untrue in any material respect
or (iii) any of the conditions to the Offer set forth in Annex A not being
satisfied (subject to the Company's right to take action specifically permitted
by Section 5.4).
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Section 5.2 Access; Confidentiality. Upon reasonable notice,
the Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records, and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to the Parent (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of Federal or
state securities Laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Except as otherwise
agreed to by the Company, unless and until Parent and the Purchaser shall have
purchased at least a majority of the outstanding Shares pursuant to the Offer,
Parent will be bound by the terms of a confidentiality agreement with the
principal stockholders of the Company, dated February 16, 1998 (the
"Confidentiality Agreement").
Section 5.3 Reasonable Efforts; Notification. (a) Upon the
terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Offer and
the Merger, and the other Transactions contemplated by this Agreement, including
(i) the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from any Governmental Entity and the making of all necessary
registrations and filings (including filings with any Governmental Entity, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of any of the Transactions contemplated by this Agreement,
including seeking to have any stay or temporary restraining order entered by any
court or other
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Governmental Entity vacated or reversed, and (iv) the execution and delivery of
any additional instruments necessary to consummate the Transactions contemplated
by, and to fully carry out the purposes of, this Agreement; provided, however,
that in connection with any filing or submission or other action required to be
made or taken by any Party to effect the Merger and all other Transactions
contemplated hereby, the Company shall not without the prior written consent of
Parent commit to any divestiture transaction and Parent shall not be required to
divest or hold separate or otherwise take or commence to take any action that,
in the reasonable discretion of Parent, limits its freedom of action with
respect to, or its ability to retain, the Company or any of its affiliates or
any material portion of the assets of the Company. In connection with and
without limiting the foregoing, the Company and its Board of Directors shall (i)
take all action necessary to ensure that no state takeover statute or similar
statute or regulation is or becomes applicable to the Offer, the Merger, this
Agreement or any of the other Transactions contemplated by this Agreement and
(ii) if any state takeover statute or similar statute or regulation becomes
applicable to the Offer, the Merger or this Agreement or any other transaction
contemplated by this Agreement, take all action necessary to ensure that the
Offer, the Merger and the other Transactions contemplated by this Agreement may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Offer, the Merger, this Agreement and the other Transactions contemplated by
this Agreement.
(b) Each of the Company, Parent and Purchaser shall
give prompt notice to the other of (i) any of their representations or
warranties contained in this Agreement becoming untrue or inaccurate in any
respect (including in the case of representations or warranties receiving
knowledge of any fact, event or circumstance which may cause any representation
qualified as to the knowledge to be or become untrue or inaccurate in any
respect) or (ii) the failure by them to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
them under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the
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conditions to the obligations of the parties under this Agreement.
Section 5.4 No Solicitation. (a) The Company shall not, nor
shall it permit any of its Subsidiaries to, nor shall it authorize (and shall
use its best efforts not to permit) any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, the Company
or any of its Subsidiaries to, (i) solicit or initiate, or knowingly encourage
the submission of, any Takeover Proposal or (ii) participate in any discussions
or negotiations regarding, or furnish to any Person any information with respect
to, or take any other action to knowingly facilitate the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Takeover
Proposal; provided, however, that, prior to the acceptance for payment of Shares
pursuant to the Offer, if in the reasonable determination of the Board of
Directors, after receiving advice from outside legal counsel to the Company,
such failure to act would be inconsistent with its fiduciary duties to the
Company's stockholders under applicable law, the Company may, in response to an
unsolicited Takeover Proposal, and subject to compliance with Section 5.4(c),
(A) furnish information with respect to the Company to any Person pursuant to a
confidentiality agreement with terms and conditions similar to the
Confidentiality Agreement and (B) participate in negotiations regarding such
Takeover Proposal. For purposes of this Agreement, "Takeover Proposal" means (i)
any bona fide proposal or offer from any Person relating to any direct or
indirect acquisition or purchase of all or a substantial part of the assets of
the Company or any of its Subsidiaries or of any class of equity securities of
the Company or any of its Subsidiaries or any tender offer or exchange offer
that if consummated would result in any Person beneficially owning shares of any
class of equity securities of the Company or any of its Subsidiaries, or any
merger, consolidation, business combination, sale of substantially all of the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries other than the Transactions
contemplated by this Agreement, or any other transaction the consummation of
which would reasonably be expected to impede, interfere with, prevent or
materially delay the Offer or the Merger or which would reasonably be expected
to dilute materially the benefits to Parent
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of the Transactions contemplated hereby which (ii) the Company's Board of
Directors reasonably determines in good faith (based on advice of its financial
advisors) is more favorable to all of the Company's stockholders from a
financial point of view than the Offer and the Merger (taking into account any
improvements to the Offer and the Merger proposed in writing by Parent).
(b) Except as set forth in this Section 5.4(b),
neither the Board of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or the Purchaser, the approval or recommendation by the Board of
Directors or any such committee of the Offer, this Agreement or the Merger, (ii)
approve or recommend, or propose to approve or recommend, any Takeover Proposal
or (iii) enter into any agreement with respect to any Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the time of acceptance
by the Purchaser for payment of Shares in the Offer if in the reasonable
determination of the Board of Directors, and after receiving advice from outside
legal counsel to the Company, failure to do so would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law, the Board
of Directors may (subject to the terms of this and the following sentences)
withdraw or modify its approval or recommendation of the Offer, this Agreement
or the Merger, approve or recommend a Takeover Proposal, or enter into an
agreement with respect to a Takeover Proposal, in each case at any time
following delivery by the Company to Parent of written notice (a "Notice of
Takeover Proposal") advising Parent that the Board of Directors has received a
Takeover Proposal, and specifying the material terms and conditions of such
Takeover Proposal and identifying the Person making such Takeover Proposal
unless the Takeover Proposal by its terms prohibits disclosure.
(c) In addition to the obligations of the Company set
forth in paragraph (b) (i) the Company shall advise Parent of any request for
information, and the material terms and conditions of such request and the
identity of the Person making any such Takeover Proposal if allowed by the
Takeover Proposal or inquiry, and (ii) the Company will keep Parent fully
informed of the status and details (including amendments or proposed amendments)
of any such request or inquiry.
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Section 5.5 Publicity. The initial press release with
respect to the execution of this Agreement shall be a joint press release
acceptable to Parent and the Company. Thereafter, so long as this Agreement is
in effect, neither the Company, Parent nor any of their respective affiliates
shall issue or cause the publication of any press release or other announcement
with respect to the Merger, this Agreement or the other Transactions
contemplated hereby without the prior consultation of the other party.
Section 5.6 Transfer Taxes. All liability for transfer or
other similar Taxes arising out of or related to the Offer and the Merger or the
consummation of any other transaction contemplated by this Agreement, and due to
the property owned by the Company or any of its Subsidiaries or affiliates
("Transfer Taxes") shall be borne by the Company, and the Company shall file or
cause to be filed all Tax Returns relating to such Transfer Taxes which are due,
and, to the extent appropriate or required by law, the stockholders of the
Company shall cooperate with respect to the filing of such Tax Returns.
Section 5.7 State Takeover Laws. Notwithstanding any other
provision in this Agreement, in no event shall the Section 203 Approval be
withdrawn, revoked or modified by the Board of Directors of the Company. If any
state takeover statute other than Section 203 of the DGCL becomes or is deemed
to become applicable to the Stock Sale Agreement, the Offer, the acquisition of
Shares pursuant to the Offer or the Merger, the Company shall take all action
necessary to render such statute inapplicable to all of the foregoing.
Section 5.8 Indemnification and Insurance.
(a) The Certificate of Incorporation and By-Laws of
the Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation set forth in the Certificate of Incorporation
and By-Laws of the Company, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
the Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required by law.
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(b) The Company shall, to the fullest extent
permitted under applicable law or under the Company's Certificate of
Incorporation or By-Laws and regardless of whether the Merger becomes effective,
indemnify and hold harmless, and, after the Effective Time, the Surviving
Corporation shall, to the fullest extent permitted under applicable law or under
the Surviving Corporation's Certificate of Incorporation or By-Laws, indemnify
and hold harmless, each present and former director, officer or employee of the
Company or any of its Subsidiaries (collectively, the "Indemnified Parties")
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages and liabilities incurred in connection with, and amounts
paid in settlement of, any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative and wherever asserted,
bought or filed, (x) arising out of or pertaining to the transactions
contemplated by this Agreement or (y) otherwise with respect to any acts or
omissions or alleged acts or omissions occurring at or prior to the Effective
Time, to the same extent as provided in the respective Certificate of
Incorporation or By-Laws of the Company or the Subsidiaries as in effect on the
date hereof, in each case for a period of six years after the date hereof. In
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) any counsel retained by the
Indemnified Parties for any period after the Effective Time must be reasonably
satisfactory to the Surviving Corporation, (ii) after the Effective Time, the
Surviving Corporation shall pay the reasonable fees and expenses of such
counsel, promptly after statements therefor are received, and (iii) the
Surviving Corporation will cooperate in the defense of any such matter;
provided, however, that the Surviving Corporation shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld or delayed); and provided, further, that, in the event
that any claim or claims for indemnification are asserted or made within such
six-year period, all rights to indemnification in respect of any such claim or
claims shall continue until the disposition of any and all such claims. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to any single action unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the
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positions of any two or more Indemnified Parties. The indemnity agreements of
Parent and the Surviving Corporation in this Section 5.8(b) shall extend, on the
same terms to, and shall inure to the benefit of and shall be enforceable by,
each person or entity who controls, or in the past controlled, any present or
former director, officer or employee of the Company or any of its Subsidiaries.
(c) For a period of six years after the Effective
Time, Parent shall cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those persons
who are currently covered by the Company's directors' and officers' liability
insurance policy (a copy of which has been made available to Parent) on terms
(including the amounts of coverage and the amounts of deductibles, if any) that
are comparable to the terms now applicable to directors and officers of Parent,
or, if more favorable to the Company's directors and officers, the terms now
applicable to them under the Company's current policies; provided, however, that
in no event shall Parent or the Surviving Corporation be required to expend in
excess of 200% of the annual premium currently paid by the Company for such
coverage; and provided further, that if the premium for such coverage exceeds
such amount, Parent or the Surviving Corporation shall purchase a policy with
the greatest coverage available for such 200% of the annual premium.
(d) From and after the Effective Time, Parent shall
guarantee the obligations of the Surviving Corporation under this Section 5.8.
(e) This Section shall survive the consummation of
the Merger at the Effective Time, is intended to benefit the Company, the
Surviving Corporation and the Indemnified Parties, shall be binding on all
successors and assigns of the Surviving Corporation and shall be enforceable by
the Indemnified Parties. In the event that Parent or Surviving Corporation or
any of their successors or assigns (i) consolidates or merges into any other
person or entity and shall not be the continuing or surviving corporation or
entity in such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person or entity, then and in such case,
proper provisions shall be
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made so that the successors and assigns of Parent or the Surviving Corporation
(as the case may be) assume the obligations of Parent and the Surviving
Corporation set forth in this Section.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or the Purchaser, as the case may be, to the extent
permitted by applicable law:
(a) Prior Performance. Each party shall have
performed in all material respects its respective obligations under this
Agreement required to be performed by it prior to the Effective Time;
(b) Representations and Warranties. All
representations and warranties contained in this Agreement shall have been true
and correct in all material respects at the time made and shall be true and
correct in all material respects as of the Effective Time as though made on and
as of such date;
(c) Stockholder Approval. This Agreement shall have
been approved and adopted by the requisite vote of the stockholders of the
Company, if required by applicable law and the Certificate of Incorporation, in
order to consummate the Merger;
(d) Statutes; Consents. No statute, rule, order,
decree or regulation shall have been enacted or promulgated by any government or
any governmental agency or authority of competent jurisdiction which prohibits
the consummation of the Merger;
(e) Injunctions. There shall be no order or
injunction of a court or other governmental authority of competent jurisdiction
in effect precluding, restraining, enjoining or prohibiting consummation of the
Merger;
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(f) Purchase of Shares in Offer. Parent, the
Purchaser or their affiliates shall have purchased Shares pursuant to the Offer;
and
(g) Option Plan. The employees and the directors of
the Company shall have consented to the transactions contemplated in Section
2.5.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated
and the Merger contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after approval of matters presented in
connection with the Merger by the stockholders of the Company:
(a) By the mutual written consent of Parent and the
Company; provided, however, that if Parent shall have a majority of the
directors pursuant to Section 1.4, such consent of the Company may only be given
if approved by the Continuing Directors.
(b) By either of Parent or the Company:
(i) if the Offer shall have expired without any
Shares being purchased therein by June 1, 1998; provided, however, that
the right to terminate this Agreement under this Section 7.1(b)(i)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in,
the failure of Parent or the Purchaser, as the case may be, to purchase
the Shares pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Entity shall have issued
an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their
reasonable efforts to lift), in each case permanently restraining,
enjoining or otherwise prohibiting the Transactions contemplated by
this Agreement and such order,
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decree, ruling or other action shall have become final and
non-appealable.
(c) By the Board of Directors of the Company:
(i) if the Company has approved a Takeover Proposal
in accordance with Section 5.4(b), provided the Company has complied
with all provisions thereof, including the notice provisions therein,
and that it makes simultaneous payment of the Expenses and the
Termination Fee; or
(ii) if, prior to the purchase of the Shares
pursuant to the Offer, Parent or the Purchaser breaches or fails in any
material respect to perform or comply with any of its covenants and
agreements contained herein or breaches its representations and
warranties in any material respect; or
(iii) if Parent or the Purchaser shall have
terminated the Offer or the Offer expires without Parent or the
Purchaser, as the case may be, purchasing any Shares pursuant thereto;
provided that the Company may not terminate this Agreement pursuant to
this Section 7.1(c)(iii) if the Company is in material breach of this
Agreement; or
(iv) if Parent, the Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of
the Offer; provided, that the Company may not terminate this Agreement
pursuant to this Section 7.1(c)(iv) if the Company is in material
breach of this Agreement.
(d) By Parent or the Purchaser:
(i) if prior to the purchase of the Shares pursuant
to the Offer, the Board of Directors of the Company shall have
withdrawn, or modified or changed in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, this Agreement
or the Merger or shall have approved
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a Takeover Proposal in accordance with Section 5.4(b); or
(ii) if Parent or the Purchaser shall have
terminated the Offer without Parent or the Purchaser purchasing any
Shares thereunder, provided that Parent or the Purchaser may not
terminate this Agreement pursuant to this Section 7.1(d)(ii) if Parent
or the Purchaser is in material breach of this Agreement; or
(iii) if, due to an occurrence that if occurring
after the commencement of the Offer would result in a failure to
satisfy any of the conditions set forth in Annex A hereto, Parent, the
Purchaser, or any of their affiliates shall have failed to commence the
Offer on or prior to five business days following the date of the
initial public announcement of the Offer.
Section 7.2 Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent or Purchaser as
provided in Section 7.1, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Parent, the Purchaser
or the Company, other than the provisions of Section 3.1(p), 4.1(f), the last
sentence of Section 5.2, this Section 7.2 and Article VIII and except to the
extent that such termination results from the wilful and material breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as provided below,
all fees and expenses incurred in connection with the Offer, the Merger, this
Agreement and the Transactions contemplated hereby shall be paid by the party
incurring such fees or expenses, whether or not the Offer or the Merger is
consummated.
(b) The Company shall pay, or cause to be paid, in
same day funds to Parent the amount of
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$3,750,000 (the "Termination Fee") upon demand if (i) Parent or the Purchaser
terminates this Agreement under Section 7.1(d)(i), (ii) the Company terminates
this Agreement pursuant to Section 7.1(c)(i) or (iii) prior to any termination
of this Agreement, a Takeover Proposal shall have been made and within nine
months after the termination of this Agreement a transaction constituting a
Takeover Proposal is consummated or the Company enters into an agreement with
respect to, or approves or recommends a Takeover Proposal (whether or not
related to a Takeover Proposal made prior to any termination of this Agreement),
provided, that no payment shall be made if this Agreement has been terminated
pursuant to Section 7.1(b)(i), 7.1(c)(ii), 7.1(c)(iii) or 7.1(c)(iv) hereof and;
provided, further, that if a Takeover Proposal (whether or not related to a
Takeover Proposal made prior to any termination of the Agreement) is made at a
lower price per share than the Offer Price, than the Company shall only pay in
same day funds to the Purchaser the amount of Parent's and Purchaser's
documented expenses (not to exceed $500,000) in connection with this Agreement
and the transactions contemplated thereby.
Section 8.2 Amendment and Modification. Subject to
applicable law, this Agreement may be amended, modified and supplemented in any
and all respects, whether before or after any vote of the stockholders of the
Company contemplated hereby, by written agreement of the parties hereto (which
in the case of the Company shall include approvals as contemplated in Section
1.4(b)), at any time prior to the Closing Date with respect to any of the terms
contained herein; provided, however, that after the approval of this Agreement
by the stockholders of the Company, no such amendment, modification or
supplement shall reduce the amount or change the form of the Merger
Consideration or otherwise adversely affect the rights of stockholders.
Section 8.3 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time. This Section 8.3 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the Effective
Date of the Merger.
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Section 8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon receipt, and shall
be given to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
Sunbeam Corporation
1615 South Congress Avenue
Suite 200
Delray Beach, FL 33445
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: Blaine V. Fogg, Esq.
(b) if to the Company, to:
First Alert, Inc.
3901 Liberty Street Road
Aurora, Illinois 60504
Attention: General Counsel
with a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attention: David C. Chapin, Esq.
Section 8.5 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation". As used in this Agreement, the term
"affiliate(s)" shall have the meaning set forth in Rule l2b-2 of the Exchange
Act.
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Section 8.6 Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 8.7 Entire Agreement; No Third Party Beneficiaries;
Rights or Ownership. This Agreement and the Confidentiality Agreement (including
the documents and the instruments referred to herein and therein): (a)
constitute the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 5.6 and Section 5.8
is not intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
Section 8.8 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated unless the economic or legal substance of the
Transactions is affected in an adverse way to any party.
Section 8.9 Governing Law. This Agreement shall be governed
by and construed in accordance with the Laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
Section 8.10 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that the Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned Subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
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SECTION 8.11 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the Transactions 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 and (c) agrees that it will not
bring any action relating to this Agreement or any of the Transactions
contemplated by this Agreement in any court other than a Federal or state court
sitting in the State of Delaware.
SECTION 8.12 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 8.2, waive compliance by the
other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a 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. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
SECTION 8.13 Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 7.1, an amendment
of this Agreement pursuant to Section 8.2 or an extension or waiver pursuant to
Section 8.12 shall, in order to be effective, require in the case of Parent, the
Purchaser or the Company, action by its Board of Directors or the duly
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authorized designee of its Board of Directors; provided, however, that in the
event that Purchaser's designees are appointed or elected to the Board of
Directors of the Company as provided in Section 1.4, after the acceptance for
payment of Shares pursuant to the Offer and prior to the Effective Time, except
as otherwise contemplated by this Agreement the affirmative vote of a majority
of the Continuing Directors of the Company shall be required by the Company to
amend this Agreement by the Company.
SECTION 8.14 Certain Undertakings of Parent. Parent shall
perform, or cause to be performed, any obligation of Purchaser under this
Agreement which shall have been breached by Purchaser.
SECTION 8.15 Company Disclosure Schedule. Notwithstanding
anything to the contrary contained herein, and without regard to the execution
of this Agreement by the parties hereto, this Agreement shall not be effective
and have no force and effect unless (i) within 12 hours of its execution by the
parties hereto, the definitive Company Disclosure Schedule is delivered by the
Company to Parent and (ii) Parent, within 12 hours after such delivery, delivers
written notice to the Company that it is satisfied with the matters contained
therein. Anything which is disclosed in one section of the Company Disclosure
Schedule shall be deemed disclosed for other sections thereof, as long as such
disclosure is reasonably apparent to a reader of the entire Company Disclosure
Schedule.
SECTION 8.16 Definitions. For purposes of this Agreement:
"Benefit Plans" has the meaning assigned thereto in Section 3.1(j).
"By-laws" means the by-laws of has the meaning assigned thereto in Section 1.5.
"Certificate of Incorporation" has the meaning assigned thereto in Section 1.5.
"Certificate of Merger" has the meaning assigned thereto in Section 1.6.
53
<PAGE>
"Certificates" has the meaning assigned thereto in Section 2.2.
"Closing" has the meaning assigned thereto in Section 1.7.
"Closing Date" has the meaning assigned thereto in Section 1.7.
"Code" means the Internal Revenue Code of 1986.
"Company" means First Alert, Inc.
"Continuing Director" has the meaning assigned thereto in Section 1.4.
"Defect" has the meaning assigned thereto in Section 3.1(v).
"DGCL" means the Delaware General Corporation Law.
"Dissenting Stockholders" has the meaning assigned thereto in Section 2.1(c).
"Effective Time" has the meaning assigned thereto in Section 1.6.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.
"Environmental Laws" means all foreign, Federal, state and local Laws,
regulations, rules and ordinances relating to pollution or protection of the
environment, including, without limitation, Laws relating to Releases or
threatened Releases of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Materials, and all Laws and regulations with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials, and all Laws relating to endangered or
threatened species of fish, wildlife and plants and the management or use of
natural resources.
54
<PAGE>
"Environmental Liabilities and Costs" means all liabilities, obligations,
responsibilities, obligations to conduct cleanup, losses, damages, deficiencies,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all reasonable fees, disbursements and expenses
of counsel, expert and consulting fees and costs of investigations and
feasibility studies and responding to government requests for information or
documents), fines, penalties, restitution and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future, resulting from any claim or demand, by any Person or entity, whether
based in contract, tort, implied or express warranty, strict liability, joint
and several liability, criminal or civil statute, including any Environmental
Law, or arising from environmental, health or safety conditions, or the Release
or threatened Release of Hazardous Materials into the environment.
"ERISA Affiliate" has the meaning assigned thereto in Section 3.1(j).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financing Agreement" means the Financing and Security Agreement among First
Alert, Inc., BRK Brands, Inc., BRK Brands Europa LTD. and NationsBank, N.A.
dated May 14, 1997.
"Governmental Entity" has the meaning assigned thereto in Section 3.1(d).
"Hazardous Materials" means all substances defined as hazardous substances in
the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
ss. 300.5, or substances defined as hazardous substances, hazardous materials,
toxic substances, hazardous wastes, pollutants or contaminants, under any
Environmental Law, or substances regulated under any Environmental Law,
including, but not limited to, petroleum (including crude oil or any fraction
thereof), asbestos, and polychlorinated biphenyls.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
55
<PAGE>
"Indemnified Parties" has the meaning assigned thereto in Section 5.8(b).
"Intellectual Property Rights" has the meaning assigned thereto in Section
3.1(r).
"Laws" has the meaning assigned thereto in Section 3.1(m).
"Lien" means any conditional sale agreement, default of title, easement,
encroachment, encumbrance, hypothecation, infringement, lien, mortgage, pledge,
reservation, restriction, security interest, title retention or other security
arrangement, or any adverse right or interest, charge or claim of any nature
whatsoever of, on, or with respect to any asset, property or property interest;
provided, however, that the term "Lien" shall not include
(i) liens for water and sewer charges and current Taxes not yet due and
payable or being contested in good faith;
(ii) mechanics', carriers', workers', repairers', materialmens',
warehousemens' and other similar liens arising or incurred in the ordinary
course of business; or
(iii) all liens approved in writing by the other party hereto.
"Material Adverse Change" or "Material Adverse Effect" means, when used in
connection with the Company or Parent, any change or effect (or any development
that, insofar as can reasonably be foreseen, is likely to result in any change
or effect) that is materially adverse to the business, properties, assets,
financial condition or results of operations of such party and its Subsidiaries
taken as a whole, other than any such changes or effects (i) set forth or
contemplated by the Company Disclosure Schedule (but not any supplement or
amendment thereto); or (ii) set forth or described in the SEC Documents.
"Merger" has the meaning assigned thereto in Section 1.5.
"Merger Consideration" has the meaning assigned thereto in Section 2.1.
"Minimum Condition" has the meaning assigned thereto in Annex A.
56
<PAGE>
"Notice of Takeover Proposal" has the meaning assigned thereto in Section
5.4(b).
"Offer" has the meaning assigned thereto in Section 1.1.
"Offer Documents" has the meaning assigned thereto in Section 1.3.
"Offer Price" has the meaning assigned thereto in Section 1.1.
"Offer to Purchase" has the meaning assigned thereto in Section 1.1.
"Option Plans" has the meaning assigned thereto in Section 2.5(b).
"Option" has the meaning assigned thereto in Section 2.5.
"Parent" means Sunbeam Corporation.
"Paying Agent" has the meaning assigned thereto in Section 2.2(a).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" has the meaning assigned thereto in Section 3.1(m)(ii).
"Person" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
"Product" has the meaning assigned thereto in Section 3.1(v).
"Proxy Statement" has the meaning assigned thereto in Section 1.8.
"Purchaser" means Sentinel Acquisition, Inc.
"Release" means any release, spill, emission, discharge, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment (including, without limitation, ambient air,
surface water, groundwater, and surface or subsurface strata) or into or out of
any property, in-
57
<PAGE>
cluding the movement of Hazardous Materials through or in the air, soil, surface
water, groundwater or property.
"Schedule 14D-1" has the meaning assigned thereto in Section 1.3.
"Schedule 14D-9" has the meaning assigned thereto in Section 1.3.
"SEC" means the United States Securities and Exchange Commission.
"SEC Documents" has the meaning assigned thereto in Section 3.1(e).
"Secretary of State" means the Secretary of State of Delaware.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning assigned thereto in Section 1.1.
"Special Meeting" has the meaning assigned thereto in Section 1.8.
a "Subsidiary" of any Person means any corporation, partnership, joint venture
or other entity in which such Person (i) owns, directly or indirectly, 50% or
more of the outstanding voting securities or equity interests, (ii) is entitled
to elect at least a majority of the Board of Directors or similar governing
body, or (iii) is a general partner.
"Surviving Corporation" means First Alert, Inc. after the Merger.
"Takeover Proposal" has the meaning assigned thereto in Section 5.4(a).
"Tax Returns" has the meaning assigned thereto in Section 3.1(k)(iv).
"Taxes" has the meaning assigned thereto in Section 3.1(k)(iv).
58
<PAGE>
"Termination Fee" has the meaning assigned thereto in Section 8.1(b).
"Transactions" has the meaning assigned thereto in Section 1.2(a).
"Transfer Taxes" has the meaning assigned thereto in Section 5.6.
59
<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
SUNBEAM CORPORATION
By: /s/ David C. Fannin
---------------------------------
David C. Fannin
Executive Vice President
and General Counsel
SENTINEL ACQUISITION CORP.
By: /s/ David C. Fannin
---------------------------------
Executive Vice President
and General Counsel
FIRST ALERT, INC.
By: /s/ B. Joseph Messner
---------------------------------
President and
Chief Executive Officer
<PAGE>
ANNEX A
Certain Conditions of the Offer. Notwithstanding any other
provisions of the Offer, and in addition to (and not in limitation of) the
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Merger Agreement), the Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares, and may terminate or amend the Offer as to
any Shares not then paid for, if (i) there shall not have been validly tendered
and not withdrawn prior to the expiration of the Offer such number of Shares
which, when added to the Shares, if any, beneficially owned by Parent, would
constitute at least 50.1% of the Shares outstanding on a fully diluted basis
(the "Minimum Condition"), (ii) any applicable waiting period under the HSR Act
has not expired or terminated, or (iii) at any time on or after the date of the
Merger Agreement and before the time of payment for any such Shares, any of the
following events shall occur and be continuing:
(a) there shall have been any action taken, or any
statute, rule, regulation, judgment, order or injunction promulgated, entered,
enforced, enacted, issued or deemed applicable to the Offer or the Merger by any
domestic or foreign Federal or state governmental regulatory or administrative
agency or authority or court or legislative body or commission which directly or
indirectly (l) prohibits, or imposes any material limitations on, Parent's or
the Purchaser's ownership or operation (or that of any of their respective
Subsidiaries or affiliates) of all or a material portion of their or the
Company's businesses or assets, or compels Parent or the Purchaser or their
respective Subsidiaries and affiliates to dispose of or hold separate any
material portion of the business or assets of the Company or Parent and their
respective Subsidiaries, in each case taken as a whole, (2) prohibits, or makes
illegal, the acceptance for payment, payment for or purchase of Shares or the
consummation of the Offer, the Merger or the other transactions
A-1
<PAGE>
contemplated by the Merger Agreement, (3) results in the delay in or restricts
the ability of the Purchaser, or renders the Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares, (4) imposes material
limitations on the ability of the Purchaser or Parent effectively to exercise
full rights of ownership of the Shares, including, without limitation, the right
to vote the Shares purchased by it on all matters properly presented to the
Company's stockholders, or (5) otherwise materially adversely affects the
consolidated financial condition, businesses or results of operations of the
Company and its Subsidiaries, taken as a whole;
(b) there shall have occurred (1) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange or in the NASDAQ National Market System, (2) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (3) a commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, (4) any material limitation (whether or not
mandatory) by any foreign or United States governmental authority on the
extension of credit by banks or other financial institutions, (5) a change in
general financial bank or capital market conditions which has a material adverse
effect the ability of financial institutions in the United States to extend
credit or syndicate loans, or (6) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof;
(c) (1) the representations and warranties of the
Company set forth in the Merger Agreement shall not be true and correct in any
material respect as of the date of the Merger Agreement and as of consummation
of the Offer as though made on or as of such date (unless made as of a certain
date), (2) the Company shall have failed to comply with its covenants and
agreements under the Merger Agreement in all material respects or (3) there
shall have occurred any events or changes which have had or which are reasonably
likely to have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole;
A-2
<PAGE>
(d) the Company's Board of Directors shall have
withdrawn, or modified or changed in a manner adverse to Parent or the Purchaser
(including by amendment of the Schedule 14D-9) its recommendation of the Offer,
the Merger Agreement, or the Merger, or recommended another proposal or offer,
or the Board of Directors of the Company, upon request of the Purchaser, shall
fail to reaffirm such approval or recommendation or shall have resolved to do
any of the foregoing;
(e) the Merger Agreement shall have terminated in
accordance with its terms; or
(f) the Company shall not have obtained a waiver to
the provision in its Financing Agreement that an event of default shall occur
and exist thereunder as a result of the purchase of the Shares in a number equal
to or greater than the Minimum Condition pursuant to the Offer.
which in the sole judgment of Parent or the Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
the Purchaser) giving rise to such condition makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payments for
Shares.
The foregoing conditions are for the sole benefit of Parent
and the Purchaser may be waived by Parent or the Purchaser, in whole or in part
at any time and from time to time in the sole discretion of Parent or the
Purchaser. The failure by Parent or the 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.
<PAGE>
EXHIBIT 99.(C)(2)
STOCK SALE AGREEMENT
STOCK SALE AGREEMENT, dated as of February 28, 1998 (the
"Agreement"), among Sunbeam Corporation, a Delaware corporation (the "Parent"),
and each person or entity named in Schedule A to this Agreement (the "Stockhold
ers"). Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Merger Agreement (as defined below).
WHEREAS, the Parent, Sentinel Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent (the "Purchaser"), and First
Alert, Inc., a Delaware corporation (the "Company"), are entering into an
Agreement and Plan of Merger (the "Merger Agreement") simultaneously with the
entry into this Agreement, which provides, among other things, that the
Purchaser, upon the terms and subject to the conditions thereof, make a cash
tender offer (the "Offer") for all issued and outstanding shares of common
stock, par value $.01 per share, of the Company (the "Shares") at a price of
$5.25 per share, and following consummation of the Offer the Purchaser will
merge with and into the Company with the Company as the surviving corporation
(the "Merger") and each then outstanding Share (other than Shares held by (i)
the Parent or any of its wholly owned subsidiaries, (ii) the Company or any of
its wholly owned subsidiaries or (iii) any holder who perfects dissenters'
rights under Delaware law) would be converted into the right to receive $5.25 in
cash, or any higher price paid per Share in the Offer; and
WHEREAS, the Parent has required, as a condition to its
entering into the Merger Agreement and commencing the Offer, that each of the
Stockholders enter into, and each of the Stockholders have agreed to enter into,
this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Stockholders' Representations. Each of the Stockholders
severally represents and warrants to the Parent (a) that such Stockholder has
the power and authority (or the capacity if an individual) to execute and
deliver this Agreement, (b) that, if a corporation, partnership or other entity,
this Agreement has been duly authorized by all requisite action on the part of
the Stockholder, (c) that the Stockholder has duly executed and delivered this
Agreement and this Agreement is a valid and binding agreement, enforceable
against such Stockholder in accordance with its terms, (d) that neither the
execution of this Agreement nor the consummation by such Stockholder of the
transactions contemplated hereby will
1
<PAGE>
constitute a violation of, or conflict with, or default under, any contract,
commitment, agreement, understanding, arrangement or restriction of any kind to
which such Stockholder is a party or by which such Stockholder is bound and,
if the Stockholder is a corporation, partnership or other entity, the
organizational documents thereof, (e) that on the date hereof such Stockholder
has good and valid title to the number of Shares set forth opposite such
Stockholder's name on Schedule A hereto (the "Stockholder's Shares"), free and
lear of all claims, liens, charges, encumbrances and security interests,
without any restrictions on the voting rights of such Stockholder's Shares,
(f) that there are no options or rights to purchase or acquire, or agreements
relating to, any of such Stockholder's Shares except pursuant to this
Agreement, and (g) that the number of Shares set forth in Schedule A hereto
opposite the name of such Stockholder constitutes all of the Shares owned
beneficially or of record by such Stockholder.
2. Parent's Representations. The Parent represents and
warrants to each of the Stockholders that the Parent has duly authorized,
executed and delivered this Agreement and this Agreement is a valid and binding
agreement, enforceable against the Parent in accordance with its terms.
3. Sale of Shares. In the event that within 9 months following
the date hereof and the Parent shall be entitled to the Termination Fee pursuant
to Section 8.1(b) of the Merger Agreement, the Stockholder shall sell, transfer
or otherwise commit to dispose any or all of such Shares to any party other than
the Parent or an affiliate of the Parent (a "Sale") and realize a Profit (as
defined below) from such Sale, then the Stockholder shall pay to the Parent an
amount equal to the Profit. Such amount shall be paid to the Parent promptly
following the receipt of proceeds by the Stockholder or its affiliates from such
Sale. The term "Profit" shall mean the excess, if any, of (a) the aggregate
consideration received by the Stock holder or its affiliates in connection with
the Sale over (b) the number of Shares sold, transferred or disposed of in
connection with the Sale multiplied by the Offer Price.
4. Changes in Shares. In the event of a stock dividend or
distribution, or any change in the Company's Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall refer to and include the Shares as well as all
such stock dividends and distributions and any shares into which or for which
any or all of the Shares may be changed or exchanged. Each Stockholder's Shares
shall include all Shares
2
<PAGE>
acquired after the date hereof by such Stockholder and all dividends or
distributions in respect of the Stockholder's Shares.
5. Legend. As soon as practicable after the execution of this
Agreement, each Stockholder shall surrender the certificates representing such
Stockholder's Shares to the Parent so that the following legend may be placed on
such certificates:
"The shares of capital stock represented by this certificate
are subject to a Stock Sale Agreement, dated as of February 28, 1998,
between Sunbeam Corporation and [the Stockholder]."
6. Specific Enforcement. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement and that
the obligations of the parties hereto shall be specifically enforceable, in
addition to any other remedy which may be available at law or in equity.
7. Brokerage Fees. Each of the Stockholders and the Parent, in
connection with the transaction contemplated herein, severally agree to
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any brokerage fees, commissions or
finders' fees asserted by any person on the basis of any act or statement
alleged to have been made by such party or its affiliate.
8. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement.
9. Survival. Notwithstanding anything contained herein to the
contrary, all representations, warranties and agreements made by each of the
Stock holders in this Agreement shall survive the termination of this Agreement
and any investigation at any time made by or on behalf of any party hereto.
10. Stop Transfer. Each of the Stockholders shall not request
that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of the Shares, unless
such transfer is made in compliance with this Agreement.
11. Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver
3
<PAGE>
such additional documents and take all such further lawful action as may be
neces sary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
12. Miscellaneous.
(a) Amendment, Etc. This Agreement may not be
modified, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
(b) Assignment. No party to this Agreement may
assign any of its rights or obligations under this Agreement without the prior
consent of the other parties except that the rights and obligations of the
Parent may be assigned by the Parent to Purchaser or any of its other wholly
owned subsidiaries but no such transfer shall relieve the Parent of its
obligations hereunder if such transferee does not perform such obligations.
(c) Binding Effect. This Agreement and the
obligations hereunder shall attach to the Shares and shall be binding upon any
person or entity to which legal or beneficial ownership of such Shares shall
pass, whether by operation of law or otherwise. Notwithstanding any transfer of
Shares, the transferor shall remain liable for the performance of all
obligations under this Agreement of the transferor.
(d) Notices. All notices, claims, requests,
demands and other communications hereunder will be in writing and will be deemed
to have been duly given upon receipt as follows:
(a) If to the Parent, to:
Sunbeam Corporation
1615 South Congress Avenue
Suite 200
Delray Beach, FL 33445
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
4
<PAGE>
919 Third Avenue
New York, New York 10022
Attention: Blaine V. Fogg, Esq.
(b) If to the Stockholder, to such Stock holder at the
address set forth under his name in Schedule A.
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above.
(e) Counterparts. This Agreement may be
executed in two or more counterparts, each of which will be deemed to be an
original but all of which together will constitute one and the same instrument.
(f) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable Delaware
principles of conflicts of law.
(g) Termination. Except for Sections 7, 8 and 9
hereof, this Agreement shall terminate on the earlier of (i) the purchase of
each Stockholder's Shares pursuant to the Offer or through the Merger and (ii)
three years from the date hereof.
(h) Remedies Cumulative. All rights, powers and
remedies provided under this Agreement or otherwise available in respect hereof
at law or in equity shall be cumulative and not alternative, and the exercise of
any thereof by any party shall not preclude the simultaneous or later exercise
of any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto
to exercise any right, power or remedy provided under this Agreement or
otherwise available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations hereunder, and any
custom or practice of the parties at variance with the terms hereof, shall not
constitute a waiver by such party of its right to exercise any such or other
right, power or remedy or to demand such compliance.
5
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by each Stockholder and a duly authorized officer of the Parent on the
day and year first written above.
SUNBEAM CORPORATION
By: /s/ David C. Fannin
---------------------------------
Executive Vice President and
General Counsel
THOMAS H. LEE EQUITY PARTNERS, L.P.
By: THL Equity Advisors Limited Partnership
---------------------------------------
By THL Equity Trust
-------------------------
Its General Partner
By /s/ Anthony J. DiNovi
-------------------------
Vice President
ML-LEE ACQUISITION FUND II, L.P.
By: Mezzanine Investments II, L.P.
---------------------------------
Its Managing General Partner
By: ML Mezzanine II Inc.
---------------------------------
Its General Partner
By /s/ James V. Caruso
-------------------------
Executive Vice President
ML-LEE ACQUISITION FUND (RETIRE
MENT ACCOUNTS) II, L.P.
By: Mezzanine Investments II, L.P.
---------------------------------
Its Managing General Partner
By: ML Mezzanine II Inc.
---------------------------------
Its General Partner
By /s/ James V. Caruso
-------------------------
Executive Vice President
<PAGE>
STATE STREET BANK AND TRUST COMPANY,
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Successor Trustee of the
1989 THOMAS H. LEE NOMINEE TRUST
By /s/ Gerald R. Wheeler
---------------------------------
Senior Vice President
<PAGE>
/s/ John W. Childs
-------------------------------------
John W. Childs
/s/ David W. Harkins
-------------------------------------
David W. Harkins
/s/ Thomas R. Shepherd
-------------------------------------
Thomas R. Shepherd
/s/ Thomas R. Shepherd - IRA
-------------------------------------
Thomas R. Shepherd - IRA
/s/ Glenn H. Hutchins
-------------------------------------
Glenn H. Hutchins
/s/ Scott A. Schoen
-------------------------------------
Scott A. Schoen
/s/ C. Hunter Boll
-------------------------------------
C. Hunter Boll
/s/ Steven G. Segal
-------------------------------------
Steven G. Segal
/s/ Anthony J. DiNovi
-------------------------------------
Anthony J. DiNovi
/s/ Thomas M. Hagerty
-------------------------------------
Thomas M. Hagerty
/s/ Joseph I. Incandela
-------------------------------------
Joseph I. Incandela
/s/ Warren C. Smith
-------------------------------------
Warren C. Smith
<PAGE>
/s/ Glenn A. Hopkins
-------------------------------------
Glenn A. Hopkins
/s/ Charles W. Robins
-------------------------------------
Charles W. Robins
STEVEN ZACHARY LEE
IRREVOCABLE TRUST DATED 1988
By /s/ Charles W. Robins
---------------------------------
Trustee
/s/ Adam L. Suttin
-------------------------------------
Adam L. Suttin
/s/ Wendy L. Masler
-------------------------------------
Wendy L. Masler
/s/ Andrew D. Flaster
-------------------------------------
Andrew D. Flaster
SGS Family Limited Partnership
By /s/ Steven G. Segal
----------------------------------
Its General Partner
<PAGE>
SCHEDULE A
Number of Shares
Name and Address of Common Stock
of Stockholder1 of the Company
--------------- --------------
Thomas H. Lee Equity Partners, L.P. 8,324,492
ML-Lee Acquisition Fund II, L.P. 2,058,474
ML-Lee Acquisition Fund (Retirement
Accounts) II, L.P. 2,281,524
State Street Bank and Trust Company
Not Individually but as Trustee of the
1989 Thomas H. Lee Nominee Trust 985,706
John W. Childs 159,178
David V. Harkins 118,518
Thomas R. Shepherd 44,446
Thomas R. Shepherd - IRA 44,446
Glenn H. Hutchins 88,888
Scott A. Schoen 87,034
C. Hunter Boll 62,000
Steven G. Segal 35,550
- ------------------------
1 Address for all Stockholders, until notice of change is given, is:
c/o Thomas H. Lee Company
75 State Street
Boston, Massachusetts 02109
A-1
<PAGE>
Anthony J. Dinovi 35,550
Thomas M. Hagerty 35,550
Joseph I. Incandela 15,500
Warren C. Smith, Jr. 11,160
Glenn A. Hopkins 6,200
Charles W. Robins 6,200
SZL Trust 6,200
Adam L. Suttin 6,200
Wendy L. Masler 1,240
Andrew D. Flaster 1,550
SGS Family Limited Partnership 6,200
A-2
<PAGE>
EXHIBIT 99.(C)(3)
February 16, 1998
PERSONAL AND CONFIDENTIAL
Anthony DiNovi, Managing Director
Thomas H. Lee Company
75 State Street
Boston, MA 02109
Dear Mr. DiNovi:
We have requested information from First Alert, Inc. (the "Company") in
connection with our consideration of possibly acquiring the Company and/or the
business (the "Business") of the Company (the "Transaction"). As a condition to
furnishing such information to us, the Company requires that we agree, as set
forth below, to treat confidentially any information that the Company or its
officers, directors, agents, advisors or controlling persons, furnish to us or
our Representatives (which term shall include our directors, officers,
employees, agents, advisors, attorneys and accountants) (such information being
collectively referred to herein as the "Evaluation Material").
The term "Evaluation Material" does not include any information that
(i) at the time of disclosure or thereafter is in or comes into the public
domain other than as a result of a disclosure by us or our representatives, (ii)
is already in our position or becomes available to us on a non-confidential
basis from a source other than the Company or its agents or advisors, provided
that such source is not and was not (to our knowledge after reasonable inquiry)
bound by an obligation of secrecy to the Company or another party or (iii) has
been independently developed by us without violation of the agreements contained
in this letter.
We hereby agree that the Evaluation Material will be used by us and our
Representatives solely for the purpose of evaluating a possible Transaction
between the Company and us, will not be used in any way detrimental to the
Company, and will be kept confidential by us and our representatives; provided,
however, that (i) the existence of a possible Transaction and any such
information may be disclosed to those of our Representatives who need to know
such information for the purpose of
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evaluating any such possible Transaction between the Company and us, provided,
further, however, that (a) such Representatives will be informed by us on a
confiden tial nature of such information and will be required by us to treat
such information confidentially as if such Representative were a party to this
agreement and we shall be responsible for any disclosure by our Representatives,
and (ii) any disclosure of such information may be made to which the Company
consents in writing.
In addition, without the prior written consent of the Company except as
may be required by law, and then only after prior written notice to the Company,
we will not, and will cause our Representatives not to, disclose to any person
either the fact that discussions or negotiations are taking place concerning a
possible Transaction between the Company and us or any of the terms, conditions
or other facts with respect to any such possible Transaction, including the
existence or status thereof. The term "person" as used in this letter shall be
broadly interpreted to include, without limitation, any corporation, company,
partnership or other entity or individ ual. It is our understanding that the
Company and Thomas H. Lee Company simi larly will not disclose to any person
either the fact that discussions or negotiations are taking place concerning a
possible Transaction or other facts with respect to any such possible
Transaction.
In the event that we or our Representative are requested or required to
disclose all or any part of the information contained in the Evaluation
Material, we agree (i) to notify the Company of the existence, terms and
circumstances surround ing such a request or requirement as promptly as the
circumstances permit so that it may seek an appropriate protective order and/or
waive our compliance with the provisions of the agreements contained in this
letter. If in the absence of a protective order, we or any of our
Representatives are nonetheless in the opinion of our counsel compelled to
disclose Evaluation Material or any other information concerning the
Transaction, we or any such representative may disclose only that portion of the
Evaluation or other material which we are advised by counsel is so legally com
pelled, and we will exercise our best efforts to obtain assurance that
confidential treatment will be accorded such Evaluation Material.
Until the earlier of (i) the acquisition of the Business by us and (ii)
two years from the date of this letter, we agree not to initiate or maintain
contact (except for contacts in the ordinary course of business) with any
officer, director, employee, supplier, distributor, broker or customer of the
Business concerning its operations, assets, prospects or finances, except with
the express written permission of the Company. It is understood that the Thomas
H. Lee Company will arrange for
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appropriate contacts for any due diligence we may require and will handle all
inquiries regarding the company.
We hereby agree that for the period two years from the date of this
letter, we will not without the Company written consent, directly or indirectly
solicit for employment or hire any person who is currently employed in a senior
management position by the Company, except as such employment may be
accomplished pursuant to the consummation of a Transaction with the Company as
contemplated by this letter or pursuant to general solicitations of employment
through advertisements or similar means not directed towards employees of the
Company or towards a class of persons who only could be employed by the Company.
We are aware and will advise our Representatives who are informed of
the matters that are subject to this letter agreement, of the restrictions
imposed by the United States Securities laws on the purchase or sale of
securities by any person who has received material, non-public information from
the issuer of such securities and on the communication of such information to
any other person when it is reasonably foreseeable that such person is likely to
purchase or sell such securities in reliance upon such information.
In consideration of the Evaluation Material being furnished to us, for
a period of two years from the date of this letter, we will not (nor will we
assist, provide or arrange financing to or for others or encourage others to),
directly or indirectly, acting alone or in concert with others, unless
specifically requested in writing in advance by the Board of Directors of the
Company; (i) acquire or agree, offer, seek or purpose to acquire (or request
permission to do so) ownership (including but not limited to, beneficial
ownership as defined in Rule 13d-3 under the Securities Exchange Act of 1934
(the "Exchange Act") or any securities issued by the Company or any rights or
options to acquire such ownership (including from a third party) or make any
public announcement or submit any proposal (or request permission to make such
announcement or proposal) with respect to any of the foregoing, or for or with
request to any extraordinary transaction or merger, consolidation, sale of
substantial assets or business combination involving the Company, (ii) except as
pursuant to a consulated Transaction, seek or propose to influence or control
the management or the policies of the Company or to obtain representation on the
Company's Board of Directors, or solicit, or participate in the "solicitation"
of any "proxies" (as such terms are defined or used in Regulation 14A under the
Exchange Act) with respect to any securities of the Company, or become a
"participant" in any "election contest" (as such terms are defined or used in
Rule 14a-11 under the
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Exchange Act) to vote, or seek to advise or influence any person or entity with
respect to the voting of any voting securities of the Company or make any public
announcement with respect to any of the foregoing or request permission to do
any of the foregoing, or (iii) enter into any discussions, negotiations,
arrangements or understandings with any third party with respect to any of the
foregoing.
Although the Company has endeavored to include in the Evaluation
Material information known to it which it believes to be relevant for the
purpose of our investigation, we understand that neither the Company nor any of
its agents, advisors or controlling persons, has made or makes any
representation or warranty as to the accuracy or completeness of the Evaluation
Material. We agree that neither the Company, nor its agents, advisors or
controlling persons, shall have any liability to us or any of our
Representatives resulting from the use or content of the Evaluation Material.
Only those representations, warranties and covenants contained in a definitive
agreement with respect to a consummated transaction shall have any legal effect.
At the request of the Company or in the event we decide not to proceed
with the transaction which is the subject of this letter, we and our
Representatives shall promptly redeliver to the Company all written Evaluation
Material provided by the Company and will not retain copies, extracts or other
reproductions in whole or in part or such written material. All documents,
spreadsheets, memoranda, notes or other writings prepared by us shall be
permanently deleted or erased, and we shall certify in writing to the Company
that we have complied with the provisions of this paragraph.
It is further understood and agreed that no failure or delay by the
Company in exercising any right power or privilege under this letter shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof.
We agree that unless and until a definitive agreement between the
Company and us with respect to any transaction referred to in this letter has
been executed and delivered, neither the Company nor we will be under any legal
obligation of any kind whatsoever with respect to any Transaction by virtue of
this or any written or oral expression with respect to such a Transaction by any
of its or our directors, officers, employees, agents or advisors except for the
matters specifically agreed to by us in this letter. We acknowledge and agree
that the Company and its advisors are free to conduct the process relating to
any possible Transaction as the Company in its sole
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discretion determines (including, without limitation, by negotiating with any
pro spective buyer and entering into a preliminary or definitive agreement
without prior notice to us or any other person), (b) you reserve the right in
your sole discretion to change the procedures relating to your consideration of
the Transaction at any time without prior notice to us or any other person, to
reject any and all proposals by us or any of our Representatives with regards to
a Transaction, and to terminate discus sions and negotiations with us at any
time and for any reason. The agreements set forth in this letter may be modified
or waived only by a separate written executed by the Company and us expressly so
modifying or waiving such agreements. We further acknowledged and agree that the
Company reserves the right, in its sole and absolute discretion, to reject any
and all proposals and to terminate discussions and negotiations with us at any
time.
It is further understood and agreed that money damages would not be a
sufficient remedy for any breach by us of the agreements contained in this
letter and that the Company shall be entitled to specific performance and
injunctive or other equitable relief as a remedy for any such breach, and we
further agree to waive any requirements for the securing posting of any bond in
connection with such remedy for our breach of this letter agreement. The
foregoing remedies shall not be exclu sive but shall be in addition to all other
remedies available at law or in equity to the Company. We agree to indemnify the
Company for any loss for account of our breach or noncompliance with the terms
of this letter agreement, including without limitation attorneys fees incurred
by the Company in connection with enforcement of this agreement.
This letter shall be governed by, and construed in accordance with, the
internal laws of the Commonwealth of Massachusetts, without giving effect to the
principles of conflict of laws thereof. We irrevocably consent to jurisdiction
of the state or federal courts located in the City of Boston, Massachusetts and
waive any objection to such venue and agree not to object to any proceeding
regarding this letter agreement as being brought in an inconvenient form.
The Company acknowledges that Sunbeam may from time to time engage in
the same or similar lines of business as the Company and that the information
provided to Sunbeam by the Company and its Representatives and any due diligence
conducted by Sunbeam may serve to enhance Sunbeam's understanding of its own
business and the markets in which it competes (or businesses in which it may
engage or markets in which it may compete in the future). Nothing contained in
this letter agreement shall serve to prohibit Sunbeam (or its subsidiaries or
affiliates) from
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engaging in any particular line of business or from developing its own product
lines or pursuing other acquisition opportunities in the same or similar lines
of business or engaging in any particular line of business now or in the future;
provided that we hereby agree not to violate the provisions of the third
literary paragraph of this letter agreement.
If you are in agreement with the foregoing, please so indicate by
signing and returning one copy of this letter which will constitute our
agreement with respect to the matters set forth herein.
Very truly yours,
Sunbeam Corporation
By: /s/ David C. Fannin
-------------------------------------
David C. Fannin
Executive Vice President &
General Counsel
Confirmed and agreed to as of
the date first written above:
THOMAS H. LEE COMPANY
By: /s/ Anthony Dinovi
--------------------------
Anthony DiNovi
Managing Director
cc Robert Kitts, Morgan Stanley
Blaine V. Fogg, Skadden, Arps, Slate, Meagher & Flom LLP
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